What's Your Problem?Alexis Rivas is the co-founder and CEO of Cover.
His problem is: How do you build houses in a factory, the way you build cars? And how do you do it so they're cheaper and better than a traditionally built house?
Cover is following the Tesla model: starting with a high-end product but aiming for the mass market. "Nail it and scale it," he says.
Pushkin. Houses in America are too expensive. There are a lot of reasons for this. One reason that we've heard a lot about in the past few years regulations, regulations that make it hard to build enough housing in the places people want to live. But there are other reasons that we've heard less about. One other less discussed reason, building houses is an inefficient process, and it's not getting better. Over the past several decades. As so many industries got so much more productive and more efficient, home building stayed largely unchanged. People have been dreaming of transforming home building for like one hundred years now, dreaming of using modern industrial techniques to mass produce houses and bring down the cost. In the nineteen twenties, for example, Buckminster Fuller even started a company to do that, but it never really got off the ground, never really worked. In the decades that followed, other people tried similar things, and you know, we got mobile homes and we got manufactured houses, but nobody has really succeeded in fulfilling that vision that Buckminster Fuller had. No one has figured out how to make beautiful homes at scale in a way that is optimized for factory mass production. Someone could do it If someone could figure that out, it could go a long way toward bringing down the cost of houses in America. I'm Jacob Goldstein and this is What's Your Problem, the show where I talk to people who are trying to make technological progress. My guest today is Alexis Revas, co founder and CEO of Cover. Alexis problem is this, how do you build houses in a factory the way you build cars, and how do you do it so that a factory built house becomes cheaper and better than a traditionally built house. Cover is based in La in California, and like basically every other startup making physical things, they're following the Tesla model, starting with a low volume, high end product with the dream of scaling to the mass market. In other words, today Cover sells expensive backyard studios to rich people in LA, but their dream is to sell affordable houses all across America. Alexis was interested in architecture from a very young age. He told me he drew his first floor plan when he was in first grade. He went to college and studied architecture, and like so many people before him, he got captured by this dream of building houses in a factory and there are companies in America that build houses in factories now, and so Alexis went off to intern at one of those companies.
I saw a problem with conventional construction and thought, well, what about building ups in a factory. So I looked that up and I actually went an intern for a company that built homes in a factory, so a prefab company, and they were basically doing it conventionally. It was like two by fours in drywall, right. But what happens is that when you add in the transportation, when you add in the overhead of actually running a factory, you know, to the customer, the price gains or the quality gains aren't really noticeable. It's not a meaningfully better product or a meaningfully cheaper product.
Well, and is part of is part of the reason that the transportation is expensive. Because they're making it like a conventional house. It ends up like a three D box, right, They're not making like flat panels. It's not an ikea house, it's a It's a house that you put on the back of a giant truck that is very expensive to hire and us a lot to move. Is that part of the issue.
That's definitely part of it. That's definitely part of it. And then and then once it gets to the site, because it's this large, you know, like you said, you know, almost container size, you know, or even bigger than a container size room that needs to be lifted into place. You need a massive crane and those cranes can be twenty thousand dollars a day, right, So that alone is a huge cost. If you need a creat for even one day, that's twenty thousand dollars.
I just want to clarify one thing that I realized might be ambiguous, and that is we're not talking about mobile homes here, right, We're talking about houses that are manufactured in kind of a similar way. But it's a full house. It's not a mobile home. It's not like a trailer park house. It's a house.
Correct, It's a house, and it's built to the same building code and building standards as a conventionally on site built home. Okay, And that's what I saw, and so you know, I saw a ton of opportunity to improve, right like I thought. I actually when I worked there thinking these guys have the solution to the problem. And I left that innership thinking this isn't the solution. And I actually started that's when I started researching all the other companies that were doing precou and learning about their approach, and no, everyone was basically doing the same thing, which was build homes in a factory but convention. And that's where I realized there was a huge opportunity to solve this problem. And that's when I started chatting with my co founder Jim Well, So, you know, went back to architecture school and said, hey, I think I think there's this huge problem. And there's kind of two parts to it. There's, you know, how do we build homes in a factory more like how cars are made, so like you know, true design for manufacturability, designed for scale, and designed for automation. Right. And then there's a second part, which is how do you do that? You know, while you're not building the same car or same home one hundred thousand times, there's some amount of variation that is necessary to serve the market. And this is where the customization comes from.
