Home as a Service with Chris Langford

Calling All: Homeowners, builders, home financiers, property managers and service providers –this one's for YOU!

WHY are homes evolving beyond the traditional mental construct of an asset to "home as a service?" How will the COVID pandemic enhance or stunt this movement?

Chris Langford is a Partner at IDEA Fund Partners, a leading early-stage investment firm with offices in Durham and Charlotte, NC. He is the former founder and managing director of Lowe’s Ventures. He has spent the bulk of his career investing in or leading strategy teams across the housing value chain.

Find Chris on twitter @clangfordvc and IDEA Fund Partners at @IDEAfund.

Many thanks to our partners at the University of Denver for their editing and post-production talents, specifically Lija Miller and Lisette Zamora-Galarza. 

The University of Denver Franklin L. Burns School of Real Estate and Construction Management, teaches the full life cycle of the built environment. From integrated project leadership skills to a cohesive understanding of the built environment ––experience the only school of its kind!

"Upbeat Party" is brought to you by Scott Holmes, songwriter from Free Music Archive. 

Transcript

Eric Holt (00:05):

You're listening to the Housing Innovation Alliance podcast in partnership with the university of Denver's Franklin L burns school of real estate and construction management. The housing innovation Alliance is a nationwide community of game changers driving the future of home delivery through crowd accelerated innovation. We represent thought-leaders from dirt to dweller with a focus on the production builders business environment.

Dennis Steigerwalt (00:31):

Right. My name is Dennis Steigerwalt. I'm the president of the housing innovation Alliance. And you're listening to our podcast series today. I'm joined by Chris Langford, partner at IDEA Fund Partners, a leading early stage investment firm with offices in Durham and Charlotte, North Carolina. Thanks for joining me today, Chris. Hey, thanks for having me, Dennis. I appreciate it. So Chris and I had the chance to meet just about a year ago now in Pittsburgh when we were both participating in a panel session that was led by a local home building startup module and Chris and I stayed connected over the past year and have been exploring opportunities to collaborate. When we first met at that panel session, I know that you were in a different role than what you're in today. Can you just tell us a little bit about your career progression and your journey in the industry?

Chris Langford (01:11):

Yeah, absolutely. Having been accidentally involved in the housing industry for the greater part of 15 years, you know, I graduated business school in the mid two thousands and went into investment banking and it just so happened that at the time the type of companies that were getting a lot of financing and M and a consideration happened to be in the housing value chain during my time as an investment banker and worked on a lot of deals related to home building, specialty contractors, the building distribution. When I got burned out from, from investment banking and decided that I needed a different role in life, I actually joined Lowe's, the the large home improvement company. I was blessed to be given a number of different roles that expose me even further to more and more industries. I started off with new business development and played a role in innovation, played a leading role in, in corporate strategy and corporate development for a period of time.

Chris Langford (02:05):

Most recently for the last five years that I was at Lowe's, I founded and was the managing director of Lowes ventures, which was an early stage investment arm of the company. I was able to meet people that were working on the very bleeding edge of what was going on in, in homes and housing. Perhaps even most importantly, I was given the freedom to really digest and assimilate all of those meetings, all of that information that I was being able to gather and really think broader about what the future of homes and housing would be as we went from construction to transaction to improvements and all the way down to how humans would be able to to consume homes in the future.

Dennis Steigerwalt (02:47):

All right. What an exciting journey. So it sounds like through all of that, there's a lot of different topics we could cover in one of these conversations, but I know that when we had a chance to connect previously started to get into the details around the concept of home a service and this evolving business model that we've seen really get traction over the past few years. So I'd like to dig deeper into that with you. And specifically just to set the tone for our audience, what, when someone says home as a service to you, what does that mean?

Chris Langford (03:10):

So for me, I always think of the concept of home as a service, as a continuum. I think the vast majority of people, when you say home as a service, immediately go to what you might call a full service, right? So that would be some sort of a rental relationship, whether that's a single family rental or or even a multifamily rental where where you have a property manager who theoretically takes care of all of your problems. I do think the concept of home as a services is actually continuum. That stretches from the idea of helped me with subscriptions for products so that that feels more like a service orientation. Perhaps even the idea of give me a full blown warranty package so that all my maintenance, all of my major issues that I have of keeping my home are prepaid and taken care of. So the backend devote my time elsewhere. And so I think part of, part of the concept of home as a service relates to who fundamentally owns and controls the asset. I think that that's a, that's a core distinction because it creates a matrix between the concept of ownership and upkeep. And I think that there are a number of different permutations between the concept of ownership, value, you know, value creation, value sharing, as well as who does the ultimate work.

