Episode 33 - Galiano Tiramani, Boxabl

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Prefab Review

Hi, my name is Michael Frank and this is the Prefab Pod presented by Prefab Review where we interview leading people and companies in the prefab housing industry. Today, we're speaking with Galiano Tiramani founder at Boxabl. Welcome.

Boxabl

Hey there. Thank you so much for having me and yeah, my name is Galiano from Boxabl. We have just set up a large factory to produce houses and we've got a bunch of innovations that we think are going to make a really big impact.

Prefab Review

Awesome! Well, we're excited to dive into it. So I think, just to set the stage, can you tell me how did Boxabl get started? I know you're a newer company.

Boxabl

Yeah, we're definitely brand new. We actually just turned on this factory late last year but the company started when we had the initial innovation which was to actually fold up the houses. So one limiting factor we saw with with prefab and modular is that it's so expensive to ship the wide loads down the highway because they don't fit on the highway. They have these expensive follow cars, police escorts, restricted routes, and all kinds of issues with shipping these wide loads. So we thought if we could turn these into a highway-legal load by folding up the rooms that would ship at the lowest cost, and that therefore allow us to scale manufacturing and hopefully dramatically reduce the costs.

Prefab Review

That's super interesting. So by the way we'll get into your product line, but my impression is right now we're primarily talking about your I think it's called the Casita. It's like a 20 by 20 unit. So I know that a lot of the companies we work with and cover on our site have 14 or 15 foot wide modules. Are you saying that your units actually fold much narrower than that?

Boxabl

Yeah, the initial product we have, as you mentioned, is the Casita. So it's a twenty-foot by twenty-foot room with a kitchen, bathroom, bedroom, and couch. Its kind of a little studio apartment. And although we end up with a very large twenty-foot room that actually folds up to 9’ wide and that makes it highway legal. And even though we're folding it up to 9’ wide we're still able to finish almost everything in the factory. So the kitchen, bathroom, electrical, HVAC, windows, flooring, all of that is done before it arrives on your site.

Prefab Review

Got it. So obviously the appliances come separately but everything else comes in the fold of units?

Boxabl

Yeah, so if you look at the way it folds up on the website which is boxabl.com, you can see that although it is folding, not all of it is folding. So there's a portion of the room that remains uncompressed and that's really important because that's where we can finish things in the factory.

Prefab Review

I see.

Boxabl

In this model, the kitchen and bathroom is in that uncompressed space. And then we're also able to fit in the washer, dryer, fridge, and oven all in there as well.

Prefab Review

Cool and is drywall completed as well?

Boxabl

Well, yes and no um because our innovations go far beyond just the folding. And that includes using all different building materials so that we don't actually have any drywall.

Prefab Review

The equivalent of the the the interior wall is basically complete?

Boxabl

Yes, the walls are completed. Yeah, it's all done, painted, everything ready to go once it arrives on site. All you really need to do is unfold it, and bolt it down to a foundation, or no foundation depending on the use case.

Prefab Review

Yeah.

Boxabl

Plug in utilities and throw in some furniture.

Prefab Review

Yeah, very cool. So I love the idea. It's in some ways a very cool combo of a lot of what we've seen with other companies, right? Meaning we've got this sort of flatpack, we call them kit-style providers, right? And we've got the modular providers. And it totally makes sense that this sort takes a bunch of the positives from both of those things and combines it. I guess one question I have on this is why hasn't anyone done this before? Is there a special sauce or sort of innovation that you all created? I don't think I've seen people do this at least at scale before like you're trying to do.

Boxabl

You know I don't know why no one's really solved this problem before because if you look at building construction in general, it's really one of the last big industries that's still pre-factory. Pretty much all the other modern products are mass-produced on an assembly line with automation and all these other benefits you get in a factory.

Prefab Review

Right. And it's actually North America where it seems like there's higher adoption than in other parts of the world.

Boxabl

Yeah, and you know, although factory-built housing does exist it really only takes about 10% of the market share. So the bulk of it is done on-site. And an example I like to use is, imagine you buy a car and they show up in your driveway and start building it with pieces of metal and welding torches and hammers. That would seem totally weird and crazy. And of course the car would be very expensive, very slow to build, and very poor quality. But that's what they do with housing. So you know, we think that our solution here is going to allow a massive disruption where we'll be able to build most building types on the planet for dramatically less and dramatically faster. And you know if we can do that, it's just going to be absolutely huge.

