🏠 Stop calling Boxabl a 'tiny-home company'

Thanks for pulling up a chair to this week’s edition of CROWDSCALE, where we talk all about startup investing. In today’s newsletter, we’re examining the poster child for equity crowdfunding: Boxabl 🏠

• The People’s Champion: Boxabl raised millions from 40,000+ retail investors

• Future is Modular: It starts with tiny homes, but modular building is the end goal

• Baby Amazon: Boxabl is a 1999 version of Amazon

Many people don’t know this, but Adam Neumann + Elon Musk actually have a son together. He’s a 35-year old man named Galiano Tiramani.

Okay, there’s no actual relationship there, but Galiano is who I imagine you’d end up with when blending their ambition & showmanship together. Along with his actual father, Galiano founded Boxabl - a company looking to revolutionize the manufacturing process of homes.

We’ve mass-produced just about everything, from automobiles to clothing, medicine, and even food. Homes are a key holdout due to their complexity and size - they’re typically far too large to ship from a factory and therefore need to be built on site.

On-site building is a long, expensive process…

• Building processes are often held up by delayed supplies

• Materials are measured and cut on-site, which leads to wasted leftovers

• Mostly-manual processes incur high labor costs

As a result, the price of building homes has only gone up. And Galiano doesn’t like that.

He set out on a solution to bring home-building into the 21st century. Boxabl’s key technological spark lies within its patented folding mechanism for walls of a building. This enables Boxabl to ‘fold up’ its small homes onto flatbed trucks. With shipping concerns addressed, Boxabl had the greenlight to begin constructing homes from a centralized factory.

In pursuing this quest, Galiano has amassed an army of supporters, a myriad of controversies, and retail investment on a scale I’ve never seen before.

Numerous Boxabl Facebook groups have popped up, comprised of fans & investors. While engagement on the Facebook platform has largely dwindled, these groups are alive & energetic - member posts are frequent and receive hundreds of likes & comments.

One of the most interesting nuggets I took away after speaking with Galiano is how the Boxabl factory (located outside Las Vegas) is turning into a tourist destination due to how much interest there is in the company. According to Galiano, the factory averages around 300 eager visitors a month. to see a factory!

Galiano’s funneled their enthusiasm into financial support, opting to run equity crowdfunding campaigns to fund the company’s growth. The company’s website claims that Boxabl has raised over $140M from over 40,000 investors. The sheer scale of this should not be underestimated, as it’s quite uncommon for startups to reach $1M in crowdfunding investment.

Galiano’s firebrand personality has no doubt been a factor in their success. Boxabl’s social following has largely been a result of his ‘professional antics’. In one of their highly-viewed videos, he tests the strength of Boxabl’s walls by trying to smash them with whatever he can get his hands on. He’s also into dirt bikes, and has received complaints from neighbors about excessive noise + partying at his residence.

Galiano has (unsurpsingly) picked up a few non-believers over the years as well. I talked to a disgruntled former employee (couldn’t verify their claims), and some critics have gone so far to call Boxabl a scam. It’s highly unlikely that Boxabl could be a scam as they have already delivered units of their tiny homes to customers and are building more every day.

Boxabl’s maiden unit is a tiny home called the Casita. The 375 sq ft living space is technically an ADU (accessory dwelling unit), which is a secondary building on a primary residence that are sometimes subject to less permitting.

Over 100,000 people have reserved their Casita - an impressive figure even if there is no deposit required to do so. Converting just 10% of these reservation would result in approximately $500,000,000 in revenue for the company.

Boxabl is currently pouring its focus into scaling production of the Casitas. It needs to, in order to prove out the concept and financial feasibility of their product.

Some improvements Galiano’s team has made in the past year:

The improvements are a result of relentless iteration and push for efficiencies. An example of this is their consolidation to a universal panel wall design. Whereas before they were making 13 different wall panels, Boxabl now makes just 1 to speed up its process.

While Casitas are the prime focus now, observers should not put the company in a box. Galiano’s ambitions stretch far beyond tiny homes. The company is making strides towards modularization of its units. This would make each unit compatible with another, and you could pair Boxabl structures together as if they were giant Legos.

At this point, you can essentially make any structure shape/size you want. Single-family, multi-home, and even small office buildings all become viable options.

Modularization at mass scale would completely up-end how buildings are made. ADUs are a small use-case that could lead to hundreds of millions in sales alone. If you expand the scope to all buildings, that quickly becomes a trillion-dollar market in the US.

In Amazon’s early days, many investors passed on the opportunity. In doing so, they’ve missed out on a 14,223% return from it’s IPO. Back then, many discredited Amazon as ‘just an online book store’. When viewing Amazon through this lens, it’s easy to put a low ceiling on its investment potential.

In the background, Amazon was building out the infrastructure to sell much more than books, and would soon expand to sell everything and anything on its platform.

Today, Boxabl reminds me of the early days of Amazon. Looking through the lens of ‘Boxabl just makes tiny homes/ADUs’ is a dangerous viewpoint to hold. It doesn’t reflect the moves Boxabl is making to offer vastly more than that.

Galiano’s team has spent the past 18 months testing new designs to make them more efficient & compatible with one another. On top of this, the company has invested roughly $15M into new equipment that will allow their manufacturing process to take a step forward. The goal is to be able to mass produce any building structure you can imagine, at a drastically lower cost.

Boxabl still faces an abundance of challenges, and its valuation is extremely high for where it currently stands. But I give the company and its founders credit for having ambitions that surpass even those of Elon Musk. With Tesla, Elon wanted to change the way people drive. Boxabl wants to change the way people live.

Whether they’re able to accomplish that goal will have a major effect on the equity crowdfunding industry. Boxabl will either serve as a shining example for democratization of startup investing, or a woeful tale of consumers being exposed to a risky asset class.

I asked Galiano if he gets stressed out knowing that 40,000 retail investors could lose their entire investment if the company is unsuccessful, to which he responded:

…The people’s champion has entered the arena.

Please note that this is not financial advice, nor a recommendation to invest in Boxabl. Please conduct your own due diligence and understand that investing in startups is extremely risky. The author of this post has a small equity position in Boxabl.