Wednesday, December 18, 2019

Katerra - Solid Performer or Master of Failed Projects

Warped lumber, failed projects: TRD investigates SoftBank’s $4B construction startup

TRD investigation finds that Katerra, the $4B firm has failed to complete roughly a dozen projects, and some of its biggest clients are tied to its executives

In an email to employees last week, Katerra CEO Michael Marks had a few uplifting thoughts on the year gone by.

His startup, which seeks to transform the $12 trillion global construction industry through technology and automation, has grown to more than 8,000 employees, is nearing profitability and will soon open a new state-of-the-art factory in California. Clients are returning, he wrote, and the company has more than $15 billion worth of building projects in a pipeline spanning the United States to Saudi Arabia.

“We can say with pride,” Marks wrote of the company’s feats, “that once we begin a project, we never walk away from that job.”

But his message glossed over a few key facts. In the last month, Katerra’s co-founder quietly left the firm’s board, the company closed its first factory and hundreds of employees have been laid off.

And the firm’s patchy track record of delivering projects stands in stark contrast to Marks’ assertion. In fact, The Real Deal found, Katerra has failed to complete roughly a dozen projects and could only name one that was delivered on time (the company says 26 prefab projects will be delivered by the close of 2019). All the while, logistical and technology-based issues have chipped away at the company’s image as a revolutionary tech startup.

Some clients have ended their relationship with the firm. Other clients, however, are tied to Katerra’s executives, and have drummed up business for the company — a similar arrangement used by WeWork executives, which became a concern for some investors when the co-working firm planned to go public.

Click Here to Read the Entire “The Real Deal” article

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