Rahul Subramany, co-founder and CEO of Monaire, joins Jason to discuss why commercial HVAC remains largely disconnected and reactive—and how sensors, software, and AI can make existing equipment smarter. They explore technician shortages, rising cooling demand, the fragmented HVAC ecosystem, and the tradeoffs between working within an established industry and trying to reinvent it.
Most commercial HVAC and refrigeration systems provide building operators with little visibility or control. Facilities teams often learn something is wrong only after receiving a complaint, while technicians arrive without the equipment data needed to diagnose the problem efficiently.
Rahul Subramany is the co-founder and CEO of Monaire, which adds a low-cost layer of wireless sensors, controls, software, and AI to existing commercial equipment. Monaire helps multi-site operators monitor their assets, optimize energy use, predict failures, coordinate repairs, and verify that the work was completed successfully.
In this episode:
00:00 — Introduction
01:00 — What Monaire does for multi-site operators
03:00 — The USPS experience that inspired Monaire
06:00 — Why commercial HVAC equipment still lacks connectivity
08:00 — Why Monaire sells directly to building operators
11:00 — The reality of reactive facilities management
16:00 — What an ideal connected HVAC system would look like
18:00 — Why BACnet hasn’t solved interoperability
21:00 — Connecting equipment from different manufacturers
24:00 — Monitoring, optimization and predictive maintenance
26:00 — How Monaire keeps installation costs low
27:00 — Using AI to predict equipment faults
29:00 — How commercial HVAC equipment gets purchased
32:00 — Working with existing HVAC service contractors
34:00 — Predictive maintenance and flattening seasonal demand
36:00 — HVAC contractors as a potential sales channel
38:00 — Why no one manages the building as one system
42:00 — Expanding into plumbing and electrical equipment
44:00 — Technician shortages, cooling demand and grid pressure
48:00 — How AI can improve HVAC service and energy efficiency
50:00 — Working within the system versus reinventing it
52:00 — Partnerships with major HVAC manufacturers
54:00 — What commercial HVAC could look like in 10 years
55:00 — Building the Samsara of commercial buildings
57:00 — Closing thoughts
Learn more:
Monaire: https://www.monaire.ai/
Rahul Subramany: https://www.linkedin.com/in/rahul-subramany
Jason Jacobs: [00:00:00] Welcome to BuiltForward, the podcast exploring where construction is heading over the next decade, and how AI and other emerging technologies will and won't transform the industry. I'm Jason Jacobs, a longtime startup founder, investor, and the host. Let's get into it
Today's guest is Rahul Subramany, co-founder and CEO of Monaire. Monaire is a company bringing intelligence and automation to commercial HVAC and refrigeration systems. Most commercial HVAC systems have little or no connectivity, leaving building operators with limited visibility, service contractors reacting to problems after they occur, and a lot of wasted energy, time, and money.
Monaire is working to change that with a low-cost layer of sensors, software, and AI that can be added to existing equipment. Rahul and I discuss how the commercial [00:01:00] HVAC ecosystem works, why it's so difficult to innovate there, the implications of technician shortages and growing cooling demand, and how AI could transform the industry.
We also explore a broader question. When trying to transform an established industry, is it better to work within the existing system or to try to change the system itself? I learned a lot from this one, and I hope you do, too. Rahul, welcome to the show.
Rahul Subramany: Thank you, Jason. It's really nice to be here
Jason Jacobs: It's great to have you. Uh, I saw you at an event, I guess, uh, I think it was a couple weeks ago. Maybe it was last week. They all blur together. But, um, yeah, we were just having a hallway chat, and you were telling me all about Moner, and, uh, and I was so interested in it and learning so much, and it's so relevant to the things that I'm exploring that essentially the show is just an excuse to, uh, to have a continuation of the discussion we were already having.
Rahul Subramany: I know. It was, it-- we initially were just kind of saying hi, and then I think, uh, we [00:02:00] talked for like thirty minutes, right? And you were literally about to get onto an elevator, and we saw, uh, each other in the hallway, and I think we had a really productive conversation. Um, so I'm looking forward to spending more time and continuing that conversation and be able to share, uh, more of what we've learned, uh, over the last couple of years, uh, with a larger audience as well.
Jason Jacobs: Sounds great. Well, for starters, um, Rahul, maybe just frame for the audience, um, w- w- what Munir is and, and how it came to be
Rahul Subramany: Absolutely. So, uh, at Monare, uh, we help multi-site operators in retail, quick service restaurants, and fitness, um, manage their HVAC and refrigeration assets across their sites. And so we help them monitor a- all these critical assets, um, optimize their runtime, uh, predict issues before they become real problems, and then automatically coordinate workflows to get these repaired through their service provider [00:03:00] network.
And we help them do all of this through a single pane of glass or a single piece of software. Um, and that's really important because, uh, if you are in facility, then you're trying to manage a portfolio of hundreds of sites that are geographically displaced. Um, needing to go look in five different software platforms while being remote is tough.
And when you don't have any visibility and control, uh, you end up, uh, getting a lot of complaints, so the people in the space are uncomfortable. You end up wasting a ton on the energy side, um, and then you also waste quite a bit on repairs and maintenance, right? So I think what we do helps multi-site operators, uh, save or reduce OpEx while also improve, improving comfort, um, and, um, sustainability outcomes across their facilities.
Um, so Monare started, uh, quite interestingly, like a, a few years back, uh, so it's, uh, when I was still at, uh, SimpliSafe, the home security company, um, [00:04:00] deep in the sort of Internet of things space. And I read an article about how, uh, Nest, uh, now part of Google, um, how Nest really transformed residential HVAC and how homeowners interacted with their HVAC systems, right?
Um, so back, let's say ten years before, um, before Nest, uh, as a homeowner, you could only dream of being able to control your AC, uh, while you were at work before you headed home. These days, ninety percent of homes actually can. Uh, you can control them from your phone. So a-- uh, Nest pretty much transformed residential HVAC.
