Pioneering Industrialized Construction and Energy Efficiency with Nolan Browne

Maybe we just start  with a little bit of background, right? Like you talk to us about ADL Ventures, talk to us about your work in industrialized construction. And how you've gotten to where you are, and then we can expand on it. Okay, well, I'm going to start by talking a little bit about what ADL Ventures is.

We're a  venture development firm. What that means is that  we are the folks who start startups that venture capitalists would invest in. And we're actually a firm that's really set up to go from zero to one, meaning from the beginning of an idea to the first prototype of the idea. Okay. That's our sweet spot in the market.

And we do that rapidly. We make our money off of doing that. Going from zero to one is something we're particularly good at. And so when we call it ADL Ventures, the money that we're investing is usually the paying the people who are going on our team to take a company from zero to one.

We've been around for seven years. We've started seven companies and our special, let's call it our secret sauce really is, I know it sounds pretty obvious, but a lot of people don't do this. We go to major corporations and we ask them what kind of service or what kind of product or what kind of startup they'd like to buy or acquire, right?

And once they tell us what that is, that's what we go and try to build. We don't build things where there isn't an obvious market for it. And so that's basically our ethos. And we're doing that in all the areas where  decarbonization or energy efficiency is relevant. So in the construction space.  In the transportation space and in the energy space, these are all industries where energy efficiency and just efficiency in general is really low compared to what it could be.

And there's a lot of money to be had if you modernize those industries and make them better.  And our pathway to do that to modernize the industry is to take startups and merge them into corporates and modernize the corporate in that way, help them bring new technologies and products to market. Like I said, we've done that 7 times in the last 7 years.

So, what you saw from me online is one of our areas, it's construction. And in construction our focus is in industrialized construction. The reason we care a lot about that is there's going to be, depending on who you talk to, anywhere from a hundred billion to 200 billion dollars moving out of onsite construction, the conventional construction world and moving into industrialized construction.

So, offsite and delivered construction. That's a huge shift of revenue. And when you look at the way the world is going to be different in an industrialized construction world, you're talking about building products being different. So the building products market, people are going to demand.

Different types of materials, for example, to use in a factory setting than they were using in a field setting. Today that doesn't really happen as much because the market isn't that big yet. So the factories cannot demand that the materials suppliers, product suppliers change what they're doing.

But as that market gets bigger, they'll command a lot more of that. So, we're going to see shifts for building product manufacturers. We're going to see shifts for the system manufacturers. We're going to see opportunities to bypass traditional distribution channels  because you're going to be producing a, let's say you're doing volumetric, for example, you're producing boxes with soap on the soap dish.

And that means they ship with appliances in them, they ship with the lights in them, they ship with everything in them already. And so that basically completely has opportunities to shift how distribution now works. Right. Traditionally, when we talk about high efficiency DC electric homes, nobody does that because it's hard to, it's pain to do it.

You have to get all the right people and all the right appliances and all the right wiring and nobody bothers because it's not the standard. However, again, if it's a factory built, you're able to completely change the paradigm quickly. And then the changes are not just limited to those two  general contractors have skill sets that are essential for the industrialized construction world, specifically somebody needs to do site prep.

And somebody needs to assemble the pieces that show up to site, and somebody's got to manage zoning and the city, and that's still going to be the domain of the guys on the ground. But a lot of the things that they used to do, they don't have to do that anymore. So, what that means, ultimately, is that  the industrialized construction revolution is going to shift the need for different types of goods and services.

A lot among the incumbents who are currently serving the conventional market. And the huge, opportunity here is to be one, if you're in business today and you're earning money, you've got special, let's call them special skills, unfair advantages of your competitors, let's say. So it's really important that those companies are looking at their unfair advantages, understand what the future industrialized construction landscape Is going to look like and is able to say, hey, how do I take what I'm good at and turn it into a profitable like business line in this new emerging industrialized construction realm?

Yeah, that's good. Several questions. Maybe we start here. Could you just to put some details around this? Could you take us through maybe 1 of the 7 ventures that you did and talk to us about what the product was of what the trend was that you were capitalizing on, right? Maybe we'd use something in construction or the electrical space just to fill that out a little bit.

