The following interview is a conversation we had with Sandeep Ahuja, CEO of Covetool, on our podcast Category Visionaries. You can view the full episode here: $36 Million Raised to Power the Future of Building Design
Brett
Hey, everyone, and welcome back to Category Visionaries. Today we’re speaking with Sandeep Ahuja, CEO of Covetool, a sustainable design platform that’s raised over 36 million in funding. Sandeep, how are you?
Sandeep Ahuja
I’m doing great. Thanks for having me.
Brett
No problem. Super excited to have you, and I’d love to jump right in. Let’s talk about what you’re building today.
Sandeep Ahuja
Lovely. Well, we are revolutionizing AI for the building design services space. Basically, think architecture, engineering, construction, and bringing together proprietary software AI and credentialed humans to disrupt this space.
Brett
Talk to us about the backstory. Where did this idea come from? Where did you decide you want to solve this problem?
Sandeep Ahuja
Oh, boy. Well, for me, it started quite a while ago, at least, the journey towards building this, because I’ve been thinking about building it long before I actually built it, but I started my life, or my career, I suppose, as an architect, and I was a licensed architect, designing buildings in India. And I happened to go to this lecture where I learned that buildings were 40% of carbon emissions. And that just blew my mind. Just by contrast, for anyone, like, airlines are like 3%. So buildings are a really big deal, and there’s nothing that I knew how to fix it, even though I was the one designing the buildings as the architect. And that’s really when I changed my life. I became an expert in building science, in building performance, and here I am.
Brett
And at some point there was there like this idea in your head of, someday I’m going to build a tech platform, or where did that idea to go into tech come from?
Sandeep Ahuja
Oh, gosh. Well, the first company I built was actually a consulting company, which did basically what my software did, does and did only manually. And I just got tired of doing it manually because it seemed really not smart. So we started, like me and my Co-Founder in the consulting practice, we just started writing code for little parts of our process, and in a couple of years we had more code than not. And then we brought on our third Co-Founder, who’s our cto, and we wrapped it in a beautiful cover and packaged it and everyone wanted to buy it. And we’re like, well, this is wonderful. And that’s really when we started winding down part of the consulting practice and really growing the tech platform.
Sandeep Ahuja
And we learned that there was such beautiful harmony in being able to support not 100 projects a year, which is what we did as consultants, but 100,000 projects, which is what our software now is able to support.
Brett
What was it like making that transition from a services business to a technology company? And the reason I ask is I think there’s just more and more founders that are doing that. You know, they’ll start off with an agency or some type of services business, learn the problems, really learn the market, and then go and build technology after that. But I know making that shift can be very difficult. What have you learned from making that shift?
Sandeep Ahuja
You know, I’ll do you one better. We’ve actually made that switch twice now because went from services to software, and then we’ve gone from software to software and services that are AI powered. So we’re kind of full circle back, at least for us, when we started the first switch from services to software, I mean, of course it was hard, right? Like services is entirely relationship based. You know, your five repeat clients, they give you enough projects that you’re doing great. And, you know, you don’t have to scale, scale, because you’re pretty comfortable. It’s a lifestyle business. At least it was for me. And of course, when went the software route, we had hundreds and thousands of architects using the software who could recognize me at architecture conferences, and were adding value across this wide, wide scale.
Sandeep Ahuja
I mean, just to put it in context, our software is now the de facto software for all architects. Like of the top 100 architects, 70 of them use it to make their buildings better and then to kind of go full circle and add services back to the menu. With AI, it’s just been fun to do the same services business, but it not be just relationship driven, but it be almost sassified services, if I could put it that way, where we’re able to do it at scale, we’re connecting with hundreds and thousands of architects. We’re building our go to market motion in a very SaaS way versus I met you at an event and we exchanged cards and then you reached out to me for a service. So it’s been a really fun journey.
Brett
What’s the go to market motion look like today? Can you expand on that a little bit for us?
Sandeep Ahuja
Yeah, for sure. So our current go to market motion is, you know, we have of course, our marketing, we’ll do our beautiful tap of funnel, we do a lot of inbound, we write a lot of content where thought leaders in our domain. And then that is then led by our outbound AE team who’ll run the full cycle, they’ll reach out to folks, they’ll build a pipeline and they’ll close the deal. And then we have a really wonderful landing band that exists in our space where you’ll do one or two or three projects with us and you’ll be like, oh my gosh, this is the best thing that ever happened because it’s lower cost, it’s faster, it’s better in every way, and then you come back for more. And then you come back for more and you come back for more.
