رونوشت کامل Third Tuesday: Using Industrialized Construction to Drive ESG Metrics

startup phase of the company. And we're now in our kind of early rapid growth stage. Betsy Scott: (06:18) So if you're looking at it to sum it up for people, you might say that you guys are, um, the PEX plumbing type plug and play solution for, um, air distribution in housing. Yeah, Nigel Watts: (06:32) You're right. That's that, that's a common analogy. We, we take because of the, it's a simple concept for most, you know, anybody who's in the home building industry, I think, is now familiar with PEX plumbing and, and they went, they went through a journey that we're going through now to, to make change in the industry and, uh, and, and adopt a new technology. Betsy Scott: (06:50) So you guys represent some, you can have an impact on a big, um, a big system within the house, but the principle of what you guys are doing is something that people could take in the field in general, and just look at different aspects of construction and how can they industrialize a piece or a system, um, within the home. So I think that's a unique play that you guys have. So a good step forward can be made in each area and get some good incremental wins. So thanks for the overview. We'll bring back in a few, um, and we'll get more into, uh, we'll get more into some of the specifics of the metrics that you guys are looking at and how you connect it back to ESG. So the next person that we're gonna bring in is Jack Oslan and he's with diamond age, he also happens to be in the Phoenix market. So I'm sure it's super hot there as well. Jack Oslan: (07:48) No shortage of heat here. Betsy Scott: (07:50) so Jack, you have more than 35 years focused, really on the manufacturing side. So high volume manufacturing and supply chain management. This is your second venture backed, um, startup that you're, that you're working with. And your goal really is the 30,000 foot view is to automate construction in the field using robotics. So you're kind of our second, second solution, um, really for industrializing onsite. So what do you, what, um, would you, how would you sum up your technology approach, um, and kind of the, the secret sauce to your process that you think will make a difference for people to industrialize what they're doing and to move forward, uh, metrics like, like we look at in ESG? Jack Oslan: (08:39) Yeah, sure. Um, so I I'll start with the motivation, um, or the, or conceptually what drove the concept of the business. So our entire founding team comes out of factory automation, a variety of different factory automation settings. So, uh, I came out of the print packaging world. Russell came out of the beverage packaging world. Uh, Phil came out of integrated circuit boards, the team effectively all coalesced at Tesla, where they started building electric vehicles together. And so when we look at solving the problem, uh, and recognizing the sort of lack of coordination and collaboration, that's attainable today because of the large variety of trade suppliers that come in and out of a job site, we looked to our factory operation experience and said, well, how do factories operate? Well, factories operate on a very specific tempo, um, using a manufacturing execution system, uh, there's generally vertical integration, uh, inside of a factory. Jack Oslan: (09:56) So all of the operations, uh, can be, uh, predicted, uh, in a very reliable way. And all of the assets can be managed in a very reliable way. So when we looked towards how we were going to do it, we knew we had to bring our technology to the field. It wasn't going to work in a centralized factory. So what we've done is we've built out an automation platform that will offset 55% of labor required to build a new home. And we do that by taking a basic gantry system and setting it up around the concrete foundation on the job site, we have seven, uh, matching Gry systems that will all share a common suite of end of our robotic tooling. And so the objective here is to create an assembly line in the field so that we can drive down cycle time and increase the utilization of all this capital expenditure that we're putting forth in the creation of the robotic platform. Jack Oslan: (11:09) So since a house is too big to move, what we do is we move the tools around the job site instead. So you can imagine having a, uh, series of seven, gantries all set up, you know, kind of juxtapose to each other. And the first tool goes into play, fulfills its job, and then moves to the next gantry and starts to do that all over again. Well, on the first one, the second tool comes into play, and then we just start leapfrogging the tools around from gantry to gantry. And that allows us to keep creating value in a sequential ongoing basis. So the diamond age robotic platform will always be building seven houses simultaneously, and that will get us onto this cadence of ultimately delivering a home every five days. So, uh, this assembly line concept, uh, sort of the early milestone value that we're going to deliver is that we believe we're going to deliver single story homes in 30 days, and two story homes in 45 days. Jack Oslan: (12:23) Uh, and that, uh, everything we've heard from the market is that would be a remarkable advancement, uh, and be extraordinarily helpful, both from the perspective of driving down carry cost, but also delivering a more predictable and reliable delivery schedule. Um, you know, anybody who's run a large business understands reporting, and if you're at the head of a publicly traded company, the difference between delivering a home on March 31st and April 1st is, is a big deal. So these are the kinds of value propositions we're offering the industry coupled with the fact that this is robotics as a service. We're not asking anyone to buy technology or license or even run it. We will bring it as a turnkey solution where we will be the owners operators, bringing the tech, bringing the people to run the tech, and then bringing the trade craft labor

required for the high value finishing that will all be vertically integrated and owned by diamond age. So, uh, it's a little bit of a throwback concept. Mm-hmm  to the way houses used to be built before the whole trade supplier ecosystem evolved, but we think it's a winning combination today. And, um, we're getting ready to demonstrate that this summer, uh, we'll deliver our first home, uh, the first week of August to century communities, and we'll have two more in various stages of production. So, uh, we've sort of extending an open invitation to all home builders to come down to Phoenix and, um, have a look for yourself. Betsy Scott: (14:07) And we're hoping to do that with you as well. We've got you potentially lined up depending on where you are in the legal process.  