PropTech

Eve Picker: [00:00:14] Hi there, thanks for joining me on Rethink Real Estate. I’m on a mission to make real estate work for everyone. Real estate can help to solve climate change, can house people affordably, can create beautiful streetscapes, unify neighborhoods and enliven cities. So I’m on a journey to find the most creative thinkers and doers out there. I’m not the only one who wants to rethink real estate. You can learn more about me at EvePicker.com or you can find me at SmallChange.co, a real estate crowdfunding platform with impact real estate investment opportunities open for investment right now. And if you want to support this podcast, join me at Patreon.com/rethinkrealestate, where there are special opportunities for my friends and followers.

Eve: [00:01:18] Today, I’m talking with Scott Ehlert, co-founder of Fabric Workshop, a company focused on low carbon, mass timber building technologies for California’s livable future. Scott is designing a proprietary hollow core mass timber plate column and wall system that uses 50 percent less wood fiber and will cost ten to 35 percent less overall than for a CLT structure. His system will also provide installation benefits like integrated MEP, acoustic and fire performance. And as if that is not enough, Scott is also designing a robotic fabrication facility to anchor a new wood product innovation campus in California to help in the state’s wildfire efforts. Scott’s background is an unlikely one for an entrepreneur in mass timber. He spent years in the production and logistics management of concerts, private and corporate events, and national experiential marketing campaigns before pivoting to system design strategies that leveraged research, data and design to meet high level business objectives. While consulting for some of the largest companies in the real estate and construction space, Scott recognized a massive need for desirable middle-income housing that wasn’t being met by the market. So, he left his agency and started on the journey of what would become Fabric Workshop. This is a story of sheer stick-to-it-ness.

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Eve: [00:03:33] Hello Scott, I’m so pleased to have you on my show.

Scott Ehlert: [00:03:37] Thank you. Yeah, good to be here.

Eve: [00:03:39] So you’ve had a fascinating and pretty astounding career, from concert and event management to design and strategic consulting, to property technology. So, I wanted to start with what you’re doing right now. What are you doing right now?

Scott: [00:03:57] Yeah, great question. Yeah. So we are, I’ve created a company called Fabric Workshop and we are pioneering a new next generation mass timber manufacturer. We manufacture in California and a fabrication, a digital and robotic fabrication facility to bring those next generation Messmer panels to life.

Eve: [00:04:20] So what does the next generation mass timber panel mean?

Scott: [00:04:26] Yeah, so, you know, we kind of started our journey looking at the cost of housing. And, you know, as you mentioned, I worked as a design strategy consultant for many years and I kind of had run my course in that in that career and was looking for something new and something for, you know, a bit more impactful. And really started looking at housing, which was the most kinda pressing thing in my life as I was starting a family and seeing how so many of my friends and peers in California were leaving the state because of the cost of housing or were in a constant state of financial and mental pressure due to housing. And I also consulted with quite a few really large companies, just by chance in my design consulting days, worked with some of the largest companies in the housing and real estate space in the United States and just saw this, you know, kind of looming existential crisis around housing affordability. And, you know, when the housing affordability comes up, we love to kind of cut out the perennial teachers and firefighters, as you know, our benchmarks for who can afford housing. But what we were seeing was that housing was really kind of impacting bankers and doctors. We were you were talking to doctors who were having to have roommates in the Bay Area because they couldn’t afford the housing.

Eve: [00:05:54] Wow.

Scott: [00:05:54] And so there was this kind of big, big question of like, how do we make housing? How do we create housing in California that’s affordable to middle income folks we traditionally call the middle-class. And so that started us down a really long journey and looking at just a year long process of just listening and asking questions and sitting in the back of rooms and talking with as many folks in the in the industry as possible. And it became really clear that how we build and the type of projects we build were really kind of fundamental to, this seems kind of obvious, the kind of fundamental to the cost of housing. And so, you know, we really started to look at how we can build things differently and what with the technologies available out there to help them offset these costs.

Eve: [00:06:53] So let’s back up a bit. Like for some people listening, they may not know what mass timber is, which is kind of all the rage in the architecture building industry, but perhaps not something that most people know about.

Scott: [00:07:06] Yes, so mass timber is kind of the catchall phrase for what is a range of engineered wood products similar to glulam beams. The most prominent is cross-laminated timber or CLT. And that’s, the that’s the type that you’ll see turning up most often. And what CLT is, is just that, it’s cross-thatched, and kind of cross-threaded dimensional lumber, 2x6s and 2x4s, laid out in a giant press with glue. And then that press puts extreme pressure on those panels and that glue and turns it into essentially a giant butcher block. It turns it into a more or less a solid piece of wood. And those panels can be 12 feet tall and 12 inches wide and 40 feet long or larger, in some cases.

