Housing Innovation Alliance's Podcast

The Future of Homebuilding with Frank Vafaee + George Casey

February 06, 2021 Housing Innovation Alliance Season 1 Episode 17
Housing Innovation Alliance's Podcast
The Future of Homebuilding with Frank Vafaee + George Casey
Show Notes Transcript

On this podcast we have George Casey, the chairman of the Housing Innovation Alliance with  Frank Vafaee, the Founder and CEO of Proto Homes.

Proto Homes brings an advanced global supply chain to a platform that enables you to produce and manage home building.  Listen in to hear them talk about some key topics such as digital tools, the production process, and where they see Proto Homes going in the next five to 10 years.

Learn more about Proto Homes and connect with Frank Vafaee.

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

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Speaker 1 (00:06):

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.

Speaker 2 (00:36):

On this podcast, we have George Casey, the chairman of the Housing Innovation Alliance with Frank Vafaee, the founder and CEO of Proto Homes. Proto Homes brings an advanced global supply chain to a platform that enables you to produce and manage home building listen, and to hear them talk about some key topics such as digital tools, the production process, and where they see Proto Homes going in the next five to 10 years

Speaker 3 (01:00):

In, in a manufacturing business, you have to have planned everything upfront. You know, the staff has to be designed engineered, and when you start bringing stuff back to being something that is more manufactured based, it means you have to do all the planning upfront. That planning takes a lot of the stop and go out of the construction because you're not waiting to figure out how does this go to that as it fit as it not. What other ways do you, uh, use digital technology? Well, uh, the most important aspect of how we build is been modeled. It is, uh, your AutoCAD or with a database attached to it. So you can embed tying formation in the background that you can achieve in many different ways. So the foundation of our whole existence is a very healthy and disciplined then model. Well, we knew exactly what to put in there.

Speaker 3 (02:10):

We know exactly what not to put in the model. Basically you can put every single nail, every single LAR, not, you can decide what to put in there. Basically. You really don't want to put everything in there. So the model becomes cumbersome and huge and approachable, but at the same time, you don't want to dilute the quantity of it. But basically our technology is the BIM model, which has most pertinent information in it and a database and an app that keeps collecting information away from it. So our instructions become actually live pictures from the model. So if I change something in the bin model, the instructions that they receive on their phone at the job site, that changes as well. One of the issues that you up that is hard in the building industry, that pre-planning is because of the culture, the culture building industry is project-based an engineer or an architect or a builder doesn't even think doesn't get engaged till there's a project in mind, right? But you have to take the product approach. You know? So once you think of yourself as an architect, your engineer or builder, that you're a product builder, you're always thinking of its production process.

Speaker 4 (03:30):

We think we're helping customers with customization and we're actually ruining the value of what we deliver because we're not able to execute on that kind of customization.

Speaker 3 (03:41):

Mass customization is, you know, for instance, Starbucks has that, right? Starbucks has the best form of mass customization. You go in, it's not just a cappuccino, but it is all with different parts of cabbage, you know, that you can order. But yet it's set up to do that because the variables that you can create variations are set up, we've done the same thing, or components can take many different forms of variation. So it's a different approach to economies of scale. You don't have to produce the exact same house, but you could recreate the same house, but yet allow for modification and variation. And the bin model does that. Fantastic. It's just, you build those families in a way that certain parameters can adjust as you automatically change other parameters. I think mass customization was another part of our technology that we have to really work on it, to figure out what crackers could be variables and what parameters could be fixed. Yeah.

Speaker 4 (04:44):

So, um, if I were to think about, um, prodo, where do you, where do you see prodo five or 10 years from now?

Speaker 3 (04:55):

A pro is really a platform we see, we would like to see pro or at least that's our ambition. It becomes an operating system or a platform where everyone produces homes. And it's not about the specific architectural look, it's not about a specific product, but it's a supply chain, which with tenet, you can create any product, but the product, of course, in our cases is a home. And so the way it would work out a builder, uh, either a huge builder or a small builder would be able to design a house on an app or on the browser. Basically everything is SGML based narcissism. So once that house is designed, then the system would give them the pyramid set or the stuff that they need to pull the pyramids short of the local requirements. So for instance, if their requirements for architectural review boards, or if there's requirements entitlement, we won't produce, uh, we will produce all this stuff that goes into the house.

