Katerra has failed to complete roughly a dozen projects and could only name one that was delivered on time. All the while, logistical and technology-based issues have chipped away at the company’s image as a revolutionary tech startup.
Some clients have ended their relationship with the firm. Other clients, however, are tied to Katerra’s executives, and have drummed up business for the company—a similar arrangement used by WeWork executives, which became a concern for some investors
— The Real Deal
The Real Deal takes an investigative look at some of the recent business dealings and project announcements from Katerra. The vertically integrated construction and modular building components start-up is facing renewed media and financial scrutiny following the recently announced closure of its first fabrication plant in Phoenix, Arizona. Katerra recently opened a new 270,000-square-foot CLT factory in Spokane, Washington.
The company also recently expanded its project offerings in Saudi Arabia and India, the former of which is the biggest backer of Japanese technology start-up investor Softbank’s Vision Fund, a financial vehicle that backed WeWork, Compass, and Uber, three highly valued ventures that all stumbled in 2019.
This is the crushing statement;
"Katerra has said its mission is to deliver construction projects that are “better, faster and cheaper.” Through tech, the company says, it can streamline the antiquated processes that plague the construction industry."
Pick two? I guess they never heard that one before.
Katerra's lack of understanding of the AEC industry destroyed my company by buying them in Fall 2018. We were an up-and-coming GC in Colorado that self-performed concrete and wood framing, and had a four person leadership of young, bright, energized people. Who, unfortunately, fell prey to the attractions of hubris and the Almighty Dollar and sold out to K.
It was completely downhill from there. There were indeed theoretical improvements, influenced by the Silicon Valley tech model, to be made to the construction process. But K's execution of those potential changes relied entirely (IMHO) upon input from their tech brain trust, as well as Mr. Wolff (the Partner with the development background and built-in back log), while ignoring input from others in the industry they wished to disrupt.
They received TONS (1B+) of startup investment from Soft Bank, which must have seemed like a huge blank check, but that money has been spent in an asinine, ignorant manner and it shouldn't take SB much longer to realize that and pull in the reigns.
Chalk this one up to a decent idea, executed deplorably. Again, just IMHO. But, I was also there on the ground floor, and damn near everything I saw was a step in the wrong direction. I truly feel sorry for some of the young/bright minds that are going to be severely tainted by their experience at Katerra.
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People from outside the AEC industry do tend to over-simplify the challenges facing the industry. This is a rough and dirty business, with little economy of scale and far more convoluted than producing an app or even building microchips.
This is the crushing statement;
"Katerra has said its mission is to deliver construction projects that are “better, faster and cheaper.” Through tech, the company says, it can streamline the antiquated processes that plague the construction industry."
Pick two? I guess they never heard that one before.
Pfffft. Pick one.
That's right, faster always goes with cheaper though.
the AEC industry includes ALL industries, this is why any time someone from a more simplified industry always fails, they imagine it's this simple industry like their own (name any, like cars, etc...)
This. This is it.
Regional differences in codes and climate, high transportation costs, competing with diversified ingrained systems make this all but impossible. Katerra is just another idiotic startup looking to cash in on "tech". Absolute bullshit, doomed to failure from the start.
This is their high-tech structural system:
https://www.katerra.com/produc...
You need robots to make this shit? LOL
We need more "disruption". LOL as well
Katerra's lack of understanding of the AEC industry destroyed my company by buying them in Fall 2018. We were an up-and-coming GC in Colorado that self-performed concrete and wood framing, and had a four person leadership of young, bright, energized people. Who, unfortunately, fell prey to the attractions of hubris and the Almighty Dollar and sold out to K.
It was completely downhill from there. There were indeed theoretical improvements, influenced by the Silicon Valley tech model, to be made to the construction process. But K's execution of those potential changes relied entirely (IMHO) upon input from their tech brain trust, as well as Mr. Wolff (the Partner with the development background and built-in back log), while ignoring input from others in the industry they wished to disrupt.
They received TONS (1B+) of startup investment from Soft Bank, which must have seemed like a huge blank check, but that money has been spent in an asinine, ignorant manner and it shouldn't take SB much longer to realize that and pull in the reigns.
Chalk this one up to a decent idea, executed deplorably. Again, just IMHO. But, I was also there on the ground floor, and damn near everything I saw was a step in the wrong direction. I truly feel sorry for some of the young/bright minds that are going to be severely tainted by their experience at Katerra.
Anything done solely for money is guaranteed to be shit.
construction of houses in Japan is almost all done in factories, with robots, all the rest. Japan is smaller country, though its economy is comparable enough to the usa, so maybe it can scale if done thoughtfully.
Even if it could all be done technically, I am not entirely a fan of the concept. The thing is that houses here look like plastic (actually just very shiny concrete panels), and plans are very very limited by the systemized production method, which requires specific scales, orientations, and a limited number of options when it comes to organization of rooms/walls/windows, etc.
People order a custom house, but need to adapt to the system rather than the system adapt to their needs. It is not a lot cheaper than hiring us to design a custom house, simply because of overhead, though I do credit the factory fabricated house makers with bringing a lot of innovation and increased expectations about comfort in homes recently. They have a massive impact on standards here, and because Japan is hyper-capitalist the general trend is towards improvement, which I can appreciate. It is mildly annoying because they are my competitors in a way (house makers build everything from houses to large apt buildings), but I am OK with it because they cannot compete with design quality as yet. People hire them because it is cheap and fast, they hire us for quality. It is a clear choice.
There is a kind of powerful technocratic society here though that smooths out all of the tough parts of this kind of effort. Does USA have that, or does the tech overcome the social and regulatory issues?
Indeed, a national policy and culture is necessary for these things to reach scale. The US is too dispersed and disparate for this to work.
interesting. The reason I wonder is because houses look the same all over the united states, as if they were all made by 3 happy builders with a really big truck and a house making machine like something from doctor seuss. Prefab seems like it would be the most natural thing in that environment.
The bizzaro thing with the AEC industry is that the vast majority of construction is very similar across climate regions - yet with the exception of a few large national homebuilders, there's a lack of prefab buzz compared to other countries in Asia and Europe. You're definitely right that most houses look similar. I suppose labor costs are still cheap enough to proceed with traditional construction. Problems such as Katerra's woes and the nightmare around Pacific Place in Brooklyn also make developers leery of prefab on a large scale.
I worked for a company with a similar mission (and a weirdly similar name) a few years back and they had the exact same stumbles before essentially going out of business and re-emerging as a traditional developer.
I'm curious if Katerra's problems are the same, just on a much larger scale.
My husband recently worked for Katerra in Boise Idaho. It's a 325 unit apartment complex. In the 12 months he was there they have yet to complete a unit that can be lived in. Between incompetence and sabotage the work that is required to be redone never ends. A project that should have been completed in less than a year is now in its 18th month and the end is no where in sight. To say it's a shitshow is putting it lightly. Katerra just announced they will no longer have inhouse electricians company wide.
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