Transcript: Smart Cities Taking Advantage of the $1.6 trillion Opportunity

Cities utilize 66% of the world's energy. They emit 70% of the CO2 emissions. They consume 80% of the world's resources. And cities only make up 2% of the Earth's land. Far disproportionate to our size, I'd say the biggest challenge outside of climate change is just urbanization itself.

The fact of the matter is 1.3 million people around the world are moving into cities every single week. I mean, this is putting tremendous demands on the existing infrastructure and ability of cities to provide services to those individuals in addition to the people who are already living in cities. Cities are being forced to do more with less and smart city solutions help them achieve that. The opportunity for buildings at all scales is just starting to open. We are not even looking at a fraction of the opportunity that exists and better building design, construction, and management.

The type of opportunity and value that the building is providing its occupants is what determines the value overall. Welcome to The Constructor Podcast, The Best Way to Build It, episode number 61. I'm your host, Brittany Campbell-Turner. This podcast is dedicated to helping property owners have certainty in their decisions about their construction projects. We talk about fostering trusting relationships, help you to understand how to lower risk, be under budget and on schedule, and most importantly, exceed your end user's desires.

So last week, we spoke with Carl Piva, Managing Director at TM Forum for the Smart Cities Initiative. He's developed the City as a Platform Manifesto and we discussed the 10 common principles for driving smart cities' success. He says that with these business model principles, cities can become regional or global knowledge hubs and innovation centers. We also talk about how the built environment drives a better open data economy and how to start impacting cities by doing simple efforts. So if you haven't listened to that episode yet, check it out at constructor.com slash EP 60.

So today we're speaking with Michael Lake, President and CEO of Leading Cities. We cover some of the major challenges that we face as cities and of course we discuss the solutions to the problems, particularly in the forms of ecosystems like sociological, economical, and environmental. We cover how introducing blockchain can help the smart city initiatives and some easy steps to work with startup companies to introduce relevant ideas that can be taken on with governments to move smart city agendas forward. And with that, let's get into the interview.

Today we are interviewing Michael Lake, President and CEO of Leading Cities, a nonprofit company focused on improving the quality of lives in cities through smart city ecosystems. So Mike, welcome to the Constructor Podcast. Thank you, Brittany. It's a pleasure to be here. Tell me, I mean, you've been in the realm of smart cities.

First things first, what makes a smart city? What is your definition? Well, truth is it's an evolving definition, I think not just for me, but for the industry. Ultimately, a smart city is a city that is running more efficiently, doing more with less, providing greater services than it used to. And it ultimately it's providing for the people who live in the city, who visit a city and who work in the city, a better quality of life.

It's observed and felt through the services cities provide, through the efficiency with which they provide them. It's also about saving taxpayer dollars. I would venture to say that most cities think that they're thinking this way already, but not all cities are smart. There are challenges that cities are facing right now. Could you give us a good reason as to why we're even venturing into having smart city initiatives?

Absolutely, I mean, certainly the two biggest challenges we face right now, all of humanity is facing, is climate change. Cities are our biggest offenders, not surprising given the density of cities, but we emit more CO2 emissions than rural areas. Frankly, the challenges that we have in cities exist because of, some of them exist because of that offense to climate change. When you look historically at cities, cities were developed, a large part of historic cities were developed around water sources, coastlines and rivers. So when you think about one of the many threats of climate change is sea level rise.

A tremendous number of cities, Boston, my hometown included, really there's an eminent threat of the dangers of sea level rise to shrinking the city, flooding homes and businesses, and creating havoc for cities. I'd say the biggest challenge outside of climate change is just urbanization itself. The fact of the matter is 1.3 million people around the world are moving into cities every single week. I mean, this is putting tremendous demands on the existing infrastructure and ability of cities to provide services to those individuals in addition to the people who are already living in cities.

