[00:00:00] Introducing the Episode

I'm going to tell you about a company that might help you buy a home in the near future.

Housing is expensive. We all know that, and it seems to be getting less and less affordable. A big part of that expense is the labor cost, and the labor cost is probably going to get worse and worse, as more people are construction than are going into it, at least in the US.

To me, it seems like this is a losing game, that is, unless we change how things are done. And that is what Cuby Technologies is set up to do. And they plan to deploy their factories all over the U. S. in the next 10 years.

In this episode, I talk with Oleg and Aleks, who are both co founders and the CEO and COO of Cuby, respectively, to learn more about Cuby and how they plan to change things.

I think you'll like this interview if you're interested in the housing shortage and how robotics and automation can help, how a complex industry like construction can be simplified to drive down the costs, and how Cuby has de risked a large technical problem with much less capital than you might think.

I thoroughly enjoyed this conversation and I hope it works out that in a few years when I want to build a house, I can go through Cuby.

With all that, I hope you enjoy this interview.

[00:01:27] Meet the Founders: Oleg and Aleks Introduce Themselves

[00:01:27] Audrow Nash: Oleg, would you introduce yourself?

[00:01:30] Oleg Kandrashou: Yeah, my name is Oleg. I'm an engineer. And, I found, the company Cuby with Aleks. I'm an experienced businessman and set up a bunch of manufacturing companies. I have a PhD in economy. I wrote a book, how to generate, how to create a big engineering team, how to, control them. This is

[00:01:51] Audrow Nash: Hell yeah. Oh, awesome. And Aleks, would you introduce yourself?

[00:01:58] Aleks Gampel: Yep, Aleks Gampel here, one of the other co founders of Cuby. My background has mostly been un linear, mostly private equity, focused on real estate, but I've built operating businesses that sit on top of real estate backed by venture. And now we've been hyper focused on building this construction technology to help solve some of the housing issues that exist in the U. S. and beyond.

[00:02:23] What is Cuby? An Overview of Mobile Microfactories

[00:02:23] Audrow Nash: So Aleks, you want to tell me at a high level about Cuby?

[00:02:28] Aleks Gampel: Yeah, I think the simplest way to define what we do is we design, develop, and deploy mobile micro factories. those happen to be our product and that product ends up manufacturing and assembling homes at mass scale. but really we're a vertically integrated, full stack hardware software technology business.

And the industry that we focus on happens to be the construction sector, one of the most vital and important sectors to any economy globally. very

[00:02:59] Audrow Nash: Would you tell me about mobile micro factories? It sounds awesome, but what does it mean?

[00:03:07] Oleg Kandrashou: First of all, I want to explain you about the Cuby, and based on that I will explain you what, the microfactories, how the microfactories look like. roughly five years ago in my previous company, I found a company, it's called Encata, it's 200 plus, engineers, hardware, outsourcing company who help deep tech startups to grow from idea to mass production.

And this company doing projects from robotics, cyberspace, and different other areas. And five years ago, we made the decision to build our own headquarter, our own building and begin to communicate with the construction industry. And I understand that the industry is totally dysfunctional in comparison with manufacturing because the same team can do the same projects and the result can be different.

And the same situation was in the automotive industry in the beginning of the last century, where there were a lot of design bureaus. All of them produced different types of cars, and the result was not so high, the productive capacity, and the quality was very low. Until the Henry Ford came up with a conveyor,

and right now we can use a good quality car with a reasonable price.

And we did almost the same, but, in a more complicated construction industry. But in this industry, there are a lot of obstacles. And one of these obstacles is just, it's a big volume you need to transport, the modules or something like that.

And we think about, why not to come up with a factory and to move it to the construction site, or as close as possible, and to use local material and local labor, begin to produce something like some kind of Lego blocks, or And with this Lego blocks, begin to, produce the houses around the factory.

And that's why we come up with the technology itself, with the software how to control and operate it, with the machines inside the factory, plus the factory itself that can move from one place to another and erect very fast and begin to produce the houses around the factory.

[00:05:09] Aleks Gampel: Just, to double click on that and to give a visual, so a mobile microfactory being our product, it's literally almost four dozen shipping containers that arrive anywhere in the world with a bunch of stations and machines. embedded within the containers and within a matter of weeks can erect to form a factory and these stations quick deploy within the factory to either one produce raw inputs that go into a home think a window or a helical pier for the foundation etc or they prep certain inputs that go into a house not from raw but preparation cutting you know prepping etc and all those things then in stages get sent down the street in batches to be assembled into homes.

But what Oleg is describing, Mobile Microfactory, it's really a first principles approach. It helped unlock, A, logistics, B, ability to quickly set up factories that aren't gigafactories that are hundreds of millions of dollars worth of capex, very little fixed costs because you don't need to rent some massive warehouse that you're competing with Amazon on.

Etc. And because you're proximate to where the construction is happening, you can now be the unskilled labor assembling the home as well as opposed to passing off whatever that end product is to a third party who doesn't know how to assemble it. So we're an end to end solution from manufacturing to assembling of the homes, replacing the general contractor and the subcontractor altogether for home builders.

[00:06:43] Oleg Kandrashou: And that's why we are more, engineering, robotics company than the construction because to come up all of these machines, 'cause it's not exist in the market. We have right now more than 150 engineers in the company

[00:06:58] Audrow Nash: It's awesome. Hell yeah. Now, that sounds super cool to me. I want to go back just a little bit. like you mentioned some of your background.

[00:07:07] Aleks' Journey: From Real Estate to PropTech to Cuby

[00:07:07] Audrow Nash: Aleks, I would love to hear how you came to Cuby and like what your professional path has been.

[00:07:14] Aleks Gampel: I think out of the two of us, Oleg is a lot more impressive and he's what deep tech, salvates over backing. my background is not linear. I haven't done deep tech in the past. Oleg has spent 20 years building businesses in hardware and more specifically scaling them and bleeding around, scaling up, which is really hard in manufacturing.

And most folks underestimate that. And I think Elon will any day tell you that design is like one percent of the actual system behind manufacturing. But anyways, I come from a real estate family, so I've looked at buildings my entire life. I like the built world. it's the backdrop to everything we do.

We work, we live, we play in buildings. So it's something that's always attracted. been attractive to me. So investing and developing real estate, and being in that ecosystem is really my background and what I speak, but I also like technology. So luckily PropTech became a world and a word where you have certain businesses that are operating businesses backed by venture, PropTech, property technology.

[00:08:16] Audrow Nash: I don't know fully what it means like property tech. I'm thinking Zillow, but I don't know if

that's

[00:08:20] Aleks Gampel: so

[00:08:21] Audrow Nash: maybe that's an

[00:08:21] Aleks Gampel: it's anything that

touches real estate and is a technology company. So it could be, your audience, it could be Zillow, it could be WeWork, and everything in between, but anything that's generally backed by venture requires certain cost of capital. Let's call it R& D, research and development, but sits on top of the built world.

So I've built operating businesses that, that sit on top of the built world. So I've developed this niche of, Hey, technology and how can it integrate into the real world ecosystem? And I met Oleg because,

at the time I was helping a mentor of mine build a real estate business. And there was a lot of demand for the product that he was building, which happened to be lowercase affordable.

And there wasn't enough skilled labor to actually build that product. So therefore I started looking for alternative methodologies to build. How do you build more effectively? How do you build more efficiently? And I started talking to my venture ecosystem as to what technologies they were backing, of which I could be a customer of.

And those categories of technologies were everything from 3D printing homes to volumetric modular, think giant rooms built off site and shipped to the construction site, and prefab, which is really the category we get placed into, although we're really not. That's almost like a deconstructed home, that's prefabricated

buildings. I couldn't find a single solution that was cost effective. What have been around long enough to for me to see its existence meaning weren't well run. There was regulatory risk around certain solutions So like a combination of reasons why I could not be a customer a family friend introduced me to Oleg out of necessity was building his own headquarters for his previous business And given what Oleg knows via Toyota's production system versus what he saw working with a general contractor and developers day and night.

