WEBVTT - Scott Brothers Talks Healthy Home Innovation Fund 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.160 --> 0:00:09.720 You may know The Property Brothers from their popular reality 0:00:09.760 --> 0:00:12.600 TV series. Well, now the Canadian siblings are embarking on 0:00:12.680 --> 0:00:15.520 a new venture to invest in entrepreneurs making moves in 0:00:15.520 --> 0:00:19.040 the housing industry. They're partnering up with Groundbreak Ventures to 0:00:19.120 --> 0:00:23.080 launch something called the Healthy Home Innovation Fund. The fund 0:00:23.120 --> 0:00:28.240 hopes to back companies finding innovative solutions that prioritize sustainability, affordability, 0:00:28.480 --> 0:00:32.879 adaptivity and connectivity in the market. Joining us now for 0:00:33.040 --> 0:00:37.040 more are the Property brother That's a lot activities the 0:00:37.080 --> 0:00:42.240 Property Drew and Jonathan Scott, co founders of Scott Brothers Global. 0:00:42.520 --> 0:00:44.760 So tell us about these activities. To you and Jonathan, 0:00:45.040 --> 0:00:47.080 what do people want and how do you get how 0:00:47.120 --> 0:00:48.960 do you give it to them cost effectively? 0:00:50.200 --> 0:00:51.519 Well, I think the biggest thing is we're in a 0:00:51.600 --> 0:00:54.200 period right now where there's so much incredible innovation that 0:00:54.320 --> 0:00:57.400 is going to transform not only how our homes operate, 0:00:57.640 --> 0:01:00.560 how we you know, secure our homes, and also the 0:01:00.640 --> 0:01:03.520 transacting within a home while you're renovating, buying and selling. 0:01:03.840 --> 0:01:07.319 So we're looking for from series to a series A 0:01:07.520 --> 0:01:10.360 right down to seed. We're looking for any companies that 0:01:10.400 --> 0:01:12.679 are providing a service or a technology that we think 0:01:12.720 --> 0:01:15.319 we can get behind and amplify. And that's why we've 0:01:15.319 --> 0:01:17.120 got a lot of interest from investors who are coming 0:01:17.200 --> 0:01:20.440 as well, saying we know there's something here that's got 0:01:20.440 --> 0:01:23.040 a lot of opportunity to grow, and we're just trying 0:01:23.040 --> 0:01:25.840 to find something unique that nobody else has touched on yet. Yeah, 0:01:25.959 --> 0:01:27.840 the main thing actually is, you know, we're looking to 0:01:27.920 --> 0:01:30.520 raise eighty five million, and that's that's just to be 0:01:30.560 --> 0:01:32.720 able to purchase and renovate Michael Jordan's house. 0:01:32.840 --> 0:01:35.440 That was the main reason for the E's that fine. 0:01:36.240 --> 0:01:38.200 I think, like John was saying, for us, you know, 0:01:38.240 --> 0:01:40.759 we've already we've always put family first, and we're really 0:01:40.800 --> 0:01:44.160 interested in finding ways to make homes more affordable, have 0:01:44.240 --> 0:01:46.720 the homework for people instead of them having to work so. 0:01:46.720 --> 0:01:48.559 Hard to afford to live where they are. 0:01:48.600 --> 0:01:51.640 So, whether we looking at sustainability or adaptivity or connectivity, 0:01:51.920 --> 0:01:54.120 there are so many ways for us to bring new 0:01:54.120 --> 0:01:56.360 innovation to the market and then utilize our face and 0:01:56.400 --> 0:01:58.320 our brand, which is a household name when it comes 0:01:58.360 --> 0:02:02.640 to home renovation design, to really help these new companies 0:02:02.760 --> 0:02:05.840 scale up. And I'm excited this is a new venture 0:02:05.880 --> 0:02:07.120 for us. So that's why we look for the best 0:02:07.160 --> 0:02:09.000 of the best partners with Groundbreak for sure. 0:02:09.040 --> 0:02:11.600 