Practical Nerds

About This Episode

In this insightful episode, Patric and Shub explore the concept of cloud manufacturing and its applications in the construction technology space. Using Coca-Cola's business model as a prime example, they break down how traditional notions of manufacturing are being transformed through asset-light approaches that maximize efficiency and utilization.

In This Episode

Shub reveals how Coca-Cola operates as a B2B company rather than B2C, selling concentrate to bottlers who handle production, distribution, and sales while Coca-Cola maintains the brand and marketing.

Patric and Shub discuss how the cloud manufacturing model differs from managed marketplaces, with cloud manufacturers focusing on concentration of suppliers and assuming utilization risk in exchange for better terms.

The hosts explore how cloud manufacturing platforms can strategically match demand and supply both at the customer level and raw material level to maximize asset utilization and price realization.

Patric offers counterintuitive guidance for founders building cloud manufacturing businesses, emphasizing the importance of maximizing utilization of existing assets before building new supply.

Timestamps

(00:00) - Introduction

(00:55) - Banter

(03:20) - Introducing the concept of cloud manufacturing

(05:26) - Coca-Cola as a B2B company example

(11:05) - Fast food franchises as another cloud manufacturing example

(12:35) - Cement and concrete manufacturing comparison

(15:19) - Benefits of cloud manufacturing over traditional contract manufacturing

(21:45) - Difference between cloud manufacturing and managed marketplaces

(26:20) - Examples of cloud manufacturing in construction tech

(32:05) - Maximizing utilization of existing assets vs. building new supply

(35:56) - Concluding thoughts on the future of cloud manufacturing in construction

Resources or Companies Mentioned

InfraMarket: A large-scale cloud manufacturing platform

Metalbook: An example of cloud manufacturing in metals supply chains

Z-Work: Cloud manufacturing platform in construction tech

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#CloudManufacturing #ConstructionTech #SupplyChainInnovation

About This Episode

In this reflective episode, Patric and Shub take a deep dive into the evolution of construction technology investment trends since Foundamental's inception in 2019. They examine which heavily-funded themes and business models lived up to their promises, which ones struggled, and what valuable lessons emerged for founders and investors in the AECS space.

In This Episode

The rise and fall of Katerra-inspired business models in construction tech, from asset-heavy manufacturing to cloud-based approaches and how the industry adapted post-Katerra

The evolution of digital general contractors for renovations, comparing successful cases like LiveSpace with challenges faced by companies like Block and Made

The limitations of iBuyer models in construction and real estate, particularly when interest rates and market conditions shifted

A retrospective analysis of quick commerce solutions for construction sites, examining why many marketplace models struggled with unit economics

Timestamps

(00:00) - Introduction and clarification about prime numbers

(04:12) - Discussion of Katerra-inspired business models

(09:21) - Digital GCs for renovations

(13:53) - Analysis of iBuyer models

(19:06) - Quick commerce for construction sites

(27:18) - Field software solutions and Procore competitors

(31:58) - Evolution of design software solutions

Resources or Companies Mentioned

LiveSpace: https://livspace.com/in

Block Renovation: https://www.blockrenovation.com/

Procore: https://www.procore.com/

SnapTrude: https://www.snaptrude.com/

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConTechTrends #StartupInvesting #ConstructionTech

About This Episode

In this thought-provoking episode, Patric and Shub explore how founders and investors in the architecture, engineering, construction, and supply chain (AECS) space can avoid building businesses on fragile assumptions. Using the recent DeepSeek AI developments as a springboard, they dive deep into what makes category-creating companies truly special and sustainable in the construction tech landscape.

In This Episode

The fascinating story of Japan's stock market dominance in the late 1980s, accounting for 42% of global equities, and the dangers of following consensus narratives.

The distinction between diversification as a risk management tool versus the pursuit of outsized returns in venture capital investing.

A framework for identifying "hidden in spite of obvious" opportunities in construction tech, illustrated through real portfolio examples like SnapTroot.

The importance of having differentiated insights rather than following generic trends, particularly relevant for AI applications in construction tech.

Timestamps

(00:00) - Introduction

(00:47) - Discussion of DeepSeek and current AI landscape

(04:58) - Historical parallel: Japan's stock market dominance

(10:43) - Debate on diversification vs concentrated bets

(23:43) - Hidden in spite of obvious framework

(30:21) - Case study: SnapTroot

(35:20) - Analysis of AI copilots in construction tech

(41:48) - Conclusion and wrap-up

Resources or Companies Mentioned

SnapTroot: A Figma-like platform for AEC 3D drawings and design

InfraMarket: Construction materials marketplace

DeepSeek: AI language model company

## Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConstructionTech #VentureCapital #CategoryCreation

About This Episode

In this candid discussion, Patric Hellermann and Shub Bhattacharya dive deep into what makes an ideal co-investor in the AECS startup ecosystem. Drawing from Vinod Khosla's observation that 70% of VCs add negative value, they explore the characteristics of valuable investment partners and share personal experiences from their work at Foundamental.

