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Welcome to this week’s deep dive exclusively for Nexus Pro members. It’s an honor to have you here. Use the comments to introduce yourself and let us know what you thought of the episode and deep dive. Yes, I’m talking to you.
Announcement: on 5/26, we’ll have our first Nexus Pro member event. Click here for details and to submit your questions for Scott Hackel, our panelist. We’ll discuss the new ASHRAE Smart Grid Application Guide on integrating facilities with the grid. I’ll send out a calendar invite to all Pro members today.
This deep dive is a follow up to my recent conversation with Troy Harvey, CEO of Passive Logic, a startup I’m super excited about. I thoroughly enjoyed this conversation and want to share my takeaways and the full transcript with you below.
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Disclaimer: James is a researcher at the National Renewable Energy Laboratory (NREL). All opinions expressed via Nexus emails, podcasts, or the website belong solely to James. No resources from NREL are used to support Nexus. NREL does not endorse or support any aspect of Nexus.
This isn’t Troy and I’s first conversation. If you’re looking for an introduction to Passive Logic, here it is. In Nexus #14, I laid out the three keys to understanding why Passive Logic is disruptive:
This concept can be combined with Troy’s recent episodes on the Control Trends podcast to give you a great intro. Here’s a summary.
First, the #1 way Troy has changed my thinking is described in his blog post on the user experience of existing controls solutions:
While we’re seeing a constant stream of band-aid solutions that bolt-on to our automation stack with hopes of fixing this old “black box” foundation, this is probably going to be unsuccessful.
Adding this new functionality, limited by the weak foundation, requires laborious effort — thus we call it “integration” not “installation!” The combination of a weak foundation with a low technology ceiling, together with laborious effort requirements, is a core source of so much dissatisfaction in the marketplace.
This point is obvious when you stop and think about it: most smart building solutions are actually smart overlays over a dumb foundation. The dumbness of the foundation is making everything we’re trying to do more difficult than it should be. Passive Logic wants to replace the weak link: the building automation system as we know it.
Troy’s first episode with Control Trends covers the long time flaws in the old model of controls and why the foundation is so weak.
Troy’s second episode on the Control Trends podcast shows where Passive Logic is headed with how easy it is to set up a new building. It’s a plug and play panel that the installer doesn’t need to build from scratch. The software automatically detects wiring issues, understands when the physics are off, creates a 3D digital twin model from CAD, BIM, or a iPad scanner device, auto-generates the control system design, etc.
What do they want to replace it with? Deep and autonomous digital twins, of course.
Let’s unpack that:
What are deep digital twins? Put simply, the intelligence reaches down into every part of the system.
Functionally, they act as virtualized analogs of real-world objects, like zones, equipment, systems, and the physiological agents of human-comfort.
Because they are built on a physics-based ontology, these analogs aren’t just labeled, but actually understand what ‘kind’ of thing they are. The term ontology comes from the philosophical study of ‘being’, and is used by computer scientists to describe computing systems that can introspect.
Ontology is a framework that comprises the technological ‘nature of existence’ for an object in the world. The ontology, for example, provides a control system with the understanding of the fundamental physics of operation, how that operation interacts with the world around it, how its internal physics is organized, how the object interfaces with controls, the physical parameters of operation, and the meta-semantics of operation. The ‘meta-semantics’ of operation is the ontology translated into language or protocol.
What’s an autonomous digital twin? Picture a fully autonomous vehicle. Most smart building solutions today are analogous to a car’s cruise control. Some even resemble adaptive cruise control. That’s only level 1 out of 8 levels of an autonomous building as proposed by Passive Logic.
Troy’s first episode with Control Trends covers this in detail. What’s possible with current technology? They also covered their underlying deep digital twin technology. He explained depth and underlying physics - allows you to design for all building types.
And, if Troy is correct, this replacement foundation will replace and render many of today’s smart building services and solutions at least partially obsolete. We get into this in more detail in the episode below.
I almost didn’t post this episode because of the lower audio quality. Troy was joining the call from the mountains, and our connection wasn’t great. But once I re-listened to it, I decided I couldn’t hold it back. It’s more important to get it out there than acting like I know what I’m doing as a podcaster!
This discussion is a great follow up to Episode #1 with Nicolas. In that one, we talked about these two growing paradigms. Should we put a smart overlay on top of a dumb foundation? Or should we replace the dumb foundation all together? Many of my other guests on this podcast are in the former camp. The next three podcasts (Facilio, Cohesion IB, and BrainBox AI) are great examples of the overlay paradigm. Troy represents the latter camp: replace it from the ground up. And there aren’t many others in his camp!
I think we’ll continue to have these two camps for some time, so we might as well get used to them! However, Troy does give compelling points for why we can have both… with the overlays sitting on top of Passive Logic’s cloud platform.
What do you think?
Troy Harvey: [00:02:02] There's a guild mentality that has tended to keep technology back. This happens in computer programming all the time, right? You know, talk to your deep Linux dude who just loves like his most-, you know, the most awkward way to do things because it like produces a sense of specialness, right? Like if you know how to wield like four letter commands, that's like nobody else even understands what you're talking about. There's like a sense of preservation. This is part of it, but as time rolls on and people in that world have this iPhone experience in their personal lives, that starts to get less and less attractive to like maintain your guild as you have a personal life that feels more automated. We're automation guys, we should be automating our own world, and yet we're still doing it this is super low-level way.
But I think that there's two other bigger forces that are really the cause here. One is it's an effect of disruption, a cycle of disruption that is true in all technology that the big four players in this marketplace, they emerged in the 1800s, right? Like their big innovation was mercury switch thermostats. And that's like a lot of industries. Look at Tesla today versus the car companies. Those are hundred year old companies with a hundred year old mindset with a hundred year old trajectory. And they just got disrupted by some guy in Silicon Valley that everybody thought was crazy at first, and you know, maybe he is a little crazy, but the end result is like is they didn't see what was coming, and in the last few years, just literally two or three years, they've gotten to this point of existential crisis, right? They no longer know if they don't put together these technologies or license it or buy it from somewhere else that they will even be in business in a few years.
So I think that's a bigger arc that has left us to where we are today, and behind that is: why don't companies self-disrupt? And I think in this market, what's very interesting if you look at the Big Four is most of them operate technical services, commissioning, installation. They're competing with their customers, right? And in a way, those parts of their business, which turn out to be actually more profitable than their product sales, are preserving and want to preserve the complexity or product, otherwise it would discount their operations, right? And while if they thought differently, they would say, well, in five years I could make a much bigger market by democratizing this technology, and then there'd be 10 times more buildings using it. In the meantime, you would end up in a bind where you would be making less money in order to make more money. And that's a no-go if you're the CEO of one of these companies. So they're not in a position to self-disrupt.
James Dice: [00:07:09] Hmm. Yeah, that's fascinating. So the main four players in our industry are the ones that for a long time have created the technologies that our buildings are using. But what you're saying is their business models are also heavily dependent on the service side of things. And therefore-
Troy Harvey: [00:07:28] Yeah, if you look at revenue splits, the majority of the businesses actually make far more from their services side than they do from their hardware side. So we can go ahead and look at an analog. The clear analog in the tech industry is Novell. I don't know if people remember Novell, but in the eighties and early nineties, they were one of the biggest tech companies, just like IBM, Apple, Microsoft, Novell, and some, those were the five bigs.
And Novell invented what was like all of the networking infrastructure, and that was complicated in the 80s. And so what do you do? You started a services division and an education division, and training and certification. Boy, it sounds a lot like if you go to BMS today, right? And you would have to go through all these hoops before you can be a certified Novell installer. And Novell became so dependent on the services side that they didn't see the future. And so at the beginning of the 1990s there were bulletin boards all across America, you know, all along the highways: Get yourself Novell certified, right next to Microsoft certified. And by the end of the 1990s they were out of business effectively because laptops just had wifi and even had it built-in, right? And it just bypassed the whole thing.
James Dice: [00:08:46] Wow. So the guys that are basically building the BAS, they're dependent on it being a complicated thing that they then have to sell services to make it work, and therefore making it easy is directly contradictory to their current financial results.
Troy Harvey: [00:09:06] Right. And just talk to anybody who's an integrator or a distributor at this time of year. They're having to pay their big fees to those Big Four to keep those certifications up, and it's an expensive process. And you have to go through all these hoops, not before you can even install it, but before anybody would even give you a price for the product.
Imagine that with your iPhone. It's like, well, go through three weeks of iPhone training, and then we'll tell you what it costs. And only after that will we even like consider selling it to you, right?
James Dice: [00:17:29] Totally. Alright. So I want to talk about then, okay, what you've basically done is started with a blank sheet of paper. And then what I think you've done, based on the little I know so far, is you said, what's possible with the latest technology, right?
So, I have kind of three things in my mind. So it seems like you guys have been super innovative on hardware, software, and then what that enables is the autonomy piece. And so I'll let you take that in whatever order you'd like, but what can we do with this blank sheet of paper, basically?
Troy Harvey: [00:18:05] Right, so first you need to make an autonomous engine. You need to make an engine that understands the buildings, understands what they are, understands the thermodynamics of buildings, understands equipment, understands systems and subsystems and how they interact, and how we as people interact with the building. Because at the end of the day with architecture and buildings, that's the goal, right? The goal is to make people happier and comfortable and modulate around our needs.
So once you have that, that's cool. And there's a lot of geeky technology we could talk about; we can talk about deep physics and heterogeneous neural nets and some of these things that are these big innovations, not just in buildings that the PassiveLogic engineers built, but really in just the space and AI in general and like moving what is naive neural nets toward these very like sophisticated, generalized computing environments that can do physics, not just like, you know, train neurons, but as cool and geeky as all that is, it doesn't mean anything unless you translate it into something that the consumer cares about.
Which is-, back to your iPhone, you know, what I think about the iPhone is it's this software engine of all these components, wrapped in a candy shell of hardware, and that candy shell hardware becomes the way that you interact with it as device. And there's a lot of innovations there that we can build on top of. So like I said, there's a combination of things that we can just straight up steal from the current technology, and then things that we have to bring that are new for buildings.
And your iPhone, again, the iPhone 11, is an example of what's happening at mobile, happening at the edge. It is literally faster - I've benchmarked it; I've run our simulators - It is literally faster than my i9 laptop. That is an Amazon edge blade server in your pocket. And that change, that shift from cloud to the edge is going to be powering a whole wide range of up opportunities and applications in all sorts of industries over the next decade.
And so while a lot of people are still talking cloud, the pendulum has actually swung back to edge and so utilizing that power, that capability at the edge, it's not just CPUs. It's GPUs and what are called TPUs or neural processing units. So this is new types of silicon that enable very fast computing at the edge. So that's one component.
Another component that you steal is steal the modern user experience, right? So that experience you have on your iPad or iPhone, translating that to building automation, that is that layer between you and the AI. So you don't have to know that it's AI. You don't need to know that there's machine learning. You don't have to be a programmer at all. You just need a rich user experience that follows the workflow that you experience as an end user.
And then, you know, finally solving the core problems that you're driving in buildings, right? You need optimality, not only in trying to get a building up and going so people aren't yelling at you, but making that building work continuously, and then making it like tell you whether it's doing after the fact. And so that needs some new technology pieces. That needed, how do we take the autonomous vehicle technology and translate to buildings? One of the big differentiators that's really important to understand is what I would say is the input and output problem. Autonomous vehicles have a really big input problem. They have to solve machine vision in a very chaotic environment. And we in buildings don't have that, which is lucky for us. So that makes it very tangible and very viable right now with, you know, buildings are with PassiveLogics technology achieving level five autonomy now, where, you know, vehicles are, you know, experimentally in that space, but really delivering product around level three right now. And that's their big challenge.
But buildings, we have another problem. We have an output problem. And this is where these really diverge. So in the vehicle, if I'm Tesla or Aurora or Uber building an autonomous platform, everybody gets the same platform, right? The outputs are pretty simple. It's like turn left, turn right, stop, go faster, slower. Right? That's the same in California and Colorado and Japan and France, right? But in buildings, and this is the really crucial thing is-, buildings, every building is unique. Every building has a different architecture. Every building has a different system topology. It has some crazy intersection between, you know, air systems and hydronic systems and BRF systems, and you know, all these different components that we're trying to engage with. Energy system, lighting system, you know, ventilation system. So that needs something different. And it needs a system that can understand buildings as a whole, but it also needs a way to engage with the user to have you describe it. What does that building look like? So that it can build a custom autonomous system for you.
James Dice: [00:23:11] Totally. And that's where the concept of deep digital twin comes in.
Troy Harvey: [00:23:17] Yeah. Because you need a way for a user to describe their building so that then the system can control it based on that description. So you can think of it as, you know, control by contract as opposed to this idea that we use today with this procedural control. You know, if this do this, and if this do this. This is more of a contract that you're saying, this is the shape of things. Now do the best, most optimal thing at any given moment.
James Dice: [00:23:45] Right, right. So we're doing away with, you know, standard and static control sequences, and it's kind of just figuring it out as it goes. Is that how I understand it?
Troy Harvey: [00:23:57] Yeah. And I think one thing for people to get their head around is, first you have to look at a flaw in the procedural solution, so the sequence approach. So let's talk about the ways that people think about making today's systems more optimal. You come up with sequences, right? And these are your best ideas for what is the sequence of operations at the time that you're commissioning the system. Then you tweak and tune those sequences. You know, you adjust the parameters. Now this is a hard task in and of itself, and so there's a few different companies out there like, well, no, we'll tweak and tune those sequences for you with a little thin machine learning that will adjust it over time.
But even with that, you're never going to accomplish all the other things that are wrong with that approach. Starting with the sequences themselves, like there is no one sequence that governs the building for every and all time. That's a dynamic process. The right sequence is different at any given moment in the building's life. So the idea of starting with a static sequence and then saying, well, I'm going to optimize that with whatever technology on top, it's kind of not even half-baked, right? It's like partially baked. And then you're still leaving out this notion of, well, like there's all this optimization within the building that the system can't understand. Going back to that million dollar system, shocking again, that million dollar system with a thousand zones doesn't understand how two zones in that building even interact. And so you have to know all of these things in order to coordinate the control of that, that whole building control all at once.
Following up from Nexus #14 on making the status quo obsolete, we did a deeper dive on how Passive Logic is removing obstacles and enabling better building performance. As I said in the episode, the approach Troy is describing replaces a lot of what we’re currently spending all our time on. We can then use that extra time to do more important stuff.
James Dice: [00:23:36] So let's start with energy modeling. So it sounds like you started as an energy modeler. Early in my career, I started as an energy modeler where you spend, you know, weeks building this 3D model of the building. You press go basically, and you'd wait up to an hour for it to run all these different runs of the model. And then at the end, it wouldn't be anywhere near the utility bills. It wouldn't be anywhere near reality. And then you'd basically start all over again. So, what is the new version of that with this new paradigm?
Troy Harvey: [00:24:56] Yeah. So the new version of that-, and, I loved that process that you just described because that's how the world works if you're an energy modeler. And it takes a lot of expertise to drive, right? Because it's all offline, and so it's all like your expertise to try to get that model to maintain accuracy. But it turns out if you put that model right into the control system and you make the model simple to install, so you're not, you're not spending a lot of detail effort on getting all of the parameters of that model perfect. You just ask people for high-level stuff like, what does the floor plan look like? Then you plug that model right into the building and all the sensors. You basically are regressing that model right in place, right in the building, right at the edge.
And that model is not only forming the basis of how you make your control decisions, but it can also inform us about our energy impact and energy engineering on a building. So we're actually in conversation with a couple of ESCOs where we're discussing, you know, adding a couple of features to PassiveLogic that would enable them to just basically plug in passive logic in a non-controlled mode, have it regress the building, and they come back in a month and they not only have a regressed, accurate model of the building but then the automatic deltas of, if I had controlled this, this is what the energy savings would have been. That gives you performance guarantees that you can put into contracts. So that sort of changes the paradigm there about how do we use it as an engineering tool.
This is where Troy shared his screen…
Troy Harvey: [00:29:05] So once you have a platform that understands buildings, it becomes really important to translate that in terms of our experience, as the guys that are doing the work on the ground, because in the end, that's really the customer here, right? It's not the building owner; it's not the occupant; it's the guy that's going to buy the product and install this and make it go.
So when we took that into consideration of, how does that process work, right? Well, we go through a design build approach, and we need to be able to connect the dots between what is the intent of the building and was it installed correctly. So first it's pointing a screen right on that controller and making it all software-defined IO. So that IO can then check that all of your wiring is done correctly. And that it meets the definition of the components you connected to it. So if you're connected to a thermistor or a pump or a chiller plant, that it's able to engage with those things as you drew them and make sure that it's working as a system, as it was designed.
And so changing that workflow. And we can get in a moment into that workflow, but I'll just kind of go through a sequence of what we see here as the value here is you brought in that single-edge solution that's replacing a catalog of parts, right? Now you can have one controller that's doing all the jobs. It's giving you that realtime step-by-step install. It's giving the self guided wiring, where it's testing out wiring and leaving in place for the rest of us an autonomous control platform. So that's our view of the marketplace: satisfy the installer, leave in place the autonomous platform that the rest of us can plug in services to. From their point of view, it's a matter of like, how do we pre-integrate these different components into one package that today, you know, we, we call ourselves integrators and that's because that's where all the work is.
Back to your iPhone, one of the things that's really interesting, there's a lot of things you could say about how the iPhone changed the marketplace, but a simple one is to say it was just pre-integrated, right? You no longer had to put together your computer and put together the software to get it up and going. You just literally buy it and it just works. Right? And that's how building automation should be. And so that's what we focused on here, putting everything that you need into one control.
But then more importantly, what does this new platform enable? Control autopilot, universal protocol translation, automated point mapping, automated commissioning. Human comfort based control, right? Not just air temperature control. And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
And then you make that a scalable model, right? So it's a question of, do you have one controller or three or five or ten or a hundred or five hundred? And that's how PassiveLogic works, is they're all software defined boxes. There's no one, quote unquote JACE or one master. They all can master. They all carry a copy of the database, and they all work together to solve the overall building's problem.
So that's from a point of view of the hardware line. How do you make the hardware actually act the way we work? But then how do you make the workflow represent what we need as an industry to not just automate, you know, automation, which is one goal, but to automate this workflow that we all have, and so you start with that control by definition, with this platform that gives you this ability to make your own custom autonomous platform for your building. And then instead of this programming we're doing today, we're replacing that with drawings, where you're going to have to make the drawings anyway to tell the guys what they're doing out in the field. So we've gotten a two-for-one, and we're doing it instead of weeks, minutes, maybe hours, maybe a day at most. Right? But you have this 90% savings and time right up front. Once you've done the drawing of the building and the systems, it actually says, well, I know how to design a control system for you, would you like me to do that? And it will design its own control system, point map it all, and then gives you this what-you-see-is-what-you-get, you know, wiring interface that gives you the live interaction. And again, this is replacing what has been, you know, a lot of days or weeks of system design, IT, and then going out to the marketplace , working with those, those end point distributors, like how do I acquire all this stuff.
Troy Harvey: The next piece is working with the utility companies to actually connect up to the incentive marketplace. Once you have a description of your building and your systems, well, it can connect you up to that incentive marketplace, where utilities today are feeling like people aren't making use of the incentives that are there. And this is unfortunate; that's their whole job is to incentivize.
Troy Harvey: Um, that guided wiring and automatic commissioning, again, it's another point of savings. Right now we're spending a lot of time and doing manual commissioning, and it's very error prone. One guy can switch two wires, and you know, you're going to have a problem that may take an hour, may take a day, maybe take years to figure out where that wire went wrong in the whole building. So guiding that whole process, again, saving us from those headaches. And we're always the last guys out of the building, so everything's going to be blamed on us whether or not it's our fault, but you know, in the end it is a little bit of our fault because our tools just aren't capable of doing what the users expect.
Troy Harvey: So basically all of PassiveLogic's controllers have their own networking. We're all IP-based networking. It can either go wired or wireless or both. And so our high controllers, they have four ethernet jacks in the back, and this is all spanning tree networking, meaning that you can do daisy chains, you can do full loops, you can do whatever kind of crazy topology you want, and it will figure it out.
And so in part of that all-in-one experience, it's not just about like, how do you make this automation process better, but the IT process, if we're going to democratize this to a broader audience, we need this to-, you just hook everything together and it will work out the details. That has a few interesting side effects, which is first, it controls its own private network. So you're no longer intermixing with the building's IT infrastructure, which means you have a more secure infrastructure by default. It also means that it becomes its own private umbrella for all of these IoT and smart sensor devices that are right now sometimes struggling to get into a building's network and get past the IT department.
We not only enable a marketplace for those IoT devices to get into the building's design, because you've got this whole tool pallet of all the different sensors you can drag and drop, and then it connects you up with the providers of those. But then it's also going to umbrella those to whatever way that they speak, providing an actionable interface, which is really important. Because most of these IoT devices, as cool as a lot of them are, they reach up to their own private cloud. And at that point, once you go up to the cloud and then your controller wants to maybe scrape that cloud and bring it back down, it no longer is actionable because you may not be able to count on the connectivity always being there to make real time decisions.
So the fact that it's in-building, under the umbrella of PassiveLogic, PassiveLogic is making that actionable right in place, and then piping that up as a cohesive cloud connection to the PassiveLogic cloud for, you know, everything that's going on in your building, all your devices, all your sensors, and with a known API.