So cities are being forced to do more with less and smart city solutions help them achieve that. Whether it's doing more by reducing the costs of what we're already doing and having resources to provide additional services or it's running programs more efficiently, adding new services, all of these things help impact and improve the quality of life with citizens, whether they're living, working or visiting cities. Thanks for laying out some of those challenges. I mean, you said 1.3 million people are moving into cities per week. I mean, that's incredible.

Per week, it's a tremendous amount. It really is. Now, truth be told, a large number of that population, that 1.3 million, it's happening in developing nations like India and China, for instance, but it's happening here in the United States as well. And throughout Europe. So we really have abundance of resources in terms of citizens that we can tap into.

And some smart city solutions also achieve that, whether it's technology or no technology. For instance, the city of Lisbon was among the first to develop a participatory budgeting process. What that is is the city set aside 5% of its annual budget, allowing citizens to propose how that money could be spent. Those projects went through feasibility tests, were uploaded to the city website, and all citizens had the opportunity to vote on them. The projects with the most votes were eventually funded.

And that's not by grant, that was by the citizens to the city, for the city to implement those projects. That concept was shared by leading cities from Lisbon to Boston and Cambridge here in Massachusetts, both of which have now adopted variations of it. But that is a city understanding the value of its citizens to tap into their ideas and their creativity, to seek their opinion on what are the priorities, what are the challenges that should be addressed first and foremost, and how can they best be addressed.

I wanna be clear that not all smart city solutions necessarily involve or rely on high technology. Thanks for clarifying that. And from my research, it looks like you're focusing on three main, I would call them ecosystems, for sustainability in cities. And if you could dig into what those are, that would be really great for us to understand sort of the broad gamut. Leading cities, as you already mentioned, our mission is to improve the quality of life in cities.

And one of the ways we do that is by creating sustainable cities. We define that sustainability in three different areas, sociological, economic, and environmental. Frankly, sociological is the human-centric piece of smart city solutions. And I think it is a critical piece because we can never forget the fact that cities, first and foremost, are about the people who live, work, and visit them. So a smart city is a city that keeps its people at its center.

Now, sociological sustainability, I like the way Dubai happens to define it. They have a 2020 plan coming out as well. So I would be very interested in learning more about that. I don't know if you'd be happy to share of some of the perspective there. I'm certainly not an expert on their plan, but what I love about it, they have put human happiness, individual's happiness, as the central tenant of their plan and their strategy.

I appreciate that because, as I said, first of all, it's a human-centric approach. Second, happiness can be defined very broadly, and it can take into account just about every aspect of life within a city, whether you're talking about how happy you are during your daily commute to how happy you are with the quality of your child's education to how happy you are with the sense of safety you feel from a secure city, how happy you are with the quality of job that you have access to, and how happy you are with your ability to live in a community and to not just work and contribute to the wellbeing of the community, but to also be able to save and build wealth for yourself and for future generations of your family.

That's an area where I think cities often don't pay enough attention to, but the quality of the city is directly related to the ability for its citizens to build wealth, and I don't mean that in a selfish kind of way. I don't mean that about every citizen of a city needs to be rich, but what I mean is that cities or urban centers that are full of people who are living paycheck to paycheck, one unexpected expense away from bankruptcy does not build a sustainable city. It's a city on the verge of collapse, and you never know when that might occur.

And it's a fantastic organization, a company that was developed in Brazil that has really done some great work in this area. I'll tell you a quick story if you don't mind. So there was a gentleman in Brazil who noticed that the people in his community were working. They were working hard, and what he didn't know initially, but they were basically living paycheck to paycheck, and then he saw what happens when there's a financial crisis or an unexpected expense, like a medical expense or a broken car or something, and it hit them, and suddenly they weren't paying their bills.

The neighborhood was starting to decline, and ultimately he was concerned by this and looked into it, and what he discovered is that these individuals were not able to save. It wasn't just because they weren't earning enough, but it was because they didn't even have a credit score, and without a credit score, as you well know, you do not have access to the financial tools that allow any person to build wealth, whether it's a mortgage to buy a home, or it's a car loan, or it's a loan to put your kids through school, or a credit card even.

