Bricks And Bytes Podcast

#030 – Stephen Poppe – Transcript


Stephen Poppe

Stephen, you have a diverse background. You started as a construction project manager, went through various customer success roles, and now you’re into investing and construction tech advisory and research roles. It sounds like quite a journey. So, why construction tech?

Yeah, I think it’s a story in a few parts. I never anticipated being in construction as I initially had a business degree and thought finance was my future. After a short stint in banking, I changed my mind and started in construction as a project engineer. I worked for a company focusing on Department of Defense (DoD) projects on the West Coast and fell in love with the tangibility of the industry and the innovators working hard day in and day out.

I read articles about how backward construction was and took some of that bias into my early experience. After listening and learning more, I realized that the issue wasn’t an adoption problem, but a bad technology problem. The wrong kind of tech was trying to solve problems they didn’t understand. I became interested in new tech that could move the needle and not just drive efficiencies, but also improve the lives of those working on these projects.

It’s important to note that I didn’t initially approach challenges purely from a technology standpoint, but more broadly, focusing on processes. Sometimes, people take a myopic view of solving challenges with point solutions without considering the broader ecosystem. I believe that a holistic approach, considering people, processes, and technology, is crucial in addressing the challenges faced by the industry today.

That said, construction technology, with its various layers, has a huge role to play. By finding the right balance between technology and understanding the real-world problems of the industry, we can create better solutions and ultimately improve the lives of those working on construction projects. This is why I am so passionate about construction tech and its potential to make a meaningful impact on the industry as a whole.

Can you maybe just broadly tell us what kind of bad technologies you came across or maybe not necessarily naming technologies, but you need to give me trouble here, Martin. I’m just kidding. Yeah, I guess like the frustrations of that technology. What in general are people doing wrong with technology? What are they not getting right? And name names.

Early on, I focused on scheduling and production management and learned the last planner methodology. This is a great example of the mixture of process and technology because last planner methodology doesn’t work if it’s only technology-based. It has to be physical, bringing stakeholders together and interacting with them in a human way. Initially, the problem was that it was all process and no tech. Then, we over-pivoted to tech, but now we’re starting to see a nice balance with solutions like Touchplan.

Outside of scheduling and production, the early focus around 2011 was on digitization. The issue was not understanding where the data goes and how it interacts with other systems. Project teams invested in point solutions that digitized workflows, but after 18 months, the project ended, the organization didn’t evolve, and the lessons and data were not carried forward. This meant recreating the wheel for each project.

Do you find a lot of the technology, or at least the construction tech companies, focused on the process as the management process? A lot of people seem to focus on project management processes, but there might be more opportunity in the production aspect, like actually constructing the building. Do you have any thoughts on that?

People usually go with what they know, and there’s a problem in our industry where we don’t talk to those at the front lines enough. When we think about the future of construction, we often consider large movements like digital twin technology or AR/VR, but it’s essential to view these innovations through the lens of a foreman or journeyman, and consider how to incorporate the best of what we have into their daily work. There’s a huge opportunity there. The challenge from a tech side is that it’s hard enough to build the right product with the right inputs when they come from other departments, and even harder to break past the project barrier and reach those who are interacting with ground-level problems.

Regarding innovation, I think that because construction is very tangible and the outcome of construction is very tangible, people are not willing to try new things on the tangible product, which is the building, because it’s very expensive. So that’s why there is a barrier to innovation, at least partially. However, as we continue to develop new technologies and solutions, it’s crucial to keep the needs of the workers at the forefront and find ways to make their jobs easier, safer, and more efficient.

So, touching on your advisory roles in tech and construction tech, can you tell us what you think happens when a company fails? Why does a company fail in construction tech?

Building a company from scratch is hard, and all the industry-agnostic reasons why startups fail still apply. But in terms of industry-specific reasons, some of the ones I see are founding teams that lack either domain expertise or humility or both. There’s also the issue of being ignorant of the realities of decentralized demand in construction, which involves projects, business units, and back office dynamics. Typical B2B SaaS isn’t always aware of these industry-specific quirks and realities. Another reason is a product whose value is too conceptual and lacks a day one value component. Founders need to produce day one value for project teams and customers in a tangible way, which will give them a foundation to build that ultimate cool widget.

Regarding innovation, it’s important to build, test, and learn iteratively. The lean startup methodology, developed by Eric Rees, supports this approach. It emphasizes building just enough, an MVP that is a small and concise version of what you want to build, so you can go back out to the market and validate your assumptions. This methodology is often ignored in the construction industry, even though it’s crucial to follow it in a different scale and focus.

The lean startup methodology is about the build, measure, learn cycle. It’s about building something small, testing it, learning from it, and iterating on your product continuously. This mindset can be applied in the construction industry to develop and test concise versions of the future and see what actually holds water.

So moving on, what do you think is important when investing in a business from a capital allocator’s point of view? There are many things to consider, but as a domain expert, some aspects to evaluate are the challenge the product is trying to solve, whether it’s relevant and timely, and evaluating the founder team. It’s important to incorporate the perspectives of all stakeholders who will be impacted by your product and bake that into your approach.

Some struggles companies and startups face during the initial stages of the business include their investment strategy and capital strategy. Bootstrapping your way instead of relying on the typical VC model can be beneficial, as there’s a lot of risk with VC-funded startups. VC money in construction tech has created many opportunities, but startups that don’t have an investment strategy aligned with their go-to market can face difficulties. If a product doesn’t have product-market fit and receives too much funding, it can force the company into behaviors that impact its learning trajectory, which might not be ideal.

The founder team is crucial as well. Your team is the only true differentiating factor you have against other businesses. Two businesses can be doing the same thing, but the team can make the difference in one that succeeds and one that doesn’t. Technology is now almost a given, but how you execute, implement, and create value ultimately comes down to the team.

Regarding the role at HITT Contracting, after spending years in operations as a project manager and then transitioning to the tech side, it offered valuable insight into the constraints faced by both the tech side and the general contractor side of the industry. When looking for the next career move, HITT Contracting stood out as a company that was strategically examining the evolving role of a general contractor in the industry. Megan Lantz’s vision for R&D and how it could play a role in shaping the future was particularly appealing.

R&D at HITT Contracting is mainly focused on identifying solutions and technology to address some of the biggest challenges the industry faces, such as labor shortages, supply chain disruptions, and safety mitigation for teams. There are initiatives within each of these categories, and working on them with a great team makes the role particularly rewarding.

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