Episode 7 on Retrofitting Homes at Scale

This week, we dive into the world of retrofitting homes at scale, featuring today's guest Becky Lane, CEO and co-founder of Furbnow, where she accelerates the adoption of low-carbon technology and helps make homes energy-efficient. 🌱🌍 With domestic heating accounting for a significant portion of carbon emissions, finding solutions in this area is crucial. Becky talked to us about:

\ Why it's not the technology that is lacking in order for us to reach net zero, but the commercial models and propositions to the end consumers
\ That 17% of the entire UK's emissions come from domestic heating
\ How technology plays an important role in making retrofit solutions more accessible to homeowners
\ Why people are wary about makes mistakes when it comes to retrofit measures like choosing the right insulation
\ Her professional testing and learning process to identify the right marketing and growth channels

If you have any questions, feedback or ideas where we can collaborate, please contact us using our website www.pt1.vc. Be sure to subscribe to the Futurebuilders podcast, so you never miss an episode, and follow us on LinkedIn for more insights.

Transcript

You are listening to the Future Builders podcast by PT One, where some of the leading voices in real estate innovation share their thoughts. PT One is creating the European venture capital platform for transformative real estate technologies and is all about investing and supporting future builders, innovative entrepreneurs from across Europe that tackle global challenges of our time, created by increasing scarcity of natural resources, affordable living space and skilled labor. Each week, your host, King Mama and his colleagues from the PT One team interview these future builders, whether they come from the startup or corporate side, to talk about their mission of shaping the future of the built world. For regulatory reasons, it is necessary to point out that this podcast is marketing communication and that investors interested to invest in PT One should make their investment decision based on the legal documentation.

So, Becky, really great to have you here today. Thank you so much for appearing on our Future Builders podcast. Love for you. If you can just introduce yourself and introduce your business. Brilliant. Thank you so much. I'm Becky Lane. I'm the CEO and co founder of Ferb Now. It's a business that's been live for the last four months. We started building with the Founders Factory in Nest Emissions Studio back in August as well, and my career has been very wandering to get to this point as well. I've been in the energy sector. I've been a commercial consultant trying to help all these low carbon technologies come to market. It's broadly agreed that a lot of the technology that we need to get to Net Zero is already here, but the commercial models and propositions to the end, consumers are not here. So I've done a lot of work in that space to try and accelerate the adoption of low carbon technology and I've just become real curious over time about how do we actually get this going on the ground? So I've moved from being in that kind of consulting position to delivering. The last role I had before setting up FERV Now was with West Midlands combined authority. I delivered the Net Zero neighborhood program and all of that was about how do we accelerate retrofit, and that's exactly what Ferbnow is doing. And through that experience, delivering retrofit in the region, getting to know the supply chain, understanding exactly what happens on the ground, it's just been obvious about how there are quite a few gaps in terms of delivery, so we can actually help people and we can innovate about helping people actually access retrofit. Beyond that, being a startup founder as well got quite a few Hobies. I try and do a lot of sport to keep myself busy and to make sure I feel balanced and deal with the day to day stresses of being a startup founder super important. I mean, being a startup founder is one of the most stressful things that anyone can endure. So really glad to hear that you've got some kind of balance going so far. I'd love to know, kind of like, what inspired you to start a business like FERV now. Yeah, I mean, it comes down to a few things. I've been passionate about trying to move the needle on the net zero agenda for a long time. Back for when I was much younger, starting my studies, doing my undergraduate. A passion about understanding climate change were the drivers for that and understanding how we can move things forward with the commercial sector and then building up that experience to the market and just being a little bit shocked in terms of what's happening with the delivery of energy efficiency schemes at the moment and how particularly the able to pay market, which is the market that we focus on with Ferb now. Those people who are not eligible for grant programs, they don't really have an option to try and retrofit their home. They would have to try and find energy efficiency, measure, install it on their own and start from scratch. So there's just so many steps within that customer journey of trying to think about retrofitting your home. So that might be trying to figure out the best place to start. Should I insulate first or to just go for energy generation? Am I ready to just have a heat pump? Trying to figure out which one's the best solution for your home. And then you've got installers advising you, basically to do the thing that they