Why Amazon Is Betting You’ll Buy a Million Dollar Prefab Home
Designers have long tried and failed to take modular mainstream. Can this Amazon-backed entrepreneur make prefab more than just a fad?
Steve Glenn is in his sun-drenched, airy, modern 2,500 square foot home blocks away from the Santa Monica beach, reducing his career to a series of missed moments. He explains that in 1994, he was co-director of Walt Disney Imagineering’s virtual reality studio, decades before VR became a thing. Next, he co-founded PeopleLink, a social network that preceded Facebook, and shut down in 2001, three years before social media was even a glimmer in Mark Zuckerberg’s eye. In his twenties, he even sold a company he co-founded — software startup Clearview — to Apple, soon after the computer maker debuted the Mac. But since then, it seems like he’s been waiting for that big moment.
The tour through the 55-year-old’s career could easily be interpreted as one big humblebrag, but for Glenn, it amounts to 30-some years of bad timing. “I’m a too-early entrepreneur guy,” concedes Glenn. “I lost an insane amount of products and business opportunities before others. That’s been a talent I’ve had.”
Success for Glenn, like many entrepreneurs, is being able to land that one big exit, something that he has never been able to quite grasp. His floor-to-ceiling glass paradise, with its raw cement floors, and Dwell-worthy eco-friendly corkboard finishes and sliding wood panels, should symbolize, at least superficially, all that he has accomplished. But for Glenn, it’s a constant, if not tangible reminder that he has a lot riding on finally getting it right. After all, this is not just the home where he has lived for the past 14 years; it’s also the showroom for his latest gambit, Plant Prefab.
Prefab has long been the unattainable unicorn of architecture, the ideal marriage of high design, efficient building, environmental consciousness, and affordability.
Plant Prefab is an all-in-one, vertically integrated startup that will design, manufacture, and install your modular dream home — imagine if Daniel Libeskind or Frank Gehry also ran their own construction companies. Glenn hatched the company in 2016, on the back of another prefab startup—that too with bad timing. LivingHomes did custom prefab luxury homes as a developer and design studio. It also barely survived the Great Recession.
Prefab has long been the unattainable unicorn of architecture, the ideal marriage of high design, efficient building, environmental consciousness, and affordability. With LivingHomes, Glenn figured he could convince the Tesla-driving, Whole Foods-shopping, organic mattress-sleeping crowd to buy a beautifully designed, exquisitely appointed prefab house for a sticker price more affordable than building a home from scratch. But when the housing market crashed in 2008 — two years after his design studio launched — it reverberated throughout the entire construction supply chain.
Since LivingHomes didn’t make the homes, Glenn found himself at the mercy of factories, which, worried about going under, were unable to commit to deadlines. Part of modular construction’s appeal is that it’s quick and dependable. When that promise started to evaporate, so did his potential clients. Even when the factories cooperated, Glenn was constantly scrambling to square a circle: where LivingHomes’ products were unabashedly high-end, sustainably built, single-family homes, the factories were used to build low-cost structures or temporary shelters. By 2010, Glenn was struggling to meet payroll. Real estate was experiencing a downturn, the likes of which tech entrepreneurs had trouble of even conceiving. “I came from tech,” says Glenn. “I was like, What the fuck?”
The architecture industry is littered with attempts at revolutionizing housing through modular construction (a term used relatively interchangeably in the industry with “prefab” and “offsite construction”). Michelle Kaufmann, the well-known Bay Area sustainable prefab architect dubbed the “Henry Ford of Green Homes,” by Sierra Club magazine, closed her eponymous studio in 2009 after seven years. In 2011, mega developer Forest City Ratner set out to build a 32-story prefab apartment building in Brooklyn with ambitions that its modular technology would “allow the company to build high-rises for 70% of the cost of a conventional building and finish the tower in 18 months, or about 75% of the typical time of construction.” But after it took a whopping five years to complete the tower, the developer ultimately sold its prefab division to one of its executives in 2016. Over the past few years, there have been a dozen other attempts to build a modular home company that can get mass adoption.
Glenn thinks he’s finally figured out the formula, and he’s convinced investors like the Amazon Alexa Fund and Obvious Ventures to come along with him. He’s also managed to recruit a who’s who of flashy designers, including tech wonderboy Yves Behar, influential California architect Ray Kappe, and sustainability-focused architecture firm Kieran Timberlake. With this combination of a vertically integrated business model, design star power, and the holy aura of tech, Glenn is hoping that maybe, just maybe, he’ll finally get the timing right.
When Glenn started LivingHomes in 2006, his aspirations were to become a real estate developer. His professional hero was Jim Rouse, a suburban mall developer and creator of the urban festival market concept, who fundamentally altered the way Americans lived and shopped.
One day at an open house in L.A., Glenn happened to encounter Ray Kappe, an iconic California architect who helped define the West Coast Modernist look. Glenn, a longtime admirer, commissioned Kappe to build a prefab house for him with a reconfigurable floor plan. That house — the one he still lives in — so perfectly encapsulated Glenn’s vision of modular utopia that, a decade later when he started Plant, he designated his Kappe home as a place to show off the possibilities of modular building.
