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Podcast Notes

This week on the show, Aakash and Xand discuss Seam [getseam.com]. Seam's product focuses on smart buildings. By building an integration layer that works with all smart devices, Seam handles the frustration of working with different smart building hardware devices. Seam brings IOT to hotels and other commercial real estate.

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Autogenerated Transcript

Aakash Shah: [00:00:00] Welcome to All Schemes Considered, the weekly podcast where we dive deep on a startup and examine its viability as a business. It's a startup case study in about 25 minutes. I'm your host, Aakash Shah. 

Xand Lourenco: And I'm your cohost Xand.  

Aakash Shah:  we're talking about, Seam,  the API for controlling homes and buildings. They launched through the YC summer 2020 batch. And they've raised $125,000 in seed funding. Xand, what does it mean to be an API for controlling homes and buildings? 

Xand Lourenco: [00:00:34] That's a really great question because it's not immediately obvious why this is really useful. Typically people don't really consider the scale at which commercial real estate operates. , and this company is exciting to me because I've actually spoken to. Commercial real estate developers  asked me, Hey, you're a programmer. 

Do you know how to do this? Who did you make? A thing that monitored all my energy and, you know, made my hotel is, or my apartment [00:01:00] complex for my, condo thing, smart. So to speak. And it hasn't always been a really easy thing to do, and it seems like Seam, might be able to do it. 

Aakash Shah: [00:01:08] So this is kind of building on. The smart home smart building trend that we've been seeing So like if it's building on that, what exactly. Is a smart home or a smart building in the enterprise sense, for a hotel, what's a smart hotel. And then how does Seam solve the problem that this smart hotel has happened. 

Xand Lourenco: [00:01:28] this is a bit different from the home automation space or the home smart space. Because when you're dealing with commercial real estate, you're dealing with economies of scale. So it doesn't really matter for a home user. A lot of the more. 

At the margins measurements, you know, in terms of waterflow or electricity metering or occupants in a certain room at a certain time of day, these are all things that would never matter   But for commercial real estate, small optimizations in these things translate to large savings. If you're a hotel. 

Or you're an apartment complex owner and you have four thousand five thousand six thousand occupants [00:02:00] or rooms or apartments. A savings of eight or nine bucks a month. 

On each of those translates to really good savings. Right.  Of the real estate developers I've talked to, there's huge amounts of waste in this space, like stuff they can't measure, you know, things that they're running constantly or too often or too little. There's a lot of space for a small optimizations of these things, which wouldn't make sense at a small scale for a home. 

Owner, but do make sense for a commercial real estate person. Who's looking at hundreds of properties over thousands or tens of thousands of occupants or rooms or spaces. 

 Aakash Shah: [00:02:31] I understand what you're saying. I see where you're going, but it's still a little abstract for me. So.  I guess my question is how does Seam make a hotel? Smart. you say it measures things like what does it measure and how might that look from a. Like. A real, like a tangible perspective. 

Xand Lourenco: [00:02:49] Sure. so there's still an, a relationship early stage startups. I expect this to change a bit as they talk to. Bigger commercial investors. Right. But the core product. Is a hardware hub that connects to [00:03:00] a lot of different protocols and different smart devices and centralizes it all into an easy to use API     Basically this little Harper hub consumes all the inputs from these different smart devices. 

And then everybody else can consume from a standardized API. So you don't have to worry about  all these different home automation or even enterprise automation solutions. You don't have to worry about  whatever these different APIs and automation solutions are, this hardware hub just takes them all, aggregates them, and you can consume them by one standard API. 

Aakash Shah: [00:03:28] Okay, so that really helps make it more explicit. What they're doing. They're creating an API platform that integrates with. Hundreds of hardware products, so I can use the same platform. And I'm not locked into like the Philips platform I'm not locked into the hardware manufacturer. For understanding. How. 

These devices are performing   Seam you can tell me, regardless of what the hardware is. How much electricity is consuming, how much water it might be moving through whether or not the devices in [00:04:00] good condition. If it's a fire alarm.  So various metrics that. 

Deal with these sort of hardware devices Seam, can tell me that through one standardized API, instead of me telling my developers to spend. Months and months integrating with 10, 15 different API APIs. That might not be that good at the end of the day. 

Xand Lourenco: [00:04:19] Right. And What this enables is the ability to do much better data analysis and optimization because you have just one API to consume, It's much easier as a developer, even to envision a kind of solution like this. For a machine learning algorithm to, for example, Hot water heaters. If I'm running 40 different properties or 4,000 rooms in a hotel. 

