From Where I Sit S3E2 Transcript: Aaron Block, Co-Founder & Managing Partner, MetaProp

Aaron Block:

I think there's a real opportunity for augmented shopping within our field of vision. When in your field of view, you have all the information at your fingertips, decisions will be made slightly differently. That's what I think about a lot. We're clearly not there yet, but we're getting very close.

Tom McGee:

Welcome to From Where I Sit, the award-winning podcast where we explore the forces shaping America's built economy. I'm Tom McGee, President and CEO of ICSC. This season, I sit down on camera with the leaders shaping the future of the built world, commerce and technology. From emerging trends to groundbreaking innovations, we'll explore what's driving change across our communities and the broader economy. Let's get started.

Proptech has become one of the most dynamic areas in commercial real estate as AI and other technologies increasingly move from experimentation to real-world adoption. Few people have had a better vantage point on that evolution than Aaron Block, Co-Founder and Managing Partner of MetaProp, one of the leading venture capital firms focused on proptech. Since co-founding MetaProp in 2015, Aaron has helped build not only a successful investment platform, but a broader proptech ecosystem through initiatives including the MetaProp Accelerator at Columbia University. Today we're going to talk about what's been learned from that first decade of proptech, what's been overhyped, where AI takes us next, and how technology may reshape the built world.

Aaron, welcome to the show.

Aaron:

Tom, thanks for having me. I'm delighted to be here.

Tom:

I'm looking forward to the conversation. And obviously, Aaron, you've been a friend of ICSC for many years. And so thanks for taking the time today to talk about, you know, venture capital and proptech. And, you know, as you and I know, you have been really, really kind of one of the founding influencers and foundational influences upon the proptech industry over the past decade plus. And I really want to start with that. When you founded MetaProp in 2015, you've seen hundreds of companies. You've obviously evaluated a whole a whole slew of different technologies. What surprised you most in that journey?

Aaron:

Tom, how much time do we have again?

Tom:

Espouse on what surprised you most.

Aaron:

Yeah. There've been a lot of surprises. There's been a lot of time and there's been a lot of surprises. And I'm not sure expectations were even totally clear in the earliest days. This was a dream of ours. And the dream was to be a part of the transformation of the real estate world, of the built environment, of the physical world we live in, and kind of have a chance to leave our little mark on this transformation over the years. And beyond that, I think a lot was left to the imagination.

So, you know, expectations I don't think were as clear as they could have been in those early days because we were all just figuring things out. I can tell you one thing that's very clear to me, Tom, and I think this answers your question, is in those earliest years when we think about the real estate industry in particular, and we think about the multinational owners, developers, managers of property as a as a subset of that group within commercial real estate.

We often thought that adoption of technology was a was a conviction problem. We thought that the CEO or the CFO or the head of IT as they were predominantly called back in those days, we thought that they just either didn't get it or didn't feel it. and what we realized, I think, and what we got wrong is the barriers weren't as much on that end. They were certainly there, but the bigger barriers were procurement and integration over those years. And, you know, we spent a lot of time in those early years, like everyone else did, 2015, ‘16, ‘17, you know, thinking a lot about what was in front of us and what was familiar and what had made the news as we were as we were deploying capital and developing our theses. A lot of time was spent on, for example, brokerages and marketplaces.

You know, the Streeteasy deal, Zillow here in New York City was well known. And we didn't spend as much time yet, although we saw for it later, on weighting properly to things like insurance and energy and construction. So, you know, we've made a lot of mistakes along the way. We've got a lot of scars to prove it, some black eyes, some rolled up sleeves, some dirty fingernails, you know, we continue to claw along here, but those are some of the things I think back on and I reflect on – could have been clearer, could have been better and really different than our original expectations.

