The Building World Debates Katerra: Bad Model or Execution
Here's what we're hearing from TBD audience members on the question of whether it was Katerra's business strategy or execution that doomed it to fail.
The bombshell shut down of high-flying, over-promising Katerra broke all records for our polling and set the building world abuzz with reflections on whether this dooms technology-driven fixes to construction's inefficiencies, or whether Katerra was a classic over-reach, made worse by being flush with private equity cash.
In case you're wondering, 66% of you said Katerra's demise was the result of poor execution, while 34% said the idea itself was just a bad model doomed from the start.
Here is a sampling of what you had to say, culled both from our poll responses and LinkedIn comments on John McManus' Katerra analysis yesterday in TBD. The whole building world is talking.
Don Dykstra, Chairman of Bloomfield Homes
It seems like most long term successful companies made money from the beginning of operations, reinvested profits, and grew as fast as the profits allowed. Investing huge amounts of capital, losing money operationally, and expecting to ultimately become very profitable was disproved in the dot com era.
Gina Nixon, Executive VP/Marketing, Thomas James Homes
Technology is a disrupter for home building but we can never lose site of the end user of our products. We deliver one of largest investments consumers make in their lifetime. I believe, our industry thrives when we put people first and enhance their experience through technology providing transparency, opportunities to learn and improved logistics.
Bill Tucker, e-3 Consulting
Taking into account all variables, perhaps residential construction is not as inefficient as purported to be.
Rodney Hall, Executive Search
I still recall touring the Phoenix facility and thinking it had the nicest lobby of any component plant on earth. Much more luxurious than Clayton’s mobile home plant in Knoxville or Buddy Raney’s in Orlando. Guess which two were profitable?
Grant Gunnison, AI&T Engineer II, Millenium Engineering nd Integration, NASA
Too many told me this would happen 18 months ago mostly due to the lack of focus. Sad to see, they were certainly pushing the boundaries on several fronts. Hopefully many will pick up the torch where they left it and continue to push the boundaries.
Always respect and approach complexity with courageous humility (probing, sensing, responding). Oversimplification of that process only makes things more complicated.
Anthony Grisolia, Managing director, Innovation Programs at IBACOS
Attacking one problem at a time with a great innovative solution is the best way to move a large homebuilding industry. We (IBACOS) can do it today in homebuilding by taking their key challenges and really digging deep to find the best way to solve them. It's a lot of hard work but very achievable.
Anthony Gude, MBA, Structural Engineering
Now roughly ~1000 people looking for new positions in the modular/contech space? Glass half full as far as I am concerned, talent development is our biggest challenge these days.
Tommy Maddox, Director of Technical Operations at ONSITE3D
Beyond drawing any conclusions towards a poor concept/execution, just look at the situation they ended up in over the last two years. Trying to prefab apartments in an era where materials are scarce, labor is scarce, costs are high, and fewer people wanted to live in apartments in the areas that would benefit most from the techniques.
Gilbert Meier, MMC-3
Doing something new is never easy. But before you spend the money your idea has to be thought out very well, and rethought.
Juan Guillen, Marketing Specialist, Entekra LLC
Katerra was a great promoter of our industry, there will be many more companies of its kind(maybe less complex in a market that is reluctant to adopt tech) to come. The future of construction is off-site.
Carol Ruiz, Principal, NewGround PR & Marketing
I remember the article (John) wrote in 2016 about Katerra and the builder you quoted who had doubts as to the company's viability. I had hoped he was wrong and agree with you that now is not the moment to say "I told you so" but to reflect on what the company contributed to disruption in our industry.