Huh.
Right, And I think so there's kind of two parts of the problem. Build homes like cars and uh and and enable some enough enough customization that you can actually serve a large enough market.
It has to be more customized than a car, yes, but but kind of with the manufacturing principles of a car, where you think, not what is what is my dream car, but what is a car that is great that we could make a million of exactly the same.
Exactly And so that's that's when we started chatting, and that's that's when we started Cover. So we started to cover while we were still in.
And when was that? That was twenty fourteen, Is that right, correct? Yeah, so a long time ago. A key moment for me that's interesting both in the life of your company and in sort of the housing story more generally, is when California passes this law that makes it easier for people to put what's technically called an ADU, which is basically like a little backyard cottage or apartment on their house. Is that the right moment to talk about next?
Yeah? So yeah, we you know, we we started the company while we're still in school, graduated, moved out to California the day after graduating, basically three months after graduating that law was passed, Okay, And interestingly, at the time, we had realized that instead of focusing to start on entire you know, single family homes, right, call it a two thousand or three thousand scriffed home. We should actually focus on backyard you know, little backyard offices or guest homes. We actually realized we should focus on this before that lock came out. Interesting because yeah, and the reason for that is is really, you know, taking the lean iteration process of a startup, and how do you apply this to this large, complex product. Well, start with the smallest possible version of that product you can, right, the.
Minimum viable product. The minimum viable product is not a two thousand square foot house. It's a five hundred square foot studio with a bathroom.
In a kitchen exactly. And so we realized that, and then turns out the timing was just perfect because this lock came out and we were already positioned, you know, we were like, we already have the website. We just have to you know, speak to this new regulation. And so the market for what we were focusing on, you know, I don't know what the number probably over one hundred x you know, within three months of us starting there.
So it was just good luck.
It was good luck. Yeah.
Yeah, and like maybe a little bit like you're just kind of in the zeitgeist. Right, that's the non pure good luck part of it is kind of it was in the wind.
Yeah. We had our investors, you know, basically reach out and say, did you guys like pass this law within three months and we're like, no, we wish we could take credit for it, but we didn't do anything there. Yeah.
So okay, so now you've got a company, you got the laws suddenly on your side. What do you have to do to go from that moment to actually sell in somebody a backyard studio and putting it in their backyard.
So really, what we wanted to do is prove to the world that not only could you build homes in a factory, you know, efficiently and at low cost and fast, but that you could build homes that are way better than conventionally built homes. So you know, high end, you know, kind of change people's perception of a home, of a prefabricated home, home built in a factory, to something that's that's actually desirable, that's better, right and noticeably, right, not like, oh yeah it's better in these three ways that you have to read on the on the brochure, right, No, it's actually used. Look at it. You're like, Wow, that's beautiful. Well, that's that's you know in the that it looks like you was built by a starchitect, right or or you know that kind of things. That's what we wanted to do.
In a minute, why Alexis had to hire people from the car business to make Cover work and the problems Cover still needs to solve to sell factory build houses at scale. That's the end of the ads.
Now we're going back to the show.
So that's the that's the dream. Tell me about some of the things you had to figure out to do that to get from the idea to the thing.
Yeah. I think one of the biggest realizations, you know, we're starting to build this. My co founder and I both have architecture backgrounds, and the more we built, the more we realized the reason that this problem hasn't been solved from within the architecture construction world is because some of the core skills that are needed to solve this problem aren't known and taught by most people in that world.
Huh.
And we realized that actually, if you want to build homes like cars, you need people that understand homes, but you also need a lot of people that understand cars. Huh to be part of the innovation process.
What specifically are the sort of skills or knowledge that's that you need from the car industry.
