SubBase and the Two-Sided Network Effect Construction Never Knew It Needed

SubBase and the Two-Sided Network Effect Construction Never Knew It Needed

In a recent episode of Category Visionaries, Eric Helitzer, CEO and Founder of SubBase, a construction materials management platform that’s raised $5 million, described a strategic decision that changes everything about how his platform grows: “We also help vendors. And that’s the approach we took.”

Most construction tech companies pick a side. They build for general contractors or subcontractors or suppliers. They optimize for one customer, solve one set of problems, and scale within that segment.

SubBase doesn’t pick a side. It connects both sides—and in doing so, creates network effects in an industry that’s never experienced them before.

The Problem With Single-Sided Construction Tech

Construction software traditionally follows a simple model: identify a painful workflow, build software to solve it, sell to the people experiencing that pain. Procore built for general contractors. Thousands of other tools built for specific trades or specific processes.

This works. But it creates a ceiling. Your value grows linearly with customers. Ten customers get 10x value. A hundred customers get 100x value. Each customer exists in isolation, benefiting from your software but creating no value for other customers.

The platform opportunity in construction was always there, hiding in plain sight. Subcontractors order materials from vendors. Vendors process orders from subcontractors. Every transaction involves both sides. But the interaction happens through email, phone calls, and spreadsheets—fragmented across thousands of relationships with no central infrastructure.

Eric saw this after 15 years in construction operations. “I saw the challenges that subcontractors, who are primarily labor and material based as far as their business, were facing to manage the complexities of ordering materials and it’s not just ordering.”

But the challenges weren’t just on the subcontractor side. Vendors struggled too. Order accuracy. Pricing updates. Invoice management. Payment tracking. The same transaction created workflow nightmares for both parties.

Why Two Sides Create Compounding Value

When SubBase helps a subcontractor manage material procurement, that subcontractor’s vendors benefit. Orders come in clearer. Pricing updates sync automatically. Invoices process faster. Payment tracking becomes transparent.

When vendors join SubBase, their subcontractor customers benefit. Material availability becomes visible. Pricing updates reach them instantly. Order confirmation happens faster.

This creates a flywheel that single-sided software can’t match. “We have a great user base who is now talking about sub base. We have a great two sides of the network on both the sub and the vendor side that are starting to talk about what we’re doing.”

Subcontractors recommend SubBase to their vendors. Vendors recommend SubBase to their other subcontractor customers. Each side of the network becomes a growth engine for the other side.

The math changes completely. Instead of value growing linearly with customers, it grows with the connections between customers. Ten subcontractors each working with five vendors create fifty connection points. A hundred subcontractors each working with ten vendors create a thousand connection points.

The Market Timing Advantage

SubBase’s two-sided approach gained urgency from an external catalyst that affected both sides simultaneously. “Covid really boosted the awareness of material price changes,” Eric explains.

Before COVID, material pricing was relatively stable. “Most people that were buying lumber pre Covid didn’t really care that pricing was fluctuating a little up and down because it didn’t really matter as much.”

COVID changed everything. “You’re in a world where vendors are not holding their material pricing. You have commodity fluctuations that have gone down a little bit that are so crazy that most people needed to gain a hold of that.”

This created simultaneous pain on both sides. Subcontractors needed real-time pricing visibility. Vendors needed to communicate price changes efficiently. A two-sided platform that connected them became essential rather than nice-to-have.

Single-sided solutions couldn’t solve this. A subcontractor-only tool still required manual price updates from vendors. A vendor-only tool still required manual communication to subcontractors. Only a platform connecting both sides could make pricing updates instant and automatic.

How to Identify Two-Sided Opportunities in Traditional Industries

Eric’s insight about construction applies to many traditional industries. The pattern is consistent: transactions happen between two parties, both parties struggle with the transaction mechanics, and no platform connects them.

Look for these signals in your industry:

Both sides of a transaction use primitive tools. In construction, that’s email and Excel for both subcontractors and vendors. If both parties in a transaction are using spreadsheets and manual communication, there’s likely a platform opportunity.

