Future of Housing with Certainty Adapt or Be Left Behind

00:00:01:08 - 00:00:27:12
Mike Collignon: This is the first of six virtual seminars that examines how to consistently optimize five key Houser housing user experiences. Now, today's webinar or seminar I guess we're calling these Now seminars, is going to provide you with an overview of the program and why it is imperative that you either adapt or get left behind. Now, I know this sounds a bit ominous, but I am optimistic that you will enjoy your time with us.

00:00:27:13 - 00:00:46:19
Mike Collignon: Now, why would I feel that way? Because today is Optimist Day of all days. My name is actually Mike lignin. I'm the housing 2.0 program manager, and if at any point you have questions, please don't hesitate to reach out to me via that chat box over on the side or by email. And I'm going to put my email into the chat box in a little while.

00:00:46:21 - 00:01:12:25
Mike Collignon: You know who else is optimistic? Same. Or ask these formally the chief architect at Doe's Building Technologies office, but he's now focused on creating and teaching the content for this housing 2.0 program. The content is based largely on Sam's latest book, housing 2.0 A Disruption Survival Guide. Now, the full program was established to help empower you, our building professionals, to design and construct higher performance, healthier, more sustainable homes at a fraction of the cost.

00:01:12:26 - 00:01:41:07
Mike Collignon: Sam's going to lead us through today's seminar and also address your questions at the end. Now, before we get started, we have some wonderful sponsors that I need to mention. The first is Schneider Electric, who is driving the digital transformation of modern homes with smart and sustainable energy solutions for comfort and energy efficiency. Their connected home ecosystem of smart energy management solutions provide digital control of energy use throughout a home from the grid, by their smart electrical panel to their connected wiring devices.

00:01:41:14 - 00:02:05:02
Mike Collignon: Next, we have Genco Solar. They are a leading PV module manufacturer and energy storage system integrator. The company has deployed more than 100GW of their Eagle modules in 160 countries globally, including more than 17GW right here in the United States. Eagle storage brings together the best energy storage technology for turnkey hardware and energy storage services. We also have Mitsubishi Electric.

00:02:05:03 - 00:02:30:25
Mike Collignon: Mitsubishi Electric promotes sustainable building through the electrification of residential and commercial heating and cooling products. Their mission is to advance technologies through increase energy efficiency and eliminate dependance on fossil fuels. And finally, we have Panasonic Healthy Indoor Living Solutions. They are helping builders across the country differentiate themselves. The powerful, code compliant and cost effective indoor air quality solutions that provide a safer environment for home buyers.

00:02:31:01 - 00:02:52:24
Mike Collignon: Now, during the course of today's seminar, you can submit questions for Sam. Simply use that questions box that you see inside the Go to Webinar Control panel. I'm going to review those questions and pose those to Sam after his presentation. All right. Is everybody feeling good? If not, you will because here is our lead optimist, Mr. Sam Raskin.

00:02:52:27 - 00:03:18:02
Sam Rashkin: Hey, thank you so much, Mike. And welcome everyone to the first seminar for this year on housing 2.0. This series, in the beginning of the year, is different from our usual format, where we go on verse five burst through the housing 2.0 framework. We're going through six different key topics about housing optimization that stand alone. So welcome to the series like Mike.

00:03:18:03 - 00:03:45:18
Sam Rashkin: I'm incredibly grateful for our sponsors who make this unique program available. The only program we know that's targeting high performance voters to become industry leaders, by helping them also address all those incredibly increasing user expectations when they buy homes. So again, thank you. It's the electric and sonic of Solar LP Building solutions, Snyder electric green building media and cognition, smart data.

00:03:45:19 - 00:04:07:16
Sam Rashkin: So here we are, our very first module 2024. And we're going to talk about the future of housing. And of course we know when things change you have to adapt or be left behind. So let's talk for the next hour. Fast paced look at how we can adapt. And the outline for today breaks out first into the context.

00:04:07:21 - 00:04:39:29
Sam Rashkin: Why, what and how behind this whole housing 2.0 approach to doing business as a builder. And then secondly, we'll look at how we learned from the past and realized disruption happens. It just it's there waiting and can't seem to be stopped. And finally we'll look at looking to the future, how disruption finally happens to housing. So we'll wrap up finally with preparing for this future and adapting so we can be positioned for the best success going forward.

00:04:40:03 - 00:05:04:15
Sam Rashkin: So this is the outline for today. And of course, like all of our webinars we do we leave open discussion at the end for any questions on almost any topic you'd like. Hopefully many of you most want to talk about the topics of today. So let's try dive right into housing 2.0. Very quick overview of why, what and how behind this unique program.

00:05:04:16 - 00:05:27:27
Sam Rashkin: And it begins with this research data comes in various formats. This is one that I like the best a national lab research study, hundreds of interviews, and to see where people spend their time every day in their home, outdoors, dining, work in their cars, other indoor locations and should jump right out at you. Is that among all the places?

00:05:27:28 - 00:05:51:15
Sam Rashkin: And we spend our time every day, nearly 70% is in our homes. So home is where life happens, and even more so since Covid, because now that we have more work at home and we just for lots of reasons in our home somewhere else is probably up to about 75% of the day that we spend in our house.

00:05:51:15 - 00:06:13:22
Sam Rashkin: So what could be more inspiring for anyone who's a housing professional and realize their focus is on where people's lives actually happen and what we do with housing 2.0. Why we exist. Our core purpose would drives us every day is homes where life happens better. And I couldn't be more inspired to do this kind of work. So next question is what?

00:06:13:23 - 00:06:45:10
Sam Rashkin: And I'm going to submit that housing is kind of a five legged stool. And what we're trying to avoid is getting two over focused on one of the legs. And for many of us who are in the high performing performance community will be overly focused on suggests on performance. In fact, there are five strategies in 160 best practices for how we can consistently deliver a better user experience for lower cost.

00:06:45:10 - 00:07:13:04
Sam Rashkin: And a framework is something that you can rely on over and over again to get that consistent outcome. So besides performance, I'm going to suggest there are these other key user experience that we'll talk more, talk more about later community design, sales and quality. And I'll also suggest that when any one of these legs of the stool is not addressed, things get wobbly very fast.

00:07:13:05 - 00:07:37:07
Sam Rashkin: So that's what we do. And how we do it also is fairly unique. On the left we have the first cost business model. Traditional way builders run their companies. And then we have the housing 2.0 business model. When we look at the cost per home in a first class business model, often we're striving to spend the least we have to spend on experts and special features that address user experience.

00:07:37:10 - 00:08:24:18
Sam Rashkin: In contrast, in our business model was saying to invest in user experience, the experts and special features only have a sure thing. We know we have an investment in the home that will lead to a transformative user experience. You are suggesting that is such an incredibly strong business opportunity. What makes this work, though, is the next step, which is that where we may have all these costs for material, label, labor and marketing, with the first class business model, we can in fact drive costs way down for materials, labor, and marketing by optimizing value, by optimizing simple, by optimizing lean, which is minimizing waste, optimizing quality, integrating systems.

00:08:24:18 - 00:08:52:05
Sam Rashkin: And something I'll talk more about later. Mass customization. These huge opportunities to drive cost out of housing, which results in a net cost savings, any superior product that has added value, better experiences, and significant owner savings. So the last step in the process is just to sell better homes for lower cost. In fact, our analysis and tabulations, we go through our housing 2.0 reference book.

00:08:52:10 - 00:09:22:28
Sam Rashkin: We like to show that 30 to 70% savings and added value to be had on a typical home. So the key is brilliant. And so throughout housing 2.0, we like to bring in empirical results. And this is when we talk more about in the in the larger housing 2.0 program. This is a builder who in a multifamily housing project, just by optimizing design, one of the five key user experiences was able to extract 24% cost savings.

00:09:22:28 - 00:09:45:24
Sam Rashkin: And we'll show in detail how he did that in the largest series. But again, everything we do is driven by empirical results. And the key resource for you is this book, housing 2.0. My new grandson's on chapter four, so I know it's there for all of you is a great, interesting piece of reading, but truly fair housing professional.