So Oleg was like, holy crap, let me build in the space because I know the system and I can apply it to construction. And I met Oleg at about 50, 000 engineering hours or so. between 50 and a thousand, 50 and a hundred thousand engineering hours. And I instantly saw

[00:10:38] Audrow Nash: What are you guys at now

for

context?

[00:10:41] Aleks Gampel: Oleg, where do you place our engineering hours now?

350?

[00:10:45] Oleg Kandrashou: now. 400? Roughly.

[00:10:48] Audrow Nash: 400. So you were like an eighth as far as you are now.

Okay.

If you

make it linear.

[00:10:56] Aleks Gampel: No, very, yeah.

[00:10:57] Audrow Nash: So you met around,

[00:10:58] Aleks Gampel: Yeah. We, met at early stages and the business has evolved a lot since then, both commercially and, one of Oleg's philosophies in the business is we have to iterate very quickly, which is in a second, he'll show you the R& D center. That's why we have And, engineers sitting side by side from the fab, the manufacturing of the machines, so we can iterate.

So so much of what we've built in the past has already been thrown in the trash and redone, et cetera. So

[00:11:24] Oleg Kandrashou: roughly to, to compare roughly just to come up with a fighter jet. It takes roughly 700, 000, like that, just to compare how big, the project is

[00:11:37] Audrow Nash: Wow.

More than halfway through a fighter jets creation.

[00:11:42] Aleks Gampel: part,

of

[00:11:42] Oleg Kandrashou: Not the fighter jet, but, the is the same size.

[00:11:46] Audrow Nash: That the

time.

[00:11:48] Aleks Gampel: Audrow part, of the reason, so you understand like the anchoring of IP. It's really three things. It's the mobile microfactory itself and the things that go inside of it, the machines, plus even things as simple as containers. Once you create 40 custom containers, they're no longer certified.

you can't insure them when you ship them. So now you have to certify containers and test them. So even as simple things like this. Requires certain amount of thought. Second

[00:12:17] Audrow Nash: Engineering effort. Yeah.

[00:12:19] Aleks Gampel: layer is around the end product, the kit of parts that go into the homes, and the third layer is software. We have an entire operating system that was built in-house to power of the factory.

The process behind the factory, the onsite assembly, none of it was taken from the third parties. It was built in house.

[00:12:39] Audrow Nash: Okay. So that's awesome. We have a lot to talk about with all of that.

Oleg, do you have anything to add? Or I'd love to hear a bit of your path through this. You've mentioned you've done a lot of things. but do you want to give a more detailed explanation of your background and how it fits with what Aleks has said?

[00:12:56] Oleg Kandrashou: you know that I don't like to explain my, awards or something like that because it's not, good.

[00:13:02] Audrow Nash: Yeah,

[00:13:04] Oleg Kandrashou: and, yeah.

[00:13:05] Audrow Nash: But what you've worked on is cool to discuss

[00:13:09] Oleg Kandrashou: We, as I told you that we are doing something that does not exist in the market just to, to solve that problem that we have. And based on that, we need to have a lot of engineers and we need to do a lot of iteration.

And based on my previous experience to, to control big engineering projects, we set up the process that help us very quickly produce something and make mistakes.

[00:13:37] Inside the R&D Center: A Tour of Cuby's Innovations

[00:13:37] Oleg Kandrashou: I can, if you want, I can show you right now how it looks like.

[00:13:40] Audrow Nash: Sure. Yeah. Happy for it.

[00:13:42] Oleg Kandrashou: I will do it. Like, that. Okay, this is my office. From the left side, it's manufacturing. From the right side, it's engineering, mechanical engineering center. Thank you. This is also one of our inventions.

This is an inflated building that we can move to any parking lot and we use them also for our own facilities. This is mechanical engineering sitting there. here it's technological guys who are doing the software for the CNC machines. This is a manufacturing where we produce the prototypes and check all, everything that would come up here.

And you can see that we're in the, just the parking lot, put the cupola here and put all of the machines.

[00:14:20] Audrow Nash: That's so cool.

[00:14:21] Oleg Kandrashou: to produce.

[00:14:22] Audrow Nash: love it. I love that you're in a parking

[00:14:24] Oleg Kandrashou: yeah, and begin to produce as fast as possible everything that we are doing here. We have almost all manufacturing facilities there. We have a, laser cutting machine, bending, milling machine, powder cutting, welding, and a lot of different stuff here.

And everything is moving from one department, for example, this is a, paint department where we cover, the steel with a powder coating like that.

each project is going from one department to another with such kind of, device like that. When they finish the job, he pushes the green card and shows to the next guy that he finished his job and he needs to do another one.

That's why, and for sure, everything is controlled by the software, and we control the movement of all the device around our manufacturing, and all of them is going to the final department of assembling, where we assembling the prototypes and where the engineers check everything. And all of the engineers that's also working here on the manufacturing, because I don't want them to produce error customs.

That's why they need to be group workers before they begin to design something. And,

[00:15:36] Audrow Nash: What was that? I missed that last part of what you said. They, you, they, what was it?

[00:15:42] Oleg Kandrashou: before they begin to do some design in the design center, the designer should work in the manufacturing for one or two months to know how all the

[00:15:53] Audrow Nash: Oh, I love

[00:15:53] Oleg Kandrashou: and only after that they begin to design. Because I don't want that they come up with something that the manufacturer can't produce.

And here, it's a department where we assemble different prototypes of the machine. For example, this is a toolbox for the construction, where we put all of the tools. We come up with that, with the cameras, and so on, that we use in each of our construction

[00:16:14] Audrow Nash: a toolbox. That's, for the people that are assembling. You have that

[00:16:18] Oleg Kandrashou: Yeah, for the construction side.

For example, this is an automated robot that moves, that we will use in the factories, that will move the pallets from one department to another, controlled by our software. We also have, such kind of developing like that. For example, this is,

[00:16:37] Audrow Nash: Okay.

[00:16:37] Oleg Kandrashou: is an air purification system. This is a system that we produce to clean the air from the laser cutting machine, because we can't.

Buy it in the market because the size that we put such kind of the machine into the ship container is not exist. That's why we need to come up a new type of the machine from the scratch, put them and so on. And that's why we have thousands of some kind of device like we design and to produce like that.

This is how, do you know, everything is look like here. I will, I can show you how, do you know, I control personally all the, you know the process of development, and if any engineer, we have three I will explain to you. During the design process, we have three touches. One of them, when the engineer have an idea, he have a task and have an idea how to solve it.

The next one, when he do the 3D model and to show all the engineering stuff. The third one, when he prepare documentation and the software for the CNC machine to produce prototype. Three of them. I control three of them. And if any engineer have a question, I'll show you. If you have a question, he put The flag like that.

And I see,

[00:17:55] Audrow Nash: Ah ha, so you see it. That's great. I love your clear

[00:17:59] Oleg Kandrashou: Yeah.

[00:18:00] Audrow Nash: So you go over to it

[00:18:01] Oleg Kandrashou: flag. And when I have time, I just move, come here and solve all the problem. And that's why I can solve, I can make a decision and to control at the same time, the hundreds of engineer and make a decision on each steps. Because, This project is very complicated, and you need, at the same time, know all

the pro exactly, all the process of the machines, of the technology, of the

software, and

[00:18:26] Audrow Nash: your head.

Yep.

You have the, big understanding. And so then you can go over to the

engineer. You can see if it fits in the larger context

and

[00:18:35] Oleg Kandrashou: Yeah,

[00:18:36] Audrow Nash: make your decision very quickly.

[00:18:37] Aleks Gampel: Oleg is the best delegator I've ever met in my life worked with, and part of that at Oleg, you're humble about it, but talk about your book, because I think a lot of that book is there a lot of, our operating philosophy, so maybe you can share that with Audrow.

[00:18:53] Oleg Kandrashou: it's interesting stuff that

[00:18:54] Audrow Nash: Yeah. Feel

[00:18:55] Oleg Kandrashou: When I just, wrote a book, I forgot about it, I sent it to Elon, and after a couple of years, he began to tweet it. And how to control the engineers that. It's a very funny story, yes.

