Boxabl, a startup known for its prefabricated tiny homes, has found itself under the lens of criticism. Despite its lofty aspirations of revolutionizing the housing market, the company has so far been marred by setbacks, including questionable spend management, slow production, and customer dissatisfaction that has thus far been unanswered.
In March 2023, Business Insider released an exposé titled “Tiny Homes, Big Problems,” raising serious concerns about the company’s financial practices and transparency. Reporters Daniel Geiger and Alex Nicoll stated that the firm was hemorrhaging money, citing an example where Boxabl spent far more than it received to construct an order. This left a gaping question over Boxabl’s proclaimed goal of offering low-cost housing at scale, the mission so many people supported in the first place.
Galiano Tiramani, the founder of Boxabl, disclosed that the company’s first order was not meant to be profitable. However, the company now spends about $42K in labor and materials for a product that retails for $60k, indicating an intention to streamline the manufacturing process and manage costs more effectively.
The Business Insider article also spotlighted an arrangement where Paolo Tiramani’s romantic partner headed the company’s accounting department. However, Tiramani clarified that the “romantic partner” is his girlfriend of 20 years, a trusted member of their family and team.
It also highlighted the eyebrow-raising annual salaries of the executives from $400,000 to $800,000, notably higher than the industry average for companies seeking funding. That, along with a lack of transparency explaining the startling jump, has been a cause of concern for some.
Moreover, despite having a hefty waiting list of 160,000 orders, Boxabl was only able to produce 400 homes during its first operational year. The delays have seen many customers failing to receive quick delivery of their homes, and some have started canceling their orders and asking for refunds due to what they perceive as unacceptable delays.
So why is production limited when there are so many interested parties? According to Tiramani, Boxabl can output one home in 4 hours. However, while there seems to be production capability in place, it is currently not enough to meet customer demands and improve satisfaction. One fix to that would be additional funding to implement further production plans.
The startup has managed to secure over $168 million in funding through equity crowdfunding, but it is ambitiously planning to raise an additional $1 billion. This funding, they claim, will be used to build the “Boxzilla Factory,” hailed as the future largest and most advanced housing factory in the world, capable of producing a house every minute and thus steeply increasing production. The only problem is that the factory is still in the planning stages, with no announced timeline or location for the construction of the factory.
In addition, despite its struggle to deliver on existing orders, Boxabl continues to aggressively solicit new investors, further stoking suspicions about its financial stability and credibility. Some people have been barraged by multiple solicitations from the firm over the years, with few seeing their orders delivered.
Tiramani, however, maintains that many well-known companies took over a decade to profit. He sees their long list of prospective customers, amounting to at least $10B in potential product, as a promising sign for future profitability.
There are also still questions about the quality of Boxabl’s product, specifically the design of its Casitas, which includes a negative lap at the base, potentially risking water damage. Boxabl uses caulking to seal this gap, but industry experts question its efficacy in the long term.
It all paints an unsteady picture of the company. On the one hand, the people behind it still have hope in the company’s mission to revolutionize affordable housing and its future. On the other hand, many waiting for Boxbal homes are concerned about the issues that, to many, seem insurmountable. It remains to be seen whether the firm can turn things around, fulfill its backlog of orders, and restore its reputation, but for now, the outlook appears dim for the ambitious startup.
Corrections (7/14/23): Updated the article with more accurate information about Boxabl’s spend, the role of Paolo Tiramani’s romantic partner, and statements from Galiano Tiramani touching on the issues raised within the article.