If I discover that, , , I can automatically lower the hot water temperature of my hot water heaters by seven degrees over these three hours over the course of the night. And nobody notices that's huge cost savings. Right.  and not just for reading, but for controlling, it becomes also a synchronized hub to control all of these other things. . 

For a home user. There's no benefit to this, right? There's no way this will ever pay itself back. But [00:05:00] for a commercial developer, that's not true. I mean, you could definitely see for even just one Marriott or Hilton or these kinds of big properties, how installing basic smart devices and consuming and controlling them. 

Through an API would bring them easily, hundreds, or even thousands of dollars a month in savings.

Aakash Shah: [00:05:16] And we have seen very successful companies come from building API layers on top of. Complicated. 

Interfaces. So for example, in the analytics space, their segment, which is a way for you to integrate your website once for analytics, and then no matter what tool you want to use.  , it's like easy way to send your data to that tool without getting into the fiddly details and differences of all the, of analytics vendor, a versus analytics vendor B all you have to think about is integrating segment once. 

, that's in the B2B analytic space. There's also plaid plaid. Does, is they're an API for financial services?   They allow developers to add. Financial [00:06:00] verification  , to their apps.  You use Plaid, and once you say like, okay, we're gonna use Plaid for verification. Now plaid is the one that actually focuses on interfacing with the thousands of banks that are out there for the details of verification. And all the individual developer has to do is worry about integrating with Plaid. So there's a huge time savings and increase in. 

 the market that you can serve when you use a kind of,  API layer of this sort. We actually chose our podcast distribution platform Anchor, simply because it let us create the podcast in one place and then Anchor automatically worries about distributing it among 10, 15 different podcast platforms. So that was a huge time savings for us. 

So there's value in having a platform that kind of aggregates distribution or integrations. 

Xand Lourenco: [00:06:49] Right. That's exactly right. The best way to think about it is. Like a plaid or a segment for this niche or collecting and aggregating and allowing standardized consumption of. [00:07:00] automation metrics around. Real estate, you know, home stuff.

Aakash Shah: [00:07:03] Right. So I think we have a good understanding of what the product is. We're both developers and engineers. So we feel pretty confident about if you're willing to put the time into integrate with all these platforms, it's within the realm of capability. It's realistic to say that you could build a. 

Integration API over it, which is what Seam's offering is.  let's talk a little about the industry and the. Person that might be looking for this. The buyer of this sort of product. You've already said it's pretty heavily enterprises for people that are managing dozens, hundreds, maybe thousands of units. For example, like a high rise hotel probably has 500 rooms. . 

is that industry big enough to need something like this? Is that industry able to move quickly enough what challenges come to Seam from trying to work with that industry? 

Xand Lourenco: [00:07:52] So there's definitely a market for it. . To give context. I live in kind of a secondary market. I don't live in New York or Chicago, but it's a big enough town. It's about 40 [00:08:00] to 50,000 people. And I spoke to someone who managed about 15 commercial properties and they were actively looking for a solution like this. So their specific use case, it was not just energy optimization, but they also wanted to know stats on things, failing. 

And what bits of their properties lasted longer .   they were discovering the different brands. If they had to replace them more often, there was a lot more cost involved. And at their scale, if they could get a water heater or a window, or these kinds of things that would last a little bit longer, even a year or two, but then it's big cost savings for them because of the scale which they operated. 

So , even something like that There was motivation and there were funds to try and find an automated solution to this, or some sort of data driven solution to this because for this person, when you're buying 180 water heaters every five years. 

That's a, that's a huge savings. You're willing to pay a couple thousand a month. To get back , 10 grand or 20 grand. So there's definitely a market for it. I think the tough part for Seam: not everybody's going to be that forward. Looking.  The person I have in mind was a bit younger,  a bit more hip to [00:09:00] the possibilities of programmatic savings and optimization. 

I don't know if you would get someone to do this. Who's maybe a bit more.  stuck in their ways they have like long five and 10 year procurement plans. They're not super interested in putting up this upfront risk. When the thing they have is working well enough, you know, they'd rather squeeze out 20 or 30 extra bucks a month. 

From their guests than do optimization. Even if it might be worth more in the long run. 

Aakash Shah: [00:09:23] Right. So even though there is a need, sometimes the inertia of the industry that they're operating in might make their sales cycles are really long and difficult. One thing that jumped out at me as something that they might face is a lack of technical expertise in there. 

Industry that they're trying to serve. you oftentimes see developers think that everyone else is a developer when that's not true. You know, here, we're going to have. Developers selling to building managers, selling to real estate managers and real estate managers, building developers. They don't know how to integrate with an [00:10:00] API. 

Even though they might understand something along the lines of this will help me optimize, like how I run my water heaters and saved me. X thousands of dollars per year. They might not know how to actually make that happen in reality. So do they have to build a UI to integrate with this API? Do they have to build machine learning models to integrate with this API? 