[00:19:07] Audrow Nash: Oh, wow.

[00:19:07] Oleg Kandrashou: Yeah, but for me, it's

just, Yeah.

for me, it's just, the, methodology, how to hire and fire the engineers and how to control them.

If you want, I can quickly explain you how it's looked like and what this book is about.

[00:19:20] Audrow Nash: Yeah, I would love that. Yeah, and I would also love a copy of the book, just

[00:19:23] Oleg Kandrashou: yeah,

[00:19:25] Audrow Nash: It sounds awesome.

[00:19:26] Oleg Kandrashou: how it's looked like.

[00:19:28] The Vector Theory: Oleg's Unique Management Philosophy

[00:19:28] Oleg Kandrashou: I'm a physicist. I have a physicist background and all my life I tried to compare and to find any physics analogs in the business or economical process. And if I will find this physics analogs, I can predict how the system will develop itself.

For example, five years ago, we find that any employees we can compare with a vector. Where is the length of the vector? This is his personal skill. And the angle, this is his loyalty to the philosophy of the company. And the effectiveness of the company, this is just the total vector sum of all its employees.

We take the book of vector algebra and come up with rules to the rules for hiring, firing, for the HR department, for the leaders of department, how to control the people, and what you need to do. And this is a simple method, lecture, mathematics, how to control the people. This is the book,

this is my book, what, the main principle of what is written there.

[00:20:31] Audrow Nash: what a wild thing. That's so interesting to, Try to distill it into vectors that you can sum and you can keep them probably in some

[00:20:42] Oleg Kandrashou: Exactly. And that's why, for example,

[00:20:44] Audrow Nash: some

[00:20:44] Oleg Kandrashou: Yeah, for example, you have very good guy, good professional, but his philosophy is vice versa of you. And that's why he will damage your company more than will give the value of that.

[00:20:59] Audrow Nash: yeah. That seems like a good, it seems like a very interesting and probably 'cause yeah, you're right. If someone might be incredibly technically talented, for example, but they are bad to work with. and they slow down the company for this kind of thing. They could actually be a net negative on the company.

So if they have a little vector this way and a bigger vector in the other way, then they actually subtract a little bit. That's very interesting. Okay. Hell yeah.

And then just touring around your building, there's a lot of really cool things. first. So the building you're in, the inflatable building, is what you use for your micro factories, correct? Or it's very similar?

[00:21:37] Aleks Gampel: Can I explain? Oh, okay. You explain. Go ahead.

[00:21:42] Oleg Kandrashou: This type of the building we produce ourself. This is our technology. We come up with, and we use the same type of the facility to our own, R& D center, laboratories, factories, and so on. But the mobile microfacture and the building of the mobile factory is almost the same, but we put them on the ship containers.

And in the ship containers, all the machines is already pre installed. And that's why it will look like the same but different, because this type of the building to move, it will take me more time than the factories, our mobile micro factories.

[00:22:17] Audrow Nash: I see.

Okay.

Aleks, did you want to add

[00:22:21] Aleks Gampel: I think I can share my screen here, right? Yeah.

I just want to show your audience so they have a visual. Our mobile microfactory is containerized, so these are all containers that line up the base and the perimeter of what the mobile microfactory is and the structure that Oleg showed earlier. Is this pneumonic inflatable dome, but the inside of the factory is essentially containers with a lot of our machines that get stuffed inside and then later when they're on site, they get deployed into stations, essentially.

[00:22:54] Audrow Nash: Very, cool. And one thing that was interesting from seeing that is you see a lot of the machinery on pallets because I guess you just move it. and that makes it easier to just move off or move out from the containers, organize on the floor. So what strikes me is what you've done. It's a huge complex problem that you're working to solve with this. And I'd like to go through the big parts of the micro factories and the containerization of it. And then the kit of parts that you're actually sending and then the software, or the kit of parts that you're using for assembly. and I think that will be the best way to have a good understanding of what your business is doing. And then from there we can see more. Oh, go ahead.

[00:23:42] Addressing the Housing Crisis: The Need for Innovation

[00:23:42] Aleks Gampel: Just a tiny step back to give folks context on why we're doing what we're doing. So let's just create the,

[00:23:48] Audrow Nash: Oh yeah. I'd love that.

[00:23:49] Aleks Gampel: so if you look at generally first world countries today, everyone's very familiar with the housing crisis, meaning there is not enough homes. And because there's not enough homes, they're all brutally expensive because they're brutally expensive.

You have, things like the late household formations and risk of population collapse, so really big things that are pivotal to, thriving civilization, if you will, or thriving, country, etc. So the reason why we're not building enough and the reason why there's not enough homes is because not enough young people want to be construction workers.

If you pick the US, for example, 40 percent of the workforce in construction is due to retire in the next 10 years. That's really devastating

[00:24:33] Audrow Nash: Yeah. It's

[00:24:33] Aleks Gampel: for every seven

young people that, sorry, for every seven people that

retire in construction, only one replaces them. So we're running into this issue. We're like, we need more homes.

There's not enough people to build them. And construction happens to be one of those really skilled professions that takes a long time to replenish. So we exist. Oh, sorry, go ahead.

[00:24:54] Audrow Nash: one. I would love if you have some additional context on other countries. I think a lot of the like rich world, I think the US actually demographically is healthier than almost all of Europe, for example. but so do you have any idea of how, the ratio changes for different countries?

one, one.

[00:25:16] Aleks Gampel: any first world countries experiencing similar things in construction and the way we quantify it or what we look at is if you look at the dollar that it costs to build a single metric of output of a building. How much of it is skewed toward a 60 70 percent ratio of labor related cost versus materials and other?

In the U. S., it's about 70 percent labor cost. We exist to reduce that by a major fraction because we're applying lean manufacturing and Toyota's production system to construction by reducing that skilled labor and the skilled labor hours required to build buildings. We essentially tackle the issue around supply demand challenges in housing by reducing the skilled labor hours and skilled labor altogether that's required to build homes and later all types of buildings.

[00:26:07] Audrow Nash: Gotcha, hell yeah, starting for homes for now and then eventually all buildings, that's what I hear. I guess labor, when you think of labor, counts for many things. It probably counts for transportation of the parts, it probably in some of the manufacturing of the components that you're going to use for the house.

you're taking from a whole big process, you're moving it super close, you're sending, materials that can be turned into things, or, turned into parts. Parts that you'll use for construction, how much of that 70 percent do you think you're able to eat away? maybe Oleg?

[00:26:48] Oleg Kandrashou: for sure. This is a typical operation, the typical, exercise that I'm doing in different industries. I did it before.

[00:26:55] Audrow Nash: I'm sure.

[00:26:56] Oleg Kandrashou: And when I begin to use the lean manufacturing approach and a lot of automation, I reduce the labor force more than 10 times. This is a typical operation.

[00:27:06] Audrow Nash: Oh my god, so it goes to 7%?

[00:27:08] Oleg Kandrashou: 10%,

[00:27:09] Audrow Nash: Oh my gosh, that's amazing. Okay, so the goal is to make it

[00:27:15] Oleg Kandrashou: is some operation where we reduce it 2 or 3

times, but there is some operation where we reduce it more than 10 times.

[00:27:21] Aleks Gampel: It's not linear,

What do you mean with it's not linear? I expect that it, there's a few things you can knock out that are very high value and then it's, it just keeps decreasing in value. So you have, okay, but so what I'm hearing with this is, new homes could cost 40 percent of what they cost now, something like

[00:27:40] Oleg Kandrashou: Something like

[00:27:41] Audrow Nash: because you're 30

percent plus

10 percent for

[00:27:43] Aleks Gampel: I'll tell you this right now. the

average cost to build a home in the U. S. today, on paper, I think from 2021 is 156 a foot. In reality, that number takes into consideration the top 20 home builders who have massive volume and build really efficiently. But if you're Bob Smith, the home builder, You're like 200 bucks a foot, 250.

You're higher numbers, especially in the Northeast. We today feel pretty confident building a home for around 100, 110 dollars a foot, all in.