And then in twenty twenty-three, I was at a USPS location, uh, and the thermostat there, uh, was set to heat to seventy-two degrees, and it was a relatively warmer day here in Massachusetts in May. And the clerk at the desk was saying that it's really hot in here, but unfortunately, they have to wait [00:05:00] for somebody from facilities to come and change that thermostat, and they only did that in the first week of June And so physically, someone had to drive to every USPS location in the greater Boston area and change set points to switch the unit from heating to cooling,
Jason Jacobs: Crazy
Rahul Subramany: it was just mind-blowing. And so if an organization the size of USPS was running their facilities operations in this manner, I just wondered how it might be across many other portfolios. And that prompted a discovery process, uh, spent the next few months talking to, uh, many operators across restaurants, retail, office, et cetera, uh, and learned very quickly that, uh, the practices that USPS carried out, uh, actually do happen across a much wider portfolio, uh, of buildings across the US.
Hence, Moner was born, uh, with the, uh, with the initial thought around how do we help these multi-site operators, uh, run their facilities more efficiently?[00:06:00]
Jason Jacobs: Mm-hmm. And, um, uh, and so coming in, it sounds like you were coming from the Internet of Things side. Did I, did I read that you have a co-founder who, um, who comes more directly from commercial HVAC?
Rahul Subramany: That's right. That's right. So, um, uh, my co-founder Nish and I-- like he has more of an HVAC sales background. Uh, so he spent his, uh, career in, uh, designing, building and selling HVAC systems. Uh, and so we were talking about some of these challenges with, uh, the likes of USPS. Uh, and so we connected through a mutual friend, and as we were talking, uh, he was the one who quickly pointed out that, uh, most HVAC systems sto-sold in the US today are these packaged rooftop units.
And because of the, uh, way in which they are sold, the channels through which they are sold, usually they get sold with minimal to no controls at all. So imagine just like a basic [00:07:00] thermostat that you can control from a wall, right? That's, that's pretty much the bulk of commercial HVAC units that get sold and installed in the US today.
Um, so until that changes, right, like you can't even imagine, uh, getting these systems hooked up to the cloud. Not to mention like they're not-- these things are not really ready even for the AI era, right? So there was a big, big opportunity there. Uh, and so we kind of realized that. Um, my co-founder, uh, has kind of stepped back from the business.
He had some family commitments, et cetera, come up. Um, so, uh, unfortunately it's just me now, uh, trying to figure this out. It's a really tough space. Uh, but we do have a, a pretty strong team now at Monare. We have about twenty-five people here. Uh, and we are fairly confident that, uh, uh, what we've built is already, uh, uh, doing wonders for our customers and, uh, we hope to continue to scale up our product and our sales motion to be able to bring this, uh, technology to more, uh, multi-location businesses [00:08:00] across the US.
Jason Jacobs: Now it, it strikes me, um, Rahul, that, that if you look at the state of the system where these devices are not connected and as a, um, building inhabitant, you don't have as much control as you would like, which then leads to not only unhappiness but inefficiency as it relates to energy usage, that there'd be different ways to tackle that, right?
You could, you could tackle that with the hardware itself. Um, you could tackle that, uh, um, working with contractors. You could tackle that, and it sounds like this is more the approach that, that you're taking is working with building owners directly. Um, why did you choose building owners, and how widely did you canvas before landing on that decision?
Rahul Subramany: Yeah. Uh, there are a, a number of different ways that, uh, you could potentially go to [00:09:00] market in this space for sure. Um, and I mean, I think the sort of three cleanest ways are the building owner, the service provider or the HVAC contractors, and then the distributor, right? Like people who are selling these large systems, right?
So you have those three channels. Um, for us though, uh, we organically, uh, went towards the building owner and the operator, uh, because they are the ones that are living with these buildings every single day, right? If you think about, uh, who is running these buildings, who is being called when somebody feels un-uncomfortable in the space, et cetera, it's the operator of these buildings.
And across the US, whether it's a sort of, uh, tenant, uh, landlord, landlord relationship, so if it's, if it's a triple net lease, for example, even in that case, the, uh, operator of the building is the one who is responsible for main-maintaining the HVAC system. Uh, and the landlord pretty much owns [00:10:00] the, uh, asset on the roof.
But running the asset and paying the utility bills, that gets pushed down, uh, to the tenant, right? If it's a gross lease where the landlord pretty much covers everything, the landlord is self-motivated to make sure that their operating costs are kept minimal so they can maximize margin. But anyways, in, in all these cases, the operators are the ones that are getting that phone call.
The operator is the one paying all the bills. And so for us, we wanted to deliver maximum value, and we thought starting with the operator was the logical, uh, option to pursue initially. Uh, but we haven't really like fully closed the chapter on the other two channels. I think those would be longer term plays for us.
We have seen strong, uh, success, uh, going after the operator, uh, operators in this space directly. Uh, and so hence we've continued to expand on that motion, and we haven't tried, uh, too much on the other two channels.
Jason Jacobs: Uh, and w-when you [00:11:00] do engage with the operators, what is, what is the function that, that typically is the one where this resonates the most? And what, what pain, uh, are you looking for in terms of what makes them, uh, someone who would stand to benefit the most from what you're providing?
Rahul Subramany: Yeah. So the, the pain really is being solved for the facilities team, right? Um, and, uh, whatever the size of the operation, it could be like a small, uh, family-owned, uh, franchisee of a major QSR brand, or it could be a really large retailer with hundreds of thousands of stores across the US. In every scenario in that spectrum, uh, you have a pretty small facilities team that is asked to do more than what they potentially can, and their budgets, budgets are getting cut every year, so they don't really have much to spend on new technology, et cetera.
And so their pain is that today they have a portfolio of buildings that [00:12:00] they have no visibility and control over. They have another portion that they have some visibility, but they have to use a VPN to log into a BMS system to even be able to see what's going on in that building. And then they'll have another small portfolio that is on a whole separate platform.
