Nov 30, 2022

Why architects make great founders

// this week deserves a different format – a love letter 💌 

Dear architects, dear archi-founders:

I think it is time I write you how I really feel about you. You deserve to know.

For the past 4 years, we have spoken a lot, done tech products and market entries, and just crazy successful venture projects together.

Over this time, you taught me so many things about you and about business. When you chose to become founders, and chose us as one of your partners, so that together we could build iconic tech firms in AEC – in 3D, design, renovation, energy efficiency and generative AI – it’s been a great ride already.

You were kind to share with me what your previous life’s in architecture taught you.

With which you allowed me a window into your world, at the intersection of architecture meets entrepreneurs meets coder.

Which made me fall in love with you.

Architects, here’s 10 things I love about you – and why you make great founders:

I learnt all of this from some of the best of you, who practiced in archi-firms and went on to become founders. I want to thank you all for taking me along on your ride, and being your partners. You taught me a lot, and I can’t wait to build bigger and better alongside you.

Thank you, architects !

Your biggest and staunchest fan as you become founders.

P.S. special shoutouts to a few of my most favorite archi-founders:

David at ArchDaily

Alex and Justus at Baupal

Jasper at Cutr

Lasse at Hananas (stealth)

Guy at Mattoboard

Jai, Manoj and Raghu at Prolance

Stan at Rayon

Dimitrie and Matteo at Speckle

Altaf at Snaptrude

Anneli at Tangible

Marc at Welcome


Number of architects globally – best estimate

Nov 16, 2022

Blue-collar 2.0

I prefer to start my AEC_VC posts with a “why now” trigger. This week, it would make sense to start with the whole $hitshow that FTX has created.

But my fascination last week was all about a favorite US company – Forge – and how they create a new tech-enabled category of employment in the blue-collar trades and crafts.

So how to connect this to how FTX triggered this post ?

How about: FTX lost a lot of money of hard-working folks in the trades and crafts who invested with them.

Those folks who TRULY keep our economy running, and build stuff.

Let’s talk about them, and how the next-generation of blue-collar 2.0 will look.

In the Western markets, inflation has hit hard over the past 18 months. It peaked around 10% in US and Eurozone in 2022 (with a history of moving the goal-posts).

Why is this relevant to blue-collar ? Because inflation, in its most fundamental essence, happens when there is too much demand for too little supply. The more money is being brought into circulation (M1 supply) and being used frequently (velocity), the more money facilitates demand to bid for supply. If we now have stagnating or – worse – shrinking supply, your inflation becomes painful.

And that’s exactly what happened in the Western markets since beginning of COVID.

Regardless of what the Fed would like to make you believe, inflation in the Western markets is here to stay unless we fix supply.

Because demand is going nowhere. Take housing: The US needs 2.3M new homes per year, Germany and UK 400k and 300k respectively. On top come several hundred thousand of thermal renovations across Europe and US that will be required to deal with the energy situation and climate asks.

While demand will stay, supply of craftsmen and installers is shrinking drastically.

Demand rising. Supply shrinking. Inflation here to stay.

Lucky for us, this is where the story begins.

We see insanely talented founders who build the next-gen of blue-collar models to fix supply. Three models in particular create the blue-collar 2.0 space:

In new construction, we observe all 3 models and combinations thereof. While in renovation, robotics are much more tricky due to less controlled environment – a combination of tech-enabled employers and BiaB work very well in reno.

We believe the academy piece to be critical to both models. Classical blue-collar education has steep on-ramps for the new talent pools of lateral hires, migrant talents and GenZ+. In Germany (representative for Europe), a carpenter undergoes 1’200 classroom hours over 3 years and has to take 2 exams to be allowed entry into the trade.

There’s so much wrong with this. Monopolistic authority over the curriculum unfit for 2023, too generalistic education (rather than verticalization and further specialization to allow fast entry into productive life), and training for flexible problem-solving rather than being linked to standardized workflows creates the steep on-ramps and too long training time.

This is where tech-enabled employers and BiaB solve the EdTech element of blue-collar 2.0. Having (1) standardized workflows around a core software/hardware stock and (2) deeper verticalized and specialized job roles that they train (3) in internal academies.

Makes for a very sticky blue-collar 2.0 employment. And low on-ramps.

Can’t wait for these next category leaders in blue-collar 2.0 to be built in Europe.


CPI for USA and Eurozone | UK construction workers retiring | UK construction workforce ageing | German unfilled blue collar jobs | US construction worker shortage | US construction workforce

Nov 09, 2022

The construction wood crisis

It’s election time in several major economies. One of which is Brazil, which is home to one of the world’s largest biomes – the Amazon rainforest.

