The following interview is a conversation we had with Eric Helitzer, CEO & Founder of SubBase, on our podcast Category Visionaries. You can view the full episode here: $5 Million Raised to Innovate Construction Materials Management
Brett
Hey, everyone, and welcome back to Category Visionaries. Today we’re speaking with Eric Helitzer, CEO and Founder of Subbase, a construction materials management platform that’s raised? 5 million in funding. Eric, welcome to the show.
Eric Helitzer
Hey, Brett, thanks for having me. Really excited today.
Brett
No problem. Super excited. Let’s jump right in. Talk to us about what you’re building.
Eric Helitzer
Yeah, so I’m Eric. I’m the Founder CEO of Subbase. 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.
Brett
Amazing. And talk to us about the early days of the company. How did you uncover this problem? Where’d this idea come from? I’m guessing you didn’t just come up with that out of nowhere.
Eric Helitzer
Yeah. So my background dates all the way back to actually studying construction management at the University of Florida. So I’m going to first give a big shout out to the University of Florida because we are big gators here. And I really was studying construction management. I graduated a time where the industry, specifically in South Florida, was not doing so well post the condo bus, and gotten really, really lucky that I was able to partner with a company who hired me out of school. And they were looking for young talent that was coming into the industry to not just revolutionize the way that workflows and construction would be managed, but really take a different spin on that. And I spent 15 years in construction management.
Eric Helitzer
I was fortunate enough to start using a platform called Procore back in 2014 when that was first starting to make headway in the space. And I got sucked in the tech space when we started to see the inefficiencies at the level below where Procore was solving for, which is at the subcontract level. And so I was in operations for many years and 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. It starts in different phases of their business. And as we started to get deeper into the operations of the business I was at previously, we started to see a very big hole that was not being fulfilled properly.
Eric Helitzer
And so we decided to build internally software, and one thing led to another, and I left the family business in 2022 to start what is now subbase. And that’s how it got started. It got started from industry experience and having a lot of knowledge in the space.
Brett
Now, what did that first, let’s say, three to six months look like after founding the company? Yeah.
Eric Helitzer
So the first three, six months was interesting because it was founded inside of a construction company at the same time that I was running operations with that company. And I obviously they knew about it, they actually invested in it from the early days, and they had a very tight leash. They gave me three months to figure out how to make this work. It was very interesting because we would be running jobs, but id also be running demos with a very early mvp that took off pretty quick. So we had a very awesome product from the get go, but were iterating very fast. And what I would do is I would actually take the product to some of our jobs. As were iterating on the product, were also building what we didn’t even know it was going to be called Subbase at the time.
Eric Helitzer
And I had to balance between building software for something that I thought could be amazing and also running a job and running multiple jobs, and being a part of the company that was hiring me to build and operate. And so it got to a point where we started to see influx of people that were coming to the office to get demos, versus coming to talk to me about new work or work that was ongoing. And so in 2022, I had to separate the two and decided to take the leap of faith into what is now the construction tech world. And that’s really how it started, was us iterating on a product that we knew was going to work, but really taking the vision a little, a lot further with where we are today.
Brett
Now, from when you founded the company to when you first started generating revenue, how much time passed?
Eric Helitzer
About a year. And that was really my fault. That was probably one of the biggest mistakes I made. We were giving the software away for free because, and we didn’t know how much value were providing yet. We were trying to build fast, and to be honest with you, we gave it away for free for way too long. But it was about a year from the time we started to say, hey, let’s start turning on some revenue.
Brett
And with those first customers, how did you acquire them? How did you convince people to give you money? That’s always my part, or one of the hardest parts of starting getting that money.
Eric Helitzer
Yeah. So how I convinced people to give you money was, you know, we would only do on site demos. Like, there was no virtual. It was, I’m coming to your office and I’m going to show you the system. And it was honestly trial and error. We had some companies that were interested, but were missing pieces. And what we would do is make sure that we followed up on the pieces that were missing, and we actually asked them, hey, how much would you pay? What is this worth to you? If were able to integrate with this system or if were able to build this module and they didn’t know. And so we actually started testing pricing by sending out contracts to see, hey, is this worth it? Is it worth this amount of dollars?
Eric Helitzer
And for the most part, when people signed fast, we knew that obviously it was worthwhile. But we also second guessed ourselves to understand, are we underpricing ourselves? And so it was very trial by error. And it was also, I almost let myself not leave their offices unless I had a commitment. But it was very much a question mark half the time until we got into a flux where we can actually show the value and really be able to show what the ROI was when they came into sub base. And that took over a year for us to figure out.
Brett
Now, if you look at the go to market today, what does the go to market strategy look like?
Eric Helitzer
Yeah, so our go to market strategy is in many different funnels. We have really gained traction with word of mouth and our in network referrals. So 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. So that’s been a really awesome time for us to get referrals from users. We have obviously an outbound motion that have stood up that has been working because we are also speaking the language of the contractors that we’re getting in front of. And we really set that up post really defining that ICP, which took us, I would say, a little bit of time to figure out.
