MAKE IT #LAST
Last Meter science #0. Welcome to the The Last Meter®.
February 6, 2019
Last Meter science #0. Welcome to the The Last Meter®.
February 6, 2019
The Last Meter® platform is gradually rolling out to more and more real estate companies, lifestyle services, retailers, and as it becomes more valuable, tested accepted, I wanted to present a general background to the model and product for anyone interested.
The #lastmeter is the space between the logistical last mile and the private apartment or office space.
We are living in a time of massive - epochal - growth in lifestyle services for home and office, including on-demand deliveries of goods, all of which comes down the 'last mile' - between urban-level warehouse, retail store, or service provider, to the user. The majority of modern urban consumers live and work in buildings and offices that they themselves don't own or manage personally.
And so: while the growth in such services and deliveries is enabled because of the changes in consumer preferences and internet-enabled and mobile technology, the last meter aspect of these services is not in hands the of the consumers.
In fact, the explosion of goods and services at the last meter is leaving a rising amount of complexity and risk in the hands of real estate owners who are responsible for managing and securing buildings on behalf of their users, even though the services have not been contracted by them.
The experience of the users, the service and retail companies (and their logistics partners), and the real estate owners/managers/developers is - in its totality - the last meter phenomenon. It leads to the #lastmeter crunch, where #lastmetercrazy is all too common: doorcodes and access information stored by countless companies in insecure ways, unknown people entering at all times, packages left all over the building, parking chaos, and worse. This the world where BASE2 and Last Meter® are contributing.
The Last Meter® member platform is a way of solving the #lastmeter challenge incrementally over time, by gradually 'integrating services' into the real estate model and experience. We want #lastmetercrazy to become #lastmetercool: a world of trusted, simple, reliable, cost-effective experiences at the the last meter.
Last Meter® creates value and reduces risk for real estate owners, offers efficiency and scale for service and retail companies, promotes affordability and quality in services for end-users, and a simpler model of engagement for partners that facilitate the last meter with supplementary technical goods and services.
Specifically, BASE2 offers Last Meter® to both real estate owners and services/retailers as a way integrate with each other incrementally, comprising five linked value propositions.
INTEGRATION The Last Meter® platform helps to exchange data between real estate owners and service partners; to inventorize, analyze and allocate available building space to specific service activities and partners: to enable promotions and sales of services that are optimized for and relevant for building users; and to support technical building upgrades (with such as package boxes and package room conversion, building smart locks, security cameras and sensors, data analysis services, and more) that enable more effective services integration.
PLANNING Last Meter® takes for granted that different owners and service partners have different levels of interest in service integration, different incentives (some may focus on security, some may focus on property value, some may focus on tenant experience), and different levels of financial and staffing resources. As such, the Last Meter® Plan - the name for the Last Meter® operational model - is not just a way to implement services integration, but a tool for assessing the level of integration that is relevant and planning accordingly.
APP STORE Last Meter® assumes that, while today there are very few - if any services - integrated into real estate, in the near future, almost all consumer experiences will become services that users and real estate owners and service providers will want to integrate into real estate. As such, Last Meter® is inherently an app store model, enabling services to become 'apps for buildings' - so services can make themselves available, and real estate owners can choose them, in a super-flexible model. This means that while any one service (in particular standard retail deliveries) might be less integrated with real estate via Last Meter® in the near future, the intention is that a lot more services will be integrated - and 'swappable', like apps - with limited or no additional financial or technical cost, over time.
DESIGN The reason for the #lastmeter crunch is not that there is a lack of technology readiness or consumer-trend awareness in the real estate sector. It's simply that buildings and cities were never designed for truly massive increasing last mile logistical and business activity. So, the evolutionary dimension of #lastmeter is the design dimension: how do we design new buildings to absorb and integrate services in a more complete, valuable, flexible and effective way; and how, in fact, do we redesign (for now, we use the word 'upgrade') existing buildings to flexibly and substantially integrate services. Last Meter® includes building upgrade support for existing properties, and BASE2 offers a more complete design service to new build developers, called Space Engine, to ingrate Last Meter® more completely.