how many people can we bring to you, but, uh, uh, when we're at EBA in September, um, we're hoping to do that with you as well. So that will be exciting to see in the field. And we'll talk to you again in a little bit about, um, your personal inspiration for how you came by that solution, as well as how it's a bit different. Um, and, and why it's a bit different, um, than what most people are thinking of in terms of 3d printing, cuz you, a lot of people have heard of you as a 3d housing provider, but your take is quite a bit different and why. Yeah. Yeah. So we'll touch on that. Jack Oslan: (14:48) We're much more for Betsy Scott: (14:49) Sure. Yeah. We'll touch on that a bit, um, in a moment as well. So thank you for that overview. That's very helpful. The next person I'm gonna bring in, we're gonna move toward offsite construction solutions. So I'm gonna bring in Paul GRA HOK from build smart. Uh, Paul's out in Kansas city today. Um, not too far from us, a little west from where we are in, in St. Louis, but we met several years ago. Um, Paul is with, uh, build smart, um, and it's parent, uh, or sister company that does a bit more of the, the technology, but we're focusing on build smart today and the expertise that you have, um, you bring a, a unique background, I think, to offsite construction in that you are litigating risk issues in building before you were actually building, um, housing . So you were, you Paul Grahovac: (15:45) Were, I was personally in my career, not my company. Betsy Scott: (15:48) Now you were putting the screws to people a little bit, catching them, catching 'em on their quality issues, but that gave you I think, a good, a good, uh, background to see, um, what could be done better. You say a lot of people see as the guy, the air barrier guy, um, in the industry, but you're really looking at wall systems, wall assemblies, and really taking that to the next level from a performance standpoint and looking at passive house. So as one of those metrics, so if you could give the build smart snapshot of what you're doing from a technology perspective and kind of what's the inspiration behind that solution, that secret sauce, that would be great. Paul. Paul Grahovac: (16:28) Okay. Yeah, I had mentioned to you previously that it, it, uh, build smart and, and PROCO, I'm known as the air barrier guy, uh, PROCO is a 90 year old, uh, family owned, construction products, company leader, uh, in the air ceiling and, and water resisted barrier field, all fluid applied products. President is, uh, uh, David Boyer, KU school of architecture, 79 and also the president of build smart. And it was his, uh, uh, inspiration, uh, having, uh, built homes of his own, including a sips home, um, that he did not, uh, quite find satisfactory. Uh, then coupled with one of our customers at PROCO Adam Cohen, a, um, an, uh, internationally recognized design build high performance, uh, uh, contractor architect. Uh, the idea that Adam had was actually doing with his business was, uh, prefabricating, uh, uh, conventional wall panels, lumber, and O and OSB, uh, and then shipping them off to a sips factory and having, uh, EPS and another layer of OSB, uh, laminated onto that. Paul Grahovac: (17:41) Cuz if you go to these high performance conferences, that's what people are calling for. Oh, I wish we had a wall assembly that was conventional wall on the inside and more like a sips assembly on the outside. And so that's, uh, what we went to business with, uh, the idea is that, you know, one day, uh, there will be a major revolution in construction and it it'll probably be somewhat slow in coming. And so we wanted to be sort of the first or one of the first incremental steps, uh, that, uh, the builders and designers and developers could take, uh, to start down that important road to go down. This makes it much, much easier and faster, uh, than, than stick building a conventional wall and also much easier than doing a high performance wall. There's a great article in, uh, fine home builder magazine, April May, 2021 about the, uh, 2021 code. Paul Grahovac: (18:40) You may not have it where you are, but it is worth following because it calls for external insulation in, in almost all of the climates. And it does that for prevention and mold and, and even  though your main goal may be code. Uh, you wanna be looking at co at mold issues, 75% of houses have mold, and it's a liability issue you can avoid with external insulation, which is much easier to do if you use a prefabricated system. The other goal, uh, was to have the shelf, uh, put up, uh, uh, as I said by, by people, uh, quickly and easily, one of our projects, uh, in the urban core, the, the developer general contractor there went out in the street and hired people who not only had no construction experience had never had a job and put these in at 31 lineal feet per hour and passed the, uh, blower door test with no leak chasing on a 40, uh, unit apartment building. So, uh, that was part of the vision. The other part of the vision was once the shell was up, all the other trades could come in on the inside and outside and have no idea, uh, that they were dealing with an

advancement in technology because everything that they see and work with is just as if a conventional shell had been, uh, a stick built there. Betsy Scott: (20:00) So really I think, uh, a key thing and a really a reason why that we asked you to, uh, join us today. We've seen a number of panelization companies, and I know that's, that's not the word you use use Wallace assemblies , but we've seen another, a number of panelization companies that don't do beyond just the frame. Um, and I think it's, uh, I think the direction that we need to go, um, in, in order to get the true value out of doing things, if you're gonna do things in the factory is to incorporate more of those systems, get more of the efficiencies in the factory. I think, um, the solution that Nigel represents in RIA, I think they're also looking at how is it, how does it work in the field? How does it work in the factory? And I think he can speak to, uh, whether they've gone the factory route yet, but I know that was a consideration, but I think we could do more with more, um, in the walls and think of it truly as the manufacturing process to really leverage that. And you guys represent a bit of that with what you're doing already. Paul Grahovac: (21:03) Yeah. And along those lines, I, I didn't mention we, uh, uh, install in the factory, the windows and air tightened and, uh, waterproof them so that when you get your shell up at 31 lineal feet per hour, you're dried in, you know, you set a roof on it and, and you're good for, for all your interior work and, you know, you miss the snowstorm or a rainstorm that could mean weeks, so, Betsy Scott: (21:24) Right. Well, I appreciate your overview and we're going to introduce our last panelists before we open things for questions, Edwin Tatum, from Tatum tech to the table and Edwin you're in Dallas. Right. Edwin Tatum: (21:41) I am, it's very hot, but I'm here. Betsy Scott: (21:44) um, Edwin Tatum: (21:45) Is Phoenix though. Betsy Scott: (21:47) So you're, uh, you are, um, an enthusiast on the, on the, um, real estate development side. Um, but it's a relatively new thing for you, you know, over the last, probably 10 years or so you were originally a, uh, professional basketball player. Edwin Tatum: (22:05) I was in my, in my former life. I was, that was, that was