want you to do, which doesn't leave you in a very empowered position as a homeowner to make a start with your retrofit project. So the motivation was behind seeing what's going on, trying to shift the needle to help people actually access retrofit. And if we're looking at what impact potentially this business can have as well in the UK. Domestic heating, which is mainly gas in the UK as well, accounts for about 17% of the UK emissions, which is a big chunk if you think about all the other activities that we have in the UK as well, like transport, freight, that kind of thing. So it's a big area that needs solutions. And we're talking about airsoft, heat pumps, obviously, as the transition to move people away from gas. But before we do that, we should really be prioritizing energy efficiency and improving the quality of housing before just moving to low carbon technology. Otherwise we'll be stuck in a few years time when everyone has transitioned to a heat pump. And from a national perspective, we'll be having to build three, four times the amount of renewable generation to provide the electricity for domestic heating. So we're trying to solve a very acute problem for homeowners who were looking for improving their energy efficiency, whether that's improving their energy bills or trying to look at the carbon emissions reduction angle, as well as trying to help with that whole system benefit as well, helping the UK to transition to net zero heating. Got it. Thank you so much, Becky. So if I were to summarize, so there's a lot of homeowners who are interested in getting their homes to net zero. They're wondering how to do it, what's the best way to invest their resources, and so they go to you to get objective, independent, high quality advice and then can go through your user journey in order to kind of continue with that process as well. So the value is really on the knowledge side on adding the right information, the right time as well. Is that kind of where you are today? Is there something in the pipeline that also you look to build as well in the future? Yeah. So in terms of the actual service that we help people with, there's a few steps to it. First of all, we help people with the plan. So today we offer that. That's helping people understand everything they need to invest in their home, from insulation, ventilation generation, all the way to low carbon heating and the steps that make the most sense to do that in. So that's a service that we provide today. When people are deciding which part of that they'd like to go forward, we advise them which products make the most sense and we help them with the delivery. So we put them in touch with accredited installers in our network. And we can also provide project management services as well to help get over that hump of the complexity of doing something that could be quite a significant undertaking. So that's where we are today. And in the future, we're also looking to build a monitoring service as well to help check that the measures that have been installed are performing as intended. And there's a couple of reasons for that too, so people can keep track of what they did and how it performed. And when they come around to do maybe a second stage of their product project, they can look at what they might do next and keep them engaged in that process. And secondly as well, we want to build an insurance product to help with that reassurance. So sometimes things do go wrong and if we want people to make sure that they feel reassured that things will get fixed, the point of that is to be there alongside that monitoring service to help people navigate if there are any issues. Also in our product roadmap as well, we're looking to provide a finance product. We don't do that at the moment, but we should be bringing that out relatively soon as well. Perfect. Lots of exciting things to build upon then. What's your business model then, at the get go when you're providing the independent advice? Yeah, of course. So at the front end with the plan, there's a cost for that plan that's associated with the services and we contract retrofit coordinators who are highly qualified professionals to go into the home, make an assessment and build a plan to build those recommendations. So that's the first part of the service. In the second part with the project. There's a couple of elements to this as well. We don't just provide the full project management service, we also provide project support, which is a little bit more advisory, just making sure homeowners benefit from the experience of the retrofit coordinators. In both of those instances it's a markup on services and then also a payment for lead as well for the installers who get to do those projects. We're also looking at referral channels as well for those other products in the ecosystem to make a benefit from that. So each stage the service makes sense. And obviously what we're trying to do is our North Star for the company is getting people to transition through to doing a retrofit project, not only for us as a business, but also for the impact potential that's when we really see reductions in emissions and those benefits for homeowners, like increased warmth, increased comfort, and reducing their energy bill as well. Nice one. Thanks. And have you launched already or are you going to launch quite soon? When you launch, how do you plan to scale your growth and your operations? Yeah, so we're already live, we launched back in October, so we've been live for the past