By Eric Peterson | Jul 19, 2021
Grand Junction, Colorado
Fay was working in mental health when his wife was thinking of opening a storefront for her music school in Grand Junction in 2010. A few showings later, the couple came away "extremely frustrated" by the model of commercial real estate, where leaseholder improvements might tally $200,000 or more.
"That asset really didn't belong to me, so once the lease came up for renewal I wouldn't have a say into what new terms would look like," says Fay. "Then there's the prospect of the next person coming in, demoing everything, and throwing it all away -- just the wastefulness of it."
That planted the seed for him to start Låda Cube, named for a Slavic goddess of beauty and fertility, a few years later. Fay says he asked God for advice: "I heard a voice, 'I want you to build a wall that looks like a traditional wall but can come apart.' I thought, 'I've never built anything in my whole life. You've got the wrong guy.'"
Fay developed his first prototype Låda Wall in his garage. He says the key features remain the same as he's innovated and improved on the concept: "structural, modular walls that could come apart" with "plug-and-play electrical."
The product won accolades at the World Architecture News Awards in London the next year, but sales started off slow. "It went nowhere," says Fay. "I ended up doing a small project in Aspen and a small project in Moab, and that was all I had the whole year."
Ready to throw in the towel, he started applying for jobs in fall 2015. That's when things turned around. "All these huge companies started calling me in 2016," says Fay. "I ended up going out and meeting with Tesla at their Fremont factory, and ended up doing a project in New York City for WeWork."
The key selling points are "efficiency and speed," says Fay. Construction "is one of the top industries in the world, but it's the only one that hasn't had a technological revolution."
He adds, "Every building is 100 percent custom. What we're doing is coming in and saying, 'Where can we add new efficiencies through what we call parametric design?' We figure out parameters that are fairly consistent within a structure, and we're able to extrapolate those and bring in DFMA -- design for manufacturability and assembly -- and really bring in a digital system that I would liken to the automobile industry. The reason that cars are the price they can get to is because they're able to extrapolate efficiencies through repeatable parts that are digitally designed and digitally fabricated."
Fay moved the company's headquarters to Redding, California, in 2018 and opened a second manufacturing location, but returned and consolidated operations in Grand Junction in 2020 after winning a $250,000 Advanced Industries grant from the Colorado Office of Economic Development and International Trade.
"It allowed us to have the capital to completely reengineer the whole system and get to where we are today, " says Fay. That would be "version four, which is highly manufacturable in high volume."
"There's literally 66 parts, and a lot of them are repeatable parts, just different lengths," he adds. "We really tried to simplify the design from a production standpoint, which obviously translates to lower costs."
Stanford University students "in most cases we were at the same pricing or slightly under, when you factor in transportation of materials, labor, not just the fixed costs," says Fay. "And we haven't even scratched the surface on our end of bringing our costs down."
Låda now manufactures in a 15,000-square-foot facility in Grand Junction. Its key supplier makes components in South Africa and ships them to Colorado for final assembly. "They're basically fabricating a lot of our parts digitally," says Fay. "It's a laser cutting system and a digital bender."
The supplier is owned by "world-class underwater hockey players" that Fay connected with in Redding. "We've basically formed a licensing partnership with them," says Fay. "They've started Låda Cube South Africa, which is primarily just manufacturing, but it eventually will be a pipeline for them to build the product and build houses in South Africa."
Fay says the new iteration has been "a catalyst for growth" as Låda Cube counts "the biggest retailers in the world" and "some of the biggest electric car companies" among its customers.
"The product qualifies for seven-year depreciation, which is a huge benefit for companies, versus 39 years for stick-built," he notes.
Låda Cube also integrates with products from other manufacturers. "If you try to own the whole supply chain, I think you leave out a lot of players, and I think it actually harms you," says Fay. "With our product, we have ways of integrating third-party doors and window systems. We're trying to bring those products in, but also create our own unique products that fit in as well. You can't isolate entire categories away from your platform."
Challenges: Fay describes an industry-wide paralysis in construction that slowed growth in 2020. "Nothing happened," he says. "Everyone didn't know what the future held."
The supply chain was solid with the partnership in South Africa. "I'd like to ship some of that back, but for now, we have to move in this direction," says Fay.
Opportunities: Top applications include interiors for offices, commercial spaces, retail, and telehealth clinics, but Fay sees housing units -- up to 1,200 square feet -- as the biggest long-term opportunity. "Retail is a means to get to the housing," says Fay. "For us, it's been an easy on-ramp to get into these structures, and really learn about the platform and make it better."
He notes, "We're saying there's got to be a new model for efficiency which we believe will bring costs down for building, increase speed, and also decrease the requirement for highly skilled labor. You can assemble entire structures using one tool, which is an Allen wrench."
Fay says most residential units could be assembled by a team of "two to four people within a couple of days."
He also hopes to develop a leasing model and a secondary market for Låda's products as he scales the company's production capacity. "Eventually, we'll have three or four more locations in the U.S. Those facilities are basically rivet and assemble what we call cassettes -- those are the walls."
Needs: "Growth and capital," says Fay. "I bootstrapped the whole thing, which is a miracle in itself."