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While many construction companies focus on technology for efficiency and transparency during construction, significant opportunities remain in applying advanced tools to the preconstruction phase. Michael Ho, CEO of Bespoke Metrics Inc. discusses the importance of tech stack integrations, growing concerns around data ownership and security, and the role of prequalification in preconstruction. 1:00 Sponsors 7:23 Bespoke Metrics Intro 9:17 High Risk Prequal and Bringing Structure 10:30 Owner Developer GC Risk Management 11:20 Not Pricing Risk Appropriately/Eliminate Low Bidder Wins 12:30 Prequal will grow 16:00 Working on Prequalifications 16:12 Larger GCs Tracking Metrics and Data Points 17:09 Is Prequal Part of Precon? 17:56 Consider Personas: Partner Vs. Risk Who is the decider? 19:40 May have a Predisposition or desire to get a cheap price? 23:08 AI in Prequal Process 26:51 Data Collection, Data Verification and Standardization 28:28 Generative AI 31:30 All-In-One Solution? 33:05 Concept of Building Tech like an App 36:25 Tech Overload, Need Fewer Choices 37:43 Get a Tech Plan Now 38:48 Choose Best in Class 40:20 Has Tech made us more profitable yet? 41:20 Apples to Apples Pricing: Flat to Lower- Price Tech Accordingly 42:49 Invented Terms and Pricing Thank You to Our Sponsors: Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=... Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit https://www.themorninghuddleconstructionshow.com/about Subscribe to our weekly e-newsletter for the latest updates. https://lp.constantcontactpages.com/s...

In this episode, we’re joined by Scott Arias, CEO of ACE Consulting, and guest host Tom Hughes, VP of Construction Operations at Genesis AEC, to tackle the vital topic of construction scheduling. Scott breaks down the essentials of time impact analysis (TIA), explains the importance of "frag nets," and dives into how the critical path influences scheduling. With real-world examples and actionable advice, Scott makes it easy to understand how accurate scheduling drives productivity and protects your business. 6:57 Introduction Scott Arias 8:25 What is Time Impact Analysis? 12:00 When to Submit Change Order for a Contract Extension 12:45 Example of Contract Extension 14:56 Retrospective Claim Analysis 16:52 As-Built Schedule 17:12 Modeling Perspective: Design Change 18:20 Firm Impact of Overall Project 21:15 What is a “Frag Net?” 23:10 Who has the financial impact and owns the responsibility? 25:19 Need a Basic Understanding to Negotiate a Change Order 28:35 Keep Proper Project Documentation 30:16 A Dozer Costs Money if Its Sitting 34:13 AI Impacting Scheduling 33:30 Tools Used for Time Impact Analysis 36:36 Concept of 3D 37:39 Integration between Primavera and Procore 40:45 Baseline the Schedule 43:40 The Navy Used the Critical Path Method to Construct Submarines 45:30 Marking Up the Schedule Thank You to Our Sponsors: Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=... Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit https://www.themorninghuddleconstructionshow.com/about Subscribe to our weekly e-newsletter for the latest updates. https://lp.constantcontactpages.com/s...

Whether you are a minority contractor or not, this episode delves into what new opportunities exist within the electric vehicle industry and infrastructure. Specifically, our guest, Larry Bullock from the US Minority Contractors Association discusses how minority contractors can capitalize on the growing EV industry, and what partnership opportunities may exist for non-minority contractors. 00:46 The Morning Huddle Construction Show Sponsors 2:12 Catching Up with Stacey and Chad, Return of the Show Season 7, Episode 1. 4:00 Well Built- Chad's New Book 6:42 Steel Toe Communications discusses launch of Instagram and TikTok @CHAT_CTE 7:35 Introduction of Guest, Larry Bullock 12:57 The Economic Boom of the Transportation Industry. 15:10: 1/3 of where we need to be in fulfilling the 500,000 Station Promise, and half way through funding. Lots of opportunity. 15:53 The Joint Office for Energy and Transportation, www.driveelectric.gov/contact 17:12 Justice40: Goal is 40% of every dollar spent under the $5B operation should be spent in disadvantaged communities. 23:50 Which Non-MBE firms are partners with MBE firms. 28:00 Become Bid Ready 30:58 What kind of trades will be involved in installing and maintaining EV. 33:41 17 Electric Car Business Ideas: You Get in Where You Fit In 46:49 Closing Thank You to our Sponsors: Well Built Construction Consulting https://www.wellbuiltconsulting.com/ Steel Toe Communications (Digital Marketing for Contractors) https://www.steeltoecommunications.com/ Katz Abosch (Tax, Audits and Accounting) https://www.katzabosch.com/ Lawrence Law (Legal Challenges for Contractors) https://lawrencelawllc.com/ Sandy Spring Bank https://www.sandyspringbank.com/ Genesis AEC (Full Service Architecture, Engineering, Construction in Life Sciences) https://www.genesisaec.com/ Marsh McLennan Agency https://www.marshmma.com/?utm_source=google&utm_medium=ppc&utm_term=ntl&utm_content=resilience&utm_campaign=ntl-brand-awareness-mma&gad_source=1&gclid=CjwKCAjw3P-2BhAEEiwA3yPhwBStkU82B0UALO_Ro1GKvn_sfhRJaY7TaEfwisj92ciDKSpYt52NwhoCPAcQAvD_BwE Construction Links Network: https://constructionlinks.ca/ For additional episodes and information visit https://www.themorninghuddleconstructionshow.com/about Subscribe to our weekly e-newsletter for the latest updates. https://lp.constantcontactpages.com/sl/Ro2QrVt/Themorninghuddlepodcast?__cf_chl_tk=9S8PSaN6zCOUNBhPtHXE.qk8HWtzxNNluBDlsEYhZkg-1726511898-0.0.1.1-8361

AI and automation are reshaping the construction landscape. Technology enhances efficiency, safety, and cost-effectiveness by optimizing equipment usage, predicting maintenance needs, and streamlining processes. Companies that stay at the forefront of technological advancements position themselves strategically, ensuring they are well-prepared to address the evolving needs of future owners. Tune in to this engaging conversation with Adam Stark, CEO of Jet.Build, where we discuss how a top-down approach driven by construction owners, combined with contractor readiness, can shape the future of sustainable construction.

In this episode, Pat McGettigan, Vice President of Excellerate Manufacturing, joins us to share his unique insights into modular construction. From UPS data centers to driving innovation in off-site manufacturing, Pat's expertise sheds light on the pivotal role of modular solutions amid labor shortages. Throughout the discussion our guest host, Tom Hughes, Vice President of Genesis AEC, also shares his valuable knowledge, enriching the conversation on the convergence of manufacturing and construction.

In this episode, we explore the evolving landscape of social media strategies and transformative tactics in the commercial contracting sector. We'll examine the strategic collaboration where marketing, sales, and business development should converge, making "collaboration" a vital force in content creation. Our guests, Matt Graves, founder of Construction Yeti, and Jonathan Cor, founder of Customer Growth, share unique insights and uncover out-of-the-box approaches for securing optimal coverage and selecting the most impactful social channels. Join the conversation as we dive into innovative strategies to up your game in the competitive commercial contracting world.

A significant number of our field employees do not speak English as their first language. This language barrier has contributed to thousands of injuries and even deaths each year. In this episode, two-time Morning Huddle guest, Oscar Garcia, joins us to discuss how he is using artificial intelligence to breakdown language barriers and create safer job sites for Hispanic workers.

While Artificial Intelligence (AI) has been a part of our lives and work for many years now, the release of ChatGPT in 2022 has brought the possibilities of this advancing field to the forefront. People like Morning Huddle guest, Stjepan Mikulić dedicate themselves to researching the latest advancements and exploring the most viable technologies AEC firms can implement in the near term. He joins us to simplify the topic and help our audience understand how they might apply AI in their construction businesses.

The spaces we occupy for our work can make a world of difference in profitability. Our guest, Nitin Govila, is the head of Sales and Marketing for global textile manufacturer Serge Ferrari. Their materials are integral to a wide array of construction products, ranging from acoustical panels to PT concrete. He’ll share insights on constructing workplaces with sustainability and profitability in mind from the start.

Virtual design and construction (VDC) as a tool for building better spaces is quickly becoming the norm, but our guest for The Morning Huddle's 47th episode, Darren Young, believes in taking things a step further.

What if your VDC efforts were aimed at reducing waste, creating scalable and resilient technical frameworks, increasing data quality, and leveraging opportunities to generate new revenue?

Join us as we discuss aligning proven VDC technology with compelling business goals to build a better future!

Ryan Lanser, the Dirt Jedi, joins our podcast to talk about how his company has applied GPS and Drone technology to revolutionize how site work contractors estimate and plan their projects. We'll talk about how it works, what value it adds, and the future of this exciting tech.

Advances in construction materials and methods are allowing us to achieve amazing levels of sustainable building. Passive house design is one of the latest advances toward net zero and net positive buildings. In this episode, we’ll speak with Trey Farmer, architect and owner of a passive house himself! He’ll walk us through the passive house design approach and demonstrate how it is more attainable than we may realize for residential and commercial applications.

Transcript:

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00:11
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you'd not speed Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today, because the world, my friend, has changed, Right?

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00:27
Speaker 2
A Latin American construction workers, they have different needs. They.

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00:32
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community relations portion, you know, the most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

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00:50
Speaker 1
Funny, isn't? Yeah, not for me. Not for me. At 11 o', clock, I am guaranteed to be snoring. So, so foreign. Good morning. It is morning huddle time. We have Trey Farmer with us and of course, Stacy, my co host stadium. How are you today?

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01:14
Speaker 3
I'm a little depressed about the Eagles, you know, lost, but I will recover.

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01:20
Speaker 1
I am depressed for you. I know. I know how it feels to have your team lose in the championship game. Better than 30 other teams in the NFL, but not better than the one that was off. Man. That was. How about the holding call? Was it a call? Was it a hold or was it not a hold?

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01:42
Speaker 3
I don't know.

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01:43
Speaker 1
The player said it was a hold. He called himself out. He goes, it was a hold. It was. I, I didn't think it was a hold when it happened, but I respected the player afterwards in the locker room saying, like, no, no, I, I held him. I grabbed. That's what happened. So it was cool. But, you know, yeah, it's a, That's a tough one. I'm on this group text with a group of friends, all from Philadelphia, and yesterday it was like total crickets until about noon, and one guy just texted, and I'm talking like 15 people, and one guy just texted. I'm so depressed. Like, no motivation at all today, you know, kind of thing. And it is, it's.

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02:24
Speaker 2
It's.

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02:25
Speaker 1
It's tough, you know, it's hard to. Hey, next year. There's always next year. It's hard to rally it up.

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02:31
Speaker 3
Yeah.

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02:34
Speaker 1
Are you a football fan? Do you have, do you have a team?

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02:36
Speaker 2
I. I am a Patriots fan. So, you know, we've just.

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02:42
Speaker 1
Many years of relentless celebration followed by the inevitable, like, being okay as opposed to.

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02:48
Speaker 2
Yeah, well, it's, you know, like being from New England. Right. It was like were kind of on the other side of it with the Yankees for so long that then you know, it's kind of. It was good, but you could also empathize with the haters, so.

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03:01
Speaker 1
Totally. Yeah, totally. Like, yeah, I know what it feels like to feel like there's a team that just has an unfair advantage. Yeah. Yeah. Well, cool. So. So Trey joins us from Forgecraft Architecture in Texas in Austin, Texas. I've had the good fortune of having some exposure to their work in my work in Texas. And I, I haven't worked with Trey directly, but I was talking to one of his colleagues about interesting topics and he said, you know, what would be an interesting topic is passive house design. And I said, well, I don't know what that is, so you're going to have to tell me whether that's interesting or not.

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03:44
Speaker 1
And it turns out that Trey not only is Passive House certified and we'll get into what all that means, but also actually lives in a certified Passive house himself and can actually speak to it not just as a design professional, but can speak to it as a homeowner. And so Stacy asked this question right out of the gate, right? Like, is this only for houses? So, you know, we're going to get into that and many more questions. Stacy, I'm confident that the audience, through the course of our conversation, we'll have some interesting questions that pop up, as you always do. I'll leave you to stoke the interesting discussion and we'll bring you back here to get some, you know, audience questions before we wrap up.

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04:29
Speaker 3
All right, sounds good.

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04:30
Speaker 1
Thanks, Stacy. All right, so. So let's start from scratch. Assume our audience knows as much as I knew, which is absolutely nothing. Whenever we first talked. What is passive house design? Just a simple description.

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04:48
Speaker 2
Yeah, it is. So it's a third party certification and it's an above code building code, basically that's looking primarily at energy use. So it's basically the most aggressive above code building certification. So it's Passive House Institute. US is partnered with the US Department of Energy. So they're sort of like Energy Star zero, Energy ready, Home Net zero. And then Passive House is kind of the highest tier of energy efficiency. And so it, depending on your climate, it'll drop your energy bills by 40 to 80%. So the analogy we use a lot is a yeti. Yeti cooler. If you think about those old school coolers versus a yeti cooler, it's more insulation. The main thing though is that it's airtight. Like that airtightness really holds the energy really well. So you get a better building, it's more resilient.

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05:43
Speaker 2
When the power goes out, it'll hold your heat in the winter, hold your cool in the summer. And then also you're controlling where all of your fresh air is coming from in your house. So there's no leaks, nooks and crannies, no air sneaking in through the holes in the wall where the cockroaches live. It's all getting filtered through a port and mechanically brought in. So there's all these knock on benefits for health and, you know, no dust, no pests, all that sort of stuff. Really quiet. You know, we live pretty close to a highway and before we renovated, we could hear cars going over the expansion joints. We could hear trains whenever they went by and now nothing. Which is really great.

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06:20
Speaker 1
It is great. I live relatively close to a main road as well. And I'm. I was right after our conversation last week, I started like googling how do I go through a passive house renovation? Because just for the sound benefits I like, hey, you know, nice to save money too. But so okay, I've got, I'll start. I'm going to, I'm going to set you up with two questions relatively quickly. I can't decide which one I want to know. First one is what is the, I guess the what are the differences between net zero and passive house? And like, what are some things that make passive house design the most aggressive? What are the things that make it sor of, you know, unique?

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07:08
Speaker 1
And then, and then the second question right on the back of that is talk about, you know, just your application and where you are in the world and, you know, what the renovation actually consisted of. And then I'll take exhaustive notes and try to figure out a budget.

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07:27
Speaker 2
Perfect. Yeah. So you can have a net zero passive house. They're kind of, you know, net zero is like you use about the same amount of energy over the course of a year as you produce, usually with PV on a single family home. Anyway, passive house is probably the best way to get there. So the idea is you're pulling some of that money out of your PV or out of your utility bill and putting it into your mechanical system and your envelope. So more insulation, more better windows, more durable weather barrier, airtightness is probably the biggest lift, I guess, at least in our climate. And so the whole thing is cost optimized. Right. So it's like we don't want to throw so much insulation at your walls that you're getting these diminishing returns and just burning money. Right.

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08:19
Speaker 2
And also, you know, from an environmental standpoint, there's embodied energy insulation. And so we don't want to be trying to reduce our operational carbon. Right. The amount of, you know, fossil fuels getting burned to heat and cool your house by putting too much into your walls. It's all about kind of finding the sweet spot and trying to make a more sustainable house that's also healthier and lasts but, you know, does better in outages. So. So like, for our house, right. We're. We're in Austin, so relatively mild climate, you know, compared to the coasts and New England. So what that looked like for us, our walls are about double code. Our code minimum wall is an R13 wall. So that's a 2x4 with fiberglass batts here. So we have two by six walls and then we use the zip R6, which is.

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09:12
Speaker 2
So zip sheathing is pretty ubiquitous down here. It's like the sheathing with an integrated weather barrier, the green sheathing you see around a lot.

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09:19
Speaker 1
Yep.

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09:20
Speaker 2
And so they make a version of that has poly ISO on the backside of it. And you can get that in various thicknesses so you get your continuous insulation. But you only have to make one trip around the building. So we did that because it was like a little easier and more normal, you know, down here.

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09:37
Speaker 1
So this is. I'm going to pause here just for a second as I wrap my head around.

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09:39
Speaker 2
Yeah, the.

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09:41
Speaker 1
So. So this is an existing structure. It sounds like you're. You're, you know, pulling off the skin of the building to, you know, so that basically gets stripped down on both sides because you also have to go from 2 by 4 to 2 by 6. When you go to 2 by 6, you just fur out of 2 by 4 wall or do you literally, you know, replace all your studs?

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10:06
Speaker 2
We. So our house was 105 years old when we renovated it. And were intending to keep the two by four studs and do more. Do a thicker zip system, you know, thicker continuous insulation.

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10:20
Speaker 1
Okay, got it. So you would have just done it on the outside.

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10:23
Speaker 2
Yeah. And we looked at doing it on the inside and it was just, you know, very expensive and then. But our wall, it was like there were no jack studs, we had no headers. It was all balloon frame down below the floor. The floor was an inch and a half out of level. So we ended up redoing most of the framing. Like there's very little. It's a renovation, but there's very little of the existing wood that was in the house. You know, we thought were going to Be able to keep a lot more of it than we could. It's kind of like peeling away the onion and it's every layer you get to is rotten. So. So were lucky enough to be able to switch to two by six walls which is like, you know, gives us a little bit stouter frame.

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11:02
Speaker 1
Sure.

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11:02
Speaker 2
We didn't mind losing the X. We didn't mind losing the two inches of the interior, you know, footprint. And then were able to back off of that continuous insulation a little bit. Which also, you know, kind of saved us some money in our window detailing as well.

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11:16
Speaker 1
Okay, got it. So we've got the insulation. Now go to the windows. What did you do window wise?

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11:22
Speaker 2
So we used Marvin windows and they're triple pane. And we used a mix of. So were like the first shipment of Marvin Modern which is this line that they put out a couple years ago that are very sleek looking, high performing windows. And then we use some of their Fibrex windows, which is the ultimate. And then we use their wood clad windows because it's a historic preservation. So we tried to match the kind of historic facade with new triple pane casement windows but they have sort of a check rail on them so they look like double hung windows from the outside. We're in a protected historic neighborhood.

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12:03
Speaker 1
Got it.

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12:03
Speaker 2
So we wanted to kind of. So we, you know, redid the detailing, redid the brackets and the roof detailing and used siding that matched the profile and window casing and trim that match what was there before. But now they're new triple pane windows that look kind of like double hung unless you come up really close to them and inspect them.

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12:22
Speaker 1
Awesome. Awesome. All right, cool. Anything else that you did to finish yours?

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12:29
Speaker 2
I'd say so then. Yeah. So airtightness is a bit, you know, going for here code,irtightness is 5 air changes per hour. Right. So that's sort of the leakiness of your building. And we had to be at 0.5 so 10x code which is quite tight. And so when you get to that level of airtightness, then your mechanical system, you know, we have a ventilator. So we're constantly bringing fresh air in with an erv, which is basically a box that allows you to constantly bring fresh air and without paying the energy penalty. So it's like pushing stale air out and the heat and moisture energy kind of come to equilibrium in that box. So you're not basically. So it's. You're not paying the same energy penalty if you're just like Open a window for all day long.

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13:14
Speaker 3
All.

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13:14
Speaker 1
All in.

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13:15
Speaker 2
If.

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13:15
Speaker 1
Can I ask roughly budget wise, what this, you know, square footage and roughly what it costs.

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13:22
Speaker 2
So our house is 2100 square feet. And then I'm in a loft right now. So one of the things that's kind of cool is we moved the insulation from the ceiling up to the roo and we got a nice little bonus space. It's my office now, but we also were able to carve into that like in the kitchen. We can post some photos later, have this big, like sort of splayed light. Well, and then our bathrooms have some skylights. So you kind of steal back some of that space, which was just kind of dumb hot space with our AC in it. It's kind of crazy that we run our air conditioner through, you know, the hottest space that's even hotter than outside, you know, so.

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14:00
Speaker 2
So yeah, as far as price, you know, I think a typical, you know, like this was a custom home, right. So it's not the cheapest home you could possibly build. It wasn't, you know, ultra luxury either. But were able, we'd say probably like 5%, you know, somewhere in that like 5 to 8% range. Also, like, were learning a lot. We hustled a lot of materials from friends. So, you know, I think 5% is a good target. And what we're seeing in multifamily is you can actually get down to cost parity with this really, with passive house. Because, you know, as you think about like multifamily building a unit only, you know, might only have insulation on two sides right.

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14:44
Speaker 2
On the exterior walls, but then it's got all these shared walls and then there's this economy of scale, you know, in your, you're repeating everything so many times. So. Yeah. And then as the markets mature, you know, we see a lot more passive. House in Seattle, Portland, Vancouver, and then sort of like New York, Chicago, Philly are definitely like ahead of the adoption curve. We're still kind of new at it down here, so we're still learning, our trades are still learning, we're still getting our supply chains up and running. But what we've seen in those other markets is that the costs come down pretty quickly when people start doing it all over the place.

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15:21
Speaker 1
So now we're getting to that question, which is, you know, it's obviously not only for single family homes. Talk about some applications where this is, you know, currently working in the United States and elsewhere.

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15:33
Speaker 2
Yeah. So were talking before we jumped on the first Passive House certified hospital just finished its certification in Frankfurt, Germany. So I think that's about a 30 million euro project. Pretty cool though. You know, like it's a big benefit of this is the healthy air and the comfort and so having hospital is like probably the first place you'd think of. There's New York, there's some, you know, 40, 50 story condo and apartment buildings going up that are passive house certified. There's schools, museums, you know, it's really all, it runs the gamut, you know, single family homes. It kind of started with single family homes and then affordable housing and really like Europe, Pacific Northwest and the Northeast are where things have taken off over the last 10, 15 years.

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16:31
Speaker 1
But that's awesome to hear that there are so many applications and I particularly like, as I think about comfort and you know, you think about, you know, health. There's the, to me, a really natural and relatively hot, relatively, you know, hot market in the US right now is senior living. Are senior living projects looking at this?

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16:59
Speaker 2
I would think so. We, we do a lot of like affordable and workforce housing. We did one senior living project maybe like five or six years ago, but it's not something that we're, our firm is focused on. I would be pretty surprised if there wasn't senior living. Looking at it, I know of a couple projects like in Maine and Massachusetts that are doing it. But yeah, totally makes a lot of sense. Senior living anything that's, especially with like legacy owners, you know, where if you've got like a senior living facility that's going to be owning it for 10 years, then you know, you're going to pay back the first cost and then after that it's all just gravy. You know, you're getting all of the health benefits and durability benefits and significantly reduced utility bills.

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17:44
Speaker 1
Yeah, it's, it does seem a no brainer particularly if you're getting close to cost parity in, you know, in the construction phase. That, that's usually the thing that causes everybody, you know, all the deals to break down this way is like, yeah, well be nice to do.

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18:00
Speaker 2
Yeah, exactly. You know, that's, we work with a lot of like supportive housing provider and so they're going to own the project for 50 or 100 years. So it's like why not get out in front of it? And you know, and it's also, it's starting to become code. A lot of areas are setting it up as a reach code. Massachusetts just set it up as a reach code for multifamily, where cities and municipalities can opt into it. And so I think there's five or six municipalities in Massachusetts that are going to start requiring it for anything over six units, which is pretty exciting. So then that'll help that cost curve come down, too.

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18:38
Speaker 1
Yeah, it does. I mean, there's always the initial pushback and frustration and, you know, I'm sure plenty of contractors and plenty of developers are, you know, will be throwing their hands up. But, but as you, if it really fundamentally does, you know, bring the cost curve, you know, if the cost is close.

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19:01
Speaker 2
Yeah.

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19:01
Speaker 1
Unless you're literally building to sell, you're going to benefit from it if you're the owner.

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19:08
Speaker 2
Right. And then there's code is there also to help the end user and protect people and things like that. So it's, I mean, the ROI question is like, it makes sense, Right. As a first thing to think about, but it really is, you know, it's just the first cost of the building. And what about the overall cost of the building over 50 or 100 years is going to be in use? And then that's not even considering, like, the health costs of, you know, childhood asthma and things like that, you know?

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19:37
Speaker 1
Yeah, if we're going to put dollars on something like that.

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19:41
Speaker 2
Right, exactly.

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19:42
Speaker 1
Which does have a financial aspect, but it's also bigger than that. What would you pay to keep your kids, you know, healthy?

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19:47
Speaker 2
Yeah, yeah, exactly. What's the, what's the return on investment on granite countertops versus your kids?

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19:55
Speaker 1
I have a formula. I'll run past you.

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19:59
Speaker 2
We'll figure it out.

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20:04
Speaker 1
So how do contractors react to this type of building standard and how does this actually impact. The majority of our audience are contractors, general contractors, specialty contractors. How do they react to this type of standard and, you know, how can they help or hurt?

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20:24
Speaker 2
Yeah, I think it runs the gamut. You know, like, some contractors are really excited about this and will jump at the chance to get involved. You know, like early adopters or people really trying to, like, push the boundaries of what they're doing and then some, you know, we get a lot of groaning as well. So, you know, it kind of similar to how our firm had worked with you on these projects in Houston was like, we want to create a, like a team that's collaborating around the project. So, like, everybody's involved. You know, if it becomes antagonistic thing where it's like we're forcing this down the contractors throw, then that's not going to work.

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21:03
Speaker 3
Right?

‍ ‍

21:03
Speaker 2
It's not going to be a successful thing. We all need to be on the same page about it. We all need to want to be doing it for the same reasons. And sometimes that means educating contractor, sometimes that means incentivizing the contractor. Sometimes that means working with a different contractor. You know, really, we want to. We want to work with contractors who want to work on the project and are excited about this kind of like, you know, pushing things forward or whatever you call it.

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21:30
Speaker 1
Yeah, it's a mindset. It's a mindset. And I. And you know, as I think about it's this case for all. I don't care what standard we're building to or what code we're building to. It's always the case that your specialty contractors need to become good partners for each other out in the field, thinking about the guy that comes before him and the guy that comes after him and taking care of each other through the course of it. But when you're building to this type of standard, especially when it's new, what are the things that contractors would do that, you know, maybe it's cutting corners, but how does a contractor accidentally, or maybe not so accidentally undermine, you know, hitting this type of standard?

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22:16
Speaker 2
Yeah, I mean, airtightness is really the tricky one, especially in our market where, like, our existing codes are pretty loose. And so it's not really. There's not a lot of, you know, buffers. Like, there aren't requirements around airtightness testing necessarily that are getting followed. And then just the code minimum is pretty loose. You know, adding more insulation, that's in your spec, that's very easy to price. Right. It's easy to detail. That's kind of, you know, no biggie. The mechanical system, same thing, right. Like, it might cost a little bit more, but the mechanical engineer is kind of dealing with the design and the installer is able to, you know, handle the install and execute. Airtightness is tricky because it's like there's so many trades, right?

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23:02
Speaker 2
You've got your electrician, your plumber, your H Vac guy, you know, random, you know, subs who are coming out. And so it's like you've gotta that and that's where it really is on the contractor and where it's tricky and where I have a lot of empathy for the GC because this is a thing where they're. They're already having to, you know, kind of babysit a lot, right? And like, you know, keep an eye on everybody and make sure Everything's happening the way it should be and the way it's drawn and working well. And now they also have to make sure that nobody's poking any holes in the building without air sealing it or that they're. You know, it's like when you're running electrical conduit, you know, it's one whole, one thing, right. With, with air sealing.

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23:45
Speaker 2
Because if you bundle all your conduit, put it through one big hole, it's really hard to air seal that. But if you just poke one wire through, you can seal it really well. So just like some different ways of thinking about stuff, some different ways of training. It's really about communication at the fundamental level. Like, like the doing is not too tricky. It's the communicating and making sure everybody's on the same page and everybody understands why we're doing this.

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24:09
Speaker 1
Yeah. As the designer on the project, are you actually out there doing any training, you know, helping, or are you training the GC how to train or how does that work?

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24:18
Speaker 2
Yeah, we do especially on like the single family stuff. We're a little more involved, you know, on the ground, like with our house, I mean part like as our house too. But we really wanted it to be a kind of like open source case study. Right. Like were have the opportunity to do this thing that was a little new. We were working with a builder who has a friend and who was really into it. And so we hosted, I don't know, probably like 15 sort of open houses where we had Huber come and do a zip install showing how to air seal and detail around windows. We had Marvin do a install. We did a bunch of blower door tests.

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24:55
Speaker 2
We rented a fog machine from Rock and Roll Rentals and filled the house up with smoke and then positively pressurized it so you could see where all the air leakage was because there was smoke pouring out.

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25:04
Speaker 1
Oh, that's fascinating.

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25:05
Speaker 2
It's really fun. And just like bought a lot of beer and barbecue and invited everybody we knew over to see it. So trying to show that it wasn't, it's not too weird or too crazy. But yeah, again, like a lot of collaboration with our builder and with our trades, which was really, it's really fun. You know, as long as everybody is like into it and on the same page, it's like, it's super rewarding for me because I learned a ton from the trades and our GC about how the things are actually getting installed, the sequencing and that helps me be a better designer. And then that all kind of comes full circle.

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25:42
Speaker 1
Yeah, that makes total sense. I think so Brought in Stacy. I know we have some questions that we want to get to, but I just want to say before we do that I think you've done a really great job of taking this thing that like a lot of these things, Trey, it's like it's new. It feels a little green or annoying to some people. Right. Like, you know, like if you're not on the, if you're not like thinking sustainably, it can sound just sort of like, oh God, you know, like we're doing more. Yeah, but I think you've done a really nice job of making it easy to understand. And, and like you said, like, you know, making it not weird or scary. You know, like it's. This is not that strange.

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26:34
Speaker 2
It's.

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26:34
Speaker 1
There are just a handful of things that we're doing here to focus on. I love the yeti cooler analogy. Air tightness and recognizing that if we can focus on that, we can dramatically reduce our energy consumption, which has just that. Who doesn't win? Aside from utility companies when we do that? You know, that's a, you know.

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26:57
Speaker 2
They, they win too though, because it's. Then the house kind of acts as a battery and so they're not their peak. You know, it's really expensive for them to have this like really variable load. And so we can kind of squish those peaks with more of these buildings because you can pre cool them or preheat them and then at those times when they'd have to.

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27:14
Speaker 1
Great point.

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27:14
Speaker 2
Plants that are super expensive. So we see a lot of utilities buying in or some utilities. Some utilities that are a little more forward thinking than others. But yeah, we love it. Our firm is now only doing passive houses for custom homes and we're using it as kind of a sandbox. Those have a little bit more customization and wiggle room, but we can learn a lot from them. And then we can track those lessons learned up to our multifamily and commercial projects and see, okay, we know we can do this easily. We know it's not going to cost a lot. Let's track that up and start getting contractor buy in on the bigger stuff.

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27:46
Speaker 1
I can't, I can't wait to start seeing it on some of the bigger stuff that I'm involved in. And you know, if anybody's watching, thinking about, you know, a strong multifamily quality architect, that's the space that I've worked with these guys I've Never personally experienced a more participatory and, you know, stronger partnering mindset from an architect. Just really going out of their way to make it easy for construction to occur and, you know, communicating openly and often. So they're a great pick if anybody's looking for one. So, Stacy, what do we have for questions? I want to try to get at least a couple in here before we wrap up.

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28:33
Speaker 3
Sure. Dennis has a great question. How does the design work with the new Covid Air requirements? Most builds are going to more air movement and air changes.

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28:46
Speaker 2
Yeah. And Chad, thank you so much. I was getting goosebumps there. You know, we really strive for that and try to. And we've loved working with you and your team and that the whole idea of, you know, like a high trust relationship and everybody being in it for the project has really changed how we think about it, so.

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29:03
Speaker 1
Oh, thanks, man. That's great to hear.

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29:05
Speaker 2
Appreciate your work. Yeah. So it's essentially like it's perfect with COVID requirements because we know how much we're ventilating. You know, most homes don't actually bring in fresh air. They're just. The analogy I've heard is kind of when you flush a toilet and the water just swirls around. Right. So. So we're actually bringing in fresh air 24 7, meeting our ASHRAE 622 requirements, filtering all that air with. We have a MERV 16 filter box and then MERV 13 filters on our dehumidifier and our ERV. So you're catching all those virus particulate and controlling your fresh air. So your CO2 stays down, you're breathing well, you're sleeping well. So it really pairs well with all the COVID error requirements.

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29:55
Speaker 3
Thank you. So what is Source zero? How can you explain that?

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30:01
Speaker 2
So Source zero is kind of an add on to the Passive House certification where. So we're doing an energy model, like a 3D, you know, pretty robust energy model that Phius, the Passive House Institute US is vetting through many rounds of review. And within that energy model, if you have more production than use, then you know, and then you execute that in the actual project. Then you get this Source zero tag. So it's basically saying that the project. And so that's. Sorry, it produces as much as your house. And then there's a. Essentially depending on your utility, there's a metric for like how much transmission loss you're getting. So that's why it's Source zero instead of site zero. That makes sense.

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30:47
Speaker 1
Got it. Got It, I think, you know, I'm glad that there are people like you and obviously, I'm sure lots of colleagues out there who are, you know, really working to take these, you know, high minded concepts about reducing our carbon footprint and creating more sustainability and you know, reducing overall energy consumption and really turning them into practical application and asking yourself, how do we get it to actually happen? And, and I love hearing that as a firm you're only doing this type of design. And, and you know, that's awesome. I mean that's, you know, with single family. I heard that part of it too. But with single family, this is the only type of, you know, custom single family design that you're doing.

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31:40
Speaker 1
And I, I think, you know, that's how you know that there is momentum behind a thing and that the thing isn't so pie sky, you know, cost prohibitive, painful that it won't ever get legs. So I'm sure there are hurdles. I'm sure there are going to be still projects for which this doesn't make sense and where, you know, people push pause and say, yeah, we're not going to be shooting for passive house certification here. It just doesn't make sense for, but if overall it moves the needle in the right direction, I think that's, you know, that's when again, it's a win for everybody.

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32:21
Speaker 2
Yeah, for us it was like, you know, we did a handful of them and having lived in one. And then Scott, one of the founders of our firm, lives in a very close to passive house home that he built from his family. And it's just like, okay, this is, there's no other way to do this. It's just got to be our best practice. And so if we just plant a flag then we're, you know, we're hoping that people will come to us who want to do this and really, you know, it's like the energy, we kind of came at it from the energy efficiency and the sustainability side, but after having lived in them and feeling like the health benefits and the comfort benefits, like, that's really where it's at.

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32:58
Speaker 2
You know, I think we do it for these reasons, regardless of the other stuff.

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33:03
Speaker 1
Yeah, yeah, no, that, and that was, that's exactly what I said. You know, it's like to everybody's benefit, probably most of all to the occupants of the space, which is, that's how, you know, it's a really, you know, it's not just to meet some code requirement, you know, goal there's, it's just fundamentally better. So it's great stuff. Last question. Do you do. Where will you take on projects? Are you only designing in Texas?

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33:30
Speaker 2
No, we do. We do work all over the country. We're primarily in Texas, Austin, Houston, Dallas, San Antonio. But we have done projects in California and Pennsylvania, Colorado, New England. So we'll go anywhere. We love it. I mean, it's all, it's a new challenge everywhere. Working in new climate, new space, and that's the fun thing for us. And then I saw the tax credit question in the chat. So with the Inflation Reduction act, you get tax credits now for Energy Star and Zero Energy Ready Home. So it's, you know, the Zero Energy home is a higher tier. So if you certify with Passive House Institute us, that's safe harbor for both of those. So you automatically get Zero Energy Ready Home, epa, Indoor Air Quality plus and watersense certifications when you certify with vs. Nice.

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34:23
Speaker 2
So you're, you can get those tax credits which can really add up, especially in a multifamily or a common lot. Right. Like $5,000 a unit can. Can add up.

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34:31
Speaker 1
That adds up fast. No doubt. That's. That's great to know. Very cool. All right, good. Stacy, anything else on your mind?

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34:39
Speaker 3
I was just curious, do you have any videos you could share? I'd love to include like a visual for our follow up email to our viewers.

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34:48
Speaker 2
Sure, yeah, we can, I'm sure we can dig something up.

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34:51
Speaker 1
All right, awesome. Yeah, send it. Maybe post it in the chat here even and you know, send it to Stacy. That way, you know, regardless whether you're so. You know what though? Darn it. People need to be on our mailing list, so please email us to be added to our weekly mailing list. Email Stacy H. Steeltocom.com and we'll get that stuff over to you. The tray shares.

