Why are there no startups in the real estate construction sector?
There&#x27;s a long list of construction startups who thought the industry was low-tech simply because everyone in it was dumb, and that they would be the smartest guys in the room who&#x27;d revolutionize everything. Those startups are pretty much all roadkill.<p>The construction industry&#x27;s fundamental constraint is that it manufactures products that are too big to fit in highway lanes. That means they can&#x27;t be shipped from a centrally-located factory to their final destinations. So they need to be built at the site, which means they need to be built with more labor-intensive methods (since it&#x27;s too expensive to build a capital-intensive factory for just one unit of output).<p>Building components that <i>are</i> small enough to fit in highway lanes, on the other hand, are manufactured in centrally-located, capital-intensive factories and shipped to their final destinations, just like cars or electronics. Think: boilers, doors, windows, air handlers, etc.<p>And, like cars and electronics, these building component products are manufactured by a small number of big companies, rather than a large number of small companies. The equilibrium capital investment and company size is much different when the product is small enough to be manufactured in a central location and shipped.