Airbnb subsidiary Samara has raised $41 billion to create tiny homes
Joe Gebbia, co-founder of Airbnb, describes the house as looking like a beautiful place for an upcoming vacation: It’s cozy, with lots of natural light, a high gabled roof, custom-made furniture, and a smart design aesthetic.
Gebbia does not describe an listing on Airbnb. He’s talking about a house he wants to sell. In fact, he wants to sell a lot of these houses; So many, that if he succeeds, Gebbia envisions versions of the home — in studio, one-bedroom, and two-bedroom configurations — in backyards all over California and, eventually, the U.S.
Samara, the startup that Gebbia co-founded with former Flex CEO Mike McNamara, has spent years refining the design of these homes and is betting that buyers will be willing to order them online, to have them delivered and installed — pre-assembled — on their property.
“Families across California who need space are looking for these solutions,” Gebbia says. luckciting multi-generational living, the work-from-home revolution, and homeowners’ interest in rental income As one of the trends driving need. “We’re following the same playbook that Airbnb brought to the travel space of ‘keep it simple, make it easy for the consumer,’” says Gebbia, who left his operational position at Airbnb in the summer of 2022 but remains on the board. .
Technically, the homes Samara is building are what are called ADUs, or accessory dwelling units: a term that includes backyard cottages, cabins, and in-law units that sit alongside some homeowners’ primary residences. The idea behind Samara is to mass-produce ADUs, making it easy for a homeowner to add one to their property without the hassle of working with a contractor or dealing with the local permitting process. Gebbia likens it to ordering a Tesla electric car online – “you go online, choose your options, configure it to your taste, and then press order.”
The San Francisco-based company’s initial product, called Backyard, ranges from 420 square feet to 690 square feet and costs between $269,000 and $369,000. Samara has been quietly listing the homes on its website since last year, fine-tuning the process, and with the capital infusion, it now plans to ramp up its sales and marketing efforts.
Samara announced on Monday that it has raised $41 million in funding in a Series A funding round led by VC firm Thrive Capital, with participation from a diverse group of investors including 8VC, General Catalyst, New Legacy, SV Angels, and Airbnb, as well as Michael Dell. and Airbnb founders Brian Chesky and Nathan Blecharczyk.
Jebbia says this money will help Samara expand its operations, including manufacturing, marketing and research and development. “We have to scale a lot of dimensions of the business.”
Build a house inside the factory
Samara is the name of the winged seed. The wing — a piece of technology embedded in the seed, as Gebbia describes it — allows the seed to fly like a helicopter when it falls from its tree. It’s an apt name for a company that started out as Airbnb’s internal R&D group in 2016. In the spring of 2022, the unit was spun off from Airbnb as an independent company, with funding from Gebbia and McNamara, along with Airbnb as an investor. .
In contrast to the principles of the sharing economy that allow Airbnb to thrive by leveraging existing properties, Samara is largely engaged in the “old” economy business of manufacturing a physical product, with all the messy inventory, supply chain, and transportation challenges that come with it. .
It’s a whole different ballgame, but that’s where McNamara comes in. The former CEO of Flex, a $30 billion electronics maker that assembles everything from laptops to hospital X-ray machines, is well aware of the complexities of global supply. chains. While Gebbia, a graduate of the Rhode Island School of Design, talks about the atmosphere and atmosphere of the product, McNamara speaks in terms of “stacked margins,” “capital expenditures,” and “time variance.”
By building the ADUs in-house, Samara enjoys a controlled environment that is not subject to unpredictable weather, while also benefiting from standardized materials and production costs, says McNamara. “Our unit will be more cost effective than a general contractor in the field,” he says.
Samara works with a long list of suppliers who offer everything from materials for custom kitchen furniture to rooftop solar panels. The company won’t reveal much about its production process, but says it has determined that the manufacturing facility would need to be between 500 miles and 1,000 miles away from the home destination for the model to work. This would allow Samara to cover a large area of territory including all of California and part of the Southwest. In order to move forward into the US Sunbelt, as the company eventually hopes, more facilities will be needed, McNamara says.
Samara’s CEO wouldn’t go into detail about the company’s financial model but says “we have a very predictable time frame in which we can break even on free cash flow.”
Another interesting contrast with Airbnb is that while the short-term home rental service has caused friction with local governments since its inception, Samara appears to have some regulatory tailwinds blowing its way. As California and other states look for ways to ease the housing shortage, tenement housing units have become a popular remedy. The state of California has passed several laws in recent years that make it difficult for local municipalities to prevent ADU construction based on local zoning laws. Earlier this month, California Governor Gavin Newsom signed a law allowing condominiums to be sold separately from a property’s main residence, meaning condominiums can now be bought and sold like condos.
However, even with the help of a service like Samara, adding an ADU to a property is inherently more complicated than taking delivery of a new car. The company says the average time from clicking “buy” to getting the keys to one of its homes is about seven months. First, a company representative must visit the property to determine if it is suitable. After that, there is the process of obtaining permits, conducting soil surveys, and completing other preparatory steps, a phase that takes three to four months, Samara says. The final step – placing the house in the client’s backyard – requires about 30 days, which includes preparing the foundation and setting up water, sewer and electrical lines. Once the crane lowers the house onto the foundation, it takes just an hour and a half to install and tie it down, McNamara says.
The fact that this process is so painful is why it’s an opportunity, says McNamara and Gebbia. The client lets Samara handle everything.
Small living space with soul
It remains to be seen whether consumers will want to live in such small, mass-produced housing. Gebbia believes that the confluence of current societal trends, Samara’s thorough handling of the construction and permitting process, and the attractive design of the backyard will make the concept appeal to consumers.
The company worked on four different versions of the product, making various changes to the design, before arriving at the Backyard version that is now on sale. “How do you create a small space that has a soul? That’s what we were going for,” says Gebbia, describing the unit as a “blank canvas” that the owners can adapt to their changing needs.
The backyard has a steel roof, engineered oak hardwood flooring, and is constructed of a six-by-two insulated steel frame. The interior walls feature a drywall-like finish, which means residents can hang pictures, paint the walls, and do any of the other customization projects possible in a regular home. The unit can be connected to the residence’s main electrical system or run on its own solar panels.
Eventually, Samara hopes to produce different versions of ADUs for different regions and climates. The current backyard is designed only for warm weather and is not suitable for snow (no doubt to the dismay of skiers and snowboarders looking for an option to own inexpensive mountain lodging). The company plans to produce a unit suitable for hurricane-prone areas, allowing it to target markets such as Florida.
Currently, California alone offers a total addressable market of $200 billion for ADUs, McNamara says. As the name suggests, Samara’s Backyard product is designed to be placed in a residential backyard. But McNamara envisions situations in which customers purchase multiple units to install side by side in a recreational facility near a park or as corporate housing. “We’ll be happy here for a long time,” he says.