Reaction Housing raises $1.5 million to make cheap, reusable disaster relief shelters

March 6, 2014: 10:00 AM ET

The coolest new startup in Austin doesn't make apps.


FORTUNE -- In the midst of the partying, marketing, and mindless app launches of SXSW, an Austin startup that's actually really revolutionary will be showing off early prototypes to investors and advisors.

The startup is called Reaction Housing, and the product is called an "Exo Housing System." It's a shelter that's inexpensive, reusable, portable, and "smart." Designer Michael McDaniel conceived of the idea after Hurricane Katrina. He was surprised that the thousands of people displaced from their Louisiana homes were being evacuated 350 miles away in Houston, with garbage bags full of their most valuable possessions and sleeping on army cots at an indoor baseball field. It was neither secure nor comfortable. Eventually the refugees were given vouchers for hotels or RVs, which the government paid an average of $65,000 each for and were not reusable. (Some cost as much as $229,000, which is cheaper than a new house in many areas.)

"They spent more than the Coast Guard's entire budget on relief housing," McDaniel says. As he researched the situation, he was surprised to find that two basic human needs -- food and water -- were handled almost redundantly buy NGOs, but shelter was in short supply.

MORE: Bitcoin's digital tip jar: Microtransactions reborn

Meanwhile, in his day job at Frog Design, he'd designed a kiosk for the MD Anderson Cancer Center in Houston. Watching cancer patients react positively to the kiosk led to his lightbulb moment. After observing a patient, he says he realized that, "every aspect of her (visit) was orchestrated and designed, and she never knew it. She looked at her parents and was actually excited to go to a chemo treatment. She was like, 'This is amazing!' ... That's the power of design, to change people's lives for the better."

So, in the wake of Katrina, he designed the Exo as a sort of rigid teepee, consisting of two parts: a base and a dome. The Exos are 80 square feet and sleep four adults. They weigh less than 400 lbs, so that four adults can lift them and set them up without machinery. They're stackable, so that 28 can be transported on one semi-truck. They can be customized to attach multiple Exos together, and different base panels and internal fixtures can turn a unit into a kitchen or a bathroom. There is a software component, which gives the units "smart" features like digital door locks, and remote monitoring of temperature and fire detection. Best of all, they cost just $5,000 each, an amount the company arrived at by working with FEMA. The government's disaster unit spends around that much per month for a housing voucher for a family of four.

MORE: The bull market in vintage college pennants

The Exo is certainly unique amid the startup world's sea of look-alike social networking apps, payment processors, or data analytics solutions. If successful, it could completely change the way non-profits and governments respond to natural disasters. On the commercial side, it might even change the way festivals and events like Formula 1 races house their temporary populations, too, McDaniel says.

It could also totally belly flop, like many ambitious startups. McDaniel points out that he tried to give this idea to the government on numerous occasions and was turned down. Besides, hardware, industrial design, and large-scale products are some of the most challenging areas for fledgling startups.

But McDaniel believes Reaction Housing has all the right elements in place. In addition to ffVC, Reaction Housing has taken investment from Rothenberg Ventures, Riverwood Capital, MI Ventures, and angel investor Michael McCartney, bringing its total fundraise to $1.5 million. The company's advisors include Doreen Lorenzo, president of hardware startup Quirky; Kip Thompson, a former VP at Dell; and Michel Wendell and Risto Kuulasmaa of Pivot Partners. McDaniel did industrial design at Fd2s, an agency, before joining Frog Design as a principal designer.

But $1.5 million isn't much capital for such a big idea. McDaniel says the capital is to lock in the company's core team and line up manufacturing and a supply chain. In nine months to a year, the company will raise more funding to cover the costs of production.

MORE: Who will occupy RadioShack's retail desert?

McDaniel isn't worried about demand. Over the past 16 months, Reaction Housing has gotten inbound sales inquiries daily, from places like the United Nations High Council on Refugees and Rotary International, to commercial groups like oil and gas companies and festivals like Bonaroo or even South by Southwest. Last week, a woman called from a Rwandan orphanage -- flooding had displaced 200 children. "We get calls like that all the time and it's just heartbreaking because we're not in production yet," McDaniel says.

Since production won't start for another nine months, Reaction Housing plans to send prototypes of the Exos to displaced people around the world. For that, the company has launched an IndieGogo campaign, where every $10,000 raised will deliver a prototype Exo. The campaign will also serve as a pre-sale for individuals.