Tom:

You know, it's interesting. You know, one of the things that you popped in my head as I was listening to you talk about those observations is real estate's often viewed as a slow adopter of technology and I think that's fair. I think that's starting to change. I think you would probably agree and we'll delve into maybe AI's role in that. As someone who's operated in the technology arena for the last decade plus in commercial real estate. Why do you think that reputation of commercial real estate being kind of a slow adopter of technology? Why do you think that is the case?

Aaron:

I think the ICSC constituency is a really good example of making this pretty obvious. If you think about the folks who own and operate on a broad scale, the most sophisticated assets, that's a relatively small group around the U.S., for example, right? They're institutional, they're super smart, they're highly technical, but more broadly, a lot of our retail infrastructure is owned and managed on the longer tail, on the mom and pops.

And those tend to be folks who may be a little bit older and wiser in many ways, but maybe less sophisticated from a technology and implementation perspective in particular. It's a really distributed group. So when I think about this, I think about looking at the tenants versus those folks who own and manage and operate within the built environment, within retail, right, as a specific example. And then you look at their tenants. And they have evolved in certainly in our lifetime and even since I’ve started MetaProp since 2015. Those retailers have really been forced to move on the digitization and transformation. And you look at the people who are running those businesses, and they're frequently less of what you would have thought traditional retailers to look like and more what you would look in the old days like technologists or digital marketers to look like as their omnichannel presence and approach to driving the business, the mix of what they need to do to survive and thrive has evolved. So I think there's a little bit of a difference in the people who are making the decisions, right? And that's just a microcosm of more broadly across real estate.

I have to say, Tom, I'm very pleased. I feel like we've nudged the ball forward together in partnership with ICSC since the earliest days in many ways, to start a conversation around the transformation of some of these more reticent or slower adopting demographics and groups in this longer tale. And you're seeing especially with this AI wave here, “why not AI?” is the question of the day. Why not evolve, transform, operationalize, drive efficiency and institutionalize that into a new wave of doing business? It mirrors what happened in retail over the last 15 years in many ways. It's just a little bit slower.

Tom:

I totally agree with everything that you said, Aaron. And commercial real estate, although an enormous industry, it's a highly fragmented industry. And you know, in a lot of other industries, there are, you know, two or three or four really big companies that kind of drive the industry forward and in certain innovation and technology technological adoption, etc. And commercial real estate just doesn't have that, you know, two or three or four really large companies that have the scale to do that. I loved your your comments around the retail community because retailers increasingly have become, you know, very technologically savvy and they have to because of the interactions with consumers and consumers kind of expect that. I want to talk about AI, but I want to go back to, you know, just this conversation around technology over the last 10 years and looking at the use of technology and the operations of commercial real estate. Are there things that—how has technology kind of changed the way commercial real estate operators manage their business today?

Aaron:

It's really cool because in the early days, the best known examples were either marketplaces or physical interaction technologies like access control, right? Things you would buzz into a building in Midtown Manhattan on and get your photo taken. That's what people thought about proptech and its effect on the built environment. And over the years, I think we've really seen a broad distribution and a bit of a democratization of the technology tools across the value chain of real estate. As my partner Zach Aarons and co-founder likes to say, which I think was maybe even taken from an ICSC professional years ago with attribution, is that tech comes from dirt all the way through to disposition of an asset. And in every piece of the value chain along that spectrum, there is technology now either enhancing what practitioners are doing in their day-to-day lives, or in some cases, removing the friction of having a practitioner and a layer of professional to do that. And technology has enabled that over the years. That entire value chain has several handful, tens, dozens, in some cases hundreds of new startups built over the last 10 plus years that we've been doing this, trying to evolve what they do.