For sure, Well you're looking to raise eighty five million 0:02:11.760 --> 0:02:14.160 dollars and put that to work. And I mean there 0:02:14.200 --> 0:02:17.240 must be so many candidates out there working on solutions 0:02:17.240 --> 0:02:18.919 to the home for example, and not just the big 0:02:18.919 --> 0:02:22.280 players that we all know. You know, why would they 0:02:22.680 --> 0:02:25.360 not to be rude, but why would they need seed 0:02:25.400 --> 0:02:28.920 money at this point if it's something that's that can 0:02:29.000 --> 0:02:30.079 generate money on its own. 0:02:31.120 --> 0:02:32.799 Yeah, Well again we're looking, well, there's a lot of 0:02:32.880 --> 0:02:35.320 information out there that just hasn't seen the light of day. 0:02:35.520 --> 0:02:38.160 Or even looking at geokermal as an example, it's not 0:02:38.240 --> 0:02:39.959 cost effective right now. 0:02:40.040 --> 0:02:41.160 So there's a lot. 0:02:41.280 --> 0:02:44.919 There's a lot that is technology, a lot that's sustainably 0:02:44.919 --> 0:02:48.080 based or you know, looking at net zero construction that 0:02:48.360 --> 0:02:50.440 doesn't have the money to grow. And so we are 0:02:50.440 --> 0:02:52.840 looking at our strategic partnerships as well with our fund 0:02:52.880 --> 0:02:56.480 and LPs, you know, whether it's insurance, banking, developers, builders, 0:02:56.919 --> 0:02:58.880 you name it to be a part of this because 0:02:58.919 --> 0:03:01.880 this is something that can help their businesses thrive as well. 0:03:01.880 --> 0:03:05.320 What's interesting as well is we have a situation unlike 0:03:05.480 --> 0:03:08.240 anyone else out there where we're in people's living rooms 0:03:08.280 --> 0:03:11.560 across the country in eighty plus million homes a year 0:03:11.800 --> 0:03:15.440 with our shows, and we get feedback, real time feedback 0:03:15.440 --> 0:03:17.359 from all of our audience. Drew and I received half 0:03:17.400 --> 0:03:20.320 a million messages a week each from fans saying, here's 0:03:20.320 --> 0:03:22.920 what I need at home. Here are the problems we're encountering. 0:03:22.919 --> 0:03:24.799 I wish there was a solution for that. In the 0:03:24.840 --> 0:03:28.720 same boat, we have technology companies, engineers who've created technologies 0:03:29.080 --> 0:03:31.320 reach out to us as a first step before they've 0:03:31.360 --> 0:03:34.280 even gone to look for funding because they have an idea. 0:03:34.560 --> 0:03:36.800 So we really get an inside scoop as to where 0:03:36.840 --> 0:03:38.800 trends are going when it comes to the home space. 0:03:39.040 --> 0:03:39.920 And we've had a lot. 0:03:39.800 --> 0:03:42.400 Of incredible partners as well who have brought us companies 0:03:42.440 --> 0:03:44.720 where they think they see the opportunity for us to 0:03:44.760 --> 0:03:47.640 amplify the message and the product that they have in 0:03:47.680 --> 0:03:49.000 a way that they couldn't do if they just went 0:03:49.040 --> 0:03:49.840 to the open market. 0:03:50.000 --> 0:03:52.560 So Jonathan, on that point, and first of all, thank 0:03:52.600 --> 0:03:54.080 you for one of you shaving so I can tell 0:03:54.120 --> 0:03:57.400 you to a part. But Jonathan that on that point, 0:03:57.760 --> 0:03:59.800 when we talk about sort of what people are looking 0:03:59.800 --> 0:04:01.840 to do for their community. Obviously, I'm sure you know, 0:04:01.920 --> 0:04:04.960 affordable housing or more affordable housing is a big issue 0:04:05.080 --> 0:04:07.160 in a lot of Marcus, certainly out there in California 0:04:07.200 --> 0:04:09.600 where you guys are based here. Some of the ideas 0:04:09.600 --> 0:04:11.360 that you're expecting to generate, or maybe some of the 0:04:11.360 --> 0:04:15.120 ideas you've already gotten, are they targeting that as well? 0:04:15.200 --> 0:04:16.279 Is that something specific? 