Part 3: Thinking in categories (Navigating the Marketplace)

Hey friends,

For years, we’ve been trying to make the smart buildings marketplace, AKA the vendor swamp, less murky.

We’ve published a newsletter series (and whitepaper) on navigating the smart buildings marketplace. Today, in part 3, let’s talk about the most important concept to understand in the buying process.

Read the rest of the series here:

‍Part 1: The pain for buyers—why this is so difficult
Part 2: Do your homework—on how engaging the marketplace depends on where you are in the buying process
Part 4: Thinking in layers—how to think about constructing your tech stack
Part 5: Thinking in properties—simple filters to narrow down your options
Part 6: When to go full stack—simplifying the process for 98% of our buildings
Part 7: A case study and what we've built

If you’re a buyer, this series contains our best advice on how to make sense of the marketplace. If you’re a vendor, this doubles as a way to stand out from the competition by meeting buyers where they’re at.

Read the Full White Paper

Part 3: Thinking in Categories

In Part 2, we provided an overview of the “Preliminary Marketplace Research” and “Vendor Shortlisting” stages in the buying process. These are the two times when buyers engage with the vendor swamp.

In both stages, we shared the concept of a “category.” Moving from window shopping to tire kicking to vendor shortlisting to vendor selection first requires prioritizing one or more categories. But what is a category? ‍

Categories are groups of at least 3 (or more) vendors with the capabilities required to fulfill the same use cases. In short, they do mostly the same sh*t for similar types of users.

Look at an example category: fault detection & diagnostics (FDD). All the vendors in this category have the following capabilities:

• Detect problems and opportunities to improve performance (a “fault”)
• Fault diagnosis and explanation
• Fault prioritization
• Data and fault visualization
• Workflow features to track fault resolution

These technical capabilities allow similar users to improve similar workflows in their energy management and maintenance programs.

Thinking in categories means you don’t buy into vendors’ claims of standing apart from all competition. “We’re the only decarbonization digital twin operating system in the marketplace!” There are 75+ categories in the marketplace, each with at least 3 vendors to choose from. Some categories have 25+ competitors. That’s the reality.

For Buyers, the philosophy behind thinking in categories is to find the best-in-class vendor to fulfill the use cases you’re looking for. This style of buying will lead to better competition between vendors, making it more likely to select the best in the category—or at least the best for you.

It’s also the best way to reduce the risk of engaging with the vendor swamp. These risks include:

• Doing a project that doesn’t move the needle for your business
• Paying too much because you don’t have competitive bids
• Trying to compare vendors that don’t do the same thing
• Wasting the time and opportunity cost of selecting the wrong vendor
• Delaying benefits of the project (e.g. carbon reduction) as a result of selecting the wrong vendor

And of course, your smart building program itself is at risk after too many unstrategic, unsuccessful pilot projects.

For vendors, the philosophy behind thinking in categories is to work with other vendors to validate the category (terminology, capabilities, users, best practices, value, ROI, etc) before worrying about standing out in it. When a buyer is evaluating your category, your competition is not other vendors—it’s the status quo.

How to Think in Categories as a Buyer

Thinking in categories is clearly the best way to buy, but most buyers don’t have time to filter through all the noise in the marketplace. They shouldn't need to do this on their own—buyers need a shared and crowdsourced resource. An easy button.

That’s why we’re building The Nexus Marketplace—the first and only resource designed to simplify the buying process for smart buildings.

We’ve spent years tracking vendors and their capabilities and engaging with them to learn what they do and what distinguishes them. We’re painstakingly splitting the marketplace up into categories of vendors with similar capabilities. We’re building consensus in defining those categories using the minimum capabilities that vendors must have to qualify. With vendor participation, we’re allowing buyers to filter the vendor properties that matter to them.

The marketplace launches soon! In the meantime, we’re happy to help any buyer using our database of categorized vendors. Send us a message and let us know what you’re looking for.

—James and the Nexus Labs team

P.S. For buyers who are just buying one technology category, this process is all they need. However, most buyers hope to buy multiple categories and want to think more comprehensively about their smart building stack. We’ll talk about that in Part 4… stay tuned!