An Abundant, Dynamic Future: Part 3

• up & up | (intellectual property)^3

• deep dive | Exploring American abundance & dynamism (Part 3: Housing)

• odds & ends | Playing around with Midjourney & the power of walks

In last week's up & up I wrote about the importance of IP, and this week TikTok was a good proving ground for that:

• The Last of Us: Before it was a universally acclaimed TV series on HBO, it was a video game that won multiple awards (2013 Game of the Year) and is considered one of the greatest video games of all time. And it represents the importance of gaming IP to film studios and streaming giants as they clamor for fresh content ideas with built-in fan bases.

• Hogwarts Legacy: A new open-world Harry Potter game is hitting the market in early February, and it's already the #1 selling game on PS5 and Steam and one of the top 100 trending hashtags on TikTok. This has been a good resiliency test for one of the most valuable IP franchises after a lackluster movie trilogy and some controversy.

• Avatar: The Way of Water: Avatar 2 is absolutely smashing it, grossing over $2 billion globally at the box office and nabbing a Best Pic Oscar nomination. What's remarkable is how a 10+ year gap in any Avatar-related IP and plenty of "no cultural impact" claims did not hold back earnings, which is very welcome from the hurting movie theater industry. Quality IP has staying power.

I promise to not bring up IP in the next issue.

An Abundant, Dynamic Future ⚛️ Part 3

We're continuing our journey of exploring an abundant, dynamic America with reinvigorated institutions and future-fit sectors. As with previous write-ups, we're looking at Derek Thompson's analysis of 5 critical areas suffering from scarcity - Healthcare, Education, Housing, Transportation, and Energy & Climate - and taking a bottoms-up approach (inspired by Katherine Boyle) to identify entrepreneurs and startups solving these issues. This week: housing.

Part 1: Healthcare 🏥

Part 2: Education 🎓

Part 3: Housing 🏘

In 1999, Disney released Smart House and showcased a future where homes had an AI-powered assist named PAT (Personal Applied Technology) which could manifest using AR-esque holographic projection technology. Similar to the smart devices of today, you activated PAT with a prompt and could ask her any question or request and she would fulfill as best she could - whether that was to prepare a meal tailored to your nutritional needs, play ambient music to help you sleep, or clean the house using 'floor absorbers'. As a child, I found it amazing. Seven-year-old me definitely thought we would live in homes like these by now (ignoring the part where PAT gains general sentience and almost destroys the home in a meltdown).

Fast forward to 2023, and the reality of our housing situation in America is starkly different. Far from some utopian (dystopian?) vision of smart, hyper-personalized homes for everyone, we have a housing supply shortage coupled with home prices that have far outpaced wage growth. Ignoring the impact of interest rate hikes on housing affordability, the stats around average housing prices are abysmal: since 1980, NYC and San Francisco have seen increases of ~700% and ~900%, respectively. These represent coastal extremes in America, but they are broader indicators for increasing housing costs (also see here, here, and here). And this graph from the White House is an excellent depiction of the worsening relationship between US population growth and housing starts.

The deficit in housing supply and lack of affordability has some fairly obvious impacts. First, homeownership continues to be a path to wealth generation. With fewer people in the housing market, fewer people are realizing significant economic gains. Second, those who can afford to buy a home are spending more of their income on mortgages, which reduces their purchasing power in other sectors of the economy (this is obviously bad - we want people to be able to afford good homes while still being able to afford a good life). Third, pricing people out of housing markets amounts to a self-imposed brain drain and can lead to inequitable outcomes (e.g., gentrification) for minorities.

There are multiple top-down levers we can pull to help alleviate the housing crisis. One lever is zoning. California recently passed measures to make it easier to build multiple housing units on land zoned for one housing unit, and to build denser housing units (e.g., apartment buildings) near public transportation hubs (e.g., bus stations). Another lever is more subsidies. Providing housing subsidies, whether direct or via tax credits, to low-to-moderate-income earners can help reduce the economic impact of housing. A final, broader category of levers is incentive design. A good example of this is the Biden Administration's recent Housing Supply Action Plan where jurisdictions that reform zoning to allow for more housing construction will score higher in federal grant processes.