0:04:17.400 --> 0:04:18.159 One hundred percent. 0:04:18.200 --> 0:04:20.160 So one of the companies that we've acquired is a 0:04:20.360 --> 0:04:24.320 company focused solely on ADU construction and multi family construction 0:04:24.400 --> 0:04:27.840 to offset the housing crisis. What we see out there, 0:04:27.839 --> 0:04:30.279 and Drew and I are both the same. We're total 0:04:30.320 --> 0:04:32.479 data nerds. We dig in and we want to find 0:04:32.480 --> 0:04:35.280 out what's causing the problem and what's a realistic solution. 0:04:35.880 --> 0:04:38.440 Most of the offerings out there are total crap. Either 0:04:38.480 --> 0:04:41.880 the product is going to fall apart, they're overcharging community, 0:04:41.880 --> 0:04:44.040 and a lot of communities really want to spend to 0:04:44.080 --> 0:04:46.680 find a solution for the housing crisis. So we're trying 0:04:46.720 --> 0:04:48.200 to dig in and find out what's going to be 0:04:48.200 --> 0:04:50.160 good for business, what's going to be good for communities, 0:04:50.160 --> 0:04:52.880 but ultimately what's going to actually solve the problem. Because 0:04:52.920 --> 0:04:54.919 we've been waiting too long for someone to actually do 0:04:54.960 --> 0:04:56.880 something that's going to be effective. Well on that baty 0:04:56.920 --> 0:04:59.600 you look here in California. One issue here is the cost. 0:05:00.000 --> 0:05:02.120 Even if you're looking for housing trying to help people 0:05:02.200 --> 0:05:05.440 up the street, just a very basic, basic, small signal 0:05:05.560 --> 0:05:09.840 room bedroom unit, the cost is over eight hundred thousand dollars. 0:05:10.200 --> 0:05:11.440 That's something that we're cracking. 0:05:11.920 --> 0:05:15.000 The housing prices is a massive issue all across North America, 0:05:15.040 --> 0:05:17.560 and so that is one of our verticals to really 0:05:17.600 --> 0:05:20.600 strongly focus and we have strong relationships whether it's federal, 0:05:20.600 --> 0:05:24.600 state or regional here to help work on that specifically. 0:05:24.640 --> 0:05:27.760 So I'm excited again with this panelized system that can 0:05:27.760 --> 0:05:29.760 come into a new way of building your home at 0:05:29.760 --> 0:05:32.479 an affordable rate that's still a solid home. It's not 0:05:32.560 --> 0:05:35.560 something that feels cheap, thin walls, it's a real home, 0:05:35.720 --> 0:05:37.600 but it can bring that price point way down. 0:05:38.200 --> 0:05:40.159 I am curious and drew on that point. And this 0:05:40.240 --> 0:05:42.520 is a broader question just about kind of the state 0:05:42.600 --> 0:05:45.799 of the home building market, home renovation market, if you will. 0:05:46.000 --> 0:05:48.400 We saw prices really get distorted because of the pandemic 0:05:48.440 --> 0:05:50.880 prices for supplies that is has that kind of right 0:05:50.960 --> 0:05:53.880 size itself I mean, is it I guess more normalized 0:05:53.920 --> 0:05:55.720 and what we saw prior to the pandemic. 0:05:56.360 --> 0:05:59.080 I guess it depends what you're looking at for your materials. 