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35:18
Speaker 2
Awesome. Yeah, we did a few videos with the build show during construction that I can share. Was pretty fun.

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35:24
Speaker 3
Awesome.

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35:25
Speaker 2
Nice.

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35:26
Speaker 1
All right, cool. Any parting comments, Trey, before we wrap it up?

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35:30
Speaker 2
No, just thank you guys for doing this and for having these conversations. I've really enjoyed getting into your podcast over the last couple months. And also, you know, big shout out to Chad if anyone's doing a multi family project, bring him in on the team. Been a huge asset to us.

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35:47
Speaker 1
They are not my customer and I'm not paying. Trey. It's. I don't know, I don't know what else. I was brought in by the developer and you know, I've been pretty hard on their guys, but they're, I mean, really, I'm hard on everybody on the project. But, but the project is this team is that we're working on together is really clicking. And, and it's anyway, lots of.

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36:08
Speaker 2
Thank you.

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36:08
Speaker 1
I appreciate that. Clearly I don't know how to take a compliment. I'll. Trey, we'll have to catch up again soon. I'll be, I'll be in touch next time I run down to Austin.

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36:21
Speaker 2
Way great. Appreciate it and be fun. Take care.

‍ ‍

36:26
Speaker 1
All right, Stacy, let's do a little housekeeping and talk about next week. So next week, same time, same channel for episode number 41 with Tim Klimchock. Tim is a, I don't know, maybe 25 year or 30 year accountant. He was a partner at an accounting firm for many of those years. Fantastic book of business, all serving the AEC community. And he recently left and started a really his own little consulting gig helping to work, you know, just on the consulting end of getting contracting companies, financial houses in order, which has been, I work with Tim on some of my client engagements. He's doing an awesome job and I really wanted to pull him into this discussion. He's going to talk about the type of relationship that the contractor should strive to have with their accounting firms.

‍ ‍

37:25
Speaker 1
And I think there's an opportunity in there to, for business owners, for CFOs and controllers as well as our, you know, obviously anybody else in our regular audience to learn. But this might be one where you drag somebody in the CFO suite or you know, the controller suite into this show and have them listen in because, you know, Tim built an amazing book of business really based on the principles he's going to share with us, which is going to be cool. So, so there's that for next week. Obviously we're always asking you to join our mailing list and be sure to catch us on all of our platforms, obviously live on LinkedIn, YouTube, Facebook, but then be sure to check out our recorded shows on Apple podcasts, Spotify and YouTube. Every week we get those uploaded right away.

‍ ‍

38:16
Speaker 1
So if you missed the show, you will catch it later on same day. Stacy, anything else that I'm forgetting from a housekeeping standpoint?

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38:25
Speaker 3
I don't know if we can announce it yet, but we will be attending one A conference soon live. So maybe next week we can see if we can get permission for that announcement, I think.

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38:40
Speaker 1
Yeah. Okay, we'll wait till next week. We'll wait till next week. But, yeah, we are gonna do our first roadshow. We're gonna we're gonna be live at a conference this May in the D.C. area. And we look forward to that experience and getting it under our belt and then maybe kind of making a thing of it, doing it on a regular basis and checking out where some of the coolest conversations are happening in the industry and going and joining those conferences for a live show. So I look forward to that. That's a great point, Stacy. And we'll have more to share as those details become formal. So. Awesome. Anything else?

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39:15
Speaker 3
That's it. Have a great day.

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39:17
Speaker 1
Have a great day. We'll talk to everybody soon. Please tune in next week.

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39:22
Speaker 3
See y.

‍ ‍

We've had on a few guests with leading views about integrating more manufacturing practices with construction. It seems like a relatively new trend to most, but to people like our guest Gerry McCaughey, offsite construction is how things have been for a long time.

Gerry has been building offsite for over 30 years between Europe and the US, and he joins the show to tell us why any other method is a mistake. Join us to hear from a true veteran in a construction space that is gaining traction.

Transcript:

‍ ‍

00:01
Speaker 1
All right, morning huddle time.

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00:02
Speaker 2
Good morning.

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00:03
Speaker 1
I'm not saying it works. I wish you Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right.

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00:17
Speaker 2
A lot of American construction workers, they have different needs. They have completely different needs.

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00:22
Speaker 3
These awards have a huge like, criteria that you have to fill out. And they usually have a community service or community.

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00:32
Speaker 2
You know, the most productive.

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00:34
Speaker 3
With a high performance value. And you know, sometimes it's 11 o' clock at night.

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00:40
Speaker 1
Funny, isn't that? Yeah, not for me.

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00:43
Speaker 3
Not for me.

‍ ‍

00:44
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

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00:47
Speaker 2
So.

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00:48
Speaker 3
So.

‍ ‍

00:57
Speaker 1
Good morning. Morning huddle time. I'm Chad Prinkley here with Stacy Holzinger and our guest, Jerry McCaughey with Off Site tech. Jerry, thank you so much for joining us this morning.

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01:09
Speaker 2
Thank you very much. Although when you said the morning huddle, I didn't realize that you meant this early in the morning. Right.

‍ ‍

01:15
Speaker 1
So when we invited Jerry, we said, hey, it starts at nine. He said, perfect. And we said on the east coast. And he was already signed up. There was no kicking out.

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01:25
Speaker 2
Early start this morning, boys. Early smart. I already start.

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01:28
Speaker 1
You're joining us from California by way of Ireland.

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01:32
Speaker 2
That is correct. Well, and it's raining outside in California, which they told me it never rains in Southern California, but not today.

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01:40
Speaker 1
Feels like. Yeah, so it's, it's election day here in the, you know, November 8th. My kids schools are closed. I never had off when I was a kid either. During election Day, my kids can't vote. So I'm not sure why they're off. But you know, it's, hey, get out and vote if you haven't done it already. If you're watching us live, make sure that you get out and vote. Use, use the opportunity to do that. So today we're going to be having a conversation about the, you know, about off site construction.

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02:22
Speaker 1
We're going to be having a, you know, we've had that conversation, I think in two different ways as I look at past episodes and in both of those conversations, really interesting, but in both those conversations were talking about it really from the standpoint of people who aren't, haven't done it, you know, personally and lived in it over the course of time. There were some, you know, people who've been consulting in it, some people who are, you know, in their engineers or think, you know, who are trying to influence more off site construction. But Jerry's lived it and not just recently. Jerry's lived it over the long haul. And that's something that I really want to hear from Jerry about is not only, you know, offsite construction. Okay, we've heard it, we've been talking about it. It's a pretty hot topic right now.

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03:20
Speaker 1
But, but you've got a long history with this. Not just like, you know, trying it in the past 10 years. What's it like, you know, to really run an offsite construction based company? And so that's going to be the nature of our conversation. Stacey, make sure that we get really cool questions from the audience and we'll bring you back here toward the end of the show. Good?

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03:45
Speaker 3
Yep, sounds good.

‍ ‍

03:46
Speaker 1
See you in a bit. So. So Jerry, I want to start off by just kind of hearing your story. We say you're in California now by way of Ireland, but kind of weave it together for us. What, what's the, what's your story in the construction industry?

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04:01
Speaker 2
Well, I mean, you're right. I mean my history in off site construction spans close on 40 years. But my family's involvement in offsite construction literally goes back 60 years. So when people talk about it here, they sort of not talk about, but when people get the impression that it's something that's relatively new, it's far from it, especially on the other side of the world. But there's an interesting story about the connects up the dots between Ireland, the United States and my involvement in offsite construction, which was that my dad was originally a carpenter. And back in the late 50s he left Ireland to emigrate to the US took a boat from Cork and ended up in New York. And that's where he first discovered homes built, you know, houses being built out of wood frame.

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04:49
Speaker 2
Because in those days everything in Ireland was built out of concrete blocks one block on top of another. But he was a carpenter primarily. He was actually a roofer and a finished carpenter. That's what he did. So he goes to America and he discovers these guys building homes out of wood. And as a carpenter, he thought, oh, this is a great idea. And so a couple of years later he emigrated back to Ireland and decided this is what he wanted to do. But it never dawned on him when he went back to stick frame, although that's what he learned. Now don't ask me why I never asked him.

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05:24
Speaker 2
He passed away two years ago why that was the reason Maybe it was the weather, but I think it was more to do with the cultural upbringing of a European is that you would automatically think that if you're going to manufacture or build anything, you'll try and do it indoors under factory controlled conditions. So when he went back, he literally rented a small building and started making wall panels and plywood gusseted roof trusses and designing homes, little single story buildings and going out at the weekend with his brothers and his friends and erecting these. And that effectively became Ireland's and pretty much Ireland and the UK's first off site construction company. And that went on to become very successful in his time.

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06:09
Speaker 2
By 1985 I think he was the largest because he sort of, when you say started a company at that point in time he really started an industry and so other people entered it. And by 1985 he was doing relatively well. I think he had three or four hundred employees and he was the largest offset manufacturer in Britain and Ireland. And I was in college at that point in time doing a marketing degree and I had to write various different reports to get my degree. And I picked the off site industry not because of any particular interest in it, but because, hey, my dad worked on it and I knew you could access the information relatively easy, right? And so I wrote a number of these reports.

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06:53
Speaker 2
I wrote my first report in 1982 and when I went to University College Dublin, I wrote a report which was basically how to set up a international B or an Irish based international off site construction company is as strange as that sounds, and handed it in, got my degree. Apparently I got first in the class for that report, but I mean I had access to colossal amount of information. I went off at that point in time to live in California after I graduated. And unknown to me, my dad was, and I spent a couple of years here. My dad sold out of his business in Ireland and he had been out of it for a couple of years and I think he got bored.

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07:37
Speaker 2
And one day I got a phone call from him saying, would you remember that report you wrote when you were in college about building an international offset company out of Ireland? Did you believe it? And I can remember saying to my dad, I can't barely remember writing the report, let alone what was in it. I was more interested in chasing girls around California at that point in time than remembering what I'd written in college. And anyway, he said, I'm going to send it to you. So he sent it to me and he said, you read it and if you think it's true, Come back here. Those exact words were, put your money where your mouth is and let's have a go at this. And three months later, I got on a plane on December 8, December 9, 1989, and flew back to Ireland.

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08:19
Speaker 2
And myself and my brother and my dad and another guy by the Name of Jim McBride set up a small company in Monaghan town, which is 6,000 population, 6,000 people in 80 miles north of Dublin. We set up a company called Century Homes out of a building that was 5,000 square feet and proud to say 15 years later, that was the largest offset company in Europe. And we had five factories, three in Ireland, two in the uk. We were shipping as far away as Japan and we had 650 to 700 employees. And we had done the world's first six story wood frame building. We had done the UK's first zero carbon, not zero net energy, way past that, we did zero carbon. So we basically pushed the limits of engineering and we pushed the limits of thermal performance in buildings.

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09:04
Speaker 2
And that sort of took up to 2005. And in 2005 we sold that business to Kingspan, which is a large buildings material company based out of Ireland. And I stayed on a CEO in that till 2008 and then I moved to the US and that point in time, 2008, the world was in free fall, the financial markets were in crisis and basically the housing market was in devastation. And housing had gone from 2.2 million at its peak at that point in time down to about 550,000. But I kept looking at how Americans were building homes basically the same way as my dad had seen it pretty much 40, 50, 60 years ago and going, this is crazy, there has to be a better not, there has to be a better way. There is a better way.

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09:52
Speaker 2
And then waited for the market to turn around. And when the market turned around and went out and pulled together a team of people that had worked with in Ireland before and set up a company in California called Entecra. And we raised 45 million from Louisiana Pacific and set that business up and then got it up to a significant scale. And I mean I've been traveling up and down from Northern California, Southern California for five, six years, said, no, it's time for me to step back from that role. And then now, I then went into consultancy, basically helping, because now I think we help to light the fire under people to look at offsite as being a serious alternative to traditional construction methods.

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10:33
Speaker 2
And now I'm helping companies to transition to the offsite Industry, but not in the, not on answer is not in the sense of the way people here think of component manufacturers. My, that's never been my view of life. Off site companies and component manufacturers are two different entities. And also in that sense, I'm also pretty much at the technological side of things. I like to push technology and that's the way I've always done it. So everything that we do is digital and it's a high tech on the manufacturer from the manufacturing perspective. So that sort of brought us up to today. So that's how I got here. I love it.

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11:09
Speaker 1
That's great. That's, it's a fascinating, impressive story and I think it's got to be loaded with lessons and that's what. Oh, God.

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11:25
Speaker 2
Right.

‍ ‍

11:26
Speaker 1
An immense amount of lessons.

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11:27
Speaker 2
Right.

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11:28
Speaker 1
And so I think I want to explore one thing briefly before we get into lessons, and that is you talked about not being a component manufacturer in our very first conversation several months back. What really jumped out to. One of the things that jumped out to me in that discussion was that you were sort of saying, you know, look, there are a lot of people who claim to be doing off site and they're not really, they're just bringing one piece to the table and that might be a good choice for their little piece of the puzzle, but it's not actually correct, you know, solving the, the problems that true off site can solve. So talk a little bit about, you know, the differentiation.

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12:15
Speaker 2
Yeah, this is an important point because it actually does go to why off site, as a European understands off site, why it hasn't taken off up to now to the extent that it has in say, other parts of the world. But there is. So when I let me just start again, clearly says a component manufacturing company is not an off site company. That's absolutely. And actually by definition just anybody there go on Google the word component and you'll see that it's an element, a part of something. But on the other hand, off site is a system by definition. A component is part of a system, but the system is a totality of it. I mean, and as you know, Aristotle said 3,000 years ago, the whole is greater than the sum of the parts. And that's the problem. That's not to criticize component manufacturers.

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13:13
Speaker 2
That's their business. The problem that I have with it is when they go around masquerading as if they are an off site company. They're not, but they do a service for People who want that particular service. But true, offsite is technologically driven. It's a holistic view of the building where you take full responsibility of the building and that includes getting invol with the concrete slab, getting involved with the plumbers, with the electricians, with all the trades. You're effectively trying to coordinate because you're trying to coordinate with everybody that actually touches off or connects us to that connects to that frame with. Your objective is to make that building help that building. And it's not so not one component of it. The whole building get built as efficiently as possible. And so the key words in off site construction are process improvement and process optimization.

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14:04
Speaker 2
And that really does involve a granular level of input into the totality of the building, not one item. So what you have with component manufacturers or with framers who use component manufacturers going around and they buy the wall panels off this guy and they might buy the floor, either the floor trusses or the I joists off another guy and then maybe the roof trusses off somebody else if they happen to get them cheaper. So it's all about driving down the cost. And in the process of doing that, they end up with these bits and parts that have not come from one supplier, where one supplier has total responsibility for focusing on the total efficiency of the building.

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14:46
Speaker 2
And I mean, I'd take far greater amount of time to explain this in detail, but if you looked at an offset company and you looked at the technology that's employed, and the fact that a good starting point is I would look and say if you don't start with a full 3D model of the whole building, then you're not an off site company. Because what you do with that is we take the drawings in and assume that the drawings are incorrect, that the building has been designed wrong, and we go back to first principles and start to rebuild it with the whole purpose of process optimization and process improvement. And then only after we've done that do we start to look at the elements. But then when we start to look at those elements, I mean it's a total view of the building.

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15:29
Speaker 2
And again, when it comes to component manufacturers, Chad, one important point I want to say is that there's a lot of guys in the United States. I mean, I get this thing said back to me, oh, I've used wall panels before and they don't work. And I really want, I mean my head starts to explode when I hear that. I mean, I really, I mean I want to grab them and shake them and go like, what the heck has that got to do with me? What is a wall panel got to do with what I'm talking about? Because it's nothing to do with it. Because using a wall panel on a job, substituting a wall panel for six framing walls, all really means is that you're running fast to stand still.

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16:05
Speaker 2
Because what happens when you get to your floor and you're back to loose joisting again? Loose joisting it again. Whereas true offset companies would prefabricate the walls, the floors, on the roof or the roof. If the roof's a flat roof, they'll use trusses. If it's, if it's a regular picture, but it's a totality. Prefabricated stairs, everything's been designed to fit and to work as fast as possible to get that building up. And so when people talk about components and they say, oh, that proves offsite doesn't work. It doesn't, it bears no relationship, no relation to it. It's like going out to buy the engine of a car and then sitting in your front yard saying, like, I can't get the car to go. Yeah, because you don't have the rest of it. You know, it's not, there's off site is a complete solution.

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16:47
Speaker 2
It's not a part solution.

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16:50
Speaker 1
How many, how many companies in the US Right now? And you may not have this data, but you know, if you, if you don't wonder if you have a guess, but how many companies in the US Right now do you think fit the definition? You've laid it out?

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17:05
Speaker 2
Yeah. Less than 10. Wow. Less than 10. I have done that analysis myself.

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17:12
Speaker 1
And so you mentioned that you're consulting right now. Right. You're, you're helping companies to make the transition. So what's first off? What's motivating people to want to make the move?

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17:29
Speaker 2
Well, I think at the, I mean, there's probably been a lot of false starts in the United States over the last 30, 40, 50 years. You hear this. Well, you'll hear people say, oh, it was tried before and it didn't work. But again, it was tried when with components, they're misunderstanding what they're saying. But this time it is different. And I think this time it's the labor issue that's the primary driver this time. Because I think previous times, the way the US residential housing industry has worked up to now is you needed to build more houses. You just brought more people across the border. Sure. Simple as that. I mean, even let's call a spade. That's how it worked.

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18:12
Speaker 2
And in many cases a lot of those people were undocumented and maybe not have been treated all that well and they were willing to work for, for very low wages and. But that's how it was done.

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18:21
Speaker 1
Yeah. And that's, and depending on what era we're talking about, depends on what border and from where.

‍ ‍

18:29
Speaker 2
Yeah, yeah, that's correct.

‍ ‍

18:30
Speaker 1
I mean we've been doing it forever.

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18:31
Speaker 2
Yeah, the Irish were part of that too.

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18:33
Speaker 1
That's exactly right.

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18:34
Speaker 2
They were coming over and doing, and I'm talking about as early, like as late as the 1980s and coming over and doing it. So. But that's the way.

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18:43
Speaker 1
Canadians are coming over and doing it. I mean it's.

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18:45
Speaker 2
Yeah, that's the way it has been done. But I think the realization is now occurring that's no longer really possible and it's not going to happen. So you're now looking at, I think current estimates are that there's a 400,000 thousand person shortage in the construction industry of people. So there's 400 more thousand more jobs than there are people available. Then add to that the rate of attrition is for every one person who joins the industry, five are leaving. Right. So when you put those two things together and people think there's a labor crisis, there isn't. This is only the beginning. Literally, this is only the beginning. If were to fast forward 10 years from now, this problem is going to be an awful lot greater than it is currently.

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19:35
Speaker 2
And I think some of the more far seeing companies are actually starting to see that and say we need to prepare for this. I mean I am and I am working for numbers of companies who actually that's what they're doing. They're saying we've got to take a longer view of this. This is not going away. And even if it was going away, you have to overlay the other fact on this is, and if you look at the last McKinsey report on the U.S. residential construction industry, over the last 60 years, U.S. residential construction productivity has been flat at best to declining at worst. Now that's a shocking indictment of an industry.

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20:14
Speaker 2
When you think of the technology that has been brought into existence in the last 60 years and you think of the productivity gains that have, say occurred in agriculture which is up 1,750%, or manufacturing which is up 400% and construction is flat to Negative. And then people wonder why there's a housing affordability issue and why there's a housing crisis in terms of a shortage. The answers are clearly there. If you're not increasing your productivity in the 21st century and you're not using technology, then costs are going to increase. The number of homes getting built is not going to match the demand, and people are not going to be able for them. And you end up then with a social crisis that will occur, which you could argue we probably are seeing that with all the homelessness in the, That.

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21:40
Speaker 3
It.

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21:56
Speaker 2
Okay, I believe we lost. Chad. I'll ask that question that somebody's asked there about do we see multifamily as being the biggest opportunity to grow off site? And I would say absolutely. I mean, I think it's the biggest opportunity, but it's not the only opportunity. But I think it's the biggest opportunity because it's the easiest one to. Not that the economics don't work on single family and in hospitality and other types of construction, but in multifamily, it's very easy to make the, it's very easy to prove the economics behind off site construction. Particularly when you look at that, you can, on average, you can take the framing time down by over 50%. I would actually say that when it's properly organized, you can actually reduce the framing time by about 66% back. Chad.

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22:54
Speaker 1
Oh, my Lord. My power got knocked out. We had a big gust and all of a sudden I heard sirens outside. I don't know what happened, but guessing that there was some issue that affected my whole area. I apologize for that. If there was anybody that I'm confident could carry the conversation, it's an Irishman. Jerry.

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23:15
Speaker 2
I was trying to, there, Chad. I was trying to, I was trying.

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23:17
Speaker 1
To go on and do it for you to help.

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23:21
Speaker 3
I was struggling.

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23:22
Speaker 1
I'm sorry. Yeah. Hey, you know what? I can't believe it hasn't happened before now.

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23:28
Speaker 2
It would happen with me. Yeah.

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23:30
Speaker 1
Gary, I appreciate your, your, your help moving us through it. So, so here's the biggest question. I'm sorry to interrupt you. I, I want to, but I, I, I, if you've already gotten to it, skip it. But the biggest question that I have is what is the, the mindset shift and the real business challenges? What are those two things that we really have to confront if we're making the jump from running a more traditional, you know, building company to an off site company?

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24:02
Speaker 2
Well, it depends. I Mean, are you asking me from the perspective of the builder who's going to use the system or are you asking me from the perspective of somebody who wants to set up an off site company to manufacture and provide the off site solution?

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24:16
Speaker 1
See, you know what, you should talk about that to our group.

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24:20
Speaker 2
Right.

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24:21
Speaker 1
Just by itself. So the builder is the, in this case, the, you know, general contractor, if you will, that's driving the project. The off site construction company is going to be the system manufacturer.

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24:36
Speaker 2
Correct.

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24:37
Speaker 1
That does the entire structure is what you're saying?

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24:39
Speaker 2
Yes, yes.

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24:40
Speaker 1
So start with the, start with a builder. What's the biggest shift the building.

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24:45
Speaker 2
Okay, great question. The biggest mindset shift is to get the builder to understand that first cost is not irrelevant. But I don't know if you're familiar with, there's a gentleman there over in the east coast called Scott cdam, he runs a company called True North Consulting. And Scott's an absolute expert in this whole area. But Scott has a great expression that says if you only ever look at first cost, you'll never know your total cost. And one of the problems that, that you face with production homebuilders in particular is the fact that they only ever look at first cost. And the way they're set up is only ever to look at first cost.

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25:26
Speaker 2
So if you put a buyer in that role and that person is out to decide, you know, the various different products that they're going to buy to build that particular home, they're basically, they're motivated, they're incentivized to buy whatever widget they use at a half a cent cheaper this year than they bought it last year. That's their drive, that's their motivation, but they really don't have an incentive to look at, well, maybe it's going to cost me a cent more to actually install that. Because they're only incentivized to look at the first cost of what is the purchase of that particular item. And this is where with off site construction it comes into.

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26:00
Speaker 2
There's a bit, there's a bit of an issue because if you take it that cycle time on a job site is a critical element and there's a value associated with time. And we've all grown up being told time is money. So it's been in us from our little kids, your parents tell you time is money. Yet when it comes to looking at the value of cycle time reduction on a job site, the buyer who's not incentivized to look at it. So I'm not Saying it's their fault, the buyer does not consider cycle time or the cost of it. And in most cases, when you ask that buyer, what is the value, what is every day on site costing your company, they can't tell you. How can you make a purchase decision if you don't know what every day on site is costing you?

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26:54
Speaker 2
So in other words, if the focus from a builder was on reducing cycle time, that was their primary objective, as opposed to let me reduce the cost of the item, because you can actually have the opposite around. You can reduce the cost of the item and increase the cycle time because it takes longer to install, but you bought it cheaper, whereas it should be. You need to look at it holistically and say, if my objective was to increase, was to decrease cycle time, how much is every day on site going to save me in terms of costs? And that's where offset.

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27:24
Speaker 2
So if you go along and you're an offset company and you say it's going to cost $40,000 to frame that particular building, stick framing it, but it's going to cost $42,000 to frame it from off site and say, oh no, I'm not going to use the off site solution, it's $2,000 more expensive. But if the off site solution is saving you 10, 12 days on site, what are those 1012 days worth? I mean, are they worth $200 a day, $500 a day, $600 a day, what are they worth? They don't know. So but by anybody's estimate, and we've done a lot of research on this, even in the relatively lower cost areas, you're looking at around between 4 and $500 per day of site cost each day. So if you take it that you save 10 days, there's $4,000 there alone.

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28:15
Speaker 2
So it means that $2,000 that they're saying are more expensive, you are actually $2,000 cheaper than it. But the buyer doesn't care because the buyer is not incentivized to look at that. The buyers just said, no, you've got a quote at first cost is 42,000 versus first cost at 40,000. Buy the 40,000. It actually costs the builder money. So there's a problem in a mindset change that needs to occur. The first thing builders should do is make sure that every single one of their buyers understands what the cost of a day on site is worth. And then what they should do is make sure that they involve their operations team on the purchase decision when it comes to framing. Not Just the buyer.

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29:00
Speaker 2
Because in many cases the buyer has never actually even worked on a job site, but the operations people are doing it every single day. The other thing that they don't even consider in first cost versus total cost is if you look at the amount of dumpsters that are on a site with off site construction, you're gonna, you're gonna at least save two dumpsters on that job site. So there's a whole load of other things that just don't get included in the cost. So it's back to this thing of you need to look at total cost, but everything here is set up for first cost. And I think that is of a reflection on the fact that everything was basically set up for sick framing in the first place. So it was never really a consideration.

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29:39
Speaker 2
But if you're looking at maximum efficiency, you should be actually using cycle time reduction as being one of the qualitative decisions that you look at when you're quality of the items that you look at when you're making a purchase decision with regard to framing. So that's one part of it that's.

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29:58
Speaker 1
A major mindset shift and it's not complicated, but definitely shifting the focus from first cost total cost.

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30:08
Speaker 2
Yeah. Let me give you an example. I mean, somebody asked me questions in. These are multifamily distance. So I'm going to give you a real world situation. Now it's multi family because it's easier to shorten this. But it's, this is, these are real numbers from a real builder on a real job site that has been completed. So we price the job, a multi family job of 270 units in Northern California. And the stick framer who had framed for this developer previously on his previous multifamily development came in at $100,000 cheaper than the off site solution. Okay. So the developer said, listen guys, I love the technology, I love what you're doing. I love the fact that you're 3D modeling this. I love that I can see the problems.

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30:55
Speaker 2
I love the fact that there's going to be reduced waste on site and there's going to reduce manpower on site. Just, I love the whole concept. But you're $100,000 more expensive. Yeah, I just, I can't go there. And went back to this discussion of first cost versus total cost. So we asked them. Now this was again the difference of the attitude of the person you're talking to because I mean, I love this expression that an Irish newspaper says that you Know, before you make up your mind, open it. So you know, come into an, come into the discussion with an open mind. So the builder said, or the developer said, we said to him, so how long is it going to take your stick framer to frame this?

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31:31
Speaker 2
So he went off and he got the framer to give him a commitment as to how long it was going to take, which was 46 weeks. And we said, okay, our view is we can do this in 14. That's 46 weeks versus 14. Then we said to him, how much is that reduction worth to you? I said, because if we're going to talk about this, we need to know this. And he went off again and he came back. It was about 10 days later he came back and he said, and I think it was actually more than this, but this is what he said. He came back and said he reckons that there's $600,000 of savings if he can bring that job in 14 weeks as opposed to 46.

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32:14
Speaker 2
So we put a proposal to him which was, tell you what, if you award us the job and we bring it in 14 weeks, let's split the $600,000, you keep $300,000 of the savings and you write us a check for $300,000, which means you're going to pay us $200,000 more than we had originally bid. But you're up $300,000.

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32:36
Speaker 1
So just like your dad asked you to do back in the 80s, you put your money where the money.

‍ ‍

32:41
Speaker 2
Right? Yeah. So the developer agreed and the developer wrote the check. Fact, not made up fact.

‍ ‍

32:53
Speaker 1
Bet you never writes that check again.

‍ ‍

32:55
Speaker 2
Well, actually. So the second part of that project, which was 170 units was awarded and it was never competitively bid, right?

‍ ‍

33:05
Speaker 1
Yeah. Well, because the proof.

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33:10
Speaker 2
That is the proof was there. He did not need any more than that. Right. So that's what I mean about cycle time and understanding and being opening your mind to understandings. In many ways, the way things are priced and the way construction operates in the United States is at such a simplistic level. I mean, yeah, oh yeah, give me the price for that widget and then nobody considers anything else. Why are the operations people not involved in that decision making process? Do you think, do you think that the buyer knows better than the guys who actually operate on the job site of what really goes on and what the real costs are? Because at the end of the day they know about all the extra over costs that have to occur. They know about the injuries that occur in the site.

‍ ‍

33:54
Speaker 2
They know about the delays that occur in the site. They know about the quality issues, that delay in the site.

‍ ‍

33:59
Speaker 1
Absolutely.

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34:00
Speaker 2
The buyer doesn't. But, but that buyer is getting that, getting the right to make the final decision on what actually happens. But again, it starts with the fact that if you don't know what your daily cost is on site, you can't make an informed purchase decision. That's a fact. That's a simple economic fact. I mean, if you explain that to a four year old, they'll get it. They will, they will get it.

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34:28
Speaker 1
I'm gonna go bring you a three year old. You think it'll work on the third hour? All right, so. So because of time here, and I want to make sure that we hit on some of the stuff that the audience may be coming up with. Stacy, what questions do you have that we can funnel to Jerry before we have to jump?

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34:51
Speaker 3
All right, let's start with Bill Wilson. He has two questions for you. I think you were answering the first one when we got cut off here, to reiterate. So he said, do you see multifamily construction as the biggest opportunity to grow off site?

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35:08
Speaker 2
Any other markets, it is the lowest hanging fruit. And because again, that example that I gave you of that particular development developer, because I think especially specialist multifamily developers, they actually do understand the time value of money. There is a major distinction between production home builders, even the production home builders who do multifamily, and dedicated multifamily developers. Dedicated multifamily developers really know the time value of money. And so they are, they're a better target market initially. But also I think that multifamily itself, by its nature and regardless of who you're selling it to, it's. They, it's much clearer where the benefits are. But the benefits are equally. The benefits are clear with single family, but with multifamily, because you get such large buildings, you can see the speed and the benefit and the cleanliness on the site.

‍ ‍

35:59
Speaker 2
Much easier than you can with maybe with single family.

‍ ‍

36:02
Speaker 3
But.

‍ ‍

36:03
Speaker 2
So yes, the answer is multifamily is definitely an easier target.

‍ ‍

36:06
Speaker 3
Okay, and then how does the design community embrace this off site construction?

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36:13
Speaker 2
Remarkably well. I mean, there was a lot of talk at the very beginning when we came into this market that, oh, the architects and the engineers won't buy into this. That's actually not been the case. In fact, I'd go as far as to say is that again, I'm speaking more now from Northern California, some of the largest architectural companies in Businesses in Northern California are fully embracing this and actually are now sitting down with their clients in advance and actually saying to them, do you think that you might be using offset? And are actually contacting the offset companies and looking for insights and in advance of them completing the design.

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36:49
Speaker 2
So I think there's a much more willingness among the architectural and design community to look at new ways of doing this because in many ways the off site company is a, which is a facilitator or an additional arm for that, for the, for the design community because they work together. But the off site company does an awful lot of work that maybe would not have done until later that maybe the design community would have had to suck up. But when you bring in the offset company into it, they do it for them and particularly down to 3D modeling the building. So I think there's a lot of opportunity there. And actually we've certainly had very positive interactions with the design community. So it hasn't been a pushback, it has been the other way around.

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37:39
Speaker 3
Nice. Mark asked, what do you think about transforming high school tech school construction malls into off site construction manufacturing facilities?

‍ ‍

37:52
Speaker 2
I love this question. I mean, I think this is where there's a lot of, where there's a lot of misunderstanding but a lot of opportunity. And I'll say you hear at the moment lots of discussions about our reasons given for the fact that the reason why we don't have more young people coming into the construction industry is because we don't have shop classes in schools anymore. Right. I want to say quite clearly that is false. The reason why we don't have shop classes is because young people don't want to go to them. The reason why we don't have people in the construction is not because there aren't shop classes, it's because they don't want to come into the industry. And there's more and more research and proof of that in existence. So people saying that don't know what they're talking about.

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38:44
Speaker 2
The reflection of the fact that there's no tech schools is because people don't want to go to them. Because if you look at a young person coming out of school now and they figure that they're getting paid 15, 16, 70, 18, $90 an hour on a job site and they can go and work in an air conditioned building for Amazon, that's where they're going. And they can get to push buttons on computers and so forth and so on. That's where they're going and they can go to the same location rather than have to drive around all different places knowing where their next job is. That's why they're going there. If you want to bring young people into the construction industry, then you need to modernize the construction industry. Bring it into the 21st century.

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39:23
Speaker 2
I mean, I put a post up yesterday said we're now, the world is now in the fourth industrial revolution. That's a fact that's been agreed by the World Economic Forum. We're now in the fourth industrial revolution. Stick framing is still in the first industrial. It actually has even been through, it hasn't even been through the first industrial revolution. And you're looking at kids that are using iPads in one hand and an iPhone in the other coming home and watching flat screen TVs, going into their high tech cars, so forth and so on. And then you want them to go onto a job site and do stuff that hasn't changed in 200 years. In reality, in their heads they're going, how does this even, how do I even relate to this?

‍ ‍

40:09
Speaker 2
So, you know, if you want to attract, think about this, think about your own kids. If you want to attract young people into the construction industry, then you need to modernize the construction industry. It's, I mean it's, this is, it's not rocket science. Every single other thing that we have used or buy or produce or touch is, has dramatically changed because of technology in the last 10 years. And yet we want young people, and I keep emphasizing the word young people, to go onto a job site to basically say technology doesn't exist. Yeah, it doesn't make sense. So training people and that question, that person's question, I think that's so true. Start moving it towards technology and construction. Let's move it forward. Let's increase the productivity of the industry through the use of modern technology.

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41:08
Speaker 2
That's what every other developed nation, by the way, on the planet is doing. That is what every other, like I'm going off on a trip that's been organized now by various different US government departments in December to the UK to look at the technology that's being applied there and at the training programs that are being put in place to actually bring the industry into the 21st century. That's what we need to do. Stop resisting change. That's what young people want. They want to do things in a modern way, the things that they can relate to.

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41:44
Speaker 3
So to piggyback off what you're just saying. And Sean made a comment about, he's seeing a lot of the drywall companies move to this type of model. Is there other trades that you see are on the forefront like electrical, mechanical, that are really trying to embrace this over other terms?

‍ ‍

42:03
Speaker 2
Yes. And there are lots of technologies out there that are being designed for those industries. I mean, whether it's. I mean if you even take the modular industry and you look at the way they do their wiring and the wiring looms that are now available. I mean there's technology moving on to improve wiring. You look at even from H VAC systems. There's technology has been improved there. You look at the plumbers now using 3D modeling of the plumbing systems before they ever go into the building and then been able to prefabricate many of those items before they ever go out to the job site. There's a whole load of things that are actually out there and some very good companies are actually trying to push that thing forward and hopefully they will benefit in the long run because they're pioneering the way.

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42:47
Speaker 2
But the problem is you have so much resistance from other people who still, you know that expression that says the seven most dangerous words in the English language are that's the way we've always done it. Where do you hear that most? The construction industry. That's the way we've always done it. So. But there are opportunities there and there are companies who are actually certainly starting to push that envelope.

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43:07
Speaker 1
I'll say one quick thing on this. Where I've been, it seems to me that to reach the maximum value off site across different systems manufacturers.

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43:25
Speaker 2
Right.

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43:25
Speaker 1
Not just component manufacturers, but different systems manufacturers. There, there has got to be. Soon as you talk about H Vac, you talk about plumbing, you talk about the other folks that have opportunities to. To be doing this type off site construction. Seems to me the maximum value is going to be those entities working together off site and finding ways to, you know, eliminate the possibility of rework.

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43:59
Speaker 2
You touch on another very important point. Chad is as crazy as this sounds, the lowest level of digitization in any industry in the United States is in the construction industry.

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44:10
Speaker 1
Yeah.