In This Episode

Most VCs chase the dream of being in the top 10% but ironically end up in the bottom 70% due to poor advice and overconfidence.

The only thing that truly scales in venture capital is knowledge, while brand name and network have limitations that many founders overlook.

Response time to founder outreach serves as a key indicator of investor quality, with responses within 60 minutes being highly favorable.

Working with equity partners versus employed investors creates different incentive structures and experiences for founders.

Timestamps

(00:00) - Introduction

(01:26) - Discussion of co-investor qualities

(04:12) - Framework for evaluating investors

(22:50) - Game theory and prisoner's dilemma in co-investing

(32:30) - Importance of investor response time

(35:43) - Equity partners versus employed investors

(38:05) - Final thoughts on investor selection

Resources or Companies Mentioned

Mosaic Ventures: https://www.mosaicventures.com/Chaffin Ventures: https://www.chaffinventures.com/Bessemer Venture Partners: https://www.bvp.com/General Catalyst: https://www.generalcatalyst.com/

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#VentureCapital #ConstructionTech #CoInvesting

About This Episode

In this insightful discussion, Patric and Shub dive deep into the concept of working capital and its importance in construction tech businesses. They explore how understanding and optimizing yield on working capital can be a game-changer for companies, particularly in managed marketplaces, fintech, and outcome-as-a-service models within the AECS sector.

In This Episode

Working capital fundamentals: Understanding the technical definition and practical implications of working capital in construction tech businesses

Yield on working capital formula: Breaking down how to calculate and benchmark working capital efficiency across different business models

Real-world benchmarks from fintech and managed marketplace companies, with examples showing yields ranging from 25% to over 140%

The banking mindset: Why construction tech companies handling working capital need to think like financial institutions to optimize their operations

Timestamps

(00:00) - Introduction

(03:25) - Defining working capital and its components

(06:06) - Understanding yield on working capital

(15:58) - Benchmarking different business models

(27:36) - Case study of successful fintech company

(35:46) - Analysis of managed marketplaces

(44:00) - Advanced working capital strategies

(52:13) - Conclusion and wrap-up

Resources or Companies Mentioned

Floating Point: Investment firm focusing on technology companies becoming financial services businesses

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConstructionTech #WorkingCapital #VentureCapital

About This Episode

In this insightful episode of Practical Nerds, Patric Hellermann and Shub Bhattacharya dive deep into what makes companies special in the construction technology space, drawing from their seven years of investment experience at Foundamental. They explore the unique traits and characteristics they look for when evaluating potential investments, from nonlinear founder backgrounds to exceptional financial metrics.

In This Episode

What makes founders special is their nonlinear experiences and approaches, exemplified through cases like Faktus where complementary backgrounds create powerful founding teams

Community building as a defensible asset in low NPS industries, demonstrated through portfolio companies like Speckle and Rayon that have rallied passionate user bases

The importance of working capital efficiency and return metrics in construction tech companies, with successful companies achieving returns exceeding 25%

Category creation as a key differentiator in construction technology, where unique approaches to solving industry problems can create lasting competitive advantages

Timestamps

(00:00) - Introduction

(01:07) - Overview of Foundamental's investment journey

(02:23) - Discussion of company evaluation criteria

(26:24) - Exploring unique founder characteristics

(37:26) - Category creators and market opportunities

(41:21) - Community building in construction tech

(47:38) - Working capital and financial metrics

(54:41) - Conclusion and wrap-up

Resources or Companies Mentioned

Faktus: Construction finance and payments platform

Speckle: Construction technology platform

Rayon: Construction industry solution

Metal Book: Materials marketplace

SnapTrude: Construction technology solution

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConstructionTech #VentureCapital #StartupInvestin

About This Episode

In this insightful episode, Patric Hellermann and Shub Bhattacharya reflect on their biggest investment regrets and the valuable lessons learned in construction tech venture capital. They explore how seemingly simple mistakes often have deeper root causes and discuss the importance of temporal diversification in investment decisions.

In This Episode

Understanding the distinction between facts and conjectures when gathering information from industry experts and how this impacts investment decisions in construction tech

The concept of temporal diversification in venture capital and why rushing follow-on investments without adequate time for validation can be risky, especially in construction tech

Drawing parallels between historical technological transitions and current investment opportunities in construction tech and AI, using the horse-to-automobile transition as an analogy

The importance of patience in discovering portfolio winners and why it typically takes five years or more to truly identify successful investments in construction tech

Timestamps

(00:00) - Introduction and 2025 kickoff

(01:15) - Reflection on 2024 episode goals and predictions for 2025

(03:07) - Introduction to investment regrets discussion

(08:49) - Shub's insights on external influence in decision-making

(21:10) - Patric's perspective on expert query fit

(29:32) - Discussion of temporal diversification in investments

(43:53) - Advice for founders on fundraising pace

(51:29) - Wrapping up and future plans for Practical Nerds

Resources or Companies Mentioned

Flow by Adam Neumann

WeWork

Trezio

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConstructionTech #VentureCapital #StartupInvesting

About This Episode

In this insightful episode, Patric Hellermann and Shubhankar Bhattacharya dive deep into a contrarian perspective on fixed versus variable costs in AEC tech startups. They explore how successful companies are challenging traditional venture capital wisdom by producing fixed costs but selling variable costs, particularly in construction technology, robotics, and infrastructure plays.