Prefab Review

Makes sense to me. So can you tell me a little bit more about the specifics? And by the way again, boxabl.com to check out this sort of demo on the website for people who aren't but for people who aren't on your site right now, do you think you can provide some details about the 20 by 20 casita - why you started with that and what makes it special?

Boxabl

Yeah, we do have a building system planned that should be able to build most building types by stacking and connecting different room modules to create, you know, a thousand unit apartment building or a single family residence and everything in between. And the idea is that eventually, we would mass produce different size rooms with different interiors. So we're starting with this 20 by 20 but we could also do bigger ones, 20 by 60. We could have, this one has a kitchen and bathroom in it. You could have one with only a kitchen and that's a bigger kitchen or only bedrooms or you know, whatever you need. And then that we would have this lineup of standardized room modules that people can stack, connect, and then finish on-site to get most semi-custom buildings that meet most needs. But when we are looking at this and deciding how do we start, we saw what was going on in California with backyard accessory dwelling units and the increased demand for those backyard cottages. And based on the changes in laws, we thought that's a great place to start. We'll start with a simple fixed product and we'll get really good at that and it'll be simpler, physically smaller. You know, it’s repeatable and we'll perfect that and then we'll move on to the remainder of the building system.

Prefab Review

That makes total sense. So I guess when we sort of talk about this 20 by 20, what do you need to actually deliver it? We talked a little about you don't need a foundation? And I say this from the head of someone who's constantly helping homeowners build these things and especially on the modular side, and especially ADUs in California as an example, let's say in Tahoe or Marin County right, you've got some narrow roads. We've had issues where like, “oh, you can't get a crane back there. You can't get this. You can't get that.” For the different project types, what do you need in terms of trucks, cranes, and foundation?

Boxabl

So we definitely solved a few problems and reduce some friction on that point as well. For example, our houses are much lighter weight than a traditional modular house. So we can actually pull these and deliver them with a pickup truck. So that kind of reduces the cost.

Prefab Review

Oh really, that's cool and probably makes it so that you can get it to some more remote places too.

Boxabl

Yeah, it makes things a little simpler. Additionally, the way the houses are actually dropped off. You don't even need to meet the crane and the developer or whatever the builder is there. Our drivers can actually go to the site by themselves unload the Castia and leave. So that kind of makes things a little more efficient as well. And you know, once it's delivered to site, at a bare minimum, you can place it in its final destination. And you can either use a crane or a forklift or we will also have a special kind of bracket that allows you to unfold the house without any heavy equipment. But you know, different options. You can use whatever makes sense for you to get it set up.

Prefab Review

Right, like there's the use case here of you need to create workforce housing where you just want to drop 50 of these and then there's the like wanderlust one where it's like you know, I own a small piece of land near some cliff somewhere where intentionally, it's hard to get to. So, that's cool that there's some flexibility. So what you have is super extensible and you all are awesome about publishing the cost of the box on your site for some of the existing projects. This is by the way, the most frequently asked question we get. Where you've shipped so far, what do the typical install costs end up looking like? Can you give one or two examples? Maybe in terms of foundation, what other things need to get added? Is it literally just like connecting new utilities or is there lots of other work that ends up being done on site?

Boxabl

It really depends on the use case. At the bare minimum, you could set this thing up without any foundation and plug it in with an extension cord and that's not going to cost too much. But on the other side, you know, you run into different permanent costs. In different areas there are different foundation requirements, it depends on how remote the site is, do you have utilities at the site, is it going in a backyard, is it going on raw land? So I kind of tell people that the range they can expect in addition to the cost of the actual house is like… one more thing to actually get this thing deployed. So then, if you end up at $110,000 for all in, you know, you're still in a pretty good spot.

Prefab Review

Yeah, especially if I'm benchmarking this against like a typical California ADU company which there's a lot of, they're probably doing more like $400 or $500 a square foot on this sort of small volume. So definitely less expensive.

Boxabl

Oh yeah, the California factory built ADUs are you know, mad money.

