Am I my target market?
Just because you love it doesn't mean everyone else will.
Every time I visit Austin, TX, I get to admire the progress of this DPR Construction project.
The stock market has been crazy… and I continue to understand why I am not a stock picker. 😉 Do not follow me for financial advice.
These turbulent times have made me think about my worst performing stock pick… and of course, how it relates to construction tech. Peloton, oh peloton. I have been obsessed with Peloton since eyeing their bike at the Prudential Center showroom back in early 2019. For those of you who don’t know me well, I love fitness, tech and data. I picked up cycling while working in Singapore (consistent 80 degree outdoor weather is incredible for cycling) and love my Strava stats.
I was the target market for Peloton… but the market size of this target market was “small” and not growing at an incredible rate (yes, hindsight is 20/20). Do you remember the time when the pandemic hit and we were all stuck at home and all of the gyms were closed? Peloton was a pandemic darling as people shifted to working out at home while working from home. That growth can now be seen as artificial and not sustainable (hindsight 20/20 again). Now that the pandemic is (more or less) over, how many people are still riding their Peloton bikes? I returned to Equinox and sold my Peloton on Facebook Marketplace… after my stock value plummeted and sold my stock.
I clearly did not do enough market sizing research before buying Peloton stock and invested with my emotions.
As I reflected on the 90%+ value loss in my Peloton stock, I was reminded of my early naïveté of the construction industry and my early personal biases in evaluating construction tech.
My first project at DPR Construction was the UCSF Medical Center at Mission Bay project. This was the most innovative and well-run project that I worked on. I learned the processes around BIM/VDC, LEAN, BIM for FM, and probably any and every top technique for on-time, on-budget construction projects. That job also started my obsession for high performing teams and culture.
For a long time, I assumed most construction projects were run very similarly given my project experience, the industry posts I saw on LinkedIn and the talks/keynotes at conferences. I had a pretty skewed view on the world of construction and its digital transformation journey. It wasn’t until I worked on a few more projects and asked more pointed questions to other industry professionals that I realized that what I saw at DPR was not the norm for the industry.
After joining Brick & Mortar Ventures, I looked at the construction industry with a wider lens and was able to learn about the varying levels of digitization across large firms and small firms. I came to the conclusion that I was the (fairly niche) target market for a lot of these new technologies and innovations coming into the industry. Some of the step-change technologies for construction may only target the top 1% of contractors who understand the problems deeply and have the interest to adopt them.
I now try to suppress my emotions (both excitement and skepticism) when looking at construction technologies.
I call my industry experience a double edged sword. Especially when evaluating startups in my current role. My industry experience gives me a very deep understanding of a startup’s product roadmap, data exchanges, impacts to the supply chain and its future growth potential, but it has also made me somewhat jaded. I am the first to admit that the target market for any BIM technology is still small when you take into consideration how many projects can manage BIM properly. But, I LOVE BIM, see the value, and promote it any chance I can get. I think the future of construction is digital — but we as an industry may not get there within a fund life (10 years).
My first question regarding any BIM technology is how accurate does the BIM need to be for the tech to work and who their target market is. Selling to tier 1 contractors in the UK (whose government regulations are leading the way for BIM requirements) versus trying to make BIM happen for single family residential construction are two very different target markets.
I can see how one who has only read McKinsey reports touting the need for construction productivity gains and one who has followed along all of the research that Stanford CIFE has put out regarding BIM/VDC can be enamored by the power of BIM. I oftentimes caution founders from only doing online research about construction trends and insights and tell them to get out onto the construction sites to talk to people. Too much of what we see online from construction companies or construction tech startups will paint a way rosier picture than reality. So I guess construction marketing is just like social media. 🤷🏻♀️
About 3 years into my career at DPR, I thought BIM was the answer to everyone’s problems in construction and that every commercial construction project leveraged BIM. If I had joined Brick & Mortar at that point in time, I would have pushed really hard for our team to invest in BIM-tech. Even now, I struggle with separating my industry passions and what I think is right/wrong for the industry from my investment evaluation criteria. Thankfully I’ve got an incredible team to balance this out.. and my Peloton stock loss to remind me to take a breath and use my logical brain.
Think about this double edged sword: is industry expertise helpful or harmful?
