By Dave Bullock, Director, Innovation & RWDI Ventures
A year like no other. As anxious as we may be to move on from 2020, there are many lessons to carry into 2021—and beyond. Like every other startup incubator, our Ventures team also failed to anticipate the global pandemic that ended up occupying nearly all of our headspace in 2020. Despite this, I think we did an admirable job of responding well. We pivoted our efforts to launch two companies that we are really proud of: Songbird Life Science and Orbital Stack.
Now, with 2021 here, I want to share some of our thinking on what we see coming this year and how our investment thesis inside of RWDI Ventures is evolving as a result.
Beyond the obvious public health crisis, the pandemic exposed the fragility of many of our systems and economies. We now have an increased awareness about hidden risks that can’t be ignored.
We have witnessed how a single crisis can accelerate change at an unprecedented pace. These are the two observations driving much of our investments in 2021. As a society and an economy, we consistently:
- Underestimate the biggest risks and fail to quantify them; and
- Fail to grasp how these risks can accelerate change.
The sub-prime mortgage crisis of 2007-2010 is a clear example of the far-reaching changes that result when we underestimate a hidden risk. Similarly, we believe that identifying and quantifying hidden risks, while anticipating the changes they will trigger, will produce healthier and safer communities and economies. They also represent tremendous opportunities to build disruptive and important startups. For our part, here are three key related insights informing Ventures’ investment strategy for 2021:
Shared spaces will never be the same
As science caught up to COVID-19, we quickly learned that spaces, not people, are the real super-spreaders. To prevent viral transmission, we had to all stay home. We became acutely aware of the impact buildings—workplaces, schools, churches, grocery stores, airports, gyms—have on our health.
Once we flatten out COVID through vaccination and ongoing measures like masks, distancing and testing, the global focus will shift from infection control to risk management. Our shared spaces will be both the biggest concentration of those risks and the key to how to control those risks.
A building’s “pathogen safety” will now be as important a consideration as its structural safety.
Armed with a much clearer understanding of the health, social, and economic risks of pathogens, new thinking will shape how we design and operate buildings to keep them—and the people inside—safe. A building’s “pathogen safety” will now be as important a consideration as its structural safety. This is where Songbird Life Science, one of our portfolio companies, will be investing in 2021. We are developing tools that design better, healthier spaces, but also monitor them on an ongoing basis for emerging threats and risks. We know that 2021 won’t be the end of COVID-19, but we do believe it will shift from a reactive-mindset to a proactive one. Risk management and thoughtful planning will be the focus.
COVID-19 will change our approach to climate change
Put bluntly, the COVID-19 global crisis was our dress rehearsal for an even bigger global crisis: climate change. As Bill Gates argues: “to understand the kind of damage that climate change will inflict, look at COVID-19 and spread the pain out over a much longer period of time.” Gates further predicts that “the loss of life and economic misery caused by this pandemic are on par with what will happen regularly if we do not eliminate the world’s carbon emissions.”
We can’t disagree. Despite pandemic warnings from many experts (including Gates), we were caught unprepared for COVID-19. We not only underestimated the public health impacts, we missed the secondary social, economic, and psychological fall outs. Our position isn’t much different with climate change. We may be even less prepared, especially after a pandemic that stole so much of our attention and resources.
Rapidly rising sea levels, punishing droughts, uncontrollable wildfires, and extreme weather event. As much as we recognize these new realities, most of us underappreciate what these threats mean for business and government. The impacts will go beyond damage to property and physical assets. Secondary impacts will affect supply chains, industrial yield rates, market demand for various commodities, human capital access, and operating costs. From there, credit ratings, insurance premiums, stock prices, bond rates, and other risk-measurement tools, will be profoundly altered.
COVID-19 may be the accelerant society needed to wake up to the true risks of climate change.
But this is where we find the gift of opportunity: We now know that ignoring hidden risks has tragic consequences. We will not be caught unprepared again. Notably, COVID-19 may be the accelerant society needed to wake up to the true risks of climate change. There is enormous potential for new business models to successfully meet these new demands for climate-responsiveness and positive change. We will be exploring a number of these ideas and opportunities in 2021. If you’ve got a unique perspective that fits this thesis, we’d love to hear from you.
A new approach to commercial real estate
Every corner of our economy and communities have been impacted by COVID-19. Yet, we feel the three most disrupted industries are healthcare, education and commercial real estate. Although change was always a constant, the pandemic massively accelerated the business mechanics of each sector. A decade’s worth of change happened over a few months. These changes aren’t good or bad, they just are.
The traditional cubical office layout is changing, as is how we access and use real estate in retail and hospitality.
With deep roots in building science and sustainability, the Ventures group is particularly focused on changes in commercial real estate. The traditional cubical office layout is changing, as is how we access and use real estate in retail and hospitality. Even if we are not exactly clear on what these changes will look yet, history has taught us that when an industry encounters big structural changes, it often is an opportunity to reassess and modernize the tools.
The digital tools we use to design and operate buildings and infrastructure have been expanding for years. BIM, Digital Twins, CFD, and the use of AI to predict performance and maintenance issues. These are but a few of the new tools developing at a faster pace than ever. The demand for these digital tools—and the adoption of use—is unprecedented. It is also fueling major expansions in 2021 of our own building-design assessment platform: Orbital Stack.
Advanced digital tools like Orbital Stack will let us design safer and healthier buildings faster. In addition to accessing physical risks, such as wind and water, we can also understand newer risks like infectious disease transmission. RWDI has always been a leader in this area and in 2021, our Ventures team will be investing even more heavily in creating tools that an accelerated industry change will demand. If this is an area of passion for you, have a look at where our digital tools team is hiring.
On to 2021
If these three lessons have confirmed anything, it is that our fundamental thesis remains true: tremendous opportunity—and meaningful, positive change—can be found at the intersections between the natural and business worlds. The pandemic has provided a fresh perspective on what this intersection looks like, renewing our energy to build stuff that matters in 2021. We hope the same for you and all good things for 2021.