Prefab Review

It's definitely a different product. I don't know if it's going after a different audience but it's definitely a different product and a more expensive one. You talked about use cases, what are you seeing people use these for, so far?

Boxabl

Well, the idea initially was to target backyard ADUs but we ended up getting interest from everywhere. You can imagine. And it actually resulted in a waitlist that we have with over 100,000 names on it of people that want the product. And they've kind of reached out to us and mentioned every use case under the sun. The initial customer that we have is actually the United States federal government, the military. So we supplied 150 houses for military-based housing and so that was the number one customer. Then we have a lot of people that want you know, workforce housing. People that want to do low-cost communities. You know, they're just rooms and you know there are so many different things you can do with them.

Prefab Review

Yeah I'm sure.

Boxabl

Even just this initial product, never mind the remainder of our building system that we have planned.

Prefab Review

That makes sense. And I think I read somewhere that you're shipping like 1 a day or so now. Is that the current volume or how's that going?

Boxabl

Yeah, we're building like 2 to 3 houses per shift. And we're really just focused and since everything we're doing is new, all the building materials are new, the product's new, the manufacturing process is new, we're focused on dialing everything in and getting everything perfect. And then we'll look to ramp up this initial factory.

Prefab Review

Wonderful.

Boxabl

And we think that we'll probably get to about 10 houses per day in this first factory. Right now, we're just doing 4 shifts per week. But we could eventually do two shifts per day or maybe even three shifts per day.

Prefab Review

When you were saying 2 to 3 per shift, is that 2 to 3 per day or are shifts multiple days. Sorry for. I got it. So 8 to 12 per day. Cool, that's awesome and then these mostly, you said you're primarily supplying the US government. So are they going all over? Are you primarily going to like certain states, right?

Boxabl

They're all going to just one military base.

Prefab Review

I got it. Cool. Are you guys going as one party? Like most modular companies, which you are not, will a lot of times they'll handle the shipping, they'll send their guys out for the sort of quote-unquote set. And then some local builder will be responsible for sort of foundation finishing. Do you think you're going to have sort of a similar operational structure for that stuff or how's that going to work?

Boxabl

The idea is that we would just be the manufacturer of these modules and that's what we would be really good at, and really fast at, and low cost. And we would enable these builders to speed up their process.

Prefab Review

Yeah.

Boxabl

So you know, we'll offer some training program for the builders. Like a certification and then we're just going to ship it to them and let them kind of do what they want with it. And we think they're going to love that.

Prefab Review

I mean, the idea is that the finishing time should be really fast, right? We're talking about days subject to all the permitting and stuff, correct?

Boxabl

Yeah, I mean with the state modular approvals, we get the inspections done in the factory beforehand. The plans are approved at the state level, then you're going to get permits set up for your site and then you can actually set these up in an hour.

Prefab Review

Right.

Boxabl

You know, and that's what we've done here. We've set them up in less than an hour. So it's really fast and really easy.

Prefab Review

Cool. I had a couple of questions that are a little more sort of structural to your business just because you are unique and cool. I guess one question is it seems like you're actively fundraising which is why before this, we talked about we'll add a note to the doc so people can learn about that more themselves. But why crowdfund? I mean, I live in the bay area right now, and as I said when we talked about in California, sort of ADU companies. There are a lot of them and a lot of them have raised venture capital. So it certainly seems feasible to raise whatever $5 or $10,000,000 from 1 or 2 bigger institutions versus from a lot of little smaller checks. Yeah, so why go that route in kind of fundraising for your business?

Boxabl

Yeah, and you know we actually are crowdfunding. We can invest directly on our website now and there should be a clickable link in the description to the offering circular so people can read all the details on that. But I just really you know, kind of have tried all the different methods to bring in the money we need to do this and pursued what worked and what ended up working really well for us was this crowdfunding. And we had you know, so much interest and awareness of what we were doing that we had a huge amount of web traffic. We had you know hundreds of people looking at this.

And a certain percentage of them wanted to invest. So you know, we ended up in a better position. The company ended up in a better position by doing it that way. And I'm still in full control of the company and you know we really weren't limited on the amount of money that we were able to pull In. I've actually raised over $100,000,000 now from this method. And it's you know, been really amazing and exciting and I don't see any downside to it. You know, we now have an army of fans. Hopefully, an army of fans that that we will make rich. And you, know it's…

Prefab Review

Yeah, totally. Just to be clear, that a hundred million dollars are not for Boxabl right? That's like across endeavors, right?

