EP17 – Profiting from GIS – How Businesses Leverage Location

Gil Castle, whose career spans the time when GIS was first utilized by businesses for planning, analysis and in particular for a competitive advantage. As a keen observer of the technology, he then published one of the first books that detailed the many applications of GIS for businesses and how to capitalize on the technology: the book “Profiting from a Geographic Information System” was published in 1993 and opened up a new chapter in how GIS was adopted beyond traditional applications like government. Gil worked in several start up companies, most all with a focus on real estate. Enjoy this episode of On Point with Korem.

Transcript

Joe Francica: That was Gil Castle, whose career span the time when GIS was first utilized for businesses, for planning analysis, and in particular, a competitive advantage. As a keen observer of the technology, he then published one of the first books detailing the many applications of GIS for business and how to capitalize them.

The book was entitled Profiting from a geographic information system and was published in 1993. It opened up a new chapter on how GIS was adopted beyond traditional applications like government. Gil worked for many startups over his career, but always with a focus on real estate. Stay tuned for this episode of On Point with Korem.

Gil can’t tell you how much I appreciate you getting on the podcast and one feature that I like to do on these podcasts is, sometimes, take a look back at the history of geospatial technology. You’ve been in it almost from the very beginning. Was there a tipping point at which you said, geospatial technology has real advantages in business rather than their traditional space, like in government applications?

Gil Castle: Yeah. Turns out that in the seventies and eighties, there were some private sector complications. For example, timber companies, like international paper, have been using it to manage their massive assets on the ground. Utility companies, if they qualify as private sector using for transmission line, routing, facility design, logistic companies. But those were still, just few and far between.

And though there were a lot of people who were dabbling and starting to using other applications, not much was going on because you need a mini-computer, a prime or a deck, or a data general, there was a cost issue there. For me, one of the big tipping points was when Steve Poizner started strategic mapping in 1983 because that was the first time anybody tried to put a GIS on a PC. And I remember thinking, nah, that’s not gonna work because too complicated. You need more processing power than that. It’s just not gonna happen. But of course, it did take off and once pretty much anybody could get any sort of a mapping tool on their own PC, then start exploding.

For me personally, another tipping point was in 1986 because I had been part of Comark systems, which is one of four GIS companies back then, along with Esri and Intergraph, and a couple of others. And our company was bought by Steve Roulak, who was one of the top real estate consultants in the country. And then he was bought by Deloitte too to become the real estate consulting arm of back then a big accounting firm. And that was when I thought, okay, me personally, and for the industry generally, now we’re leasing and going into real estate and others will follow.

A couple of other tipping points, as far as I was concerned, one was when AOL bought MapQuest in 1999 for 1.1 billion dollars. And I think maybe you had the same reaction; I thought MapQuest, that’s just pretty dug down GIS. What the world’s all gonna do with MapQuest and then, low and behold, Google bought Keyhole in 2004, then you said, okay, we’re not the smartest guys in the room anymore clearly. So, I’d say those are pretty key tipping points from my perspective.

JF: Yeah, since there was a pretty good big gap in years though, between 83 and 2004, I always thought the limiting factor was hardware and people supplying data on a stack of 20 CDs or, in those days, floppy discs. I always thought a tipping point was when they finally did get more powerful desktop computers in that area where MapInfo, for example, stepped into the world of Windows when it went from DOS to a Windows platform.

And I think even, Poizner’s company went from Atlas graphics to Atlas map and even put Atlas map on a Mac, which was the first time we had seen it in an Apple platform. To me, those were real tipping points too.

GC: I was always surprised at how long, even when fuels were there, how long it took for the adoption of the technology. Because the first time I was ever exposed to, it was in 1975 when I joined Comark. Back then, you maybe call the old Tektronix 4010 monitors with little green squiggles going all over the place making the maps. And the first thing I ever saw was a parcel map of San Rosa, California being rendered on this Tektronix monitor. I thought, oh my God, this is gonna revolutionize everything. I got bugged really quickly.

But it took forever for cities to adopt parcel mapping, at least a decade longer than I would’ve thought, and for pretty much every other application that when I was first exposed to, I thought, oh, this is gonna be catching on like wildfire, but now it takes time for the supertanker to change course.

JF: Yeah. I wanna move to my other question, which is if I get this up and talk about the book. Yeah, there it is. Okay. So you wrote this book in 93 Profiting from a geographic information system. What was the real impetus to publish that book at that time and get that compendium of applications together and the n, the incredible mistake you made of asking me to write the insurance chapter because I knew nothing about insurance at that time, but to me that was a signal that something changed in that period?

GC: There’s good news bad news. You can still get it on Amazon. Bad news is it costs $177 and it’s out of stock.

JF: Yes, I think I saw that. Yeah.

GC: Actually the credit goes to Denny Parker. Denny got involved with GIS and fish and wildlife service. In the late eighties, he started a magazine, GIS World, and in the early nineties, he came to me and I had been working for Deloitte, you know, the real estate consulting practice, and I decided to go out on my own because there weren’t that many people knew a lot about real estate and computer mapping. So, I was looking for things to do and Denny said, he had this idea for this book on private sector applications and would I like to spearhead that? And to his vast credit, he gave me carte blanche to do whatever I want. He just backed off, and said go for it.

