Episode 37 - Jordan Easterling, Building Swell

The Prefab Pod

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Prefab Review - Hi, my name is Michael Frank and this is The Prefab Pod presented by Prefab Review where we interview leading people and companies in the prefab housing industry. Today, we're speaking with Jordan Easterling. Jordan is the founder of Building Swell and I'm sure he can explain what they do better than me but basically, they make software that helps prefab companies better run their operations. Previously, he was a VP at Factory OS which is a modular company and he worked at ManufactOn which is another software solution for the offsite manufacturing industry. We're going to try to have a wide-ranging conversation about his journey and his areas of expertise because I think it'll be really helpful. We get a lot of questions about what really happens in the factory and in the construction process. And since he's been an executive and founder in this space, he can definitely be helpful. So Jordan, Welcome.

Building Swell - Hey, thanks for having me Michael. I’m really excited to chat.

Prefab Review - Awesome! Well, thanks again. So I guess to start, you obviously worked at a bunch of different spots within the industry. Can you tell me a bit about your personal journey and how you got involved in what you did at each of your professional spots?

Building Swell - Yeah, absolutely. At the very start, you know, I was a structural engineer by education and basically stumbled into forensic engineering. And what that means is if something failed on a job site or something failed as part of a construction project, I had to figure it out. So, what was the mode of failure? And you know, how can we support folks that are digging into that? And I was doing that for quite some time. And then the lines get a little bit blurry when you start looking at not just buildings that have already been completed, but how can we start to prevent some of those problems from coming up during the design or during the pre-construction phase? During that journey I was exposed to a really interesting project that was by default a prefabricated project. And it was my first foray into that space. And oh man, it was so fascinating. That was a light bulb moment for me I thought, “well, wait a second. if we're doing it for this project that actually needs prefab because it's in this remote location but it's working really well, why aren't we doing this more broadly in the construction space?” I mean, this is applicable for any project. And so that peaked my curiosity.I did some more consultative projects around that. I was at a company called ManufactOn that was focused on providing high level status tracking for different prefabricated builds. But you know what, you mentioned most recently I was at a company called Factory Os. And FactoryOs focuses on these multifamily mid-rise, wood frameed apartment complexes. Basically apartment units but manufactured in more of a manufacturing workflow. And there I was responsible for anything the tech touched.

And I'd like to break it into 4 big areas. We looked at commercially viable R&D so, you know lidar or a lot of times like hardware applications. And then we built a bit of custom software just from the ground up. And then we also looked what can we pull off the shelf from the software side and develop training or implementation programs around that. And that was a super fascinating time at fFactoryOS but really good exposure to see what is the tool set available for a modular builder or prefabricated contractor.

I guess at Building Swell, I stepped away from Factory OS in 2021 to focus on what we do at Building Swell. Now full-time and at a high level, we focus on, I think you hit the nail right on the head, running a shop is really hard. It's so multivariable and so where Building Swell comes in is we help manage teams and some of the production schedules. Even when you have a myriad of different project schedules and help manage inventory. Basically a lot of the the difficult planning and operation style functions. We help shops tackle that.

Prefab Review - Got it. That's helpful to understand. So I guess let's jump in. So FactoryOS has gotten a lot of press in the Bay area, where where we both live. They partnered with a bunch of the big tech companies to do different multifamily and sort of high profile projects. So they partnered with both Google and Facebook or at least one of those 2 companies I know.

Building Swell - Yeah I forget what's been published. But yeah, definitely some big some big names in the tech space. And you know a lot of either corporate housing or a good a blend, FactoryOS says a really good blend of affordable supportive and market rate housing.

Prefab Review - So that's like a fairly scaled company relative to at least a lot of the prefab companies we work with. So is a lot of what you're doing bringing like the best practices that a company like that would have to maybe a smaller company or is it actually providing a different capability?

