Practical Nerds

Patric Hellermann
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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).

  1. 84⎟EquipmentShare Files For IPO | What The S-1 Reveals About Construction Tech's Next Giant

    ٢٦ يناير

    84⎟EquipmentShare Files For IPO | What The S-1 Reveals About Construction Tech's Next Giant

    About This Episode In this episode, Patric and Shub dive deep into EquipmentShare's S-1 filing as the company prepares to go public. They analyze the financials, business model, and growth trajectory of one of construction tech's most significant players, offering insights into what this IPO means for the broader AEC technology ecosystem. In This Episode EquipmentShare's journey from a equipment rental marketplace to a multi-billion dollar construction technology platform Analysis of the company's revenue streams, including equipment rental, equipment sales, parts and services, and the T3 telematics platform The innovative OWN program that allows EquipmentShare to securitize equipment and lease commitments into asset-backed securities Examination of profitability challenges, including rising depreciation and interest expenses despite growing gross margins The strategic importance of the one-stop shop model for future growth and potential 10x valuation expansion Timestamps (00:00) - Introduction and Happy New Year (01:28) - Patric's bold prediction: Three billion-dollar exits in the project economy this year (02:34) - Overview of EquipmentShare's S-1 filing and business segments (05:00) - What EquipmentShare does: From marketplace origins to multi-service platform (07:01) - The one-stop shop strategy and TAM expansion (09:07) - Revenue analysis: $3.8 billion in 2024 with 45% CAGR (15:26) - Profitability deep dive: Gross margins vs. rising operating expenses (19:56) - Leverage and liquidity concerns: Debt-to-EBITDA ratios of 4x to 10x (24:19) - The OWN program explained: Asset-backed securitization innovation (30:06) - IPO valuation: $6 billion target and what it means for investors (32:59) - Governance concerns: 20-to-1 voting shares for founders (33:28) - Three key observations: Mature location margins, T3 ROI, and Q4 revenue anomaly (41:17) - Future outlook: Why diversification beyond equipment is critical (42:22) - Conclusion and wrap-up Resources or Companies Mentioned EquipmentShare: ⁠https://www.equipmentshare.com/⁠ Procore: ⁠https://www.procore.com/⁠ Bricks, Bucks & Bytes Podcast: ⁠https://bricks-bytes.com/podcasts/bricks-bucks-bytes/⁠ Connect With Us Practical Nerds Website:⁠⁠⁠ ⁠⁠https://practicalnerds.com/⁠⁠⁠ Subscribe to the Newsletter: ⁠⁠⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠⁠⁠ Foundamental: ⁠⁠⁠https://www.foundamental.com/⁠⁠⁠ Patric Hellermann: ⁠⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠⁠ Shub Bhattacharya: ⁠⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠⁠ Youtube: ⁠⁠⁠https://www.youtube.com/@foundamentalvc⁠⁠⁠⁠ The Daily Blueprint: ⁠⁠⁠https://tinyurl.com/the-daily-blueprint⁠⁠⁠⁠ #ConstructionTech #IPO #EquipmentShare

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  2. 083 | VC Meets Movie | The Netflix Shows In VC You Find Entertaining - But Don’t Want To Star In

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    083 | VC Meets Movie | The Netflix Shows In VC You Find Entertaining - But Don’t Want To Star In

