More than a billion people worldwide live in substandard housing conditions, without access to things like clean water, sanitation and electricity (according to UN Habitat). A small start-up in Pasadena, California hopes to offer this huge market of potential homeowners a house for under a thousand dollars.

WorldHaus is a kit home that can be put together by a family in less than a week. It’s being developed by the Pasadena-based business incubator Idealab (founded and run by Bill Gross) who are partnering with banks, micro-finance institutions and local entrepreneurs to create a modular, owner-assembled home complete with solar panel for sub-$1,000.

Daniel Gross, emerging markets development manager at WorldHaus, about his recent research trip to India, what potential clients want in a home, dropping the cost from $2500 to $1,000, how small is big enough, and why a for-profit company makes sense for creating real change.

An aspirational home

The idea of Worldhaus is can we create a home that is livable and aspirational. What I mean by aspirational is a home that someone would actually want to live in not a house that we can have a thousand houses donated and people not really want it, not really have a say in how it’s designed and not really have a say in what kind of structure they’re living in.

Our experience with that is most donated housing schemes end up failing because people end up living in the houses they put together themselves and end up using the donated government house for a variety of things whether it’s housing their livestock or turning around and flipping it and selling it to someone else.

We wanted to create a house that is affordable, but also something that people would look at and say I want to live in that house. That is a house that will improve my living standards and help me get out of poverty. So that’s the original inspiration behind WorldHaus.

How to design a $1,000 home

We were aware in our research of other affordable housing ventures around the world that the main impediment to getting people decent affordable housing is price. So you can design a great home that has a number of amenities and features but if you can’t get it to a price point where someone making  anywhere between 2 and 3 dollars a day can afford it then you’re missing out on the vast majority of the population in countries like India and Sub-Saharan Africa. So we decided that we wanted to try to change the design of the house to take advantage of two low cost options.

Minimize shipping volume

One is size. So by designing a kit house we are able to minimize the amount of space that’s wasted in shipping on air. And that is a very large factor in increasing the price of the house. If you manufacture a house let’s say in China and you try to sell it in India and you send it in a shipping container over to India. If your house is prefabricated and already built then maybe at most you can fit 4 or 5 houses into a shipping container because most of the space is taken up by air. 

If we can design a house that can be easily assembled by the end user or by the end user and their local mason or carpenter then we can fit somewhere in the range of 400 houses into a shipping container. So we can radically reduce distribution costs by the fact that we can ship so many more houses to a given location. So that’s one of the first ideas that gave rise to WorldHaus is how can we minimize shipping volume.

A self-assembled home

The other main innovation that we were looking to do was can we utilize local labor. Whether it’s the end user him or herself, whether it’s local carpenters, masons, fabricators, to reduce the cost of the house. So if we can have local Indian labor in let’s say Gujarat, where we are looking to sell houses, building it themselves it is far cheaper than having it pre-assembled by say American workers or European workers and then shipping it out to families in India. 

So that’s the other main innovation that we use to bring the cost of the house down. By making it into a kit home we allow the end user to assemble it with local labor which are far cheaper often times a tenth of the cost than if we had pre-assembled it here in the United States.

faircompanies: One of the issues that I hear you talk about is really listening to what people want. What is it that people want?

Early on in the development of WorldHaus I went and traveled to India for about a month. I went to 7 Indian states in about a month and I interviewed over 100 rural families to find out what they wanted in a house. And we felt this was very important before we started building houses and building prototypes because we wanted to find out where the demand was. 

A home that can withstand the elements

What we found was the number one demand that people have is a safe, sturdy structure. As much as people like electricity, as much as people like clean water and find it important, the number one priority for most families was we want a house that is going to withstand the elements, the extreme elements in our part of the world. 

So we need a house that can withstand the heat. It can get up north of 46 or 47 degrees Celcius (115 or 116°F) in many parts of India in the summer. So we need a house that can stay cool. They wanted a house that can withstand the wind and the rains during monsoon season. And so we needed to design a house that can withstand those elements so that’s priority number one. 

An electricity-generating home

Priority number two I would say was electricity. So a lot of families in many of the poorer India states like Uttar Pradesh, Bihar, Orissa, those states we find that people have either no access to electricity or very intermittent access to electricity. Particularly at the evening hours, the hours from 6pm to 10pm, very few families that we met in those states have consistent access to electricity. 

It has an impact on their ability to get their children out of poverty. If they’re in very remote areas they don’t have the ability to study at night, they come home from school late. And these are for the children that are lucky enough to go to school. But for those that do the lack of electricity at night was a major impact on people. 