But then from a security point of view, when you install PassiveLogic beyond its private network, it then, at whatever point you bridge it out to the outside world, it talks one way. It goes and establishes a prearranged key with the PassiveLogic cloud and talks up. It doesn't establish it down, so it can't, you can't hack into it in reverse. It has to say, hey, PassiveLogic cloud, I've got my special key, you know who I am. And it connects that private VPN to the cloud, at which point that you can then do you know all your portfolio management there. So because it's an integrated solution, we get rid of all of this ad hoc security and networking stuff that people are trying to manage on their own and build a very durable thing at the factory that you can then guarantee that you've got security in every install.
Troy Harvey: And then, you know, this automatic analysis that comes out of it, not just the what of regular analytics, but the analysis, right? Like telling you what happened and why it happened and what was the lineup of things. And then ending up with, you know, with a single click, you know, you can add it to an optional cloud where you can see all your buildings in a portfolio and be able to navigate and manage, like all your different issues and do across-portfolio insights and so forth.
James Dice: [00:40:14] Right, right. Okay. How about, so I'm an analytics guy. I've been doing fault detection and monitoring-based commissioning for, I don't know, nine years now, something like that, quite a bit. And I actually just had Nick Gayeski from the KGS buildings on last episode, and so what in this new paradigm do all of the analytics nerds like me, what do we do with this new, this new technology?
Troy Harvey: [00:40:41] Well that's, I think, where it gets exciting. So if you have a building automation system that understands buildings and understand systems and equipments, and it understands them beyond the points, you know, that we tend to think in. So today you might have a Haystack point that you've manually or in some semi-automatic way added to, say, a pump. And now you're going to have an analytics point that shows pump going on and off. Well, what about all the other variables of the pump, right? That's the only variable you know of, but the pump is governed by, you know, two dozen different physics variables that are part of how that pump works. And those are not-, those are opaque to you. And so the first thing that's interesting about PassiveLogic's approach to this deep physics is all those variables are considered. So that that pump will have these variables exposed to the analytics user with different quality of data, you know, for each variable. So as an example, a pump flow can only be certain answers within the rest of the system's operation. And that becomes clear to the physics underneath that is managing how the system is working as a complete subsystem, even where you don't have a flow sensor.
Now, depending on how that system works, the quality of data may be 50% or maybe 90%. But as an analytics guy, having access to this much richer pool of data that is not just data, but really turned into information, right? Because it's all pre-labeled. All the physics know what they are. You can, you know, compute it and query it. And so for data analytics or data scientists, it also creates this new world of excitement where you will automatically get an order of magnitude deeper, richer data without effort because it just comes as a free side effect of the deep physics control.
Troy Harvey: And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
Troy Harvey: When we talk about the digital twins and digital twin interface, one of the things it enables is all of these cloud providers of services to then connect the buildings in a one-click way, just like you experienced with your iPhone. And today that is a minimum $50,000 integration cost just to the simplest analytics app, or even the simplest, just like, you know, warmer-colder comfort app. Getting the control autopilot and then providing that human comfort-based control. So at the core of it, because it's physics-based, we're controlling not around just air temperature. We're actually controlling around comfort. And that can be human comfort, the building's comfort, you know, the building science of the building, can be a process control comfort. You know, maybe you have a carbon fiber layup line that has to have certain comfort dimensions of the carbon fiber in terms of, you know, the temperature and humidity in these boundaries.
Troy Harvey: But it also enables some new opportunities in the marketplace, which is also part of what our DOE agreement is about, is how do you enable the future of grids? How do you enable the future of smart cities, where buildings as the biggest component of energy use, can start acting in a peer-to-peer way and talking back and forth with utilities, and being like, 'Hey, this is what my demand and supply will be over the next 12 hours.' And we can all guarantee what everybody is saying is accurate and nobody can end run the system. And that's going to be a really key component. You can't have smart cities, you can't have smart grids unless you have smart buildings that can act as agents on behalf of their owners and be able to communicate in a reliable and provable way. And so that's the more distant future, like, enablement of what physics-based digital twins can enable.
James Dice: [00:42:46] Right. And I think that kind of mirrors my perspective on all of these. You know, you could say on one hand, a lot of the current building optimization jobs that we do, a lot of what we spend our time on right now, a lot of that with current technology and PassiveLogic's approach can be automated away. So on one hand you could say, well, what are we going to do? Are we going to lose our jobs? On the other hand, you could say we're actually going to enable more capabilities. We're going to enable better building performance and remove obstacles to what we're all trying to accomplish anyway. Right?
Troy Harvey: [00:43:23] Right. So I think there's two sides to that, though. The first is the question of labor and jobs. There's no doubt that autonomous vehicles are going to put out of work a lot of people. You know, the number one job in America is truck driver. And the technology is largely there to put those jobs out of work.
But we think the opposite is true here in buildings because it's about: how do we enable a broader audience of people to be doing automation while making the experts more expert? And so we actually see this will engage a labor pool that may be 10x bigger in another 10 years, where you have now technicians and electricians and HVAC installers now being able to do automation on a much broader market scale. At the same time, when we look at the experts, so much of our expertise, you know, frankly, is being squandered in just shuttling bits around, and tagging things manually, and doing just like-, why aren't we actually seeing how buildings are working? Because we're spending all of our time doing these low-level things.
So, you know, I think the outcome of that is something interesting. When you look at the cloud providers, and we're probably at a point right now that we're signing two to three cloud providers of services per week into the PassiveLogic cloud and app store infrastructure. And at first gloss, you might say, well gosh, you know, out of the box, PassiveLogic's analytics are providing much richer data that even with a lot of hard work, you won't get with a traditional analytics solution. Does that put them out of business? It's like, no. I think what it does is, you see these companies in whatever segment, whether it's fault detection or analytics or district management or energy audits, that what they'll be able to do is let go of the 80% of work that's just weighting them down and focus on the 20% of work where all their value is, which means they get to put five times more effort into the high value part of their business.
James Dice: [00:45:28] Great. I'm glad we're seeing the same things. I mean, there's always two different ways to tell the story. Cool.
James Dice: [00:45:28] So the other thing I wanted to key in on, on that whole story is that at least for the foreseeable future, there's always going to be, it seems like to me, two paradigms, right? There's buildings that installed a new building automation system yesterday that wasn't a deep digital twin, right? So there's going to be all of these buildings that have the old technology essentially. Even if it was installed yesterday, right? And so how do you guys approach buildings that have infrastructure that's not sort of ready to be replaced yet?
Troy Harvey: [00:46:09] Right. I think it's worthwhile going into the two proesses side by side, because-, and we'll just say at the beginning here, there's multiple ways you can use this, right? So our goal as a company is that you have this huge value chain of players, and some of those people are coming in at the beginning, whether that's an engineering firm or an integrator or an architect or engineer who just wants to make a high performance building that actually works, and they're going to drive new construction. It's like a pure PassiveLogic solution all throughout. And then there's people coming in at the end of the value chain, whether that's a cloud provider of services, who today, it's too much of a lift to get their projects through the CFO of a company, because that $250,000 integration is too high just to get to that thousand dollars a month SaaS fee. Or on the retrofit side, where you're an energy service company or an integrator doing a maintenance job, where you're saying, okay, we've got to retrofit and modernize this building.
And we work in either way. So in a retrofit scenario, you might just take out the head of those controls and then put in PassiveLogic and talk down to the existing BACnet stuff. Or analog and digital, you know, we're very agnostic to what level-. And going back to pneumatics, you're just gonna have to do some retrofit work. But we're pretty agnostic from analog, digital, through the different protocols of both the, you know, the common ones, like BACnet and Modbus, to the emerging ones in the IoT space, whether that's over the BLE mesh or over WiFi.
But what we're seeing that is interesting when you look at the difference, say you're going to do a retrofit, and you're like, okay, maybe you're going to leave the VAV controllers in, but you're going to put in some modern head controllers and put in some IT infrastructure. And now you have to program sequences for this thing, and now you have to, you know, go through a commissioning process and all these things. Well, that was just a lot easier to stick into PassiveLogic on top.
Let's talk about an even lighter-weight case. Say you're just an analytics company or an energy monitoring company. It seems lighter-weight at first to like put in some cloud middleware to aggregate through, you know, divert pipes of your IoT and sensor products that you maybe put in the building. Until you realize that you have to go and label everything, tag everything, put together a schema for it, and then get that schema, like adapted to your internal systems to describe that building and that scenario.
And what we're finding is these cloud providers are looking towards PassiveLogic as a lightweight install that removes what was a lot more software work, even though this hardware component requires something on site. Because at the end of the day, you're going to have to do a lot less work if you just draw what the building looks like, draw what the systems look like, and let it build its own internal digital twin that it can re-describe to your software.
James Dice: [00:49:20] Right, okay. Yeah, I'm seeing that. I didn't see that before. That's fascinating. So you guys could always install one of your controllers, start off deploying a deep digital twin, and then as certain systems on that old system get replaced, then you would just start replacing that with your stuff. Is that kind of how you see things rolling out?
Troy Harvey: [00:49:42] Yeah. I mean, I'll give you an example. Right now we have a strategic partnership with NVIDIA. And NVIDIA, they are, if people don't know, they're traditionally a graphics chip company, they make these GPUs. But that turned out to be the perfect platform for AI. So five years ago NVIDIA was a graphics card manufacturer, graphics chip manufacturer, and today they're probably, you could easily consider them one of the top five companies driving AI infrastructure.
Well, they get this idea that buildings are the next revolution. Because they've gone through it with vehicles and vehicles are now, they are the core component. They are the engine behind everybody's autonomous vehicle platform. And the CEO said recently, you know, when they called us, he said to one of the VPs that that was in charge of their building programs, why is it that I've got this vehicle here that all have to do is fill it up with gas and it'll drive itself to New York, but my $700 million brand new corporate headquarters can barely function, right? It's crazy.
So they called us and we've been talking to them about what a rollout would look like, and that includes a variety of buildings throughout the world. What is, in some cases, a deep retrofit of PassiveLogic all the way down to the VAV controller. On a new building, well, that doesn't make sense. You leave all that stuff in place and just replace the top end of the control system and talk to the existing BACnet infrastructure. And then on new construction, it's just new PassiveLogic throughout. And so I think you could think in all of those different models for, you know, what is the right approach, whether it's a progressive install or a deep install or, you know, kind of this mixed model where you'll lose a little bit. You'll lose the end point commissioning, you know, all the way to the bottom of the wire, but you won't lose the commissioning of the system as a whole. We'll still be able to interact with that.
James Dice: [00:51:40] Right. Okay, cool. Well, as we get towards the end of our hour here, I want to circle back on iPhones. But first I had circled on my notes here to ask you about small buildings. And so I mean I've heard you talk about it before in other places: small buildings are a very underserved automation market. Can you talk about how you're attacking that?
Troy Harvey: [00:52:02] Yeah, so I think what we've seen in previous attempts at this market was we already have too complex of a model for our big buildings. It takes a lot of expertise to drive, and they're not that good, right? That's the problem. That's why we're all struggling. And when you decide that you're going to keep that as a high value market and then come out with a small commercial product, it takes something that was not very capable or good in the first place that's too complex to use, and pull out the features, when you didn't make it any easier to use. And you just made it worse, right?
And I think as a marketplace, everybody feels these are just not compelling products. So we felt at PassiveLogic, our goal is not to just to go head-on with the Big Four, but to enable that small to midsize market, which by the way, for everybody, if you do go to talk to the customers, you talk to installers, you talk to the HVAC guys, it's not like the demand is not there. Everybody wants it. Everybody wants something in that space. The problem was it wasn't friendly enough to use or cost-effective enough to use.
So PassiveLogic first solved the democratization problem: enable the average HVAC installer to do this stuff. And then we built a business model that doesn't require you to go through three weeks of hoops before you figure out the price. We have a pricing scale model that like really enables a $1,500 install up to your $1.5 million install. And it really scales with the size of your building, the number of buildings, number of controllers.
And so, you know, our controllers, you can get a controller in a zone for around 1,500 bucks, and you can get a zone license. And do a small coffee shop. And that becomes more friendly and buyable and easier to install than even, you know, a thermostat and dome controlling type approach.
So I think it's technology that enables new business models.
James Dice: [00:54:01] Yeah. I mean as an energy engineer, we'd always run into clients with large portfolios of small buildings. And the economics were always difficult when, like you're saying, there was no compelling products to get to where there was a good enough payback, essentially.
Troy Harvey: [00:54:20] Right. I mean, going back to your iPhone, it's not like you got the engineer's iPhone, and then the blue collar worker got the blue collar iPhone, and the executive got the executive iPhone. Everybody gets the same iPhone, right? Like there's no 'we're gonna dumb it down for you.' That's the ridiculous notion in 2020. Everybody should get the same features. We all have the same energy efficiency needs, the same operational needs, no matter how big your building is.
James Dice: [00:54:47] Totally. I love that. Okay, so back on the iPhone, but the app store component. You took us through a little bit of your vision there and your partner ecosystem. Is the iPhone for buildings with the app store for buildings, is that an appropriate analogy for PassiveLogic?
Troy Harvey: [00:55:09] It is the appropriate analogy. And I think one thing that people should understand about that, other than the sort of top level thing, is honestly, it's far more compelling in our market than it ever was in the consumer market.
And we talked a little bit about that. Like if you take an app store from a 15 minute software install to a one second click, that's not as compelling as taking it from $100,000 integration cost to a one second clinic. That's a lot more compelling. right? But the thing that's missing, what I think often people don't realize, we can talk a little bit about the digital twin standard.
So when you have a physics-based controller, just the setup of that controller generates the digital twin inside that controller for its own operational purpose. Well, that digital twin description of your building has far more use cases than just our own controller. And one of those use cases becomes the cloud, or other applications whether it's cloud or mobile applications.
And what's been missing in this marketplace is there's been no platform for buildings, right? You can buy a JACE or similar types of things from different manufacturers, but it's more akin to a Linux kernel than it is to the iPhone iOS with these high-level APIs. So the first thing it enabled from this digital twin standard-, which by the way, we have an investment from the Department of Energy where we're working on making this an open standard. But it has multiple use cases.
Now, most people are here are probably familiar with things like Haystack and Brick. Haystack is tags. That means that a variable in a system has a name. Brick provides structure to those tags to say, well, these are how things are arranged in the system, the topology. But that's still only maybe 15% of the world that you need to describe what's going on in a building, right? You have the building, the construction, the floors and the zones, and both walls and assemblies, people walk around, and all these things, and that deep ontology, that deep variable space of all of the things that data scientists want. PassiveLogic enables a singular API that as an application or strategic partner, you can program to that API once, and then you will be able to walk that API consistently in the same way for every single building after.
And that's one of the things that's really been missing in buildings, is one way to describe buildings in a deep and rich way that describes everything that's going on there. And that enables first, the application market and the cloud services and the mobile market for prop tech and energy tech and construction tech.
What did you think about these highlights? Let us know in the comments.
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
James Dice: [00:00:00] Hello, friends. Welcome to Nexus, a smart buildings technology podcast for smart humans. I'm your host, James Dice. If we haven't met before, I write a weekly newsletter on the same topic. It's also called Nexus. Each week I share what I've learned, my opinions, and what I'm excited about in the quickly evolving world of intelligent buildings. Readers have called Nexus the best way to stay up to date on the future of this industry without all the marketing fluff. You can check it out and subscribe at nexus.substack.com or click the link in the show notes.
Since starting the Nexus newsletter, many of you have reached out to me wanting to talk shop, and we have. After a few weeks of those wonderful conversations, I realized I needed to record and share them with our growing community. So here we are. The Nexus podcast is born. This is our chance to explore and learn with the brightest in our industry together.
One more quick note before we get to this week's episode. I'm a researcher at the National Renewable Energy Laboratory, otherwise known as NREL. All opinions expressed on this podcast belong solely to me or the guest. No resources from NREL are used to support Nexus, and NREL does not endorse or support any aspect of Nexus.
Let's dive in, then. Episode 5 is a conversation with Troy Harvey, CEO of autonomous building startup PassiveLogic. Troy taught me a ton this episode. We talk about how the hell we got here, to this point where building technology is 20 to 30 years behind the tech we're carrying around in our pockets.
We talk about the limitations of modern building automation systems and what it means for a building to be fully autonomous, why that's needed, and how PassiveLogic is doing it. We talk about what full autonomy means for all the service providers in our industry. Oh, and digital twins, deep digital twins.
This episode of the podcast is directly funded by listeners like you who have joined the Nexus Pro membership community. You can find info on how to join and support the podcast at nexus.substack.com. You'll also find the show notes, which has links to PassiveLogic's, website and Troy's LinkedIn page.
Finally, just a heads up that our Zoom call had some minor connection issues, so please do forgive us on the one or two words that are hard to make out. Without further ado, please enjoy Nexus podcast, Episode 5 with Troy Harvey.
Alright. Hello, Troy. Thanks for coming on the show.
Troy Harvey: [00:02:34] Well, thanks, James, for having me.
James Dice: [00:02:36] Yeah. Could you go ahead and introduce yourself and your company to us?
Troy Harvey: [00:02:40] Yeah, so I am the CEO of PassiveLogic. And PassiveLogic is the first fully autonomous platform for buildings in this building market. So we're in large part doing what-, when you take what you think of an autonomous vehicle, and you think about the brain in the autonomous vehicle that knows how to drive, you take the brain out of the vehicle and teach it about buildings instead of driving, and have that autonomous platform enable us to manage and automate, as well as, you know, this whole life cycle of the things that we do in buildings, both getting them up and going in the first place, operating them, and managing them after that.
James Dice: [00:03:19] Great, great. Yeah, and I definitely want to dive into some more details. I thought I'd start with a story a little bit, so I'm what you would call, as far as my personal technology, a late adopter. So up until Sunday I had an iPhone 6, and I just got a new, I just got a new iPhone. I went ahead and got the newest one, iPhone 11. And the process for setting it up was a crazy jump in technology for me. So the process was basically turn on the new iPhone, set it next to the old iPhone, and then wait 10 minutes, and literally everything was set up. Every app was downloaded. Every login was set up, all the settings were done. And what I've been thinking about since then was how crazy things have evolved on the personal side of our lives, when it comes to technology, and then how far behind that buildings are.
So I was wondering your perspective on how we got here, to this point where building technology is 20 to 30 years behind the stuff we're carrying around in our phones.
Troy Harvey: [00:04:26] I think there's multiple factors, and , it's a really interesting thing to bring up the iPhone experience because, you know, just to sort of remind everybody, this is only 10 years old, and in the first four years of iPhone we out-sold, or Apple out-sold, all 40 years of personal computing. So why is that? You know, Windows and Macs at the end of the 90s, they seemed, you know, pretty easy to use, where we'd have installed cards in the back or where we're having to put things together. But there was this level of integration that happened with, just starting with the iPhone that you could just buy it, like you said. You buy it, you pull it out of a box, and it's just ready to go. Like everything you need is right there. So that's now this personal experience that we've all consumed.
And one thing that's interesting, and I think this is important, we'll talk about a part of technology culture that is being somewhat dispensed with, that the buildings still belong to, which is the thing about the iPhone that's fascinating, or an iPad, is that both you as an expert user can use it expertly, and you can see a two year old interact with an iPad at the same time. Right? And so this is a really interesting phenomenon. And how do we make everybody more expert at whatever level they are at? And we call that progressive disclosure, right? So the iPad or the iPhone, you know, you can simply start swiping around and click on icons instantaneously without anybody giving you the instructions. At the same time, as you get into more sophisticated application, you build up your expertise within it.
So in these commercial industrial worlds like building automation, we're pre- this revolution. Frankly, we're pre- the desktop revolution, as a person who was a successful entrepreneur in the building prop tech space said to me after he graduated with this computer science degree, he like goes into this first building and like goes in the basement, you know, in the back closet where all this gnarly stuff is sitting. He's like, oh my gosh. It's like, it's basically a 1970s mainframe running this building. Right? And it just blew his mind.
And, and so part of that is, is several forces. There's a guild mentality that has tended to keep technology back. This happens in computer programming all the time, right? You know, talk to your deep Linux dude who just loves like his most-, you know, the most awkward way to do things because it like produces a sense of specialness, right? Like if you know how to wield like four letter commands, that's like nobody else even understands what you're talking about. There's like a sense of preservation. This is part of it, but as time rolls on and people in that world have this iPhone experience in their personal lives, that starts to get less and less attractive to like maintain your guild as you have a personal life that feels more automated. We're automation guys, we should be automating our own world, and yet we're still doing it this is super low-level way.
But I think that there's two other bigger forces that are really the cause here. One is it's an effect of disruption, a cycle of disruption that is true in all technology that the big four players in this marketplace, they emerged in the 1800s, right? Like their big innovation was mercury switch thermostats. And that's like a lot of industries. Look at Tesla today versus the car companies. Those are hundred year old companies with a hundred year old mindset with a hundred year old trajectory. And they just got disrupted by some guy in Silicon Valley that everybody thought was crazy at first, and you know, maybe he is a little crazy, but the end result is like is they didn't see what was coming, and in the last few years, just literally two or three years, they've gotten to this point of existential crisis, right? They no longer know if they don't put together these technologies or license it or buy it from somewhere else that they will even be in business in a few years.
