AI in Industrial Real Estate

Agency is the new currency. If you want to explore the world, well, I have good news for you. You have more opportunity than ever before, right? If you wanna learn something, you've got more opportunity than ever before. If you wanna do nothing, you can. The real thing we're now facing is actually discovering. You know, the, the, the world is gonna be pretty, there's gonna be a ton of optionality.

Welcome to our Industrial Advisors podcast. You have Bill Condon and Matt McGregor, and we have a fantastic, uh, guest with us today. Uh, Zach Cass, who we heard at IAMC, he was a keynote speaker, uh, at our IAMC conference in Sacramento. He's an AI futurist former head of GTM at Open ai. Was a fantastic speaker at the event. We said he was one of the best speakers we've ever, ever heard. Um, I said the best, I said the best just for the record. Um, and obviously with.

All the AI stuff that's going on we are super excited about, about this podcast. And what's kind of cool is Zach just jumped on to this and, uh, is at a cafe in Manhattan because he couldn't quite make it to the office. They, they had an event that went long. And so we're just gonna do this thing with Zach, uh, in a cafe in Manhattan. And so, Zach, it is awesome to, to have you join us. Uh, thank you for taking the time and making this happen. Thank you both for, for being here.

And should we tell everyone now this podcast is sponsored by me. Thanks. You know, and now, now they can make sense of all your, all your kind words. It's now. Yeah, yeah, yeah, yeah. I'm kidding. It's not, not not sponsored.

Zach, before we get kicked off, why don't just give a little bit of your background? 'cause you know, when you're on stage, I think you'd said you'd been in. AI for 19 years, and I'm like, I thought AI was only like two years old. Right. So I was like, so give us a little bit of background of, you know, your, how long you've been in AI and what you've done. Yeah. Well, I spent my whole career, 16 years, I spent my whole career in ai.

I, I joined a machine learning, but I joined a, a company trying to do data labeling, human data labeling at scale in 2010. This was the year that we, for context, the term data scientist was born out of Facebook around 2009. And so it's sort of like the, the advent of, of what you could consider modern AI when statistical machine learning started getting good enough. If you had the money and the compute and the data, which very few companies did.

I mean, Google, Amazon, Facebook, a few others, you saw companies like, uh, IBM building Watson and making these promises. But it wasn't, you know, it wasn't good enough unless you were really, really, really well capitalized. And so I worked in this category. Called data labeling for a company called CrowdFlower, which became fee eight.

And then that became massive category now dominated by scale AI among others companies you've heard of, and then eventually found my way after working at a couple other large language model companies to, uh, to open ai.

First of all, I gotta give you, uh, some props on the way you shut the audience down. You are the only person I have ever seen. That got everybody to actually put their phones away for over an hour. And I thought of you, of all places, Zach, when I was in mass, uh, Sunday night. 'cause I, I kid you not, I'm in mass. A lady's phone rings behind me and she answers. She answers it. She answers it. Yeah. And she starts talking and I turn around and I'm like, I go like this.

And she goes like, just a minute. And she's talking and I'm like, and I thought of you. And I'm like, uh, we need Zach here. Right. Okay. So just tell, tell theAudience briefly. Station identification. I start all of my keynotes by asking the audience. A very simple, if I recall, IMC also had circular tables. So I asked the audience two things. I said, if everyone could return, turn their chair. So you're facing me? Yes. Also, uh, put away your phones. And I asked to everyone.

It's like, look, if you need to work, I get it. Go outside. It's, I'm not offended. If you don't need to work, don't, don't open your phone. It'll wait. And also what, every time you do it distracts not just you, but the person next to you because device addiction is infectious, et cetera, et cetera. And if you speak to people as adults, and if you speak to people, and I'm also honest, I say, look, it hurts my feelings.

So like when I see you on your phone, it makes me sad and, and that like, you know, doesn't make me feel good. So as long as I'm here, I'll tell you what you can do to not hurt my feelings and people respond to it. I mean, if you, you know, it's like people get it. What's amazing is of all the things that I do in my talk, it is one of the three things that are, is most profound to people.

I mean, it, it, it's, it, you know, it really is like the talk weaves a lot of these ideas in, but people come up afterwards and they go, you know what I, I realized I need a better relationship with my device. And it's like you're giving people the, this opportunity that their pastor doesn't give them that they're like.