[00:28:15] Audrow Nash: That's amazing. Okay, and that is so, cool. So you're getting this huge reduction. That's the motivation, labor shortages, drive up costs. And you can probably, I would bet you, so if six out of seven. We're losing six people per, or we're losing seven people and gaining one.

for what's the time unit for that?

[00:28:40] Aleks Gampel: That's already today.

We're short almost a million

[00:28:44] Audrow Nash: I expect that will get worse in the future. And then I expect that cost will drive that 70 percent labor because there will be fewer workers. I expect that will drive that up. Do you imagine similar things? Like it'll go from 70 percent to 90 percent or 80 percent or something like that.

Is it a reasonable forecast?

[00:29:02] Aleks Gampel: say it, less dramatically. This is the right time to be building what we're building because it's a necessity, not like a, good to have. It's a necessity, and if you're Bob Smith, the home builder, who happens to be our customer, there's no way you're competing with what we call the primes, which is if any of your audiences, bought a house from the top 10 home builders, think DR Horton, Lenar, Toll Brothers, some names that folks might be familiar with, there's no way that Bob Smith, the home builder is competing with that guy on cost to build at the moment.

And so this is an essential need or some need to have, meaning want to have.

[00:29:44] Audrow Nash: let's see. Yes, I see. Oh, like anything to add?

[00:29:47] Oleg Kandrashou: No,

[00:29:49] Audrow Nash: Okay, so the motivation to me seems really strong. I would love

[00:29:54] Oleg Kandrashou: one motivation I can add.

[00:29:56] Audrow Nash: oh yeah, go ahead.

[00:29:58] Oleg Kandrashou: right now, when you build a lot of buildings, one of the main problems for you is not only the cost. This is a quality control and repeatable quality that you can generate money. For example, if you will build at the same time, a hundred homes, the probability that you will do all of them with a high quality that you can sell decreased when you increase the amount of houses that you build at the same time. That's why the system that we can provide with manufacturing conveyor approach, all the quality is controlled by the conveyor process itself. That's why it's not the construction anymore. It's manufacturing from scratch from A to Z.

And that's why everything is controlled step by step in the conveyor belt. And this is the second motivation, especially in that countries where their salaries. Not so high in, in, that's why the, our reduction in labor is not doing dramatically, can affect on the price for them. One of the main motivations that they can do it was a repeatable quality control.

[00:31:06] Audrow Nash: Gotcha. Yeah, that's a big win I imagine because you can make it so that you are producing the parts and it's more about the assembly and once you have simple assembly Then it's a lot less likely you have variation and quality For that kind of thing and that drives down the labor cost because it doesn't need to be as specialized

Okay,

[00:31:27] Aleks Gampel: also to give your audience a bit of context.

[00:31:29] Audrow Nash: Yeah, go ahead

[00:31:30] The Construction Process: Challenges and Solutions

[00:31:30] Aleks Gampel: is typical construction? What is the typical process to, to build a home? Cause I think a lot of folks assume that it's, same as turning on a light. It just happens. But,

[00:31:41] Audrow Nash: Okay. Yeah get into it.

[00:31:42] Aleks Gampel: So you have a developer or a sponsor or someone that's actually executing on putting the project together of building a home or a set of homes.

And that in itself is a pretty, disjointed task. You have to get through planning and design, right? You've got to choose a site. You've got to design the type of home you want to build. You got to get the financing for the home. Then you need permits and legalities, right? Because you can't just innovate in this space.

You can't just build. You have regulatory bodies that allow you to build certain things and don't allow you to build other things. Then you have to actually construct, right? When you're constructing, you have to prepare a site. You have to lay the foundation. You have to frame the house. You have to install the systems.

things like electrical, plumbing, HVAC. HVAC being heating, ventilation, air conditioning systems. You have insulation and drywall, you have exterior and interior finishes, and you have these regulatory bodies, inspectors, that are ongoing throughout the build, showing up and inspecting certain, certain, stages of that build.

And then you have final inspection to TCO to physically be allowed to sell or rent that home to an end consumer. Then you have final touches and landscaping and then, that's it. But it's a lot of steps in between and what's more interesting is there's all these different parties involved in these steps.

It's not a harmonious process. It's all these misaligned, disjointed, fragmented third parties. You have this general contractor who hires subcontractors and then there's specialty contractors. So you have all these. different bodies involved. And today a home gets built with say 10 to 14 people over the course of say 9 to 12 months.

If you're really good you're at 7 months. We're trying to be that entire unfragmented solution and we're trying to build homes in about 1 to 2 months. with only four unskilled people in two shifts, so it's quite a big difference, but the reason why construction is so challenging is because every project is a one off.

That's the crazy part. You can, Audrow, the home you're in today, right now, it could be the same bank financing it, the same general contractor, the same developer, building the same exact home next door will come out different. That's the crazy part. So that's how far construction is away from typical manufacturing, which can create repeatable product with very little deviation.

[00:34:09] Audrow Nash: Yeah. Actually, thank you for going into that to explain the scope of it. Yeah. and so you guys, are you doing things like foundation work and how does all that work?

Maybe Oleg?

[00:34:23] Oleg Kandrashou: I think that it would be better if Aleks will explain, because I talk a lot.

[00:34:26] Audrow Nash: Ah, go ahead.

Ah,

[00:34:29] Aleks Gampel: yeah, so

[00:34:30] Foundation to Finish: Building with Cuby's Technology

[00:34:30] Aleks Gampel: we touch everything from a home, from the foundation all the way through interior finishes. And there's elements that we literally make from raw input. Meaning, we get raw glass into the mobile microfactory, we get one SQU of glass, and we turn it into a double pane window from scratch.

There's things like foundation that we literally make and we choose a particular type of foundation. We like what's called a helical pier foundation or screw pile. For your audience, it's literally these giant screws that get screwed into the ground really deep and the frame of the home sits on top of them.

So we do from foundation to interior finish.

[00:35:07] Audrow Nash: That's really cool. I wonder, so I'm in Texas and we either have, I think, concrete foundation or we have People have the homes like sitting on blocks of wood or pallets or something like that. Like even not even I don't know typically smaller homes, but so this helical one You screw it in you get some stability from going so far down and then you it's similar to the wood one But you have the benefit of being far into the earth and the stability that comes from that.

Is that

[00:35:43] Aleks Gampel: Yeah, it's actually a really great foundation system for, potentially flooding, hurricanes, tornadoes, etc. It's a great foundation system, because it gives way. There's concrete cracks. And then just so your audience gets context, a typical home is made up of lumber, like the home you're in right now, it's framed with lumber, which actually in different parts of the world is perceived as a very, cheap solution, that doesn't have a lot of longevity and durability because we reduce the skilled labor coefficient by such a significant margin.

We can afford to use higher end materials. Therefore, we use steel for our framing. We use steel beams.

[00:36:23] Audrow Nash: Oh, that's so cool.

[00:36:23] Aleks Gampel: And then up of what's called, it's a take on SIP panels, which is a essentially a non structural wall with two steel coils, uncoiled, and it forms this thin interior exterior formation of a steel with pure foam in the middle, which is like an insulation foam that forms the non structural walls.

So like slight different take, but all still regulatory compliant, but it makes for a higher, more efficient, more durable home.

[00:36:53] Audrow Nash: We bought this house a few years ago. We're thinking about our next house and, I've been looking into different things and I'm not that advanced in looking, but, what you're describing is around what I've been wanting. So I hope you guys come to San Antonio, Texas, and I can have a house built out of what you're doing.

Let's see. So I'd like to go back. A little bit now and talk more about, your mobile micro factories and what's being sent with them and how are you shipping them and containerization and all that. why don't we start from the actual machines that you're sending. and I'd love to hear, unfortunately, I feel like there's so much to talk about with this, but I'd love like a high level understanding of what machines you're sending, what you had to do yourself, why to some level you had to do it yourself, and then we can go into the containers and then, go from there. but Oleg, what machines are we, are you sending and, what are their roles and what do you have to do yourself?