many, uh, years ago. And now I need a lot of WD 40 to play. So , I'm a little old, but, uh, no, I, I, uh, that is correct. I got in the industry around 2010, uh, and started doing, uh, traditional stick, build individual fix and flips and things of that nature, uh, in the Dallas, uh, Fort worth metroplex. So during that time became very, very, both frustrated and fascinated, um, in, in construction. And so, uh, the inspection process, uh, quite frankly, was a huge nuisance, uh, for me and gave me a lot of headaches. And I was just, you know, wondering why are we doing it the same way we did when Andrew Jackson was president? Right. I just didn't understand that  so, uh, coming from the entertainment area area of the world, I think it gave me a, a bit of a perspective to say things can be different. Mm-hmm , uh, it allowed me to question, uh, norms that I think probably an industry incumbent wouldn't or if they did have those same frustrations, they didn't want to, uh, project them. And so giving this sort of, uh, fresh perspective, it allowed me to go in this curious journey over the last 10 years, and then ultimately formed my company three years ago Betsy Scott: (23:17) And you've done, um, what a lot of people do in our industry who are looking at more modern methods of construction and really looked to Europe and yeah. Explored and became a student of what's going on overseas and how much farther they are along their journey and in offsite construction. So, yeah. When have you representing the volumetric modular part of the discussion, um, today, and, um, I'm gonna bring everyone else back into the group. I wanted to get a sense from each of you really, who moving forward, do you see as your ideal customer? So for those on the phone, who might be, um, looking for a partner or looking for a solution to build homes, or, you know, deliver multi plan or master plan communities, or do community development, who's your ideal customer that you would work with in the residential space. And, um, if you can reiterate for everyone where you are on your journey in terms of scale, just at the high level. So we're gonna go, we'll go to Jack we'll mix things up to go to Jack first, um, to reiterate that, and, um, Edwin and Nigel and Paul. So Jack, um, who's your ideal customer and, um, remind us of where you are on your journey at this point in time. Jack Oslan: (24:44) Sure. So, uh, we literally are at the beginning of our journey. Uh, we've spent the last three years developing technology and we've just recently rolled it out commercially, uh, in a development, uh, for century communities. So, uh, our customers are production home builders, uh, production, home builders align with our mission. Our mission is to get first time home buyers into their first home faster. So in order to do that, uh, they are the perfect platform because all of the experience and infrastructure around building volume, uh, already exists. So for us, uh, our, uh, alignment with them is really less about disruption and more about unlocking growth. Uh, we're, we're not here to change the way homes are designed. We're here to change the way homes are constructed. So, uh, track housing suits us very well, uh, and our systems are built to build volume. So again, just to reiterate, we started our first commercial, uh, unit, uh, beginning of June, uh, and it will be ready for viewing, uh, beginning the first week of August. So we've got a long way to go. Uh, it's a big undertaking, uh, as you might imagine, um, changing the, uh, the way homes are built and consolidating the backend of a supply chain. That's really sort of been perfected over the last

hundred years. Um, there's, there's a couple things to do. Betsy Scott: (26:37) Now. You do have investors though, who are on the builder and development side, so they are actively working with you to, um, to collaborate and, and to give input on the development of your solution. That's true, right? Jack Oslan: (26:52) Oh, absolutely. Well, century has been an amazing, I mean, they're, they're less a customer and more of a partner mm-hmm , uh, they have, you know, early on they, uh, recognized the potential for what a diamond age system could do for them, as well as other production home builders. And they followed our progress really from the very beginning. Uh, we met them at an Alliance event back in Scottsdale. Betsy Scott: (27:22) Well, there you go. Jack Oslan: (27:23) Say 20, 20 18. Um, and so, uh, it's been a very close relationship, um, over the course of the last three years, uh, they did make an investment. We received investment from BB living, which is also a large build to rent developer. Uh, and we have, uh, Hillwood communities has made an investment. I'm sure a lot of your folks know those guys mm-hmm , um, as well as a big land developer out in, uh, Charlotte, North Carolina, so who controls thousands and thousands of lots. So yeah, I'd say we're in a, we're in a pretty good position. And, you know, again, it's always incumbent upon us to keep advancing the business and, and proving that what our, what we believe to be true, uh, to be actually true. Betsy Scott: (28:13) So Edwin, on your side, who, who would you be your ideal customer you're in the DFW market? Yeah. Looking to maybe branch out into other markets as well. Edwin Tatum: (28:23) Yeah, so I, I would certainly, um, echo Jack's, uh, sentiments that we're, we're extremely early. Um, however we've gotten, uh, a lot of traction, uh, in a couple of different places, one single family built for rent. Uh, there there's been a lot of activity as it relates to our solution with, uh, those types of investors, uh, as well as your, uh, production, uh, home builder or production developer, uh, land developer, uh, and then your multifamily developer. We also do volumetric modular construction for uh multi-family. And so those, those three, uh, sort of principal types, uh, would define who would be our perfect customer. And as we expand to the east coast, uh, we'll probably have three facilities in the next 18 months, uh, two here in Dallas, uh, and then one on the east coast. And so, uh, we want to get as close to our customer as possible. And so we look at, uh, you know, macroeconomic data as it relates to specific MSAs and wherever there's a, a Delta or strong need for attainable housing or multifamily. We try to look at that area to invest Betsy Scott: (29:25) Nigel. How about on your end? Nigel Watts: (29:28) Yeah, for us, uh, you know, the top production home builders are, are our customers. And as I mentioned, seven of the top 10 of those invested in us. So that makes