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44:11
Speaker 2
Which is probably the one you would think would have the most.

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44:15
Speaker 1
But it has the, has one of the greatest needs for it.

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44:17
Speaker 2
This is correct. But now just to take your point, you said is, can you imagine now if everybody was digitized and was actually properly using technology that's out there so that you could actually coordinate in advance with the plumber, the electrician, the hitch fact, the off site company that everybody was actually using the same model and could interact with each other before you ever got to the job site to figure out how much money you would save. Yeah. How much more efficiency you would have. I mean, it's a very simple thing to do, but nobody does it. Nobody. I mean, try getting drawings from a, from the average plumber electrician in advance of them. Going on the job site is what's going to happen. Can't get them, don't.

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44:58
Speaker 1
I, I, and man, I would love to continue this conversation. We're Now a full 15 minutes past and I, so I should, I should draw it to a close. But I want to say that I think I'm hopeful coming away from this conversation. And I'm hopeful because I, I think what you have shared with us today is a story that to some extent is kind of, you know, if you build it, you know, they will come in, you know, type of thing. So, so if you're someone right now that is, you know, doesn't, I mean, there, I'm sure, limitations. Right.

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45:34
Speaker 1
But if you're running a construction company today and you have your, you're in a space that has the potential to, to have an off site system, to manufacture an off site system, there's evidence that the market has a willingness to take this on. And if you have the proof that in your ability to beat traditional methods of manufacturing and installation, then you, I mean, that's, you'll not only benefit from, you know, being on the leading edge of it, but you'll, you know, help to usher in, you know, positive change, which is, you know, Jerry, the decision you've made, right. Which is to be in this role now of coaching and leading other companies into embracing this change.

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46:30
Speaker 1
So I've got to ask you if people want to contact you and if somebody's, you know, watching or listening to this, if somebody wants to contact you and get help, how do they do that?

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46:41
Speaker 2
Well, they can get me on my office, on my website, offsitetech.com or it's very easy. Just email. It's very easy. My email is just Jerry with a.

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46:48
Speaker 1
G@Offsitetech.Com it's just T E K. Correct.

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46:54
Speaker 2
Yeah, TK that's correct. But I also want to say, Chad, I think there's an important point. I'm not, and you said this at the very beginning, but I said I'm not speaking from a point of, it's hypothetical. Right. I've been at this. All of my life, my family has built successful offset companies. I can give you a list offset companies around Europe that are doing this. And I've been doing this for 30, 40, 50 years. This works. You just have to approach it the correct way.

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47:29
Speaker 1
Love it. All right, thank you so much for joining us, Jerry. I'm sorry for the mishap in the middle of the show, but it's. I. I was amazed to come back and find that you were still here and that everything was still rolling. Hanging my head.

‍ ‍

47:46
Speaker 2
Maybe. Maybe I missed my. Maybe I missed my calling in life. Maybe I should be a. A podcast host or something.

‍ ‍

47:52
Speaker 1
Well, you are a hell of a storyteller, my friend.

‍ ‍

47:55
Speaker 3
Yeah.

‍ ‍

47:55
Speaker 1
And, you know, it's been. It's been a lot of fun having.

‍ ‍

47:59
Speaker 2
Thank you very much. Thank you very much. Even though you got me up in, you know, the middle of the night, but I returned the favor. Someday I'll have one.

‍ ‍

48:07
Speaker 1
I look forward to it. Yeah, I look forward to it. Yeah, you'll have me on at midnight Eastern.

‍ ‍

48:12
Speaker 3
Yeah.

‍ ‍

48:14
Speaker 1
Jerry, thank you so much. Stacy, let's wrap up a couple loose ends here.

‍ ‍

48:17
Speaker 2
So.

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48:19
Speaker 1
So next week we have our 36th episode, and we've got Tom Hughes coming on who's going to be talking about practical applications of lean in construction, which is probably something that, you know, Jerry could talk about as well, you know, in. In taking Apple, you know, concepts from the manufacturing, you know, space and applying it to the construction space. Although I think Jerry would argue that construction is by definition, manufacturing, which I think is, you know, a really, a valid way of thinking. So I look forward to that. Stacy, do you have a marketing tip of the week for us from Steeltoe Communications?

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49:02
Speaker 3
Yeah. So real quick, when you're doing your marketing, try to think about your customer and their pain points and use the word you or your instead of me and I. And we'll keep it short because this was a long episode. Great episode.

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49:18
Speaker 2
It was. Yeah.

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49:20
Speaker 1
Thank you. That's. It's. Customers care about them, not you. Yeah, I think. I think that's right. People like to hear about themselves, so. So good advice. All right, folks, as always, we thank you for joining us. Please spread the word, do us a favor, and just this week, try to find somebody that you know and tell them about the morning huddle and encourage them to check it out, whether that's live or whether it's however you get your podcasts or on YouTube, however you want to engage. And then lastly, if you or anybody that you know is creating positive change in the construction industry. Please join us. Be a part of our platform and spread the word.

‍ ‍

50:01
Speaker 2
Thank you.

‍ ‍

50:01
Speaker 3
Have a great day.

‍ ‍

50:03
Speaker 1
Thanks. ACU too.

‍ ‍

For companies and project teams that have embraced prefabrication and other concepts from manufacturing, the results are undeniable. To bring these ideas home to more contractors, we at the Huddle want to showcase more stories!

The Queen of Prefab, Amy Marks joins The Morning Huddle to continue her mission of advancing industrialized construction. Her role at Autodesk puts her in a position to meet and interview some of the industry's most successful leaders in Design for Manufacture and Assembly (DfMA).

We get to hear her real-world stories of Prefab in action and hold a Q&A for practical tips for our audience.

Transcript:

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00:00
Speaker 1
Sam, it.

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00:57
Speaker 2
Good morning. It's morning huddle time. Hello, Stacy and Amy. How are you two today?

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01:04
Speaker 3
Doing great. How are you?

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01:06
Speaker 1
I'm great. Good morning.

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01:08
Speaker 2
Good morning. Good morning. So Amy is joining us from San Francisco, but correct me if I'm wrong, you live in Jersey, so when we initially booked this, weren't thinking. We were asking you to join at 6am but here we are.

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01:22
Speaker 1
Yeah, well, all the construction workers are up anyway at the job site, so I figure it's really not that early, to be honest.

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01:26
Speaker 2
Well, that's true. Yeah. 6:00am is kind of not. Not an abnormal time in our industry. Yeah, no question. Well, good. So. So what are you. Give us a little bit of background, Amy, Sort of. Obviously, we know you as the queen of prefab. We know you as the creator of all this amazing content on, across all social media platforms. I only use LinkedIn. I'm trying to catch up, but I've seen you all over the place. Stacy and I have talked about you for quite a while and were super excited when you agreed to come and join us on the show. But talk a little bit about, you know, sort of who you are, what your background is, that type of stuff.

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02:04
Speaker 1
Sure. I work at Autodesk. I'm actually the vice president of industrialized construction now at Autodesk. But before that, I really, I grew up in construction and owned a couple different companies that were anything from one of the largest manufacturers of steel and concrete volumetric mods and assemblies like bathroom pods, to you know, then opening up a consultancy that was optimizing industrialized construction around the world for governments and big customers. And then really, you know, Autodesk found me and it's such a great opportunity for me to come here and work with some of, you know, the largest customers around the world and, you know, helping Autodesk with the way we are looking at things and the way customers are looking at things every day.

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02:50
Speaker 1
So I get to, I get to do what I love to do with some of the coolest people around and the smartest people around, which is great.

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02:58
Speaker 2
That is great. I mean, I think, you know, were talking about just sort of this dream job for somebody like Stacy or I who are just kind of nerds and love learning and being around, exposed to what all these sort of leading companies are doing and how people are doing things differently and better all over the country. You get an opportunity to do this at a really high level, which is. Which is amazing.

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03:21
Speaker 1
I do. Good morning, Mark Jury. I see some friends out in the audience. That's great. Hope you guys are going to join up this morning. It is. It's really a great job. You know, I think a lot of what we do is it has to. We have to be seen, right? People need to see other people that look like them, that talk like them, that are talking about things they're interested in. So it's one of the reasons why I rarely say no, you know, to people, because I want to make sure that, like, everyone has the opportunity to see other people that look like them, not just every day on the job site. And I think social media is such a great way to get that across, aside from the work that, you know, to talk about the real work that we're doing.

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04:00
Speaker 2
Yeah, agreed. So. All right, well, let's. Let's kind of orient ourselves a little bit with our objective today. I think we talk about prefabrication. What it really all kind of fits into, I think, is something that you and I were talking about is, you know, calling it the industrialized revolution in the construction industry. And, and it's. It really is a different way of thinking about looking at construction and how are we doing something that, you know, pulls in best practices from other industries and innovates and takes, you know, really, construction to a whole new level of productivity of, you know, creativity and, you know, effectiveness, safety, so on and so forth. So I. I'd like to, I guess, get a little bit of an orientation from you on this idea of what is the industrialized revolution, you know, in. In the building industry. What?

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05:08
Speaker 2
Describe that. A little bit.

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05:11
Speaker 1
Well, I think first we have to recognize that, you know, there are a lot of industries, individual industries out there doing great things. We're not really one industry. I think the first thing we have to recognize is that we're an ecosystem of, you know, 17, 20 different industries all trying to get a building out the door. And, you know, typically the way that we've worked historically is it's been a real cash for chaos type environment where people made money off of the misinformation or lack of information, you know, out in the job sites. And by the time it got there, you know, my dad used to say, walking around job sites, those guys over there looking in the ceiling, like, we're either making money right now or we're losing money. I can't tell which. But something's going on, like.

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05:50
Speaker 1
And I think that's one of the reasons we're seeing a little bit of a change now that, you know, it's not going to be we can't be just an industry can be disrupted from the bottom up, as you know, Clayton Christensen said. But we're an ecosystem that needs connection at the very top levels as well. And that's what's really been missing, that it's not just about the outcome of getting a wall panel on the job site. It starts much earlier in things like, you know, how we're thinking about conceptualizing these buildings and reuse of these building components and, you know, what we're doing that will result in an outcome of having industrialized construction out on your job site. But it's so much more than the physicality. It's about the data. It's about, you know, connection of the information. It's about the cloud.

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06:35
Speaker 1
It's about, you know, things like turning the eye and building information modeling into more intelligence so that we have things like manufacturing informed design now as a category of information that needs to be influencing our buildings. So it's just so much more than what I think meets the eye. And that's. That's part of what people have to get over in the beginning, that it's not just about.

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06:56
Speaker 2
I love that way of describing it. We're not just our own industry. We're not on an island. We're not sitting over here, you know, by ourselves. I think, you know, when. When I look at other industries, when I look at. When I look outside of what many of my clients, right, who are awesome, middle market, for the most part, general and subcontractors, some larger. But, you know, we're in a little bit of a bubble, right? We're in a little bit of a bubble. When we look outside of that bubble, what will we find? What will we find? What's happening? That is so exciting, I think.

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07:40
Speaker 1
Well, first of all, I gotta. I gotta answer, Henry, who, like, is out there saying, like, it's been a long time since I've had to introduce myself. But Henry, the point is that I want to introduce you to new people, new faces, new young people that are out doing podcasts and not the same old. You know, I think. I think what's different out there right now, it's a really different time, right? Like, it's not that we're in a place that things are happening that are so great. I think, look, change happens when there's first dissatisfaction with the way things are. And when you see that there's a potential vision that you want to reach, but you just aren't there yet.

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08:12
Speaker 1
So I think we're seeing that now in the world that, like, there's not enough housing, there's not enough hospitals, there's not enough digital infrastructure. And, you know, we also don't have the same labor that we used to have. And we have to make sure that we're capturing a lot of that craftsmanship and knowledge in things like technology and people so that we can pass that along to future generations. But it's a time of great pressure. And I would say, look, it's been at emergency levels for the fact that, you know, I don't know, 10 years ago, people would say, like, don't talk about this prefabrication stuff where you're taking jobs away. And I'm like, okay. Two years later, they're like, no one's applying for these jobs.

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08:47
Speaker 2
Right.

‍ ‍

08:48
Speaker 1
And it's not going to be the great resignation that people are talking about that is happening. It's stuff like, you know, Gary Vee, I'm a fan of Gary vee actually on TikTok and things is that people are not going to apply for these jobs like they are. Young people are thinking about where do I want to work, where I can get known and see what's going on and people can see what I'm doing and they're used to an expected experience of life that we're not offering. They're used to being digital natives. They're used to being able to portray their lives and see other people in their businesses. And, you know, were talking earlier, you said 3% of people are providing content on LinkedIn.

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09:22
Speaker 1
Okay, well, if you're under 25, that number is much higher on things like, you know, TikTok and Instagram, it's like everyone creates content. And you know, look at, even on TikTok, there's 6 billion hashtags about welding right now. And yet there's, I can guarantee you there aren't a lot of companies that have social media accounts on TikTok looking for welders, but we need to, you know, we do.

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09:44
Speaker 2
I, I, okay, so you, you touched on something that I, I always key in on. I can't help it. It's one of my most favorite discussion points is just this idea that any time we stand in the way of progress for fear of what that might do to, you know, people's jobs or what that might do to this person's income bracket or what that might do anytime we stand in the way of progress, it, number one, it delays the inevitable because it's coming. You're not going to actually stop it. So you're just gonna, you're just putting yourself on the wrong side of history.

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10:25
Speaker 1
Right.

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10:26
Speaker 2
But, but then number two, if you know, if you learn actually to embrace it, you not only do you, okay, from on a company by company standpoint, do you put yourself in a potential possibility to, you know, to be a, a market leader. But that aside for the industry, if we learn to embrace it, you actually create more opportunity. It never ceases to amaze me. People freak out about self driving cars. What about all the truck driving jobs? They will find other jobs, right? Other things will show up. There will be. We innovate. That's what we do. When the horseless carriage disappeared, everybody freaked out. They did, you know. I'm sorry. When the horse drawn carriage that is disappeared, everybody freaked out.

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11:10
Speaker 2
It was, there were, you know, hundreds of thousands of jobs cleaning up horse crap in cities all across the United States and everybody was like, what are we going to do? What are we going to do? All these people, they're going to be out of jobs. They find a new. We innovate, we create better things. What are the things that people are. And I'm not asking you to call out anybody who's, you're standing in the way of it, but what's the progress that's actually being impeded right now? Is there anything that you're seeing that people are actually trying to slow down in the construction industry?

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11:39
Speaker 1
And if, I mean, look, I've been known to call people out, so that's fine, I don't mind, you know, like I, I'm an equal opportunity offender and I think that's important. First of all, I say that because you have to have agents for change around this world, right? If you don't have an agent for change in your company that you know, is asking the hard questions, making you think differently, that's constantly thinking how you're going to go out of business. You probably are missing somebody on your senior leadership team. So I think sitting with the same people and talking about the same things and then one day waking up and realizing all the things you were doing to keep people working have now eliminated your company and got rid of all these great jobs.

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12:15
Speaker 1
I mean, look, I have a real love for the trades and I believe in the trade contractor. I believe in the fact that we are creating work for families. And if you're not thinking about how to protect these families by evolving your business and evolving what you're doing, you're actually putting them more at risk and I can prove that and say that, you know, think about the future state of the expected experience, right? Like, and what I mean by that is like, I could go on my Apple watch right now, I could order a pizza, customize it on my watch, figure out when it was going in the oven. They would give me transparency as to when it was leaving. I would see the license plate of the car and the make and model and a picture of the face of the driver.

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12:55
Speaker 1
And on my, you know, ring doorbell. I would see them walking up so I could come to the door before they would ring the doorbell, right? That is my expected experience in life from for anything totally down to ordering a pizza. Yet in our space, the only certainty 95% of people have on job sites is to call somebody to see if their equipment is going to show up. Who has to call somebody else? Who has to call somebody else? Who has to call somebody. Like, even though the technology exists because you have it for pizzas and we have, you know, geolocators and you can, you don't even have to scan things anymore to know where they are if they got on the ship. Like, I have lots of friends, you know, that have different technology, but not enough of them, right?

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13:32
Speaker 1
Like I was with somebody the other day and they were pulling up on their phone where their equipment was on the ship, and he's like 1.001% of my, the world that I know that's tracking equipment on his phone, right? Like, he doesn't have to call anybody. But the expected experiences is that one day you'll be able to know about things on the job site, design things, if you're an architect, to find things online and be able to incorporate them into your design without having to understand how that thing is made. Because the tools are not allowing you to do that right now anyway. So it's like we have very static data and listen, like, there's no secret. We have margin on top of margin on top of margin that is created because of this disconnected waste.

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14:17
Speaker 1
How many $14 trillion ecosystems still exist in the world that somebody doesn't want to disrupt and wipe those people off the face of the earth and take that margin over combining those things. I think, I wouldn't say there's anyone necessarily stopping it right now. It's more that they're turning a blind eye to that it's happening. So if you don't realize that is happening and you don't know your future value in that new future state of the expected experience, you probably want to step back. Like I had a guy recently as were talking and he was like, you know, I talked about the fact, you know, conducting things online and architects the vision of being able to see in real time things that are available to them where they can understand the sustainability outcomes at a touch of a button.

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15:01
Speaker 1
Just like I do when I order anything on prime, right where I set my own parameters, I could find the products available. I can even do bundling on there I go, oh, you should buy this shoe, these shoes, this shirt and the socks. Why don't I have. You should buy this assembly designed for this, for these outcomes when you're looking for them. We don't have that option. And a gentleman who was in his, I would say 70s, 60s, who is the owner of a big mechanical contracting firm said, well that'll never happen to my Craftsman. Like you'll never buy a pipe spool online.

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15:29
Speaker 1
And I was like, wait, you do realize like in 2019, Amazon had 145,000 different private label products under 45 different brands that I was like, listen, I put in my mouth and on my skin and hair and in my baby's mouth, skin and hair. Like you think your pipes full is so special that one day somebody's not going to be able to configure a pipe in your. And again, like we are. You are kidding yourself if you think that, you know, if you can't provide value that you won't exist. And that's what I think is really happening.

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16:03
Speaker 2
Okay, so that, and like you just said exactly what I, I was just writing furiously as you were talking, so I didn't forget. I, I think what occurs to me is if you're afraid of innovation hurting your business, then get better. Right? Bring more value. That would be the answer. You know, I, I was one time I was talking to an insurance agent who was really freaking out about, you know, what self driving cars were going to do to his industry. I mean, what value is a broker going to have if self driving cars never crash? You know, oh my God. And I, and I immediately responded by saying like, look, if your only value is connecting people to car insurance, you should go away. I'm sorry.

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16:47
Speaker 1
Right, right.

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16:47
Speaker 2
Like that's, that you're not adding value. So if, you know, if you're worried, do something, better, bring more value to the market. And what you're saying is, look around the ecosystem that we're in. I think I'm getting, you know, if I'm getting you right, assess what innovations, what's happening in your space that's relevant to you and start proactively trying to figure out how to make your company better today rather than turning a blind eye to it, rather than saying it'll never happen.

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17:22
Speaker 1
Right.

‍ ‍

17:22
Speaker 2
You know, there's lots and lots of examples of companies that turn blind eyes that, you know, went away. Right. Blockbuster and I mean, we could make a list.

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17:34
Speaker 1
There's no one left on the, you know, top 500 companies from like 20 years ago. So I think if you think about it like that. And again, it's not, I don't like fear for fear's sake. I like fear for a motivator. It's that dissatisfaction that makes. Look, if you don't have money in your pocket and you're growing up and you need to eat like, you will figure out a way to make some money. You know what I mean? Like right now, your family's families are not going to eat like that you employ. And that fear drives me to better. Like, it drives me to understand where the value of what my core capabilities are.

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18:07
Speaker 1
Like you should start asking yourself, how many things do you do that you get paid on because of some upstream wasteful process like redrawing things that have already been drawn, re estimating things, value engineering things, you know, designing things that have already been designed, pricing things to people that will never win the jobs transactionally. The transactional waste of a project is now at about 40% and it's. The answer is not only going to be about, well, go to an IPD contract. I see some of my friends from the Lean Congress that were with me last week. That's not the only situation. Right. Like, we have to start thinking about different measurements of success. Right. And we have to start thinking about where value is going to exist today.

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18:49
Speaker 1
Where it exists today and where it's going to exist and what matches up with what you know how to do. Like, I love the trades because I think they have a lot of make information. But they're not the only people that know how to make things. The building product manufacturing side knows about products already. They know about how to productize things. They know how to inform design with the actual productization that we talk about for construction. We have like some people are really in the infancy in construction trying to get into a place where we have products that can inform design so we have some certainty. Well, there's a whole category of groups that already know how to do that think about a skid. When a skid is made industrialized construction. Think about all the manufactured piece parts that are on there.

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19:28
Speaker 1
They're not being made by subcontractors, they're being aggregated by subcontractors and maybe the skid is being fabricated. So you're the guy that makes all those really complicated things that's on that skid, and yet you're even further downstream than these guys. Isn't it in your best interest to start making the skid and aggregating your own manufactured products? Like, we have to recognize that's a risk to some of the guys that are assembling other manufactured products. Right. That if that's not of a real value anymore and somebody else can do that besides you, that is a risk. And we have to recognize that it's not like these, it's not like manufacturing doesn't exist outside of construction. Like we have to reinvent it. That's. That's not true.

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20:07
Speaker 2
Agreed? Yeah, agreed. So here's a question, really direct one. Are we going to see considerable consolidation over the next 10 years in the building industry? Are we going to see companies, you know, are we going to see that the number of companies dwindle and potentially the size of companies grow?

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20:30
Speaker 3
Yeah.

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20:30
Speaker 1
Let me ask you this. Have you already seen it upstream with the owners? Aren't you seeing more serial owners, guys that, and women that don't own one building, they own 40 or data centers that aren't one data center, it's now 50 data centers. Or this hospital that's aggregated into this system, like we already see it happening. Do you think that those people that have now aggregated the information and certainty, programmatic certainty is more important to them than savings because they don't make the money on the building, they're making it on the services in the building, whether that's pharmaceutical or manufacturing or data. Do you think they're going to want to keep doing business in the fragmented, disconnected way now that they have consolidated upstream?

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21:10
Speaker 1
I can't imagine that it doesn't happen like that because it's more important for them to know what they're doing than it is. And the certainty around that, it's just so much more important now because everything else is connected in the expected experience that I think we have to recognize that it's coming. So think about this. I know guys that are doing contracts now, owners that want to name multiple partners from like, you know, a three building contract. So they're looking for the price to go down over that time, but they want named people in the Contract that are come coming from project to project because they don't want to relearn everything over and over again. That's happening already around the world. So I think you'll see some people that'll actually get consolidated.

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21:52
Speaker 1
But I also think there'll be some categories where if you're not providing any value, that entire category of types of businesses will be wiped off the face of the earth. It just won't exist anymore. You know, think about the people that you.

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22:03
Speaker 2
Any predictions? Any predictions on which categories?

‍ ‍

22:05
Speaker 1
Yeah, I mean I've had this conversation in the past. Like most of my contractors will say, and this is not me saying it, this is them, if they don't figure out how to become more like systems integrators. My dad used to say, as a contractor, just take great meeting minutes, Amy, and like make sure we get the best prices from subs. Okay, well those days are over. So like unless you can figure out like what value brings. If you're just getting. If you're just the middleman now for something, I think you've got to be really scared. I think on the other side of the business, if you are just distributing things and you're not actually, I mean, look, distributors these days are so far downstream, but they are providing some credit and financing and logistics. I don't know.

‍ ‍

22:45
Speaker 1
There are big companies on this planet that do pretty good logistics, right? They wanted to microfinance, they could.

‍ ‍

22:50
Speaker 2
That's exactly what I'm thinking. Yep. I agree.

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22:53
Speaker 1
I believe the distribution model. But here's again, I always say expect experience. When I shop on Amazon.com I see manufacturers, resellers and distributors all in the same query. They are. They figured out a way to provide some value or no one buys from them. But. But they are up there, right? Like think about what you're doing. You know what I mean?

‍ ‍

23:10
Speaker 2
Yep. Yeah, I think you know, if I'm. If when you talk about if you're being a middleman, right. Or middle person, you know, as a part of a value chain, that's a potential risk. If I'm a general contractor, my ears just perked up. Right. If I, if I've, you know, embrace the model of self performing absolutely nothing doing pure construction management and being that, you know, sort of logistics person. As the, as the owner gets more and more information, as the owner gets more and more power in the market, which is what will happen. It's just what does happen. General contractors models have to shift to what are we bringing to the table?

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23:47
Speaker 2
When an owner doesn't need us to buy subs when an owner doesn't need us to shop, when an owner doesn't need us to figure out whether their buildings are constructible, when an owner doesn't need us for V when an owner. All those different things, what do we, what do we stand for? What do we do? And I think you know what become.

‍ ‍

24:06
Speaker 1
What is estimating if you know the price as part of the criteria, right? Like, I mean think about these guys. Like right now, I saw Mark, I saw your question. Like we've been trying to standardize for many years. Standardization is only part of it. That's why it hasn't succeeded. I had a bathroom pod catalog. Look, my daughter's 14 before she was born, right? Like, but if you don't have a way for some, if you have to sell your standard product with your mouth or your feet these days, that's a problem. And until we connect the ecosystem with where you can place your standards in the cloud in real time and have it be updated in real time with the data backbone for your product.

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24:40
Speaker 1
And unless I can see analytics the way I do when I put something in my cart that people can market to me and they can change the price and they can see my wish list until I have that, standardization is only part of it and it won't succeed. Like you're basically a catalog in the dark. You know, if you're, if somebody is still drawing a geometric box and not being informed by those standards that you're creating. And I believe the standards will be created by the market, not necessarily one authority or you know, they'll meet code. But I don't think it's anyone's place to look at Amazon like what's what. I keep going back to expected experience. Look at Alibaba, what standards are being created by them.

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25:17
Speaker 1
It's just the data standard of being able to place your product in the, in the online catalog. Right. It's not, they're not telling me what I, how I have to make something. They're just allowing me to be there if I meet the requirements for someone to consume that data and to aggregate the data with other data. Right. Like so I always like to say yes, a revit button is amazing. You should all think about auditor's platform services to create great apps. And that's the, I think it's the beginning of the Internet right now with the way in which auditors platform services has been open to having any developers come and make the secret sauce. I like to say like look, right now there's no ways or WhatsApp on the Autodesk platform in totality, yet.

‍ ‍

25:55
Speaker 1
You could create your, take that domain expertise that's now in jeopardy and make something out of it that will be far more valuable than, you know, getting the next job. And I think we have to recognize if you're a young person in this space and you're into technology, or if you have the domain expertise, partner up, because you can literally make the next Waze, which is worth, I don't know how many billions on. And by the way, on my Apple platform lives, Waze, Google Maps, Apple Maps and probably 10 other, you know, directional capability apps. We, we have like, I don't know, 4,500 apps right now on Autodesk platform services, but they're growing at like, I don't know, 200amonth right now. So this is the beginning of the Internet.

‍ ‍

26:32
Speaker 1
If you were too young to make money at the beginning of the Internet, this is your time, right? So I think that should inspire you to want to come to this space and be an entrepreneur, because there is nothing but opportunity right now in the expected experience of how this is changing.

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26:48
Speaker 2
That's awesome. Wonderful. Okay, so now I have to ask a question on the counter end of this and sort of say, but how do we keep from getting totally lost in the wilderness of all that there potentially is out there? And how do I sort between. How do I sort the wheat from the chaff?

‍ ‍

27:15
Speaker 1
You know, I think, look, not. That's one of the reasons I came to Autodesk. I came here to help customers get on this journey. I think people are very good at seeing vision, right? Like, it doesn't take much to be like, an army of robot dogs is going to be on my job site one day and like, people predict that. And I go, yeah, that could happen. But let's take it step by step. In that formula of change, you have to do some first concrete steps of action. So assuming you have one robot dog, what does that dog want to eat? How do you charge it? Where does it go? Where does it stay? How do you interact with it? What data do you have? So it's like, take a first concrete step of action.

‍ ‍

27:51
Speaker 1
And for a lot of people, that's going to be digitization of what they have. Like just getting it up there to see what it is so you can use technology to sort it. You can't sort things in people's brains. You can't organize metrics. If you're not measuring things. So I would like just start to visually collect and so that you can digitize things that are only known to that one person that you are afraid if they leave your company. Right? And I think that's, that's the first concrete step of action you can take is to take an assessment of your readiness, of your culture, of your tools, of your technology.

‍ ‍

28:26
Speaker 1
Like, you know, in my Lean Friends, like do a little bit of a Shingo to like understand what assessment you need to do to see like what could be your value in the future state. What are your risks, what are your, you know, dependencies right now. Start there, take a little stock to make sure that you're ready for the future state and be really honest with yourselves. And sometimes that helps to bring in a third party to do that assessment. What's your technical health right now? What's your digitization of? What is your prefab readiness health right now? Like if this happens, there are people that can actually come and help do that, not just from my company, but others that we partner with.

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29:00
Speaker 1
Because look, at the end of the day I always say you can afford to potentially buy a 6 axis arm robot, but you probably shouldn't in your fab shop unless you're ready for that future state. Like it'll just get dusty or make scrap faster like my treadmill these days. You know what I mean? Like don't do it. Don't buy toys. Don't buy toys without understanding like why.

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29:21
Speaker 2
Yeah, I think that's brilliant advice. One, one of the biggest where I oftentimes start with my clients is let's. Before we start improving your processes, can we just write down what we do? Can we just write down how we currently do it? Just taking stock of what you currently do and actually just setting the standard for. Okay, at least we've assessed how things currently work. Now we can, now we can really prioritize what needs to be innovated, where we need to integrate technology and so on, you know, but it's not until you really take stock of what you have. So I think that assessment is a fantastic recommendation. Stacy, do you have any questions either yourself or from the audience? While we still have Amy, I want to start to wrap her up here soon.

‍ ‍

30:10
Speaker 2
I'm sure she's got plenty of other things happening today.

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30:13
Speaker 3
Amy, do you have any experience with, I guess giving some advice on how to establish an innovation committee within your organization like you were just talking about? You know, don't just go out there and grab a robot and then it sits in the dust because you don't have that team that can really take the time to start playing, you know, and integrating whatever virtual or technology, any technology, and kind of experimenting with it. Is there anyone out there that's doing a good job at, you know, implementing something new?

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30:50
Speaker 1
Interestingly enough, I was just talking to a company that's doing some 3D printing. There are a couple of young guys, right, and they were talking to me about a board seat with them. And I was like, they asked me the same question actually, Stacy. They're like, you know, they want to move from one type of the part of the business to like, they don't even really know what's out there. As an example, like what could be in 3D printing these days. And I was like, the first thing you need to do is stop asking the same people that have been in your place in your company for advice. Like, you have to go out. Anybody can create an advisory board. Like, it's not expensive. And mostly you can find people that would volunteer for the experience.

‍ ‍

31:26
Speaker 1
To be honest, there are boards that are created, that are real boards as well as, like, you know, that have paid board positions. But when you look for those people, look for people first that are going to ask the hard questions. Some of them that challenge you. And I think second, that people that have different experience from other places around the world and also that have seen things being done that maybe you haven't seen before. So it's like, you know, I often say, like, people ask questions like, well, when. If we could just do that. And I'm like, that's done every day. Like, I literally say that probably three times a week. Like the thing you're hoping for happens in this place. Like these companies are already doing that thing.

‍ ‍

32:03
Speaker 1
The fact that you don't know about it and you're trying to, you're not building on the shoulders of what information, what learning, what people know by bringing in outside perspectives. Again, I love diversity and perspective. Yes, we should all hire people that don't look like us and don't talk like us and that are creating, you know, diversity in the population. But diversity and perspective is almost even more important, right? Like I have a reverse mentor, actually, because I don't. I'm 51. I don't know what a 23 year old these days, what their true expected experience is, right? Like, you can have all the Tik Tok accounts as a 51 year old. Like I do, but you need to Actually know, like how somebody, I ask my 14 year old all the time, like, what do you, like what does that mean?

‍ ‍

32:43
Speaker 1
What's that, how you do that? And you know, it's like we need that diversity perspective so that our expected experience becomes something new. Right.

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32:53
Speaker 2
I love that. I think that it's so rather than looking at an internal innovation committee, look at external voices, opinions, and I think that's one of the biggest takeaways I have from this conversation. Amy, is exactly what you said. It's like what you're thinking about potentially trying to do. Somebody's doing. Yes, somebody is doing. You have to expose yourself to that information. If you were to rattle off sort of like, I don't know, top three to five resources that people should tap into to get exposure, aside from like building their own advisory board, which I think is great, but you know, whether it's publications or associations or, you know, what would you. Here's an opportunity to talk about.

‍ ‍

33:36
Speaker 1
So, I mean, look, I'm not, I'm the ambassador for the Advancing Prefabrication show for six years. It's a, it's one of the, I think it's coming to be like the largest show on not just prefabrication, but there's like seven different tracks. And, and it started really, I would say, with my personality. Like people ask hard questions even from the audience and there's workshops and there's CEO day and there's like, you know, market applications University is a great opportunity to go and find out some of those things. But I would say, you know, they're again, somewhat self serving. Like, I don't sell software and I don't sell consulting at Autodesk. But we do have an amazing customer success group that if you're buying our software, you can go and get resources for help.

‍ ‍

34:20
Speaker 1
A lot of people don't realize we're agnostic to the proprietary software you might have or competitive software. We're interested in the customer's business being successful. So you can go to like just the people you deal with at Autodesk and ask for some help. And believe me, I believe we should just ask for help. That, that's a, that's an. We should normalize that. We should normalize asking for some help.

‍ ‍

34:41
Speaker 3
Yeah.

‍ ‍

34:42
Speaker 2
Awesome.

‍ ‍

34:43
Speaker 3
Perfect.

‍ ‍

34:44
Speaker 2
All right, great. Stacy, anything else for Amy before we wrap it up today?

‍ ‍

34:50
Speaker 3
Nope, we're good.

‍ ‍

34:52
Speaker 2
Awesome. Amy.

‍ ‍

34:54
Speaker 1
I love seeing you guys, by the way. I love seeing young people. I love seeing you know, women that are out there. Doing their thing. I think it's really important for us. Expected experience. Remember, I think we want to see ourselves in places in this ecosystem. So the more you can get out there and be visible, if you have a diverse perspective, you know, whether that's quietly or even on social media, just do it, like, get out there and be seen. Be your authentic self.

‍ ‍

35:19
Speaker 3
Thanks so much for joining us. So fun.

‍ ‍

35:23
Speaker 1
Thanks for having me, you guys.

‍ ‍

35:24
Speaker 2
It was a blast. It was. You're very generous with your time this morning as well. Sorry we ran a few minutes past, but I hope that you have a wonderful day, enjoy your trip out in San Francisco, and I hope that you'll stop by and see us again soon.

‍ ‍

35:37
Speaker 1
Of course. Thank you, guys. Thanks so much.

‍ ‍

35:41
Speaker 2
So, Stacy, that was awesome. Thank you so much for, you know, being relentless and finding Amy and running all that down. I think that was. She was a joy to have on. So next. Oh, hey, what do you have for the Steeltoe Communications marketing ticket?

‍ ‍

35:59
Speaker 3
Yeah, real quick, very easy. I'm seeing this a lot with contractors when they're giving me some marketing pieces just to look over. They're always forgetting their call to action or normally. So a call to action. If you're doing a brochure, a flyer, a video, whatever it is, make sure you have an end goal. Once someone watches their video, where do you want them to go? Do you want them to email you? Do you want them to watch another video? Do you want them to go to your website call you just make sure to include that call to action with any marketing piece. It's pretty key.

‍ ‍

36:35
Speaker 2
I always forget that part. I'm sitting here like, okay, right. Reassess all marketing. Thank you yet again for a good reminder, Stacey. So, all right, so next week we have a fascinating conversation coming up. It's one that actually ties into some of the other stuff that we've talked about over time here. And we're going to be talking about human trafficking on the, on job sites. And we've got Meg Huey from Freedom Network usa. She's done some speaking for different associations around the construction industry. How I got some exposure to her and really wanted to bring Meg into the conversation about what we can do to not only spot, you know, infectious fix human trafficking as we see it in the, in the building industry, believe it or not, it's happening. It's not.