Most of his neighbors were living in a cash society, and today's day and age, that is very difficult unless you have an unlimited amount of cash. Living paycheck to paycheck, dollar to dollar, just doesn't work for most families. This gentleman developed a way to bridge the gap that was the challenge in why banks were not offering, or financial institutions were not offering these individuals financial tools to build wealth, that being the lack of a credit score. So what he did, he does not deal with transactions directly, but he developed a software program that connects employers to banks.

Those banks, which by the way, today in Brazil, 52 out of the 53 financial institutions in Brazil are using this program. And what it does is financial institutions to provide individuals loans and other financial tools, and not worry about the credit score, which is essentially measuring how much risk is involved in that individual being able to pay them back, pay the financial institution back. What he did was he took all that risk out, and he connected employers directly to the financial institutions. And essentially it equates to payroll deduction.

If you're a financial institution and you know you're getting paid before the employee even has an opportunity to spend that money, because ultimately a credit score is nothing more than saying, if I give you a loan with a thousand dollar payment each month, and you're making $2,000 a month, then on paper it seems like no problem. If you actually have $3,000 worth of expenses already, then you're already in the hole. If that thousand dollar payment comes out of your paycheck before you even have a chance to spend it on anything else, there is no risk to the financial institution.

Ultimately, $17 billion are already being exchanged with this system. It's about four and a half million transactions a month. Almost three million people in Brazil are using it. That's three million families that now have the opportunity to build wealth. That changes lives.

Coming back to the ecosystem and how we look at it as sociological sustainability, that's creating a sustainable society. A society where families can live, can work, and play, and afford to stay. I love that afford to stay part. That's the part that you hear often. It's so essential, and thank you for sharing that about the company in Brazil.

Something else you touched on earlier about some of the challenges that we're facing about carbon emissions. There's an ecological sustainability perspective as well. Could you tell us more about that and then also some of the potential solutions that smart cities could have? And I'm sorry, I realized I only talked about one of the three sustainability ecosystems. So the second sustainability challenge is ecological or environmental.

And cities, as I said before, are tremendous offenders. Cities utilize 66% of the world's energy. They emit 70% of the CO2 emissions. They consume 80% of the world's resources. And cities only make up 2% of the Earth's land.

So we're far disproportionate to our size, just how much damage we're doing on the environment. And it's serious damage. Recently a study was done that brought the realities of pollution to the forefront. Everybody I think understands the fact that pollution is not good. But until recently, there was not a number we could associate with just how bad it is.

And this recent study determined that 9 million deaths every single year are caused due to pollution. I mean, that's a serious amount of lives that are lost for this challenge. And to put it into perspective, that's three times as many deaths as AIDS, tuberculosis, and malaria combined. I mean, it's a serious issue. I mean, it says that pollution plays a role in essentially one in six deaths across the world in 2015.

Wow. I do wanna dig in to the construction standpoint. We talk a lot about the AEC, Architectural Engineering and Construction. I guess I'm looking for some ways whereby companies who hold a corporate real estate portfolio can potentially improve the way that they are impacting their environment. Obviously there's sustainability programs, there's the Well-Building Institute, things of that nature.

But I'm wondering, is there a perspective that you have that you could help us kind of think a little bit further about what to do? Well, let me start by saying that when we talk about environmental impacts of cities, two of the top offenders within a city, is transportation and the built environment, buildings. I think that there is a huge opportunity, huge potential for developers, property managers, property owners to really dig in and really have an impact, a positive impact on how we can turn around this challenge of carbon emission.

I mean, there are a number of new building technologies that are being developed. In fact, I think one of the bigger challenges that property managers, for instance, have is knowing which technology to use, how it will fit in with existing technologies, they're using the interoperability of those. Those are real challenges. And of course there are consultants out there that will help individuals navigate that. The fact of the matter is buildings do provide a huge opportunity for cities to reduce their carbon emissions.