COMMUNITY As the platform evolves, it becomes a trusted digital community. BASE2 doesn't currently offer ratings, rankings or matching of partners, but naturally, in a platform model, this is what happens - particularly in a brokerage model where, by design, BASE2 simply wants to support the right partners matching and collaborating with each other, rather than dictating anyone's experience or value pathway. This leads to a sense of and growing opportunity for shared value creation, beyond the specific value functions of the platform described above. Already at the current stage of the roadmap, partners subscribed to basic standards of conduct.
So, experience so far has been, no matter how much we explain what Last Meter® is or does, there are questions about what it "really is"?
NEW STUFF Some of this is, for sure, the experience of a presenting a new product in a new sector addressing new challenges and opportunities. I know this because, often, partners and potential partners can sometimes feel confused. But often they go from asking the same question in different ways, requiring ever more information - to coming up with their own, excellent, description of the model, relevant to their case, and saying they need less information not more!
If you ask, imagining yourself to the early days of these offerings, what AirBnb, Uber, the Apple App Store, even Google Search "really were", you can run into the same challenge. What they are doing is a blend of infrastructure, interfaces, and services; and what they are offering is often a value model based on multiple actors, and all sorts of new-and-old value concepts. Working these out in words and diagrams can take ages - until one just gets it, and then it's not worth explaining!
AirBnb is (or was originally) not a hotel chain, not an aggregated booking service, not a property management service, not a user community, not a rental broker - and yet has elements of all those. Uber is not a taxi service, car rental service, public transport provider, ride-sharing board, logistics provider - and yet, somehow, has all of the above.
SALES VS INTEGRATION The App Store is particularly important business model that is a strong map for BASE2 Last Meter®. To understand an AppStore, it's important to understand the difference and complementarity between sales channels, marketing channels, and integration.
It's a giant piece of the value of the Apple App Store and Google Play Store that they distribute digital products and services to - between them - about 2.5 billion users. But this is not the defining element of their value, nor even the most important. After all, the internet and web enable distribution of digital goods to, basically, all 7 billion people, with vary levels of efficiency. So what is definitive proposition for the App Store? It's the device integration - and how the device integration creates a radically different and better sales proposition for digital suppliers.
For some reason, this piece is almost entirely invisible to users and society - who see the app store as a sales channel - and this is one of the reasons for confusion in presenting such models. They look like one thing, but have something else really driving their value.
If the app store was simply a sales channel, it would be exactly the same as ... the internet, with all the spam and chaos that would imply. The likelihood of any one app you choose from the general internet doing what it says it does, without hassle or risk, would be extremely slight. Instead, the app store is, first and fundamentally, a device integration channel (or app integration channel, seen the from other perspective), which enables apps to 'just work' for the devices and users where they are downloaded. Don't forget that Apple waited two years before releasing the SDK - the software development kit that enables app developers to offer integrated apps, that just work on iPhones - as the entry requirement for apps to be included in the app store. If the app store was just a sales channel - that would not haven useful or attractive.
SALES VS MARKETING This is the integration that BASE2 is supporting - the incremental collaboration between the 'devices' of real estate and the 'apps' of lifestyle service providers. Once this is clear - services integration into real estate - BASE2 can clarify an other, essential, distinction.
The sales channel of an app store is not a very good marketing channel. Once it becomes clear that the app store enables digital goods to be sold and distributed to many users in a highly efficient and effective way, it is not appropriate or efficient to use it as a way to market specific goods and services to users. Instead, it needs to be protected as a way for users to choose whatever services they prefer to use, perhaps guided by other users' preferences, or supply partners (such as Apple or Google), but relying its core function as a real market. This is the same as real world stores where, by and large, once the goods are stocked, there is then limited open marketing. The point of marketing is to get people into the store; the point of the store is to get them to buy, and marketing in-store is somewhat confusing and annoying and self-defeating (because: why direct consumers away from goods you want them to buy?).
In this way, the app store model differentiates from internet based distribution and sales - not just by enabling integration, but also by separating marketing from sales.
So, with these considerations in mind. Last Meter® is (really really really is):
A good question is, why not make it simpler? While we are making it simpler for any one partner all the time, and supporting better user experiences gradually, there are irreducible facts that have to be retained without which, the business model is very different.