Eve: [00:08:00] Smaller, non-structural pieces of wood, glued together and engineered in such a way that they become much larger structural elements.

Scott: [00:08:09] Yes. And then they take on some really incredible structural properties. So, you know, they are stronger and lighter than steel. Stronger and lighter than concrete. You know, it’s an incredible product. It has been widely adopted in Europe and into East Asia and Japan. And it’s just starting to kind of trickle up in the United States. And as you said, it’s kind of all the rage right now. Everybody’s talking about CLT and there’s a lot of hopes and prayers being put on CLT as the, you know, the silver bullet that’s going to save us from our cost of housing.

Eve: [00:08:46] So it’s cheaper than steel and other structural elements. Is that what you’re saying?

Scott: [00:08:52] Um, no, that’s kind of the problem, that’s the that’s the challenge with it, is that while it does have these incredible attributes, you know, speed of construction is one of them. You know, these are essentially printed building panels. You know, you can get an entire wall or, you know, five, half a dozen panels to make an entire floor plate of a large building. And so you’re seeing buildings, you know, eight story buildings go up in two weeks. Right. It’s all crammed in. It’s all kind of flat packed like, an IKEA footer. Pre-cut, pre-manufactured, there’s no saws on site, no hammers. You know, nobody’s doing anything manual on site. They’re just essentially cramming these giant plates into place and a small crew catching the plates and then screwing them into place with some really advanced metal connectors to hold this together.

Eve: [00:09:51] But the materials themselves are expensive…

Scott: [00:09:54] Right.

Eve: [00:09:55] But you’re saving, you’re saving time on the site. You’re saving uncertainties like weather. Because they are factory built.

Scott: [00:10:03] Yes, exactly.

Eve: [00:10:05]  Insurance you’re saving.

Scott: [00:10:09] Yeah. Insurance is still kind of a question mark. It’s still very new in the US. So, the insurance has not quite caught up yet, but it is completely a completely safe product that has to go through a very rigorous testing process called PRG 320. And that is the fire certification process. And it’s also been the new international building codes updates around mass timber and CLT. So they’re able to build much larger buildings now. So, you know, 18 plus stories, large warehouse facilities, distribution centers, you know, these very large type two, type four type structures can now be built with mass timber.

Eve: [00:10:47] So, in balance then, if you can save all of these site costs, will it provide a less expensive solution? And especially for, you know, what you’re focused on, which is what I understand, the missing middle housing, those smaller infill lots that maybe are not as efficient as a huge 800-unit building, but certainly helped to kind of just stitch cities together, right?

Scott: [00:11:17] Yeah, exactly. So, when we were looking at CLT, we want to have all of the benefits of CLT, but without the biggest drawback and the biggest drawback of CLT, or there’s a couple of other variants like DLT, which is dowel laminated timber, which is they use wooden dowels to connect the boards together, or NLT, which is nail laminated timber, which is just that the boards are stuck together with nails. The biggest drawback with them is, with those technologies, is they just use a lot of wood. There’s just no way around it. It’s a giant butcher block and so, you know, and it uses dimensional lumber, the same lumber that stick frame builders use and modular builders use. You know, when you go to Home Depot and buy, you know, Doug fir for your deck, that’s the same stuff that goes into CLT. And so, you know, it’s a commodity product and they’re using a lot of commodity product. It’s susceptible to high prices and that there’s just no way around that. And so, you know, I don’t know how anybody that started a CLT project a year ago is going to make those projects pencil today. What, the cost of dimensional lumber up to, what, two hundred percent or something like that over year over year. Right?

Eve: [00:12:34] Why is it up so high?

Scott: [00:12:36] Yeah, so…

Eve: [00:12:37] I’m sorry. I’m completely new to this so I’m learning.