Specific examples that I think are interesting from our own portfolio of companies that may help illustrate this and bring it home, Tom, is let's say you're a manager of or an owner of warehouse space. As warehouse and distribution and e-commerce became interesting, you started to have a lot of sheds being built, a lot of big boxes, reverse logistics being important to as you manage. A warehouse and distribution facility, not a lot has changed over the last several years, but a lot had changed in the office space, for example. You had WeWork or Industrious and some of these shared service providers, almost the Uberization of space. We invested in a company called Saltbox, where an owner and manager could actually take co-working concept and bring it into warehousing and in the industrial sector. You know, in the early days, you wouldn't have even expected that, Tom. You would have thought there's a light switch that can be used through an app. Would have thought there's a facial recognition more recently that can allow me to bypass security concerns. But this touches every step of the value chain, whether it's site surveying with drones, from the boiler room to the boardroom of every organization. There is new tech attacking both internally with a lot of internal AI innovation and externally, which is what we spend a lot of time doing, which is the open innovation world, the new startups that are developing, similar to one of your guests from recent memory, Raj from JLL Spark, right? That we've we have a whole crop of professional investors helping seed that stuff. And it touches every single aspect of that value chain. And it's only getting more pervasive as we have developed our firm and our investment program.

Tom:

That last phrase pervasive, I think that technology has become so integrated in our day-to-day life, and including in, you know, in commercial real estate and interactions with the built environment that we kind of take it for granted, right? I mean, you don't even realize you're interacting with technology, and technology's doing things, whether it's smart buildings and all the examples that you laid out, or the business processes underlying, you know, the actual management and operations of the business.

Okay, so you've mentioned AI a few times. You have “why not AI?” posted above your head. So let's talk about AI. And there's not a—you can't have a conversation about just technology, but in almost any business conversation now, the topic of AI comes up and its implications in every industry, you know, could be quite profound, including commercial real estate.

Let's tie let I just want to get your baseline view. Do you believe AI is as potentially transformational as it's being positioned to be or viewed as it relates to proptech or commercial real estate?

Aaron:

Absolutely. I think it's totally transformative. but it's not unique to us, Tom. We're not so special. We're not going to be, I think, a huge outlier. I think we're a part of overall how you do business transformation. I think it comes down to that foundational level. I happen to run an investment management business today and how we look at our business and how we look at the difference between people who run businesses who are embracing agentically native business processes and the folks who aren't yet there. The gulf is growing and the value being created by the folks who are using the latest tools is incredible. I think you and I can probably remember, I'll speak for myself here. I certainly remember walking around the streets of Midtown Manhattan, probably in 2000, I'm going to guess it was 2002, 2003. And I remember folks who had a bulge in their side of their suit. And it used to, you know, make people a little nervous when you're walking into a building and there's a bulge inside your suit jacket and what it was, it was your handheld device.

Tom:

Yeah, it's your BlackBerry connected to your belly.

Aaron:

You remember, remember when people started using the BlackBerry? And I remember the efficiency difference looking at my peers. I was working at the time at a ICSC member, Cushman & Wakefield, and I remember some folks, including one of the top brokerage professionals here in here in New York, Paul Amrich, was a few years older than I was, a few steps ahead in the career, and Paul got this BlackBerry and his efficiency, I could tell, went through the roof.

The folks who are using the latest technology, whatever it is, and are making it part of their day-to-day business operations, whether external or internal, are going to see a separation from the folks who are laggards. And I think that's a moment we're in across all businesses. And I know we're living it in the real estate space for sure, which has historically been a laggard industry, as we spoke about earlier. We are seeing the folks starting usually at the mid-market and lower, that distributed long tail of the folks who operate in the space.

It's been really cool to see the most forward-thinking folks from that end start to transform their business with the new technology. The same way, you know, we went from an, you know, abacus to a calculator. And from a calculator to a spreadsheet, right? Now we're in a similar type of transformation where the people who are using the tools are going to get a huge benefit before everybody else catches up. And I think that's the moment we're in now and real estate is not unique. We're not alone here, but there is, because of our data opportunity, a huge chance to really transform in a way that creates a lot of value that wasn't previously created.