[00:38:02] Why Shipping Containers? The Efficiency of Factory in a Box

[00:38:02] Oleg Kandrashou: Okay, first of all, I will explain you why we use ship containers. For example, you have, you need to open the factory, and you have a big warehouse. And for example, you have all the machines that close to this warehouse, everything that you need. It will take you no less than seven months just to take all of the machines.

Put them onto the four floor plan to connect them, put all the tools, set up the process and so on. It's taken no less than seven months.

This lead time of the factory is very big, very high. You pay the money, the salaries, the renting and so on. Our goal is just to open next 10 years 270 factories only in the U. S. And that's why we have no this seven months in each factory that we plan to open. It'll take all our life, and based on that, we begin to come up with a factory in the box. That's why we have a Papa Factory, where we produce the factories, we take ship containers and put in pieces, ships into this ship, containers, all the machines ready to work, all the wires, plug in all the tools is just on, on the toolboxes and so on.

Everything is ready. And this, container is like a device, separate device. We stuck this container one on one in the line, connect them, and they begin to create the conveyor belt. And in this case, our lead time, our time that we start manufacturing, it's one month. And only by this approach, we can, distribute our technology very fast.

[00:39:54] Challenges and Competitors

[00:39:54] Oleg Kandrashou: Because in our industries, there are a lot of competitors. All of them is focused on the technology, but the market is so huge that none of them, all of them can affect somehow on the market. Because if you produce everything with very high production capacity, you need to distribute and copy paste your factories on your technologies. That's why, with this approach, when we put all the machines into the ship containers, there is a lot of restrictions, the height, the weight, and so on, and to produce

[00:40:31] Audrow Nash: So I'm imagining like those shipping containers. They're the large is it like the what is it? Is it like 10 foot by 10 foot by 40?

[00:40:40] Oleg Kandrashou: yeah,

[00:40:41] Audrow Nash: Gotcha. Okay.

[00:40:44] Customizing Shipping Containers

[00:40:44] Oleg Kandrashou: that's why to produce everything in house, screw piles, windows, glass paints, walls, finishes, and so on, We need to have the machines. Half of these machines, we can adapt to the ship containers. Some of them we can't, and we need to reinvent this machine.

And some of the machines is not exist in the market, and that's why we need to produce a design and to produce it ourselves.

[00:41:11] Engineering and Production Innovations

[00:41:11] Oleg Kandrashou: For example, we take this line that produce, peer panels. But in this line, we need at the same time in the conveyor, we need to screw The holes in the walls during the walls is going on the conveyor belt.

That's why we have a CNC machine that is drilling the holes and moving during the, when the line is, for and this kind of machine is not exist in the market, or for example, the, the wrapping machine that wraps all the walls at the same time, but the size is much higher and so on.

[00:41:47] Audrow Nash: Okay, with all these containers, you have your forty foot shipping containers, you said that there's something custom about them and you had certified. What about them is custom? So I suppose they fit in the volume of a 40

[00:42:07] Oleg Kandrashou: of the main stuff that the walls of this ship container, we need to remove it when we put it inside the inside. And to remove it, when you just change something in the containers, you need to pass through the certification as a transportation. And that's why if you will drill the holes in the container, you can use it into the ship. That's why you need to drill it, you need to pass through all of the certification, you need to make your design, you need, you make to do all the tasks that it will not affect on all other ship containers when you, when it will, during the shipping.

[00:42:45] Audrow Nash: Yeah, and so do you have, so how many shipping containers do you send to set up a micro factory?

How many was it?

[00:42:54] Aleks Gampel: So

[00:42:55] Oleg Kandrashou: depend, on

[00:42:55] Aleks Gampel: this is also important because containers, they go on site as well on each construction site, so it's not, so it's all the equipment for on site, it's all the equipment for off site, so it's both.

Was just going to simplify it, for your audience and to answer your original question, about 50 percent of the machines are proprietary to us. Some things are simple, like shelving systems, some things are complicated. And the other 50 percent we get existing certain machines and certain systems from the market, but we'll customize them to our needs.

And they'll even come white label of our logos on them in many

cases.

[00:43:36] Audrow Nash: Oh, did you have something you wanted to say with

[00:43:39] Oleg Kandrashou: Yeah, the ship containers on the construction site. To assemble the building, it's not enough only to produce a skid of parts. For you, you need to have all tools in the machines and the robots. that help the construction assembling work is to assemble the building. And in this case, we have also a lot of tools and machines that we come up to help them.

For example, we have a grid in our building. It's 10 feet and 20 feet. We have columns on this grid. And we have a special robot that we fix on these columns that we'll use as a CNC machines and put the semi dry concrete slab on the first floor and do it automatically. Because we need to save, the labor hours of the workers.

After that, it's begin to draw on the floor plan. all of the, the walls and so

[00:44:32] Audrow Nash: so you just know exactly how to set

[00:44:34] Oleg Kandrashou: Yeah, and why we need to come up also machines for that, guys. And that's why we have, to all each construction site, we have two ship containers. Small one, it's 20 foot. One of them, it's with a shower locker, everything that's where the people can spend their time and can change their, their clothes. Another one, it's, All the tools, machines, robots, electric tractors and so on that help them to do their job.

[00:45:05] Audrow Nash: That's awesome. So this seems, to be a Herculean effort, just absolutely massive. And I'm, amazed that, to me, a fighter pilot, maybe, the details, and engineering, it's, huge to go into it, but, this seems huge. Like maybe I would expect that it would be larger.

Than a fighter pilot. but how, tell me a bit about getting to here, and, 'cause I think you're doing a good bit of your engineering in Europe,

[00:45:41] Aleks Gampel: Eastern Europe,

Yes.

[00:45:42] Cost Efficiency and Global Talent

[00:45:42] Aleks Gampel: So one thing we've done that's probably not traditional, but we would maybe advise more deep tech companies to do right. Deep tech inherently is pretty hard and deep as in complicated technology that doesn't fit into SaaS, let's put it that way. It's a massive engineering effort and it requires a lot of engineering hours, very expensive in the US, which requires a lot of upfront funding and high risk octane funding.

So what we've done is we've been able to arbitrage engineering hours and engineering talent in Eastern Europe. That's how we got through so many engineering hours, raising likely, you know, a 10th of the cost and capital that maybe competitors in the space have raised. So we'll be able to get the commercialization having raised less capital and getting through all the technical de risking with less capital.

So our ratio of technical de risking per dollar has been really efficient.

[00:46:40] Oleg Kandrashou: Yeah, but it will be very difficult to hire 150 engineers in the United States and do such kind of project like that.

[00:46:50] Audrow Nash: So you're say, why would it be difficult? Is it just the cost or is it like actually hiring

[00:46:55] Oleg Kandrashou: It's the plus we will need to compete with big players like Tesla or something like that.

[00:47:03] Audrow Nash: Where in Eastern Europe?

[00:47:05] Oleg Kandrashou: We are in Minsk, in Belarus.

[00:47:06] Audrow Nash: What's the ratio that you think? one engineer in Belarus versus one engineer in the US, how much are you saving?

[00:47:17] Aleks Gampel: One tenth.

[00:47:19] Audrow Nash: Is it is one 10th? Wow.

[00:47:21] Oleg Kandrashou: Roughly,

roughly, maybe 1/5, something like that.

[00:47:26] Audrow Nash: somewhere between. Do you, and then, Oleg because of your management style, this works really well in the quality checks you have in place. Do you compromise on quality with less expensive engineers or is it, you get about the same thing or you have better processes to manage quality or how do you think of it, Oleg?

[00:47:47] Comparing Engineering Schools

[00:47:47] Oleg Kandrashou: Do you mean that to compare the engineers from Belarus and to compare the engineers in the United States?

[00:47:53] Audrow Nash: Yes.

[00:47:54] Oleg Kandrashou: this is a different

[00:47:55] Audrow Nash: Because you're saying it's a tenth of the

[00:47:56] Oleg Kandrashou: can explain it, it's a different school.

In the US, I had a couple of engineers in the United States and they have a little bit difference, Different thinking.

They try to solve the problem directly. They want to, use a robot. They want to use a lot of, gadgets, machines, and so on. But in the school of engineering from this part of the world, there is a tree. It's theory of solving engineering problem. And this theory is helping to think about the engineering is a little bit different.