One of the presidential candidates in Brazil ran on a “zero de-forestation” campaign. Looks like he won. That’s certainly a step forward.

If you follow my work regularly you know that I’m about the architecture, engineering and construction industry – not the wood industry. It just so happens that A TON of politicians and lobbyists in the Western markets seem to have fallen in love with using a ton of wood in construction recently – other than this Brazilian politician.

That’s why I am fascinated by the use of wood in construction. Last week I prefaced my “wood in construction” thoughts with a primer on CO2 from construction. I recommend you read the primer here before proceeding.

Read the primer? Great. Let’s continue part-deux here.

Various scientists come to the conclusion that scaling up the use of wood in construction can significantly reduce CO2 in the atmosphere. Latest estimates point to 30% reduction or more if we use timber buildings for 50% of our new construction.

Here’s the problem that lobbied Western politicians don’t get:

This means: We are already consuming more than our supply, we are increasing our demand even before we put more wood into construction, then we need to use even more wood in construction, and by doing all this we will kill our wood supply.


So maybe some lobbyist will tell some politician over fancy lunch: “We’ll just recycle wood”.

Not happening, amigo. Wood is a downcycling material due to its specific properties. In the US, 17% of wood waste is recycled once or twice. 83% are downcycled to be either a fuel or compost/landfill. You can’t change the shape and structure of wood the way you can with metals/steel.

Meaning: Supply is supply. Not much we can do other than not fuck it.

What we need to fix is the consumption of wood in other sectors to allow construction to use much more wood.

So who consumes wood?

Ikea alone is consuming 1% of global wood. Furniture + packaging.

So the way I see it, we have amazing founders working on decarbonizing one of the largest CO2-emitting sectors (construction) by bringing new materials and wood into buildings, such as Mighty Buildings, 011h and Juno.

But our politicians need to enable these founders to use more wood by eliminating the use of wood in packaging, paper, fuels, cooking and furniture.

Amazon needs to replace paper-based packaging with new materials.

Ikea needs to replace wood with new materials.

And Western politicians need to equip emerging markets with non-wood-based cooking and heating alternatives, and also need to ban cozy fireplaces for role-model reasons.

Only then we can free up wood supply for scaling up wood in construction, bring construction emissions down to 10% or less of world emissions, and not fuck the (Amazon) forests.


Great guide for differentiating wood products | WWF | Churkina et al. | UCSUSA | EPA | GOIAM on IKEA | Consuming sectors of wood | Wood consumption | Wood consumption

Oct 31, 2022

CO2 from buildings

I became quite fascinated by how eco-friendly wood in new construction is. For one, because we partnered with numerous founders over the years who use technology to make the use of wood in buildings more efficient, for example:

But also because I had chats with people from the wood-processing and forestry businesses.

One chat in particular last week stood out. It came with a European family owning a billion-dollar business in wooden construction materials. They asked me flat out: “Where do you see wood in construction going?”

No one is fully immune to media manipulation and public debate. So my first nano-second reaction was “hey, of course wood is great and steel and cement are dirty, so it must grow in use”. But does it? My interest was piqued.

To answer the question where wood in buildings might be going, we have to start by understanding the CO2 footprint of construction and buildings. That’s what I’m doing this week – and will follow up with part two on wood specifically next week.

We all know that the world population continues to rise. 10 billion people are expected by 2060, which is another +30% vs. 2020. And middle classes in emerging countries are rising, too, which means they have more money to spend on consumption. Just from 2009 to 2020, the middle class almost tripled in 11 years.

And that’s the issue with CO2. The demand. Per capita, CO2 has increased by +55% to 4.7 tons per capita compared to 1960.

CO2 is not just a world population issue. It is driven by consumption per capita !

Meat +85% per capita. Cars + 125% per capita. Oceanfreight + 100% per capita compared to 1960. Per person.

And the most dramatic CO2 per capita increase comes from construction. Take cement: +270% vs. 1960 and +135% in just last 22 years.

The issue is per-capita CO2 consumption.

And construction is a massive consumption driver. 17% of the world’s emissions come from construction. Another 17% from operating residential buildings, and 11% from operating commercial buildings. (side note: this is freaking why we need heat pumps across the Western World – go and buy yours with Lun)

However: If you ANNUALIZE the CO2 demand from constructing and operating a building, the design and construction is a 10x higher CO2 driver than the operations phase – because the construction emissions are set free in first 1-2 years, while the ops emissions are set free over the 30-50 following years.

That’s why the 17% of construction vs. the 17% of residential building ops are not the same. The Construction emissions are a 10x larger and instant lever.

