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The latest in venture and technology in the real world, from construction-tech to design-tech. Two early-stage investors shooting the breeze about startups, founders and venture funding. We talk about design, construction, renovation, blue-collar, robotics and supply chains. Hosted by Patric Hellermann and Shub Bhattacharya, General Partners at Foundamental (www.foundamental.com).

Practical Nerds Patric Hellermann

    • Technologie
    • 5,0 • 2 Bewertungen

The latest in venture and technology in the real world, from construction-tech to design-tech. Two early-stage investors shooting the breeze about startups, founders and venture funding. We talk about design, construction, renovation, blue-collar, robotics and supply chains. Hosted by Patric Hellermann and Shub Bhattacharya, General Partners at Foundamental (www.foundamental.com).

    039 | Outcome-as-a-Service ⎟The playbook ingredients for startup founders in AECS

    039 | Outcome-as-a-Service ⎟The playbook ingredients for startup founders in AECS

    Exploring the rise of Outcome-as-a-Service models in construction tech, this episode dives into how AEC startups can disrupt the industry, build defensibility, and create significant value through innovative service-based approaches.

    (02:30) Outcome-as-a-Service models in AEC, inspired by IT giants

    (15:06) Construction industry's ripeness for tech-enabled service disruption

    (21:26) Strategic branding advice for AEC startups

    (32:48) Building defensibility through track record in AEC tech businesses



    In this episode, we dive deep into the emerging trend of Outcome-as-a-Service models in the Architecture, Engineering, and Construction (AEC) industry. We explore how these models are gaining traction, mirroring the success of IT services giants like TCS and Infosys. The conversation highlights the vast market potential for tech-enabled service businesses in construction, emphasizing the industry's readiness for disruption.



    We discuss the need for venture capitalists and founders to rethink traditional software approaches in the AEC sector, suggesting a service-first strategy that evolves into software development. The episode also touches on the timely opportunity created by labor shortages and increasing digitization in the industry, opening doors for innovative service models.



    Strategic branding is another key topic, with advice for AEC startups to position themselves more like traditional firms rather than tech companies to build trust and credibility. Finally, we delve into the importance of building defensibility through track record and reputation in AEC tech businesses, highlighting how this approach differs from the traditional VC playbook.



    Throughout the episode, we provide insights on market dynamics, investment strategies, and the unique characteristics of the AEC industry that make it ripe for innovation and value creation through tech-enabled services.

    • 49 Min.
    038 | The Hidden Pitfalls of Construction Tech | Why Startups Stumble in AEC

    038 | The Hidden Pitfalls of Construction Tech | Why Startups Stumble in AEC

    Uncovering the hidden reasons why construction tech startups often fail. Industry experts reveal common pitfalls, from the "Icarus problem" to distribution challenges, offering crucial insights for entrepreneurs and investors in the AEC sector.



    This week:

    (01:12) Common pitfalls for construction tech startups

    (12:45) The importance of distribution in AEC innovation

    (15:15) Misalignment between generic investor advice and industry realities

    (27:42) The risk of premature expansion in construction tech

    (37:40) Balancing technology adoption with real industry needs

    In this episode, we dive deep into the reasons why many construction tech startups fail. We explore the "Icarus problem" where founders overestimate their ability to revolutionize the industry without fully understanding its complexities. The conversation highlights the dangers of force-fitting hyped technologies without proper market validation, leading to impressive demos but little real-world traction.

    We discuss the obsession with SaaS models in an industry that often requires more tangible, outcome-based solutions. A significant focus is placed on the often-overlooked importance of distribution strategies in the AEC sector, with insights on why mastering distribution can be more crucial than having the most advanced product.

    The episode also touches on the potential pitfalls of following generic investor advice that doesn't align with the unique realities of the construction industry. We examine how pressure from investors can lead to premature expansion across categories or geographies, diluting a startup's focus and resources.

    Throughout the discussion, we emphasize the need for founders to balance technological innovation with a deep understanding of the construction industry's needs and operational realities. This episode provides valuable insights for both aspiring and established construction tech entrepreneurs, as well as investors looking to understand the unique challenges of this sector.