The United Nations believes so deeply in this, and frankly, because of the Paris Agreement and the goals that cities have set, buildings are absolutely on the table. They're a huge part of the equation in order for cities to meet those goals. So the United Nations has already started looking at ways that they can support the efforts of property managers and developers and so on and so forth to achieve more efficient building. Now, to put this in my perspective, as we build smart cities, smart cities are kind of like the central nervous system of a community.

It's building that infrastructure to connect the city. And if you think of that in terms of human anatomy, the infrastructure the city is responsible for is like your central nervous system. Buildings are like the accessories we add to our body. So if you think of the technology shift in terms of wearables, we moved from watches with a battery and a TikTok to things like smartwatches that not only tell you the time, and I'm not necessarily talking about the connectivity to your email or your text messaging, but I am talking about things where it connects to your quote central nervous system, where your watch is keeping track of your physical location or your heart rate or things like that.

This is the opportunity that buildings have. Buildings have the choice of being an old TikTok watch or a smartwatch. And whether they're gonna connect into the infrastructure that cities are building, whether they are going to connect their own infrastructure within a building to better understand and monitor the efficiencies or inefficiencies of their building, the usage of space. There's a startup out of Massachusetts Institute that has designed monitoring systems to better understand how people interact with space and what spaces are most utilized and why, therefore allowing the better design of space within a building.

But there's also the connection of a building to a smarter grid, for instance, in terms of energy usage or production. Certainly, buildings have the opportunity to produce energy as well with the rooftop solar arrays and things like that. Connecting to a smart grid is a choice that buildings have if their city has made the investment in that infrastructure. It goes hand in hand, I think building owners and operators have to work with city officials to design a smarter city, a more connected city. And ultimately, the goals that cities have set for themselves in the Paris agreements can be met through the reduction of carbon emissions from building.

Not buildings alone, but it's certainly a huge step in the right direction. And thanks for that perspective. I did want to touch base with you on technology as a subject, particularly, because we've interviewed the architects for The Edge in Amsterdam. I'm not sure if you're familiar with that. Only by its reputation.

Of course, yes, because there are people that are simply applying to work at Deloitte, lesser there, and they're just applying simply, not that Deloitte isn't an amazing company to work for, but they simply want to work at The Edge. I think about buildings like that, smart buildings, and the capability that they have to tap into the smart grid because of the wearable technology that you mentioned and the capability for them to understand how better design allows for people to be more productive and more happy in their space.

But like you said, the buildings produce energy and they could potentially share energy with the next building over if they're using less that day. Things of that nature. So I appreciate that perspective. The one thing that I've been digging into most recently is the area of blockchain. And I'm curious as to whether you had a perspective on where that could integrate the way that buildings are communicating information for cities.

Absolutely. So blockchain, I think, is probably the next biggest game changer. It will, I think, have an impact in much the same way that the internet did. First was radio, then television, then internet, and now it's blockchain. I think it is that impactful.

And take example, the city of Dubai, coming back to that city because they had the first city in the world to set the goal of becoming an entirely paperless city in terms of city government where all transactions, everything is done electronically. And they are using blockchain to achieve that. So in a city like Dubai that is building that infrastructure, now you have, from the simple connection of blockchain to a building where building taxes and energy usage and all of those bills and payments can be done through blockchain.

That's just one example. Now, if you're talking about commercial space, you're talking about purchase transactions and things like that that can be used for blockchain. All of this has an impact. One of the interesting things I think that we're seeing in terms of connectivity of business, and let's be real about this. I mean, in the end, whether you're a developer or a property manager or owner, and we have to talk dollars and cents.

If we are going to get to a point where the real estate industry is fully on board with this and it becomes commonplace rather than the exception where every building is built like the edge, then it has to make financial sense. And there are many opportunities to make that possible. For as long as we have, humans have had the concept of real estate, we have believed in the concept of location, location, location, that value was determined by location. And location meant, to put it in different terms, proximity to something of value.