Boxabl

It's just been great. No, I've raised a hundred million dollars through crowdfunding for Boxabl. It's crazy.

Prefab Review

Oh, wow. So Boxabl’s raised $100,000,000. That's amazing. I didn't realize. That's really cool. I didn't realize the scale. Yeah for some reason I assumed that you had raised, I think did your current offering say the offerings up to like six million dollars? So I'd assume that was the sort of cap on what you had done. That's very cool. What is the extent you can talk about, what's the average check size? I would have assumed it was like you know, $500, a thousand dollars, two thousand dollars.

Boxabl

Yeah, it's crazy to me every damn time. Like, “oh my God. This is big.” Yeah, so we've done a few different types of offerings throughout. And it started off with an initial called RegCF crowdfunding. Where you know, the limit was a million dollars for the general public and they could invest up to $200,000 each. But soon soon after that, we started raising from accredited investors. So right now the minimum investments and check size from the accredited investors is $20,000 and the minimum investment size from the not accredited investors is $1,000. So you know, we've had everything from you know, a $5,000,000 check down to the thousand dollar check and everything in between.

Prefab Review

Okay. Wow. So, if you are already at $5,000,000 checks, that's actually not that different than venture capital investment and it might even be less.

Boxabl

And we actually do have a bunch of different institutional investors and venture capital investors in our crowdfunding, but you know, what I was able to do is kind of flip things around instead of us going you know, cap in hand and begging for money and doing whatever they say and getting a bad deal for myself, I said, “here's the deal. Take it or leave it.” And they took it.

Prefab Review

That's great. So it sounds like you guys were effective in that. And then I guess I’ll start a secondary question. I don't know that much about your background, so feel free to fill in the blanks if it's applicable to the question. What is the process of setting up a factory like? Obviously, it's a newer process and I mean there are companies, we get press releases, probably once a month from different modular factory companies saying, “hey, we're setting this up. And I mean, I think our comment to you guys may have even been the same at some point of like, “oh, that's awesome. Let us know when you start to ship units.” Because we sort of learned from experience that saying you're going to set up a factory and doing it effectively is not the same thing. So can you talk a little bit about that?

Boxabl

Yeah, so you know, what we're doing is very different than any traditional house building. We're not using lumber and nails. You know, we're not shipping a wide load. We're using all different materials and all different processes. So there really was not an established way to do any of this. All of our manufacturing equipment is different. And you know, it was a process of a couple of years of doing a tremendous amount of research on alternative building materials. A tremendous amount of research on manufacturing equipment and you know, I have no significant background in manufacturing. Neither do any of the other founders of the company. But you know, we figured it out and we kind of set up this factory. And in record time, I think after we went out with the Casita prototype, and decided we were ready to start producing them for sale. We went out and looked for a building. So last year, early last year, we signed a lease on a brand new construction building that's 170,000 square feet. Then over the next few months we went about getting permits and fitting out the factory. By August/September we were moved in. And then by October, houses were coming off the assembly line. Since then, we've produced a few per day and it's been a really exciting process. We have you gone through a huge learning curve and a huge amount of hiring. In many ways, it’s still a very manual process but very different than what other people are doing. And then the next step will be to add in some more automation and improve all of our processes. But you know, what we've done is we've changed everything and fully re-engineered the building. So we're not using you know, nails and hundreds of little pieces of wood and nailing them together in this labor-intensive process. We have these different materials. There are bigger pieces so there are less of them. They're all processed by computer-controlled cutting equipment so they can then assemble together rapidly. For example, when we make one of our walls, like the front wall of our house, we make that in about 20 minutes and to a very significant level of completion and you would never do that in a traditional lumber stick-frame factory. And that's just this stage. Once we upgrade some of the equipment in the next few months, we'll be making one of those walls in 3 or 4 minutes and that's even just in the first factory with limited automation. And we do have big plans to take another step into a factory that's much much larger and really looks more like a modern automobile factory. When I look at modern manufacturing, I see them as the best example of the most advanced practices and efficiencies. And we think we've designed a product that's compatible with that type of manufacturing. Whereas traditional modular is not.