The transaction creates workflow problems for both parties. SubBase didn’t just solve ordering for subcontractors—it solved order processing for vendors. When both sides struggle with the same transaction, a two-sided solution creates value for everyone.

Each party transacts with many counterparties. Subcontractors work with dozens of vendors. Vendors serve hundreds of subcontractors. This many-to-many relationship structure is what creates network effects. If relationships were one-to-one, a two-sided platform wouldn’t compound value.

Information asymmetry creates friction. Material pricing, availability, order status—all of this information existed but didn’t flow efficiently between parties. Platforms solve information asymmetry better than single-sided tools.

Existing relationships are strong but operationally inefficient. Eric emphasizes that construction is “a very relationship heavy industry.” SubBase doesn’t try to create new relationships—it makes existing relationships operationally smoother. That’s easier than building a marketplace from scratch.

The Wedge Strategy for Two-Sided Platforms

Building a two-sided platform from day one is nearly impossible. You need critical mass on both sides before network effects kick in. Eric’s approach was more strategic.

SubBase started by solving subcontractor problems. “SubBase is a user friendly tool that’s solving for every inefficiency when it comes to the manual workflows involved in material purchasing for subcontractors and really large self performing gcs.”

This created initial value without requiring vendors to adopt the platform. Subcontractors got workflow improvements immediately. Better organization. Clearer tracking. Simplified processes.

But the platform was designed from the beginning to connect with vendors. When vendors saw their subcontractor customers using SubBase, the value proposition became clear: join the platform and your customers’ orders come in cleaner, pricing updates push automatically, and payment tracking improves.

This wedge strategy—solve one side first, then expand to the other side—is how most successful two-sided platforms launch. Uber solved rider demand before building driver supply at scale. Airbnb built guest demand before massive host supply. SubBase solved subcontractor workflows before expanding vendor adoption.

The Compounding Referral Engine

The two-sided structure creates a referral dynamic that single-sided software can’t replicate. Eric describes how both sides now advocate: “We have really gained traction with word of mouth and our in network referrals.”

When a subcontractor tells a vendor about SubBase, they’re not just recommending software—they’re asking their vendor to join a platform that makes their mutual transactions easier. The vendor has direct incentive to adopt because their customer is asking them to.

When a vendor tells a subcontractor about SubBase, they’re offering their customer better service through the platform. The subcontractor sees adoption as getting better service from their existing vendor relationship, not switching to new software.

This is fundamentally different from traditional B2B referrals. Usually, referrals are peer-to-peer—one CFO tells another CFO about accounting software. With two-sided platforms, referrals cross sides—customers telling suppliers, suppliers telling customers. Each side becomes a sales force for the other.

The Strategic Moat of Network Effects

Network effects create defensibility that features alone can’t match. A competitor could copy SubBase’s interface, replicate its features, even undercut its pricing. But they can’t easily replicate the network.

Every subcontractor on SubBase makes the platform more valuable to vendors. Every vendor on SubBase makes the platform more valuable to subcontractors. As the network grows, switching costs increase for both sides.

A subcontractor might consider alternative software, but if their vendors are already on SubBase, switching means losing the connection benefits—automatic pricing updates, streamlined ordering, transparent tracking. A vendor might consider alternatives, but if their subcontractor customers are on SubBase, switching means breaking those automated workflows.

This compounds over time. The larger the network, the more valuable it becomes. The more valuable it becomes, the harder it is for competitors to displace it.

What This Means for Founders in Traditional Industries

Construction isn’t unique in its platform opportunity—it’s just uniquely behind in platform adoption. Manufacturing, healthcare, agriculture, logistics—all have similar transaction patterns where two-sided platforms could create network effects.

The opportunity exists wherever transactions happen through primitive tools, both parties struggle with workflow inefficiencies, and no platform connects them.

Eric’s approach shows the path: start by solving one side’s problems, design for two-sided connection from the beginning, and let network effects compound as both sides adopt.

The construction industry is massive, fragmented, and has operated the same way for decades. But Eric’s building something it’s never had before: a platform where every new user makes the platform more valuable for everyone else.

That’s not just better software. That’s a different kind of business entirely.