The following interview is a conversation we had with Nick Hegeman, CEO of Paintjet, on our podcast Category Visionaries. You can view the full episode here: $17M Raised to Build the Future of Commercial Painting with Robotics
Nick Hegeman
Hey, how are you? Happy to be here.
Brett
Yeah, super excited. Let’s jump right in. So, I know you’ve been in the painting space for a while, which I can’t say I’ve started many podcasts that way. Tell us about the world of painting.
Nick Hegeman
So painting is one of those spaces that most people never intentionally get into. It’s always something where it was, hey, I’m doing a high school job, and maybe college isn’t for me, but I’m good at this thing. I can make some good money. And 35 laters, I’m selling painting. So what that means is that essentially, there’s been very little innovation in the space for about 50 years. And while there’s basically been little innovation in this space for about 50 years, while at the same time it touches almost every single thing, we look at it, you’re looking at infrastructure, you’re looking at houses. It’s almost like the real estate tax that everyone has to pay. But there’s not a lot of innovation in the space.
Nick Hegeman
And so what we’re doing is bringing robotics and AI and helping to address the labor shortage in this space head on by focusing on really heavy industry exterior applications, we think that is the area where theres the most opportunity for innovation and is also a really good fit for robotics. When you look at, hey, what a robot is good at, they’re good at big, uniform, repetitive tasks. And when youre looking at hundreds of thousands of square feet on a warehouse or a water tank or an oil tank or a ship hull, like, that’s the perfect fit for robotics. And so that’s what we focus on.
Brett
What did you learn from running a painting business? Cause I believe you owned a franchise, right?
Nick Hegeman
Yes, I owned a certified painters franchise, and that was really my biggest insights in terms of the depth of the labor shortage, but then also gave me a unique insight in terms of if were going to disrupt the space with technology, how that would need to happen. Technology adoption isn’t easy. And so as were entering the space, gave me unique insights when we’re talking with investors and partners about, hey, why are we going to be successful over someone else who may not really know and understand intricacies of the painting industry?
Brett
And just for our audience that’s listening in, can you paint a picture of what the solution is, how it works, and maybe just talk through it from the eyes of a customer? So let’s say that I’m a customer. What’s the experience like for me? What’s the technology like? And what am I getting out of the technology?
Nick Hegeman
Yeah, so our customers are asset owners, general contractors, shipyards, people who are painting big objects. And one of the things that’s unique about us is the fact that we don’t actually sell the technology outright to selling hardware and robotics to a painting contractor who has basically a zero capex budget is extremely challenging. Then you got to train them and support that. So it is very challenging to do that. So effectively. How we work with our customers is we charge them on a per output per square foot painted by the robot, and that includes the operation. So our customers, and that’s how they’re actually already building these budgets already for their projects. So they’re currently paying, let’s just say, a buck a square foot to get painting services. And we provide them a painted building for ninety five cents a square foot.
Nick Hegeman
And so it actually makes it very easy for our customers to work with us because they’re already buying essentially what we’re providing, and they are buying it in the way that we communicate our pricing to them. So really makes for really a seamless transfer. Instead of paying Joe’s painting, they’re paying Paintjet.
Brett
And is it only like a 5% savings or what is that savings?
Nick Hegeman
So typically we say we’re going to be anywhere in market between five and 10%, but the reality is we’re able to paint buildings faster. You’re looking at half the crew win half the time with higher quality and less defects while removing people from heights. And so really it is a premium experience. And the savings is really just kind of a bonus on top.
Brett
That makes sense because there’s a lot of indirect savings then I’m guessing as well, right? Like there’s probably insurance costs are cheaper, liabilities cheaper. There’s probably a lot of things that are cheaper just from using this yeah.
Nick Hegeman
And the other thing too is that typically painting will be the last trade to come on a building. And so painting is often holding up their completion bonus. So essentially, if they can just know that its going to get done on time, thats going to put more money in their pocket anyways. So its really more just around the predictability of on demand production that is unique in trades as a whole. But its painting specifically, Trey.
Brett
And then how does it work? Do you ship that big machine out to them?