In early days, it was proximity to a water source. Today, it's proximity to things like public transportation, for instance. Now, you talked about the hopeful employees that are applying just to Deloitte, just to work in the edge. What they want is proximity to smart building services. What they're applying for, what they're looking for is access or proximity to a smart building, a building that will help improve the quality of their life, better internet connection or better service to their wearable devices or whatever it is that they value.

As a property owner or manager, that is value add. That makes your building more valuable than another. And that's what I think is going to ultimately drive the improvements in building technology and that will get us over the hurdles that we now face in terms of sifting through the myriad of technologies that are being developed daily basis, it seems. And we'll get over those challenges. We'll get beyond the question of is this a valuable investment or not?

And we will build buildings that people want because when people want them, they will occupy them. And that's when you get to the bottom line impact for the real estate industry. I do wanna mention just one other thing. We were talking about blockchain. One other example, now this is a city example in a residential real estate example.

In New York City, in the Bronx, they have developed a smart grid where residents have put rooftop solar panels on their homes. Using blockchain, they are able to sell their excess energy to one another. They have created a marketplace. They have turned their home into a revenue stream. Now think about that applied to large buildings.

I mean, skyscrapers have a small surface area on their roof, but think about warehouses that are smaller and wider. These are massive opportunities for solar. There's water collection. There's any number of things that we can be turning our physical assets into revenue streams rather beyond rent and rather than just expenses. I see technology as a huge enabler of all of this.

And coming back to the proximity to a smart building, I mean, when we think about connected devices, IOT, Internet of Things devices, in 2000, just 17 years ago, there were about 200 million connected devices in the world. Today, we have a population of 7.6 billion people on the planet Earth. We have 8.4 billion connected devices. So we have more connected devices today than we have people. In three years, we're projected to go from 8.4 billion connected devices to 50 billion connected devices.

And by 2035, which is just 17 years from now, we will go to a trillion connected devices. So the amount of connected devices and their proximity to smart technologies is going to be a massive value add. In addition to that, you're going to have a situation where data is being produced at phenomenal rates. Let me just give you what I consider a mind blowing fact. In the years 2015 and 2016 combined, all of the data produced in the world equaled the amount of data produced in the first 5,000 years of human existence.

Now, to give you one crazier thought, last year, 2017 alone equaled the first 5,000 years of data produced. That's with 8.4 billion connected devices. I mean, it's almost impossible to wrap our heads around the amount of data that's produced when a trillion connected devices exist on this planet. Buildings have that opportunity to collect the data, to better understand it. I mean, data by itself is just numbers.

You have to turn that data into information, information that leads to better informed decision making. That means buying something at a cheaper cost and a higher value. That means choosing the better long-term building material. That means making decisions on the right kind of building systems to implement. It means choosing the right technologies to integrate within the building.

All of those things, not to mention how to design a building so it's best used by its inhabitants, whether you're talking commercial space or residential. The world of opportunity for buildings at all scales is just starting to open. We are not even looking at a fraction of the opportunity that exists in better building design, construction, and management. Thanks for that perspective. I completely agree with you that the data that we're collecting, we're at the point right now that we don't know what to do with all the data that we have.

But one thing I really appreciate is that when you look at the individual and how they operate within the city, you can then take that data and really analyze it for the benefit and fulfillment of that individual, wherever and whatever they're doing and what their goals are. I completely agree that we have so much data that we're collecting even now at so many different stages of the design, the actual construction of the building and commissioning. And then obviously with Breanne, there's really so much that we can take and improve our designs for everyone that's in the built environment.

Just to give you a sense of the data that's produced daily. I mean, all of us know how frustrating it is when our iPhone tells us that its storage is full. Imagine this on a daily basis right now, in the world today, the equivalent of 150 million iPhones are filled every day. That's 90 years of HD video, the equivalent of 250,000 libraries of Congress. It's an incredible amount of data and opportunity that exists within that data.