Sure. Like I said, we've done seven startups since we started the most mature one because it's the most mature, the most successful one is a building products startup. I alluded to the fact that in the industrialized construction world, you're going to have to rethink the product that you're delivering to the factory because it's not, you're not delivering it to a field.

In this particular case, we were working with corporate who built panels and wall facade systems and panels and volumetric and all that stuff. The challenge that they were facing, was that in, you guys may remember there was a big fire in London and a lot of people died, sadly, and the EU had started talking about outlawing extruded polystyrene as a insulation material that could be used.

So EPS and XPS as well. And for a number of organizations, that would be catastrophic. Because they're using that installation material and that, well, at least that installation material is their product is built around that material. And so that would be a big hit for their sales. The way that we move forward with this, the way we were able to help them was we determined that we needed a drop in replacement for EPS.

We're able to work with the corporation. Right. And they can tell you exactly what a tolerable drop in replacement, what the specifications would look like. And they can provide a lot of market intelligence to you. They can give you a whole bunch of numbers, like what the costs look like, what the costs have to be, distribution, handling characteristics they know at all, because that's what they do for a living.

So as a startup, we looked at them and said, Oh, well, we have all this market Intel from you guys. And we have all this, we know what you're trying to build. And we know we have to do this drop and replacement for the extruded polystyrene. So we have a pretty tightly circumscribed playing field, to come up with a solution.

And then we are able to, and ADL is very good at this. We're able to use an open innovation platform and effectively crowdsource a startup or the branch  of a corporate. So somebody with an idea for how to fix this, how to solve this, make this installation material. We selected three winners for our competition that we put out for three different products.

They weren't all drop and replace installation, fireproof installation, but we awarded a non defunct.  Award winners. So  that means we're not taking any equity from them. We're not doing anything. We're just working with them. We give them a little bit of money to work with us. And then we basically set up milestones, knowing that if you can hit those milestones, then we can start putting this into pilot production and we can start manufacturing it.

And so that was the first company that we set up. The company, it has been quite successful. It's called Liatris. They have agreements to be producing at scale two years from now. 

Nice. That's cool. And would you say, that approach is really interesting to me from a startup perspective, what would you say for folks that have been in business for a while, right? Or rep firms that are selling or they're repping other manufacturers products and things, how can they maybe apply some of these same strategies with their, in their world?

What do you think?

 Yeah, so if you're a rep you actually have a really big opportunity, right? Because a rep basically, their special skill is they can assemble a portfolio of things, Right.

And going back to industrialized construction for a moment, the portfolio of things, the things that I want as a factory owner, an industrialized construction building,  is pretty specific. I would say a rep could actually has the luxury of going out and figuring out what to put in their portfolio. What are the things that fit best?

So they have an opportunity to go out and look at what the future should look like and then create portfolios of those things and go out and sell them. A lot of people do not know, what kind of materials they should use for their factory. It's a huge open problem right now. I work with at least five or six fabricators.

I see fabricators who do volumetric and who have already told me that the materials they have are not great for what they want to do. They want better materials. Build better building products, but they don't know where to get them because they have a source they're just limping along with and so people like that are people that you can change you that those are customers you can win. So I would say that's one way that your reps could actually change the game and take advantage of the fact that the game is changing. So the business as a whole is just changing and when you're painting that picture of okay, this is the way it used to be done.

Here's the way that the whole industry is heading. I think as a rep, you've got to be able to see that. Okay, well, if I'm here, but I got to get over here to where it's truly going to change my business, partnering with the right people that are going to fill those voids or, change, or going to fill those requirements in a different manner.

And, understanding current state and in future state, I think that's a huge thing in any kind of business. But from a rep perspective, it's... you can't just continue to rest on your laurels. You can't look at it as, okay, this is the way we do business today, and this is going to be like this forever.

Everything's changing. So having insights like you guys are seeing on the front end and being able to get ahead of it is truly, truly important to survival. Oh, yeah. And there's one thing the reps have access to that I think, the manufacturers wished I had access to, which is the customer. Now understanding the customer and the customer feedback is real important.

