Practical Nerds Patric Hellermann

In this episode, Patric and Shub discuss the potential of Europe as a breeding ground for category creators in the construction technology (ConstruTech) space. They explore the unique characteristics of different European countries and how they contribute to the development of innovative startups. They highlight the importance of understanding the market context and the specific needs of customers in each country. The conversation also touches on the growth trajectories of Germany and France, and how their economies and construction industries differ. Overall, the episode provides insights into the opportunities and challenges of building ConstruTech companies in Europe. The conversation explores the characteristics of French founders and the fundraising dynamics in the French venture ecosystem. It highlights the natural inclination of French founders to be close to their customers and develop strong relationships. The French VC ecosystem has matured slower than the British and German ecosystems but has solidified itself from within, with successful French founders reinvesting in other French founders. The market conditions in Europe, particularly in compliance, AI safety, energetic renovations, and construction robotics, make it a prime breeding ground for category creators. Europe is not a poor version of Silicon Valley but has its own unique strengths and opportunities.



Chapters



(00:00) Europe: A Breeding Ground for ConstruTech Category Creators

(11:16) France's Optimism and Structural Changes

(25:57) Opportunities and Challenges in European ConstruTech

(32:40) The Maturation of the French VC Ecosystem

(49:39) Europe: Not a Poor Version of Silicon Valley

This week:



(01:17) - CAD wars: The untapped potential for contractor-focused solutions

- Schneider Electric's acquisition of Bentley Systems and industry implications

(16:19) - Opportunities and challenges in building "CAD for Contractors"

- Incumbent CAD players' struggles to adapt to contractor needs

(28:26) - The future of BIM: Integration, collaboration, and progressive UX



In this episode, Patric and Shub dive deep into the world of CAD solutions tailored specifically for contractors in the construction industry. They discuss the untapped potential of contractor-centric CAD tools and the limitations of existing solutions in meeting the unique needs of contractors, particularly in the estimation and bidding process. The conversation also touches on the recent acquisition discussions between Schneider Electric and Bentley Systems, signaling the growing interest of industry giants in construction-tech for energy infrastructure.



Patric and Shub explore the opportunities and challenges in building "CAD for Contractors" solutions, which enable easy 3D BIM model enrichment and detailing for accurate quantity take-offs. They highlight the need for user-friendly tools that allow contractors to enrich models with minimal training and effort. The discussion also delves into the struggles of incumbent CAD players to adapt to the specific requirements of contractors, such as browser-based accessibility, mobile compatibility, and intuitive user experiences.



Looking to the future, the hosts share their insights on the evolution of Building Information Modeling (BIM) in construction. They emphasize the importance of integrating as-built models, collaborative estimation, and progressive user experiences tailored for untrained users. The episode concludes with a discussion on the perspectives of construction-tech investors, who recognize the significant potential in the market while acknowledging the challenges in developing and scaling contractor-focused CAD solutions.

This week:



- Vertiv - the "shovel seller" powering the AI data center boom

- Looking beyond the obvious for construction's hidden opportunities

- The power of "tooling" to enable the broader AEC industry

- Uncovering the "hidden champions" in the construction tech space

- Constructing relevant advice for founders in this industry



This episode dives deep into the overlooked yet compelling opportunities in the construction technology landscape. The conversation explores Vertiv, a traditional industrial company that has quietly emerged as a critical provider of power, cooling, and infrastructure solutions for the booming AI and data center industry.



The panel highlights the importance of looking beyond the obvious, first-order problems and trends, and instead identifying the "second" and "third order" solutions that can create durable competitive advantages. The concept of "tooling" - building technology products and services that empower and enable the broader AEC ecosystem - is discussed as a powerful business model.



The discussion also shines a light on the prevalence of "hidden champions" - niche, specialized construction technology companies that have achieved dominant market positions but remain under the radar. Uncovering these gems requires dedicated focus and industry expertise, which is often lacking in the generic advice given to founders by VCs.



Ultimately, this episode offers a fresh perspective on the vast potential within the construction technology space, emphasizing the value in taking a more holistic, systems-level view to uncover promising avenues for innovative, defensible companies.