Tom:

I agree with you. I when people say how is AI going to impact this industry or that industry, AI is going to impact all industries. and it's really hard, at least when I get asked the question, I always say, you know, it's very hard to predict exactly how AI is going to impact X, Y, or Z, because, you know, if you go back to the internet in the mid-1990s and somebody asked you, was the internet going to be big? Yeah. But how it manifested itself and what it what we how we use it today was a lot different than we thought in the, you know, late to mid-90s. And so things like social media and so forth weren't even, you know, weren't even something that we could have in a million years comprehended or contemplated.

Talk a little bit more depth though. You said something that I think a lot of folks are coming around to, which is that AI is going to impact every industry, but it may not disrupt as many jobs as we think it will. It may end up just making us much more productive and in and enable us to do a lot more. Obviously, every industry's kind of had its turn in the market's evaluation of the potential disruption of AI on the industry, including commercial real estate. That’s been, you know, there a few months ago. Is that kind of your general view that you still think the things that people are perceiving as the biggest risks, you know, the service industry, for example, the large, you know, brokers, etc., that they'll just—AI will just become a tool to make them more effective as opposed to completely disrupting that industry?

Aaron:

It'll be a CRM. It'll be a BlackBerry. It'll be a CRM or a BlackBerry on steroids, Tom, for those folks, right? It'll really make a short-term change. The amount of change and difference it will make is more substantial, I believe, than some of those other technological innovations that were brought into the day-to-day work over the years. But it is not entirely different. It will all get swept up into the daily operations of business. And what won't change is the people side of things.

There still needs to be human intervention. It'll just be that the humans will be doing a lot more human-centric work and a lot less find, copy, paste, edit, copy, paste, redistribute, format. That type of menial work is gone. And that all started to get automated and organized. cycles and cycles of technology ago. It's just happening in a ubiquitous way where it's touching many more people and many different seats and at a speed at which we're not quite used to over the past couple of cycles. That, you know, nobody's sitting still. If you look at my former employer or the peers, the largest players in the space, you have Raj from JLL. If you look at CBRE, these folks aren't sitting still. It's not just people coming to eat their lunch. They're making huge investments into transforming their businesses. And these are entrepreneurial organizations, right? Folks like that.

Their teams who are doing work and their departments are doing—they don't want to be last. They don't want to have someone else eat their lunch. They're implementing, they're testing, they're piloting, they're trying things. These folks are finding ways to stay ahead and not fall behind. I think you said there's a hype cycle going on right now, Tom. I think there's a bit of a fear trade, as you saw, as you mentioned and alluded to, that's just part of a natural evolution of folks getting used to the new normal. The new normal is better, faster, stronger and more tech enabled than it ever was, thanks to generative AI and agentic AI.

Tom:

You know, you mentioned just the human, it allows humans to do more human centric behavior. And as you well know, as somebody not just from your technology background, but your commercial real estate background, this is a very relationship driven business. I mean, people want to do business with the people that they know and trust, and particularly with the amount of cap—how capital intensive this is and the size of the bets that are being made. I don't think that's going to change. And perhaps maybe technology just actually increases the emphasis upon human interaction as opposed to replaces it. At least that's my thinking. You see hundreds of companies have the opportunity to, you know, invest and evaluate different opportunities on a daily basis. Just talk a little bit as a VC, as a venture capitalist, as an investor, your perspective. How do you evaluate these different opportunities that come in front of you, both from a, you know, technology perspective, but there's also the leadership perspective? And I know you spend a lot of time, you know, with leaders and mentoring young leaders, etc. So let's break it down first, just in regards to, you have an opportunity in front of you, MetaProp, to invest in in a particular company. How do you—what filters do you go through to determine whether this is something that you guys want to do or not?