You know, their partner doesn't give them to actually put their device away because it's a new voice and I'm, it's not lost to be that, like the novelty of my voice in this setting and also this much group think. 'cause if you take out your device once Zach has said not to, you really are an alien in the group. Yes. Yes. It works. And so for you. It's one of these fun exercises.

That being said, I have seen in the last six months the most egregious, I mean, I watched a guy the other day on the plane at 35,000 feet, take out his phone and just start talking. You know, someone called, took a call. No problem. And, and I, you used to just be like, oh, it's just the kids, but it's not just the kids. It's everyone. Right? It's like, yes. It is, it is, it is an indiscriminate disease. And their volume goes up, right? Yeah, yeah, yeah. It, yeah, nothing, it's, it's bad.

Anyway. Well, I'm, I'm glad that I could, you know what? It works. It really never fails, but then you have an onus, which is to capture the, if you do that, you better be good, is what I realized. It's a gauntlet because if you're bad and people can't distract themselves, then you, you know, people are gonna remember how terrible you were. That's right. Lemme make sure you capture people if you're gonna ask them to do nothing else. Yes. Well, yeah.

Well e everybody listening to this podcast, please put your phones down while listening to this. Right. Um, and, and I, Zach, real quick question this, you didn't say this at IMC, but you said it on YouTube a few months ago.

There is a wave of scientific advances coming, curing, diabetes, all sorts of stuff because of AI talk. Hit that, if you could for a moment, what's the wave? What's it look like for those who are listening if you haven't paid attention? Um, the way this is happening right now is fundamental Science Discoveries used to happen very slowly and they would sort of build on each other, and now they're happening faster and faster.

What's impressive about novel science is that novel science begets novel science. So when we learn more about. This thing, we learned more about that thing, right? Like car batteries like didn't evolve for a long time. And then we made some slight changes to improve the fundamental car battery and that had all these other consequences on like home batteries, Duracell, et cetera, which is why these companies make the same thing.

So these, what we consider often orthogonal or ancillary discoveries actually end up having crazy other implications. So what's happening right now in novel sciences is everyone around the world is basically being supercharged in part because of ai, but also because.

We are learning how to learn better and do and do more fast discovery improvements in material sciences, molecular sciences, particle sciences that we used to think of sort of being as inconsequential, are now having crazy implications. CRISPR is this obvious example, whereas like we learned how to modify DNA, we, it was very expensive. We weren't very good at it.

Fast forward to yesterday, I don't know if you beat, both of you saw, we cloned two dire wolves, an animal that went extinct 12,000 years ago. Wow. Is now, is now howling at the moon. Wow, wow. Whether or not we should play God, that's like, you know, for, you know, Matt, you, you and me and your priest to argue. But I do think it, it's this reminder that all of these things that we have been learning about are now building on each other.

And so the molecular sciences breakthroughs are fast and furious. Particle sciences breakthroughs. Microsoft a month ago announced that it had discovered a new matter, a new state of matter as part of their quantum chip. So they announced the chip and in the process said, Hey, we think there's something besides gas and liquid and solid and, and like there's this or, and, and we think there's this like other thing.

This is now happening at a faster and faster rate, and nowhere is it being more noticed than life sciences because we're all afflicted by. You know, either personally or, or secondarily things like cancer and neurodegenerative disease. And so we used to be focused on all these, these like solutions, you know, better pumps for diabetes, better, safer chemotherapy. Now we're like, Hey, what if we go to the source?

And so we are seeing radical ways of, of potentially not just solving or treating these diseases, but actually curing them. And the GLP ones are a step in the direction of, of curing diabetes. In the same way that like there's a bunch of drugs in the market right now that we think could actually cure forms of cancer and forms of neurodegenerative disease, and you have to pull on that thread and assume it's gonna happen. That is really incredible.

I mean, it seems like AI is progressing at just such a, I. Such a rapid pace, you know, in all aspects.

What would you say are some of the kinda misconceptions of AI currently? I mean, there's probably a lot. Well, it depends on who's ask, who's asking. Yeah. So let's say, you know, one of the biggest things that people fear is like, am I gonna lose my job because of ai? Yeah. Uhhuh, let's talk about that segment, because that, when, when you talk about ai, that's one of the biggest fears, right?

