Predicting Our Future

For most of human history, we’ve accepted that keeping a home clean and filled with essentials is a burden that we must bear. But are we on the cusp of witnessing a technological revolution where our homes will take care of themselves and manage our lives for us? In the final episode of a 7-part series on the future of the smart home, Andrew paints a picture of what life in our future homes might look like and explores how smart homes will use personas and Artificial Intelligence to fulfill our needs before we’re even aware of them. Interviewees

If you’re incredibly proficient at using your Amazon Echo, you might already being giving it directions to order more toilet paper or laundry detergent. But how long will it be before the home is communicating directly with Amazon or Walmart and it places an order with no verbal cue or even involvement from you? Will Amazon use their own delivery people to stock your refrigerator? Interviewees

Over the past few years, the public has mostly come to associate the voice activation capabilities of Amazon’s Echo and Google Home with smart speakers. But in fact these devices and others like them can be viewed as Trojan Horses being used by the world’s biggest technology companies in the war of home operating systems. From devices like the Echo and Google Home, users are now able to control their thermostats, blinds, cameras, locks, and entertainments systems. Will the company that develops the winning operating system for the smart home enjoy similar monopolistic power to that of Microsoft with desktop computing in the 1990s or to the market share Android and iOS hold in mobile devices today? Interviewees Episode Excerpt Microsoft & The Keys To The Castle Long before there was Google Docs and longer still before there were Microsoft Word and Excel, there was a dominant word processing program called WordPerfect and a dominant spreadsheet program called Lotus123. Those products are long gone, and not necessarily because Microsoft built better programs with Word or Excel. In the 1990s, Microsoft controlled over 90% of the market for operating systems for desktop computers. Through their relationships with PC manufacturers, they made purchasing their word processing and spreadsheet programs really easy. The result: Word and Excel became so dominant that WordPerfect and Lotus123 no longer exist. A few years later, Netscape built a dominant web browser. Then Microsoft developed a web browser that they distributed with their operating system Microsoft Explorer. The result: Netscape was sold in what felt like a fire sale to AOL. Today, there’s no Netscape. This story repeats itself over and over again. Real Networks developed a media player called RealPlayer, and then Microsoft developed a competitive media player that they tied to their operating system. In spite of a $1 billion settlement, Real Networks is no longer around. The conclusion: if you control the operating system, you control the keys to the castle. If you’re still not convinced of the power of the operating system, think about the power that Apple has with its App store, or the power Google has by operating the Android operating system. These are companies that write the rules in today’s modern smartphone and tablet-driven world. Have you ever tried to buy a book through Amazon’s Kindle app on the iPad? You can’t. That’s because Apple makes the rules and has said to Amazon: “If you sell a book through your app on an Apple device, you have to pay us a percentage of each sale.” Amazon will only sell you a book through a web or mobile browser so that Apple can’t put their hand in the till. If you think the battle for an operating system is only limited to computers, smartphones, and tablets, you’d be overlooking Tesla, Google, and others that are working on building an operating system for the car. In what could be the most important battle for years to come, most of the world’s largest and most important technology companies are now battling for supremacy in what will become the operating system for the home. The Evolution Of The Smart Home's Operating System There’s something very unusual about the evolution of an operating system for the home. In the case of the computer, we literally couldn’t have any functionality without the operating system. If we had no Windows (or before Windows, if we had no DOS), then there would be no Microsoft Word. On the smartphone, if we had no iOs, there would be no Snapchat. However, in the home, we had Nest’s smart thermostat before we had Wink or Apple’s HomeKit, since there was no central operating system for the home back when Nest launched in 2011. I spoke with Cliff Rosen, CEO of Whole Home Control, a company focused on design and installations for smart homes at the highest end of the residential market.