So I think that's a bigger arc that has left us to where we are today, and behind that is: why don't companies self-disrupt? And I think in this market, what's very interesting if you look at the Big Four is most of them operate technical services, commissioning, installation. They're competing with their customers, right? And in a way, those parts of their business, which turn out to be actually more profitable than their product sales, are preserving and want to preserve the complexity of their product, otherwise it would discount their operations, right? And while if they thought differently, they would say, well, in five years I could make a much bigger market by democratizing this technology, and then there'd be 10 times more buildings using it. In the meantime, you would end up in a bind where you would be making less money in order to make more money. And that's a no-go if you're the CEO of one of these companies. So they're not in a position to self-disrupt.
James Dice: [00:09:29] Hmm. Yeah, that's fascinating. So the main four players in our industry are the ones that for a long time have created the technologies that our buildings are using. But what you're saying is their business models are also heavily dependent on the service side of things. And therefore-
Troy Harvey: [00:09:48] Yeah, if you look at revenue splits, the majority of the businesses actually make far more from their services side than they do from their hardware side. So we can go ahead and look at an analog. The clear analog in the tech industry is Novell. I don't know if people remember Novell, but in the eighties and early nineties, they were one of the biggest tech companies, just like IBM, Apple, Microsoft, Novell, and Sun, those were the five bigs.
And Novell invented what was like all of the networking infrastructure, and that was complicated in the 80s. And so what do you do? You started a services division and an education division, and training and certification. Boy, it sounds a lot like if you go to BMS today, right? And you would have to go through all these hoops before you can be a certified Novell installer. And Novell became so dependent on the services side that they didn't see the future. And so at the beginning of the 1990s there were bulletin boards all across America, you know, all along the highways: Get yourself Novell certified, right next to Microsoft certified. And by the end of the 1990s they were out of business effectively because laptops just had wifi and even had it built-in, right? And it just bypassed the whole thing.
James Dice: [00:11:06] Wow. So the guys that are basically building the BAS, they're dependent on it being a complicated thing that they then have to sell services to make it work, and therefore making it easy is directly contradictory to their current financial results.
Troy Harvey: [00:11:24] Right. And just talk to anybody who's an integrator or a distributor at this time of year. They're having to pay their big fees to those Big Four to keep those certifications up, and it's an expensive process. And you have to go through all these hoops, not before you can even install it, but before anybody would even give you a price for the product.
Imagine that with your iPhone. It's like, well, go through three weeks of iPhone training, and then we'll tell you what it costs. And only after that will we even like consider selling it to you, right?
James Dice: [00:11:57] Wow.
Troy Harvey: [00:11:57] Go democratize that market. Right?
James Dice: [00:12:00] Yeah. Yeah, totally. Okay. Well thank you for that history that is enlightening.
So I want to kind of shift towards what you guys have done and what you guys are doing. So when I wrote my last newsletter on PassiveLogic, I said you guys are thinking zero to one. And what I meant by that is that you're just like starting-, you're erasing that whole process that we just talked about and basically starting with a blank sheet of paper. Will you fill us in on why you guys decided to do that?
Troy Harvey: [00:12:28] Yeah, so we started with the goal of full autonomy. Now, it's worth stepping back and saying, why? You know, and the glib answer is: well, in every controlled infrastructural market, full autonomy is just the end point. That's where everything will be. And we know that the technology exists, so why not shoot with that as the goal?
But when you looked at the needs, what were the challenges in the market? Where were buildings falling down? And I started as an energy guy. You know, I think a lot of us come from that point of view into the market, and it was a winding back from energy. Hey, we want all buildings to save energy. Because at the end of the day, when you do the math buildings are 41% of the nation's energy. The DOE has done a study and we've been able to show that it's true that just through optimal control and optimal conditioning, on average for the U.S. building portfolio, you could save 40% of the energy, right? That's not changing any infrastructure; that's not putting in better, more efficient, you know, chiller plants; that just controlling what we got and optimizing it better, 40%. So if you add those things up, 100% of buildings have control. 41% portfolio of energy is buildings. And if you could save 40% across the board, that is the single largest energy savings opportunity in the marketplace.
But on the other hand, nobody really cares about energy in the marketplace. Right? That is a terrible thing to try to sell on, because maybe 5, 10% of the market cares. Right? And so what we saw, though, was these are energy, energy efficiency, optimality, well, they're these like concomitant issues. They're like intertwined with the same things that are causing installers to pull their hair out and buildings to run poorly. And the owners calling up the maintenance management company and screaming at them. It's all about, how do you make a building just work well? And we look back at this and said, well, just like any autonomous system, right? If you start with a vehicle, the level of autonomy and this is something that, you know, maybe later we'll show a slide about level of autonomy, I think it's important for us as an industry to get our head around, how smart is smart? So that we know what we're talking about. So level zero autonomy is where this industry lives today. That's manual control. That set points, thermostatics, and PIDs. That's the same thing as cruise control in your car. You set your car to 60 miles an hour, you set your building 72 degrees. It's the exact same concept, but you can't say, well, I've got cruise control and I'm going to build a whole autonomous vehicle out of cruise control. Like that's going to take you down all kinds of wrong paths, and you're going to put bandaids on top of bandaids, and remove things and add things and try to fix things, and you're going to end up with the biggest, craziest Rube Goldberg machine.
And that's what we're doing in buildings today, is over time we started with those Big Four inventing mercury switch thermostats. It's like cool idea, right? Like the 1850s 1860s. And then Honeywell had this breakthrough idea of like the PID control, which they ripped off from the Navy to stabilize ships' rudders. And what was interesting is that Naval engineer, he's like, Hey, PID is not meant for generalized control. And then Honeywell went and turned it into digitalized control. Well, you can't blame them. They had pneumatics work with, and it's like PID could fit the pneumatic model. But here we are literally 90, 100 years later, still building one building block on another of PID, which was just basically cruise control, right?
And you're just not only not going to get there, but you're just going to make it worse and worse and worse and more complicated the more things you layer on top trying to get this whole thing to work together. So if you're like, okay, we need to start over if we have any hope of getting to level two, three, four, or certainly level five, full autonomy in buildings. And you have to start with a different assumption. You have to start with the notion that a control system needs to understand buildings if it's ever going to optimize and control those buildings in real time. And this is what you have in autonomous vehicles, right? Out of the vehicle, you need to understand the physics of your vehicle and the physics of the other vehicles if you're going to keep two vehicles from colliding on a road. With a building, same thing is true.
And I think what's interesting to me is when I have conversations with people outside the industry, who are maybe the owner of a building, they are shocked to learn that their million-dollar BMS system knows nothing about buildings. Like it's just kind of a blank platform. Right?
James Dice: [00:17:18] Right.
Troy Harvey: [00:17:18] So you have to start from scratch, otherwise you'll end up like the industry is today, which is this like compendium of like point solutions tied together with bailing wire.
James Dice: [00:17:29] Totally. Alright. So I want to talk about then, okay, what you've basically done is started with a blank sheet of paper. And then what I think you've done, based on the little I know so far, is you said, what's possible with the latest technology, right?
So, I have kind of three things in my mind. So it seems like you guys have been super innovative on hardware, software, and then what that enables is the autonomy piece. And so I'll let you take that in whatever order you'd like, but what can we do with this blank sheet of paper, basically?
Troy Harvey: [00:18:05] Right, so first you need to make an autonomous engine. You need to make an engine that understands the buildings, understands what they are, understands the thermodynamics of buildings, understands equipment, understands systems and subsystems and how they interact, and how we as people interact with the building. Because at the end of the day with architecture and buildings, that's the goal, right? The goal is to make people happier and comfortable and modulate around our needs.
So once you have that, that's cool. And there's a lot of geeky technology we could talk about; we can talk about deep physics and heterogeneous neural nets and some of these things that are these big innovations, not just in buildings that the PassiveLogic engineers built, but really in just the space and AI in general and like moving what is naive neural nets toward these very like sophisticated, generalized computing environments that can do physics, not just like, you know, train neurons, but as cool and geeky as all that is, it doesn't mean anything unless you translate it into something that the consumer cares about.
Which is-, back to your iPhone, you know, what I think about the iPhone is it's this software engine of all these components, wrapped in a candy shell of hardware, and that candy shell hardware becomes the way that you interact with it as device. And there's a lot of innovations there that we can build on top of. So like I said, there's a combination of things that we can just straight up steal from the current technology, and then things that we have to bring that are new for buildings.
And your iPhone, again, the iPhone 11, is an example of what's happening at mobile, happening at the edge. It is literally faster - I've benchmarked it; I've run our simulators - It is literally faster than my i9 laptop. That is an Amazon edge blade server in your pocket. And that change, that shift from cloud to the edge is going to be powering a whole wide range of up opportunities and applications in all sorts of industries over the next decade.
And so while a lot of people are still talking cloud, the pendulum has actually swung back to edge and so utilizing that power, that capability at the edge, it's not just CPUs. It's GPUs and what are called TPUs or neural processing units. So this is new types of silicon that enable very fast computing at the edge. So that's one component.
Another component that you steal is steal the modern user experience, right? So that experience you have on your iPad or iPhone, translating that to building automation, that is that layer between you and the AI. So you don't have to know that it's AI. You don't need to know that there's machine learning. You don't have to be a programmer at all. You just need a rich user experience that follows the workflow that you experience as an end user.
And then, you know, finally solving the core problems that you're driving in buildings, right? You need optimality, not only in trying to get a building up and going so people aren't yelling at you, but making that building work continuously, and then making it like tell you whether it's doing after the fact. And so that needs some new technology pieces. That needed, how do we take the autonomous vehicle technology and translate to buildings? One of the big differentiators that's really important to understand is what I would say is the input and output problem. Autonomous vehicles have a really big input problem. They have to solve machine vision in a very chaotic environment. And we in buildings don't have that, which is lucky for us. So that makes it very tangible and very viable right now with, you know, buildings are with PassiveLogics technology achieving level five autonomy now, where, you know, vehicles are, you know, experimentally in that space, but really delivering product around level three right now. And that's their big challenge.
But buildings, we have another problem. We have an output problem. And this is where these really diverge. So in the vehicle, if I'm Tesla or Aurora or Uber building an autonomous platform, everybody gets the same platform, right? The outputs are pretty simple. It's like turn left, turn right, stop, go faster, slower. Right? That's the same in California and Colorado and Japan and France, right? But in buildings, and this is the really crucial thing is-, buildings, every building is unique. Every building has a different architecture. Every building has a different system topology. It has some crazy intersection between, you know, air systems and hydronic systems and BRF systems, and you know, all these different components that we're trying to engage with. Energy system, lighting system, you know, ventilation system. So that needs something different. And it needs a system that can understand buildings as a whole, but it also needs a way to engage with the user to have you describe it. What does that building look like? So that it can build a custom autonomous system for you.
James Dice: [00:23:11] Totally. And that's where the concept of deep digital twin comes in.
Troy Harvey: [00:23:17] Yeah. Because you need a way for a user to describe their building so that then the system can control it based on that description. So you can think of it as, you know, control by contract as opposed to this idea that we use today with this procedural control. You know, if this do this, and if this do this. This is more of a contract that you're saying, this is the shape of things. Now do the best, most optimal thing at any given moment.
James Dice: [00:23:45] Right, right. So we're doing away with, you know, standard and static control sequences, and it's kind of just figuring it out as it goes. Is that how I understand it?
Troy Harvey: [00:23:57] Yeah. And I think one thing for people to get their head around is, first you have to look at a flaw in the procedural solution, so the sequence approach. So let's talk about the ways that people think about making today's systems more optimal. You come up with sequences, right? And these are your best ideas for what is the sequence of operations at the time that you're commissioning the system. Then you tweak and tune those sequences. You know, you adjust the parameters. Now this is a hard task in and of itself, and so there's a few different companies out there like, well, no, we'll tweak and tune those sequences for you with a little thin machine learning that will adjust it over time.
But even with that, you're never going to accomplish all the other things that are wrong with that approach. Starting with the sequences themselves, like there is no one sequence that governs the building for every and all time. That's a dynamic process. The right sequence is different at any given moment in the building's life. So the idea of starting with a static sequence and then saying, well, I'm going to optimize that with whatever technology on top, it's kind of not even half-baked, right? It's like partially baked. And then you're still leaving out this notion of, well, like there's all this optimization within the building that the system can't understand. Going back to that million dollar system, shocking again, that million dollar system with a thousand zones doesn't understand how two zones in that building even interact. And so you have to know all of these things in order to coordinate the control of that, that whole building control all at once.
James Dice: [00:25:35] Right, right. Cool. So I think there's a lot to dig into on hardware and software. And what I'm going to do is I'm going to summarize and put links to the control trends demos that you did. So you did some great screen shares, great software demo. I'm going to link to all of that for everyone so that anyone that wants to dig deeper-, I'll also put the levels of autonomy together in the show notes as well.
What I'd like to dig into is everything you just described, Troy. What it kind of exposes as far as the things we're doing right now in buildings that are obsolete if this new paradigm takes shape. So, kind of, as I walk you through these different things, I want you to tell us what you see that like the new version is.
So let's start with energy modeling. So it sounds like you started as an energy modeler. Early in my career, I started as an energy modeler where you spend, you know, weeks building this 3D model of the building. You press go basically, and you'd wait up to an hour for it to run all these different runs of the model. And then at the end, it wouldn't be anywhere near the utility bills. It wouldn't be anywhere near reality. And then you'd basically start all over again. So, what is the new version of that with this new paradigm?
Troy Harvey: [00:26:54] Yeah. So the new version of that-, and, I loved that process that you just described because that's how the world works if you're an energy modeler. And it takes a lot of expertise to drive, right? Because it's all offline, and so it's all like your expertise to try to get that model to maintain accuracy. But it turns out if you put that model right into the control system and you make the model simple to install, so you're not, you're not spending a lot of detail effort on getting all of the parameters of that model perfect. You just ask people for high-level stuff like, what does the floor plan look like? Then you plug that model right into the building and all the sensors. You basically are regressing that model right in place, right in the building, right at the edge.
And that model is not only forming the basis of how you make your control decisions, but it can also inform us about our energy impact and energy engineering on a building. So we're actually in conversation with a couple of ESCOs where we're discussing, you know, adding a couple of features to PassiveLogic that would enable them to just basically plug in PassiveLogic in a non-controlled mode, have it regress the building, and they come back in a month and they not only have a regressed, accurate model of the building but then the automatic deltas of, if I had controlled this, this is what the energy savings would have been. That gives you performance guarantees that you can put into contracts. So that sort of changes the paradigm there about how do we use it as an engineering tool.
James Dice: [00:28:22] Cool. Okay. And I think what we'll do is, instead of digging into each one individually, we'll go kind of rapid fire and then if we want to circle back on anything in detail, we'll do that.
So how about the building automation system design and installation process?
Troy Harvey: [00:28:39] Yeah. And I think this is related to some things you asked a moment ago. So I'm gonna actually maybe switch to screen. You asked about this. Does that make sense?
James Dice: [00:28:49] Yeah, sure.
Troy Harvey: [00:28:51] Okay. Let's just kind of go through it if you can see this.
James Dice: [00:28:56] Yep, yep. And anyone who's only on audio right now, we'll kind of talk through it, and then we'll also share the video afterwards.
Troy Harvey: [00:29:05] So once you have a platform that understands buildings, it becomes really important to translate that in terms of our experience, as the guys that are doing the work on the ground, because in the end, that's really the customer here, right? It's not the building owner; it's not the occupant; it's the guy that's going to buy the product and install this and make it go.
So when we took that into consideration of, how does that process work, right? Well, we go through a design build approach, and we need to be able to connect the dots between what is the intent of the building and was it installed correctly. So first it's pointing a screen right on that controller and making it all software-defined IO. So that IO can then check that all of your wiring is done correctly. And that it meets the definition of the components you connected to it. So if you're connected to a thermistor or a pump or a chiller plant, that it's able to engage with those things as you drew them and make sure that it's working as a system, as it was designed.
And so changing that workflow. And we can get in a moment into that workflow, but I'll just kind of go through a sequence of what we see here as the value here is you brought in that single-edge solution that's replacing a catalog of parts, right? Now you can have one controller that's doing all the jobs. It's giving you that realtime step-by-step install. It's giving the self guided wiring, where it's testing out wiring and leaving in place for the rest of us an autonomous control platform. So that's our view of the marketplace: satisfy the installer, leave in place the autonomous platform that the rest of us can plug in services to. From their point of view, it's a matter of like, how do we pre-integrate these different components into one package that today, you know, we, we call ourselves integrators and that's because that's where all the work is.
Back to your iPhone, one of the things that's really interesting, there's a lot of things you could say about how the iPhone changed the marketplace, but a simple one is to say it was just pre-integrated, right? You no longer had to put together your computer and put together the software to get it up and going. You just literally buy it and it just works. Right? And that's how building automation should be. And so that's what we focused on here, putting everything that you need into one control.
But then more importantly, what does this new platform enable? Control autopilot, universal protocol translation, automated point mapping, automated commissioning. Human comfort based control, right? Not just air temperature control. And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
And then you make that a scalable model, right? So it's a question of, do you have one controller or three or five or ten or a hundred or five hundred? And that's how PassiveLogic works, is they're all software defined boxes. There's no one, quote unquote JACE or one master. They all can master. They all carry a copy of the database, and they all work together to solve the overall building's problem.
So that's from a point of view of the hardware line. How do you make the hardware actually act the way we work? But then how do you make the workflow represent what we need as an industry to not just automate, you know, automation, which is one goal, but to automate this workflow that we all have, and so you start with that control by definition, with this platform that gives you this ability to make your own custom autonomous platform for your building. And then instead of this programming we're doing today, we're replacing that with drawings, where you're going to have to make the drawings anyway to tell the guys what they're doing out in the field. So we've gotten a two-for-one, and we're doing it instead of weeks, minutes, maybe hours, maybe a day at most. Right? But you have this 90% savings and time right up front. Once you've done the drawing of the building and the systems, it actually says, well, I know how to design a control system for you, would you like me to do that? And it will design its own control system, point map it all, and then gives you this what-you-see-is-what-you-get, you know, wiring interface that gives you the live interaction. And again, this is replacing what has been, you know, a lot of days or weeks of system design, IT, and then going out to the marketplace , working with those, those end point distributors, like how do I acquire all this stuff.
The next piece is working with the utility companies to actually connect up to the incentive marketplace. Once you have a description of your building and your systems, well, it can connect you up to that incentive marketplace, where utilities today are feeling like people aren't making use of the incentives that are there. And this is unfortunate; that's their whole job is to incentivize.
Um, that guided wiring and automatic commissioning, again, it's another point of savings. Right now we're spending a lot of time and doing manual commissioning, and it's very error prone. One guy can switch two wires, and you know, you're going to have a problem that may take an hour, may take a day, maybe take years to figure out where that wire went wrong in the whole building. So guiding that whole process, again, saving us from those headaches. And we're always the last guys out of the building, so everything's going to be blamed on us whether or not it's our fault, but you know, in the end it is a little bit of our fault because our tools just aren't capable of doing what the users expect.
And this may be as big as PassiveLogic itself, but when we talk about the digital twins and digital twin interface, one of the things it enables is all of these cloud providers of services to then connect the buildings in a one-click way, just like you experienced with your iPhone. And today that is a minimum $50,000 integration cost just to the simplest analytics app, or even the simplest, just like, you know, warmer-colder comfort app. Getting the control autopilot and then providing that human comfort-based control. So at the core of it, because it's physics-based, we're controlling not around just air temperature. We're actually controlling around comfort. And that can be human comfort, the building's comfort, you know, the building science of the building, can be a process control comfort. You know, maybe you have a carbon fiber layup line that has to have certain comfort dimensions of the carbon fiber in terms of, you know, the temperature and humidity in these boundaries.
And then, you know, this automatic analysis that comes out of it, not just the what of regular analytics, but the analysis, right? Like telling you what happened and why it happened and what was the lineup of things. And then ending up with, you know, with a single click, you know, you can add it to an optional cloud where you can see all your buildings in a portfolio and be able to navigate and manage, like all your different issues and do across-portfolio insights and so forth.
So it's a really different workflow than today's workflow, but follows what is really the business workflow of automation.
James Dice: [00:36:19] Yeah, yeah. Thank you. Thank you for taking us through that. I just took notes and I have this list of all the things that we spend all of our time on right now that you just checked through. And next to the list I have: done, 90% done, automated, included, automated, optional, done. So I'll lay all that out for everyone in the show notes, show everyone my notes, basically. But one thing I wanted to key in on that was on one of those slides that you briefly mentioned is networking and security. So, past couple of newsletters, I've mentioned a couple of tools that people are finding helpful to create remote access due to this time we're all in where we're all working from home. So you mentioned that there are built-in switches and VPN tunnels, it sounds like, already built into the system, which is very novel.
Troy Harvey: [00:37:11] Right. So basically all of PassiveLogic's controllers have their own networking. We're all IP-based networking. It can either go wired or wireless or both. And so our high controllers, they have four ethernet jacks in the back, and this is all spanning tree networking, meaning that you can do daisy chains, you can do full loops, you can do whatever kind of crazy topology you want, and it will figure it out.