Yeah, I mean one big one is designed for manufacturability and designed for assembly. So you know, you don't just design the part for what it's going to do, what it's in the car. You design the part with how you're going to make it in mind, so that you can make it incredibly efficiently and a low cost and reliably and at a very high quality, consistent uh huh.
And like it has to be exactly the same every time. Right, It's like a precision element I think of in cars that is probably not there in conventional home building.
Right, that's right, even the units that you talk in right, Like you know, when I was an architecture school, people talk, you know, people talk, you know, oh, it's going to be within an eighth of an inch or even an eighth site tight, Right, Most people are like, you know, yeah, within half an inch, within a quarter of an inch, right. In in automotive you're talking you know how many thousands of an inch? Right? And so and actually at cover that's that's we talk in terms of Yeah, this tool has to have this many thousands of an inch precision.
So it's orders of magnitude more precise. And that's because it just has to fit together automatically. You're not going to have a carpenter there to kind of just make it work exactly.
And we actually we learned that the hard way, you know, that's exactly how we learned that this is a problem. We tried to build something ourselves. It didn't fit as expected, and as we kind of went and root caused it, we learned that, yeah, you know, being off by one percent, you know, in a degree over eight feet like that doesn't fit together at the end of the day. And yeah, if you need someone on site to then you know, send something or trim it down. That kind of defeats the purpose because now you're building it once in the factory and you're rebuilding it again once it gets to the site. So defeats the purpose. It has to just fit together right once it shows up on site.
So you figure it out eventually, right you do. You are now making and selling little backyard homes or studios. So, I mean, one thing we haven't talked about in the sort of bigger why is home building inefficient? Why hasn't it progressed? Part of it seems like the regulatory piece, right, there's so many rules for construction permits you have to get in some places, it seems to be captured by the people who are being regulated.
Right.
So, as you are trying to figure out how to mass produce these studios, is there a regulatory piece you have to deal with?
Because we're building homes in a factory, there's a state approval process for everything that's built in the factory, okay, And so that's something that we have a relationship with this agency. They go and look at our design and our way of doing things, and they actually look at our quality control process and our pulled control documentation. They approve that as an overall process, and then yes, we're an approved factory built home manufacturer. Okay, but we still have to submit and get approval for each home from the city. But the scope of what the city looks like looks at is smaller, okay.
And the city you're basically selling in La now right, So when you say the city, is that basically of Los Angeles?
Yeah, City of Los Angeles. Yeah, And and what they look at is much narrower. It's basically, are you even allowed to build this, you know, on this property? Where on the property is it going to be located? And is that acceptable? Right? And and things like how far is it from the closest fire hydrant, right, and what's the access like if there was a fire, you know, basic kind of safety things, right. And so that's the permitting process with the city, and they'll also look at the foundation, right. So so the majority of the actual building side of things is handled on the state level, and then the local specifics are handled at the city level.
When did you sell your first thing, your first studio, the.
First actual backyard home with a kitchen and bathroom, right, like a real home? That one we sold in twenty seventeen and then we delivered it in twenty eighteen. It took us a while to figure out the system and engineer the whole thing.
And where are you too now, Like how many have you sold? How many do you sell per whatever, per month or per year however you look at it.
Yeah, yeah, So we've built dozens of these, like, you know, well over thirty of them, you know, across LA. We've also built one in Joshua Tree. We've built dozens of them. And we're delivering homes every month.
So let's talk about where the product and the process are. Now, how does it work.
The way I think about is we have multiple production lines for different parts of the home. So you have, you know, a roof and floor panel production line, a wall panel production line, a cabinetry production line, and so these are running. We're making the individual parts, uh, where we're we're doing quality control uh and then and then we're getting the ready to ship and so these are these all gets shipped on regular flatbed trucks.
The sort of output of the factory is like a bunch of like walls and roof panels and cabinets and they like and the and the and the walls have like pipes and wires in them. I mean, just just give me like a little bit more detail of like how this is actually working.
Yeah, yeah, so so so yeah, it's it's on the production line. We're building you know, the structure. We're putting the insulation in, we're putting the waterproofing in. We're putting all of the connection mechanisms so that everything can can connect quickly on site, and and we're also putting in plumbing and electrical so.
