Nick Donahue’s parents were in the business of building houses, which means he spent his childhood hearing about the U.S. construction industry. His dad built homes for major developers, and his mom sold to big-box builders across the East Coast.
Donahue was particularly interested in why designing a custom home cost a fortune and took forever, and why most people had to settle for whatever the developers were offering that year. So when he dropped out of NC State and moved to the Bay Area, he eventually did what you might expect a college drop-out to do in San Francisco: he started a company to fix it.
That effort, Atmos, went through Y Combinator, raised $20 million from investors like Khosla Ventures and Sam Altman, and tried to use tech to streamline the custom home design process. It had designers on staff who worked with clients while software handled the back-end. It grew to 40 people and $7 million in revenue, and they designed $200 million worth of houses, and built 50.
All that sounds great until you hear Donahue describe it. “It became this extremely operational business,” he told me on a Zoom call last week. “Kind of like a glamorized architecture firm.”
It never quite replaced the humans, in other words. Then the Federal Reserve started jacking up interest rates, and suddenly clients who’d spent months designing their dream homes couldn’t afford them anymore. Nine months ago, Donahue shut it down.
Here’s where most founders would take a break, maybe write a few LinkedIn posts about what they learned. Instead, Donahue regrouped and started another company.
Drafted is now nearly five months old, and it’s everything Atmos wasn’t. No designers on staff. No operational complexity. Just AI-driven software that generates residential floor plans and exterior designs in minutes. You tell it what you want – bedrooms, square footage, whatever – and it spits out five designs. Don’t like them? You can generate five more and keep going until something clicks.
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Right now, Drafted has six employees, four from Atmos, and it’s raised $1.65 million at a $35 million post-money valuation from Bill Clerico, Stripe’s Patrick Collison, Jack Altman, Josh Buckley, and Warriors player Moses Moody.
Clerico led the round because he’d also been an angel investor in Atmos, and had watched Donahue will houses into existence 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 a two week period until Donahue agreed.
The pitch is straightforward. Right now, if you want a custom home, you’ve got two options: hire an architect (expensive, slow), or buy a template plan online (cheap, inflexible). Drafted sits in the middle, offering customization at template prices. A complete plan costs between $1,000 and $2,000.
The economics work because Drafted built its own AI model, trained on real house plans from homes that were built and passed permitting. Practical constraints are considered, and Donahue says the specialized model costs almost nothing to run: two-tenths of a penny per floor plan, compared to 13 cents for general-purpose AI.
Drafted only does single-story homes right now, but multi-story and lot-specific features are coming. The bigger question is whether there’s actually a market for this.
The numbers aren’t huge. Of the million new homes built in America each year, only 300,000 are custom designed. Most people buy existing homes or pick from whatever tract homes the big builders are offering.
Clerico’s argument is that this is a chicken-and-egg problem. Make custom design cheap and fast enough, and many more people will do it. Donahue compares it to Uber, which didn’t just replace taxis but made on-demand car service something that nearly everyone uses. “There’s really no reason in the future why everyone shouldn’t have a totally custom designed home,” Clerico says.
Or maybe most Americans will keep being price-conscious buyers who take what’s available. The housing market has a long track record of rebuffing disruption.
There’s also the “moat” question. Asked what’s to keep an LLM player or even another vertical player from buying similar data sets and creating the same product, Donahue talks about brand, pointing to his friend David Holz, who founded the video and image generating AI outfit, Midjourney. Despite the plethora of new image-generation models being launched, Midjourney’s usage barely moves, Holz has told Donahue; its customers keep coming back to make AI images.
Similarly, Donahue thinks if they move fast enough and please enough customers, Drafted can become the place for people to design houses.
Time will tell. Since opening to the public, the outfit has begun seeing about 1,000 daily users. Not huge numbers, but they show steady growth for such a young product.
In the meantime, Donahue has something pretty valuable that could give Drafted an edge: deep knowledge of a problem and the insights gleaned from taking a crack at it once already.
Pictured above, the Drafted crew, left to right: Martynas Pocius, Albert Chiu, Martina Cheru, Carson Poole, Stephen Chou, and Nick Donahue