So, wow, okay. I really am mind blown. I love all the data and that's certainly really helpful to put things in context for sure. Let's move on a little bit into the third ecosystem that you focus on at Leading Cities. We touched on a little bit, but the economical sustainability.

One of the challenges cities have, of course, is creating its own economy. And the challenge is, what is the best way to build a better economy? And that means tackling issues like foreign direct investment, talent attraction and retention. It means building and supporting industries, certainly means the built environment and building the right kinds of buildings to meet the needs of the companies and workers that you have. One of the things that I see as a tremendous opportunity globally is the fact that this smart cities industry that we are talking about right now is a very important one.

And cities around the world, and I can't tell you how many of them I talked to, who refer to themselves as trying to be or some variation of the Silicon Valley of insert country. And the truth of the matter is there is only one Silicon. And for cities to try and be the next replication of that in my opinion, a semi flawed strategy. It's a lot more difficult to try and take Silicon Valley away from California than it is to create a new Silicon Valley that has nothing to do with the high tech industry.

And if you look at all the opportunities that exist in the world, I would say number one at the top of that list is the smart cities industry. There is no global mecca, no quote Silicon Valley for smart city solution. And I'm not talking about the people who are in other cities that are implementing. I'm talking about a physical location, a cluster of smart city companies that are producing tomorrow's solutions that are experiencing the bump and connect impact that you see in Silicon Valley around high tech.

Cities have an opportunity to build that. I think it's a tremendous opportunity given the audience that we're talking to right now. I mean, somebody has to build that environment for smart city solution providers to occupy. Cities also have the challenge right now of global integration. I mean, this is a tremendous challenge for cities.

We're no longer dependent on local economies the way we once were. We have to balance education with job creation and infrastructure, both in terms of investment, but also in terms of alignment. Are we building the right infrastructure to meet the needs of employers who are creating new jobs and that we're educating people to fill those jobs? We need to create inclusive economies, meaning that every citizen in a city has an opportunity to work in a position that pays a livable wage. This comes back to the wealth thing we talked about some time ago, but every citizen should have that opportunity.

So when we talk about economic sustainability for cities, we talk about all of these things, but smart city solutions have a real impact on this. I mean, today, when I talk about a burgeoning industry, I'm not talking about necessarily a small industry. The size of the global smart city market last year was about $622 billion. In 10 years, we are projecting that to grow to 3.4 trillion. That's over an 18% growth rate.

Now here's an interesting fact. In that same 10-year period of time, we are projecting that cities will spend about $78 trillion or about $9 trillion a year on infrastructure. So that 3.4 trillion smart city market that I'm talking about is that fraction of the $78 trillion that represents today's solution. Every day, a new solution is developed. So yes, we have smart parking systems, for instance.

And so an assumption is being made that X percentage of the cities in the world will implement smart parking solutions and that gets taken out of the $78 trillion. But when the company comes out with an affordable way to not pave roads with asphalt, but with solar panels, for instance, that takes a tremendous chunk out of the $78 trillion expenditure of cities and infrastructure. But that's not included because that technology in an affordable way does not exist today. So I mean, we are talking about a minimum of a $3.4 trillion industry and a maximum of $78 trillion over just the next 10 years.

The smart cities represents more than just technology. It represents more than just the improvement in quality of life in cities, although that's the piece that leading cities, my organization focuses on. Smart cities also represents tremendous economic opportunity. Economic opportunity for cities, economic opportunity for families, economic opportunity for young people graduating from college looking for a job and a career in an industry that is growing. Smart cities provides a number of solutions to a number of the world's problems.

And it's not just the obvious ones. I do want to get a better understanding of how you're supporting that, particularly with startups and Acela City. And I wanted to give you the opportunity to share with us about what organizations you're helping and what that looks like. Leading cities, we were founded as a research program within Northeastern University. And we were producing great research.