Nick Hegeman
So actually our machine is small enough that it can fit in two pallets. And so we’ll just drop ship the pallets directly to the site. And then our operators are there on site. They will attach our machine to a man left, and then they’ll be able to remote control that man left to paint the building.
Brett
What’s it like selling technology into this market? Like you said, for the last 35 years, it hasn’t changed. It hasn’t really embraced technology. What’s that like trying to be the one to change that?
Nick Hegeman
So it’s been really interesting how that’s evolved. We actually started off by specifically not using the term robot in construction. If you say robot, it freaks everyone out. And so how we move to market was all right. There’s not enough painters out there for the most part. The purchasing departments require three bids. Maybe they can get one, two. So it was really more just to meet their business purchasing requirements. And all right, so we’re going to paint your building, and we just happen to have some technology that can make us better, faster, more productive, and do it safer on your site so you can hit that line. And that was the approach. Now, that’s changed over the past year or so, as we’ve continued to improve the technology, as we’ve gained more credibility with our customers.
Nick Hegeman
And now we really are talking about the robotic system, taking pictures, providing real time quality control, and it’s really about talking about the benefits from the technology. And that is now gaining more and more interest from our customers. And so that’s been exciting to see that evolve over the past couple of years.
Brett
I had another company on a couple, maybe it was about a year ago, I think their name was Skyline Robotics, and they were doing robotics window cleaners in high rises. And I was talking to him about this and asking him, you know, what are your views when it comes to, like, this idea that this is taking away work from people? And his response there was like, this is the work that no one wants to do. It’s dangerous work, and most likely no one should be doing this. Is that similar view that you have, or how do you view that part of the conversation? Because I’m sure that’s come up before of, you know, what happens to the labor that’s displaced from this.
Nick Hegeman
Yeah, absolutely. So I think the biggest thing is that we currently don’t have enough people to do the work that needs to be done anyways. We’re actually not taking away jobs. We’re helping the people that are doing these jobs do them better, do more of them, and just really stay on par with the backlog. And then the other piece of that is that we’re finding that this actually extends careers. So in trades, as you get older, a lot of people find they just can’t move the way that they used to be able to move.
Nick Hegeman
And so what this allows painters to do is because they don’t have to get up in the lift and actually physically move their arm for 8 hours a day, and they can do it safely from the ground with remote control, is that they can take all that knowledge that they built up over the years and put that to good use while it being relatively low stress on their bodies. And so overall, it just becomes a better job in general. And also because we pay out based on productivity, were actually seeing opportunities where people can make more money on.
Brett
The other part of the conversation were just having, when it came to robotics, you werent using that at first. Then you started to use it. What was that? Primary drivers that the world just became kind of more familiar with AI because of chat GPT, and then they were more open to technology. Or what was that trigger that made it okay to talk about robotics now, but you didn’t want to talk about it before.
Nick Hegeman
So I think we just needed to get some time where weren’t the only robotic solution to our customers or in construction. And so there was a certain familiarity before the chat GPT, but chat GPT is definitely accelerated and increased the interest. But I would also say that the reality is most of our customers, they’re not checking in on TechCrunch every day. It’s their more kind of peripherally seen stuff, major news networks, and it’s more, it’s like, okay, technology. The buzz around technology has just been consistent over the past three years, and it’s now it’s, well, I keep on hearing about this so much, maybe we should start looking at this. The other piece that is also interesting is the fact that the labor shortage isn’t going away and can cause so much issues. Eventually it becomes, all right, what we’re doing isn’t working.
Nick Hegeman
The problems are getting worse, and there’s a desperation for solutions that it’s okay, we’ll try it. And then they talk to their friend, and it’s, hey, their friend. They had a successful interaction with robotics, and then they’re open to trying it on there. So I think part of it’s just taking time.
Brett
Where did you even begin when it comes to building this technology?
Nick Hegeman
So, my background by education is in engineering, an engineer with ExxonMobil for a while, and then we actually were working, sponsored a senior design course for my alma mater at Purdue back in, I think, 2018. And so working with them and some undergrads to help build solutions that could help my careers assertive propaners, franchise owner to be more productive. And this is really where it started. And then the tool that we had wasn’t crazy complex. It was more plausible than anything else. And it cost us five, $600, which was a vast cry of my expectations of it cost me $500,000. And so it wasn’t anywhere near perfect. It was plausible, and I think that’s what gave us the confidence to take it to the next level.
