Construction darling Katerra has confirmed another round of layoffs as the construction startup looks to find a road to profitability.
A spokesman for the Softbank-backed firm said seven percent of staff – mostly in the US – are being let go. It is the fifth round of cuts the Silicon Valley contracting giant has made since last fall, trimming back its workforce from its 8,000 peak.
The company said that while the coronavirus has impacted its business, the layoffs were “driven by the focus to accelerate our path towards becoming a self-sufficient, profitable business.”
The spokesman said, “Katerra is entering a new chapter as we look to accelerate our path toward becoming a self-sufficient, profitable business. We will continue to implement our vision of transforming the construction industry through technology and value chain integration, while we further increase our focus on execution excellence and monetization of our significant technology investments to date.
“With this shift, we will also streamline parts of our operational and support organizations and scale back certain investment programs, which unfortunately means we must lay off around 7 percent of our staff. These are very tough decisions and we do not make them lightly. Ultimately, these actions will help us accelerate our path to profitability, as we continue to pursue the incredible growth opportunity in front of us.”
The announcement came days after Katerra, which bills itself as a technology company redefining the construction industry, replaced CEO and co-founder Michael Marks with COO Paul Kibsgaard and announced another cash injection from Softbank, bringing its total venture funding to more than $2 billion, according to the WSJ.
Marks started Katerra in 2015 with the goal of using technology to transform the construction industry. Under his leadership, the firm grew its revenue more than 20-fold and was ranked No. 5 in the NMHC’s Top 25 Builders list. On route, it acquired eight general contractors and architecture firms, including the Hoboken, NJ-based Fields Construction. The modular builder now has factories in Tracy, Calif., Spokane, Wash., and two locations in India.
Marks said, “We brought Paal into Katerra with the intention of someday appointing him CEO. Operational excellence will be instrumental to our long-term success as we come out of the COVID crisis, and now is the right time to put Paal’s experience to work as CEO.”
Before Katerra, Kibsgaard was the chairman and CEO of Schlumberger Limited, a multi-billion dollar international oilfield services company. A petroleum engineer with a master’s degree from the Norwegian Institute of Technology, Kibsgaard began his career in 1992 working for ExxonMobil.
Marks is a general partner at venture capital firm WRVI Capital in Menlo Park, and plans to move full time into that role.
Jeff Housenbold, managing partner at SoftBank Vision Fund said, “The board is excited to welcome Paal to the role of CEO as he builds on the foundation Michael established as founder of Katerra. The new round of financing further strengthens Katerra’s balance sheet, enhances its competitive positioning, and provides growth capital as Katerra executes on its mission to radically transform the way people build commercial and residential properties.”
Since the start of the COVID-19 pandemic, nearly 40 percent of US construction have laid off workers, according to the Associated General Contractors of America.
However, a new report hints at a recovery on the horizon. The AGC surveyed firms with construction technology firm Procore and found that construction activity is returning to pre-coronavirus levels in many parts of the country.
The new economic data, however, also shows some future projects are being canceled and many others are being delayed by supply chain issues and labor shortages.
“Many of the immediate economic impacts of the coronavirus have passed and, as a result, activity and hiring are up, a bit,” said Ken Simonson, the association’s chief economist. “But while the immediate crisis appears to have passed, we are just now beginning to appreciate some of the longer-term impacts of the pandemic on the industry.”