Not only could open rooms flex into private bedrooms, the outdoor garden could become an extension of the indoor dining room. It was the first single-family home ever to be LEED platinum-certified, and it also became the first in Santa Monica to get a city permit for greywater usage. The home received a lot of press and earned Glenn the title of “21st century gray-water pioneer.” L.A. Times architecture critic at the time Chris Hawthorne, who is now the chief design officer of L.A., wrote admiringly of Kappe’s vision, though he was put off by what he described as Glenn’s hyperbolic marketing techniques. In addition to an affinity for overstatement, wrote Hawthorne, Glenn was somebody who wore “his ambition on his sleeve.”
Up until then, that ambition had served Glenn well. He grew up in Chapel Hill, North Carolina, with a single mother who, he says, was a “a waitress, an astrologer, and cleaned houses.” At 18 he won a scholarship to do a post-grad year at the Phillips Academy Andover in Massachusetts. By the time he was studying organizational behavior at Brown University, he and a group of friends dropped out to develop a form-creation software company called Clearview. That’s when Glenn, the marketer of the group, spotted the pivot that ultimately enticed Apple to scoop them up: what they originally conceived as niche office-management software for doctors, Glenn realized could be recast as a much more mass software product.
Clearview’s founding team would provide Glenn with an important personal network that would pay off years later. One of Clearview’s co-founders was Glenn’s freshman year roommate, James Joaquin, who would go on to become a serial entrepreneur and Silicon Valley CEO. He was also the co-founder of Obvious Ventures, an early-stage VC firm that invests in “world positive” companies, which he co-founded with Twitter co-founder Ev Williams (the founder and CEO of Medium, which Obvious is also an investor in). Joaquin would come in particularly handy in 2014, when Glenn was grappling with what to do with his floundering LivingHomes.
With LivingHomes, Glenn was dependent on factories his design studio had no control over, therefore was subject to their unreliable schedules and uneven quality. He realized he needed to own a factory, one that was engineered for precisely the niche he was targeting. His old college roommate Joaquin was already a personal investor in LivingHomes; Glenn approached him with his new idea for Plant Prefab, which would be both modular home designer — like LivingHomes — but this time, also manufacturer. Joaquin was on board, and urged him to pitch the idea to his firm, Obvious.
He told Obvious — which had agreed to invest seed money — that he could run the business, but he was not the guy to lead an operations-heavy factory. After enough failed startups, Glenn came clean to his potential new investors about his own shortcomings. At social network PeopleLink, he admitted, “at one point we had a worker revolt because I was changing directions too much, because I’d get excited about ideas. I had a management showdown with the board” and was eventually replaced as CEO. (The Plant team eventually found Deep Bhattacharya, who with a PhD in Electrical Engineering from UCLA, and stints at Frank Gehry’s architecture technology company, McKinsey, and a materials manufacturer, was hired as Plant Prefab’s COO.) “This one,” Glenn told he told his new investors, “I’m going to do differently.”
When most people hear the word “prefab,” the first thing that comes to mind are trailer parks or emergency housing. That’s a problem for Glenn, who’s trying to convince people that a prefab home is worth spending upwards of $500,000 on.
So for Glenn’s prefab makeover campaign he’s enlisted Yves Behar. The floppy-haired, Swiss-born San Francisco industrial designer behind FuseProject is not one to pass up an opportunity to help pioneer the next big thing. He has no shortage of commercial hits, like the Samsung Frame and a line of Herman Miller chairs (though his enthusiasm for technology that overcomplicates a product has backfired more than a few times). This kind of star power is critical to Plant Prefab’s pitch: If you tell your neighbors in Aspen you’ve got a prefabricated home, they might look at you askance. If you tell them in the same breath that Yves Behar designed it, they might look at you with envy.
Behar is designing a line of Plant Prefab Accessory Dwelling Units (ADUs), a sort of sleek, modern mother-in-law unit fitted for a backyard. The first of Behar’s line is the YB1; it retails for $300,000 (plus another $100,000 for things like delivery and installation) and is a 625-square-feet, one-bed, one-bath that looks like a glass cube with a slatted wooden exterior. Historically, one of the challenges in designing ADUs has been to create a space that feels both open and private, so Behar has tricked it out with large windows and open interiors to help keep it from feeling cramped. Glenn is also hoping these are a desirable, practical solution, particularly in California, where the housing crisis is in full swing. “My belief is that within 10 years, all construction, not just ADUs and residential, will have prefab components,” says Behar.
Designers like Behar sell their designs to Plant Prefab, then receive royalties, plus an advance, for every home of theirs that Plant sells. Kappe, who died just a few weeks ago, had already designed several homes for Plant, the kind of glass and wood mid-century California designs that put him on the map; all of the homes sell for well over a million dollars. KieranTimberlake’s designs are boxy, contemporary dwellings that resemble more typical prefab: handsome, practical, and much more affordable — selling for about half of what Kappe’s do.