This week:



• Leading indicators from global shipping for construction economy

• AI agents guiding construction firms through supply disruptions

• Climate crisis effects on construction supply chains explored

• Efficient construction sites through optimized logistics management discussed

• AI solutions for electrical grid construction projects examined



This episode delves into the intricate relationship between the global shipping industry and the construction economy. Shipping rates are highlighted as powerful leading indicators, capable of foreshadowing market trends in the construction sector by six to twelve months. The conversation then shifts to the transformative potential of AI agents and language models in navigating supply chain disruptions faced by construction firms. Practical examples illustrate how these AI assistants can synthesize critical information, prioritize tasks, and facilitate proactive decision-making amidst volatile conditions.



The climate crisis emerges as a significant disruptor of global supply chains, with far-reaching consequences for construction projects. The impact of rising sea levels, extreme weather events, and water scarcity on critical shipping routes like the Suez Canal and the Panama Canal is explored in-depth. The episode also underscores the importance of optimized logistics management for efficient construction sites, drawing parallels between construction and supply chain businesses.



Furthermore, the discussion highlights innovative AI solutions being developed to enhance port operations through seamless shift handovers and address bottlenecks in electrical grid construction and maintenance. Overall, this episode provides valuable insights into the convergence of construction technology, AI, and supply chain management, offering a glimpse into the future of resilient and sustainable infrastructure projects.

This week:




PoolCorp: A billion-dollar vertical niche one-stop-shop success story in the construction industry
Lessons from PoolCorp on distribution, pricing power, and recurring revenue in a service niche
Why it's so powerful when you dominate vertical niches in construction-tech



In this thought-provoking episode, Shub and Patric delve into the remarkable success story of PoolCorp, a publicly listed company with a staggering $15-17 billion market cap in the pool products and services industry. Despite its massive size, PoolCorp remains relatively unknown, even within the construction and tech sectors. The discussion unravels the company's strategic focus on a narrow niche, providing a one-stop-shop for all pool-related products and services, from construction and installation to maintenance and remodeling.



Through the PoolCorp case study, the hosts explore the power of dominating vertical niches in the B2B construction-tech space, particularly in the early years. They challenge the conventional wisdom that narrow markets are insufficient for venture-backable outcomes, highlighting PoolCorp's $10-12 billion serviceable market as a prime example. The conversation underscores the potential for companies to achieve disproportionately large market shares by going deep into a niche, developing unparalleled expertise, and building strong customer relationships.



Moreover, the episode dissects PoolCorp's masterful distribution strategy, fostering an "illusion of choice" for customers by distributing through a vast network of retailers, contractors, and online stores, often using generic or third-party branding. This approach not only avoids the perception of a monopoly but also creates an omnipresent presence across channels. Construction marketplaces can learn from this strategy by establishing their own private label products, breaking the illusion of perfect price discovery and increasing pricing power.



Furthermore, the hosts explore the concept of recurring revenue redefined, drawing parallels between PoolCorp and major elevator manufacturers. In these industries, the bulk of revenue and profitability comes not from the initial sale or installation but from ongoing maintenance contracts, which are often non-discretionary due to the inherent need to maintain mechanical and electrical systems.



Finally, Shub and Patric challenge the widespread assumption that market shares in construction niches are limited to 5-10% at best. They highlight the reality that in many B2B construction niches, legacy players routinely command market shares of 50-70% or higher, necessitating a shift in thinking when evaluating niche opportunities.

This week: What founder traits and behaviors lead to success in AEC-Tech:



Traits and behaviors we discuss:


How founders think about BUSINESS
... about OPERATING
... about PRODUCT
... and about PARTNERSHIPS and relationships



In this episode, we delve into the world of successful construction tech founders. Rather than boasting overconfidence, these founders embody humility, recognizing the complexities of the construction industry. We explore how financial discipline and transparent reporting fuel operational success and discuss the importance of treating investors as partners. Additionally, we examine the strategy of prioritizing frequent interactions with customers for iterative product development and the integration of off-the-shelf technologies for carbon reduction. Join us as we uncover the key traits and strategies behind thriving construction tech startups.