The following interview is a conversation we had with Fraser Patterson, CEO of Skillit, on our podcast Category Visionaries. You can view the full episode here: $13M Raised to Tackle the Skilled Labor Crisis in Construction
Fraser Patterson
Hey Brett, thanks for the invite.
Brett
Not a problem. Super excited, and I’d love just begin with a quick summary of who you are and a bit more about your background.
Fraser Patterson
Yeah, so I actually founded Skillit in 2021 after years struggling as a GC. So I was a former general contractor. I was struggling to hire retained skilled workers for a bit of backstory. I kind of grew up with a father trying to pull me into construction and a kind of grandfather pushing me into academia. So I ended up spending kind of many years as both a carpenter and also a GC and also a math researcher and tutor. So I kind of somewhat inevitably ended up building context startups, and the most recent was a startup here in New York, a tech enabled GC and doing kind of high end renovation of homes and building out a huge craft workforce. And that’s when I came face to face with our nation’s skilled labor crisis. And that’s when I started Skillit.
Brett
Well, let’s talk about that aha moment then, in 2021. What was the tipping point for you that you said, I need to go out and solve this problem? Yeah.
Fraser Patterson
So I think historically we’ve pretty much ignored skilled trade workers. The best recruiter, if you will have on them is a kind of online business card. Right? So there was no way for my recruiters to source workers easily. They couldn’t filter job boards to get the exact workers they want. They didn’t know how to assess the skills. It’s super laborious and painful to try and do so. You don’t know how much to pay, and connecting with the workers is really tough and the whole downstream process is just really painful. And I think the insight really was when I would be having calls with those carpenters. As a former carpenter myself, I learned to ask really quick questions that were like, using knowledge as a leading indicator of skill.
Fraser Patterson
So, for example, asking what the true dimensions of a two by four and getting workers that might. Some would say, oh, it’s a trick question, or others would say, two by four inches. You know, the ones that knew that the true dimensions, the only way you would know that is if you’re installing or you’re buying it. So these types of signals gave us a good feel on a worker and to digitize that was kind of the birth of Skillit, building out these kind of digital craft assessments that could assess a worker’s skill using knowledge as a leading indicator. And that was how Skillit was born. And so it was really realizing that this is a data problem, fundamentally, what’s.
Brett
The feature that gets customers really excited? Is it the skill assessments? Is it the search? What is it that gets them really excited?
Fraser Patterson
I would say it’s fundamentally the extremely data rich, 360 degree profiles that we are able to have built by our workers. Like I said, the best alternative is maybe imagine a job board, like, indeed, and you have a kind of online business card. You can’t really tell anything about the worker. You can’t discover them. Very hard to filter by what you’re actually looking for. I think those really data rich profiles are the skeleton key solution. And, of course, everything else from that, the ability to find them, the ability to search filter by really any kind of hiring characteristic you need from a skilled trade, and then the ability to, like, super easily connect as a result. And for a lot of that downstream process to be kind of automated or at least as efficient as possible because of those profiles.
Fraser Patterson
So, yeah, I would say those profiles.
Brett
Are much loved when it comes to those assessments. How do those work for context? We interviewed a company called high people based out of Berlin. They do skills based assessments, but that’s the digital world. This is the physical world. So I imagine it’s a little bit different. How do you do digital skill based assessments for physical world stuff? Yeah.
Fraser Patterson
So the insight here is that you can use knowledge as a leading indicator of skill. So I’ll give you an example. If you were to ask somebody, say, a physics question, or maybe they’re reading Schrodinger’s cat, Erwin Schrodinger’s famous book on quantum theory, and you might be able to kind of fudge your way through a bit of convo about calculus, but it doesn’t mean that you understand the underlying differential equations or can manipulate one. But when you understand things about construction, I mean, like, for example, the true dimensions of a two x four. That’s unlikely that you’re staying up at night reading nailing patterns or something before you go to bed. That’s reliable indicator of your level of skill or your kind of experience in the trade. So we find those really kind of like insider questions and we build out the assessments accordingly.
