Alexis Rivas of Cover: How We Are Helping To Make Housing More Affordable

Hire for trajectory, and try to understand the rate that someone will learn and grow rather than what they know today. We work with potential candidates on a small problem first before hiring them full time and see how it goes.

In many large cities in the US, there is a crisis caused by a shortage of affordable housing options. This has led to a host of social challenges. In this series called “How We Are Helping To Make Housing More Affordable” We are talking to successful business leaders, real estate leaders, and builders, who share the initiatives they are undertaking to create more affordable housing options in the US.

As a part of this series, we had the pleasure of interviewing Alexis Rivas

Alexis Rivas is the CEO and co-founder of Cover, a Los Angeles-based technology company that builds homes with production lines and algorithms, starting with custom backyard homes. At Cover, Alexis is focused on unlocking the untapped potential of people’s backyards by making it easy for them to design, permit, and build Accessory Dwelling Units, commonly known as backyard homes or granny flats. Alexis graduated with a Bachelor of Architecture from Cooper Union and was named in the Forbes 2018 30 Under 30 list for Manufacturing & Industry.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?

I started my career working at various residential architecture firms ranging from ultra-luxury single-family home construction to multi-use developments. I saw a pattern of issues and inefficiencies in conventional construction that led me to keep asking myself “why does it cost so much?”

The majority of the costs in construction come from coordination between the various parties involved, such as the architect, engineer, general contractor, subcontractors, fabricators, etc. Each home is treated as a one-off, so I then started asking the question, “what if homes were all built in a factory?” Most everything in our lives comes from a factory — cars, furniture, clothing, electronics, so why not homes?

That led me to dive into the prefab industry where I learned that while building homes in a factory is not a new idea, it’s still niche (less than two percent of homes in the U.S. are built in a factory). I then went to work for a prefab company in Los Angeles where I expected them to have the solution to the problems I was seeing. They were, after all, actually building homes in a factory, but ultimately their approach didn’t work either. They were building homes in a factory, but they were building homes the same way as conventional construction, still using 2x4s, hammers and nails, and drywall. The result was a marginally better process and product, but the gains were outweighed by the cost of transporting the large room-size blocks on oversized trucks and by the overhead of a factory. To make a product in a factory efficiently and realize a meaningful improvement to the product you have to redesign the product from the ground up to be geared towards manufacturability from the start.

Nobody had done that for homes. That’s when I realized that there’s a massive opportunity here to improve the quality of the spaces everyone lives in. I then approached Jemuel Joseph and we started to work on Cover, which had two main parts to the solution; Automotive-like manufacturing, and software to make mass customization possible. We realized at its core this was a solvable technology problem, and that was incredibly exciting.

Can you share the most interesting story that happened to you since you began your career?

I can give you a handful from nearly every week since starting Cover — it’s hard to pick just one! In the early days of Cover before we had a factory, warehouse, or office, we were using the driveway and garage of our bungalow to prototype and build in. As part of the build, we needed to dry 50 pieces, and it was taking too long naturally, and we had a timeline to hit. We went to the local Walmart and bought all the cheap portable heaters they had, and a dozen extension cords, and effectively turned our bungalow’s garage into a drying oven, taking electricity from each circuit of the house to prevent any one breaker from repeatedly tripping with the extension cords. Then we would go into the garage with our masks on in the middle of the night when our timer went off to flip the pieces and dry the other side. We did this non-stop for a couple of days. I’ll never forget that.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

During the installation of our second Cover unit we really started approaching the problems related to home building differently — less as architecture and more as a product. We applied an engineering practice known as “first principles” where the idea is to break down complicated problems into basic known truths and then reassemble them from the ground up. The result is often quite innovative and different from conventional wisdom. To do this, we realized that we needed more than just a team of people who knew how to build homes, what we needed were people who knew how to build cars, since we were trying to build homes more like how cars are made.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?

My co-founder Jemuel Joseph. We met while studying architecture at the Cooper Union and before starting Cover we built a computer numerical control (CNC) machine together. Our school didn’t have one at the time and we thought it would be a great way to make our architectural models faster. Jemuel had already started building the CNC and I was excited when he told me about it and I wanted to help complete it. That was the first time we worked together outside the academic environment.