I have a feeling people begin to realize this massive CO2 reduction lever that construction is.

However, I fear it is becoming (again) an emotional and non-scientific debate. Much like energy choices after Fukushima and vaccine choices during COVID – experts do not get heard and lobbyists and politicians lead emotional debates.

I fear the same for the use of wood in construction to decarbonize the construction of buildings.

I will write here next week about why wood will make a great contribution to CO2 reduction, but scaling it massively is not going to be a very healthy choice for decarbonization targets.

The same way scaling gas consumption post 2011 was a very bad choice for the EU.


World Bank 2018 | OECD 2020 | IPCC 2017 | Global Carbon Project 2017 | Oxford 2019 | OICA 2016 | UNCTAD 2018 | Cembureau 2015 | BNP 2018 | UNFCC 2019 | UNFAO 2018 | IEA 2017 | European Commission 2018 | Rocky Mountain Institute 2018 | UN 2017 | Ecoinvent 3.1 2018

Oct 25, 2022

Mergers and acquisitions in AEC part deux

This is part deux of my look into the state of M&A in architecture, engineering and construction (AEC) software in October 2022.

Last week I wrote about the last 18 years of acquisitions and how they shaped 9 leading AEC software firms – from Autodesk over Trimble to Unity and Epic.

But that’s not where the story ends. With the economy in tumble, I wonder if some (if not all) of these players to be active acquirers in 2023 and 2024. Hexagon seems to already lead the charge with 5 acquisitions year to date in 2022.

So I became fascinated by the logical follow-up question: What might happen in AEC M&A in 2023 ? What strategies and targets are available to buyers?

I prefer numbers. The best numbers available to us to work out available strategies and targets is funding data. It should allow us to look at a large share of the AEC-Tech universe (though not all firms). It should be accurate enough, and much better than no numbers.

6‘900 AEC-Tech firms received some form of external investor funding (incl. VC or corporate investments) since 2005 until October 2022. In total they fundraised $120B – no chump change.

Of those 6‘900, 560 have been acquired (not counting IPO‘s). A meager 8% !

Then I pulled a looooooong list of active AEC-Tech firms who have not yet been acquired, not IPO‘d and not deadpooled. This gave me ca. 4’000 firms, the vast majority of which are software. These firms generally could be seen as targets by potential buyers in 2023 and 2024.

I was wondering how a buyer in 2023 might view the landscape. One approach someone in corporate M&A told me is that they use four characteristics to describe AEC-Tech firms.

Based on this, the following picture of which firm might be available emerges:

I was particularly fascinated by two clusters of AEC-Tech firms for this debate:

  1. Firms in difficult cash positions (either young and no differentiated tech but high burn, or older firms with or without differentiated tech) in the anticipation they might face a difficult fundraising environments. More a 2023 target. I call this Strategy 1.
  2. or older firms who have raised in the last 2 years, preferably with interesting tech or otherwise good businesses in the anticipation they might reach a plateau in the next year. More a 2024+ target, but opportunities to build a pole-position relationship early might be available in 2023 already. Let’s call this Strategy 2.

For Strategy 1, I was able to find ca. 4’380 AEC-Tech firms right now. Of those, 1’390 who raised last between 2017-2020, so prime candidates for a discussion. Some acquirers might be having debates to get in front of the firms with the most exciting products or ARRs, and find ways to have acquisition discussions. I imagine a big challenge will be to filter effectively, as a lot of these firms will require cash for a reason … but how to know outside in? Protracted discussions with all 1’390+ firms will hardly be possible. Probably only a small fraction of them. Positive is that founders might be more motivated though.

Ca 1’180 firms are available for Strategy 2. 75 firms raised $100M+, 180 firms $20M+, 130 firms $10M+, and 130 firms $5M+. The entire rest raised less than $5M and might not be that interesting. I wonder if an interested buyer would first focus on the middle of the pack with $10-100M raised, since the quality of these firms might be highest. Remember the 8%/560 firms acquired in last 18 years I mentioned at the top of this post? My guess is that a fair share of those 8% in the NEXT years will come from these Strategy 2 targets. Here founders and shareholders might not yet be particularly interested in soliciting M&A offers right now, as they probably see their firm on the up and promising. It might be that interested buyers find more luck in taking minority stakes, building an internal view how the tech and business performs, and moving into pole position to make future offers in 2024+ if the firm begins to plateau.

Strategy 2 could allow for high payout if executed well. The challenge to overcome might be the adverse signaling that founders and shareholders will be afraid of when a potential strategic buyer takes stakes. Something to consider for the acquirers, I imagine.