  • Google wants to automate your home (and your life)

    As the tech giant looks to become more than just a set of tools you use at work and on the go, smart engineering will be key. So will design.

    By Olof Schybergson

    FORTUNE -- Google has successfully developed technologies that make life easier for people at their offices or on the go. Think of services such as Search, Mail, and Drive. And apps, such as Maps and Play, are designed to ease the MORE

    Feb 12, 2014 1:42 PM ET
  • Scott Belsky, founder of Behance, joins Founder Collective

    Founder Collective is just what its name says -- a collective of founders, who happen to be doing deals together.

    FORTUNE -- After selling his startup, Behance, to Adobe (ADBE) for $150 million in 2012, Scott Belsky might have done what most successful founders do: leave and start another company. Instead, he's joining a venture capital firm.

    By his telling, Belsky is not a serial entrepreneur. He founded Behance in 2006 as MORE

    - Feb 3, 2014 8:16 AM ET
  • Videos: Up close with Apple's Jony Ive

    Charlie Rose has clips of Apple's chief designer in whatever size fits your schedule.

    FORTUNE -- We haven't seen this much of Jony Ive -- Apple's (AAPL) senior vice president for design -- since he was knighted by Princess Anne in 2012.

    Last week it was a book -- Leander Kahney's Jony Ive: The genius behind Apple's greatest products.

    Tonight it's a fundraiser at Southeby's for Bono's Project (RED).

    And on Friday it was MORE

    - Nov 23, 2013 11:20 AM ET
  • Netflix refashions itself for the small screen

    With a content strategy well underway, the media company takes a hard look at how its core product appears in the living room.

    FORTUNE—America's obsession with Netflix goes well beyond recent hit shows like House of Cards and Orange is the New Black. It spans genres and generations, and accounts for 1 billion hours of viewing a month—nearly one third of all downstream Internet traffic.

    Now Netflix (NFLX) wants to ensconce itself even further in MORE

    - Nov 13, 2013 12:01 AM ET
  • The most popular design firm you've never heard of

    He may not have the celebrity of Jony Ive, but when it comes to design, the tech world knows to seek out Fred Bould.

    FORTUNE -- Fred Bould is far from a household name, but his small industrial design firm is behind some of the hottest gadgets currently on the market. You'd never guess it by visiting Bould Design's offices -- the small team works out of a nondescript building right MORE

    - Oct 30, 2013 1:12 PM ET
  • Business needs to practice the tao of simplicity

    To succeed, companies of all types have to learn how to help simplify consumers' lives.

    By Doreen Lorenzo

    FORTUNE -- Every day we are inundated with ever more complex technologies in the products and services we are offered. Yet what we really crave is a return to simplicity and back-to-basics minimalism in design, form, and function.

    Invoking the concept of simplicity might sound like heresy at a time when technology is generally MORE

    Aug 1, 2013 2:48 PM ET
  • Even business brands need effective UX

    Traditionally the province of consumer-oriented companies, user experience design has become more important for B2B companies.

    By Doreen Lorenzo

    FORTUNE -- The clear separation between consumer brands and business-to-business brands is fast disappearing, with profound implications for how companies plan, develop, design, and market their products and services.

    In many ways, this evolution was inevitable. Our smartphone, tablet, and app-enabled age raised customer expectations. Whatever we do at home, at play, or MORE

    Jun 18, 2013 11:18 AM ET
  • What great design can do for data

    Companies are waking up to the power of design to make data meaningful for customers and create better relationships with them in the process.

    By Olof Schybergson

    FORTUNE -- Companies that have long believed in the virtues of hoarding data are now looking for ways to use it to the benefit of their customers. Big data presents a massive opportunity for organizations across industries to become more transparent and trustworthy, get MORE

    May 15, 2013 6:45 AM ET
  • Manufacturing 2.0: The rise of 3-D printers

    Three-D printers are coming to a desktop near you. Should designers and factories be worried?

    By Johnny Ryan, contributor

    FORTUNE -- Three-dimensional printing is pretty wacky sounding. Imagine hitting "print" on your home computer and instantly manufacturing any number of plastic, titanium, clay, or silicone objects -- a pair of earrings, say, or a new toy for your kid.

    Corporations already use 3-D printers to make product prototypes before embarking on mass manufacturing. MORE

    May 23, 2011 5:00 AM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.