Ambitious construction startup Katerra has laid off 7 percent of its workforce as it shifts its focus from fleshing out its product offerings to becoming profitable. This is at least the fourth round of layoffs at the company since last fall.
Defining the vision
Katerra was founded in 2015 with a vision to become a vertically integrated, technology-enabled construction company. The company’s goal was to cover all aspects of building design and construction, even to providing its own windows, HVAC systems and plumbing fixtures.
Katerra built factories where major building modules could be manufactured away from the construction site as a means of reducing construction costs. It focused on the apartment construction market since its characteristic of having many similar units in a building made it particularly suitable for modular construction. Under co-founder and CEO Michael Marks, Katerra grew to become the number 5 builder of apartments in the United States in 2019, according to the NMHC.
The company has also made major investments in cross laminated timber (CLT), an emerging building material currently more commonly used in Europe than in the United States.
Change at the top
Last month, Katerra announced that Marks would be replaced as CEO by Paal Kibsgaard, a member of Katerra’s Board of Directors since 2016 and the company’s COO since 2019. Prior to joining Katerra, Kibsgaard had been chairman and CEO of Schlumberger, the international oilfield services company.
The current layoff appears to affect employees from the human resources, civil engineering and mechanical engineering functions. A Katerra spokesperson said, “With this shift, we will also streamline parts of our operational and support organizations and scale back certain investment programs, which unfortunately means we must lay off around 7 percent of our staff. These are very tough decisions and we do not make them lightly. Ultimately, these actions will help us accelerate our path to profitability, as we continue to pursue the incredible growth opportunity in front of us.”
In May, Katerra also announced that it had raised $200 million in new financing from the Softbank Vision Fund. Softbank Vision Fund managing partner Jeff Housenbold said, “The new round of financing further strengthens Katerra’s balance sheet, enhances its competitive positioning, and provides growth capital as Katerra executes on its mission to radically transform the way people build commercial and residential properties.”
