SEH Core Enterprise Module
A $1.2M net per year (Core Enterprise Model (CEM) level 1) enterprise that builds 24 houses per year (with 24 workers on each swarm build) that provides meaning via a lifelong learning opportunity to Apprentices as they build affordable, ecological housing and learns skills of collaborative development to transition the world from proprietary to collaborative development. At the worker level - one gets the ability to get paid after 6 months of training, at $50/hr pending certification of ability.
This enterprise - at the level of a Collaborator serving as CEO of this operation - can be replicated via a 2-5 year training program (based on one's prior experience in enterprise and building things).
The design involves automating the process - within 6 months of the first house build. This requires further management skills, and can free up time for other pursuits of systems transformation - as part of a lifelong learning journey. On the scalability front, the SEH Enterprise Core Module allows for rapid scalability (trillion dollar distributive unicorn based on the 1000x potential of open collaboration). Once the first Enterprise Module is developed, it can scale to additional ones in a 2-4 year hands-on training program - with a starting cohort of 24 entrepreneurs (CEM 1) at the beginning of Y1 - building up to 200 by beginning of Y2 (CEM level 2) - such that 200 new entrepreneurs are produced on a 5 year cycle assuming the conservative 4 year builder training. First 200 cohort is produced at Factor e Farm (FeF) . Each SEH Core Enterprise Module (CEM level 1) thus grows to 10 build teams of 24 - or $12M net (CEM level 2), in 5 years. See continuation at CEM PhD.
Working Assumptions for $1.2M Net Enterprise
- Swarm builds produce houses on a time scale of 1 hr/sf (1000 hrs combined for the base Rosebud Model) - 5 days with 24 people. 4 houses at one time mean addressability of lazy inspection schedule where it takes 3 days for inspection
- $10-16k tuition for Apprentices. Need scalable zero interest loan option or other financing options for students.
- First 6 months - training period until $50/hr productivity is reached, while building housing. But it could take 6-18 months to learn, depending on one's capacity
- Apprentice starts getting paid $50/hr pending competency exams, with 20 hours paid work hours per week and rest being voluntary education
- Education is self-selection for growth - to set your own pay if you continue learning.
- Upon passing competency exams for house building, the Apprentice shifts to 50% learning time - with 20 hours work, 20 hours learning each week. The focus is on learning how to think and learning the art of possibility, as a foundation for problem solving towards a better world. Thus, we are at core an education organization cross subsidized by work, addressing a critical need in society: forming accurate mental models of reality. The work time is the standard swarm builds, 24 per year at $50k net per build
- Some may take up to 2 years to get to full productivity, in which case they are subsidized by sales revenue. Successful recruiting would mean everyone reaches productivity milestone at month 6.
- Onboarding consists of a first 2 week crash course - Apprentices build their own microhouse at FeF to dive right in to construction.
- At end of Y1, person walks away with $24k paid if they got certified in month 6. Considering tuition - one can come out ahead at end of Y1, making this model scalable if tuition zero interest loans are available. Tuition is used to assist in bootstrapping infrastructure - housing is the main need. By program start, we will have built our production facility.
- House builds: estimated $60k materials, $50k labor (1000 hrs), $15k land, $5-15k connections. All-in build cost $130-145k - sales price of $180k-$195k.
Working Assumptions for $12M and $288M Modules
- CEM Level 1 - First Core Enterprise module (CEM) - 6 months to $1.2M potential (24 houses per year) once first cohort of 24 Apprentices of Builder Track starts. Best scenario is competency in 6 months, worst case is 2 years. Basic facility of Amish + Microchips.
- CEM Level 2 - 18 months to $12M, with core facility expanded from 24 to 240 builder apprentices (10x gets us to max capacity of Factor e Farm, the OSE International Headquarters). Low risk (zero flight risk/culture fit risk) as this is trail-blazing by OSE leadership. Basic facility of Amish + Making Microchips.
- CEM Level 3 - Ambitious - At 18 months, the Enterprise Track is started, initial cohort of 24. 18 month minimum training time. Thus at end of Y3, there are 24 Entrepreneurs, each brining in $12M. Each entrepreneur gains a facility of 240 builders in 18 months - which is a blazing fast onboarding time that would require tremendous HR capacity (see Optimized Recruiting). Thus training is about operations management: land acquisition, solar facility construction, and operational startup. Thus, the Enterprise Track yields startup of a $288M enterperise at end of Y3. Best case is 18 months, worst case is 3 years. For an individual defecting from the OSE ecosystem, the time required is 2-5 years to attain the $1.2M level (6-24 months builder training, 18-36 months enterprise training).
- CEB Level 3 - Likely - More likely here is each Enterprise Track apprentice gets to $1.2M in 2-5 years, so the $12M of CEM Level 2 is augmented with 24*$1.2M of enterprise track, who are hired to work with OSE, so it could be $40M net by end of Year 3. This may be realistic in terms of 24 cohorts recruited in 18 months - as 240 cohorts in 18 months are extremely ambitious and a 240 cohort is more realistic once we have more traction.