We met dozens of families that the only way that they had electricity was they would put a lead acid battery into their tractor and drive it around the field for 3 or 4 hours and take it out of their tractor and bring it inside and hook it up to some lights. Which was the only way that they could generate electricity.

faircompanies: So how are you meeting these needs? It sounds like the big needs are electricity and a structure that is sound and doesn’t heat up too much. What is WorldHaus doing then to meet those two main needs?

Now that we’ve returned from India we’re now beginning construction of a prototype here in Pasadena, here in Los Angeles. So we’re working with a number of different materials to test out their strength, to test out their ability to withstand heat. 

We have a partnership with the California Institute of Technology where we are looking to use a number of pieces of their test equipment as well. Earthquake shakers, wind tunnels, etcetera. Where we can test the sturdiness of the house.

The original conception of the house was to use aluminum as the main construction material we have now broadened that search to include other different materials. We are including concrete, including brick, including steel. And we are trying to innovate the sturdiest structure that can be had for the lowest cost. And also have it be a solid insulator against heat.

So we aim to have the first prototype finished in April or May and we aim to go to India probably by the fall to have a pilot project where we choose one Indian state and one village in that state where we roll out somewhere between 10 and 20 of these houses and see how people like them. See how they withstand the elements. Have them out there for several months and see how people respond and see how it meets their needs.

faircompanies: Materials like concrete and brick don’t sound like a light-weight kit house. What will determine what materials you ultimately select?

The way that WorldHaus is conceptualized and the way we’re designing our prototype is whatever materials are put into the house, whether it’s cement panels, whether it’s aluminum panels whether it’s a steel frame, all of those will be able to be stacked flat in a shipping container so that we are not pre-assembling the house here and then shipping it over. 

The concept of the house is that we will have all of the necessary pieces of the house so that includes the frame, the walls, solar panel, battery, LED lights, a solar powered fan and an option for a clean-burning cooking stove that the smoke can exit cleanly through the top of the house. Those are the elements that we are looking to include in the house. 

Pictures for easy assembly

All of those are designed so that they can stack into the smallest possible shipping space along with instructions, simple instructions that even someone who can’t read can put together. Color-coded pictures, designs to show them how a house gets put together so that it can be easily constructed.

Now we are going to supplement that with people locally so we can teach the first few people how to put it together because it is going to be a new concept. But the house is conceptualized and designed to be very simply constructed at the point of use.

faircompanies: It’s interesting because I’ve talked to so many people whether about LEED construction or those just trying to do more sustainable building and one of the big concepts is using more local materials. Is that something you considered or is that something that’s just not feasible?

I’d say it is feasible. At the stage we’re at right now, we’re trying to develop at least a blueprint for what a house, an affordable house can look like. So right now our focus is on getting the house under a thousand dollars. We had originally designed a house for 2500 dollars and we felt that wasn’t going to reach the majority of the population so much of our focus right now is getting the cost as low as possible.

If we can reduce the cost than we make the house within reach of people that are at the poverty line and that is the key demographic that we’re going after. We definitely have a target demographic in mind. We’d like to give people who don’t have better houses a better place to live.

In terms of local materials, we would like to not only use local materials, we’d like to manufacture locally. So if we have success in India, let’s say we have a large demand for houses in Uttar Pradesh, we’d like to be manufacturing either in Uttar Pradesh or as close to Uttar Pradesh as possible. Not only to take into account local needs, but also you have the advantages of reducing cost and you also have the ability to stimulate the local economy if it’s manufactured locally. 

Customizable exteriors

That will not only include local materials, but the last part of local materials is people like to decorate the outside of their houses individually. People don’t necessarily like a cookie cutter solution where everyone’s house on the block looks the same. If you visit an Indian village their houses are bright, they’re colorful, they are often times fashion statements for people living in villages. 

So when we’re designing the house, at least the exterior of the house, we’re going to give people options in terms of what local materials they want to put on the outside of the house to make it theirs. Whether it’s paints, whether it’s cement. Often times you’ll see families with plaster on the outside of their house covered in designs.

So we’d like to be able to integrate that if we can. Because I think that’s really going to improve our ability to make people want the house. Because this is a for-profit venture. And we want people to look at that and say I can see that being my house rather than here’s a large donation of the house where that’s okay but I prefer my own.

faircompanies: I find it Interesting that it’s a for-profit venture. Was that important for it to make sense to everybody?

I definitely think so. I was in Costa Rica last summer and I was in some very poor villages installing solar panels in people’s houses and giving them electricity. And we came upon at least 10 families who had been part of a Canadian government plan to give people houses that were far better than what they had. They were living in wooden huts. The Canadian government came in and donated very large concrete structures, they were beautiful they were well-maintained. And most of the families remained living in their wooden house and you asked what they used the cement house for and they said that’s where we keep our pigs and chickens. 