‍ ‍

37:28
Speaker 2
When we think about human trafficking, we always think about sex trafficking, which is a thing and horrible. Right? It's terrible, but it's not. It doesn't Always take that form. And it's actually happening a lot in, in the, in the building industry way more than we. Than we know. So Meg's going to help us to see that and also to maybe consider some of the conditions that we have in the industry that are contributing to it that we could, you know, kind of stop it at its source. So I'm really excited about that conversation. I hope that everybody enjoyed today. If you have any, if anybody, just as always, you know, I got toss this up on the screen.

‍ ‍

38:03
Speaker 2
If you want to get added to our weekly mailing list so that you're not reliant on getting the invites through LinkedIn mixed in with everything else that you're getting, shoot us an email. Shoot it to Stacy. Stacy h.steeltoe calm.com and Stacy will make sure that we get you added to our weekly newsletter. It's not spammy, and it's really specific to making sure that you're teed up for the show, so please do that. And then, as always, we don't say this enough.

‍ ‍

38:31
Speaker 2
If you or someone, you know, has an important story to tell about creating positive change in the industry, like the story that we just heard from Amy or stories that we're going to, you know, that we hear every single week, please let us know we're building our guest list for the winter at this point and would love to build that guest list with people that you know and that you think are doing an amazing job. So reach out to us. Stacy, anything else? Did I. Did I miss anything?

‍ ‍

39:02
Speaker 3
Go Phillies.

‍ ‍

39:04
Speaker 2
Yeah. So I'm gonna have to say go Astros.

‍ ‍

39:08
Speaker 1
I understand.

‍ ‍

39:09
Speaker 2
Yeah, I know I've got. I've got some clients down in Houston that I love dearly and who. This is like, their entire life right now. So I. But it has been for. It's, you know, the Phillies are the underdogs, right. Coming in, and I have a hard time not rooting for the underdogs, and Philly's like an underdog town, so it is hard to root against. I'm not rooting against Philly. I've just. I just want to see my friends be heavy now. Stacy, I want you to be happy.

‍ ‍

39:38
Speaker 3
You better. I'm your partner here. You better be on my side or I'm not showing up next week.

‍ ‍

39:43
Speaker 2
You guys can have game one. I. I hope. I hope that. That's tonight, right? Game one tonight?

‍ ‍

39:49
Speaker 3
No, I think it's Friday, actually. They have.

‍ ‍

39:51
Speaker 2
Why the delay? What are we. We're going to be playing baseball on, like, November 20th.

‍ ‍

39:55
Speaker 3
I know.

‍ ‍

39:55
Speaker 2
Crazy.

‍ ‍

39:56
Speaker 3
I know it is.

‍ ‍

39:58
Speaker 2
Stacy, have a wonderful week, all right, you too. See ya.

‍ ‍

40:00
Speaker 1
Byebye, guys.

‍ ‍

Many construction companies develop meaningful innovations that create strategic advantages in their market in a crowded field of competitors. Perhaps they develop a tool, a fabrication method, or an operational process that gives them the upper hand only to have an employee leave and bring that information to the competition, diminishing a hard-won advantage.

When you think of Intellectual Property (IP), the industries that come to mind immediately are manufacturing and software, not construction! Greg Stone, IP Attorney with Whiteford, Taylor & Preston, joins us to see how construction companies can protect and monetize their IP.

Transcript:

‍ ‍

00:00
Speaker 1
Good morning. I'm not saying it works.

‍ ‍

00:01
Speaker 2
I wish you God speed.

‍ ‍

00:03
Speaker 1
Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind of success you're gonna have with that today because the world, my friend, has changed. Right?

‍ ‍

00:14
Speaker 2
Latin American construction workers, they have different needs. They have completely different.

‍ ‍

00:20
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community relations portion, you know, the most with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:38
Speaker 1
Funny, isn't that? Yeah, not for me. Not for me. At 11 o', clock, I am guaranteed to be snoring.

‍ ‍

00:45
Speaker 3
So.

‍ ‍

00:45
Speaker 2
So.

‍ ‍

00:55
Speaker 1
Hey, it's morning huddle time. For those of us, those of you who are joining us live, thank you for hanging in there. We the joys of live production. We are starting 11 minutes late and that is on. Really? Nobody? Just. It's on technology. I, I literally just had to do like, coding to get this. I, I had three panic attacks. But we're here and thank you, everybody. Thank you, Greg, for having such a. Being such a good sport about. Greg was like, so is this normal? Like, no, this is normal. I've had. I haven't had to deal with this in 30 meetings.

‍ ‍

01:31
Speaker 2
Not a problem. Not a problem.

‍ ‍

01:33
Speaker 1
You were very calm. Your calm brought a lot to the table. All right, Stacy. Greg. Thank you so much, Greg, for being here. Stacy, how are you today? What's going on in your world?

‍ ‍

01:45
Speaker 3
I'm doing good. It's fall. The leaves are looking beautiful. Maryland.

‍ ‍

01:51
Speaker 1
That it is. Yeah, it's, it's looking great. Greg, how about you? What's new in your world?

‍ ‍

01:57
Speaker 2
Same sunny, nice day for now. Cool day in Baltimore city.

‍ ‍

02:03
Speaker 1
So, yeah, we'll take it.

‍ ‍

02:04
Speaker 2
All good?

‍ ‍

02:05
Speaker 1
Yeah. So were getting like, as were killing time during the panic attack, one of the things that Greg and I were talking about was that Greg is in kind of has been a lifelong musician and has been playing out for a while. Greg, just give us the. What are you into and where are you playing?

‍ ‍

02:27
Speaker 2
Yeah, sure. So I actually played out in a cover band from an 80s cover band. From 2006 to 2014, I was the keyboard player for Voodoo Economics. It's a nice 80s themed name there. And just after we stopped playing, I got the bug to go out on stage. So for about the past year, I've been doing a monthly gig, just me, my keyboards, microphone at an Irish pub in Severna Park. So you Catch me there one Saturday a month in the afternoon, just playing stuff that I like to play.

‍ ‍

03:00
Speaker 1
That's awesome, man.

‍ ‍

03:01
Speaker 3
Name of the pub?

‍ ‍

03:02
Speaker 1
Yeah, I was just gonna say. Which club? Which pub?

‍ ‍

03:04
Speaker 2
Yeah, it's called Brian Baru. So, yeah, giving them a quick shout out. But one, usually one Saturday a month, you'll find me in there playing music.

‍ ‍

03:14
Speaker 1
Excellent. So if Greg says anything today that you either want to confront him about or you don't want to find the dude, once a month, you'll have an opportunity. Well, excellent. So Greg is an attorney at White for Taylor and Preston, is that right?

‍ ‍

03:35
Speaker 2
Yep.

‍ ‍

03:36
Speaker 1
He focuses specifically on intellectual property law. And Greg and I got into a conversation several months back just, you know, getting to know each other in a breakfast environment. And in that conversation, it came out that, like, you know, I said, well, yeah, there's no IP in construction. Right. Which naturally led Greg to be like, not so fast. That's right. Yeah, not so fast. And I started learning a ton in that conversation. Said, hey, this is a conversation we need to be having in the huddle, a conversation that the audience that we. That we work with every day, or, I'm sorry, every week would really benefit from. So we're going to get into intellectual property in the construction industry. And Stacy, assuming anybody did hang around live, please engage with those folks, you know, on the, you know, live chat.

‍ ‍

04:29
Speaker 1
We'll pull you back and see if we have any audience questions to, you know, approach here. With about 10 minutes to go, so I have to, like, recalibrate my brain to make sure that we land that time correctly, but we'll see you soon. So, Greg, let's start off by talking just a little bit about what intellectual property means in a legal sense. What is ip, which we, you know, intellectual property, or ip, as we call it.

‍ ‍

05:01
Speaker 2
Yeah, yeah. So when we're talking about intellectual property, generally that's a body of law, but fundamentally, we're talking about four different areas. Patents, trademarks, copyrights, and trade secrets. That's kind of the universe of categories of intellectual property. So patents protect new inventions, and particularly inventions that are embodied in a product, a process, a machine or a composition, some type of chemical composition. Right. And I can give examples, if you like, Chad, of how they relate.

‍ ‍

05:44
Speaker 1
Yeah. So what's an example of a patent in, like, what. What's something that. That we think of that. That all of us would know immediately as a patent and then maybe give us, like, the construction example.

‍ ‍

05:57
Speaker 2
So. So, I mean, you know, the. The first automobile engine, you Know the, the for the, an assembly line for making an automobile. I mean, you know that there are what, 12 million almost the issued patents now, you know that have issued over the last two centuries in the U.S. you know, so there are many, many and many different categories of invention, but particularly in the construction industry, it would be things like, you know, different machines. I mean Caterpillar for instance, has loads of patents for bulldozers and different machinery. You've got, you know, some of the stuff that we've done are concrete repair methods and apparatus. You've got, you've got monitoring drugs.

‍ ‍

06:56
Speaker 1
Yeah, I can patent a method.

‍ ‍

06:59
Speaker 2
Absolutely.

‍ ‍

07:00
Speaker 1
Okay, so that's, you're going to talk about the difference between a patent and a trade secret because in my brain I'm going wait, isn't a method kind of a trade secret? But, but I'm sure you'll, you'll paint that picture. But okay, so we got it for patents. I think I can picture that's usually it's associated with what I get inventions. That term that you said we invented this new product or new way of doing something that we are then putting a patent on and saying nobody can do that but us or nobody can use that but us.

‍ ‍

07:33
Speaker 2
Yeah, exactly. Yeah. And so importantly, fundamentally, the patent gives a right to block others from making, using, selling or offering for sale that new product, that new process, that new composition. But in exchange for that, you have to file a patent application that is a detailed technical description of exactly what the invention is. So you're telling the world exactly what it is that you've developed, how to go out and make it, how to go out and use it. And that's the trade off.

‍ ‍

08:07
Speaker 1
Yeah, the trade off is the moment that patent expires, which is how long?

‍ ‍

08:12
Speaker 2
It's 20 years from the time you first file the application.

‍ ‍

08:15
Speaker 1
The moment it expires, everybody knows how to go out and replicate your.

‍ ‍

08:20
Speaker 2
And the public is encouraged to why we make those documents public so that once it expires the world can use it.

‍ ‍

08:27
Speaker 1
Furthermore, I can, I'm publishing my patent which says, you know, use a little from column A, column B and column C. And this is exactly how you do it. If somebody's really creative and they may be able to say actually we're going to use column D and it's going to be different and we're not going to be infringing on the patent. But you know, they actually by being able to see their recipe, they just Educated me on how to do something better.

‍ ‍

08:50
Speaker 2
Yep. And there's a whole body of law how close you have to be infringing. You know, can you do D or can you maybe do C prime and come that close? Right. And, and still avoid the scope of the patent. And that's where you get into the big, heavy, nasty litigation.

‍ ‍

09:07
Speaker 1
Interesting. Fascinating. All right, so then we got trademarks. Talk to me about trademarks.

‍ ‍

09:11
Speaker 2
Well, if I may though, just to contrast, before we get to trademarks, I'd like to contrast patents from trade secrets. Trade secrets are really at the opposite end of the spectrum from patents.

‍ ‍

09:24
Speaker 3
Right.

‍ ‍

09:25
Speaker 2
Patents again become a public document, but they let you block anybody else from going out and making, using and selling the thing that you've invented. Right. Regardless of whether or not they know about your patent. A trade secret protects any type of information that has independent commercial value that you take reasonable measures to keep it locked up, to keep it secret. If you take those protections and you don't let the cat out of the bag, you protect the information by non disclosure agreements. You have a legal trade secret interest in that information so that if a former employee runs away with it to a competitor, if a competitor wrongfully gets access to that information, they're able to go out and use it.

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10:13
Speaker 2
If they go out and start using it, you can assert trade secret protections against them and sue them for misappropriation of the trade secret. But the key difference between trade secrets and patents are the trade secret. You, you keep it secret, you keep that information locked up and that's great. But somebody out there that independently develops whatever the thing is, that is subject to that trade secret. So let's say you've got a, an installation process that talks about how you are coding a wall to make some multi level surface on a wall. And the way that you're doing that is really a secret process. If somebody else comes in after the fact and looks at the wall and is somehow able to figure that out, reverse engineer it, you know that's fair game.

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11:06
Speaker 2
They're able to do that because it's not patented because you relied on trade secret. If somebody can reverse engineer it, that's fair game. If they wrongfully got access to your information, you can go after them for trade secret misappropriation. But if they didn't and they just figure it out, then that's fair game.

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11:24
Speaker 1
So you have to make a decision. Do I want to go for a patent? Publish how exactly I'm doing this, make that a part of the public Record and then have 20 years of making hay before everybody can come and replicate, you know, duplicate my stuff or do I want to go down the trade secret route, just, you know, put together non disclosure information, put together, you know, agreements, that is, and put together a sort of a way to make sure that if somebody does on illegitimately get their hands on this information that I have recourse.

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12:00
Speaker 2
Right.

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12:02
Speaker 1
But I'm not going to go through the whole patent process and publishing and all that type of stuff. You have to make that decision which makes more sense for my business.

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12:10
Speaker 2
Right, exactly. And people weigh it. Depending on how difficult it's going to be for somebody who has proper access to be able to reverse engineer. If it's going to be tough for them to reverse engineer, then trade secrets might be more appropriate. If it's really going to be easy for them to figure it out once they see it, patent route probably makes more sense.

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12:30
Speaker 1
Excellent. All right, that's great. So, so trademarks and then copyrights real quick.

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12:35
Speaker 2
Yep. Yeah. So trademarks protect branding that are associated with any product, any service. So that branding might be in the name of a company, it might be in a unique logo. You know, for lots of repair companies they have different logos that might have a building silhouette or a house silhouette. There's a gazillion different registrations for trademarks for logos that have those house emblems in them. But any unique design element that you use to identify as a source or identify as a brand of a product or service or any name that you associate with that product or service can serve as a trademark. And you can protect that by getting a federal trademark registration at the US Patent and Trademark.

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13:26
Speaker 1
This is, this is easy. This is the big McDonald's M. This is the Nike Swoosh. This is the right, those different types of things. And I have to make sure that I'm not putting my Nike a Nike Swoosh on my product and trying to do business off of their good name.

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13:43
Speaker 2
And the ones that you just gave examples of, Chad, are really great examples. The McDonald's M, the Golden arches. Right. When, when people see that, they immediately associate that with McDonald's burgers. The Nike Swoosh. When, when somebody sees the swoosh mark, they immediately associate it with shoes, with sneakers. Those are really fanciful original marks. Very strong brands.

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14:07
Speaker 1
Yep.

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14:07
Speaker 2
That versus Chad Prinky construction. Right, that's very, very descriptive. You can't get any trademark protection for the term construction. Your own name is a descriptive term. For you. So there's not much protection that attaches there. So when you're coming up with a name that you want to have distinction wrap around from a branding perspective, the more original you get. You know, again, that Nike Swoosh is really original. The, the golden arches are really original. So the more original or fanciful you can be in your branding, the stronger the trademark rights are going to be that attached to it.

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14:47
Speaker 1
Excellent. Okay. And in construction, we would just see that associated with construction brands. Right. We would see that with the logos that we've come to know. You can probably picture some in your mind right away as you start to think of the construction brands that you're most familiar with. And then. And so now into copyright.

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15:05
Speaker 2
And so copyrights are a really active field intellectual property field, particularly as it relates to construction. So you see lots and lots of disputes over what can different parties do with, for example, blueprints, architectural drawings, all the way from drawing phase up to a finished building, photographs of buildings, any technical design documents that get wrapped up in the. And ultimately in the finished blueprints or building information modeling models. Right. You know, any of this stuff can be protected by copyright. Copyright protects any original work of authorship that's fixed in a tangible form. So that's why I'm giving these examples of things like architectural drawings of photos of different types of software. All of these are protectable by way of copyright. And to get the strongest protection, you file an application to copyright office for copyright registration.

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16:16
Speaker 2
But really important issue is that the copyright only protects the literal expression itself. So for instance, with a blueprint, a copyright in the blueprint protects you against somebody else making copies of the blueprint and then maybe going out and holding that copy that they've made and constructing a building from that copy. It does not protect against somebody rightfully using the blueprint, building and then somebody else going in and scanning through the building, figuring out exactly how it's put together, and then building their own exactly identical building. The copyright in a blueprint only protects against making a copy or substantially similar copy of the blueprint itself, not of the building that results.

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17:11
Speaker 1
Yeah, so if I'm able to go in and sort of make my own drawings as I'm doing it, putting it into my own model, and, you know, replicate exactly what you built, that's no copyright protection there. But if I get my hands on your plans and then I build something substantially similar, now we got a problem.

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17:33
Speaker 2
Well, yeah, particularly if you've gotten my plans now, you're making copies and you're giving it to your architect and you're giving it to your construction team and that kind of stuff. And the only exception there is where it's possible that you come up with a final building design that's so incredibly, amazingly unique. Like it's a building that's shaped like a queue, like the letter Q or something like that, you know, something that's so original that the building itself is essentially a sculpture, then you could have a copyright interest in the building itself. But just, you know, a rectangular office building now it's going to be really hard to assert a copyright interest in a traditional new tower.

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18:14
Speaker 1
And what are the most common. You say this is a pretty active space. What are the most common disputes that are arising here? Well, let me pose one. You tell me if I'm off base. The picture I have in my mind is, you know, I, as the architect designed something, the, you know, who owns that design? Does the owner own it or is the architect owner?

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18:37
Speaker 2
Yeah, and it really depends ultimately. And you know, what is the original document? What's the agreement between the architect and the, and the project owner. Right. You know, if the, you know, if that doesn't spell out that the owner is going to own the copyright interest in those plans and absolutely the architect is going to own those plans. So up front in the agreement, when you're bringing in the architect, those issues have to be fully vetted. Right. And documented in that agreement to spell out, okay, I'm going to own these plans. And presumably then an architect who's jumping into that type of venture is going to price in the fact that I'm doing this development work entirely for you and I'm going to assign over my interest in the copyright. I'm doing this work, creating this work for you to own.

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19:32
Speaker 2
But absent that agreement spelled out up front, you know that with some exceptions, the architect is going to own it. And, and the owner is going to be, you know, out in the cold if he wants to go and take that to the, to his next development.

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19:48
Speaker 1
Right. That's what I was just thinking is, you know, why can't I just use these plans to do 10 more developments just like it in different cities across the country and just hire you, the architect, to be my ca. You know, you can just be my. Right. You can just do the CA work on that stuff.

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20:03
Speaker 2
But just quickly, I, I do want to do. Want to clarify that there are certain exceptions, you know, for outside Contractors like an architect, if they're specially commissioned, which is a term of art under the copyright laws to do this particular work, then there could be automatic assignment. If they're an employee of the company for copyright purposes. The, the ownership could automatically go from employee to owner. Just for copyrights doesn't relate to patents or inventions. But, but there are certain circumstances where you could have that automatic transfer. But fundamentally, because those are exceptions to the basic rule, it really dictates you deal with the issue upfront in the agreement spelling out who owns what in the end.

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20:50
Speaker 1
I love this. Okay, so thank you very much. I think that was, so we've got these four different areas of intellectual property, how they relate specifically to construction, where we can see these things actively. And I hope that the audience is starting to process through, you know, probably some light bulbs, because again, you know, I've been working with construction companies for 15 years in a consulting capacity. I've never once ended up in an IP discussion. And so, you know what I mean? So I, I, this leads down this path of like, what's the biggest issues or the biggest mistake that you're seeing made in the construction industry regarding intellectual property?

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21:30
Speaker 2
Yeah, well, I kind of alluded to it a bit so far. One of the biggest challenges, one of the biggest problems is just a lack of understanding of what I as an owner own by way of developments that are, that pop up, right? So if I have an employee, if I'm a company that's doing construction projects, but every now and then I'm coming up with a new novel improvement for, for forming patios on concrete buildings, right? Invention comes out of that process.

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22:16
Speaker 1
Right?

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22:16
Speaker 2
And the way our patent laws work and protect inventions, an employee owns that invention. With very rare exceptions, an employee owns that invention unless again, there's an agreement that assigns it over to the employer. So employer is thinking, I pay this person's salary. I have them, I've assigned them to this team to work on coming up with a solution for how we're installing a patio on an existing flat planar concrete building surface. And they come up with this great concept. So if I've paid for that effort, surely I must own it. And that's simply not the case. And so the problem is, you know, owner who thinks he owns it has gone through the patent process. If he's never gotten an assignment of the inventor's ownership interest over to the company, he simply doesn't own it.

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23:11
Speaker 2
And so he's invested all this time, money and effort in trying to obtain patent protection. And because he never went through the process of getting an assignment, you know, he's now out in the cold. His former employees, a lot of the times now own that invention, and there's nothing that he can do unless he can go chase down and give him $1,000 to now assign the vention, or more likely, you know, $100,000.

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23:41
Speaker 1
So it goes back to what I kind of alluded to now a couple of times during the. During the show, which is that, you know, the biggest issue is that they're not thinking about it. And then once they are thinking about it, they. It's too late. You know, there are. There are a series of issues that you really have to be proactive about. One of the issues in particular that you get just gave an example of is if you're an employer considering putting together some sort of, you know, statute that your employee doesn't own the invention, but the employer owns the inventions that the employee develops while there. So exactly this overall, you know, and you know me, I'm. I'm like, I just like a fight. I just like a fight. So I. I'll pick one with you here for a moment and just.

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24:34
Speaker 1
And just say, you know, all of this. I'm having a hard time squaring all of this protecting of. Of our stuff and preventing other people from using our stuff and keeping employees from being able to own their own stuff. And like, I'm having a hard time squaring all of that with this idea of, like, actually making positive strides in the building industry. You know, Stacy and I built this platform of the morning huddle, really, to showcase people who are helping to push positive change in the construction industry. So, you know, when. When I come up with some fanciful invention that changes the game for the construction industry, man, it pisses me off to think about that, you know, being something that now only I can do, nobody else can do. Right. Help me to square that in my own mind or, you know.

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25:28
Speaker 2
Yeah.

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25:29
Speaker 1
How would you respond to that?

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25:30
Speaker 2
Yeah. And so that, Chad, is a debate that is no way exclusive to the construction and really hear it a lot in the pharmaceutical industry. But look, fundamentally, our patent system is an incentive system. It incentivizes innovation. And in exchange for you going out and innovating and teaching the world about your innovation, by way of coming in and filing a patent application that becomes public, the government will give you a monopoly for a limited amount of time over that invention. But benefiting the public by giving them that knowledge, the knowledge of how to make and use your innovation once your patent expires.

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26:15
Speaker 2
And if we didn't have that, that drive that driver for people to innovate in the first place, then why is any company going to go through the blood, sweat and tears that has to be invested in the innovative process, you know, if there's not gravy for you at the end by way of a patent. So if we're going, if we want to see new innovation coming up, really in any industry, we want to be able to reward that innovation. And that's the whole goal of the patent system, reward innovation so that people are going out and they're developing new things that are going to benefit the public. And the benefit that innovator gets is this monopoly by way of a patent for a limited amount of time.

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27:06
Speaker 1
So what you're saying is that, you know, fundamentally the protections system has competition built in, but it has monopoly built in as the incentive for a period of time. And I would also, I will concede that, you know, if we aren't that every time somebody pushes the envelope and does something amazing and is changing the way that things work, while I might not be able to replicate it will inspire similar advancements elsewhere. And, and so overall, as long as somebody is innovating the innovations, even though they may be licensed, protected, will inspire, motivate and create market demand for additional motivate or for additional innovation. Yeah, absolutely.

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28:06
Speaker 2
And that's one of the fundamental philosophies of the patent system. It's, you know, not only am I teaching the public about my great new thing, but I'm planting the seeds for everybody else to come after me and build onto it and further improve it.

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28:22
Speaker 1
1, 1 comment. I wonder how you would respond to this. As I'm reflecting on everything that we've talked about is, you know, as we talk about incentivizing innovation, you know, if it's going to be the employees themselves that you're leaning into to create, to innovate, to do something special, wouldn't it be wise to have some sort of maybe mutual incentive that says, you know, an employee is entitled to 50% of any, you know, whatever rent of revenues generated as a result of monetizing said patent or said trade secret or fill in the blank?

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29:03
Speaker 2
Absolutely. And many companies will do that. They'll actually have an internal incentive system and they vary in Structure and let's say reward level, you know, from company to company. I mean, you know, some might get a nice pen, others might get a 10% royalty, you know, ongoing for the life of the patent. I mean, it really varies, but I think generally it's a good business practice. It's smart business practice to incentivize your employees, to reward them for that innovation. It's just improving your product on the marketplace.

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29:42
Speaker 1
Yeah, I feel the same. I think, you know, as we talk about incentivizing innovation, you know, you're. You can't. You can't say, hey, anything you do here belongs to me and not you, so go be creative.

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29:55
Speaker 2
Right, right. Exactly.

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29:57
Speaker 1
Exactly. Yeah, I think. I think. All right, awesome. I want to bring Stacy back. I think we have some questions, comments, and, you know, I want to make sure that we get an opportunity to hit on some of those. Stacy, what do we got?

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30:13
Speaker 3
All right, we have two questions on copyright. So I can go through the. I can go through with a digital scanner and replicate the model and not violate a copyright question mark.

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30:29
Speaker 2
And so again, it depends. It's going to depend on the specific building. And is there really something super original about the building? But, you know, a, you know, let's say a colonial house. Somebody could absolutely go in with a digital scanner, walk through the house, take very precise dimensions, and go and build an exact replica without. And again, this is assuming it's a standard colonial house. Right. But assuming that's the case, absolutely somebody would be able to go and create an exact duplicate of that house in another neighborhood. What they would not be able to do is go to the source plans, the source blueprints, or the prints that they got originally from the builder, make copies of those and hand them to an architect or a builder to go out. And because. And that's just the way the copyright interest works.

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31:34
Speaker 3
Okay. And I think the next question probably answers it similarly, but. So school system hires architect to design an elementary school, pay for the design, decide that I want to now build six identical elementary schools with one set of drawings that I bought. Copyright.

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31:55
Speaker 2
So a copyright interest absolutely exists in those plans. And who owns it depends on what that agreement said outright between the school system and the architect. And so if it was the school's plans, to be able to take that out and use it to build a bunch of other schools, it would be wise in that scenario to up front, say that, spell it out in the agreement. The architect then has the benefit of knowing that up front they can build that into the basket of rights that they're giving the school system and say, you know, you can go out and build seven more units. You can go out and build 10 more units, whatever cap they want to put on it. Because originally the architect presumably owns those rights in those plans.

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32:43
Speaker 2
But really depend, again, it dictates dealing with this issue up front in the initial agreements between any third party and owner developer who's working a project. Awesome.

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32:59
Speaker 1
Awesome. I have one question, Greg, which is how do I know when I should be taking steps to protect ip?

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33:12
Speaker 2
Anytime that you're doing, anytime that you're being creative, you should be going. It doesn't necessarily mean you have to run out to an IP attorney, but anytime that you're doing something new, you have a new branding that you're associating with this process for installing X, right? You installed X and found that in doing it, I can improve my reinforcement by adding these elements to it. Anytime that you're doing something new, inherently there is intellectual property that's associated with that new thing. And so you need to go through, go through the mental process of, you know, does this really give me some type of economic advantage, some type of benefit that my competitors might want to use if they found out about it?

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34:04
Speaker 2
And if that's the case, then you should be looking at, okay, well, if that's the case, what kind of protections can I wrap around it? Is it a new branding that my competitors are going to want to adopt? If so, I want to go seek trademark protection. Is it, is it some type of functional improvement? If so, I want to consider the possibility of patent protection or have a strategy where I'm going to maintain trade secrecy over that information. But fundamentally, anytime you're coming up with anything new, that's giving you some benefit out in the marketplace that your competitors are interested in, there's IP there and that should be vetted.

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34:37
Speaker 1
Excellent. That's really useful. So, so, you know, you talk about financial value, it's the, the motivation to do it. What's, what's the financial incentive to do this? One of the biggest issues that I see with construction companies from my seed as a consultant, helping companies to figure out where they're trying to go over the next three years, five years, 10 years, those types of conversations, all the time I'm having lots of conversations about exits, right? About what are we planning to do when it comes to selling the business, when it comes to whether it's, you Know, creating an esop or whether it's, you know, trying to find a way to keep it in the family. But more often right now, a lot of the conversations that I'm having really do revolve around how do we get the most possible valuation for the business?

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35:25
Speaker 1
Do you see intellectual property having these types of protections in place, mattering in any meaningful way to construction company valuation?

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35:37
Speaker 2
Yeah, absolutely. And again, it's an issue that's not unique to the construction industry. It's, you know, anytime a company is looking at an exit, obviously you're looking to maximize the valuation. And so hopefully you're doing that early on, long before, five years before you're getting to a negotiation table for some type of exit, some type of MA transaction.

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36:04
Speaker 1
Right.

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36:04
Speaker 2
And so to the extent we talked about different examples of ips, they relate to construction industries. So it would really behoove somebody that's looking at an exit five years down the road to go through and say, okay, do I have some things that are sitting on a shelf that I've maybe not jumped through the hoops of seeking protection for the brands that I have out in the marketplace? Have I secured trademark registrations for them? If there are. Are issues that I've kept secret and that, you know, we've been working on and tinkering inside, can I wrap some patent protection around them? If, if you get the negotiation table and you.

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36:49
Speaker 2
And there you find that you've got these things that have been sitting on the shelf that you haven't taken the steps to protect, now your valuation's down here, whereas five years before, you've secured all this protection, you know, for the stuff and have federal protections that now attached to it, boom, your valuations way up here. So it's really a useful exercise to go through, you know, an itemization, if you will. Well, before you get to that negotiation table to see what things are. Do we have in process, what things do we have sitting on the shelf that we just haven't really acted on that could just add value to our basket of intellectual property that we can wrap protections around just to boost our valuation. And we see that a lot. And the folks that are doing it early are benefiting.

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37:40
Speaker 2
The folks that are waiting until they get to the negotiation table are realizing, oh, man, I wish I would have done that.

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37:48
Speaker 1
When I think of some of the most pervasive challenges, you know, or, you know, yeah. Challenges the business owners face in the construction industry, this is one of them, is Just, you know, exiting from the business is oftentimes just so unappetizing. It's just, you know, yay. I get 2x profit, you know, or, you know, 3x profit. It depends on the world that you're operating in. But I think getting a comprehensive IP strategy in place and really taking a look at what protections you can bring to the table, that's going to make a huge difference, particularly to a strategic purchaser rate. Somebody who's going to buy your company and be strategic with that. I mean, imagine a private equity firm that owns 18 different mechanical contractors.

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38:29
Speaker 1
You own protections on four different patentable techniques and processes that I now, not only am I going to be able to buy this company and get the value out of, but I'm actually going to be able to take this and apply it to the 18 other companies that all. Now all 19 of my companies are going to be enjoying federal protection for the next, whatever, 15 years on this very unique way of doing things. It's going to give a strategic advantage in the market.

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38:54
Speaker 2
Exactly.

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38:55
Speaker 1
Definitely worth doing. Last question. What's it cost? How do I protect all this stuff? Right. Like how much?

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39:00
Speaker 2
How much?

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39:01
Speaker 1
So, so all there might be some people who are listening and watching saying like, I gotta do this, but wait a minute, I don't want to get sucked down the rabbit hole with, you know, a bazillion dollars with attorney's fees.

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39:14
Speaker 2
Yeah. And costs are really all over the place for the different types of protections that we talked about for trade secret protection. That's all, that's all client based. It's building the systems internally to literally keep information locked up. Right. And having data password protected. So that's just whatever your internal infrastructure costs are.

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39:35
Speaker 1
So internally that's, in the scheme of things, the most affordable protections you can have are trade secret protections.

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39:42
Speaker 2
Right? Right. Copyrights are pretty simple process. It's a registration fee that's under $100. And attorneys, if you work with an attorney to do a copyright application, probably under $500 to do a registration. It's really a pretty simple process. Trademarks are, I say, usually between $3,500 and $4,500 from start of the process through the, through to registration, assuming there are no tremendous headaches that come out in the process. And there are headaches that could come up during the process, but Generally in that $3,500, $4,500 range is appropriate. Budget patents are oftentimes very valuable. But likewise the most pricey type of protection that you can get. So for a very simplistic application going through the entire examination, you might spend $15,000 for something that's incredibly complex. You know, maybe a new piece of software or really complex electrical control systems.

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40:59
Speaker 2
You know, that could be 25, 35, $40,000. It really depends on the specific technology. And there I'm talking about from the start of the process, through the multi year examination process, all the way to ultimately an issued patent.

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41:16
Speaker 1
Wow, that's, I mean, go ahead, Stacey. Sorry, please.

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41:19
Speaker 3
Oh, I just have a quick question. So is there a way to like, you think you have something unique and innovative and then you go through the process and pay for everything. What are the chances you're going to get denied for something? Like maybe you weren't aware that something like this is already out there.

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41:39
Speaker 2
Yeah. And so that does happen where you're going through the process. You filed your application 99 times out of 100. We expect we're going to get an initial rejection from the patent office and then we get into argument with the examiner to explain why we're different from what the examiner cited against us. And so, I mean, but that's really where the game is. That's the back and forth, that's the negotiation that takes place during the patent examination process. And again, that's pricey. That's part of that 15 to $40,000 budget. You know, if it sails through, it's only a little bit of interaction that's back and forth with the examiner and you get to an issued patent. However, if there's lots of back and forth, lots of fight, sometimes the examiner digs his heels in.

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42:34
Speaker 2
You feel that he's wrong in citing against you what he cited against you. You have to appeal. And the appellate process gets pricey. So it really varies. Sometimes the examiner is very well grounded in the rejection that, that he or she makes, and sometimes they're not. But if they're not, you have to keep fighting, you know, which just adds cost to the process.

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43:01
Speaker 3
Thanks.

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43:02
Speaker 1
Awesome. This has been a really useful conversation. It's got, it's definitely got my wheels turning and I have nothing to protect. But, but you know, I, I, I can picture having some different conversations with my clients as a result of this. So I appreciate your time just even personally and I know that our audience, you know, has probably got their creativity peaked and going to be having some interesting discussions this week and afterward as a result. So thank you so much for joining us and having the discussion, Greg.

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43:35
Speaker 2
Absolutely. My Pleasure. Thanks for having me.

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43:37
Speaker 1
Yeah, it's our pleasure. So anything that you want to say? Parting words?

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43:45
Speaker 2
Just the one morsel that I'll leave everyone with is you hear horror stories about people leaving value on the table. The earlier you address these issues, the better. Do it internally. Just have a sit down and brainstorm about what do we have on the shelf that we think gives us that competitive edge and is there some protection that we can wrap around it? The earlier that you do that, the better. If you wait too long, your competitors could beat you to the process.

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44:12
Speaker 1
Wonderful. Great advice. Thanks, Greg. Stacy, we got some housekeeping to do. Let's, let's walk people through some of the stuff that's coming up so you can see across the bottom here. Join us next week at the same time for episode 33. Amy Marks, the queen of free prefab. Freepab. Free prefab joins us to talk about all things prefab. I can't wait for that discussion. That'll be a lot of fun. She's extremely dynamic and I'm sure people will, you know, have a great time as well as learn a ton during that episode. Stacy, do we have the Steeltoe Communications marketing tip of the week?

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44:49
Speaker 3
Yes. Just a quick reminder to protect your digital footprint. Just do a scan online of your company to make sure you're managing your reputation and not waiting for a crisis to happen. So that could be looking at your reviews, making sure you're active in the community, applying for awards. You want to make sure there's positive feedback about your company and you're keeping that up to date. Don't wait for something bad to happen. And that's all people see when it comes to your digital footprint online.

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45:25
Speaker 1
Great advice. Love it. I want to just plug for a moment. I will be. I'm running a presentation tomorrow in conjunction sponsored by HMS Insurance down at the BWI Marriott. If that's something anybody would like to learn more about, please reach out the focus of the conversation. I'm going to be splitting time with an economist and we will be talking about economic conditions in the construction industry in 2023 and what you can be doing today to prepare your company to deal with whatever may come and capitalize on the opportunities that you show up. So if anybody again would like to hear more about that, just shoot me a message right here on LinkedIn. Stacy, I look forward to seeing you again next week. Anything you want to say before we wrap?

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46:12
Speaker 3
Nope. I'm looking forward to next week, too.

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46:14
Speaker 2
All right.

‍ ‍

46:15
Speaker 1
See you guys.