Building Swell - Yeah, you know it's a little bit of that. I would say there are a couple challenges regardless of what type of prefabrication you run. You know, some of our customers are in the electrical space. So they're not necessarily doing these volumetric modular residential units. So it can be broadly applied but really where we focus is any time that you're building something prefabricated. There's a high degree of variance or a degree of of change that happens in the product line that you're building. And so really where we focus is bringing best practices into these spaces but also making it very clear when something varies, how does that impact your production process? One of the things that we hear over and over from different companies is, “we don't really build the same thing twice.” You may have a product catalog where you're building the same studio unit but every local jurisdiction is going to have different requirements based on what you can and can't do and what some of the the subassemblies have to look like. And so we make it really easy to capture that variability and and give you the next steps or what's next.

Prefab Review - What were companies doing before before you existed? Were they using another software? Was it going to some gantt chart and was kind of done less rigorously how? How are people dealing with these sort of different variations of housing before 2021?

Building Swell - We see a variety of things. There are some companies that will try to leverage a true manufacturing software. And there are some very powerful, very wonderful softwares, but it could be very expensive. The bigger challenge is that some of this software just doesn't capture the variability that you see in construction. It's assuming when you build something, you're building the same thing over and over and over again. Let's say an automotive manufacturer. Basically you're saying look, we're not going to change this design for the next year, this is locked. We're just going to really figure out how can we continue to tweak or optimize process so that we can drive down cost and really increase the volume of production that we're putting out. Bu none of the prefabricated construction players don’t do that. There's going to be some small change. And if we're just talking about fixtures or finishes, that's one thing. You know, if you're swapping paint colors or maybe the exterior facade. That's less of a challenge but you know if you have anything else that's changing which is anywhere that you're building if you're going from one municipality at another or just a different building owner, you're going to have pretty big changes. And that has a ripple effect through your production process, through your design process, through how your supply chain operates. And so while it's good to focus on how can you eliminate some of that variance, eliminating all of it is just not practical. So anyways, that's a longwinded way of saying, yeah there are some style of tools but the lion's share of what we see, even in large shops is some permutation of a spreadsheet, whether that's a locally stored excel file or sometimes this is an airtable or smartsheet but it's still a spreadsheet and they're trying to figure out, okay, how can we track some of this production process or some of this production status.

Prefab Review - That makes sense. That sounds really cool. It sounds sounds very needed. One of the really cool things about having you on here is again, as I said to you before we started, we talk to a lot of Founders or CEOs of different companies but not necessarily people who are so focused on the actual construction and the construction processes. So one of the things that we do and anyone who goes to our website prefabreview.com can ask a question. And so we ge questions and we try to answer some of them. But we get hundreds and hundreds of questions every month. So I went in there this morning and I picked out a bunch that kind of fall into areas that more expertise on than I do. So I was hoping I can just go through and you know, if you don't know the answer, that is totally fine. But I think you'll be able to be helpful on some of these. So with that being said, you talked about this idea a second ago - most factories are not Toyota, right. It's not like they have 4 different types of RAV4s or whatever. You know, there's almost like an unpredictable number based on site, location, and jurisdiction. And all that stuff if you think about it, I don't know if you've worked with these companies, but you probably at least have some understanding of Champion or a Clayton or some company that probably is a little bit close to not specializing quite as much and you know they have big catalogs. Probably hundreds or tens of homes. But it may be less customized. How would they differ from a more custom shop in these processes?

Building Swell - Yeah, you have to keep in mind that you still have to, well before we jump into that, there are two sort of big branches, right? You have more HUD-style requirements where you're building to a different standard and national code. And so when you're building to that you have a little bit more of an ability to reduce that variability or that variation in your product line. But oftentimes it's difficult to know. And until you start building or unless you know you've been in this space for a while what some of those local requirements are and how that is going to impact your overall production. So to give you a good example, in a past life I worked with someone that was building 2 different residential, multifamily units in 2 municipalities that were side by side and very seemingly small changes. One municipality required an additional layer of drywall flame spread. Well that’s so trivial, right? Like no owner’s going to care too much, just throw the additional layer of drywall on that's not a problem.