Eric Helitzer
We knew who would buy the software, but we didn’t really know the pain until we realized the size of the companies that we needed to go after. And the other two pieces of the go to market was we started marketing, we started getting our name out there. We realized that most people had the problem but didn’t know where to find the solution. And in construction, getting in front of people is a very relationship heavy industry. Doing events and making the events tailored to education is another part of our go to market that we started to hit on that has seen a lot of, I would say, early success for us. So those are kind of the four different baskets of go to market. Each one of them requires a different, I guess, approach.
Brett
And from a marketing perspective, whats working, whats not working.
Eric Helitzer
I still think its a little too early to be able to pinpoint that. What I would say that is working for us is more on the, I would say educational piece. People in construction don’t just want to be sold software. They want to be educated. They want to understand why this piece of software that didn’t exist a couple years ago is going to beneficial now. So we’ve taken the approach of education and obviously I come from the industry. I love speaking about what we’re doing. So let’s call it that thought leadership approach has been very helpful and its really about getting ourselves out to educate the masses that have a problem in construction material procurement. So I would say talk to me in about a year and I can give you kind of some more detailed information on whats working, whats not.
Eric Helitzer
But ultimately marketing for us is something that is necessary. Its definitely necessary for us.
Brett
Trey, and what about your market category? When I did the intro there, I introduced you as a construction materials management platform, which a bit of a mouthful there. Now, when it comes to the companies that you’re selling to, do they already have a platform in place or are they just doing this all manually and managing it manually?
Eric Helitzer
Yeah. So the category you nailed on the head, we are very focused on the material management space and construction, which is a very large space. And yeah, the companies we talked to, they have a software in place. It’s called email, text and excel. That is what they’re using. That is typically where we saw the most advantage for us to get in is because we take the process that they’ve been using and used to for so many years, and we don’t flip it on its back and disrupt it so abruptly. We wedge into their workflow and we layer on the pieces of software that allow them to streamline and organize themselves. But the software they’re using today is anything that you would imagine. It’s email, text, and really excel.
Eric Helitzer
And obviously their accounting system, which is really the software that we meet them at and we tie into that would be the other piece of software they’re using. Everything else is very different, various communication channels. And that’s where we saw a big opening for us in the industry. We knew how to meet them, where they’re working today.
Brett
Is it hard convincing these folks to change? I can just, you know, kind of picture it, and maybe I have the wrong Persona in my head, but I picture someone who’s been in this space for a long time. They have habits, they’re used to doing things a certain way. And then all of a sudden, this Eric guy comes along and is trying to tell real technology to solve it. What’s that like? And how do you convince people to say, yeah, okay, let’s use real technology, not email?
Eric Helitzer
It’s a huge challenge. It is a huge challenge to this industry, and I’ll tell you why. So whenever you’re going in this industry, especially with technology, you have to understand that their businesses, which are profitable that we sell to, have been running for years without your technology. Okay, so how do you get them to understand, right, this is again, the education and peeling back the onion and understanding the industry so well that we’re able to show them that they could be more profitable.
Brett
Right.
Eric Helitzer
With system like Subbase, they are actually losing time and money here. They are actually spending an absorbed amount of time on maybe getting those invoices into an accounting system and losing track of their budgets without knowing where their project is headed from a p and L until months later. So we knew where the pain was. But you have to be able to explain it in a way that is not a software sales explanation. It’s, hey, we are in the industry. We understand your relationship with your vendors, and we’re going to enhance that. We’re going to make it ten x better. And there’s also been a lot of catalysts in the market that have helped. Right. Covid really boosted the awareness of material price changes.
Eric Helitzer
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. Post Covid, 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. And so we hit it at the right time to make sure that we can solve that problem, but also be a two sided platform where we also help vendors. And that’s the approach we took. So I would say to go back and answer your question. Yes, selling to construction subcontractors, which is what we sell to, it is not an easy sell because they do not like change. But we are not changing.
Eric Helitzer
What we’re doing is we’re enhancing and we’re optimizing a system that’s in place, but we’re making it ten x better, and that is to sell. It is not a traditional software sales with these construction folks.
Brett
Okay, that all makes a lot of sense. Now, what about fundraising? Or actually, before we dive into fundraising, let’s just paint a picture of the general construction technology landscape. What does this landscape look like? What’s the appetite with investors? Are you seeing more investors interested in this space?
Eric Helitzer
Yeah. So the landscape, let me just preface by saying how big it is, so I can throw out numbers that some people say it’s trillions, some hundreds of billions. As far as materials, well, globally it’s trillions, but the market is so big, but it’s also so fragmented. And that was the biggest challenge we saw when investors came into the space, is how do you not just systematized, but how do you really centralize all of these applications and construction in general? And the industry is changing. The venture capital world is coming very heavily into the construction tech space. A lot of them are coming without prior knowledge, and they’re trying to, in my opinion, and I’ve talked to a lot of investors, they’re trying to take what other industries have done and bake it into construction, and thats not the way it is.