A big part of why I’m so grateful to Jemuel is that we brought such different, yet complementary, perspectives to the idea of creating a better way to build homes. He came from the software and tech world while I came from residential architecture and construction, and he encouraged me to think about Cover as a technology company. He introduced me to the world of venture capital and Y Combinator, and I brought knowledge about what worked and didn’t in conventional and prefab home building. Together we built a tech startup that is streamlining home building using an approach more common with agile software development.

Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?

One of the most impactful things that changed the way I thought about home building was a conversation with another architect who was comparing home building to building a car. The example he gave was that a Toyota Camry is about 100 square feet and costs about $20,000, which comes out to $200 a square foot. A custom home built in California ALSO starts at around $200 a square foot. This really stood out to me as crazy considering a home is mostly flat surfaces whereas a car has doubly curved surfaces everywhere, hundreds of moving parts, thermal comfort, an engine, and is mobile. Based on pure complexity, a car should be way more expensive per square foot than a home — and it’s not.

It is entirely possible to make homes in a factory the same way cars are made, it just hasn’t been done before. The home building industry will need a lot of restructuring and rethinking, but it is entirely possible to get beautiful custom homes for $50 a square foot if cars can be done at $200.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” — Albert Einstein

We really applied that to Cover. We spent a lot of time researching the problems in home building and why various approaches didn’t work. We really dug into answering the question “what are we trying to achieve?”

The biggest impact comes from what you decide to solve, how you do it almost becomes secondary. The hardest part is truly understanding the problem that needs to be addressed.

Ok super. Let’s now shift to the main part of our discussion about the shortage of affordable housing. Lack of affordable housing has been a problem for a long time in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities. I know this is a huge topic, but for the benefit of our readers can you briefly explain to our readers what brought us to this place? Where did this crisis come from?

There are a number of factors that have led to lack of affordable housing. One is a shortage of skilled labor (plumbers, electricians, etc.) A shortage in these trades means they become more expensive, which makes properties less economical to develop. It also means they are busy and take longer to get to each job — this all factors into developer economics.

Developer economics paint the picture as to why there isn’t more construction. Housing supplies are lower now because it hasn’t been economical for developers to build. When the timeline for building is too long — such as waiting for the skilled trades mentioned above — developers are exposed to more market risk. Developers are often painted in a poor light, but they are just trying to make money, the same as any industry. If developers could build 100 homes in a week, for example, they could afford to make less money per home because they would be able to complete more developments in a year and would take on less risk, but with today’s long timelines and labor shortages they can’t operate at that speed.

Regulatory factors also play a big part — red tape, navigating building code, permitting and entitlement have become increasingly complex, which adds time and cost to the home building process. As regulations have gotten more onerous construction costs have gone up due to a lack of innovation. Don’t get me wrong, things like stronger environmental and energy codes, and higher safety standards are great, but now we need to innovate so that when standards go up, costs don’t. There are lots of opportunities here.

Can you describe to our readers how your work is making an impact to address this crisis? Can you share some of the initiatives you are leading to help correct this issue?

Where other industries have seen innovation and industrialization, residential housing hasn’t seen this, and remains largely unchanged over the last 100 years. Cover’s mission is to make thoughtfully designed and well-built homes for everyone. Homes that improve people’s daily lives, reflect our modern way of living, embrace progress, enhance their environment, and are uncompromising in their design and performance.

We are doing this with a strategic approach to scaling, starting with rapid iteration and improvements of our building systems that we deploy on our initial product backyard homes/accessory dwelling units (ADUs), which will in turn enable us to refine the technology, and then rapidly scale to homes and multi-family apartments of many sizes in any location.

Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?

The quality of the physical product. Every time I walk through and see clients’ reactions and how much they enjoy it, there’s a great sense of pride that we built something that’s being enjoyed and used.

There was one customer who purchased a Cover home that was used as a rental property. The customer collected over $22,000 a year in rental income and then received $100,000 OVER their asking price when they sold the property, which set a record for that area. Calculating market rates and price per square foot for the area, this was easily attributed to the value the Cover unit brought to the property. It’s uplifting to know we helped a homeowner meet their financial goals in a pretty significant way.