sense obviously, to work with them as good as we can. Um, and, and really, you know, when we think about it, our ideal customers are, are the leading contractors and distributors and, and builders who have that a kind of attitude and approach to, to, to be able to, to want to change, um, that, that, that attitude really smooths the adoption process allows us to expand into a market through their additional builder customers, if it's a co contractor or a distributor. And, um, for us, you know, we've passed through that startup phase. We did a lot of pilot homes, uh, right in the middle of the pandemic of, uh, 2020, just to make it interesting and, uh, got through that phase and, uh, went into full production ramp up last year. And, um, right now we're targeting around, well, well over 10,000 installations in 2022, uh, we're possibly past that, that tracking past that mark right now, um, depends on what the market ha what happens in the market towards the end of the year, but, uh, doing well there. And, um, you know, in the end, we're just trying to impact as many, many homes in homeowners lives as possible. Um, and, uh, obviously the investor builders and their contractor distributor suppliers are the ones to work with. Betsy Scott: (30:48) And currently, um, you know, Alan Lang joined you a number of people in the industry would recognize his name as Ben, um, which I think gives you guys a leg up as well as having been a leader on the operations side, executive side, within production, home building companies, you know? Yeah. And Taylor Morrison, just to name a couple. Yeah. So, um, so certainly having that kind of bigger builder board, and then having the leader who has the expertise, you're not just drinking your own, Kool-Aid, you actually have some really good feedback on how it's gonna work. So I think that is certainly, um, important for buy-in and important for getting the, the solution off the ground and, and really taking advantage of it. So, um, you are not, uh, new to this neck of the woods, Paul, uh, you guys have been doing this for a while. So where are you in your process and your thought process, and who's your ideal customer at this point? Paul Grahovac: (31:46) Well, we've had to, uh, uh, enlarge our tent a little bit from what we first envisioned, uh, our current, um, um, clientele, if you will, are, uh, custom home builders, uh, whose, uh, clients appreciate energy efficiency, a house, uh, pump full of fresh virtually allergen free air, and being able to withstand a polar vortex if, if, uh, uh, the, the energy goes out, um, those, and, um, uh, multi-family projects in the, uh, low income housing tax credit program. And we have a repeat customer in the private sector, um, where, uh, they reward energy efficiency. Um, our ideal customers are, uh, production builders because that's where prefabrication, uh, really can pay big dividends instead of, uh, every house being a one off like we're doing now, although we're set up to do

that, we have a custom builder in Kansas city. Most of our projects have been in the Northern quarter of the us Northeast quarter, uh, quadrant and, uh, Ontario. Paul Grahovac: (32:53) Uh, but we have a custom home builder in Kansas city, a certified passive house builder who, uh, has done production building and wants to get back to it and wants to use these panels to build energy efficient, high quality housing for the, the missing middle that, uh, that is, uh, currently underserved mm-hmm , um, as to scale, um, basically my research, uh, and word of mouth has been that the only time that, uh, wall panelization has caught on is, is when the, uh, builders have initiated it themselves and set up their own shops. And, uh, our, our mode, uh, of expansion is not by, uh, setting up our own factories around the country, but rather by supporting builders and others, uh, who wanna bolt on business, um, that they can have there locally. I, I contacted a, uh, bathroom pod, uh, prefabricated, and I said, you know, I wanna buy a couple of pods here for a investment project I'm working on. And they said, well, no, we only supply complete apartment complexes. I said, why is that? And they said, well, we don't have a factory. We build a popup factory, uh, wherever, uh, there's gonna be an apartment building. And it seems could be said, uh, for the footprint that we have for this system and the Adida 'em in the need to supply a development or a city. Betsy Scott: (34:15) So you're, uh, if I'm hearing you correctly, you're saying that you can kind of license your approach Paul Grahovac: (34:22) To yeah. Yeah. We, uh, consider, we would consider ourselves a hub of a spoked wheel and, uh, basically, uh, uh, do all the  work that, that like the others we've had to invest in to figure out how to do this. Right. Keep it here and then, uh, uh, put the easy stuff out at the end of the spokes for the people that want to use it and get on with building. Betsy Scott: (34:46) Okay. That's fair. Um,  um, I know that at obtainability was, um, is a core to what you're looking at, Jack and, and you shared an interesting story about your frustration and kind of what inspired you. So if you could share what inspired you to get into, um, diamond age, I think that would be a great way to start kind of talking about the potential to take what we see as really a social aspect of ESG and drive it through, um, an industrialized construction approach. Um, and, you know, at obtainability is something that we, we would agree with you and that you said on the missing middle, there is that need, what can we do through industrialized construction to deliver more housing, um, that is suitable, um, and can support more of those middle family, uh, incomes. So Jack, tell us your, tell us your story. Jack Oslan: (35:41) Yeah. Yeah. My, my origin story is pretty personal, uh, and, uh, for everybody on the call who has not started a business, let me just tell you that it's hard. And, uh, it's

one thing to start up a lifestyle business, like a corner market or a dry cleaner. It's another thing to take large amounts of industrial capital from professional investors, uh, that is a whole nother level of heart. And so I don't recommend it unless you have enough sort of personal passion to carry you through. Uh, all of the intensity that is building a business and mine actually came from an experience I had with my son, uh, back in 2017. He called me to tell me that he was getting ready to move his family because they couldn't afford to buy a home in the area. And as you might imagine in that moment of rage and despair, when a father hears his son telling him he's going to move away from him, um, I got sufficiently off enough to start a business. Jack Oslan: (37:00) Um, and I don't, I don't do venture back startups for kicks. They are really hard. There's a lot of lost sleep. Uh, there's a lot of tension, uh, that you bring home into your family. So I don't take it lightly. And so the miss the necessary emotional drive was born out of my son's, um, announcement that he was moving away from me. And, uh, I was quite frankly, out of touch with housing. I hadn't bought a house for 30 years, so I didn't really understand the scale of the problem. And when I dug in, uh, it became clear in a hurry that something had to get done, because we're not just talking about my children, we're talking about everybody's children. And, and then once you get past that, you're talking about the entire ecosystem of housing, uh, renters included. Um, so you know, that, that's what sort of got me over the hump. Jack Oslan: (38:03) And, um, we got in, well, it, it got me far enough along Betsy to put down 250,000 in my own capital, just to figure out if there was something worth pursuing. Um, right. And, uh, so, so that, that's, that's the origin story of diamond age. And I was just fortunate enough that I had enough good friends, uh, on the technical side of things that, uh, when I, when I went to them and said, you guys should all leave your cushy jobs right now.  and go on this journey with me, because I guarantee you that you can work six, seven days a week and have a 90% chance of failure, but you should do it anyway.  