Aleksandr Gampel: Reinventing Homebuilding with Mobile Micro-Factories and Cuby Technologies

Speaker 2

Reduction in skilled labor is the biggest coefficient in driving down costs. That hard cost that you're saying doesn't pencil. Most of that is anchored in labor costs. Our product is a mobile micro factory. All the things we've done, there's some things that could literally be sent out entire companies. In fact, there are other companies doing stuff just based on like one 50th of what we're doing.

Speaker 1

Welcome to the Building Culture podcast, where we explore holistic solutions to crafting a more beautiful, resilient, and thriving world through the built environment. I'm your host, Austin Tennell. If you are in the market for high quality windows or doors, whether residential or commercial, new construction or remodels, I highly recommend you check out Sierra Pacific Windows, who we use at Building Culture on a lot of our projects, as well as if you are in the state of Oklahoma, check out One Source. windows and doors and want to thank them for sponsoring this podcast. Welcome back to the Building Culture podcast. You might notice my recording room looks a little bit different and it's also been a few months. I've taken a break for the past, I don't know, three or four months as we've been finalizing Townsend on our project. And in that time I moved and actually moved to Wheeler District, a New Urbanist community just adjacent to downtown Oklahoma City. I'll give you an update on that later. Today, I've got a really interesting guest on Alex Gample of co-founder and COO of Kubi Technologies, and they create micro mobile factories for home building. So you've got a lot of people trying to solve. construction and the cost of construction and new and new housing. so prefab or 3D printing are the two things that usually come to mind of what people are working on. What Alex and his team are working on is truly unique and revolutionary in my mind. It has a tremendous opportunity to succeed in areas and in ways that no one else has. And I'm excited to share this conversation with you. They've been in business for four and a half years and are really on the verge of going full commercial, they're already a factories. So something that I've got my eye on and part of the thing or the reason I'm excited, cause you might be going, I mean, we build a building culture, these beautiful brick buildings. Well, we're really expanding outside of that as we kind of think about developing more and more because there's so much that you can do at the neighborhood level in terms of,

Speaker 1

creating a lifestyle and the life for people because it's not just the buildings and the ingredients in my mind that are broken. It's also the recipe, how we literally build our neighborhoods and cities where the $300,000 house is all in this neighborhood. And if you got a $500,000 house, you got to move out over here. And if you live in a rental, you're way over on this part of town and it doesn't make sense to remodel your kitchen and the $300,000 neighborhood because the comps aren't going to make sense. And there's no freedom for kids and there's no freedom for elderly and there's no place to gather in the neighborhood and everything has to be planned. So I'm very passionate about the recipe and how we can improve people's through by going back to more traditional building patterns. then, but at the same time, the cost of construction is just, it's just really mind boggling. And, and I haven't talked about this a whole lot on the podcast, I don't think, but It cost us 40 to 50 percent more to build today than it did four years ago pre-COVID. And it was already expensive back then, right? People were, it's not like affordable housing is a new problem. People have been talking about it for a long time. And this isn't just us. This is every volume builder, custom home builder I talk to that everyone's in that 40 percent plus and it's not going down. It's only going to keep going up. And so when people talk about affordable housing, it's not possible to build new construction, affordable housing. We can increase the support. supply of housing and bring down kind of like net cost across the board by adding supply. But in terms of the actual cost of construction, that's only going up unless we figure out new ways to actually build and manufacture housing. And that's where think Qubi really comes into play here. So excited to share this conversation with you. Be sure to share it with your friends and you can always check them out on their website and you know. Hopefully their next mobile micro factory will be in your town. Thanks for listening. Alex, thanks for coming on. I'm excited to talk to you today.

Speaker 2

Yeah, for sure Austin. Thanks for having me. Yeah, it's been a couple years. talked to you, I know when you were fundraising a couple years ago, and one of the reasons I'm excited to talk to you is one to kind of catch up. think what you're doing is super interesting, incredibly unique in the space. But it's also something I'm very passionate about, and I think a lot of people are, because the cost of housing in the United States, and probably globally, but in the United States, has gotten ridiculous. And there's kind of the supply part of, yeah, there's not enough housing, we need to... regulate and enable the construction of housing so that there's more supply. Yes. But also there's the cost of construction. And I know this because I'm in building and it cost me 40, 50 % more to build today than it did just four years ago. And that's every builder I talk to. So I feel like you're in a really interesting space right now. So to kind of kick it off, if you could give a little bit of your background where the idea came from and then go ahead and jump into mobile micro factories a little bit, kind of that teaser of what is this as we start to unpack. Yeah, my background is I come from real estate family. So I've been around the real estate ecosystem my entire life. I always, I remember as a kid, thought it was a lot cooler that someone builds a building for someone that makes an app. know, buildings are the backdrop of our lives. It's where we live, where we work, where we play. So to me, that's always been interesting. I was institutionally trained as a real estate investor. So I worked in private equity and real estate development for most of my career.