Sandeep Ahuja
So the same deal that might have started out as ten k is over 100k by the end of the year, which is really wonderful and exciting from.
Brett
A thought leadership perspective. What do you do to build thought leadership?
Sandeep Ahuja
A little bit of everything. I mean, we do a lot of panels. There’s a lot of really smart folks in our industry, and we try to pull many of the really interesting voices together and have, of course, our own perspective intermingle there as well. We sponsor a lot of posts, we write a lot, we do a lot of case studies. We shine light on our customers, you know, with their testimonials and their featured studies as well. So it’s just a lot of content.
Brett
What did you learn about building out that marketing team to create all of that content?
Sandeep Ahuja
Oh my gosh. I mean, I think content’s been our backbone since the very early days, since before I had a marketing leader, since before I had a marketing hire. Content was where we knew we needed to be, predominantly because our space is so technical that if people trust you, then they want to buy from you, but I want to say that’s probably true of most spaces. But again, it felt like that is how we made the most impact. I could send 1000 random emails, but sending just 100 really well curated journeys because I knew who I was sending it to so what kind of messaging would resonate to them and what kind of content I needed to produce for it to hit home that I thought has been really fun. Of course, you know, I’ve learned things in the last five years.
Sandeep Ahuja
I’ve brought on wonderful team members. My partner in marketing, our marketing leader, she is a badass. Like she’s taught me a lot and I challenge her and she challenges me back and that’s kind of all part of the fun journey.
Brett
Can you think back to something that you disagreed on with this marketing leader that was maybe, you know, debated a little bit?
Sandeep Ahuja
Oh, so many things. Gosh, I think we disagree every day, even today. And that’s okay. I think that’s all part of the, it’s all part of the fun, right? Because when you’re a Founder, you can never quite entirely get out of the kitchen because it’s your house and you care intensely about your house. So you’re not leaving the kitchen, but you do trust the chef to do the cooking. But you do want to understand what ingredients are going to the cooking. Probably more so than a non Founder CEO, I would imagine. So a very specific example perhaps that comes to mind is a time where again, we had just scaled into sending a lot of our marketing and were basically scraping a lot of email addresses, again, United States only. So no problem with GDPR.
Sandeep Ahuja
And were sending them a lot of emails with our case studies and we used to get a reasonable click rate, you know, and a reasonable read through rate. And that gave us enough to generate some sort of a pipeline in it. What our marketing leader wanted to do was reduce the number of emails that we sent, you know, to go from a few hundred thousand to, you know, tens of thousands. And that was a big transition. And her point was that, hey, this is going to end up in a junk folder and, you know, it’s going to all be spammy and it’s really not going to do much for us. And that is one that I entirely disagreed on. But I was going to let the chef cook and I did.
Sandeep Ahuja
And I think it was really fun to watch our click through rates, our open rates, heck, our pipeline, all of that rise drastically because just sending a lot of cold emails, were warming folks up, were sending them on nurtures. And I just thought that was very, very fun to watch. So sometimes I win, sometimes she does. But all in all, coastal wins, which is all that matters.
Brett
Let the chef cook. I love that. Have you always been good at that? Because I think that’s very hard. When I just think about my own team that I manage, it’s hard to not get in there sometimes. How’d you learn to do that?
Sandeep Ahuja
I think I learned to do it by making mistakes in some way. I do truly believe, again, as a Founder, as a CEO, when you watch the math, you watch, I look at our numbers, I look at our math. I watch data closely. Not just math and how we perform, but also math on, you know, like exactly how much we spend, how much burn we’re adding, how, what decisions that I make. And my thought is that if I’m spending the amount of money that I spend to bring on an excellent, incredible vp for any given department, what is the whole point if I don’t even collaborate with them, if they don’t even let them do their job? Because if I was going to do it myself, I could do it a lot cheaper, and that’s just nothing worth it.
Sandeep Ahuja
Data has told me over time.
Brett
And if we just look at the marketing approach in general, is it fair to say it’s a content first approach or how would you summarize the approach you take to marketing?
Sandeep Ahuja
Yeah, I would say that we’re extremely focused on content and we’re driving engagement across all of these micro communities within our AEC space. And I think that to do this really well, we’ve just needed to be extremely data driven almost to the contact level to understand and make sure that what we’re saying is the exact right thing to the right person for them to become the handraisers to our sales team. So in short, yes, very content heavy.