I will explain you the, case. For example, you have a goal, you have a task, to find, you have a room, and inside the room you have, for example, like a lot of pipes, and in these pipes you have a task to find some leaks, for example. You need to find the hole inside, hole on the pipe in the room where there is a lot of pipes. How the, the engineers from the US will solve the problem? He will find, he will come up with the robots that will inspect each pipe and using a lot of CNC software, AI machine system and so on, will solve the problem. but engineers from this part of the world will solve this problem a little bit different.

He will switch off the light. Put inside the, put inside the pipe some Luminescent, and we'll find the liquid. This is a difference in thinking.

[00:49:36] Audrow Nash: Ah.

[00:49:36] Oleg Kandrashou: And based on that, in some solutions, US engineers will 100 percent much better to do that. But in

[00:49:45] Audrow Nash: but in

[00:49:45] Oleg Kandrashou: In another stuff, when you need to do something to, solve the problem, but we reduce that, reduce the cost, and so on, this part of the world is better. This is a different schools. That's why I explained

[00:49:58] Aleks Gampel: Audrow, I have something to add to that. So I get your question. You're asking,

with such a reduction in cost, is there a compromise in quality, essentially? We don't think there is, but not everyone can employ the system we've employed, because A, you need a founder that's top down innovation, which is Oleg.

And you need someone from that part of the world, which I was born in Russia, but moved to the US when I was eight. Oleg was born in Belarus and has lived there for a big portion of his life. and now obviously splits time. And unless you culturally understand how to manage that culture, it becomes very hard.

But we haven't seen a reduction in quality, mainly because we live in an era now in the U. S. where, so much of the world has gone towards software. You're a software engineer, and the last decade has been all software, and there has been no, there's been a very little amount of skilled engineers that have gone into hardware.

We're now getting that back, but it's early days. These are young kids coming out of school. They're not gray haired. I've been through the trenches of building complicated manufacturing systems, but we're getting back to that. But it's hard to see this boom and renaissance in deep tech and compete with the engineers, the good ones that do exist in the US.

So we found this, it's not for everyone, but this other alternative to be able to get through what ultimately is just engineering risk.

[00:51:21] Audrow Nash: yeah, I think so too. And also a thing is Oleg, as you're saying where it's okay, you can solve the problem differently. I've definitely seen this where say companies in Australia will come up with a very, clever solution because they don't have the same venture capital markets, that you.

[00:51:39] Oleg Kandrashou: You're right.

[00:51:41] Audrow Nash: So I think, I imagine it's quite similar. and that's really cool that you're able to de risk a huge technical problem.

[00:51:48] Oleg Kandrashou: Yeah, but, and that's why I explained to you about trees. Have you heard about this theory?

It was one guy, it was one guy, whose name was Al Truller. This guy come up with a theory and a methodology how to solve engineering problems. And there is exact way how you need to solve it. There is a matrix with problems and with solving. And based on this matrix, you can easily find the way how to solve this or that solutions. And the theories help engineers in this part of the world to solve such kind of problems very easy and very fast. A lot of U. S. based corporations begin to use trees as a method to solve their corporate problems. It's a theory of thinking.

[00:52:41] Audrow Nash: Let's see.

Yeah. I, I, want to, both your book and this trees idea I want to explore after, cause these seem like really interesting ideas that I don't know much about. and they seem well principled, which is nice. I always like a good theory that is well, like simple. I let my favorite thing are simple systems with big effects.

I like those. And this sounds like one of those. Hell yeah. that sounds great. With, one question I had with, you said everything comes all wired up. and so I'm imagining you have this shipping container, you take off the walls, you have a whole bunch of stuff inside that's all connected, and you distribute it in a way that has been planned in your larger building.

How is it to pack these systems back up. So I'm done. we've made a micro factory. We've used it. Now, we want to move it somewhere else. how does that work? Is that a really challenging thing?

[00:53:40] Aleks Gampel: so a clarification because sometimes mobile micro factory might be misleading because a lot of folks assume like you need to go build a house, you send over an entire factory to build a house, but that's, not really how it works. It's we go where there's demand,

[00:53:54] Audrow Nash: you have one for a bunch.

[00:53:56] Aleks Gampel: there's, demand. We put up a mobile microfactory and for the next several years, it's servicing this, 150 - 200 mile radius. In a recurring manner, and maybe eventually once you've paid it back, like generally each of these factories, they can stand for 20 years. We're missing six and a half million homes in the U. S. You pick any dot on the map, that's thousands of homes that need to be built. But in what you're saying, it can be picked up. There's a cost to it. It's about, a couple hundred thousand dollars. You pick it up and you can technically go reuse it elsewhere.

[00:54:31] Audrow Nash: so the idea is the it's more about deployment of factories close to the end use than it is about picking them up and moving them wherever there's demand. I see.

[00:54:44] Aleks Gampel: yes.

[00:54:44] Audrow Nash: Okay, and you can technically pick them up but you want them to be there for many years because there's demand and this kind of thing.

Earlier we mentioned it's a product. So are you, do you have like you were saying, the smaller mom and pop contractors who are doing home assembly that can't compete with the larger companies that you were saying, how, is this a product for them? I was thinking you do some sort of rental model or something, but it sounds like it's something you purchase outright.

[00:55:15] Productizing Factories

[00:55:15] Aleks Gampel: So it's a product for us. The way we think about Kube is that we don't love using this analogy, but I think Elon Musk has been very public about talking about the system. The reason why, for example, Tesla's More relevant than other, competitors is because it's not the model three, like the model three, it's an okay car, right?

Like it definitely, you can get comparable cars. What makes Tesla incredibly unique is their high margin. Why do they have high margins? Because their product is not really a car, it's the factory itself. So we think about the system and day one, we were thinking about not building homes. We were thinking about how do you scale the system, which happens to be a mobile micro factory.

How do you copy paste that hundreds of times?

[00:55:59] Audrow Nash: very cool.

[00:56:00] Aleks Gampel: Now to get to commercialization, which is your part two of the question. Because we need to get, 200 plus mobile micro factories out into the market over the next 10 years, that's really our ambition and we think it's doable. The way we're doing it is very much tied to cost of capital. first venture and then how do you wean off venture and get into it? Things like project financing, equipment leasing, potentially, big credit lines from banks. So we first are white labeling our factories. The analogy there is, McDonald's is a good example. I could be the crappiest cook in the world, but tomorrow I can run the most P and L efficient F& B Outlet, F& B being food and beverage, very profitable outpost and it's because McDonald's has invested also hundreds and thousands of hours into their hardware, software, system, SOPs, supply chain, hiring standards, whatever.

We've essentially done the same thing. We're able to go find local partners in different regions to put up factories on our behalf that they finance, yet we take a license fee or operating fee on. With time though, we will eventually own our own, but our customer for now happens to be anyone we launch a factory with.

The factory's customer, so the by product, which is the home and the customer of that by product, are mom and pop home builders within a 150 mile radius. I hope that, I know it's a bit complicated, but I hope that explains it.

[00:57:34] Audrow Nash: The mom and pop part, I don't quite understand. Cause it sounds like it's a big capital expenditure to get these 40 containers to set up this factory. so someone else who has more capital would purchase this, I imagine. And then they would contract to the mom and pop shops.

Yes. To build things is the way you're thinking. I just I don't quite understand the mom and pop part versus Why would one of these big five or whatever it is? Companies not just buy your thing and make themselves way more efficient, especially because they probably have the capital How do you think about this?

[00:58:11] Aleks Gampel: Yeah. So again, it's all tied to cost of capital. So right now we're very focused on making sure that the mobile microfactory itself is a very profitable standalone venture. So we resonate a lot with ultra high net worth families, larger developers slash general contractors. Private equity groups that understand manufacturing and industrials.

So they're just buying into

the

[00:58:35] Audrow Nash: like a real estate private equity group could be a great

[00:58:40] Aleks Gampel: a factory private equity group or an ultra high net worth family that comes from legacy manufacturing and industrials. So anyone that sees value in launching a manufacturing business, that's incredibly profitable. So we're essentially finding someone else to fund it and taking a licensed operating fee on it.