The most influential companies in lighting are reimagining one of the most fundamental features of our homes: the light switch. Will the smart home of the future understand our lighting needs without us needing to flip a switch? In the fourth episode of a 7-part series on the future of the smart home, Andrew explores whether there’s a place for light switches in the future of smart lighting and why the winner of the space is far from obvious. Interviewees Episode Excerpt Is The Light Switch Doomed? What are the benefits of having your home's lights on the network? The most obvious use case is that, when you’re away from home, you can turn your lights on or off. But you can also imagine how a really smart system knows that, when you get into bed, it should turn off the lights in the rest of your house. Or you can imagine how, in a security context, if a sensor on the outside of your house notices suspicious movement, it might turn on the lights to mimic your presence. In the case of smart lighting, the fight for supremacy won’t simply be a function of user interface or distribution. Instead, the winner in smart lighting actually might be based on which company possesses the right vision determining how your entire lighting system is set up. Today, you walk into a room, and if you want the lights on, you’ll flick a switch on the wall. What is the ideal way that this should work in a smart home? Would you find it easier to take out your phone, open an app, and turn on the light from there? Maybe not, if you’re walking into the room and you have to dig your phone out of your pocket. More likely, if you’re sitting on the couch and too lazy to get up, that could be a particularly useful instance where you might want to tell your Amazon Echo: “Alexa, turn on the lights.” What if the room just knew you were in it and turned on the lights for you? Could we ever get to a place where there would be no light switch in the wall and the home would simply understand our intentions before we articulated them? Neil Orchowski & Lutron If you want to retrofit your lights by connecting them to the network, it would seem logical to do this by replacing the box that contains your light switch to include some receiver and transmitter within the switch so that you can control the switch remotely. The market leader in light switches and dimmers in the United States is a company called Lutron. Neil Orchowski is Lutron’s Product Development Manager for Strategic Alliances. Caséta Wireless is the name of their lighting control product line. When I spoke with Neil, I wanted to understand all the different components of Caséta Wireless and what the integration with an existing lighting system would look like. Neil Orchowski: “Caséta consists of a few basic building blocks. . . . We have dimmers, we have switches, they all communicate wirelessly through what Lutron calls our ‘Clear Connect wireless technology.’ That would be like WiFi or Bluetooth or Zigbee or Z-Wave.” Zigbee and Z-Wave are wireless communication protocols that are similar to WiFi and Bluetooth, except that these transmitters and receivers require very little power. Neil Orchowski: “From there, you start your smart home with Caséta with what we call our Pico Wireless Control, which is a wireless remote control that happens to also mount to the wall inside that same wall plate that you might use for your dimmer. If you want to add a three-way location for controlling your lights from anywhere else in the room or in the home, you add this Pico to the wall, put a wall plate around it, and now you've created a smart three-way application that didn't require a calling an electrician, pulling wires, cutting drywall, etc. For some people, that's smart.” Me: “The way that works is, if I did not have a third switch somewhere else, it's essentially a relay. . . . Is that right?

While Nest wasn’t the first company to offer a smart thermostat, its first product quickly developed rock star status. Nest helped turn the thermostat -- a relatively forgettable device -- into a sexy offering that made consumers excited about other devices that would be offered as part of the smart home. Honeywell, a company that has long dominated the traditional thermostat market, is now going head to head with Nest in selling smart thermostats. In the third episode of a 7-part series on the future of the smart home, Andrew examines how an industry titan is able to maintain its lead in the smart thermostat space and what this means for manufacturers of smart home devices in other verticals. Interviewee Other Leaders Consulted for this episode Episode Excerpt The Birth Of Smart Home Cool In the mid-2000’s, Matt Rogers started as an intern on the engineering team at Apple that worked on the iPod. At the time, Tony Fadell was running the iPod group that Rogers reported into. Rogers went on to work on the iPhone and the iPad, and then, in 2010, in what must have seemed like a crazy move at the time, both Rogers and Fadell left Apple and decided to collaborate on, of all things, a thermostat. They began designing the prototype out of a garage that Rogers rented in Silicon Valley. When Rogers presented the idea of building a smart home to Fadell, even Fadell, who was building his own smart home at the time, told Rogers he thought that smart homes were only for geeks. Eventually, Fadell told Rogers that instead of a whole smart home, he’d like him to focus on a smart thermostat, and they came up with a plan to deliver on one with an interface as friendly as an iPod. This required a team of 100 people, and Fadell and Rogers released the first generation of the Nest device in 2011. Two things seemed revolutionary about the Nest Learning Thermostat. First, I'm guessing that, before Nest, the overwhelming majority of people couldn’t tell you the name of the company that manufactured their thermostats. For people who purchased Nests, the user interface was so enticing that people began to brag about their thermostat. If you’ve ever used a Nest, you’d know that there are no switches or mechanical buttons. There’s just a dial. As you turn the dial, you see different options (which are really menus and sometimes menus within menus). When you press on the dial, it selects the menu you want and then you’re presented with more choices you can see by turning the dial. Again, you press to choose air conditioning or press to choose the temperature you want. Strange as it may sound, using Nest is fun. Then, there was the second innovation. You could control your Nest from an app on your iPhone or Android device. I have two Nest thermostats in my home. There are many times when I’m lying in bed and too lazy to get up and change the temperature. So I take out my phone or iPad and change the temperature from where I am. Yes, it’s an exercise in extraordinary laziness. In subsequent Nest models, they incorporated a motion sensor to detect when you were in a room and then adjusted the HVAC to the temperature you liked. If the device didn’t recognize any motion, then the HVAC was turned off to actually save you money on your energy bill. The experience was so revolutionary at the time Nest was released in 2011 that sales went through the roof. Only a month after its release, it was “sold out” in Nest’s online store. Three years later, Google bought the company for $3.2 billion. The Smart Thermostat Market It turns out that thermostats are big business and serve as a gateway to much more functionality within the home. If a thermostat possesses a motion sensor, it might inform other decisions about how the room operates. Motion at a certain time of day might trigger a decision about what lights to turn on or whether the blinds should be ...

