Home News Investment The Next Step: Hinduja Brothers Investment Shows Billionaire Appetite For Smart Cities

The Next Step: Hinduja Brothers Investment Shows Billionaire Appetite For Smart Cities

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Startups and smart cities: Perhaps the most obvious environment the innovation mantra can be applied—just because you can doesn’t mean you should.

It’s difficult to think of a space where so many bad ideas have attracted such a disproportionately large amount of attention. Heart-rate monitor door locks at your office—useless if you’re (literally) running late; self-cleaning pavements—nice idea, but rain is better. And free.

So how, as we rush headlong into this new technology, do we stop it from being more annoying than useful? Taking things slow might be the obvious way. Despite the bold prediction back in 2013 that smart cities will be worth $400 billion globally by 2020, the pace of change has been somewhat pedestrian. Maybe for the better.

Mumbai Daily Life

rush around to catch train at Dadar station in Mumbai, India. (Photo by Hemanshi Kamani/Hindustan Times via Getty Images)

Energy-Creating Baby Steps

But last month, the hype and promise of so-called smart cities took a definite step in the right direction. The strategic partnership between London startup Pavegen and Hinduja Group – a massive manufacturing conglomerate straddling the U.K. and India, points to the arrival of more money, more hunger, more opportunity to actually lift this hype out from big-brand-sponsored tech events, and onto the actual streets.

“They’ve been saying it for a long time but they’re finally making smart cities happen,” Pavegen’s thickly-quiffed Laurence Kemball-Cook tells me, sitting in their office above a branch of the Turkish Embassy and a beautician training school just off London’s noisy Grays Inn Road.

It’s a quiet space, not what you might expect from one of London’s most visible green startups. The office looks lived-in, and the numerous awards mounted in frames along the wall have yellowed at the edges. Almost all are wonky.

The Prince Of Wales Attends The Launch Of The At Ease Appeal

Prince Charles meets Gopichand Hinduja.

Pavegen is a small firm with a big idea – to turn footsteps into usable energy. They claim a single footstep can power a 3-watt LED lightbulb for a second; or in a language we can all understand: one step is 6 seconds’ talktime on an iPhone 8.

It’s a bright idea (no pun intended), and even if it is just limited to simply keeping the lights on, the potential for Londoners in the rat race, or commuters at Mumbai Central, is obvious.

Challenges remain, namely the cost of the technology, which at present costs anything between £100,000 to £1 million depending on the project. Kemball-Cook admits, “We need it down to 50% of what it is now. The plan is for $50 to $100 a square metre. But you can’t click your fingers and get it that cheap on day one.”

So we’re getting there, albeit slowly. The first tiles were sold for £20,000 per square meter, but the true test for the business is not just having a good business idea, it’s in having a good business idea that scales. In this case – one low price point for 60 million people in the U.K. market, and an equally appealing price point for the billion-plus people in India, and the energy-producing potential of the subcontinent. This is the gargantuan step between Pavegen the idea, and Pavegen the business.

UAE-FRANCE-DIPLOMACY

A driverless vehicle in Masdar City, a planned sustainable city project powered by renewable energy on the eastern outskirts of the Emirati capital Abu Dhabi. (Photo by Mahmoud KHALED)

We’re not quite there yet, and that’s why the link with Hinduja is about so much more than cold hard cash. Kemball-Cook tells me it’s about access to a 1,400-strong team of engineers based in Chennai already working on value engineering for Nissan and Aston Martin, looking at every single component and driving down the price.

And Pavegen’s baby steps are now quickening as the road to the Indian market opens up.

“Mumbai station was something we raised with Laurence very early on,” says Vivek Nanda, CEO of Hinduja Investment & Project Services, the bridge between the elusive British-Indian billionaires and their startup investments. “There’s an intensity of movement there that just cannot be surpassed globally.”

Dating back to 1914, Hinduja Group today is a multinational conglomerate with business interests ranging from trucks and lubricants to banking and cable television. Of the brothers, Srichand and Gopichand live in London and Prakash in Geneva, while the youngest sibling Ashok oversees their Indian interests from Mumbai.

However, the business is making a deliberate turn to get ahead on smart cities and projects Vivek Nanda describes as those “on the horizon of the future.” He adds, “This is not about technology overtaking cities, it is about technology creating a more connected, communicative city. In a smart city, technology becomes the base for looking at and tabulating data, and integrating it into an understanding of the infrastructure that makes a place connected.”

Nanda admits that having found the Pavegen project online, the idea is “a very nice fit” for Hinduja—a 21st-century update on “the family ideals” that date back to 1914.

