Research Driven Ideation: Sustainable construction with Aro Homes
The speed of innovation is increasing. As it does, more brilliant scientists and technologists will be looking to contribute to our world — even if they aren’t sure exactly where to start.
That’s why we launched Research Driven Ideation (RDI) — to offer visionaries a framework for researching, mapping, and unearthing brilliant ideas. This framework has already helped hundreds of Stanford GSB students and students at MIT and Harvard to research an industry deeply, dive into a problem, and determine an idea. The first steps are available now for current and future entrepreneurs looking to find their inspiration.
This following series profiles the founders who have successfully undertaken this journey and what came of their research.
Typically, an RDI journey begins externally, but sometimes, it’s kickstarted by the framework’s founder — as is the case for Aro Homes. Long after he published Project SHED and years after he started teaching the Research Ideation process to his students at the Stanford GSB, Scott Brady had an exploration of residential construction that he put to the RDI test.
A little background: Innovation Endeavors has been investing in the physical economy, and more specifically, the construction industry, for over a decade. In that time, our team has only become more convinced that residential construction is ripe for innovation. The way we build homes hasn’t changed much in the past 100 years. So the question is, why hadn’t the home-building process evolved further? And what company would be able to improve this behemoth industry?
The answer to this question is Aro Homes: the first tech-driven product company in residential housing. Aro Homes makes beautiful, carbon-negative homes, which, thanks to world-class design and systems engineering, actually produce more energy than they use.
Below is an interview detailing how Aro Homes co-founders Scott Voulgaris and Carl Gish came to work on this RDI pursuit and what the process led to.
Innovation Endeavors approached you to revolutionize the construction industry. Why did you take up the call?
Scott Voulgaris: Scott Brady had written a 16-page primer [which RDI alums know is the end result of phase 1 and 2 of the process] covering some of the opportunities that he saw in residential construction, which really started the process. He shared that research document with 30 or so people, and Carl, Simon, and I got pretty excited about it. I didn’t know much about the industry, but the problem it presented was super intriguing.
Carl Gish: First, the timing needs to be right, and for me, the timing worked out. I was doing some advising at the time. Single-family construction has been — and continues to be — a fascinating problem that affects our environment and the way we live. It’s a business challenge, an intellectual challenge, a product challenge, and a management challenge.
Not to mention the team. Simon, Scott, and I have complementary skill sets. Simon has deep manufacturing and supply chain experience, I have deep go-to-market product development and management experience, and Scott has deep research, entrepreneurship, and finance experience. There was a good confluence of skill sets, which made it possible to dive into this.
So, you saw Scott Brady’s research primer, saw an opportunity, and got excited about the team and area of focus. What then?
Scott Voulgaris: We began following the RDI process. I went out, researched, and interviewed as many people as I possibly could. I talked to a lot of other startups in the space and a lot of larger companies. We wanted to understand what characteristics made companies in residential construction successful and then what characteristics were causing companies not to succeed.
We didn’t intend to start a company per se. This was a research initiative designed to figure out the core risks of this new business model and dive into each of those in insane detail. We wanted to understand permitting. I spent countless hours on the phone with different permitting agencies, and that informed more of the business model. And it actually wasn’t until probably a month and a half in that we started learning about the NTA, the state approval process for offsite construction, and how that works in conjunction with the municipal permit process. This discovery ended up playing a foundational role in our business model and had important downstream effects as well. It ultimately led to another three or four weeks of research just to understand it and build confidence around it.
How much time did you spend researching before a clear idea or hypothesis started to form?
Scott Voulgaris: I worked on research and interviews for two to three months before Carl and Simon became more involved. Once we had the research, we architected a business model that capitalized on what companies were doing well and that avoided some of the challenges that the other companies were facing that were not performing. After about five months, we had a hypothesis we liked, and we brought in another six or seven people with modular construction experience to really convert this from research into a process. Once that team was formed, we spent another three months just researching and understanding this space as a group. So it took eight months to get the research to a point where we had an idea for a company and started to bring people on to operationalize that idea. But the research never really stopped at any point.
What were some of the challenges you had to address as you started to really pursue this company idea?
Carl Gish: We wanted to innovate the entire homebuilding process end-to-end. And right now, every part of the homebuilding process is incredibly optimized for its small niche, but it’s disconnected. Some of the industry experts we approached didn’t like our ideas, but others said, ‘oh my God, the way you do this fixes a problem that we’ve been trying to fix with conventional methods for 20 years.’ Even something as simple as getting a PGE appointment to power a new house was a challenge — mainly because nobody had asked them to power a house within three months. You have to really dig in and listen and be curious about why things are the way they are.
Taking such a diligent and research-driven approach to company building takes time and patience. What do you feel was the most important thing that you got out of this process?
Scott Voulgaris: Approaching this industry as a layman before we started was incredibly beneficial because it was purely an exercise in learning. The people in this space are super smart, and there’s a lot to be learned about how and why residential construction has been approached the same way for so many years. And waiting eight months to start the company was a huge benefit. We had space to research and that allowed time for innovation and critical thinking. And there was no confirmation bias until we got the first check. So, until that point, everything was fair game. We could explore any idea we had. That was critical to our success.
During the study, we brought on some pretty incredible contractors. They were able to “date” us, and we were able to “date” them before we actually offered them a full-time role. That helped us build confidence in the team and build a culture before the company actually started. We likely wouldn’t have been able to hire those people if we had just started the company without all that research done in advance. We’d done a lot of the early de-risking and made the relationships with the state permitting agencies and cities before the company had even been named. And so that was very powerful as well.
Carl Gish: The process was so positive. You’re optimized to learn and aren’t pressured for a particular outcome. The dynamic is like an incubator.
The RDI framework is available now for those looking to begin their own data-driven journey.