The David and Goliath story of startups entering an entrenched industry and disrupting its leading players isn’t a new one. Yet within the smart home space, an unlikely development has birthed a particularly startup-friendly environment. Crowdfunding websites like Kickstarter and Indiegogo have provided the right financing dynamics and access to early customers for startups to successfully launch smart home products. In the second episode of a 7-part series on the future of the smart home, Andrew investigates the evolving role of crowdfunding for smart home startups that have been making waves with innovative hardware devices. Interviewees Episode Excerpt Crowdfunding: A Success I Didn't Bet On My personal relationship to Kickstarter is not one that I enjoy repeating. I met Perry Chen in 2007 when I was introduced to him by Sunny Bates, a long-time friend and Kickstarter’s first investor. While Chen’s initial idea was around getting fans of bands to fund the bands’ music, he quickly came up with this idea that people would pay for a product in advance simply because they wanted to see that product created. He offered me the chance to invest and I turned him down. Why would people devote their time offering to buy products that didn’t exist? I’ve done a fairly good job in my career in sizing up entrepreneurs and the opportunities in front of them. But here’s a story of a company that I badly misjudged, and it’s because I didn’t appreciate the dynamic behind the vision and how vital it would become to the future disruption of so many industries. From an entrepreneur’s perspective, it should be obvious why a platform where you can visually or verbally describe a future product would be appealing. Why waste time on building something that people don’t want when you can ask people ahead of time whether they would buy your product? For those of you who haven’t used Kickstarter or aren’t familiar with it, that’s exactly how it works. You can browse products that people want to build. And if you like what you see, you can commit to buy the product if and when it’s ever built. What surprised me was that, in a world where you might think every conceivable product is available on Amazon, there are still lots of products people are willing to pay for that are yet to be conceived. When innovation comes in a form so dramatic that it can disrupt an entire industry, it almost always comes from startups. In the case of technology giants like Amazon, Uber, and Tesla, these companies followed the same path as so many of their predecessors: they relied on venture financing. In all of their cases, the venture capital came from the bluest of blue chip Silicon Valley venture firms. Some of the most well-known startups in the smart home space have followed a similar path. Nest, the smart thermostat, started with two engineers who had considerable experience in building mass market products. Together, they had worked at Apple on the iPod, iPhone, and the iPad. Their Series A round of financing included capital from two of the best-known venture firms in Silicon Valley: Kleiner Perkins and Shasta Ventures. In 2009, Dropcam was formed by two former startup engineers from Google this time: Greg Duffy and Aamir Virani. Dropcam reimagined the way security cameras should operate inside of a home and constructed a hardware device that seamlessly connected to your WiFi network, enabling you to stream video from your home directly over the Web. The company was also backed by a top venture firm in Silicon Valley, Accel Partners. Both Nest and Dropcam eventually sold to Google. These companies aren’t outliers in their financing strategies, but in the smart home vertical (as in others), a new path has emerged for funding this type of company. It’s worth noting that hardware companies are often more expensive to build than their software company counterparts,

The idea of a home that can take care of its inhabitants has been around for over 100 years. But only in the last few decades have we seen technological breakthroughs that can make smart homes a reality. In the first episode of a 7-part series on the future of the smart home, Andrew traces the history of the smart home and presents a vision of its future as a multitude of devices are being connected to the Internet. Interviewee Episode Excerpt The Long Awaited Smart Home Revolution It’s the dead of winter and you’re driving home. In my case, it’s to my house outside of New York City on the eastern end of Long Island. I remember coming home in the dead of winter and huddling with blankets on the couch until the place warmed up. The use case for a thermostat that could be accessible over the Internet was so obvious, I wondered why it took until 2011 for Nest to launch. It would have been prohibitively expensive for me to heat a weekend home throughout the week, and a timer wouldn’t work, as I was never really sure I was going to be at the house on a weekend. The perfect solution: a thermostat that could be remotely accessed from a smartphone over the Internet to turn on the heat as I’m on the highway and still a couple of hours away from getting home. That’s what Nest does. It’s a thermostat that is connected to the wireless network in your home. There’s a corresponding downloadable app for your Android or iPhone that, when you open it, shows you the temperature of the room. If you have multiple zones in your house, you can see the temperature in each zone. You can even see the temperature outside of your house. Best of all, there’s a friendly interface that allows you to adjust the temperature upwards or downwards. In my case, I typically pull over in traffic on the Long Island Expressway about an hour away from my home to adjust the temperature. You’d be forgiven if you thought that the Nest was the first instance of a connected device that was part of the smart home. The truth is that people have been talking about and building some variation of a smart home for decades. When I refer to a smart home, I’m referring to a house featuring “intelligent” technology that simplifies and automates everyday activities such as turning on lights, locking the door, lowering shades, and, yes, changing the settings on your thermostat. You can call any device “smart” that is capable of doing something autonomously. A smart thermostat automatically adjusts the heat downward if there isn’t any motion in my house. That’s what makes it autonomous. Smart devices are almost always also devices that are connected to a network. The first connected locks and light switches introduced to the home more than a decade before Nest weren’t even connected to the Internet. They were connected to a stand-alone device in the house (called a bridge) that you could operate remotely only if you were in the house. The catch: they were connected from the lock or the light switch to the bridge using protocols like Z-Wave and Zigbee. Think of a protocol as a language for one device to speak to another. WiFi is also a protocol, but it couldn’t be found in these early devices. In 2004, you could operate connected locks and connected lights from a mobile device, but not an iPhone, because the iPhone wasn’t launched until 2007. It’s not hard to see why your average consumer had difficulty getting excited about this type of configuration. First, you needed a dedicated remote control to make these devices work. Second, they only worked when you were inside of your house. Fast forward to 2011 and Nest and a time when most people you knew had a smart phone. While Nest wasn’t the first smart thermostat, they captured the tech community’s imagination with a clever interface and by putting a WiFi chip inside their thermostat that connected it to the Internet.