But the groups that benefit locally from the system are home builders, and generally it's smaller home builders that need to find better solutions because they can't compete with the really big guy that's in their market, the Lennar, for example. Maybe with time we start working with the top 20 home builders, but we believe right now it's very tough to work with some of these big corporates just given the space.

[00:59:23] Audrow Nash: Oh, the speed of them adopting anything. Yeah. Okay. So you could work with the big ones, maybe eventually when they see that part of their market share is being eaten up by smaller people that are doing these jobs, but they're hard to get into and they're hard to move and all this kind of thing. Is that kind of the

[00:59:42] Aleks Gampel: exactly.

And we have this three tier master plan over the next 10, 20 years. And the way we

[00:59:48] Audrow Nash: Love master

[00:59:49] Aleks Gampel: the way we think about it now is like most cost effective way to put out as many factories as possible and service B2B. But with time, as our cost of capital goes down, and we can just put out our own factories, control their destiny.

I know this is really Oleg's vision even more so than mine, but eventually the idea is you have someone like you that's eventually looking to build a different home, would go on our website, we would be the lead, you would design the home and that home would get pushed to one of the nearby factories to get put into production and into eventual assembly.

So like you bring the land, You design the home, we build the home. that's the ultimate goal, eventually, is to somehow become the developer as well, in a way.

[01:00:36] Audrow Nash: Ah, yes, that would be really cool. But it's, you can start with less and the system's already very complex. and so you can do this. Okay. That's really cool. thank you for clarifying that just for, so for our. Listeners,

[01:00:56] Should You Invest? Expected Cashflow from a Mobile Micro Factory

[01:00:56] Audrow Nash: if we have anyone who like say it is an ultra high worth individual or anything.

I think the, two numbers that would be important is a rough ballpark of the cost of one of these. And another one would be like the throughput for the number of houses, that you can expect for a, from one of these factories. Any, ballparks for

[01:01:18] Aleks Gampel: Yeah, for sure. And I think what's interesting we generally get a really wide gamut of folks that reach out to us because I think we're some of the first folks in the world to productize a factory, right? Because that's what we're offering is this

[01:01:30] Audrow Nash: It's super

[01:01:32] Aleks Gampel: what's interesting is part of our, our innovation is the ability to launch factories for about 10 million bucks. That's not a lot of money for manufacturing world at all.

if you look at the 90 infrastructure projects that, Biden is essentially, activating, those are multi billion dollar factories. We're talking about 10 million bucks, this mighty mobile tiny factory, right? Like it really is mighty because we're able to spit out about 200 single family homes a year out of it.

That's the general output capacity. so these things become very profitable annual ventures.

[01:02:11] Audrow Nash: What would you, I'm sure you can do the math based on average housing, and your expected margins. do you have those numbers on hand? I think that would be really cool. 200

[01:02:21] Aleks Gampel: if you

[01:02:22] Audrow Nash: The cash flow to be

[01:02:24] Aleks Gampel: if all goes you're essentially. The capex to put up a factory is about 10 million bucks. And if you're successful in filling up the factory to full capacity, you're looking at 50 to 70 million in top line per year with about 10 to 20 percent EBITDA margins.

[01:02:45] Audrow Nash: 20 percent margin.

Okay, that's super cool.

I hope that one of these comes near me,

[01:02:51] Aleks Gampel: We're looking in Texas, actually. We're looking in

between you and Austin right now.

[01:02:57] Audrow Nash: yep, it's such a hot area, there's so many people moving here and it's just lovely, it's crazy because I've been here two years and the traffic has already increased, we're noticing it, but, okay, that's super cool, thank you for providing those numbers, I think that's a, good, thing to think about for people who might actually be interested in setting one up and i hope you set up one let me know if you set up one in San Antonio Austin area because maybe in a few years we're going to look to buy build a

house

and that would just be awesome

[01:03:33] Aleks Gampel: could always tech, we technically could always do you a favor. So like our first mobile micro factory, the first of a kind is set up in Eastern Europe. We don't like doing this, but we could in theory pack all the different kit of

[01:03:45] Audrow Nash: ship all the

[01:03:46] Aleks Gampel: because it's in about

37 stages. That's the max stages. We can pack it into several containers and just send it to you and it will still come out cheaper than the way you're building in, Texas today.

[01:03:58] Oleg Kandrashou: And in order, we're getting, robotic perspective of Cuby.

[01:04:05] Assembling Houses with Humanoids

[01:04:05] Oleg Kandrashou: We have a goal in maybe five or ten years to, to use humanoids just to do everything in our factories. And I, I, will explain to you why. We have a special software that controls and gives the tasks, this sort of complicated stuff that we did last three years.

This is software and software is working like that. The house itself has final numbers of kit of parts. When we, in our software, design the house, it's automatically, shared on all of these parts, and in each of them we exactly know how much hours and materials we need to spend, and the instruction and the sequences where we need and when to produce it.

After that The house go to the factory and the construction, the worker in the factory push the button and the system give him exact task what he need to do right now based on the pipeline of the houses and his personal skills. That's why this is some kind of a Uber for the workers in the factory and in the construction side.

This is non stop distribution task managers that control the task and give the task with full instruction. After that, as we have a 3D model of all the houses, we have Unreal Engine department that create for us an automatical and automatically video instruction, but it is not a video how to do this or that stuff.

This is a video based on the exact house that we assemble now, and this is stage by stage generating the video instruction, plus we use additional reality. Because we have all of the 3D models to show where and what we need to install. Based on that, all of these tasks

[01:06:00] Audrow Nash: it's like custom IKEA with videos. That's

[01:06:02] Oleg Kandrashou: And based on this step, we exactly know the coordinates and the vector coordinates of each part that we need to install.

And based on that, for us, it's easy to give the task to humanoids what they need to do. Because we automatically

have all,

[01:06:18] Audrow Nash: following instructions. And you already have it in simulation.

[01:06:21] Oleg Kandrashou: And this is what, how the software is look like.

[01:06:25] Aleks Gampel: I was just going to add, given this is a robotics podcast, Audrow,

so we have a controversial take, right? So a lot of, folks trying to industrialize construction or certain aspects of construction, they automatically jump to robotics. But in our industry, if you compare it to like Tesla, for example, Tesla had, almost 50 years of Toyota's production system that they got to work off of what Ford has done, in terms of a conveyor belt. construction has never had even the slightest improvement on efficiency from a human productivity perspective. So we're like that first iteration. So before you deploy any robotics in the wrong direction, in the negative ROI,

[01:07:05] Audrow Nash: Oh,

[01:07:05] Aleks Gampel: You first have to make humans more efficient. very little of our stations are actually fully roboticized and automated.

But with time, they all will be, when we reach that point of figuring out the right direction for efficiency, and once we cap that efficiency.

[01:07:20] Oleg Kandrashou: In lean manufacturing approach, it's called Kaizen. Kaizen is the process of non

[01:07:25] Audrow Nash: Ah, I've heard it.

[01:07:26] Oleg Kandrashou: That's why you need to start with labor, and after that, by the Kaizen, you need to change the man by the robot, but you need to do it only in that case, when everything is going very good.

[01:07:38] Audrow Nash: Very well. Yep. Yeah, you basically, it's like the programmer thing where premature optimization is evil. Kind of thing. You try, you basically, you're figuring it out. You're getting your process nailed down. When the process is really humming along, then you can automate the things that are the most time consuming for this kind of thing.

Something like that.

[01:07:58] Oleg Kandrashou: Exactly.