    About This Episode In this candid episode, Patric and Shub explore the challenging side of founder-VC relationships by sharing their most difficult experiences with concerning founder behaviors. They examine patterns of deceptive, manipulative, and hostile conduct they've encountered in the AEC startup ecosystem and discuss whether extreme personality traits are necessary for building outlier companies. In This Episode Identifying concerning behavior patterns and their manifestation in startup foundersExperiences with founders who fabricated term sheets and manipulated VC relationships to create false bidding warsExamples of hostile founder reactions when facing rejection or difficult conversationsThe most challenging case studies including founders with surprisingly few professional references across long careersWhether extreme traits are required for building successful AEC and construction technology companies Timestamps (00:33) - Introduction and Seinfeld reference setup (03:11) - Defining the psychology aspect of VC work and founder evaluation (06:18) - First category: Deceptive and manipulative behavior examples (09:08) - Shub's story of a founder who falsely claimed term sheet offers (17:47) - Patric's example of founders fabricating existing term sheets (24:38) - Additional example of founders misrepresenting VC conversations (31:11) - Second category: Hostility and aggressive reactions (34:19) - Stories of founders making threats after receiving pass decisions (41:32) - Third category: Most extreme challenging cases (51:48) - The founder with zero professional references across four companies (01:00:35) - Final discussion: Do you need extreme personalities to build outlier companies? (01:07:30) - Conclusion and wrap-up Connect With Us Practical Nerds Website:⁠⁠ https://practicalnerds.com/⁠⁠ Subscribe to the Newsletter: ⁠⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠⁠ Foundamental: ⁠⁠https://www.foundamental.com/⁠⁠ Patric Hellermann: ⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠ Shub Bhattacharya: ⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠ Youtube: ⁠⁠https://www.youtube.com/@foundamentalvc⁠⁠⁠ The Daily Blueprint: ⁠⁠https://tinyurl.com/the-daily-blueprint⁠⁠⁠ #FounderBehavior #VentureCapital #StartupPsychology

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  3. 082 | The Pre-Raise Paradox | Why Founders Delay The Work That Matters Most

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    082 | The Pre-Raise Paradox | Why Founders Delay The Work That Matters Most

    About This Episode In this episode of Practical Nerds, Patric and Shub share their candid observations from reviewing thousands of startup pitches at Foundamental. They discuss the most common gaps they see in founder presentations and what they wish more founders understood about the fundraising process, offering practical insights for construction tech and AEC startups looking to improve their pitch and execution strategy. In This Episode The critical importance of having extremely specific tactical plans before fundraising, including detailed execution strategies for the next 6 months rather than vague ambitions Why founders should actively seek out and acknowledge bottlenecks in their business, from personal weaknesses to competitive challenges, rather than avoiding uncomfortable truths The power of maintaining direct access to primary information as a founder, including customer conversations and sales calls, rather than delegating information collection Understanding fundraising as capital allocation and recognizing that raising money means trading company ownership for resources that must generate returns The difference between research and experimentation, and why founders need strong hypotheses before running experiments rather than using fundraising to "figure things out" Timestamps (00:00) Introduction and Thanksgiving in Japan banter (02:00) Overview: What founders get wrong about pitching and fundraising (03:56) The lack of tactical specificity in founder plans(09:01) Why founders delay tactical planning and the gym workout analogy (14:34) The importance of identifying and acknowledging bottlenecks (20:48) Founders who delegate information collection versus staying hands-on (24:37) Examples from successful CEOs who maintain founder-led product and sales (26:56) Founders as capital allocators and the cost of equity (32:40) Wrap-up Resources or Companies Mentioned Faktus: https://faktus.eu/ Nvidia: https://www.nvidia.com/en-us/ Palantir: https://www.palantir.com/ Connect With Us Practical Nerds Website: https://practicalnerds.com/ Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/ Foundamental: https://www.foundamental.com/ Patric Hellermann: https://www.linkedin.com/in/aecvc/ Shub Bhattacharya: https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/ Youtube: https://www.youtube.com/@foundamentalvc The Daily Blueprint: https://tinyurl.com/the-daily-blueprint #StartupFundraising #FounderMindset #VentureCapital

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  4. 081 | Unlearning Success | Why Your Best Venture Playbook Can Become Your Biggest Liability

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    081 | Unlearning Success | Why Your Best Venture Playbook Can Become Your Biggest Liability

