Energy self-sufficient houses for California

With their start-up the two founders passed through the familiar “Y Combinator” accelerator, where they received what they needed to develop their business model in a way that gives it the right product-market fit. Talking to Acre Designs, I frequently encounter the same keywords that all founders here employ for a successful start: recognising the “pain” of the customer, developing a “value proposition” for the “customer segment”, lean start-up, pivoting and many more – the methods that once made HP and later Google grow are now successfully employed in all start-ups like Acre Designs.

I learned that building in California is anything but easy. Jennifer considers California to be the toughest market in the entire United States for house builders – building land is scarce, large housing projects are seldom approved and sites for classic single-family dwellings are also mostly approved in batches of 10 lots. Building regulations are complex and approval processes drag on. At the same time, many prospective building owners are not prepared to pay a premium for something special. It is within this context that Acre Designs developed the following business model, which it is now scaling up extensively.

Acre Designs is looking to standardise the building process! 2 types of family home are offered: Series A and Series B, for which there are various versions and equipment packages. Standardisation results in significant gains in efficiency: design details were firstly comprehensively developed, validated and tested, before being utilised in all houses and scaled up. The contractors work with these details on each project, with the same materials, thereby undergoing a learning curve with significant gains in efficiency

Acre Designs looks for speed in all processes, avoiding waste and thereby reducing costs. These savings are then “invested” in high-quality materials, branded products and technology for the home. All (!) Acre Designs houses are not only zero energy buildings, they even produce more energy than they consume. All houses of the start-up are “standard” smart homes!

The core competencies Acre Designs has established are interesting:

• Research + development
• Design
• Methods for co-operating with partners on realisation of designs
• Building services + smart home technology

Whilst the prefabricated timber components are produced industrially by a partner and assembled on the construction site by a network of contractors, all of the building services are pre-assembled in the workshop of Acre Designs before being configured and installed and put into operation on site by the firm’s own employees. Acre Designs has realised that building services technology is a key element for generating customer enthusiasm, integrating it into its own value chain as a consequence.

The value proposition that Acre Designs offers from the customer viewpoint is zero energy smart homes which, thanks to increased efficiency, can be offered at a competitive price whilst also utilising well-known brands for interior equipment. Observed from the angle of the partner companies undertaking the manufacturing and fitting work, Acre Designs offers them a way to standardise and scale construction processes – as well as making them more profitable – in a way that other customers do not.

So what does the customer get out of it? – a single-family home that delivers a genuine brand experience through design and the brands used for the kitchen, interior fixtures and lighting. Viewed over the lifetime of the house, insulation, building services and smart home result in considerable savings on running costs.

German prefabricated housing has also achieved many of these points in the last 70 years. One thing that stands out to me in particular is that here in California there are a number of companies looking to specifically analyse customer requirements before applying the methodical competence of Silicon Valley to launch new -for the USA- business models. Whoever has this ability can also restructure construction business models in Europe and achieve success with these. Thinking one step further and combining the extensive construction know-how of Europe with the ability of the Bay Area to develop new markets, using new business models to establish new rules for these, the result could be completely new perspectives – including for Europe.