I think Seam is going to have a very hard time. Digging into this. Persona that isn't as familiar with, technology. And. It might have to enable them more directly than just providing an API. I think there's going to have to be a strong professional services on that effectively builds these UI for them. 

Xand Lourenco: [00:10:40] No, that makes total sense. And you're absolutely right. the persona they're selling too, from what I can gather on their site is not even just that commercial real estate, professional or manager. Whoever's the actual stakeholder it's to the developer of stakeholder. The site's very technical. Talks about API calls and hardware devices and the different protocols that [00:11:00] these different technologies use. So their audience right now that there, it seems like they're aimed at is people who've already bought into this idea, which is a much smaller fraction of people. Then the people you could convince to buy into this idea. So I think certainly something that they should consider. Is partnering with people who do these kinds of installations, or even setting up some sort of consultation team. I think you're absolutely right. That. This is aimed at existing developers, technical people, people who may not have quite the overlap that. Seam might be hoping with real estate professionals who are stakeholders, who would understand the value proposition of the product. 

Aakash Shah: [00:11:36] Right. Because the customer's job to be done. Is it that the customer wants an API? No one wants an API. They want an API because it enables them to do something. And here the enablement is understand and optimize the costs and failures improve the operations Of their hotel or up their condos or whatever it may be. the API is a means to an end. no [00:12:00] one. Very few people. I don't want to say no. Very few people, enjoy an API for the sake of being an API. 

even the largest company that is solely in API. Stripe is still, they don't sell themselves as an API. They sell themselves as off. One line of code to let your

website collect payments or to let your app click payments. . 

They don't build themselves as the API to collect payments, even though that is what

they are. 

. Okay. That makes sense. I feel pretty confident about the product. We feel confident about the industry. We feel confident that there's a problem. 

we kind of got into like, how do they actually serve these customers? When we talk about this consulting arm? Let's take a step back .   Even before they get to enabling their customers, how do they find their potential customers? How do they find their potential users? How do they find people that have this problem and wanted addressed? 

Xand Lourenco: [00:12:52] So given that they're a seed company. I won't say this will be true forever, but given that they're a seed company. Honestly, [00:13:00] I. I just do a lot of outbounds. I think it would not be hard to find someone locally or even in your region. That needs this kind of thing and has thought about this kind of thing. 

Certainly kind of commercial automation is not a new concept. So I don't think give it a little bit of prospecting, give it a little bit of like LinkedIn hunting and traditional cold calling. , how much did they raise? 

Aakash Shah: [00:13:22] 125,000. 

Xand Lourenco: [00:13:24] Yeah, I think little bit about that and work and hustle that could definitely find three or four deals, you know, of their specific persona. Real estate or commercial.  you know, Commercial real estate. 

That's looking for automation with a developer, I'm pretty confident in a year, you could probably find three or four deals of that exact persona and then build off that. 

Aakash Shah: [00:13:42] Why were you hesitant to suggest outbound sales? 

 Xand Lourenco: [00:13:45] So I just don't think that's the best way for them to go forever. I could definitely see a company like this growing. 

A different way. Right? You could eventually have inbound leads where you become some sort of like partner channel or some sort of, you know, there's definitely ways where you could [00:14:00] branch out that wouldn't require you to outbound. But since this is an enterprise thing, And they're a seed company. I think outbound sales is going to be. 

I would, if I was their VP of sales, certainly would be their bread and butter for the first few years. Maybe forever

Aakash Shah: [00:14:12] there's a company called augury, which is similar to this, which does internet of things for industrial devices. they set up analytics for your factory so that you can understand what parts of your factor you're failing, how often and when, and like it does pre and post analysis . 

You know, it's IOT and all the benefits of IOT for factories. There's another company called samskara. Which does IOT for trucking fleets. Again, this is very focused on like, Okay, so you have your trucks, where are they going? How efficient are they? effectively turning every trucking fleet into something as efficient as ups, which is very well known for  focusing on efficiency. 

ups and so focused on efficiency, they don't put doors on their trucks. Or let their trucks take many left turns. So,  You know, efficiency is always a big sale factor [00:15:00] when it comes to IOT.  because IOT brings the analytics which have made web based company. So successful. into the real world, into the physical world. 

It to meet space. As I've heard it called. Those companies rely aggressively and almost solely on outbound sales and outbound outreach. Because that's the best way to grow your market. Because a lot of times, They're buying personas. We're not looking for a solution. They don't know that a solution of the, of the sort that IOT offers was even possible. 

Xand Lourenco: [00:15:32] And sometimes they don't even know they have a problem. 