and they did. So that's how we got there. Betsy Scott: (38:48) . So add one. How does, um, at obtainability factor into your priorities, um, on the volumetric Mo modular side, Edwin Tatum: (38:59) Uh, number one, uh, I, I would say, uh, you know, to, you know, speak subjectively. I come from, uh, low income, uh, as a kid and, and I grew up in section eight housing. So I'm, uh, acutely aware of, uh, the product, let's just say, uh, in terms of your first time home buyer, or, you know, your, your low income house, single family house. And so when I got into, after my professional basketball career, and I got into building myself, you know, one of the, the driving forces outside of the frustration with just the overall process was how can we innovate the process to, to be economic enough, to where people can have quality homes that they can attain? I, I think it's a travesty that a firefighter or a nurse or a teacher can't get a home in the United States right now. And so, uh, at least our team is, is, is dead set on, focused on that problem. Edwin Tatum: (39:55) Uh, we have about, you know, 65 years of, uh, specific offsite, modular manufacture housing on our board, uh, 65 years of experience, uh, and then another a hundred years total, uh, of construction experience. And we're trying to use all of that institutional capital to say, well, what are the best ways that we can advance the program? One to make our direct customers life easier, meaning our, you know, home builders and developers, but then our indirect customers, meaning the people that will occupy these homes, how can we make this, uh, more cost efficient in the best way possible? So that's, you know, it's a, it's certainly a subjective and a personal, uh, drive from the, the lack of things that I remember as a kid and hopefully the next generation won't have to suffer those issues. Betsy Scott: (40:36) Have you found specific metrics that you're looking to move that are gonna help bring costs down? Or are you still in the ideation phase on that at that point? Edwin Tatum: (40:45) No. I think just our process itself, uh, because we're able to, one, one of the things that we don't want do is we don't want to over index on technology. I think that's a fatal mistake, uh, in terms of, you know, Elon must learn that with Tesla when he tried to automate his entire factory. Uh, now we do think that there's a, a tension, uh, between automation and, and utilizing human capital, right? And so in systems where, you know, we need to OSB is heavy, right? And so we want to lift OSB, you know, we don't want a human doing that for eight hours a day, right. We want to bring in a robot to assist them in that process. So what we've seen, uh, is we're able to cut labor about 20 to 25%, uh, in certain facets of the production line that drives down costs both directly to our customer and indirectly, uh, to the end user. Now I don't have any pricing control when it comes to our customer. So I can't promise you anything, but I can say when we deliver to our customer, they are getting savings. Betsy Scott: (41:44) Okay. Um, Nigel, how about on your end from attainable perspective, cost savings perspective. Nigel Watts: (41:52) Yeah. So that's some interesting points that, that been made there. I agree with, and, you know, for us, um, the labor issues always been one of those big cornerstones of what, why we, why we're doing what we do has been for a long time. You know, labor shortages are just prevalent. They have been for many years, I don't think that's gonna go away. Um, so for us, we've been looking carefully at how we use the technology of designing, uh, the system, uh, and, and the home run approach and the plastic components and how

you can actually integrate features and benefits into those components and the way they go together to make it quicker and easier, make it, make it easier to, to put a system together. Um, and we've seen neighbor savings, you know, easily at the 50% mark in many cases, depends on where you are in the country and what the system is. Nigel Watts: (42:42) But, you know, when you talk about cutting a day or a day and a half out of just the H V a C rough in station, part of the equation, builders care, right. That, that makes a difference to them. And it gives the contractors an opportunity to, to do more business, to, to do more work. Uh, if they can't find people they're limited to how much, uh, how much work they can do with per crew, but if we can increase that by 50% or even a hundred percent, then that makes a big difference. Um, and, and, and for us, that's been one of the driving factors. Betsy Scott: (43:11) Is there an overlap between, uh, or another opportunity as well in the, the material usage, in addition to, with your solution in addition to labor? Nigel Watts: (43:22) Yeah. Um, one aspect of, of the, uh, of, of, of the system that we have is it's very compact, right? So it's, it's easy to move around. Um, we can get pretty much all of our componentry on a, on a four by four pallet without any trouble at all, all the duct work and all the components. So, you know, getting that to the job, site's a lot easier shipping and freight that makes that easier as well. Um, and then just the fact that it's, you know, there's small parts, you can handle them very easily. You can, you can install and assemble them without worrying about cutting your hands or getting ma all over your, uh, and tape everywhere. So it just becomes a more pleasant experience for the contractors and, and for those installers in the field, we get a lot of feedback on how they love to work with it, because it's just quick and easy, and it just makes it it's, they're not crawling up in addicts trying to manipulate large insulated duct that has fiberglass floating around and all of that's gone. Um, it's very clean and, and, and almost, uh, high tech in away from their perspective. Betsy Scott: (44:22) Paul, how about on your end with your wall assemblies? What are you looking at in terms of at obtainability and, and cutting costs or adding value into the process? Paul Grahovac: (44:33) Well, there's some great, uh, articles out there, um, that, uh, uh, builders, uh, ought to take advantage of on the subject of total cost analysis. You know, there's two buckets of money that you save with prefabrication. Uh, the national association of, uh, housing finance agencies say says, you save 20% on the assembly itself. Uh, but then, uh, there's the other costs and savings while the site excavation, uh, work is being done. And the foundation's being put in, uh, the