It was in 2013 when Leia de Guzman — then an undergraduate working on a campus project to build a solar-powered house — learned that buildings generate about 40% of the world’s carbon emissions. As someone who was already, as she puts it, “passionate about the notion of battling climate change,” de Guzman suddenly saw a vast opportunity to do this through the built environment.
The other epiphany came when she and her team were looking into energy efficiency technologies that could be applied to buildings, which generate emissions through everything from lighting, heating, and cooling to appliances and elevators. “The real discovery was that a lot of these technologies already exist,” says de Guzman, who was pursuing a joint bachelor’s degree in environmental science and commerce at Canada’s Queen’s University.
Fast-forward to today, and de Guzman, a recipient of Stanford GSB’s Climate Solutions Prize, plans to decarbonize the world’s buildings through an artificial intelligence startup called Cambio. She and her co-founder, Stephanie Grayson, also MBA ’22, are developing a software platform that will give commercial real estate owners and occupiers the data-driven insights needed to put their buildings on a path to net-zero emissions.
To achieve maximum impact, the team’s focus is on older buildings, rather than new or recent construction, since older structures generate 75% of the sector’s emissions, of which commercial real estate portfolios are a large piece. Second, as a former investor who has deployed $7 billion in capital across Canada, Europe, and Asia, de Guzman observed that most of the world’s real estate lies in very few hands: institutional investors, commercial landlords, and large corporate tenants.
The question, then, became how to encourage these groups to decarbonize. De Guzman identified a clear answer to this: “You build software to target that cohort,” she says. “And that’s what we’ve set out to do.”
The Problem
Transforming the world’s stock of older buildings into low-carbon, sustainable buildings is a daunting task. First, while new buildings can easily incorporate the latest technologies, materials, and systems during construction, existing buildings require retrofitting of structures that may have been standing for decades, or even centuries.
Moreover, the real estate sector lags others in digital transformation — something de Guzman saw while at Oxford Properties Group. “I experienced first-hand how undigitized the commercial real estate industry is,” she says. “If we can apply AI-based recommendations to consumer retail or transportation logistics, why can’t we apply it to buildings?”
Pressure to decarbonize buildings is growing. Governments are pushing the real estate sector to disclose more sustainability information. Some even require buildings to display energy certificates publicly, providing a “name-and-shame” incentive to those with low ratings. Meanwhile, corporate tenants, property owners, and investors are setting ambitious net-zero goals. “For the first time in real estate history, all stakeholders are asking for the same thing,” says de Guzman.
However, retrofitting large commercial portfolios is currently cumbersome. “It’s manual, expensive, and spreadsheet-led, and it results in decisions made in silos,” says de Guzman. “So institutional landlords and corporate tenants are not optimizing for deployment of their time and capital.”
She also points out that current analytics providers tend to focus on individual buildings and most offer no recommendations for steps to take based on the data. “Commercial real estate managers currently have a fragmented user journey,” she says. “And it’s hard to apply a lot of the insights.”
The Novel Idea
What Cambio offers, de Guzman says, is a portfolio overview showing which buildings are high performers on energy efficiency and resource consumption, and which need upgrades. This provides a data-driven view of where to focus across a real estate portfolio.
“But after seeing the 40,000-foot view, Cambio enables you to double-click down to the building level to see exactly you need to do in each building, whether it’s upgrading the lighting or replacing the HVAC,” she says. “Buildings are complex pieces of equipment that have multiple levers you can pull to make them more efficient and sustainable — that’s where the opportunity lies.”
Using technologies such as natural language processing and computer vision (which extracts information from visual records such as digital images), Cambio captures data from everything from utility bills and building permits to construction and renovation records.
In addition to showing clients where to prioritize their investments, Cambio also identifies any available green loans, tax rebates and other financial incentives. “Here’s where we really differentiate ourselves,” she says. “We overlay ROI [return-on-investment] and regulatory impacts across our recommendation system.”
De Guzman also knows that driving change at scale through the building sector means creating a process that is simple and streamlined. “We want to provide a single application that is a one-stop shop for your retrofitting journey.”
The Innovator
After completing her undergraduate studies, de Guzman knew exactly what she wanted to do — tackle climate change — and where she wanted to work: Oxford Properties Group.
Owned by Canada’s Ontario Municipal Employees Retirement System pension fund, Oxford Properties has ambitious carbon reduction goals. “They were one of the first real estate companies in North America to release a sustainability report,” says de Guzman. “It was exciting to me that they were leaving a sustainable mark on the world through their investments. So they were top of my list.”
With no contacts in the industry, de Guzman took to the phone, emailing and cold calling about 70 real estate executives in Toronto and took a three-hour bus trip to the city to meet whomever she could for a few minutes. “That’s how I landed my dream job,” she says.
Some of this determination can be put down to her roots. Born in a fishing village in the Philippines, de Guzman’s family moved to Canada when she was young. “Growing up in a family with an immigrant mentality, I worked very hard at school,” she says. She earned a full academic scholarship to Queen’s University.
However, in addition to her work ethic, de Guzman also has a sense of purpose that she knows is essential when taking on the challenges of being a founder. “It’s absolutely critical, especially when you’re venturing out to do the daring thing,” she says. “When you’re disrupting your industry with an entirely new solution, you have to be passionate about the cause.”
Luck has also played its part. Through a chance introduction before embarking on her MBA at Stanford GSB, she ended up as roommate of Grayson, who became her cofounder and was one of only two other real estate investment students in her class. “A lot of the little pushes that got us to where we are now seem to have been fate,” de Guzman says. “It feels meant to be.”
Reprinted from Stanford Business.
