This CEO—who has a PhD in computer science from MIT—plans to build the Amazon of residential construction

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Homebuilding has long been considered one of the least innovative sectors in the U.S. economy. In fact, consulting giant McKinsey finds that construction, as a whole, is the least digitized industry in the world.

Salman Ahmad, CEO and co-founder of Mosaic, believes this lack of innovation and digitization makes residential construction ripe for disruption.

Founded in 2017, Mosaic, a general contractor, has a construction pipeline of around 6,000 build-to-rent housing units in Arizona and Texas.

For a typical Mosaic build-to-rent community, subcontractors make between 25,000 to 30,000 trips to the site. Not only is Mosaic at the forefront of the build-to-rent trend, but they’re also analyzing each of these trips to identify ways to innovate and speed up the process. Mosaic aims to not only revolutionize the speed and efficiency of homebuilding but also to eventually allow other builders to leverage Mosaic’s software and subcontractor network to reimagine their own processes.

To learn more about Mosaic’s vision, ResiClub conducted a Q&A with Ahmad, who earned his Ph.D. in computer science from the Massachusetts Institute of Technology.

Q: What's your assessment of the current housing market landscape? And what do you expect the housing market to look like over the next year? 

“The housing market has been slow since the second half of 2023, but macro supply/demand factors will continue to influence positive momentum in the market for well-located communities. We believe interest rates, investor demand, and the upcoming election are the primary influencers that will get the market back on track in the near term. As we move into 2025, we expect a significant uptick in new project activity, particularly in the second half, as the bulk of new rental home supply started in 2021/2022 is absorbed, and rent growth begins to trend upwards again.” 

Click here to view an interactive of Mosaic’s Arizona activity

Q: Tell me more about Mosaic. What’s the company's business model, and what economic problem are you trying to solve? 

“Mosaic is a construction-technology company.

As a construction company, we build houses. As a technology company, we build software that makes us better at building houses.

Our software, called Mosaic Hub, is designed to augment the existing supply chain and labor force (instead of trying to replace them) to create more productivity through better approaches to contracting, scheduling, and payments. 

We are primarily focused on build-to-rent housing projects for our customers, who are predominantly large real estate developers. Together, we are working to bring more housing stock online faster.”

Q: It didn’t happen overnight, but by analyzing millions of data points bit by bit, Amazon was able to completely change how—and how fast—Americans get goods delivered to their homes. It sounds like you want to do something similar in homebuilding. Walk me through how you’re analyzing these projects—and how, over time, you hope to offer a service to other developers that would allow them to tap into your subcontractor network?

“The analogy between Amazon and Mosaic is interesting in two ways: 

1. We both are very focused on data to augment operations and fuel our obsession with finding ways to deliver value to our customers.

2. We both have a specific metric we are uniquely focused on—for Amazon it was delivery time and for Mosaic it’s payment time. 

The common denominator for both of these is starting with a rich data platform, something that is less common in construction than other industries. Through Mosaic Hub, we deconstruct our projects with very high granularity in which we model and track every single trip that our subcontractors make to our sites. We’ve recently begun to accumulate a critical mass of this data and, similar to Amazon, our plan is to use this for analytical purposes to find ways to save time and money for our customers, avoid issues in the field, continually get better at what we do and at larger scales, and allow our subcontractors to become more profitable.

I also want to take a moment to specifically discuss payment times. For Amazon, a huge inflection for them was getting to Free Two-Day Shipping with Amazon Prime. This not only delivered huge value to customers but also spurred significant economic growth, changes in consumer behavior, and was a forcing function for Amazon to deeply innovate in technologies that spanned their entire operation. It was their north star.

For Mosaic, our north star is paying our trades faster. We aspire to do so within 24 hours of them completing their work. We believe this will have wide reaching impacts on the industry. With faster payments, subcontractors would need less working capital allowing them to grow, incentivize high throughput of work, and be a forcing function for the industry to adopt more granular data controls. 

Like two-day shipping, this is not a problem that can be solved by us unilaterally. Amazon needed deep integrations with logistic partners and merchants. So too does Mosaic need deep integrations with lenders and developers. 

By enabling faster payments, we are creating a critical piece of economic output, which is very similar to Amazon’s goal of faster delivery.”

Q: You have a Ph.D. in computer science from MIT. Why did you choose to go into the residential construction space? After all, over the past several decades, residential construction has developed a reputation for being less innovative compared to other sectors of the economy. 

“For me, it’s about mission orientation. 