walls, uh, are being fabricated in our factory. Whereas normally you have to wait sequentially until the foundation's up and cured before you can start even building the wall. And so that, that sort of thing brings on tremendous acceleration of construction. And that greatly reduces the amount of interest on the construction loan. And, um, the national association home builders have found that prefabrication, uh, reduces waste by 30 times. Paul Grahovac: (45:41) And I'll tell that to contractors and they'll say, great, that's 30% decrease in race. I said, no, that's 2900%. That's 30 times. . And, and I'll say, when you, when you figure the, the comparative cost of prefabrication, do you figure in the U utilization of dumpsters at $800 a week and all that wastes you're managing right now to mention your fellow contractors, that I help you fill it, fill it up after hours when you're gone. So, um, there's two buckets of money and anybody in prefabrication or considering prefabrication needs to carefully look at boa, both. Betsy Scott: (46:24) So anything to add Jack on the, at obtainability side, I wanna go back in a moment to the higher level of ESG and see what other metrics you guys are trying to move. Uh, but wanted to go back to you since you started with a personal story. Um, do you have metrics that you're, you know, big targets that you're looking to hit from a, an attainable perspective? Jack Oslan: (46:46) Well, well, certainly, uh, I mean, for, in, in the world of automation, uh, you're replacing labor, right? So, you know, we look at our model that, you know, we're replacing 55% of the labor, uh, required to build a home. And it's mostly rough end and a little bit of finishing work, but we should be able to replace that with like $11,000 worth of automation cogs. So, I mean, there's a straight up savings there. Uh, you know, a radical reduction in cycle time should have immediate impact. And then, you know, as any technology company scales, you generally, uh, find that there are step changes in your business that you get from scale, whether that is within the, uh, opportunity to build the systems cheaper, uh, or just, it it's really all, all the things that you don't know that you don't know,  those things, those things start to uncover themselves. Jack Oslan: (47:56) Yeah, well, we, we built our first demonstration home, uh, last October, November out back of our shop in Northern California. And we had, I don't know, we had 15 engineers and five fabricators, all crawling all over the, the site, uh, you know, watching the equipment run and they put down thousands of strings of concrete. And, uh, and they're all watching this thing and never cease to amaze me. Like every 30 minutes, two guys would look at each other and go, I didn't see that coming  and like, how could you not see that coming? You've been doing this for three years. Theoretically, you get in, you start producing a real floor plan and you start getting things at height. And all of a sudden, you know, uh, empirical knowledge takes over. So, you know, we will, we will learn

a hundred things every day for a hundred days. Jack Oslan: (48:57) And, and, and that's when things will start to improve and start to drive cost out today. You know, if I'm being brutally honest here, I don't even know how many guys are going to work on the automation team, uh, and on the trade craft team. I mean, we won't know that till we've got probably 30 houses under our belt. So, you know, these are the, uh, these are the things that all technology companies go through. You can project, uh, to the best of your ability. Uh, I tell every investor that I send my model to all this proves that I can do math built a hundred home. I haven't built a hundred homes yet. So, uh, I think transparency is the, the only way to get this thing done and that sort of align with ESG there. Betsy. Betsy Scott: (49:48) Absolutely. But I would say, and correct me if I'm wrong. If you look at this, no matter which approach you guys are using, because you have it, you're looking at systemizing, it, it should change the change, the nature of the labor that you need as well. Jack Oslan: (50:04) Well, in, in our case, that's absolutely true because we will be effectively taking, uh, our trade craft labor and boiling it down to a task orientation. So, uh, I won't require a whole fleet of electricians, uh, that know the entire ecosystem of electricity. You know, I can take young people out of high school or vocational schools or JCS, and, uh, I can have an experienced electrician, uh, teach them how to terminate electrical outlets and switches and putting in canned lighting and like, and then put them out in the field attached to a mentor for X amount of time, so they can get a lot of reps. And then I'll take that same person and bring them back in and we'll have an experienced plumber, teach them how to land a toilet and make, you know, sink connections and a like, and we'll do that. Wash, rinse, and repeat. Jack Oslan: (51:01) And, uh, it's literally the exact same process that the automotive industry takes when they put associates on an assembly line, you get certified in 12 to 18 different tasks from putting in a steering wheel to putting on, you know, left quarter panel to putting in the passenger side seat and you receive a certification. And then when you go out into the field to do that job, you install that product for two hours and then you stop and then you change tasks and it prevents repetitive stress injuries. It keeps people's interest higher because they're not putting steering wheels in for eight to 10 hours a day, six days a week. The same thing holds true in construction. If all I'm doing is putting in light switches and terminals, uh, terminating, you know, outlets, you know, I'm, I'm gonna burn out after a while. So it's how we keep people cross trained. Uh, they become more valuable to the business. The jobs are better for them. And quite frankly, it's higher value work, cuz all the crummy work goes to the robots. All the higher value work goes to people. We can pay them a little higher wage, they get a little higher job satisfaction. It it's really a win for everybody, Betsy Scott: (52:24) But it also expands your ability to have people with different skill sets, ability to have people with different educational backgrounds, ability to have people, you know, women. Um, Jack Oslan: (52:35) Look, this has already been a boom for women. We, we do extraordinarily well hiring women into diamond age because we just offer them the promise of, you know, as Edwin says, nobody schleps around an eight foot sheet of OSB at diamond age. Um, you know, the work that people are doing is more rewarding work. So, you know, if you are a, you know, if you're a five foot, four female diamond age has great work for you, uh, and has a pathway to even more interesting technology oriented work, driving a robot, uh, I, I have, we have, we have women on staff who are electrical technicians who build electrical panels and, and maintain robots out in the field. I mean, these are all jobs that are way more interesting, no offense to guys who