This week:
Narrow niches and customer profiles are a good thing (to start with)
Starting with services
Slog precedes exponential growth
Copy & paste pitfalls, and why using funding data to evaluate who could be a category creator can be dangerous
Start narrow, deliver value
Category creators in construction tech need to start with narrow niches and be obsessed with delivering instant value and excellent products. As Patric advises, founders should "Start with first principles" and not copy others. He stresses being "absolutely insanely obsessed over instant value and product" within a niche segment first. Shub agrees that discipline and avoiding obvious spaces is key - "in none of these companies, in none of these companies, did it look like a straightforward or an obvious bet to make". Staying focused on a wedge allows startups to intimately serve needs and incrementally expand the model.
Serve needs creatively
Successful construction tech category creators often use unusual methods to serve pent-up customer demand in underserved markets. Shub observes that you see "a pattern where the customers are either terribly disappointed with what's out there or feeling really underserved". This creates an opportunity to employ novel solutions tailored to the niche, which over time can become industry standards. Delivering value in unfamiliar ways that tap into disappointment with the status quo is a signature of enduring category creators.
Endure the slog
Construction tech category creators take 3-5 years to prove themselves and often appear risky in the early days. As Patric highlights, "a lot of category creating companies in the first three or four years, they might actually look like failures." Shub agrees it takes time for the concepts to spread - "until it gets obvious, it is not obvious at all". But eventually the solutions become must-have. The long road of iteration is necessary to craft products perfectly fitted to user needs.
Analyze details thoroughly
Copying successful construction tech business models requires deep analysis of market nuances rather than superficial analogies. Shub warns against oversimplification, saying "the degree of oversimplification, it's disappointing." Patric notes factors like manufacturing supply chains and incentive structures need to be considered. Shub remarks they have seen many superficial "X of Y" pitches claiming to replicate successes like InfraMarket, but missing key ingredients.
Judge on substance, not funding
Investors should evaluate construction tech startups based on customer feedback and metrics rather than fundraising success. As Patric states, "a VC came in, this brand name investor came in...well, it doesn't tell me anything about the quality of the product." Shub agrees that actual traction with users is key while companies are proving themselves in the early years. Rounds raised indicate investors' reactions rather than validity of the model or market fit.
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Keywords: construction technology, AEC tech, category creators, startups, underserved markets, customer demand, niche markets, product-market fit, investor metrics, fundraising