Brett
Can you talk to us about the strategy to engage these communities?
Sandeep Ahuja
Yeah, I mean, again, right, like, as we identify these communities, for example, very recently we wanted to reach out to all of the architects that are specifically within California and not just all the architects, all of the principal architects. So that’s very specific Persona, very specific geography. And we wanted to reach out with them with one very specific message that, hey, your energy codes have recently changed and Calgary now makes you do all these complicated things. Let us do it for you. It’ll be cheaper, it’ll be faster, very simple message. But to be able to get this message just to the California principles and be able to segment that out with thought leadership pieces around what it meant to do California title 24 energy code. Again, I’m getting too technical, but if I pull back.
Sandeep Ahuja
But what it meant to do something very specifically for them. So, right, like we wrote articles, we held webinars, we held panels all about that very specific thing so we could drip kind of that campaign out and folks would get nurtured. Even if the first set of folks weren’t interested in a blog, perhaps they’re interested in a webinar. If they weren’t interested in the webinar, perhaps they’re interested in a panel and kind of pulling as many folks as we could possibly to become a hand raiser, you know, from kind of that multifaceted strategy I thought was really awesome.
Brett
What about mistakes with marketing? Are there any mistakes that you’ve made that come to mind?
Sandeep Ahuja
Oh, my gosh. I mean, so many, right? Like, I feel like the key thing that I think that everyone on my leadership team does extremely well is iterate fast and move really quickly. And when we move that fast, like, there is always going to be mistakes. But what it also means is that when we make them, we move fast and we fix them. For example, I’ll tell you about a very specific strategy where were going out after a particular Persona, which is building product manufacturers within our space. We went after that Persona. They seemed all like, you know, they were more account based marketing type. And again, I know everyone throws around that word, so we certainly did too.
Sandeep Ahuja
But we wanted to define what that meant for us and how ABM were we going to because if we do true ABM, I mean, that costs a lot. So we wanted to figure out exactly how were going to strike that balance. And as we kind of pursued our path and we built this really detailed nurture campaign that was so Persona modified very quickly. We learned that none of them were hand raisers, and that’s because no one in that particular Persona read any emails. And the only way they did business was at trade show floors. So we had to go to trade show floors. All to say, not that it’s, I don’t know, not us winning or anything, but I think that’s us learning, right? Like that. We spent all this time, we got all these contacts, and we built it out.
Sandeep Ahuja
We built these detailed campaigns. It didn’t pan out too much other than, okay, got it. They don’t do email. We gotta go to these events.
Brett
Makes a lot of sense. And I think a lot of other founders have probably experienced something similar. What about category I introduced you as a sustainable design platform. Is that the category, or how do you think about the category that you’re in?
Sandeep Ahuja
I mean, truly the category that we’re in today and have been, you know, with the AI revolution is we are the de facto design professional. So we are in the design services space where we’ve started out as the sustainability consulting sub vertical. But really, over the next three to five years, we’re just scaling up the playbook that we’re perfecting with this sub vertical into other sub verticals within our space.
Brett
So how would we fill in the blank of, you are building the future of XYZ? Like, what is XYZ?
Sandeep Ahuja
I’m building the future of building design.
Brett
And if we look at building design and if there were a market map, how would that be broken up right now?
Sandeep Ahuja
It would be broken up by a lot of consultants and sub consultants. In the middle would sit an architect who we are not currently intending to be, give us time. And then surrounded by the architect is, you know, different types of consultants, a mechanical engineering consultant, a structural consultant, a civil consultant, a sustainability consultant, and so on and so forth. There’s about ten different subverticles that surround this architect. We’ve just tackled the first subverticle. So we’re basically saying, instead of hiring a traditional consultant, that’s going to, you know, take four to six weeks and charge you about half a percent of your building project cost, come to us, we’ll charge you a quarter of that, and we’ll do it in a week versus four weeks. So that’s basically the pitch that we’re making.
Brett
Are there some people that hate you then? I have to imagine there’s some people on the other side of that who don’t like being undercut by so much.