Aaron:

First, let me contextualize a little bit. You know, what we're best known for in the market is doing early stage technology investments in the built environment, whether it's retail, office, industrial, parking, arenas and stadiums, the multifamily, you name it, single family. That's what we're great at, getting in before anybody else does and helping change the trajectory of this business, which means we need to look for different things than a traditional later stage private equity investor for that subset of our investment profile and program are going to look for. And I'll quote a wise venture capitalist from Silicon Valley who once came in and spoke to a cohort of our earliest founders, the emerging founders, who had just recently, I think in the last twelve months started their business. He was leaning up against a wall. He was wearing his venture capitalist vest from the Valley and it was unzipped and he was cool and he had his

trendy glasses on and his and his sneakers, you know, as we call in Chicago, gym shoes, you know, everyone else is wearing a little bit the more formal. I'm looking, I'm like, this guy's smart and this guy's cool. And he said, he said, in response to a question about what are you looking for an early stage startup in our space or others, he said, look, I'm looking for five things. Five things, Tom.

I'm looking for team. I'm evaluating team. I consider very highly the team. And then I do a bunch of diligence on the on the team. And then maybe I look at how big the problem is that they're trying to solve. And of course, Tom, of course he was being funny, right? And there's hyperbole in there. But it's not so far from the truth when you're in a business like we've been in for the last 10 years. Is that whether you're in a real estate cycle that's moving up or moving down, whether you're in an AI and technology wave hype cycle that's going up or in a retrenching, you know, of the 2000s or other times. No matter what, the resilience and the creativity and the hustle and the capability of the team and the leadership is the single most important determining factor in the outcome of the success of these investments. And these are investments for us. They're not just technologies, right? These are these are bits of companies that we're expecting to really grow. So, you know, the real answers, you spend a lot of time on the on the people, but that's a bit generic. So I want to peel the onion back a little and give you something that may have a little more use and substance.

If I'm someone who's listening to the podcast or watching now, and I'm thinking about looking at an early stage tech company and I get past the people stuff and I understand it's a huge problem, what am I looking at next? I would ask four questions, generally. Four questions if you're peeling the egg. Number one is for what they're solving, who ho owns the budget? Whether it's a consumer, who in the family owns the budget or an enterprise, who owns the purchasing decision and whose pain is going to be felt and where does that money have to come from? Got to really know that when you're looking at an investment. You got to be clear on that as an investor, or at least have a hypothesis that you feel confident in if you don't know yet. Number two, if I'm looking at a team, one thing I want to be looking at beyond just, you know, how capable they are, how resilient they are. I want to understand: do they really understand the problem as deeply as I would like them to do? Do they understand the nuances between the many different people who have to make this decision, but also who influence a decision around making a purchase? This can make the difference between a cool technology, a cool startup, a cool AI agent and a commercialized success that returns capital to investors and ultimately limited partners in funds. Number three, I would ask, especially in this day and age of improved efficiencies thanks to agentic AI, if I'm looking at a deal right now, I'm going to say what's your distribution edge? What is going to make you go to market better, faster, stronger than anybody else? And how are you going to handle that in a way that not just separates you today, but can separate you as things continue to evolve very quickly from a go to market perspective? And number four, what's going to compound this into a , you know, multiple hundred million dollar business or a billion dollar business?

If I'm going to take the risk of my money and my investors' money, that's something, you know, I'm thinking about when I'm sitting in investment committee all the time, is there's a lot of great businesses out there, Tom, tons of great businesses. We see them every day when we're walking down the street from a retail perspective. Those are great businesses. That doesn't mean that those should be startup funded by institutional venture capital. And that's what we do. They have to become huge companies. Right. And a lot of times we're leaning on our LP network, the big names that we you know, CBRE, JLL, Cushman & Wakefield, you know, whomever in the ecosystem that invests with us, we're using these folks to help us think about the procurement side of those things. And then we're spending a lot of time with the technologists in our world. We incubated a business called, you know, MetaProp Labs a year ago to help transform mid-market real estate businesses. We're sitting with the senior AI engineers and they're pushing us to ask the question, you know, if inference and decision making gets 10 times cheaper, how do you get better or how do you get commoditized? And you have to have a founder who's thinking about how the technology is evolving, not just understanding the underlying business needs. You know, if my team devoted one week at CBRE, for example, using a name that we all recognize to build this ourselves, how far would we get relative to how far you are today and how far you think you're going to get? If I can do this better, faster, cheaper on my own, why do I need you? They better have a really good answer to a lot of these questions. The defensibility and the moat questions start to evolve a little bit.