Fraser Patterson
And they are a really good representation of a workers skills and abilities.
Brett
What’s the business model look like? Is it a marketplace model like upwork? Or is it more of a recruiting staffing model? What does that look like from the business side? Yeah.
Fraser Patterson
So Skillit is free for workers, free and frictionless. Our business model is a subscription. On the employer side, we also have a use based model so that it’s fast and easy for companies that have intermittent hiring needs to get into the platform and start hiring and do so on a kind of consumption basis. And of course as they start to grow and their usage grows, they can convert to a subscription and the subscriptions for the larger customer, the large mid market and enterprise, that’s how they like to buy. It’s actually a great model. I mean it’s essentially a single fee per month for a region which is a state typically and across all trades. So you can hire electricians, plumbers, carpenters, et cetera, say in Florida for one fixed fee a month. And that’s how our customers like to buy. It’s how they think.
Brett
Makes a lot of sense. What’s the competitive landscape look like? If they’re not using Skillit, what are they doing? Are they just posting on the job boards like you mentioned?
Fraser Patterson
Yeah, I mean there’s a few options. You’ve got job boards that are pretty horizontal, right. You’re indeed ziprecruiter, et cetera. But they don’t have any verticalization, right. So they don’t have good quality supply. They don’t have tools that help solve construction recruiters kind of unique challenges. And same for the worker.
Brett
Yeah.
Fraser Patterson
So there’s job boards and I guess you have the more legacy solutions like staffing agencies and so on and so forth. But they range on to one end of that spectrum. They’re super expensive. Taking a percentage of a workers pay, for example, all the way through to your say, you’re indeed where they’re at the lower end of the cost spectrum, not verticalized and laborious to use and not particularly effective.
Brett
Do staffing firms hate you then? This seems very disruptive to their model.
Fraser Patterson
Yeah, we haven’t had any public vitriol our way, but I’ll tell you what we do have those staffing agencies trying to use our platform because by definition it’s easier for them to hire through Skillit than go out and have to do job fairs and various other laborious mean by which you typically acquire, I guess a roller deck of skilled construction workers.
Brett
Is that a segment of the market that you’re going to really try to service like the staffing firms and helping them become more tech focused I guess.
Fraser Patterson
Or tech enabled I would say eventually. Its not our core focus at the moment. Were going after the mid market self performing construction company, gcs and specialty trade companies. Thats our core focus. But definitely we see more and more use cases emerging. We’ve had trade schools sign onto the platform, staffing agencies, small companies, very large companies, international companies asking us if they can take the platform abroad, et cetera. So we’re seeing a lot of demand but we’re staying really focused on ICP, our ideal customer profile for the short term.
Brett
What kind of marketing activities are you doing to connect with that ICP?
Fraser Patterson
So we have a really strong content strategy writing specifically about the challenges that we know our customers are facing and that gets discovered and intercepts them across when they’re searching for a solution. And two, they’re searching for solutions to finding trades in their respective regions. We also have a digital, we have an outbound motion so that’s more targeted. And we have an organic strategy, we have referrals and we also are starting to look into and like our business naturally has kind of network effects baked into it. So we’re starting to productize some of those and create some viral loops. The ability for our recruiters to collaborate with one another and share with their subcontractors who have the same recruiting challenges as they do, thats kind of how we think about acquisition.
Brett
How much time do you spend on marketing? Is this a big priority for you or do you have an awesome CMo that you’ve run in thats leading the charge?
Fraser Patterson
I mean I have a great team across all functions. I set the goal, like set the strategy, set the goals, hire the best people possible, let them run, maybe step in if we encounter challenges or were behind on goal. But I spend my time across sales, marketing, customer success, product engineering and strategy fairly equally. Try and theme my days best I can. But yeah, we’re at a really interesting time seeing a ton of demand and scaling, so I feel like I’m 100% on all of those.