In your opinion, what should other home builders do to further address these problems?

Be more like Cover! Jokes aside, the current home building process is outdated and inefficient. Building homes in a factory is the way of the future and all home builders should be looking at how they can improve their process, their materials, and ultimately the final product.

Can you share three things that the community and society can do to help you address the root of this crisis? Can you give some examples?

Help fulfill the demand for homes by creating a backyard home someone could live in. Anyone with space in their backyard should consider building an ADU and renting it, which adds to the housing supply directly.

We all also have to work together to change people’s perception of what a home built in a factory can be and overcome the stigma some have about factory-built homes being lower quality. While historically factory built did mean lower quality, with Cover it’s actually the opposite, and we can all work together to spread the word on our approach.

Lastly, Cover is looking for engineers — software, mechanical, supply chain, quality, and manufacturing — so if anyone is interested in making a direct impact with us, we are adding talent!

If you had the power to influence legislation, are there laws which you would like to see introduced that might help you in your work?

One thing that would significantly lower overall build costs would be rules that require all zoning and permitting related regulations to be driven off data that is digitized and publicly accessible. There are some cities where if you want to see parcel boundary data you have to physically go to the county planning office and spend hours finding the right paper document. This prevents a streamlined online process that can be affordable and accessible, and leads to an information gap. One of the things that sets Cover apart is that we have a free online tool where anyone can input their address and see what building options are available to them — it’s currently for residents of Los Angeles, but will expand to other regions as we scale.

Another thing that would help is building code that is more performance based rather than prescriptive. There are a lot of things that are funky in building code. For example, you would think electric water heaters would be viewed favorably as we move away from gas or fuel, and more people have solar, and yet builders are still encouraged to use gas heaters in the code. If gas cars are expected to be phased out of California by 2035, why aren’t we phasing out gas heaters as well, or at least making electric an option that can be easily permitted, especially when there are many energy-efficient electric options already available?

What are your “5 things I wish someone told me when I first started leading my company” and why? Please share a story or example for each.

1. Hire for trajectory, and try to understand the rate that someone will learn and grow rather than what they know today. We work with potential candidates on a small problem first before hiring them full time and see how it goes. We are trying to do something no one has ever done so we can’t hire people that know exactly how to solve this problem because no one has done that. We need people that can trailblaze with us.
2. If you think you need someone six months from now, start hiring immediately. It takes time to find really good people and then onboard them, so plan ahead. That way when you think you need them, they will be ready.
3. As a leader you will repeat yourself a lot. You will repeat your story to the team, to investors, to customers, to press, to potential candidates, to vendors you work with. You will repeat metrics internally. It feels inherently wrong and counterintuitive to repeat yourself so much, but it’s truly needed, and I didn’t appreciate that early on.
4. The importance of being able to communicate something very simply is incredibly valuable. Being able to do that comes from a deep understanding of what you want to communicate because then you know what is and is not necessary to include.
5. Iteration is everything. Break big problems down into small problems, solve them, and continuously iterate. At Cover we did that by asking ourselves what constitutes a “minimum home?” It happens to be a backyard home, and we learn a lot building a 500 square foot backyard home that we can later apply to a 2000 square foot home. In each Cover unit we actually roll in improvements — we are constantly iterating and no two homes are built the same exact way, even though they may appear so from the outside.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

We want to create a world where we’ve raised the bar around home building to such a high degree that the idea of a low-quality home is shocking. Everyone deserves to live in a thoughtfully designed, well-built home and we want that to be a reality.

Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. :-)

There are so many! I love meeting and learning from people solving all kinds of hard problems. If I had to pick one, I’d pick Elon Musk. Like Cover, Tesla and SpaceX are both changing big industries that haven’t seen much change in decades, and the problems we’re solving have many parallels: there’s a software, physical product design, and manufacturing component to the problem, the industries are regulated, and solutions require intense cross disciplinary collaboration. I’d love to learn from his experience.

How can our readers further follow your work online?

Readers can learn more about Cover at https://buildcover.com/. We are also on Twitter @coverbuild and Instagram https://www.instagram.com/coverbuild/.

This was very meaningful, thank you so much, and we wish you only continued success.