Laurent Grill -- JLL Spark

Laurent Grill — JLL Spark

Wednesday, August 10, 2022
Corporate venture capital is becoming a first choice option for founders seeking the value-add that corporates can bring in an industry.
 
This is the thesis of Laurent Grill as he seeks to build the #1 choice PropTech fund at JLL Spark.

I’m with my friend Lauren Grill, partner at JLL Spark. JLL is a global commercial real estate company and JLL Spark is the corporate venture fund. They’re investing in seed through Series B technology companies that are transforming the real estate industry.

And of course, before JLL, Laurent was many years leading investments at LA-based Luma Launch. Hello, Laurent.

About a year ago, I transitioned over to JLL spark, which is the strategic corporate venture fund for JLL. We’re focused on Series A, Series B and frankly growth investments in the prop tech space. We’re investing across a variety of different themes ranging from FinTech in our space to smart buildings , construction tech, tenant experience platforms, ESG really broad on, on the construction as well as built world overall. So, you know, just to give a little background where we’re writing from the direct fund $2 to $10 million checks, both leading and participating.

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As I said, I’ve been doing this now for a year and , you know, the space is just massively exploding. Really?

And, and how so. in the last decade. Real estate technology has grown 300%. Um, Which is, yeah, exactly. Wow. I mean, uh, in the first half of 20, 21 alone, there was about $10 billion of funding,

and does some of that have to do with COVID and our changing assumptions about the office.Yeah. So, the future of work is incredibly top of mine for, I think everybody, right,

Um, And so with that type of transformation, there’s a variety of technologies that need to be adopted in order to make it more efficient and effective for these, remote employees to be able to work in a new environment. Um, Everything from IOT devices in buildings to usage to track cleanliness everything to access control, right? Like the whole concept of access control has to be rethought because if I’m going into a building every single day, it’s okay to have a key fab that was issued to you. And if you think about the change where someone might come into an office in Utah for a week, and then go for a couple of days to New York and then work from home, how do we create an environment where all of these buildings can live under?

You know, sort of sanctimonious uh, singular consumer facing products. And there’s not a lot of great options for that. And so uh, we have a company called swift connect that is solving that where they are a middleware company that sits in between the hardware solutions and all of these different buildings around the country and the world.

And so these are just examples, obviously there’s lots and lots and lots of, uh, products out there that are helping to solve this, kind of get back into the office. I think a lot of companies are trying to figure out, how do we get our, our teams to collaborate again?

How do we get people to, come together and be creative?

And I don’t necessarily believe that the future of the office looks like a bunch of Cuba. And frankly, I think it was roughly a hundred square feet per employee was a standard. Um, I think that’s going to change. Think that’s such a leap for me to say, but there’s definitely going to be a need to create an environment where people can come back together where we’re giving them the tools to do it in a way that is exciting that like people want to be back.

And so it may not be a hundred square feet per employee and maybe a thousand square feet per employee. people would come in once, two times, three times a week. So, I mean, is it like if you’re a startup and you’re trying to budget your office space needs, like, do you really think that it might go from a hundred square per person to five X that, or even 10 X that

Yeah, again, it’s not necessarily getting more space, a lot of it is about converting the spaces that we have today, actually thinking about what the future office looks like. So. You know what might’ve been a 20,000 square foot office for all of your employees, it doesn’t mean that

you won’t have more or less, make, keep the same footprint, but you’re not going to have everyone in at the same time.

One, I think we’re starting to see that a little bit more where there’s a bit of a stagger and how employees are actually coming in and utilizing the office. But it’s also about adapting the office differently, right? It’s, creating an environment. That’s not just a bunch of people sitting at desks and sitting isolated because ultimately they can do that from home.

How do you create more of a creative environment and startups have been doing this for frankly a long time. This is not new. Um, I think larger enterprise companies have probably been a little slower to adopt this, Yeah. Are there any other to go about that? It’s the open office plan? It’s whiteboards everywhere. Is it sort of stuff I tend to think of for a startup?