And what I learned is that no matter how good the research is you producing, it tends to sit on a shelf and collect dust. So we expanded our operations beyond research. And we started to look at the entire smart city ecosystem, which we define in terms of seven pillars. It starts with research. It includes policy.

It includes media, developing a public awareness of these opportunities. It includes events like the Smart City Expo, for instance, the largest smart city event in the world that where industry exchanges ideas and whatnot. It includes sharing of best practices. It includes financing all of these opportunities, whether you're talking venture capital or you're talking capital required for implementing a smart city project. But at the core of this ecosystem is innovation.

And innovation is happening within startups. As we have seen in other industries, there are the multinational corporations who will do a lot of the execution, a lot of the implementation, but they're too large, they're too slow, they're too rigid to allow real innovation. So innovation occurs within startups that are much more nimble, operate much more quickly. And the challenge that smart city startups have or the challenges that smart city startups have right now, I refer to as the challenge of four capitals. Number one, it's human capital.

We need to be producing, as I just mentioned, students that are graduating with the skill sets necessary to fill these jobs, the jobs of the 21st century. The second is political capital. And understanding that we need city leaders who are willing to spend that political capital to implement smart city solutions. And yes, it's okay to be the first city to do so. We have to take these risks because the opportunity in doing so is far outweighs the negative smart city risk can produce.

We need investment capital. Now, one of the real challenges for startups in the smart city industry is that if they involve technology, you get dumped into a high-tech bucket where investors will tell you they want rapid returns, they want high growth, and by the way, they don't want you to do business with government because it's way too slow. Well, guess what? You've just eliminated the entire market for smart city solutions. So they don't get money there.

If you don't involve technology, the good news is you don't get dumped into that bucket. You get dumped into the social bucket. And the problem there is you're not curing cancer, you're not saving children, you're not doing the things that pull on the heartstrings of people. And therefore, there's not much money for you in that bucket either. So we need to look at investors.

We need to educate investors of the real opportunities. As I said before, it has to come back to dollars and cents. So investors have to make money. We understand that. And they wanna do it with as little risk and as quickly as possible.

We understand that as well. And that's why on the high-tech side, you'll have high growth and rapid returns. But compare that to say the pharmaceutical industry. I mean, the pharmaceutical industry gets tremendous amounts of investment, tremendous amounts. But it is a very long regulatory one way between prototype of a new drug and actual sales.

Smart City's the midpoint perhaps, or somewhere in between those two. It's not as fast as high-tech and it's not as slow as life sciences. So if it works for life sciences, it has to work for the smart cities. There are investors who aren't patient enough for life sciences, but are more patient than high-tech. This is a serious challenge.

It's a simple challenge to overcome. It just requires education of investors. The fourth challenge is project capital, which I referred to a little while ago. Project capital is simply the capital cities have or have access to implement these projects. And we need to be more creative on how cities can finance these things.

We have more recent tools like public-private partnerships and performance contracting. We need to continue to innovate on financing mechanism for cities. And I think there are opportunities out there. I mean, coming back to blockchain, cryptocurrency opportunities, perhaps there are things that we have not even, in fact, I know there were things we have not even thought of yet. We have to be more flexible, more creative, on how we're financing these projects if they are going to be implemented.

And once we have all of those challenges resolved, then we have an industry, there's nothing left to slow it down. It will be on a rocket-like trajectory to tremendous growth and success. How are you supporting startups to do that, to be able to contribute in that way? The AcelaCity program that we are launching later this year is designed to build on the work of accelerators that covers the gap between graduating from an accelerator to becoming successful. And for me, success is defined by revenue.

You cannot be successful if you do not have sustainable revenue. Accelerators, I refer to as Ridland for entrepreneurs, because they help startups focus to develop their business plan, to develop their go-to-market strategy, their pitch. It's an extremely valuable process that entrepreneurs and startups must go through. And accelerators provide that structure and the process to achieve it. But they don't provide that final step, which is connecting startups to their clients in sustainable ways.