00:09:45:25 - 00:10:20:08
Sam Rashkin: This is a unique reference. It's a 40 pages. It's about how to optimize all those 160 plus user experiences. It's over. It's got hundreds of graphics and over 360 citations. A lot of my great friends in the industry have contributed some amazing essays, and it's gone through eight years of vetting. So I like to say to anyone who asks for the actual slide deck, this is the ultimate reference for everything we do with housing 2.0 and said the Green Builder website you see at the bottom.

00:10:20:11 - 00:10:48:20
Sam Rashkin: So let's jump in and let's see if we can learn from the past and understand how how profound disruption is as a occurring event that happens over and over. It just happens. And the example I like to say, many of you have seen my presentations will know this is a go to for me as just because it's so visually clear just what disruption looks like with this example.

00:10:48:22 - 00:11:16:20
Sam Rashkin: The entry 1900s. The two choices for how you got around the city so you can drive a horse and buggy, the the kind of the major choice for, for people for transportation or this new fangled technology called the automobile came around about the turn of the century. So those are your two options. And when we look at two images, nothing is more clear at selling how profound disruption is.

00:11:16:20 - 00:11:41:12
Sam Rashkin: So we have a picture in 1903, Fifth Avenue in New York City used to parade and in the sea of horse and buggy. The worst Waldo question becomes, can you find a lone automobile? And there she is right over here. It is a one car and the big Easter Day parade. But fast forward ten years and now you see what disruption looks like.

00:11:41:14 - 00:12:07:23
Sam Rashkin: You flip the words Waldo question to where in the sea of one of mobiles, can you find the one or some buggy on the exact same Easter Day parade, Fifth Avenue, New York City. And there she is right over here. And that's what disruption looks like without just a blip of time. Your world changes everything, you know, it gets flipped on its end and you have to figure this out.

00:12:07:26 - 00:12:39:27
Sam Rashkin: And now two conditions are great at forecasting and getting you to know ahead of time disruptions happening. The first condition is that you have a driving force for change. There's some problem and or some opportunity to really improve the user experience. The second condition is you have some innovation, a solution to the problem, and or an innovation that drives a far greater user experience, much more superior.

00:12:39:27 - 00:13:26:17
Sam Rashkin: And this goes on steroids, this whole process. When problems become a crisis, the urgency gets greater. And the and it just amplifies and accelerates the whole disruption process. So the way we can understand this best is by looking at fiction and reality about what was happening at the turn of the century. So at the turn of the century, if you watch this HBO series called The Gilded Age and, you know, you look at the streets at the time and it's a complete fiction, you know, there are hundreds hundred thousand horses in the city producing over 2.5 million pounds on the New York per day.

00:13:26:17 - 00:13:53:06
Sam Rashkin: But with this fiction as it's portrayed, the streets are visually pristine odors, healthy living when in reality and documented in various news stories. To turn the century was an environmental crisis for all the big cities in Europe and the US. In this article for happening in New York City again, you can just see the reality was not pristine.

00:13:53:06 - 00:14:16:17
Sam Rashkin: It was visually appalling and had stifling odors and a health epidemic that was famous at the turn of the century and all that was so much driven by just the amount of waste that just overwhelmed the ability to manage it. So we had to manage this crisis. And at the turn of the century, in the early 1900s, this is how bills are made.

00:14:16:17 - 00:14:44:21
Sam Rashkin: So we had the technology. Cars, in fact don't poop. But we had a foreign theory, UX, user experience, the cost for the cars, the slow production, they were clunky, awkward to drive, and the maintenance on them was just incredibly frustrating. So something happened to drive the transformation or drive the disruption. And all of you probably know what happened ten years from 1903.

00:14:44:23 - 00:15:16:19
Sam Rashkin: The assembly line innovation was well on implementation, and so we could produce cars and assembly lines in this Ford and forward assembly line. And now we had both a solution to the problem, the cars that don't poop. And we had a far greater user experience. On the cost side, about 85% reduction is maintenance enhanced drivability. But looking ahead, of course, we know that cars are now going through another disruption, which we'll leave for another time.

00:15:16:22 - 00:15:49:11
Sam Rashkin: Electric vehicles. Now, the key thing I want to kind of wrap this whole story up with is this adapter be left behind reality. So look at all the people that were disrupted that were brought into this whole scenario of change. You had all the veterinarians and animal workers in the city who no longer had work. You had all the horse exchanges, the horse and buggy companies, the feedstock suppliers, the stables.

00:15:49:13 - 00:16:23:00
Sam Rashkin: You had the horse shooting and dropping facilities, and the poor people who ran around picking up after the horses. All of them were displays and the myriad of connections of other business activities that support these people that were displaced. And it just like I said, it's tsunami of change and you've got to be ready to adapt. So looking to the future, I'm going to suggest the same scenario, hyper scenario is playing out in the housing industry to the point where disruption happens to housing finally.

00:16:23:02 - 00:16:59:24
Sam Rashkin: So let's look at it first that there's we finally have problems that are evolving or turning into four crises driving a tremendous amount of pain throughout the industry. And we'll look at those individually. They are the lack of user experience readiness, the lack of affordability, lack of trades, and a lack of productivity. So first thing I want to highlight, we'll start with user experience readiness though, is that we have these tabs at the top that I use to keep all of us anchored into where we are within this framework of four crises.

00:16:59:24 - 00:17:28:00
Sam Rashkin: So you can track it right across the top where we are. But in terms of his experience readiness, you have to first realize, based on our earlier conversation about homes over life happens, that the caller to that is that housing is the ultimate consumer product. Again, use that's where we spend our lives size, cost, emotion, impact on our lives, aspirations, financial obligation, transaction.

00:17:28:03 - 00:17:55:10
Sam Rashkin: Everything about housing makes it the ultimate consumer product. And the second thing you need to know is that our new reality is that the amount that the buyer knows is going up exponentially, no matter of resources, content, guidance, peer reviews, ratings, there's so much more information the buyers form with before they buy this ultimate consumer product. 95% of consumers using it to search on their home now.

00:17:55:13 - 00:18:28:01
Sam Rashkin: And that was from a 2016 National Association of Realtors study. And so these numbers are just clear that virtually every significant home buyer is much more informed. So the with this brings to mind is I think all buyers are getting also well aware that performance is a must have that the you know we'll talk about in some in further seminars how high performance is left to station with zeros left the station.

00:18:28:01 - 00:18:55:04
Sam Rashkin: And so a lot of builders are jumping on this and going to zero and health and so forth. And so it's great because it's a must have. The problem is the crisis crisis exists is when we don't address all the other increasing and exponentially growing must haves open space, daylight, fresh air, outdoor living, storage, smart home, work at home, advanced lighting and color.

00:18:55:05 - 00:19:30:05
Sam Rashkin: All these things are just a short list of the much larger list of what home buyers expect when they buy a newly constructed home, and the evidence for me that we're not ready is peer reviews. I tabulated and put on a spreadsheet what I think it's one of the more reliable builder rating sites, consumer affairs. And they had, I think at the time that 125 a large production builders, when I went in there to look at the ratings and I put all the numbers into a spreadsheet.

00:19:30:05 - 00:20:02:27
Sam Rashkin: And what turned out was shocking, which was 75% of the builders listed for less than two star average rating. So only one fourth the builders had over a two star rating on average. I won't go into a city and not look at a restaurant review online and go to a restaurant with less than four stars for $8,090. Meal state Hotel It's less than four stars for a $200 state.

00:20:02:29 - 00:20:32:27
Sam Rashkin: What's the chance I'm going to buy a $600,000 $700,000 home from a builder that's less than two stars? So this data is very revealing to me that I think we're not meeting owned by our expectations. The average ratings by the by industry analyst is that you need 3.4 to just to be considered. And again, with the ultimate consumer product, I'm going to say you've got to be four or higher.

00:20:32:27 - 00:20:55:03
Sam Rashkin: So we got to get there. And I'm going to suggest the rank and file builders are not getting four star reviews that are not generated by themselves, but independently by sites like this. The next key crisis is affordability, and this is the one that's probably most obvious to everyone who is listening. First, I like to look at just where we live as a nation.