Sandeep Ahuja
I mean, I think that. I honestly believe that if you’re not making anyone uncomfortable, you’re probably nothing. Creating something that’s entirely too valuable because no one actually probably needed it. And I think that if you’re creating something that someone needs and that need has somehow been filled to some degree by someone, and if you’re making it better, if you’re making it faster, if you’re making it lower cost, if you’re making it higher value, someone’s not going to be happy about it.
Brett
It’s a good test for business and probably life in general. How do you get people to be okay with this idea of something that is radically different from what they’re used to? What I see in a lot of other industries is buyers just kind of get in the motion. And it can be very hard to get them to change. What do you do to get them to be willing to change?
Sandeep Ahuja
I mean, I think that we make the point with value, and we tell people that it’s okay for them to dip their toes. It’s fine if they’re not giving us for their first project, their half a million dollar project. It’s okay if they only come to us with their $10,000 project, their $50,000 project, and we show them how wonderfully we can execute on that. And then they love the cost savings that they get, and they come back for more. And I will say that at least for our space. And again, I know the economy is working in funny ways across different industries, but in our space, the architectural billing index is kind of a good measure. It’s been down for four consecutive quarters. Quarters. So it’s not like it’s, you know, the heydays, and, you know, everyone’s kind of like rolling around like 2021.
Sandeep Ahuja
So, you know, everyone is thinking about cost cutting, and everyone is thinking about making their practice more efficient. And we are that lower cost, higher value alternative, you know, in that circumstance. So it is more appealing, even with the timing.
Brett
What do you think has been the most important go to market decision that you’ve made?
Sandeep Ahuja
Oh, my gosh. I mean, I’d say so many, but literally the single most important thing, I think that has changed everything for me. And I know it sounds, what I’m going to say is likely going to sound very basic. But I promise you, as you grow your business, and you probably know this, you get to a path where perhaps you do this less, but I’ll get to it. It’s listen to, listening to customer calls. There was a point in my business as were scaling so fast, growing so fast, that my attention towards that, or how many customer calls that I was listening to dropped down to almost none. And really focusing in and listening to customer calls to know exactly what the market wants and know that the market changes, too, I think has been the most critical decision for me.
Sandeep Ahuja
For example, in our market, the folks wanted software a few years ago. I mean, that’s why we became the de facto software. But with the AI revolution, our market evolved, too. Folks no longer wanted software that they didn’t want to learn a thing and then do a study in it. They just wanted the study done. They were like, I go to Chad, GPT, it doesn’t give me results. It just gives me the answer, can you do that, please? And that was a really big shift for us to go from, of course, the traditional SaaS to what we now call vast, which is value as a service, and we’ve become value providers. So I thought that was a really important decision for us.
Brett
You had mentioned there earlier in the conversation, I believe it was 70 out of the top 100 firms. If you reflect on that market penetration and that success, what do you think you’ve really gotten right as a company?
Sandeep Ahuja
I think the thing that we got right as a company was understanding what this specific buyer Persona that was going to buy sustainability software in architecture wants and needs like we under. I know that no one can take that learning away from me, and I know that by listening to the folks. What I have also learned is that buyer Persona is small and that is why we need to continue to iterate, because the folks that will use the software are not the folks that will go win the project. So we need to connect more to the leaders, which is again, what’s bringing us now to vast versus SaaS. Not that we don’t love that original bars Persona. I mean, we love them, they love us, they use the software, we want them to use the software.
Sandeep Ahuja
We grow our feature set for them, but you know, it’s always about the next and about the new, and that’s the next for us.
Brett
That’s a perfect pivot to the final question here of what’s next. So what does the next three to five years look like for you?
Sandeep Ahuja
I mean, I envision a world where Covetool is the de facto design professional that lowers the cost and design time across North America. So if you drive past any building that’s getting built, for you to know that was likely designed by Covetool, that is my vision.
Brett
I love it. All right, we’re up on time, so we’re going to have to wrap here before we do. If there’s any founders that are listening in that want to follow along with this journey, where should we send them?
Sandeep Ahuja
Send them to my LinkedIn. I’m Sandeep Ahuja. My LinkedIn is pretty active. I love to hear from folks. I post a lot, so check out what I’m posting, too. I connect to a lot of folks I feature. A lot of folks would love to connect with you there.
Brett
Awesome. Sandeep, thanks so much. Really appreciate it.
Sandeep Ahuja
This has been pleasure. Thank you.
Brett
All right. That was awesome. You’re a great guest.
Sandeep Ahuja
Oh, thanks. You are so, I mean, clearly.
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