So those four main questions, plus, you know, going to the experts to quickly be able to size and shape, get the feeling that—the contours of where the answers are is something that we spend a lot of time doing and what I would suggest others to the extent they want to get into this crazy business would be interested in and thinking about as well.

Tom:

You know, thanks, Aaron, for walking through all of that. You know, one of the themes that's been kind of consistent on almost all of our conversation today was the importance of people. As you made reference even at the start of this to the topic around the importance of team. I know that you spent a lot of time actually mentoring young leaders, coaching young leaders and so forth, as you've learned a lot about leadership at different levels of organizational size, but particularly with those emerging companies that you guys focus on investing in. What are some of the attributes that you look for in someone that's a kind of a natural leader?

Aaron:

Yeah. I think Tom, one thing I've noticed over the years, I don't know if you've seen it too in your CEO seat, I found the people who run the best businesses and the best leaders, therefore I think are highly correlated, tend to ask the best questions. Whenever I'm in a room with an entrepreneur and they're doing a lot of talking and not a lot of listening, I often think to myself, what's going on? And what is this person's personal trajectory going to be? And how long will they be able to sit in the seat they're in? Not everybody is right for every phase of a business's growth. I don't know what the answer is. All I know is that curiosity and listening and paying attention to signals is a huge part of what being a good leader is. And I can tell you who wasn't very good at that early in his career. This guy. A lot of intentional work has been put into studying the art of listening, really hearing and understanding and demonstrating understanding of other people, empathy, being able to rally folks around you in good times, being able to rally folks around a cause in tougher times. These are things that are incredibly important to the journey of the early stage entrepreneurs in particular that will back with our capital. And that's some of the stuff that I personally filter for during our investment process. That's one of the voices that I carry heavily in investment committee relative to some of my partners and if other folks on the investment team really understand this person's current leadership potential, long-term potential, and the first signal I'm looking for is they how much they use their mouth and how much they use their ears.

Tom:

Yeah. Well, you have two ears and only one mouth and you should use them in proportion for sure. And I do think that's—I totally agree with you. I mean, to be an effective leader you need to learn to listen and you need to realize that you don't have all the answers. But sometimes a good leader just knows that they don't understand—that they don't know all the answers and so they listen to people that might be an expert on those things and just get perspective. And I at least in my life, I had a similar experience to you. I had to learn that the hard way too. But when you get knocked down a little bit, I think sometimes you become a better leader through those lessons that you learn.

Let's talk a little bit about just outside of the U.S. and the evolution of proptech in other parts of the world, in Europe, in Asia, etc. Are you seeing, you know, the use of technology at the same scale in commercial in the built world and commercial real estate outside of the U.S. as you are in the U.S.?

Aaron:

Yeah, I think it's hit or miss, Tom. It's a great question. Outside the U.S., they are particularly at the more sophisticated ends of the proptech ecosystem, the owners, the developers, the managers, the brokerages, the service providers of scale have the same exact needs and wants and demands, and so do the consumers as folks here in the U.S., right? So the wants, the needs, the exposure is relatively similar. The difference I see, and this informs the answer, is that the ecosystem for startup creation, the ecosystem for early stage startup success financing, go-to-market, pilots tests, scale-ups is much, much bigger here in the U.S. than it is in any other market. and that gives a huge edge to organizations in the real estate related spaces and sectors that are that are heavily operating in North America because this is the home of the innovation by and large. Now, don't get me wrong. There's great technologists and there's great technologies outside of the U.S. We see it all the time. But on the whole, they are fewer and farther between. And their commercial growth, the application of that tends to be more fragmented and smaller in most other markets. And I speak about ex-China in particular, which is a whole market in and of itself. So the good news is markets outside the U.S. tend to be leaders in some aspects of technology adoption, including decarbonization, for example. Particularly in Europe and Asia, it is a huge topic. There is a lot of money, there's a lot of regulation, and culturally, it is much more forward there in those markets than it is here. We backed a company out of Japan called Asuene that's doing carbon accounting and technology for that. That's screaming growth and actually growing into the United States recently through its most recent financing round. So there are cases where you will see some of the technology get imported into the U.S. But by and large, a lot of the technologies that we are seeing in some of the markets where we are actively investing, most notably East Asia, but occasionally Europe, EMEA and LATAM is three, four years behind what we had seen in the United States.