Speaker 2

I'm also educated as an engineer, but I was never practicing engineer and maybe I'm the world's worst engineer. But I always, for that reason, like technology, those two worlds started to fuse over the last decade quite a bit. And when I was looking for more interesting ways to develop and be, I thought I was smarter than everyone. I'll go find some technology that will unlock, you know, weren't development capabilities, whether it's cheaper cost of bill, better identification of acquisitions, et cetera. I was sad to not find any industrialized construction companies that I could make use of, whether it was modular, prefab, 3D printing, et cetera. None of it was cost effective. None of it was customizable to my liking. Some of it was not regulatory compliant. Some of it just... was to start at the AKA balance sheet will not be big enough to even support my project. So a lot of these venture backed companies didn't end up being something I could use. I started thinking through and looking for solutions, potentially building a solution. And I met my co-founder and partner Oleg, who had a very interesting thesis. He thought the only way to make industrialized construction work is to bring manufacturing closer to the construction site itself. And that's where our company was born. We're now four and a half years old. We have 230 people approximately and growing across three continents. We're a vertically integrated hardware software business. Our entire existence is dedicated toward improving processes in the construction ecosystem and making the construction labor force more efficient. And really the North Star is reducing skilled labor altogether when building homes, which is the biggest driver of the cost coefficient. So that's really what we're solving. Our product is a mobile micro factory. It sounds odd, but it's exactly what it is. It's a quick deployment system to create a factory near where you're actually building single family homes, whether attached or detached. So we basically triangulate between being a GC who had a baby for all the 22 subcontractors and lives with the manufacturing facility next door.

Speaker 2

That's maybe the best analogy to who we are and what we do. Wow. Okay, cool. Okay, so let's dive into this mobile Microfactory a little bit. What are you doing at the mobile Microfactor? What I remember at least is bringing in raw materials and actually manufacturing all the components of a home on site, windows, blocks, things like that. can you kind of dive into that actual process? What are you creating in the factory? What are you bringing in? What's coming out of the factory? Yeah. So the factory in itself is a product and that's very important in how we think about scaling to 275 of them. It has to be a highly repeatable system, much like say McDonald's and launching each subsequent retail location for McDonald's, of which there's 40,000 of them. It's just a very important nuance. So when the factory arrives, it's plug and play to serve two functions. We make things from scratch. We'll make our own windows. We'll make our own helical piers for the foundation. We'll make our own framing elements that are structural. We'll make our own sandwich panels that serve as the enclosure or the envelope of the house. So there are things that we truly make from raw good to finished product. Everything else that touches a home, things like sheetrock or OSB or PEX pipes or taking a door and putting it into a frame. We're essentially cutting, prepping and really preparing in a way that doesn't require dirty work, in quotes, on site. But basically, the things that we make, the things that we prep, we palletize, and we deliver to the construction site in stages, just in time, where it's our unskilled labor that's putting together those pieces into a home. We also dispatch tools and equipment in a container to the site that are used cohesively in that process.

Speaker 2

And all of this is orchestrated with our in-house software that is a multivariate equation to coordinate all these push-pull interconnected steps that seemingly are chaotic, but really orchestrated to serve as a function of, hey, raw input to finished house at the end. But that's really what happens. So those are the two things we do, but it allows us to create parts. Those parts come together to form all types of homes from town. from finishes to sizes to layouts of the home in hundreds of different permutations, all while not stepping on the toes of any regulatory compliance related issues. In terms of construction typology, whether it's a wood frame house with OSB sheathing and some kind of veneer or siding on it, or you've got concrete block and different building systems, steel, what is the building system? Is it multiple building systems or like a building system that you're What is your structure and wall section? At the moment, it's one core building system which sits on rails. Those rails can shift a degree or two to accommodate 26,000 different zoning codes in the US. So make slight modifications. But the way to think about our product is it's no different than what a production home builder is building, except for our framing, we use steel tubes and rivets. So our homes are much more structurally sound. We can afford to do that because we do all the work in advance in CNC machines. There's no... cutting and welding done on site, anything along those lines. The other difference you'd recognize in our homes is we don't enclose it in sheathing and insulation that way traditionally. We essentially have a panel. It's like a metal sandwich panel. So SIPs has been really common in the US and becoming more more common. We have our own version of a SIP. It's a metal sandwich panel, EPS in the middle. But it's not a

Speaker 2

pre-cladded with any mechanical electric plumbing because then that would trigger certain regulations state to state. We still do that on site. But we prep it in vans so it's done on site in a very easy way. But other than that, it's a pretty regular house. to set those panels with a boom or a crane. No, the philosophy of Quby in general is no oversized equipment. That's very helpful. Okay. So then when you, when you set that house up, what, is the versatility of what you can clad it with? Are those finished sit panels or someone, are you applying siding or brick or whatever, or are there multiple options? So we have two colors for our sandwich panel. It's like a dark and a light. You can leave it as is. And then on top of it, we have a patent on magnetic facades. We use a Luma composite, which generally is used in commercial buildings, actually. That Luma composite essentially can have printed to look like wood. You can make it look like concrete. You can make it look like brick. So it's finished by look, not by texture, if that makes sense.

