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welcome to Deerwood Realty YouTube channel I'm John Schink founder manager broker of Deerwood Realty in St Louis Missouri so I just kind of wanted to go through you know how I look at the news in real estate like how it how it happens today we're just G to we're just going to do that so um basically I get started I look at Twitter I look at a bunch of other sources bunch of news aggregators and just kind of go through things and today what came up was kind of interesting and it started with this tweet right here from Lance Lambert who has a uh has his own deal right now he it's a residential Club is his um his Venture and so it says property technology startup Viv a Pioneer in modular construction technology which has raised a total of 600 million is on the verge of closure VV informed its staff of the impending closure on Sunday and so I was like hm modular construction I'm I'm somewhat familiar with modular construction um we looked into it years ago uh for a development and it didn't work out uh and then I looked at the total of 600 million and I said to myself man they got 600 million and failed like what is wrong with these people like I I mean so then let's let's take a look so then I went to the website and I just want to check and see if you guys can see yeah you can see it so what did they do here they I mean it looks like they got a wall and then it's got a nice little house little modern house right and uh you know so they build walls right it says to reimagine the home we reinvented the wall well I mean that that got you $600 million I mean that must be a pretty cool wall right a home that works for you oh look it's we've got developers we're extending our presence beyond the barrier to vibrant neighborhoods in California and Texas I would say this for

startups for startups is there any place other to to go than like California it just seems like they have they have it right like if you can sell something you can sell it in California so look they they just basically they read it a wall so okay right all right I mean that's that's that's you need a a hook when you're trying to sell something right and their their Hook is we learned how to build a

wall seriously let's look at the article it says after raising 600 million prop Tech startup Viv is on the verge of closure also obviously if you can build a new wall and somehow get you know words in there like uh technology and real estate put those together those are good for getting funding as well it says with over 400 employees at its peak including 100 in Israel VI informed staff of the impending closure on Sunday attributing it to the abrupt cancellation of a capital raising initiative so they had raised $600 million and that wasn't