Yeah. But I also think it’s a software that’s being used in order to engage these tenants. There’s a company called HQO that we’ve invested in that um, is all about the tenant experience and how, to provide them a variety of these tools in order to allow for it to be desk looking for instance, right.

Like everything from, maybe you don’t have like dedicated spaces everywhere. And how Do you manage. To, you know how do you provide better lunch services and how do you , provide better amenities across the board and give access to those amenities in a more seamless way.

Do you know what the numbers are in terms of people actually going back to the office

Yeah, I mean in LA, a number that I heard was about

50% as of today where it’s may of 2020 to about 50% of, offices are back to full occupied. What is defined by full occupancy, I think is a little bit broad, honestly. So I would be careful with what that means. I think that just means that people are back in the office.

Does that mean that every single day, 50% of offices have someone coming in or the same amount of people? Probably not. , I don’t want to get quoted on that, but that’s it’s growing, it’s coming back. I think more just from a non data perspective when we start seeing our own startups.

And, and how they’re thinking about people coming back into the office. It’s, probably about 50%. but I, I expect that number to grow.

mean, it’s pretty comfortable working from home. Any other thoughts on future of work broadly

Yeah, but by the way, I just want to touch on this. Like, I think that the people that are missing out the most on working from home. Are the younger generation that are missing opportunities to learn. It’s much easier for the likes of you and me to work from home because comfortable. we

have, you know, you have families and it’s easier. You’re in your nice home. You have all these things. Amazingly, I think um, there’s this perspective from leadership in companies that kids want to work from home. And that’s not the case, the vast majority um, of people coming out of college who are career ambitious are actually looking to get back in the office to be surrounded by their peers and gets a network.

Good point. will say this one of the big topics that is only growing and something that is incredibly important to JLL core, our larger parent business as well as us is sustainability.And so from our perspective, there’s a whole new wave of companies that are. Seeking to combine design and offsite construction and new materials we’ve actually made a couple of investments in modular construction company, we called Beav and another one called Juno both taking slightly different approaches, but We think future of affordable housing is going to be built off of this concept of utilizing new technologies, both on the materials side, but also on the process side in order to actually provide housing for, those growing areas like Austin, for instance, Austin, I think is getting 65,000 new residents per year which means that they need 15 to 20,000 new units a year. This a very small city that’s. Exponential rate and how are they going to be able to keep up with that and do it in a way that’s actually affordable for these, residents. And so that’s just like a small example of, you know, what we’re looking at in terms of identifying technologies that can actually help real meaningful problems.

And then on the flip side, you know, if you think about carbon emitters across the world, construction is one of the largest carbon emitters, but just the built world in general is huge. Over 70% of carbon emissions in New York city come from the built world. So it starts obviously at the build, So one of the largest submitters is stealing concrete.

And if we can remove that from the supply chain and build there’s a lot of ways that we can actually lower emissions. And we just saw there was a skyscraper that was built purely on mass timber, which is really, really, really cool. So there’s some good stuff out there right now,

 So first off, 70% of new York’s emissions are the built world.

correct. That’s obviously broad that’s everything from construction to building usage.

and what is really gonna move the needle on building emissions.

Yeah, we’ll look over the next few years. We’re likely going to see a flurry of mandates that lower emissions across all of the asset classes. So like these mandates will inspire companies to experiment with tons of new technologies. Uh, And so as, compliance deadlines draw closer, we’ll likely to see a wave of adoption across we’ll call it smart buildings which really encompasses a variety of things, right?

So data and IOT infrastructure platforms that are both tracking and uh, and helping to understand how we’re utilizing our buildings better you know, I don’t actually have the numbers, but someone was telling me that you would think over, COVID when people weren’t using some of these offices for two years, the emissions of those offices would go down, right? The energy usage and emissions turns out no turns out. It was like 1% or something.