Speaker 1

Yeah, interesting. so, I mean, what it sounds like to me is these these homes that you are building, of course, you're still in early stages. I you're four and half years in, but I imagine this will be something you'll be innovating on for a very long time and adding optionality, whatever that is. But they're structurally more, more structural, more durable in that sense. The fact that you're not using OSB sheathing or things like that is also a positive sign in my book in terms of. longevity for a home. So it sounds like these are pretty like durable, low maintenance homes and products that you guys are producing and doing it cost effectively. Yeah, the whole key is to be incredibly cost effective. We think that technology in this sector doesn't scale unless you can prove that you're at cost parity or better value prop for a developer on the yield on cost side day one. And I'm not talking about, we're faster or we're better quality. That's a cherry on top. Developers can't put that in their model. It's really like, what are the hard costs? And then a yes, no decision. whether the risk makes sense to create that additional upside. That's likely how you think too, given you fall in that bucket. So the goal is to be Toyota Camry. What's the best bang for your buck that we can offer? Like for example, we have triple pane windows always. That's preserved for luxury homes in the US market, like very luxury homes. We do that as a given, because we can afford to. So there's like little things where we're overcompensating on, but still trying to be kind of value driven. Technical question, are you guys making the windows in your factory? So you're filling them with argon gas and everything? Wow, that's pretty freaking cool. Because I've walked some window factories and they're shocking how big they are. They can take an hour to walk across the entire factory of, know, a Pella or...

Speaker 2

There is a reason because they make all types of windows. We have standardization around their windows, so we don't need such a big surface area. But now you're starting to appreciate why it's not very easy shoving a window making machine in several containers and shoving a production line in a containerized format. Yeah, that's what we've done. That's why, yeah, quite impressive. How big is the mobile micro factory unit? it, there multiple sizes or is there already kind of a standard size? We take six acres of land typically and the facility itself is 30,000 square feet, but we use the outside quite a lot as part of the lean manufacturing process as well. Got it. I know it's something, well, I'm curious too, but I know everyone will be asking. Now that you're producing things and your goal is to bring costs down, how do you think about costs? How are you measuring costs? Are you just saying, hey, this is where everyone else is $200 a square foot, we're doing it for $150 a square foot and it's better quality. How are you communicating about costs and kind of where are you on that? The way we think about entering a market is, I'll talk about Nevada, because that's where we're headed next. And I'll just use broad strokes. Let's say that there's a bunch of small to medium sized home builders. Let's say they're 50 % of the market. Let's say they're building all on average for 200 bucks a foot on vertical hard costs. Let's assume that for a second. We come into the market and we say, OK, great. Would they be happy if we say 175 a foot? So we give a 15%, 20%.

Speaker 2

reduction to where they are today to create incentive. Our self-cost is around 100 a foot. So that's the spread that the factory makes. It has to cover expenses, et cetera, but that's really the spread. So we think about it from a market-by-market basis. Yeah, makes sense. OK. So you've got a six acre and then moving into a little bit of the product too. are you guys designing all the homes and you've got kind of different variations or do you ever have someone saying, like, hey, I'm coming in with this design. Can you can we make this within your factory? Yeah, in most cases, it's the latter. It's what you're mentioning. And we come back and say, hey, we can't do this or this. But 95 % of the time, we'll back into your floor plan, your size of house. Ironically, by definition, well, not ironically, actually, just exactly by definition, when you're industrializing something, you step away from a one-off spec home, which is what most home building is today. I think that if you give people the optionality of size layout and then between three finishes on kitchen cabinets, two different toilets, some different hardware, that optionality is enough for 99 % of the market, which is what we're targeting. If all of a sudden you're building, I don't know, a 17,000 square foot mansion, you have a 30 foot drop ceiling and you have imported Italian grand countertops, we're probably not who you're working with anyways. We're really trying to work with small to medium sized home builders that are doing X amount of scale per year.

Speaker 1

I think that's a really important point because people complain about the look of housing now and they call it cookie cutter housing because it all looks the same. But I actually don't think that's the problem is that a lot of it's just bad housing or it's ugly housing. And a simple example when you're talking about optionality is, mean, how many people own the same 4Runner, the same Tesla, the same Tahoe, whatever the heck it is. And there's a few options to customize it, but no one's going, someone else has a car that looks like mine. It's a good car. looks good. You can select some of your options and you're happy with it. And I kind of agree with that. I want housing to be beautiful, particularly on exteriors and things, but a lot of that's how it's arranged in the recipe. If houses are the ingredients, a lot of the magic comes from the recipe. I actually have an even different take than this. You know that whole saying of beggars can't be choosers? We're in such a place right now of housing in the US that I think folks are just happy to find something that's cost-effective. Like design is the last thing on someone's list when you can't afford housing. Yeah, I it's what is the median home price like four hundred and thirty five thousand dollars today with. Percent mortgage. I think we're at the highest spread of living wage, income to cost of housing. This is the highest spread that's ever existed.