swung a hammer for 20 years. But I, I would say it's more interesting than swinging a hammer for 20 years. Betsy Scott: (53:39) Well, and I think with the younger generations coming up, it will be more appealing to them because there is the technology aspect to it. There is the, you know, it is more of a, a cool potentially, uh, opportunity for them to use different, different, uh, technology platforms, robotics, etcetera, um, to deliver housing. So Jack Oslan: (54:03) Absolutely, uh, you know, our, this manufacturing execution system that we're deploying out in the field, as my children tell me all the time, we're the generation. That's not afraid to push buttons. And so, uh, if you can imagine Betsy that you show up and you get, uh, you get a yellow vest with R F I D tags on it and URL codes and you get an apple watch that will communicate out to you as you are moving through your job. Mm-hmm , it will be telling you what's coming up next, when it's coming up, what it'll be, where you should be, approximately how long through geolocating, it'll take you to get from this place on your job site, to the other place in the job site. And oh, by the way, you'll be passing by the construction trailer, pick up two boxes of, you know, number nine, screws that and hand those to the maintenance supervisor when you get there. So we can load up the next tool. These are all the types of efficiencies that young people are not afraid of. They actually appreciate having more information, uh, pushed out to them in real time. Mm-hmm  so they can do their jobs better. There's a greater sense of accomplishment, uh, and integration in the success of the overall process project. Betsy Scott: (55:28) So there are some comments that we get here. I wanna make sure that we share some of these. So Frederick said it was interesting what you explained Paul, about integrating more value into the

wall prior to delivery on site. So you should catch up with him offline he's he's kind of given you an open invitation there. Um, Nigel Johnson, um, he asked Edwin is the 20% in labor reduction, primarily due to prefab solutions. Are there additional ways that your company is using automation, uh, or technology to reduce labor use in development? Edwin Tatum: (56:04) Uh, the answer is yes. Um, so I'll just say a combination of both, uh, for instance, uh, I didn't mention this earlier, but we, the com commodity of choice for us is steel, uh, co form steel. And so through the use of technology, uh, in our experience, uh, with the machines that we are using to produce, um, these housing plans, we reduce our framing labor by more than 25%. And so what that, what that does at the ability to produce 3 million square feet a year, um, that those savings are automatically given to the customer, uh, in their, in their final price. And so just in our framing, uh, machines alone, you know, we're able to produce at a significant clip, um, to where, uh, we can pass those savings on both to those, uh, indirect and direct customers. So, great question. Uh, but that's just one area that we, we use technology to reduce labor. Betsy Scott: (57:00) So Damien says to maximize the true benefits of offsite embracing a turnkey volumetric modular system implemented correctly can tick so many boxes. He agrees with you about getting the balance rate with manual labor and automation is key. And we found that in a number of, we do a lot of site tours. We're actually going to Madden Lee lumber, and Millworks tomorrow here in St. Louis. It'll be interesting to see the strategic decisions of incorporating or not incorporating automation. And when are those capital investments, when do those make sense? Um, both to the process and, and to the value that you're delivering, certainly in the field, uh, with your approach, Jack, uh, they make absolute sense, but yeah, in the factory, what is the right level of automation? Um, so that's a very good point to make. Um, let's see, uh, Frederick asks you Jack with automation. How is it possible to get custom houses? Do you see any innovation or solution coming? Um, that's maybe he means from the car industry in terms of custom houses. Jack Oslan: (58:07) Yeah. So if you think away, if you think about the way that Tesla sells cars now, uh, it is not a, it is not much a leap to think that that's way that diamond age will offer houses in the future. So if you want a Tesla, uh, you have to go to the website and you have to design your own product from a configurator model. And configurator are not that difficult. It's really, uh, I think the term is curated customization, meaning that you have a set number of choices, whether it be, you know, four floor plans and maybe three different exterior elevations, couple of different paint colors, et cetera. And then you just start picking and pulling those down and building your own product. And

that becomes, uh, that becomes accretive to the home builder as well, because they have designed the community already. There are X number of floor plants. Jack Oslan: (59:05) There are X number of elevations. There will be Y number of paint colors. And so this'll just be a way for home buyers to access the offering from the home builders in advance and build their own product if you will. And the great thing about configurators is every choice you make impacts the price. So you'll be able to see that price change before your very eyes. Now, based on the economic conditions, you might have to hurry to transact because the interest rate could change tomorrow, but nonetheless, , uh, there is a way to sort of sift through all of the different optionality and arrive at a, a product price point. Um, so these are some of the things that we look at that we, again, not to disrupt production housing, but to be accretive to it and help take some of the friction out of the process for them. So the closer we can help the end buyer, you know, the home buyer and the home builder get to each other, the better it's going to be for diamond age. Betsy Scott: (01:00:20) So Dennis, um, on our team said, great to see these pathways to improve process productivity and performance. What call to action do each of you have for the industry to accelerate adoption of new concepts, um, and to work with you guys moving forward. So Nigel, if you wanna jump in on that one Nigel Watts: (01:00:40) We'll yeah, that's Betsy Scott: (01:00:40) A great call and circle around Nigel Watts: (01:00:42) that's a great question. Isn't it? Um, we have so many of those on our list based on, uh, the last couple of years of experience, maybe, uh, if I could move a magic wand, I would say, um, if, if we can, um, all together and in particular looking at the home builder, think about systems uh, approach to costing and evaluating a new technology. Um, we often, because we're, we are essentially replacement to a conventional, uh, system today. We get a lot of comparison pricing, right? It's like, well, what's your system parts cost versus that you have a lot more duct and therefore it's gonna be more expensive. And, you know, getting them to look at the whole picture is, is, is quite hard. Now