‍ ‍

For most Americans, shopping online has become the norm for so many items in their lives. I mean, can you even remember what shopping was like before Amazon? As consumers, we have the ability to check pricing across platforms, read reviews, and buy the best available options with a click. Could we be seeing the same consumer experience developing in the construction industry?

Michael Wisnefski is working to foster the evolution of commerce in commodity raw materials. His company, MaterialsXchange is a digital marketplace for lumber.

During this show, we discuss the impacts of this kind of shopping experience on the construction industry. Who is for it, who is against it, and why? Join us as we reimagine the future marketplace for raw materials and beyond.

Transcript:

‍ ‍

00:00
Speaker 1
All right, it's morning huddle time. Good morning. I'm not saying it works. I wish you God speed, Godspeed with all of that. I think that's really nice. You know, I'm not sure what kind.

‍ ‍

00:11
Speaker 2
Of success you're gonna have with that.

‍ ‍

00:12
Speaker 1
Today because the world, my friend, has changed. Right. A lot of American construction workers, they have different needs.

‍ ‍

00:20
Speaker 2
They have completely different needs.

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00:22
Speaker 3
These awards have a huge, like, criteria that you have to fill out. And they usually have a community service or community, the, you know, the most productive with a high performance value. And, you know, sometimes it's 11 o' clock at night.

‍ ‍

00:40
Speaker 1
Funny, isn't? Yeah, not for me.

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00:43
Speaker 3
Not for me.

‍ ‍

00:44
Speaker 1
At 11 o' clock, I am guaranteed to be snoring.

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00:47
Speaker 3
So, so.

‍ ‍

00:58
Speaker 1
Good morning. It's morning huddle time here with Stacy Holzinger. I'm Chad Prinke with our guest, Mike Wisnevsky. How's everybody this morning?

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01:07
Speaker 2
Very good, Doing good. Bushy tailed.

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01:10
Speaker 3
Yeah.

‍ ‍

01:11
Speaker 1
Sweet behind, right?

‍ ‍

01:15
Speaker 2
Yeah, it's 8 o' clock here.

‍ ‍

01:16
Speaker 1
8Am that's too early. Now. We used to do, we used to do the huddle at 8, Stacy, remember that?

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01:22
Speaker 3
Yeah. But then we had some people, luckily, that joined us on the west coast and they said, we want to come on live, but too early for us. It's still early for them.

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01:33
Speaker 1
It is still early for the West Coasters. But I, do I, you know, more people are toughing it out on the west coast joining us live, which is cool. So, so Mike Wisniewski is joining us from Materials Exchange. It is an online marketplace for raw materials. He's going to tell us a lot more about that, Mike. Tell us just a little bit about where you are in the world and your business. Just give us a, I guess, you know, 32nd overview.

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02:02
Speaker 2
Well, I'm in downtown Chicago and yeah.

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02:05
Speaker 1
I actually have a picture. I'm going to overlay this while you talk. Yeah, go ahead.

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02:08
Speaker 2
And what we've created here is a, a digital marketplace that has the look and feel and functionality of a financial marketplace or a financial exchange. The important factor there is it allows for price discovery. And as everyone knows, I would assume lumber and material prices can be very volatile. And, you know, the idea of volatility prior to what we experienced for the last two years was substantial. And then the last two years have obviously, you know, blown the lid off this and shown what's really possible.

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02:46
Speaker 1
Yeah.

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02:47
Speaker 2
So, yeah, it's really important in my opinion, to have a medium or a Platform where the, you know, people, the users, the people in the market can get together and figure out what's going on. What's. What are the prices today, man?

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03:04
Speaker 1
And, and, you know, it's always been this way to some extent. What you've alluded to. Price has always changed a little bit day to day, but. But a little bit, you know, is nothing compared to what we've been experiencing with price fluctuations day to day over the past couple of years in particular, probably the past, well, I guess depends on the market that you're in. But, you know, throw inflation on top of COVID and we got a whole. Got a whole storm right with price wise. And so in that picture, were seeing that this is the view from your office, right? This is Michigan, huh?

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03:36
Speaker 2
We're looking east. We're in the Chicago Board of Trade building, the iconic birth. Birthplace of the futures markets.

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03:43
Speaker 1
Awesome.

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03:44
Speaker 2
So this is looking east. And I think the fun part of this picture is if you look on the right side, that beige building that has all the skinny little windows. Yeah. Most people don't realize that's a federal prison and it's in downtown Chicago. I mean, we are. The Sears Tower is just behind us. So, yeah, this is the beautiful view I get every morning. I look out at the lake, and then I glance over and I remember to always walk the righteous path.

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04:13
Speaker 1
Yeah, no doubt. You got a constant sort of reminder that, you know, do the right thing. Do the right thing.

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04:20
Speaker 2
Exactly. That's great.

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04:22
Speaker 1
That's awesome. All right, well, good. So we've got a lot to talk about. I want to dig into sort of why you're doing what you're doing, and, you know, how that whole experience has gone. Stacy, I'm guessing there's going to be a fair amount of conversation, you know, on the chat. Please keep that fired up, and I will bring you back here with 5, 10 minutes left, something along those lines, and we'll hear from the audience.

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04:45
Speaker 3
Yeah, yeah, sounds good.

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04:47
Speaker 1
Sounds good. All right. So, Mike, paint a picture of just, you know, you start talking about, you know, creating this digital marketplace, a place to connect buyers and sellers, a place where people can be more informed. Paint a picture a little bit of, I don't know, 10 years from now or 15 years. I don't know how long it is in the future, but the future of the materials procurement for our audience, which is mostly construction companies, what does materials procurement look like in. In your picture of the future?

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05:23
Speaker 2
It is going to be much more scientific, a lot less art form. When you Just consider all of the technology that is coming into our industry which is badly needed. You know, there's a bunch of statistics out there that show construction is the production of how they say the construction output is down.

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05:47
Speaker 1
Sure.

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05:47
Speaker 2
Compared to 100 years ago. It's taking us longer to do stuff while every other industry has utilized innovation and has they get more done with less. So anyway, the technology coming into the market or to this industry is nothing short of remarkable. But to operate properly it needs data and it needs good data and clean data and easy to access data and most important, it needs it digitally. So that's the science behind the game, if you would. It's about connectivity and collaboration. Let's just say if you went over to the big three car makers, you know, I guarantee you that they are integrated into their suppliers and their supply chain is fully visible and they know what's going on.

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06:43
Speaker 1
Yep.

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06:45
Speaker 2
Now you look at our supply chain and you have zero visibility into your suppliers, inventories, pricing, you know, it's really crazy. There's very little collaboration.

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07:00
Speaker 1
So. So yeah, I remember a couple of different, there were a couple of different moments in my life that I stored along these lines. I remember an interview I was listening to, I think it was 2007 on the radio and I was driving up the road and somebody was talking about the very first. And I don't think they were calling it a smartphone, I think they were calling it a camera phone at that time and. Right. And I was driving up the road and they were talking about this camera phone. And the person said, you know, what do you paint the picture of the future of cell phones? What's the future of cell phones going to look like? And the person who was being interviewed said, you know, I think we're talking about more than the future of cell phones.

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07:44
Speaker 1
I think we're talking about the future of cameras, I think we're talking about the future of video, I think we're talking about the future of maybe even computers. And they're like laughing and they're talking about like how crazy that would be and how this powerful thing in your pocket may very well turn out to be like your go to device for most life items, you know, and they were like, imagine, you know, talking to friends on video on your phone, imagine banking on your phone and things along those lines. I remember that interview back in 2007 or so, it just like burned into my brain as, you know, as, you know, time went on, I went, damn, you know, that was really spot on. And then I remember one other conversation. I was talking to a buddy of mine who, it was so funny.

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08:29
Speaker 1
Right out of college, he went and he became like a store manager at Blockbuster. And I was like, I said to him, I was like, that doesn't seem like a long term gig. And he was so upset with me. It was like it was 2005 or 2006, something like that. And he was like, I don't know, man. He goes, I think people are always going to walk in, they're going to want to always shop around and get advice from somebody. And you know, obviously the market has changed. So when I start thinking about the future of materials procurement in construction, right. And I start, you know, painting this picture. Are we going to point and click for everything? Is that, is that what we're going to do?

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09:04
Speaker 2
No, actually the answer is no, we're not.

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09:06
Speaker 1
Okay, so what's it, how's it going to work?

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09:08
Speaker 2
The system is going to do it for us.

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09:10
Speaker 1
Oh, weird. Okay, now you're freaking me out. Talk about it.

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09:13
Speaker 2
Okay, so here's the. If you don't know the term BIM building Information Modeling, that is going to change everything.

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09:22
Speaker 1
So, so we really embrace bim. Everything gets built in this model and then the model automatically talks to the marketplace.

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09:29
Speaker 2
Yeah.

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09:30
Speaker 1
Yeah.

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09:31
Speaker 2
Okay. You're, you're in a meeting with all the trades around building this building and in the center or you know, everyone's looking at the same screen and they're looking at a, the blueprint, if you would, which is a bim.

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09:44
Speaker 1
Yep.

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09:44
Speaker 2
And they go, okay, here's what's going to happen. We are going to move this wall from here over here and we're going to add a bathroom. Yep. And everyone in today goes, oh, now I gotta reorder.

‍ ‍

10:00
Speaker 1
Right.

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10:01
Speaker 2
The system will be connected up to your management system and your planning and all of that. And it will go, oh, click, order those new things.

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10:13
Speaker 1
Cool.

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10:14
Speaker 2
And it'll reschedule it. Everything will be done by the system, by the art. It's really, it's artificial intelligence is what it turns out to be.

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10:24
Speaker 1
And will I be, will I be plugged into like my preferred supplier or will they be just one Amazon? Will it automatically shop for me? What do you envision there?

‍ ‍

10:35
Speaker 2
Yeah, absolutely. It'll, you'll look into your suppliers and you'll see in their inventories and you know when their next available truck is. Cool.

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10:45
Speaker 1
So, so maybe I can plug in my preferences. What's more important? Delivery time, price?

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10:51
Speaker 2
Actually, you won't have to. The system will do all of this.

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10:55
Speaker 1
All right, so because the system's so.

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10:59
Speaker 2
Much smarter and as you slide the wall around, everything's going to be changing, you know, okay, now you need more two by fours. Nope, now you need less two by fours. Now you need more two by six. So like the system can think so much faster obviously than any human, any group of humans can.

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11:16
Speaker 1
Yeah, there's going to need to be obviously oversight on that. But you know, this goes to one of the things that I've told my children already, which is like, you know, if there's one thing to go to school for folks, it's robotics. And like just, you know, just be somebody that can handle, that can work with the future workforce that may be largely robotic or, you know, artificial intelligence driven behind that.

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11:40
Speaker 2
The next term, CLT or mass timber.

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11:44
Speaker 1
Yep, sure.

‍ ‍

11:45
Speaker 2
That is absolutely going to change our industry.

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11:49
Speaker 1
Yeah. Talk about that from your perspective. Why is that going to change our industry?

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11:54
Speaker 2
Well, two ways. First, it consumes an immense amount of forest products.

‍ ‍

12:00
Speaker 1
Yep.

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12:02
Speaker 2
As it replaces concrete and steel, it's going to, number one, change the way we build. It's going to change who is important from a supply side in the market. You know, your preferred vendor. If they're slinging two by fours today and they decide we're sticking with two by fours instead of going to mass timber, they're probably going to have a hard go of it. It's going to change the trades in the field and how they build and you know, their roles.

‍ ‍

12:36
Speaker 1
There's the first mass timber project is actually being built right now in Baltimore. What's the status of that in Chicago? Do you have a sense of what that's like in your world?

‍ ‍

12:44
Speaker 2
Yeah, Chicago is a couple buildings. I was just up in Milwaukee, the tallest residential, the tallest mass timber building in the United States. This ascent in downtown Milwaukee is.

‍ ‍

12:56
Speaker 1
Do you know how tall it is?

‍ ‍

12:58
Speaker 2
26 stories, I believe.

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12:59
Speaker 1
Oh my, that's awesome.

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13:01
Speaker 2
And these, here's the other thing is everybody wants to say, well, you got it's all wood or it's all concrete and steel. And the reality is as you mix them and you put the best possible material in the best roll for a building, it. That works out really well. And you know, mass timber right now at its price point only makes sense above five stories, five or six stories. But as they figure out a cheaper way to produce it and use it's going to come down like the Midwest has a massive issue with bricklayers.

‍ ‍

13:42
Speaker 1
Okay.

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13:42
Speaker 2
There just aren't enough masons. And you know, you look at many of these, the houses in Chicago, they have concrete block walls. They're going to replace those with mass timber and these houses are going to go up so much faster. So they're like, I haven't teased the whole thing out, especially from how much fiber, how much wood it actually consumes. So it's going to be really interesting.

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14:11
Speaker 1
Yeah, I see the supplies end of that being a critical question. I'm positive there's a bunch of work being done on that right now. I'm not privy, but okay. So we see this materials procurement world where BIM and the machine surrounding all of that tells us what we need, helps us to see where we should be getting it from, and essentially is our decision making tool, human oversight, to double check and make sure all that makes sense. But the AI kind of does it for us. We're envisioning that sort of future world. Why are you doing this? What motivated you to get involved in leading this kind of change?

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14:57
Speaker 2
So I've always been a bit of a problem solver and kind of swimming upstream, going a little bit against the current. And the term that always has driven me nuts since I was young was oh, you have to pay your dues or this is the way we've always done it and you just have to learn.

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15:15
Speaker 1
Right.

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15:17
Speaker 2
When I first got in the business, I looked and there were these people that were making a bunch of money that weren't really that bright and really weren't studying or working their craft, if you would, and they were making money just because they had the relationship.

‍ ‍

15:32
Speaker 1
Right, Sure.

‍ ‍

15:32
Speaker 2
I said, there's just got to be a better way to do this. And I became so frustrated with the lumber and building materials industry that I left and I went into the financial trading world. And at that time the financial trading world was just embracing this digital idea, you know, of trading online. And my, you know, I was actually sitting in Chicago and trading futures market in Europe, the URX Exchange. And we would click the mouse and it would take like one second for the signal to go all the way over to Frankfurt and come back.

‍ ‍

16:07
Speaker 1
Sure.

‍ ‍

16:08
Speaker 2
And it just blew me away by the way, that, oh my gosh, it happens in a second now, you know, we're in milliseconds, like that 1 second time frame wouldn't work. So I ended up coming back into the lumber industry and I walked into the lumber futures pit in 2009, which at that time was all open outcry, just, you Know, guys standing around yelling back and forth at each other and you know, don't let it get lost. That I said, guys, because here's how that industry, that business worked. You had to be very aggressive. It helped if you were big, it helped if you were tall and you had a booming voice. And that's. It was a great system. Don't get me wrong.

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16:51
Speaker 2
Absent of technology, the amount of trading that was being done in the trading pits of Chicago was nothing short of remarkable. But now you overlay the fact that we have technology that we can do these transactions more efficiently, more accurately, have more transparency into them, make the markets more fair. So I walk into the lumber pit with a computer, these all these guys laugh at me and they're like, oh, what's this guy gonna do? In the first five minutes I made $1,000 because there was a digital market alongside the pit market that they were ignoring. Yeah, it was almost like if all the booksellers in the world said, oh, there's that Amazon thing, we're just going to ignore it's going to go away. And I walked in and I was arbitraging between the booksellers and Amazon.

‍ ‍

17:41
Speaker 2
Anyway, 18 months later, 95% of the volume had gone on to the screen, the digital market and the guys in the pit were standing around doing nothing.

‍ ‍

17:52
Speaker 1
Yeah, that's the way it works.

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17:54
Speaker 2
What I want to circle back to though is the comment about there were guys in the pit. Here's where the opportunity lied then. I was an outsider and I came in and I went from totally outside to being one of the biggest traders in the lumber market, especially in the options market. My neighbor is a traitor. Now if this neighbor of mine was a traitor in 1995, that person would have been, you know, probably about 30 years old, about 6 foot 4 with a booming voice and probably an athletic background. Anyway, she is a about 5 foot nothing Korean girl with a master's in physics and getting a PhD in something. So the, everything's been turned on its head right now. That opportunity for her to, you know, apply what she knows, which is utilizing technology to make a system more efficient.

‍ ‍

18:57
Speaker 1
And, and the market now values a different set of trades. Right. Characteristics.

‍ ‍

19:01
Speaker 2
And she trades soybean options. Yep, kind of. You would never expect.

‍ ‍

19:08
Speaker 1
That's awesome.

‍ ‍

19:10
Speaker 2
The cool thing is it doesn't mean that a 6 foot 4, athletic background person could still be trading soybean options.

‍ ‍

19:18
Speaker 3
Right.

‍ ‍

19:19
Speaker 1
It's, you got to have the ability to add value. You know, to that space. And so, so, man, there's so many questions I have. What kind of headwinds have you faced trying to get. Is there anybody who doesn't want this to be successful? I mean, other than your competitors, Is there anybody who doesn't want this to be successful?

‍ ‍

19:37
Speaker 2
Well, who is our competitor is the question. Right.

‍ ‍

19:39
Speaker 1
Okay, talk about that.

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19:42
Speaker 2
Yeah. The wholesale. There's a, a big segment of the wholesale community that has zero interest in this. Now. In this last run up, these wholesalers made so much money. I mean, obscene. Like I know people that made well over a million dollars just quickly buying and selling over the phone.

‍ ‍

20:04
Speaker 1
Yeah.

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20:04
Speaker 2
Or email, whatever. Just being in the mix of it taking on very little risk. They want everything to stay. Nobody wants change. Change is a four letter word, man. You stay away from change. Right. Because if you've built something up, just you want to milk it Right. As long as you can. The, the forward thinking people really like it honestly that the. As the market has shifted, as the market was going screaming higher and there was very. Getting your hands on materials was difficult.

‍ ‍

20:44
Speaker 1
Yeah.

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20:44
Speaker 2
The people coming to us were those whose current vendors were no longer able to support them. So they were looking for something different. Builders, a lot of turnkey framers, panel manufacturers, trust manufacturers. The, the ingenuity of the crafty people out there who are really building the buildings. They were coming to us, the actual distributors and those people in the supply chain, they really weren't so keen on it. Like they were going, you know, I, we see that you're going to disrupt our business.

‍ ‍

21:20
Speaker 1
Yep.

‍ ‍

21:21
Speaker 2
And the guys and the ends, they had already been disrupted. Like they weren't getting their material. They're like, look, we throw in the towel, we'll look for anything. Now what's interesting is the sellers, the supply side are coming back to us and are open to discussing using our platform.

‍ ‍

21:39
Speaker 1
Why, why do you think that is?

‍ ‍

21:41
Speaker 2
Because it's not as easy to sell. You know, they, those guys walked in every morning and they had, you know, a pile of wood to sell and by 9am it was gone.

‍ ‍

21:50
Speaker 1
Right. Because their customers are shifting.

‍ ‍

21:53
Speaker 2
Well, the market was so strong that they didn't need help selling.

‍ ‍

21:56
Speaker 1
Sure. Right. There was, there was so much demand. But do you see the customer shifting to a more online experience? Right.

‍ ‍

22:04
Speaker 2
Yeah, absolutely. Well, you know, this show is a perfect example of what's shifting. And it is, it's about transparency and it's about information people. Now since we have our phones and we have this connectivity and this ability to communicate over long stretches instantaneously. They want real time data. So the information that gets, you know, talked about on your show, they very easily could rely on their sales rep to come out to the job site or whatever and say, oh, let me tell you about this new thing.

‍ ‍

22:37
Speaker 3
Right.

‍ ‍

22:39
Speaker 2
But they don't. That messes with their day. This works out so much better for people.

‍ ‍

22:44
Speaker 1
Right. This is either live or recorded. People can catch it up on their own time. They can fast forward to the parts that they really want to listen to. Right? Yeah.

‍ ‍

22:51
Speaker 2
It's putting the control back into the user's hands.

‍ ‍

22:55
Speaker 1
Well, and I think that's ultimately the way every market has gone, isn't it?

‍ ‍

23:00
Speaker 2
Right.

‍ ‍

23:00
Speaker 1
Like every, every cons, every market will find a way, the consumer will find a way to push progress toward more transparency, more affordability, more quality. The consumer tries to find ways to do that. And I think anybody who tries to stand in the way of that, anybody in industry, if you're, you know, again, if you're Blockbuster and you're saying, nope, we're keeping all the stores, everybody loves walking in, that's just ignoring progress.

‍ ‍

23:35
Speaker 2
It is, but it's the innovators in the industry who bring a product and show it to the consumer and the consumer says, oh, that's kind of cool. Like what cracks me up. People are like self driving cars, for instance. Oh my God, never. I, I like to hold the wheel well, Are you kidding me? Do you know how nice it would be? So my family has a vacation house in way northern Wisconsin. It takes six hours to get there. Can you imagine? If you say I'm going to the lake house, how are you getting there? Well, I'm gonna plug it in the car, the destination, and I'm gonna go get in the car in my pajamas at nine o' clock tonight and I'm going to wake up at, you know, 6 o' clock in the morning at the cabin.

‍ ‍

24:16
Speaker 2
Totally sign me up for that. Right? Yeah.

‍ ‍

24:21
Speaker 1
And again, I think for every, you know, one person who says, I like the feel of the steering wheel and I really like, you know, that's what they're okay. But that's not, I would say there's probably 20 others that would rather wake up at the cabin. I mean that's, you know, that's the deal. So it's not that these marketplaces go away altogether either.

‍ ‍

24:42
Speaker 2
Right.

‍ ‍

24:42
Speaker 1
It's just that they, it's just that the consumer shifts.

‍ ‍

24:45
Speaker 2
Sure. Look at Uber and taxis, like, right. Were we as consumers saying I'm done with this taxis. I want to be able to order it on my phone. No, you have no idea. Like you were just used to downtown Chicago. You walk out and you wave your arm and a car pulls up. That's pretty easy. Why do you, what else do you need? Well, oh, wait a minute. I can sit at my, the table and order the car and pick which kind of car I want. Oh, that's kind of cool. I'll do that instead. Oh, and then they're going to tell me when they're here, right?

‍ ‍

25:13
Speaker 1
And I know the price in advance and I can see my rough arrival time. And I can see, right, if I.

‍ ‍

25:20
Speaker 2
Leave something in the car, I know who did it or know whose car like it and what cracks me up. That's such a good example. The taxi industry was in the best possible position to have pulled off that.

‍ ‍

25:34
Speaker 1
Oh my God, they had all the drivers. Are you kidding me? It was crazy.

‍ ‍

25:37
Speaker 2
Let's flip to the current building material supply chain. Who in this supply chain is better positioned to bring a digital solution and make the lives of their customers more easy?

‍ ‍

25:50
Speaker 1
I would say the people with all the customers.

‍ ‍

25:53
Speaker 2
Right? But you know what? They're not. And they don't want to because they want everybody to be reliant on the archaic systems they have in place. Because if I'm so crappy as a supplier and they're so crappy, I just have to be less crappy than them and just get my talons into you. And once we're locked in, you know, you can't go anywhere else.

‍ ‍

26:20
Speaker 1
Man, I any again. I think you can play this out in any capital market. You can even play it out in, you know, societal change, all those different types of things. Once the world is moving down the progress line, it's, it's a bad idea to try to, you know, ignore it, fight it, disagree with it. It would be much wiser to start to, you know, figure out ways and you know, my God, one of, if not the most powerful company in the world has literally given us the playbook with Amazon. This is how we want to buy, fill in we right with anybody. We all want to be able to shop easily, quickly, and surround ourselves with the information.

‍ ‍

27:07
Speaker 2
Here's the study that I've just basically finished and I'm working on my solution. This last market we had very volatile, In a volatile market, as the consumer of the product, let's say the builder, you know what they need? They need longer term, guaranteed pricing. They need more security. What happened 90 day pricing went to.

‍ ‍

27:30
Speaker 1
30 day, they lost all that. I mean it went to 11 day. Yeah.

‍ ‍

27:34
Speaker 2
It went the absolute opposite direction.

‍ ‍

27:36
Speaker 1
Yeah.

‍ ‍

27:37
Speaker 2
So, oh, you have a problem. Here's my solution. You're more screwed.

‍ ‍

27:41
Speaker 1
Yeah.

‍ ‍

27:42
Speaker 2
And now it's not all the blame, by the way, on the material supplier. As an industry, we need to remember the prison in the background and actually do the right thing and we need to have solid contracts. If I go, look, I want to buy from you for 120 day pricing. Okay. That's a deal. Like you're not walking away from that.

‍ ‍

28:06
Speaker 1
Yeah.

‍ ‍

28:06
Speaker 2
And his customers not walking away. So like we need to get rock solid agreements and it's out. See the crazy thing is it's out there. You can get this long term pricing, it's just a matter of getting the agreements. But this is a perfect example of where someone is going to come up with the solution that the industry really needs, which is, you know, good product, the right product, the right time, the right price held inside of a commodity market. That's not easy, but it's possible. But we have to work together on this. We have to have good contracts, we have to have good information and we have to think differently. You got to think outside the box.

‍ ‍

28:50
Speaker 1
Well, you're, we're operating in a very interesting world and I, I can't even imagine the, I mean you're a relatively young company. Would you say four years, three and a half, something like that?

‍ ‍

29:01
Speaker 2
Three. It's just over three years from the first code being typed in the computer.

‍ ‍

29:05
Speaker 1
I mean, what a wild ride.

‍ ‍

29:08
Speaker 2
Yeah. If someone would have said, what do you think? Let's do a startup in the middle of a pandemic.

‍ ‍

29:14
Speaker 1
Yeah.

‍ ‍

29:15
Speaker 2
Or you know, we're gonna have a pandemic, then we're going to have a, the wildest volatility you've ever had. Yep. And oh, just for icing on the cake, then we're going to throw inflation and the fastest rate rises you've seen in, you know, 50 years and.

‍ ‍

29:32
Speaker 1
Go, yeah, sign up.

‍ ‍

29:35
Speaker 2
But the ironic thing is it's those outside forces that really pull the covers back on how inefficient and how broken the system is.

‍ ‍

29:45
Speaker 1
It does.

‍ ‍

29:46
Speaker 2
Without those outside forces, you're like, you know, the car still work and don't lift the hood, the car's still working.

‍ ‍

29:52
Speaker 1
Well, keep doing what you're doing, man. I think that's pretty, I think it's pretty aggressive to. I love people who are trying to do something dramatically different. You clearly are and it's working. So, Stacy, what do we have from the audience?

‍ ‍

30:09
Speaker 3
Yeah, let me check. I don't see any new questions, but I was just thinking as you were talking, so you talked about the digital marketplace and building information modeling. What are your thoughts on. So you haven't huge mechanical room and you have all these, you know, equipment will, though, where will there be like ticklers that say, you know, we're coming up on 30 years of this equipment now you should replace it or will there be if like a system breaks down? Do you work with that on? It's time to testing buildings. Yeah. Existing.

‍ ‍

30:52
Speaker 2
You're talking a building that was built using bim, right? Yes, it. Oh my God. Bim's the beautiful. The best solution for this. Think about your house today. You look at the wall. Wouldn't you love to know what's behind that wall if. If you had a digital print of that and you can go so far, there's technology today where they will take an image of the job site every day or every few hours and you can literally see what was behind that wall as it was being built.

‍ ‍

31:24
Speaker 1
Yeah.

‍ ‍

31:24
Speaker 2
So, yeah, the BIM idea with all the information about the building in one spot. Yeah. You can have a tickler and all of a sudden the light pops up. It's been 10 years since you replaced your water heater. You should consider, you know, checking and.

‍ ‍

31:41
Speaker 1
Automatically connect you to. Here's, you know, three different models that you might want to consider and they're being carried by these four different retailers. And this is a new.

‍ ‍

31:50
Speaker 2
System you could put in. It's a tankless water heater and it's going to do this. There was one. Someone made a comment about hard to imagine CLT and residential light frame construction. I don't disagree with the comment utilizing the CLT we know today. But what if the CLT was a honeycomb CLT or if it was a little bit lighter or like, this is where you really need to think outside the box. Do you know why we build with two by fours and two by sixes in the United States?

‍ ‍

32:22
Speaker 1
Because we always have.

‍ ‍

32:23
Speaker 2
Because that's what they make, right? Exactly.

‍ ‍

32:26
Speaker 1
Right.

‍ ‍

32:27
Speaker 2
If when you pull out your kid's drawer of Legos, what are you going to build? Something with the blocks that are there? Yeah, change the blocks.

‍ ‍

32:36
Speaker 1
Yeah.

‍ ‍

32:37
Speaker 2
So I think the one. I don't want to just say clt. I'd like to say mass timber more and just off site construction, new concepts of how to build. And I think it's really, it's a blend. It's using CLT, where it makes sense and then regular, you know, stick frame around the outside. The, the challenge the industry has is that there's probably no one contractor or no one company that knows how to do all of it at one, you know, in one building. All the different type of construction methods.

‍ ‍

33:15
Speaker 1
Katera was opposed to.

‍ ‍

33:17
Speaker 3
I'd love to meet that.

‍ ‍

33:18
Speaker 2
Katera was an amazing idea.

‍ ‍

33:22
Speaker 1
Yeah.

‍ ‍

33:23
Speaker 2
And look, Katera was onto something. And by the way, the assets of Katera have been bought by some really bright people that are going to take it to the next level. Yeah. Look, does everyone love their file sharing and you know how much music that they don't have to have CDs they like? You know, you can go on Amazon Music or Spotify.

‍ ‍

33:47
Speaker 3
Yeah.

‍ ‍

33:47
Speaker 1
Probably 90% of people strongly prefer that to the old CD days.

‍ ‍

33:51
Speaker 2
And it all started with Napster.

‍ ‍

33:54
Speaker 1
Yeah.

‍ ‍

33:54
Speaker 2
And guess what? Napster failed horribly. We work. I think we work is a genius idea. They just basically failed horribly, but they are the ones that are going to plow the street for the idea of, you know, shared space.

‍ ‍

34:12
Speaker 1
Yeah, I think that's right. I think at the, I think at the end of the day we'll think of what Katera tried to do as a, as a positive step, maybe, you know, an overstep, but a positive step.

‍ ‍

34:24
Speaker 2
Right. They definitely brought a new set of, a new way to look at the problem. Yeah.

‍ ‍

34:31
Speaker 1
Yeah, I think that's right. Oh, good. Stacy. Mike, anything else? Stacy, you seeing anything else you want to surface?

‍ ‍

34:40
Speaker 3
I don't see anything, but I don't know if my LinkedIn is freezing because it's all good. Yeah, sorry.

‍ ‍

34:46
Speaker 1
Mike, anything else on your mind before we wrap?

‍ ‍

34:50
Speaker 2
I mean, I just. Kudos to you guys for doing this. Information is power and what I really love is the fact that you're putting it out there and, you know, allowing companies like mine to come on here and talk about what we're doing. But the people who are watching this now live and they're going to watch the replay, those are the people that are going to move this industry forward. So, you know, kudos to you guys. Kudos to the people listening here. Let's, let's make construction great again.

‍ ‍

35:23
Speaker 1
Right? Hey, thank you so much. We really appreciate you being on again. I think you're doing a hard thing. You're challenging norms and overall, I think, you know, the, the trend toward transparency is progress and I really look forward to watching. I'll be I'll be for sure keeping up, keeping my eye on your company and, and looking for the success stories as things come out and leading change. So. And where would people find out more if they wanted to learn more about you?

‍ ‍

35:54
Speaker 2
Materialsexchange.com you know, if you look it up, it's here's the store. This way. No, there is no Eon Exchange.

‍ ‍

36:03
Speaker 1
It's Materials exchange.

‍ ‍

36:05
Speaker 2
Yep.

‍ ‍

36:06
Speaker 1
Yeah.

‍ ‍

36:06
Speaker 2
And look. So this is kind of interesting. In our logo, the bottom of the X is filled in and if anyone remembers from their chemistry class, delta means change.

‍ ‍

36:16
Speaker 1
See, look at that.

‍ ‍

36:18
Speaker 2
Huh?

‍ ‍

36:19
Speaker 1
So it's the details, Mike, the hidden logo. Well done, sir. All right, cool. Thank you so much, Stacy. We have a few housekeeping items. Mike, we'll see you again soon. Thank you, Stacy. Let's, let's talk a little bit about next week. So next week we have someone coming on from the Maryland center for Construction Education and Innovation, the MCC E I. A lot of letters, but they. So we have Jennifer Sproul joining us. Do you know Jennifer?

‍ ‍

36:52
Speaker 3
I do. I've worked with Jennifer. She's, you know, fierce in this industry with leading the way in education and volunteered this past year out in Baltimore. We were doing a bunch of stuff with middle school kids to get them interested in the industry and learn about estimating cool.

‍ ‍

37:13
Speaker 1
We need estimators, my Lord, Please make them good at estimating good. So, so we have Jennifer joining. What she's going to be coming on to talk about is solving the workforce puzzle. So from her perspective on this, you.

‍ ‍

37:29
Speaker 2
Know.

‍ ‍

37:32
Speaker 1
Workforce development starting at the very youngest ages at just as you know, Stacy was talking about creating interest in the youth and things along those lines. She's going to talk about what the MCC EI is doing. She's going to talk about what employers are doing and hopefully what each of us can do to contribute to the industry. So I'll be looking forward to that conversation. Stacy, do you have our marketing minute, our marketing tip for the week?

‍ ‍

38:03
Speaker 3
I do. It's super simple and a change since our conversation today. But when you're thinking about your stilto marketing tip of the week, Mike was just talking about how he left the lumber industry and went to the finance industry and then came back. I think we have to use that in a lot of different ways, but with our marketing too. So stop looking at your competition on what to do, but look outside the industry, especially since other industries are so advanced and see what they're doing marketing wise and bring that information back to your company and use those ideas.

‍ ‍

38:37
Speaker 1
I love it. I think it's a great idea. Get outside the get outside the bubble a little bit looking at what other construction companies are doing. Maybe take a look at what another business to business enterprise is doing or yeah right. Take a look at finance. Take a look at accounting. Take a look at tech. Yeah, I think that's great advice. Hard to translate some of those lessons back into your world but if you can figure out how to do it, you'll be doing something nobody else is doing.

‍ ‍

39:03
Speaker 3
Correct.

‍ ‍

39:03
Speaker 1
Thanks Steel.

‍ ‍

39:05
Speaker 3
That's strong.

‍ ‍

39:06
Speaker 1
All right good. We're gonna wrap it up. I, I have nothing else. Stacy, anything else on your end?

‍ ‍

39:11
Speaker 3
That's all.

‍ ‍

39:12
Speaker 1
I've got a new little wrap up jingle. I look forward to pressing play on. See you next week. Audience will see you next week. Thanks so much for checking in and joining us for the huddle.

‍ ‍

39:24
Speaker 3
See y.

‍ ‍

Not many people in the construction tech community started in the industry with a shovel in their hands like Duane Gleason. After spending several years on the physical end of construction, Duane began to master the digital side of the business.

Today, he works for Trimble, an industry-leading construction technology company as the Program Director for Connected Construction. He joins The Morning Huddle to talk about how construction companies can leverage technology to build better, more profitable projects.

No pie in the sky theoreticals here, just real examples of things companies can do immediately to drive a better result using the right technology to build their projects digitally AND physically.

The construction industry needs skilled tradespeople and not enough young people are entering the workforce with the skills we need right out of school. However, training the workforce poses significant time and financial challenges.

Chris Bybee and his company, Interplay Learning, are working to address those challenges by bringing an immersive VR training platform to the trades. Chris joins The Morning Huddle to talk about what his company and others like it are doing to close the skilled trades gap in our industry.

Transcripts:

‍ ‍

00:00
Speaker 1
We need to get back to work. And work is one of the ways.

‍ ‍

00:03
Speaker 2
That we contribute to this country, that.

‍ ‍

00:06
Speaker 1
We grow our gdp, we grow our tax base, we contribute to each other effectively. We help finance our national security, our homeland security, our infrastructure.

‍ ‍

00:15
Speaker 2
I had key employees that really wanted to be leaders in the company, but they didn't want to have any ownership.

‍ ‍

00:21
Speaker 1
In responsibility that way. So I just had to start researching.

‍ ‍

00:25
Speaker 2
Out and figuring out, well, how do I market my company?

‍ ‍

00:28
Speaker 1
Go to your local school board for one hour twice this year. And if you can have even just 10 or 15 employers show up and do that at the same school board every single month, there's two contractors filling out a little card to give your 30 seconds at the podium that says, I need your help and we have great jobs. Eventually they will hear you. But if everyone just did two hours a year, that's how we change this. Stacy, how you doing this morning?