Brett
This show is brought to you by Front Lines Media podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io slash podcast. Now back today’s episode. What’s keeping you up at night when it comes to go to market?
Nick Hegeman
So, for us, it’s always about how do we continue to expand geographically. When you look at construction, the big problem is labor. And it’s not about scheduling, it’s not about optimizing. It is labor. In the painting, labor makes up 70% of your costs, and so you’re impacting that. You get demand from a lot of people in a lot of different areas. And so for us, it’s really about how do we expand systematically without burning out our team and upsetting customers in the process, while simultaneously improving the technology at a rapid pace?
Brett
Does this require a lot of education? When you’re trying to sell to customers, do they have, like, an endless list of questions, or is it a pretty straightforward and pretty clear?
Nick Hegeman
There will be questions, but for the most part, it’s even when you’ve been talking with the person for the hey, we’ve got, they’ll say, you know, we’ve been working same painters for 20 years, and then they work with us for a project, and you find that they’ve been trying to replace them for the past 20 years, but there’s just no one available there. And so it’s a relatively straightforward in terms of people willing to give you a shot, but then you got to deliver. And I think that’s the part that technology companies and robotics as a whole have really struggled with, especially when you look at exterior uncontrolled environments, which is where we operate.
Brett
Clay, are there some big painting companies that hate you?
Nick Hegeman
Not yet, although there are definitely some that were familiar with. But at the end of the day, the markets that were in are pretty big, and we continue to have dialogue with those companies to see how we can work together in the future.
Brett
Trey, as I mentioned there in the intro, you’ve raised nearly $17 million to date. What have you learned about fundraising throughout this journey?
Nick Hegeman
So I think the biggest thing is that for us has been, if you believe in a certain business model that you know to be the right answer, don’t shy away from that, own it, because the markets are going to change. And when we first started, it was no one wanted to invest in what was a technology enabled service company. It’s too complex compared to a SaaS model. Your financials are more complex, harder to read. Scaling isn’t as efficient or as easy, and so a lot of investors shied away from us. However, the thing about our model allows us to spit off cash and survive, especially as it relates to robotics companies, especially in the past couple of years, is that starts becoming unique.
Nick Hegeman
And the last time around, with our series a, we felt that were uniquely positioned and had a unique demand because we had a viable commercialization plan that people hadn’t really seen before. And when you look at a place or a space that has gotten really hammered from an ROI standpoint, and there’s a lot of dead bodies of robotics companies, and you see an alternative where that doesn’t have to be the outcome and you see the core problems that we address, theres a lot of appetite for that. And so I would say if you have a business model that works, eventually the market will come around to you. And as an entrepreneur, you can get discouraged. You’re upset if you don’t feel like you’re getting the right market pricing. Ultimately, you got to stay alive. And if you can stay alive, thats.
Brett
The name of the game.
Nick Hegeman
And eventually, the market come around and can see that value.
Brett
Who was the robotics company that was trying to disrupt the pizza market? I think Softbank pumped in a few hundred million or something like that, and they were never able to fully commercialize.
Nick Hegeman
I can see the robot, but I cant picture. I can see the robot. I can see the end effector, but I cant remember the name.
Brett
Yeah, I think it starts with a z, but. Yeah, I can’t remember, but it makes sense. I’m sure that’s not easy, right? You’re trying to pitch your idea, and then in the headlines there’s these stories of robotics companies failing.
Nick Hegeman
Yeah, so when we first started pitching, they were failing, but there was still enough people raising money that it was, well, you have all these other players, and this is what they’re doing, and this doesn’t fit, and this seems operationally too complex, and I just don’t know if this is the answer. And then last time went out, this was post zero interest environment, and a lot of the robotics companies had pop and were trying to figure out business model, and we had something that was real, and people were like, all right, if were going to bet on anyone, its going to be someone whos figured out how to survive.
Brett
What do you think about whats going on with Boston Dynamics? I saw they just released a new robot, but thats a company that comes to mind of, like, I don’t even know, it’s probably been ten years, right? Every few months, like, they pop in or they release a video, the robot’s doing something cool. But as I understand it, they’ve still failed to commercialize. There’s no product that they can sell. Is that accurate?