So maybe there's a web front end for that, uh, but that front end doesn't always work. It requires custom graphics, et cetera. So you have this kind of really Wild West kind of scenario happening within each facilities team. And so usually what facilities does it, is that they wait for that phone call, right?
So somebody in the space goes, "It's too hot in here." And so they call it in or they put in a ticket, and then facilities doesn't even bother logging into any of these platforms. They default to just send-- let's send somebody, uh, to go on site. And so a technician shows up on site, and that tech usually has to start with figuring out, okay, which unit am I even going to touch?
Because they go up on the roof and the complaint
Jason Jacobs: [00:13:00] Is it-- And is it-- Is this a vendor? Um, I mean, is it, is it, is it, is this a-- This is an external service provider who shows
Rahul Subramany: is an external service provider. Exactly. Right, like, so they, they show up on site and all they know is that it's hot in the, uh, sort of retail floor. Now, the retail floor has 15 rooftop units servicing that space. Now, which unit do I even start with troubleshooting, right? Like I have no idea. So I'll have to spend some time, talk to a few people in the store and do my own discovery before I even figure out which unit I'm there to service.
Uh, and then I start, um, diagnostics from step one because I can't really access any telemetry from any of these systems because that's, that's not easily shared between facilities and, uh, the technician that's there to fix it, right? Uh, so let's say the technician does fix the problem. Uh, now as a facilities person, how do I verify whether the tech actually solved the problem or not?
And so today what happens is I don't. I just, uh, assume the tech did their job [00:14:00] and I'm just gonna now wait for the next phone call. Uh, because I'm so busy, I'm spread so thin that I just don't have the bandwidth to close the loop on every single service call, right? And so this is how most of commercial buildings in the US are run, right?
Very, very much reactive. Uh, even if they think they have some predictive analytics, uh, most buildings don't actually use it 'cause it's more painful to use predictive analytics the way it's been implemented than just to keep doing what they've always been doing which is react to complaints, uh, and get that through a service provider to come and, and fix.
And, and so that's a reality. And so the pain is really felt by the facilities people and their pain because they don't-- they have so much pain that they don't spend enough time optimizing any of this. That eventually then shows up in the P&L as really high maintenance costs, really high energy costs.
You talk to any CFO that operates commercial buildings and they'll tell you the, the [00:15:00] utility bills have been going up five to to ten-- five to ten percent year over year without any rhyme or reason over the last decade. Whether they add new buildings or not, it goes up five to ten percent. Whether utility rates go up or not, it goes up five to ten percent and nobody knows why. Repairs and maintenance, exact same story, right? And we-- people say inflation, et cetera, et cetera. It just keeps going up, up, up and up, right? So facilities pain eventually shows up in the P&L and the CFO, the C-suite, uh, uh, feels it too. Uh, so those are like sort of the two, uh, key areas that we focus on: uh, the facilities team, who's the user of our product, and then the, uh, the financial team, uh, who kind of is able to derive benefits from, uh, the product that facilities is using to optimize their operations.
Jason Jacobs: And, um, if you take a step back and maybe take a long view or even a theoretical view without constraints, [00:16:00] what would be the most elegant way to address this problem? And then I wanna bring that back around to, given the practical realities within which we live with, you know, multiple stakeholders and different vendors and lack of integration and standards and whatever, like, you know, practically, where did you start?
And I'm guessing those aren't the same, um, which is why I asked the question.
Rahul Subramany: Yeah, I mean, I think if you had like a clean slate and if you, uh, assume that, uh, uh, every manufacturer in this space would, uh, feel self-motivated to, uh, provide a common governance layer, that would be ideal, right? So you buy a commercial packaged rooftop unit from the factory. It comes with software that automatically connects it to the cloud.
Maybe it even comes with, uh, a cellular SIM card inserted right into it, so you don't have to figure out how to get it connected. And once connected, it can be [00:17:00] easily integrated into your, uh, software platform of choice. Right? Now, that would be the ideal world. So now you can connect the hardware to the cloud, and you can connect the cloud to applications that you use to run your business, right?
But as I just talked through that, you can see the number of pitfalls across each step, right? Uh, manufacturers obviously, uh, don't want to use a shared layer because that reduces differentiation, right? And so if everybody can build applications on top of your hardware, then you can't really sell and stand out against the competition.
So manufacturers don't play ball. In fact, in the HVAC space, there is this common protocol, BACnet, right, that you hear, uh, that is-- uh, has been in use, uh, for decades now. And all sort of, uh, commercial building systems, uh, uh, not all, many of them do have support for BACnet. But unfortunately, BACnet is [00:18:00] not a, uh, easy standard, and there are a lot of different interpretations to it, too.
So manufacturer A can choose to interpret, interpret and implement BACnet in XYZ manner, while manufacturer B can choose to do it in an ABC manner. And so now bringing those two systems together would require someone else to put their intelligence layer on top of it, right? So even though there is a common protocol, actually using it in practice has been really, really difficult.
So just on the hardware side, like those are the challenges. And then it goes, uh, every step of the way there are challenges, right? So, uh, uh, let's say you are, um, a commercial retail operator, and you decided to buy all your hardware from the same vendor. Now who's gonna build your software or which software platform are you going to use?
Are you gonna use the same thing that the hardware vendor provides? Are you gonna use something else? Do you build your own custom one, et cetera? So lots of options there. Um, and then let's say you do end up using that same hardware vendor's [00:19:00] software. Uh, what happens in the future when you're adding a new site and now you're getting a much better price from that hardware vendor's competitor? Are you gonna give up on all those savings? Probably not, right? And so now you have a portfolio where you have ninety-nine percent of your buildings on one platform and one percent on a different, and that keeps growing year over year, right? So this is where it becomes really difficult. And I see a lot of parallels to, uh, the smart home space, uh, with all of this, uh, which is where I came from, uh, before starting Monare.
