AI-Powered Kitchen Design Business Opportunity Discussion

Date: May 20, 2025 Participants: Gary Sheng, Danny Soos Location: Austin, TX Key Topics: AI-powered design services, contractor business opportunities, custom cabinetry

Overview

Gary Sheng met with Danny Soos in Austin to discuss Danny's new business concept following challenges with his previous company in the custom cabinetry space. Danny outlined his vision for an AI-powered design service that would enable contractors to offer comprehensive design-and-build solutions, increasing their earnings potential. The conversation explored business models, implementation approaches, funding strategies, and market opportunities, while also touching on broader topics including modular construction, charter cities, and the Austin lifestyle.

Key Points Discussed

Previous Business Challenges

• Danny's previous company faced what he described as a "hostile takeover" situation
• Competitors "hired most of the team" after showing interest in Danny's business model
• Danny has laid off the remaining team members after these challenges
• Mentioned issues with a German manufacturer, citing logistics problems and communication challenges with international partners

New Business Concept

• Core Value Proposition: Enabling small contractors to earn more money by offering design-and-build services rather than just installation
• Target Users: Small contractors who currently either introduce clients to designers/showrooms or ask clients to figure out design on their own
• Implementation Approach:
  • Three-step process: (1) Contractor visits home for measurements using guided app workflow, (2) Client consults with designer, (3) Contractor confirms and completes checkout
  • Potentially using AI-powered onboarding flow that works even for contractors with limited English or design skills
  • Presenting the offering as a "business in a box" or franchise-like model for contractors
• Technology Integration:
  • Considering a blend of room scanning technology and manual measurement verification
  • AI-assisted design tools to streamline the process
  • Focus on making the solution accessible to contractors with varying technical abilities

Market Validation

• Danny tested the concept earlier in the year and "got like 30 people to sign up within like six weeks"
• Noted that cabinetry has very high margins, making it an attractive starting point
• Claims no direct competitors are currently offering this specific solution in the custom cabinetry space
• Indicated the target demographic has historically been "design forward, higher household income" clients, but this model could expand the market

Business Strategy

• Planning to focus initially on empowering contractors rather than direct-to-consumer
• Sees potential to evolve into a two-sided marketplace over time
• Not concerned about sourcing suppliers, with a preference for U.S.-based manufacturing
• Intends to be price competitive while maintaining quality since contractors need competitive pricing
• Looking to spend a couple of months "working through the kinks" before fully launching

Funding Approach

• Planning to speak with VCs before developing extensive prototypes
• Considering exploring government funding opportunities (prompted by Gary)
• Taking a measured approach: "not be too attached to the outcome"
• Recognizes the venture is in "the very hard category" of startups but with significant potential upside

Additional Topics Discussed

Modular Construction

• Gary showed Danny a video of modular home construction by one of his mentors
• Discussed the tension between prefabrication efficiency and customization desires
• Noted that home customization creates "a lot of problems" but is desired since homes are "generally people's most expensive asset"
• Acknowledged that urban contexts often require working with existing structures rather than new builds

HUD and Government Opportunities

• Gary suggested exploring HUD (Housing and Urban Development) contracts
• Mentioned potential opportunities aligned with Trump administration initiatives
• Discussed non-dilutive government funding as an alternative to VC investment
• Referenced AI tools like Perplexity to research government contracting opportunities

Charter Cities and Urban Development

• Brief discussion of charter cities and new urban development projects
• Referenced Elon Musk's development activities in Bastrop, TX
• Discussed challenges of building entirely new cities versus adapting existing ones
• Danny drew a parallel to his business: "This goes back to why people have to fucking remodel. It's hard to just build fresh."

Personal Exchanges

• Both participants recently moved to Austin and discussed their appreciation for the city
• Danny moved to Austin in summer 2022 after spending a month there
• Gary mentioned living in Denver before moving to Austin about a month and a half ago
• Both expressed positive feelings about Austin's lifestyle and dating scene
• Discussed mutual connection Stefan, who is apparently very busy and stressed with work

Action Items and Next Steps

• Danny plans to attend USF the following week to network and discuss his concept
• Gary suggested researching government funding opportunities, particularly through HUD
• Potential follow-up regarding government contracts and non-dilutive funding
• Danny intends to spend "a couple of months" refining his concept before formal launch

Key Quotes

Danny Soos on Market Opportunity:

"The real need I think we can fulfill with the technology that's available is like, small contractors basically can earn more money if they can offer design and build. So they can offer, like typically you buy design and build separately. And basically, they're already doing the installation. They're already acquiring the customer. So we're just allowing them to basically make money on the products and help them win more jobs."

Danny Soos on Business Model Testing:

"This was like weirdly the easiest thing to sell. So we tried it like at the start of the year. And basically, we got like 30 people to sign up within like six weeks. So like it wasn't difficult at all."

Danny Soos on Implementation Approach:

"I think the key, I think the way to do it is to have like an AI-powered onboarding flow. So the contractor can go, even if they don't speak English super well, even if they don't have any interest in design, they can go into the customer's house, take them through like workflow, plug in measurements."

Danny Soos on Customization vs. Scale:

"I think there is like the whole ADU piece was like a big prefab thing. So my sense is really like, to start with, it's almost like I have to just focus on empowering contractors to earn more. That's kind of the way I see it. And then I think if I build up like a network of contractors, there's kind of like no real limit on what we could sell through that contractor network, right?"

Danny Soos on Business Specialty:

"The more you specialize, the more you can essentially market... I think we bring a lot of the same value as like franchise. So it's like a kind of full business in a box, you know?"

Danny Soos on Venture Approach:

"I'm just going to give it a couple of months probably to just work through the kinks and stuff, figure out like how it's going to work all that kind of thing. And like if it hits, it's like let's go, let's do this thing. And like I think just not be too attached to the outcome. That's like what I've learned."