So now, I encourage everyone looking at the construction technology space to think about this double edged sword. Not only founders, but funders too. I go back and forth about how to evaluate founders coming from within or outside of the construction industry. There is a fine line of understanding the industry and the target market well, but also knowing too much or having too many preconceived notions that you’re building a product for yourself (that also happens to be a niche) or are just solely digitizing a manual process when the greater opportunity is to redesign a process.
People with industry expertise can bring credibility, a large network of potential customers, understanding of how to sell into the space, familiarity with partnership opportunities, etc. People from outside of the industry can bring a fresh perspective and learnings and techniques from other industry that may be the change that’s needed for our industry. There’s no right or wrong answer from a founding team or early team perspective, but a well rounded group with experience in construction, startups and technology can be an edge. This includes investors and advisors!
I have spoken with too many founders who have such deep industry experience building a product for who they are most familiar with (they are their own target market), but if you take one step back, the bigger market may actually be selling to a stakeholder that is adjacent. That stakeholder may have a greater willingness to pay and higher margins to afford the technology!
I have also spoken with too many founders who come from outside of the industry and think that the product they are building is going to solve the problem for everyone… and also risk getting false signals from the construction industry! That’s where we ask them to focus and have a better target market because we know that different parts of the supply chain makes decisions differently and cares about different pieces of information or data. Those false signals of interest need to be validated by willingness to pay. People working in the construction industry (like myself) love to complain about it and talk about all of the problems or annoying things with the day to day job. Founders need to figure out what problems people are willing and able to pay for solving.
Our construction industry has such a long supply chain that everything there are so many different go-to-market strategies or wedge products that you can build. Having an open mind to tackling the problem from different angles will also help reduce the risk of building a product to a niche audience. This is why I am such a big fan of encouraging startups to speak with customers from various market verticals, various sized companies, and various stakeholders in the supply chain (shameless plug for our accelerator program: Formwork Labs).
Democratize a product to make it less niche.
I honestly hate the phrase “democratizing ____.” But in this case, it works! One tactic to grow your target market is by making a product more simple or more applicable for more companies or individuals. I know just a few paragraphs ago, I mentioned that sometimes founders need to focus to not try to solve a problem for everyone. There’s a time and a place for making a product more accessible for growth and a balance between a product that is too versatile/flexible versus sales. For construction, a product that can do everything is harder to sell than a product that has a very clear ROI.
As you may know from the previous article I wrote, I have an obsession for planning and scheduling. Practices and processes around planning need to improve and I think technology is here to help us with it. Adoption of all sorts of planning tools (short interval planning to complex CPM scheduling with P6) has been very slow over the last decade or so. There is absolutely no shortage of startups in this space (though some have pivoted or shut down since that article).
I have spoken with so many different project teams from various parts of the globe and learned that the target market for an experienced planner who knows how to use P6 well and understands construction dependencies is very small—and this is the issue with most of the planning/scheduling tools out there today. Technology companies are building tools for this fairly niche group of people and only very complex projects (think airports and hospitals) tend to keep the construction team accountable for keeping the schedules up to date and are managing towards the plan.
When evaluating these planning and scheduling solutions, I was part of that target market. I LOVE P6. I think I may love planning/scheduling more than BIM. Actually I know I love planning/scheduling more than BIM. I see the world in Gantt charts. My life (work and personal) is all planned out in my calendar(s) and if it’s not in my calendar, it doesn’t exist. I also know that not everyone is like this. But I selfishly want other people to live similarly to the way I plan life because it makes my life easier.
In order for planning and scheduling to be widely adopted, we need to change the tool so that anyone from the most senior project architect to the client (who may be a nurse or doctor) to the green project engineer to the field foreman can interact with and access project schedules. We need to “democratize” the schedule.
This was not meant to be a pitch for Planera… but Planera is making planning/scheduling easier for everyone on a construction site so that they can visualize and understand the construction schedule in the way that is most comfortable to them (whether it’s a Gantt chart or a white board or a process diagram). And that is why I am extremely excited that we invested in Planera.
This article was also posted on Last Week in Contech.
the "stop trying to make BIM happen" meme omg hahahaha
Great read. Go Con Tech Go!