Aakash Shah: [00:15:34] Yes, absolutely. 

so you say that you think the BP of sales would be important for the first one to three years? I think VPO sales is how they're gonna. Make money for their first decade. If not more after yes, partnerships are important, but at the end of the day, it's going to need to be handheld sales, especially. 

When. There's a whole component of enablement as we've discussed or professional services, as we've discussed, kind of like. You know, [00:16:00] I've run a Marriott hotel. no, let's, let's go big. I run to Marriott hotels. And, you know, I want to make them more efficient. I buy this for my hotels, but I don't know what to do with it.  I'm a hotel, man. I'm like a hotel owner.  I'm not a fancy tech was. I need the tech Wiz to help me understand how his solution can make me more money in my hotels. I need professional services and I need handholding and sure I'll pay for it. But you got to deliver at the end of the day. 

 Xand Lourenco: [00:16:30] Right. 

Aakash Shah: [00:16:30] And so I think professional services, is it going to have to be a huge part of this, of their go to market strategy? Which professional services does very well when combined with outbound sings. They go hand in hand very well because that's how budgets are oftentimes allocated. 

Yeah. 

What else is there you think. Anything else from you, Xand, on go to market or acquisition strategy. 

Xand Lourenco: [00:16:52] No, it's funny. I should unpack my distaste for outbound sales. It's it's funny. Cause. It's so effective. And yet I never [00:17:00] think of it as like the longterm sustainable solution, but you're absolutely right. Outbound sales is going to be the bread and butter of this sort of company.

Aakash Shah: [00:17:07] I'm just glad you didn't say SEO. 

like you say SEO for a lot of things. 

Xand Lourenco: [00:17:11] It's everything you need. Inbound and content marketing, SEO. Boom. 

you're absolutely right. That outbound sales is going to be, Probably for the life of the company, , their best bet. 

Aakash Shah: [00:17:19] Okay then. 

So now let's analyze Seam as an investment for Y Combinator.  let's say we're the follow on round? Where the series a round would you put. You know, $1 million into this company to help power it for two years. 

Just going off the premise that we've discussed here, assuming there is no execution risk. 

Xand Lourenco: [00:17:37] Oh, absolutely assuming no execution risk. this is a solid niche and it's definitely, it's not sexy. never going to be like a unicorn or something like that. absolutely I would get my investment back. I'm pretty sure. I mean, just, looking at their pricing structure, for example, . Their enterprise device per month is two bucks. So you figure. If a, if a hotel or something goes fully, you know, really buys into the solution.  [00:18:00] That's. 30 40,000 little devices in a hotel. That's. Some of these contracts will easily be six figures. If not more. 

Aakash Shah: [00:18:06] I think you were wrong when you said that it couldn't be a unicorn. 

Xand Lourenco: [00:18:09] Yeah, I guess that's true. Yeah. 

Aakash Shah: [00:18:10] Seems like we're pretty positive on the company. Having a, a growth track that an investor would want.  and hitting that, you know, seven to 10 X multiple on investment. 

 So Zan. What did we learn today? 

Xand Lourenco: [00:18:25] Well, we learned that I'm really into home automation. But beyond that. I think you brought up Samsara and augury, which are two great examples that I forgot. And I think my takeaway. Combined with Seam and Augury and Samsara, I think. 

 a key takeaway here is there's definitely a market for niche analytics solutions. There's a lot of industries out there where. The scale at which they operate means  little optimizations and efficiencies. Would it be very helpful, but they don't know how, or don't know what is possible in terms of analysis and efficiency. 

And so I think what Seam addresses and [00:19:00] what the other's address as well. It's kind of the core problem that making analytics easy, accessible. And universal across whatever your niche is really helps you easily find. Often large inefficiencies,  that you can find cost savings on pretty quickly. 

Aakash Shah: [00:19:13] Sounds good to me that. That sounds about right.  thanks for listening friend. And we'll see you next time. Adios. 

Xand Lourenco: [00:19:21] Later.    

Aakash Shah: [00:19:24] Thanks for listening to this episode of All Schemes Considered. It means a lot to Xand and I. If you enjoyed this episode, make sure to subscribe and check out a few of our older episodes. We're available on our website allschemesconsidered.com and every podcatcher under the sun. If you really want to make our day, consider sharing it with a friend or coworker.

If you have a scheme you'd like us to consider, a guest you'd like us to have on. Maybe you just loved or hated this episode.  We want to know your thoughts. I'm on Twitter @aakashdotio. That's A A K A S H D O T [00:20:00] I O. Or you can send an email to allschemesconsidered@aakash.io. Xand, you can't find online because he doesn't believe in the digital public forum.