But when you start digging in, you realize that okay, the window that you're mounting into this space now has a deeper sort of rough opening depth. So that is going to change the window that you're using which could have a high cost. It's going to change the flashing around that. And then, you know, that could have a pretty profound effect on the supply chain now. Now with windows, let's say it's an 8 week lead time. And now you know, mid process, you have to order another window. And now you're sort of bloating that lead time. So I guess, the differences are when you're a company that has that national reach and you've been around a little bit longer, it's more the experience you understand. Okay, these areas are going to be a little bit more suitable for this style and then if we've been burned by this type of change in this municipality in the past, maybe we just don't sell to that area or you know maybe we've already thought through the details around that. So I think that's one of the big differences is it's less like a structural change and more like an experiential change.

Prefab Review - Got it. Interesting. Moving on, what are the innovations in factories you're seeing these days? We've worked with a lot of different prefab factories and some of them are like, “hey, you know we have 20 scientists from Stanford and we're trying 3-d printing or something.” And some are like, “my grandfather started this prefab factory in this warehouse and we're still going.” So there's a lot of pretty old prefab factories. Is there going to be a huge amount of difference in their process or like what are the cutting-edge changes, you're seeing.

Building Swell - That's a really good question. You know, it's difficult because it's not necessarily one size fits all. If you've read the Toyota method there are some really good concepts out there around either continuous improvement or this theory of constraints. And the takeaway is that what you're building is different, because you know the the different areas that you're in is going to be the best use of your time, right, maybe it was better just to focus on areas where you have a much longer lead time or a longer cycle time. You know, just the area where it's the highest risk for your overall process.

Prefab Review - Got it, that makes sense. Another question we got, why do companies miss their targets for completion so frequently? We sort of know the answer since you're building software. But if you were in a factory, could you minimize that and is there stuff you would do beyond good planning and sounds like flagging variances early?

Building Swell - So this is a really tricky problem and a really tricky thing to answer. But one that we're happy to dig into is this is our bread and butter. This is what we really like to focus on and give you a good example. Let's just take a look at scheduling in the first place. So if you are a prefab shop and let's say that you're doing a couple multifamily projects and a couple of single family projects. Obviously, the single family projects are going to be much more pared down in terms of scope and duration. But you know, you only have a certain capacity in your shop. You only have a certain number of of things that each of these work cells can hold and projects are super dynamic. You're not just managing your material lead times and let's say a customer says, “you know what, we don't want this window. We want this other window.” Not understanding and you may not even understand what that lead time Delta is when you're in the conversation but also you know prioritization. Maybe one project gets delayed because of a permitting issue and now you have this soft spot in your schedule. It is very difficult because you have so many moving parts to keep track of and so it's a really challenging thing for any shop to handle. The more variance in in each step of your process from design to some of the the inventory management or supply chain pieces to your production is sort of multiplying. So reducing variability is good but you know at a certain point construction is just really tricky because it's so multi-variable. There are so many different moving parts. There's this really good article I'll drop to you afterward that you can share it in the notes but it talks about the difficulty of innovating in construction because of the fact that it's so multi-variable and because you can only compress a schedule so much. But your potential for blowing the schedule on the other side is sort of unbounded. You can have this progressive delay that just like a delay, feeds on another delay and it's sort of adding up.

Prefab Review - So kit build versus modular, how are the processes very different? One of the things that I think customers like about modular that I wouldn't exactly call it QA but is a little bit helpful, is when you're shipping a modular house to the site, you can see that like at least the frame of the house is there. Whereas you know, I know there's theoretically high-quality shop drawings or whatever that the kit's been fabricated to and those get sort of QA’ed and checked before they get flatpacked. But beyond that, how are practices different otherwise on the sort of factory construction side?