Speaker 1

Yeah. Yeah. And I do think optionality, you like quality and health within a home even, which I like what you guys are doing there with just without the sheathing, without kind of insulation that's going to mold easily or rot and all these kind of air quality issues within homes that are causing people to get sick. And we kind of have a health crisis in this country that I mean, I think human health within housing is important. But I also think the context of where these houses can be built, like you're working on the kind of ingredients in terms of the buildings themselves. And one of the things that the perspective that I come from is creating walkable neighborhoods is a much richer life for people and creating diversity of housing within a place and making a place that's for kids and for elderly and for people at entry level, $300,000 houses and. rental units and a little neighborhood center, you can do that with the products that you're making, I think. Yeah, and we're going to also scale to different products too. like archetypes are just single family homes detached and attached are an easier starting point than multi-comly for obvious reasons. I do think people did master plan developments, bad reputation. Like part of why we became the US is because like Howard Hughes was really good at doing giant master plan developments. I think if you did a 21st century version of that, it would do incredibly well. Like no one gives Disney enough credit, I don't know if you followed story living, but like, that's like the right approach to curate the right experience in a master plan community. The problem is that it just become dull. If you just like honestly take the most immeditized multifamily building in any gateway market and just make it horizontal, there would be demand for, you know, large scale master plan developments, especially if a economist driving like driving into a place two, three days a week, an hour and a half away is not that big of a deal.

Speaker 1

Yeah.

Speaker 1

Yeah, I mean, as an example, I live in a master plan community adjacent to downtown Oklahoma City. They're like 30 acres into the development out of they've got 100. It's very rare for someone to have 150 acres next to a downtown. This is one of those. It's a new urbanist community that it's large. They started with single family detached homes, but then they've got 80 years out back. They've got small houses. They've got, you know, three hundred thousand dollar houses, a million and a half dollar houses. They've got rental. Humphrey's capital. Well, I don't know they're like the official developer, but Blair Humphrey, who's a local real estate developer and investor, and they've brought in some of the best kind of like design. mean, he used to be a professor, you know, teaching urban design as well, but they're also very financially minded and it's already becoming the most valuable real estate in Oklahoma City because you're creating a place that people want to be. And I live here with a one year old and a five year old and my wife. And it's a beautiful place to walk around on a Friday night. We can just walk over to the local, you know, brewery or taco shop, you know, and coffee shop. They just got a little neighborhood center. It's really not that hard if you start mixing the ingredients better. But these these homes in these neighborhoods, because it is all new construction, they're expensive. And so the idea of being able to bring costs down a construction, but still offer this lifestyle to people is is really exciting to me because people say people will get upset, you know, as a developer, why aren't you building affordable housing? How dare you build something that's not, it's impossible to build affordable housing today unless it's highly subsidized. Like it's impossible to build non-subsidized affordable housing and people don't really get that, but it's really kind of frustrating. It's not like I don't want to. The math physically doesn't make sense.

Speaker 1

Exactly, exactly. I mean, there's two problems, right? It's like the regulation piece, which is really hard to solve. Like you truly have to be the president. Even so you can't solve it. So that's a hard one to focus on. The next one is we believe reduction in skilled labor is the biggest coefficient in driving down costs. That hard cost that you're saying doesn't pencil. Most of that is anchored in labor costs. Yeah, absolutely. It is. And it's that's a problem that is getting worse, not better. I know, know, some Gen Z people. There's less and less skilled labor. They're for supply demand that costs more. Right. Yeah. OK, so so. If we were to, you know, I were to go to you and say, hey, I'm wanting to build this 2000 square foot house. What does that process look like in terms of. Working with you to do that and then also just through the factory and like how once you know, how long does it take to get that design kind of programmed into the system, whatever you would call that, and then, hey, once it's like, hey, we're ready to go, how?

Speaker 1

quickly are you outputting complete houses? And I guess, I mean, you said you're kind of delivering things on time to site, but like how long is that bill process for kind of just your pretty standard home? Well, first off, when the fact all of this conversation starts from if and when that mobile micro factory is in your market. OK. And we go into a market with demand always already in place that anchors that factory or which we then use that demand to raise infrastructure dollars to correctly capitalize it. A lot of folks use venture dollars to capitalize factories, which is not Yes.