four months. We've hit quite a few significant milestones. We have lots of customers that have gone through the plan stages and we're now just starting delivery of our retrofit projects as well. So already hitting the market quite quickly after setting things up and starting back in August in terms of the growth strategy. So at the moment we've been doing a lot of testing different channels, both direct marketing channels, going through partners as well to find the best and most effective channel for kind of cost of customer acquisition, but also finding those customers that are higher intent for moving forward to a retrofit project as well. So it's very much a kind of testing and learning process to find those best growth channels for us. But saying that we've had quite a lot of success using direct marketing channels, we're performing very well in comparison to other propositions in the market that are the traditional kind of just buy a particular measure. So it seems that people are really resonating with our proposition and wanting to proceed forward with the plan. So on the growth side, a lot of our strategy is kind of repeating what we've done and then also learning and iterating to make sure we're prioritizing those channels that are most successful. On the operations side, we initially went national to try and understand how the kind of marketplace approach that we have to delivering this could work. So what's the coverage like for the supply chain? How easy is it to respond to the demand that we get for the retrofit plans and the retrofit projects? We found that was actually relatively easy to do to find suppliers in particular regions. And now because of that, we're currently at a team size of four. We're looking to expand, we're currently hiring for two new roles and we'll continue growing the team over the next few months. We've decided to focus our region in the Midlands, and that just helps us with managing demand, managing supply, ensuring that the supply chain is really excellent quality as well for what we're delivering for our customers. So in terms of operations, our plan is to look to expand to a new region or potentially two by the end of the year, and we're being led by the demand from customers. So we're taking national interest at the moment and delivering in the Midlands, and we'll look to prioritize the next region as we go from there. Thanks, Becky. Now, when it comes to understanding of energy efficiency and net zero, for most homeowners, their understanding comes from EPC certificates. So how does your proposition sit alongside EPC certificates and EPC surveyors? Yeah, EPC certificates are a useful policy tool, I think is probably fair to say. They're a really good indicator for understanding what's going on across the country or in local areas where there might be issues as well that need investment. And also kind of that indicator for designing policy, like the minimum energy efficiency standard, for example, that's in the commercial and private landlord sector. But it does lack a little bit in terms of the detail of how do you take these things forward. And a lot of the research that we found is that people understand kind of the scope of the type of work that they should do. So they know they need to insulate, they might need to insulate their walls, but it's a project they've never done before. So trying to understand finding the right installer, how does the retrovit design process work to make sure they don't have any unintended consequences in the future? So that could be damper mold, for example, if it hasn't been installed properly, people are wary about getting it wrong. So although the EPC does a good job of kind of indicating and demonstrating the kind of range of measures and starting a good starting point, it doesn't help you get over that hump of trying to figure out exactly where the right place to put your money is first and also finding those good installers that will do the job for you properly. So how our service kind of builds on that is our retrofit plan. We do use a similar calculation methodology, it's called SAP for anyone who works in the building sector. They'll be very familiar with it, but we go beyond that as well to look at how the measures so, for example, wall insulation, loft cavity wall insulation, how that integrates with some of your renovation plans. And also we take it beyond that as well to help you with the detailed design and the actual implementation as well. So going from an indication or a signposting tool, which would be an EPC, to actual delivery as well. Perfect. When speaking to retrofitting businesses like yourselves, there's really clear why now reasons to support, invest and kind of grow these kind of companies as well. There's a lot of regulation, of course, coming into place. Probably the most well known one is the EPC rating of C or above required for landlords to lease out their properties to tenants expected to affect the UK property market in 2025. And so I guess my question is what role do you think public policy could have for growing a business like Ferb now? Are there public services or recommendations that you can leverage upon as a kind of tailwind or do you think potentially it might even come as a competition or kind of distraction around your proposition? I think there's a role for public policy to start to give us more certain direction for what's expected from the private homeowners, the private owner occupy market. So at the moment, if we look at what's