Kind of in many cases they're copycat solutions or evolutions of existing solutions that we had seen in markets that weren't quite ready for it yet time, because they didn't have the capability.

Tom:

Well, you know, that makes great sense. I mean, you think of the size of the U.S. capital markets, obviously the source of capital and the mature maturity of the technology and quite frankly, the investment community, the venture capital community. It makes sense that the U.S. would be the epicenter for kind of innovation. Let's talk about an industry that I hold near and dear to my heart, the retail industry. And I know you have a lot of experience in that as well. And let's talk about, you know, the use of proptech or AI for that matter. We recently did a, you know, a major report with McKinsey, “Shopping in the Age of AI.” You know, one of the one of the big findings was that you had mentioned agentic AI and that agentic commerce would generate about a trillion dollars of revenue by 2030. When you think of the shopping center of the future, or you think of the store of the future and the use of technology, do you have a certain vision of what that might look like? And you can pick whatever timeframe you want, five years from now, ten years from now. Do you think there's just some aspects of technological use that aren't being adopted today that you could envision in the future?

Aaron:

Yeah, and part of it's because I occasionally can be personally an early adopter of new technology. I get a chance to see what a little more augmented reality looks like. And I think the shopping experience will be extraordinarily augmented. Tom, you probably are familiar with the old movies that had augmented reality in them over the years. I think about the Terminator or Minority Report. I think there's a real opportunity for augmented shopping within our field of vision, which is, as humans, very important to us relative to other beings, to change the shopping experience. I still think physical shopping, you know, the mall is not dead, right? Things are changing. The back of the store is the new front of the store. These changes are clear and will be here. But I think in the front of the store, the experience is really going to change when in your field of view you have all the information at your fingertips, decisions will be made slightly differently. That's what I think about a lot. We're clearly not there yet, but we're getting very close here. And you can kind of smell it coming. I think it's going to be really interesting to see how the retailers themselves evolve around this and then what needs to happen in the shell around them of the buildings, the malls, and the retail to be able to support that evolution. I'm very curious and I'm very excited.

Tom:

You know, my view is that and the report we just did, you know, would support this, the input we got from surveys and interviews and so forth, that in some ways as technology advances in retail, the store becomes a whole lot more important. And you know, to the point of human interaction, just like the conversation we're having earlier, where technology just allows you to spend more time on the human aspects of things and quite frankly, if you look at the younger generation, you know, the Gen Z generation, they really, you know, they really thrive and look out for opportunities to really engage with people in a shopping environment. The mall has very much become a go-to place for the Gen Z generation, shopping in general, going out to eat, etc.

They've grown up with technology. And so as a result of that, they actually, you know, really thirst for that opportunity to connect. And of course, the store becomes a little bit of a fulfillment center in so many ways, in the integration of the e-commerce world and the physical world.

Let's talk a little bit also just about—I want to get back to you, Aaron, as someone who sees a lot and has access to a lot of different things that are happening. But as a as a business person, as an investor, what what makes you curious right now? I mean, what are the some of the things that are top of your mind as you look, as you think about where's the future headed? What you curious about?