There are like pipes and wires just running through walls that you're building in the factory.
Yes, okay, Yeah, the goal, right is to minimize the amount of complexity that you have to do on site.
How long does it take to put the house together at the.
Site we're right now, we're at about a month.
About a month. That might be longer than I would have guessed. I mean, I'm ignorant. I don't know why I would have guessed less, but I was just imagining, like, oh, it's just a bunch of lego blocks and you get there and you're just snapping together.
Yeah, and actually we're working on making it even faster, right, I think we can go even faster than that, and so we're working. That's when we say the reason we're not building one hundred homes per year, right or a thousand homes per year, is because we want to get it even faster before we go and scale not just on site but even in the factory. Yeah.
So presumably the person the buyer already has what poured a foundation, and we do that as all of the hookups ready. That is that that's like before the house gets there from the factory obviously.
Yeah, that's the foundation, the hookups, the utility hookups, that's all done before. We do manage that for our customers, right, huh, so that they just come to us and we take care of everything in the permit, the foundation, the manufacturing, the installation. But yeah, the the assembly itself is yeah, about a month.
So what is that? What is that month of work? What are people doing for that month?
Yeah, So so the structure goes up relatively quickly, like one or two days. And then and then you're waterproofing it, you're installing the windows, you're installing the interior walls U and then and then you're you have some plumbing, you have some electrical in but you've got to connect it all. You've got to connect it to the panel, right and connect that to the to the utilities. Actually we installed we we ship them with deducting and HVAC already installed, right, but you still need to make connections. Test those connections, make sure they're reliable. Right, go and install, and then go and install all the finishes, all of the interior interior wall panels, exterior finishes, you know, countertops, cabinetry, align them. That's one thing that that that takes quite a bit of time. And then and then while we do the first code of paint from the factory today, we do a finished code on site. And so that's another thing you know, that'll take a few days, right, you know, including letting it dry and all. It's still you know, that's still faster than conventional construction. But we can go even faster than that, and that's what we're working on.
So you mentioned that you're still sort of trying to get the process right so that you can scale so that you can sell ten times as many houses as you're selling now or whatever. What's a thing in the process that you haven't figured out yet? What's the like a optimization problem that you're working on right now?
Yeah, I'll give you some one, like the paint right, painting on site. To paint something well, it requires a good eye, it requires craft, it requires attention to detail, and so that requires sending a painter on site. You know, when you're building a car, you don't want to be reliant on someone's skill and craft aft. So one of the things that we're trying to figure out how to do is and we're going to is move the painting process into the factory and then ship things in a way where they're protected so that it all comes together. When people are moving around with their you know, the fridge or the cabinets and they accidentally knock on the or scrub past the wall, it doesn't damage the painting and require refinishing.
And so you're talking about interior painting.
Now, interior painting yet naively not.
Knowing anything about it, I would think, well, you could just paint it at the factory. That shouldn't be that hard. But tell me why it is hard. I'm sure it is.
I just yeah, we've done that. We've tried to do both cotes in the factory, and then what happens is that they get scuffed along the way right, or or you know, there might be something that you know, one part doesn't fit together and so you need to trim it and that creates dust and I have dust all over it, right, that kind of problem.
Is there some kind of like industrial scale sort of saran wrap? Could you paint it and then put like a plastic film over it and then not remove the plastic film until the end.
Yeah, exactly right, that's that's the solution, right.
Probably not, but I don't know anything That's what came to my mind. I mean, what have you tried.
I mean, we've tried just painting for the factory. That doesn't work right. We've tried kind of protecting it in shipping. And while that helps right from the shipping process, you know, once you even saw it on site, there's some challenges there. Right, a film right might not cut it right some of the Sometimes what happens is, you know, that might help for eighty percent of the scuffs, right, but if you actually, let you know, moving a fridge and you hit the corner of the fridge, that's going to create a bit of a dent. So there's many things like that. It's not like there's one big thing that takes a ton of time. It's it's really like hundreds of small things that need to be figured out and and from a process standpoint and from a product standpoint to make this you know, much more like like a car.