Scott: [00:12:40] Absolutely. Yeah. Yeah. No, this is you know, we are we are incredibly focused on the forestry and supply side. You know, we are kind of a hybrid between a housing prefab re-manufacturer and a forestry company, in particular the wildfire side, so I can definitely share more on that. And so, yes, you know, the implications on the lumber costs are, have a big, big impact. And lumber prices were already going up, right, there was just limited supply. There’s limited companies involved in the forestry space. And everybody’s going out to the same suppliers, like, you know, in the US. Dimensional lumber on the West Coast comes primarily from British Columbia, Washington and Oregon. And Idaho and Montana to a lesser extent. But those are the three kind of major producing markets and everybody’s buying it. Right. And even if you’re on the East Coast, a lot of people want that, like the aesthetic and material qualities of West Coast feedstock. And it’s primarily Doug fir. That’s what everybody wants. And so there’s just high demand, it’s just a supply and demand, and then Covid came and just threw a giant wrench into all of that. The mills shut down, the logging shut down, and everybody thought the housing and construction industry would collapse with Covid. But just the opposite happened. There was a huge remodel boom, a huge push for new homes in the suburbs. People were trying to get more space. And so the macron effects of that are that an industry that was already under high demand pressures is now under extreme demand pressures. And then they took their capacity offline for a period of time with Covid. And now they’re just trying to play catch up. And the industry in 2019 is already at record highs. And now we are just, it’s just through the roof, you know, OSB board, plywood of all that down the stack is all impacted by this. And so, when prices are just really high so CLT or DLT, NLT that’s just going to be less price competitive now than they were before.

Eve: [00:15:00] Interesting. So let’s go back to what you’re trying to solve and what your solution looks like. And then we can talk about how the last year has impacted that.

Scott: [00:15:11] Yeah, absolutely. Yeah. So, you know, that use of material is kind of fundamental to our approach. And, you know, we were really pursuing a CLT based product initially. But when we, when that reality of the the material cost, the fiber cost, just was the 100 pound gorilla in the room, there’s no way around it. It’s going to just do more research. Kind of went back to the table and some to look at those more mature markets in Europe and Japan and started to see this kind of, as I was saying, the next generation of mass timber products coming out where they’ve already kind of gone through that and recognize that, you know, a CFT panel is not necessarily the ideal product for a lot of building types, particularly smaller and faster buildings. And so what they’re using now is what are kind of known as cassette systems. They, these are a panelized approach, just like CLT, but they’re taking the fiber out. And so, what they’re doing is, they’ll be more or less there’s like two kind of sandwich layers, a top and a bottom and then a structure on the inside of those two sandwich pieces that give it the structural integrity. So you get a box-like panel with a hollow core and that removes a substantial amount you know 50, 60 percent of the fiber, from those panels, driving the cost down while still maintaining the structural integrity of a full kind of solid wood panel.

Eve: [00:16:47] Like a hollow core door, but not as flimsy?

Scott: [00:16:53] Exactly. A hollow core door that you could build an eight-story building out of.

Eve: [00:16:58] Yeah, yeah.

Scott: [00:16:58] There’s a membrane, a structure on the inside of that hollow core that gives it its strength. Ingenuity at play here. Companies are now taking advantage of that cavity to include things that would normally be exposed in a CLT building. So, CLT with the solid wood in place, all of your MEP systems, your electrical, your plumbing, your lighting, all of that can’t run in the middle of the plate. It’s solid wood. Right. And so it has to be hung underneath or run in interior walls or both in most cases. But with these hollow core cassette systems, you can actually run those MEP systems inside the cavity of the floor plate. So, it gives it a much cleaner and tight aesthetic.

Eve: [00:17:46] Yeah, yeah.

Scott: [00:17:48] And then you can also add additional elements to those cavities. So you can add acoustic materials, you can add insulating materials to increase the R value. You can add seismic and fire safety materials in there. And so you can actually get a much thinner for floor plate overall than CLT, where you have to then just have any piece stuff hanging beneath it. With CLT, a lot of that insulating and acoustic and dampening performance has to be laid on top. And it’s generally a really thick concrete layer that’s poured on top of the wood panel. So, a lot of people with CLT they think that you get to see all the wood, but in most cases you don’t. Actually, on the floor plate it’s kind of covered in five inches of concrete and gypsum and all that stuff. So, the cassette systems are a really genius kind of approach to a lot of those challenges with CLT.

Eve: [00:18:44] And it means less time on site, by the sounds of it.

Scott: [00:18:48] It does, yes. But the flip side of all of this is that it does add complexity and you do have to be in much deeper coordination with your trades very early in the process to coordinate where all of those runs are going through those plates so that the connection points on site are all, you know, when you when you’re doing a small prefabricated, a lot of it’s going to be automated. And so, the tolerances are down to the millimeter. So things have to be tight. There’s no change orders, I guess. So there’s no saws, there’s no handsaws or circular saws on site to fix problems. Everything has to be really, really tight. So that really, kind of, front loads the design and the engineering process. And all of the trades have to be at the table very early. And so, it’s a very different process than a standard site build construction. You know, that’s the trade-off. Is that the process that has to adapt to the material.