[01:08:00] Audrow Nash: That's a very cool approach. And yeah, I think what you've done seems to lend itself very well to being more automated, and it's really cool. I feel like a thing that's a very clever and probably a huge advantage for you guys is the nuance that it sounds like your scheduler has where you have the full build of the house and all the components and all the steps and you're using Unreal Engine to display things and provide the videos of exactly what to do which makes the job easier.

and yeah, I think it is like an Uber of work because you can just do the next task a person doesn't have to be involved in any of the planning. They get a specific task to do they do that. They get paid for that. That's super cool I'm I think of everything i'm most excited about your scheduling setup and the whole infrastructure required to

make that work. That's super cool. Yeah, go ahead

[01:08:55] Aleks Gampel: Oleg, maybe you can cover some of the software because what Audrow is getting excited about is like one small subset. this software, I just got the first demo of Audrow, two days ago. I was mind blown, A, the amount of work that's been done, but also, like, how comprehensive it is.

[01:09:13] Cuby's Software Setup

[01:09:13] Oleg Kandrashou: Okay, I will explain it. We have four blocks in the software. Big blocks. The first of them, we call it CubyFactory. This is a software where we come up with the machines, all the function of them, plus all the process between the machines, where we need to put all the parts, all the materials, all the instruction, and so on.

And based on this, like a creator or something like that, we give the ability to give the task in the factory. The second software, we call it Cuby Construction. This is a Cuby Construction. It's the same software for the factory, but for the construction, because four guys in two shifts working in 35 stages of the factory, and it's control all their tasks and the construction side. We have Cuby Logistics. This is a task that gives the, the driver, tasks where, what they need to take and where to move. Because, it's nonstop distribution task for, the, for, the driver and to deliver. We have the software for it. We, it's, it's Cuby Pro, this is the software where we do all the registration, the, all the cabinets that all the workers can see.

Their track number, their learning, how they're learning and so on to control, because we use unskilled paper. And the last stuff that we have, on Unreal Engine. Based on that, cover on that. And we have a software, like a before construction worker come to the working, to the factory or to the construction site, we have a game.

where he plays the game on the computer doing the same job that he will do in one, in the next month, playing the game in one month, and he exactly knows what he needs to do in the next couple of months, and he has some small trainings based on that.

[01:11:05] Audrow Nash: that's so cool.

[01:11:05] Oleg Kandrashou: And the last stuff that we have, this is the software that we are working on right now.

We have, Additional Reality, where we take all the models from Unreal Engine and put them into that coordinate that it should be in to show where to need to install. Next year and a half, roughly, we finish the software for the consumer, where the consumer itself, like playing the Sims game,

[01:11:32] Audrow Nash: you can walk through and see the space.

[01:11:35] Oleg Kandrashou: exactly, we have it right now already, we have it. right now, but my play, my goal is like that. The small family, the young family, sitting near the computer, playing the Sims game, Construct with very simple instruments, construct their house, and they see exactly the budget right now. He can change something, the budget will change, he push the button, and the system give the task to the factory to produce it, take the loan, and in two months they will have their house on their plot.

This is a goal that we're doing as close as fast as possible.

Yeah,

[01:12:10] Audrow Nash: I love that too, that the pricing is straightforward. Because you're like, you add a window here and it's oh,

[01:12:16] Oleg Kandrashou: not easy.

[01:12:18] Audrow Nash: yeah, it makes sense. But, oh my goodness, how nice that is. Because everything is so hand wavy now, it feels so having that where you see instant feedback for what you expect is really

[01:12:30] Aleks Gampel: It doesn't exist in construction today. In fact, actually, the way you get quoted on pricing,

between general contractor and the developer who's hiring the general contractor. I'm sure you've heard it like real estate and construction general is never on time and it's never on budget.

[01:12:49] Audrow Nash: definitely. Yeah. So this, the idea is very, nice. I feel like it's, like Tesla in their pricing where you just like, instead of going and negotiating a car, whatever, you just agree right when you select it on the website kind of thing.

[01:13:02] Oleg Kandrashou: It's the same, because each house that the factory built has a serial number. It's like a product.

[01:13:09] Audrow Nash: Yeah. Yeah.

[01:13:10] Aleks Gampel: makes our system more complex actually is Tesla, they only have, what is it now, four car options.

[01:13:16] Audrow Nash: A few permutations. Yeah,

[01:13:18] Aleks Gampel: We have hundreds of permutations. different size of a home, layouts, the combinations create different finishes. So it literally is in the hundreds of permutations. Now imagine trying to control that.

That's why the software is so important here.

[01:13:33] Audrow Nash: Definitely. Yeah, very cool. And with the nature of your system, it's going to be a bit more modular in building a home. And so then you can cost all that up and that's really cool. But we're getting to the time when I have a hard cut off.

[01:13:48] Scaling and Future Plans

[01:13:48] Audrow Nash: but so I would love to see what you guys think of so you say in the next 10 years, you want to build 220 of these micro factories in the U S what, does the future look like for you guys?

So you're going to be working towards this. What are the challenges? What are the new things you think you're going to be getting into? and actually so have you, you currently have one in, Belarus, is it correct?

Belarus, is it correct?

[01:14:17] Aleks Gampel: Yes, it's our test signed our first commercial large scale contract for a factory that will go to Las Vegas. And then we have several more. Thank you. We have several more that we're trying to deploy, but we're going to cap for the next one. And we're going to cap for the next year or two and just perfecting the first three we're going to launch.

And then we can go really fast. And what we've built now allows us to go mass produce these already today, but we can't do it until we've perfected everything and have created the right cost of capital.

[01:14:51] Audrow Nash: Make sense. So are your next few years head down working on these, making your first three go and then from your first three you'll do 15 and whatever until you scale up and can do the larger because I imagine as the 10 years go you do more and more deployments, for this but I guess what does, it sounds like you've done so much interesting technology.

Is it really just scaling, getting the first ones out and then scaling?

Is that your Outlook on

[01:15:22] Aleks Gampel: so I'll even tell you how we speak to investors is, we've done most of the technical de risking, our TRL, Oleg, would you say 7 going to 8 or 8 going to 9 at this point?

[01:15:33] Oleg Kandrashou: know, we, are doing right now TRL 8, and TRL 9 will be when we'll finish the first two factories as a commercial purpose.

[01:15:44] Audrow Nash: I don't know what it means

[01:15:44] Aleks Gampel: Dan Golden from NASA coined this term TRL. It has to do with like, how ready is the technology to be commercially viable? Yeah, so we've done most of the technical de risking, now we're switching over to risk around operations, execution, and scaling. That's really where most of the risk now lies.

[01:16:07] Audrow Nash: Yes. Okay. So that is the thing for the next 10 years, say for this kind of thing where you're going to be scaling, just for the TRL one. How, many levels are there for this? I'm not familiar with the, oh, so you're at the end and that's why you're ready for scaling. You're

[01:16:27] Oleg Kandrashou: and when you have the, the product ready to mass production and TRL 9 when you take the product from the conveyor belt.

[01:16:36] Audrow Nash: That's awesome. Okay. If there is anything that you hope our listeners and watchers, get from this interview, what, are your main takeaways? we'll start with Oleg.

[01:16:52] Oleg Kandrashou: I can say that don't forget, don't afraid to do the big projects. That's why you need to do non stop and if anybody will tell you that you're doing very, complicated stuff and you will not be at the end, don't listen to them.

Continue doing that.

[01:17:11] Audrow Nash: Hell yeah. And

[01:17:12] Aleks Gampel: I think I'll be less inspirational And more vain than I'll like, but we're always like good investors, we like folks that want to build factories that want to build homes. So anyone that wants to chat with us about how we can commercialize together, we're always ears.

[01:17:29] Audrow Nash: Hell yeah. Any best ways to reach out to you guys?

[01:17:32] Aleks Gampel: I think our website could be technologies. com and there's a direct submission form if anyone wants to talk to us. yeah, that goes directly to me and Oleg.

[01:17:43] Audrow Nash: Hell yeah. Awesome. Thank you for the time and this has been awesome to learn about what you guys are doing and I hope I can get one of your houses in a few years.

[01:17:52] Aleks Gampel: You're, you're, you're now a friend, so we'll, we'll try to be as helpful as possible.

​

[01:17:55] Audrow Nash: That's it. What'd you think? Do you think Cuby's approach is promising? Would you like to spring for buying one of the micro factories with me? I'm just kidding. I have nowhere near enough cash. Although it does seem like a good idea.

That's all for now. See you next time.