The Exchanges

Q As you're having these initial conversations to figure out, basically, can you work together? What is Happening inside WS development. Like, how are you convincing your team to do this? Because obviously you've got this ethos of experimentation. So does that mean you sort of mentioned this in a meeting and everyone's like, yes, let's go do this? Or was it more complicated than that to get everyone bought in?

A Nobody really knew what to expect at first. This was something completely new. And although we like to think of ourselves as a company and our Seaport team as at the forefront of innovation in the built environment, The reality is the design and construction industry generally, especially in the United States, tends to be pretty reluctant to try new things and to try new materials and products. So there was a, I would say there was a healthy skepticism among the team when this idea was first raised. Uh, it was not something that had ever been used in commercial construction before. Now re-enter at that point Sublime. They recognized that Reluctance. They recognized kind of the ethos and culture of the design and construction industry, and they recognized early on that in order to gain traction and ultimately be adopted by that industry, they had to do a tremendous amount of legwork in terms of testing and demonstrating that the product could meet the appropriate standards to satisfy both the designers who were going to have to specify the product and be comfortable that the product will perform, And construction partners who are going to have to actually work with the product and put it in place in the field. And so what we found is that the Sublime team had already done a really, really robust array of tests, both in the laboratory and in the field, that they had already been …

AI assessment note: “I would say there was a healthy skepticism among the team when this idea was first raised”

Q Okay, so tell us about the moment that you decided to press go as a company. How excited did that feel? What was it like? Or was there even a single moment?

A No, there was definitely a moment when, when all the stars aligned, uh, the data was, was good. The design and construction team had signed off. We identified the location. Uh, Sublime had confirmed that they'd be able to deliver the product, and this was a relatively short time before we actually were making the installation, just because they were the ones who, who were, uh, On the hot seat to, to produce enough product in a timely manner for us. And so it came together a couple of weeks before the placement. And I think we were all sort of just looked around, uh, around the room at one of our weekly job meetings and said, okay, we're going to give this a shot. We're going to try it out. It's going to be really neat. And we had our first placement at the beginning of May, uh, 2024. By that point, everybody was lined up. We had the plan in place. We knew where it was going to be. We had the logistics plan done in terms of where the trucks were going to come in, how the concrete product was going to get to the place where it would ultimately lie. You know, all the legwork had been done, and we were all just sort of holding our breath, waiting to see how this was all going to go.

AI assessment note: “there was definitely a moment when, when all the stars aligned”

Q Okay, so your confidence is going up and up, and now you're approaching a second concrete pour date, and you hit a bit of a snag in the form of one of this podcast's favorite bugaboos, which is the weather. So can you tell us a bit about what happened in July?

A Sure. So the sidewalk pour was an outdoor pour, and it was a very, very hot day. And just by way of background, when concrete cures, it's an exothermic reaction that generates a lot of heat, And you really don't want to have concrete get too hot as it cures because it'll crack, it'll fail, it'll spall, uh, and you have to chip it out and start over. So we're, you know, we're pretty good in the industry at, at figuring out how to deal with, um, hot weather placements of normal ready mix concrete. We add ice to the mix. There are other admixtures that we can add to the mix, uh, to keep the concrete temperature down and the, uh, uh, the exothermic reaction under control. We really didn't know what to expect with the Sublime product. We didn't know whether it was going to respond the same way. And so we sort of stood around that morning and said, okay, it's going to be really hot. What should we do? Is there anything different we should try? And the team, the Sublime team suggested that we just treat it like any other ready mix concrete, you know, in a hot weather pour, which is exactly what we did. Nobody knew how it was going to work. Nobody knew how the, how workable the concrete was going to be, whether it would set up too fast, too slow, whether it would crack very quickly, but we treated it just like normal ready-mix concrete on a hot day, um, and everything worked out great.

AI assessment note: “the sidewalk pour was an outdoor pour, and it was a very, very hot day.”

Q They also had a unique partnership with Boston Sand and Gravel, right? So can you say a bit about how important that partnership was? Had you worked with Boston Sand and Gravel before? What did Sublime and Boston Sand and Gravel do together that kind of helped give you confidence?