Uh, 'cause in the smart home space, uh, couple of decades back, we were all sold on this promise where in the future, you would walk into your home and the home would know you, and it would behave like your desires, right? You'd walk into your home and you don't have to unlock the door. It'll just unlock based on maybe recognizing your face, et cetera, et cetera.
And then you go in and the lights go to, uh, whatever light levels that you prefer. The AC comes to whatever you [00:20:00] want. Uh, the reality is that less than five percent of homes can even remotely do any of this today. And so smart homes, except for small pockets like maybe cameras, et cetera, outside of that smart home hasn't really taken off.
And I think a large part of that is because all the hardware manufacturers and the software manufacturers, they never really wanted to play nice with each other. And so I think somewhat of a similar thing is happening or has happened within commercial buildings. And, uh, that's where like I'm, uh, while the vision sounds great, I don't think practically it's possible
Jason Jacobs: Uh, so then as a new entrant coming in, observing these dynamics and these problems, um, how did you balance broad coverage with, um, uh, with improved functionality around a more narrow set of devices? 'Cause I'd, 'cause I'd imagine there's this tension where the more narrow you work, the deeper you can [00:21:00] go around those devices and the closer you can work with the manufacturer, but the more narrow you work, the less coverage you have, and, and maybe coverage is paramount, and if you can't cover 100%, people will shut you out altogether.
So, um, yeah, like what's the dynamic and, and how did you, um, uh, plan for it as you thought about c- coming in as a, as a new player?
Rahul Subramany: Yeah. So I think the first challenge we had to solve was how do you bring an entire portfolio with many different pieces of, um, hardware, how do you bring that entire portfolio to a common cloud layer? So I think that was like the first challenge, right? Like that's-- you have to get the data out. Um, and so, uh, we took a couple of, uh, principled assumptions there.
The first assumption was that, uh, we assumed running wires is going to be very expensive. And so we kind of said, naturally, let's go wireless, uh, everywhere we can. And so, uh, [00:22:00] that was the first one. The second one was, uh, getting the data from the existing control board, et cetera, was going to be tough because every manufacturer tries to lock it down or they have a different way to, uh, store and process the data, et cetera.
So getting it out of the system was going to be tough, right? So that was a principle, was like, let's not try to get the data out of it. Let's try to augment with our own sensing layer. And the third thing was like, uh, control capabilities. So now we have to get the data out, but then we also have to be able to send control signals in.
So let's find the common control layer that is ubiquitously available across all manufacturer lines. And so there's like a few different protocols, like BACnet is one of them. And so we kind of narrowed down to a couple, uh, that, uh, uh, we have added support for. So that then helped us build the common operating layer, which is a wireless sensing system with controls interfaces that work with any existing, uh, commercial HVAC unit out there.[00:23:00]
And so that was the first thing that we built. Um, and, um, we built it in such a way that anybody, including Jason, if I sent you a kit with Monare hardware in it, anybody can learn how to install it without needing any formal training, right? And so we have this app that walks you through step by step, this is what you're gonna do.
Uh, and because everything is wireless, it makes it super simple too. So in many cases, all you're doing is, uh, peeling and sticking the sensor inside, let's say an HVAC ductwork. And the sensor automatically connects to our gateway, which automatically connects to a cell network, which then allows that gateway to talk to your phone, so you can manage and set these up with just a few different clicks in the app, right?
So that's what allows us to now bring, uh, this disparate set of hardware connected to the cloud, and we're able to get data out, and we are able to send our control signals in. And that, that builds our initial platform, uh, for us.[00:24:00]
Jason Jacobs: And, and then, um, with the initial platform, uh, what is the primary value that you're adding today? And directionally, how do you see that evolving over time?
Rahul Subramany: Um, so I think the, uh, main advantage is now you can roll out a common layer across an entire portfolio, uh, without breaking the bank, right? So for us, uh, the total install cost is about one tenth of our nearest competitors today. It's that much lower. And so when you're operating a large portfolio, it's now feasible, uh, financially to, uh, build a common operating layer. Then the data powers pretty much all the downstream benefits, right? Now, we have data on the asset, we have data on the telemetry from that asset, and we're able to send control signals down to it. So then we are able to now build algorithms that, uh, optimize runtime to reduce energy use, [00:25:00] uh, look at the sensor data to predict faults into the future. And before those faults actually show up on-site, we are able to issue work orders that can go straight to their service providers, uh, through software platforms that they use today, uh, via integrations, et cetera. So, uh, what happens there is like post-Monaire, you go from a very reactive approach where you're just waiting for that next phone call or a ticket, to one where your tech shows up before the store manager even realizes that there's something going on.
And the tech fixes the issue, and our AI is able to then verify the fix, whether it actually worked or not automatically, and if it did not, tell the tech to go back and, and address it again without having to wait for a phone call, uh, from the same space, right? So this common operating platform allows you to get, uh, full automation, full monitoring, full control and visibility across an entire portfolio, uh, in a really [00:26:00] simple, cost-effective manner.
I think that's really what this enables.
Jason Jacobs: Uh, w- what is it about your platform that enables you to deliver it for a tenth of the cost relative to your competitors? And, and what prevents them, if anything, from heading down a similar path and copying your approach?
Rahul Subramany: Um, I think the, the main-- uh, there are a couple of main reasons. Number one is, uh, um, the, uh, hardware is, is pretty much wireless first, so that keeps install costs really low. Number two, the installation process itself, uh, has been, uh, made super simple so anybody can install it. Uh, which means we don't have to fly a technician to a site in Miami, they install it, then fly that same person to another site in Atlanta, right, which adds a ton of cost.
Versus with Monaire, what you can do is the local HVAC provider in Miami can install our product. The local technician in Atlanta can do the same thing. [00:27:00] So that drastically reduce install cost. But none of this would matter if the data from, um, our platform, uh, cannot provide the insights needed that derive the outcomes.