And so in part of that all-in-one experience, it's not just about like, how do you make this automation process better, but the IT process, if we're going to democratize this to a broader audience, we need this to-, you just hook everything together and it will work out the details. That has a few interesting side effects, which is first, it controls its own private network. So you're no longer intermixing with the building's IT infrastructure, which means you have a more secure infrastructure by default. It also means that it becomes its own private umbrella for all of these IoT and smart sensor devices that are right now sometimes struggling to get into a building's network and get past the IT department.
We not only enable a marketplace for those IoT devices to get into the building's design, because you've got this whole tool pallet of all the different sensors you can drag and drop, and then it connects you up with the providers of those. But then it's also going to umbrella those to whatever way that they speak, providing an actionable interface, which is really important. Because most of these IoT devices, as cool as a lot of them are, they reach up to their own private cloud. And at that point, once you go up to the cloud and then your controller wants to maybe scrape that cloud and bring it back down, it no longer is actionable because you may not be able to count on the connectivity always being there to make real time decisions.
So the fact that it's in-building, under the umbrella of PassiveLogic, PassiveLogic is making that actionable right in place, and then piping that up as a cohesive cloud connection to the PassiveLogic cloud for, you know, everything that's going on in your building, all your devices, all your sensors, and with a known API.
But then from a security point of view, when you install PassiveLogic beyond its private network, it then, at whatever point you bridge it out to the outside world, it talks one way. It goes and establishes a prearranged key with the PassiveLogic cloud and talks up. It doesn't establish it down, so it can't, you can't hack into it in reverse. It has to say, hey, PassiveLogic cloud, I've got my special key, you know who I am. And it connects that private VPN to the cloud, at which point that you can then do you know all your portfolio management there. So because it's an integrated solution, we get rid of all of this ad hoc security and networking stuff that people are trying to manage on their own and build a very durable thing at the factory that you can then guarantee that you've got security in every install.
James Dice: [00:40:14] Right, right. Okay. How about, so I'm an analytics guy. I've been doing fault detection and monitoring-based commissioning for, I don't know, nine years now, something like that, quite a bit. And I actually just had Nick Gayeski from the KGS buildings on last episode, and so what in this new paradigm do all of the analytics nerds like me, what do we do with this new, this new technology?
Troy Harvey: [00:40:41] Well that's, I think, where it gets exciting. So if you have a building automation system that understands buildings and understand systems and equipments, and it understands them beyond the points, you know, that we tend to think in. So today you might have a Haystack point that you've manually or in some semi-automatic way added to, say, a pump. And now you're going to have an analytics point that shows pump going on and off. Well, what about all the other variables of the pump, right? That's the only variable you know of, but the pump is governed by, you know, two dozen different physics variables that are part of how that pump works. And those are not-, those are opaque to you. And so the first thing that's interesting about PassiveLogic's approach to this deep physics is all those variables are considered. So that that pump will have these variables exposed to the analytics user with different quality of data, you know, for each variable. So as an example, a pump flow can only be certain answers within the rest of the system's operation. And that becomes clear to the physics underneath that is managing how the system is working as a complete subsystem, even where you don't have a flow sensor.
Now, depending on how that system works, the quality of data may be 50% or maybe 90%. But as an analytics guy, having access to this much richer pool of data that is not just data, but really turned into information, right? Because it's all pre-labeled. All the physics know what they are. You can, you know, compute it and query it. And so for data analytics or data scientists, it also creates this new world of excitement where you will automatically get an order of magnitude deeper, richer data without effort because it just comes as a free side effect of the deep physics control.
James Dice: [00:42:46] Right. And I think that kind of mirrors my perspective on all of these. You know, you could say on one hand, a lot of the current building optimization jobs that we do, a lot of what we spend our time on right now, a lot of that with current technology and PassiveLogic's approach can be automated away. So on one hand you could say, well, what are we going to do? Are we going to lose our jobs? On the other hand, you could say we're actually going to enable more capabilities. We're going to enable better building performance and remove obstacles to what we're all trying to accomplish anyway. Right?
Troy Harvey: [00:43:23] Right. So I think there's two sides to that, though. The first is the question of labor and jobs. There's no doubt that autonomous vehicles are going to put out of work a lot of people. You know, the number one job in America is truck driver. And the technology is largely there to put those jobs out of work.
But we think the opposite is true here in buildings because it's about: how do we enable a broader audience of people to be doing automation while making the experts more expert? And so we actually see this will engage a labor pool that may be 10x bigger in another 10 years, where you have now technicians and electricians and HVAC installers now being able to do automation on a much broader market scale. At the same time, when we look at the experts, so much of our expertise, you know, frankly, is being squandered in just shuttling bits around, and tagging things manually, and doing just like-, why aren't we actually seeing how buildings are working? Because we're spending all of our time doing these low-level things.
So, you know, I think the outcome of that is something interesting. When you look at the cloud providers, and we're probably at a point right now that we're signing two to three cloud providers of services per week into the PassiveLogic cloud and app store infrastructure. And at first gloss, you might say, well gosh, you know, out of the box, PassiveLogic's analytics are providing much richer data that even with a lot of hard work, you won't get with a traditional analytics solution. Does that put them out of business? It's like, no. I think what it does is, you see these companies in whatever segment, whether it's fault detection or analytics or district management or energy audits, that what they'll be able to do is let go of the 80% of work that's just weighting them down and focus on the 20% of work where all their value is, which means they get to put five times more effort into the high value part of their business.
James Dice: [00:45:28] Great. I'm glad we're seeing the same things. I mean, there's always two different ways to tell the story. Cool.
So the other thing I wanted to key in on, on that whole story is that at least for the foreseeable future, there's always going to be, it seems like to me, two paradigms, right? There's buildings that installed a new building automation system yesterday that wasn't a deep digital twin, right? So there's going to be all of these buildings that have the old technology essentially. Even if it was installed yesterday, right? And so how do you guys approach buildings that have infrastructure that's not sort of ready to be replaced yet?
Troy Harvey: [00:46:09] Right. I think it's worthwhile going into the two proesses side by side, because-, and we'll just say at the beginning here, there's multiple ways you can use this, right? So our goal as a company is that you have this huge value chain of players, and some of those people are coming in at the beginning, whether that's an engineering firm or an integrator or an architect or engineer who just wants to make a high performance building that actually works, and they're going to drive new construction. It's like a pure PassiveLogic solution all throughout. And then there's people coming in at the end of the value chain, whether that's a cloud provider of services, who today, it's too much of a lift to get their projects through the CFO of a company, because that $250,000 integration is too high just to get to that thousand dollars a month SaaS fee. Or on the retrofit side, where you're an energy service company or an integrator doing a maintenance job, where you're saying, okay, we've got to retrofit and modernize this building.
And we work in either way. So in a retrofit scenario, you might just take out the head of those controls and then put in PassiveLogic and talk down to the existing BACnet stuff. Or analog and digital, you know, we're very agnostic to what level-. And going back to pneumatics, you're just gonna have to do some retrofit work. But we're pretty agnostic from analog, digital, through the different protocols of both the, you know, the common ones, like BACnet and Modbus, to the emerging ones in the IoT space, whether that's over the BLE mesh or over WiFi.
But what we're seeing that is interesting when you look at the difference, say you're going to do a retrofit, and you're like, okay, maybe you're going to leave the VAV controllers in, but you're going to put in some modern head controllers and put in some IT infrastructure. And now you have to program sequences for this thing, and now you have to, you know, go through a commissioning process and all these things. Well, that was just a lot easier to stick into PassiveLogic on top.
Let's talk about an even lighter-weight case. Say you're just an analytics company or an energy monitoring company. It seems lighter-weight at first to like put in some cloud middleware to aggregate through, you know, divert pipes of your IoT and sensor products that you maybe put in the building. Until you realize that you have to go and label everything, tag everything, put together a schema for it, and then get that schema, like adapted to your internal systems to describe that building and that scenario.
And what we're finding is these cloud providers are looking towards PassiveLogic as a lightweight install that removes what was a lot more software work, even though this hardware component requires something on site. Because at the end of the day, you're going to have to do a lot less work if you just draw what the building looks like, draw what the systems look like, and let it build its own internal digital twin that it can re-describe to your software.
James Dice: [00:49:20] Right, okay. Yeah, I'm seeing that. I didn't see that before. That's fascinating. So you guys could always install one of your controllers, start off deploying a deep digital twin, and then as certain systems on that old system get replaced, then you would just start replacing that with your stuff. Is that kind of how you see things rolling out?
Troy Harvey: [00:49:42] Yeah. I mean, I'll give you an example. Right now we have a strategic partnership with NVIDIA. And NVIDIA, they are, if people don't know, they're traditionally a graphics chip company, they make these GPUs. But that turned out to be the perfect platform for AI. So five years ago NVIDIA was a graphics card manufacturer, graphics chip manufacturer, and today they're probably, you could easily consider them one of the top five companies driving AI infrastructure.
Well, they get this idea that buildings are the next revolution. Because they've gone through it with vehicles and vehicles are now, they are the core component. They are the engine behind everybody's autonomous vehicle platform. And the CEO said recently, you know, when they called us, he said to one of the VPs that that was in charge of their building programs, why is it that I've got this vehicle here that all have to do is fill it up with gas and it'll drive itself to New York, but my $700 million brand new corporate headquarters can barely function, right? It's crazy.
So they called us and we've been talking to them about what a rollout would look like, and that includes a variety of buildings throughout the world. What is, in some cases, a deep retrofit of PassiveLogic all the way down to the VAV controller. On a new building, well, that doesn't make sense. You leave all that stuff in place and just replace the top end of the control system and talk to the existing BACnet infrastructure. And then on new construction, it's just new PassiveLogic throughout. And so I think you could think in all of those different models for, you know, what is the right approach, whether it's a progressive install or a deep install or, you know, kind of this mixed model where you'll lose a little bit. You'll lose the end point commissioning, you know, all the way to the bottom of the wire, but you won't lose the commissioning of the system as a whole. We'll still be able to interact with that.
James Dice: [00:51:40] Right. Okay, cool. Well, as we get towards the end of our hour here, I want to circle back on iPhones. But first I had circled on my notes here to ask you about small buildings. And so I mean I've heard you talk about it before in other places: small buildings are a very underserved automation market. Can you talk about how you're attacking that?
Troy Harvey: [00:52:02] Yeah, so I think what we've seen in previous attempts at this market was we already have too complex of a model for our big buildings. It takes a lot of expertise to drive, and they're not that good, right? That's the problem. That's why we're all struggling. And when you decide that you're going to keep that as a high value market and then come out with a small commercial product, it takes something that was not very capable or good in the first place that's too complex to use, and pull out the features, when you didn't make it any easier to use. And you just made it worse, right?
And I think as a marketplace, everybody feels these are just not compelling products. So we felt at PassiveLogic, our goal is not to just to go head-on with the Big Four, but to enable that small to midsize market, which by the way, for everybody, if you do go to talk to the customers, you talk to installers, you talk to the HVAC guys, it's not like the demand is not there. Everybody wants it. Everybody wants something in that space. The problem was it wasn't friendly enough to use or cost-effective enough to use.
So PassiveLogic first solved the democratization problem: enable the average HVAC installer to do this stuff. And then we built a business model that doesn't require you to go through three weeks of hoops before you figure out the price. We have a pricing scale model that like really enables a $1,500 install up to your $1.5 million install. And it really scales with the size of your building, the number of buildings, number of controllers.
And so, you know, our controllers, you can get a controller in a zone for around 1,500 bucks, and you can get a zone license. And do a small coffee shop. And that becomes more friendly and buyable and easier to install than even, you know, a thermostat and dome controlling type approach.
So I think it's technology that enables new business models.
James Dice: [00:54:01] Yeah. I mean as an energy engineer, we'd always run into clients with large portfolios of small buildings. And the economics were always difficult when, like you're saying, there was no compelling products to get to where there was a good enough payback, essentially.
Troy Harvey: [00:54:20] Right. I mean, going back to your iPhone, it's not like you got the engineer's iPhone, and then the blue collar worker got the blue collar iPhone, and the executive got the executive iPhone. Everybody gets the same iPhone, right? Like there's no 'we're gonna dumb it down for you.' That's the ridiculous notion in 2020. Everybody should get the same features. We all have the same energy efficiency needs, the same operational needs, no matter how big your building is.
James Dice: [00:54:47] Totally. I love that. Okay, so back on the iPhone, but the app store component. You took us through a little bit of your vision there and your partner ecosystem. Is the iPhone for buildings with the app store for buildings, is that an appropriate analogy for PassiveLogic?
Troy Harvey: [00:55:09] It is the appropriate analogy. And I think one thing that people should understand about that, other than the sort of top level thing, is honestly, it's far more compelling in our market than it ever was in the consumer market.
And we talked a little bit about that. Like if you take an app store from a 15 minute software install to a one second click, that's not as compelling as taking it from $100,000 integration cost to a one second clinic. That's a lot more compelling. right? But the thing that's missing, what I think often people don't realize, we can talk a little bit about the digital twin standard.
So when you have a physics-based controller, just the setup of that controller generates the digital twin inside that controller for its own operational purpose. Well, that digital twin description of your building has far more use cases than just our own controller. And one of those use cases becomes the cloud, or other applications whether it's cloud or mobile applications.
And what's been missing in this marketplace is there's been no platform for buildings, right? You can buy a JACE or similar types of things from different manufacturers, but it's more akin to a Linux kernel than it is to the iPhone iOS with these high-level APIs. So the first thing it enabled from this digital twin standard-, which by the way, we have an investment from the Department of Energy where we're working on making this an open standard. But it has multiple use cases.
Now, most people are here are probably familiar with things like Haystack and Brick. Haystack is tags. That means that a variable in a system has a name. Brick provides structure to those tags to say, well, these are how things are arranged in the system, the topology. But that's still only maybe 15% of the world that you need to describe what's going on in a building, right? You have the building, the construction, the floors and the zones, and both walls and assemblies, people walk around, and all these things, and that deep ontology, that deep variable space of all of the things that data scientists want. PassiveLogic enables a singular API that as an application or strategic partner, you can program to that API once, and then you will be able to walk that API consistently in the same way for every single building after.
And that's one of the things that's really been missing in buildings, is one way to describe buildings in a deep and rich way that describes everything that's going on there. And that enables first, the application market and the cloud services and the mobile market for prop tech and energy tech and construction tech. But it also enables some new opportunities in the marketplace, which is also part of what our DOE agreement is about, is how do you enable the future of grids? How do you enable the future of smart cities, where buildings as the biggest component of energy use, can start acting in a peer-to-peer way and talking back and forth with utilities, and being like, 'Hey, this is what my demand and supply will be over the next 12 hours.' And we can all guarantee what everybody is saying is accurate and nobody can end run the system. And that's going to be a really key component. You can't have smart cities, you can't have smart grids unless you have smart buildings that can act as agents on behalf of their owners and be able to communicate in a reliable and provable way. And so that's the more distant future, like, enablement of what physics-based digital twins can enable.
James Dice: [00:58:49] Great. Yeah. And several of my projects at NREL are working on these sorts of grid interactive type of projects. So, yeah, that's fascinating. That's awesome. So I have to ask you, and I don't know if you got the chance to listen to Episode One of the Nexus podcast, but I had Nicolas Waern on. And it sounds like you visited Nicolas in Sweden a couple of months back and maybe helped him move a couch.
Troy Harvey: [00:59:14] Yes, it's true. Yeah. He thought that was funny to get me moving a couch around, then he can take a picture, CEO of PassiveLogic with my couch.
James Dice: [00:59:25] Yeah. He made sure to tell me that you were really a nice guy. So I have to ask you about something he said on the podcast, and this is his model. And I hope I'm quoting him correctly. I'm sure he'll tell me if I'm not. But three stages of smart building technology, and this relates to these different types of platforms basically. So we have, his first level is old technology. So it's basically everything that we've been talking about, how it doesn't work. The second level is new-, in other words, what can you enable with new technology. And he's actually putting you guys in the second level. And I hope I'm not stirring up a bunch of stuff here. But he's basically saying that there's a third level, which would be more open than you guys are. So I think what he's saying is that when you guys are in a building, you have to use PassiveLogic hardware.
So can you sort of, for everyone, respond to his question?
Troy Harvey: [01:00:24] Yeah. I think that's an important question. And I think, you know, for guys like Nicolas who are saying, what's happening in the market and how do I reconcile it all? Here's the problem that I see. And we don't have to make this up. We can just look at history. So, you know, Linux is probably the one single thing that we can all point to as the most successful open-source project. And for over a decade, no, two decades now, there's been a joke in the industry about: this year will finally be the year of the Linux desktop.
And of course it's not, right? And it's not anywhere in sight in the future, and probably never will be. Because we've seen a bifurcation of where open source has become successful and where new technologies have developed what that future path looks like. And so open source has become successful in one domain, which is the tools that programmers use to build other tools, where the core value is. So we don't have to go reinvent the kernel again because, you know, we can just use Linux. You don't care at the end of the day if your iPhone runs off of Apple's Mach kernel or the Windows kernel or Linux kernel. It doesn't really affect you. It's a very low level piece in the year 2020.
So that tells you something about the open model. It is a lagging market of technology. It's where 10 to 20 years out the technologies settle out as being commodity. Right? That's where open source is. So what we're seeing, there's a bunch of people in the automation market saying, well, we need this open source operating system. Replace Tridium, we need an open source this and that.
At the end of the day, those ideas, because it takes a crap load of effort and work and investment to do the new things, they don't settle out into the open market until they're commodities. And so by nature, the innovations that will change our world will not be in the open source space.
You know, a very communitarian, maybe Swedish ideal of Nicolas's, but that's just the way it works, right? I can't raise, you know, tens of millions of dollars to then give away all the key pieces that made that valuable. But I can, then, decide, well, where are the places that we can collaborate that make it matter? And that, like the iPhone, is, you know, there's millions of applications. That's open for people to build their own applications on top of. There's the connectivity, WiFi and Bluetooth right on your phone. Well, we have BACnet, we have all these other things. That's what's important, to make sure that we have industry standards, so that then people can make these domains of innovation where you will just have things go orders of magnitude faster.
And it's not just in terms of where the money is coming from and how innovation happens, but it's once you get 10 people in the room and you start negotiating around what the look of BACnet should be, right? Like we've seen that alone takes decades, and that's not the place to innovate, right? The place to innovate is getting the group of people to come up with, you know, a commodity product.
So I think that we're going to see that all over. And we do see that. We see that in the IoT space, smart sensor space. Again, you're not going to have the coolest, newest sensors that are like an open platform. They're going to be, you know, the latest technology that people worked hard on. And that's just the history of technology. And that will be the future of technology.
James Dice: [01:04:04] Fair enough. Yeah, and the way I understand what you're saying is that this model helps things move faster for everyone, if I were to summarize it all up.
Troy Harvey: [01:04:15] Yeah. And PassiveLogic's not alone in that. There's a lot of people doing innovative stuff out there, and they will move orders of magnitude faster in the general market or the general market, you know, working together in working groups. And so we have to decide, where are the places that we want innovation and where are the places that we want cooperation?
And it turns out, I think, you can see in the consumer space, you can see in an art space that-, you know, Tridium today has probably been one of the more successful platforms, and it's sold in a more open way, but that doesn't make it open, right? Tridium is proprietary software. But that's pushed further than the general market of control, and PassiveLogic, we think, commoditizes it even further. And that's the democratization.
Linux today, 25 years in, nobody would claim is a democratizing force. In fact, only a few very expert people can even weild it. So I think that's often the misunderstanding of open source. Like we can make things open source and obscure and have fewer and fewer people use it, or we can go build things to everybody can use, and we can share amongst us programmers, the open source components that we think keep there from being industry overlap.
James Dice: [01:05:32] Got it. Okay, so tell me about your - as we wrap things up here - your launch. So what's the roadmap? When's the product going to be available? When will I see PassiveLogic in my next energy audit?
Troy Harvey: [01:05:46] So we've been in private beta for the last couple of years, and we've been building our go-to-market product. Our first products rolled off the factory lines just a month ago. We will be working with a network of partners to deliver to: first, some of our strategic partners later this year, and probably for your general audience, they'll probably be more like this time next year.
James Dice: [01:06:10] Got it. Cool. Alright, well, as we wrap up, is there anything else you wanted to say to the folks?
Troy Harvey: [01:06:17] No, I think this was a fun conversation and I'm happy at some point that we can maybe go deeper on one of these subjects. I know that you have some interests around the digital twins and how deep physics works, and we can get geekier on another episode.
James Dice: [01:06:34] I'd love to. Yeah. Well, signing off for now, I guess.
So thanks, Troy. Thanks for coming on the show. Appreciate it.
Troy Harvey: [01:06:40] Yeah, absolutely. Thanks for having me.
James Dice: [01:06:43] All right, friends. Thanks for listening to this episode of the Nexus podcast. For more episodes like this and to get the weekly Nexus newsletter, please subscribe at nexus.substack.com. You can find the show notes of this conversation there as well. As always, please reach out on LinkedIn with any thoughts on this episode.
I'd love to hear from you. Have a great day.
Happy Thursday!
Welcome to this week’s deep dive exclusively for Nexus Pro members. It’s an honor to have you here. Use the comments to introduce yourself and let us know what you thought of the episode and deep dive. Yes, I’m talking to you.