    About This Episode In this episode of Practical Nerds, Patric and Shub explore a critical question for venture capitalists: how do you know when your investment playbook needs to evolve? Drawing parallels from the evolution of software companies (from on-premise to SaaS) and the mobile app revolution, they discuss the challenge of recognizing phase shifts in the market before it's too late. The conversation examines strategies for staying relevant in venture capital, from focusing on timeless founder qualities to actively hunting emerging markets, with particular relevance for investors in construction tech, supply chain, and deep tech spaces. In This Episode Why successful investment strategies eventually become obsolete and how VCs can recognize when they're in the middle of a phase shift The danger of confirmation bias when evaluating founders, including real examples of VCs using irrelevant criteria like "was a debater in high school" to justify investments How the transition from e-commerce to enterprise SaaS left many investors struggling to adapt, and what this means for construction and supply chain investors today Five distinct strategies VCs can use to stay relevant: refining founder taste, moving to growth stage, building massive portfolios, developing prepared minds for emerging markets, or trying to be experts in everything Why more than 50% of value in outperforming funds comes from emerging markets (geographic or thematic), making phase shift detection the core business of venture capital The unique advantage millennials have in adapting to rapid change, having experienced the transition from offline to internet to mobile to social media firsthand Timestamps (00:00) Introduction and Severance reference(01:50) Why successful companies and investment strategies eventually fail(05:20) The software transition from on-premise to SaaS as a case study(10:00) The apprenticeship nature of venture capital and the Midas touch bias(12:30) How the mobile app era caught many investors off guard(15:20) Real examples of investors applying irrelevant B2C playbooks to construction and B2B companies(18:30) The challenge of evaluating "inventions" versus traditional startups in supply chain and deep tech(19:15) How do you know you're in a phase shift?(22:00) The information overload generation and constant phase shifts(26:40) Strategies for dealing with continuous market evolution(28:30) Strategy 1: Reverting to timeless founder evaluation(34:20) Real examples of poor founder evaluation criteria from investors(40:30) The confirmation bias in "founders who know their blind spots"(42:40) Why big VC firms struggle with hardware despite backing Intel and Apple(43:50) Strategy 2: Building prepared minds and picking emerging markets early(45:15) The Airbnb example and emerging category recognition(45:50) Fun anecdote about founder disputes post-funding Resources or Companies Mentioned Airbnb: Microsoft Adobe SAP Intuit Autodesk Apple Nvidia Intel Anduril Connect With Us Practical Nerds Website: ⁠⁠https://practicalnerds.com/⁠⁠ Subscribe to the Newsletter: ⁠⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠⁠ Foundamental: ⁠⁠https://www.foundamental.com/⁠⁠ Patric Hellermann: ⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠ Shub Bhattacharya: ⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠ Youtube: ⁠⁠https://www.youtube.com/@foundamentalvc⁠⁠⁠ The Daily Blueprint: ⁠⁠https://tinyurl.com/the-daily-blueprint⁠⁠⁠ #VentureCapital #ConstructionTech #EmergingMarkets

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  5. 080 | The Decay of Credit Worthiness | When Your Co-Founder Isn't Cutting It Anymore

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    080 | The Decay of Credit Worthiness | When Your Co-Founder Isn't Cutting It Anymore

    About This Episode In this candid conversation, Patric and Shub explore one of the most challenging aspects of building a startup: when co-founder relationships break down. Using the financial concept of "decay of credit worthiness," they discuss why founder misalignment becomes more likely over time, how to recognize the warning signs, and practical strategies for addressing performance gaps before they destroy company value. In This Episode Why founder teams with 4+ members face over 50% likelihood of co-founder conflict over a 10-year period The "decay of credit worthiness" framework: how co-founder compatibility naturally erodes over time due to changing circumstances, ambitions, and external pressures Warning signs of founder misalignment, from skill gaps to diverging values, and why close personal relationships can actually mask performance issues Practical communication strategies for addressing co-founder concerns, including the importance of identifying bottlenecks before escalating to difficult conversations How to seek objective outside perspective when evaluating co-founder situations, including the specific criteria for choosing the right advisors Timestamps (00:00) Introduction and casual banter(02:12) The founder misalignment problem: why it's a top cause of startup failure(03:58) The "decay of credit worthiness" metaphor explained(07:50) How to re-underwrite your co-founders over time(10:51) Can investors spot founder misalignment from the outside?(13:15) Why founders avoid confronting co-founder issues(14:52) How team size amplifies risk: from 2 to 4+ co-founders(17:00) The dangers of founder cliques and investor camps(19:44) When close friendships create blind spots(23:14) Communication strategies: starting the difficult conversation(25:59) Identifying and solving bottlenecks before escalating(29:24) Why adjusting compensation doesn't fix fundamental mismatches(32:00) Finding objective advisors: the four critical criteria(36:42) Conclusion and final advice Connect With Us Practical Nerds Website:⁠⁠https://practicalnerds.com/⁠⁠ Subscribe to the Newsletter: ⁠⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠⁠ Foundamental: ⁠⁠https://www.foundamental.com/⁠⁠ Patric Hellermann: ⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠ Shub Bhattacharya: ⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠ Youtube: ⁠⁠https://www.youtube.com/@foundamentalvc⁠⁠⁠ The Daily Blueprint: ⁠⁠https://tinyurl.com/the-daily-blueprint⁠⁠⁠ #ConstructionTech #StartupFounders #CoFounderRelationships