Some wild numbers, like barely anything went down because these buildings have to run at a certain capacity in order for them to maintain their, their usage. So it’s a very disappointing thing to hear. Even think that we would lower our emissions from each individual building that wasn’t being used. And it turns out that’s not.

Whoa. I don’t even understand that entirely. Like I make sense to me that like lights, which is not being on doesn’t really move the needle that much. But what is it? That the building has to do if it’s still at such low capacity

You know, buildings are alive.

And so, you know, you’re, you’re talking about even HVAC , And ultimately everything has to sort of run if you want it to continue to run moving forward.

It’s just how the buildings have been built. Without getting too jargony. it is they have to stay alive in order for them to be alive. Right. You can’t turn a body off just cause they’re not hanging out. And all of the various different pieces of a building have to work together and have to continue to, to move forward in order for that building to sustain itself.

 So I I think it’s the number one thing that we could potentially do at JLL spark is identify more companies that we can incorporate into our study. That are solving ESG issues. Do you mostly focus on commercial real estate is JLL just commercial real estate broker.

So JLL does a lot, you have to be a hesitate saying we’re just a commercial real estate broker. Obviously that’s a large part of our business. I think many people who have seen signs on, windows and retail store and variety, you’ll see the jail logo in a broker.

next to that. But we also have a variety of different aspects of our business globally.

So we are a global company. We have over a hundred thousand employees in the company now, and it ranges from, you know, an industrial warehousing practice to retail, to uh, multifamily and hospitality. And So we touched pretty much every aspect of the real estate industry.

Okay. Zooming out a bit. Do you think about how cities are reshaping or like how cities in the future are just going to look different? look the reality is that cities are going to have to shape themselves tremendously through a variety of things. you know, there’s going to be multiuse types of buildings that are going to be renovated or, you know.

any new building has to be thinking about that.

How we’re utilizing both retail and housing and commercial, all in the same building. There’s these really cool buildings that have all of them, right? You’ll have like retail on the bottom floor on two floors. Then you have like a gym on the second and third floor, and then you have commercial from the third, fourth and fifth floor.

And then you have housing. It’s a really, really interesting way of thinking about how we can start to incorporate more local living, where everyone’s kind of incorporated into a very dense area.

Yeah, no local living makes a lot of sense. What about the role of brokers? Like Does the role of brokers change.

Slippery slope. I mean, yeah. I think that industry is going to have to change, right. Especially ones that have been sort of for awhile. think that the relationships that brokers have for larger sort of inventory or larger assets um, will maintain, you know, massive value.

Right? If you have a great broker who has the ability to provide. Tons of great tools for you to not only understand how to better utilize your space but also just identify the best space for you. I definitely think that there’s a place for brokers for a very long time, as long as we’re staying ahead of the curve in terms of utilizing technology Uh, And so I think one of the great parts of, JLL is that we are a tech focused brokerage. We’re thinking about how to identify and utilize the technology that we’re both building internally uh, with JLL technologies, as well as , identifying and investing in externally with JLL spark So I hesitate to say brokers will go away.

That’s not something that in a position to say, because I don’t think that’s the case, but I think that we all have to evolve So tell me more about JLL and JLL spark and like one of two partners, as I understand it, what does the team

look like?

 We are a global team. we have an investment team as well as our uh, what we call our, our growth team, which is our operating team. It consists of uh, me and my partner, Raj, and the investment team. And then we have four other investment professionals,

And then we have a growth operating team all over the world. And the purpose of that is because we believe that being a strategic venture fund. Is it long lasting relationship when we make an investment, it’s not as simple as us putting a stamp that you got invested in by JLL.