Speaker 2

correct cost of capital and they ultimately end up failing because it's just not the right setup. But when we choose a market, we choose it because a partner anchors a lot of that initial demand. Therefore, it warrants us being there. Once the factory is set up, we likely aren't working with one-off builders. So we're not working likely with someone that wants a home for themselves. We're really targeting B2B. We could, but we're really targeting, if B2B is there, And at the Man's Dare, we're always going to take those repeat programmatic relationships over one-off. But it's a simple process. It's no different than a developer coming to a GC. They get better price. Basically, the GC GMP is the price. And you get going, and you start drawing on a cost curve. No different. We're trying to build homes in about 60-day cycles. Even if it's 90 days, 120 days, we could be 2x wrong and still be 50 % faster than where homes are built today. want to share a little trick we use at Building Culture. So if you're designing a house, you have to have egress windows or egress in any bedroom, for example. And the problem with that is egress windows are very large, especially if it's a double hung window or something like that. And because of design constraints, sometimes we want a smaller window if it's in a dormer or just for the hierarchy of the elevations. Well, a really cool trick that we use with our Sierra Pacific windows is we'll take something from their urban casement line and we'll put what's called a piano hinge on it. And so rather than kind of a normal casement that kind of slides open where only part of the window is open, this is almost like a door hinge. And so the entire window opens and you can meet egress with a two foot by four foot window, a 2040 window. It's the smallest possible egress window anyone makes. And that's a nice little design trick. If you're as nerdy as I am, you will actually think that's really cool.

Speaker 1

So check out Sierra Pacific Windows and if you are in the state of Oklahoma, check out OneSource Windows and Doors. We at Building Culture use both of them regularly. Wow. So what's the capacity for, you know, maybe that can scale up per factory in a given year, you know, if you had maximum demand. Yeah, we do about, we underwrite two shifts and we do about 200 homes per year out of any mobile micro factory. it's actually, it's very intentional that that's the volume because we can pick any market. And I'll give you an example where we're launching in Nevada. If you draw a 200 mile radius of our factory, that's 15,000 single family home permits that got filed in the last three years on average, like 10 to 15,000. Being 200 of those 15,000 isn't very risky. That's whole point. Yeah, that makes sense. How many so so the way you're set up being vertically integrated and you guys come when you say you guys come into a market, it's not. Like, Qubi is officially running that. You're not like... Someone is not saying, hey, I want to buy this mobile micro factory. Help me run it. All that. You're actually like... You are choosing the market and you're owning the technology, but also the sales. Like, you're just kind of selling to people. It's Qubi coming in and setting up the factory, doing the financing. All of that. Like, you hire all those people running the factory and everything? Yeah. Well, a little different. Each factory is a standalone business. It's its own kind of project or structure. So it carries its own P &L. We can be 100 % of that project, or we might have a partner for some interest, or we might layer a piece of debt or project finance on top of it. But that P &L carries itself. Our job is to run the factory profitably. And essentially, that project

Speaker 1

I see.

Speaker 2

is essentially licensing and paying us a management fee plus we're owners in it. there's essentially mechanisms for us to control the project and to make sure that we're incentivized for it to be a success even if we have third party partners in it. Got it. Okay. How many people does it take to run a factory at kind of full steam? So a lot of folks quote this, I think, incorrectly. I'll quote it in what I think is the most turnkey way to talk about this. Really, you're buying into a turnkey business that builds 200 homes a year. Because we're the GC, because we're the subcontractors, because of what happens in the factory, I'll bifurcate it. In the factory itself, there's about... And there's multiple shifts. So I'll speak all in on the shifts. There's about man.

Speaker 2

80, 90 folks at any given time, like in or around the factory. And then the rest of the folks, the Delta to 355, which is the total, are all the folks spread on construction sites. So imagine there's 20 different pads being built. Those 20 different pads will have two shifts. Each shift will have four to five unskilled folks putting together the home, plus some fractionalized folks, times 20 homes per month, essentially. You get to kind of that Delta. TLDR around 355 people at full scale doing everything on the vertical side of Plus the manufacturer. And when you come into a place, 355, that makes sense. Each one is its own business. You're coming in and hiring, ultimately, 355 people, finding and hiring. How long does that process take to... We're actually going to do this. We've got all the green. We've got the money in place. And then we are actually operational because while you're reducing... That's still pretty fast. Yeah. Yeah, we have quite a nuance as to how we physically put up the factories. That's the whole difference. It's part of our IP. But also remember, we're hiring unskilled labor. We have quite a lot of public sector support because pound for pound, we're doing a lot for that locale, right? From an impact economic development perspective. Pound for pound, time for time, we're creating quite a lot of incentives. So we get a lot of support. Yeah, I would imagine it seems like you started this factory or just not the factory, the business at a really good time in terms of progress in AI and robotics. I would assume your factory using unskilled labor is fairly automated, even though, yes, you need 80 to 90 people. These aren't some.