Brett
As you continue to expand and scale, what’s top of mind? What’s keeping you up at night?
Fraser Patterson
I think what I care about the most is building at this stage a product that our customers love. I really believe that engagement and retention are fundamentally the most important growth engine we have. Right. If you solve for engagement, if you’re actually solving something the segment of the market loves, and they take the core action, which we want them to take, which is to connect with our workers, and we’re able to retain those users, then we build this super efficient growth engine. The water level in our bucket just keeps rising. I think that’s essential for short term, midterm. Long term, the world is rotated away from cheap money and growth at all costs and top line MAU and top line revenue. As a single KPI, we got to be efficient in terms of how we scale.
Fraser Patterson
So that’s a huge part of our focus, just building something our customers love and helping them complete the core action and retaining them and giving them a delightful experience. That’s critical. So a lot of my attention goes there for now.
Brett
At the moment, what’s your market category is like the general category, construction staffing, or is it something else?
Fraser Patterson
Yeah, so I would say we’re probably taking an existing category, like construction recruitment or construction staffing. And by virtue of digitizing all of these attributes of the worker, from their skills to their pay preferences and doing so in a way that’s really worker first. And I don’t think they’ve never had an experience like this. We see huge uptake from workers, and so I think that digitization is kind of key. So I think we’re the first to truly digitize the full kind of experience, both sides, whether that’s a new category or an augmentation of an existing one, I don’t know. I feel like we’re in a category of one, frankly.
Brett
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Fraser Patterson
Yeah, so I’d say, like from last year, our customer growth grew 540% year on year. I mean, it’s early stage. So all these numbers are going to be quite impressive on a percentage basis, but half of those customers were won just in Q four. So we’re really seeing kind of customer adoption ramp up 1000% year on year skilled worker growth. We were seeing tens of thousands of members join. We had 1000 a week just in Florida join. We’ve also, we’re a little bit past this, probably about 2.1 million proprietary skills, compensation and experience data points that we’ve managed to, that our workers have kind of directly into our platform. So and our core kind of like say our North Star which is connections between customers and like recruiters and our workers grew 400%. That’s our primary kind of engagement metric.
Fraser Patterson
And again, three quarters of those occurred in Q four. So yeah, we’re kind of firing on all fronts there.
Brett
I’m sure any Founder listening in is thinking, yeah, I want to grow like that. What do you think you’ve gotten right? What have you done to achieve that type of growth?
Fraser Patterson
Well, since how far back you want to go, I would say I feel like I’ve been kind of in this space for most of my life and therefore it was really unsexy say ten years ago when I came to New York and I founded my last startup which was a tech enabled kind of GC, nobody would admit that their family were in construction so I would be raising money from VC’s and id be in like mahogany panel boardrooms on like Fifth Ave in New York and stuff. No one would mention that their brother, their dad was in construction. Now almost everybody I encounter has a story about their family being from the trades. So something I think were solving a really. So it felt like the world kind of caught up to where id always been playing, if you will.
Fraser Patterson
And so I think were in fast moving waters which I think is super important. Theres so many tailwinds behind us, theres a huge skills shortage. This is an incredibly fundamental industry thats starting to be maybe a few years back started to get the attention of investors and its an exciting problem to solve. Its a wicked problem. Its attracted people from different industries. Again, id say getting the team right is critical and I think having an insight born out of the frustration rather than just having a bit of a hypothesis, actually feeling the pain and knowing firsthand what its like to be the user on both sides. By the way, I think building a marketplace is insanely difficult to get off the ground. You’ve got a perpetual cold start problem.
Fraser Patterson
I think understanding our customer and understanding the worker having been a skilled trade but also having been on the hiring side, gave us a leg up. I think those are all things that we got going for us.
