Can there be an Amazon of housing?

A recent WSJ article reported that the disproportionate gains in labor productivity in recent years have affected a small percentage of companies. They write that, “the most productive 5% of manufacturers [in all sectors] increased their productivity by 33% between 2001 and 2013, while productivity leaders in services boosted theirs by 44%.” During that same period, “all other manufacturers managed to improve productivity by only 7%.” 

According to the Organization for Economic Cooperation and Development, the reason for the disparity is what they call diffusion—i.e. innovation and talent are being consolidated by the largest players and not diffusing to the smaller ones.

The market reach and pocket depth of giant multinational corporations—Amazon, Google, Apple, IKEA, Toyota, etc.—enable them to attract top human capital and make large technological investments. These resources create a nearly-insurmountable innovation gap for their smaller competitors and upstarts. In fact, the number of first-round VC financing was down 22% in 2017 versus 2012, and many attribute this to the dominance of companies like Amazon and Google. Investors might be asking why bother competing when the big guys will create a superior product in-house? Continue reading “Can there be an Amazon of housing?”

Katerra: Construction’s $865 million question?

What?

Silicon Valley-based construction tech company Katerra announced a SoftBank-lead $865M Series D.

Why?

It’s common knowledge the construction industry is FUBAR. It’s second to last in terms of labor productivity of all major industries; it’s one of the least digitized major industries, spending <1% of revenue on R&D; and “large projects across asset classes typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget,” according to McKinsey. Look no further than Denver’s unfinished VA hospital that’s gone $1 B (B as in boy) over budget as a case-in-point.    

Continue reading “Katerra: Construction’s $865 million question?”