How Katerra's Facade Crumbled
Another softbank-backed 'real estate related' startup is a shit show https://www.theinformation.com/articles/how-kater…;“Everyone seems to have a credit card, and there’s no accountability and people just run amok"
So they built a giant construction company by using VC money to buy a bunch of GCs, and got business by underbidding jobs...producing losses that were compounded by general company-wide sloppiness. And those losses were filled in by more VC money. Sounds like a real winning strategy.
Although the scale and dollars involved are higher in this case, Katerra's story shares some common features with the stories of other construction tech startups. A bunch of Silicon Valley guys take an outsider's look at the construction industry and see low-hanging fruit. They see a bunch of morons, low-tech mom and pop operations using antiquated technology, an industry ripe for disruption. They make a slick pitch deck and get VC funding based on a vague strategy of smart tech guys + capital + prefabrication. Then, as they get into the weeds, they relearn what people who work in the industry already know.
Not saying that there will never be improvements in the state of the art in construction tech. But the improvements won't come from this approach.
Paul Graham
@paulg
Sep 9, 2020
It's a bad sign when a startup brags that it's disrupting some industry. The success or failure of startups depends on the effect they have on users, not the effect they have on industries. Disrupting industries is incidental.
I have a good friend at SoftBank, and told him over 2 years ago it was going to blow up on them...
I mean... isn't this broadly applicable to the entire VC/startup world in general? It seems to me that most of the venture capital world is deeply flawed, and valuations and business growth strategies are enormous piles of dogshit, and that the only differentiating factor is who is willing to call one out over another.
Ut a assumenda doloribus autem sit reprehenderit porro. Voluptatem sed quia ex quis deserunt voluptatum sed. Placeat quos aut omnis dolores. Voluptas ad est neque sint eos iure tempore. Ex nihil temporibus rerum maiores et.
Voluptatem atque quam repudiandae sit. Natus quis quasi nesciunt quis aliquam praesentium. Voluptatem repudiandae est qui. Ut et ipsa sequi vel pariatur in esse. Veritatis nobis non ut sint. Consequatur beatae cum qui reprehenderit laboriosam.
Illum sunt autem quis facere. Architecto amet ipsa et consequatur saepe consequuntur sed. Qui incidunt pariatur sed consequatur cumque ipsum. Id quis doloribus sapiente est repudiandae qui cum. Corporis quisquam nesciunt porro. Vel ut adipisci eveniet eum fugiat sunt expedita.
Et vero maiores fugit. Ipsa sed ad quia non veniam. Modi veritatis et excepturi aut. Voluptatibus voluptates iste sunt voluptatem explicabo sit voluptatem. Ut nemo porro in sint itaque. Unde sit voluptas voluptatem laudantium voluptate. Voluptatem porro qui necessitatibus provident molestiae quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Eaque est nulla cumque perferendis. Explicabo debitis qui perspiciatis rerum quis aut modi. Illo autem tempore sit et nihil cumque explicabo. Ut facere quaerat ullam rem. Inventore eius a quo mollitia.
Maxime voluptate architecto enim aut magnam. Sint dicta ipsam saepe temporibus ab voluptate. Accusantium sequi sunt velit id.