00:20:55:03 - 00:21:19:02
Sam Rashkin: It's kind of surprising that 70% of our population is less than 20% of the land area. These concentrated areas where we live are called mega regions or mega, and they're just generally communities that are connected by a sophisticated transportation network, usually roads, and sometimes also rail and other networks. That gets you around. But this is where we live.

00:21:19:02 - 00:21:47:14
Sam Rashkin: And keep that in mind when we look at the nation and housing affordability ranking. What this is, is basically a look at the nation by median home price to median household income. So as you get better and redder to read, you go to ten x as a ratio. In other words, the median income is ten times main price is meaning is ten times the median household income.

00:21:47:17 - 00:22:18:18
Sam Rashkin: So the US, the National Association Realtors will tell us that 2.66 is a threshold for affordability. And so I draw a box on everything yellow, red, dark red and suggests this is not affordable. And even the areas that are green are usually mostly way above 2.6 x closer to the four. So here's where we live. And we're living basically based in places that just aren't affordable.

00:22:18:21 - 00:22:45:19
Sam Rashkin: And we see that by the indications of the data, again, 40% of Americans can't pay for the unexpected expense. Nearly two thirds of Americans living paycheck to paycheck. 62% of Americans are worried about paying for housing the following year, and to be reading new reports as a surge in default rates on. And there's a surge in default rates on car loans.

00:22:45:20 - 00:23:16:15
Sam Rashkin: We're just because we're paying instead of 2.66 ratios we're paying, we should be at 30% of our monthly take home as our house obligation. We're at 40, 50, 60%. There's no money left for anything else where house port. And the result of the incredible disparity in costs has had a side effect that I think is really not talking about, but should be shocking to everyone.

00:23:16:18 - 00:23:46:01
Sam Rashkin: We don't have geographic mobility anymore. If you're from the very much lower cost middle swatch of the country, is really hard to move to the coastal cities that are really like double or triple the cost per square foot. 80% of home buyers in 23 2023 verses 2014, 80% more home buyers in a decade said affordability was the most important factor.

00:23:46:04 - 00:24:18:06
Sam Rashkin: More important than location when selecting a new home. It just we've lost the ability to move anywhere we want and that shows up on the on the national movers charts that show where people are moving the highest inbound moves and the highest outbound moves. Generally the highest outbound moves from the highest cost states. There's some effect, of course, by climate for people going there and the highest inbound states, those that are generally much more affordable.

00:24:18:11 - 00:24:42:10
Sam Rashkin: And so that's great, except now the once affordable states are becoming increasingly unaffordable themselves. So this is just a trend because we're stuck. Americans just want to be able to be able to afford the housing. The outcome, of course, of all of this is we have a price income disconnect. The price of the home has no relationship to incomes.

00:24:42:13 - 00:25:05:16
Sam Rashkin: This article I thought said it all. A professional couple who make over $200,000 combined say say it's hilarious to think they can Ford to buy a home in Los Angeles. And the red flag is when a couple in the 95th percentile of household income can no longer afford to purchase a basic come in and stay with an outbound move rate that rose to 60%.

00:25:05:18 - 00:25:27:03
Sam Rashkin: Way more people going out and coming in and you still, it's just hilarious to think housing is something that you could do without some incredibly sizable gift from mom and dad or some other windfall that people have. It also shows up just in stories like this, where Americans feel they need to win a lottery to own a home.

00:25:27:04 - 00:25:53:03
Sam Rashkin: One sorry, found that 40% of 2000 current non homeowners believe that winning the lottery is the only only path for them to homeownership. And so this is this should be disturbing to everybody that that this does not work. And in fact I'll suggest it not sustainable. This is the curve for meeting household income. And here's a curve median home price.

00:25:53:09 - 00:26:18:19
Sam Rashkin: And it should scare everyone because I don't care whatever trends are going on the last three months, last five months, there's so many distortions that are going on. We have a housing shortage because I think 60% of households have mortgage rates under 4% interest, and they're not going to give up those 4% interest rates, creating a real shortage and therefore artificially propping up home prices.

00:26:18:22 - 00:26:50:28
Sam Rashkin: We know that things have to burst. And the other thing you scared about are trends. So if you look at all the trends for when prices go up incredibly steep, it's always a major downturn. Recession right after or the housing market goes into a deep slope. And so here we are right now, right in the midst of an incredible steep price increase curve and a less we we buck every trend that's been happening in the last 70 years.

00:26:51:00 - 00:27:16:22
Sam Rashkin: We have to also realize that there's some high impact event to happen to this industry. It only doesn't happen if for the first time in 70 years after state increase, there isn't a big recession in the housing market. And so I'll highlight that it takes greater than two times in median household income needed to afford a home in 2021.

00:27:16:25 - 00:27:42:22
Sam Rashkin: Now what you need twice the income being income to afford to buy a home in 2021. And more recently, we found in 2023 that was the least affordable year for housing on record. So I don't think anyone in the audience will disagree and know even coming into this session, affordability is such a crisis. I hope this helps understand a little more detail why and how serious it really is.

00:27:42:24 - 00:28:26:10
Sam Rashkin: Trade crisis is just as worrisome by 90% of builders report finding framing crews and carpenter carpenters were just impossible. In 2022, 90% plus are reporting just what a incredible challenge it is to just find the workers, forget about training, skills and all other qualifications. Just getting people to work is impossible. And by the home building, Home Builders Institute then ran the numbers and found that you need about over about 723,000 new workers each year just to meet the demand and combat the 1.5 million home shortage that we have.

00:28:26:14 - 00:28:53:11
Sam Rashkin: That's a huge amount of workers. And lastly, I'll say in this topic. This is why it's so serious. For every five workers that retire out of the construction industry, they're only two in the pipeline coming to replace them. It's not getting better. What really tells you it's not getting better when you also look at the average age for construction workers 42.5 and no pipeline to replace them.

00:28:53:13 - 00:29:12:14
Sam Rashkin: This is just a tsunami of worker shortage that's getting worse and worse. We have to adapt to this and then productivity would be the last crisis I want to talk about. No, it's just obvious. When we look at the auto industry, I should do this image of how automobiles are first made in the back room at 120 years ago.

00:29:12:14 - 00:29:41:11
Sam Rashkin: And then the assembly line came, and now it was incredible. Disruption had happened. You look at it in the subway line today for a automobile plant with all the robotics and advanced construction and automated systems, and it's just stunning just how much innovation has improved productivity in this industry. However, take a look at building housing closure in 1877.

00:29:41:13 - 00:30:11:03
Sam Rashkin: In Nebraska, picture from the Smithsonian archives to 150 years later. Building today and you just your head will span how glacial productivity improvements have been in this industry, especially for the enclosure year. The same amount of just supply materials lie around the site, and the same amount of incredible amount of waste and working conditions that aren't safe. And you know, you're stuck with when you try to come up with innovations.

00:30:11:03 - 00:30:42:22
Sam Rashkin: Look at these two pictures with probably four that I can think of. One is going from balloon framing to Western platform framing, from dimensional lumber to engineered lumber, advanced fasteners and advance power tools. And I'm quickly out of innovations. It's just something that you cannot believe can persist this long. And when you see the job site dumpsters, it's so revealing just how poor productivity is this much way.

00:30:42:22 - 00:31:16:07
Sam Rashkin: So you don't even know if it's a supply bin or the waistband. And it costs so much money for the waste, and it costs so much money because of the extra time. It's everything about this process is broken and it shows up in the numbers. When you look at the productivity curves across different industries, in this case, you see manufactured in a factory and and construction construction alone is the only industry that had negative productivity growth over the last 30 years.

00:31:16:14 - 00:31:45:14
Sam Rashkin: When McKinsey and company quantifies what that cost to industry, it's a whopping $200 billion in the productivity gap that can be closed by adopting 21st century manufacturing methods. This is just unacceptable. And time when the affordability crisis is just creating massive pain for both the builders and the buyers. So we have what I will submit are the conditions for disruption.