And what I m-mean by that is, uh, as many people in the tech industry, including Steve Jobs, like they all say, "Simplicity is the ultimate sophistication," right? And that's really what we have tried to do. With very simple sensing data, we are able to derive insights that others struggle to do even with a ton of data. And so that's really unique for Monaire. So we have our proprietary algorithms that are able to just based on high frequency temperature data and, uh, control signal information, they're able to figure out about eighty different faults that may happen with an HVAC or refrigeration system. And that we are able to predict those and also figure out the root cause, um, in a pretty [00:28:00] accurate manner, um, using our proprietary machine learning algorithm.
And we've been, uh-- or, or sorry, we've trained, uh, these algorithms with data from thousands of systems across the US. And as you know, like in this space, like as you add more and more systems, your algorithms are going to get better and better. So that's really our secret sauce, which, uh, won't be easy for competitors to replicate.
Uh, at the same time, being very focused on building the simple hardware, that's also really tough, especially for vendors, uh, in the HVAC space that are used to complicated. Um, and so I think that's really where like we stand out. Um, and I mean, honestly, like if another manufacturer wants to do the exact same thing, I'm all for it, uh, 'cause this space needs a lot of effort, and I welcome competition in this space, which is like I'm very comfortable openly talking about what we do.
Um, but we do need a lot more players in this space that deeply understand the problems that [00:29:00] are facing commercial operators today, uh, and come up with solutions to help them out. Um, so I think some competition would actually help, uh, Monaire, uh, continue to stay sharp and, and provide more differentiated value.
Jason Jacobs: Uh, when it comes to, um, monitoring issues and addressing them, as well as just making sure that the right system's installed to begin with, um, w- how has it historically worked? So in a world without Monaire, um, like what's on the business owner? What's on, uh, the, um, the HVAC, um, in-install arm, and then what's on the services arm?
And then how, how does that dynamic look different, um, in a world where Monaire is, is introduced and, and incorporated?
Rahul Subramany: Yeah. So the, um, current, uh, or the existing, uh, [00:30:00] HVAC purchase installation process, uh, has a, a, a number of different players, and every scenario can be unique. Uh, but it's usually going to have, um, like whoever is going to pay for the HVAC asset, and it's either the, uh, operator of the building, the, the tenant, or it's going to be the landlord.
So one of the two. Then you'll have the installation company. That's your-- It's usually going to be the, uh, HVAC company that services, uh, HVAC systems in that market for you, right? So there'll be them, and then there'll be a distributor, um, of these HVAC assets. So these would usually be the three key players.
And often what happens, especially if it's a landlord-led scenario, the landlord wants to pay the least amount of money possible. The HVAC service provider wants to make the maximum margin possible. So does the dealer or the distributor. So what hap- often happens is you end up [00:31:00] providing the cheapest hardware all the way up to the landlord.
The landlord's happy because it's the cheapest. The distributor and the HVAC service provider are happy because they can make the maximum margin on the cheapest hardware, right? And so that's what gets installed. Uh, and that hardware, to begin with, will have no smarts at all in it And so that's what happens pre-Monaire.
Post-Monaire, it's still exactly the same thing. The only difference is that now the tenant who is paying all the bills can add the Monaire layer on top of this dumb equipment for very low cost of money, right? And so now you've, you, you have let the channel decide to purchase the cheapest equipment, and because you have very little influence on it, you've just let it be.
But once the equipment shows up, you can just add your smarts on top of it and make it a smart equipment, right? And so that's, that's really what we are enabling is like now you can-- It doesn't have to be solved by like fixing all the channel [00:32:00] conflicts. Let that be. You just add your smarts on top of, uh, what gets installed
Jason Jacobs: And then, um, what involvement does the, um, the s-services contractor have during the evaluation process of Monaire? And then what's required from the services, um, f-firm post-Monaire integration? And lastly, wow, I'm even lumping in a third question as, as, as part of the question now, but, um, but lastly, what impact does this have on that service provider's business?
Rahul Subramany: Yeah. Uh, I mean, I think all three are, uh, really important questions. Um, so, um, during sort of the upfront process, uh, the service provider, uh, gets involved mostly to discuss, discuss install logistics. Uh, I think as I was sharing earlier, our hardware gets installed by whoever is servicing your [00:33:00] HVAC systems today.
You don't need any special technicians to do so. Um, and so they get pulled in to pretty much help install the hardware. Uh, and then post-installation, um, our team, uh, does, uh, training sessions with the service providers, uh, to help them understand how the telemetry in Monaire can be used. And we make it super simple.
Uh, the technicians, uh, all they need is, uh, an access code to the work order that they have been assigned to. And the work-- the access code is actually shared straight via their, uh, existing platform that they use, uh, to funnel out work orders, right? So if I'm a technician, I get a work order saying there's this HVAC system that's down at, let's say, a USPS store, um, in a neighborhood, and here is a Monaire access code for that work order, right?
So I can take that access code, put it into the Monaire app and get access to the telemetry, the history of the unit, all kinds of [00:34:00] additional information before I even get into my truck. So we kind of just quickly show them how they can do that. So it's a brief training session. And then post-Monaire, usually what happens is we flatten the curve. And what I mean by that is before Monaire, uh, the first heat wave of the year, there will be a huge amount of work orders being created. Everything breaks down. And you would have your technicians that are just spending sleepless nights, right? Like twenty-plus hour work weeks. Uh, in fact, uh, I spoke to a technician in Nevada this summer who said it's been four weeks continuous, like he wakes in the-- he works in the Greater Vegas area.
Four weeks continuous, he slept less than four hours. And you know where he sleeps often? Up on the roof.
Jason Jacobs: Wow
Rahul Subramany: Right? This is-- I mean, they're gonna get burnt out, right? Like, he is, like, twenty-three years old right now. He's gonna retire at twenty-six saying, "I don't wanna do this ever again in my life," right? [00:35:00] But that's a reality.