Eve: [00:19:47] Just listening to you speak of it sounds to me like you might be enjoying that process.

Scott: [00:19:53] Yes, very much so. Yes. As somebody that that worked in design and system design and customer experience design, you know, all of that thinking is really, you know, and you can see the outcomes, right?

Eve: [00:20:07] Yes.

Scott: [00:20:08] You know, you can go and tour these sites in in Europe and parts of Australia, where they’re being, you know the sophisticated approaches, is happening in Japan and particularly Central Europe, where this market is very mature. I mean, you’re seeing build costs in major urban markets, you know, down to 140-150 dollars a square foot.

Eve: [00:20:29] Oh, that’s extraordinary.

Scott: [00:20:31] Whereas in San Francisco, you’re at, what, 750-850 a square foot for a poor-quality building.

Eve: [00:20:39] Yeah.

Scott: [00:20:39] That’s what we’re kind of chasing. Right. Like that’s the that’s the end goal is to build out the system that can drive towards those better pricing outcomes and make housing more affordable.

Eve: [00:20:50] Where are you in your process right now? You’ve been at this for how long?

Scott: [00:20:56] We’re now officially into year three, so it’s a long and winding road. As I mentioned, with our company, with Fabric Workshop, there’s this really big wildfire and forestry component to it. So, we are focused very much on the California market. We’re based in California. We by no means will turn clients away, that’s in a neighboring state. But the challenge in California is so enormous that we feel like that so many other housing starts to take on like a national approach. And we feel that we just need to be very specific to California and the codes and the and the challenges and the crisis that that’s at hand here and that it’s a big enough opportunity that it can justify that. The new housing element numbers are coming in across the state. And, you know, we’re going to need two million units of housing in the next, within the next 10 years. You know, it’s just a staggering number of housing. And so that that volume actually presents a really powerful opportunity to impact another, maybe bigger crisis at hand in the state of California. And that’s the wildfire situation here. And so, I don’t know, I’m sure you’ve seen that on the news.

Eve: [00:22:21] Oh, yeah. I mean, I’m Australian, I don’t know if you realize from my accent, so I’ve lived with it.

Scott: [00:22:27] Yes, that’s right. Right. So, yeah, in California, you know, five of California’s six largest fires in modern history were all, all happened last year. And they were all burning at the same time. Right. When four million acres of forest burned across the state last year, which was double the previous record, which was just in the previous couple of years. You know, it’s just really staggering, right? There was nearly ten thousand separate fires across California last year. And the fire season is growing, right? Climate change, drought is driving more extreme fire seasons. And so, we’re now seeing fire season in 2020 is 75 days longer than it was 20 years ago, just 20 years ago. And that’s two months longer, two and a half months longer. And so there’s this overarching kind of pressing need to fix that. And one of the best things that we can do is to get this excess unnatural growth out of our forests and turn it into wood products. So our forests in California are completely overgrown, grossly overgrown, naturally overgrown. We have, for the last hundred years, we’ve taken a policy of complete fire suppression.

Eve: [00:23:52] That’s really interesting. Yeah, because fire is an actual regeneration of forests and that’s what was brought up on me.

Scott: [00:24:02] Exactly.

Scott: [00:24:02] They happen for a reason. So, you have to just control them.

Scott: [00:24:07] Yes. Yes. And so we actually have to go back to a natural fire cycle where we’re not stopping fires. We’re actually letting fires happen. But in order for that to take place without being so destructive, like they are now, is we have to get all of that overgrowth that was the result of stopping fires in the forests.

Eve: [00:24:26] That’s really interesting, though.

Scott: [00:24:28] Yeah.

Eve: [00:24:29] But my question is, is why were they stopped? I’ve always thought that the push of, you know, the spread of cities into forests. I mean, I’ve seen it in Australia, you know, as housing popped up in amongst the forests. Of course, you want to stop fires there. And that also exacerbated the problem because, you know, you have this push and pull between people who want to live in those places and the natural the natural forest. It’s a mess.

Scott: [00:24:58] Yeah, right it is. Yeah. That’s a huge, huge driver to it that that growth is called the WUI. It’s the WUI and that’s the wilderness urban interface. And that that growth, particularly since the 90s, has just been exponential as we’ve continued to sprawl ever farther outward in California. We’ve pushed our towns and cities, the perimeter, more and more into that WUI. And so that’s been a big, big driver as well as the, you know, the agricultural, livestock and forestry industries in the 20th century. They didn’t want fires. And you combine that with just a…

Eve: [00:25:44] Yeah

Scott: [00:25:44] Very. What’s the term? I mean, what’s the word? How do you describe it?