Meanwhile, Brooks + Scarpa, an L.A.-based architecture firm known as the darlings of sustainable design, has partnered with Plant to create a stackable building system that can be used to configure multi-unit housing. The design won a $1 million grant from the 2018 L.A. County Housing Innovation Challenge. It’s this design, perhaps more than any other, that may substantially contribute to solving the affordable housing crunch. In comparison, the other homes seem like glamorous, sustainable houses built for rich people.
Plant is integrating various smart home capabilities into their design, and they’ve got access, through Amazon, to the very latest in voice technology. But the investment also raises serious privacy concerns.
The other big name that has earned Plant Prefab some cache is its second investor: Amazon. Last September, Glenn announced Amazon’s Alexa Fund was participating in its $6.7 million Series A round. The Obvious team had introduced Glenn to the venture capital arm of Amazon, which invests in companies “to fuel voice technology innovation.” It’s the first modular company the fund has invested in, though Amazon already had a deal with Lennar, the country’s largest builder of new homes, to include Alexa in every unit they build. An Amazon spokesperson says they invested in Plant “because it’s created an easy way to build modern, energy-efficient, sustainable, and connected custom homes that are more efficient and affordable than traditional homebuilding.” The news immediately brought publicity to Plant Prefab, giving the manufacturing company a high-tech sheen.
Plant is integrating various smart home capabilities into their design, and they’ve got access, through Amazon, to the very latest in voice technology. But the investment also raises serious privacy concerns. Amazon today holds an unprecedented amount of deeply sensitive personal data, due to its e-commerce platform; it also stores massive amounts of data through its cloud storage business. Even if it never shares data with third parties (it says it doesn’t), the company already has its hands in so many different markets, it doesn’t really matter. One’s data can get plenty of use within the company confines.
“I don’t share those concerns,” Glenn tells me, when I ask about privacy issues. All of Plant’s homes come with the Amazon Ring and the Nest, which is Alexa-enabled. And so for most people, there will be an incredible amount of data-capturing technology inside the home. An Amazon spokesman told me that Amazon’s smart voice devices like Alexa and Echo aren’t recording all the time — only when a “wake word” is detected.
But there are several lawsuits against Amazon right now that allege the opposite, including a class action suit in California claiming that Alexa surreptitiously records and stores data that Amazon then uses for broader commercial purposes. (If all this sounds a bit far-fetched and dystopian, consider the case of Ring: It started out as a high-tech gadgety doorbell created by an entrepreneur; since being acquired by Amazon in 2018, it’s now a smart home surveillance video system being used by police departments around the country.) Glenn’s attitude on these privacy concerns, and breaches, is optimistic, if somewhat naive. “I hope,” he says, “the Amazons and Googles of the world will act increasingly responsible.”
Think of a prefab module as a Lego piece that can be stacked, joined, or combined with any number of other modules to add up to a house. In 2017, Plant Prefab’s first full year of production, it built 17 modules; in 2018, it more than doubled to 39. This year, it’s on track to build 112.
On paper, modular construction makes for very smart business. As UC Berkeley Professor of Architecture Dana Buntrock explains, it yields greater productivity since, in traditional construction as much as 25% of a laborer’s time per day is spent setting up and packing up. In a plant, she says, “You just walk in and get to work, you walk out at the end of the day. It increases efficiency.” Factories don’t have to close when it’s too rainy or hot outside. It improves worker safety. And off-site construction drastically reduces waste by as much as 75%.
The structures themselves might be economical to produce, but the logistics around them are not. The cost to ship units on the back of flatbed trucks from the factory can cost tens, sometimes hundreds of thousands of dollars, depending on the size of the home and the distance required to travel. And while the home itself is built off-site, the land still needs to be prepared — the foundation has to be built, hills leveled, utilities installed. In hilly places like San Francisco and Los Angeles, those costs can be astronomical.
Take, for example, a deal Plant Prefab landed this year with a developer in Lake Tahoe. The order is for a 40-unit housing development, but the math to transport the homes to their destination isn’t pretty: Tahoe is 425 miles from Rialto, where Plant Prefab’s factory is located. Each module costs $10 to $15 per mile to ship by truck, so the shipping costs for that order will run close to a whopping $200,000.
The degree to which Glenn can overcome forces like these — economic, technical, perceptual — will likely determine whether or not Plant Prefab ends up in the very capacious graveyard of ambitious housing ideas that never came to be. Glenn is optimistic, though. He often thinks about a TED Talk he saw years ago by Bill Gross of IdeaLab, yet another venture Glenn was involved with in the nineties. In it, Gross attempts to identify the factors that lead to a startup’s success or demise. His conclusion is that, more important than the team, the business plan, even the idea, is timing.
Glenn believes his timing is finally right. He says in the last year, Plant Prefab has tripled its revenue. He has products for different market segments, and can control how and when they get made. He has plans for a patented new flat panel system that will make it cheaper to ship houses across the country. This time, it seems, he’s thought of everything.
Still, the most haunting line of Gross’s talk, says Glenn, the one he’s never quite been able to shake, is that famous one by Mike Tyson. “Everyone has a plan,” recites Glenn, “until they get punched in the mouth.”
Update: An earlier version of this piece misidentified the Amazon technology that comes with Plant Prefab homes. It comes with the Amazon Ring and Nest, which is Alexa-enabled.