Nick Donahue grew up immersed in the world of home construction. His father built houses for major developers, and his mother sold to large builders across the East Coast. This background made him keenly aware of a persistent problem: designing a custom home was prohibitively expensive and slow, forcing most people to settle for whatever standard designs developers offered.
After dropping out of NC State and moving to the Bay Area, Donahue started a company to solve this issue. That company, Atmos, went through Y Combinator and raised $20 million from investors like Khosla Ventures and Sam Altman. It used technology to streamline custom home design, employing a staff of designers supported by software. Atmos grew to 40 people, generated $7 million in revenue, designed $200 million worth of houses, and built 50 of them.
Despite these numbers, Donahue describes the venture differently. He says it became an extremely operational business, resembling a glamorized architecture firm that never fully replaced human designers. Then, when the Federal Reserve raised interest rates, clients could no longer afford the dream homes they had spent months designing. Nine months ago, Donahue shut Atmos down.
Rather than take a break, Donahue immediately started a new company. This venture, called Drafted, is now nearly five months old and represents the opposite approach of Atmos. It employs no designers and avoids operational complexity. Instead, it is an AI-driven software that generates residential floor plans and exterior designs in minutes. Users input their requirements, such as bedroom count and square footage, and the software produces five design options. They can then generate new sets until they find a suitable plan.
Drafted currently has six employees, four of whom came from Atmos. It has raised $1.65 million at a $35 million post-money valuation from investors including Bill Clerico, Stripe’s Patrick Collison, Jack Altman, Josh Buckley, and Warriors player Moses Moody. Bill Clerico, who was also an angel investor in Atmos, led the round. After a coffee meeting where Donahue explained the new company, Clerico was so convinced he repeatedly asked to invest until Donahue agreed.
The company’s pitch addresses a gap in the market. Currently, those wanting a custom home must choose between hiring an expensive, slow architect or buying a cheap, inflexible template plan online. Drafted aims to sit in the middle, offering customization at template prices, with complete plans costing between $1,000 and $2,000.
The economics are viable because Drafted built its own specialized AI model, trained on real house plans from homes that were actually built and permitted. This model considers practical constraints and is extremely cost-effective to run, costing two-tenths of a penny per floor plan compared to 13 cents for general-purpose AI.
Currently, Drafted only designs single-story homes, with multi-story and lot-specific features in development. A central question remains whether a substantial market exists for this service. Of the one million new homes built in America each year, only about 300,000 are custom designed. Most people buy existing homes or choose from tract homes offered by large builders.
Investor Bill Clerico argues this is a chicken-and-egg problem. By making custom design cheap and fast enough, he believes many more people will opt for it. Donahue compares the potential to Uber, which did not just replace taxis but expanded the entire market for on-demand car service. Clerico suggests there is no reason why everyone shouldn’t have a custom-designed home in the future.
However, it is possible most Americans will remain price-conscious buyers who accept what is readily available. The housing market has a long history of resisting disruption. There is also the question of a sustainable competitive advantage. When asked what prevents other companies from replicating the product, Donahue points to brand loyalty, citing his friend David Holz, founder of Midjourney. Despite new competitors, Midjourney’s user base remains loyal. Donahue believes that by moving quickly and satisfying customers, Drafted can become the definitive platform for home design.
Early signs show promise. Since opening to the public, Drafted has been seeing about 1,000 daily users, showing steady growth for such a young product. Most importantly, Donahue possesses valuable insight from his deep experience with the problem and the lessons learned from his first attempt with Atmos. This knowledge could provide Drafted with a significant edge as it moves forward.