00:31:45:14 - 00:32:19:27
Sam Rashkin: We have problems that have evolved into four converging crises, imposing tremendous pain in the industry. The good news is we have this work. We have a solution. We have four innovations. Market ready to relieve that pain. Let's talk about each of those innovations. There's user experience optimization I'm the aforementioned mass customization. Digitization and systems built. These four underutilized innovations are ready to go to make housing affordable.

00:32:19:27 - 00:32:47:21
Sam Rashkin: So let's start first with this user experience optimization. And what I'll do with live presentations I do is often do it kind of on the spot surveys and raise your hand. Well, I'll say not raise your hand off. Say everyone tell me. Shout out what you think, Bill degrade means. And virtually 90 plus percent of the responses I get in unison a large shout of cheap.

00:32:47:23 - 00:33:13:09
Sam Rashkin: I try to figure out where did it ever occur to the kind of the leaders of the building industry that are term called bill degrade should mean that build is left to their own devices. Would always choose the cheapest path for their buyer. Where do that? Where that seem to manifest itself is a great business model for such an important industry.

00:33:13:12 - 00:33:56:00
Sam Rashkin: I finally went to look for an official definition. This is. This is the one I can find that popped up most quickly. Build the grades to find is an inexpensive products made from low grade materials, as opposed to quality grade or custom grade materials that are more durable. That's not a good look for an industry. The builder grade option means lower grade solutions, and in contrast, you can look at one of the most successful companies on the planet, Apple and the origins of Steve Jobs, about what helped them become such a profoundly rich and successful company is this business model.

00:33:56:02 - 00:34:20:18
Sam Rashkin: If you keep your eye on the profit, you're going to skimp on the product. But if you focus on making great products, then the profits will follow. Making great products. So what is a great product? And I add in red a great products. Obviously one of the great user experience. This model has served Apple incredibly well and has served all industries, all companies, incredibly well.

00:34:20:20 - 00:35:10:26
Sam Rashkin: When analysis is done to look at stock performance of major companies and their pocketed into user experience leaders, S&P 500 and user experience laggards, the leaders outperform the laggards three times 300%. Greater performance 63 versus 184%. Just incredible indicator how compelling a user experience business model is, but not just in financial returns. Also in resilience. McKinsey and company did a separate study just looking at resilience, how well companies could recover with shallower troughs and quicker recovery during recessionary periods, and the user experience leaders have three times the resilience advantage compared to the laggards.

00:35:10:29 - 00:35:48:09
Sam Rashkin: And what you see, by the way, it's a consumer experience leaders, which is the same term in a different name. So the data points are just shouting at us. The user experience leader for the best business outcomes. And so I have my first hypothesis is okay, what experiences. And my first hypothesis I put out eight years ago and have been waiting for eight years, is that there are five keys or experiences that apply to all products company design, performance, how product works, quality, how last finished term and all that.

00:35:48:11 - 00:36:20:00
Sam Rashkin: The sales and after sales experiences in the company. And so my next hypothesis was know I can convert that those five experiences into a spotted diagram tool for benchmarking different companies to see how they're doing that we can benchmark their experience. So I go back to Apple. I see why they're so successful as a company. They inspire people by their just ambition to just use technology to create better experiences.

00:36:20:06 - 00:36:49:09
Sam Rashkin: Their design of the products, just how elegant and simple intuitive their products perform, the quality and engineering goes into the products and the whole sales process, from going into an Apple store and how it's designed and laid out and the service you get and the packaging and you get home, and then the genius bars when you want assistance, everything about sales and service, this company is just off the charts, and they have more cash reserves reported in 2011 than the entire US Treasury.

00:36:49:11 - 00:37:13:03
Sam Rashkin: As an indicator for just how rewarding a user experience business model is in contrast. Oh, I know three is a failure to deliver any of the five key user experiences instead of staying. So this earlier I showed you that five legged stool and just started just one leg is kind of a joke, but any one of the legs is gone.

00:37:13:06 - 00:37:37:00
Sam Rashkin: My hypothesis is everything goes very quickly. So I'll give you just one of five examples for each of these experiences. I'll give you one Chipotle. Many are probably familiar with that. In 2015 and 2018, 1100 customers got sick and tainted food, and the cost of the company was at least $25 billion in fines. But more importantly, they were just growing exponentially.

00:37:37:00 - 00:38:02:27
Sam Rashkin: And it's just a whole tailspin that company went into only now, recently. It's a company back on really good track for growth. So, you know, it's like almost a decade to recover from a really bad user experience failure. And again, I can show you the exact same type of devastation to amazing companies Volkswagen, Toyota and other Samsung all by missing one experience.

00:38:02:27 - 00:38:31:24
Sam Rashkin: But I don't want to spend the time today. I just want to make this point. You got to get all five kids. My number four is that use experience benchmarking applies to housing, but with one change you take company and swipe it out with community. And the reason we do that is because housing is a unique product. You not just buy in the home, you're investing in the community, and you can't just deliver the home experience.

00:38:31:24 - 00:38:57:12
Sam Rashkin: With design, performance, quality and sales, you have to deliver a good community experience. Thus the real estate mantra everyone. Location, location, location. What happens with the company? Experiences gets embedded in sales and we only buy on average about three homes in a lifetime. And that's all homes. And we buy 6 to 1, 8 to 1 existing versus new homes.

00:38:57:12 - 00:39:23:05
Sam Rashkin: So the amount of times the average household won't engage with a homebuilder is minuscule. So there's not much basis to build a relationship and understanding about company. So that happens when finally they're interested in consider new housing. And so companies embedded there. So we have the same spider diagram. And we have these five key community experiences. The ones I showed you earlier on the five legged stool.

00:39:23:10 - 00:39:48:19
Sam Rashkin: And so for me I'm a hard scorer. I traveled and visited tens of thousands of homes or quarter century of leading the national programs, and they just start certified home and zero energy ready home. And I travel and I see so much product and I like I admit, I'm a hard scorer, not because I think everyone's so bad, but because there's so much opportunity is the way I look at it.

00:39:48:19 - 00:40:10:23
Sam Rashkin: I think communities can be incredibly stronger consistently. Designs have so much opportunity to be better for lower costs, and performance is so much ability to be done more cost effectively and more comprehensive. And quality is just amazing what's left on the table. And finally, sales may be the biggest gap in what you can do versus what's being done.

00:40:10:24 - 00:40:32:07
Sam Rashkin: The service in this industry compared to other industries to me, is such a shortfall. So I score the industry tough. This is what I do. I spent a lifetime trying to get builders to zero or Energy Star, and all I'm doing is moving one point out further on. The spider diagram shows not enough for builders to become industry leaders.

00:40:32:14 - 00:40:58:09
Sam Rashkin: In that one leg of the stool, you don't have a chance of holding it up. You got to do all five. So this is why I spent my career in my life doing right now. How do we address the whole user experience? Much like the way building science wants to treat the house as a system, I want to treat housing as a system and respect and understand why home buyers truly buy homes and deliver on those expectations.

00:40:58:16 - 00:41:23:15
Sam Rashkin: That's what this whole program is about. You have to do all five. So the framework for those of you that will get into the book and into the fall series will especially dive into each of those experiences in greater detail on the first. First one community has three strategies and 24 best practices. Design has five strategies and 60 best practices, performance is five strategies and 48 best practices.

00:41:23:21 - 00:41:55:13
Sam Rashkin: Quality has three strategies and 20 best practices, and sales has three strategies and 20 best practices. And what I mean by a framework, again, is a process for consistently getting to a desired outcome. In this case, better homes at lower cost. And this isn't enough. I want you all who are in the high performance space to realize you have to become more facile and able to integrate with all five key user experiences.

00:41:55:13 - 00:42:23:11
Sam Rashkin: That's what we do and how we do it. This is what we talked about earlier. I won't repeat the animation, but essentially we reinvest in the user experience optimization on the front end with experts and special features. The extra cost savings with simple lean quality integrated systems, mass customization. Talk about next, and then we sell these better homes for lower cost.

