For Amazon, friction-free access to goods and services we want or need to buy is power. For Apple, trust that our digital connections, hardware devices and solutions can go on with a sense of security and well-being is power. For Google, a fluid, constant all-direction exchange of knowledge—creating dynamic moments or platforms of value—as we carry out daily routines in our homes, is power.
Each of Silicon Valley’s big three companies has a big and growing stake in leveraging unique respective relationships, a value proposition, devices, etc., into Americans’ homes, where household and consumer spending accounts for two of every three GDP dollars, and where economies and private sector enterprises both get their giddy-up, now and forever.
What’s more, Amazon, Apple and Google have each committed to extensive investments—ranging from single-neighborhood pilots to full-on strategic venture roll-outs—in select smart home technology partnerships with the nation’s 200 largest home builders, who today account for more than half of new residential construction sales and deliveries in the U.S. The depth, intimacy and strategic alignment of these builder-tech organization partnerships today suggest an ever more entwined front-end design, development, capital investment and construction process whose endgame will merge and meld real property and its value with intellectual property and its capacity to create and regenerate value.
Jake Fingert, general partner at New York and Rockville, Maryland-based real estate technology investment firm Camber Creek, says that the three data, tech, marketing and sales giants well recognize that “data in the home is valuable. If you can capture how people live in their homes, and how they want to live, you can unlock significant value.”
Welcome to what one day soon we may think back on as the pre-evolved days of machine learning-enabled technology’s convergence with living in our homes. In this primitive moment in time, devices—as comely as they are in design, user interface and connection to our personal smart phones or wearables, etc.—sit on counters, or mount on the wall, or hang from ceilings, or protrude from the baseboards, or take up room as display dashboards, hub systems, routers, amplifiers, WiFi signal distribution points and the like.
That’s reality for home tech’s internet of physical things, for now, and perhaps for a foreseeable, near-term future. But in the medium-term, we’ll see an evolution, and ultimately a profound change toward the conceal-and-reveal design and engineering experience we’ve come to expect and delight in in many of the retail and hospitality environments regarded as leaders, such as Apple stores and chic W Hotels.
Question is, which of the three Wall Street and media darling tech juggernauts will jump the fence and make comfort, security, well-being, sanctuary, health, entertainment, nutrition, work and sleep at home a core business model platform first? Will it be Amazon, which has aligned with one of the top two most prolific single-family builders Lennar; Apple, whose HomeKit Siri-controlled system has been part of Brookfield Residential’s new construction in select California neighborhoods; or Google, whose Nest and Google Voice Assistant and Home packages are becoming household words among Pulte, KB Home and a number of other leading home building enterprises?
“They’re all very competitive companies,” says Camber Creek’s Fingert. “Where and how we live in our homes seems to be the next frontier for them to compete.”
Coming soon to new homes everywhere—initially at the custom and high-end of the house price spectrum, and soon thereafter migrating to the mid- to lower price tiers—smart home technologies and their nodes of connection with people in those homes will be integrated “inside-the-walls,” as part of the building envelope and systems, like electric, plumbing, heating and ventilation, etc.
Not only that, these systems will come complete with a certain level of “future-proofing,” which can add to would-be homeowners’ view that investment in them won’t lose value the moment a series of upgrades and improvements makes this year’s line of technologies obsolete. What this suggests is that, just as your iPhone updates, goes through upgrades, and adds functionality during your ownership, both your home’s systems—including smart tech functionality—and its structure, including durability, repairs to damage, and alerts on the remaining life of lights and other electric components would be updatable with firmware-like upgrades.
As futuristic as this all sounds, both the materials and building science and the sensor, micro-processing, and machine-learning technologies are homing in on the marriage of smart home function and building technology performance.
Brad Greiwe, cofounder and managing partner at real estate-focused venture capital investment and strategic consultancy firm Fifth Wall, wrote here of last week’s announcement that Amazon has joined as a direct investor in Southern California-based high-end prefab home builder Plant Prefab, as part of a $6.7 million Series A funding round, as an inflection point.
Plant Prefab manufactures higher-end custom homes that appeal to Amazon’s target demographic. Those cookie-cutter modular homes of decades past, don’t even begin to encapsulate the potential. High-end, customizable designs not only look great, but the integrated smart technology offers a forward-facing appeal aimed squarely at those in the upper-middle income bracket, those willing to pay for unprecedented control, flexibility, and convenience in their homes.
We see Plant Prefab’s strong focus on automation and connectivity as also strategically aligned with Amazon’s goals and the inevitability of a built-world future. Key Amazon products — namely Echo, Dot, and Show — will be integrated directly off the conveyor belt into Plant Prefab’s modular homes, giving these smart devices a needed infrastructure of power and integration that ensure easy and seamless use in the everyday lives of Amazon customers.
My view of the Alexa Fund’s investment in Plant Prefab—from the bias of covering the home builders themselves—is slightly different. I see integration and interoperability—software, user interface, and user experience—as blending together, obviating the need for an external, visible device at all. Just as a home’s windows can work as photovoltaic systems, internal walls and light fixtures and vents could as easily function as Alexa’s voice-recognition speaker system, carrying on the routines—eating, sleeping, playing, work, being safe, healthy and serene—that “ensure easy and seamless use” in our lives. The walls can literally "have ears." And talk back.
Picking Plant Prefab, Amazon uses its low-cost research and development capital to two key advantages. One, the modular operator’s higher-price-point and urban infill customer demographics mesh well as an investment acupuncture point for Amazon to learn how people want to live and engage with technology. Secondly, it can secure early adoption—and profitability—among home buyers who don’t mind paying an extra $100 on their monthly mortgage payments.
Friction—life’s way of creating grey hair, knotted stomachs, shortened tempers, white-knuckles and frayed nerves as we engage in the infinite ongoing array of rituals around exchanging money for value in kind—is Amazon’s stock in trade. Or rather reducing it.
Says Camber Creek’s Fingert, “Amazon, with this infusion in a home builder-developer seems to be taking the lead with its investment in unlocking that value. We wouldn’t be surprised to see Google and Apple up their respective antes in this area as well. At the real estate technology investment level, they’re already doing it. But we’ll also likely see equity investments and acquisitions in the home builder space to come.”