I've worked for big building products manufacturers before, and I always feel like we're not close enough to the customer sometimes because distributors and reps are the ones who are who have that connection. So that's an item of real value that the reps can bring is like understanding if your customer is an industrialized construction firm. Understanding what their problem is on the line would be a big deal. 

And like I know a guy in particular, who's a top of his field in the year. And he's doing, oh, he's gotta be doing 30 percent of the industrialized construction work for hospitals out there. So he's making some money at it and they're just so busy and they're just so stressed that they don't have time to go hire two or three or four people to go out and find better materials than they currently have.

So that's a huge opportunity. It's a huge opportunity to win pretty big accounts by just showing up with the right stuff. And so that's where reps could actually make a big difference for themselves. Talk a little bit about the renewable space, how you guys have participated in that and just maybe get some insights on where you see us going as an industry from a renewable standpoint.

And I don't know if you want to touch on any EV or, anything like that, but just love to get your your insights on where you think we're going. Well, renewables is going to happen whether one likes it or not. It's just going to happen because the world's governments have decided we're going to do this. 

I don't see them backing away from it. If you're a rational business person at this point, you start calculating, okay, well, if this is coming, what does it mean? How do I make money at it? More importantly, how do I avoid losing money at it and lose my current business? But the future of renewables, I believe is, and so my interest in the construction space is heavily guided by my interest in building energy efficiency and its connection to renewables.

So, when we talk about renewables, we often are talking about, or at least people think about solar panels and wind propellers and stuff like that generation. A lot of people think about generation when we talk about that. And I think that's not necessarily wrong. Renewable energy has traditionally represented that there's a whole aspect to, you're not exactly, EVs aren't exactly generating new power.

There are a means of getting from A to B and there you plug them in. They're basically rolling batteries. So a little bit different. I would say, if we just summarize what's going to happen in the renewable space, I'd say that you're going to see the greater penetration of solar. Solar is going to be, I think, going to be built into all the buildings.

I think we're moving to an industrialized construction society where everything is going to be kits of parts and it's pre engineered together. Just like it wasn't in Japan about 20 years ago. People will buy their houses with solar on them. The wind is going to keep going. There's absolutely no reason why we're not going to put more in their grid interconnects.

That's basically connecting renewables to the grid. That's really the only thing that's slowing down the whole process. Now, if interconnects were to go faster, we would grow faster in the space. So that means that renewables generation install, it's going to ramp. It will continue to ramp. As it's been doing over the last 10 years with the EV thing, I think the EV thing's here to stay just like when we first started using the Internet, it takes off and then it falls down for a while and people are down on it.

And then it doesn't go away again. That same thing is probably going to happen with EV's  too. Right? So we had Tesla, then everyone got excited. Then Kurtz started renting off, buying all these rentals for its fleet. And we all got ahead of ourselves a little bit and we're like, well, if I'm on a business trip, do I really want an EV when I don't have one at home?

And I don't know where to charge it. Probably not. And that's why they haven't been doing so well with that. So yeah, there's a,  they're going to move off that kind of euphoric bump and they're going to move towards like, but a more steady state for EV batteries, EV transportation. The other thing about EV, which you may or may already know is that an EV car is a basically a huge battery and you can run your house on that battery and when you come home from work, your car is usually at your house.

So there's a lot of thought about how do you build, this is why we put a construction group with the transportation group with the energy group, they're all intertwined with each other. So you can imagine you have a house, you have a solar on the house, you have an EV car that you  put in the garage and you use that as the battery when you're using your house at night.

And then during the day, you could charge it up again. Now there are obvious issues. There's problems sometimes depending on like if you work during the day, you'd need to be able to plug in your EV at work, but in general, a lot of these things are interconnected. Yeah. And I agree with you a hundred percent.