Eve: [00:25:48] It’s a manmade problem.

Scott: [00:25:51] Yeah, yeah. And just a desire to control nature, you know, is man’s desire , the man emphasis there to control nature and dictate, basically saying fires are evil and treating them as a as an enemy that needed to be defeated.

Eve: [00:26:07] When I was young in Sydney, Australia. I mean, I remember bush fires. Like Sydney’s a huge….

Scott: [00:26:12] Bush fires. Yeah.

Eve: [00:26:12] I remember in the middle of the city, seeing just red and grey sky all around me. But there wasn’t the pain and misery of today because not, there was not nearly as much suburban housing – it pushed into the wilderness.

Scott: [00:26:31] Yeah. Yep. Yep. And that’s the same here. That’s just an overarching problem that needs to be solved. And there’s really no easy solution to it. The state now has about 33 million acres of forest, which is bigger than Oregon, and 13 million of them are considered very high risk. These are drought affected, beetle infected, because of lots of dead trees, and they have just this extreme level of overgrowth and that overgrowth are small and medium diameter trees. Those are the trees that normally would have been cleaned out by natural wildfires. And because there was no natural wildfires, they just exploded. And what they do, the small and medium diameter trees, they’re much more susceptible to fire, but they’re also tall enough to carry the fire into the canopies of the healthy, strong trees. And that’s where we get these infernos that then get the wind picks up in the canopy and carries it from tree to tree. And it just creates these, this tinder box. So, we have to get those small and medium diameter trees out of the forest. And right now, they have no value. They’re used for livestock, mulch, woodchips in your yard. And that’s not a valuable enough product to justify the cost of thinning, mechanical thinning. And mechanical thinning is a laborious, hard job. You have to, you know, carry chainsaws and particularly if we want to take a much more ecological approach to forestry thinning and not clear cut and carve up all of these fire roads that cause horrible erosion. The state’s trying to avoid the forestry problems of the past. So, it’s all done, a lot of that has to be done by hand, much more mechanical.

Eve: [00:28:20] 32 million acres, manually cleared.

Scott: [00:28:24] It’s staggering.

Eve: [00:28:25] It’s really staggering. How long does it take?

Scott: [00:28:28] Yeah, the goal of the California Forest Management Task Force, which is kind of the broad extra agency group that’s trying to address this challenge, their goal is a million acres per year by 2025. And right now – in 2019, we had 114 thousand acres – so we’re off by a factor of ten.

Eve: [00:28:47] Wow. That’s like one hundred years we’re looking at and more.

Scott: [00:28:52] That’s right. And what’s going to be left in California in 100 years of we’re burning four million acres a year. And it’s not just, this is not an abstract any more. Our water, for all of those cities comes from these forests and with these forest fires that you can grossly impact our water supply. The carbon impact of this. Right, 2020, there was 112 million metric tons of carbon were released by the 2020 wildfires. Which is 30 percent more than all the power plants that generated power that year. So, the health and that’s how you get into the asthma and respiratory issues of all that wildfire smoke. I mean, the implications of our society are bleak. And so, we have to figure out ways to get those small and medium diameter trees out of the forests. And that’s why we really kind of looked at, you know, not only these cassette systems, but getting away from dimensional lumber and really kind of focusing on veneer-based products. So, there’s another sub product of mass timber known as laminated veneer lumber or mass plywood panels, mass plywood. MPP is a brand from an Oregon company called Freres Brothers. And what they do is instead of cutting the log into 2x4s and having a bunch of scraps left over, is they put the log on a peeler and they peel the log and turn it into a big, long sheet. And then they glue those sheets together versus gluing 2x4s together. And that’s something that you can do, that’s, a that’s a vehicle for these small and medium diameter trees, whereas 2×4 dimensional lumber is not really feasible. And so they can peel logs, you know, down to six to eight inches and turn them into veneers. And so that’s what we’re really focused on, is these veneer-based structural products. Both floor plates, floor and ceiling plates and wall plates as well. That’s where we see our role in the forestry and the wildfire piece is creating market side demand for these small and medium diameter trees and putting them into really advanced, these really advanced cassette-based plate systems.

Eve: [00:31:14] Interesting. So I’m going to back up one more time. I sense a two-parter is coming on here. This is fascinating because…

Scott: [00:31:24] Yeah.

Eve: [00:31:24] I heard somewhere in amongst all the impact finance center information that there is a company out focusing on small diameter timber products. I can’t remember the name of the company, in California.