0:05:59.200 --> 0:06:02.120 Some in some ways it's normalized. Its timelines are the 0:06:02.160 --> 0:06:05.080 thing too. The timelines were ridiculous for you know, even 0:06:05.160 --> 0:06:08.400 just ordering windows, our timeline was ten times longer than 0:06:08.440 --> 0:06:10.600 what it used to take. It's not just that though, 0:06:10.640 --> 0:06:12.680 which you know, you're well aware, the cost of debt 0:06:12.839 --> 0:06:15.080 is so high as well, and it's so hard for 0:06:15.120 --> 0:06:17.719 a family to look at getting a home or renovating 0:06:17.800 --> 0:06:20.600 a home because when you have expensive materials, long time 0:06:20.600 --> 0:06:23.680 delays and you have expensive debt is just a losing recipe. 0:06:23.880 --> 0:06:26.720 So this listening too is we're seeing a lot of 0:06:26.760 --> 0:06:29.240 the delays coming from labor shortages as well. There's just 0:06:29.279 --> 0:06:31.880 too much work happening and not enough people that can 0:06:31.880 --> 0:06:33.880 sustain the workforce. So we're going to see and we've 0:06:33.880 --> 0:06:36.039 already started to see a real surge in the trades 0:06:36.080 --> 0:06:38.120 as well. People can come out of college and be 0:06:38.160 --> 0:06:42.000 making a six figure salary right off the bat, and 0:06:42.040 --> 0:06:44.279 so I think that's a huge thing too, Balancing the 0:06:44.400 --> 0:06:47.000 jobs out there with the technologies that are coming in 0:06:47.040 --> 0:06:49.039 to make life a little healthier at home. 0:06:49.160 --> 0:06:51.720 Jonathan, One of the small things that people are starting 0:06:51.720 --> 0:06:53.440 to look for the newer things. I mean, it used 0:06:53.440 --> 0:06:55.320 to be that the kitchen was all important, or that 0:06:55.400 --> 0:06:58.920 extra bathroom or that rainforest shower. What are the next 0:06:58.960 --> 0:07:02.279 things that we will be wanting in our homes. Yeah, 0:07:04.040 --> 0:07:06.200 everyone likes the rainforest, so I guess I don't know 0:07:06.320 --> 0:07:10.400 rainforce without the buzz. 0:07:11.480 --> 0:07:12.720 Technology is everything. 0:07:12.720 --> 0:07:15.520 But we're noticing is there's going to be a real 0:07:15.680 --> 0:07:20.080 shift toward things like leak detection and AI driven leaked detection. 0:07:20.200 --> 0:07:23.440 Because water is getting more expensive, the quality of air 0:07:23.560 --> 0:07:25.920 and water at home is going to be incredibly important 0:07:26.200 --> 0:07:29.280 as well. As homes are moving toward an electrified system. 0:07:29.360 --> 0:07:31.920 It's much more efficient and the data that comes off 0:07:31.960 --> 0:07:34.960 of that as well can preemptively catch anything like an 0:07:35.000 --> 0:07:38.240 appliance breaking down or you know, something that could cause 0:07:38.240 --> 0:07:41.160 you a more expensive problem. So technology is like smart 0:07:41.200 --> 0:07:44.320 electrical panels, leak detection. These are all things that are 0:07:44.320 --> 0:07:46.840 really really high on our radar because they're actually going 0:07:46.880 --> 0:07:49.960 to help people in the their budgets at home, but 0:07:50.000 --> 0:07:51.240 they're also going to make life easier. 0:07:51.840 --> 0:07:54.320 And on top of that, for example, battery walls at home. 0:07:54.720 --> 0:07:57.440 Solar is amazing and people are shifting and regulation is 0:07:57.440 --> 0:08:00.040 also making people shift away from gas. But if you 0:08:00.280 --> 0:08:02.680 don't have battery backup, you're really missing out on a 0:08:02.680 --> 0:08:05.840 lot of opportunity to offset your costs at home and 0:08:06.160 --> 0:08:08.880 protect your family. So there's so much excited about I 0:08:09.120 --> 0:08:11.360 would definitely say that that's another reason we're excited to 0:08:11.400 --> 0:08:13.720 start allocating funds from our. 0:08:13.680 --> 0:08:16.320 Fun Yeah, and this is a great idea. And I'm 0:08:16.320 --> 0:08:19.360 just looking through kind of all these materials and preparing 0:08:19.400 --> 0:08:21.200 for this, and I really wish you guys the best. 0:08:21.320 --> 0:08:23.400 I do kind of want to end on a liner note. 0:08:23.440 --> 0:08:25.760 You were joking a little bit earlier, Drew about the 0:08:26.000 --> 0:08:28.280 Michael Jordan property. I don't even know how many square 0:08:28.320 --> 0:08:30.240 feet that is. You can see that you can build 0:08:30.240 --> 0:08:32.680 a lot of affordable homes just out of that property. 