During graduate school, my research was focused on Human Computer Interaction and Programming Languages. I was specifically focused on ways in which new programming methodologies could improve automation of “physical” workflows instead of just digital processes. 

When I graduated, I wanted to find ways to commercialize that. But I quickly realized that instead of creating a solution and then trying to find a problem I could apply it to, I should focus on a problem that was meaningful and work towards a solution. That resulted in the mission statement that came out of that, which fuels Mosaic today: ‘Create places people love and make them widely available.’

While I was primarily motivated by our mission, I will also say that the construction industry is a good industry full of entrepreneurial opportunities - large markets, high fragmentation, the ability to establish strong moats, and opportunities to reward innovative approaches.

There’s a lot of good business reasons why Mosaic is in the residential space, but I think the true calling for me was more of a mission orientation.”

Q: When Mosaic launched in 2017, you were primarily focused on general contracting and constructing homes in the for-sale market. In 2022, you started building homes for the build-to-rent (BTR) market. In total, how many homes have you constructed in both segments? And why did you decide to enter the build-to-rent space?

“Our entrance into build-to-rent was a convergence of a few factors that all aligned around the same time frame—starting with a lot of expressions of a new way of approaching the space. There were market forces at play with an increased economic demand for BTR housing that we were tracking. We were also looking at finding customers who were willing to take bets on a new approach to residential construction. And as a business, we were looking to add additional product types to our repertoire. Today, we’re coming up on a huge milestone for the company at our 1,000th home completed—which includes 550 for-sale homes (all Dept of Energy “Zero Energy Ready Homes”) and 450 BTR homes.”

Between 2003 and 2020, the share of single-family homes under construction that were built specifically as rentals rose from 2.7% to 4.5% as the build-to-rent business model gradually gained momentum. The easy-money era during the pandemic, with cash-flush Wall Street firms seeking assets to buy, further fueled this growth. By 2022, 6.9% of single-family starts were built-to-rent, and in 2023, a record 9.5% of single-family starts were built-to-rent. Looking ahead to the next decade, what do you expect to happen in the build-to-rent market?

“We expect BTR to continue to grow market share as a percentage of the overall housing market. This is influenced by the increasing pace of adoption of the product type at scale. In the early innings of BTR, say, ten years ago, BTR developers were trying to raise debt and equity to capitalize a product type that hadn’t been built before, entitle it in municipalities that didn’t have an existing zoning standard, insure it with a risk market that hadn’t underwritten it before, build it with general contractors who couldn’t determine if it required a commercial or residential construction code, and then rent it to tenants who we’re used to seeing traditional multifamily, for-sale, or scattered single-family rentals with an unsophisticated landlord opportunities. Now that the product has gone mainstream, most of these stakeholders are comfortable moving projects such as these through the development process and prospective tenants know what to look for when they want to rent a home in a professionally managed community. This is happening broadly in the Sunbelt and some parts of the Midwest, and it’s only a matter of time before the rest of the country adopts BTR as a mainstream residential asset class.”

Q: What do you think is the biggest long-term headwind facing the U.S. housing market? And what do you think is the biggest long-term tailwind facing the U.S. housing market?

“When you look at the United States from a global economic perspective, our biggest tailwind is that we have a very strong, vibrant relative economy. Irrespective of what happens in the next 2 years, we are hopeful that there’s going to be strong economic gains over the next 10.

Yet, there is a housing shortage in the U.S.—not an induced demand situation but legitimate demand taking place. This bodes well for participants in and around the housing market. 

The biggest long term headwind facing the US housing market is the fact that it's challenging to get all the stars to align. Housing is an inherently collaborative endeavor that requires a lot of stakeholders to come together. We can't just have an executive make a decision and increase production by 30%. 

Right now, we are facing challenges around interest rates, mortgages, and broader macroeconomic concerns. But once these are resolved, new challenges could arise around labor shortages, entitlements, infrastructure, water rights, and excessive industry regulations which amongst other things can specifically limit developable land.

The same things that make the United States an incredible economy—the free market, private land ownership, vibrant financial sectors, diversified industries—have resulted in an industry that is incredibly specialized. 

In housing, a lot of pieces have to fall into place to get things done.”

6.61% —> The average 30-year fixed mortgage rate today, as tracked by Mortgage News Daily

255 bps —> The “spread” today between the 30-year fixed mortgage rate and the 10-year Treasury yield

7.62% —> The average 30-year fixed mortgage rate on the same day last year (October 9, 2023)