This founder just secured funding for a second attempt to solve the same problem: designing an affordable custom home

Nick Donahue’s parents were homebuilders, which meant he spent his childhood hearing about the US construction industry. His father built homes for major developers, and his mother sold to large construction companies across the East Coast.

Donahue was particularly interested in why designing a custom home cost a fortune and took so long, and why most people had to settle for whatever developers offered that year. So, when he dropped out of NC State and moved to the Bay Area, he eventually did what you might expect a San Francisco dropout to do: He started a company to fix it.

This effort, Atmos, went through Y Combinator, It raised $20 million From investors like Khosla Ventures and Sam Altman, they tried to use technology to simplify the custom home design process. It had designers on staff who worked with clients while the software handled the backend. The company has grown to 40 people, generated $7 million in revenue, designed $200 million worth of homes, and built 50 homes.

This all sounds great until you hear Donahue describe it. “This has become a very operational business,” he told me on a Zoom call last week. “Sort of like a glamorous architecture firm.”

In other words, it never replaced humans. Then the Fed started raising interest rates, and suddenly clients who had spent months designing their dream homes couldn’t afford them anymore. Nine months ago, Donahue shut it down.

This is where most founders take a break, and maybe write a few posts on LinkedIn about what they’ve learned. Instead, Donahue regrouped and started another company.

It was drafted It’s now nearly five months old, and it’s everything the Atmos wasn’t. There are no designers on staff. There is no operational complexity. Just an AI-based program that creates residential plans and exterior designs in minutes. You tell him what you want — bedrooms, square footage, whatever — and he comes up with five designs. Don’t like them? You can create five more and keep going until something clicks.

Currently, Drafted has six employees, four from Atmos, and has raised $1.65 million at a post-money valuation of $35 million from Bill Clerico, Stripe’s Patrick Collison, Jack Altman, Josh Buckley, and Warriors player Moses Moody.

Clerico led the round because he was also an angel investor in Atmos, and watched Donahue Housing come into being despite rising interest rates. When Donahue told him about the new company over coffee, Clerico didn’t need convincing. “Nick, please take our money,” he apparently said repeatedly over the course of two weeks until Donahue agreed.

The pitch is clear and straightforward. Right now, if you want a custom home, you have two options: hire an architect (expensive, slow), or buy a sample plan online (cheap, inflexible). Draft is placed in the middle, offering customization at template prices. The full plan costs between $1,000 and $2,000.

The economy works because Drafted built its own AI model, trained on real home plans from homes that were built and received permits. Practical limitations have been taken into account, and Donahue says it costs almost nothing to run the specialized model: two-tenths of a penny per floor plan, compared to 13 cents for general-purpose AI.

The draft only works on single-story homes at the moment, but there are more multi-story and more specific features coming. The bigger question is whether there’s actually a market for it.

The numbers are not huge. Of the million new homes built in America each year, only 300,000 are custom-built. Most people buy existing homes or choose any of the homes offered by major builders.

Clerico’s argument is that this is a chicken-and-egg problem. Make custom design cheap and fast enough, and a lot of people will do it. Donahue compares it to Uber, which has not only replaced taxis but made on-demand car service something almost everyone uses. “There’s no reason in the future why everyone can’t have a completely custom-designed home,” Clerico says.

Or perhaps most Americans will remain price-conscious buyers and take what is available. The housing market has a long track record of… Reject disruption.

There’s also the “trench” question. When asked what prevents an LLM player or even another vertical player from buying similar data sets and creating the same product, Donahue talked about branding, pointing to his friend David Holz, who founded AI-generated video and image generation company Midjourney. Despite the slew of new image generation models being launched, use of Midjourney is barely moving, Holz told Donahue; Her clients keep coming back to create AI images.

Likewise, Donahue believes that if they move fast enough and satisfy enough clients, Drafted could become the place for people to design homes.

Time will tell. Since opening to the public, the outfit has begun seeing around 1,000 users daily. Not huge numbers, but they show steady growth for such a young product.

Meanwhile, Donahue has something very valuable that could give Drafted an edge: deep knowledge of the problem and insights derived from actually solving it once.

Pictured above are the drafting staff, from left to right: Martinas Posius, Albert Chiu, Martina Schiro, Carson Ball, Steven Chu, and Nick Donahue