Announcement: on 5/26, we’ll have our first Nexus Pro member event. Click here for details and to submit your questions for Scott Hackel, our panelist. We’ll discuss the new ASHRAE Smart Grid Application Guide on integrating facilities with the grid. I’ll send out a calendar invite to all Pro members today.
This deep dive is a follow up to my recent conversation with Troy Harvey, CEO of Passive Logic, a startup I’m super excited about. I thoroughly enjoyed this conversation and want to share my takeaways and the full transcript with you below.
In case you missed it in your inbox, you can find the audio or video here:
Nexus site | Apple Podcasts | Spotify | YouTube | Add to other podcast apps
Enjoy!
Disclaimer: James is a researcher at the National Renewable Energy Laboratory (NREL). All opinions expressed via Nexus emails, podcasts, or the website belong solely to James. No resources from NREL are used to support Nexus. NREL does not endorse or support any aspect of Nexus.
This isn’t Troy and I’s first conversation. If you’re looking for an introduction to Passive Logic, here it is. In Nexus #14, I laid out the three keys to understanding why Passive Logic is disruptive:
This concept can be combined with Troy’s recent episodes on the Control Trends podcast to give you a great intro. Here’s a summary.
First, the #1 way Troy has changed my thinking is described in his blog post on the user experience of existing controls solutions:
While we’re seeing a constant stream of band-aid solutions that bolt-on to our automation stack with hopes of fixing this old “black box” foundation, this is probably going to be unsuccessful.
Adding this new functionality, limited by the weak foundation, requires laborious effort — thus we call it “integration” not “installation!” The combination of a weak foundation with a low technology ceiling, together with laborious effort requirements, is a core source of so much dissatisfaction in the marketplace.
This point is obvious when you stop and think about it: most smart building solutions are actually smart overlays over a dumb foundation. The dumbness of the foundation is making everything we’re trying to do more difficult than it should be. Passive Logic wants to replace the weak link: the building automation system as we know it.
Troy’s first episode with Control Trends covers the long time flaws in the old model of controls and why the foundation is so weak.
Troy’s second episode on the Control Trends podcast shows where Passive Logic is headed with how easy it is to set up a new building. It’s a plug and play panel that the installer doesn’t need to build from scratch. The software automatically detects wiring issues, understands when the physics are off, creates a 3D digital twin model from CAD, BIM, or a iPad scanner device, auto-generates the control system design, etc.
What do they want to replace it with? Deep and autonomous digital twins, of course.
Let’s unpack that:
What are deep digital twins? Put simply, the intelligence reaches down into every part of the system.
Functionally, they act as virtualized analogs of real-world objects, like zones, equipment, systems, and the physiological agents of human-comfort.
Because they are built on a physics-based ontology, these analogs aren’t just labeled, but actually understand what ‘kind’ of thing they are. The term ontology comes from the philosophical study of ‘being’, and is used by computer scientists to describe computing systems that can introspect.
Ontology is a framework that comprises the technological ‘nature of existence’ for an object in the world. The ontology, for example, provides a control system with the understanding of the fundamental physics of operation, how that operation interacts with the world around it, how its internal physics is organized, how the object interfaces with controls, the physical parameters of operation, and the meta-semantics of operation. The ‘meta-semantics’ of operation is the ontology translated into language or protocol.
What’s an autonomous digital twin? Picture a fully autonomous vehicle. Most smart building solutions today are analogous to a car’s cruise control. Some even resemble adaptive cruise control. That’s only level 1 out of 8 levels of an autonomous building as proposed by Passive Logic.
Troy’s first episode with Control Trends covers this in detail. What’s possible with current technology? They also covered their underlying deep digital twin technology. He explained depth and underlying physics - allows you to design for all building types.
And, if Troy is correct, this replacement foundation will replace and render many of today’s smart building services and solutions at least partially obsolete. We get into this in more detail in the episode below.
I almost didn’t post this episode because of the lower audio quality. Troy was joining the call from the mountains, and our connection wasn’t great. But once I re-listened to it, I decided I couldn’t hold it back. It’s more important to get it out there than acting like I know what I’m doing as a podcaster!
This discussion is a great follow up to Episode #1 with Nicolas. In that one, we talked about these two growing paradigms. Should we put a smart overlay on top of a dumb foundation? Or should we replace the dumb foundation all together? Many of my other guests on this podcast are in the former camp. The next three podcasts (Facilio, Cohesion IB, and BrainBox AI) are great examples of the overlay paradigm. Troy represents the latter camp: replace it from the ground up. And there aren’t many others in his camp!
I think we’ll continue to have these two camps for some time, so we might as well get used to them! However, Troy does give compelling points for why we can have both… with the overlays sitting on top of Passive Logic’s cloud platform.
What do you think?
Troy Harvey: [00:02:02] There's a guild mentality that has tended to keep technology back. This happens in computer programming all the time, right? You know, talk to your deep Linux dude who just loves like his most-, you know, the most awkward way to do things because it like produces a sense of specialness, right? Like if you know how to wield like four letter commands, that's like nobody else even understands what you're talking about. There's like a sense of preservation. This is part of it, but as time rolls on and people in that world have this iPhone experience in their personal lives, that starts to get less and less attractive to like maintain your guild as you have a personal life that feels more automated. We're automation guys, we should be automating our own world, and yet we're still doing it this is super low-level way.
But I think that there's two other bigger forces that are really the cause here. One is it's an effect of disruption, a cycle of disruption that is true in all technology that the big four players in this marketplace, they emerged in the 1800s, right? Like their big innovation was mercury switch thermostats. And that's like a lot of industries. Look at Tesla today versus the car companies. Those are hundred year old companies with a hundred year old mindset with a hundred year old trajectory. And they just got disrupted by some guy in Silicon Valley that everybody thought was crazy at first, and you know, maybe he is a little crazy, but the end result is like is they didn't see what was coming, and in the last few years, just literally two or three years, they've gotten to this point of existential crisis, right? They no longer know if they don't put together these technologies or license it or buy it from somewhere else that they will even be in business in a few years.
So I think that's a bigger arc that has left us to where we are today, and behind that is: why don't companies self-disrupt? And I think in this market, what's very interesting if you look at the Big Four is most of them operate technical services, commissioning, installation. They're competing with their customers, right? And in a way, those parts of their business, which turn out to be actually more profitable than their product sales, are preserving and want to preserve the complexity or product, otherwise it would discount their operations, right? And while if they thought differently, they would say, well, in five years I could make a much bigger market by democratizing this technology, and then there'd be 10 times more buildings using it. In the meantime, you would end up in a bind where you would be making less money in order to make more money. And that's a no-go if you're the CEO of one of these companies. So they're not in a position to self-disrupt.
James Dice: [00:07:09] Hmm. Yeah, that's fascinating. So the main four players in our industry are the ones that for a long time have created the technologies that our buildings are using. But what you're saying is their business models are also heavily dependent on the service side of things. And therefore-
Troy Harvey: [00:07:28] Yeah, if you look at revenue splits, the majority of the businesses actually make far more from their services side than they do from their hardware side. So we can go ahead and look at an analog. The clear analog in the tech industry is Novell. I don't know if people remember Novell, but in the eighties and early nineties, they were one of the biggest tech companies, just like IBM, Apple, Microsoft, Novell, and some, those were the five bigs.
And Novell invented what was like all of the networking infrastructure, and that was complicated in the 80s. And so what do you do? You started a services division and an education division, and training and certification. Boy, it sounds a lot like if you go to BMS today, right? And you would have to go through all these hoops before you can be a certified Novell installer. And Novell became so dependent on the services side that they didn't see the future. And so at the beginning of the 1990s there were bulletin boards all across America, you know, all along the highways: Get yourself Novell certified, right next to Microsoft certified. And by the end of the 1990s they were out of business effectively because laptops just had wifi and even had it built-in, right? And it just bypassed the whole thing.
James Dice: [00:08:46] Wow. So the guys that are basically building the BAS, they're dependent on it being a complicated thing that they then have to sell services to make it work, and therefore making it easy is directly contradictory to their current financial results.
Troy Harvey: [00:09:06] Right. And just talk to anybody who's an integrator or a distributor at this time of year. They're having to pay their big fees to those Big Four to keep those certifications up, and it's an expensive process. And you have to go through all these hoops, not before you can even install it, but before anybody would even give you a price for the product.
Imagine that with your iPhone. It's like, well, go through three weeks of iPhone training, and then we'll tell you what it costs. And only after that will we even like consider selling it to you, right?
James Dice: [00:17:29] Totally. Alright. So I want to talk about then, okay, what you've basically done is started with a blank sheet of paper. And then what I think you've done, based on the little I know so far, is you said, what's possible with the latest technology, right?
So, I have kind of three things in my mind. So it seems like you guys have been super innovative on hardware, software, and then what that enables is the autonomy piece. And so I'll let you take that in whatever order you'd like, but what can we do with this blank sheet of paper, basically?
Troy Harvey: [00:18:05] Right, so first you need to make an autonomous engine. You need to make an engine that understands the buildings, understands what they are, understands the thermodynamics of buildings, understands equipment, understands systems and subsystems and how they interact, and how we as people interact with the building. Because at the end of the day with architecture and buildings, that's the goal, right? The goal is to make people happier and comfortable and modulate around our needs.
So once you have that, that's cool. And there's a lot of geeky technology we could talk about; we can talk about deep physics and heterogeneous neural nets and some of these things that are these big innovations, not just in buildings that the PassiveLogic engineers built, but really in just the space and AI in general and like moving what is naive neural nets toward these very like sophisticated, generalized computing environments that can do physics, not just like, you know, train neurons, but as cool and geeky as all that is, it doesn't mean anything unless you translate it into something that the consumer cares about.
Which is-, back to your iPhone, you know, what I think about the iPhone is it's this software engine of all these components, wrapped in a candy shell of hardware, and that candy shell hardware becomes the way that you interact with it as device. And there's a lot of innovations there that we can build on top of. So like I said, there's a combination of things that we can just straight up steal from the current technology, and then things that we have to bring that are new for buildings.
And your iPhone, again, the iPhone 11, is an example of what's happening at mobile, happening at the edge. It is literally faster - I've benchmarked it; I've run our simulators - It is literally faster than my i9 laptop. That is an Amazon edge blade server in your pocket. And that change, that shift from cloud to the edge is going to be powering a whole wide range of up opportunities and applications in all sorts of industries over the next decade.
And so while a lot of people are still talking cloud, the pendulum has actually swung back to edge and so utilizing that power, that capability at the edge, it's not just CPUs. It's GPUs and what are called TPUs or neural processing units. So this is new types of silicon that enable very fast computing at the edge. So that's one component.
Another component that you steal is steal the modern user experience, right? So that experience you have on your iPad or iPhone, translating that to building automation, that is that layer between you and the AI. So you don't have to know that it's AI. You don't need to know that there's machine learning. You don't have to be a programmer at all. You just need a rich user experience that follows the workflow that you experience as an end user.
And then, you know, finally solving the core problems that you're driving in buildings, right? You need optimality, not only in trying to get a building up and going so people aren't yelling at you, but making that building work continuously, and then making it like tell you whether it's doing after the fact. And so that needs some new technology pieces. That needed, how do we take the autonomous vehicle technology and translate to buildings? One of the big differentiators that's really important to understand is what I would say is the input and output problem. Autonomous vehicles have a really big input problem. They have to solve machine vision in a very chaotic environment. And we in buildings don't have that, which is lucky for us. So that makes it very tangible and very viable right now with, you know, buildings are with PassiveLogics technology achieving level five autonomy now, where, you know, vehicles are, you know, experimentally in that space, but really delivering product around level three right now. And that's their big challenge.
But buildings, we have another problem. We have an output problem. And this is where these really diverge. So in the vehicle, if I'm Tesla or Aurora or Uber building an autonomous platform, everybody gets the same platform, right? The outputs are pretty simple. It's like turn left, turn right, stop, go faster, slower. Right? That's the same in California and Colorado and Japan and France, right? But in buildings, and this is the really crucial thing is-, buildings, every building is unique. Every building has a different architecture. Every building has a different system topology. It has some crazy intersection between, you know, air systems and hydronic systems and BRF systems, and you know, all these different components that we're trying to engage with. Energy system, lighting system, you know, ventilation system. So that needs something different. And it needs a system that can understand buildings as a whole, but it also needs a way to engage with the user to have you describe it. What does that building look like? So that it can build a custom autonomous system for you.
James Dice: [00:23:11] Totally. And that's where the concept of deep digital twin comes in.
Troy Harvey: [00:23:17] Yeah. Because you need a way for a user to describe their building so that then the system can control it based on that description. So you can think of it as, you know, control by contract as opposed to this idea that we use today with this procedural control. You know, if this do this, and if this do this. This is more of a contract that you're saying, this is the shape of things. Now do the best, most optimal thing at any given moment.
James Dice: [00:23:45] Right, right. So we're doing away with, you know, standard and static control sequences, and it's kind of just figuring it out as it goes. Is that how I understand it?
Troy Harvey: [00:23:57] Yeah. And I think one thing for people to get their head around is, first you have to look at a flaw in the procedural solution, so the sequence approach. So let's talk about the ways that people think about making today's systems more optimal. You come up with sequences, right? And these are your best ideas for what is the sequence of operations at the time that you're commissioning the system. Then you tweak and tune those sequences. You know, you adjust the parameters. Now this is a hard task in and of itself, and so there's a few different companies out there like, well, no, we'll tweak and tune those sequences for you with a little thin machine learning that will adjust it over time.
But even with that, you're never going to accomplish all the other things that are wrong with that approach. Starting with the sequences themselves, like there is no one sequence that governs the building for every and all time. That's a dynamic process. The right sequence is different at any given moment in the building's life. So the idea of starting with a static sequence and then saying, well, I'm going to optimize that with whatever technology on top, it's kind of not even half-baked, right? It's like partially baked. And then you're still leaving out this notion of, well, like there's all this optimization within the building that the system can't understand. Going back to that million dollar system, shocking again, that million dollar system with a thousand zones doesn't understand how two zones in that building even interact. And so you have to know all of these things in order to coordinate the control of that, that whole building control all at once.
Following up from Nexus #14 on making the status quo obsolete, we did a deeper dive on how Passive Logic is removing obstacles and enabling better building performance. As I said in the episode, the approach Troy is describing replaces a lot of what we’re currently spending all our time on. We can then use that extra time to do more important stuff.
James Dice: [00:23:36] So let's start with energy modeling. So it sounds like you started as an energy modeler. Early in my career, I started as an energy modeler where you spend, you know, weeks building this 3D model of the building. You press go basically, and you'd wait up to an hour for it to run all these different runs of the model. And then at the end, it wouldn't be anywhere near the utility bills. It wouldn't be anywhere near reality. And then you'd basically start all over again. So, what is the new version of that with this new paradigm?
Troy Harvey: [00:24:56] Yeah. So the new version of that-, and, I loved that process that you just described because that's how the world works if you're an energy modeler. And it takes a lot of expertise to drive, right? Because it's all offline, and so it's all like your expertise to try to get that model to maintain accuracy. But it turns out if you put that model right into the control system and you make the model simple to install, so you're not, you're not spending a lot of detail effort on getting all of the parameters of that model perfect. You just ask people for high-level stuff like, what does the floor plan look like? Then you plug that model right into the building and all the sensors. You basically are regressing that model right in place, right in the building, right at the edge.
And that model is not only forming the basis of how you make your control decisions, but it can also inform us about our energy impact and energy engineering on a building. So we're actually in conversation with a couple of ESCOs where we're discussing, you know, adding a couple of features to PassiveLogic that would enable them to just basically plug in passive logic in a non-controlled mode, have it regress the building, and they come back in a month and they not only have a regressed, accurate model of the building but then the automatic deltas of, if I had controlled this, this is what the energy savings would have been. That gives you performance guarantees that you can put into contracts. So that sort of changes the paradigm there about how do we use it as an engineering tool.
This is where Troy shared his screen…
Troy Harvey: [00:29:05] So once you have a platform that understands buildings, it becomes really important to translate that in terms of our experience, as the guys that are doing the work on the ground, because in the end, that's really the customer here, right? It's not the building owner; it's not the occupant; it's the guy that's going to buy the product and install this and make it go.
So when we took that into consideration of, how does that process work, right? Well, we go through a design build approach, and we need to be able to connect the dots between what is the intent of the building and was it installed correctly. So first it's pointing a screen right on that controller and making it all software-defined IO. So that IO can then check that all of your wiring is done correctly. And that it meets the definition of the components you connected to it. So if you're connected to a thermistor or a pump or a chiller plant, that it's able to engage with those things as you drew them and make sure that it's working as a system, as it was designed.
And so changing that workflow. And we can get in a moment into that workflow, but I'll just kind of go through a sequence of what we see here as the value here is you brought in that single-edge solution that's replacing a catalog of parts, right? Now you can have one controller that's doing all the jobs. It's giving you that realtime step-by-step install. It's giving the self guided wiring, where it's testing out wiring and leaving in place for the rest of us an autonomous control platform. So that's our view of the marketplace: satisfy the installer, leave in place the autonomous platform that the rest of us can plug in services to. From their point of view, it's a matter of like, how do we pre-integrate these different components into one package that today, you know, we, we call ourselves integrators and that's because that's where all the work is.
Back to your iPhone, one of the things that's really interesting, there's a lot of things you could say about how the iPhone changed the marketplace, but a simple one is to say it was just pre-integrated, right? You no longer had to put together your computer and put together the software to get it up and going. You just literally buy it and it just works. Right? And that's how building automation should be. And so that's what we focused on here, putting everything that you need into one control.
But then more importantly, what does this new platform enable? Control autopilot, universal protocol translation, automated point mapping, automated commissioning. Human comfort based control, right? Not just air temperature control. And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
And then you make that a scalable model, right? So it's a question of, do you have one controller or three or five or ten or a hundred or five hundred? And that's how PassiveLogic works, is they're all software defined boxes. There's no one, quote unquote JACE or one master. They all can master. They all carry a copy of the database, and they all work together to solve the overall building's problem.
So that's from a point of view of the hardware line. How do you make the hardware actually act the way we work? But then how do you make the workflow represent what we need as an industry to not just automate, you know, automation, which is one goal, but to automate this workflow that we all have, and so you start with that control by definition, with this platform that gives you this ability to make your own custom autonomous platform for your building. And then instead of this programming we're doing today, we're replacing that with drawings, where you're going to have to make the drawings anyway to tell the guys what they're doing out in the field. So we've gotten a two-for-one, and we're doing it instead of weeks, minutes, maybe hours, maybe a day at most. Right? But you have this 90% savings and time right up front. Once you've done the drawing of the building and the systems, it actually says, well, I know how to design a control system for you, would you like me to do that? And it will design its own control system, point map it all, and then gives you this what-you-see-is-what-you-get, you know, wiring interface that gives you the live interaction. And again, this is replacing what has been, you know, a lot of days or weeks of system design, IT, and then going out to the marketplace , working with those, those end point distributors, like how do I acquire all this stuff.
Troy Harvey: The next piece is working with the utility companies to actually connect up to the incentive marketplace. Once you have a description of your building and your systems, well, it can connect you up to that incentive marketplace, where utilities today are feeling like people aren't making use of the incentives that are there. And this is unfortunate; that's their whole job is to incentivize.
Troy Harvey: Um, that guided wiring and automatic commissioning, again, it's another point of savings. Right now we're spending a lot of time and doing manual commissioning, and it's very error prone. One guy can switch two wires, and you know, you're going to have a problem that may take an hour, may take a day, maybe take years to figure out where that wire went wrong in the whole building. So guiding that whole process, again, saving us from those headaches. And we're always the last guys out of the building, so everything's going to be blamed on us whether or not it's our fault, but you know, in the end it is a little bit of our fault because our tools just aren't capable of doing what the users expect.
Troy Harvey: So basically all of PassiveLogic's controllers have their own networking. We're all IP-based networking. It can either go wired or wireless or both. And so our high controllers, they have four ethernet jacks in the back, and this is all spanning tree networking, meaning that you can do daisy chains, you can do full loops, you can do whatever kind of crazy topology you want, and it will figure it out.
And so in part of that all-in-one experience, it's not just about like, how do you make this automation process better, but the IT process, if we're going to democratize this to a broader audience, we need this to-, you just hook everything together and it will work out the details. That has a few interesting side effects, which is first, it controls its own private network. So you're no longer intermixing with the building's IT infrastructure, which means you have a more secure infrastructure by default. It also means that it becomes its own private umbrella for all of these IoT and smart sensor devices that are right now sometimes struggling to get into a building's network and get past the IT department.
We not only enable a marketplace for those IoT devices to get into the building's design, because you've got this whole tool pallet of all the different sensors you can drag and drop, and then it connects you up with the providers of those. But then it's also going to umbrella those to whatever way that they speak, providing an actionable interface, which is really important. Because most of these IoT devices, as cool as a lot of them are, they reach up to their own private cloud. And at that point, once you go up to the cloud and then your controller wants to maybe scrape that cloud and bring it back down, it no longer is actionable because you may not be able to count on the connectivity always being there to make real time decisions.
So the fact that it's in-building, under the umbrella of PassiveLogic, PassiveLogic is making that actionable right in place, and then piping that up as a cohesive cloud connection to the PassiveLogic cloud for, you know, everything that's going on in your building, all your devices, all your sensors, and with a known API.