happening with private landlords and social housing, although we're still awaiting the me's direction for EPCs, for the private landlords, it's still clear that there is a standard that's being set that those houses need to improve with EPC bans over the coming years. But we don't have any direction on that at all for private homeowners, which just means that a lot of the investments so if we're talking about the mass market, how this could shift and go beyond kind of a smaller market of people who are motivated by comfort or carbon emissions reduction. The mass market driver for retrofit is when there's a clear link between either accessing, preferential lending rates, stamp duty incentives or potentially even not being able to sell your house because your house doesn't perform at a particular rate. So there's a lot of policy options that are available on the table to start linking the energy performance of the property with the value of the house. And when that happens, that could really provide a massive boost in terms of making retrofit more mainstream and also for the mass market to see the value in retrofitting their homes and improving the energy efficiency as well. So that's a little way off, but I think that's kind of something the retrofit market is really looking for, to seek to come from central government to help consolidate the direction of growth in that area. And your question as well around public services and how this could integrate. So with what's going on at the moment, lots of building professionals will know. But just for anyone listening who's not so familiar, there are some grant funds that are available at the moment. They've got a lot of acronyms, but broadly speaking, they're for lower income houses, the cap being around 30,000 pounds. And they're provided through local authorities or energy suppliers and they have a very set way of doing that. So they have particular caps, for example, a cap of 10,000 pounds spending per home, particular measures that will be eligible for the house as well. And although that obviously helps people who are in the very difficult position tend to be in fuel poverty as well to improve the energy efficiency of the home. It's not the kind of service that we found that able to pay customers who have a little more agency, have more finance, wanted to do a larger project and expecting a higher quality of service want to work with. So although there might be in the future a space where public sector organizations put in place able to pay services, there's certainly a gap for now and I would see probably for a couple of years while the focus is on delivering grant programs. But it all helps overall with that broader mission of helping the UK housing stock become more energy efficient. Absolutely. And right now your focus is very much on private residential properties which are probably owner occupied, looking kind of ahead. Do you think there's also a valuable market by working with housing associations or working with larger property landlords or real estate investment groups as well that focus on residential developments? Yes, I think there's definitely a role for what we're building with Ferb now to go into other markets in the future. If we look at what we're actually building and the technology that we're building, a lot of it is around how we're communicating the information about retrofit to households in a very digestible manner. So we could fit in with those kind of housing markets by providing the software that we've built as a communication method to help households that they're working with, even if they're not making that investment decision about the retrofit measures that go in the home, it can help with that communication to the end customer in the household. Other parts as well include how that moves forward in terms of the actual retrofit coordination and the design as well, and the software that we're building around that to help with the project management of individual houses. So although our primary market at the moment is that kind of able to pay more affluent private homeowner, we definitely see an opportunity in other housing markets whether that could be potentially private landlords as well where the same data, but in a slightly different way to look at the investment pathway to get them to a particular EPC band, or whether there's elements of the service that we're building at the moment that could potentially be licensed to help with other points in the journey for retrofitting in different housing markets. Got it. And I know we've talked about EPC and we've mentioned standard assessment procedures or SAPS as a kind of calculation to work out energy efficiency. There's also some other standards that also exist in the housing market. Passive House, for example, is quite a well known, internationally recognized design kind of framework as well. Do you also work with Passive House standards or other standards which we haven't mentioned, or do you want to focus on a particular measurement for now? Yeah, in terms of standards, I suppose we have a slightly different viewpoint to many people in the market. We're not working to get a house to a particular standard. We're trying to activate private homeowners to invest in their home for retrofit. So whether they achieve a certain standard or an EPC band or a watts per meter squared in their home is not what we're quite focused on at the moment, because we're trying to activate people to invest and they continue to do that as