Seed Home 2 Strategy
Simple Enterprise: Task Queue to Change the World
Summary: we hire people, very selectively as Fellows, or less rigorously as Buildlers, and provide a transition plan for incentivizing their continued performance. Retention may be an important issue, but the solution may come from a right mix of individuals who are selected for ethics and psychological integration, and who are paid really well, but who contribute to world transformation because they are trained to keep a higher vision in mind.
Simple program milestones are:
- Revenue model of $25k net revenue per Master Builder per month, based on a 1 month build, with $80k materials cost, and sale price of $130k for a 1000 sf home. This is the data collection right now that we are working on. If Master Builder takes 200 hours to build, with a $25/hr assistant for 200 hrs ($5k), then the Master Builder commands a $225/hour equivalent. There are significant costs associated with equipment, which can be addressed by open source equipment, making high hourly revenue a reality at around the $200/hr point. This comes to $5k equipment costs using off-shelf equipment, but should be 20% of this if open source equipment is used. These are theoretical values that the model is expected to garner, assuming $20k land costs, and $20k utility connection, legal, and impact fees. This omits design, plannind department submission, and engineering costs based on open source design and calculations. See Seed Home 2 Calculations. The requirement on the Master Builder is significant - because if the Master Builder is doing the work themselves, they have to understand dealing with customers, design, construction, organization, and enterprise aspects. This is under a small business operation where the Master Builder does the work by themselves, with minimal assistance. Once full division of labor is counted in this model, then the builder's revenue should drop to 20% of the soloprenuer value, from $45k, to about $9k for the job.
- Pending success of a $25k/month net revenue model, we will have discovered a method to bootstrap fund development. $25k/month can be the case where $50k revenue is obtained with a 2 month total. This depends compkletely on the actual build time data - how effectively we can build, and what product value we obtain in the given time.
- Success minimum of $50k/month is the optimal milestone that can address 'solving housing' pending quality of the product and the actual build time. Builders gross profit average is $1M net [1] at 6% profit for spec builders. For $50k profit, a spec builder would sell a house for $883k. For the OSE model, the revenue should be 38%, but that is for actually doing the work. Thus, the open source worker model should come out to 6x the industry standard, which is reasonable.
- So in summary, the revenue projections for OSE Fellows would be significant, but they would have to be based on highly trained individuals. Otherwise, the site adaptation costs, marketing, customer service, financing, and other costs go go someone else. OSE's model must involve financing in some way for customers.
- The difference between OSE Fellows and others would be the expectation of significant revenue. Good candidates may be hard to find, but we can simply call out for the best. We can train simple builders at 25/hr starting. That may be the onboarding route.
- Perhaps the best route would be hiring of the OSE Fellows, where keeping them on avoids flight risk. We offer the marketing, R&D, sales, design infrastructure. Perhaps the best idea is that we guarantee to hire the individual, but they will have to pass qualificiations. So they have to come up with the money up front, but we guarantee to hire them based on revenue from the Seed Eco-Homes.
The revenue projections simply need to be proven at this point, that is the next step.
Rationale
The Master Builder being a jack of all trades using open source design allows for high revenue efficiencies. This is the model that we are testing: industrial productivity on a small scale. The promise of such a model is increase of revenue from 20% to 80% of the operation - or about 4x. This allows for economic surplus, and thus psychological integration of the participant.