00:42:23:13 - 00:42:56:05
Sam Rashkin: With this big prize out there waiting for us 30 to 70% savings and a value. If you read the book, you see all the tabulations. It sounds like an impossible number. It's not, and we need it. Okay, I promise you mass customization. What we are doing as an industry is we're building a product people can't afford. We're building custom tailored homes on what we can afford for a huge chunk of the home buying public is a much more mass, customized product.

00:42:56:06 - 00:43:21:27
Sam Rashkin: You can't buy a custom product away to the extent we're buying it today. So I share this picture because many of us would love to have a tailor make or pants or shirts or or suits, but we don't because the mass customized shirts, pants and suits we buy or have our fit have our size, there's so much cheaper and are well within what our expectations and desires are for clothing.

00:43:21:27 - 00:43:51:18
Sam Rashkin: So 99.8% of us. 99.8% of us will buy clothing that's mass customized. And I don't believe that we're going to go that number in the industry, but we've got to go from like almost 0% to at least 25% of buying mass customized homes. And what the concept is, is you want to develop these optimized building blocks that you use over and over again.

00:43:51:20 - 00:44:16:13
Sam Rashkin: If you're going to use them over and over again, it means you can invest and infuse world class expert solutions. And because you build them over and over again, the cost of that world class expert solution, the expert themselves and the and the special features is amortized over so many applications. And then you offer strategic design options. I will forever be debating my builder friends.

00:44:16:15 - 00:44:43:03
Sam Rashkin: You don't need all the customization you think you do. You're overwhelming consumers. You go to the design centers and I do this over and over again and watch people. It is overwhelming. It's exhausting. You finally just choosing things without careful selection. It's too complicated a process. And we do these three concepts. We wander with ample choice diverse streets, streetscapes, diverse interiors and use sales.

00:44:43:04 - 00:45:11:12
Sam Rashkin: And that's we cannot we cannot ignore opportunities for each savings. So I'll give you an example. A friend of mine, that amazing what I thought was almost like a a project that no one paid attention to in Libertyville, Illinois, north of Chicago. And he just in this one production environment. So I'm going to build these six blocks over and over again on the street, and we'll mix and match and we'll do 2 or 3 floors.

00:45:11:13 - 00:45:39:17
Sam Rashkin: And it's amazing how it works. ABCd F. And so the first floor there's a, b, c, d f, second floor is there, you have a, b c and and and you basically infuse these with the amazing amount of attention to great detail for design building science I think these are zero ready help smart home lighting, color landscaping. And you wind up with also interior building blocks.

00:45:39:18 - 00:46:08:29
Sam Rashkin: You use the same kitchen concepts. Maybe you vary the counters and cabinet choices, some backsplash choices, and you have the same thing for the bathrooms and on the half bathrooms. But you use them over and over again and optimize them for cost for esthetics. And so this is what your options look like on a mass customized project. And I submit that the diversity is well within the expectations of the home buyer.

00:46:08:29 - 00:46:41:05
Sam Rashkin: So in this case, you see you have 2 to 3 expert curated options in terms of number of stories. Roof truss configurations, pop out window configurations, front porch designs, signing trim layouts and color packages. And the actual street looks like this. And finally, one to tell me this looks like a typical track development. We'll also talk when we talk about design, the power of landscaping architecture in mature neighborhoods.

00:46:41:08 - 00:47:06:10
Sam Rashkin: Landscaping overwhelms the house architecture, so it's always stunning to me how much we invest in complexity that costs more, that's incredibly more burdensome to maintain and is unnecessary when you have great landscaping. But here you see a beautiful street of mass customized homes built in the six building blocks. And here's what it looks like when that same builder applied it to another project, I think in four columns.

00:47:06:10 - 00:47:32:09
Sam Rashkin: So I think it was a street neighborhood of about 60 units. And what happened basically is they took the street and they developed the lots. So it was set up so that you had a curated collection of one story homes. And so there were three unique designs now, one with a Adu in front and one with the side unit, makes up for like a fitness at home and the other with extra bedroom in front.

00:47:32:09 - 00:47:58:03
Sam Rashkin: And you start with versus maybe the craftsman exterior option. Then you have a bungalow exterior option and just carefully done simple details, but you wind up with these six distinct elevations and the very make these building blocks used over and over again with really great designs, great diversity and great choice. And it's so much lower cost to build this way.

00:47:58:06 - 00:48:19:21
Sam Rashkin: Okay, the last second to last. On the innovation in the basis of want to talk about is digitization. And first of all, I just show you this stunning lagging position. The housing industry is in his construction right near the bottom. And we want to give a big shout out and thanks to the agriculture and hunting industry for saving housing from being dead last.

00:48:19:22 - 00:48:52:22
Sam Rashkin: But that's no big reward. It's still almost all red across, except for a few oranges, which still mean incredibly low digitization. I mean almost nothing close to lack of digitization as housing, and that's significant when you look at, again, the why, when McKinsey and company went and looked at how companies performed relative to three key metrics are profit, earnings, total shareholder returns and returns, intangible equity.

00:48:52:24 - 00:49:20:19
Sam Rashkin: They found that the digitization leaders outperformed by 26 to 65%, again, use a profit gains by jumping in and getting Ahold of digital technology. And so what is digitization. So this example is probably the best I can do as a concept of what it is. You've built the car virtually all twin of the car, first on the computer.

00:49:20:21 - 00:49:43:16
Sam Rashkin: And when you build it on a computer like this first you can fully optimize it. You can be more efficient, you can make sure you get rid of any waste that you don't need. You can make sure all the systems are optimized and how they are integrated together and work together. And you can also test the dynamics of the cars it drives down the street from mileage.

00:49:43:18 - 00:50:12:22
Sam Rashkin: Just everything is fully optimized, understood, and the manufacturing has so much less uncertainty and defects and rework. And it's just a completely different process from this two dimensional analog construction. So we we have to understand that the ultimate consumer product demands and must have a fully digital solution. So this is what it looks like. And it's faster and it's better and it's cheaper faster.

00:50:12:23 - 00:50:38:21
Sam Rashkin: Again we do cycle time. You have automated bills bill materials, automated scheduling. It's also faster in terms of the ability when it's digitized to be used many times over, just by placing your digital solutions right onto large sites for planning big neighborhoods, it's better quality and accuracy. Systems integration, machine learning, and the savings come from productivity, waste savings, and less.

00:50:38:21 - 00:50:59:19
Sam Rashkin: Rework this. We just need to fully understand how it works. So and this example, you'll see a digitized house built by a friend of mine. And it's so clear where the plumbing is going, how it works, how can we optimize. It can be bid so much more accurately. And then here's the mechanical systems fully laid out again, optimized for flow.

00:50:59:19 - 00:51:21:01
Sam Rashkin: Every piece can be understood. And same thing with all the lighting and the solar in the locations. And how they integrate can be absolutely optimized. And then you can start putting your structure, here's your foundation and here's your wall framing. Then here's your roof framing. And you can make sure all the parts are integrated. And then you can take a tour and dive right in and take a tour of the whole assemblies.

00:51:21:01 - 00:51:40:28
Sam Rashkin: Make sure everything's optimized, the trim and everything's going to work right. Everything's just place for the ducks and the plumbing. Everything will be worked out ahead of time, and then you can actually look at the finishes and make sure they're optimized as well through the trim intersections. They smooth or they have good details or all the spaces working the way they need to work.

00:51:40:29 - 00:52:10:11
Sam Rashkin: This is a completely different way of optimizing a home. But first you have to mass customize. And so here's what it looks like all together with mass customization and digitization. So here we have one base plan in this example Largo Place in Texas. And it's a beautiful ground floor layout fully optimized. And then you'll have five choices for how we can create outdoor living for this incredibly beautiful first floor plan on the main level.

00:52:10:14 - 00:52:40:08
Sam Rashkin: And then we have an upper level with five different choices for how we can live upstairs, number of bedrooms and offices and so forth. So we pick an upper level, we pick a main level outdoor living experience we want and the lower level, what spaces we want came in and more bedrooms. And when we combine and choose what we want, then because it's all digitized, we combine it into one digital home using the building blocks that are fully digitized.

