A company that develops and builds really efficient, or even near energy zero homes.
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The Story of Friendly Buildings Sweden
Friendly Buildings builds homes, they deliver a product: really efficient, or even near energy zero homes. These pre-fabricated homes represent a relatively new market in the very mature Swedish home building market. Friendly Buildings is a private company that started small in 2010 with one entrepreneur/sole employee. Initially start-up capital was very hard to generate. The CEO was forced to “scrape” together capital, though she did receive a little funding through public sources (ALMI).
The CEO has a background in building management and development, and is an engineer. She knew that the capability of conceptualizing, innovating, and partnering was key to success in this market. Given her background, she understood that large construction firms had already attempted to develop nearly zero energy homes, but she wanted to do it cheaper and better. Her experience was that these firms failed because they “bit off” very large projects, sinking large investments in planning that created high expenses.
So Friendly Buildings decided to “just do”. She started with small projects, found capable partners, learned through trial-and-error, tested and improved from project-to-project. The biggest change in the business model was witnessed in the marketing and sales proposition.
The low-energy design, and Friendly Buildings’s partnership with an architecture firm, has in principle not seen much change. Friendly Buildings orchestrates to the max. The company’s activities include land acquisition, the design of the home or building, the module fabrication (in factory), project management and marketing and sales. This requires quite some expertise resources around architecture, assembly, project management and marketing and sales.
Friendly Buildings spent quite some effort on stretching a key element of its brand across its partnerships: quality. It is very complicated to deliver a passive house. One of the first messages on the Friendly Buildings website is that they deliver the highest performance quality thanks to their partners. Partners include the architectural firm, but also a firm that installs the modules, a metering and measurement firm, and then solar system providers and installers. As such Friendly Buildings demonstrates great orchestration capability. They buy the land, set up the condo structure for ownership, and manage the project with all their diverse partners. Friendly Buildings developed a complete ecosystem around its product.
In terms of costs and revenues this company is very old school. The building and material costs is far and away the largest cost center and revenues only include the sale of homes and buildings. There is no service delivery after sale of the home.
The sale occur through regular sales channels for selling homes and through professional, knowledgeable purchasers. At first the sale was a disaster. Friendly Buildings started by marketing its homes by stressing”zero energy home”. They got zero buyers. So, Friendly Buildings removed all of the advertising and waited 2 months. Then they showed and marketed the interior designs, showed a lot of interior pictures etc. They pitched the houses as well designed, attractive homes/ buildings with high-quality, air tight construction with uniform quality. They sold all the houses in 2 hours.
The families that purchased the homes were families with young children - children under the age of 2 and even with kids on the way (pregnant). These families did not express much interest in being green or environmentally friendly, but were mildly interested (curious). After they purchased the homes then they were completely “sold” on energy savings and really went” all in” with respect to saving energy. Friendly Buildings had the same customer experience in two projects (Upplands Väsby and Örebro).
Interestingly enough, although Friendly Buildings delivers homes to single family and town home owners, there is no involvement at all from these users. The homes are modular and prefab designed upfront. Friendly Buildings develops the homes and takes care of all the details. Customers take it or leave it! Indeed, Friendly Buildings even states that as soon as users become too involved the building becomes non-efficient. There is however a high level of co-creation of the prefabricated homes business model by all partners. The architect is instrumental, as is the factory, installation firm and solar firm. There is active learning across the partners to increase efficiency in the process.
For larger and non-residential buildings this is different. Friendly Buildings for example also delivers to professional buyers who sells schools to municipalities, and school design requires more interaction with the users because of the complex use of the building.
Although “low energy” is not the reason customers buy the homes, once in their metered homes, customers have really appreciated the ability to know how much energy they consume, and to be able to compare energy consumption with their neighbours and Friendly Buildings’s other projects. They are very engaged and really want to save energy, as long as doing so does not compromise comfort. Friendly Buildings now intends to install metering systems in all of their own projects going forward, as long as they are the decision-makers. They would be in a position to do this economically now. However, Friendly Buildings is also developing projects for other developers. The pricing is so competitive with these projects are so ”squeezed” that metering will not be included. Buyers have not so far been interested in spending more for the metering, either.
Friendly Buildings is driven by ambition and wants to scale up, to grow. In the past years they have sold several dozen buildings and made substantial leaps in revenues, from 7 million SEK the first year, to 15 million the second year, up to 17 million Swedish Crowns last year. To scale up further, Friendly Buildings believes it needs to not only continue being the orchestrator of a high quality ecosystem, but also become part of an orchestrated ecosystem delivering a total solution. Therefore Friendly Buildings develop partnerships carefully with potential professional customers, municipalities or larger customers such as schools. Partners that can resell the product. Those that know how to specify pre-fabricated buildings and procure and or sell projects to for example municipalities.