So let's talk about let's talk about cost and price. What does one of your backyard studios costs today?
You know, for a unit that has like a bedroom, a bathroom, a kitchen, right, like a fully functional living space. While you can go smaller and get under three hundred thousand dollars. Most of them are going to be over three hundred thousand.
Over three hundred thousand, so but that's.
All in that includes the sixiensive.
I mean, the median price of a home in the United States is somewhere around there. So like, yes, you're you're building an expensive backyard home.
Now we're starting off with a product that's very high end, right, Like we've we include like sub zero wolf appliances, right, which you know that a fridge and an oven there can be fifteen thousand dollars, right, just just that, right, So it's very high end, and we're proving to the world that this is better than conventional construction. And then as we ramp up production, as we build more and more, we will lower the cost and be competitive with you know, mass you could build the same home, like the typical American home for the same price, right, Like, that's where we want to get to.
For you to get from where you are now to where you want to be to building full size houses for people who are not rich, you need to get better at building the houses, and then the world needs to discover you and want to buy your houses. Right, those are the two sides. So one side of that is you getting better at building those houses. You mentioned painting as an example of a thing you have to get better at. What's another example, Yeah, I.
Mean another example is actually on the supply chain side. So a lot of our supply chain historically has been what I would call a prototyping supply chain. Who's close, who can get it done fast, and who can we basically go, you know, just drive to and if we have feedback or we need to make changes because what we've optimized for is speed of iteration. Huh right, But as we scale, one of the biggest changes we need to make is to say, you know what, we're gonna lock down this design, not forever, but we're gonna say we're gonna build one hundred that are gonna be the same.
Yeah, we're gonna stop, We're gonna stop monkey in with it. We're gonna stop iterating on this one thing for a while.
For a while. So we order one hundred the same parts. And when you order a hundred parts from a supplier versus you know ten, right, it's a huge difference in costs. I mean, you're talking about you can you can reduce the cost sometimes you know, fifty percent sometimes even more?
Right, And so are you there? Are you there yet? Are you ordering one hundred at a time?
Now, we're close, We're close. We're now setting up the long term supply check. Okay, we're kind of taking the product from this prototyping phase to hey, we're ready to scale this. Let's let's go build thousands of homes. That's where we are.
So so then there's the demand side, right, Is that the other piece of people have to want to buy these houses from you?
Yeah, people have to want to buy these homes from us. Fortunately, there because we have a product that is much better than conventional construction. Even at this price point. We've we've always had a backlog of orders.
So is the only thing keeping you from selling full size houses right now your own desire to make your process better before you do that?
Yeah, it is. It's it's the it's kind of like, you know, nail it and then scale it.
Did you make that up? Or is that a thing people say? Is that like a y Combinator thing?
I didn't make that up. An investor friend said it. Actually, it's like we love the nail it scalet approach. It summarizes it. Well, when you.
Put it that way, it sounds binary. It sounds like there will be a day when you're like, okay, let a rip. But you know, the real world is often not like that. Do you have a moment in your mind. Is there a thing you're trying to get to when you say like, okay, we know how to do this well enough that we can we can let a rip.
Yeah. The focus is really on the on site assembly side of things. There Once that process can basically be done by anyone. Right, So this is not necessarily people that have extensive construction training. Right, we can you and I can go build it, or you know, are as someone who's currently working at Starbucks or at a restaurant. You know, as long as they want to work with their hands and and can you know, follow the instructions. Well, anyone can build a cover. Once it's at that point, the installation side of things can scale very well.
Oh right, because that's is that the binding constraint now, I mean you were talking about the bottleneck is the real bottleneck Now the skilled labor you need to install the house on site once it's out of the factory.