    • 44 Min.
    037 | Navigating the Seasons | Unraveling AEC Industry Cycles and Strategies

    037 | Navigating the Seasons | Unraveling AEC Industry Cycles and Strategies

    This week, we explore the diverse impacts of seasonality on the construction industry and related markets. We discuss how weather patterns, cultural observances, and fiscal calendars affect business operations and decision-making. We examine examples from various global regions and faith traditions, highlighting the challenges these seasonal cycles present. We also consider strategies for mitigating seasonality's effects and offer practical advice for founders and investors navigating these cyclical patterns in the AEC sector.



    (01:19) Seasonal patterns in AEC: monsoons, holidays, and religious observances

    (11:08) Construction software sales paradox during peak building months

    (20:16) Fiscal year-end budget rushes driving AEC technology purchases

    (35:55) Diversification strategies for AEC startups to counter seasonal fluctuations

    (40:18) Temperature-driven demand trends in energy renovation services



    In this episode, we dive deep into the complex world of seasonality in the Architecture, Engineering, and Construction (AEC) industry. We explore how various factors, from weather patterns to cultural observances, significantly impact construction activities and related businesses. The discussion covers the challenges faced by construction companies during monsoon seasons in countries like India, and how religious events such as Ramadan affect work schedules in Islamic nations.



    We also uncover a counterintuitive trend in construction software sales, where peak building seasons actually result in slower technology adoption. This leads to an interesting examination of how software companies are adapting their sales and marketing strategies to align with the industry's unique rhythms.



    The conversation then shifts to the phenomenon of fiscal year-end budget rushes, exploring how this creates unexpected spikes in AEC technology purchases across different global markets. We discuss the implications of these spending patterns for both buyers and sellers in the construction tech space.



    Recognizing the challenges posed by seasonality, we offer insights into diversification strategies for AEC startups. We examine how companies can develop complementary products or services, or expand into different geographic markets to maintain more consistent revenue streams throughout the year.



    The episode also touches on the seasonal nature of energy renovation demands, particularly in Western markets. We explore how temperature changes drive consumer behavior in this sector and discuss the challenges and opportunities this presents for businesses in the energy efficiency space.



    Throughout the discussion, we emphasize the importance of understanding these seasonal patterns for investors in the construction technology sector. We highlight how this knowledge is crucial for accurate valuation and setting realistic growth expectations for AEC startups.



    This episode provides valuable insights for anyone involved in the AEC industry, from startup founders and investors to established companies looking to navigate the complex seasonal landscape of construction and related technologies.

    • 47 Min.
    036 | Navigating the VC Landscape⎟How to Choose the Right Investor for Your (Constru-Tech) Startup

    036 | Navigating the VC Landscape⎟How to Choose the Right Investor for Your (Constru-Tech) Startup

    This week:

    (00:00) Avoiding harmful VCs that obstruct progress or give detrimental advice

    (05:31) Realistic expectations for value-add from investors

    (24:08) Identifying an investor's true strengths and expertise

    (26:22) Cautionary tale of ex-founder VCs providing misguided advice

    (34:28) Finding an enjoyable, long-term investor partner for the startup journey



    In this episode, Patric and Shub dive deep into the crucial factors founders should consider when selecting a VC. They emphasize the importance of avoiding investors who might hinder the company's growth or force harmful advice upon the founders, noting that a staggering 70-90% of VCs either contribute no value or actively harm the companies they invest in. The duo also discusses the need for founders to have realistic expectations about the value-add they can expect from investors, suggesting that trajectory-changing insights are rare and that founders should view the relationship as an intersection of timing and expertise.



    Patric and Shub also explore the importance of identifying an investor's genuine capabilities by directly asking about their superpowers and the specific situations in which they can provide exceptional value. They warn founders to be cautious of VCs who are former founders or operators of unicorn companies, as their past experiences may not always translate effectively to an investor role and could lead to misguided advice during times of adversity.



    The conversation also touches on optimizing angel investors by prioritizing those with strong networks within the startup's industry vertical or with specific expertise in company-building. Finally, Patric and Shub emphasize the significance of finding an enjoyable, long-term investor partner to make the startup journey more pleasant, given that founder-VC relationships often outlast the average marriage.

    • 43 Min.
    035 | Chasing Vertical Singularities | The Next 5 Years Of Foundamental and AEC-Tech | Streaming Our New Community Letter

    035 | Chasing Vertical Singularities | The Next 5 Years Of Foundamental and AEC-Tech | Streaming Our New Community Letter

    This episode is better enjoyed with the video experience!