Dennis Steigerwalt (04:28):

Very interesting. So if we look at this maybe across this continuum, where are you most interested?

Chris Langford (04:34):

I'd say three of our biggest areas of focus really centered around the concepts of automation, uh, leveraging data for decision making. And then ultimately the democratization of expertise. The concept of democratization of expertise is really centered around the idea that it's becoming cheaper and easier for people to access experts. So in this particular scenario, most likely you would think of that as a contractor or some kind of a home services professional when it comes to data driven decisions, more and more sensors and more and more connectivity are being put into the home. You know, I think there's so many different ways in which the home is being quantified through through sensors, and that data ultimately can be sent to a central repository where it can be matched against what's normal. It can predict outliers, it can give you information about how to better manage the home.

Chris Langford (05:27):

And then when you get to the concept of automation, I think that's really the combination of data-driven decisions and the access to expertise. So I think when you really think at the highest level about what home is, a service looks like, it could be a world where your home actually takes care of itself. Think about the idea of a connected refrigerator where the condenser coil goes out and the sensor may notify your connected home solution that, Hey, there's a problem with the refrigerator. It appears that it's a condenser. It pushes that out into the world. And, and the world says, Oh great, there's a appliance repair person who has an opening today at two o'clock that person could be dispatched, come to your house, receive a one time authentication code to undo your front door lock under your security system. Come in, do the repair, snap a picture, use some photo recognition technology, or just have the, the refrigerator itself say I feel healed.

Chris Langford (06:24):

And all of that. Then release funds to that particular person, give them a timeframe to leave the home and then subsequently kind of lock and secure the home behind it. I think that's probably the most futuristic version of, of home as a service. But we do envision a world where all of that is technically possible. Those are some of the areas where maybe we're not investing in that future at the very, very end because, because there are a lot of interim steps that have to happen, but I think we're very interested in things that enable a future that looks a little bit more like that.

Dennis Steigerwalt (06:55):

No, that's really interesting to sort of think that I as a homeowner could be, you know, get that peace of mind and remove that many inefficiencies from the process. I mean, nothing worse than sitting on the phone with our current version of the Maytag man. Right. So I think that this is, this is really interesting and as you said, so that's a bit more futuristic. Is there anything or any, any solutions or any specific companies that you were idea fund partners are looking into right now that are, that are maybe a little bit more short term and immediate impact?

Chris Langford (07:21):

Yeah, one of our, one of our portfolio companies, second nature provides a a filter subscription service. It's something that has profound impact on one of the major systems. It's something that has to be done regularly and it's shockingly done with, with a really poor level of frequency by the homeowner. You know, we, we continue to look at, you know, a number of different companies that are helping to create that access, create that level of automation and level of data on the home itself.

Dennis Steigerwalt (07:52):

I think when you look back at it, I think about whenever I buy a car, right, I get a full service manual. They walk me through how to do everything and that's a piece that's really missing. Not on necessarily on the new construction side, but if you look, when you buy a home that's been lived in before and you're purchasing existing inventory, there's never really a clear handoff. Right? So not only is it about what are the things making things readily available to you that you need to optimize the performance of your home, but just the fundamentals of understanding it. So kind of, you know, a comprehensive homeowner's guide in some ways would be incredibly helpful. And all the pieces that plug into that, like this filter subscription service that you're mentioning,

Chris Langford (08:24):

there are a number of startups that have worked on that problem, continue to work on that problem. What's been challenging in the past is the assets aren't standard and they become substantively less standard. The more people that live in them and the more modifications that have been that have happened, it's easy to get the high level data. You know how many bedrooms, how many baths, what's the square footage? As you get deeper and deeper into some of the things that really go into automating, you know, what kind of, what are my appliances, what are their age, what's their care record? I do believe that the technologies exist. I think one of the biggest barriers to that particular industry has been an over reliance on the homeowner themselves to provide that data and we've seen a pretty general reluctance for the average homeowner to go in and catalog every aspect of their home. And I do believe that the perfect data set is probably the biggest piece that will unlock housing as a service to the degree that we talk about tech enablement of it in the current form of what technology exists, if there was greater institutional ownership of housing. I think that having true complete data sets on each one of the single family homes in America is one of the biggest prerequisites.