Yeah. And I would love you to throw in the Waymo, uh, elevator combo that just in perception of ai, right? Yeah. Well, so what you're, yeah. Matt, what you're describing is what we've studied is as the societal threshold. What does it mean for us to, the question of whether or not we want to adopt a machine has nothing to do with, with whether or not it is capable of that thing. Right? So separating the technological threshold.

What does a machine capable of from the societal threshold, what do we want it to do? Let's come back to that. Because I do think that the misconceptions about AI actually spur our sort of rejection of the societal threshold, but it's a consequence. I think the big misconceptions right now, well, for a long time people didn't think it was very good.

Everyone was convinced that it wasn't gonna be good, and you had all these people I. Saying, you know, people that get a lot of airtime, Gary Marcus, a professor at NYU kept announcing that it was all smoke and mirrors and then changed his tune and now he's like, oh, it's just very dangerous. And then changed the tune. And now he's like, oh, it means Sam Altman's gonna get too rich. And you know, it's like there, the goalposts move a lot. Uh, and anytime these things happen a bunch.

But I think of the, like, collective concerns. One of the big ones is around, uh, job displacement.

And I think that the concern around job displacement is what is the, you know, what, what's gonna happen to me economically if we automate these jobs? And look, this is, you know, I. The logical thread that you, you, you're, you're pulling here is if AI automates our job, what will we do for work? Therefore, what will we do for money? Therefore, what will we do for food? Will we starve? And this is misguided, right? This is, this is clearly a misguided, uh, fallacy because.

In a world where AI actually automates a lot of work, the world will get economically better. This is a rich tradition of technology. It makes the world economically better empirically, universally, yes. But it doesn't make the world necessarily a happier place. And the reason for that is sort of, they're multifaceted, but what's clear is that in a world where we are attaching more and more of identity to our work, it is hard and going to be even harder in the future for us too.

Find purpose in a world where our work changes frequently and a lot.

And so my message to everyone is, the misconception here around job displacement is that it is an economic issue when it in fact is clearly an emotional issue because the world is going to get much better economically, certainly if we ought to be work. And we all might find ourselves, all of us feeling a loss for purpose. And the obvious solution to this is, well, we should find purpose outside of our work and we should.

Spend more time with friends and family and find more purpose in our day-to-day lives. But that is easier said than done, and certainly in a world where the rust Belt is feeling harmed and aggrieved, even though it's not like it's destitute emotionally, but in fact supported economically, right? Mm-hmm. Food stamps mean that no one in the United States dies of. Starvation anymore, whereas they used to, but that's not the principle issue.

The principle issue is we took the jobs, we took the purpose, we took the meaning from these places, and they are destitute now as much sort of emotionally and spiritually as they are economically. And, um, and I, and, and you know, there are lots of studies on why economic success is not perfectly correlated to happiness. And Costa Rica is this amazing example of a place that is. Very happy. One of the happiest places on earth and also one of the poorest places on earth.

So this, I think, is the thing people are missing, in fact, of all the things the most. Yeah. That's fascinating by the way.

You told a a great story that that would mean a lot I think to the listeners of this podcast 'cause we're industrial about that relationship to the job and the future of the port and how they push back on automation. Maybe just touch on what you said about that, the dock workers, the, the late, the longshoreman went on strike in November last year. I think. Uh. It certainly caught my attention. I imagine it caught a lot of other people's attention, for sure.

Yeah. And they, they, you know, they went out into the world and they said they had been seeing this trend of, of the, of the ports themselves starting to automate. And so the head of longshoreman said, we're gonna go on strike. And he pointed at the, at the nation on CNN and said, if you automate our jobs any further, that's why we're gonna strike. And so you need to guarantee that you won't automate our jobs. And what he was saying was. We need to guarantee that we can do this job.

He did not ask for much more money. I think he asked for like 25 cents or 50 cents more an hour. Something very nominal. And critically, he did not ask for more job safety because you know what happens when you automate the ports? They get a lot safer. You get a lot safer. Yes. You know the things that the unions typically ask for money and job safety, it's not what he asked for. He said, I need to know that we're gonna have this job.