Every heat wave, there's a p- a s- a s- a huge spike. What Monaire does is that we catch issues with those units well before that heat wave, and so we help flatten the curve. And so to service providers, what that means is that, uh, they're now getting more predictive business. They're also able to maximize profit on every truck run because, um, let's say you're doing a pretty much a reactive repair.
The employee in the store says it's too hot in here. They put in a complaint. The technician shows up, and the unit's working fine. It's undersized a bit. It's hot outside. It's doing the best it can. That truck roll, um, they can bill the customer $200, but the profit margin on that truck roll is gonna be much smaller than if they fixed a real issue, right?
With Monaire, every issue is a real issue, so that helps increase profit margin for service providers as well. So, [00:36:00] uh, they benefit from the early insights. They benefit from flattening the curve, and I do think this is a more sustainable model for both facilities as well as service providers into the future
Jason Jacobs: Uh, and, um W-- uh, could it be argued that the s-service provider w-would either be a natural client or a channel to, um, selMonaireir to the business owner? I, I guess, um, the fact that it's two distinct relationships, even with overlap, is, um, uh, a bit surprising to me
Rahul Subramany: Absolutely, it is. Um, and it is, it is gonna be a very valid channel of growth for us in the future. We already have, uh, a bunch of our existing service providers. Uh, now keep in mind, they are our customers', uh, service providers, but they've been working [00:37:00] with Monaire for a while now. We have a bunch of them already inquiring about how can they resell, how can they help resell Monaire.
Uh, the short, uh, time that, uh, we've spent in exploring that channel, we've learnt that, uh, we'll need to put in a lot of effort to train commercial service providers on how to sell products like Monaire, right? Because they're used to selling hardware. So they can sell equipment, they can maybe even sell thermostats.
They don't really know how to sell a system today, right? And so if, for us to really consider them to be a channel, uh, we'll have to invest, uh, a ton of effort into, uh, helping to train them on how to sell a product like this. Uh, but it is going to be a, a, a really strong channel for us in the future because they today have our customers as their customers today, or our potential customers as their customers today, right?
And so it would be a lower friction pathway for us [00:38:00] to get into, uh, if we can crack, uh, how to train them to sell our product and services.
Jason Jacobs: Who, who, who, uh, who thinks about it like a system? Um, does-- is, is that primarily on the inside, is it the facilities team? Um, and on the outside, is it anybody?
Rahul Subramany: Uh, in the inside, yeah, it is the facilities team. Uh, in the outside today, nobody does. I think that's, that's fundamentally part of the challenge here, um, is that, um, from the outside-- So you have, uh, historically you've had, uh, building management system vendors. So these are usually, uh, your Trane, Johnson Controls, large HVAC manufacturers.
Uh, they kind of offer BMS or building management systems. And then you, uh, over the last two decades, uh, you saw these energy management, uh, [00:39:00] platforms, uh, come online. And so they worked on top of the existing BMS, uh, platform to reduce energy use. Uh, and then a
Jason Jacobs: Like who?
Rahul Subramany: Uh, like a Gridpoint, for example. Uh, they've been around since the '90s, uh, and they sell an energy management system, uh, targeting multi-site operators, but their focus is purely just energy.
Um, and then you have software platforms, uh, that, uh, these facilities teams use to, uh, get complaint tickets, uh, roll them out to service providers, et cetera. Uh, that category is called CMMS, contractor, uh, maintenance and management softwares. And that's a huge industry, and there are a lot of big players in that space. Now, you have these different disparate tools, and in facilities, you're getting a ticket through a CMMS platform. As a facilities person, I'm often [00:40:00] on the road. I'm gonna have to stop, pull out my laptop, to a VPN to log into my BMS system or my EMS system to see if I can even verify if it's a real problem or not.
And often what I see in those platforms is a bunch of alerts, a bunch of problem codes, um, and I can't really tell what's going on there. And so I usually don't even look at that. And so I get the work order from the CMMS platform, and I just say, "Okay, approved. Let's send it to the service writer and let the service writer manage it." This is, this is really what, uh, happens today. Um, and I think, um, internally, the facilities team, uh, lives with all this ch- all these challenges. Externally, people have always been looking at this in silos: energy, maintenance, and repairs. Uh, and usually it's been sold as like two separate platforms. Uh, and we are kind of doing the hard work to bring them [00:41:00] on all together under one single layer.
We're not really choosing to replace, uh, the CMMS platforms, but, uh, what we're doing is seamlessly integrating the hardware control layer with the CMMS platform so everything can, uh, run concurrently to help manage the asset, uh, for whoever is operating these buildings, which is usually the facilities team.
Jason Jacobs: And I think what I'm hearing, uh, and correct me if I'm, I'm wrong, is that, um, y- what you're focused on is essentially something that is important but kind of falls through the cracks in a world where, um, where each group is, is focused on their, their own piece, but no one is looking at the overall system.
Is, is it-- Does that align with your assessment?
Rahul Subramany: That's right. That's, that's absolutely right
Jason Jacobs: so the natural q- question that comes to mind for me then is what else falls through the cracks, um, [00:42:00] besides the things that you've chosen to bite off as Monare, um, and, um, uh, and what types of solutions could there be or, or are the biggest gaps to make the overall system hum better, which I would think would be better for each of those stakeholders, b- but also better for you guys?
Rahul Subramany: Yeah, absolutely. Um, so we've chosen to focus on HVAC and refrigeration as kind of our, uh, initial focus area. Uh, but you can imagine similar challenges happening in the plumbing side of the world, right? So today, uh, you're waiting for that water leak, somebody complaining, saying, "Hey, there's water leak in this restroom area."
Um, and then, like, you send a plumber to get it fixed, and they say they fixed it only for it to break or leak again in a couple of days, right? And so very reactive [00:43:00] and plumbing is obviously your highest, uh, dollar driver on the insurance claim side too, usually, right? And so, uh, imagine if we can replicate like a similar approach in plumbing.