Speaker 2

Yeah, it's Toyota's production system at play. It's how do you reduce any incremental function to a point where the next function can't even start. That's like the definition of TPS in a way. So it's about process. But I think a lot of groups that use buzzwords like AI and automation, cetera, they're either naive or underselling the home process, which is 10,000 steps. You can't automate all of those 10,000 steps. even off-site, 100 % not on-site. So I think it's all about reducing skilled labor, reducing skilled labor hours via better process. When you've squeezed all the efficiency out of unskilled labor to a point of no more squeeze possible, that's when you know the ROI is positive to go and do something within the robotics space for that specific task. I would say a very minute portion of our stations are automated. Got it. via robotics that is. Yeah, yeah, very interesting. Yeah, it seems even like if you go on your Twitter, like you take a very practical approach to all of these things and obviously very process oriented as you said.

Speaker 2

I would say we're building a system, a platform process more than anything else. The problem is it's a very hard equation because you're talking about 10,000 steps that are push-pull interconnected coming from up left, right side. Like how do you make it all orchestrated? That's the hard part. You're four and a half years in y'all can produce houses. know, you're going to Nevada. If you were to put a percent on, if you even can, here's how far we are. I can like, there's so much innovation left to happen or it's like, Hey, we're getting like, where are you on that spectrum of man? We've just got it so dialed in. Now it's just about managing and operations versus innovation process improvement. Maybe it never quite finishes, but. Yeah, mean, it's always part of the kind of the philosophy is your constant improvement. So it's always going to be tracking, like I'll speak to kind of deep tech world. There's a concept of technology readiness level, or a generated NASA. It's really like, where is your technology today relative to it commercializing? Nine is being kind of the end, or like an eight going to nine, I would say. But we have three phases to our business plan. would say we're like, it always feels like we're at the 1 % mark, to be honest, because we have three phases to our business plan. One is to put out 200 plus mobile micro factories out into the world. That's not a crazy idea given we set up the business day one to mass replicate factories. It's different if that's some decision you made later, but like everything we do is with that in mind, everything. It's also not crazy when you think about like localized supply chain. If you combine Lowe's and Home Depot and the amount of locations they have in the US, it's like 3,500 locations. So it's not crazy to think we can put out 275 mobile micro factories building 200 homes a year. That makes us like 4 % of the US housing annual supply, like delivered supply, which is like a tiny bucket. That's not even what could be absorbed. That's just what's built. Phase two of our master plan is really about delivering all the materials and procuring all the materials ourselves.

Speaker 2

and doing it in bulk to our factories. So that's another $7 billion of top line at a 20, 30 % margin that we can do. So like being our own supply company, essentially, material supply company. Phase three is we actually want to become a developer and a home builder. We want to take some percentage of offtake of production of each factory that we put up and build homes ourselves. There's no reason why If we're the best builder in the market, we can't just approach landowners and say, hey, you're cash poor, but land rich. Contribute this land into a JD, we're the builder. Now all we have to do is bring third party capital to unlock this entire equation and have a really massively large prop go as well. That's really cool. I love the big vision you have. How many micro mobile factories do you have out right now? We just have our first of a kind, so our initial one that was for testing in Eastern Europe. And then we're putting up our facility in Nevada that's active and underway. And then we have a Papa factory that we're building, so a factory of factories. So factory to mass produce mobile micro factories, which the first iteration of it is going to be ready and online in October, producing four factories per year. Awesome. then so Nirvana is already underway. So how long till that becomes operational? Do you think?

Speaker 2

Um, 12 months. Yeah. Okay. Very interesting. So in 12 months, seeing Kube homes in the U S it sounds like, so that is its own business. Are you still having to raise funds? know, and I don't know what terms you're using in terms of business names, but you know, let's just call that Nevada LLC, that one. obviously you had to raise money for that in any new factories. Are you still having to bring in money for kind of your core Kube technology? So you're going to be licensing. Yeah, so for Kubi, the parent co, we're still sometimes raising. I would say we've under raised a lot relative to what we've done. And it's just a factor of how capital efficient we are in our engineering prowess. I'd say like people reputationally know us. They say we're like the most capital efficient. That's probably the one adjective they did use. So for that reason, we always raise sources equal uses. I think in a lot of venture people over raise because they don't actually really know yet what they're spending it on. We try to raise at milestones to dilute less. We did our series B. We're going to add a little bit to our series B right now. then honestly, just where we are, I think, and where we'll unlock project finance, this will probably be likely the last equity we do this go around. And everything should be funded in a very different way going forward. Yeah, you seem to take a detailed and like mature approach to all of it. And I don't mean like I saw on your Twitter that you still you and your co-founder still review like every invoice over a hundred dollars, you know, that you're really you really dial in and pay attention to the details and to the costs.