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  6. 079 | The Strategic Priority Gap | What Happens When Robots Are Deemed

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    079 | The Strategic Priority Gap | What Happens When Robots Are Deemed

    About This Episode Shub Bhattacharya shares firsthand insights from attending one of China's largest robotics and automation trade fairs in Shanghai, an event spanning 500,000 square meters with 18 exhibition halls. The conversation reveals six critical observations about China's robotics ecosystem that every AEC technology founder and investor should understand, from unprecedented scale and capital access to cost asymmetries and execution efficiency. In This Episode China's robotics industry operates at a mind-boggling scale, with trade exhibitions filling venues equivalent to 90 football fields and installing 10 times more robots than major Western markets combined in 2024 Chinese robotics manufacturers benefit from systematic access to cheap debt, government subsidies, and export tax credits, creating structural advantages that enable rapid capacity building and competitive pricing Significant cost asymmetry exists between Chinese and Western markets, with identical robotics products selling for three to six times more in Western markets compared to their Chinese domestic pricing Robotic arms have become commoditized in China, with nearly every manufacturer offering multiple arm variations across horizontal use cases rather than focusing on vertical specialization Chinese robotics companies demonstrate remarkable capital efficiency, achieving substantial revenue scale and multi-geography operations with significantly lower capital requirements and burn rates compared to Western counterparts Timestamps (00:00) Introduction (01:26) Why Shub traveled to China and the importance of the robotics trade fair (02:51) First takeaway: China's mind-boggling scale in robotics (06:05) Visualizing the exhibition venue: 500,000 square meters across 18 halls (14:21) Second takeaway: Access to cheap capital, debt, and government subsidies (18:18) The Nvidia analogy: How cost advantages can overcome technology leadership (26:42) Third takeaway: Cost asymmetry between Chinese and Western markets (29:50) Fourth takeaway: Robotic arms as a commodity product (32:22) Fifth takeaway: Product-focused rather than application-focused marketing (38:33) Sixth takeaway: Capital efficiency and VC funding in Chinese robotics (43:28) Why founders and investors must gain primary information from China (44:43) Conclusion and wrap-up Resources or Companies Mentioned Nvidia: https://www.nvidia.com/en-us/ Connect With Us Practical Nerds Website: https://practicalnerds.com/ Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/ Foundamental: https://www.foundamental.com/ Patric Hellermann: https://www.linkedin.com/in/aecvc/ Shub Bhattacharya: https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/ Youtube: https://www.youtube.com/@foundamentalvc The Daily Blueprint: https://tinyurl.com/the-daily-blueprint #Robotics #ChinaManufacturing #AECTech

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  7. 078 | Strategy vs. Networking: Get The Most Out Of Your CEO Time

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    078 | Strategy vs. Networking: Get The Most Out Of Your CEO Time