Like that'll be our next frontier, right? That's an unsolved problem today, uh, something which I hope Monaire has the opportunity to solve in the near future. Um, and you could imagine sort of the same thing happening with critical electrical systems too. Uh, the critical electrical systems in, uh, let's say a commercial, uh, kitchen, uh, would be, uh, your, uh, electric, uh, stoves, electric toasters, et cetera.
Uh, if you, uh, sort of expand to retail, it could be, uh, the garage door openers that you use to control your bays. Um, there, there are critical electrical equipment at every commercial building. Uh, and today, those all, uh, are pretty much run to failure. And imagine if you can replicate the Monaire [00:44:00] model of running them optimally, catching issues early, and automatically getting those issues resolved.
Uh, that would, I think, unlock tremendous value, uh, for, uh, commercial building operators. Um, so long story short, I think what we've built is autopilot. Uh, sorry to borrow that from Tesla, but we built autopilot for HVAC and refrigeration. We think we can-- uh, there is an opportunity to do something similar in plumbing and in electrical systems.
So MEP, the critical-- all critical building systems can get covered, uh, which would make life a lot simpler for future facilities folks.
Jason Jacobs: So it, it seems like directionally, if I take a step back and look at more of the macro trends, um, demand for these types of services, um, the, um, the HVAC, the, the plumbing, et cetera, um, is only growing, especially with the power needs of AI and data centers. And, and meanwhile, the landscape's so fragmented and, [00:45:00] I mean, there's-- I've heard different stats, but it's something like for every eight people that are retiring out of these trades, there's only, you know, one or two new people replacing them.
So they're, you know, the, the-- there's so more is being asked from these trades as the, um, not only numbers go down, but also the judgment, uh, of decades of experience goes out the door. Um, as that plays out, what do you think the answer is, and also what do you think the implications are for your business of those trends?
Rahul Subramany: Yeah. Um, I also wanted to call out an additional trend to all this, which is as the earth warms, we are adding even more cooling, and that is causing even more global, uh, greenhouse gas emissions, which is increasing the need for cooling again. And so it's this vicious
Jason Jacobs: the o- the opposite of a virtuous cycle.
Rahul Subramany: Exactly. And so we have that problem to, [00:46:00] uh, to deal with while figuring out how do we, uh, um, make sure there are enough technicians available to service these critical equipment, uh, while we figure out how do we make more energy available to data centers, et cetera, et cetera, right?
Um, and so I think this is where like, uh, solutions such as Monare, uh, can help transform the industry, uh, 'cause we're able to help in pretty much every category, right? Um, so, uh, on the, uh, how do you reduce the demand for energy side, um, we help, uh, um, reduce runtime and make sure, uh, the units are operating optimally.
So that reduces the demand for energy. And because we, we digitize every HVAC asset, we also connect them to, uh, utility demand response services and things like that. So, uh, in a world where there are a lot of renewable energy sources, there are also major [00:47:00] consumers like data centers. Uh, you could turn off AC in a space that's unoccupied or under-occupied for a while, uh, in order to provide more power to a data center that's demanding it.
So you could potentially make those choices in the future 'cause every HVAC asset is now connected to the cloud, right? So we enable that to happen. Um, on the technician side, you're absolutely right. Uh, I, I think the average age of an HVAC technician is fifty-five years old today, and many of them are going to retire in the next few years.
While the young crop that's coming in, uh, they're being really put through the wrench because of, uh, of the crazy demand. Oops, sorry. Um, sorry about that.
Jason Jacobs: No problem
Rahul Subramany: uh, yeah, so, uh, the, the young technicians that are coming on board, they're literally just being put through the wrench, uh, given the demand and how every heat wave, every cold wave, uh, they're out, uh, [00:48:00] dealing with the elements that they don't wanna do this through-- for the rest of their career, right?
So they wanna get done with the first few years and then just retire and or else go do something else, right? And so we have a real challenge. Uh, and so how do we make these systems fail less? How do we help every service call be optimal so that technicians spend the least amount of time? And how do we help these technicians, uh, fix these issues in a time period when it's not actually ninety-five degrees outside, uh, and when it's a heat wave, right?
So how do you flatten the curve? And I think those are all, like, real ways in which we could address these challenges, and solutions like Monare, uh, really help with that. Uh, and I think this is, uh, also a frontier where, like, AI can practically, uh, do a lot, uh, in solving all these three problems, right? Um, whereby, uh, AI can help technicians diagnose faster, AI can help verify if what [00:49:00] they did was correct or not, and AI can help sort of flatten that curve in catching issues early.
Um, AI can help balance demand versus supply at the utility grid scale, uh, and AI can also help catch energy waste, right? Like, is it because of scheduling issues? Is it because somebody, uh, overrides a thermostat and then forgets about it, right? All kinds of things like that you can now, uh, easily catch and rectify, uh, with AI, right?
And so I think we are really at that juncture where, uh, we have these problems, but solving it has also become a lot more easier than, let's say, even five years ago
Jason Jacobs: Uh, gi-given that there are these, um, structural dynamics that make this category difficult to, you know, drive innovation through at scale, and you mentioned that, um, you know, Connected Homes had similar dynamics, do you have a point of view as an entrepreneur on when to, [00:50:00] you know, try to work with what you've got, if you will, in terms of the existing system and when, you know, to, to maybe make a bolder bet of, of trying to change the, the system?
Like, is it, is it always one or the other? And your bias is that, like, you know, one way-- You know, 'cause I, I mean, I know which way you're going, at least in the early days of Omo and Air in terms of like, you know, finding, um, uh, you know, kind of frictionless or ways with, with the least friction to get a toehold and then, and then expand once you're in there without, without rocking any boats, right?
It sounds like that's the approach, which I mean, to me is rational and seems like a really smart approach. I-is that always the right approach, or are there times where you might just say, "Screw it," like rather than, you know, try to eke it out with all the constraints around me, I'm gonna try to rip the Band-Aid and maybe make a bolder move that's gonna, you know, rock more boats, but if it works, uh, you know, be, be far more impactful?
