Why We Invested In Mosaic

Mosaic is a tech enabled home builder that partners with top-tier home developers and runs their operations, literally building the homes from foundation to move-in ready. 

But my first conversation with Sep and Salman, co-founders of Mosaic, had nothing to do with home building whatsoever. The subject didn't even come up. We talked exclusively about how teams work together, different styles, different formats of collaboration, autonomy, authority. For Sep and Salman, how people work together and, importantly, how they work with technology is the subject that originally brought the two of them together at Stanford, where they studied human computer interaction.

It's amazing that the two of them found residential home building as the medium upon which to write their novel. Human-technology interaction in home building is virtually non-existent. The world builds homes today almost exactly the same as they did 20 years ago. And that's not a way of saying the industry is filled with Luddites. In fact, it's saying the opposite. The industry is filled with hard-working people who learned their craft through the process of apprenticeship. Plumbers care about plumbing, electricians care about electrical circuits, framers care about framing.  Salman describes it through this quote:

 

“There is one timeless way of building. It is a thousand years old, and the same today as it has ever been.  The great traditional buildings of the past, the villages and tents and temples in which man feels at home, have always been made by people who were very close to the center of this way.”

 - Christopher Alexander, The Timeless Way of Building (1979)

 

If building a home didn't involve a craftsperson, it would be easy. But the reality is, even with perfect specs, each home is a little different. The environment is a little different. The people who worked on it are a little different. And these differences matter. When a framer needs to change the positioning of a two by four by a few inches, that will change the positioning of an electrical outlet, which will alter where a pipe goes, which the drywall will have to be custom fit to.

These change orders add up, each one potentially creating errors in the process, each one driving up the cost of real estate. And residential home building is one of the few industries in the world that has never seen increasing efficiencies over time either to technological advances or economies of scale. Each home still takes a certain number of people working a certain number of hours and certain number of materials to succeed.

Most innovation in the sector has until recently been in moving construction offsite and standardizing it.  But that doesn’t serve the other 99.99% of homes that are still customized to the buyer and built on site.  No one has figured out a way to change that equation until Sep and Salman started Mosaic, and the magic of why Mosaic works is they care just as much about why people work together as the homes that get built.

I saw the magic when I visited their site in Prescott, Arizona. In Prescott, Mosaic has hundreds of homes already built, hundreds more in development, and thousands in the pipeline.  Each home has a digital twin. All of their specs, cut sheets, change orders, plans digitized. The process is managed through the workflow apps that they've created. They measure things like percentage of days where 100% of materials are available on site so that the craftspeople can start work immediately. They excessively track number of warranty tickets. They track speed, quality, throughput, and efficiency.

And although those all those metrics are the numbers that exist on their dashboards, it's not what they want to talk about.  For Sep and Salman, the winner of the home building game is the company that treats the tradespeople the best. Full stop.

Whoever convinces the best electricians and plumbers and framers to switch over to their shop is the one that will win. The best people will build the best homes the fastest. Even with all their technology, it's all about the people, and thus their technology stack is beautifully written to help these craftspeople do their best work.

And anytime you talk to a true craftsperson in any industry, they want a few simple things. They want to be paid fairly and timely, for sure, but they want to be respected, valued, and empowered to do their best work.

And as I walked the sites talking to random construction crews, this was the subject that came up.  They enjoyed working for Mosaic because they felt like their time is valued, their opinions respected, their compensation fair and fast, and most importantly, they were proud of the homes they were building.

When I talk to the home building partners that have entrusted Mosaic to take over their entire operations, this was the subject they kept returning to, "Mosaic treats my people well and so we trust them."

In just a few short years, mark my words, people will be writing analyses of the growth, market size, margins, defensibility of the Mosaic business model, and for us, at Peak State, all those numbers pencil out. It's a huge business. But our thesis today in leading their Series B is that Sep and Salman and their team have figured out how to help the best people work together to build homes that people love.

Or as Salman more eloquently puts it:

 

"Our mission is to make places people love and make them widely available."

 

We are holding true to the timeless way of building and evolving it through technology.  In a thousand years when people look back to the great traditional buildings of this millennium, we want them to be beautiful and resilient. We recognize it is an ambitious vision, but we are inspired by and committed to delivering on it every day..

Go Mosaic! We're excited to be on this journey together!