So, I came up with the idea of having the four sections, the technology overview, vertical applications, including insurance that you wrote, data sources, and then, a bunch of people looking at what the future may hold. And so then, I looked around, identified 30-35 of the leading people in the industry, you included, and asked them to write chapters. And everybody said yes, which was great. And we actually pulled together pretty quickly and it’s still one of the things I’m proudest of.

JF: I think at that time, that’s why I answer the question, the tipping point, right around that time, 93, 92, there was an article in Forbes that looked at it, in fact, our mutual good friend Hal Reed who worked at Arby’s at the time, I was featured in that article. I think right around the same time, there was an article in Fortune magazine, which was still publishing at that time, it all seemed to be like that was an era where, and then I think MapInfo and then RQ moved from DOS to Windows, it all was coming to fruition right around that time.

Denny, had the conference GIS and business conference, right around that same time. And it all just exploded. And then you had companies coming out of the woodwork to actually talk about what they were doing. And I really thought that was incredible. And again, I think the book had something to do with that word. It finally opened people’s minds up to what the potential was.

GC: Yeah. That’s absolutely right. It’s hard to gauge how much of an impact that particular book had because I don’t know how many copies were sold. I know I got very modest royalties for a decade or more so that’s one sign, not sure how many copies were used in university courses, that would’ve been another leading indicator, but certainly, yeah, there were, as you say, all sorts of signs that people were refining taking notice and starting to look into.

JF: So, let’s go down that path because the educational side is something I’ve asked other people. It’s yet to really take hold in business schools, you don’t see geospatial technology discussed, and yet it seems to be an integral part of the business’s competitive advantage. And to that end, you see it popping up now in business intelligence software, Tableau, and others, Cognos, information builders,… And yet, it’s still not recognized as anything core that you would teach at a business school. And I wonder why.

GC: Yeah I do too, because another tipping point, the things were really changing was when, in any given organization, you no longer had one or two people who were the GIS department and they were a service bureau, and everybody else, was when some of the tools were in the hands of everybody and use like a brokerage company example, a Cushman & Wakefield type example, when the brokers themselves were doing their own little analysis and maps and so on, rather than relying on some centralized department that you know is really gonna take off.

And so yeah, when you have people like Penn State, pioneering GIS education, but they’re still training people to be a service manager rather than a niche player, maybe that’s the problem that when you have a zillion niches, you can’t have a zillion degree offerings at a university.

JF: Wharton had at least a kind of a skunkworks project they did a lot of consulting. But it was coming out of the real estate area and that is primarily your focus. Do you think the real estate industry has absorbed the technological advantages that it can bring? Or are they still in the backroom stages of, Hey, this is fun technology, but it isn’t really a core advantage.

GC: I don’t think there’s any real estate entity of any size now that doesn’t have these tools used to one degree or another. I mean you think about Zillow. Everybody knows who Zillow is, Zillow obviously had an impact. But then there are others like CoreLogic that was started in 1991, and CoreLogic really… and others like it, like CompStatus, San Diego County, really revolutionized what you could do with the data, bringing all sorts of demographic and natural system and competitive data into one place. And that really is all behind the scenes, but it really changed things a lot.

And from my perspective, there are three overarching ways that it’s been used in the industry. The first was you gotta find a property, so, looking for a property. And intelligence location tools apply to all the property types, single-family, multi-family, hotel, industrial office, and so on. But the one that was the slam dunk, which I think got your attention, my attention the most, was retail site selection. So, retail site selection just boomed like crazy. With Hal Reed, you mentioned at Arby’s, folks like that leading the charge, but then showing how you could really integrate all sorts of databases into doing a much better job of predicting which site locations would be best.

So, finding a property was one really big deal. The next really big deal was putting a value on the property. How much am I gonna be willing to pay for it? And that’s where CoreLogic first excelled both in bringing together the databases and having automated map models to predict what the value would be.

And that’s of course almost how Zillow first got on everybody’s radar too, because they were predicting what your neighbor’s house looks like. So, everybody looks up their neighbors’ property value but even though public sector appraisers members of the international association of assessing officers, they were experimenting with computers, a mass appraisal in the eighties. So it was nothing new, but again, there was this longer time than I would’ve thought for adopting the technology, both the private sector and public sector.

So, you find the property, you put a value on it, and then you use a broker most likely to either buy or sell your property. Most of the big brokerage houses, like Christian Wakefield again, or the national association of realtors, they had a unit in place very early on, late eighties, early nineties, but then they slowly distributed to all their people, who didn’t need a centralized department anymore. So yeah, I think it’s been a very dramatic change in the real estate industry, but a lot of it is, you just don’t know this anymore, you just take it for granted, which in many ways is the biggest compliment of all.