So if there’s no ownership, if people aren’t paying for it, if they aren’t paying a down payment or paying monthly rent or if they don’t have any skin in the game, it’s not their’s and they won’t take ownership over it and they won’t maintain it. And I think over the long run our business will probably fail if we can’t have people wanting the house and having a stake in it. 

So while I fully support the work of non-profits, and there are hundreds of very amazing non-profits in India that are working on housing and other issues that I met while I was there, I think for us, our niche is going to be a for-profit venture. And I think that’s going to be the key to our success.

faircompanies: Did you consider something like earth building or cob? We’ve done a lot of stories on that (See videos A return to natural building: cob, straw bale, earth, etc and Build your own home from earth and straw). It’s interesting that in the U.S. we’re kind of coming back to that and everyone talks about how that is how the majority of the world builds their homes. 

We definitely had thought about that and so when you look at sustainable building and local materials, you have earth, you have people building out of bamboo, you have a lot of different materials that people are looking at that are arguably more sustainable and environmentally-friendly than say concrete or aluminum or steel, so we definitely have given consideration to that because we want the house to be eco-friendly and we’re designing it so the materials can be recyclable and as sustainable as we can make it.

The one problem with building out of bamboo or building out of earth if you’re going to make a for-profit venture is that people have to want to buy it. Let’s say that someone has no savings and they’re currently in an earth house, they want to improve to a house that’s better than the one they’re in. 

Oftentimes in a lot of these villages the top houses on the block are beautiful concrete and brick structures and when you interview families they want a house that seems sturdier than earth. They want a house that seems more aspirational than earth. If you have people who are living in tents, earth houses are definitely an option. But a lot of times with the amount of cost, even a thousand dollars to a lot of these people is probably the largest cost they’re going to have in their adult lives.

So we’ve kept a strong eye toward not what is the most sustainable, which is very important, but what are people telling us they want, what are people saying. And when we talk to families and say how about a house made out of earth, what about a house made out of bamboo, they say that’s a great idea, I don’t know if I’d pay for it.

And so, while those ventures are definitely something that we continue to look at and we are constantly trying to keep aware of who else is out there so we can learn from other people’s successes in the States, we are trying to respond as much as possible to respond to the needs of the different customers we talk to. 

Now that could be very different in other locations. We’ve been to India, we plan on going later this year to Kenya and South Africa, those are other markets that we’re looking at. We want to find out what those people want and can’t extrapolate what Indians want over to Kenya and South Africa. It’s something we continually look at, but it’s not something we’ve made the focus of our building so far.

faircompanies: These are going to be tiny houses. That’s also a trend we’ve been following (See videos The human scale of tiny homes & McMansions as fad and DIY home for less than $3500). It’s interesting the things that run in parallel with what’s going on in the U.S. There’s the whole Small House Movement and looking at different ways of building tiny homes and how much space you actually need to be comfortable. Have you looked at how much space a family in India may need to be comfortable and what is that?

Definitely. One thing I should add when you asked what people prioritize in terms of a home, one complaint we heard all the time was space. Indian families are oftentimes very large. We met many families with 5 or 6 children. And oftentimes the eldest child and the father will sleep outside of the house if it’s not very cold just because of lack of space. Many people told us that they wanted more space.

The general feeling we got from people is that there’s a very large price sensitivity in terms of the space/price tradeoff so we’re trying to ride that line as much as we can. From our research we’re trying to come in with a house that’s somewhere between 100 and 150 square feet for under a thousand dollars. 

Now if we can make that customizable, and one of the questions you asked earlier is how can you make this customizable. If you make a house out of panels that are repeatable building blocks of a structure, a family can theoretically build a 50 square foot house when they can afford it and then if they have more money later they can add on another 20 square feet or they can add on another 100 square feet. So that’s one of the other concepts behind the house is we want to make it customizable to size so that people can get what they can afford. 

Financing for a modular tiny home

One of the things I should mention, if you look at a lot of the other housing ventures a lot of times one of the biggest impediments is financing so that’s why partnering with regional rural banks, and local governments is going to be critical in the success of WorldHaus or any housing venture. 

If you can get people financing which is something that we are making integral to our business model, you can really increase the number of people who can afford your house. Very few people are sitting around with a thousand dollars in cash that they can spend on a house. 

So if we can bring in the financing, if we can make it customizable, we can try to give people the size that they want. But the rough guideline that we saw was people living closer to the poverty line were living somewhere between 100 and 150 square feet. Many wealthier families that were either landlords or wealthy independent farmers they oftentimes could have houses that were anywhere between 350 and 400 square feet. So the house is smaller than many of the large estates in the villages but because our key focus is affordability we’re trying to balance that as much as we can.

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