00:52:40:08 - 00:53:05:16
Sam Rashkin: And when it's digitized, computer can grow it into a complete and four product, including all the framing, the plumbing, or the electric. So here you see the home being assembled. But now I can do the same thing for every lot in this project and locate all those homes on that site. And I create almost in a fraction, tiny fraction of time, completely, completely visualized, realized community of homes.

00:53:05:19 - 00:53:18:20
Sam Rashkin: This one is scheduled to be built hopefully in the next year or two in Texas. So you see how all these pieces work together and are just insanely.

00:53:18:22 - 00:53:47:29
Sam Rashkin: Amplifying productivity. Quality user experience is just amazing. So now we need to figure out a way to reduce trades and systems built. It's time. The business case is that when you build the systems, built construction, which are kits are the least sophisticated level, but you can have your framing kits, you can have panels of various types, frames, structural selected panels, insulated concrete panels, precast concrete.

00:53:48:02 - 00:54:11:10
Sam Rashkin: You can have modular volumetric building. You can have hybrids where you may have modular for the core kitchens and bathrooms and panels for the other rooms. You can have 3D printing. There's lots of options out there that are all being rapidly being developed for for delivery and their better quality, the accuracy, the strength and the cost savings and time.

00:54:11:10 - 00:54:40:02
Sam Rashkin: Rework waste and at scale. When you start getting two and three shifts under these production facilities, cost go down more and more as the as the base fixed cost or amortized over many, many more homes being produced. So just showing what the value of cycle time is in a systems built schedule on top and a site built traditional schedule and bottom, you both have to design, engineer and permits and approvals.

00:54:40:02 - 00:55:03:26
Sam Rashkin: Those are the same before we get allowed to start building, but from their systems built has this huge advantage. And it comes from the fact that when you're site building the site and lot development and foundation, you at the same time the systems built, you can be building the home of the plant. In other words, the home doesn't require a foundation to build the walls and the interior and the roof.

00:55:03:26 - 00:55:26:08
Sam Rashkin: You can do that in the plant. And then when you do the final steps with site built, I have to construct the home in the field under all sorts of conditions, with thousands and thousands of parts where the system's built. You're disassembling these key building blocks and components into the home much, much more quickly than it takes to construct.

00:55:26:08 - 00:55:56:08
Sam Rashkin: And you wind up with hardly any site restoration work because all that was in the plant, the any waste that exists and any issues of restoration are far diminished. So that might be 30 to 50% time savings. The cost from that are huge. If systems built is 30 days less 65 versus 95, and the average cost per day for a builder operates 5 to $800 a day, that's 15 to $24,000 cost savings just from one component.

00:55:56:09 - 00:56:32:09
Sam Rashkin: Time to get rework quality from having just greater productivity. Just the savings from time cycle time. On top of that, you now have greater velocity because I'm building 30 days less cycle time. I may build one or 2 or 3 extra homes a year, and if the property charm is 2020 $5,000 on top of the 15 to 24,000 for time, I may be each year getting another 50 $70,000 of profit because I can build more homes with greater velocity.

00:56:32:12 - 00:56:54:22
Sam Rashkin: Time is really expensive. No one even thinks about it to enough extent. In the true cost of our different choices for how we build. And to that point, look at the numbers for the US 2% from this study done in 2019, compared to the rest of the world, UK had grown to about 11%, Germany about 20%, Japan to about 20.

00:56:54:22 - 00:57:14:07
Sam Rashkin: And Sweden's, like the poster child for systems built there were about 85%, mostly panel constructions where that country is settled as the most effective way to build on the plant. So we may be growing right now to about 3% systems built in the US, not nearly nearly enough. And you see where the rest of the world is going.

00:57:14:12 - 00:57:41:02
Sam Rashkin: Why do I say not nearly enough? Because we don't have the people to build the shortage of poems that we have. We have to figure out how to get better, faster with systems built. So I just want to wrap up this whole session to explain why we're so slow to innovate in this industry, the home builder business model, and then the impact on how it slows housing evasion goes step by step.

00:57:41:02 - 00:58:08:09
Sam Rashkin: One is the priority for sure. Is acquiring land that's the dominant priority. So there leaves there's so much pressure to use all available resources. To have the land to build a home is very little resources set aside for innovation. Then the variable cost business model, where the builders don't want to own any part of construction and outsource the entire construction process, so they're not vested in innovation of the production process.

00:58:08:09 - 00:58:37:07
Sam Rashkin: And then third, the fragmentation of the industry is enormous, so much more so than any other industry in the logistics. Coordinating innovation are tremendous. If I innovate an enclosure, then I have to get the electric trades to buy into it and mechanical trades and the plumbing trades, and I have to get the finishing trades. There's so many complexities with all the fragmentation and everyone not owning the entire process, that logistics shuts it down.

00:58:37:07 - 00:59:02:11
Sam Rashkin: And finally, the focus is understandable by builders on all the massive complications, uncertainty. They are dealing with hundreds of different building codes. They have design trends that are changing constantly. They have interest rates that are going up and down. The economy is having all sorts of different kinds of changes over time. They have supply chain issues that have lack of trades and resources.

00:59:02:11 - 00:59:35:04
Sam Rashkin: They have to hold on to the relationships they have. The outcome is so predictable, their risk averse to change or innovation because they are just trying to survive with all the complexities, uncertainty of the business of their any result is 20 times less builder investment innovation than the manufacturing industry. So this is why innovation so slow. So wrapping up today's seminar, I'm going to say that we have these four crises creating a real problem.

00:59:35:05 - 01:00:02:03
Sam Rashkin: We have four innovations creating a solution. We're ready for disruption that are homes for lower cost. And so if we line up our our crises at the top, and then we have our innovations on the left, we can see that user experience optimization will make us more ready for delivering a better user experience and be more affordable by being again optimized for lean, for simple complexity or integrated systems.

01:00:02:03 - 01:00:24:12
Sam Rashkin: All those things will happen and then you've been worthy. So it's time to start mass customizing and building blocks and getting even more affordable. And then you digitize for even more productivity. And then your systems built to finally get to the trades trade shortage that we have and also to enhance productivity.

01:00:24:14 - 01:00:45:17
Sam Rashkin: And that's the disruption that is simply there to see when you all you do is connect the dots. And what another way I show how plays out, at least in terms of one significant segment of the industry. I don't know if it's going to be 25 or 30% of the industry, but here's what it looks like when all that innovations apply.

01:00:45:17 - 01:01:11:05
Sam Rashkin: And somebody says, you know what? Housing is a product. I'm going to build it as a product. So if I look at cars, I ask the question, how can all the innovation cars be ignored by the housing industry? And when you look at the image there for percentages, we use a car about 4% of the day and it lasts about 15 years.

01:01:11:08 - 01:01:40:14
Sam Rashkin: In contrast, a home we use 75% of the day last, hopefully at least 100 years. So how can innovations that replace obsolete old platforms ignored in the car industry? We replace that internal combustion engine that was made in that first assembly line factory with electric vehicles. Now the forecast would be about 6,065% electric by 2035. Maybe it'll be closer to 30%, 35%.

01:01:40:16 - 01:02:01:16
Sam Rashkin: We'll see where the number works out. But the electric vehicles disrupting the industry. And when the next innovation comes, the solid state battery. And we have 800 mile range and we can operate under any temperatures. If you think the innovations that are coming are not going to create a massive shift, electric cars, just not looking at the user experience.

01:02:01:16 - 01:02:29:07
Sam Rashkin: And so I'm saying how can that innovation happen in housing offsite replacing field construction or systems built place and construction and everyone we'll talk more about in future module all electric replaces fossil fuel. It's almost insane to run gas lines to subdivisions and have all tanks. The advanced electric technologies work better. They are just is and more reliable.

01:02:29:11 - 01:02:54:17
Sam Rashkin: They're going to replace. And so I think the future is something called zero electric cars, not just the way electric vehicles have become the future for the car industry. The next innovation that can't be ignored is loading up the tech. The cars by electric cars have these amazing controls, cameras, sensors, smart capabilities that are app controlled and batteries.