enough now I know like you know some of the some of it has to go to salaries and right I mean it's not they didn't just nobody handed them just a $600 I'm sure or $600 million I'm sure there was some sort of uh you know tranches they couldn't spend the money unless they did this and that right no one would just give you $600 million to build a wall we Viv VI was in the process okay uh yeah was in the process of raising Capital which was canceled at the last minute in light of the current market situation in Israel and globally it was not possible to secure additional funding the company wrote a statement therefore the current entity of the company will be closed in the coming days and transferred to an asse who will be in charge of the assets and their sale in the US in the meantime until a buyer is found for the assets the company's operations will continue at this stage the company's employees in Israel will continue to work so I guess not so much in California but still in Israel and it says the current entity of the company so I think they'll be back just as a different name and as soon as they get someone to Pony up a couple hundred million dollars to do this again it says it's estimated that there are currently negoti it's estimated that there are currently negotiations taking place with a leading company to acquire Vives activity and assets should these negotiations not prove to be fruitful all the company's employees will be fired and the company will be shut down well I mean there's always this buyer right if you ever like have you ever been involved in like baseball do you watch baseball like there's always this free agent right and then there's this always the secret bidder that comes in at the last minute and then that just jacks the price up even higher got to have a secret bidder this is the same thing there's well I remember one time Amazon was going to buy oh Amazon was going to buy peltin yes right CU that's what that's what Amazon needs is a expensive Fitness bike like that's that really fits in well with their portfolio of things I mean it just it is what it is so uh as part of its activity in the US ve acquired properties in California financed through debt from various lenders and bankers okay well fine well I thought now now here's the where I don't I don't know like are these are these properties for like construction like to build your plant or are these for um you know like to build houses to proof of you know proof of concept what are we doing here says in a recent letter to these lenders Viva expressed its inability to continue interest payments due to the challenging economic environment and declining real estate prices particularly in California so they got 600 million they borrowed against a bank for property and then they couldn't even pay the interest payments the company has halted payments until the properties are sold and claims that has been unsuccessful and striking deals to the to the difficult real estate market conditions look if you couldn't make it in the last two years in residential real estate like like you're never going to make it and by the way you should see a stream of these things happening like like there was so much free money in real estate for these types of activities prop Tech that you know we'll we'll start to see these things turn ugly soon I just want to double check something okay where we go it says Viv which laid off 100 employees last November raised 400 million series D and reached unicorn status in March 2022 to grow it system to which leverages a preparatory panelized approach to fully cladded walls complete with mechanical electrical and plumbing Solutions you said at the time the funding would be used mainly to expand its operations in the US so it raised 400 million to raise its expand its op its operations and just that didn't work vves 100 million through the televis stock exchange tase up platform in March 2021 so there's so there's 400 plus 100 is 500 I don't know where they got the other 100 million how do you burn through that much money my God Viv was founded in 2008 it says by some fellas are emit heler Emy aami and DNA AKA heler and aami are also behind Israel founded real estate platform really which ceased operations last September so these guys have a a history of of building up businesses and they fail at times so this isn't unusual but I wanted to go into it a little bit more in depth so let's read some tweets okay this one here this this was in response to Lance Lambert's original tweet it says these startups fail for one insurmountable reason inputs and outputs are subject to Transportation costs it's really this simple inputs need to be transferred to the factory outputs need to be transported to the market this is far less in efficient than transporting inputs Sticks and Bricks to the construction site and assembling into the output building I just saved you a billion dollars in heartache look when I was in school and when we talk talked about development everybody in everybody in the class wanted to build container ship you know those containers they wanted to build houses with those that's such a great idea it's so green and so helpful and it's like I don't want to live in a container but whatever and I mean when I was looking at the development back in the mid 2000s we were going to use um what we called modular home so it was like basically what used to be um what used to be like an RV company turned into like they were building houses uh mobile homes like but they were but but they stopped building mobile homes and they built like higher quality homes and you would ship them down the highway in halves and the idea was is you could get a better product that way than if somebody built it on site arguably though it was arguably I don't I don't know that that's true because once you factored all the things you needed to to to drive that thing to the the property you're right around the same price as you were if somebody just built it I mean that was then so I've always been a little skeptical but remember when you need to get private Equity money you need to have a story and then you need to hope that the people that are investing in your story have no idea what's going on with like that industry let's look at another one it says modular guy here the problem with Innovative and creative companies like V and many others that are somehow getting a lot of money from VCS and then failing no no that's that's there not somehow getting a lot of money I know how they're getting the money you basically need to find people that have no idea about anything related to the product and then just give them like a story so like look we're we're building a wall a new wall oh well a new wall that seems like something we should invest in uh is there absolute an incorrect focus on making a home techy and green rather than cheap first there is something to that they buy robots they hire full staff in an expensive location they focus on using more expensive recycled materials or spending a lot in R&D so do we know if we bought robots I don't Know full staff and expensive location they were in California focus more on using expensive recycled materials or spending a lot in your R&D uh I don't know this stage will come though either naturally occurring improvements in the design or materials through through government subsidies through thirdparty Acquisitions but not yet now we just need two for homes faster that are strong and deliver the living experience people expect today okay so what he's saying is we can't be doing green he says this is why I build products outside of the US and deliver them it saves money for the developer for the homeowner when a design needs to change we just change it no robots to program look everyone wants to be the next Tesla I totally get at me too but we need to be realistic about the end result in the buyer we can drool over nice sounding prop Tech Concepts once we have added a decade or so of modular products on the market to learn from and we've been doing this for 11 years these companies are spending too much money on on things that are and are not focused on the core requirement of a home that's cost I I I kind of agree with that I do not care like if I want to build a 100 houses okay I don't care if they're green at all not at all I mean if the building code requires it fine but I mean I don't care I want a cheap house that I can make a profit off of selling if I'm a developer okay that's at the end of the day I I don't care if if I can and what's been going on in America for the last 20 years if I can argue that something's green and some idiot will pay more for it well then that's that's fine I'll do that and I and I suspect that a lot of that is is going on where people say say I will pay more for green product because I believe that you know we've got issues in the world that's fine that but that's marketing that's not necessarily you know fact you know anyway that's that one now I got another one here it says I followed the modular prefab Factory built housing space for years it's an unmitigated disaster it feels that way companies like this one have raised hundreds of millions but somehow managed to deliver products that are more expensive and lower quality than siteb Built Homes there's no value proposition so there's no demand as real estate pointed out companies in this space all want to be the Tesla of housing when they should aspire to be the Honda of the80s delivering a more affordable highquality alternative I agree with that affordable and high quality don't have to be uh against each other right you can have you can have an affordable and high quality product it doesn't necessarily have to be green this is my opinion so I you know I'm L to 3D printing I I'm I'm very interested the idea that you can build a house with 3D printing seems great um I've I don't like the way the houses look so far but whatever um I I like the idea I I I'm not of the narrative that we don't have enough housing in the United States I'm I'm not having enough housing Supply um and just look at any of your major downtown areas or suburbs uh from those major areas in the bad parts of town and tell me that there's like not enough housing Supply there's always plenty of housing Supply the problem is is you know the situation isn't great for what ever reason I don't I don't even know why we allow things to occur um but anyway I think that this product is a great idea I mean the idea is great it's sellable and let me tell you let me show you another one that I thought was interesting this is boxable have you seen boxable see how they're I don't know if you can see it on my screen oh yeah you can so see they bring it in a box and they just put it together on site not hard at all right it shouldn't be a problem and it's it's high quality in theory everything fits in there I don't know my friend showed me that a long time ago he's like I'm I'm investing in this because I think it's really the future and I said okay knowing what I know about this particular space I don't know why it doesn't work like it should but it [Music] doesn't I mean it's like it doesn't seem that difficult um but anyway I just you know if some if you guys have some thoughts on this type of construction and why it doesn't work put it in the comment section I will actually I will actually read them um and you know I I do think that if you could build a product that was of high quality uh and came to Market and affordable it it should work but it doesn't and one one person says it's because of the transportation cost which I can understand what do you think I don't know I thought it was interesting hopefully you do too with that I'm going to head on out thank you for watching thank you for listening and I will catch you on the next one