And we went and talked to the longshore and a bunch of questions, told us everything we needed to know. One. What's the most important part of your job? Four. Four said community two. Do you believe you could be gainfully, employ, employed outside the ports? Three or four said yes. Three. Yeah. And there's in fact all evidence to suggest there's an incredible demand for skilled and semi-skilled physical labor. I. Right.

Like especially the guys in Long Beach, a lot of people need needed to rebuild a lot of LA right now. Yeah. These guys are very skilled. I mean, there's a lot of construction work available. Three. Was anyone in your family in the union? Three of the four said yes. Their fathers were in the long, were in the union. Four. Do you want anyone in your family to be in the union? Three of the four said yes.

One of the four said they were gonna continue having children until they had son, so that their son could be in the longshore. Wow. It's just clearly not an economic issue. That's right. And what I remind everyone is, you know, who benefits economically if we automate the ports? All of us. Everyone. Yeah. Every person. Yeah. Including by the way, the longshoremen eventually, like including their kids, like their prodigy.

Like everyone gets better when we introduce technology into the world and yet no one actually wants their job to be the one that automates Right. Right. And, and so we are, we're left now in this place where we're like, I want the world to be better, faster, cheaper, more resilient, more robust. I never want to face a wait for my stuffs. I don't, you know, I, I want the, I want the supply chain to be great. And then when faced with that, you know, reality of like, Hey, what happens?

We have to automate your job. People go, well, not, not my job, because you know, who the long term we wanna automate all the tax and account. And those people are sitting there going, well wait a second. Wait, hold on. Not me. Right? Like, yeah. Someone else, and this is, you know, this is just the, it's just, it's, it's easy to understand and impossible to solve for really. And, um, I think it's gonna be our generation's greatest sacrifice.

I really think that our generation is gonna come to realize a, a, a, a, a profoundly economic, abundant world. And we may not have yet seen the bottom in terms of. Happiness. I really think we may have a, have, have ways to go. A lot of people are not procreating. A lot of people are not partnering. I know it's insane. A lot of people are living recruitive isolated lives.

The rise of the incel, you know, men who have not had sex in their life is like tripled and, and I'm not, you know, it's like 18 to 25-year-old men who spend all day playing video games inside. Here's a, here's a really messed up fact. That I learned the other day for the first time, maybe in human history, but certainly for the first time in modern history, since we could study this, a father and a grandfather is more likely than their son to break a bone. Wow. So forever. Oh wow. Oh right.

The emergency rooms were flooded with kids, right? Yes. You know, it's like, you know you have a boy. It's like you know that that kid's gonna break their bone and then you're gonna have to take the emergency room. Yes. That's what boys do. They break their bone. That's insane. Not anymore. That's insane. What's the dad? Right. You can't break a bone playing video games. Right. You can't break a bone playing video games. You can't break a bone strolling TikTok. Wow. Well, I'll say this.

I mean, I, I had 10 baseball games between three of my boys this last weekend, so there's some broken bones in our future. Yeah. By the way, I, I, I will say that what I think Bill, you just pointed out is something that I also stress in any of these situations. Everyone's like, well, not me. And I'm like, actually that's probably true. So like there's a confirmation bias if someone's listening to this podcast, I mean, I don't know.

You know, they're in a different socioeconomic space probably, but I. They're making a decision in their life to enrich themselves. Agency is the new currency if you want to explore the world, well, I have good news for you. You have more opportunity than ever before, right? If you wanna learn something, you've got more opportunity than ever before. If you wanna do nothing, you can. The real thing we're now facing is actually discovering.

You know, the, the, the world is gonna be pretty, there's gonna be a ton of optionality. And the only good news about the lethargy and the isolation right now, I. Is that the, those who are participating in it are miserable, right? They're miserable. Yeah, yeah. Yeah. The evidence is mounting that living an isolated life is the worst thing a human can do. That's right.

And so I think we should expect to see this sort of reversion to a much healthier mean, especially when we go and study and, you know, Bill's boys are gonna live in a world that, that are profoundly better than the one we lived in. Filled with all sorts of wonder and, and exploration and journey, and they're be like, I don't, you know, what's everyone talking about? Well, yeah.