In the United States, there are over 500,000 elected officials. In the overwhelming majority of elections, less than half of eligible voters participate, resulting in one of the lowest levels of voter engagement of any Western democracy. In this episode, Andrews asks and tries to answer: What can be done to increase turnout for elections conducted every year in the U.S.? Can the security risks of implementing online voting be overcome? If online voting did become available in the United States, what might it look like? Which companies would be the winners? Sponsored by: SaneBox sorts through your email and moves all of the trivial stuff into a different folder so the only messages in your inbox are the ones you actually want to see. They also have a feature called BlackHole where you can relegate a sender’s messages to obscurity. For Predicting Our Future listeners, visit sanebox.com/future and receive an extra $25 credit on top of their two-week free trial. Interviewees Episode Excerpt Improving Voter Turnout for 500,000 Elections On November 2nd, 2016, I went to my local polling station in Brooklyn and voted, even though I knew my vote wouldn’t really count. In New York, it’s long been a foregone conclusion that the state would vote for Hillary Clinton for President, and where I live in Brooklyn, my congressional district is so overwhelmingly Democratic that there wasn’t a one in a million chance that the Republican candidate would win. Still, I woke up early and walked the few blocks to the local school to vote. You wouldn’t believe the line. It was a 90 minute wait to vote. I stayed, but many people didn’t. And I didn’t feel particularly encouraged doing my civic responsibility in voting. When the results were counted later that night, Hillary won New York, won the popular vote, and lost the presidency. What about my civic responsibility to participate in all the other elections that I was eligible to vote for? On a New York City ballot, depending on the year, you can find candidates for the following public offices: President and Vice President of the United States United States Senators Members of the House of Representatives Governor and Lieutenant Governor of New York State State Attorney General State Comptroller State Senators State Assembly Mayor of New York City Public Advocate City Comptroller Borough Presidents City Council Members District Attorneys Surrogate Judges State Supreme Court Judges Civil Court Judges I think I’m significantly more involved politically than the average person, and I have to admit that I could not name all of the people who fill these positions and represent me. And if voting for the President felt so useless and required so much time, I began to think about how much time I or anyone else would devote to all of these other positions, none of which carry the import, visibility, and glamor of the presidency. Most people must subconsciously perform some type of equation in their heads: importance of office times likelihood my vote counts times the amount of effort involved is equal to some unquantifiable feeling that one should or should not vote. Local Elections: A Better Place To Start In the 2016 presidential election, the likelihood of my vote counting in the state of New York was small, and the work -- not just measured by the time standing in line, but by the effort to familiarize oneself with all the candidates on the ballot -- was high, so you would expect it to depress turnout. In an off-presidential election year like 2010, 2014, or 2018, we know from experience that voter turnout is even lower than it is during a presidential year. In 2014, less than 40% of the electorate voted in the November congressional races. How many opportunities does a voter have to be apathetic?

In a 2016 testimony addressing the House Committee on Space, Science & Technology, Dan Wallach warned that the country’s voting infrastructure was vulnerable to hacking by foreign governments. Computer scientists have long spoken of the dangers of electronic voting machines, and now they’re warning against adopting online voting. But is there a fundamental difference in the way that academics and entrepreneurs approach the risks and benefits of online voting? How might the introduction of online voting change the way that we conduct American elections? Sponsored by: SaneBox sorts through your email and moves all of the trivial stuff into a different folder so the only messages in your inbox are the ones you actually want to see. They also have a feature called BlackHole where you can relegate a sender’s messages to obscurity. For Predicting Our Future listeners, visit sanebox.com/future and receive an extra $25 credit on top of their two-week free trial. Interviewees Episode Excerpt An Exercise In Frustration: Testimony Before Congress Dan Wallach is a Professor in the Departments of Computer Science and Electrical and Computer Engineering and a Rice Scholar at the Baker Institute for Public Policy at Rice University. On September 13, 2016, he testified before the U.S. House Committee on Science, Space, and Technology for a hearing entitled “Protecting the 2016 Elections from Cyber and Voting Machine Attacks.” Dan Wallach: “My main message for you here today is that our election systems face credible cyber-threats from our nation-state adversaries, and it’s prudent to adopt contingency plans before November to mitigate these threats.” Professor Wallach is one of the nation’s foremost experts in researching electronic voting systems. During his testimony, he addressed the real concerns posed by Russian hacking of DNC emails, and also pinpointed where hacking might occur in the presidential election that, at that time, was less than two months away. Dan Wallach: “I believe my top concern is the voter registration systems because they are generally online. If it’s online, it’s accessible from the internet, and if it’s accessible from the internet, it’s accessible from our nation-state adversaries. . . . If you can selectively or entirely delete people who you’d rather not vote, the current provisional voting system can’t really scale to support a large number of voters who are filling out affidavits and following that process." Dan suggested we invest more in computer backups and be prepared to restore data from those backups if the original voter registration lists became compromised or corrupted. He also identified a second area of vulnerability around whether our adversaries can get malware into our electronic voting machines. His solution? We must replace our aging electronic voting machines with either “next-generation” optical scan systems or new touchscreen systems, both of which would have paper trails for subsequent auditing if there were allegations of fraud or tampering so that it’s much more difficult for outside actors to manipulate them. Dan is not a fan of the electronic voting machines we use in our elections, but at the time of the hearing where replacing the machines was not an option, his recommendation to Congress was for aggressive contingency planning in case it became evident that the machines were tampered with or disabled. The Biggest Risks To American Democracy While a day doesn’t go by without a news story about Russian influence on the election, Dan Wallach’s worst fears about a direct hacking of the election seem to have gone unrealized. Experts generally agree that the votes cast weren’t tampered with and that Donald Trump, while losing the popular vote, did in fact win the Electoral College, and was rightfully inaugurated in January as the 45th President of the United St...