‍ ‍

00:51
Speaker 3
I'm doing great.

‍ ‍

00:52
Speaker 1
She loves it. I ask the question every time. She's like, I'm fine, dude, just a little much.

‍ ‍

01:01
Speaker 2
And I say to that owner, I said, so you're not willing to invest in yourself, you're not going to invest in yourself. You're going to invest in companies you have no control over, whereas your company you control and you don't have the confidence to pour the money into that. When things are busy and they're looking for their GC friends to sit down and negotiate a project on a GC and a fee, and they're more excited about building the project and then all of a sudden the model, the market swings and now the developer market is going to go out and they're going to hard bid the same project to two or three different GCs. And that's where it starts going down.

‍ ‍

01:44
Speaker 1
It's morning huddle time. Good morning. I've got Chris with us and Stacy with us this morning. Good to see you both. Stacy, how are you today?

‍ ‍

01:53
Speaker 3
I'm doing great. A little shout out to my new intern, Lexi. So hopefully she logged on today, but she's going to be helping us with some of the morning huddle activities throughout her internship this summer with me.

‍ ‍

02:05
Speaker 1
Wonderful help is something we need.

‍ ‍

02:08
Speaker 3
Definitely.

‍ ‍

02:10
Speaker 1
Thank you. That's. That's great news, Stacy.

‍ ‍

02:13
Speaker 2
It's great.

‍ ‍

02:14
Speaker 1
Chris, how are you this great?

‍ ‍

02:16
Speaker 2
I'm great. Yeah. Thanks, Chad. Thanks, Stacey, for having me on.

‍ ‍

02:19
Speaker 1
Yeah, it's our pleasure. So Chris Bybee is the Director of Strategic growth for Interplay Learning and he's Interplay Learnings and is a company that has designed immersive sort of virtual reality training experiences for the skilled trades. So there are ways to create faster educational paths. I'm going to let Chris describe this a little bit more. Chris, talk a little bit about the company and maybe a little bit more on your background so our audience has a sense for sort of who you are.

‍ ‍

02:52
Speaker 2
Yeah, no thanks, Chad. No, you nailed a lot of it. Yeah. So as Chad mentioned, I'm Christopher Bybee. I serve as Interplay Learning's Director of Strategic growth. Really looking at new markets, new opportunities, and the more interesting thing is really what Interplay does. And as Chad mentioned, we're. We're trying to be the global leader of on demand career trades training. And how we do that is we do that via simulations.

‍ ‍

03:16
Speaker 1
So.

‍ ‍

03:16
Speaker 2
So I think the simplest way to put it is think of a video game. Instead of shooting a bad guy, we swap out that with troubleshooting a rooftop package unit or fixing a toilet. And we're really trying to bring this simulated environment, which allows for very scalable training, to the next generation of worker. We're trying to equip contractors, educators, workforce development programs with a tool to really meet that next generation of worker and train them up in a faster way. So excited to dive in and really appreciate you all having me on.

‍ ‍

03:48
Speaker 1
No, it's. It's our pleasure. And. And if I'm not mistaken, Stacy, isn't there some personal connection that you have to. To Interplay or at least.

‍ ‍

03:59
Speaker 3
Yeah, my boss at the time, Mark Jury, who's now with Mark Jury Associates, he, me and him sat down with Interplay maybe like six years ago, and you guys were kind of in preliminary stages and more on the residential end than commercial. But since then, and you'll get into it, I mean, they've made so many great improvements. He just gave me a demonstration a couple months ago, so it's pretty impressive. So you'll get to see it.

‍ ‍

04:28
Speaker 1
It's definitely an exciting time for technology of all kinds. It's an exciting time for technology in the building industry. And, and for all the ugliness that Covid brought us, one of the things I think Covid did bring us, at least in the building industry, is a willingness to embrace technology out of necessity in a way that didn't exist before. And I'll be interested to know, did that propel the growth or the sort of the. I don't know, did that change. Did Covid change in any way the trajectory of your business?

‍ ‍

05:03
Speaker 2
Yeah. No, no, entirely. I think you nailed it on the head. I think the, you know, the construction industry generally tends to follow second on some of these technology changes. Right. And yeah, and I think what we saw was contractors and educators got comfortable with the idea of online remote learning out of necessity, like you said, through Covid. And where were able to step in, and I think where VR and other augmented technology is able to step in is really by creating those lifelike field like environments in that technology world. So you reduce materials cost entirely. Right. You no longer need lab space to teach your guys. You also don't have to worry so much about safety. So you can put them in an environment that's safe and they can practice.

‍ ‍

05:49
Speaker 1
If you electrocute yourself virtually, you're going to be okay.

‍ ‍

05:52
Speaker 2
We're working on that. We're working on a way to really put this should. Yeah, exactly. Right. But you know, I guess in summary, I think it was overall a good thing, I think for the construction industry, for virtual reality in general. And were excited to help fill that gap in kind of that time.

‍ ‍

06:12
Speaker 1
That's cool. So, so by way of additional play in just to kind of get everybody's head wrapped around exactly what this looks and feels like, I'll apologize in advance for our audio only audience that may be listening to this via Spotify or Apple music or Apple PODcast or what have you, but I'm gonna play a, what is it, a little less than a minute video clip that kind of goes through what this looks like and feels like. And, and Stacy, coming away from that, I'm gonna ask you obviously to do what you do so well, which is to, you know, work with the audience and capture any questions that we can bring back with the last ten minutes or so.

‍ ‍

06:52
Speaker 3
All right, sounds good.

‍ ‍

06:53
Speaker 1
Awesome. All right, cool. Let's check this out.

‍ ‍

07:42
Speaker 2
Cool.

‍ ‍

07:43
Speaker 1
All right, so for those who are joining audio only, what just occurred was you can actually see this experience in action where you have somebody with the VR and you'll talk about some of this technology itself. But with a VR headset is the best, as I can describe it, and a couple of hand controls actually going through the process of messing with electronics. Not electronics, but appliances, you know, H vac units, you know, things along those lines. And so which I think is really impressive and it's exciting. I'm going to ask Chris, what's the goal with this whole movement speaking maybe a little bit less about interplay at this point and maybe more as a spokesperson for the movement that might be VR and construction training?

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08:38
Speaker 2
Yeah, that's a good question. And I think VR is. I'll make a quick comment about VR and then I'll tie it all back to your main question. But VR is a part of our technology. It's an important part, but it's not the crux of it really. The simulations are which can be delivered on VR, desktop, tablet. And why that's important is because that allows this tool to be a one to many scalable solution. And when you look at kind of the more professional workers, so, you know, desk jobs, they've got a lot of tools like Masterclass, LinkedIn learning, where this idea of one to many scalable solution has worked very well from a teaching standpoint.

‍ ‍

09:18
Speaker 2
And our kind of single truth that we believe in is that the one to many skills training platform is really the tool and solution to the global skills gap problem. So you have to have some sort of training tool that is deployable across geographies, meets learners where they're at to really solve this skills gap we're seeing. And it equips the contractor with a tool that's deployable in that sense, it gives the learner a tool that's smart and complex and allows them to learn at their own pace. So ultimately I think that VR simulations in this broader scalable solution just allows for the construction industry to really combat the global skills gap, if you will.

‍ ‍

10:01
Speaker 1
Right on. You know, and I know you follow the morning huddle. So you know that in our past two episodes we've been really talking about that skills gap. We talked with Amy Rock, who's developed this, your program inside Prince George's County Public Schools that's being emulated by other school systems. Really talking about how do we get the young people involved. There's something that's designed to, you know, address the total personnel count problem that we have. Right. And you know, leading then into the conversation that we had last week, you know, with Mark Perna, who was talking about generations in the workplace and what are we doing to engage youth and young people. Now you're talking about bringing VR to bear as a training tool, as a way of helping to close a skills gap.

‍ ‍

10:53
Speaker 1
But another thing that I can't help thinking about is how that actually plugs in with the youth aspect that both Amy and Mark were with us talking about for the past two episodes. So to what extent, I guess, do you feel like in addition to addressing the skills gap and bringing technology to where people are, do you have any reason to believe that this is helping in any way to attract more young people?

‍ ‍

11:22
Speaker 2
Yeah, definitely. I Mean, you know, one funny story that I like to tell and it's one of our customers who has said it is, and he's a big believer interplay and kind of the broader, you know, simulation technology is, you know, the challenge is we try to recruit these 18 year old, 19 year old guys or girls into our program. They've spent the last eight, ten years of high school or middle school using an iPad, learning on the computer and they show up on day one, we put a 65 year old guy in front of them to teach them. Out of a textbook.

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11:51
Speaker 1
Right, with a chalkboard.

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11:53
Speaker 2
Yeah, exactly. And you know, a little bit of a funny story and you know, no shame against the 65 year old instructor. But I, I think, you know, where we can step in is really as a supplemental tool and whether it's us or, you know, another simulation or VR provider, I think it just, it allows you to almost make the trade sexy again, if you will, for lack of a better word. And so I think you're exactly right. You're spot on there.

‍ ‍

12:18
Speaker 1
Well, and you said that word, that story illustrates it well. Where I think what happens is the educational system has actually done a pretty nice job of integrating technology into young people's experience, whether that is, you know, partial virtual classroom environments or, you know, fully immersive experiences that they're going through. You know, virtual. Yeah, virtually as a part of, you know, their college curriculum or as a part of their, you know, tech school curriculum and things like, I mean, certainly I'm here on location today at Penn College, which is a Penn State affiliate in Williamsport, Pennsylvania, long story, but I'm up here hanging out and one of the, I mean their facilities are absolutely amazing. I'm not getting paid to say that, but they're really spectacular facilities in terms of, you know, technical education.

‍ ‍

13:12
Speaker 1
And, and yeah, now here they go into the workforce and the tech, There's a tech drop off.

‍ ‍

13:18
Speaker 2
Right.

‍ ‍

13:18
Speaker 3
It.

‍ ‍

13:19
Speaker 1
Shouldn't it be the opposite, you know, shouldn't it be like, all right, now I've graduated, now here comes the real stuff.

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13:24
Speaker 2
Yeah.

‍ ‍

13:25
Speaker 1
And you know, anyway, so I do think that there's, you know, kind of a strategic advantage that an organization could get by embracing this type of, you know, technology as a way of attracting more of that young talent that has, you know, kind of come up with a technology background. So fit this all in with apprenticeship programs. Help me understand where all that fits because I think, you know, we all know that apprenticeship programs are critical. Is this going to replace apprenticeship what happens?

‍ ‍

14:05
Speaker 2
Yeah. In the near term the answer is no. You know, we're a believer that we're not the first to come in with trades curriculum. We believe that we have maybe an additional tool to put in the toolbox, but really a reinforcing mechanism at this point. You know, we're well aware and close with a lot of the national providers of curriculum for a lot of these apprenticeship programs and where we have really fit in as a supplemental tool to provide that enhanced hands on training aspect. Do I, you know, from a bias perspective, believe eventually maybe there's a world where you could have a trade school from the Oculus? Absolutely. But we're certainly not quite there yet. And for now it's really as a supplemental tool.

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14:50
Speaker 1
I think, you know, all the organizations that are fueling apprenticeship today, they're obviously doing a world of good.

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15:01
Speaker 2
Yep.

‍ ‍

15:04
Speaker 1
And I think it's extremely important that they, that there comes to be a collaboration between what you're talking about, what you're doing and what they're actively doing and have been doing for decades.

‍ ‍

15:21
Speaker 2
Agreed.

‍ ‍

15:22
Speaker 1
Are you, are you in communication with apprenticeship organizations or agencies across the country?

‍ ‍

15:30
Speaker 2
We are, yeah. And in my mind that takes a few forms. One is we actually have worked closely with the Department of Labor and have our own apprenticeship program. We really just did that so that our content, it can easily be placed into an existing program and the standards don't have to be. Got it radically. So that's kind of number one. Number two is we work closely with you know, folks like NCCR and other curriculum providers to say how do we map to your curriculum? And then lastly is we've worked closely with a lot of associations who put all of this on. Right. And you know, the ABCs of the world. We have a close partnership with ABC and so. Exactly right. We're late to the game in terms of apprenticeship.

‍ ‍

16:11
Speaker 2
But we do believe that our tool allows kind of a enhanced experience for both the learner and for the ultimate employer. Right. We, our belief is that you're going to get a more a better trained, better equipped technician on day one than you would otherwise with this technology. And so really again, I think it's just another tool in the toolkit.

‍ ‍

16:32
Speaker 1
I think. I'm glad to hear you describe it the way that you are. I feel really any. Anytime you take technology like this and you pit it against the establishment, if you will, it's a recipe for nothing happening. So, so I, you know, but anyway, you didn't come here for a lecture for me. Sorry. I Think I heard it.

‍ ‍

17:07
Speaker 2
I've heard it before. Yeah. Yeah.

‍ ‍

17:09
Speaker 1
I think you're heading down a good path. I like that. So one of the things when you and I had a kind of a, just a, you know, get to know conversation leading up to the show that we talked about is that 72% of contractors or 70 plus percent of contractors believe that they will have trouble finding labor in the years ahead and that they're currently having trouble finding labor today. If I just anecdotally, without any hard statistics, I don't know a single trade contractor that wouldn't take more qualified, capable technicians, foreman management, you know, fill in the blank.

‍ ‍

17:47
Speaker 2
Yep.

‍ ‍

17:49
Speaker 1
Meanwhile, so they have this hard time finding labor. Meanwhile, they also believe that they're going to be growing their businesses and those two things don't mesh.

‍ ‍

18:00
Speaker 2
Right.

‍ ‍

18:02
Speaker 1
Where can what we're talking about help?

‍ ‍

18:07
Speaker 2
Yeah, yeah, it's a good question. And you're spot on. I mean, every contractor we talk to is feeling the exact same pain. And just one add on point is that the pain is not just from, you know, if I have H Vac Shop, I don't just feel the pain from Chad's H Vac Shop, I feel it from Amazon and every other hourly employer who's investing in education as a benefit. Right. Where I think, you know, this technology can help is do a couple things. One, it allows you to broaden your recruiting funnel. Right. You might be able to recruit someone who has less skills because you're able to train them up faster with kind of the simulated technology. You theoretically put them in the field faster in the virtual reality world than you would be able to in actual real life.

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18:53
Speaker 2
Number two is I think with this technology you're able to just get better data on what skills they're gaining, what skills they're having trouble with. And so it allows you to run, I would call a smarter shop, if you will, and know where to deploy, you know, talent across the field. So in short, I think it reduces the training time, it allows a broader funnel which just allows you to compete for talent for the world on talent as we describe it.

‍ ‍

19:17
Speaker 1
Okay, so I'm gonna, I'm gonna, I hope not upset you when I say this, but I. So circa March 2020, right? Let's take everybody back to March 2020. No, let's not go back to March 2020. But, but I certainly experienced as a parent of three young children, two of whom were in school at that time. I remember virtual school. And I got to tell you, I don't Think there was a lot of school occurring. Yeah. You know, during that time. Our opinion, the picture we have now of online school, I mean, it's not very positive.

‍ ‍

20:00
Speaker 2
Right. So.

‍ ‍

20:02
Speaker 1
So as we sort of work our minds to embrace this idea of virtual learning, you know, with what we're talking about here, help me understand why this is not going to suck.

‍ ‍

20:17
Speaker 2
Yeah, no, it's a good question. And I think we've gotten all of that pushback. You know, I think the fundamental difference is the field like learning. Right. The simulations and there's some good data about the media recall, which really just means how much do you remember compared to desktop learning, when it's about 75%. So you're actually, you know, interacting with a desktop versus the simulation. You recall about 75% of what you learned via desktop. You recall about 90% what you've learned via a simulation. So our belief is it's just better. You know, it's like saying, you know, you're driving a, you know, a dinged up old car. In reality, what I think we're offering is kind of a new Chevrolet. Chevrolet. Right.

‍ ‍

21:02
Speaker 2
It's where I think there's a difference between kind of what we saw through the pandemic and that kind of zoom based online learning and the technology you see with simulation. So the last thing I'll note is we will never claim to replace on the job training. Hands down, that will always be the best form of training. What's challenging is there's typically, you know, one or two apprentices per journeyman, and that's hard to scale as you think about growing your business. So this is just a tool to both allow for better recall and be allowed to scale faster.

‍ ‍

21:32
Speaker 1
Yeah. I gotta tell you one other thought that I'll have, I'll kind of layer into this. I've heard dozens of times about one key roadblock is reliable transportation every single day for people to get to classroom environments. Young people, 18, 19, 20, you know, that kind of range, not uncommon, that they don't have reliable transportation. I had an old school VW GTI I would not call reliable at that time, you know what I'm saying? So, you know, I can relate. I think everybody, you know, at that age is potentially challenged. I think if there's a way to augment some of their education by bringing them an education at home that actually works.

‍ ‍

22:19
Speaker 2
Totally.

‍ ‍

22:19
Speaker 1
That actually really does work. There's something cool to be done here. I'm going to bring back Stacy. I'm sure she has amassed some questions and we can kind of hear more what the audience wants to cover because I could probably geek out going down all rabbit hole.

‍ ‍

22:41
Speaker 3
So Chris Blake from Pivot Workforce, he had a couple questions. We already answered the NCCER question, but can you confirm what trades you're actually currently working with?

‍ ‍

22:53
Speaker 2
Yeah, good question. So we serve the H VAC plumbing, electrical markets. All of those roll up well into a nice facility maintenance catalog as well. And then we also serve the mult. Stacy, as you noted earlier, we have our roots on the residential side. We've done a lot of good work over the last year to move more into the commercial side. So you'll see more commercial service, more commercial install content both in the catalog and coming.

‍ ‍

23:21
Speaker 3
And then what big like commercial contractors are you currently working with?

‍ ‍

23:27
Speaker 2
Yeah, good question. I won't, maybe I'll just leave it at the ABC relationship. I just don't want to name drop anybody without permission. But we do have a great relationship with ABC and several ABC chapters and a number of ABC contractors. We are working closely with a guy named John Morris through ABC Ohio Valley to both fit within their apprenticeship program and to sell through to all of their or a lot of their contractors as well.

‍ ‍

23:56
Speaker 3
And then could you walk us through like you're a first year apprenticeship program or apprentice, just say plumber, electrician, what does it look like? You log into your system and can you just kind of visualize that somehow for us?

‍ ‍

24:12
Speaker 2
Yeah, sure.

‍ ‍

24:13
Speaker 3
Yeah.

‍ ‍

24:13
Speaker 2
I mean it's similar to, you know, many other kind of learning management systems. You'll have a dashboard which shows your, it's like kind of your home base. Right. And you're able to see how many points you've acquired, what courses you have do that are upcoming. Who on your team has more points than you? So we have a little bit of a competitive flair. From there we have our catalog and from there, you know, you're able to do the simulation. So you have access to all the catalogs. And in those catalogs we have what's called learning paths, which is really just an organized way of putting all the simulations together or video courses to say here, let's walk through H Vac Fundamentals 1 and we kind of take a walk job run approach where we show you some videos, kind of teach theory.

‍ ‍

24:58
Speaker 2
We'll then show you a video of the simulation with One of our SMEs talking about, hey, here Stacy's what you're going to do in the simulation. And then we actually Put you in the simulation. And we have a couple different levels of that where we first it's kind of like training wheels, very guided, and then it moves to kind of a more advanced where we really test your knowledge and recall.

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25:16
Speaker 3
Nice.

‍ ‍

25:17
Speaker 1
I could imagine there as an organization, let's say I'm an electrical contractor that makes this investment in having VR technology be a part of our program. I could imagine there's a big potential fail point of us as an organization not knowing how to manage this particularly effectively. I hear things like learning paths and I, I absolutely agree that's sort of a well established best practice for self guided training types of courses or. Yeah, self guided. Is there. If I'm an organization wanting to implement something that incorporates at home simulation learning, what kind of advice would you have for that organization?

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26:18
Speaker 2
Yeah, that's a good question. I think ultimately you have to show outcomes to the learner. Meaning, I mean ultimately the biggest challenge we have is people don't love to do training. Regardless if it's this cool training or your traditional training. People like both the contractor likes their employer to be in the field and the likes their employee to be in the field. And the employee when they're not working, doesn't necessarily want to be doing virtual training.

‍ ‍

26:47
Speaker 1
Right. They hate getting, they hate not getting paid to train.

‍ ‍

26:50
Speaker 2
Yeah, right, exactly. And so I think either you have to pay them for that time or you say, hey Chad, here's your learning path. Once you complete this and you've got six months of experience, here's the promotion that you'll be eligible for. And so once you tie training, the outcomes and skills achievement, I think there's just so much more buy in. And it's all about this cultural shift of education being embedded in the workplace and less of a check the box of, oh yeah, we did our safety training this month too. No, let's ensure that Chad is gaining skills in developing his career.

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27:22
Speaker 1
Love it.

‍ ‍

27:22
Speaker 2
Yeah.

‍ ‍

27:23
Speaker 1
One of the things that, in addition to the, I think those are fantastic points, one of the things that I would wonder if you've seen is when an organization kind of assigns a director of training, you know, training director, even if they're a small organization and that training director wears other hats, you know, making, you know, somebody in a leadership capacity accountable for following through and you know, making sure that the people who are supposed to be doing this are doing this. I can't tell you how many people, how many contractors I've talked to who've told me, you know, there's nothing I can do, like, it's amazing to me that I'm trying to offer these guys free money and they don't complete their training. It's crazy to me type of stuff. And anyway, training directors, what's your take?

‍ ‍

28:13
Speaker 2
Yeah, no, I mean, we've. That's another. Another observation we've had that you have to have someone who is responsible for it, and it doesn't. You know, a lot of organizations are not big enough to have a director of training. And so maybe it falls on the, you know, the person who handles all the hr, or maybe it's the owner. But I think, yeah, as an owner of the business, you have to do the ROI math. And we've done a lot of the math ourselves where you show when we add one guy and we get him in the truck, we're gonna drive $200,000 of revenue per year. Right. When you start to really peel back the layers, you can start to justify some of these investments as an owner. But you're totally right.

‍ ‍

28:51
Speaker 2
You have to assign someone who is responsible for these technicians or employees, you know, doing the work.

‍ ‍

28:58
Speaker 1
And I know our good friend Mark Drury, whose second call out in one show.

‍ ‍

29:02
Speaker 2
Mark.

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29:02
Speaker 1
All right, good job. But our good friend Mark Drury will enjoy hearing me say this, which is that you don't. Organizations have to break the mentality that their job is to go out and find qualified people. Now, their job is to find people who have the potential to become qualified people and then take educating their people really seriously and. And grow their own talent. If you're waiting for somebody else to train people and put them in your organization, you're going to be waiting a long time and you're going to be falling behind. So. So, look, I love this conversation. Stacy, do we have any other questions.

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29:39
Speaker 3
On the career path of things? If someone wants to get hired within your organization, how do you look for people that know the construction trades and also know VR or what kind of positions are you looking for? Because that seems a little tough.

‍ ‍

29:56
Speaker 2
Yeah, it's a good question. I mean, to be fair, I didn't know really anything about the H vac or plumbing or electrical industry when I started and have learned a lot. But we employ a number of SMEs, market experts, subject matter experts, who help both on the content side and then help my team on how do we go to market effectively. So I guess what I would say, really for the audience listening is, yeah, if you don't know anything about VR, but you have a passion for the trades and you Want to help on developing the next set of content for these learners? I would welcome a conversation because we're always looking for additional help to think through content or go to market strategies, really, to better serve the contractor and the employer. Yeah.

‍ ‍

30:37
Speaker 3
Awesome.

‍ ‍

30:39
Speaker 1
Thank you so much. Chris, any final words before we jump?

‍ ‍

30:44
Speaker 2
No, just really appreciative to be on here. I, I have enjoyed y' all show and Mark's. Mark's been a, a fun guy for us to work with. And so anybody who has Mark on status, I guess, is I'm a big fan of. Thank you guys. And yeah, thank you so much for the time.

‍ ‍

31:01
Speaker 1
Thank you. Real pleasure. Okay, Stacy, let's talk about what we have coming up next week. And my gosh, we're heading down the final stretch of season two. I cannot believe it.

‍ ‍

31:11
Speaker 2
I know.

‍ ‍

31:12
Speaker 1
We're, we're. It's moving fast. It really is. So, so one thing that I want to just plug real quick is that if as we're loading up for season three, which is going to get rolling in sort of early fall, if you or someone, you know, has an important story to tell about creating positive change in the building industry, reach out to me or Stacy and, and let us know. We're putting together guests. I think we have 13 or 14 shows that we'll be putting on in season three. I think we have something like six guests already lined up here in, you know, in May.

‍ ‍

31:45
Speaker 3
We'll probably fill up quickly. Season two filled up really quickly. So if you have any interest, we're definitely looking for, like, fun and new topics surrounding the building industry. And then we'll have some, you know, popular guests return.

‍ ‍

31:59
Speaker 1
No doubt. Yeah, some folks that we definitely got cut off with and said we could keep talking for, for a long time. So.

‍ ‍

32:07
Speaker 2
Good.

‍ ‍

32:08
Speaker 1
Please reach out to us on that next week along the lines of interesting topics. We've got Dwayne Gleason coming to talk about connecting digital and physical construction. Dwayne is somebody who spent the first half of his career working in the field in the trenches with a construction company, and then has spent. Spent the second portion of his career to date behind a computer screen, taking what he learned in physical construction and applying it to the digital world. It should be a really interesting discussion with one of the leaders at Trimble who's obviously a leader in construction tech. So please do join us for that.

‍ ‍

32:50
Speaker 1
And then finally, a reminder to everybody to, you know, just shoot Stacy a note, let us know that, you know, you want to be on our weekly newsletter that you don't want to have to try to keep up with the LinkedIn invites, and you just want to get an email that tells you what's happening and when so you can click and register with all of that. Anything, Stacy, that I've missed or that you want to add?

‍ ‍

33:12
Speaker 3
Nope. You got it right.

‍ ‍

33:15
Speaker 1
I love that. All right, so thank you so much again to Chris. Stacy, great job getting Chris here. I'm excited. You know, I'm glad that we had that conversation. I think that it'll lead to some really interesting discussions internally for our. For our audience.

‍ ‍

33:29
Speaker 3
Nice. Well, have a great day, and we'll see you next Tuesday.

‍ ‍

33:33
Speaker 1
Sounds good.

‍ ‍

33:34
Speaker 3
See ya.

‍ ‍

33:35
Speaker 1
See ya.

America's infrastructure is at risk of cyberattacks, and private businesses are a favorite target for cyber-criminals looking to wreak havoc and line their pockets. As the second-largest global industry, construction is a definite target for hackers. Meanwhile, the average construction firm in the US is not taking the steps necessary to protect itself and its data from attack. Security Fanatic, Nick Espinosa joins The Morning Huddle to talk about why we should be worried about cybersecurity and some tangible steps construction companies can take to protect themselves.

Transcript:

‍ ‍

00:01
Speaker 1
We need to get back to work. And work is one of the ways that we contribute to this country, that we grow our gdp, we grow our tax base, we contribute to each other effectively. We help finance our national security, our homeland security, our, you know, our infrastructure. I had key employees that really wanted to be leaders in the company, but they didn't want to have any ownership responsibility that way. So I just had to start researching out and figuring out, well, how do I market my company?

‍ ‍

00:29
Speaker 2
Go to your local school board for one hour twice this year.

‍ ‍

00:32
Speaker 1
And if you can have even just 10 or 15 employers show up and do that at the same school board every single month, there's two contractors filling.

‍ ‍

00:39
Speaker 2
Out a little card to give your.

‍ ‍

00:41
Speaker 1
30 seconds at the podium that says.

‍ ‍

00:43
Speaker 2
I need your help and we have great jobs. Eventually they will hear you.

‍ ‍

00:46
Speaker 1
But if everyone just did two hours a year, that's how we change this.

‍ ‍

00:49
Speaker 2
Stacy, how you doing this morning?

‍ ‍

00:51
Speaker 3
I'm doing great.

‍ ‍

00:53
Speaker 1
She loves it. I ask the question every time.

‍ ‍

00:55
Speaker 2
She's like, I'm fine, dude, just a little much.

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01:01
Speaker 4
And I say to that owner, I said, see, you're not willing to invest in yourself. You're not going to invest in yourself. You're going to invest in companies you have no control over, whereas your company, you control. And you don't have the confidence to pour the money into that. When things are busy and they're looking for their GC friends to sit down and negotiate a project on a GC and a fee, and they're more excited about building the project, and then all of a sudden the model, the market swings, and now the developer market is going to go out and they're going to hard bid the same project to two or three different GCs. And that's where it starts going down.

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01:44
Speaker 2
All right, it's morning huddle time. Good morning. How's everybody doing? Stacy and Nick Espinosa here with us this morning. How are you too, Stacy? How are you this morning?

‍ ‍

01:54
Speaker 3
I'm excited because it's finally getting warmer over here in Maryland.

‍ ‍

01:59
Speaker 2
What I'm talking about. Yeah, we're gonna have like a 70 degree day.

‍ ‍

02:02
Speaker 1
Yes.

‍ ‍

02:03
Speaker 3
Thank God.

‍ ‍

02:04
Speaker 1
Yeah. And we had snow three days ago, so, you know, hey, welcome to the Midwest.

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02:08
Speaker 2
Nick, you're coming to us from Chicago, right?

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02:11
Speaker 1
Indeed. Indeed. Chicago it is.

‍ ‍

02:13
Speaker 2
So, yeah, it's. It could swing any direction until, like, when is the threat over?

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02:19
Speaker 1
Yes, yes. Roughly July. It starts up in August. So here we are. Oh, man.

‍ ‍

02:28
Speaker 2
So this morning, Stacy and I are psyched to. To have Nick Espinosa on from Security Fanatics, among other really interesting things. So Nick is joining us this morning to talk about the cyber security threats that are facing the building industry. What construction industry companies need to have their antenna up for and planning to prevent when it comes to security threats. So we're going to get really into the, you know, details on some specific actions that these organizations can take. But before we go down that road, I think it'd be good to just orient ourselves a little bit with your story, Nick, what's. So I know you're you own Security Fanatics, which is a security consulting firm. You're a radio host for a show called the Deep Dive that's syndicated across 150 stations across the country.

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03:26
Speaker 2
And you know, you're clearly an avid collector of film.

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03:33
Speaker 1
A little bit. Little bit, yes. Yes. I also don't sleep just given the way cybersecurity is going these days. Right. You know, but yeah. I also, I'm on the Forbes Technology Council. I, you know, I write for free. Forbes, my naturally radio show, it fluctuates but the last time it was on about 150 stations. And I think that's in part because I've been interviewing members of Ukraine's government for my show because we've had access to Ukrainian government just given our regular jobs in cyber security. You know, I also sit on various boards as well, like Roosevelt University. I help them spin up an NSA certified cyber security program, you know, those kinds of things as well. So, so we are super busy in cybersecurity right now. It's everybody's hacking everybody, let's just put it that way. So, so it's non stop.

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04:20
Speaker 2
I can think of trends that are, are, you know, less painful than that. Everybody's hacking everybody. That sounds terrible. Yeah, but it really is. I mean, you know, it's one of those things that, speaking from personal experience, you know, 10 years ago it was sort of like a buzzword but you know, nobody's really dealing with that today. You know, I think we all know at least one company personally that.

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04:49
Speaker 1
Oh yeah.

‍ ‍

04:49
Speaker 2
Been attacked.

‍ ‍

04:50
Speaker 1
Right?

‍ ‍

04:51
Speaker 2
Yeah. It's hap, it's not, it's, it happens on a regular basis.

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04:55
Speaker 1
Yeah, Yeah. I mean I, and I founded my first company in 1998 and its focus was cyber security and I was the redheaded stepchild in the room until about 2015 or so. And, and that's essentially what it is. We have just as human nature, a certain sense of complacency if it ain't broke, don't fix it. And so a lot of businesses have taken that model because quite frankly, they're not looking at what the next innovation is going to be, not necessarily in their industry. Meaning I'm not running a construction firm. And if I was, I would be looking at, okay, what's the next thing I'm going to be using in construction? Is it drones? Is it automation? You know, am I hiring more people? What, what does my company look like in five, 10 years?

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05:34
Speaker 1
But one of those things is, you know, what does cyber security look like in five, 10 years? What does the landscape of threat look like? And that's something that I think is sorely missed on companies from small to huge. And it's something that we really need to understand because at the end of the day, what cybersecurity is a quantification and mitigation of risk on the technology side. So a lot of organizations don't understand their risk.

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05:55
Speaker 2
I'm really worried. Nick's way, way smarter than me. This is going to be very uncomfortable. All right. No, this is great. So Stacy, you know, let's make sure that we, you know, solicit the specific direct questions from the audience to the best of our ability. Stacy, we'll bring you back here with about 10 minutes to go. While Nick confuses me wildly and then confusion.

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06:24
Speaker 1
For the record. For the record, I pride myself on nerd to English translation. So we'll be aligned. We'll be aligned.

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06:30
Speaker 2
That is great news. That is great. Could, does it go all the way down to a third grade level? Out of curiosity?

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06:36
Speaker 1
It does.

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06:37
Speaker 3
Excellent.

‍ ‍

06:38
Speaker 1
That needs that too for the rest.

‍ ‍

06:40
Speaker 2
I am gonna be fine.

‍ ‍

06:41
Speaker 1
Sweet.

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06:42
Speaker 2
All right, so Stacy, we'll see you in a bit. I, I want to start off you, you mentioned conversations that you're having. I, I can't help it. I'm just interested. It has nothing to do with construction. But you mentioned conversations that you're have having with folks in the Ukraine. What are those conversations about and what are they like right now?

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07:01
Speaker 1
Yeah, yeah. So just by virtue of our work in cyber security, we've had some interesting connections and ties to the area of, in and around Ukraine, given our clients and various entities that we work for. And so by virtue of that, we've had access to members of Ukrainians topper government, like higher end government. So I've been interviewing members of parliament. The last one was in a substance. She's also the deputy minister for science and education and all of that And I wanted to talk to her about what her daily life is. I mean the first time I interviewed her she was in Kiev, the bombs were dropping. I mean she had just had to evacuate. Sometimes these interviews, oh, we're going to do it on X date at X time.

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07:41
Speaker 1
They can't, they just ghost and it's, you know, and then they come back hours later, oh, I'm sorry. I had to evacuate. And I was like, you have nothing to apologize for. You're in a war zone. I'm just glad you're alive. You know, we also know that, or I should say I know that some of the people that I've been talking with, I believe are no longer with us anymore as well. They've simply just dropped off the face of the earth. Even though they've been incredibly communicative before that, which is heartbreaking but I wanted to just because I have a platform with my radio show, kind of, you know, talk to them, see what's going on. Very rarely do we get a first hand account in a war zone.

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08:15
Speaker 1
And one of the things that we are seeing by benefit of the Russians at least initially, not going after the Internet in Ukraine and intel speculated that the Russians needed it just as much as the Ukrainians did to coordinate their troop movements and all of that. The double edged sword was that every Ukrainian with an iPhone or android became a citizen journalist, recording everything, sending it out, tweeting it out, you know, putting it on and thank God for that.

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08:38
Speaker 2
I mean, yeah, really, if it's not, if it weren't for that, you know, what would you know? I think there are people still, there are people in Russia who still don't know that there's anything going on.

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08:50
Speaker 1
Right, right. Well and that's part of the big issue though is that if you didn't know they actually had the state, the same state run television show called Varemia basically every evening at 9pm Moscow time. And it's been going on since like 1952 or 1956, something along those lines. And that's essentially the expectation is that's where you get your information that carried over even after the USSR fell. And so that's where they're getting it. Their body count still hasn't changed From, I think it's 462, which is what they first reported in early March. So you're looking at a population that has been wildly misinformed, you know, about this or simply is not getting that information. And Russia's Been doing their best to try to block the Internet there. So it's been absolutely nuts.

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09:35
Speaker 2
It's a crazy, you know, not much of a segue. I got nothing for in way of a segue to, you know, get into talking about construction. But I, you know, I would encourage all of our viewers to check out your, you know, radio show, the Deep Dive again. That's, that's the name of it. And, and where. What's the easiest place to find it?