And when you have the challenges that I've just referred to, those four capitals, human capital, investment capital, political capital, and project capital, it is a serious chasm that smart city startups have to cross in order to be on that path of success where they are generating revenue in a sustainable way from clients, namely cities. So what Leading Cities is doing is developing a global web-based curriculum, connecting smart city startups with mentors and experts in the field. We are connecting them directly with cities and investors. We're providing a boot camp to be located here in Boston.

It's an intensive study over the course of about a week that includes a pitch day in front of investors who have been educated on the opportunities of smart city startups. It includes a demo day in front of potential customers, mostly cities, but also corporations. And it's an opportunity for these startups to have global exposure at the Smart City Expo as being a featured member of the Leading Cities Pavilion. The Smart City Expo I mentioned earlier, Smart City Expo is the largest smart city event in the world with over 18,000 attendees, over 700 cities present in Barcelona.

It's a real opportunity for smart city startups to accelerate their growth, to expand into new markets, and to achieve that success that they need in long-haul. Thanks for sharing what the program is developing into later this year. What would you recommend to the owner-operator audience or the AEC industry on a whole to work towards developing a smarter city wherever they are? I would say first and foremost, it's to collaborate, to reach out. I mean, leading cities exist in large part to share best practices.

We are a resource for those owners or operators. We can help connect them to the right people, but it's not just us. It's reaching out to city officials. It's sometimes reaching out not to get information, but to share information, so that cities are kept up to date on the opportunities that building owners and operators can be providing. So I would say that the biggest thing is collaboration, to think outside the envelope of your building and think about how you as the operator or the owner can connect into this tremendous opportunity that exists with smarter buildings, more efficient buildings, more attractive buildings for occupants.

Because as we have said, it ultimately comes back to that. And in the 21st century, I'll kind of end, so to speak, with where I began, which is to say that location, location, location is no longer the only driver of value for real estate. That the quality of the building, the type of opportunity and value that the building is providing its occupants is what determines the value overall of the building. So just like Leading Cities is doing with the startups we just talked about, we're providing access to projects, we're validating their solutions and global exposure.

Those same three things are challenges for building owners and operators. Identifying the right projects, validating those and sharing their best practices with one another. And with that, where can we learn more about you or contact you and get to learn more about Leading Cities? Well, certainly you can visit our website, www.leadingcities.org. Your listeners are always welcome to contact me directly.

My email address is m.lake at leadingcities.org. And anybody can call us at area code [phone number removed]. Of course, you can also follow us on Twitter or Facebook, LinkedIn, we are on all social media networks. We would very much welcome any conversation, any interest that your listeners have because we do see the future of smart cities relying heavily on the future of smart buildings. Thank you so much, Mike.

This has really been a pleasure speaking with you today. Thank you, Brittany. It's been great to be here and I really appreciate your interest in the smart cities opportunities. So thanks for listening to this interview with Michael Lake. If you learned something valuable in this episode, share it with your friends and colleagues.

You can also let me know if you enjoyed our discussion by connecting with me on Twitter, at Brittany underscore CT or find me on LinkedIn. Or you can just email me too at Brittany at constructor.com. That's BRITTANIE at construct double R.com. So next week I'll be speaking with Damon Hernandez, founder and executive director of the AEC Hackathon. Now today we talked with Michael Lake about the cross section between startups, investors and governments.

Damon speaks about the simple solutions that can be found by combining industry professionals, software developers and government agencies to create software solutions that can solve the Monday problem. I look forward to sharing that episode with you next week. If you haven't already subscribed to the podcast, you can do so at iTunes Stitcher, Google Play, TuneIn and iHeart Radio. You can also find replays on Periscope if you are connected with me on Twitter. Please leave a review to show your support and let me know you're enjoying the podcast.

I look forward to talking with you guys next week.