JF: Yeah. One of our customers, Prologis, works in leasing warehouse space and we provide them with a number of consulting services, but one interesting thing, I had to speak with a person there who does data analytics, who’s the VP of analytics is, they have trouble finding space to put new warehouses space with the supply chain issues is almost 98% leased. It’s not like you can go out and build a 500,000-square-foot facility on any piece of land and things are drying up. And so they’re using it to their best advantage.

And I think that was one of the more gratifying things I had heard, which is here’s a different part of the real estate market taking a lot of advantage of finding land, leasing space. And then, on the logistics side, they don’t deal with fleet management, but that’s another area where today, in particular, with the supply chain issues, is a big beneficiary because you need more efficiency built into the supply chain.

GC: Yeah. Especially with the pandemic and Amazon orders shooting up and everybody else’s orders shooting up, the need for warehouse space is obviously really dramatic, will continue. A lot of what I really enjoyed using real estate or location intelligence tools at Deloitte too was showing how the institutional investors would get into it, pension funds were investing heavily in real estate, California teachers, and so on.

But also the real estate investment trusts, the REITs, were really getting into it. And I was monitoring which REITs were doing what, the warehouse REITs were among the leaders in using it as a tool to find these places to place their bets in the real estate world.

JF: Yeah. And Prologis, I think was one of the leading companies up there as well. So, let me just have you look back a little bit over your career, and maybe what innovations do you think radically changed the industry? You mentioned a few of them along the way, Google Earth being one of them, anything else that strikes you that seemed to have been helping the industry take a leap forward, maybe even outside of the vendors themselves, but anything technologically that you saw.

GC: Yeah. I’d like to say that what I like with MapQuest, I called it, but I just didn’t and to me, the one that really stands out to most, in my mind, the killer app that was changed not only real estate, but all sorts of industries was GPS and navigation. And, up until the year 2000, the satellites were up there, but the government was scrambling the signals so that our cold war opponents wouldn’t use our own satellites against us in targeting and military maneuvers and all that. But then, in 2000, President Bill Clinton said, now we’re not gonna do that anymore, we’re gonna let GPS signals be accurate. That just opened up all the navigation apps and then everything in between.

One of my favorite apps these days, I suppose it’s the sign of the pandemic is, down here in where I live, we have a delivery service called PedidosYa, here in Ecuador. And I just love that when I order up something from a restaurant for delivery, it shows the guy where he is on his motorcycle, on the streets, getting closer to delivery. And that’s just a simple little thing but it’s just great. And so, it’s just no end to the way GPS has changed all our lives.

JF: And there’s an assumption that all of these apps will have some sort of mapping interface. And so that, to me, floated everybody’s acknowledgment that mapping geospatial data is a fundamental technology embedded into so many different things. And I just think today we’re at that point where yeah, it’s there, it’s what I assume, and if it’s not there, it’s a detriment to the app, right?

GC: Yeah. Two other things that I’ve been anticipating and are happening, but again, much more slowly than I thought. First was 3D visualization, now it was obviously 3D models of all the major U.S. cities around the world for that matter. But I thought everything would start being in 3D and we wouldn’t even use two-dimensional maps much anymore. And there have been augmented reality apps on your phone that sort of thing. But that’s still, to me, lagging a little behind, especially for simulation of, show me how I’m gonna get there from A to B or whatever, that will come, but that’s been a little slower than I would thought.

And also, it’s happening, but again, sort in the background, integration of artificial intelligence with location intelligence tools. I would’ve thought there’d be more couples about that. It’s interesting in the book of Jack Dangermond, of course, founder of Esri, he mentioned even back then that AI was one thing that he was anticipating was gonna come along and I had already started AI special interest group at URISA. So, it’s not like he was the only one thinking about it. But maybe there’s more going on than I’m aware of. You’re closer to what the VCs and hedge fund managers are investing in these days, but I would think AI linked to mapping has gotta be a big E.

JF: Yeah I would think so too. And I do think, hedge fund people are using it, they just won’t tell us how they’re using it. I do follow what Bloomberg is trying to do in terms of supporting their subscribers. I think they’ve got a nice little mapping app that they help with, maybe it’s even showing commodity pricing and whatnot. And I thought that’s an area where I think that the technology is moving. We see some things going on in crypto spatial, and maybe that’s one thing, maybe we’ll finish on whether you’ve seen blockchain being a killer technology for the real estate industry.

GC: With Zuckerberg promoting metaverse, that, of course, would have all sorts of ramifications on how this technology is used.

JF: Yeah. Yeah. I just, I see this area that may be another tipping point in the future if we’re using blockchain to look at real estate transactions, and who knows where that’s going in the future.

GC: Yeah.

JF: Gil, thanks again. I guess we’ll leave it there and really appreciate your time and look back, especially where at the book and how your career transpired, how my career followed you all over the place, and always appreciated the time to talk.

GC: Yeah, always a pleasure, Joe.

JF: Thanks again for joining us on another On Point with Korem. And if you like today’s podcast, please leave a comment in the comment box where this podcast is posted, which could be Apple Podcasts, Google Podcasts, Spotify, or YouTube. I hope you’ll join us next time for another On Point with Korem where we’ll get on point.