Wednesday, June 2, 2021

Katerra’s Closing Will Have Little Impact on Off-Site Construction Industry

After more than two billion dollars invested in them, after hundreds of articles praising them, and after securing some of the best and brightest talent in the off-site construction industry, Katerra will simply end up being just another case study in how not to start a business in MBA programs.

On the plus side, Katerra actually attracted some new talent to the construction that will now take what they learned about the industry to new employers. Some will go to established factories including modular while others will seek out new factories. A few will even try to start their own factory.

Katerra will also be known for trying new procedures and processes. Many of these were the result of their rich talent pool. Even though many of their ideas may not have succeeded as hoped, many of those ideas have gained a foothold in construction.

But aside from all those achievements, Kattera had few completed projects and even if they had 10 projects waiting to build,
they were never a powerhouse that would shake an industry with their closing.

The real story of Katerra’s rise and fall will come out just like WeWork’s did, after it’s fall. Interesting how the biggest investor in both was Softbank. But I’ll let the writers that love to delve into that side of the story regale us with all the behind the scenes dirt they unearth.

The bottom line is over $2,000,000,000 was sucked down the drain by a startup that had most veterans in the offsite industry scratching their heads. To them, this was not a surprise but rather an inevitable conclusion.

Will Katerra’s closing have an impact of investors turning away from the off-site construction industry? Absolutely not! For some reason investors love bright shiny objects to throw their money at hoping for the next big thing instead of looking at successful existing factories where $2,000,000,000 could have turned the off-site and modular industries into a true powerhouse, brought in thousands of new projects, created thousands of new jobs and actually made a profit.

Instead, those investors will once again begin their search for the next Katerra or WeWork. Actually kind of sad for our industry.

Gary Fleisher
is the Managing Director and contributor to the Modcoach Network and its affiliated blogs.

No comments: