The first master plan that we wrote some 3 years ago (June 2017) has recently entered its later stages of completion. Let's quickly revisit the main conclusion of that previous plan and see what it consisted of.

Master plan part one:

1. To build a SAM prototype.
2. To validate our theoretical assumption on this prototype.
3. To sell SAMs to a B2B market (Project developers, building companies,...)
4. To continuously invest in R&D to increase the functionality and the efficiency of SAM.
5. In the long run, invest earnings into other products that can help expedite the move from rather costly, polluting and stressful construction techniques toward more affordable and sustainable housing solutions.

In this second plan, we are going to see where we are in realizing this first "master plan" but we will also look a bit into the future to see where we are going. More specifically we are going to look into points 4 and 5 of part one. Back in 2017, these were vaguely highlighted and they have become a bit more clear in the meantime. But first, let's take a step back.

Why write a master plan (part two)?

The exercise in itself is very powerful. It obligates the organization to define a very clear number of goals and rank the urgency behind them. It puts all the team members and different stakeholders in the same direction and on top of this it makes the defined goals very public so the accountability increases dramatically. This doesn't mean that diverging from this predefined set of targets is never an option but it does make the hurdle of doing so substantially bigger. An extra added benefit is that by communicating this "master plan" to the outside world our actions are understood within the bigger picture.

What do you guys do again?

The point of starting Bao Living has always been, and remains to be, to aid in accelerating the move from today's rather costly and very polluting construction methods towards more affordable and sustainable housing solutions. We continue to believe that this is a very constructive and meaningful thing to work towards because of the fact that the cost of housing is still rising throughout the world and the environmental impact of the construction industry remains so alarmingly high.(30% Of global annual greenhouse gas emissions, 33% of all waste and up to 40% of all energy consumption).

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This means that if we would like to evolve toward a truly environmentally neutral society it will be very difficult to do so without making enormous progress on the above-described statistics. Of course one could always ask, "Why should we evolve toward an environmentally neutral society?"

Well, for now, we live in a system (planet earth) that by default has limited resources and at some point we will run out of these and civilization will collapse. This means that we must evolve towards a closed-loop economy anyway. And the faster we achieve this the less pollution our environment will contain and the lower the carbon levels in our air will be. Basically all scientists agree that further dramatic increases in atmospheric and oceanic carbon levels can and will impact many lives negatively. So the faster we achieve environmental neutrality, the better.

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The way Bao Living was going to have a positive impact on the above-described issues wasn't clear when we started though. As mentioned in our first master plan we did make a breakthrough on this when we started separating two big parts of the construction process: the construction of the structure of a building (A) and the installations of the different utilities in this structure (B). We believe that both these phases can be realized in a much more affordable and sustainable way if we separate them from each other and when we move the production of these two, as much as possible, to an (automated) production facility. Let's dive a bit deeper into these two separate elements.

Let's dive in!

A: structural components (walls, stairs, roofs, windows, doors,...).
When we began working on the above-described issues we started focussing on part one: structural components. By doing a detailed market study we started realizing that substantial progress on this front was already being achieved by the increased usage of products like CLT and other kinds of prefabricated building systems. The market was moving in the right direction for this part of the construction process. That's when we switched our attention and we started focusing on the second part of the construction progress, utilities.

B: utilities (heating, ventilation, sanitation, electricity, lighting, fixed furniture, ....).
By working on this second part over the last couple of years we realized that this also consists of two separate elements:

• The utilities on a "living level" (a.k.a, kitchen, bathroom, local heating and ventilation, home automation,...).
• The utilities on a "building level" (a.k.a, all different types of central heating/ventilation systems, solar energy, battery storage, internet network, rainwater filtering, ...).

When we started working on this part of the construction process we started with focusing on the utilities on a living level. This is how SAM was born.

How SAM would help to make construction more affordable and sustainable and what we would need to do to get it launched can be read in part one of our "secret" master plan series. The main goal of this second edition is to look forward into the future of SAM and, on an even broader note, to look into the future of Bao Living as a whole. So let's peek behind the curtain and see what's up.

What does this vague "point 4" consist of in part one?