But then from a security point of view, when you install PassiveLogic beyond its private network, it then, at whatever point you bridge it out to the outside world, it talks one way. It goes and establishes a prearranged key with the PassiveLogic cloud and talks up. It doesn't establish it down, so it can't, you can't hack into it in reverse. It has to say, hey, PassiveLogic cloud, I've got my special key, you know who I am. And it connects that private VPN to the cloud, at which point that you can then do you know all your portfolio management there. So because it's an integrated solution, we get rid of all of this ad hoc security and networking stuff that people are trying to manage on their own and build a very durable thing at the factory that you can then guarantee that you've got security in every install.
Troy Harvey: And then, you know, this automatic analysis that comes out of it, not just the what of regular analytics, but the analysis, right? Like telling you what happened and why it happened and what was the lineup of things. And then ending up with, you know, with a single click, you know, you can add it to an optional cloud where you can see all your buildings in a portfolio and be able to navigate and manage, like all your different issues and do across-portfolio insights and so forth.
James Dice: [00:40:14] Right, right. Okay. How about, so I'm an analytics guy. I've been doing fault detection and monitoring-based commissioning for, I don't know, nine years now, something like that, quite a bit. And I actually just had Nick Gayeski from the KGS buildings on last episode, and so what in this new paradigm do all of the analytics nerds like me, what do we do with this new, this new technology?
Troy Harvey: [00:40:41] Well that's, I think, where it gets exciting. So if you have a building automation system that understands buildings and understand systems and equipments, and it understands them beyond the points, you know, that we tend to think in. So today you might have a Haystack point that you've manually or in some semi-automatic way added to, say, a pump. And now you're going to have an analytics point that shows pump going on and off. Well, what about all the other variables of the pump, right? That's the only variable you know of, but the pump is governed by, you know, two dozen different physics variables that are part of how that pump works. And those are not-, those are opaque to you. And so the first thing that's interesting about PassiveLogic's approach to this deep physics is all those variables are considered. So that that pump will have these variables exposed to the analytics user with different quality of data, you know, for each variable. So as an example, a pump flow can only be certain answers within the rest of the system's operation. And that becomes clear to the physics underneath that is managing how the system is working as a complete subsystem, even where you don't have a flow sensor.
Now, depending on how that system works, the quality of data may be 50% or maybe 90%. But as an analytics guy, having access to this much richer pool of data that is not just data, but really turned into information, right? Because it's all pre-labeled. All the physics know what they are. You can, you know, compute it and query it. And so for data analytics or data scientists, it also creates this new world of excitement where you will automatically get an order of magnitude deeper, richer data without effort because it just comes as a free side effect of the deep physics control.
Troy Harvey: And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
Troy Harvey: When we talk about the digital twins and digital twin interface, one of the things it enables is all of these cloud providers of services to then connect the buildings in a one-click way, just like you experienced with your iPhone. And today that is a minimum $50,000 integration cost just to the simplest analytics app, or even the simplest, just like, you know, warmer-colder comfort app. Getting the control autopilot and then providing that human comfort-based control. So at the core of it, because it's physics-based, we're controlling not around just air temperature. We're actually controlling around comfort. And that can be human comfort, the building's comfort, you know, the building science of the building, can be a process control comfort. You know, maybe you have a carbon fiber layup line that has to have certain comfort dimensions of the carbon fiber in terms of, you know, the temperature and humidity in these boundaries.
Troy Harvey: But it also enables some new opportunities in the marketplace, which is also part of what our DOE agreement is about, is how do you enable the future of grids? How do you enable the future of smart cities, where buildings as the biggest component of energy use, can start acting in a peer-to-peer way and talking back and forth with utilities, and being like, 'Hey, this is what my demand and supply will be over the next 12 hours.' And we can all guarantee what everybody is saying is accurate and nobody can end run the system. And that's going to be a really key component. You can't have smart cities, you can't have smart grids unless you have smart buildings that can act as agents on behalf of their owners and be able to communicate in a reliable and provable way. And so that's the more distant future, like, enablement of what physics-based digital twins can enable.
James Dice: [00:42:46] Right. And I think that kind of mirrors my perspective on all of these. You know, you could say on one hand, a lot of the current building optimization jobs that we do, a lot of what we spend our time on right now, a lot of that with current technology and PassiveLogic's approach can be automated away. So on one hand you could say, well, what are we going to do? Are we going to lose our jobs? On the other hand, you could say we're actually going to enable more capabilities. We're going to enable better building performance and remove obstacles to what we're all trying to accomplish anyway. Right?
Troy Harvey: [00:43:23] Right. So I think there's two sides to that, though. The first is the question of labor and jobs. There's no doubt that autonomous vehicles are going to put out of work a lot of people. You know, the number one job in America is truck driver. And the technology is largely there to put those jobs out of work.
But we think the opposite is true here in buildings because it's about: how do we enable a broader audience of people to be doing automation while making the experts more expert? And so we actually see this will engage a labor pool that may be 10x bigger in another 10 years, where you have now technicians and electricians and HVAC installers now being able to do automation on a much broader market scale. At the same time, when we look at the experts, so much of our expertise, you know, frankly, is being squandered in just shuttling bits around, and tagging things manually, and doing just like-, why aren't we actually seeing how buildings are working? Because we're spending all of our time doing these low-level things.
So, you know, I think the outcome of that is something interesting. When you look at the cloud providers, and we're probably at a point right now that we're signing two to three cloud providers of services per week into the PassiveLogic cloud and app store infrastructure. And at first gloss, you might say, well gosh, you know, out of the box, PassiveLogic's analytics are providing much richer data that even with a lot of hard work, you won't get with a traditional analytics solution. Does that put them out of business? It's like, no. I think what it does is, you see these companies in whatever segment, whether it's fault detection or analytics or district management or energy audits, that what they'll be able to do is let go of the 80% of work that's just weighting them down and focus on the 20% of work where all their value is, which means they get to put five times more effort into the high value part of their business.
James Dice: [00:45:28] Great. I'm glad we're seeing the same things. I mean, there's always two different ways to tell the story. Cool.
James Dice: [00:45:28] So the other thing I wanted to key in on, on that whole story is that at least for the foreseeable future, there's always going to be, it seems like to me, two paradigms, right? There's buildings that installed a new building automation system yesterday that wasn't a deep digital twin, right? So there's going to be all of these buildings that have the old technology essentially. Even if it was installed yesterday, right? And so how do you guys approach buildings that have infrastructure that's not sort of ready to be replaced yet?
Troy Harvey: [00:46:09] Right. I think it's worthwhile going into the two proesses side by side, because-, and we'll just say at the beginning here, there's multiple ways you can use this, right? So our goal as a company is that you have this huge value chain of players, and some of those people are coming in at the beginning, whether that's an engineering firm or an integrator or an architect or engineer who just wants to make a high performance building that actually works, and they're going to drive new construction. It's like a pure PassiveLogic solution all throughout. And then there's people coming in at the end of the value chain, whether that's a cloud provider of services, who today, it's too much of a lift to get their projects through the CFO of a company, because that $250,000 integration is too high just to get to that thousand dollars a month SaaS fee. Or on the retrofit side, where you're an energy service company or an integrator doing a maintenance job, where you're saying, okay, we've got to retrofit and modernize this building.
And we work in either way. So in a retrofit scenario, you might just take out the head of those controls and then put in PassiveLogic and talk down to the existing BACnet stuff. Or analog and digital, you know, we're very agnostic to what level-. And going back to pneumatics, you're just gonna have to do some retrofit work. But we're pretty agnostic from analog, digital, through the different protocols of both the, you know, the common ones, like BACnet and Modbus, to the emerging ones in the IoT space, whether that's over the BLE mesh or over WiFi.
But what we're seeing that is interesting when you look at the difference, say you're going to do a retrofit, and you're like, okay, maybe you're going to leave the VAV controllers in, but you're going to put in some modern head controllers and put in some IT infrastructure. And now you have to program sequences for this thing, and now you have to, you know, go through a commissioning process and all these things. Well, that was just a lot easier to stick into PassiveLogic on top.
Let's talk about an even lighter-weight case. Say you're just an analytics company or an energy monitoring company. It seems lighter-weight at first to like put in some cloud middleware to aggregate through, you know, divert pipes of your IoT and sensor products that you maybe put in the building. Until you realize that you have to go and label everything, tag everything, put together a schema for it, and then get that schema, like adapted to your internal systems to describe that building and that scenario.
And what we're finding is these cloud providers are looking towards PassiveLogic as a lightweight install that removes what was a lot more software work, even though this hardware component requires something on site. Because at the end of the day, you're going to have to do a lot less work if you just draw what the building looks like, draw what the systems look like, and let it build its own internal digital twin that it can re-describe to your software.
James Dice: [00:49:20] Right, okay. Yeah, I'm seeing that. I didn't see that before. That's fascinating. So you guys could always install one of your controllers, start off deploying a deep digital twin, and then as certain systems on that old system get replaced, then you would just start replacing that with your stuff. Is that kind of how you see things rolling out?
Troy Harvey: [00:49:42] Yeah. I mean, I'll give you an example. Right now we have a strategic partnership with NVIDIA. And NVIDIA, they are, if people don't know, they're traditionally a graphics chip company, they make these GPUs. But that turned out to be the perfect platform for AI. So five years ago NVIDIA was a graphics card manufacturer, graphics chip manufacturer, and today they're probably, you could easily consider them one of the top five companies driving AI infrastructure.
Well, they get this idea that buildings are the next revolution. Because they've gone through it with vehicles and vehicles are now, they are the core component. They are the engine behind everybody's autonomous vehicle platform. And the CEO said recently, you know, when they called us, he said to one of the VPs that that was in charge of their building programs, why is it that I've got this vehicle here that all have to do is fill it up with gas and it'll drive itself to New York, but my $700 million brand new corporate headquarters can barely function, right? It's crazy.
So they called us and we've been talking to them about what a rollout would look like, and that includes a variety of buildings throughout the world. What is, in some cases, a deep retrofit of PassiveLogic all the way down to the VAV controller. On a new building, well, that doesn't make sense. You leave all that stuff in place and just replace the top end of the control system and talk to the existing BACnet infrastructure. And then on new construction, it's just new PassiveLogic throughout. And so I think you could think in all of those different models for, you know, what is the right approach, whether it's a progressive install or a deep install or, you know, kind of this mixed model where you'll lose a little bit. You'll lose the end point commissioning, you know, all the way to the bottom of the wire, but you won't lose the commissioning of the system as a whole. We'll still be able to interact with that.
James Dice: [00:51:40] Right. Okay, cool. Well, as we get towards the end of our hour here, I want to circle back on iPhones. But first I had circled on my notes here to ask you about small buildings. And so I mean I've heard you talk about it before in other places: small buildings are a very underserved automation market. Can you talk about how you're attacking that?
Troy Harvey: [00:52:02] Yeah, so I think what we've seen in previous attempts at this market was we already have too complex of a model for our big buildings. It takes a lot of expertise to drive, and they're not that good, right? That's the problem. That's why we're all struggling. And when you decide that you're going to keep that as a high value market and then come out with a small commercial product, it takes something that was not very capable or good in the first place that's too complex to use, and pull out the features, when you didn't make it any easier to use. And you just made it worse, right?
And I think as a marketplace, everybody feels these are just not compelling products. So we felt at PassiveLogic, our goal is not to just to go head-on with the Big Four, but to enable that small to midsize market, which by the way, for everybody, if you do go to talk to the customers, you talk to installers, you talk to the HVAC guys, it's not like the demand is not there. Everybody wants it. Everybody wants something in that space. The problem was it wasn't friendly enough to use or cost-effective enough to use.
So PassiveLogic first solved the democratization problem: enable the average HVAC installer to do this stuff. And then we built a business model that doesn't require you to go through three weeks of hoops before you figure out the price. We have a pricing scale model that like really enables a $1,500 install up to your $1.5 million install. And it really scales with the size of your building, the number of buildings, number of controllers.
And so, you know, our controllers, you can get a controller in a zone for around 1,500 bucks, and you can get a zone license. And do a small coffee shop. And that becomes more friendly and buyable and easier to install than even, you know, a thermostat and dome controlling type approach.
So I think it's technology that enables new business models.
James Dice: [00:54:01] Yeah. I mean as an energy engineer, we'd always run into clients with large portfolios of small buildings. And the economics were always difficult when, like you're saying, there was no compelling products to get to where there was a good enough payback, essentially.
Troy Harvey: [00:54:20] Right. I mean, going back to your iPhone, it's not like you got the engineer's iPhone, and then the blue collar worker got the blue collar iPhone, and the executive got the executive iPhone. Everybody gets the same iPhone, right? Like there's no 'we're gonna dumb it down for you.' That's the ridiculous notion in 2020. Everybody should get the same features. We all have the same energy efficiency needs, the same operational needs, no matter how big your building is.
James Dice: [00:54:47] Totally. I love that. Okay, so back on the iPhone, but the app store component. You took us through a little bit of your vision there and your partner ecosystem. Is the iPhone for buildings with the app store for buildings, is that an appropriate analogy for PassiveLogic?
Troy Harvey: [00:55:09] It is the appropriate analogy. And I think one thing that people should understand about that, other than the sort of top level thing, is honestly, it's far more compelling in our market than it ever was in the consumer market.
And we talked a little bit about that. Like if you take an app store from a 15 minute software install to a one second click, that's not as compelling as taking it from $100,000 integration cost to a one second clinic. That's a lot more compelling. right? But the thing that's missing, what I think often people don't realize, we can talk a little bit about the digital twin standard.
So when you have a physics-based controller, just the setup of that controller generates the digital twin inside that controller for its own operational purpose. Well, that digital twin description of your building has far more use cases than just our own controller. And one of those use cases becomes the cloud, or other applications whether it's cloud or mobile applications.
And what's been missing in this marketplace is there's been no platform for buildings, right? You can buy a JACE or similar types of things from different manufacturers, but it's more akin to a Linux kernel than it is to the iPhone iOS with these high-level APIs. So the first thing it enabled from this digital twin standard-, which by the way, we have an investment from the Department of Energy where we're working on making this an open standard. But it has multiple use cases.
Now, most people are here are probably familiar with things like Haystack and Brick. Haystack is tags. That means that a variable in a system has a name. Brick provides structure to those tags to say, well, these are how things are arranged in the system, the topology. But that's still only maybe 15% of the world that you need to describe what's going on in a building, right? You have the building, the construction, the floors and the zones, and both walls and assemblies, people walk around, and all these things, and that deep ontology, that deep variable space of all of the things that data scientists want. PassiveLogic enables a singular API that as an application or strategic partner, you can program to that API once, and then you will be able to walk that API consistently in the same way for every single building after.
And that's one of the things that's really been missing in buildings, is one way to describe buildings in a deep and rich way that describes everything that's going on there. And that enables first, the application market and the cloud services and the mobile market for prop tech and energy tech and construction tech.
What did you think about these highlights? Let us know in the comments.
Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!
James Dice: [00:00:00] Hello, friends. Welcome to Nexus, a smart buildings technology podcast for smart humans. I'm your host, James Dice. If we haven't met before, I write a weekly newsletter on the same topic. It's also called Nexus. Each week I share what I've learned, my opinions, and what I'm excited about in the quickly evolving world of intelligent buildings. Readers have called Nexus the best way to stay up to date on the future of this industry without all the marketing fluff. You can check it out and subscribe at nexus.substack.com or click the link in the show notes.
Since starting the Nexus newsletter, many of you have reached out to me wanting to talk shop, and we have. After a few weeks of those wonderful conversations, I realized I needed to record and share them with our growing community. So here we are. The Nexus podcast is born. This is our chance to explore and learn with the brightest in our industry together.
One more quick note before we get to this week's episode. I'm a researcher at the National Renewable Energy Laboratory, otherwise known as NREL. All opinions expressed on this podcast belong solely to me or the guest. No resources from NREL are used to support Nexus, and NREL does not endorse or support any aspect of Nexus.
Let's dive in, then. Episode 5 is a conversation with Troy Harvey, CEO of autonomous building startup PassiveLogic. Troy taught me a ton this episode. We talk about how the hell we got here, to this point where building technology is 20 to 30 years behind the tech we're carrying around in our pockets.
We talk about the limitations of modern building automation systems and what it means for a building to be fully autonomous, why that's needed, and how PassiveLogic is doing it. We talk about what full autonomy means for all the service providers in our industry. Oh, and digital twins, deep digital twins.
This episode of the podcast is directly funded by listeners like you who have joined the Nexus Pro membership community. You can find info on how to join and support the podcast at nexus.substack.com. You'll also find the show notes, which has links to PassiveLogic's, website and Troy's LinkedIn page.
Finally, just a heads up that our Zoom call had some minor connection issues, so please do forgive us on the one or two words that are hard to make out. Without further ado, please enjoy Nexus podcast, Episode 5 with Troy Harvey.
Alright. Hello, Troy. Thanks for coming on the show.
Troy Harvey: [00:02:34] Well, thanks, James, for having me.
James Dice: [00:02:36] Yeah. Could you go ahead and introduce yourself and your company to us?
Troy Harvey: [00:02:40] Yeah, so I am the CEO of PassiveLogic. And PassiveLogic is the first fully autonomous platform for buildings in this building market. So we're in large part doing what-, when you take what you think of an autonomous vehicle, and you think about the brain in the autonomous vehicle that knows how to drive, you take the brain out of the vehicle and teach it about buildings instead of driving, and have that autonomous platform enable us to manage and automate, as well as, you know, this whole life cycle of the things that we do in buildings, both getting them up and going in the first place, operating them, and managing them after that.
James Dice: [00:03:19] Great, great. Yeah, and I definitely want to dive into some more details. I thought I'd start with a story a little bit, so I'm what you would call, as far as my personal technology, a late adopter. So up until Sunday I had an iPhone 6, and I just got a new, I just got a new iPhone. I went ahead and got the newest one, iPhone 11. And the process for setting it up was a crazy jump in technology for me. So the process was basically turn on the new iPhone, set it next to the old iPhone, and then wait 10 minutes, and literally everything was set up. Every app was downloaded. Every login was set up, all the settings were done. And what I've been thinking about since then was how crazy things have evolved on the personal side of our lives, when it comes to technology, and then how far behind that buildings are.
So I was wondering your perspective on how we got here, to this point where building technology is 20 to 30 years behind the stuff we're carrying around in our phones.
Troy Harvey: [00:04:26] I think there's multiple factors, and , it's a really interesting thing to bring up the iPhone experience because, you know, just to sort of remind everybody, this is only 10 years old, and in the first four years of iPhone we out-sold, or Apple out-sold, all 40 years of personal computing. So why is that? You know, Windows and Macs at the end of the 90s, they seemed, you know, pretty easy to use, where we'd have installed cards in the back or where we're having to put things together. But there was this level of integration that happened with, just starting with the iPhone that you could just buy it, like you said. You buy it, you pull it out of a box, and it's just ready to go. Like everything you need is right there. So that's now this personal experience that we've all consumed.
And one thing that's interesting, and I think this is important, we'll talk about a part of technology culture that is being somewhat dispensed with, that the buildings still belong to, which is the thing about the iPhone that's fascinating, or an iPad, is that both you as an expert user can use it expertly, and you can see a two year old interact with an iPad at the same time. Right? And so this is a really interesting phenomenon. And how do we make everybody more expert at whatever level they are at? And we call that progressive disclosure, right? So the iPad or the iPhone, you know, you can simply start swiping around and click on icons instantaneously without anybody giving you the instructions. At the same time, as you get into more sophisticated application, you build up your expertise within it.
So in these commercial industrial worlds like building automation, we're pre- this revolution. Frankly, we're pre- the desktop revolution, as a person who was a successful entrepreneur in the building prop tech space said to me after he graduated with this computer science degree, he like goes into this first building and like goes in the basement, you know, in the back closet where all this gnarly stuff is sitting. He's like, oh my gosh. It's like, it's basically a 1970s mainframe running this building. Right? And it just blew his mind.
And, and so part of that is, is several forces. There's a guild mentality that has tended to keep technology back. This happens in computer programming all the time, right? You know, talk to your deep Linux dude who just loves like his most-, you know, the most awkward way to do things because it like produces a sense of specialness, right? Like if you know how to wield like four letter commands, that's like nobody else even understands what you're talking about. There's like a sense of preservation. This is part of it, but as time rolls on and people in that world have this iPhone experience in their personal lives, that starts to get less and less attractive to like maintain your guild as you have a personal life that feels more automated. We're automation guys, we should be automating our own world, and yet we're still doing it this is super low-level way.
But I think that there's two other bigger forces that are really the cause here. One is it's an effect of disruption, a cycle of disruption that is true in all technology that the big four players in this marketplace, they emerged in the 1800s, right? Like their big innovation was mercury switch thermostats. And that's like a lot of industries. Look at Tesla today versus the car companies. Those are hundred year old companies with a hundred year old mindset with a hundred year old trajectory. And they just got disrupted by some guy in Silicon Valley that everybody thought was crazy at first, and you know, maybe he is a little crazy, but the end result is like is they didn't see what was coming, and in the last few years, just literally two or three years, they've gotten to this point of existential crisis, right? They no longer know if they don't put together these technologies or license it or buy it from somewhere else that they will even be in business in a few years.