In the 2016 U.S. presidential election, a little over a half of the voting age population cast their votes and the candidate who won the presidency lost the popular vote. Is the problem with low U.S. voter turnout due to culture or lack of accessibility? Without amending the U.S. Constitution, is there a way to use technology to improve voter turnout and overcome the effects of the Electoral College? Sponsored by: SaneBox sorts through your email and moves all of the trivial stuff into a different folder so the only messages in your inbox are the ones you actually want to see. They also have a feature called BlackHole where you can relegate a sender’s messages to obscurity. For Predicting Our Future listeners, visit sanebox.com/future and receive an extra $25 credit on top of their two-week free trial. Interviewees Episode Excerpt Every time I see a protest against Donald Trump, I wonder whether the protesters were there when progressives needed them most -- namely, on Tuesday, November 8th, 2016. On the day of this last Presidential election, only 54.7% of eligible voters showed up to vote. Is it only now that people have seen Trump’s policies that they have begun to recognize the import of that election? Should we expect more people to show up to vote in the 2018 or 2020 elections? I would certainly hope so, but if history is any guide, we shouldn’t just expect an excited electorate to turn out in substantially greater numbers than they have in the recent past. Scholars have been grappling for some time with why so few Americans show up to vote. Many argue that the Electoral College has the effect of rendering many votes in the United States meaningless, so people figure, ‘Why vote should I vote if my vote doesn’t count?’ Others suggest that if we made voting easier, we could increase turnout. In my new podcast series on the future of online voting, I set out to explore how to defeat the Electoral College and also how to make voting easier. Here’s what I found. Getting Rid Of The Electoral College The American Electoral College comes from Article 2 of the Constitution, which provides that each state shall elect a number of “electors” equal to the number of congressmen and senators from that state. We have a total of 538 electoral votes: 438 congressmen (that includes 3 from the District of Columbia) plus 100 senators. It’s difficult to identify any redemptive aspect of the system today. The voting by electors, and not by the general populace, was designed as a safeguard to prevent an “unqualified” individual from taking the highest office in the nation. In the near term, I’m ruling out the possibility of abolishing the Electoral College. Because the Electoral College is a construct derived directly from the Constitution, its abolishment would require an amendment to the Constitution. In order to pass a Constitutional amendment, you need to have a bill passed by 2/3rds of the members of House of Representatives and 2/3rds of the Senate, in addition to being ratified by 3/4ths of the state legislatures. To give you an idea how difficult it is to pass an amendment, the last amendment to the Constitution was passed in 1992. It required that any changes that Congress voted on to amend their own pay would not take effect until after the next election for members of Congress. When was this amendment first proposed? On September 25th, 1789. The last amendment that passed before this was the Twenty-sixth Amendment in 1971, which lowered the voting age to 18. Suffice it to say, it’s really hard to pass new amendments. Eliminating The Electoral College Through State Legislation There is one creative solution being implemented by some states that would have the effect of completely eliminating the power of the Electoral College without actually abolishing it. The formulation for this state legislation comes from Jo...