What really matters to accelerate a sustainable construction future is being able to scale up production volume of our products as quickly as possible. While doing this we should, however, try to keep the environmental impact of our products as low as possible as well. All of our R&D efforts are focused on these two variables. We will unpack this a bit more below:

Scaling up production: the biggest element of our SAM is the cabinetry that it consists of. The high scale production of this type of cabinetry is a technical challenge that has been solved for quite a while. This is a big advantage for us, it means we can plug into this existing production infrastructure. The main challenge that we need to overcome is to make this "plugin" process as easy and flawless as possible. In order to realize this, we have developed our SAM configurator that consists out of different interactive cabinet, sanitation and wiring elements. Not only will this technology help us translate the different production elements into production sites it also really helps us with the design of the different plans for our customers. With the public release of the first version at the beginning of this year, our customers can very quickly customize and personalize their own SAMs.

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The further development of this software is something that we will be heavily focussed on. By doing this we will allow the customer to make the necessary finishing decisions on his own in a really clear and transparent way while seeing the price changes in real-time. We believe this kind of experience will be a drastic improvement in comparison with today's techniques.

Other essential elements to scale production are strategic partnerships with HVAC and electrical installers in each market that we enter and further increase the amount of work that gets done in a factory environment. For both of these elements, we are now executing the associated roadmaps.

Environmental impact: the main metric that we follow for this variable is the % of the SAM that can be disassembled and re-absorbed in the right material cycle. Systematically incorporating recycled materials will be an essential part of this process. We are getting closer and closer to making this a full 100% but for certain elements, it seems that the market hasn't yet provided a solution. These are the tricky parts. To solve this, we will always analyze whether it is interesting for us to start producing these elements ourselves. Provided the available resources and constraints of course. By continuing in this process we aim to achieve full life cycle closure for the SAM as quickly as possible. Pending the achievement of this goal, we have started a tree-planting program that's offsetting the current carbon impact of the installed SAM's. This way we limit our negative environmental impact as much as possible while working towards carbon neutrality.

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Another important element that determines the sustainability of a product is the length of its useful life. The longer a product is in use the lower it's per year environmental impact is. To maximize the useful length of life of each SAM we are going to invest heavily in service. We believe we can have a competitive advantage on this front because of the recurring technical solutions in our SAM. This will dramatically lower the complexity of maintenance especially when we are going to combine this with the necessary smart measurement devices that can indicate the level of wear on each device through systematic check-in moments. This will allow for preventative maintenance contracts as known in other industries like aviation and automotive.

Did you mention other products?

Point 5 of our first master plan was the following: "invest earnings into other products that can help expedite the move from rather costly, polluting and stressful construction techniques towards more affordable and ecological housing solutions." Now that we have been active in the industry for a couple of years we are starting to get a sense of what these different products should be.

As mentioned above the utilities part of a construction project actually consist out of two different elements: "living" and "building level". Our SAM covers the "living" part so a logical second product would be to cover the "building" part. (Actually, we have projects in development that almost cover both elements by installing a heat pump inside SAM. Anyway, I'm digressing). The idea behind it is quite similar to our SAM, prefabricate and automate the work and make the design as modular and software-based as possible. This would remove inefficiencies and dramatically lower the complexity which, in its turn, would lower the price and make service easier. If we can get these two products developed and produced next to each other (with interwoven software and service capabilities) we have the entire utility side of a building covered. At this point, only one major aspect of the construction process would be missing: the structure itself....

So, in short, Master Plan, Part Deux is:

1. Continue to focus R&D on the further ease of scaling our SAM while keeping the environmental impact as low as possible. (2020-...)
2. Start introducing real cost-efficient service contracts for our SAM through the use of smart measuring devices and our recurring selection of technical appliances. (2022)
3. Create a great second product that focuses on the "building/energy production" part of the utilities and that's very compatible with the software and service capabilities of SAM. (2023)
4. Develop partnerships with pre-fabricated sustainable structure producers and get their solution to be fully in line with our existing two products. (2024)
5. Become a one-stop-shop solution for sustainable construction. (2024-...)

Once again, don't tell anyone....

Team Bao

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