some of the, some of the smarter builders we work with there, they, they know how to do that. And they're figuring that out. Nigel Watts: (01:01:31) And then they go beyond that, looking at the value, well, what can we do with this value? What can we do with a better performing system? What can we do, uh, in the, uh, in the way we market the products or market the house, can we push, uh, push more of a message of energy efficiency or comfort or whatever it may be. And also on the, on the, um, on the distributor, on the, on the contractor's side as well, what, what can they do to sell their solution to the home builder? Um, thinking about it from a, from a more of a systems approach perspective, I think it's, that's, that's a critical one moving forward. And I think that feeds into everyone else on the panel as well, and the way they want the builders to look at a new solution. You can't just look at it as a price to price comparison. It's gotta be, you gotta look at the whole system and, and the whole solution. And if you do and add onto that, you know, what, what, what incentives are out there from the state and federal level to, to do this, to build more energy efficient homes. There's lots of, lots of benefits there on the, on the, on the financial side as well. Betsy Scott: (01:02:30) Well, and your, your, um, developers or, um, or your performance metrics that you're supposed to hit may focus also on healthy homes, you know, from an ESG perspective. So, you know, what is the pain point you're trying to, to solve? Not just, what is the, the direct comparison of cost? How does it get you to deliver on the promise that you're looking to deliver, um, and deliver that value? Exactly. So, Paul, how about on your side? Paul Grahovac: (01:03:02) Well, you just, uh, you know, you raise the healthy home issue. I mentioned previously, you know, virtually Aller and free, uh, homes filled with fresh air people who are window openers, uh, stop opening their windows, cuz they realize the air is just as fresh in these homes as, as the air out on their porch. And uh, you know, you get an energy recovery ventilator. Heck it, I figured I figured out it loaves down the street. You can pick one up for $450. So this, this is not rocket science, uh, you know, strange, odd technology that's being foisted on people. This is, this is, uh, the future is here. Betsy Scott: (01:03:42) Edwin, you're shaking your head. Edwin Tatum: (01:03:47) I think he's right. Uh, you know, both had great answers, you know, for us, it's, you know, having the incumbents look at the bigger picture, uh, from a comprehensive perspective in that it's not just a ESG thing, it's not just a financial savings tool. Uh, but you know, it's, what's what value can we get? So we can pass that onto our customers and, and our opinion, prefabrication and modular construction, particularly because we're building to the same code, right? We're building the international building code. I mean, this is it's been around, right? This is nothing novel. Uh, even manufactured housing has been around for a hundred years. The only thing we're doing to Jack's points, we're layering technology and places that it makes sense to augment human capital, not supplement human capital. Uh, and, and then we're, we're saying, Hey, this is a guaranteed delivery day. You don't have to worry about change orders anymore. Cuz once we start going, you're there is no turning back. Right? And so planning will be very, very critical. I think that's the biggest pain point we have with our customers right now is getting them to understand the planning involved with our architectural and engineering team, as it relates to

shop drawings, to whatever they've designed, the, the end product won't change, but the process to get that end product does change Betsy Scott: (01:04:58) Anything to add Jack. Jack Oslan: (01:05:00) Uh, well, I, I would, my advice to the industry is always, you know, it, it's the definition of insanity, right? If we do the same thing over and over and over again, we should expect the same result. Um, and so today's environment is not sustainable. So whether it is diamond age, factory in the field, or whether it's Tatum tech building modular in a factory, uh, I would encourage all home builders to look at, you know, innovation with a, in a broad lens and then evaluate it as it pertains to your own business. Uh, and then backs something, right. I mean, sitting on the sidelines will get you absolutely nowhere and you know, a, a, a partner like century communities, they, they are the complete opposite end of the spectrum. They're super aggressive. They're putting big money down. Uh, I know Dr. Horton and Lenar has put big money forward. Jack Oslan: (01:06:06) Um, so the, these are companies that are moving the needle, um, and then it's really going to be incumbent upon the companies, us to go out and prove it. And it's why my deal with century was I will take your money. I'm happy to take your money  but it comes with the string or two because I have to, I have to serve the entire industry. I can't just serve century communities. So I need you to look at this as a larger investment and not as a way to wall off diamond age solution for yourself. And you know, it, wasn't hard to get them to get there. Uh, I think that the production housing industry, uh, has some of that co-opetition, uh, going on. Um, so you know, it rising tide lifts all boats. So again, for the industry, you know, find your spots, uh, and back somebody, you know, take, take a little bit of a risk and, uh, get, get in the game. Betsy Scott: (01:07:17) Yeah. And there are a lot of interesting solutions out there with potential and as a, as an industry, we under invest in innovation. But I think as you were saying, coopetition, seeing those eight bigger production builders, I think you said eight Nigel who are backing R and investing in it because they know that it's gonna benefit them and their money goes so much farther when it's lumped in with other investors who are also have an interest in the solutions. So, um, that's great advice. Um, I don't know that we have any final questions, but, uh, if we hear anything from you guys, we're gonna continue this, um, in the longer term, um, this will, this will go live as an archive directly on our LinkedIn. So we'll follow what the comments are and we'll try and, um, engage people in follow up discussions on this, uh, standpoint as well. Betsy Scott: (01:08:14) Um, both industrialized construction and ESG are ongoing topics for us. How can we improve the design and build process? Um, how can we leverage and, and understand what's going on, um, in terms of ESG, which encompasses as we've seen so far, a lot of different metrics that we've always been already been looking at as an industry, but I think by it being a buzzword now, um, and an area in which people are pushing some innovation, there's an opportunity, um, to, uh, to move things forward. So thank you guys for your participation today and no problem. Thank you. And, uh, we'll, uh, connect with you again soon. Speaker 6: (01:09:01) Very good. Thank you.