    In this episode, Patric and Shub delve into Foundamental's updated mission for the next five years by streaming the VC firm's new community letter, focusing on backing vertical singularities in the construction-tech sector. They discuss the tremendous potential for disruption and growth in these unique, sector-specific opportunities and how Foundamental aims to drive innovation within the architecture, engineering, and construction (AEC) industry.

    The construction-tech sector is experiencing a notable funding inflection, with its share of venture capital increasing from 0.1% to 0.45% in recent years. Despite this growth, the industry still holds massive potential for further expansion and investment. Patric and Shub explore how Foundamental's early recognition of this trend positions the firm to identify and support the most promising startups in the space.

    Patric and Shub also discuss the key to success in construction-tech, which lies in founders who pursue unobvious opportunities that are apparent to industry insiders. They emphasize the importance of developing innovative solutions that address critical pain points and drive meaningful change within the sector.

    The episode also covers Foundamental's recognition of outcome-as-a-service business models as particularly well-suited for the construction industry, despite the prevailing herd mentality among venture capitalists. They discuss how construction companies are accustomed to purchasing services, transactions, and outcomes rather than just tools or software, and how embracing outcome-as-a-service models can unlock significant value and drive adoption more effectively.

    Lastly, Patric and Shub delve into Foundamental's investment philosophy in construction-tech, which is centered on seeking out category creators rather than backing category clones. They discuss how true innovation and disruption in the sector will come from startups that forge new paths and define entirely new categories, and how Foundamental's deep sector expertise and willingness to think outside the box enable them to spot the immense potential in these unconventional opportunities.



    Chapters

    (00:00) Fallacies in B2B Capital Allocation and Category Creation; what generic VC's are getting wrong (about AEC)

    (35:56) Uncovering Vertical Singularities: The Core of Early-Stage Investing

    (43:42) Earning Nuanced Knowledge and Strong Signals in Venture Capital

    (01:04:00) The Future of Early-Stage Investing in Construction Tech

    • 1 Std. 8 Min.
    034⎟Thesis: Why incumbents are FORCED to buy tech⎟Our 4-part answer⎟Exploding demand⎟ Shrinking productivity⎟Fleeing labor⎟AEC is service & project biz⎟Perfect storm for industry

    034⎟Thesis: Why incumbents are FORCED to buy tech⎟Our 4-part answer⎟Exploding demand⎟ Shrinking productivity⎟Fleeing labor⎟AEC is service & project biz⎟Perfect storm for industry

    This week:



    - Construction demand exploding globally, creating multi-decade tailwinds

    - Productivity paradox: construction worker output decreased 20% over 35 years

    - Aging workforce crisis: 20-25% of US construction workers nearing retirement

    - Global skills shortage: severe lack of skilled workers worldwide

    - Industry vulnerabilities exposed, creating perfect storm for construction-tech adoption



    In this episode, Shub and Patric dive deep into the factors driving the explosive demand for construction globally, including population growth, aging infrastructure, migration, and rising middle classes. They discuss the alarming productivity paradox in the industry, with construction worker output decreasing by 20% over the past 35 years, contributing to over 60% of inflation in Western markets. The aging workforce crisis is also explored, as 20-25% of the US construction workforce is nearing retirement, taking with them decades of experience and wisdom.



    The conversation then shifts to the severe global skills shortage, with a lack of skilled workers in both developed and emerging markets. This shortage exposes the vulnerabilities of the construction industry, which relies heavily on a per-diem, project-based business model. With demand surging and qualified labor fleeing, the industry finds itself in a precarious position, creating a perfect storm for construction-tech adoption.



    Shub and Patric explore the potential for AI and construction-tech to compensate for the fleeing qualified labor and boost stagnating productivity. They believe that the industry is at an inflection point, with technology emerging as a critical solution to the challenges faced. The episode concludes with a discussion on the generational opportunity for the AEC tech sector, as the construction industry stands at the dawn of a technological revolution that will reshape its future.



    Chapters



    (00:00) Introduction and Small Talk

    (04:45) Chapter 1: Exploding Demand in the Construction Industry

    (13:53) Chapter 2: Shrinking Productivity in Construction

    (24:57) Chapter 3: Opportunities for Technology and Innovation in Construction

    (36:14) The Potential of AI in the Construction Industry

    (43:23) AEC Tech: Addressing Challenges and Capturing Demand

    • 43 Min.

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