A Yeah, great, great question. Boston Sand and Gravel is a, is probably the largest ready-mix concrete, um, provider in Boston. Uh, they've provided most of the concrete for our Boston Seaport project over the years. They're a great Partner. But we as WS almost never intersected with Boston Sand and Gravel as an organization because they were a supplier to a subcontractor to our general contractor. And so we were, you know, we're several rungs of the, of the supply chain removed. And frankly, the first time any of us had ever actually met the whole team for Boston Sand and Gravel was in the context of the Sublime adventure. Which I think was, is kind of interesting and illustrative in and of itself. But Boston Sand and Gravel is, um, simply put, is Sublime's customer. Sublime sells their product to Boston Sand and Gravel, uh, which at a batch plant near North Station, uh, Boston mixes the cement product, which is the, the catalytic component of ready-mix concrete, with the aggregate, with the admixtures, with the water, In order to create the kind of ready mix concrete that comes off the cement, the concrete truck in the field. Um, and Sublime, again, very presciently had been working for several years with Boston Sand and Gravel to better understand the ready mix concrete business, the, the risks that Boston Sand and Gravel as their primary customer would be concerned with, some…

AI assessment note: “that foundation had already been laid, so we weren't starting from scratch.”

Q Okay, so you're working with Sublime. You're talking to them about what they can potentially provide to you. There's got to be some cost associated with what it is they're ultimately going to be providing around green cement. So tell me about kind of your initial discussions around that. Um, how did you think about the price premium associated with green cement that you'd be employing in One Boston Wharf?

A Sure. I mean, the reality in this case is, is that the quantities that we were talking about, you know, the building was already under construction. The Foundations were already in place. A bunch of the slabs had already been poured. So the quantities that we're talking about here were small enough such that whatever the premium was for, you know, the product at the time that we used it. And of course, it's, it's important to point out that the, the moment in time or the moment in the sublime trajectory where we use this product, it really was still sort of handmade in their pilot plant in Somerville. And so it's a, it's a pre-scale cost structure, but the reality is that The relatively small amount of product that we were using , it was such a infinitesimally small premium to be paid that it was not at all part of the discussion.

AI assessment note: “it was such a infinitesimally small premium to be paid that it was not at all”

Q I love this. So what do you think this has meant to Sublime as a company? Uh, I, I would imagine that they've got folks coming through all the time to check out the real installed version of their cement.

A Yeah, our, our hope is that this helps them a lot. And, and as a result, helps the product gain, um, you know, more traction across our industry, not just in Boston, but locally, nationally, globally, of course. Um, and so that's, you know, a big part of the reason that we did this was to help the, the company and the product, um, proliferate. And yeah, it's been great over the, just over the past few months, Sublime has had a number of prospective customers, a couple of prospective investors, You know, through the project and to meet with us and interview us about our experience. And, you know, that's every bit as much part of our commitment and aspiration as putting the product in place in the first place.

AI assessment note: “Sublime has had a number of prospective customers, a couple of prospective investors”

Q so talk a little bit about what Sublime did right and what kind of lessons there are for other companies that are like Sublime in their scaling journeys and are looking to partner with big companies, get real demonstrations under their belts. Are there certain things that really stand out to you as really critical to the story that Sublime did that could illustrate what to do for other companies?

A Sublime did a lot of things right. First of all, they started with a really incredible Idea and technology. Like, let's be clear about this. Um, they have discovered something really extraordinary, and so that was the first thing they did right. But what they did with that, and I think this speaks to the sort of the humility of that organization and the, the humble nature of the concrete industry, is they understood very clearly where they stood in the supply chain and what the risks and barriers would be to the adoption of their product by what they, I think, assumed would be their customer, which is the ready mix concrete industry. Very risk averse, very set in their ways, um, not a, Great history of innovation or entrepreneurship or trying new things, um, you know, for all for, for valid reasons. And so they set about very early on taking this incredible new product, this incredible new idea they had developed, um, and coming up with the, the data and the technical, uh, foundations that would be necessary to convince their very conservative, very set in their ways primary customers That this product was something worth looking at, and worth buying, and was not unacceptably risky.

AI assessment note: “they understood very clearly where they stood in the supply chain and what the risks”

Q Well, and I think it's true generally, right, that when you're thinking about the total cost of construction within a building, you know, a green premium on a different kind of cement, particularly in the future as these costs comes down, is not necessarily something that's going to break the bank on these projects. Is that right?