well in terms of standards. So, as you've mentioned, the Passive House standard, it's something we are looking to integrate with. So particularly looking at that route to market where people are considering extensions or looking at how they could maybe achieve an Nfit standard within their home and how retrofit could complement an extension or remodeling of their house. It's been quite an interesting journey with that as well, to see how many architects don't have that expertise in terms of energy efficiency in retrofit and trying to see how we can access that market as well. So just to come back to your question, in terms of standards, I think they're very valid. And again, they're kind of that measurement tool. But our primary focus at the moment is trying to activate, get people to see where their opportunity is, to invest the benefits they can have in terms of energy saving, carbon emissions reduction, but also other aspects as well around appearance and comfort to help people start investing in their own homes for this. Thanks so much, Becky. Lots of really interesting answers with respect to the market you're at and also your product as well. Just kind of moving on to the more personal side of actually running a startup and starting a startup as well. Love to kind of know more about kind of the background of Ferb. Now, I know you guys came out of Founders Factory as well, so would you be able to kind of explain kind of how Slash Nestor has kind of supported your growth and in terms of launching the business? Yeah, of course. So for those that aren't familiar with Founders Rectory, they work with organizations like Nesta to partner on finding interesting niches in the market or business models that could be started. So with Nestor, they're very mission focused and business came out of the sustainable future mission that they have at Nestor looking at how they can decarbonize the UK housing stock. So over a year ago now, this all started with people looking at what the opportunity would be in the sector. It was identified that something around a retrofit marketplace would be the kind of business model to take forward and from there they've gone and recruited founders. So I was recruited into the role even though I was previously working on a similar initiative beforehand and kicked everything off from August. So what happens from then was a studio process. So the mission studio that's been set up between Nestor and Founders Factory where there's a tremendous amount of support on operations, advice, helping with recruitment. So we've gone from a really great idea to a product, launching it in market, having a growth strategy, building our team in what is very short period of time over six months. And as you mentioned as well, we've successfully spun out the studio recently. We've moving into the accelerator as well and secured precede investment from Founders Factory and Nestor as well, which will help continue our growth and building our product. Perfect. Does that mean looking at raising another round of seed, round of funding is somewhere in the pipeline there as well? It is indeed just to help it continuing with our growth trajectory as well. We have some big targets for 2023 and looking to start raising our seed round as well within the next month or so to hit that target by the end of the year. So it's very exciting and there's been some big milestones as well over the last couple of weeks. Not only just leaving spinning out the accelerator, but we've featured in the Guardian as well. We had a very good review which boosted things again. So there's just been a bit of a push and a bit of growth in a very short period of time, which has been brilliant. But we need to continue that investment, building our product, building our operational capacity as well to make sure we can serve that demand that we're growing. Very cool. And when we release this podcast, we'll release it on our LinkedIn channels as well. There's probably going to be some audience or potential investors as well. So we're happy also to put some links to whatever suitable contact details you might want to share in case they want to continue conversations on the investment front as well. That would be brilliant. Thank you so much. Just in terms of running the startup and growing the startup. So you were hired in by Founders Fats for you by Nestor obviously. It's probably quite a big change from your previous roles. So what do you enjoy most about running a startup? Having the freedom to go after the things that you're really passionate about and want to do. So normally, when you're within a larger organization, what you spend your time on is a little bit is dictated by the needs of the organization. And when you're in the driving seat with a scope that you're really passionate about to deliver, it means you can really go after it and see some significant impact from the work you're doing as well. So it's been incredibly rewarding to do this and also to find some people and recruit some people into the business that are equally really passionate in giving people a home to put their skills and their passion for helping decarbonise housing in the UK to give that a home and really drive this sector forward. But running a startup is also full of challenges as well. What would you say is also the hardest part of running a startup? Having enough hours in the day is probably my answer. Particularly when we're at this kind of early stage with only four of us. We are looking to hire so we