Um, When we make an investment, we are partnering with you. And And so our growth principles when we make an investment or paired up with our portfolio, Um, So they are experts in navigating that and helping our portfolio companies figure out ways of uh, of working with JLL. And then the secondary is how do we actually expand that network beyond JLL Jaylon, all of our partners um, that go into, various different industries.

 and what I’ve seen so far from what our capabilities are helping all of the companies in our portfolio are, you know, massive magnitude larger than I’ve seen in many funds because of the nature of how integrated we are with, so many of the.

Frankly just end customers of these startups.

Well, I mean, I’m curious for you personally, like, as you said, it’s a much bigger platform for you. Like it’s a global team, you know, how are you thinking about where you want JLL spark to go instead of what are the initiatives maybe that are on your horizon?

I joked around with my team when I said this at the beginning, I said, I want to be considered the number one global props had funded.

Great.

Simple right. And not very hard. Uh, Historically corporate venture has been viewed in different ways. I think times have changed dramatically because we’ve had a few examples of corporate ventures that have been uh, structured effectively in order to allow for success. we’ve seen some really interesting blueprints with like Comcast Salesforce ventures and a handful of others that have done this really well. And I actually see, especially with the amount of money that’s coming into our asset class and our asset class being venture capital. I think that the need for stronger strategics on the cap table , has grown tremendously. As long as we have the, capability of. Delivering the promises that we say we can do and, backing that up.

I have no doubt that, especially in our industry, that we’re, you know, we’re just kind of taking off. There’s a lot of great funds that we’re actually investors in it as well. So do invest in other venture funds in the PropTech space and we partner with them and it makes it even better to, grow with them.

It’s definitely a rising tide raises all boats situation, but I don’t see why we can’t be considered essentially the top global, again, key global PropTech fund because we want to be investing, not just in the U S but in APAC, in India and around the world. And so does that mean that a lot of investment you will go into what you call your growth team

I mean, we have eight people on our growth team

We have more people on our growth team than the investors We value our ability to actually work with our portfolio companies and effectively block them into these meetings far more than our ability to actually just write checks.

Hm.

How much of the time do you lead?

As much as we can.

, , what for you? I mean, now you’re leading a series B deal. Let’s say,

Yeah.

I mean that must be massively different than a pre-seed.

Yeah.

 What’s been interesting to you in this process?

What have you learned?

It’s so much harder to invest in pre-seed

Interesting.

um, No, I mean, look, I’m kind of kidding, but there’s challenges for both. I mean, you know, this it’s when you’re investing at the pre-seed stage, you’re investing Justin people on a vision generally, right? Like it’s, purely like do your assessment of the market and do all of those things that you want.

But ultimately the vast majority of times, these businesses will probably change two or three times by the time they’re successful. You know, at series a and series B, you have a little bit more validation, right? You have the ability to actually take a product That’s been vetted and there’s some version of product market fit and walk it into potential customers offices and say, Hey, you should try this. And I love that because.

one of the things that really enjoy doing is matchmaking. I like, I’ve always liked that I like matchmaking founders or, connecting great investors with my portfolio companies. And it’s not that much different when I walk in and say, Hey, you should check out this product info grid. What they’re doing is really game-changing will help bring tenants back into the office and having that conversation and doing our best to actually be that valuable partner a great place to be.

It makes frankly a lot easier to make investments for series a series B and what makes it challenging is there’s just so many people that are trying to invest in that stage. So you really have to.

Lean on your reputation. And ideally people pick you to be their partner, at least in the.

best deals.

Yeah. But you know, you’re also, you have to map out the market and the competitive landscape and all of that in a way.

Of course. Yeah. But that’s, I shouldn’t say that’s easy. It’s not easy, but that’s all, it’s all data, right? That’s now that’s data that exists. So you can take all of that run that through your, your models and figure out what works. that’s not what makes great investor. Even at series a series B, still investing in people you’re still investing in, you know, , in the vision and identifying the differentiations that aren’t obvious The difference, as I said is just like, it’s not a napkin, right? So it’s a spreadsheet.