Speaker 2

Yeah, I mean, think it's important. think in a world of... Venture is a very interesting asset class, I will say that. We're interested in maybe playing less of the venture game and building more of a profitable, enduring generational business. And I think there are certain things that need to happen for that to be true.

Speaker 2

But it's a very hard problem to solve. We're trying, but it's hard. All good things are, seem hard. I meant to ask this around design. You said you're starting with single family detached and detached. Are there any major design limitations that come to mind? I mean, I know you said, you've got standardized things, but is it still pretty versatile or is it, can you do only do one story? Can you do two story? Can you do four story? Can you do TPO roofs? Can you do dormers or gable roofs or hip roofs? How limited are you right now? Eliminate is the wrong word. would say it's really willpower around staying really concentrated. We can do all types of sizes, layouts, and finishes of poems. We're trying to do ranch style a lot. think demographically it's interesting, just aging population. People want single storey. We think it's interesting and from a price per foot perspective, it's interesting too. There's nothing about our technology that prevents us from doing two storey given we use steel and tubes and rivets. So structurally it's very sound. It's just a function of a different process on site. When you actually do the construction, we have a very interesting solution to it, which we just haven't tested yet. Therefore we're not out to market to it yet. But I'd say in the next 12 months, we'll be doing two storey as well with basement.

Speaker 2

Our limitation is a 10 by 20 foot grid, so columns every 10 by 20 feet. Pitched roof we can do, no problem. It's tallest peak is 15 feet, shortest peak, or essentially average ceiling height 10 feet. You want a weird curve delivering room, probably not us. So think of a production home builder. Think of all the model unit types they do. can do mostly that. Yeah. So you're trying to phase one, you're still in phase one about to, you know, trying to get to 200 mobile micro factories. What, what's kind of the next five, 10 years look like? it, is it, what, what, is even the goal? If there is a goal in terms of timeline of getting 200 out there now that you're about to build your kind of factory of factories. Yeah, the goal and timeline is probably a decade. It's going to go really slow and then it's going to go really, really fast. It's about staying really concentrated now, perfecting this Nevada one, while also at the same time not sleeping and building out the infrastructure, the Papa factory to do a lot of these mobile micro factories, which we're actively building out. Cool. What are some of the things over the past four and a half years in starting this company that, that do you have anything that comes to mind that you're, most like proud of, of things that you're like, wow, that, that works so much better than I thought, or we had to work really hard for this thing to figure out that you're able to actually share. Maybe not specifically, but more so like I, our team is very resilient and it's been, it's been exciting to stress about things and have things work out. So I like that kind of feature of building this business. I'd say the things that are most exciting that I've seen that like they're random things that have gotten me excited. So because we're so vertically integrated, best examples I can give are like,

Speaker 2

It's like Medusa's head, you solve a problem, but then 10 more problems emerge and you keep going down this rabbit hole. I'm very proud that we build a lot of things in-house for solutions to things we're seeing ourselves within our own technology. I posted this on Twitter the other day. It's like a small random example, but you can extrapolate and multiply that by a thousand different things that we've done. For example, we deliver these containers onto each construction site. They have bathroom, showers, lockers, tools, and equipment to actually assemble our specific kit of parts. Lowering that container of oversized equipment off a truck bed is not that easy. And you can't get on oversized equipment. So the team developed basically these four lifts that completely disassemble and flat pack to take down an entire 20 foot container. But imagine having like literally hundreds of these types of things you've made yourself to accommodate all of the things that you need them to do because they don't exist in the market. I mean, that's what a mode is. So it's been pretty cool to see like some of these little nifty things that literally, they could be an entire product line in a business. some of our, all the things we've done, there are some things that could literally be sent out entire companies. In fact, there are other companies doing stuff just based on like one 50th of what we're doing. So it's been interesting to see that, but it's a huge challenge to communicate that to the outside world because there's just so much you can't ever meaningfully communicate it correctly. Yeah, that's extremely cool, but I also understand what you mean, that that's just, it's not something that other people see it.

Speaker 2

The only way I'll ever get communicated, seen, understood, et cetera, is like when we get to 60 bucks a foot on homes, then it's almost like, okay, it it works. That's what it is, but no one really cares what happens behind. Yeah. You, you, you use your iPhone. You don't care where or how it's made. It just works really well. And you bought your 10th one, you know, steps.

Speaker 1

Yeah, I remember seeing like a video not long ago, but I think it's how, what is it? Semiconductor. don't like, I'm not, not the world I live in, but like how it's made with like the light flashing. I mean, it's just like absolutely insane, but obviously I never think about that when I pick up my iPhone to your point and all the hundreds of thousands of engineering hours that, you know, went into being able to do something like that. How many engineering hours did you say you have in a queue? I know you've like posted it before, like it's a lot. I think of the last month, we're at 760,000. It's obviously not like an exact number. It's our approximation. calculated, we run an Excel spreadsheet because my partner Oleg is the best process systems person I've ever met in my life. Everyone in our company, there's a lot of people now. Any of their task is they estimate hours and actual hours, every single task on the engineering front. And Oleg is able to project like T minus when we're going to be finished a certain aspect of a project, like with deviations of like 10 % of hours. Incredible. What was his background before? Yeah.

