Smart Building As a Service: The Latest Innovation from Obayashi’s Silicon Valley Ventures & Lab

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Meeting at Obayashi's Silcon Valley Ventures & Laboratory
Meeting at Obayashi's Silcon Valley Ventures and Laboratory with Chief Operating Officer Takashi Tsuchiya and Marcel Nagatoishi, assistant project manager.

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In an unassuming building in an unassuming area of Silicon Valley, sits Silicon Valley Ventures and Lab - the somewhat unbranded innovation outpost of $15 billion revenue, $8.6 billion market cap Japanese real estate, design, construction and facilities maintenance giant Obayashi. One of the earliest construction companies from outside of the US to plant a permanent flag in Silicon Valley, Obayashi established the Lab here in 2017, where it has been a steady, if quiet, fixture in the Smart Building ecosystem, ever since. 

It's tempting to write off these types of “tech scouting” operations that dot Silicon Valley as merely signal gathering outposts. However, Obayashi’s recently announced new venture, Oprizon, formed in partnership with global industrial giant Hitachi and led by Obayshi’s former head of Silicon Valley Ventures and Lab (SVVL), shows how companies like Obayashi are taking what they are learning and using it to strategic commercial advantage in their core businesses. 

Oprizon is led by Hiroto Sato, who previously spent six years at SVVL, and serves as general manager of digital business, innovation division, at Obayashi's Tokyo head office. During Sato's tenure at SVVL, it made investments in a number of startups in the construction sector and explored proofs of concepts.

The innovation division operates separately from, but in partnership with, the company’s 270-person research and development group and is closely linked to the company’s business development efforts. In a statement linked to a 2022 award from the Japanese government, Obyashi’s Lab was recognized, not only for its work in finding and developing solutions to Obayashi's business challenges, but also for facilitating the exchange of technology that's bringing new solutions to projects and clients in the Japanese market.

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It appears that Oprizon is a logical extension of this effort. Spun out of SVVL, the firm's stated mission is to “make our life comfortable” by “connecting human and device through the built environment" and then “updating peoples’ experiences there continuously.” Working in partnership with Japanese electronics giant Toshiba, Oprizon professes a new business model for smart buildings that the firm is calling Managed Built Environment Services in which the cost of smart building hardware and software is lessened through s subscription arrangement. Hosting services in a secure, cloud environment and providing hardware via subscription also allows Oprizon to add enhancements to their services as they identify and integrate new solutions and also helps make the conversion of older buildings more efficient.

It is an exciting next chapter for Sato, and one of a series of promising spinout companies from SVVL. The story of SVVL, Oprizon and other SVVL spinout companies also helps to dispel the myth that strategic, corporate investors are just "venture tourists" - making investments without creating true benefit for their core businesses. Undoubtedly many companies may still be in the stage of making small investments in startups without linking those efforts to strategic offensive and defensive moves in their mainline business. But in that regard, while the physical structure of Obayashi’s Silicon Valley Lab may be humble, its potential impact on its multi-billion dollar parent, as well as on the industry at large, could be very dramatic.