A That's right. I mean, the reality is that the The premium that we pay for sustainability in terms of this building being all electric, uh, in terms of the quality of the systems and the nature of the systems that we're already building into the building, uh, makes the cost of the cement, even if it were the entire building, pale in comparison. So the industry has already adjusted to a degree and embraced the notion of paying some degree of premium for sustainability. And through the lens of, you know, a 700,000 square foot building, Some modest premium for green cement or green other types of products. It's not unique to cement. I would say the industry in general has already kind of adjusted to that reality and embraced that reality.

AI assessment note: “That's right. I mean, the reality is that the The premium”

Q What, what are some of the things that could go wrong here?

A Sure. I mean, look, if, if you're going to innovate, you have to be ready to fail. I mean, that's sort of, that's sort of foundational to the culture. And in the very worst case scenario, we place this stuff, and then a month later, it starts to crack, or it goes to pieces, or it, you know, turns purple or something, and we have to chip it out and Replace it with normal ready mix concrete. And in this instance, um, you know, we're not talking about an entire portion of a building. We're not talking about an entire floor of a building. We're talking about a very prominent, but, you know, somewhat, uh, a small area, uh, of the building. If that was the worst that happened, we're fine with that. And that was a, that was definitely a scenario that we discussed. Um, and it was a choice that we made. And, uh, we were certainly prepared to, to bear the consequences if the product failed, but we also had a very high degree of confidence because of all the testing that had been done that the product was not gonna fail.

AI assessment note: “it starts to crack, or it goes to pieces... and we have to chip it out”

Q How important do you think it is that WS Development is private, locally owned, family owned? You know, do you think this is possible in the context of a big public company?

A It's certainly possible, um, anywhere, but it definitely helps a lot that we're a relatively small company. We're privately owned. You know, it's a very flat organization. Uh, the decision-making process here is very integrated, very, uh, engaged across different levels of the organization. And so it's very easy for us to be entrepreneurial and to be nimble and to try new things without having to check with, you know, somebody across the country or around the world or, um, you know, the public markets. Uh, for example, we have a lot of ability to be entrepreneurial just because of the way we're set up. Um, but that doesn't give us a monopoly on innovation or entrepreneurship. It just makes it a little bit easier for us to be nimble and flexible and try new things like this.

AI assessment note: “It's certainly possible, um, anywhere, but it definitely helps a lot”

Q And when will you know that the placement has been fully successful? I know that one of the things you're tracking right now is the freeze-thaw cycle. Which we're so familiar with in Boston.

A So the interior placement is certainly performing very well. The outside placement on the sidewalk, um, we are going to watch very closely over time. You know, concrete in Boston and sidewalks is subject to a freeze-thaw cycle year after year. It's subject to corrosive agents like salt and other de-icing agents year after year. And, you know, the industry has figured out how to make Very durable sidewalks. There are plenty of 30, 40, fifty-year-old sidewalks all over the city of Boston that are performing great. We're definitely gonna watch the Sublime pour carefully over time to understand how it performs. So far, so good. We're halfway through the winter, and it's been more focused on freeze than thaw, um, but it's something we're gonna learn from over time.

AI assessment note: “it's something we're gonna learn from over time.”

Q What are some of the lessons for other building owners and real estate developers who want to be as innovative as, as you are? Uh, what can you tell us about the decision-making process, the number of decision-makers, The ways in which you've infused this culture of innovation and experimentation. What are some of the things that other companies could do to start to run in these directions?

A It's an excellent question. There are a couple of different topics here. Number one is just the nature of the organization and the culture of the organization. Um, there are lots of businesses, real estate development being one of them where innovation and trying new things is dangerous in the sense that, you know, whether you're building single family homes or retail centers or office buildings, you know, very often around the country, around the world, um, there's a bit of a, of a, of a formula and there's a sense of, well, look, if we build it this way, we know it's going to work, uh, because that's what the market has always told us. And there's nothing wrong with that per se. Um, but, you know, very often there, there are organizations that come along and say, well, that's great. That's the typical prototype. That's how it's been done, you know, for a long time. And that's proven, but maybe we can do better by trying something new by innovating. And I, this isn't to say that that's, you know, better than, uh, uh, you know, a more traditional approach. It's just different. It's a different business model, but certainly having an organizational culture that Treats innovation and entrepreneurship, um, in a way that's celebrated and embraced is really important because inevitably, um, you know, whether this is coming from a, uh, the most junior assistant project manager, uh, y…

AI assessment note: “having an organizational culture that Treats innovation and entrepreneurship, um, in a way that's celebrated”