I think that all the governments have said, hey, renewables are going to be a part of the playbook going forward. The subsidies show it. It's here, but we just got to figure out how do we capitalize on that from a rep perspective? How are you able to, maybe get into some markets that you typically maybe didn't play in. In our world is, we deal with utilities and, we've seen over probably the past 7, 8 years, a huge influx of developers, EPCs, a whole different group of customers that we've never dealt with in the past. So trying to figure out how you get the right package of products and how you penetrate these new customers, a lot of it, like we talked about was just understanding. 

Is the pool, is it this big or is it this big? Understanding who all's out there, because there's so many new players. But just, now you answered the question perfectly, and it is all intertwined. And that was one of the main points was you've got EV's an issue. It's stressing the grid.

You've got renewables coming, the interconnections. Lead times on products. It's slowing that down where you can have these interconnect. It's all tied together. And it's just an interesting dynamic because the business that we've known for 40 some years is changing and it's been changing and it's going to continue to change.

So, understanding current state, future state is so important and having people like, you guys at ADL that you guys are seeing it. You're seeing it from a different perspective. And, I think our viewers, I know I'm getting a lot out of it from the standpoint of, hey, you're seeing it, where the money plays in and that's where we're going.

Where the money plays in and that's going to take us where the business as a whole is going to move. I also think we're going to wind up, construction is going to get a lot weirder than it currently is,  right? Like you're going to start seeing growth hacking, effectively start happening in the construction space, in my opinion.

So, for example, I was doing the math on this. This is a venture, actually, that we had been thinking about starting. We do have an EIR who was working on it at one point. But we were trying to understand for ourselves why mini splits were not more widely installed in the United States. They're more energy efficient, they're cheaper, they're, all in all, you can control the temperature in each room.

Like, why on earth would that not be an obvious thing to do? And it's not obvious it's economically not feasible because nobody who knows how to install those things wants to do it because about HVAC those guys are all about the pipes, all about duct work and venting. That's  where they make the money on the business.

So do you really want to have ductless vents when the monies are in the ducts? So yeah, you can't, I'm in Cambridge, Mass. I can't get a person, to come over and install a mini split in my apartment for a reasonable price, right? For them, for the local guy who's, they see this as cannibalizing their own market.

So why would they do that? So if I ask him for a mini split, it's going to be the same price as it is for the standard HVAC system, even though it's a heck of a lot less work. Making way better margins on that mini split, right? So we actually took a look at it and we realized you could go and buy I mean you can go online now and look at Alibaba and they'll sell you mini splits for I mean nothing five hundred dollars a head or even less, but you got to buy like a hundred of them, nobody's ever going to buy a hundred for their house.

So you have to actually do it as a business. Now what happens if I start buying stuff off of Alibaba? I have it delivered to my place in Cambridge. There's lots of condos out here and a lot of people would love to have mini splits. You I don't want to personally install people's mini splits. There's a lot of people out here that would like to have, let's say there's a lot of like people who are unskilled labor out here who would like to be able to make 40 bucks, 50 bucks an hour, right?

Reliably. Well, I got plenty of work in those mini splits. I could immediately get. 100, 200, 300, 500 contracts to install some mini splits. And if it's the same mini split, if I have 500 of the same one, I can probably teach these people, couple people on how to install them, people who normally you'd have, they'd make minimum wage, but I could get them up to 50 bucks an hour.

Cause the margins on this stuff would be good enough. So I guess this is a long way of saying the construction, the, maintenance, all of these things are going to start changing because the world is becoming more and more fragmented.  And it's not necessarily a bad thing in this case. Like we could actually go out and set up a regional,

minisplit market in Cambridge, Massachusetts. Grow it throughout Boston. You'd probably retire once you grew it throughout Boston because you'd be pretty rich by then. But you could grow it throughout the nation. And therein lies the beginning of, like, how you change the game on, like, mini split installation.

It's not the long term game, by the way. If I was talking, like I was saying before, you're going to have like a whole new distribution model through the factories, right? All the new builds anyway, will be like, I sell 500 mini splits or actually Alibaba will sell 500 mini splits to the factory and the factory will basically just be clunking them in as they go.

They always put the same piece in, but yeah, that's where I see like this space going, but people are going to have a lot more latitude. Monopolism is in my opinion, is going to go away. So the one thing that's really kept the construction space where it is, and the one thing that's just going to evaporate is the special privileges and the monopolistic practices.

