A New Model for Better Homes A New Model for Better Homes
Business

A New Model for Better Homes

by Cliff Kuang

April 17, 2009

How one architecture start-up with a novel business plan is giving away plans for LEED-certified homes for free-and heading towards profitability.

Architects often say that architecture influences everyone-which makes being an architect sound like an excellent soapbox, if your goal is bringing about change. Pity that the idea's a fairytale. For example: houses. A mere 5 percent of all homes have an architect involved in their building. When they met several years ago as students, David Wax and Ben Uyeda were both intrigued at the prospect of bringing green design to the masses. So they aimed at a sleepy, but large market: Stock house plans, which are behind 30 percent of all the houses built.Where most stock plans cost upwards of $2,000, Free Green, the company that Wax and Uyeda created, offers plans at one low, low price: $0. Each set of plans comes with a checklist of features which qualify the house for LEED certification. Already, the site's 8,500 users have downloaded 22,000 plans, making Free Green perhaps the most widely distributed designer of housing plans. There are currently 25 to 50 housing starts underway, and many more influenced. By comparison, even the most popular prefab green homes might sell only a couple dozen copies. Thanks to an unusual ad model, Free Green will be profitable as early as 2010. (More on that below.)Uyeda and Wax think of design in an unusual way, and the rationale behind Free Green reflects that. "Housing design has a 50 percent black market," says Wax, who was an MBA student at Cornell when he met Uyeda, then a graduate student in architecture. He points out that in 2006, 200,ooo housing plans were sold, but 400,000 were actually used-meaning that the plans get passed between developers, families, and all points in between. If that's the case, giving away plans is just acknowledging the way the market already works. "Design isn't a service or a product," adds Uyeda. "It's a medium." Which is to say, it's like television or newspapers, which reach peak influence when they become ubiquitous. Architecture usually works the opposite way: The best design goes to high-end clients that pay richly for the privilege; The prizes go to one-off projects.
Instead, users can remix Free Green's plans however they see fit. On the site, green features such as better insulation are offered with all the blanks filled in, from what to buy to where to install it. In turn, those features are presented in novel, consumer-friendly terms, showing, for example, that specific improvements that might add $50 a month to a mortgage will return $100 a month in reduced utility bills. The point, for Uyeda and Wax, is to distribute green design wherever there's demand-slashing the $20,000 it typically costs to source and design a carbon-light home, while breaking down the long-term economics into common-sense morsels.Which brings us to their unusual ad model: Rather than posting banner ads on their site, they make paid product endorsements, both on the site, in a list of recommended products, and on the plans themselves. "The banner ad model has failed," Wax explains. "And no one has ever looked at the house plan as a form of media."In retrospect, that's mystifying. Most ads try to reach people by brute force: Since you can never know who is planning on buying something, you better reach as many people as possible. But housing plans are perhaps the last thing a contractor or homebuyer sees before buying the raw materials for a house. An endorsement there-from what spray foam to use, or what countertops to buy-has a good chance of affecting a purchase. And the typical custom home costs $200,000 to $300,000 to build.That point might raise alarms: Might Free Green, even unwittingly, become an avenue for greenwashing, by promoting dodgy products that aren't green at all? The site has a series of checks in place, to prevent that from happening: The products all have to meet third-party building standards, such as LEED, and they're vetted by Free Green as well-they've already turned down advertisers whose products don't pass muster. Any products that affect the energy performance of a house are included in the savings models that users see online. "Our sponsors will meet the projections that the customer sees on our site," says Wax.Product placement isn't new, but we're bound to see it evolve, as advertisers struggle to reach buyers. Once the model gets reinvented, it'll support all kinds of previously impossible things-such as affordable green housing.
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A New Model for Better Homes