Financing lag: for $1.2M package, it is 1 house every 2 weeks. Closing Time - 70 days. 10 weeks. That means we need cash flow for 5 houses as we do each house. 5 houses at all-in cost of $130 means we need $650k in the bank to build 5 houses. Reserve requirement of $650k - comes from a loan at startup. Thus, the formula is roughly Annual Net/2. If we are doing $12M, then we need $6M in reserves - but that solves itself if we are building up to that level. Simple analysis says that if we are at the $1.2M level - growth requires setting aside 50% max (is that a good number?) for business growth. If we do that, we have $0.1M every 60 days (50% of net revenue from 60 days) - so we can grow only by 1 additional home every 60 days. The time to grow organically is excessive if we use the spec housing route.
If we have customers, they pay up front, or 50% up front.
Up front: we can scale production as fast as we can recruit.
50% up front: we can scale in to 12 more houses per year ($600k allotted to growth). Thus, unless we are going for up-front payment, we need serious financing to scale rapidly.
If we are building at Level 2 (240 houses per year) - we need money for 1/6 of yearly output (60 day house sale time) or 40 houses - which is $5.2M. Yes - Annual Net/2.
There is a real issue with organic growth, in that it is impossible without financing. 70 day payment delay.
Is there a scenario for bootstrapping? Yes, a loan for annual revenue/2. About $600k, allows us to generate net of $2OSE International Headquarters). Low risk (zero flight risk/culture fit risk) as this is trail-blazing by OSE leadership. 50k every ~70 days. That's just the nature of the game. Only at the point of 6 months do we have enough money ($600k) to buy materials up front - but with zero budget for anything else. After 1 year, we are self-sufficient - we have $600k operating cash for that year (traction on projects), and can pay for the up-front costs of house building.
- Solve housing - with digital housing 2.0. Coordinate a global effort of collaboration - best house at the lowest possible cost means that we take housing out of the realm of scarcity. Also addressing political issues, such as land access, by building new villages worldwide. Such as urban block redevelopment, eco-housing subdivisions, etc. If animals don't have a problem with housing, humans shouldn't either.
- Net Energy Production - each house can power itself, and even export energy if operated in a smart way.
- World peace - by training people (5760 people or 240*24 in 3 years) - and multiplying this in a modular way - we train significant numbers of people in nonviolent productivity. This has the potential to reduce resource conflicts by providing livelihoods, which in turn provide products built from abundant materials and using abundant energy (PV). Reduction in resource geopolitics comes from the planned transition to renewable energy (solar hydrogen), and using common materials such as earth for CEBs, plastic waste for abundant recycling into construction materials, rocks to make solar concrete, etc - pushing the envelope on common materials processed with advanced, open source technology on a distributed scale.
- Financial Independence - The 2-5 year Enterprise program enables anyone to walk away with financial independence, able to run their own business at $1.2M net. We are developing operations management expertise which allows one to treat this as 'passive income' if one chooses to do so - at the cost of significant learning. For civic-minded people, this is an excellent opportunity to cross-subsidize transformative work. The intent of our program is to cross-subsidize solutions of all pressing world issues - with the SEH revenue model and other collaborative enterprise.
- Lifelong Learning - the program is designed to allow 50% of one's effort to go to learning new things - meaning that we smash the glass ceiling with the possibility to advance to peak performance until the world is fixed
- Renewable Energy - PV is a stock option, house makes more power than it uses. SEH is intended to cross subsidize further development, so everyone can make fuel for their cars at home - solar hydrogen from water. This is related to world peace.
- Reinventing Production - the evolution of the SEH garage is the highly-capable, open source microfactory fueled by global design. So that the multi-car garage can produce just about anything. This means that producers capture 80% of productive value, not stockholders. This is done with renewable energy in a circular economy, where people can fix and modify things so that products improve over a lifetime.
- Economic Transformation - creating the open source economy by teaching collaborative design and swarm builds to normalize collaborative development across all sectors and disciplines, thereby eradicating proprietary development. SEH has a direct pathway to continuing product development - through the wiki, forum, incentive challenges, swarm build public events, and a global community.
- Reinventing Education - with applied learning that leads directly to financial independence, while integrating the person to be an effective steward of Earth - a creator of new systems and institutions. This transcends all pressing world issues. We would like to introduce collaborative incentive challenges as a new standard in collaborative education. We can train teachers to run such incentive challenges, by providing financial independence to do this.
- Initially I thought that we just train people and put them into the wild, but now the shift is towards stronger ties with OSE as the skill set produced is priceless and would serve OSE's goals with continuity. Of course there will be defectors, and the system is designed to emit 20% and keep the rest in general - effectively once with OSE - we provide a lifelong learning program. Is this too restrictive, as others would want to 'do their own thing'? How to reconcile 'do their own thing' with long-term OSE growth and continuity given OSE's intent to solve all Pressing World Issues within 2 decades of SEH Enterprise Module startup?