can increase the capacity. Because I think our attitude has been trying to get something out to market, to demonstrate traction, to demonstrate that there really is an able to pay market who's interested in investing in retrofitting their home. It's meant that we have a lot on our plate in a very short period of time. So the hardest part is being that time pressure and being quite brutal with prioritizing time to achieve a lot of those goals that you have in the early days to make sure that we're demonstrating what we need to continue our growth and secure further investment as well. Makes sense. Do you have any kind of advice to share for any budding founders out there? Especially any budding propsec founders? I think on the founder side, what I found really valuable by being in the founders factory ecosystem is getting that cohort of founders around you who've done it before or in the same boat as you to kind of even though they're not in the same sector, kind of sharing their perspectives. Everyone's got similar worries, similar challenges and it just sometimes takes you out of the place that you're in and gives you some perspective as well. It's good to have that network of support around you and for Proptech founders as well, whether you're kind of in this sector looking to come in the Proptech theme itself, I'm quite new to it, a bit more specialist in kind of energy and retrofit. I've been a bit surprised that there's been so much focus with Proptech on commercial. It does make sense because the business cases are so much clearer in terms of what the route to market is, the problem that you're solving. But I really think that there's so much opportunity on the residential side with domestic housing to look at Prop tech opportunities in that area. But generally speaking, from the founder perspective, building that network up of founders who've been through it before will be able to give you some really good pearls of wisdom to help you through these early stages is really helpful. Yeah, absolutely. Thank you for that advice. And just on speaking on the Prop tech point, I mean absolutely. If we're talking about reaching net zero goals on the built world, about two thirds of all built environment emissions are coming from existing building operations and about two thirds of that is coming from residential. So residential forms by. Far the largest kind of segment of carbon and greenhouse gas emissions as well. So yeah, when we're looking therefore at topics relating to sustainability and property, then it makes absolute sense to focus on residential. The only question sometimes is about scaling that kind of solution as well because obviously in the UK most of that residential property is in the hands of private individuals as well. So that comes from with all these different distribution strategies and business models compared to, for example, on commercial. But I'm sure it'll balance out quite quickly, especially on the topic of sustainability. Just maybe kind of question for me as know if there's one thing that you could request or one thing you can indeed actually change about the UK markets when it currently comes to the number of retrofits, the number of sustainability retrofits that are installed, what would you like it to be? There's probably a couple of points to add to that. One is on the kind of the skill side because there are a few competitors to what we're building as well who are popping up at the moment. And I think that's great because the size of the market is just the one that we're looking at is about 14 million homes. So there's a huge target addressable market for us to all go after. But the problem is that we're all fishing in a very small pool of supply chain and we're doing what we can and we will continue to do what we can to help support people and advertise the opportunity that there is to retrofit. But obviously we're a very small player in this market. So for sustainable retrofit, I think there needs to be something done in this space to help encourage more people to join construction, to join retrofit, to make sure we have that supply chain in place, that's good quality and able to scale with the demand that will be coming in the next few years. So whether that's employers becoming a little bit more innovative in terms of how they think about and attract talent, how they train and retain talent, I think there needs to be something around companies that are on that installation and surveying side, thinking about how they can innovate to increase the number of the people on that side of things. And then I suppose the companies who are on the supply, like trying to attract homeowners in, is to start thinking about what the opportunity there is a real opportunity here at the moment for the able to pay market. It's thinking about what we can do to catalyze this now instead of waiting maybe two or three years for the right finance product to be in place. And that's definitely our approach is to think about what we can do to deliver and demonstrate now, build traction, learn, because there's so much that we still have to learn around working with the able to pay market in retrofit before we get it right. And we can't be waiting three years for the right market conditions to exactly be in place. So just a call on that side for people to be brave and to look at, researching and investing in this space, to keep driving it forward. That's brilliant. Thank you so much, Becky.

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