Kasita, Austin’s maker of tiny modular homes, preps for breakout with new CEO
Kasita Inc., which wants to apply the time-tested concept of an assembly line to homebuilding, is preparing for a serious growth phase with a new chief executive at the helm.
Martyn Hoffmann was promoted to CEO in September, less than a year after joining the Austin-based company. His career has mostly been in large-scale real estate development — guiding resort communities, hotels and golf courses through the construction pipeline for major companies.
It could be ideal experience for leading an innovative but untested company such as Kasita, which wants to revolutionize how people think of living spaces by making them modular: You can plop one of its 352-square-foot homes (which sell for $139,000 apiece) in your backyard or combine 100 to make a multifamily building.
“There are a number of moving pieces involved in actually taking this idea of treating housing like a product and then being able to deliver on the manufacturing and sales aspects,” Hoffmann said. “My role is to take this idea that’s been formulated, that’s had its proof of concept, that’s gaining traction through sales, to take that and ramp up the manufacturing side.”
He replaces Jeff Wilson, the founder of Kasita who came up with the idea of building the technology-equipped tiny homes after living in a converted dumpster for a year. Wilson incubated the idea from the company’s creation in 2015 and set the stage for the start of manufacturing. But now that the company is on the precipice of scaling up to annual production possibly in the thousands of units, he has stepped aside from day-to-day management and moved to chairman of the board (in an email, Wilson declined to share details on what he’s working on next, but said details would be coming in the new year).
Kasita homes are rolling off the production line and revenue is finally flowing in; the company recently relocated to more than 25,000 square feet on Techni Center Drive in far East Austin near U.S. Highway 183. The business has received the OK to sell its homes in three states: Texas, California and Nevada.
But that brings up the next big question: Will Kasita find the space it needs to grow in Austin? Hoffmann said the current facility could produce up to 100 homes per year if it runs at full production but that isn’t enough to meet projected demand.
“We’re looking at where is the right place to expand: Is it the Austin market or something closer to the West Coast or the East Coast?” he said. “We’ve always thought of this facility as a stepping stone to a larger facility that can accommodate our expected growth in 2018.”
Kasita, which employs about 40 people, has attracted wide-spread acclaim, from outlets such as The Verge and Inc. magazine, which earlier this year named it one of the country’s 25 most disruptive companies.
Development exec, turned manufacturing boss
Hoffmann was previously a project executive at Greenfield Partners LLC and helped the Connecticut-based real estate investor scope out Kasita as part of a $10 million series A round it participated in that closed last year.
Hoffmann joined Kasita in January as director of operations and sales. He was promoted to chief operating officer in April then quietly took over as chief executive three months ago.
It is his first CEO role but not his first time in charge of a large project with lots of money on the line. Working for The Athens Group in the U.S., Mexico and Central America, Hoffmann helped manage large luxury properties throughout planning, construction and operation. Later with Greenfield he helped the investment firm manage 656 acres of various holdings in Costa Rica, according to his LinkedIn profile.
“My background is very project driven,” Hoffmann said. “The multifaceted nature of developing large-scale projects has a lot of similarities to the complexities we face in this business. The difference is the manufacturing element but, fundamentally, in terms of how they operate and how things get done, it’s similar.”
Including the $10 million funding, Kasita has raised about $11.5 million. Hoffmann will soon begin cobbling together a series B round, although he declined to say how much money he is seeking.
“We are definitely in the early stages of being a revenue-generaitng company but it’s wonderful to see revenue coming in and to see the ongoing traction in the marketplace,” he said.
Big plans for tiny homes
Kasita right now is pitching its homes for three types of situations: for disaster relief, where the tiny units can be deployed on short notice as emergency shelter; as granny flats, the accessory dwelling units you might see in someone’s backyard; and as the building blocks for large-scale multifamily developments.
Because it takes much longer to negotiate with real estate developers — the sales pipeline is about eight to 12 months — revenue from individual Kasita sales is helping boost cash flow.
“Developers have to solidify land purchases, secure entitlements and other essentials so during that entire process we’re having a back-and-forth about what kind of density they’re looking for,” Hoffmann said. He added that having both types of sales profiles “really helps” keep the manufacturing line busy.
Future Kasita uses could be in the hospitality business for hotel construction and in student housing, Hoffmann said.
Source: Austin Business Journal
Will Anderson, Digital Editor