Overall, it looks like some 400+ potential AEC-Tech firms might attract interest by potential acquirers in the next years. I expect smart buyers to follow one or both of the above strategies. Both are not easy to execute since information is hidden and adverse signaling is real.

My conclusion of last week and this week is: it looks like a lively 2023 in AEC software M&A might be on the horizon.


Crunchbase | Tracxn

Oct 18, 2022

Mergers and acquisitions in AEC

3 triggers that stimulated me last week to look deeper into M&A in AEC. First, various friends who work at AEC software firms recently debated about M&A going into 2023. Second, Autodesk received another open hate-letter about their (M&A) practices. Third, we’re heading deeper into the 2022 crash – and thou shall be greedy when others are fearful.

So I wondered “wut M&A doin” in AEC.

I checked out 9 well-known (hybrid) AEC software firms and their M&A track record – including the likes of Trimble, Autodesk, but also game engine devs Unity and Epic to check for alternative strategies.

I went as far back as 2005. My colleague Fabio 👏👏👏 did a helluva job researching and harmonizing the numbers (thanks Fabio !).

331 M&As were done by these players in the last 18 years.

The trend is up – M&A activity almost 2x’ed over this time frame.

2009 was a crash-related down. We already see the same in 2022 – while 2021 was THE record year with 31 deals, 2022 YTD is at half of 2018 (15).

What surprised me was the makeup of those deals. First, by acquirer, and second, by acquiree.

Autodesk might get all the attention (and hate) for their product and M&A strategies.

But it’s hybrid hardware+software players such as Trimble, Hexagon and Faro who dominate M&A. They make up more than 50% of all M&As.

Autodesk is rightly in the discussion, though, making up 20% of all acquisitions (67).

It’s fascinating to observe outside-in that Trimble v. Autodesk seem to follow completely different strategies. While Trimble goes after targets that enable an “on-site” strategy, Autodesk seems more enamored with a “3D-enabled” roadmap.

Hard to say by the numbers how these acquisitions drive a product strategy. Although the numbers give an idea why 3D-users are fearful in their open hate-letters to Autodesk…

But it’s not just behemoths Trimble and Autodesk who we should look at. Over time, M&A priorities clearly shifted. 10 years ago, acquirees used to be much more in hardware and GIS/mapping – those two sectors got hammered.

On the other hand, acquirers today love (1) 3D, gaming/assets, field mgmt and (2) a much more diverse range of (specialty) applications than they used to. 61% of all M&A’s in the last 8 years happened in these spaces.

A special note I found intriguing was that – while 2022 M&A dropped hard by 50% – Hexagon acts contrarian and has their most active M&A year since 2016 (5 deals already).

Yet 2022 deals are down. Multiples (not analyzed, but anecdotally) have come crashing hard, by factor 5-10x or more in some crazy places.

I hypothesize that while seasoned acquirers such as Trimble, Autodesk and Hexagon (each bought more than 60 firms over the last 18 years) are on the prowl for great deals – many shareholders of fantastic software firms are not particularly interested in entertaining shitty deals right now or next year.

So what gets done in 2022 and 2023 ? I wonder if it’s mostly firesales/distressed deals. Or in other words – dogs ?

The numbers I found, plus common sense, don’t suggest that shareholders in great firms in the sought-after categories such as 3D or field management with strong cash positions are particularly keen to sell in the next year.

In my conclusion, acquirers should consider a dual strategy: (1) acquire great products/tech in distressed situations for affordable money (even if it means the multiples look off) and (2) find ways to engage meaningfully with good businesses which still grow in the ballpark of 1.5x-2x YoY in current environment and you expect to plateau on their own in a year or two from now, and then be in pole position to strike a deal at fair multiples in 2023 or 2024.



Oct 10, 2022

Anti-fragility in construction

Looking at our financial markets in early October 2022 is like riding one of these rollercoasters that take you up a loooooong time, only to become really sloooooow before you reach the apex.

You know markets will come down hard. This wait seems like an eternity.

Can we learn to benefit from the uncertainty ahead ?

Our financial markets show indicators of another hard correction impending. The VIX is as high as it was right before the first COVID crash. Morgan Stanley (under-) estimates that the financial markets will take a 15% plunge from here (after already being down 24% on the year). The Fed indicates continuing interest rate hikes into 2023. Rumors of Credit Suisse going bust.

Nicholas Taleb is a leading economist of our time, who made waves with theories around the 2008 financial crash. He explained black swan events in 2007, and posited that growth in uncertainty flourishes under barbell strategies due to anti-fragility.