Okay. So it’s kind of an unfair question because like, obviously the stage is a big difference. how else do you think you’ve really changed as an investor?

 I don’t think that’s an unfair question. I think that’s a great question. How have I changed as an investor?

I don’t think I have honestly. and I fight it. I don’t want to change. The only reason that I’m a venture investors, because I really love working with founders and getting to be same room as people who are always tremendously smart and, , ambitious and trying to solve problems that I didn’t know existed.

Right. And so , I think that my, intuition might be getting stronger with repetitions. there’s no question that I look back at some of my early decisions and I would have probably not made them And frankly, probably half the time, I still would’ve made that investment. And it’s okay because that’s how it works.

Right. You have to take risks, you have to take swings. But I don’t think I’ve changed at all. and I hope not, frankly, I really don’t. I don’t think that would be a benefit to me.

And why do you hope not?

 I find this kind of interesting and sort of infuriating at times when I hear venture funds say that we’re really good at pattern recognition, or I look for pattern recognition.

I’m like, that’s how you invest in the same shit over and over and over. And don’t invest in stuff that’s really revolutionary and going to disrupt. It’s probably the reason why tons of venture investors missed out on companies like Airbnb or missed out on companies like Uber, because they were not necessarily part of that pattern recognition.

Right. And so never want to fall under that category. I always want to be thinking like I’m maybe a little bit of an underdog or always trying to work a little bit harder. Understanding why I want to pass on a business. like when my reason for passing is there’s no way this is going to work.

Those are the companies I really need to think about

Hmm. Interesting. So you’re one of those like swings are what really excites you serve investor.

Yeah. Well, and also I think a big problem. That’s why sustainability is such a big focus. I think we’re trying to solve big problems. Construction is a massive problem. It’s $13 trillion business a year. Huge,

huge, huge market. so if you’re solving massive problems, it’s gonna require massive swings.

 as long as I can continue doing that, I’ll continue to venture invest, but that’s the fun part.

That’s cool. What’s your like, Sort of a, what makes you successful? Like I think you said you don’t consider yourself like the smart guy in the room. Who’s like coming up with the answers. Are you working twice as hard? Like what’s

No,

have you gotten to where you are?

I, you know, I don’t know. Um, I like to think that I’m, fairly decent at matchmaking, as I said, like, I think I do a decent job of connecting good people. And ultimately in venture, I think that’s a large part of, success. I think I’m fairly lucky to, As I said, we’re only a year in uh, in terms of Roger and myself.

And so we have a long, long way to go, but The um, founding GPS learner and the here Shaw are?

having an amazing background. And they’re now the co-CEOs of JLL technologies. So their, leadership has only grown JLL. And so them alongside us coming in, I think our ability to really grow JLL technologies as a whole and JLL spark.

It’s just endless.

Exciting for you?

 I’m here for the ride guys are the real smart ones though.

Well, you alluded to your background and I feel bad because we didn’t really, people have to go back and listen to our interview because you talk a little bit about your previous startups in our first interview.

Yeah, Well, we’ll, we’ll give them some extra, extra listening if they actually want to find out more about that.

fair enough. If you want the backstory, the Ron was one of our very first episodes. Let’s look forward. I know you lecture, you talk to students.

What is the advice or perspective that you. I’ve always said, I wish I had a real skill now. I don’t think that’s fair to say I have a skill, but like having hard skills is probably going to be more valuable than it ever has been in the past. the ability to not only be able to, whether it’s coding or designing or we’re doing something that, that is a direct contributor to an operational environment is extremely valuable.

Even if You want to go into venture. it’s, it’s, funny because when I was coming out of college, going into venture was not really like a hot thing. Um, Shark tank came around and changed the landscape. , I truly think that was actually the catalyst. And I speak to students all the time about going straight into venture capital out of undergrad, or even. And I, I really hesitate to tell him to do that because I don’t think that’s the mood. If you have the ability to work in a startup or in a company that’s fast growing and learn about the day-to-day struggles that come with, actually building a business and the passion that’s required in order to get over some of the challenges that, come to you as an operator on a day-to-day basis, the empathy that you’ll grow alone, just that alone will go so far if you ever want to be an investor.