Building Swell - That's an interesting question. So you're shortening some of your processes with kits. One of the things that we see if we're talking residential is you know the standard in the US and in Canada is using drywall. And of the one of the most attractive things of prefabrication regardless of whether you're in residential or commercial or you know some of the subcontractor sort of trades.One of the things that bloat the process the most is cure time or something where you're literally waiting on painte to dry. So one of the interesting things about kits is you just don't have to deal with some of that cure time, right? Because the drywall work is happening on site and the finishes, you know that paintwork is happening on site. But you know conversely for the homeowner, what's really nice about the volumetric side or the prefab side is if you're doing that in your factory it's going to be more challenging for you to QA it. You see that and you have to figure out what to do with that cure. But, we've seen some clever shops bury that cure in their process in a clever way to where they're shortening the overall cycle time for those units. One sort of example case of you know, just interesting differences. I guess zooming out even more broadly, something that I think is really interesting, there was a good presentation we saw at the industrialized construction forum at Stanford, a couple years ago, talking about the tradeoffs of volumetric modular versus like panalized versus more of a kit approach. And basically what you're doing, you think of the surface area of coordination is what I'd call it. You're pulling a lot of that coordination into the shop and reducing that time on site, the closer you get to the volumetric approach and you're going to have a little bit more coordination required on site than with the panelized. So you are saving a ton of time. But what you're then doing that's sort of inversely related is you're reducing some of the flexibility or the degree of freedom that you have downstream. Right? So what we see is actually companies that have done really well are actually blending a couple of these different styles for different use cases or for different subassemblies or product lines that they run.

Prefab Review - Right. Yeah, we've seen that as well. So I guess this is actually one of the biggest questions and I'm not positive and I’ll be interested in your answer. How should consumers evaluate construction quality? That's one of the hardest questions for me to answer for people. Normally it's pretty easy for people to evaluate - do I subjectively like the aesthetic, we can like tell people building permit information and we can give them some information especially on sort of like the finishes level. These are considered higher-end finishes. These are sort of certain practices of construction that are a little bit nicer or more robust in certain ways. But it's very hard for us to say like objectively this high-end construction modular company has better construction practices than this one. I mean there's a little bit of that in what's the r factor and like home installation and stuff like that. Which is I guess one aspect of it. Prefab Review - But yeah, how do you evaluate that stuff?

Building Swell - That is such a good question. There are a lot of different aspects of that we can dive into. I would say that high level, a lot of the QA that you can do as a homeowner or sort of the end user is visual. I mean that's how a lot of the the testing is done in a shop for QC is very visually based. So there are a couple of cues there that we can talk through a little bit more. There are also very formal or formalized quality control protocols that these shops will run and we can talk through the differences between what's required at a state level or you know, at local level versus what shops go above and beyond. And then there's a standard battery of tests that are traditionally done that are a little bit more quantitative. You know, air leakage, your water penetration tests. You're talking about the thermal performance of some.

Prefab Review - If you're in the factory, I fully understand how you can get r values, I sort of understand how can get that data but right, like can consumers even, maybe it's just negligent on our part. Not negligent, I shouldn't use words like that, shortighted our part, I don't think we've ever asked a modular company about water penetration testing and different thresholds for that and I don't know we've evaluated thousands and thousands of houses, so is that something that we should be asking about or yeah, what's your perspective?

Building Swell - So here's the thing, a lot of these shops actually do it. They may not advertise it because it's not as sexy as advertising some of the design differences of their units but a lot of them are doing it and you know a lot of them are actually really open to sharing some of their QC reports. You know, they may have internal reports that they run that they may not be willing to share but they have something they share with the state or local building agencies. And sometimes they have programs in place where they will walk the customer through that. And we think that that's really powerful. The ones that have more of a structured quality control program and are open to sharing that. That’s wonderful on a couple different levels. It's wonderful before you actually have the module setup on your site but even for long-term operations, just having that additional information is like a turnover document or turnover package is wonderful because let's say that you want to swap where your electrical outlet or your roughend goes, you now know this is where it was, this is where it passed inspection. This is you know, maybe some other notes that you have while the unit is being made.