Brett
Why do you think that ships took place where that construction became cool or became something they were okay with talking about?
Fraser Patterson
Yeah, I think there’s a stigma that’s just gradually being lifted. So I would say maybe. I think there’s a few things here. One is we’ve started to see as a culture, I would say, in the US in particular, the cultural obsession with the four year college degree or bachelor’s degree or whatever, the ROI on that, the educational ROI, the data is starting to come in, and we’re starting to see that maybe that’s not the right path for everybody. And I think there’s more and more. I speak to high schoolers. I’ve actually presented in schools what we’re building, because there’s so much interest in doing something that is meaningful and doing something that is debt free as well. Going to college, you might be incurring $100,000 of debt, maybe don’t want to burden the family with that and burden their own future with that.
Fraser Patterson
But a career in construction where it’s becoming more technologized, there’s more venture money behind solutions, going into context. So it’s modernizing, it’s debt free, it’s interesting work, it’s challenging. There’s actually a lot of job satisfaction, there’s good pay, and it feels like you’re doing unambiguous good. And I think the other thing as well is a lot of the knowledge world is probably getting. There’s definite anxiety around AI, whereas there’s really no anxiety around the skilled work of a carpenter, an electrician, plumber, pipeline. These jobs cannot be, by definition, automated anytime soon. Right. They’re operating in unregularized environments. So it’s not like even manufacturing, where you’ve got a somewhat regularizable environment and you can roboticize a lot of the process. These are hard to outsource, while they’re impossible to outsource, and they are very hard to automate.
Fraser Patterson
So I think there’s a lot of job security there and also just macro trends like the infrastructure bill and the various kind of government driven capital injection and climate. Arguably biggest problem we have. That’s going to take an awful lot of construction to help us build our way out of this. And robots aren’t going to come to a rescue. It’s going to take skilled humans. So I just think there’s just a bunch of tailwinds that make this fast moving water and the right place to be, the right time.
Brett
On the topic of AI here, I think I remember seeing a billboard a while ago. I didn’t see it in person, but I think it went viral. And it was like, hey, Chad, GBT finish this building? Or something along those lines. And I think it was a construction firm kind of making the point that AI or chat GPT isn’t going to be putting these folks out of work. You know what I’m talking about? Or do you remember that billboard? Do you see that?
Fraser Patterson
Yeah, if I recall, it’s actually a german labor platform.
Brett
Yeah.
Fraser Patterson
Look, we’ve got to build 7 million housing units in the US, right? That’s the house, some 16 million Americans. We’ve got all this government funding put to work. We’ve got to solve an infrastructure crisis. We’ve got, as I mentioned, this, you know, we’ve got to tackle the climate crisis. These are all massive problems that require, all depend on construction. And, yeah, robots are now coming to the rescue. I mean, there is semi autonomous masons, painters, drones, there’s exoskeletons, right, there’s rovers. These can all augment the skilled work of humans. But the actual chances of fully autonomous craft robots clocking into job sites in any helpful timeframe are slim at best. I mean, you can actually ask chat GBT, how likely is it that fully autonomous robots will do highly skilled construction work anytime soon? And his answer is really interesting.
Fraser Patterson
It’s essentially highly unlikely, right, because there’s so many factors that make it highly unlikely a robot can perform skilled construction work, right. It’s complex, dynamic environments. That’s the regularized piece I was talking about. Super, like variety of tasks, really, like, find more skills and decision making. There’s safety concerns, there’s cost and complexity, regulatory issues, ethical issues. I mean, it’s just, I don’t think that’s a solution for us anywhere in the decades to come. Frankly, I think we’re way off.
Brett
What would you say has been the most important decision that you’ve made to date in the company, Trey?