It is and and for most PREFIX companies even the ones where they're shipping entire rooms, that on site process still takes you know, they say, oh, it assembles in a day, but really really what they do is they put the parts together in a day, but then they spend four weeks patching it up or six weeks thatching it up. So even when they're shipping room size pieces, that that's the bottleneck. And so yeah, that's the focus is making it so that you know, that won't be the bottleneck because then the complexity can mean the factory. But there's a playbook for making factories more efficient, right, Like any company that's had to scale up production has had to learn how to make factories more efficient. So there's much more of a playbook for how to do that than there is for how to scale what's going on on site.
Right, So the the real process improvement you need to figure out is what can you change in your in the factory manufacturing process so that assembling the house on site requires less skill.
That's right, and and and the result of that is that it's also faster. But yeah, exactly.
At a certain level, what alexis uncover are trying to do, you know, designing this thing so that it can be made in a factory, so you don't need high skilled laborers to assemble it on site. It reminds me a little bit of the original Industrial Revolution in England more than two hundred years ago now, where they did something quite similar, but instead of doing it with houses, they did it with cloth. That moment, you know, figuring out how to produced something for cheaper with machines. That's really the beginning of this era of technological progress that we've been living through ever since. We'll be back in a minute with the Lightning round, including Alexis tips for designing a small space that doesn't feel that small. Now back to the show, let's finish with the Lightning Round. I'm just gonna ask you a bunch of questions. Yeah, I read that you canceled all meetings for everybody at your company on Tuesdays.
Is that true?
It's true? So why Tuesdays?
I Actually I wasn't like big on the Tuesday. The Tuesday thing was just that we had to pick a day and I just had to Hey, it's either gonna be Tuesdays or Thursdays, and we put it up to a vote, and Tuesday one, surprisingly by like seventy percent, So I was like, Okay, let's do let's just do Tuesdays.
Who's the most overrated architect of the last one hundred years.
I think there's I think Frank Garry. Honestly, I think Frank Aarry. There there's some I will say, there are some very impressive things that he has done from a technology standpoint, right as far as how his building, because there's such crazy.
Metal that looks like it's like rippling in the breeze or whatever.
Yeah, exactly, and and and and that metal actually like they've done some pretty innovative stuff on it. So I'd say from from a technology standpoint, he's actually very impressive and inspiring. But but I just don't see why buildings need to look like, you know, scraunched up napkins. Like why this is controversial, but you know why.
I like it. So, who's the most underrated architect of the last one hundred years?
Oh? Uh, underrated, I'd say, you know, Knees, Vandero and Lac Corboussier. So by no means underrated. They're i think highly respected within the architecture world. But outside of the architecture world, a lot of people don't even know about them, right, And they One of the things that I think was really really interesting about the work that they did and the vision that they set out for the world was they looked at the car as kind of this thing that we should aspire to in architecture in terms of making it affordable to people, making it a mass market product. And actually they talked a lot about the vision of factory made homes so that you could have incredible homes for everyone. And I think a lot of that has been lost.
From your professional experience. What do you understand about houses that most people don't?
Yeah, I think I think one thing there is is not all square feet are created equal. And like the degree to which this can be true shocks people sometimes, right, people look at like, oh, how many square feet is this home? Like you can have a thousand square foot home that feels smaller than a six hundred square foot home.
Huh.
And and and I'm not I'm not exaggerating. So there's a lot that you can do from a design standpoint to make small spaces feel bigger. Right, So you know, again, less is more, right?
What's one way to do it? What's like one tip for optimizing your your space.
Yeah, large windows is huge, large Florida ceiling windows. And then and then just good layout where you don't have a bunch of wasted space and kind of like transition like hallways right or foyer's right, like you kind of don't think about that space because you don't use it all the time.
Do you think you'll run cover for the rest of your career?
That's all I want to do. I want to build awesome homes and you know, whether it's backyard homes, single family homes, multifamily that that's all I want to do. Yeah.
Alexis Revis is the co founder and CEO of Cover. Today's show was produced by Edith Russello, edited by Sarah Nicks, and engineered by Amanda Ko. You can email us at Problem at Pushkin dot fm. I read every email. You can also find me on Twitter at Jacob gold STEAE. I'm Jacob Goldstein and we'll be back next week with another episode of What's Your Problem.