Rahul Subramany: Yeah, I mean, I think as a young [00:51:00] company, um, in its really early stage of, of growth, um, there are certain choices you obviously have to make. And I think that's where, like we have chosen to make this choice of, uh, like building a more efficient cloud-connected HVAC system is beyond our capability early on.
While adding smarts to an existing system is a lot more accessible, right? So that we have basically taken the easier option between the two. And, uh, there's no right or wrong answer here really, it's just that from a business perspective, this was the choice that was available to us. Now, if I had, if, if I had made my first billion in my twenties, I would've probably, uh, taken the bolder bet of let's start a company to compete with Trane or Carrier, right?
Uh, because, uh, the fundamental concept of heating and cooling hasn't changed since Carrier invented, uh, cooling back in the early [00:52:00] 19-- late 1800s, early 1900s. That concept hasn't even changed. The packaging around it has evolved. And so if I had all the money in the world, there's probably an opportunity to take another shot at repackaging all of it to make a better HVAC system that, um, uh, comes out of the box cloud connected and can deliver all these benefits that, uh, we are currently providing.
Um, but, um, that is just not feasible right now. And hence we've taken this approach of let's, let's focus on the smarts and how can we add that across every commercial system out there.
Jason Jacobs: Uh, and, um, from a s-strategic partnership standpoint, uh, you know, would, would you ever envision having those types of discussions with the big hardware players, uh, looking forwards in terms of how to enable them to, you know, maybe work together to combine your capabilities and their hardware to build the kind of hardware that would support the kinds of [00:53:00] systems that, um, you know, that, that, uh, that provide more f-flexibility, control, and, and, and, and visibility that, that the industry is seeking?
Rahul Subramany: I mean, absolutely, that would be the dream. Uh, like imagine if you could buy a Carrier unit with Monaire built in, right? Uh, that would be, uh, amazing. Um, but I think the biggest challenge is going to be the channel, right? Uh, for that Carrier unit to be Monaire built in, someone has to pay for the additional Monaire hardware.
And let's say Carrier buys that from Monaire for 100 bucks. By the time it gets to the, uh, landlord who's buying it, uh, you're probably paying $500 for that exact same $100 piece of thing, right? So for the landlord, it's always gonna be cheaper to buy it from Monaire after the fact at 100 bucks versus paying Carrier for it, right?
So it's-- And that's, that's-- The channel problem is not gonna be solved overnight, right? Uh, these are established channels that have been operating for [00:54:00] decades. Uh, and I, I'm not really trusting Monaire's ability to be able to solve this anytime soon. Uh, but I think the vision makes a ton of sense.
Jason Jacobs: Uh, so looking forwards, if you look, say, a decade out, um, at this commercial HVAC landscape and, um, you know, buildings and monitoring and controls, what are the elements, uh, at that time that will be the same as they are today and, and what will be different if, if, if you had to guess?
Rahul Subramany: Um, I think, I think in a decade, uh, this industry slows or changes very slowly. Uh, so I would still expect many of the problems that we're talking about today, uh, to be, uh, talked about even a decade from now. Uh, but what I'm hoping is that we slow down the, uh, pace at which some [00:55:00] of these problems are growing, right?
Uh, for example, carbon emissions. Uh, by reducing energy use, by reducing greenhouse gas emissions, refrigerant leaks, et cetera, hopefully we can reduce the pace at which, uh, global warming is sc-scaling. By allowing technicians to be more efficient, et cetera, uh, we reduce or we make it a lot less scary than what it seems today when a large portion of the HVAC technicians, uh, start retiring, right?
And so that's really what I'm hoping for, is that we, uh, uh, ease the pain and buy ourselves more time, uh, to eventually solve these problems once and for all. But I think over the next decade, fundamentally how these things, uh, how HVAC systems have worked, managed, et cetera, uh, is not really gonna change that much
Jason Jacobs: Uh-huh. And then same question from a Monire standpoint. Um, you know, if you say, uh, look at that same decade, if Monire's successful beyond your wildest dreams, [00:56:00] um, what does the company look like at that time, and what have you achieved?
Rahul Subramany: Yeah, I mean, I think, um, I would love to achieve, uh, the same kind of growth that, uh, uh, Samsara in the telematics space, for example, has been able to achieve, right? I think, uh, recently they announced they crossed two billion dollars in annualized recurring revenue, uh, and pretty much every major, uh, trucking operator out there using-- uses Samsara's hardware and software.
Um, we would like to do something similar, uh, to, uh, commercial buildings as what Samsara has done to the telematics space. Uh, and so I think, yeah, in a decade, if we can get to where Samsara is today, uh, that would be dream come true for me.
Jason Jacobs: Great. Well, Rahul, this was such a, um, wide-ranging and thorough discussion. Uh, is there anything I didn't ask that you wish I did, or any parting words you'd like to leave with listeners?
Rahul Subramany: No, I think it was, uh, it was really thorough. I really enjoyed the [00:57:00] conversation. Um, and yeah, I think as kind of parting words, um, commercial HVAC is, uh, not that interesting, but, um, as you dig deeper and deeper, the problems, uh, that, uh, come with commercial HVAC are really, really interesting. So for anybody out there that is kind of thinking about, uh, what to, uh, start their companies around, definitely consider HVAC, uh, and commercial HVAC, and I'm always there, uh, as a sounding board, uh, if, if I can be, uh, if you're looking into problems in this space.
Jason Jacobs: Great. Well, Rahul, thanks again for making the time to come on the show, and, uh, I was really glad for the opportunity to learn more about Moner, and, uh, best of luck to you and the team in the future. I'll be watching and, and rooting for you guys
Rahul Subramany: Amazing. Thank you so much, Jason
Jason Jacobs: That's it for this episode of BuiltForward. I hope you enjoyed it. If you found it useful, share it with someone building in the [00:58:00] industry and follow the show so you don't miss what's next. Thanks for listening and see you next week