That regions used to be able to do. I'm not saying that's a good or a bad thing. I'm just saying that, the unions are, weaker than ever before. So that's, going away. Also on top of that, like people aren't going to have the money they used to have to do construction. And we don't, we used to be a very,

wealthy and wasteful country, and we're going to be a less wealthy and more, what do you call it? Lean country on how we get things done.  So I see all that stuff coming right at us. And there's tremendous business opportunities. If you can get, just  get your head around them. That's interesting.

How, long do you think till you start to see some pretty, pretty big shifts in what you're talking about?  Is that like a five year, 10 year thing already happening? It's already happening, but it hasn't happened huge yet. There's going to be one or two huge projects that happen in the next, let's say, three years, that will actually just flip the entire market, right?

People will be able to look at industrialized construction. They'll be able to see a 1 billion dollar deployment over multiple buildings over a period of time, and they'll be able to say, oh, that worked. And they're able to say, okay, now I understand what this thing is and I'll make some investments in it.

What we have consistently seen. And this is actually one of the most important things I should have clarified right at the beginning. There's a reason that I call this industrialized construction. And I don't call it offsite and I don't call it prefab because prefab is basically a time prefabricated beforehand and offsite is built, not onsite.

One is a location. Right? And one is a linear time.  And neither of those are a technology.  There is no commonality between off site players. All it means is that we fabricate, we create something off site and bring it on site. It doesn't talk about how do you create it. And industrialized is the, that's the winning thing that makes it interesting.

That's how you get economies of scale, and that's how you actually get to be efficient and better, is that you're following a disciplined manufacturing process. If you build off site just with some guys in a warehouse under a roof, well, not a lot to that. You're doing labor arbitrage. That's fine. It's not bad,  but you're not going to get anything else out of that in terms of efficiencies.

And so that's why industrialized construction becomes so important. So yeah, what's held industrialized construction back up until now is that there is no clarity in the market, right? When I go out and pitch a industrialized construction project, people say, Oh, what's that? And then I say, well, it's like offsite.

They're like, oh yeah, well, half that offsite or 75 percent of the offsite stuff is just horrible and doesn't work and over budget overruns and it's like, that's all the stuff that's not industrialized construction offsite and it's that level of market confusion that's really stymied the industry.

So what we need is. Something that's called an industrialized construction project that goes out there and they, a big one and they demonstrate, oh yeah, it works. And then you'll have all kinds of developers going after these projects as soon as they know it works. Yeah. When you first started at me, I thought my brain went prefab.

That's exactly where I went. I see, you see these hotels all the time and it looks like they're bringing these huge, like concrete walls in and just assembling it. But yeah, what you're talking about is a whole different level. Well, so the, prefab can be similar to what we're doing.

It's just how you create the prefab, right? So I know a company actually who does these projects for munis, right? they'll hammer a whole bunch of volumetric boxes together and then they'll ship them with soap on the soap dish and there'll be affordable homes and they put them up in a major city and good for them.

And that's a nice thing to do for society. But they don't come out super cheap and, because they can't charge much for them because these are like for affordable or for homeless people, can't charge that much for these to the city. So these guys are operating on hyper thin margins. They might get themselves in real trouble if they haven't got a special advantage,

to make each build cheaper for themselves, right, because their margins have thin and yeah, right now that they're not doing it. They're not pushing the price of the fabrication down over time by adding automation by creating the same thing and doing it over and over again by sourcing materials and volume by getting huge labor efficiencies.

Because, everybody knows exactly what they're doing by automating some of the labor off the line, right? You can do that too. And it's always the same thing. So I'd say that, part of this, of what we're talking about is super important. It's basically demonstrating that industrialized construction, what it is, demonstrating it works and then demonstrating the quantitative aspects of like how much cheaper and better it is.

Right. Well, I know we're probably coming up on time here. So I, maybe two, just two questions to close out. One is what would be your recommendation? You mentioned how ref firms are uniquely positioned to take advantage of some of these things, right? Because they can create the portfolio, the product portfolio to take to people and drive the industry in a certain space.