Eric Helitzer
Construction is a very large industry. It is ripe for technology adoption. And the best investors who invested early in the space see where the best companies are coming from and see what some of those trends are. But what I think a lot of investors get wrong is they think it is a much easier go to market motion or that there is a figured out go to market and there is not. Construction isn’t a playbook. Every project in construction is unique. Every process in construction could be tailored to a specific company because the projects are so unique. So you’ve got to take a lot of different hats and understand how the industry works. But ultimately, the venture markets are definitely opening up to construction technology and it’s super exciting to see because they’re starting to make bets.
Eric Helitzer
And those bets are allowing companies like Subbase to actually get into the market and be able to make a name for ourselves. So it’s definitely changing and we’re super excited about what’s going to be happening over the next couple of years.
Brett
Why do you think this industry has been slow to adopt technology? Or maybe a better way of asking that is like, why have investors been slow to realize this massive opportunity? When you say the word trillion, obviously my ears perk up a little bit. Im guessing thats the case for investors. Why has this been neglected so far?
Eric Helitzer
My opinion here is that because of the complexities of the business, it takes a lot of these companies a lot of time to understand it. A single building that gets built has so many different pieces and so many different parts and so many different people. It’s all custom. Every building that is built in the world is custom. There is no print, copy paste, even the modular buildings that are being, you know, let’s call it built. There’s still customization and like the foundations or where, like the underground civil infrastructure. So I think that has a lot to do with it because you can’t just make a cookie cutter assessment of the business and of the industry. So I think that’s one thing.
Eric Helitzer
And I think the other thing that most didn’t understand was all the different layers of a business in construction, starting from the owner and then going down to the GC and then all the trades and all the materials, the vendors involved and then within the vendors, all the different materials. So I think that theres a lot to chew on and obviously theres been companies that have done a great job raising awareness and proving that theres a huge market here. Procore is one of those. But again, there is such an understanding that is not there from a lot of investors. And it takes years of experience to really understand the business. And I think that’s really the been the biggest challenge is them understanding the business and really diving deep into all the different nuances of the construction world in general.
Eric Helitzer
That would be my thought.
Brett
Now, based on everything that you’ve learned so far, what would be the number one piece of go to market advice that you’d give to another Founder who wants to build technology in this space?
Eric Helitzer
Yeah, so the first two that I would have done way different if I had to start again is I would have started charging way sooner. That was my mistake. And the reason why Im saying that is because when we started off real early on, were giving the software away for free upfront to get people to use it. But we got into a pigeonhole where we didn’t understand who the real ICP was and were getting false positives. People would say they’d use it, they wouldn’t pay for it. Then once we started to turn on payment, thats when we knew who was our real true ICP or who really cared for this.
Eric Helitzer
Because, you know, we started getting phone calls when things didn’t happen or things were not working as it should, and the people that may gave us the phone calls weren’t paying for it, which were the ones that were seeing the value. So that would be the first piece of advice for anyone entering the industry is a you need to start charging much sooner because that’s when you’re really going to find out if you a, are solving a problem, but b figure out who your right ICP would be. And the second thing about going into construction from a go to market motion is relationships.
Eric Helitzer
It is such a heavy relationship based business that if you don’t start by understanding that first, and no matter what product you’re building, you’re not going to have the success upfront and it’s going to take you a lot longer to figure that out. So those would be the two things. Charge early very fast to make sure you’re solving a problem with the right ICP and learn the relationship gaming construction.
Brett
Final question for you, let’s zoom out three to five years into the future, what’s the big picture vision look like?
Eric Helitzer
Yeah, so for sub base three to five years, we’ve already digitized a lot of the workflow. We want to move heavier into the financial piece of material procurement, we want to go deeper into the integrations with our vendors and we want to go deeper into the integrations with our own customers to give them an experience that is so easy that I can come into subbase and not just onboard within minutes, but be able to really loop in my entire ecosystem from the precon planning phase all the way post to payments to a vendor. That is where Subbase is headed, and we’re super excited about it because of the opportunity that exists not just in the United States but globally. This is a global problem that we’re solving for.
Brett
Amazing. I love it. I think it’s going to be impossible for someone to listen to this and not want to go out and build construction tech. So for solving dream here, love what you’re building, love the approach that you’re taking and really enjoyed this. Before we wrap, there are any founders that are listening in that want to follow along with your journey. Where should they go?
Eric Helitzer
Sure, LinkedIn is a great spot for us so they can follow our sub base LinkedIn page. They can request me on LinkedIn and if not our website. So Subbase dot IO has all the information. That’s really the best way to contact us.
Brett
Amazing. Eric, thanks so much for taking the time.
Eric Helitzer
Thanks, Brett. Appreciate it.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io . And for the latest episode, search for category visioners on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.
Twitter
facebook
linkedin