Fraser Patterson
Wow. The most important decision, I would say building a labor marketplace or any kind of marketplace is pretty insanely difficult to get off the ground. And I think the one advantage that you have as a Founder is you’ve got limited attention and you’ve got limited capital. No matter how much you’ve raised, you have limited capital is insurance to get you to the next milestone. So really leaning into those constraints and deciding to apply those constraints to focus. So, for example, we get pulled in a lot of directions, right theres a lot of demand for different trades in different regions and theres almost endless verticals and so on and so forth that we could go after being really disciplined about saying, okay, were going to start in one region with a handful of trades. Thats all were going to offer.
Fraser Patterson
I think that focus has been, it’s like an endless return. That was a great choice. I know that’s the most important, but it’s certainly one that keeps appearing as being a huge advantage and how we’ve built the company so far.
Brett
I mentioned there in the intro, you’ve raised over 13 million to date. What have you learned about fundraising throughout this journey?
Fraser Patterson
Yeah, that’s a good question. So like being kind of honest with yourself, being frank and being brutally honest with yourself as to how well you’re actually performing and running a process, all those maybes they can convert to nos. And if you’re not being honest about that, then the top of your funnel is going to get hurt and you’re quite possibly going to miss the mark, I think being super targeted and segmented. So really understanding your investors in the same way that you would think about an ideal customer profile. What funds are out there? Whats their thesis? Whats their vertical? What stage are they?
Brett
At?
Fraser Patterson
What stage do they invest at? So getting a target list, being super prepared, I think being prepared gives you confidence and it shows. And I think being able to draft a really compelling narrative that almost has like, its clear that you understand where the business is today. Right. You have an insight, you have a kind of almost chutes and ladders approach to how you become a company, a consequence five years from now, 1015 years from now, whatever. But I think the story is key, the mission, the vision, because I think thats what changes minds. And I don’t think the data does much in the early days. I think its really storytelling because if you can storytell, you can also acquire customers, you can attract great talent, you’ll attract future capital, etcetera. So I think storytelling is critical.
Brett
Does storytelling come naturally to you, or is that a skill that you’ve had to really nurture and develop? William?
Fraser Patterson
Well, as a Scot who enjoys a weedram, I grew up telling stories all the time, but I don’t know if its something natural per se. I think it takes really drafting a compelling story, testing that out, being committed to making yourself understandable and in as short a timeframe as quickly as possible, delivering a really compelling vision of the future and one that’s credible. And again, paint the kind of logical steps that you’re going to take to get there. I think that brings people along, and, yeah, I think it’s probably the most fundamental skill of a Founder.
Brett
Well, I’ll put you on the spot then, for our final question. Tell us a story. What’s the future of Skillet going to look like?
Fraser Patterson
So I think that the data set that we’re building is going to enable us to build really powerful software. That’s what we’re doing at the moment. And it can automate a lot of the real work that craft recruiters are having to do today, freeze them up to focus on higher value activities and so on and so forth. And this is like the focus of our product today, is really solving our customers biggest hair on fire problem. Right. The sourcing of qualified skilled labor. And I think by being able to do that is critical. But the big vision here is, can we use that proprietary data and that digital infrastructure to help train and upskill the talent network, if you will, to become increasingly valuable to employers?
Fraser Patterson
And I think if we can achieve that, I think we can make skilled labor one of the greatest assets on earth. I think we can actually fix the world skilled labor problem, and I think we can ultimately help the world achieve its housing, its infrastructure, its clean energy goals. That’s the vision here.
Brett
Amazing.
Fraser Patterson
I love the vision and I love.
Brett
The story, and I really love this conversation. I think it’s going to be a big hit with our audience. We are 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 your journey, where should they go?
Fraser Patterson
Yeah, so obviously, Skillit.com is our website on fraserkillit.com. So F R A S E R. If you want to email me, you can also find us on LinkedIn at Skillit usa. And if you’re interested in working with us, go to Skillit.com. Work here.
Brett
Amazing. Thanks again. Really appreciate it.
Fraser Patterson
Yeah, thanks, bro. Cheers.
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 podcast. 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.
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