Speaker 2

this? He's a physicist, but you know, he's a pretty capable business person as well. But he ran a really big product development engineering company that he started in Eastern Europe at about 200 engineers. they other companies would hire them to develop their I.T. on the hardware side. So they were hired as engineers and they figured this out. No. Question. Why do you think prefab has not really worked? Like, why did you go this? A ton of people are trying prefab. I've already seen a bunch of people trying. A bunch of people go out of business. And then at the same time, there's some companies that seem to be at least appear to be growing and raising money. Boxable comes to mind or something. You don't have to comment on them particularly. just mean, why hasn't prefab in your mind? Why hasn't prefab worked? And why did you? go in this other direction. Yeah. The concept of it, I mean, listen, I think the TLDR is I think we're the anti thesis to industrialized construction. Actually, all of the steps we've taken were to essentially be an anti thesis to this entire category. There's a lot of reasons why it hasn't worked, but it depends on like who you are. Are you a 3D printing company? Are you a modular company that makes volume metric boxes? Are you a prefab company? It really depends. I'd say the

Speaker 2

Maybe let's take 3D printing for a second. think that one's just really unfamiliar. The US market is not used to concrete. But more importantly, framing is just 10 % of the home building process. So even if you 100 % get that right in a cost effective way, you don't really solve a big portion. What's 10 % of 100? It's not a lot. Like literally, it's not a lot. Even if you fully automated, et cetera, it doesn't make a dent into the cost. Volumetric modular, I think, can work. If you're making highly repeatable buildings, so student housing, hotels where you have the same room every time, where you don't need a lot of customization, but even so, the issue is that you're launching a $100 million gigafactory, you need millions of square feet of throughput, demand is always in ebbs and flows, you don't ever get that, you don't cover your fixed costs, you die. And on top of that, you have to ship and... You're not talking about AirPods, you're talking about entire buildings worth of... boxes that's millions of square feet, millions of tons in some cases, that's oversized that you're shipping. And then you have some third party putting it together that GC has never seen that system. They make a mistake. OK, now you have 1,000 miles in between. There's a lot of reasons. I don't think the existing business models make much sense. I think it has to be a very localized approach and vertically integrated. Yeah. I mean, there's a lot of like, it's, this is a longer conversation candidly. Like I can give you the answer to a very long one, but there's a lot of literature as to why this hasn't worked and why there's a huge graveyard of companies that have failed on big cohort will fail, et cetera.

Speaker 1

I would like to have that long conversation at some point because I. Yeah, that would be interesting. Any technologies or materials, even like material science that you're excited about, whether it's actually commercialized or you think you've got your eye on kind of stuff that could further further. So what's mission? What's cool about us is when we're the infrastructure for housing, our factory can feed in 550 different SKUs. Someone comes out with something that's more cost effective, better. We just substitute someone as an alternative OSB that functions the same and actually costs less. We care about cost end of the day. I'm probably not a good person to ask because we're just choosing the most cost effective best material we can find. We're dictated by that. But we've seen a lot of material science advancements. There's been a lot of interesting boating technology that has applications to housing. We've seen this new sheeting recently that is from the boating world. There's a lot of alternative concrete, alternative decarbonized steel companies. Folks are working on stuff all the time. Yeah. I've got my, not that I know a whole lot about it, but geo polymers are very interesting to me because they have some incredible properties of, know, compressive strength, tensile strength, you know, fire resistance. Our friend Alexi started a company called Mighty Buildings. They used 3D printed polymers to create wall panels. Incredibly durable and really cool product.

Speaker 1

Right. And for you, what is cool, what you're saying, you know, it's just an, another input for you. And if you can increase quality or reduce costs.

Speaker 1

Yeah.

Speaker 1

co-founding a company like this. This is an open-ended question, but what's that been like?

Speaker 1

How do you think, in what way have you become a better co-founder, manager, leader, whatever, over the past four and a half years?

Speaker 1

Bye!

Speaker 1

that is an entirely different skill set.

Speaker 1

Well, Alex, I really appreciate you coming on. I'm extremely excited, even as I was two years ago when I came across what you guys are doing. I've definitely got my eyes and it will be following. I really would love to get... Yeah, I mean, that's what I'm talking about. Once again, I really think mixing the right master planning with the ingredients Like we could we could do something really pretty incredible. So Well, Alex, thanks a lot. How can people follow you find kube technologies you personally

Speaker 1

Cool. And you're LinkedIn. I know you have an X too, so. Alex, thanks.

Speaker 1

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