For Taleb, anti—fragility is fundamentally about creating optionality and accepting that knowledge is always limited, while exploration under trial & error is unlimited. Taleb says that if trial & error costs less than the upside of being right once – we should adopt an anti-fragile strategy of learning through trial & error to maximize outcomes.

This inspired me to spend to explore anti-fragility further – and look at it in the context of construction.

If we dumb it down, construction has two types of projects: n = 1 projects, where every project is unique in many ways, and n > 1 projects, where we repeat a project serially (or parts of it, for example volumetric modules).

Taleb has identified 7 rules of when anti-fragility applies and an optionality and trial & error maximizes the outcomes – and not seriality.

I’ve analyzed and applied the 7 rules of anti-fragility to both construction project types. You can find the analysis in my slide deck.

To my surprise, it seems to suggest that construction has higher chances of maximal long-term results BECAUSE it widely uses an n = 1 approach. All 7 rules of anti-fragility seem to check out with n = 1 construction projects.

When I interpreted the results, there is a way to make sense of it. Construction is known for relying more on people and their coordination and trouble-shooting than on plans. It’s because construction projects have a lot of interdependencies and externalities. Within the anti-fragility world, top-down derived strategies are inherently less likely to achieve the optimal outcome than a trial & error approach led by the construction project managers and workers on the ground dealing with the interdependencies.

I also find it fascinating in the context of asset-heavy serial modular construction companies, such as Katerra (which went out of business in mid 2021). Anti-fragility suggests that asset-heavy modular contractors will suffer from avoidance of optionality through trial & error which leads to slow knowledge acquisition. Looking from the outside-in, this seems to be consistent with Katerra’s well-documented shortcomings.

It’s fascinating to think that either construction has already found the most efficient learning mode by being n = 1.

Or that projects which are n > 1, asset-light supply chain integrators such as 011h or Juno who facilitate existing competencies in the supply chain and allow for prototyping and testing are more optimal than asset-heavy models.


Definition of anti-fragility | Knowledge is a poor substitute for convexity and anti-fragility | Seven rules of anti-fragility

Oct 03, 2022

Renovating air-gaps

The EU already had aggressive decarbonization targets for its homes before the war in Ukraine. With inflation ravaging due to money printer go brrr, and war leading to shortage of cheap fossils across Europe – I became fascinated by how European homes are actually heated and insulated going forward.

As it turns out: Europe’s homes are reliant on low-quality energy – fossils.
And their insulation is worse than I thought.
The most idiotic yet true answer I found are air-gap-walled homes.

A home with an air-gap wall is simple. Built between ca. 1900 and ca. 1980 across European countries – e.g., Germany, Netherlands and the Nordics – it is a home that has a double outer wall. Think of it like a sandwich where the cheese and ham is just air.

The double wall consists of a thicker interior-outer wall, against which a thinner outer wall, or layer of brick clinker, is built. In between the two walls is air. The air is supposed to function as a natural insulator. Spoiler: its insulation is poor.

It is estimated that up to 27 million homes in Germany are constructed with air-gap walls. An additional 10 million homes across Netherlands and the Nordics. On top of any other European countries I did not research.

While that (lack of) insulation is worrisome in light of current events, what really blew my mind is just HOW reliant these home owners are on fossils. 79% of single family homes and 82% of multi-family homes across the EU+UK heat their homes with gas, oil and coal.

And we pay dearly for it. 34 million households were in energy poverty prior to the Ukraine war. In Germany the expectation is that gas bills for home owners will routinely exceed €3000+.

All this when powering and heating homes is already responsible for more than 20% of CO2 emissions.

As it turns out, we have a proven way to insulate air-gap-walled homes – which are heated 80%+ by fossils – with a retrofit cavity insulation. The technology and approach are proven.

A trained craftsman can tell with 95% certainty just by the age of the home and its construction if it is air-gap-insulated. If it is, insulation foam or granule can be injected into the air-gap easily.

The effect: 50%+ heating cost reduction and a 25%+ CO2 emissions reduction. It costs between €5000 and €10’000 for regular homes.

So it has a fantastic ROI.

However, there are only a couple hundred SMB businesses in Germany doing this retrofit cavity insulation. And many home owners won’t be able to pay it in cash and will need financing.

Time to change that. Who’s working on a tech-enabled insulation business, and can scale up cavity insulations?


EU decarb targets | Energy poverty | Air gap wall | Air gap wall | Cavity insulation approach | Cavity insulation approach | Homes built with air gaps | Estimated number of homes in Germany | Estimated number of homes in Nordics and Netherlands | Example of an SMB doing retrofit cavity insulation | Heating cost reduction potential | Dutch cavity insulation offers | German cavity insulation offers | German web 1.0 player