0:08:32.800 --> 0:08:34.480 But I mean, for those of us who've watched you 0:08:34.520 --> 0:08:36.960 and seen you guys, you know, you know, tear up 0:08:36.960 --> 0:08:39.240 these homes and turn them into something better. How do 0:08:39.320 --> 0:08:43.319 you deal with a home that is constructed so specifically 0:08:43.640 --> 0:08:45.880 just one person's taste and then have to put that 0:08:45.960 --> 0:08:48.120 home back on the market and make it. I guess 0:08:48.160 --> 0:08:50.800 palatable to someone else or to the masses, if you will. 0:08:50.920 --> 0:08:53.360 You know, it's the one thing we tell clients all 0:08:53.360 --> 0:08:55.679 the time, for twenty years working with clients who've been 0:08:55.679 --> 0:08:57.840 saying the same thing. It's great if you have something 0:08:57.880 --> 0:09:00.720 you personally really love, but you always have to think 0:09:00.840 --> 0:09:03.200 as though you may have to sell this house. What 0:09:03.240 --> 0:09:05.160 if your family grows you need a bigger home, or 0:09:05.160 --> 0:09:07.920 what if you your job transfers you to a different city. 0:09:08.160 --> 0:09:10.520 Always think of what if you had to move so 0:09:10.880 --> 0:09:13.160 that secret man cave that you want and the secret 0:09:13.200 --> 0:09:15.600 panel in your wall or the basketball court in the basement. 0:09:15.840 --> 0:09:18.120 I always bug my friend Michael Boublay because he dug 0:09:18.200 --> 0:09:19.920 out in his basement and put in a full hockey 0:09:19.960 --> 0:09:20.760 rank in his basement. 0:09:20.960 --> 0:09:22.960 He will never see that value back again. 0:09:23.280 --> 0:09:26.040 But it's up to them if somebody wants to possibly 0:09:26.080 --> 0:09:28.600 throw that money away. You know, Michael Jordan makes enough 0:09:28.640 --> 0:09:30.040 to be able to be okay to walk away from 0:09:30.120 --> 0:09:30.679 a few million. 0:09:31.240 --> 0:09:32.920 It's just it's a decision you have to make. 0:09:33.040 --> 0:09:35.480 An easy way to remember is we always tell people 0:09:35.880 --> 0:09:38.800 the more bold you go with an idea in design, 0:09:38.880 --> 0:09:40.880 at home or in construction, the more bold you go, 0:09:41.000 --> 0:09:43.000 the faster, it's going to go out of style, and 0:09:43.080 --> 0:09:44.400 so just be prepared. 0:09:44.000 --> 0:09:45.240 That you're going to spend on it again. 0:09:45.480 --> 0:09:46.440 Yeah, the full. 0:09:46.320 --> 0:09:48.000 Basketball court in the basement is pretty bold. 0:09:48.360 --> 0:09:50.240 Yeah, that's the great wooden floors though. 0:09:50.440 --> 0:09:50.680 Yeah. 0:09:50.720 --> 0:09:51.240 Absolutely. 0:09:51.280 --> 0:09:53.640 I guess if you have their kind of money, you know, 0:09:53.960 --> 0:09:55.760 I guess it doesn't matter here. Why not put a 0:09:55.800 --> 0:09:58.280 hockey rink in your basement or a basketball court? Maybe 0:09:58.280 --> 0:10:00.559 one day I'll get there. Hey, thanks to both of you, guys, 0:10:00.640 --> 0:10:03.640 really appreciate you join us. Drew and Jonathan Scott of course, 0:10:03.640 --> 0:10:07.040 the co founders of Scott Brothers Global. Of course HGTV 0:10:07.160 --> 0:10:08.280 stars as well.