Nick Hegeman
Take I really don’t pay too much attention to, you know, you look at peripherally and you’re trying to learn things about stuff like that, but I’m not paying too much attention to, hey, is this company successful from a media standpoint, is how are their technologies being introduced with our customers and our potential adjacent segments? And so that’s the thing that we keep an eye on from a humanoid robotics standpoint. And so for us, I think humanoid robotics, while very interesting, and they’re still a little ways off. And so we’re more focused on, hey, what robotic system can be used today to deliver real value? And that’s really been our focus. We go about marketing our way, and we understand that’s not going to be for everyone. But that’s okay.
Brett
Let’s imagine a young Founder comes to you and they say, Nick, I’m building a robotics company. I want to bring it to market. Based on everything you’ve learned so far, what would be your number one piece of go to market advice?
Nick Hegeman
Number one, make sure that you’re solving the problem in the industry. If you’re looking at doing something marginal, no one’s going to go through the complexity of integrating robotics into their system. It’s got to be the problem. And for us, it’s labor. The other thing for me is that really, especially in construction, you really do need to be vertically integrated because there’s so much value that you can capture that goes beyond just labor efficiency. So for us, not only is there labor efficiency, but to your point earlier, there’s lower insurance costs, there’s better material consumption rates, where you’re more effective there overall, project management is improved, operational complexity is reduced. The management team can scale up their efforts, taking over larger geographies with smaller headcount. And you don’t get credit for any of those things if you’re just selling the robot.
Nick Hegeman
And so for me, and in construction specifically, it really is to embrace vertical integration, understanding that theres a whole bunch of stuff youre going to have to figure out. And that might not be for everyone, but those that get it really understand it can be great partners.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision look like?
Nick Hegeman
So for us, and if you actually looked at our legal documents, we are forming technologies and DBA, Paintjet. And so for us, it’s really about, and this isn’t uncommon when you look at painting because it’s so technically challenging. If you can do painting, there’s a lot of Paintjet things like drywall finishing, Laurene Drywall insulation installation, sanding, those type of things that very easy for you to work into your process. And so for us now, it’s not going to be this year, but 510 years down the road. The fact that we are figuring out commercialization with robotics puts us in a unique position to additional robotic capabilities to our portfolio and really become a fully integrated robotic contractor. I think thats where were going and ultimately were able to combine construction revenues with software margins. That gets really exciting.
Nick Hegeman
And we are addressing core systematic issues within the industry of construction at large. I think that starts getting really exciting.
Brett
So in five years, on IPO day, Paintjet may not be your name anymore. It sounds like theres a lot of different areas that you could focus on as well.
Nick Hegeman
Jeff yeah, Paintjet will definitely always be part of what were doing it’ll always be important to what we are, but I think it will be a part of who we are, not the only thing that were involved in.
Brett
How do you evaluate what to do next? You listed out a few different options there, different routes you could go. How do you decide what to do? Because it sounds like you have options there. How do you choose one? Or do you not have to choose one? Would you move into multiple different verticals at the same time?
Nick Hegeman
So for us its really about what makes sense with our current customers and contracts and what are the demands and what are the operational complexities involved with everything. Not only the operational complexities, but what are the sales complexities? Do you need to add in a new sales skill or can you just pack it onto a current contract? Do you need new operational expertise or is it something that your current people already know how to do? Or is there geographical concentration or that widely dispersed across the country as it relates to that? It’s really, we’re going through that process and trying to identify, hey, how do we continue to grow without expanding and overreaching from an operational complexity?
Nick Hegeman
And then for us, it’s really about systematically making sure that we nail down being able to operate in excellence in that space before moving into the next.
Brett
Amazing. I love it. All right, Nick, we’re up on time here so we’re going to have to wrap before we do. If there’s any founders listening in that want to follow along with your journey, where should they go?
Nick Hegeman
So shoot me an email at nick aintjet.com dot. I can add you to my monthly updates. Follow me on Twitter or on LinkedIn and would love to share what were doing.
Brett
Amazing, Nick, thanks so much for taking the time.
Nick Hegeman
Thank you, Brett.
Brett
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