So I think that's a bigger arc that has left us to where we are today, and behind that is: why don't companies self-disrupt? And I think in this market, what's very interesting if you look at the Big Four is most of them operate technical services, commissioning, installation. They're competing with their customers, right? And in a way, those parts of their business, which turn out to be actually more profitable than their product sales, are preserving and want to preserve the complexity of their product, otherwise it would discount their operations, right? And while if they thought differently, they would say, well, in five years I could make a much bigger market by democratizing this technology, and then there'd be 10 times more buildings using it. In the meantime, you would end up in a bind where you would be making less money in order to make more money. And that's a no-go if you're the CEO of one of these companies. So they're not in a position to self-disrupt.
James Dice: [00:09:29] Hmm. Yeah, that's fascinating. So the main four players in our industry are the ones that for a long time have created the technologies that our buildings are using. But what you're saying is their business models are also heavily dependent on the service side of things. And therefore-
Troy Harvey: [00:09:48] Yeah, if you look at revenue splits, the majority of the businesses actually make far more from their services side than they do from their hardware side. So we can go ahead and look at an analog. The clear analog in the tech industry is Novell. I don't know if people remember Novell, but in the eighties and early nineties, they were one of the biggest tech companies, just like IBM, Apple, Microsoft, Novell, and Sun, those were the five bigs.
And Novell invented what was like all of the networking infrastructure, and that was complicated in the 80s. And so what do you do? You started a services division and an education division, and training and certification. Boy, it sounds a lot like if you go to BMS today, right? And you would have to go through all these hoops before you can be a certified Novell installer. And Novell became so dependent on the services side that they didn't see the future. And so at the beginning of the 1990s there were bulletin boards all across America, you know, all along the highways: Get yourself Novell certified, right next to Microsoft certified. And by the end of the 1990s they were out of business effectively because laptops just had wifi and even had it built-in, right? And it just bypassed the whole thing.
James Dice: [00:11:06] Wow. So the guys that are basically building the BAS, they're dependent on it being a complicated thing that they then have to sell services to make it work, and therefore making it easy is directly contradictory to their current financial results.
Troy Harvey: [00:11:24] Right. And just talk to anybody who's an integrator or a distributor at this time of year. They're having to pay their big fees to those Big Four to keep those certifications up, and it's an expensive process. And you have to go through all these hoops, not before you can even install it, but before anybody would even give you a price for the product.
Imagine that with your iPhone. It's like, well, go through three weeks of iPhone training, and then we'll tell you what it costs. And only after that will we even like consider selling it to you, right?
James Dice: [00:11:57] Wow.
Troy Harvey: [00:11:57] Go democratize that market. Right?
James Dice: [00:12:00] Yeah. Yeah, totally. Okay. Well thank you for that history that is enlightening.
So I want to kind of shift towards what you guys have done and what you guys are doing. So when I wrote my last newsletter on PassiveLogic, I said you guys are thinking zero to one. And what I meant by that is that you're just like starting-, you're erasing that whole process that we just talked about and basically starting with a blank sheet of paper. Will you fill us in on why you guys decided to do that?
Troy Harvey: [00:12:28] Yeah, so we started with the goal of full autonomy. Now, it's worth stepping back and saying, why? You know, and the glib answer is: well, in every controlled infrastructural market, full autonomy is just the end point. That's where everything will be. And we know that the technology exists, so why not shoot with that as the goal?
But when you looked at the needs, what were the challenges in the market? Where were buildings falling down? And I started as an energy guy. You know, I think a lot of us come from that point of view into the market, and it was a winding back from energy. Hey, we want all buildings to save energy. Because at the end of the day, when you do the math buildings are 41% of the nation's energy. The DOE has done a study and we've been able to show that it's true that just through optimal control and optimal conditioning, on average for the U.S. building portfolio, you could save 40% of the energy, right? That's not changing any infrastructure; that's not putting in better, more efficient, you know, chiller plants; that just controlling what we got and optimizing it better, 40%. So if you add those things up, 100% of buildings have control. 41% portfolio of energy is buildings. And if you could save 40% across the board, that is the single largest energy savings opportunity in the marketplace.
But on the other hand, nobody really cares about energy in the marketplace. Right? That is a terrible thing to try to sell on, because maybe 5, 10% of the market cares. Right? And so what we saw, though, was these are energy, energy efficiency, optimality, well, they're these like concomitant issues. They're like intertwined with the same things that are causing installers to pull their hair out and buildings to run poorly. And the owners calling up the maintenance management company and screaming at them. It's all about, how do you make a building just work well? And we look back at this and said, well, just like any autonomous system, right? If you start with a vehicle, the level of autonomy and this is something that, you know, maybe later we'll show a slide about level of autonomy, I think it's important for us as an industry to get our head around, how smart is smart? So that we know what we're talking about. So level zero autonomy is where this industry lives today. That's manual control. That set points, thermostatics, and PIDs. That's the same thing as cruise control in your car. You set your car to 60 miles an hour, you set your building 72 degrees. It's the exact same concept, but you can't say, well, I've got cruise control and I'm going to build a whole autonomous vehicle out of cruise control. Like that's going to take you down all kinds of wrong paths, and you're going to put bandaids on top of bandaids, and remove things and add things and try to fix things, and you're going to end up with the biggest, craziest Rube Goldberg machine.
And that's what we're doing in buildings today, is over time we started with those Big Four inventing mercury switch thermostats. It's like cool idea, right? Like the 1850s 1860s. And then Honeywell had this breakthrough idea of like the PID control, which they ripped off from the Navy to stabilize ships' rudders. And what was interesting is that Naval engineer, he's like, Hey, PID is not meant for generalized control. And then Honeywell went and turned it into digitalized control. Well, you can't blame them. They had pneumatics work with, and it's like PID could fit the pneumatic model. But here we are literally 90, 100 years later, still building one building block on another of PID, which was just basically cruise control, right?
And you're just not only not going to get there, but you're just going to make it worse and worse and worse and more complicated the more things you layer on top trying to get this whole thing to work together. So if you're like, okay, we need to start over if we have any hope of getting to level two, three, four, or certainly level five, full autonomy in buildings. And you have to start with a different assumption. You have to start with the notion that a control system needs to understand buildings if it's ever going to optimize and control those buildings in real time. And this is what you have in autonomous vehicles, right? Out of the vehicle, you need to understand the physics of your vehicle and the physics of the other vehicles if you're going to keep two vehicles from colliding on a road. With a building, same thing is true.
And I think what's interesting to me is when I have conversations with people outside the industry, who are maybe the owner of a building, they are shocked to learn that their million-dollar BMS system knows nothing about buildings. Like it's just kind of a blank platform. Right?
James Dice: [00:17:18] Right.
Troy Harvey: [00:17:18] So you have to start from scratch, otherwise you'll end up like the industry is today, which is this like compendium of like point solutions tied together with bailing wire.
James Dice: [00:17:29] Totally. Alright. So I want to talk about then, okay, what you've basically done is started with a blank sheet of paper. And then what I think you've done, based on the little I know so far, is you said, what's possible with the latest technology, right?
So, I have kind of three things in my mind. So it seems like you guys have been super innovative on hardware, software, and then what that enables is the autonomy piece. And so I'll let you take that in whatever order you'd like, but what can we do with this blank sheet of paper, basically?
Troy Harvey: [00:18:05] Right, so first you need to make an autonomous engine. You need to make an engine that understands the buildings, understands what they are, understands the thermodynamics of buildings, understands equipment, understands systems and subsystems and how they interact, and how we as people interact with the building. Because at the end of the day with architecture and buildings, that's the goal, right? The goal is to make people happier and comfortable and modulate around our needs.
So once you have that, that's cool. And there's a lot of geeky technology we could talk about; we can talk about deep physics and heterogeneous neural nets and some of these things that are these big innovations, not just in buildings that the PassiveLogic engineers built, but really in just the space and AI in general and like moving what is naive neural nets toward these very like sophisticated, generalized computing environments that can do physics, not just like, you know, train neurons, but as cool and geeky as all that is, it doesn't mean anything unless you translate it into something that the consumer cares about.
Which is-, back to your iPhone, you know, what I think about the iPhone is it's this software engine of all these components, wrapped in a candy shell of hardware, and that candy shell hardware becomes the way that you interact with it as device. And there's a lot of innovations there that we can build on top of. So like I said, there's a combination of things that we can just straight up steal from the current technology, and then things that we have to bring that are new for buildings.
And your iPhone, again, the iPhone 11, is an example of what's happening at mobile, happening at the edge. It is literally faster - I've benchmarked it; I've run our simulators - It is literally faster than my i9 laptop. That is an Amazon edge blade server in your pocket. And that change, that shift from cloud to the edge is going to be powering a whole wide range of up opportunities and applications in all sorts of industries over the next decade.
And so while a lot of people are still talking cloud, the pendulum has actually swung back to edge and so utilizing that power, that capability at the edge, it's not just CPUs. It's GPUs and what are called TPUs or neural processing units. So this is new types of silicon that enable very fast computing at the edge. So that's one component.
Another component that you steal is steal the modern user experience, right? So that experience you have on your iPad or iPhone, translating that to building automation, that is that layer between you and the AI. So you don't have to know that it's AI. You don't need to know that there's machine learning. You don't have to be a programmer at all. You just need a rich user experience that follows the workflow that you experience as an end user.
And then, you know, finally solving the core problems that you're driving in buildings, right? You need optimality, not only in trying to get a building up and going so people aren't yelling at you, but making that building work continuously, and then making it like tell you whether it's doing after the fact. And so that needs some new technology pieces. That needed, how do we take the autonomous vehicle technology and translate to buildings? One of the big differentiators that's really important to understand is what I would say is the input and output problem. Autonomous vehicles have a really big input problem. They have to solve machine vision in a very chaotic environment. And we in buildings don't have that, which is lucky for us. So that makes it very tangible and very viable right now with, you know, buildings are with PassiveLogics technology achieving level five autonomy now, where, you know, vehicles are, you know, experimentally in that space, but really delivering product around level three right now. And that's their big challenge.
But buildings, we have another problem. We have an output problem. And this is where these really diverge. So in the vehicle, if I'm Tesla or Aurora or Uber building an autonomous platform, everybody gets the same platform, right? The outputs are pretty simple. It's like turn left, turn right, stop, go faster, slower. Right? That's the same in California and Colorado and Japan and France, right? But in buildings, and this is the really crucial thing is-, buildings, every building is unique. Every building has a different architecture. Every building has a different system topology. It has some crazy intersection between, you know, air systems and hydronic systems and BRF systems, and you know, all these different components that we're trying to engage with. Energy system, lighting system, you know, ventilation system. So that needs something different. And it needs a system that can understand buildings as a whole, but it also needs a way to engage with the user to have you describe it. What does that building look like? So that it can build a custom autonomous system for you.
James Dice: [00:23:11] Totally. And that's where the concept of deep digital twin comes in.
Troy Harvey: [00:23:17] Yeah. Because you need a way for a user to describe their building so that then the system can control it based on that description. So you can think of it as, you know, control by contract as opposed to this idea that we use today with this procedural control. You know, if this do this, and if this do this. This is more of a contract that you're saying, this is the shape of things. Now do the best, most optimal thing at any given moment.
James Dice: [00:23:45] Right, right. So we're doing away with, you know, standard and static control sequences, and it's kind of just figuring it out as it goes. Is that how I understand it?
Troy Harvey: [00:23:57] Yeah. And I think one thing for people to get their head around is, first you have to look at a flaw in the procedural solution, so the sequence approach. So let's talk about the ways that people think about making today's systems more optimal. You come up with sequences, right? And these are your best ideas for what is the sequence of operations at the time that you're commissioning the system. Then you tweak and tune those sequences. You know, you adjust the parameters. Now this is a hard task in and of itself, and so there's a few different companies out there like, well, no, we'll tweak and tune those sequences for you with a little thin machine learning that will adjust it over time.
But even with that, you're never going to accomplish all the other things that are wrong with that approach. Starting with the sequences themselves, like there is no one sequence that governs the building for every and all time. That's a dynamic process. The right sequence is different at any given moment in the building's life. So the idea of starting with a static sequence and then saying, well, I'm going to optimize that with whatever technology on top, it's kind of not even half-baked, right? It's like partially baked. And then you're still leaving out this notion of, well, like there's all this optimization within the building that the system can't understand. Going back to that million dollar system, shocking again, that million dollar system with a thousand zones doesn't understand how two zones in that building even interact. And so you have to know all of these things in order to coordinate the control of that, that whole building control all at once.
James Dice: [00:25:35] Right, right. Cool. So I think there's a lot to dig into on hardware and software. And what I'm going to do is I'm going to summarize and put links to the control trends demos that you did. So you did some great screen shares, great software demo. I'm going to link to all of that for everyone so that anyone that wants to dig deeper-, I'll also put the levels of autonomy together in the show notes as well.
What I'd like to dig into is everything you just described, Troy. What it kind of exposes as far as the things we're doing right now in buildings that are obsolete if this new paradigm takes shape. So, kind of, as I walk you through these different things, I want you to tell us what you see that like the new version is.
So let's start with energy modeling. So it sounds like you started as an energy modeler. Early in my career, I started as an energy modeler where you spend, you know, weeks building this 3D model of the building. You press go basically, and you'd wait up to an hour for it to run all these different runs of the model. And then at the end, it wouldn't be anywhere near the utility bills. It wouldn't be anywhere near reality. And then you'd basically start all over again. So, what is the new version of that with this new paradigm?
Troy Harvey: [00:26:54] Yeah. So the new version of that-, and, I loved that process that you just described because that's how the world works if you're an energy modeler. And it takes a lot of expertise to drive, right? Because it's all offline, and so it's all like your expertise to try to get that model to maintain accuracy. But it turns out if you put that model right into the control system and you make the model simple to install, so you're not, you're not spending a lot of detail effort on getting all of the parameters of that model perfect. You just ask people for high-level stuff like, what does the floor plan look like? Then you plug that model right into the building and all the sensors. You basically are regressing that model right in place, right in the building, right at the edge.
And that model is not only forming the basis of how you make your control decisions, but it can also inform us about our energy impact and energy engineering on a building. So we're actually in conversation with a couple of ESCOs where we're discussing, you know, adding a couple of features to PassiveLogic that would enable them to just basically plug in PassiveLogic in a non-controlled mode, have it regress the building, and they come back in a month and they not only have a regressed, accurate model of the building but then the automatic deltas of, if I had controlled this, this is what the energy savings would have been. That gives you performance guarantees that you can put into contracts. So that sort of changes the paradigm there about how do we use it as an engineering tool.
James Dice: [00:28:22] Cool. Okay. And I think what we'll do is, instead of digging into each one individually, we'll go kind of rapid fire and then if we want to circle back on anything in detail, we'll do that.
So how about the building automation system design and installation process?
Troy Harvey: [00:28:39] Yeah. And I think this is related to some things you asked a moment ago. So I'm gonna actually maybe switch to screen. You asked about this. Does that make sense?
James Dice: [00:28:49] Yeah, sure.
Troy Harvey: [00:28:51] Okay. Let's just kind of go through it if you can see this.
James Dice: [00:28:56] Yep, yep. And anyone who's only on audio right now, we'll kind of talk through it, and then we'll also share the video afterwards.
Troy Harvey: [00:29:05] So once you have a platform that understands buildings, it becomes really important to translate that in terms of our experience, as the guys that are doing the work on the ground, because in the end, that's really the customer here, right? It's not the building owner; it's not the occupant; it's the guy that's going to buy the product and install this and make it go.
So when we took that into consideration of, how does that process work, right? Well, we go through a design build approach, and we need to be able to connect the dots between what is the intent of the building and was it installed correctly. So first it's pointing a screen right on that controller and making it all software-defined IO. So that IO can then check that all of your wiring is done correctly. And that it meets the definition of the components you connected to it. So if you're connected to a thermistor or a pump or a chiller plant, that it's able to engage with those things as you drew them and make sure that it's working as a system, as it was designed.
And so changing that workflow. And we can get in a moment into that workflow, but I'll just kind of go through a sequence of what we see here as the value here is you brought in that single-edge solution that's replacing a catalog of parts, right? Now you can have one controller that's doing all the jobs. It's giving you that realtime step-by-step install. It's giving the self guided wiring, where it's testing out wiring and leaving in place for the rest of us an autonomous control platform. So that's our view of the marketplace: satisfy the installer, leave in place the autonomous platform that the rest of us can plug in services to. From their point of view, it's a matter of like, how do we pre-integrate these different components into one package that today, you know, we, we call ourselves integrators and that's because that's where all the work is.
Back to your iPhone, one of the things that's really interesting, there's a lot of things you could say about how the iPhone changed the marketplace, but a simple one is to say it was just pre-integrated, right? You no longer had to put together your computer and put together the software to get it up and going. You just literally buy it and it just works. Right? And that's how building automation should be. And so that's what we focused on here, putting everything that you need into one control.
But then more importantly, what does this new platform enable? Control autopilot, universal protocol translation, automated point mapping, automated commissioning. Human comfort based control, right? Not just air temperature control. And you put that into a box that represents, you know, how we all work that's self-contained. So this is not cloud dependent. You plug it in, it goes, and it's its own control system just like it is today, because we're just not going to convince our industry to be cloud tethered. Even if we could, it's not resilient enough to run things from the cloud, and I think that's an important thing for everybody to understand: why autonomous systems? By nature, they can't be driven from the cloud resiliently enough, even in the best of circumstances, even if you're at Microsoft's headquarters.
And then you make that a scalable model, right? So it's a question of, do you have one controller or three or five or ten or a hundred or five hundred? And that's how PassiveLogic works, is they're all software defined boxes. There's no one, quote unquote JACE or one master. They all can master. They all carry a copy of the database, and they all work together to solve the overall building's problem.
So that's from a point of view of the hardware line. How do you make the hardware actually act the way we work? But then how do you make the workflow represent what we need as an industry to not just automate, you know, automation, which is one goal, but to automate this workflow that we all have, and so you start with that control by definition, with this platform that gives you this ability to make your own custom autonomous platform for your building. And then instead of this programming we're doing today, we're replacing that with drawings, where you're going to have to make the drawings anyway to tell the guys what they're doing out in the field. So we've gotten a two-for-one, and we're doing it instead of weeks, minutes, maybe hours, maybe a day at most. Right? But you have this 90% savings and time right up front. Once you've done the drawing of the building and the systems, it actually says, well, I know how to design a control system for you, would you like me to do that? And it will design its own control system, point map it all, and then gives you this what-you-see-is-what-you-get, you know, wiring interface that gives you the live interaction. And again, this is replacing what has been, you know, a lot of days or weeks of system design, IT, and then going out to the marketplace , working with those, those end point distributors, like how do I acquire all this stuff.
The next piece is working with the utility companies to actually connect up to the incentive marketplace. Once you have a description of your building and your systems, well, it can connect you up to that incentive marketplace, where utilities today are feeling like people aren't making use of the incentives that are there. And this is unfortunate; that's their whole job is to incentivize.
Um, that guided wiring and automatic commissioning, again, it's another point of savings. Right now we're spending a lot of time and doing manual commissioning, and it's very error prone. One guy can switch two wires, and you know, you're going to have a problem that may take an hour, may take a day, maybe take years to figure out where that wire went wrong in the whole building. So guiding that whole process, again, saving us from those headaches. And we're always the last guys out of the building, so everything's going to be blamed on us whether or not it's our fault, but you know, in the end it is a little bit of our fault because our tools just aren't capable of doing what the users expect.
And this may be as big as PassiveLogic itself, but when we talk about the digital twins and digital twin interface, one of the things it enables is all of these cloud providers of services to then connect the buildings in a one-click way, just like you experienced with your iPhone. And today that is a minimum $50,000 integration cost just to the simplest analytics app, or even the simplest, just like, you know, warmer-colder comfort app. Getting the control autopilot and then providing that human comfort-based control. So at the core of it, because it's physics-based, we're controlling not around just air temperature. We're actually controlling around comfort. And that can be human comfort, the building's comfort, you know, the building science of the building, can be a process control comfort. You know, maybe you have a carbon fiber layup line that has to have certain comfort dimensions of the carbon fiber in terms of, you know, the temperature and humidity in these boundaries.
And then, you know, this automatic analysis that comes out of it, not just the what of regular analytics, but the analysis, right? Like telling you what happened and why it happened and what was the lineup of things. And then ending up with, you know, with a single click, you know, you can add it to an optional cloud where you can see all your buildings in a portfolio and be able to navigate and manage, like all your different issues and do across-portfolio insights and so forth.
So it's a really different workflow than today's workflow, but follows what is really the business workflow of automation.
James Dice: [00:36:19] Yeah, yeah. Thank you. Thank you for taking us through that. I just took notes and I have this list of all the things that we spend all of our time on right now that you just checked through. And next to the list I have: done, 90% done, automated, included, automated, optional, done. So I'll lay all that out for everyone in the show notes, show everyone my notes, basically. But one thing I wanted to key in on that was on one of those slides that you briefly mentioned is networking and security. So, past couple of newsletters, I've mentioned a couple of tools that people are finding helpful to create remote access due to this time we're all in where we're all working from home. So you mentioned that there are built-in switches and VPN tunnels, it sounds like, already built into the system, which is very novel.