Of course, these levers carry their own controversies. Existing residents often block the building of apartment buildings near single-family residences out of fear for their home's market value (although recent research disputes this). In the federal budgeting process, there is a give and take: tax credits for one program must be funded somehow and as we've seen recently, the debt limit debate is rife with conflict and partisanship. And poorly designed incentive schemes will inevitably cause unintended outcomes (here's a famous example).

There are other levers we can pull, and one in particular which requires zero top-down policy intervention: we can build. We can build more housing using more sustainable and affordable materials. We can prioritize home styles that are quicker to build and allow the new homeowner to move in quicker and start building their new life. And we can use bits to augment and accelerate an atoms-intensive industry. Let's take a look at two categories of startups innovating in a traditional industry:

1: Printable & Modular Constructors 🖨

There is a slew of well-funded startups using 3D printers and pre-fab construction to build housing units quicker and with less waste. Some tout the units as more affordable, but they often provide the bones and then outfit them with high-end luxury finishes. What's important is the underlying tech and fabrication principles that innovate upon the traditional (antiquated) stick-built method.

• ICON uses construction-scale 3D printers to build more affordable, high-quality homes using sustainable materials. (Series B, $185m, Tiger Global, Feb 2022)

• Modal builds pre-fab small housing units which are good for 90% waste reductions, 43% fewer carbon emissions, and 50% faster build times than conventional on-site builds. (Crowdraise, ~$730k, Aug 2021; non-equity assist from TechStars)

• Cover, like Modal, also builds pre-fab small housing units and vertically integrates from design to installation, giving them greater control over speed and sustainability on their journey to build 1 million housing units. (Series B, $60m, Gigafund, Feb 2021)

• Veev (Series D, $400m, Bond Ventures, Feb 2022), Boxabl (Crowdraise, $97m, June 2022), and Mighty Buildings ($22m, Series B, July 2021) offer similar 3D printing and pre-fab solutions as the previously mentioned startups.

2: Bot Builders 🤖

There is a shortage of construction workers (many are foreign-born and are significantly impacted by immigration policy) which slows housing builds. A new generation of construction startups is using technology, especially AI-powered robotics, to help augment construction teams and free them from time and labor-intensive tasks.

• Built Robotics providers after-market upgrade kits which can be added to heavy industrial equipment like excavators and can automate trenching. (Series C, $64m, Tiger Global, April 2022)

• Diamond Age uses advanced robotics-as-a-service to backfill the construction site with a 'factory-in-the-field' solution that can scan, cut, print, and assemble. (Series A, $50m, Prime Movers Lab, March 2022)

• Dusty Robotics has an AI-powered robot that prints construction layout systems which is an often timely and complex task. (Series B, $45m, Scale Venture Partners, May 2022)

As mentioned above, these startups' target markets do not initially appear to be low-to-moderate-income homebuyers who are in most need of affordable housing (correct me if I'm wrong). But they are still worth paying attention to because they act as signals for the future of housing & residential construction. Again, the underlying tech and fabrication principles alone have the potential to be incredibly valuable. And as these startups scale and realize cost efficiencies from said scale, they can begin to offer even more affordable housing units and help close the gap in the housing supply crisis.

While owning a home is a huge life milestone (although don't take my word for it as I've never owned one), access to affordable, liveable housing should be a basic promise of modern society. With technological advancements, we are fast approaching a world where do not need to make such harsh trade-offs between abundance and scarcity. The housing industry would stand to benefit from a dash of empathy - empathy for individuals who cannot afford basic housing but should be able to. Now and in the future, we can and should apply new technologies at-scale to build abundant and affordable housing solutions for those individuals.

Up next: Transportation.

Midjourney

I asked Midjourney to generate an image with the following prompt "A 3D printer printing a futuristic city with happy citizens looking on". Fairly pleased with the outcome given the lame prompt.

The Power of Walks

Friendly reminder about the usefulness of 'going on stupid walks for your stupid mental health'.

Thanks for reading 😬