How would you recommend that they identify maybe these opportunities that with your ADL ventures, you've been successful in finding these opportunities and pursuing them. So maybe what do you, what would you say there? And then I just want to give you the opportunity before we close out, if people want to get in touch with you and help you out in any way, what would you be looking for?

And then how do they best connect with you? Yeah, well, thank you. So how do you find these opportunities? That's a great question. Part of it's just being creative. When you think through, well, for my company, I talk to my folks about a theory of change, right, you need to have a theory of change. How is the world going to change, and I want you to have a detailed idea about it.

You don't have to be right. It just has to make sense and you have to keep it updated based on new facts you learn. So for us, when we have construction, we were like, oh, theory of change is that industrialization is going to happen. And that's going to have all these knock on effects.

You can go a step lower from there. Right? So if the theory of change is industrialized construction. Well, then it's like, oh, well, that means that people are going to fabricate all of their things in a factory. Okay, well, what does that mean? What that means we're not doing it in the field anymore.

Well, what does that mean? Well, if y'all have been in a factory before, you'll notice that the materials we use in a factory usually look a lot different. And stuff we use in a field. There's techniques that you can use in a factory, say UV curing, can't UV cure stuff in a field, practically speaking, can certainly do it in a factory.

So like my air moisture barrier, now it could be a UV curable 30 seconds. Thing as opposed to I painted on and I wait eight hours and have to have like huge gaps in my line or huge way dry stations on my line in order to drive my air moisture barrier, or you could use maybe some sort of lamination machines.

Right. And you don't use lamination machines in the field, really. You have to make any sense. And so, yeah, you might start with what changes right in a factory environment versus a field environment. Or you might start with, if you're selling software to architects, right. You might start with, okay, how does the architect's job change?

And then how does that affect what they're going to want to buy? Like they're going to want to probably want some new software tools. What kind of tools? Right. How would I put them together? Same with logistics, right? Logistics and supply chain for buildings today is pretty straightforward. I shipped two by fours to the site.

That's going to change when you start shipping entire boxes to a site or when you're shipping panels. And how you ship things makes a big difference, right? Because if you're shipping volumetric boxes, you really want to know when you're unloading your box where to put the box and hopefully you never have to move it again. So you want to stack them as you go, right?

So I guess what i'm saying is it really matters to people or it really matters to anticipate. And I guess that's just what entrepreneurship is anticipate what people are going to go need and go do that. Go figure it out  But the easiest way to anticipate is to have a pretty, just a pretty creative mind and, just think through how does the world change if this is true.

Yeah. I like that. I like that theory of change. I like that.  I'm gonna, I'm gonna copy that.  Welcome to it. In terms of people getting ahold of me, what do we do? Think of the people we're talking to today, the most relevant thing that ADL Ventures does is, we work for established companies who want to get into industrialized construction, that we help them understand what their unfair advantage is in the new industrialized construction world.

And we've done for multiple occasions. We've built new business units with them or startups for them to leverage.  Startup could basically be built on an, of course, unfair advantage that your client has. And you spin it out as a startup and it goes out into the world. Or it could be just a business unit they want to have.

So they can win more projects in the industrialized construction space. So that's what we do. If anyone wants to talk to me about that, my email is nol@adladventures.Com. And yeah, this is something we do all day long. Actually that's what ADL stands for all day long. I guess the ADL part is that this is what we're thinking about.

This is all we're thinking about is like the theory of change and how do we take advantage of this new opportunity based on the theory of change. So that's really cool. That's great. Great conversation. I like it. Cause a lot of times you can feel maybe it's a little bit stale or we're not moving in the right directions, but,

that people like you come in and say, let's look at this in a little bit of a different way. Let's think about what's coming. And let's maybe try to push the industry in a certain way that is beneficial for our businesses and so forth. I think that's a great, perspective. So I appreciate you coming on and sharing your perspective with us.

Yeah. Thank you very much. Thanks for having me. I really appreciate it. And look forward to chatting again soon. All right. We'll do. Sounds good.