Scott: [00:31:38] So, we pitched at that event. So you might have, is that our pitch that you’re referring to?

Eve: [00:31:44] No, I think there’s another company I talked to so, we can come back to that.

Scott: [00:31:50] Yeah, yeah.

Eve: [00:31:51] But I’ve heard of people focusing on specifically that product and now it’s all falling into place for me. Personally, I didn’t know all of this. It’s really fascinating. But the importance of using that small diameter timber is becoming pretty clear.

Scott: [00:32:07] Uh huh. The great thing is that it could actually go into a very valuable product for the construction industry, the building industry. Incredibly green product, right? Very, very high embedded carbon in the veneer-based products, much lower travel times if we’re sourcing our wood from our local forest and putting it into buildings in Los Angeles and Sacramento and San Jose. Think of all the truckloads from British Columbia and northern British Columbia that we’re saving, right. And all that diesel fuel that gets burned. So, this really big upstream and downstream and benefits to sourcing this wood from California.

Eve: [00:32:51] Sounds like a whole new industry can emerge.

Scott: [00:32:54] That’s the goal, right. And that’s what the state is trying to incentivize is a re-ignition. I hate to use fire related terminology when talking about this stuff, but like, we kind of rekindling, that’s another one, restarting a forestry industry in California, which is really kind of on its last breath. Like, in the last 45 years, 70 percent of wood processing facilities in California closed. So, there’s really no eco system to actually process this. There’s no LBL manufacturers in California. There’s no plywood manufacturers in California. There’s very few mills left in California. There’s very few loggers left in California. And so we’re kind of having to start from scratch. And what the state is working on is incentivizing and creating these wood products, wood innovation campuses, across the state to bring this industry back. And to bring it back with a much greater kind of technological focus and an environmental and ecological focus. And so that things are done right. And so we’re at very early days of that. You know, we are not going to try to get into the manufacturing side of the LBL panels. It’s a very capital heavy side and there’s a reason why most of the companies that get into that, you know, they have three or four family generations that have been in the logging industry or they’ve been around for 150 years. You know, there are companies that just know how to do that and to manage those supply chains and to manage that production. And so we’re focused on it being a remanufacture of those products. And so, if we can help, you know, kind of show that there’s demand for this for this LBL and MPP type panels in California, hopefully we can then lure a manufacturer to the state, with our some of our demand, and get them active in the state and thinning our forests.

Eve: [00:34:58] So, Scott, you’ve bitten off a huge project, like where are you? You said you’re in the third year.

Scott: [00:35:04] Yes.

Eve: [00:35:06] I mean, where are you in the process of building a company?

Scott: [00:35:09] Yeah, yep. So, it is a very meaty challenge and myself and everybody that’s on our team is up for that challenge. That’s why we’re all here. We all understand the enormity of it and the, and the urgency of it. And that’s what motivates us every day. And the fact is, there’s not a lot of other companies doing this is yes, it’s an opportunity, but it’s also drives us to lead and to show that it can be done. And so, you know, we have to take advantage of the resources that we have. This is all bootstrapped at this point and self-funded, as you said, this is a big, meaty challenge. So, it’s really hard for investors to kind of wrap their head around it or see an exit to liquidity event in the near term. So fundraising has been a challenge, but that’s really not a deterrent to us in the slightest bit. And so, we have to focus on what we can sell for.

Eve: [00:36:08] Well, you have to eat. It’s going to be a little bit of a deterrent, right?

Scott: [00:36:13] Well, you know, the spouses of entrepreneurs do a lot of the heavy lifting. Right? And so, I have a really, my wife is an incredible partner and she’s also an entrepreneur, though a much more successful one. And she’s able to carry us through this kind of start-up period. But what’s great is that our story and our kind of mission is bringing a lot of really amazing people to the table. We are working with a company, for example, called Hacker Architects up in Portland, and they are an incredibly experienced, one of the most experienced architecture firms in North America working with mass timber. And they are becoming friends. Right. Like they they’ve really been a key supporter of our mission. And it really kind of backed us up and provided a lot of design assist and are really helping the design of our building system, because we have to think of this as a holistic building where we can put these different wood materials throughout the building. And so that’s just one example. We’ve got a whole network, whole ecosystem of companies that all share our same values and recognize the enormity of the problems that we’re solving. And so, we’ve built this great network of aligned allies that are helping us drive this forward. So, like I said, we’re a small kind of bootstrap team, but we’ve got some really great friends. And, you know, we are in the R&D phase and getting closer to a first prototypes. We originally had our first building construction project penciled as supposed to break ground this year, as a single-family home in the Tahoe region. Unfortunately, that project kind of fell through, just wasn’t the right application. And so, we decided to kind of shift focus. But ideally, we’d like to get a project off the ground here sometime this year with our investor pool that we do have and get a proof of concept project on paper this year and breaking ground next year. So that’s really what we’re what we’re driving for at this point.

