Interviews and profiles of small businesses that exemplify environmental sustainability, ethical management, and sound business structure.

Wednesday, March 23, 2011

Housing with purpose - LivingHomes. Santa Monica, CA

Steve Glenn's LEED Platinum "LivingHome" in Santa Monica, CA

“Green luxury” is a term that has without a doubt been gaining popularity in the past few years, and many big companies are leaping at the opportunity to tout their new giant hybrid SUV or eco-resort that can only be reached by at least a 3,000 mile flight.  Some of these groups might deserve praise for moving in the right direction, but many of these projects, let’s face it, are somewhat oxymoronic (clean coal, anyone?), thinly veiled marketing ploys.  Occasionally, though, the blend of environmental sustainability and profit works like it should (hooray, a win-win!), and Living Homes does just that.

LivingHomes provides several prefabricated modular-home configurations

It’s refreshing to stumble upon an entrepreneur that is mixing profit and purpose in the way that Living Homes’ CEO Steve Glenn is doing: “What’s cool about capitalism is that it’s an incredibly efficient distribution mechanism, but it has no ethic… so I like co-opting that system to get out products or services [integral to which is a socially beneficial purpose.]” 

Glenn’s vision for LivingHomes was simple but ambitious.  He wanted to address a market of consumers that want products with great design (form and functionality) that are healthy and built in a sustainable way, but that currently can’t find homes that reflect their values.  So, he came up with a business plan to bring together world class architects who design standardized, modular LivingHomes with a comprehensive environmental program using a prefabrication process to make the homes better, quicker, cheaper, and with a smaller ecological footprint.

Modern design with customizable configurations
In Steve’s excellent DO lecture “Can we make sustainable housing for everyone?” he commends organizations like Ben and Jerry’s for having excellent corporate responsibility and promoting ethical business practice, but his main qualm with their overall business models is that their sensitivity to important issues is not integral to their purpose “I don’t believe that integral [to] what they do is anything purposeful.  It’s the highest fat content ice cream you can buy generally in the supermarket.  In the list of world ills, ‘more high fat content desserts’ is just not there.”

Glenn also departs from the conventional wisdom about great companies in his view that “…what makes great companies great…it turns out it’s not a charismatic CEO like Steve Jobs or very high-growth industry like the internet.  Actually, the number one biggest correlate to great companies are people who believe in a greater social mission behind what they’re doing.”

Extra points for air-filtering indoor vegetation!
One thing that stands out in Steve’s business model is that even though his long-term vision was to create extremely affordable sustainable housing for low-income areas, he realized he couldn’t immediately jump into that market.  Glenn decided to start by constructing mid-to-high priced homes to build his business within a proven customer base with attractive margins, and hopes to expand to his initial vision of low-cost housing in the near future after LivingHomes has gained sufficient momentum:

“I said for two reasons - I really don’t know much about this; I’m gonna screw up a lot.  And if your goal ultimately is to create a great product, sometimes you can be really smart or lucky and get it right your first time, but…we said we’re gonna have to go a little bit slower…iterate, and they’re gonna be more expensive because frankly, that gives us the ability to have a greater runway and make those mistakes.  Nothing brings cost down more than volume, and last year we finished one home; this year we’ll finish 13 homes. We’re absolutely focused on lower-cost homes, but to get there, we’re having to do some higher-cost homes to give us the runway to get the learning that enables us to do those homes.”

LivingHomes is starting to expand to multi-unit communities
Even though LivingHomes is focusing on a higher-cost, higher-margin market right now (starting prices, not including the land they’re built on, range from $224,400 to $589,030 for their standard houses ranging from one to five bedrooms – you can design yours here), they are making enormous progress in construction efficiency.  According to Steve, most site-built homes in the USA result in 30-40% of the building material ending up in the landfill, because “…it’s just not economic for the site-built builders to take the extra materials to a warehouse, store it, sort through it, [and] take it to another site, so they just landfill it.”  LivingHomes, on the other hand, sends only 3-10% of their material to landfills, and the total build process takes between 1/3 and ½ of the time a site-built home does.  In fact, from start to finish, a LivingHomes house is ready to be moved into about 3 months after it’s ordered.

Besides having a low-waste construction process, the efficiency of LivingHomes is mostly focused on energy savings throughout the life of their homes:

“This is the most important area to get right – Energy – because your homes will use far more energy over their life than is embodied in the materials used in those homes, so we use [LED lights, a very high level of insulation to create a tight envelope, super energy efficient appliances, photovoltaics where you can, geothermal where it is very cost effective, low flow fixtures, and in addition, all of our homes are grey-water ready.]”
And it pays off: LivingHomes was the company to build the very first residential building in the USA certified LEED Platinum (you can tour it here).  Luckily, I live only a few blocks away, so I was able to attend one of the tours LivingHomes runs every week of Steve’s house, and I must admit I was envious.

There is a wealth of knowledge about LivingHomes at their website
All quotes were taken from Steve Glenn’s DO talk at this link