Troy Harvey: [00:37:11] Right. So basically all of PassiveLogic's controllers have their own networking. We're all IP-based networking. It can either go wired or wireless or both. And so our high controllers, they have four ethernet jacks in the back, and this is all spanning tree networking, meaning that you can do daisy chains, you can do full loops, you can do whatever kind of crazy topology you want, and it will figure it out.
And so in part of that all-in-one experience, it's not just about like, how do you make this automation process better, but the IT process, if we're going to democratize this to a broader audience, we need this to-, you just hook everything together and it will work out the details. That has a few interesting side effects, which is first, it controls its own private network. So you're no longer intermixing with the building's IT infrastructure, which means you have a more secure infrastructure by default. It also means that it becomes its own private umbrella for all of these IoT and smart sensor devices that are right now sometimes struggling to get into a building's network and get past the IT department.
We not only enable a marketplace for those IoT devices to get into the building's design, because you've got this whole tool pallet of all the different sensors you can drag and drop, and then it connects you up with the providers of those. But then it's also going to umbrella those to whatever way that they speak, providing an actionable interface, which is really important. Because most of these IoT devices, as cool as a lot of them are, they reach up to their own private cloud. And at that point, once you go up to the cloud and then your controller wants to maybe scrape that cloud and bring it back down, it no longer is actionable because you may not be able to count on the connectivity always being there to make real time decisions.
So the fact that it's in-building, under the umbrella of PassiveLogic, PassiveLogic is making that actionable right in place, and then piping that up as a cohesive cloud connection to the PassiveLogic cloud for, you know, everything that's going on in your building, all your devices, all your sensors, and with a known API.
But then from a security point of view, when you install PassiveLogic beyond its private network, it then, at whatever point you bridge it out to the outside world, it talks one way. It goes and establishes a prearranged key with the PassiveLogic cloud and talks up. It doesn't establish it down, so it can't, you can't hack into it in reverse. It has to say, hey, PassiveLogic cloud, I've got my special key, you know who I am. And it connects that private VPN to the cloud, at which point that you can then do you know all your portfolio management there. So because it's an integrated solution, we get rid of all of this ad hoc security and networking stuff that people are trying to manage on their own and build a very durable thing at the factory that you can then guarantee that you've got security in every install.
James Dice: [00:40:14] Right, right. Okay. How about, so I'm an analytics guy. I've been doing fault detection and monitoring-based commissioning for, I don't know, nine years now, something like that, quite a bit. And I actually just had Nick Gayeski from the KGS buildings on last episode, and so what in this new paradigm do all of the analytics nerds like me, what do we do with this new, this new technology?
Troy Harvey: [00:40:41] Well that's, I think, where it gets exciting. So if you have a building automation system that understands buildings and understand systems and equipments, and it understands them beyond the points, you know, that we tend to think in. So today you might have a Haystack point that you've manually or in some semi-automatic way added to, say, a pump. And now you're going to have an analytics point that shows pump going on and off. Well, what about all the other variables of the pump, right? That's the only variable you know of, but the pump is governed by, you know, two dozen different physics variables that are part of how that pump works. And those are not-, those are opaque to you. And so the first thing that's interesting about PassiveLogic's approach to this deep physics is all those variables are considered. So that that pump will have these variables exposed to the analytics user with different quality of data, you know, for each variable. So as an example, a pump flow can only be certain answers within the rest of the system's operation. And that becomes clear to the physics underneath that is managing how the system is working as a complete subsystem, even where you don't have a flow sensor.
Now, depending on how that system works, the quality of data may be 50% or maybe 90%. But as an analytics guy, having access to this much richer pool of data that is not just data, but really turned into information, right? Because it's all pre-labeled. All the physics know what they are. You can, you know, compute it and query it. And so for data analytics or data scientists, it also creates this new world of excitement where you will automatically get an order of magnitude deeper, richer data without effort because it just comes as a free side effect of the deep physics control.
James Dice: [00:42:46] Right. And I think that kind of mirrors my perspective on all of these. You know, you could say on one hand, a lot of the current building optimization jobs that we do, a lot of what we spend our time on right now, a lot of that with current technology and PassiveLogic's approach can be automated away. So on one hand you could say, well, what are we going to do? Are we going to lose our jobs? On the other hand, you could say we're actually going to enable more capabilities. We're going to enable better building performance and remove obstacles to what we're all trying to accomplish anyway. Right?
Troy Harvey: [00:43:23] Right. So I think there's two sides to that, though. The first is the question of labor and jobs. There's no doubt that autonomous vehicles are going to put out of work a lot of people. You know, the number one job in America is truck driver. And the technology is largely there to put those jobs out of work.
But we think the opposite is true here in buildings because it's about: how do we enable a broader audience of people to be doing automation while making the experts more expert? And so we actually see this will engage a labor pool that may be 10x bigger in another 10 years, where you have now technicians and electricians and HVAC installers now being able to do automation on a much broader market scale. At the same time, when we look at the experts, so much of our expertise, you know, frankly, is being squandered in just shuttling bits around, and tagging things manually, and doing just like-, why aren't we actually seeing how buildings are working? Because we're spending all of our time doing these low-level things.
So, you know, I think the outcome of that is something interesting. When you look at the cloud providers, and we're probably at a point right now that we're signing two to three cloud providers of services per week into the PassiveLogic cloud and app store infrastructure. And at first gloss, you might say, well gosh, you know, out of the box, PassiveLogic's analytics are providing much richer data that even with a lot of hard work, you won't get with a traditional analytics solution. Does that put them out of business? It's like, no. I think what it does is, you see these companies in whatever segment, whether it's fault detection or analytics or district management or energy audits, that what they'll be able to do is let go of the 80% of work that's just weighting them down and focus on the 20% of work where all their value is, which means they get to put five times more effort into the high value part of their business.
James Dice: [00:45:28] Great. I'm glad we're seeing the same things. I mean, there's always two different ways to tell the story. Cool.
So the other thing I wanted to key in on, on that whole story is that at least for the foreseeable future, there's always going to be, it seems like to me, two paradigms, right? There's buildings that installed a new building automation system yesterday that wasn't a deep digital twin, right? So there's going to be all of these buildings that have the old technology essentially. Even if it was installed yesterday, right? And so how do you guys approach buildings that have infrastructure that's not sort of ready to be replaced yet?
Troy Harvey: [00:46:09] Right. I think it's worthwhile going into the two proesses side by side, because-, and we'll just say at the beginning here, there's multiple ways you can use this, right? So our goal as a company is that you have this huge value chain of players, and some of those people are coming in at the beginning, whether that's an engineering firm or an integrator or an architect or engineer who just wants to make a high performance building that actually works, and they're going to drive new construction. It's like a pure PassiveLogic solution all throughout. And then there's people coming in at the end of the value chain, whether that's a cloud provider of services, who today, it's too much of a lift to get their projects through the CFO of a company, because that $250,000 integration is too high just to get to that thousand dollars a month SaaS fee. Or on the retrofit side, where you're an energy service company or an integrator doing a maintenance job, where you're saying, okay, we've got to retrofit and modernize this building.
And we work in either way. So in a retrofit scenario, you might just take out the head of those controls and then put in PassiveLogic and talk down to the existing BACnet stuff. Or analog and digital, you know, we're very agnostic to what level-. And going back to pneumatics, you're just gonna have to do some retrofit work. But we're pretty agnostic from analog, digital, through the different protocols of both the, you know, the common ones, like BACnet and Modbus, to the emerging ones in the IoT space, whether that's over the BLE mesh or over WiFi.
But what we're seeing that is interesting when you look at the difference, say you're going to do a retrofit, and you're like, okay, maybe you're going to leave the VAV controllers in, but you're going to put in some modern head controllers and put in some IT infrastructure. And now you have to program sequences for this thing, and now you have to, you know, go through a commissioning process and all these things. Well, that was just a lot easier to stick into PassiveLogic on top.
Let's talk about an even lighter-weight case. Say you're just an analytics company or an energy monitoring company. It seems lighter-weight at first to like put in some cloud middleware to aggregate through, you know, divert pipes of your IoT and sensor products that you maybe put in the building. Until you realize that you have to go and label everything, tag everything, put together a schema for it, and then get that schema, like adapted to your internal systems to describe that building and that scenario.
And what we're finding is these cloud providers are looking towards PassiveLogic as a lightweight install that removes what was a lot more software work, even though this hardware component requires something on site. Because at the end of the day, you're going to have to do a lot less work if you just draw what the building looks like, draw what the systems look like, and let it build its own internal digital twin that it can re-describe to your software.
James Dice: [00:49:20] Right, okay. Yeah, I'm seeing that. I didn't see that before. That's fascinating. So you guys could always install one of your controllers, start off deploying a deep digital twin, and then as certain systems on that old system get replaced, then you would just start replacing that with your stuff. Is that kind of how you see things rolling out?
Troy Harvey: [00:49:42] Yeah. I mean, I'll give you an example. Right now we have a strategic partnership with NVIDIA. And NVIDIA, they are, if people don't know, they're traditionally a graphics chip company, they make these GPUs. But that turned out to be the perfect platform for AI. So five years ago NVIDIA was a graphics card manufacturer, graphics chip manufacturer, and today they're probably, you could easily consider them one of the top five companies driving AI infrastructure.
Well, they get this idea that buildings are the next revolution. Because they've gone through it with vehicles and vehicles are now, they are the core component. They are the engine behind everybody's autonomous vehicle platform. And the CEO said recently, you know, when they called us, he said to one of the VPs that that was in charge of their building programs, why is it that I've got this vehicle here that all have to do is fill it up with gas and it'll drive itself to New York, but my $700 million brand new corporate headquarters can barely function, right? It's crazy.
So they called us and we've been talking to them about what a rollout would look like, and that includes a variety of buildings throughout the world. What is, in some cases, a deep retrofit of PassiveLogic all the way down to the VAV controller. On a new building, well, that doesn't make sense. You leave all that stuff in place and just replace the top end of the control system and talk to the existing BACnet infrastructure. And then on new construction, it's just new PassiveLogic throughout. And so I think you could think in all of those different models for, you know, what is the right approach, whether it's a progressive install or a deep install or, you know, kind of this mixed model where you'll lose a little bit. You'll lose the end point commissioning, you know, all the way to the bottom of the wire, but you won't lose the commissioning of the system as a whole. We'll still be able to interact with that.
James Dice: [00:51:40] Right. Okay, cool. Well, as we get towards the end of our hour here, I want to circle back on iPhones. But first I had circled on my notes here to ask you about small buildings. And so I mean I've heard you talk about it before in other places: small buildings are a very underserved automation market. Can you talk about how you're attacking that?
Troy Harvey: [00:52:02] Yeah, so I think what we've seen in previous attempts at this market was we already have too complex of a model for our big buildings. It takes a lot of expertise to drive, and they're not that good, right? That's the problem. That's why we're all struggling. And when you decide that you're going to keep that as a high value market and then come out with a small commercial product, it takes something that was not very capable or good in the first place that's too complex to use, and pull out the features, when you didn't make it any easier to use. And you just made it worse, right?
And I think as a marketplace, everybody feels these are just not compelling products. So we felt at PassiveLogic, our goal is not to just to go head-on with the Big Four, but to enable that small to midsize market, which by the way, for everybody, if you do go to talk to the customers, you talk to installers, you talk to the HVAC guys, it's not like the demand is not there. Everybody wants it. Everybody wants something in that space. The problem was it wasn't friendly enough to use or cost-effective enough to use.
So PassiveLogic first solved the democratization problem: enable the average HVAC installer to do this stuff. And then we built a business model that doesn't require you to go through three weeks of hoops before you figure out the price. We have a pricing scale model that like really enables a $1,500 install up to your $1.5 million install. And it really scales with the size of your building, the number of buildings, number of controllers.
And so, you know, our controllers, you can get a controller in a zone for around 1,500 bucks, and you can get a zone license. And do a small coffee shop. And that becomes more friendly and buyable and easier to install than even, you know, a thermostat and dome controlling type approach.
So I think it's technology that enables new business models.
James Dice: [00:54:01] Yeah. I mean as an energy engineer, we'd always run into clients with large portfolios of small buildings. And the economics were always difficult when, like you're saying, there was no compelling products to get to where there was a good enough payback, essentially.
Troy Harvey: [00:54:20] Right. I mean, going back to your iPhone, it's not like you got the engineer's iPhone, and then the blue collar worker got the blue collar iPhone, and the executive got the executive iPhone. Everybody gets the same iPhone, right? Like there's no 'we're gonna dumb it down for you.' That's the ridiculous notion in 2020. Everybody should get the same features. We all have the same energy efficiency needs, the same operational needs, no matter how big your building is.
James Dice: [00:54:47] Totally. I love that. Okay, so back on the iPhone, but the app store component. You took us through a little bit of your vision there and your partner ecosystem. Is the iPhone for buildings with the app store for buildings, is that an appropriate analogy for PassiveLogic?
Troy Harvey: [00:55:09] It is the appropriate analogy. And I think one thing that people should understand about that, other than the sort of top level thing, is honestly, it's far more compelling in our market than it ever was in the consumer market.
And we talked a little bit about that. Like if you take an app store from a 15 minute software install to a one second click, that's not as compelling as taking it from $100,000 integration cost to a one second clinic. That's a lot more compelling. right? But the thing that's missing, what I think often people don't realize, we can talk a little bit about the digital twin standard.
So when you have a physics-based controller, just the setup of that controller generates the digital twin inside that controller for its own operational purpose. Well, that digital twin description of your building has far more use cases than just our own controller. And one of those use cases becomes the cloud, or other applications whether it's cloud or mobile applications.
And what's been missing in this marketplace is there's been no platform for buildings, right? You can buy a JACE or similar types of things from different manufacturers, but it's more akin to a Linux kernel than it is to the iPhone iOS with these high-level APIs. So the first thing it enabled from this digital twin standard-, which by the way, we have an investment from the Department of Energy where we're working on making this an open standard. But it has multiple use cases.
Now, most people are here are probably familiar with things like Haystack and Brick. Haystack is tags. That means that a variable in a system has a name. Brick provides structure to those tags to say, well, these are how things are arranged in the system, the topology. But that's still only maybe 15% of the world that you need to describe what's going on in a building, right? You have the building, the construction, the floors and the zones, and both walls and assemblies, people walk around, and all these things, and that deep ontology, that deep variable space of all of the things that data scientists want. PassiveLogic enables a singular API that as an application or strategic partner, you can program to that API once, and then you will be able to walk that API consistently in the same way for every single building after.
And that's one of the things that's really been missing in buildings, is one way to describe buildings in a deep and rich way that describes everything that's going on there. And that enables first, the application market and the cloud services and the mobile market for prop tech and energy tech and construction tech. But it also enables some new opportunities in the marketplace, which is also part of what our DOE agreement is about, is how do you enable the future of grids? How do you enable the future of smart cities, where buildings as the biggest component of energy use, can start acting in a peer-to-peer way and talking back and forth with utilities, and being like, 'Hey, this is what my demand and supply will be over the next 12 hours.' And we can all guarantee what everybody is saying is accurate and nobody can end run the system. And that's going to be a really key component. You can't have smart cities, you can't have smart grids unless you have smart buildings that can act as agents on behalf of their owners and be able to communicate in a reliable and provable way. And so that's the more distant future, like, enablement of what physics-based digital twins can enable.
James Dice: [00:58:49] Great. Yeah. And several of my projects at NREL are working on these sorts of grid interactive type of projects. So, yeah, that's fascinating. That's awesome. So I have to ask you, and I don't know if you got the chance to listen to Episode One of the Nexus podcast, but I had Nicolas Waern on. And it sounds like you visited Nicolas in Sweden a couple of months back and maybe helped him move a couch.
Troy Harvey: [00:59:14] Yes, it's true. Yeah. He thought that was funny to get me moving a couch around, then he can take a picture, CEO of PassiveLogic with my couch.
James Dice: [00:59:25] Yeah. He made sure to tell me that you were really a nice guy. So I have to ask you about something he said on the podcast, and this is his model. And I hope I'm quoting him correctly. I'm sure he'll tell me if I'm not. But three stages of smart building technology, and this relates to these different types of platforms basically. So we have, his first level is old technology. So it's basically everything that we've been talking about, how it doesn't work. The second level is new-, in other words, what can you enable with new technology. And he's actually putting you guys in the second level. And I hope I'm not stirring up a bunch of stuff here. But he's basically saying that there's a third level, which would be more open than you guys are. So I think what he's saying is that when you guys are in a building, you have to use PassiveLogic hardware.
So can you sort of, for everyone, respond to his question?
Troy Harvey: [01:00:24] Yeah. I think that's an important question. And I think, you know, for guys like Nicolas who are saying, what's happening in the market and how do I reconcile it all? Here's the problem that I see. And we don't have to make this up. We can just look at history. So, you know, Linux is probably the one single thing that we can all point to as the most successful open-source project. And for over a decade, no, two decades now, there's been a joke in the industry about: this year will finally be the year of the Linux desktop.
And of course it's not, right? And it's not anywhere in sight in the future, and probably never will be. Because we've seen a bifurcation of where open source has become successful and where new technologies have developed what that future path looks like. And so open source has become successful in one domain, which is the tools that programmers use to build other tools, where the core value is. So we don't have to go reinvent the kernel again because, you know, we can just use Linux. You don't care at the end of the day if your iPhone runs off of Apple's Mach kernel or the Windows kernel or Linux kernel. It doesn't really affect you. It's a very low level piece in the year 2020.
So that tells you something about the open model. It is a lagging market of technology. It's where 10 to 20 years out the technologies settle out as being commodity. Right? That's where open source is. So what we're seeing, there's a bunch of people in the automation market saying, well, we need this open source operating system. Replace Tridium, we need an open source this and that.
At the end of the day, those ideas, because it takes a crap load of effort and work and investment to do the new things, they don't settle out into the open market until they're commodities. And so by nature, the innovations that will change our world will not be in the open source space.
You know, a very communitarian, maybe Swedish ideal of Nicolas's, but that's just the way it works, right? I can't raise, you know, tens of millions of dollars to then give away all the key pieces that made that valuable. But I can, then, decide, well, where are the places that we can collaborate that make it matter? And that, like the iPhone, is, you know, there's millions of applications. That's open for people to build their own applications on top of. There's the connectivity, WiFi and Bluetooth right on your phone. Well, we have BACnet, we have all these other things. That's what's important, to make sure that we have industry standards, so that then people can make these domains of innovation where you will just have things go orders of magnitude faster.
And it's not just in terms of where the money is coming from and how innovation happens, but it's once you get 10 people in the room and you start negotiating around what the look of BACnet should be, right? Like we've seen that alone takes decades, and that's not the place to innovate, right? The place to innovate is getting the group of people to come up with, you know, a commodity product.
So I think that we're going to see that all over. And we do see that. We see that in the IoT space, smart sensor space. Again, you're not going to have the coolest, newest sensors that are like an open platform. They're going to be, you know, the latest technology that people worked hard on. And that's just the history of technology. And that will be the future of technology.
James Dice: [01:04:04] Fair enough. Yeah, and the way I understand what you're saying is that this model helps things move faster for everyone, if I were to summarize it all up.
Troy Harvey: [01:04:15] Yeah. And PassiveLogic's not alone in that. There's a lot of people doing innovative stuff out there, and they will move orders of magnitude faster in the general market or the general market, you know, working together in working groups. And so we have to decide, where are the places that we want innovation and where are the places that we want cooperation?
And it turns out, I think, you can see in the consumer space, you can see in an art space that-, you know, Tridium today has probably been one of the more successful platforms, and it's sold in a more open way, but that doesn't make it open, right? Tridium is proprietary software. But that's pushed further than the general market of control, and PassiveLogic, we think, commoditizes it even further. And that's the democratization.
Linux today, 25 years in, nobody would claim is a democratizing force. In fact, only a few very expert people can even weild it. So I think that's often the misunderstanding of open source. Like we can make things open source and obscure and have fewer and fewer people use it, or we can go build things to everybody can use, and we can share amongst us programmers, the open source components that we think keep there from being industry overlap.
James Dice: [01:05:32] Got it. Okay, so tell me about your - as we wrap things up here - your launch. So what's the roadmap? When's the product going to be available? When will I see PassiveLogic in my next energy audit?
Troy Harvey: [01:05:46] So we've been in private beta for the last couple of years, and we've been building our go-to-market product. Our first products rolled off the factory lines just a month ago. We will be working with a network of partners to deliver to: first, some of our strategic partners later this year, and probably for your general audience, they'll probably be more like this time next year.
James Dice: [01:06:10] Got it. Cool. Alright, well, as we wrap up, is there anything else you wanted to say to the folks?
Troy Harvey: [01:06:17] No, I think this was a fun conversation and I'm happy at some point that we can maybe go deeper on one of these subjects. I know that you have some interests around the digital twins and how deep physics works, and we can get geekier on another episode.
James Dice: [01:06:34] I'd love to. Yeah. Well, signing off for now, I guess.
So thanks, Troy. Thanks for coming on the show. Appreciate it.
Troy Harvey: [01:06:40] Yeah, absolutely. Thanks for having me.
James Dice: [01:06:43] All right, friends. Thanks for listening to this episode of the Nexus podcast. For more episodes like this and to get the weekly Nexus newsletter, please subscribe at nexus.substack.com. You can find the show notes of this conversation there as well. As always, please reach out on LinkedIn with any thoughts on this episode.
I'd love to hear from you. Have a great day.
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