01:02:54:19 - 01:03:19:21
Sam Rashkin: You're not going to leave this out of car houses. The ultimate consumer products are going to say these innovations not for us. Controls, cameras, sensors, smart controlled app controlled batteries and solar. Then there it's got to come. We can't ignore it in this industry and optimizing user experience again. We did too many indicators that when you optimize design performance and quality, you lead the industry.

01:03:19:21 - 01:03:49:24
Sam Rashkin: So I think the same is going to happen to the housing industry, where that extra experience community thrown in because of the unique nature of investing in both the neighborhood and the product, the home itself. And then cars are mass customized. They're basically they have digitized, curated design packages and building blocks that configure all these choices from a very short list of platforms for chassis, for engines, for trims and for finishes.

01:03:49:24 - 01:04:16:06
Sam Rashkin: It's amazing how the basic building blocks creates so much diversity and just the way we can change cladding. We change some body configurations to get lots of choices. Same thing will happen in housing well Digital to digitize curated design packages and building blocks. And the last innovations owning the customer for life. With the car, you have a tech driven transaction and all these ongoing services and revenue.

01:04:16:11 - 01:04:38:22
Sam Rashkin: I'm buying things from my electric vehicle right from my phone. I'm buying enhanced navigation or entertainment and safety, and they keep improving my car, and they keep sending me upgrades that make it work better. The same has to happen in housing. It has to be a tech driven transaction. Get rid of the complexity and burden and all these ongoing services and revenue for the home builder.

01:04:38:25 - 01:04:58:16
Sam Rashkin: Maybe we'll have monitoring. You can opt in for your mechanical system so you know that's going to have a failure or it needs servicing, or you're going to have monitoring for the indoor air quality of the home. You'll have monitoring for safety and entertainment. You can opt in for all these packages because all the capabilities will be embedded in them, much like they are in the car.

01:04:58:17 - 01:05:22:08
Sam Rashkin: And as a user, we can opt in as we can afford more and more to get those embedded capabilities to manifest and deliver better and better experiences. And of course, everything's on your phone. If you have anything you need to know, you have a video, how to fix the house security system, or whatever you want to do. And so I'm going to leave you today with two things.

01:05:22:08 - 01:05:43:19
Sam Rashkin: I want to show you one example of what it might look like with a new player that promises to produce this, offer this product this year, 2024. So we'll see if they do it and then what you can do to adapt. So I won't walk you through Roomba. Not because I believe I don't know enough about them to forecast them as walking success or not.

01:05:43:22 - 01:06:09:17
Sam Rashkin: But I just showed you this and I made this up before I even knew about Roomba. Us. And look at us. This is their home. Of course it looks like a product. Okay, but notice on the roof here you have the solar panels, you have the battery, and you have this amazingly optimized modern home that's built smart, beautiful with it's about 2 or 3 times stronger than conventional wood frame.

01:06:09:17 - 01:06:32:01
Sam Rashkin: And when you go inside it's all integrated. The lighting, speaker systems, the storage systems, everything that finishes, all of it curated for maximum effect and least cost. There's hardly any trend that you need or waste because of the manufacturing capabilities in the plant to mitigate the need for those things, but you wind up with clean lines and beautiful finishes.

01:06:32:03 - 01:06:58:22
Sam Rashkin: It's made for happiness and committed to the environment. So it has. Every choice is based on creating a healthy indoor environment. This advanced incredibly way, way more full featured shower that they focused on. The design is so efficient there isn't a wasted inch in it. The space is all these storage and capabilities. It has fully fitted kitchens and batteries you mentioned.

01:06:58:22 - 01:07:22:28
Sam Rashkin: And there's your application. The whole home operates from your smartphone just the way your your electric car might. The front door, your comfort, your lights, your mood cameras, your windows security and so forth. All of it. Even guests and everyone else you can you can set this up as a as a Airbnb or whatever it may be, and have guests have codes and come and use and leave that are timed.

01:07:23:01 - 01:07:47:12
Sam Rashkin: You have a personal doorman with A300 0 pound resistant deadbolt. Amazing security, far ahead most photos are providing and a whole brain for the home. A whole home control unit where everything is wired and optimized for a truly smart experience. So you have remote locks, smart lights, smart climate control, powered windows, smart ceiling speakers. You have all these mood settings that you can do for your home.

01:07:47:12 - 01:08:07:03
Sam Rashkin: Just at a push of a button. You can have multiple user profiles depending on different people using a home have like different settings. And I mentioned the guest access. So you can have timed entry and then the digital access goes away. Enhanced security. You just this is what you come with the basic package when you buy the home.

01:08:07:03 - 01:08:32:17
Sam Rashkin: And then you have choices. You know, it's basically a casino right now. And the reason I mentioned this is the price for the one bedroom unit with a kitchen and, and a full featured bathroom and all those events, battery and solar system capabilities is $89,000. Okay. So it's almost 500ft². So I buy another two modules. One just a connector.

01:08:32:19 - 01:08:55:04
Sam Rashkin: Maybe it goes up to $200,000. And I put that on the site. That cost me 100,000. That's $300,000. And look at everything. You're getting all the features in that home. Let me get going the right direction. So here's what it looks like. If you take the building blocks and you symbol three of them together. So this is it during the day.

01:08:55:10 - 01:09:27:12
Sam Rashkin: This is at night. You can see the solar collectors, the battery, the whole advanced lighting systems. And you see what it looks like when you want three bedrooms and an office, plus kitchen with one just two bedrooms plus the office. But you see how the modules can be combined. So I showed this not because I believe know enough that this is going to just disrupt the market, but it shows that people are thinking exactly what I'm suggesting, that you can't ignore all those innovations that are there for the taking.

01:09:27:15 - 01:09:49:26
Sam Rashkin: And I know that one of these providers is going to crack the code and people are like, oh my God, I can get this for $200,000. Do I want to buy that custom made home for $500,000? And you're going to see someone's going to crack the code. So how do we adapt and how do we prepare for the change?

01:09:49:29 - 01:10:20:07
Sam Rashkin: So if you're a housing professional, builder, architect, developer system, built company, portable housing, first bullet trains. Everyone needs a transition to a user experience business model. Let's not fuller cells. That housing is going to be the only industry where being a user experience leader doesn't provide incredible, massive returns on the bottom line. And the best way to do it is just by start customizing the housing 2.0 optimization framework for your business.

01:10:20:10 - 01:10:46:22
Sam Rashkin: I have 160 best practices, but I'm not delusional that everyone should do that. I'm saying here's what we've learned from 30 years of curating collecting all these best practices. What meets your preferences, your tolerance for change, your marketing conditions, your demographics, your climate conditions? Just start curating what best practices you're ready to do, but start to take your house to the next level.

01:10:46:22 - 01:11:15:24
Sam Rashkin: And more and more you got to look to stop over customizing homes. We have to start using building blocks over and over again. Maybe start with kitchens and bathrooms and track the emerging digitization providers. You can engage experts or in fact become one. Invest in house to have people become your digitization in-house expert. And then you can start digitizing your BIM worthy designs because you'll want to use them over and over again and evaluate the systems options.

01:11:15:25 - 01:11:38:22
Sam Rashkin: There are many that I didn't have the beginning of the time to go through, but do the math and realize that the first time you tried when these new systems were structural insulated panels, or whether it's a modular home, you'll have more time and cost the next one, because once you figure it out, you get past the winning curve, their savings to be had.

01:11:38:25 - 01:12:10:24
Sam Rashkin: And lastly, I want to talk about housing programs because I came from running national programs, and I was always frustrated that the programs are too focused on energy or on solar, on health. And I have a couple of suggestions, whether it's high performance through energy, green, affordable ESG. First, the certification program should start training the partners, the builders and architects designers to deliver all five key user experiences.

01:12:10:27 - 01:12:36:01
Sam Rashkin: Why? Because you're invested in the success of these partners, and the partners cannot be leaders and optimize their success. In absence of taking and getting the most of all five key user experiences, you can't ignore them. Housing 2.0. There is a as a default for a way to start right away today and recognize and all the recognition award programs.