Prefab Review - Okay, interesting. So maybe we'll do an experiment, we'll email a bunch of the companies we're close to and ask them. This is just called like a standard quality control processes document. Because again, I mean we have plans right, and those show the rough-ins and the outlets and all that stuff, but what you're talking about I think, is you're talking something beyond plans you're talking about something that speaks to right, like kind of quality and standards beyond just like the state required stuff that they walk through?

Building Swell - Absolutely. To give you some examples of what may be captured in a QC document for some of these shops, let's take a wood-based single-family home builder as an example. Hypothetically, let's just say that they have 10 work cells that they work in. Well the first stages they're going to be setting up a lot of the the frame, right? The floor panels, the the wall panels, the ceiling trusses, you know ceiling panels and each of those are going to have a series of visual inspections that they go through. Like how square is this? Do some of the the rough openings for windows or let's say that you have some pass-throughs for plumbing or for electrical, do these line out the way that they're supposed to? And this is important even at the early stage This is important for the company themselves. I mean they're doing this themselves because if you get something that's out of squar, well now it's not going to sit right in the next stage where you're adding those walls and you know adding a roof to that. So oftentimes, they're running those visual inspections throughout the process. Once we get downstream and you have the electrical, they're running electrical tests to make sure that each of the circuits are performing the way that they should so that they don't get to the site. What do you do now if this light doesn't turn on. So there's a standard battery of tests through each of these stations that they're doing so that they know it's going to flow through their process. I imagine it's pretty standard for some of these shops to share with their customers. We see it all the time with commercial, you know, them sharing these QC reports with their general contractor. Or you know, the larger maybe like tech company building owner, right?

Prefab Review - Yeah, that makes sense. That's interesting. Yeah, we'll request some and see how open they are to providing them. I guess the next question is this is a little bit of a California-centric question. But we've done projects all over the country. So I think it's centric to everywhere. A lot of times for modular construction, particularly. The building approvals are on the state level for the home and then essentially the local levels but I'm really speaking to a residential use case here, the local building department. Is that a reasonably good process? Because the thing we haven't had any issues with but that has occurred to me is, okay, if something happens between this time it moves from the factory to site that’s not visually apparent, is anyone going to check this? The last thing I want generally in California is more regulation for permanent houses but just curious about your perspective on if that's sufficient.

Building Swell - I think you're going to see some variance in the process depending on who you work with. And I think this goes back to our prior conversation around quality control, right? We've seen some wonderful shops. Some that that use Building Swell to do this but we'll basically capture what do things look like from a visual perspective. Maybe some of the finish work. You know before it gets to sight and so you have this sort of chain of custody, right? You have this information around what it looked like when it left the shop, what it looked like when it left the truck, what it looked like when it was installed from those companies themselves or from some of their third-party set partners or or whoever else is involved. That's done just because it's sort of required for the company generally and so that type of information, even if the state or the local may not have eyes on that, you know generally, the company does and and yeah going above and beyond on the company side I think that is more sufficient than adding additional layers on the local or state inspection level.

Prefab Review - Yeah, I mean ideally, I guess the other good thing is most of these states there's some alignment around who’s responsible if stuff breaks. Ok, a slightly silly question. Why isn't 3D printing, why isn't that really a thing? I mean like, I know we've spent a little bit of time with Mighty who I think, is in Oakland.

Building Swell - Yeah, yeah.

Prefab Review - And there's a few groups we've talked to I think in like Austin or in Mexico or Latin America where there's some level of this happening, but I don't know what the exact numbers are. We're probably talking about like a few hundred or less than 1,000 homes total at this point. Why isn't this a commercial process of any scale?

Building Swell - That's a pretty layered question.

Prefab Review - I don't know if you've dealt with that. But we get questions all the time like, “can I just 3D print my house?” And we're almost always seeing there’s no scaled, mature technology as far as we can tell. But we don't usually say like this is why.