‍ ‍

09:55
Speaker 1
You can go to my SoundCloud channel, soundcloud.com Nick A. ESP and it's listed out there. And there's a playlist of all my past shows. It starts with number one, which is from years ago. And I really should reverse that on the playlist. So, so scroll to the bottom to get my, my latest shows a couple weeks behind usually. But, but they're there. They're there and my interviews are pinned to the very top of the top of my SoundCloud channel.

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10:20
Speaker 2
In general, all the conversations that I've heard on any various, you know, interview shows with people on the ground in Ukraine, they're. It's just extremely valuable and you know, really hard sometimes to hear, you know, kinds of conversations.

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10:37
Speaker 1
It's brutal. It's just what they're going through, it's just brutal. So I'm happy to help if I can.

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10:42
Speaker 2
So, so obviously, you know, your, your experience in cybersecurity spans well beyond the scope of AEC firms, right? The, the, you know, the building industry. But you know, when you think about your experience inside that industry, you know, my take is construction companies are pretty small, right? Statistically, obviously there are big construction companies. They exist. But the average construction firm, if you know, out there taking a look at, you know, architects, engineering firms, contractors, is probably in the neighborhood of 25 to 50 employees on average. And you know, what's going on in their mind is we're too small for anybody to care about us. How would you respond to that?

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11:36
Speaker 1
Yeah, I mean, I think that's there's a gross misunderstanding, you know, essentially of the perception of hacking. I, I'll be honest with you. Hackers are lazy. We are lazy people. You know, one of the, I'm serious, one of the hardest things I have in dealing with the construction industry is I'm sitting here at 8:00am Central Time, you know, doing this when I would love to wake up at the crack of noon every day, you know, why can't you have this at noon? You know, and so we are, we are going for the lowest hanging fruit always. I mean that's, that we just do. And so think about it from this perspective. You're a 25 person firm.

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12:12
Speaker 1
Odds are, you know, whatever your role in AEC is, mechanical, electrical, sheet metal, you know, et cetera, whatever you do, plumbing, you are looking at catering to and working with larger customers, right? You're typically not, you know, doing the, you know, the smaller jobs, especially if you're on the commercial side. And so by virtue of that, what you're doing is you're building a roadmap for somebody like me, but malicious to break into your lives. Thanks to your website, thanks to LinkedIn, thanks to other places on social media where you are promoting this. So think about the Target data breach, for example. So that actually when that happened, Target, we all shop at Target, when that happened, they blamed their mechanical contractor. They threw that mechanical contractor under every bus on the bus schedule that week. Oh yeah, they completely blame them for this.

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12:59
Speaker 1
Even though it was shared responsibility, was one part them, another part, you know, Target. And the reason why they did that is because they're obviously trying to mitigate their losses. But think about it from the mechanical contractors point of view. What's that going to do to the reputation when they are basically splashed out on the news to say they got Target hacked? Do you think they can walk into Walmart or Home Depot or any other big box store and say, hey yeah, we can, we can service you, we can maintain you, we can do whatever you need us to do. Their reputation is ruined.

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13:29
Speaker 1
And on top of that, basically when you're looking at those 25 user firms, they're not spending the money that a Target or a Home Depot or a large corporation is on an army of nerds like me to defend the barn. Oftentimes they're outsourcing their IT to a third party IT provider. IT providers typically are not cybersecurity. They put a shingle out there that says, oh yes, you know, we will do your cybersecurity. And at best, usually what they're doing is selling you products that are low to mid range, which again doesn't really quantify your risk. All it does is give you a couple layers of defense, which is important, but it's not the be all end all. And so the problem that we have with smaller organizations is they don't think that they are targets because well, quite frankly, we're small.

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14:13
Speaker 1
The other side of that is that the construction industry, AEC in general is in the top three basically verticals that get hit with ransomware. And, and it's, they get hit most consistently. And the reason being is that all y' all pay. It is basically considered high margin, meaning most of these businesses have cash on hand. Most of them are on deadlines for larger GCs or their customers. They're not going to sit there and say, well, we can't fix your air conditioning for a week. You know, those things don't happen. So they pay historically faster and therefore they continue to get hit. And so when you are looking at small business alone, small business to low midsize business accounts for something like 63 to 65% of all data breaches in the world right now. Primarily because they're complacent on their technology.

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15:01
Speaker 1
They usually don't have any of these things in place at an advanced level. Even though the enterprise technology is affordable. Their IT providers don't work at those levels, you know, and they pay. So it's a perfect storm. It's almost on par with health care. Who pays as fast as humanly possible because if they don't, people die. So, so construction in and of itself is right now a huge target that we see. And it's considered part of the critical infrastructure of the United States. All y' all keep the lights running. My house isn't falling down. My H Vac works. You know, thank you. Thanks to my local H Vac contractor, thanks to my local gc, et cetera. So it's a huge problem in that vein.

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15:40
Speaker 2
So it's because in fact, we almost should switch the thinking. It's, it's that smallness that you thought made you safe.

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15:54
Speaker 1
Right.

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15:54
Speaker 2
Is actually a potential, really making you a very easy target.

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16:01
Speaker 1
Right, right. I mean, and that's what it is. I had, I literally had one that was, I want to say 30, 45 called me frantically. The number one call we get, the record is, oh my God, help. The world is burning down. We've never worked with you, but you know, I saw you on stage or I listen to your show, like whatever it is, right.

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16:18
Speaker 2
And we're being held ransom, right?

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16:20
Speaker 1
Oh my God. Like it's an end, it's a life ending event for the company. The number two call we get is, yeah, I don't want to be that guy. So what do we do? You know, how do we improve?

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16:29
Speaker 2
Yeah, if you could flip those, we get less of the first one.

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16:32
Speaker 1
Right. But I've heard more than once where, you know, basically the business owner that calls me, especially on the small side, I literally just had one, about 35 employees or so that called frantically and said, I didn't think this could happen to me. Like, I'm flying under the radar, you know, I'm just, I'm in the middle of nowhere. Like, why would they hit me? And it's like, well, because you're easy to break into, we can leverage you to get to larger clients. I'm going to use you to get to Target, you know, or Home Depot or, you know, wherever I'm trying to break in, you know, so you are on the radar and you don't train your people. They're clicking on everything, they're opening everything. I mean, these are things that, you know, we really don't take into account.

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17:06
Speaker 1
And most small businesses have not fully quantified their risk. It's a huge problem.

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17:11
Speaker 2
It, it. I'm, I'm seeing that and I, so I think I want to go back real quick to this comment about outsourcing it. You're right. I, it's very rare. My, my personal experience, very rare that I will see an AEC firm under 150 employees actually have, you know, what I would call real I, IT staff.

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17:39
Speaker 1
Right.

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17:40
Speaker 2
And even then, it's pretty rare. It's like, you know, you're into like the 500 to 1000 employee range before.

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17:45
Speaker 1
Right.

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17:46
Speaker 2
You know, that starts to become the norm. So, so outsourcing it is. It's very much the norm.

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17:52
Speaker 1
Right.

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17:53
Speaker 2
Is there anything that if you're gonna. Because, I mean, by the way, the people that we're talking to right now, our viewers, they can't afford to hire an IT staff internally. They can't afford a quarter of a million dollars a year in. That's not going to happen.

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18:08
Speaker 1
Right.

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18:09
Speaker 2
So is there anything that you would advise if you're going to outsource it? Here are some of the do's and don'ts. And here, here are some of the things as it relates to your cyber security that you should be looking for or careful of.

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18:23
Speaker 1
Sure, sure. So the number one problem that a lot of organizations have when they outsource to it, and it's a very common thing. There are pluses and minuses to this. But one of the biggest things is you don't understand the industry that it swims in. In the same way that, like, I can take my car to my mechanic and he can say, oh, yes, you need to replace your Framistan. And I'll be like, I have no idea what that is, but please replace it. You know what I mean? I don't even know if that's real. But you know, it's, you know, I go to my doctor and my doctor tells me, oh, you broke your thingamalaringathoid. Sure, okay, you know, just fix the damn thing.

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18:57
Speaker 2
What do I do?

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18:58
Speaker 1
Right, right, exactly. By virtue of that, what ends up happening is you're sold on not necessarily the capability of the organization, the IT company. You're sold on the friendliness. You're sold on what you perceive to be the reliability. Meaning they're going to keep our lights up, they're on it. The problem that we have is that it is not cybersecurity. Cybersecurity pivots on a dime and has to innovate as quickly as possible. Sometimes we never know when that 15 year old kid is going to break all of Google and we have to slam on the brakes and figure out, okay, what on earth just happened? How did they get around that? And how do we now apply that defensive technology into our clients to make sure that they don't end up being the next Google? It is different. It is trained differently.

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19:45
Speaker 1
They keep the lights on, they keep your printers running, they keep your computers on, all of these kinds of things. But they also understand the need to sell cybersecurity because like I said, everybody's hacking everybody these days. And so what ends up happening is they come in and say, we'll give you a cybersecurity solution. Sometimes it starts with a cybersecurity assessment that they say, which is anything but. They run a couple scans on your network, they see some holes that gives them an end in order to sell products to fix those holes. But that is not holistic. I would never do a cybersecurity assessment in a week because a cybersecurity assessment is holistic. On average, it takes us three to four months even on a small business to do a full blown cybersecurity assessment. On top of that, it tends to be incredibly complacent.

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20:29
Speaker 1
Meaning these IT companies know to the penny exactly how much that firewall is going to make them money. You know, what it's going to cost them, how much it's going to take to install. They don't have to invest in training because they're typically lower end products that are easier to install. So the older Technicians can train the new technicians so you don't have to actually invest money into these kinds of things. And what you end up having is a low to mid range data security solution, which is a very small subset of cybersecurity. And so as I am counseling any organization or any company that says, hey, we're looking at outsourcing it, I say, okay. The benefits to that are you're going to get more than one person because if you just hire somebody on site, they're pigeonholed into your technology.

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21:11
Speaker 1
You're going to get more than one person, they're going to be relatively responsive to you. You know, they're going to take care of some of these things. But understand that the proof of the capability of the company is in their products. If I can sit down with a company and they can list out what's their firewall, what's their antivirus, what is their wireless access point, what do they use for all of these different things? I have a snapshot very easily of are they mature? Have they been investing in training? Have they been keeping up with the latest trends and innovations? We've had our products here every 90 days. Every 90 days. I can't walk into a Fortune 100 level client and basically say, yes, here's last year's technology, I'll get walked right out the door. These are differences that are key.

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21:55
Speaker 1
Conversely, you wouldn't hire me to fix your printer. One, you'd get charged way too much. And two, I would never take that job. So we specialize. I don't go to my podiatrist for brain surgery. I don't go to my neurosurgeon for footwork. Both are important. I like to walk and think. But they're two different things. And I think that's a rather important distinction to make. But the proof is in the technology that they're leveraging. And as I'm asking or consulting with customers, my first question is, give me your product stack, tell me what they're running and I will tell you if it's good, bad or ugly. Usually it's low to mid range at best. So here we are.

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22:29
Speaker 2
All right, so I'm going to bring Stacy back, but as I do that, I want to ask you to, you know, lay it on the line for us. I'm a mid sized, maybe small, maybe bigger than mid size, right. But figure I'm a 25 to a thousand employee, right. Which I know is a swing construction company. What are some of the, just in general, what are some of the thoughts I should be having, what should I be doing to protect myself?

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23:00
Speaker 1
So, yeah, so I don't care if you're 25 or 25,000 or 250,000 employees. One of the things that you need to be approaching holistically for your organization, it goes beyond cybersecurity, is understanding and quantifying the risk. I can't tell you how many organizations I've walked into from small to utterly massive. And basically the person says, okay, Nick, let's talk about cybersecurity. Or the chief information security officer of the Fortune 100 company says, you know, let's talk cybersecurity. And my default answer is, no, we're not going to talk about cybersecurity yet. We're going to talk about risk. How many organizations? If you can't tell me in hard and soft dollars how many computers can be often for how long? And so until it's so economically unviable for your organization, then how on earth do you know what you are doing is correct?

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23:46
Speaker 1
How do you know your backups are working in the way that you need them to work? On paper, 24 hours sounds great, but maybe 6 hours is too long for production. Maybe marketing can be down for a week and nobody cares. If you cannot quantify these things for me, how on earth do you know the technology and the product solutions you have in place are actually doing what they say they are and will keep your business afloat in a tornado, in a ransomware event, in an earthquake, in an alien invasion, whatever it is. These are things that we need to understand. Start there, understand that there, and you will be ahead of the game for most companies in general.

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24:21
Speaker 2
Well, it seems to me that if I start. If you start by quantifying risk, you start by doing that kind of assessment. A couple of things that are going to happen. You know, one is you start getting your head really in the game in terms of what is it going to take to. To hurt my business and where. Where are. Where am I? You know, where are my priorities? And the second thing that it's probably going to do is scare the hell out of you and motivate you well to, you know, take, you know, to start taking whatever recommendations are coming next very seriously.

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24:51
Speaker 1
Right. Well, and I get that from a lot of IT directors or CIOs or CISOs that basically say, how on earth do I sell my C level? And it's like, you're not selling the C level. You're showing them the risk right now. They have they understand, I can spend X money to indemnify myself from this risk and mitigate it, or I can keep doing what I'm doing, understanding that I, my risk appetite is vastly increasing. And that is it. You're not selling anything. All you're doing is saying, this is your risk. You want to, you want to lower this risk because you think it's too risky. We need to buy X, we need to invest in this. That's really the name of the game here and that is, I think, important.

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25:29
Speaker 1
Now the difference between a 25 user firm and let's say a 1000 user firm is as you grow, you start to develop internal maturity on processes, on flows. You start to have employees that aren't outward facing, meaning they're going to customers to generate revenue for you. They are internal teams that aren't just doing things like supporting the external team. They're looking at the internal processes that we see. Meaning, is everything in place? Do we have good controls for our users, for our systems, for everything? And that's not just cybersecurity, that's anything the business requires. And so as you grow, as you develop these teams, you should also be maturing those policies, those procedures, those controls that help also mitigate that risk, but also align your employees with the technology solution that you have. It's very hard at 25, should be much easier at 250.

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26:17
Speaker 1
And if you're hitting, you know, a thousand, you should have these things in place. That's just the nature of, this is the nature of business.

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26:26
Speaker 2
Re. Realistically, if I'm at 25, what are the things that I absolutely must like? It's just simple stuff. Go, go do this, I'm at 25. Like go do these things. You can actually handle this, right?

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26:39
Speaker 1
You have to take time at 25, you have to take time to look internally in your organization. You have to look at a gap analysis to say, where are we falling down on the cybersecurity side? It's a quantification of risk. In other words, understanding, okay, I'm paying X amount of employees, I'm paying X amount in electricity and idling trucks for gas, in leases for the trucks, all that kind of stuff. What happens if I have a complete work stoppage, meaning I'm ransomed? Nobody can go out on a job site, nobody can do anything. And I figure, how much money am I losing?

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27:12
Speaker 2
I'm gonna, I'm gonna go, I'm gonna be, I'm gonna run out of cash in three weeks if that goes down, and then I'm going to run out of my line of credit in six weeks if that goes down. Right? So, so now I'm quantifying the risk. And if I, once I've done that, now what do I do? What, what, what should I, what.

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27:29
Speaker 1
So once you understand I'm losing X amount of dollars, let's say you realize that if you were down for complete week, paying for everything that you're paying, everybody's getting a free vacation, you know, because they're not taking time off. You are paying their salaries. And if you've got union, the union guys are still getting paid. I mean, this is just the nature of it, right? So, so once you've quantified that to say I can survive for X amount of time before it's so economically unviable, the goal is then to start developing a solution that says, okay, what basically ensures that if I get hit with ransomware or something else, I'm not going to be down for a week or X amount of days, whatever that is. How do we make it half of that? How do we make it a third of that?

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28:10
Speaker 1
How do we make it whatever is economically viable, Meaning I will eat, let's say, a quarter of the money that I will, I can lose on this and no more. So what you do is you then start investing in solutions that ensure that you can do that.

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28:24
Speaker 2
So what I think I'm hearing you say is quantify the risk and develop a clear backup plan so that you're able to mitigate that risk to the best of your ability. Should it go, should that happen?

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28:37
Speaker 1
So I would say contingency planning in the sense that a backup disaster recovery plan is part of a greater contingency plan. But, but in that vein. Yes, but then you have to execute on that. It's great to have it on paper, but if you're not actually putting in the solution that, you know, gets you up in six hours, if that's what you need, then what's the point of having it on paper? Get it on paper, start executing on those things because you're investing in the longevity. You're investing in the security of the company, which ensures the longevity. I mean, it's, it's. That kind of cycle.

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29:06
Speaker 2
Makes sense. Stacy, what do we have?

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29:10
Speaker 3
I have so many questions to ask you, but we'll start with the audience. So Jose Posada said, would it better not paying the ransom and using the backup servers.

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29:20
Speaker 1
So that's a good question. I get that a lot. I walk into some ransomware events where they're like, we are not negotiating with terrorists. Screw them. You know, like, we're gonna go straight to backups. And usually if you're doing backups, right, Jose? Then yeah, you go straight to backup. So if you have a backup on site that is sitting what is known in what is known as immutable storage, then those can't be altered by ransomware, so you have a very fast restoration. Conversely, if you have a cloud backup, how we back up to the cloud, which is via agent as opposed to computer like you do on site. The cloud can be your lifeline as well. Understanding that you're going to have to get that data from the cloud or spin it up virtually in the cloud as you repair your systems.

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30:03
Speaker 1
Understand what that does? But yes, the reason why people pay ransom most more often now than what we've seen in the last few years is not because they don't have the backups. And that does happen on occasion. It's more, I don't want this sensitive information on my massive clients to get out because if they find out, I will be fired and I will never be able to work with a large client again because everybody will know that it'. This is the problem with Target. You think anybody wanted to go to that mechanical contractor after Target threw them under the bus? No. And so by virtue of that, companies will pay ransoms and negotiate those down. And you can negotiate ransom to keep that information out of the public eye to ensure that they will continue to survive as a business. Great.

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30:46
Speaker 3
We also have. What role does social media play in a company's cybersecurity now?

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30:53
Speaker 1
Oh, my God. So I like to talk about something. I've talked about it for years and thanks to Covid, and it's the only thing I can thank Covid for is I no longer have to explain global herd immunity. We have the same concept in, in basically technology that we do with medicine in terms of herd immunity. Think about it this way. We are all connected on link. You're probably watching this on LinkedIn or Facebook or wherever it is. We're all connected. But if you know not to open the phishing emails or you know how to spot, you know, a potential malicious message or whatever it is, but your friends don't, they're the ones getting hit, which makes you more susceptible. This really comes down to user education.

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31:31
Speaker 1
We social engineer all the time when we are running reconnaissance on organizations, we'll check the website, we will check LinkedIn, Facebook, Twitter, anything that we can possibly get insight on into the organization to build an attack profile against it. I actually talked about this in my very first TED Talk, which was called Trusts Sucks. And that was, I think, aptly named, you know, because that's essentially what we're doing. We are putting out a huge amount of data on social media that can be used against us. Not to mention the fact that I can send infections through Facebook messenger, through LinkedIn messenger, etc. Etc. Pretty easily, and I can infect you straight through social media. So. So think about it that way as well.

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32:12
Speaker 3
Do you have any stories of any prominent AEC companies that have been attacked to date that you could share?

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32:20
Speaker 1
So, short answer is yes, without naming names. I got called into a large engineering firm last year to help support their IT team as they went through a massive ransomware event. Basically, they gave essentially hundreds and hundreds of employees a free vacation for about a week and a half as they were scrambling to essentially unscrew that. And it cost them, ended up costing them millions of dollars. Aside from the millions that the ransomware people wanted, the. They lost millions in everything from salaries to electricity to stoppages to, you know, all those kinds of things, contractual obligations that they were trying to meet. So, yes, these things happen constantly and continuously. And we got called into, I want to say it was.

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33:05
Speaker 1
It was before the pandemic, so maybe three, four years ago, into a large GC that is pretty well known specifically for an event like this as well. And they caught it halfway through. And so were there as a second set of forensic eyes to take a look, to see, okay, did this actually, you know, only hit like 40 of our computers? Did it hit the rest and then those kinds of things? So. So yeah, this is. It's a huge problem in. In aec, we see it all the time. I'm. I'm dealing with multiple right now contractors, two of which have been through ransomware events right now. So it's a huge thing.

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33:40
Speaker 2
Yeah.

‍ ‍

33:40
Speaker 3
So I guess to wrap it up, can you just describe to our audience what ransom. How the ransom attacks work, you know?

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33:49
Speaker 1
Sure, sure. So essentially, basically, somebody breaks into your organization. Typically the fastest way is through phishing, meaning somebody in your company has answered an email, clicked a link, downloaded something they shouldn't have downloaded or opened something they shouldn't have opened, that installs what we call a payload that essentially establishes what we call CNC or command and control traffic to go and phone home. That traffic is typically encrypted. So most firewalls don't pick it up. Enterprise firewalls will, but most don't. And most of you are not running enterprise firewalls that are watching or listening to this. So we download it right through the firewall, and then we started installing infections into the machine. But we're not activating anything. We're running reconnaissance, meaning we're looking through those files. We're trying to crack every username and password that you have on site.

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34:36
Speaker 1
We have tools that will do that rather easily for us. And so once we have all of these things, we'll log in as an administrator, we will start slowly copying out information, or we'll copy out your latest backup, assuming it's not encrypted. Because a lot of. A lot of organizations don't encrypt their backup. So that's a very easy way to get all your data. Once we have a copy of it, then we start strategically putting out ransomware where we know we're going to hit, such as servers, other critical infrastructure that. And then usually in the middle of the night, you know, 3am Here is business hours in Moscow, you know, we turn it on and then, boom, everybody's hit. Everybody's locked out. And we leave ransomware notes absolutely everywhere.

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35:12
Speaker 1
And then you get a dark website, typically, or now a telegram channel, possibly, where you have to go and communicate with us. And we want a whole bunch of money from you.

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35:19
Speaker 2
Oh, my gosh.

‍ ‍

35:20
Speaker 1
So that's what it is.

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35:21
Speaker 2
And Russia is coming. And Russia's coming for us. I mean, we got. We have to be prepared for that. Agreed. I mean, that's happening.

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35:29
Speaker 1
Yes. I actually was just in New York City last week talking to a construction organization out in New York about that specific thing that we have to prepare for. Russian cyber attacks. They're not going to launch a land invasion over our sanctions because there's no way they would win that. The best thing that they can do, in their terms of their retaliation is cyber warfare against the United States and our allies. So we have to prepare for. For that eventuality. We really do well on that.

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35:58
Speaker 2
Uplifting and not terrifying at all note. Thank you so much, Nick. This was, I think, a fascinating conversation, certainly for Stacy and I, I hope, for our audience. And I, you know, can't express enough, you know, how we appreciate your taking the time to join us this morning.

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36:17
Speaker 1
Yeah, well, thanks for having me. I think it's such an important topic, and so I'M glad you guys are on it. Thank you.

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36:25
Speaker 2
So, so I'm gonna just take a, a moment and, you know, kind of plug next week. Next week we're going to be talking with a construction attorney named Mike Wagner. One of the things that's happening, you know, rampantly across the economy, but certainly in the building industry is inflation. And in particularly in the building industry, what we're seeing is material cost escalation beyond the scope of what anybody could have anticipated. Now maybe it's currently plateaued, maybe it's going to be going down. Who knows? But what we do know is that there's been lots of, you know, instability in materials pricing. Mike has been working with his clients who are construction companies as well as developers for developing fair contractual solutions to dealing with material cost escalation.

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37:21
Speaker 2
I really hope that we have people join, you know, that episode with their real world challenges and toss some of those on the table with Mike. Stacy, is there anything that I'm leaving out from a housekeeping standpoint?

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37:33
Speaker 3
No, you got it all covered.

‍ ‍

37:34
Speaker 1
Awesome.

‍ ‍

37:35
Speaker 2
Thank you so much. Great work today. I'll look forward to seeing, you know, the audience again here soon. Next week, same time, 9:00am Eastern on Tuesday. Thank you.

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37:45
Speaker 3
See you guys. Have a great day.

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37:47
Speaker 1
See ya.

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Join Host Chad Prinkey (Well Built Construction) and Co-host, Stacey Holsinger, (Steel Toe Communications) every Tuesday morning at 8 a.m. EST. on LinkedIn as they interview top A/E/C industry experts. Guests can participate in the conversation live!

Transcript:
Speaker 1: 00:00

Man.

Speaker 2: 00:04

So, so I'm an hour behind right now. I am in Louisiana, which I, I can't figure out. Where, where is the line? Is it in Mississippi? Is it in Louisiana? When do you shift over to Central as opposed to Eastern?

Speaker 1: 00:20

Oh, it's actually, it's actually along the Alabama, Georgia border. And I know that because I used to live about four minutes from the line. I used to work in, in Eastern time and live in Central time, so I used to get home an hour earlier than I left work.

Speaker 2: 00:39

Really?

Speaker 1: 00:40

Yeah.

Speaker 2: 00:42

That's craziness.

Speaker 1: 00:44

Yeah, that's, that's the truth. I did that for, for a couple of years.

Speaker 2: 00:48

So. So it'd be like bonus in the morning and then a bummer in the evening. Is that, Is that right?

Speaker 1: 00:56

Was the other way because I was coming back to Central time, so I.

Speaker 2: 00:59

Oh, you got it.

Speaker 1: 01:00

Yeah.

Speaker 2: 01:00

Coming back to Central. Yeah.

Speaker 1: 01:02

Give me half an hour to get home. So I'd leave around 5:30 and I'd get home at 5.

Speaker 2: 01:09

Got it.

Speaker 1: 01:10

Yeah.

Speaker 2: 01:10

Stacy, are we. Can you confirm that we're up and rolling on LinkedIn right now?

Speaker 3: 01:15

Let me check. I can't send messages.

Speaker 2: 01:18

I got it. I just got a. I just got a little thing. We are. Hi, LinkedIn. What's happening? All right, we're gonna get rolling in about a minute. We'll start right on time. As per usual. When I, When I travel, I keep my computer on regular time so that. Because everything else in my world will fall apart if I don't remember what time it is where I'm from. Right. But. But my phone changes in my watch change so that I'm not late to the stuff that I'm supposed to be. I gotta tell you, it's, it's, you know, when you're, when you're doing travel, it can, it can really sneak up on you. And then, of course, I can't sleep a moment past whatever 5:30am Eastern is, so I'm just toast when it comes. Like, I'd say, okay, I guess I'm seeing 3:30 if I'm in Mountain time, you know?

Speaker 3: 02:16

Yeah.

Speaker 2: 02:20

Stacy, how was your leadership program?

Speaker 3: 02:23

It was awesome. Grinnell Leadership Jumpstart. I met eight wonderful strangers, spent a week with them, learned a lot about myself. And you know how I want to apply that to my business. I highly suggest, you know, if you're early in your career, your 20s, you're a little confused about, like, who you are, where you want to go to jump in and try to get that training, and then again taking it, like years down the road, whether you have like a life changing event happened personally or professionally, to get some more clarity on who you are and you know where you're headed, it was, it was pretty cool.

Speaker 2: 03:05

That's awesome. I'm gonna go ahead and get rolling. I want to ask you a little bit more about that in a second. Stacy. Hello and welcome to the morning huddle. I'm your host Chad Prinky alongside my partner and producer, Stacy Holzinger. Stacy, it is great to hear that you had an awesome experience at a leadership training all week last week. You said that it helped you to learn some things about yourself. And I wonder if you could share with us something that you learned about yourself.

Speaker 3: 03:31

Yeah, one of the things was, you know, in every business, leadership wise, I liked you have to find the Ying to your yang. So someone hires someone that you know, pretty much their strengths are your weaknesses. So that's kind of what I'm looking for now.

Speaker 2: 03:51

You have weaknesses.

Speaker 3: 03:52

I know, right? No, I have plenty. I feel bad for that person actually, that I'm gonna trust me.

Speaker 2: 04:01

Whitney is. Whitney gets a sainthood dealing with me. It's amazing what she's able to do. Yeah, Yeah.

Speaker 3: 04:07

I think your go to sometime is to hire somebody that you're comfortable, that you want to hang out with, but that's not really a good business, smart business decision.

Speaker 2: 04:16

So hopefully you like them and you do want to hang out with them. But I totally agree. I think that's awesome. And so you got a little insight as to, you know, when you do make that hire, what direction you'll go. That's cool.

Speaker 3: 04:28

Yeah.

Speaker 2: 04:29

Do you want to make an announcement of who you're hiring for right now or do you want to hold off?

Speaker 3: 04:34

I'm just looking for, you know, someone that can do 10 hours a week, payroll, accounting, that kind of thing.

Speaker 2: 04:42

Awesome. Very cool. The word is getting out as we speak, so that's awesome. Good. So as always for the audience joining us live, please type in your questions throughout the course of the show and Stacy will select a handful of those questions to cover at the end. Stacy, we will see you with about 10 minutes left. I'll drop you off so you can take notes.

Speaker 3: 05:06

Okay.

Speaker 2: 05:06

All right, thanks, Stacy. Justin. Our guest today is Justin Panzer. Justin, thanks so much for joining us.

Speaker 1: 05:13

Sure. Thanks a lot.

Speaker 2: 05:15

Justin is a friend of mine, somebody who spends a lot of time in the construction technology space. And. And Justin and I were talking about the possibility of him coming on probably what, like three months ago when we first had the notion of this program. We wanted to get the word out. So Justin, if you would give us a little bit of background on yourself.

Speaker 1: 05:37

Yeah, sure. So I'm Justin Panzer, I'm the director of marketing for Jack Solutions, which is based in the Baltimore area. My background is about almost 30 years now in mobile technology, mobile communications, wireless business, and you know, not so much the consumer grade phones and tablets that you may be familiar with that everybody might be watching this on today, but more enterprise grade, you know, business to business solutions that are highly customizable, that we put in a lot of construction, manufacturing, logistics, really sort of challenging conditions, you know, harsh environments, real heavy workload kinds of applications. And you know, here, here at JAX actually we customize those things right down to the, the bits and bytes so that they fit perfectly and whatever it is that you're doing out there.

Speaker 2: 06:41

So you're so, so, so, so just so the audience is clear, I think what you're saying is you make like custom devices, you know, so you're, you're literally, you know, like a competitor iPad or whatever, right? Like when you're making customer custom devices for, for specific applications.

Speaker 1: 06:59

Yeah, to an extent. I mean if, you know, just to, you know, put it into that kind of context because everybody's familiar with iPads and Samsung tablets and things like that where you know, you can buy one of a million of those right off the shelf. We don't do that. We still sell tablets and devices of that type, but one is not like the other. And, and you're never gonna find anything like this off the shelf. It's usually very purpose built for a specific application, specific customer need.

Speaker 2: 07:36

Awesome. So, okay, so with that as our context for the conversation we were talking about, this episode is all about your field technology strategy. We talked about reducing costs, we talked about reducing risk, you know, and, and that, that's sort of, you know, some of the things that we want to get into today. But, but I want to take it all the way back to that first term of strategy. What do you mean by technology strategy when it comes to, you know, the field?

Speaker 1: 08:09

Yeah, that's, it's a good point and a good question. I mean, I think the first, first thing is, you know, have one, have a strategy. And, and what that means is that I think everybody knows we need to be connected. The, the way that we work is a lot different. And thinking about what do the devices look like that I need to incorporate into my work, what kind of functions are they going to perform? How can I put tools in the hands of my people or the people that maybe sub for us, that keep us connected, that are reliable, that are secure, that, you know, offer the kinds of automation. And, you know, we hear terms all the time like digital transformation. I mean, those kinds of things are not just about, you know, putting a phone in somebody's hand or putting an iPad in somebody's hand. It's really more about thinking holistically about the technology and how it all connects everything together.

Speaker 2: 09:16

Yeah. So, like, I. Now I'm feeling guilty because I can. I can think back to at least a dozen situations where I've come back in my role as a consultant, where I've come back and told a client, you know, you need to up your field tech. And they say something like, what should we do? And I'm like, I don't know. Put iPads in their hands. I'm not a technology guy.

Speaker 1: 09:37

And they go out and they buy.

Speaker 2: 09:38

60 iPads, and they're like, all right, we did it. And what I'm thinking is just. Just. Just hearing that sort of background is that that's. That that's not a strategy and that. But. But I. I would say, by and large, and that's what I see. So. So, you know, I mean, the nature of the construction industry is most of the companies are small companies, right. It's, you know, small businesses. And. And, you know, there might be some people saying, hey, I'm not small. Okay, but if you have several hundred employees, you're not small in the construction world, but you're a small business. You know, when it comes to the total economic environment. Right. Compared to, you know, auto manufacturers or, you know, fill in the blank. So in that small business environment, it's not surprising that, you know, usually what has happened somewhere along the line is somebody said, let's. Let's get devices in the hands of our field. And whether that was phones or iPads or Samsung tablets or whatever, it just sort of started and wasn't necessarily a thoroughly considered strategy. So, so. So put yourself in the shoes, right, Of. Of. Of the, you know, 150 employee trade contract or electrical contractor, you know, concrete company. Fill in the blank. What are some of the benefits to our viewers of developing this type of strategy? Why. Why should we take the steps to, you know, go into the. To the tech strategy realm?

Speaker 1: 11:12

Yeah. Well, I'm gonna kind of hone in on one of the things you said and that was, you know, you talked about the economics of it. Right. And total cost of ownership is. Is something that's not often really thought of when you're you're thinking, okay, I've got to put devices in the hands of everybody or I've got to get some software or I've got to connect everything. You know, think about again, maybe like an off the shelf, consumer grade tablet. They're pretty cheap entry costs, right? I mean, you could probably do something in the $300 range, put one in everybody's hands. But you know, if those things are, you know, you're carrying those around a work site, you're putting them on a forklift, you're, you know, it's in the cab of a tr. Chances of those things getting broken are pretty high. And when those things break, we're, you know, then we're replacing them. The, you know, the high failure rate in dusty, dirty areas, you know, maybe these things get wet, they get, they get dusty, they get, they get left places in the heat or the cold. I mean, there's a lot of ways that these things can fail that you maybe didn't really think of. It was cheap to get into, but now the replacement, the repair, not to mention the downtime and productivity and all those kinds of things. I mean, you can put all of that into the total cost of ownership equation. And I'll throw one other thing in there too, is like how much stuff is on a off the shelf tablet when you buy it, for example, right? What can be installed in that thing? What's it taking away from day to day? So again, it's not just about devices, which, you know, that's kind of my bread and butter and where I live every day. But you know, think about the software and even I don't know how technical some people in the audience are, but you know, we talk about firmware which is really getting into the operating system and starting to lock down some things. So, you know, people aren't installing YouTube and Angry Birds and whatever else and just, you know, basically distracting from work all day. There's a lot that goes into that.

Speaker 2: 13:37

So as you were talking, I literally last week visited a client job trailer and had I, I feel like, I feel like this scene plays out all over America all day, every day, where, you know, the cracked screen, the shattered screen, you know, a tablet that the superintendent's trying to show somebody on, you know, and they say, screw it, let's go into the trailer, let's go to my computer. And you, and whatever efficiency gains you thought you were getting from the, from the technology you're losing in that moment until they, you know, get new technology. So I'm seeing what you're saying. And I, I, I, I don't disagree. I think there's a, I think that the, oftentimes the hardware isn't up to the, to the, to the task, if you will, you know, out, out in the field for these guys. So that, that clicks together and as you started to talk about unnecessary software on, on devices, that's got my mind going a little bit. Tell me more about that. Maybe not so much from, like we want to keep people from, you know, playing Angry Birds. Though there's, you know, probably some relevance in that. But, but what are, what are some examples that you see of, of unnecessary software?

Speaker 1: 14:58

Yeah, I mean, you know, there's, there's software and then there's also a level down which like I mentioned before, we call firmware. So, you know, when you get a, any kind of electronic equipment, whether it's your PC, your Mac or a tablet or a phone, I mean, you've got the operating system that comes pre installed with a bunch of things. And how many of us on here have had woken up to get that message that says, hey, your device has been updated or your device is updating or something like that? A lot of what goes in there is what we call bloatware.

Speaker 2: 15:34

Did you say bloatware?