Speaker 3 (06:03):

We will have these fulfillment centers across the nation that the builders would get their stuff from that fulfillment center and things would arrive just in time. So the app allows them to control what they're going to receive when they can say, send me factor one, which is just about the house layout. And then that package has ROI. And this way, now they can, you know, they can break down the workflow into smaller portions so they can, you know, give it to not so skilled laborers. They can dilute the skillset, but basically it becomes a supply chain that gets, you know, get, gets sourced from these fulfillment centers. Now the fulfillment centers, sometimes they can manufacture a lot of the components, but we also have producers that produce the components that fit into the, uh, supply chain. And the supply chains basically delivers that the fulfillment center and the builder picks it up from there.

Speaker 3 (07:06):

So to us, proto homes is just a platform you can take, you can take, uh, any form of architecture to produce and supply. And then the app allows people to access and manage the stuff they're getting. Now it eliminates the need for fancy architectural drawings and eliminates the need for fancy work working drawings, because at the site, they, they don't use the blueprints. They use the app. So it provides the instruction, provides the materials and goods and components. And at the end also it has a post occupancy component, which is very important, especially for the build to rent market. So if there's an issue with the house, the owner of the house on the app just puts the SOS button and someone from the Prado replies to it, they would either hook them up with the local, you know, sort of maintenance contractors or they'll troubleshoot it because all the information about the house is on the app we have access to. So it becomes a platform that you build and also the platform would follow the life cycle of the building all the way to the end. So at the end, when you sell the house, whoever buys the house to the app would know when the house was built, I was built and what the previous owners did to it.

Speaker 4 (08:20):

You've talked about this in the context of these sections or whatever you call it, that would come out just in time to build. And you're doing it in the concept or the context of building site could that same system supply, basically sub component manufacturing, things modules, for example, are cartridges.

Speaker 3 (08:45):

Yes, indeed. It is actually, we never thought about that to be honest, but I might steal that idea from you. I think that's a very clever idea, basically you a sub unit or pre-assembly unit, which makes that assembly much easier. However, the only difference between we always thought about assembly process, something that should be done without a crane, uh, at most with a grade or what they call it, reach forklift for bigger project that having the crane is not that difficult, of course, that the smarter way of doing it. So you create the larger module. Uh, but then the end process becomes really minimal.

Speaker 4 (09:30):

One of my theories is that this kind of productivity is going to happen first in the single family for rent market, because there is a very high, uh, consistency of product was very low variability. And therefore you can, you know, scale this stuff up and Noah can go over a couple hundred or a couple of thousand homes as you're doing and get it perfected that way. And once you've got it perfected, the question will be well, if I could build that same house for rent, can I take that same simple house? What would somebody pay for me knowing that there's not a lot of customization that you can do with that stage, but it's very efficient

Speaker 3 (10:14):

That I think as we put in a build to rent market is a bitter or it's readier for innovation. The other reason is that the economics is a little bit different. You know, they are pressed for scale much more than built to sell builder because build to rent on us to scale as fast as possible. They don't have to wait for the units to be sold in order to build some more, right? So th there's a, you know, they have to respond to the capsule much better than the builders. The builders don't have to do it. They can have the money in the bank or whatever they can say, well, I'm not going to build anymore because my sport is going to be great until I sell so many, right. So they have to meet, keep them inventory to minimum. But these guys, they worked the opposite. They have to maximize the

Speaker 1 (11:01):

Inventory. Frank,

Speaker 4 (11:04):

Thanks very much. I really do appreciate it. Thank

Speaker 3 (11:06):

You as always, it was very inspiring.

Speaker 1 (11:17):

On be half 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.