Eve: [00:38:22] What is good proof of concept look like at this point?

Scott: [00:38:25] Yes. So, we’re looking at a small multi-family project and that’s the market that we’re going after is a unique market in the industry. Most of the construction industry and the prefab industry is really kind of set up to focus on how we build in the United States today, which is sprawl or tall. Right? Like it’s single-family homes on the peripheral cities, or it’s a big giant two hundred unit podium structures or towers in the urban core. And Fabric, we see the opportunity, especially considering the sheer scale of the housing need and how fast that housing needs to be produced and brought to market. We really see the opportunity in that missing middle upper missing middle range, small to medium lot, three to eight story buildings. So that’s really our key focus and really kind of unique, a bit more unique in the marketplace. And so we want to, we want to get a proof of concept project of at least four units. It doesn’t have to be huge. It just needs to show how the systems kind of work together and kind of bring that to life in an infill type application.

Eve: [00:39:42] I’m excited to see it.

Scott: [00:39:44] Yeah.

Eve: [00:39:44] Are you going to act as your own developer or are you looking for a developer who will use your system?

Scott: [00:39:51] Yeah, it’s kind of like yes and…

Eve: [00:39:55] Yes, I know.

Scott: [00:39:56] If we yes, either, you know, we are talking to more and more developers. We are finding that network of of young kind of independent developers, baby developers, I’ve heard that kind of term kind of thrown around, you know, the folks that are producing like the 20-unit buildings and the odd 16-plex. Right. Like those small buildings. And we’re building that network. And hopefully we can bring a developer partner to the table sooner rather than later. But we’re also kind of setting ourselves up for self-developing our first project. And that’s what we were going to do on that single family home. We were going to develop that through our, through one of our investors, but we kind of shifted and would like to ideally bring on a development partner that knows that process better than we do. You know, we’re not developers.

Eve: [00:40:47] And so you might stretch yourself very thin during trying to do both.

Scott: [00:40:52] Yes, exactly. And we have to kind of kind of focus on what our value add is. And the development side is not it today, who knows down the road where this goes. But as of now, ideally, we have a partner that can, that can really kind of drive this through that to the development process.

Eve: [00:41:11] So you’ve talked about these materials looking very sleek. What does that first project going to look like?

Scott: [00:41:18] Yeah, I wish I could show you some of the renderings, the absolutely beautiful renderings that Hacker put together for us. One of the advantages of focusing on this smaller type three, type five building typology is that the fire code and the fire ratings aren’t as strict with the CLT. So we can leave a lot more of that with the mass timber, we can leave a lot more of that exposed. So, you’ll see a lot of exposed natural wood elements. So wooden ceilings, heavy timber beams, well it will have the aesthetic about heavy timber beams, but it’s actually LDM. A lot of the columns in the beams will be exposed and even wall panels can be of exposed wood to them. So, a very natural and a minimal, what’s the term a soft minimal kind of aesthetics to them and and very high precision tolerances on that minimalism, right, like that’s kind of what separates good minimalism from bad minimalism is the execution and the precision of it. And because everything is cut in a factory, the aesthetic is just really tight and really clean. And so we’re really looking forward to bringing that to life.

Eve: [00:42:37] Do you have the renderings on the website you’d like to share?

Scott: [00:42:40] Yeah, on our website we have a few renderings on there. So you can kind of get a sense out of the real aesthetic and that that would be our proof of concept project. Each developer will have that choice that they want to drywall over those exposed wood elements they can. But our preference would be to leave them exposed. And there’s a lot of really interesting data back to that benefits of mass timber. There’s a lot of really interesting data around the biophilia benefits of mass timber, where people get that sense of serenity and calm. Like being in a forest.

Eve: [00:43:16] Yes.

Scott: [00:43:17] In a mass timber house, they are really cool buildings. I don’t know if you’ve had a chance to spend time in one. But they do have a a dampness to them, not not wet, damp, but just materially damp. And so sound travels differently. And you do get the sense that you’re in the forest. It’s really, it’s a really cool experience.

Eve: [00:43:37] So I’m going to go back.  You’re in Truckee. Right. And I’m wondering…

Scott: [00:43:41] That’s correct. Yes.