Speaker 1: 15:35

Bloatware, yeah. Bloated code and all kinds of things with, I mean, a lot of the stuff that comes in these, these updates, it's great, it looks nice. It's, you know, it adds some conveniences, but they're very consumer focused. It may be a lot about design, it may be a lot about animating the, the, the, the haptics and the, the, the touchscreen, you know, gestures and things like that. It's not anything that really benefits us in an enterprise environment or in a, you know, a work environment. And those things add a lot of, they take a lot of processing power. They, they also take away, you know, they may impact the bandwidth and the throughput when we are transmitting data. So, you know, there's, there's just a lot of stuff that's sort of built in that we can do away with or not just we, but lots of providers like us can do away with and make sure that those things are keeping the, you know, the work flowing and you know, not taking the valuable bandwidth. Especially, I mean, if you're at a site where Internet access is a little difficult. Maybe it's somewhere a little bit rural. Maybe you're in the midst of a project where you're surrounded by cinder block. I mean, you can't be wasting bandwidth and, and, and fighting with unreliable access just to make some of these unnecessary things work.

Speaker 2: 17:16

Makes total sense. And, and, and I'm now having flashbacks to my 1998, you know, top of the line Windows laptop that, that five years in, took, you know, 20 minutes to start because it had to do the big groovy animations before it got going. And I was like, come on, just get straight to the. I just need Word right now. I just need Microsoft Word.

Speaker 1: 17:37

Yeah, that's, that's a, that's an awesome point too, is that, you know, you, you said top of the line, right? And if you see a Verizon commercial, T. Mobile, AT&T. Whatever, there's all discussion about 5G and the, the broadest 5G network coverage and things like that, which is actually, you know, that's great technology for a lot of reasons. But think about back to the strategy. What is the application that you're running? What kind of bandwidth do you need? What kind of security do you need? 5G may not be necessary and it may be more expensive than what you need. Back to the total cost of ownership. I hate to use the term good enough, but sometimes a, you know, more legacy technology or a more established technology is good enough for what it is that we need to do. And it allows us to do those things more cost effectively and more efficiently.

Speaker 2: 18:41

So this gets to the return on investment. So, so if I'm, if I am. All right, let me give you, let me give you kind of a scenario and maybe paint, paint a little bit of a picture for the audience. So I'll. Let's say I'm, I'm a trade contractor. You know, maybe I'm a, you know, masonry company or a plumbing company, doesn't matter. But I've got, you know, folks out in the field and let's pretend it's an outdoor trade just for, you know, kicks. So, so they're spending. I've got, I've got 30 people out in the field. My 30 people are dealing with the weather conditions on a daily basis. Gets hot in the summer, gets cold in the winter, gets wet. You know, all those different types of things. And they, they, they're running a software platform like Procore, you know, that I need them to be able to access from a mobile device, run me through, you know, some of the, like, just, just hearing some of the things that I just went through, some of the things you'd recommend they consider and, you know, just come up with a theoretical diagnosis like you should get these types of Devices, you should focus on this type of firm. Just lay out a theoretical, if you would.

Speaker 1: 20:00

Yeah. I think from a hardware perspective, you're looking at things that are either, maybe you've heard the terms ruggedized or semi ruggedized. Right. And those things are built to withstand drops, vibrations, temperature changes.

Speaker 2: 20:14

Can't I just get a case?

Speaker 1: 20:17

Sometimes, but more often than not, I mean, those cases, they, they break as well. They come off, they come loose, they, they prevent the, the charging cable from sitting properly. You try and mount them. We have people all the time, they mount our devices in, in machinery, in trucks, in cranes, in forklifts. You put some of these cases on and, and now you've taken away all of the like Visa mount screws and all the access. You can't mount them any longer into the vehicle sometimes.

Speaker 2: 20:55

All right, fine, you got me. I'm going to semi ruggedize, get back to it. I'm sorry about that, I just.

Speaker 1: 21:01

No problem. Sorry, that was a bit of a tangent, but it happens all the time. So. Yeah, I mean, I think that's the, that's just kind of the form factor in the hardware. There's other things too that maybe if you're working with somebody who can customize a device. And to your point about working outside, there are special customizations to a backlight, for example, so it's always going to be visible. Maybe you're working in places that need special speakers so that you're able to hear over the loud equipment all the time. Take it down a level. And then we'll look at like the software applications. And right now if you have a device, you can go out to the Google Play store and get whatever application you want. Maybe, but maybe your team has developed something in house. What's nice about those things, or maybe a partner of yours developed it, is that you're not necessarily subject to the constant updates. Right. So I mentioned the updates to the operating system, but the updates, when there's one to the operating system, you have to retest and make sure that your software is then backwards compatible. So now there's additional costs, there's additional time, there's additional loss in productivity to go and, you know, rework that app that you've been using with no problem at all. But now you have to do it because there was some other update that you're, you're chasing down. And then the last thing that I'll mention on this is, you know, look for something that has the security profile that you require. Right. That may be in some instances very high security. But in a lot of cases, if you're just maybe sending photos of a, of a site back to someone, or you have to send a blueprint or maybe it's just a time card even, do you need like, you know, military grade encryption and all kinds of things like that built into, to your firmware or built into your device? Probably not. So, you know, you think about things that's three different levels, hardware, software and firmware, where you can kind of look at what, you know, what your technology is going to look like. That's rolling out to the field.

Speaker 2: 23:30

Makes sense. All right, that's, you've given us a lot to think about. I mean, you know, for me so far my big takeaway is that, you know, frankly that there are options that aren't sitting on shelves. And I'm just going to ask you candidly, you know, our price point. When I hear custom device, I'm like, oh man, I probably can't afford to do custom device do, do just quick comparison to consumer grade just for the audience to wrap their head around that.

Speaker 1: 24:02

Yeah. And I, I think that that's, that's not an easy one to always answer because the customization options are so broad. But for the most part, again, remember, you know, we're thinking about things like it's not the absolute latest, greatest technology. Sometimes, sometimes good enough is good enough. Maybe you can scale back on some of the, you know, 5G modules and you can focus on the software and you can get something that ends up costing you about the, an off the shelf consumer grade product would.

Speaker 2: 24:31

But your point is we're not talking about doubling and tripling your cost to get custom, you know, devices which, which, you know, I don't know, I don't know how many companies that are watching this have actually considered custom devices, but I would wager probably not a ton. And, and so that's, it's, that's great. So I'm going to shift gears just because we're, we're running into about eight minutes here remaining. And I want to hear from Stacy. Stacy, what kind of questions do you have for us?

Speaker 3: 25:01

What do you think is like the average replacement cost on a tablet or something like that?

Speaker 1: 25:07

Yeah, well, most of the time it's a, it's a brand new tablet. So I mean those are 300 to 600 to $1,000, depending on what we're talking about. So I mean, it's going to be just replacing outright. It's a whole lot easier, especially with consumer grade stuff to just replace it than to try and repair.

Speaker 3: 25:32

Okay, so for technology wise, is there, do you factor in training, costs and all or I guess for strategy, when someone comes to you, do you put together like, do you come in and analyze all of their techno technological devices?

Speaker 2: 25:56

Right. What's the starting point? Yeah, yeah, yeah.

Speaker 1: 26:01

You know, again, it kind of depends on how we come into the equation. Sometimes we're, we're a sub or sometimes we're a prime. In these, in these sort of contracts with our customers, we may look at the entire device portfolio and what's in place now and then make recommendations about what the, the technology is that can better enable those things. Or we'll identify where there are some productivity, some, some cost issues. You know, we're, we're pretty good at looking at those things and saying, you know, right there is where, you know, you're going to have connectivity problems that are going to keep your people offline or is going to affect the reliability of your, your connectivity back to your, your headquarters or wherever else you're trying to get everything back.

Speaker 2: 26:54

So, so you mentioned being, sometimes being the sub and sometimes being the prime. Pardon me? When you're a sub, the picture I have in my mind is you're working underneath maybe a holistic technology consulting firm that is in there looking across their entire tech stack and making decision, you know, in advising and then they identify this need for custom devices and they, and they come, come out to a company like, like Jacs. Like Jax?

Speaker 1: 27:23

Yep. Yeah, very much so. You know, we get pulled in all the time by, you know, somebody that's doing that kind of top to bottom review and you know, then we'll, we'll work on, on hardware, we'll work on firmware, we'll will just help build out the end solution.

Speaker 2: 27:42

Awesome.

Speaker 1: 27:43

Cool.

Speaker 2: 27:43

Stacy, Sorry, what else do we have?

Speaker 3: 27:46

What is the turnaround time from contract to implementation?

Speaker 1: 27:51

Again, it's going to depend on the degree of customization. But we can do some things in six to eight weeks, some things in 16 weeks, some things take a year or more.

Speaker 3: 28:04

Okay. And then for the audience, which is comprised primarily of contractors and subcontractors, someone had asked what are the three most important things for us to consider with respect to field technology?

Speaker 1: 28:20

Yeah, in the, in the field, I'd say one is what is your access to a network? What type of network connectivity are you using? Are you going to use cellular? Are you going to use a private network? Are you going to use WI Fi? That goes a long way to determining what your technology selection is going to be. The second thing is the security. I would always put that really close to the top of your consideration is how secure do you need your data to be and your transmissions to be? And I would also say the, the, the, the form factor, the ruggedness, the, you know, the environment and the conditions that you're going to be working in. You know, do you need, look, rugged ruggedization costs money. There's no question about that. If you don't need it, we don't want to give it to you. Right. We want to make sure we, we give you what you need. Think about that. Because we've talked a lot about the hardware, but it's not always about that. It's, it can be about those privacy.

Speaker 2: 29:30

And connectivity issues as it relates to connectivity. For, for a moment on that, you mentioned private network. So I can picture setting up a WI FI network. I can picture working off of the, of whatever, you know, whatever networks or provide. Right. Public networks. When you say private network, what does that mean?

Speaker 1: 29:49

Yeah, so I won't spend a lot of time on it because I know we're close to the end. But there, there's a shared frequency band out there that's been allocated by the FCC called CBRS in the US Anyway, it's called something else in other parts of the world. But it's. You can build a private cellular network within a campus environment, a job site, even a, you know, distributed rural environment where mobile access may be difficult. It's very small cells. You can buy the equipment and set up a private network and then only the devices that you authenticate and that you, you allow onto your network will have access.

Speaker 2: 30:39

Got it. That's awesome. So that's kind of, well, like you said, sake of time. But, but I think mega projects where there might be, you know, over a thousand people on a job site that can create like a dead spot in a regular network. Like just like, you know, I don't know, try using your device in a football stadium. It can have that effect. And so a private network may. Makes sense. That's.

Speaker 1: 31:13

Wow.

Speaker 2: 31:13

Okay, cool. So. So, Stacy, anything else? We probably have time for one more if we need it.

Speaker 3: 31:19

I was just curious. Do you. Or will you dabble in like VR and augmented reality and caption like all that?

Speaker 1: 31:26

So we, we actually don't make anything that's VR ar, but we have a partner we work with that, they make a, a very cool AR headset that is like a pair of goggles and goes around the, like a headband and we provide the connectivity for it. And those are things that you know, you can, you can be viewing instructional videos on how to operate certain equipment and you can look at a piece of gear and be downloading all the manuals to the headset. And we provide the connectivity for that through a USB dongle that includes a SIM card. It's actually really cool technology. It's a lot of fun, but it's probably its own hour long discussion. It's pretty cool stuff.

Speaker 3: 32:17

Cool.

Speaker 2: 32:18

That is wonderful. All right, cool. It's just about 30 minutes and we like to finish on time on the morning huddle. Justin, thanks so much for joining us.

Speaker 1: 32:30

All right, thanks, guys. Appreciate it.

Speaker 2: 32:32

Absolutely. Yeah. So, so word to the audience. If you're passionate about the industry, if you want this industry to be better and, and you've got a message that you want the, you know, that you want to share, please reach out to me, to Stacy and with your interest in joining us as a guest, we would love to get you involved. We're probably looking at, you know, February or, or April next year. So, you know, please reach out to us next week. We have Josh Hauserman from hms. He is a bonding guru and he's coming on to talk about what he has seen all of the most bondable companies have in common. So the companies that the bonding companies view as a great risk, aside from being huge, what do they have in common? And I think we're going to try to pull out some business best practices. If you're trying to expand bonding capacity, that is something you should absolutely be checking out and also just learn about what the best companies are doing. So please join us. That's next Tuesday, 8am Eastern, just like we have every week, 8am Eastern. If you can't join live, check out the recording on, on YouTube or whatever app you use for your podcast. One last message that I want to send out to you guys is please, if you would like to be getting an email rather than relying on LinkedIn to find out about these shows, shoot us a message with your email address. We'll add you to a weekly email distribution list. It'll have both the link to sign up for this week's new episode and a link to the YouTube episode if you happen to miss the, you know, the live experience. So that, that's it. Justin, any final word before we sign off?

Speaker 1: 34:21

I just want to thank everybody for, for tuning in. A lot of great questions. So appreciate you guys having me on and feel free to reach out if there's anything else that I didn't get to.

Speaker 2: 34:32

Thanks, Justin. Yeah, if you, if you have additional questions. Shoot. Justin, a note. I'm guessing that if you put them just into the chat here, Justin will be taking a look at the chat and he'll respond to anything. That was outstanding, Stacy. Anything. Any final word for the audience before you sign up? We sign off.

Speaker 3: 34:48

Just wanted to thank Justin again. I'm not too tech savvy, so I definitely learned a lot today, and I appreciate you being here.

Speaker 1: 34:56

Thanks a lot.

Speaker 2: 34:58

Have a great one. We'll see you next week on the Morning Huddle. See ya.

Join Host Chad Prinkey (Well Built Construction) and Co-host, Stacey Holsinger, (Steel Toe Communications) every Tuesday morning at 8 a.m. EST. on LinkedIn as they interview top A/E/C industry experts. Guests can participate in the conversation live!

Transcript:

Okay. We should be live. 

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Speaker 2

00:05

Yep. Good morning, everybody. 

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Speaker 1

00:07

Good morning. 

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Speaker 3

00:08

Good morning. 

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Speaker 1

00:09

Let's take a look and see if we are officially streaming to the. To the post here or to the event here. Want to make sure that's happening in the meantime. All right. Yes. Yes. It sure is wonderful. The tech worked. We did it. 

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Speaker 3

00:31

All right. 

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Speaker 1

00:32

I got to tell you, this is the easy part. It's all the stress leading up to the live stream that's the hard part. That as soon as the live stream is working, my mind just goes to its happy place, which is having fun conversations with cool people. Chris, Stacey and I are here in the metro Washington, D.C. Baltimore kind of realm. I know you mentioned that you're out in Park City. Where are you originally from? 

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Speaker 3

01:05

I'm originally from just outside of Cleveland, Ohio. Town suburb Hudson, Ohio. 

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Speaker 1

01:11

Cool. 

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Speaker 3

01:12

So just southeast of Cleveland a little bit. 

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Speaker 1

01:15

And did you. Did you live there? Like, how long ago did you make the move to Park City and from where in. 

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Speaker 3

01:22

Yeah, so interesting. Prior life. I was a college athlete and also a competitive skier, and I lived in Park City for a little while after school and was competitive, and then I moved back to the Cleveland area. So I originally moved out here in the mid-90s and then bugged the heck out of the ski CEO from my last company and moved back to Park City in 2007. In the fall of 2007. 

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Speaker 1

01:58

Right on. 

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Speaker 3

01:59

Yeah. 

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Speaker 1

01:59

So this is not. This is not like a. A Covid development like so many. 

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Speaker 3

02:04

Right. 

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Speaker 1

02:04

Like so many people who. Who have fled to. To remote work in beautiful areas. You've been. You've been working and living in this beautiful area for. For, you know, a decade and a half, and all combined two decades, it sounds like. 

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Speaker 3

02:18

Yeah, yeah. Was not a Covid move. And loved a mountain bike. Loved to ski and moved out here and then met a lot of people from both the east and west coast this last year and a half that are working remotely. A lot of folks from New York City and Chicago and the LA area seem to have migrated here. 

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Speaker 1

02:43

You gotta wonder how long that is all gonna last. And. And, you know, if there's. If there's ever gonna be a big migration back, you know, because they realize, you know, if the market doesn't allow for constant remote work. 

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Speaker 3

02:58

Yeah, yeah. It will be interesting to see, but I. I think some of them really like it, so we'll see how they're. If their companies can lure them back into their offices. 

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Speaker 1

03:08

Yeah, no kidding. Well, cool. We're coming right up on eight. There it is. 8:00 let's go ahead and get started with this second episode ever of the Morning Huddle. Today, we've got Chris Blyk joining us. But. But for. For now, I'm Chad Prinke alongside my partner and producer, Stacy Holsinger. Stacy, how are you today? 

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Speaker 3

03:32

Good. 

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Speaker 2

03:32

Good morning, everybody. 

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Speaker 1

03:34

Stacy, what's the best thing happening in your world this week? 

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Speaker 2

03:38

Just busy. I have, God, a ton of things to do, but nothing too crazy. Just work and kickboxing and, you know, nothing crazy. 

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Speaker 1

03:49

Just work in kickboxing. 

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Speaker 2

03:52

My boring life. 

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Speaker 1

03:53

That's awesome. We're gonna have to do a whole episode on your kickboxing. 

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Speaker 2

03:58

No, no. Thanks. 

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Speaker 1

04:01

As always for the audience joining us live. Please type in your questions throughout the show. All throughout the show, type in the questions. Get comfortable chatting with each other during the course of the conversation. If you guys have, you know, some, you know, if you're inspired by something, you want to grab that and run with it. That's what the chat channel is there for. Please, you know, engage in that, enjoy that and all the stuff that you type in the, you know, during the course of the show. Stacey will be back on with 10 minutes remaining, which is 8:20 Eastern Time here. And she'll help us to kind of go through those questions and, you know, prioritize the ones that were most common or the. Or the most interesting and what have you. 

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Speaker 1

04:46

So, Stacey, we'll see you again with about 10 minutes to go. Cool. 

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Speaker 2

04:50

All right, sounds good. 

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Speaker 3

04:51

See ya. 

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Speaker 1

04:53

All right, so, Chris, let's jump into it. Our guest today is Chris Blyk. He is with Pivot Workforce. And welcome to the morning huddle. It's good seeing you. 

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Speaker 3

05:04

Thank you very much for having me pumped to be on show number two. 

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Speaker 1

05:09

We're really psyched to have you. Thank you. So tell us a little bit about your background, Chris. Tell us your story a little bit. 

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Speaker 3

05:19

Okay, well, my story, I grew up in a construction family, specifically in excavating just outside of Cleveland, Ohio. I think like a lot of people that I hear that are in the industry and I grew up in it. The last place they thought they'd end up was back in the industry, but grew up running excavators and bulldozers. And I wasn't quite as talented as my older brothers brother. And after school, you know, like everybody else, I dabbled in real estate a little bit, started looking around and I found a construction staffing startup back in 1993, and I have been in the construction staffing side of the business since Then and frankly love it and just like everybody else, get a little obsessed with it. 

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Speaker 1

06:14

Awesome. Awesome. So tell us, how did you end up starting Pivot workforce? This is a new company, right? This is months old, just like mine. 

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Speaker 3

06:24

Yeah, yeah. So like I said, I work for one of the largest or the largest construction staffing firms in the United States or North America for almost 27 years and decided basically from a startup through a couple of private equity acquisitions and left in June of 2020 and have spent the rest of that time, the last 15 months, putting pivot together. After a lot of collaboration with people in the industry, both contractors and even some of the software providers in the industry really started to understand when asking questions about workforce demand, kind of this new niche with construction technology and also some of the more direct hire positions, that's where Pivot came from. 

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Speaker 3

07:23

Probably spent, I don't know, six months, eight months talking to, whether it was virtually or actually in person, meetings when we could do it, contractors on the MEP side about new workforce demand, and then, like I said, also some of the large software providers. 

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Speaker 1

07:43

So you were listening to the market and the market said construction technology and you got sort of inspired to launch into this space because you were paying attention to what the market was telling you. 

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Speaker 3

08:02

Yeah, the conversations. And frankly, I looked at other forms of staffing. I had a couple of people approach me in a couple of different niches, it, healthcare. And then like I said, you know, construction is my passion. I love it. And after talking to more and more folks as to where the industry was headed with prefab and the manufactured process and that workforce demand that was there, we decided to explore this and have dove in with both, both feet and are chasing after that and learning more and more like everybody else because it is developing rather quickly. 

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Speaker 1

08:44

Wow. So, so tell us a little bit about Pivot. What do you do and what do you not do? What are, what are? You know, draw some of those lines for us just so that as we have our discussion today about emerg technology roles, everybody can have some context for exactly what it is that you do and don't do. 

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Speaker 3

09:04

Yeah. So we basically focus from field supervision up into some of the C suite positions. So we do project managers, project engineers, senior project managers, and then we also are doing some like C level hiring for HR directors in some of those positions. And then we also are in the context space. So on the design side, you know, the bim, some data engineers, data analytics, cybersecurity has become a big one as far as the Conversation that's been around for a while. But yeah, we do not. We're not in the skilled trade space, but we're basically everything else but skilled trades. 

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Speaker 1

09:56

Awesome. Got it. So you're not doing the skilled trades, but you're doing all the other sort of management roles. Field management, internal management, executive leadership, and then the technology stuff. So let's stay focus on the technology angle for the remainder of this conversation. Well, I don't know, we'll see where the heck it goes. But what are some of the fastest emerging construction technology roles? What are you seeing, you know, happening around the industry? And maybe it's inside construction companies, maybe it's, you know, around construction companies. I don't know. You, you paint the picture for us. 

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Speaker 3

10:33

Yeah, so there I, there's kind of a few different bucks to that. On the AEC side and the MEP side, you know, you have your, the design piece. So bim, virtual design, even some of the CAD that's still being used then a lot of the industry is moving towards this data driven approach per se. So you have again, on the AEC side you have data engineers, data analytics, computational engineers. Drones are becoming a much bigger piece of the construction community, so to speak, both in renewables and the regular construction. And like I said, cybersecurity. On the tech side there's been, I think it's since 2016 or 17, there's been over $12 billion of investment in technology that just this year to date, $2.1 billion from venture capital. It's 3,500 startups in the construction space. On the tech side, 3,500, yeah. 

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Speaker 3

11:53

So there's been a lot of investment and there's a lot of innovation going on there. So from the tech or software providers, you're seeing software engineers, DevOps, cybersecurity is another one. And then there's the client integration piece. With all this technology, they need people to be able to service a client and do the integrations for the technology that the client or contractors are buying. Then there's an interesting one, the client service side. You're seeing more and more. Some of these software companies are reaching out. I actually saw an advertisement last night looking for example, estimators to sell their software and be the link between them and a contractor because they understand the construction side. So that's, you know, they're looking for people with previous experience in the industry. 

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Speaker 1

12:47

That's the last thing our contractor watchers want to hear. Is that right? Like, hey, your people could leave construction and go to Technology. But I think, you know, one of the other things that really struck me in our conversations leading up today was the idea that, you know, the enhanced role that a technology background is playing in your everyday construction positions. Right. So, so that now there's a project manager. But if the project manager has X and Y qualifications or technological technology capabilities, they become considerably more appealing. What, what have you seen there? 

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Speaker 3

13:33

Yeah, so you see both sides of it. For example, senior project managers need to understand some of the different software programs to help manage the job, run the job. They have to be to collaborate with everybody. A lot of the, most of this is going to cloud based technology. And then the other side of it, to your point about the tech companies stealing an already depleted workforce from construction, in some cases it's actually lengthening a career for you know, say an estimator that was getting ready, he's burned out, he's getting ready to retire from the industry. It's giving him another option or her another option to keep going and move into a different space in the industry and keep working in the industry as opposed to retiring. 

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Speaker 1

14:26

Yeah, it's a really good point. I think that you know, working in a company that is supporting the industry, adding value to the industry is certainly better than losing them to like the financial sector or something like that. 

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Speaker 3

14:42

Yeah. The challenge with the construction tech stack, if you will, is even some of these, the higher end tech positions, they still need to understand that the contractor's world, the built world and finding those people is a big challenge. 

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Speaker 1

15:00

So what do you think? You mentioned all this investment, $2.1 billion this year alone, which is amazing. What do you think that's about? Why is it, why is there so much money pouring into produce technology for the construction industry? 

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Speaker 3

15:23

Yeah, I think there's a couple of things. I think the first thing that comes to mind is innovation. Construction is measured very much on productivity and the more that tech can help enhance that productivity and bring automation to the industry, that is one of the big drivers. So there's a big opportunity there. And obviously the venture capitalists are seeing that with all the different tech startups and frankly, you know, going, talking about the skilled trades a little bit, you know, as people, I think I saw a stat that 53% of the industry is going to retire by 2036. We're not replacing the skilled trades fast enough. This has been a couple of decades of a conversation. So bringing this automation and manufactured environment to construction will help with that. It's not going to solve the problem, but it will Help. 

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Speaker 3

16:22

So I think a lot of it is around innovation, safety, productivity, and there's a big opportunity there. And obviously the tech companies are seeing it. 

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Speaker 1

16:33

You mentioned productivity and obviously I think all those buckets, safety obviously also chief among them. But when I think about productivity and construction, I think about. It was a 2018 McKinsey & Co. Study that was produced that identified that the construction industry is just about as productive today as it was in 1974. 

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Speaker 3

16:58

Right. 

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Speaker 1

16:59

Something along those lines. And I think there's a bunch of reasons for that we won't get into during this show, but I think tech companies are recognizing a massive upside in terms of elevating productivity. Right. Compared with other sectors of the economy, it's dramatically less productive and has not grown nearly on the same stride as, say, manufacturing, let alone know technology as a market sector. So, so I think it's not a surprise. It'll be really interesting to see what starts to happen in the next three to five years, five to 10 years, as a result of these massive investments from technology and whether the lagging technology, you know, construction industry, that sort of old school, you know, we, we do things the way we do things, you know, kind of mentality, see how that impacts it. 

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Speaker 1

18:05

Because at the end of the day, construction folks aren't going to change just to change. 

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Speaker 3

18:09

Right. 

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Speaker 1

18:09

They're only making a change if they can point at real meaningful improvement. 

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Speaker 3

18:15

Yeah. What you see from a lot of the tech companies, because there's, they're all over the place, they typically solve a single problem, whether it's contracts or, you know, just getting all the data scrubbed and making sure that everything makes sense. But they still, you know, a building still needs to get built physically. So I think that, you know, the challenge is getting the minds that are behind the contractors and the tech industry to work together. And they're different. Right. It's, I think it's 41% of our workforce now are millennials, and I think it's 5% are Gen Z right now. And then by 2025, Gen Z will be about a quarter of the workforce. So there's a big transition going on there. 

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Speaker 3

19:07

And it'll be interesting to see how the two worlds come together because that is one of the attraction points for the new workforce is having contractors that are innovative, that are diverse. So it's a big challenge for the industry and frankly for a lot of this workforce, you know, we're competing with Amazon, Apple, Google for this talent. So it's going to force us to, you know, be innovative and look at the way we're doing things on all levels. 

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Speaker 1

19:37

Let's. I'm going to jump right on that question because you get a chance to talk to obviously the companies that are interested in hiring new talent, but also I can't even imagine how many candidates you and your team get a chance to interface with. It probably gives you a fantastic perspective on what they care about. So you talk about the, you know, sort of, and I don't care what generation they're in. What are candidates asking for when you're in those discussions or your team's in those discussions with potential, you know, candidates for your clients? What are, what are they looking for in the companies that they would come and join you talk about the vert, like diversity. Is that really a topic that is coming up regularly with a candidate? 

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Speaker 3

20:24

Yes, particularly actually with Gen Z. There's a couple of different studies that are out there and that is they want to work for diverse companies because of, you know, what comes from that is innovation and different trains of thought. And there's a massive opportunity, you know, for the industry as we talk about losing, you know, 53% of our workforce in the next 15 or 16 years. Getting into a more diverse workforce is one way to backfill that and also bring innovation with it. But they, yeah, they do have those questions. They're big on company culture. You know, it's not all about money, but, you know, that being said, I think wages are up 7,7% in the industry and so money is a factor. But they're looking for culture. 

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Speaker 3

21:19

They're looking at benefits and not just the standard benefits, but they're looking for, you know, like mental health benefits. They're looking for PTO that they don't, you know, they don't have to wait three years to have two weeks of vacation. So they are looking at things differently. 

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Speaker 1

21:38

Yes, there's a higher, and I've read this and seen, you know, anecdotally seen this watch, you know, read studies about it, all that type of stuff, but there is, there really is, it sounds like, you know, from your experience a higher value being placed on quality of life issues on companies that are thinking about the whole person that they're hiring and not just the, you know, I guess the employee aspect of the person. 

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Speaker 3

22:11

Yeah, you know, they look for a lot of the same things we all have, but they are, you know, the me time is a real thing. They also are looking for career paths. What does it look like as they come into a company, as they move through the company, have other people in the company followed a career path. I was listening to another interview the other day, and it's a big, very large mechanical contractor, I think, with 40 people in their design department, and now they have eight remotely. So that remote workforce is a, it's a thing. It's a real challenge for our industry because again, the thing, you know, buildings get built in the field, so the collaboration needs to happen. 

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Speaker 3

22:56

But were even seeing with some of the senior project manager positions, not necessarily a remote, but a hybrid situation where they don't have to be on site all the time. And when you talk to clients about that, they, you know, it's a real challenge for them to wrap their head around doing something like that. 

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Speaker 1

23:15

So we just have a minute or so before we shift gears into taking questions from the audience. I would go ahead and prompt the audience. I don't know what kind of questions have come in, but please, if you've been holding off on sending those in now, go ahead and fire in a few so that we can address your specific questions and thoughts while we have Chris this morning. One question that I have is when you. Let's fast forward five years. What is a position that is currently not the norm for a contractor to have, you know, on staff that you think we are going to see more construction companies, more contractors have as kind of a normal role inside their company? 

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Speaker 3

24:12

Yeah, that's a great question. I would say this because everybody's trying to wrap their arms around data and understanding, you know, how things are happening and being able to take that to their client, to their owner. I think, you know, data and data analysis, data engineers, data scientists. I didn't even know what one of those were until three years ago. And being able to take real information and, you know, one of the challenges, I think, is, you know, what is the information a client or a contractor really deems as important and what isn't. But then also being able to go to, you know, say they built, you know, a commercial building and they're in a, they're bidding for another one. Being able to take that data and show an owner, hey, here's what it's going to look. 

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Speaker 3

25:13

Here's what your mechanical is going to look like on this site. Here's a similar site, this is what it looked like. So I think everything revolving around data is going to be important because whether it's even on the HR side looking at data, who's applying for jobs, what posts are attracting People who wants to come to work for your company. I think that the data is going to win from that perspective because you can pull real information out of it. 

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Speaker 1

25:43

And talk about things that can really contribute to enhanced productivity. If these construction companies are able to start capturing and doing something with this data that they monitor, they're going to be able to actually make business decisions to drive productivity. I love it. So we have 10 minutes, a little less than that remaining. And I'm sure we have some questions in from the audience for you. So I am going to pull Stacy back up for us. Stacy, there we are. 

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Speaker 2

26:20

We don't have any questions yet, but I have some questions for you. 

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Speaker 3

26:24

Yeah, hit it. 

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Speaker 2

26:24

You could answer. So you were talking about all these tech startups and I was wondering, like, the only one that I can think of is Interplay and they do 3D simulations to help, you know, train people in H Vac and plumbing virtually. And their whole goal, I believe, is to try to get people trained quickly within like three weeks or something like that, as opposed to going to an apprenticeship program. So I was wondering if you could throw out some names of any tech startup companies that you know that we could just, you know, check out and look into. 

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Speaker 3

27:05

A company called Join is. Is one of them. There's a, there's a couple of companies. You know, there's two really big companies that are buying up other tech startups. Company called Labor Chart Workforce Management Platform. But I believe they were just bought by Procore. There are, you know, some fascinating ones on the human resource side, a company called Paradox. They're, they're four years old. They're using some AI to help track who's applying for jobs. And they're using bots to, when somebody goes to apply online, they're using those, using bots to chat with people to get information and ask questions. And you wouldn't know that you're actually talking to a bot when you start asking questions about wages and benefits and where the jobs are and stuff like that. But yeah, there's a multitude of them out there in different spaces. 

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Speaker 2

28:15

Thanks for those examples. 

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Speaker 1

28:17

Yeah, that's awesome. Now I've got a bunch of research to do and I sincerely hope you're a shareholder and all of those Right. 

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Speaker 3

28:28

Just here at the moment. Right. 

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Speaker 2

28:31

I also wanted to ask, I know, me and you had conversations before, but just to tell the audience, kind of share some stories about how competitive it really is out there. So, you know, if you have a PM and you think that they're A great candidate and they get the job offer and then another company comes in and snatches them. Like, what does that look like? 

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Speaker 3

28:56

Yeah. So one way I'll address it is addressing the great resignation that everybody keeps hearing about. So I would call it more the great transition because the numbers are, I think in the first five months of this year, 17 million people moved to different roles. They didn't leave the workforce, but they left their existing role. It was pre Covid, it was 2.5 million people a month had moved and the first five months of this year was 3.4 million a month were changing jobs. So the competitiveness in the market, you don't have days, you have hours to make decisions on people. 

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Speaker 3

29:48

You know, we see people that are, you know, looking at project manager jobs, senior project manager jobs, and you know, whether they move, you know, we have a client that needs them, they interview them, they like them, their current employer offers them more money to stay. But then client number three or company number three offers them a, you know, 10k sign on bonus and you know, three weeks of vacation out of the gate and they end up over there. So it's, we've seen a lot of very quick decisions and I think that's the big challenge for, you know, contractors on their side are making decisions on some very important roles and they should take their time. But you know, quick decisions and really getting through the interview process is important. 

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Speaker 2

30:43

Yeah. 

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Speaker 1

30:44

Awesome. 

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Speaker 2

30:45

And finally one more question. Do you have any resume tips for people that are looking for new roles in the construction industry and how that's changed because many of us have stayed with company long term, but maybe we're looking for a new opportunity. But it's been so long since we have updated our resume and so much has changed. So what do you suggest there or even researching companies? 

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Speaker 3

31:12

Yeah, I think that what we see typically and is what, you know, people that haven't updated their resume for a long time, but also, you know, the different types of, you know, for example software they have used, integrations, they have done some real detail, you know, on the operations side, you know, being detailed about what type of projects you have been involved in and really updating it consistently is probably the most important part. And nobody likes doing resumes but you know, we'll get resumes for a fantastic candidate. For example, a project manager that is, has worked in the pharma space, which is obviously crazy right now and they'll have three bullets under their last job. 

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Speaker 3

32:05

So really getting some detail in there and what your experience is and how many people you manage on site and the different operating systems you use is important. 

S

Speaker 1

32:17

Chris, fundamentally, just. This should probably be a 10 second answer, but fundamentally, are you seeing companies actually take steps to offer what candidates are looking for? 

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Speaker 3

32:33

Some, yes. I think that's, you know, we're seeing, you know, a few different things happen. Some are being very innovative and I think frankly, the industry gets a little bit of a bad rap because I think we have some of the most innovative companies in any environment in the construction industry. Some are slow to adapt. We have an old school mentality in some. Understandably, some of these companies have been around a long time, but we are seeing companies look at benefits, looking at hybrid versus remote working through that because it is being asked for. But yeah, were seeing some move. 

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Speaker 1

33:13

That's awesome. That's great to hear. All right, so that's just about our 30 minutes. And just like a strong contractor on the morning huddle, we finish on time. So if you're passionate about the industry and you have a message that our audience should hear, please contact us in with your interest in joining as a guest. You can contact me or Stacy directly right here on LinkedIn or email or whatever you like. Next week we've got Brett Harton, who is the vice president of construction at Folger Pratt. That's going to be a fantastic conversation where we're talking about, from a general contractor's perspective, the steps that Brett and his team take to treat subcontractors like partners. Please join us live every Tuesday at 8am Eastern. 

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Speaker 1

34:02

And if you can't join live, check out the recording on our yout Channel, which I think is coming, Stacy, or whatever app you use for your podcast, which I think is coming down the line. So we're pretty excited about that. But. But Chris, thank you so much for joining. Any final words before we sign off? 

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Speaker 3

34:21

No, I appreciate y'all having me. It was fun. A little early out here, but it's okay. And yeah, love to do it again sometime. 

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Speaker 1

34:31

We'd love to have you. It sounds great. Stacy, any final word? 

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Speaker 2

34:34

Nope. I think this was a great conversation. Hopefully people can take something that they learned today. And I look forward to next week too. 

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Speaker 1

34:44

Same. Sounds good. See you guys. 

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Speaker 2

34:46

All right, see you guys.