You, you were raised to love the physical world and community and friends and family and values, and a bunch of people were forsaken in that regard. Mm-hmm. Because they could, because you could truly just sign off. Yeah. And for a long time and you, or you could not opt out of the society. Now you can, you can just do whatever you want because it is actually so inexpensive to be alive. That's amazing to think about all that. It's also like interesting to think about like during.

How like the, and not to go back into the pandemic, but like people got like used to just hiding out during the pandemic and then you have this like AI. Boom. Right. That, that makes it even easier to like, just isolate yourself. Not only hide out during the pandemic bill, but they stretched it three years past it. Well, that's, we're still calling people back. It's insane. Right? They're back to the office.

Yeah. Yeah. Anyway, bill, you, you might have seen this with your boys, three boys, is that right? We have a daughter and then, but she's in college and we have three boys that are 16. Oh, okay. Uh, 13 and 11. So the, um. Average American male aged 18 to 24 to in 2019, spent an hour a day playing video games. Today, that number is almost three hours. That's not surprising. And what we saw during this co, we called it a covid bump, right?

We saw lots of things that were temporary ephemeral to covid, but the device addiction and the isolation was not interesting, and the anxiety and depression that has come from that, you know, sadly feels like. Like a fixture of this generation in the same way, honestly, that like alcoholism was a fixture of the greatest generation. Mm-hmm. Right.

Like, you know, it is like, and by the way, this is also my reminder, if you snapshot the United States in the 1950s, you would assume we're all gonna die of alcohol poisoning and cigarettes. Right. Right. So my, my, my, my reminder to everyone is, and we figure it out, right? And. We get better all the time. Every generation tries to fix the, the prior generation's mis, you know, failures. This one's gonna be expensive. Yes, it is. That's fascinating.

Well, last question, let's tie it real quick.

Back to industrial real estate. How is AI going to be changing? Site selection and the way people per pick locations for fulfillment, distribution and manufacturing. So this is what I said to you all, and what I'll say to anyone in real estate, which is I think the currency of the future is the physical community. So like in a world where stuff gets really cheap. Wilmore like, okay, you know, bill enjoys a life that his great-grandfather couldn't fathom. Right? Yep. Like he is like, yeah.

Luxury is beyond their anyone's comprehension for healthy, amazing kids. You just like, you have everything. What is the thing that like any of us would not just bill not to pick on Bill, but any of us would want more of it's time with friends and family in the spaces that we cherish the most. Right? Real estate, to me, it. You know, the more things change, the more they stay the same.

Creating the spaces in which people live and work becomes critical and creating the spaces that allow for those things becomes critical. So my expectation is obviously AI is gonna be way better at like making a more perfect market. Is a site available is no longer maybe gonna be the thing that actually helps a buyer and seller meet, right? Like you have, you have these satellite images now that can find any warehouse anywhere and triangulate should this, should someone make an offer here?

And what should the offer be? Repricing a market, creating more fungibility in the market. Obvious, but I think what's even more important is there's gonna be this massive rise of the experiential economy. My bet is that we, we live in a world where I. So much more emphasis is placed on experiential economy and that the real estate market will, will come to reflect that.

Moreover, we should expect to see just massive investments in the infrastructure that powers this experiential economy, data centers, vertical farms, uh, power plants, et cetera. And so I'm not saying this to pander the audience, it's a pretty amazing time to be in real estate because. The actual use of like the one thing we cannot grow more of is land. It's actually truly the one thing we cannot make more of.

And designing the spaces in which we live, work, play becomes so much more important in a world where that we start to actually appreciate the scarcity of that land and to not mention how much more infrastructure we're gonna need to actually power all the things in our lives that we want to do.

Well, Zach, you were my favorite speaker at IMC. You are now my favorite. Guest on our podcast. This, this podcast is typically 15 to 17 minutes. We've doubled that. Uh, I think this is our longest podcast, uh, that tells you how interested, uh, we were in you. And so thank you so much for joining us. You truly were, uh, brilliant. Thank you guys so much. And, um, yeah, I'll, I'll, I'll, I'll be around and we got a book coming out that I'll bother you about.

You can send it out to your listeners. Yeah, we'll for sure we'll put, uh, you've been, your contact, been information in the footnotes here. Yeah, absolutely. Terrific. Um, alright, well thank, thank you guys. Thanks for putting up with this, uh, this space and I appreciate, I appreciate you making time and taking an interest.