Have we hit a tipping point for residential construction where the cost and quality of a factory-built home always compares favorably to the cost and quality of a conventionally-built home? Are Silicon Valley entrepreneurs and venture capitalists beginning to train their sights on this mammoth industry? In the sixth and final episode of a series on the future of homebuilding, Andrew discusses how entrepreneurs eager to disrupt this space might conceive of building and financing a modern homebuilding factory. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt SCG Heim – The Factory of the Future If you’re interested in what the process looks like to build a house in a factory, you can get a pretty good idea just by searching on YouTube for the company that owns the factory. Most companies engaged in this type of manufacturing are proud to display their factories’ capabilities in videos. Amazingly, most of the factories in the United States are not what you would typically associate with the image of a modern factory. Inside of a huge hangar, you can see lots of people manually moving house components from one location to another with relatively few machines in sight. There’s an assembly line, for sure, but it looks more like what you’d expect to see in a factory from 100 years ago than something you’d associate with a modern factory operated primarily by robots. If you look outside of the United States, you can find much more advanced homebuilding factories that are more evocative of the robotics-driven future that automotive factories like Tesla and Toyota have already made into a reality. The factory that most impressed me was the SCG Heim factory in the province of Saraburi in Central Thailand, northeast of Bangkok. SCG Heim is a joint venture between The Siam Cement Public Company and Sekisui Chemical Group. SCG is the fourth largest company in Thailand, making chemicals, paper, cement, and building materials. Sekisui is a Japanese chemical company that also has a housing division. While I couldn’t get anyone from SCG Heim to speak with me for this podcast, the robotics visible in their video reflected as impressive a manufacturing process as any I had seen. They use light gauge steel for framing homes with fully-automated robotics supplied by Kawasaki. I read online that the factory has the ability to produce 1,000 homes per year. In a factory run by SCG Heim, or even Tesla, you see giant machines with arms moving parts that are welded together by other giant machines with arms. So it’s easy to imagine if someone were going to literally copy this kind of automated factory for producing housing modules, the materials they would be using to frame the homes would be steel or aluminum. Except, here in the United States, we have a long history of building our homes from wood. And with good reason. Unlike many other parts of the world, North America has a relative abundance of forests that can be harvested for wood. You can also generally expect the cost of labor to be cheaper if you’re framing a home with wood, as compared to bricks, for example, which is much more labor-intensive. So what would a factory with robots look like that makes housing modules out of wood? Weinmann Weinmann, located in St. Johann, Germany, sells more machinery worldwide for this type of homebuilding factory than anyone else. There are currently 5,000 Weinmann machines operating in 150 homebuilding factories worldwide. Weinmann won’t just sell me the machines for my factory. They’ll design the entire factory for me. Hansbert Ott is Managing Director for Weinmann and has worked at the company f...

In 2012, six single-family homes were made by a 3D printer in China. The inventor of that technology is now working on a 3D printer designed to construct buildings on Mars. Does this technology have a future on Earth? Or does the future of homebuilding involve modern factories that leverage robots to build wood or steel framing similar to the types of machines you might find in modern automotive plants? Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt 3D-Printed Homes In January of 2015, a company revealed a six-story home that they made with a 3D printer. The best to way to explain how a 3D printer works is to contrast it with a typical printer that uses ink to print on a sheet of paper. The thickness of the ink is so infinitesimally small that if you held the paper up to your face, you likely wouldn’t be able to see any elevation of ink on the printed area of the page. Now imagine if the printer used a thicker type of ink and printed on that sheet of paper not just once, but in multiple layers over the same area. Eventually the inked area would become raised. If you used a different printing material other than ink, and you altered the printer’s instructions to achieve a certain height, you might eventually be able to print something like a plastic bowl. That’s how 3D printing works, and the options of materials and instructions you can use to print are only limited by your imagination. 3D printing is currently an explosive field where lots of entrepreneurs have trained their sights. Already, we have 3D printers that make toys, apparel, even car parts. How about 3D printing to make a home? The same company that used the 3D printer to make that six-story home in 2015 had a year earlier made 10 stand-alone one-story houses with a 3D printer from construction waste and cement. Although, I must tell you that I wasn’t at all impressed by the video I saw of the 3D printed home on YouTube. The company that made these homes basically rigged a giant squirt gun to repeatedly squirt layer after layer of cement in a pattern that ended up forming the walls of each house. If 3D printing is going to revolutionize the construction industry, it certainly won’t happen with this implementation. Nonetheless, I wanted to speak to the inventor of this 3D printing technology to see how this technology might be used more effectively in the future. Colonies On Mars And Machines In The Meteor Belt Behrokh Khoshnevis is a professor of Industrial and Systems Engineering at the University of Southern California. He patented the Contour Crafting system that seems to have been sloppily implemented to 3D print the house in the YouTube video. Behrokh has no relationship with the company that built those homes. If you really want to see the future of construction, you have to listen to how 3D printing would work in the most ideal circumstances. What I’m about to explore is out of this world. Literally. Behrokh is currently working with NASA to use 3D printers to build structures on Mars. Behrokh Khoshnevis: “I approached NASA with a proposal to use lunar and Martian in situ material and build the structures. As opposed to all the proposed methods of taking stuff from here and building stuff on those planets, I recommended a much more viable approach. If there is a technology that can use what is up there, of course it would be economically much more attractive.” Me: “So the extraterrestrial approach would be, you would transport the 3D printer, if you will, and the associated materials?” This was a pretty stupid question. Prior to speaking with Behrokh,