So from my career trajectory, it was, you know early founding teams, startup founder, So I was always incredibly early as. And uh, there were so many challenges that came with that and like really depressing times and really amazing, And that would be my advice is while you’re young, know, learn a skill and spend time like in the struggle And that’s invaluable.

You have advice for startups? Like someone who’s in it. And who’s maybe they’re struggling, maybe it’s fundraising, maybe it’s the emotional side of things. I MDU and many ways, and I don’t want to be you in so many others. Right. I think that it’s one of those where I, I definitely miss. Um, there’s a feedback loop when you actually are building a company that’s really cool that you, you see people using your product and you wake up in the morning and you’re like, you have a goal that you’re going to build something and that something, whatever it is, is going to be used by someone else.

And when they use it it’s feedback, And so cherish that, right? I think the one thing is cherished the ability to close the feedback loop of whatever you’re doing because it’s the best feeling in the world.

 even when things aren’t going well, it puts fire under your butt to go and actually fix it right when fires start, the ability to go and put them out is kind of a fun challenge that seemed Stressful.

at the time because they are, yeah, it super stressful.

But when you look back on it, the level satisfaction that you get from the accomplishment of, hopefully solving them. is, as I said, invaluable and, and super exciting.

I love it. Any other advice you’ve been given that’s really stuck with you.

 No. I think the big thing that I always talk about, and it’s a, it’s always a top of mind, conversation is culture and culture is not built off of kombucha and ping pong tables, Culture is built off of creating a transparent feedback loop. it’s built off of expectations being Mets and delivered in a very fair way. Um, And when people wake up in the morning and go to work and they know what’s expected from them and they know whether or not they were successful or whether they fell a little short.

That’s culture. That’s when people feel like they’re bought in and they’re part of something that’s, fair, that’s it? You know, that they’re on the team that they’re not just a cop.

Do you think PropTech has any sort of different culture now that you’re like a hundred percent in PropTech then, you know, maybe when you were doing more consumer or storytelling work or do you notice a difference?

Um, No, actually I, and I think that’s probably a product of the last few years. It’s more technologists are moving into the space rather than traditional real estate background individuals. And you have to remember proxy is stuff that we engage with every single day, right? even someone who doesn’t come from real estate has worked in an office and recognize that like, why is the thermostat that way?

Or why is, you know, why is it always hot in one room and always cold in another, I can solve that problem. Or, you know, why is this access control? So. and bulky and shitty. at least in, you know, being a year in this space, that’s sort of my perspective on it.

Yeah, no, I wasn’t sure. Um, So we’re running out of time. So the question is sort of a, were there other things that, that we should have covered is about you JLL spark? What you’re doing? think the reality is that it’s going to be really interesting to see how this industry, that I’m now in evolves. I look at PropTech as sort of similar to what FinTech was five years ago where you’re going to have tons of innovation and you’re gonna have tons of adoption of.

Previously antiquated industries that will allow for some really, really big players. We don’t actually have any real Goliaths in the PropTech space, in the IPO set, right? we’ve had a handful of IPOs. You had Procor, you’ve had some SPACs of latch and so on, but I mean like Matterport and whatnot, but there’s not a lot of very large real estate tech/PropTech companies yet.

So what I expect is the next three to five years, you’re going to start seeing some really big companies that takes shape. And there’s going to be some real household brand names.And hopefully we’re on the cap table.

That would

be the goal.

Um, Well it sounds like a great role. It sounds like a really big, interesting role um, and uh, wishing you lots of luck on that journey. Building the best global products.

Well, thank you so much for having me as usual. It’s always a pleasure seeing you. I hope you feel better.

Thanks dude.