About This Episode

Patric and Shub challenge fundamental venture capital assumptions by analyzing why traditional VC focuses on horizontal software companies when 95% of the world's most valuable companies are vertical, sector-specific businesses. Using Six Sigma methodology and construction industry data, they make a compelling case for why AEC startups have better odds of becoming "decacorns" than traditional tech companies.

In This Episode

Statistical analysis revealing that only 50-70 tech companies achieve decacorn status (10+ billion valuation) while over 1,000 traditional companies surpass this threshold, challenging the venture capital playbook

The shocking discovery that only 3% of unicorns graduate to decacorn status, a lower success rate than seed to Series A funding rounds, raising questions about venture capital's scaling assumptions

Deep dive into construction industry economics showing 115 off-spec companies generating $3.14 trillion in combined revenue, demonstrating the massive scale potential in vertical markets

Comparison between "thin slice" horizontal companies that capture 1-2% of customer spend across multiple industries versus vertically integrated companies that can capture 25-50% of spend within their specific market

Timestamps

(00:00) - Introduction and dancing skills revelation

(02:30) - Six Sigma analysis of global company valuations and the 1,130 off-spec threshold

(15:00) - Unicorn to decacorn graduation rates and the 3% success barrier

(26:00) - Construction industry deep dive and the $3.14 trillion market opportunity

(34:00) - Thin slice versus thick slice market capture analysis

(43:00) - Examples of successful vertical companies: SpaceX, Tesla, BYD, and Anduril

(46:00) - Conclusion and closing thoughts on venture capital's adverse selection

Resources or Companies Mentioned

Monster Beverage: https://www.monsterbevcorp.com

WeWork: https://www.wework.com

Stripe: https://stripe.com

Databricks: https://www.databricks.com

Snowflake: https://signup.snowflake.com

CrowdStrike: https://www.crowdstrike.com

Anduril: https://www.anduril.com

SunTech: https://www.suntech-power.com

Caterpillar: https://www.caterpillar.com

CRH: https://www.crh.com

Holcim: https://www.holcim.com

Saint-Gobain: https://www.saint-gobain.com

Kingspan: https://www.kingspan.com

Bouygues: https://www.bouyguestelecom.fr

Vinci: https://www.vinci.com

Arcadis: https://www.arcadis.com/en

Palantir: https://www.palantir.com

Klarna: https://www.klarna.com

Chime: https://www.chime.com

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Foundamental: ⁠⁠https://www.foundamental.com/⁠⁠

Patric Hellermann: ⁠⁠https://www.linkedin.com/in/aecvc/⁠⁠

Shub Bhattacharya: ⁠⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠⁠

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#Decacorns #ConstructionTech #VentureCapital