To combat the problems of America’s current housing market, a number of companies have begun offering “manufactured” and “modular” homes. These houses are constructed off-site, shipped to their desired locations, and then placed on solid foundations. By using this efficient construction process, manufacturers can cut costs and offer would-be homeowners a bargain on comfortable and customizable living spaces.

Modal Living is one such company specializing in accessory dwelling units (ADUs). Modal’s ADUs can be installed in homeowners’ backyards, acting as rentable living spaces or back offices for remote work. We reached out to co-founder and Chief Operating Officer Colin Jube to learn the inspiration behind the company and its role in the American housing market.

Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.

Funding Round Details

Modal Living logo
Company: Modal Living
Security Type: Convertible Note
Valuation: $12,500,000
Min Investment: $1,000
Platform: SeedInvest
Deadline: Aug 14, 2021
View Deal

Can you give us a brief elevator pitch for your company?

Modal designs, builds, and installs modern, modular backyard homes and offices that maximize space while providing homeowners an opportunity to create passive income and increase their home value.

What inspired you to take the leap and build this company?

I have always been interested in being a part of the solution to the ongoing affordable housing crisis. Housing is a basic foundational necessity from which individuals and families can build and improve their lives. As housing costs rise, small, efficient living spaces are more important than ever, and I firmly believe that principles of minimal living are key to designing the future of housing. Accessory dwelling units (ADUs) in particular play a critical role in addressing affordable housing due to the multi-generational living they facilitate. Modular construction happens to be a great way to build these small units because their reduced footprint is really quite conducive to the factory-built process. I am thrilled to have taken the leap, and we are just getting started!

What past experiences prepared you to start, build, and lead your company?

Early on in my career, I worked in sales for the software giant Qualtrics. At that time, Qualtrics was in the startup phase, and I absolutely loved the energy. The founders were so passionate about the business, and you could tell they were set on transforming their industry. That energy eventually would take them to an $8 billion valuation and beyond. Software ended up not being the right fit for me, but that experience taught me to find something I deeply believed in and to go all-in. It took years, education, and a variety of jobs before finding my passion, and I feel lucky to have found something worth diving into headfirst. When you have passion for what you do, going to work every day is a blast, and it doesn’t feel like work. We are building something really exciting here, and I can’t imagine doing anything else.

What is your vision for the future of the industry you are operating in?

We operate in two growing industries: ADUs and modular construction. The ADU industry is relatively young. Many of the regulations driving industry growth have been enacted during the last few years, and we are just beginning to see the effects. We expect to see major growth in this industry as cities, states, and counties across the country continue to recognize the benefits of ADUs. This is a large and exciting new industry that is ripe for innovation. I believe that we will eventually see millions of ADUs all over the United States and beyond, which will make a big dent in the affordable housing crisis. 

Modular construction, on the other hand, has been around for some time, but new technology is improving factories’ efficiency and manufacturing processes. As construction and labor costs rise, offsite construction has become a key method for keeping costs down and speeding up delivery times. Modular construction is a far more efficient way to build a variety of construction types, and as technological advancements take root, we expect to see growth in this space.

Who is on your team and how did you come together?

We have a fantastic team! They deserve so much credit for all the work that has gone into getting us where we are today, and I have full confidence in their ability to execute our strategy into the future. We have a unique mix of industry-leading expertise and young, up-and-coming talent. Key leadership positions in sales, finance, and construction are occupied by individuals with decades of experience in their field. Some of our younger employees in sales and project management have shown incredible work ethic and talent, and we expect great things from them as they are trained and mentored by experienced leaders. Early on in the business, I was lucky enough to connect with Scott Stowell, who is a family friend. Scott is an industry veteran and the former CEO of Standard Pacific Homes, the eighth largest homebuilder in the US. He eventually became Modal’s largest shareholder and CEO/executive chairman. His leadership has been critical in setting up the business in a scalable, sustainable way. 

Do you have any competition, if so, how do you differentiate?

We believe there are two lenses to view differentiation/competitive advantage in our industry: 1) consumer perspective and 2) strategic perspective.

 Consumer Perspective – Consumers’ evaluations are based on design, value, and experience. In the end, design is a personal preference. We offer our units at an extremely competitive value and usually beat our direct competitors on price. Lastly, we have been laser-focused on offering the best buying experience for our customers to increase the ease of transaction. 

Strategic Perspective – The companies that will be successful and last in this space are those with operational excellence. This includes delivering units on time/budget and generating sustainable profits. Scott has been vital as we set our strategy and defined our operational processes. His experience operating the largest homebuilders in the nation has allowed us to structure our business to optimize margins, cash flow, and operational efficiencies. 

Another example of why this is a winning strategy is that our barrier to enter new markets is drastically lower than our competitors. Our network of contractors/consultants already have a presence in every market we want to grow into, and at the flip of a switch, we are ready to deliver units there. In contrast, our competitors would need to hire an entirely new team in each new market before being operational. 

What does your business model look like?

Modal has set up a lean and efficient business model leveraging our network of contractors, manufacturers, and consultants. This model provides two primary benefits: 

(1) Keeps our overhead costs low, which decreases our breakeven rate to three to four sales per month (compared to our competitors’ significantly higher breakeven rates). 

(2) Allows us to scale up or down more quickly and efficiently to grow with demand, enter new markets, or adjust to seasonality.

What brought you to equity crowdfunding and how do you intend to use the money you raise this round to scale the business?

As we have progressed on our mission to make ADU’s accessible, we have been supported by a passionate and loyal community. We wanted to give our community the opportunity to invest in our vision and mission. 

We have spent the past two years developing products and creating scalable processes, and we believe that we are at an inflection point and are ready to scale. We will use the proceeds of this round to significantly ramp up our sales and marketing efforts to increase sales volumes. Additionally, we will use these funds for working capital, new product development, and piloting a new revenue share/lease to own program. 

What do you want potential investors to know about you and/or your company?

Our leadership, team members, and investors are passionate about the social mission of Modal and believe that we can create a scalable and profitable business while also helping to address the affordable housing crisis. 

Modal has demonstrated that there is a demand for our products and that we can execute operationally. Most of our sales have been accomplished with a single field sales rep. We expect that as we build our sales and marketing team, sales will increase in tandem. 

As you think about the business 5-10 years down the road, what do you see exit opportunities looking like? Have you set any future goals for the company?

In the short-term, our team wants to build on initial momentum by penetrating the California market and driving innovation with new product offerings. Modal plans to expand to new geographies, including the Pacific Northwest, Texas, and the East Coast. In the next five to 10 years, we plan to build out a revenue share/lease-to-own program to break down hurdles for customers who would otherwise have difficulty obtaining financing. This would unlock a larger share of the market and create a valuable recurring revenue stream. Furthermore, we see an opportunity to build a pipeline of larger commercial development customers (e.g. hospitality sector) to increase sales volume and diversify sales channels. 

We see many exit opportunities within the real estate sector from businesses that would complement Modal. Prospective acquirers could include large homebuilders, property management companies, REITs, modular manufacturers, or mid-market private equity funds. 

We are excited to see where Colin and his team take the company. Modal Living is currently raising on SeedInvest.