In the summer of 2016, the world’s tallest modular building at 32 stories high was completed at 461 Dean Street in Brooklyn, NY. Once the building’s apartment modules were completed at a factory located in the Brooklyn Navy Yard, they were transported to the development site and essentially stacked one on top of another into a high-rise building. To the dismay of its original backers, the building was delivered years late, riddled with construction problems, and the subject of a costly litigation. Still, excitement about modular construction in New York abounds with new projects under development. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt U.S. Multi-Family Building If you were paying any attention to the 2016 U.S. presidential election, you would think that just about every factory in the United States has either left for China or is about to leave. But when it comes to factories that are currently building apartments, or will soon be building apartments, we’re probably just getting started with constructing these factories in the United States.S hipping costs make transporting building modules from overseas to the United States expensive. And while one Polish company has managed to successfully transport modules here, the transportation expense is likely to make this a predominantly local industry. That, along with undeniable demographic shifts afoot in the United States that will be pushing the demand much higher for multi-family buildings in urban areas, suggest that we may very well witness the transformation of American factory-built construction into a multi-billion dollar industry. Based on what world populations and growth rates suggest, you might think that the urgent need for urban housing over the next 30 years will largely be an African and Asian phenomenon. But the truth is that the migration to cities is also expected to happen right here at home. The United States Census Bureau provides statistics on the number of permits issued for new construction starts each year throughout the entire country. In 2015, 41% of permits were issued for structures that consisted of two or more units (referred to as a “multi-family residence”). Not exactly a screaming validation of my argument that you should be building modular multi-family buildings in cities when 59% of permits were for single-family residences. But let’s look at the trend line towards multi-family construction over the past 25 years. Again, from the United States Census Bureau’s website: In 1991, 21% of permits were for multi-family residences; In 2000, 25% of permits were for multi-family residences; In 2007, 30% of permits were for multi-family residences; And again, in 2015, 41% of permits were for multi-family residences. The rising trend of multi-family starts, as a percentage of total building starts, is unmistakeable. Here’s another interesting set of facts. The U.S. Census Bureau breaks down the multi-family residence into three categories: two units; three and four units; and five units and up: In 1991, 79% of the multi-family category permits were for buildings with five plus units; By 2015, 93% of permits in the multi-family category were for buildings with five plus units. As it turns out, if you’re an entrepreneur and thinking about factory-built housing in the United States, the biggest market to go after today is single-family homes. But if the trend towards urban development continues, the biggest market to attack will soon be for multi-family homes. In New York City, two companies began with a modular approach,

If a trillion dollar market opportunity exists, you can bet the people at Google are thinking about it. Within X, Google’s most secretive lab, they’ve been working on solving the problem of how to make building construction more efficient in order to deal with the world’s severe and worsening urban housing shortage. By the year 2050, the global population is expected to grow by 2.2 billion people, and 90% of that growth is expected to take place in cities that are in dire need of new housing. In China, one company has figured out how to deal with this challenge by prefabricating components for skyscrapers inside of a factory. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt Google & Flux When you hear the word Google, you first and foremost associate it with search. You have a disagreement with someone: let’s Google it. You want to know where to vacation: Google it. You want to know what a company does: Google it. But if you’ve been watching Google over the years, you know that Google does much more, than well, Google. There’s Gmail and Google Hangouts and Google Apps and Google Drive. The relationship between these offshoots became so obvious that Google just decided to brand them collectively as the “G Suite.” Somewhere along Google’s path of phenomenal success, the company decided to start working on some super interesting and hard problems that are really unrelated to the company’s initial mission of organizing the world’s information. The founders of Google have become so invested in developing other businesses that the company is no longer called Google. In January of 2016, the company was renamed Alphabet, with Google becoming just one of their subsidiaries. Calico is Alphabet’s biotech subsidiary that is focused on extending human life. Verily is Alphabet’s life sciences subsidiary. One of their projects is to develop contact lenses for diabetics that are able to determine when a person’s glucose levels are running high. And then there is Google X, now referred to simply as “X,” the secretive think tank within Alphabet pioneering projects like the driverless car that will one day make the act of driving obsolete. On the website for X, the mission statement reads: “We’re a moonshot factory. Our mission is to invent and launch ‘moonshot’ technologies that we hope could someday make the world a radically better place.” Google can be very secretive about their work, and this is ground zero for where their secret projects are born. X’s stealth projects have one of three outcomes: they are elevated to a division within Google and made public, they are spun out to become a separate stand-alone company, or they are killed. To date, the only company to ever come out of X and be spun out into a separate entity is Flux. I spoke with Jen Carlile, a Co-founder of Flux, who initially joined Google as a software engineer in 2010. Jen Carlile: “The way that Google X works is they identify what they call ‘world scale problems’ and then put a group of smart people together and say, ‘try to come up with a solution for this that can be tackled within a 10 year time horizon.’ So our big hairy problem was urban population growth. And the Google X leadership recognized that the pace at which we're building buildings and with the way that we do it now, we're simply not going to be able to keep up with urban population growth.” In 1803, just 3% of the world’s population resided in urban areas. I have this romantic image of living in the 18th century in a glamorous European city. But as it turns out, if you lived in a city in the early 1800’s, you were part of a minority.