01:12:36:01 - 01:13:03:26
Sam Rashkin: I get so frustrated how complicated they are. I go to mad as judges for these programs. We make them way too hard. There's only three things you need to know to is still an award in recognition for a home or builder in your program one. Did they meet your criteria threshold? Two did they do it where they optimize the user experiences?

01:13:03:26 - 01:13:29:16
Sam Rashkin: Was it great design, great community? Was it great quality? You want to recognize the participants in your program who are going to be the leaders. So recognize the user experience optimization players. And the third thing, now that you reach the threshold, show us how you did it cost effectively. Those are the only three criteria you need for a recognition program the complications of things and details.

01:13:29:16 - 01:14:00:01
Sam Rashkin: They go after way beyond what you need. Always try me crazy. Third, affordable housing programs cannot keep ignoring user experience. Just because you're a lower income household doesn't mean you don't need storage. You don't need something without their living, that you don't need some open space in your communities. All the things that we speak to, if anything, are more urgent in low income developments.

01:14:00:08 - 01:14:25:04
Sam Rashkin: We have to provide some dignity in housing. We cannot just be a shelter over people. What I would go and visit the first habitat for humanity homes and talk to Millard Fuller, the the mastermind genius who put habitat together. I suggested having a garage in these homes, and he almost he almost looked at me like he would kill me.

01:14:25:05 - 01:14:50:20
Sam Rashkin: He was so he was so excited to suggestion. He said, we don't build shelter for cars. We built shelter for people. I said to Millard, though, right there on a stage sitting next to him, Millard there going to be 6 or 8 people living in this three bedroom home. You got three closets that are two foot by three foot, one in each bedroom, and that is it.

01:14:50:22 - 01:15:21:21
Sam Rashkin: Do low income households are moving and not have and outdoor bikes and have garden tools and other tools. And the garage is not a shelter for a person. It's a place of the neighborhood, doesn't look cluttered and doesn't look miserable. Just. And there's no way I can win that. But I was submit that affordable housing, if it ignores these critical experiences, will be like all the failed social housing projects of the past.

01:15:21:23 - 01:15:51:00
Sam Rashkin: They won't stand the test of time. And finally, aggregate demand for high performance systems built homes. I think we way over invest in research programs. Research is the problem. About a dozen builders systems builders out there can do zero energy today. Just give them the demand. Give them a price so that they can build the scale and fine tune their solutions so they can be at the lowest cost.

01:15:51:02 - 01:16:13:02
Sam Rashkin: We have prizes tied to rigorous user experience and cost targets. They're already getting to zero way, way to overflow. This thing is a research problem. It's not. It's a demand problem so that factors can produce and do what they do best at scale drive tremendous cost savings. So that's that's the thinking on the future. I hope some of this makes sense.

01:16:13:06 - 01:16:18:00
Sam Rashkin: Mike I'm going to hand it back to you and open to any discussion.

01:16:18:03 - 01:16:41:05
Mike Collignon: All right. Thank you sir. Much appreciated. And we do have some questions from our audience. We'll go to the bottom of the hour here. So first a question from Zoran. He was wondering does home digitization mean the same thing as a BIM building information modeling?

01:16:41:08 - 01:17:19:03
Sam Rashkin: No. BIM is building formation. Modeling using software like Revit is the first step. You're you're getting a lot of it organized three dimensionally. But digitization is able through automated systems to take that and then create building materials to to do tremendous more advanced scheduling and other aspects to that set of drawings so that you know, how, you know, in sequencing how things will fit together, when they'll fit together.

01:17:19:03 - 01:17:34:24
Sam Rashkin: And it's much, much more involved. But it's a critical first step. So, so building information modeling is, is kind of the gateway to being a digitized solution.

01:17:34:27 - 01:17:45:10
Mike Collignon: He also wanted to know, do we even need so many new houses, our deep energy retrofits, a more environmentally friendly option?

01:17:45:12 - 01:18:14:11
Sam Rashkin: I think we have about a 4 million home shortage right now nationally, and we just it's just people moving in with parents and doing whatever they can to get by. We have homelessness is at staggering heights, historic lows we've never seen. We have a vast housing shortage. We don't have nearly enough homes. But he's not. But of course, we need to also do upgrade existing homes.

01:18:14:13 - 01:18:37:09
Sam Rashkin: It's probably one of the biggest infrastructure issues that people don't talk about in about 80 million single family homes that have to be on some path to at least zero already. So I think in module six or module five of this series, we're going to talk about existing homes and how to get them to zero. And it's a combination of both making the right technical solutions.

01:18:37:09 - 01:18:45:08
Sam Rashkin: But very much also I would submit a sequencing challenge how we do it.

01:18:45:10 - 01:19:00:02
Mike Collignon: Yep. That's right. Actually we are going to be talking about that in seminar number six of this series that is scheduled to happen on May the 2nd. So registration is not open for that yet. But that's just kind of a coming attraction.

01:19:00:05 - 01:19:27:09
Sam Rashkin: We might want to put that on the calendar. There are huge minefields for trying to go to zero ready, or even an energy star level performance that could really ruin these homes in terms of moisture issues and other problems. It's really critical to understand those minefields. So I think, like everyone, to put that on their schedule, because I think that's a great question about something very important.

01:19:27:09 - 01:19:31:11
Sam Rashkin: What do we do with the existing housing?

01:19:31:14 - 01:19:56:20
Mike Collignon: I'll put a note in the chat. Box a second. Make sure you're there. All right. So we had a question and I apologize if I butcher the pronunciation here. But Lutz Marina wanted to know, is it possible to get your presentation in Spanish? Thinking of having you maybe present in Spanish speaking countries?

01:19:56:22 - 01:20:16:24
Sam Rashkin: Boy, I am, I struggle so much with English. My goodness, to think about Spanish. If they're interested, reach out. I'll see if we can find a way. I have a lot of good friends that speak Spanish, and if not me, we can. Maybe we could find a way to translate.

01:20:16:27 - 01:20:39:12
Mike Collignon: You know, we've joked internally about taking housing 2.0 on a world tour as in-person events increase. And now here we are getting international requests. Back to Zoran. He had a question. Is a fall in home prices unavoidable in certain in current circumstances? Sorry. Current circumstances.

01:20:39:13 - 01:21:12:12
Sam Rashkin: Great question. So let's understand what home price is, right? It's two components. It's the land and it's the the house itself. So in terms of new construction, I don't know that the cost of materials and the cost of labor of any chance of going down. So I think that cost is locked in to either at best stay the same or go up on the cost and race that we're seeing.

01:21:12:14 - 01:21:35:17
Sam Rashkin: However, land is a completely arbitrary cost. It's someone says the land is worth this and there's no other basis for it except, of course, what people agree to pay. So the one soft area in housing where costs can go up or down the most is on land cost, and on most homes. I would suggest about, a new construction.

01:21:35:17 - 01:22:01:13
Sam Rashkin: It's about, let's say, maybe a third land and two thirds, two thirds a house. When you go to existing homes and you get into established neighborhoods, it may start shifting the homes of summer children that their value maybe half of the total costs and lands the other half or even less than half. So when you ask about is there a risk of cost of housing going down?

01:22:01:15 - 01:22:19:07
Sam Rashkin: It's the risk is with how far down the land costs can. Correct. Because right now we can't afford the price that they're asking us to pay right now. But I don't know how material and labor costs go down.

01:22:19:10 - 01:22:41:09
Mike Collignon: All right. I don't see any other questions right now, Sam. So we're going to go ahead and wrap this one up for today. Certainly want to thank everybody for being here today asking wonderful questions. And if you like this first seminar well there are five more you can attend. In fact, our next one is going to take place two weeks from today.

01:22:41:10 - 01:23:07:13
Mike Collignon: That's on Thursday, February 15th at our start time of 2 p.m. eastern. We're going to be discussing a very popular topic in the housing 2.0 program, and that's optimizing design for lower cost, high performance homes. I want to thank you again for attending. Thank you again to our sponsors as well, Schneider Electric, Genco Solar, Mitsubishi Electric and Panasonic Healthy Indoor Living Solutions for their generous sponsorships.

01:23:07:14 - 01:23:10:20
Mike Collignon: Until next time, stay safe, stay healthy and take care of.