Dennis Steigerwalt (09:41):

Yep. No, that gets back to your data decision making. I like it. Let's talk a bit about our current operating environment. There's obviously been a significant change to what's happening in our social lives and our economic lives. Everything we just said. Can you put into context of what's happening today and how that kind of plays out over the next four, six 12 months?

Chris Langford (09:59):

Yeah, absolutely. Yeah. You have been thinking a lot about this lately. One of the things that I think is coming that could potentially come out the back end with the, with the coven pandemic. So one thing that I think would push people to really reconsider the concept of home as a service as opposed to home as an asset is if we have another major housing downturn. You know, prior to kind of the late two thousands housing downturn, one of the biggest overall, you know, discussion points around why you buy a home is it never goes down. Right. It never goes down. It's a great investment. I think if we have another housing downturn, you know, you take someone who call it as 35 to 45 right in their prime kind of home buying years and that person will have lived through, you know, a downturn either as an older child or young adult as well as right in the middle of maybe after having bought their first home.

Chris Langford (10:51):

And I think you could just have so many people who are fundamentally turned off by the idea of having so much financial exposure to this asset that there could be a massive decision, which is yes, we want someone else to own the asset, someone with a 30 5,000 year view so that cyclically, they're not nearly as concerned, but I want to just access it and I'd rather invest my money in another way. I know for myself, you know, having been at home almost primarily for three straight weeks, there's two things that have come about. One is a greater appreciation for having this home and what it's been able to grant me during these times. You know, I've kind of renewed my own bond I guess, if you will, with with my home. And then secondarily, I've had so much time to work on the house and in doing so, I've actually demystified several projects that I would have probably said were, were above my pay grade, if you will. And you know, so I do think that that another option is no, let's say this

Dennis Steigerwalt (11:53):

turns out to be a relatively minor blip that doesn't have major corrective forces on the underlying asset price. The amount of time people spend at home could drive this greater and greater appreciation for it, which might actually reignite the passion to, to improve their home and even do more and more of it themselves. Yeah, no, that's interesting. I mean, we saw the, the tremendous growth in the build for rent market right over the last five years. I mean, this was kind of the most aggressive growing for FA, for new home building company. So I think this is really interesting. And then it's kind of to take that and tweak it with or add to it what you said about, um, kind of demystify some of your home projects and reinforcing that bond or rebuilding that bond that you had. It reminds me much of what happened after the, uh, the tech bubble burst and a lot of people, you know, they saw their, their portfolios shrink and they were investing more and more into their homes and spending more time at home and you kind of see, you could see that investment happening. So from my perspective, I think you can kind of see both of these avenues be pursued by different generations. No, this is, this has been really fantastic. I appreciate you taking the time to kind of share your thoughts and insights with us. You know, before we wrap up, are there any final words you have for our community or for the industry you'd like to share?

Chris Langford (13:02):

The one thing that I've come to realize is that, you know, housing is such a major industry that really drives, you know, the outcomes of all of our lives. I think that people should be more and more aware of, of the role that the home plays in their life. I'd say more than anything, no matter which way the future ultimately goes, I think we should all be very thankful. Those of us who have homes, you know, we should all be very thankful, you know, I think the future overall is, is going to be interesting and bright. You know, I really appreciate you having me on today and uh, it's always an interesting topic and I'm excited to hear more about what, what comes out of the podcast in the future.

Dennis Steigerwalt (13:41):

Excellent. Well thanks Kristen. We'll certainly keep you involved as we continue to explore this conversation. Well, with that I just wanted to say thanks again Chris Langford from idea fund partners for joining us on today's discussion about home as a service and we'll be reaching out to you with any questions we hear are connected directly to our community

Eric Holt (13:56):

on behalf of the Housing Innovation Alliance and the university of Denver. This is Dr. Eric Holt. Thank you for being part of our journey. This is where innovation calls home. [inaudible].