Uber is very aware that some - many - of its drivers are not really that good. It is even more aware of the number of potential drivers that download the driver app but don't offer rides very often or very predictably. But the solution for them, to retain their business model and role, is not to ... start driving the cars themselves. Even if this would mean more value for users and Uber itself in the short term.
While making the solution simpler and more valuable, any platform-oriented company needs to be decide how far it wants to or can go towards simply providing a like-for-like replacement for existing services - instead of brokerage and integration capacity that, ultimately, support the same or better outcomes, but far more efficiently.
In the case of Last Meter®, the essential focus is to support real estate owners and service companies. But BASE2 is not a user services company.
Instead we help real estate and services to better serve their existing users - rather than trying to supply another interface and control layer that, we believe, is unnecessary and undesirable. In other words: it may seem simpler to provide a consumer model of integrated services ("click our app for services!", "ring this concierge number for services!"), and we do want to support highly integrated services - but through our partners. We don't want to 'help' our partners so much we end up, ultimately, getting in their way, holding back their progress, and restricting their value or choice creation. Uber, AirBnB and similar work because, basically, they get out of the way.
In the real estate space, WeWork has an evolutionary, light-touch, model that is in the same universe of partner-platform, integration-enabling solutions: Powered by We. And there are other exciting businesses with similar solution-models in relevant segments: Mobility46, Keyo, and more.
It's helpful to understand what Last Meter® is not - as part of reviewing its relevance, to position it against alternatives or things that claim to be solving the same or similar problems, and to clarify why BASE2 is not offering certain services it is often asked for.
NOT GENERAL LOGISTICS SUPPORT SERVICE I'll explore the dizzying trajectory of last mile logistics in another #lastmeter science piece, and some of the logistical aspect of the last meter - package boxes - was covered in the first piece.
But for now, it's enough to say that Last Meter®is not a general logistics support service. Last Meter® is definitely a specific logistics support solution. But the big reasons why it's not possible to offer a general logistics service at this time are easy to understand.
The problem for real estate and cities is, in a fundamental way, not a technical one: it's a spatial deployment problem. I'll put it in simple terms: THERE IS NOT ENOUGH SPACE FOR EVERYTHING TO BE DUMPED IN BUILDINGS AT THE LAST METER. But even if there was, real estate has ± zero incentive to catch the grenade of ever increasing generalized logistics. Because: THERE IS NOT ENOUGH VALUE TO BE TAKEN FROM GENERAL LOGISTICS BY REAL ESTATE that's worth spamming the world's real estate with undifferentiated packages.
On the other side, logistics is behaving in a fundamentally ineffective way by not using the most basic spatial thinking. While logistics originally optimized around hub-and-spoke distribution models, when it comes to the modern last mile, a new 'neighborhood (sub-city) hub' is needed to help aggregate consumer deliveries. Right now, it doesn't exist and there are too many different actors delivering to homes and offices. EVERYONE DELIVERING ANYTHING TO ANYONE IS SYSTEMICALLY INEFFICIENT. Worse than this, the pricing model of logistics penalizes high-value retailers. Retailers need to step in and demand logistics priced by package value at the last meter; without which undifferentiated logistics (i.e. undifferentiated by price, and undifferentiated by function or sector or supply chain optimization or security/safety requirement) will not be rewarding real estate correctly for access to locations close to users. LOCATION IS THE PRIME VALUE DRIVER OF REAL ESTATE, AND LOGISTICS IS NOT PRICING IT CORRECTLY (AT ALL).
As such, Last Meter® supports on-demand logistics (such as hot food - where the urgency and value is high), and commodity logistics (such as groceries and waste management - where the social value is high and use is universal but the margins are low), and the spatial aspect of last meter services (such as storage and laundry - that have a spatial requirement. None of these are part of the flood of undifferentiated package deliveries.
To solve that problem - the general logistics challenge of vast undifferentiated packages flowing towards the last meter - BASE2 is working in a strategic way with larger logistics actors, cities, logistics aggregators and others, to support more strategic solutions. In particular, BASE2 is inviting retailers to take a long-term view of logistics - and start supporting, given the vast money they are now spending on it, these strategic differentiated solutions that in the end, we believe their value propositions will rely on.