Prefab Review

Got it, yeah. That makes sense. So this has been awesome learning a bit about your company. I’m definitely very excited to see more of these on the road. If you don't mind, I’m hoping to transition and pick your brain in on our fire around. So for some of our frequently asked questions, if you can do your best to respond in 1 minute or less that's great, but not too much a stickler. One question we have all the time from customers is, how do I understand build quality? Every company says they're building high quality, and it can be like a little difficult to actually understand. So how do you evaluate build quality or at least ensure that yours is high?

Boxabl

So to start, like I said, we are not using traditional building methods. So as a result, we're using these new methods. We have to do a tremendous amount of testing to make sure they're strong and safe and energy resistant and fire-resistant. So we now have all that data showing that these buildings are better than probably the building that you live in now. For example, all of our walls have hurricane speed wind rating on them. The energy efficiency of the house is off the chart. They can stack multiple stories based on the structural strength. So you know all of that data is there.

And then because we're creating this very repeatable product in the factory, we get to really refine everything. So you know, a traditional site-built house is kind of a one-off custom every time. So they're not able to perfect what they're doing. We're building the same thing over and over. We can tweak and perfect everything until it becomes extremely high quality and then we're also using the CNC cutting equipment. So pretty much everything in our building envelope is cut by the CNC and that's just a robot on a computer and it's doing it the exact same way every time.

Prefab Review

And then in terms of if someone's evaluating site feasibility, what do you recommend to them? Like is there a checklist of things they should be aware of to make sure that you know your units can work?

Boxabl

Well, there are a few different tools that we have and are putting out there for people to be able to do that. One of them, which is on our website right now, is permits.com. So they'll basically do the work for you. You pay them a few hundred bucks and you say, “I want to put a casita in my backyard, can I do it?” And they'll do it and they'll even get the permits for you. So really, it's just going to be about knowing the local rules regarding the use of your land.

Prefab Review

Okay, got it. So as long as you can build on it. And then are there certain foundation types that you need to be able to build to actually support them?

Boxabl

Our houses are very strong and they don't need any foundation once they're set up and unfolded and locked in. You know they're good to go. You can drop them on some bricks or on the grass or whatever you want to do. Or just bolt them to a permanent foundation. You also don't need to support the bottom of them just at a minimum you could put it on piers and the rest of it can be kind of suspended and it's strong enough to handle that.

Prefab Review

Cool. And then finally, I don't know if I’d call these customization options or customizations. It seems like you guys are creating a box with the idea that people can use their imagination. Are there sort of manifestations you've seen already? Or you know, things you plan to see people using them for from a custom standpoint.

Boxabl

We think of it as kind of an architecturally neutral universal building box that can probably build most things. Most of the time what we're selling is not necessarily a finished house ready to turn to live in, but it shortcuts the builder's process. You can add to our house any different roof style or pitch you want. You can bolt on different siding or architectural styles onto it. You can build a deck around it. You can change things inside. For now, we're trying to keep the product really standardized in the factory and just get really good at doing this one without any custom requests. But eventually, we'll have options in the factory as well. And then those builders can customize things on site.

Prefab Review

Got it. Awesome! Well, thanks so much. It's been terrific learning a bit about your company. The question I ask everyone as sort of a final question is, what are you most excited about for your company or for the industry in the near future?

Boxabl

Well, you know things are really taking off. Our trajectory is crazy. The speed that we're getting this done is crazy, in my opinion. And I'm just excited for the next step and for me, what I'm looking to do is get into another factory. That's hopefully going to be a billion-dollar factory where we have kind of the most advanced housing factory ever done. We have incredible speed and precision and I want to be able to build one house every minute because that's what they do in automobile factories. So why shouldn't we be doing that with housing?

Prefab Review

That's awesome. I think given the need for more housing in the country, I think that's a really laudable goal. Thanks again Galliano, it's been terrific learning about Boxabl. For more information about Boxabl as we mentioned visit Boxabl.com and as always you can visit us at prefabreview.com. Thanks for making the time.

Boxabl

Yeah, thank you so much for having me, and appreciate it.

Anyone can buy shares in boxabl for $0.80 at https://www.invest.boxabl.com and read the offering circular contract at https://www.boxabl.com/circular

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