In This Episode

The hosts discuss ServiceTitan's successful IPO and its implications for the construction technology sector, marking a potential new phase in the market cycle.

They analyze the evolution of business models in construction technology, from traditional SaaS to outcome-as-a-service models, explaining why selling outcomes often proves more successful in construction than pure software plays.

They explore how cloud manufacturing platforms like Inframarket are revolutionizing the construction materials space by converting variable costs to fixed costs through capacity agreements with manufacturers.

They examine the transformation in construction robotics, using Monumental's innovative approach as an example of how robotics companies can succeed by selling outcomes rather than hardware.

Timestamps

(00:00) - Introduction and ServiceTitan IPO discussion

(03:26) - Deep dive into variable vs fixed costs

(27:17) - Cloud manufacturing and marketplace evolution

(34:19) - Construction robotics and outcome-based models

(48:29) - Distribution strategies and hybrid models

(55:48) - Conclusion and key takeaways

Resources or Companies Mentioned

ServiceTitan: https://www.servicetitan.com/

Monumental: https://monumental.is/

Inframarket: https://www.inframarket.com/

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#ConstructionTech #VentureCapital #RoboticConstruction

About This Episode

In this candid discussion, Patric Hellermann and Shubhankar Bhattacharya reflect on their journey of creating the Practical Nerds podcast and explore the role of authenticity in venture capital communication. The conversation delves into why they started podcasting, their approach to genuine dialogue, and how it differs from the typical VC content landscape.

In This Episode

The hosts discuss their motivation for starting a podcast without specific business objectives, viewing it as an extension of their natural conversations and a way to improve decision-making through open dialogue.

They explore the current state of VC podcasting and content creation, examining how many shows have become marketing vehicles rather than platforms for authentic discussion.

The conversation addresses the importance of maintaining authenticity in venture capital communications and why genuine dialogue matters more than polished presentations.

They reflect on the challenges of maintaining authenticity in an increasingly noisy venture capital ecosystem and why communication skills alone shouldn't be the primary signal for investment decisions.

Timestamps

(00:00) - Introduction

(00:50) - Reflecting on podcast beginnings

(05:13) - VC decision-making and information flow

(07:09) - VC content and marketing discussion

(09:06) - Analysis of recent startup funding

(14:44) - Authenticity in communication

(24:21) - Purpose of their podcast approach

(31:20) - Future format considerations

(34:00) - Impact of podcast appearances on startup evaluation

(41:37) - Conclusion and wrap-up

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#VentureCapital #AuthenticityInVC #StartupInvesting

About This Episode

In this insightful discussion, Patric and Shub explore the shifting market sentiment in tech and venture capital, examining recent mega-rounds and IPO activities. They analyze how the market appears to be entering a new cycle of optimism, particularly evident in recent funding announcements and IPO activities in India, with implications for the global AECS (Architecture, Engineering, Construction, Supply Chain) startup ecosystem.

In This Episode

Market sentiment is driving new mega-rounds, exemplified by Databricks' rumored $1B raise at a $55B valuation and Waymo's $5.6B raise

India's IPO market is heating up with significant listings including Swiggy's $1.4B IPO and Blackbuck's successful public debut

The emergence of mid-cap IPOs as an alternative to traditional growth rounds, particularly relevant for capital-intensive businesses

The potential impact of increased IPO activity on growth funds and private market dynamics

Timestamps

(00:00) - Introduction

(02:03) - Discussion on market sentiment and its impact on business

(04:28) - Analysis of recent mega-rounds including Databricks

(16:38) - Overview of Indian IPO landscape

(24:42) - Discussion on mid-cap IPOs and alternative funding routes

(28:18) - Impact on growth funds and market dynamics

(31:41) - Outlook for 2025 and concluding thoughts

Resources or Companies Mentioned

Databricks: https://www.databricks.com/

Waymo: https://waymo.com/

Zepto: https://www.zeptonow.com/

Swiggy: https://www.swiggy.com/

Blackbuck: https://www.blackbuck.com/

Connect With Us

Practical Nerds Website: https://practicalnerds.com/

Subscribe to the Newsletter: https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/

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

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

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

#TechIPO #VentureCapital #MarketSentiment