Aaron:

I'm really curious about where we are in the cycle, Tom, as an investor. I think a lot of hype around inflated round sizes for the investments that we do, inflated valuations. I think a lot about what's happening on the macroeconomic level, about what's happening in the debt space right now and what's happening with interest rates. So as an investor, really thinking about the capital we have to deploy, the dry powder, and where we end and cycle and make sure we're not overindexing into a hype cycle, you know, into the eye of a storm is kind of what's ringing into my head of having lived through a few of these cycles over the years. I there's a lot of sense of that in me at the same time and on the other side of things, I have not seen more growth out of our portfolio, more commercial traction, more sales, more implementation, more efficiency inside these businesses than I've seen over the last 36 months. And that gets me more excited to deploy even more capital into the existing businesses we have, into the new companies. So I think we're in a real moment of trying to balance these two things.

A lot of what gets to the headlines lately in the tech space is all the upside. But I think in our world of just having been around a while and having to deliver on our promises in good cycles and in bad, figuring out how to manage those two and merge those two is what I personally spend a lot of my time thinking about. And then I think about where the opportunities and pockets are from not the folks who will never use agentic AI in their business ubiquitously but the folks who will be the slowest adopters. And how can we go into those sub segments and really exploit their slow adoption before they wake up and find the tools, or before the Googles and the Metas and the and the other large players in the space find ways to make those tools more easily accessible and implementable? There's a window here to make a lot of money.

You see the private equity roll-ups going after services businesses. These are things we talk about in investment committee and the theses. We're exploring incubating new businesses and funding third-party traditional businesses that we've backed in the startup world.

Tom:

We're lucky to be living in this, in these times when you look at just the pace of innovation. but there are a lot of things out there that kind of conflict with each other. I mean, just the, you know, some of the uncertainty in the economic environment. On one hand, obviously we're seeing what's happening in the bond markets and so forth, and some uncertainty in there as well, and putting some upward pressure on lawn rates and how that will impact investment. On the other hand, just the scale of technological change and the opportunities that are ahead of us just seem, you know, just astounding.

 So Aaron, we're at the end of our time. Just before we conclude, let's assume we're having this conversation 10 years from now. What aren't we talking about that we wish we should have we should have talked about today that 10 years from now you think will be kind of embedded in in our day-to-day life and our industry?

Aaron:

Other than my hair? Because I'm pretty sure ten years from now it won't be as—

Tom:

Other than your hair. Well you can always adopt my hairstyle, Aaron.

Aaron:

You know, that may be where we're going ten years from now, Tom. We'll be laughing about how young and fun we were. Ithink ten years from now we'll be looking back on this on this moment saying we should have been talking about extraplanetary opportunities. I think we're on the verge of being beyond our sphere of rotation close to the sun and really being able to take advantage of some things that are in broader environment similar to what we've seen in in communication technology over the last, you know, fifty years with the advent of and deployment and scaling of satellite technology. I think a lot more beyond just communication, beyond weapons, space and other planets are going to have a much bigger place in our day-to-day lives here on Earth and how we do things than it does today. And I don't think enough people yet are really thinking about that. And I think the folks who are thinking about that are really backing things like SpaceX, for example. And I think 10 years from now is about the right horizon where we're going to really look back and say, wow, we had no idea how profound of a difference this extraplanetary and global space change and transformation will be.

Tom:

Well, that's a whole other podcast we could have. I mean, it's a fascinating topic. And obviously AI and quantum computing and all those types of things, you know, allows the possibility to solve issues and challenges that we haven't been able to do for the last, you know, series of generations.

Aaron, thank you so much for the conversation today. It was such a joy to speak to you. I really appreciate the time.

Aaron:

Love spending time with you. Thank you for bringing me on, along with other great guests over the last couple of cycles. I'm privileged to be here and appreciate the opportunity.

Tom:

Thanks again and thank you to all of our listeners.

Thanks for joining me on From Where I Sit. Follow the podcast on Apple, Spotify, YouTube, or wherever you get your podcasts, and share it with anyone interested in the future of the built world, commerce, and technology. I'm Tom McGee. Thanks for watching and listening, and I'll see you next time.