Modern homebuilders have taken the art of prefabrication to new heights where they can construct entire rooms complete with insulation, plumbing, and electric wiring all within a factory. These rooms, called “modules,” are then transported from the factory to the building site and stacked to form a home in mere days. In the Hamptons, Seattle, San Francisco, Los Angeles, and a number of other major cities, it’s now possible to build a beautiful modern home modularly for dramatically less than the cost of building with local contractors. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt Modular Homebuilding When it comes to homes built in factories, people use the term “prefabricated” to mean a number of different things. In a history spanning hundreds of years, which I briefly covered in the last podcast episode, people have long assembled house components off-site and then shipped those components to sites along with instruction manuals for assembly. Prefabrication has been used for everything from sending houses from England to Australia via ship in the 1800’s to rapid construction of suburban home developments in post-World War II America. In modern times, home pieces are precisely cut to size in a factory, so a finished building made primarily from these pieces can be accurately called “factory-built.” Once you’ve constructed all the pieces for the home, it’s usually a relatively straightforward proposition to ship them, as they’re designed to fit inside of a container that goes on the back of a flatbed truck. While this prefabricated kit-based approach to homebuilding can provide virtually unlimited flexibility in design, it can still take a while to assemble once the pieces arrive at the building site, especially if the construction crew doesn’t have experience building with that particular type of kit. In the world of factory-built housing, the alternative to a kit build is a modular approach where a box, in the form of four walls, a floor, and a ceiling, also known as a “module,” is constructed inside of a factory and then shipped to the site. There are varying degrees of completion of these boxes in the factory. In some instances, the walls are complete and the plumbing and electrical wiring are already in the walls. These homes can go up in a matter of days, instead of weeks or months. Outside of the United States, this type of construction is called a “volumetric build.” Bill Haney & Blu Homes The most high-profile modular builder in America with venture backing is Blu Homes, the company I spoke with in the last episode that Forbes once described as “The Apple Of Green Prefab Homes.” At one point, Blu Homes was selling nationally, but the company found that it was necessary to work very closely with subcontractors in the field who could pour the foundation and set the home. Bill Haney, the Founder and CEO, made clear that the expansion of those relationships would be a slow and painstaking process. Bill Haney: “In California, we're building enough concentration at present that we know the local subcontractors who dig the foundation or put in the driveway or do the electrical hookups. And in the great state of New York, we know them in some places some of the time, and when we don't know them, the customer or we get hurt. So we just feel like the right answer, the prudent answer, is to grow in stages, and the reality is that the great state of California is going to build 40,000 new houses this year.” Building near your corporate headquarters has advantages, but with California in particular, there’s a sense that Bill is facing the toughest b...

Between 1908 and 1942, Sears sold 100,000 homes that were delivered in kits consisting of 12,000 pieces. While Sears is no longer in the business of making prefabricated homes, a number of technology-driven startups have picked up the mantle and are now delivering new kinds of kits, which, once they’re put together, make modern homes. In the first episode of a 6-part series on the future of homebuilding, Andrew interviews some of the most innovative companies that are reinventing the way we think about prefabricated housing. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Other Leaders Consulted for this Series Episode Excerpt My Home Renovation My interest in homebuilding began a few years ago when I renovated a summer home in the Hamptons at the end of Long Island in New York. My plan was for a total gut renovation: new kitchen, three new bathrooms, new plumbing, electric, insulation. I acted as my own general contractor and quickly learned why people aren’t their own general contractors. The project took four times as long as I expected and was 100% over budget. There were two main reasons for the overruns, and both of them were predictable. First, I changed scope as we went. With each reframing, I thought of a new way to configure a room, a nook, a lighting plan. And changes in scope set off a cascading series of work orders from different tradesmen that made the smallest modification significant. Second, there were scheduling challenges: the plumber couldn’t begin work until the framing was done, so when the framer was late, the plumber needed to be rescheduled. Once he was rescheduled, I had to reschedule the insulation company, and then the sheetrocking company. All of the workers had other jobs, which meant I faced weeks of delays before getting them back to my job. I had largely put the development out of mind until a friend of mine, also with a home in the Hamptons, told me that he was looking to tear down his house and replace it with a factory-built home. A “modular home” was what he called it. Homes Made In A Factory Sometimes, you hear things and a light bulb goes off. This was one of those times. We live in an era of mass production where every item we consume is made in a factory. If a factory can churn out toasters and phones and cars, why aren’t homes made in a factory? Instead of using labor in the most expensive locations for home construction, factories might be set up outside of cities where the cost of building was less. Maybe in the future, homes would be built overseas and shipped to us, much like how other types of manufacturing have moved offshore. Sometimes you look at an industry with which you have little familiarity or experience and see what’s obvious about where it will be in 20 or 50 years. At that moment in time, that’s how I felt about the construction space. Of course, everything will eventually be built in a factory. Of course, one day I will go to a website and create the design of my home. I’ll choose the number of rooms and bathrooms and style of my kitchen. I’ll select from a few models. There will be paint choices, and maybe even the ability to apply for a mortgage as I complete my purchase. A few weeks later, a crew will arrive at the address I provided at the website to pour a foundation and grade my property. Then my house, delivered in modules, will arrive. In a few days, it will go up. Shortly thereafter, I’ll move in. The whole process won’t be that much more complicated than buying a car. So if the future is so obvious,

Have you ever wondered what it would be like if you could predict where the world was headed? What kind of company would you build or invest in if you could see what disruptions were coming next? This is a sneak preview of the new podcast, Predicting Our Future, where serial entrepreneur Andrew Weinreich interviews leaders in different verticals to predict what changes and opportunities await.