NOT A DIGITALIZATION SERVICE At the current time, real estate is undergoing one of the first big waves of real digitalization. BASE2 is clearly part of that, but we want to clarify that we, firstly, are not a general digitalization service or partner; and secondly, that are not, in fact, even that focussed on the current trends in digitalization.
To clarify further, general digitalization involves a multi-dimensional process of strategic, financial, operational, competence, communications transformations, in which #lastmeter optimization and service integration is an important - but only partial piece.
So, the discussion of grand sectoral transformations is not something we can support very much - if we want to deliver value in the specific area of #lastmeter solutions. Instead, there are industry leaders in the non-profit space - e.g. Christoffer Börjesson and Fastighetsägarnas Nya Verklighet, and Teemu Suila with the Platform of Trust. And there are consulting leaders with #lastmeter insights on offer - such as Centigo, CapGemini, Kairos Future, OMD, Matters Group (who has invested in BASE2), and more. All of these can be trusted to support the bigger picture of digitalization, in which the #lastmeter crunch and solution area, and the Last Meter® platform are a coherent digital evolution path.
Another reason to hold back from the current cycle of digitalization of the real estate sector is that, it seems, it amounts to one of two strategies, both of which have been shown to be mistaken (leaving out, obviously, those are are doing nothing):
Almost every industry confronted by digital transformation tries these one of both of these two things as the first serious transformation cycle. But, since real estate is late to the party, it is possible to observe that while digitizing the things is a bit conservative, and owning the future is very ambitious, both have similarities: they are extremely expensive, and neither works very well.
There have been cycles of digitization-of-things in education, medicine, personal transport, media, and music: devices and tricks that didn't lead to any of the modern digital products in these sectors. And likewise, these sectors have experienced (and are experiencing) incumbent innovation: where giant companies push mega-'solutions' on users in the name of 'innovation'.
BASE2 is trying to navigate pragmatically between the two, without getting caught in either. We want to skate the where the puck is going to be instead. A form of digitalization that - as has been shown, at least, so far in other industries - unlocks real and sustainable value in the digital age. This this is a kind of platform-of-platforms approach, where all industries that interface with each other start interacting in a self-managing and interoperable way, but no one actor tries to do everything.
At the present time real estate is only slowly waking up to this bigger picture, and moving beyond the digitization and incumbent innovation tracks. This includes, perhaps particularly, the 'proptech' investment community that seems to want to offer change ... without much change.
NOT A 'PLATFORM' While BASE2 describes Last Meter® as a platform, we are cautious about the implications of the term.
For a brief moment in the last decade, the platform concept came into being and the word was chosen to imply that a goods, services, experience - value - is created supported by a 'platform'. This is the essential insight of modern digital businesses - that data, computation and connectivity, coupled with creative asset deployment models, can achieve hugely valuable advances for society. In this sense, Last Meter® is a platform, and BASE2 is a data + design platform company.
Unfortunately, the word 'platform' has now deviated from its core - literally supportive - implication, to something much less innocent and less technical. It implies, simply, a monolithic digital business structure that is in a position to control others. This is not only unattractive, it is neither socially nor technically sustainable. And this is the sense in which BASE is 'not' a platform company; and Last Meter® is 'not' a platform offering.
What is happening, in the larger platform companies, and in the smaller companies with platform offerings, is a second-generation evolution of platform models where the business operations and culture are grounded in principles including the following:
The bigger picture is that as almost all assets become digitalized, the platform framework of business will extend in every direction, and both the technical opportunity and social acceptability of creating giant empires out of, basically, other people's assets will become smaller and smaller. So BASE2 is hoping to contribute to a new-generation platform concept, from these and other principles.
The opportunity space - at the boundary of retail transformation, real estate transformation, logistics transformation - amidst the grand change of universal information, computation, and connectivity - for any involved actor, large and small, is vast. The #lastmeter challenge is only really beginning. But the risks are at least as large as the opportunities.
Our goal is to help you on the pathway to increased value, efficiency, and trust from integrated services - while avoiding risk and cost. We can't promise that all services can be integrated at the same speed, immediately. But even if you think you want that, I promise you, you actually don't. We want service integration solutions to be made to #last - as part of an evolution towards safer, more benign, more flexible, second-generation of platforms across all sectors of modern living.
Welcome to Last Meter®. This is not a rehearsal. The future is here. So let's get it right.