Building Swell - You know, pretty good question and we just haven't seen many vendors in this. I think you can break the answer into 2 big reasons why we don't see more of that. And keep in mind that there are some companies that are that are really pushing the envelope here and we could see some interesting progress over the coming years. But right now, it's really it's really based on how cost competitive is it. We can jump into that in a second but also there's some technical limitations around what you can and can't 3D print. Starting with it being cost competitive, when you think about 3D printing on site, let's say.One of the values of prefabrication in the first place is you're taking a lot of the complex sort of management and complex construction processes and moving that into a more efficient, streamlined manufacturing process away from the job site in a controlled environment. And so obviously, you still have to pay for shipping costs to get it there. And so you're betting on having a more streamlined process that will outpace cost.

Prefab Review - Yep. Plus I mean honestly, a lot of prefab for us is a labor arbitrage, right? If you build your house and the labor’s gonna be cheaper than in Los Angeles or whatever.

Building Swell - But think about it with like a 3d printing system, right? Whether it's a gantry or sort of you know this five six axis robotic arm sort of based system or deployment system, you know, basically you're moving all of that to the job site and then still doing the work there. So someone can't work in that space. But you know, the other interesting thing is a lot of what's being printed is concrete and concrete is so prevalent. It's easy to find some of those components locally or some of the materials locally. And we've gotten really good as a global sort of construction industry at producing concrete to be really high performance. You know, low cost and so you're competing against sort of like the best in class material if you could call it that on a cost basis.

Prefab Review - Right. That's interesting. So if you could 3D print like framing or whatever in a more efficient way something, that's more laborious, more expensive etc, that might be more efficient? Okay, that makes sense. I mean, it's a very cool concept and it makes sense in terms of turning your labor into capital. But yeah, honestly we're not that intellectual at our company about this stuff. We just basically say who's done really cool stuff with reliability and then we recommend that to customers and stuff. Unfortunately, we haven't seen it very prevalent. So hopefully it gets there.

Building Swell - Now, well one thing to add there that we have seen that's really interesting is using 3D printing as part of your internal process, now that's where it gets really interesting. Let's say that 3D printing really good at complex geometries and you know shapes that would be difficult to do in a traditional process. So if you can leverage that and do that in your facility, and then incorporate that into your volumetric or panalized prefab process, that's where things can get really interesting, especially when you're using novel materials. You know, something that may be more of like a polymer-based approach. The last thing that I'll say about it that's just about you know 3D printing material and specifically 3D printing concrete is you know, you brought this up earlier, we're both in California and you know, heavy seismic requirements here. One of the beautiful things about modern concrete is rebar. You know, having steel to sort of compensate for how poorly concrete performs in tensile and in tension, right? But you can't really push rebar through a front head. That's a really challenging thing to do and you know, there are fibers that you can push but anyways, nothing works as well as just good, old-fashioned rebar. But advancements in you know, different material types or even different processes for how to compensate for the the poor tensile strength of concrete. But for now, it's just sort of like a watch and seeing how people people continue to innovate.

Prefab Review - Cool. Thanks so much. That's a good answer as well. So last question Jordan, we really appreciate all your time here. We ask this to everyone. What are you most excited about for your company or for the industry in the near future?

Building Swell - So we are really excited about empowering more companies to be able to come onto the market and help drive more housing. One thing that we've been focused on pretty heavily over the past year is making it easy for customers to see what types of changes you may make, whether it's you know, moving people around or reprioritizing different projects or even different subassemblies within your project - making it super clear. Super transparent. This is how that is going to impact your overall throughput and we're just really excited to see how we can demystify some of the complexity so that more people can come online and build more housing to start attacking the housing crisis.

Prefab Review - Awesome! That's terrific and we're excited about that as well. Well Jordan, thanks again. It was awesome talking to you. For more information about Jordan and Building Swell visit buildingswell.com and as always you can visit us and learn more about the industry at prefabreview.com Thanks again.

Building Swell - Thanks Michael.

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