Eve: [00:43:42] Why are you in Truckee?

Scott: [00:43:44] I asked myself that question sometimes, too. I love Truckee, but I’m definitely a city kid. So, Truckee is more or less a one road town. And so, I do feel a little stir crazy here sometimes, but it is a great place. And I have two young kids, four and six years old, and just this is a big playground for them. So, we ended up in Truckee a long time, a decade and a half in San Francisco, three years down in Los Angeles, and then had to get out of L.A. and Truckee was supposed to be a one year stopover on the way back to the bay. But, shocker, the cost of housing was so high in the bay that we couldn’t afford anything there so we could afford something in Truckee, Truckee at the time. So we were able to…

Eve: [00:44:34] You’re living the Californian dream.

Scott: [00:44:36] Yeah. More or less trying to.

Eve: [00:44:40] Okay. So tell me, I’m going to move to shift gears a little bit and just ask you, are there any other current trends out there or innovations in real estate development or construction that you believe are really important for our future?

Scott: [00:44:54] Yeah, and so a couple, yeah, so one thing that we are bringing in house we have, this is a capability that we are, as we speak, kind of building out a facility is the fabrication side of construction and particularly automated and robotic fabrication. That is the piece that’s going to have prefab construction kind of realize the benefits that it kind of promised the world when it came out a few decades ago. You know, from pricing to quality control, robotic fabrication is going to be a huge piece of this. And we are actively building that capacity out in California, will be a leader in that space here in the state. And particularly as more and more construction will go towards wood-based construction to offset the carbon and environmental impacts of concrete and steel. You know, we firmly believe that wood construction is the future of construction. And so, to make that a reality, you have to have a much more advanced fabrication capabilities like you see across Switzerland and Austria and Germany and Sweden, for example.

Eve: [00:46:10] Right. Right.

Scott: [00:46:11] And so that’s going to be a big piece. Right. And then, you know, I do believe fundamentally that we are seeing the cracks in the dam when it comes to planning and zoning in particular. I think that the sea change and our laws and regulations on what gets built and where is going to happen very quickly, much faster than I think a lot of people give it credit for. You know, we are slowly starting to see the end of single family only zoning. When I first really started thinking about creating the housing company in 2014, most of them really talk about like, oh, yeah, houses are expensive in nice parts of the city. But that was kind of the attitude. And now fast forward seven years and it’s a topic in our presidential campaigns. It’s just becoming a fundamental issue in this country. And I think that the 20th century experiment of highly segregated neighborhoods, housing over here, business over there, commerce over here. Single family based, car based, an entirely car-based society, car exclusive society. I really fundamentally believe that that is coming to an end in California and that those changes are going to happen. It’s going to build and then is going to happen really rapidly.

Eve: [00:47:36] Wow. I have one final question for you, and that is, what is your big, hairy, audacious goal?

Scott: [00:47:43] Yeah, I and I would say, you know, not as ambitious to say we want to build a new city out of wood, but definitely, you know, a neighborhood out of wood. That’s kind of our big goal is to build a five 600-unit community, all sustainably sourced, locally sourced, sustainably sourced timber neighborhood. And we’re seeing those neighborhoods pop up in Europe and Japan and they are incredibly inspiring. They are walkable, human scaled, car free, no carbon passive house technology. And I would love to just get my hands on a decrepit shopping mall in central Sacramento and convert that into the neighborhood. A vibrant, diverse, mixed income neighborhood in in Sacramento, for example. And that’s our big, big goal that we’re driving towards.

Eve: [00:48:41] Oh, I’m really excited for you. It sounds amazing. And I hope sometime in the future we’ll get to host one of your projects on Small Change.

Scott: [00:48:51] Would absolutely love that. Yes.

Eve: [00:48:53] Thank you so much, Scott.

Scott: [00:48:55] Yes, thank you, Eve. Really appreciate the time. And I’m honored to be on your podcast and be part of this group. So thank you.

Eve: [00:49:11] That was Scott Ehlert of Fabric Workshop. Scott pivoted his life and career in a way that most people do not dare. He is making all bets on an industry that doesn’t quite exist yet and technology that he needs to design. While other housing developers try to crack the construction affordability code using the same old building systems, Scott has spent years planning how to become a housing developer using a brand new building system, one that he has designed and one that he will manufacture. We’ll be hearing more about Scott. I’m sure.Eve: [00:49:58] You can find out more about this episode on the show notes page at EvePicker.com, or you can find other episodes you might have missed, or you can show your support at Patreon.com/rethinkrealestate, where you can learn about special opportunities for my friends and followers. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.