    About This Episode In this candid discussion, Patric and Shub dive deep into their personal philosophies on conferences and events within the AEC startup and venture capital ecosystem. They explore why the events industry rebounded stronger than ever post-COVID, despite digital collaboration becoming more sophisticated, and share their contrarian views on optimal time allocation for fund managers and founders in the construction technology space. In This Episode How the COVID pandemic failed to permanently shift the conference industry toward digital collaboration, and why in-person events are more popular than ever in AEC venture capital The ROI framework for evaluating conference attendance, including how portfolio strategy (concentrated vs diversified) should influence a fund manager's event calendar in the construction technology sector Why many AEC founders and VCs fall into validation-seeking echo chambers at conferences instead of focusing on core business bottlenecks like capital allocation and customer acquisition The cultural differences in networking approaches between American, European, and Indian AEC markets, and how relationship-building varies across these regions Why attending conferences specifically for fundraising purposes often backfires for both fund managers seeking LPs and AEC startups pursuing venture capital Timestamps (00:00) - Introduction and recording setup (01:31) - Discussion on lifestyle choices and travel preferences (03:03) - COVID's impact on the events industry and digital collaboration (05:13) - The conference industry's stronger-than-ever comeback (06:59) - Personal ROI framework for conference attendance (08:24) - Shub's perspective on industry outliers and time allocation (10:19) - Capital allocator feedback on fund managers' event attendance (13:31) - Portfolio strategy: concentrated vs diversified approaches and conference relevance (18:33) - Echo chambers and validation seeking in the AEC community (20:29) - Founder case study: prioritizing conferences over business fundamentals (23:49) - The bottleneck identification framework for strategic decision making (25:22) - Thought experiment: hiring a CEO who spends 50% time at conferences (28:00) - Social validation and dopamine hits from event attendance (31:28) - High-value event formats: the House of Cards example (33:10) - Cultural differences in networking: India vs US vs Europe (36:05) - Conference attendance for fundraising purposes (40:00) - Conclusion and travel wishes Resources or Companies Mentioned House of Cards: Referenced TV show discussing high-level business networking events S&P 500: Mentioned as performance benchmark for fund returns Connect With Us Practical Nerds Website:⁠⁠ https://practicalnerds.com/⁠⁠ Subscribe to the Newsletter: ⁠⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠⁠ Foundamental: ⁠⁠https://www.foundamental.com/⁠⁠ Patric Hellermann: ⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠ Shub Bhattacharya: ⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠ Youtube: ⁠⁠https://www.youtube.com/@foundamentalvc⁠⁠⁠ The Daily Blueprint: ⁠⁠https://tinyurl.com/the-daily-blueprint⁠⁠⁠ #ConTech #VentureCapital #AECStartups

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  8. 077 | Negative Gross Margins: The Canary in the Market Froth Mine

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    077 | Negative Gross Margins: The Canary in the Market Froth Mine

    About This Episode In this episode, Patric and Shub dive deep into negative gross margins as a predictive indicator of market froth in venture capital. They explore why businesses that lose money on every transaction they complete represent a fundamental misunderstanding of value creation, particularly in the AEC and B2B technology sectors. In This Episode How gross margin reflects whether customers truly find value in what you're delivering and serves as a measure of pricing power in competitive markets Why negative gross margin businesses fundamentally contradict the purpose of capital allocation and represent value destruction rather than creation Historical examples of negative gross margin bubbles including scooter companies like Lime and Bird, quick commerce platforms, and their inevitable market corrections The current AI and LLM industry's troubling trend toward negative gross margins, with detailed analysis of companies like Cursor paying more to AI providers than they generate in revenue Common window dressing techniques founders use to disguise poor unit economics and why clean financial reporting starts with honest gross margin calculations Timestamps (00:00) - Introduction and discussion about their break (02:17) - Introduction of negative gross margins as market froth indicator (02:55) - Definition and explanation of gross margin across different business models (09:54) - The fundamental question: does your customer find value? (18:49) - Historical examples: scooter businesses and quick commerce failures (25:23) - Why negative gross margin businesses still attract funding (31:28) - AI and LLM industry analysis: Anthropic, Cursor, and GitHub Copilot case study (39:46) - Window dressing techniques and financial reporting tricks (42:23) - Conclusion and final thoughts on B2B vs B2C differences Resources or Companies Mentioned Anthropic: https://www.anthropic.com Cursor: https://www.cursor.so GitHub Copilot: https://github.com/features/copilot Lime: https://www.li.me Bird: https://www.bird.co Perplexity: https://www.perplexity.ai OpenAI: https://openai.com Connect With Us Practical Nerds Website: https://practicalnerds.com/ Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/ Foundamental: https://www.foundamental.com/ Patric Hellermann: https://www.linkedin.com/in/aecvc/ Shub Bhattacharya: https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/ Youtube: https://www.youtube.com/@foundamentalvc The Daily Blueprint: https://tinyurl.com/the-daily-blueprint #VentureCapital #GrossMargin #AECTech

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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).

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    Patric Hellermann
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    Practical Nerds