But despite this claim, there’s definitely a sense that Hinduja have branched out at an odd angle here. The endgame, Nanda says, is for a family of firms specializing in “renewability and sustainability,” eventually aiming to “knit them together to create a larger [smart cities] vertical” bearing Hinduja’s name.

Billionaire And Hinduja Group Co-Chairman Gopichand Hinduja

Gopichand Hinduja, billionaire and co-chairman of the Hinduja Group.

© 2015 Bloomberg Finance LP.

On the Pavegen part of the project, Hinduja is looking for firms with London intelligence and Indian scalability. Nanda adds, “The level of growth in Indian cities is amazing. They’re growing faster than the infrastructure can cope with. We need ideas to link people to power, and people to data.”

Pavegen joins Swiss virtual reality startup MindMaze, which Hinduja sees as having huge potential in hospitals, as a part of this new family.

The problem with top-down cities

Professor Michael Batty is the Emeritus Professor of Planning at University College London, a sage, gray-haired academic who has seen a few young men like me, turning up at his office and asking about so-called smart cities.

“Smart cities are many things to many people,” he adds. “To some extent cities have always been smart. I mean almost the very act of living in a city is a bit smarter than people who don’t live in cities in that sense.”

Prof Batty’s major works–Cities and Complexity (MIT Press, 2005) and The New Science of Cities (MIT Press, 2013) chart the development of computer models of cities and regions.

Meeting at his labyrinthine office in the furniture district of London’s Tottenham Court Road, I’m here to ask whether the startups and billionaire investment, or governments and centralized pools of money are the best way to develop the so-called smart city?

He’s adamant that when it comes to the development of smart cities, the Pavegen example where startup meets like-minded billionaire is a preferable model to a slew of centrally planned tech cities popping up around the world that rely on a slurry of gimmicks rather than a knitting of the living, working world to technology.

“So the United Arab Emirates have Masdar City–which is an all-singing, all-dancing New Town. And there’s probably about a dozen of these worldwide,” Prof Batty says. “There a kind of digital focus that appears to make it intelligent.” But, he warns “they’re built from the top down, and things that are built from the top down, in modern societies, are always problematic.” He adds: “It’s not at all clear how far you can get by just stuffing cities with information technology. Cities are social and economic environments where people do a great number of very different things on a daily basis. And that’s really more relevant to the kind of smartness of the place than [moving] electric walkways.”

The next step

Still building his business from the bottom, up, Kemball-Cook takes me on a tour of Pavegen’s lab. We see his first few attempts and get to see how the tech works, basically a child’s spinning top toy you push down with force that spins, and generates power, on its way back up. The latest version sits beneath small triangles of flexi pavement. When I stand on it, a light comes on and slowly fades.

I want to know why this technology is not everywhere. The firm is now ten years old and Kemball-Cook is a veritable veteran of the startup speaking circuit. And there’s no shortage of celebrity endorsement. Queen Elizabeth II powered up one of their floors at the Chelsea Flower Show last year and further support comes from tech veterans like iTunes “pioneer” and “digital wizard” Jeff Martin, former Global Head of Media at Apple.

So should we expect a sharp pivot sometime soon? Is Pavegen merely a branding opportunity for firms like, say, BP or Shell to virtue-signal or green-wash their business model at a random sustainability conference? Or is Pavegen a data-gathering business where the phone tracks my movement down the high street, and Costa pings me a half-priced macchiato?

Kemball-Cook stresses that Pavegen is all about good decision making. The firm simply cannot afford to rush and hoover up the easy money it doesn’t yet need. He stresses that a new “product vertical” taking “a quick $100 million VC cash could be the end of us”.

The beach beneath the street

For Kemball-Cook, smart cities are at their best when they form, what he describes as, “a layer between digital and physical cities.”

“I don’t believe in the internet of things”, he adds. “And I don’t believe in randomly putting tech into cities. It’s not going to make a city better if I can scan your heart rate and open the door to your building.”

However you can’t get away from the hype that it might actually be possible to change a preexisting commodity (in this case, a footstep) into reusable energy. Even if it were to become a fraction of urban power use in the years to come—that’s a big help.

And perhaps step-by-step is the best way. Kemball-Cook has the final word: “People see us and think it’s the answer to the world’s energy problems–we need to balance out what we can and can’t do. We’re not going to power the world—I’m not saying, ‘Shut down the power stations, we’ve got people walking here.’ . . . I’m just trying to make the world a better place through the power of a footstep.”

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