Show Notes

There is typically more than one way to complete a construction project. The key is finding the best way to complete the project, especially when adjustments need to be made midway through. That’s exactly the problem that Alice Technologies is solving after developing the world’s first generative construction simulator. Alice’s software is a form of project management that the construction industry has never seen before.

Alice Technologies founder and CEO Rene Morkos joined the Midstage Startup Momentum Podcast with Roland Siebelink this week to talk about this cutting-edge technology and his startup’s progress.

• The journey of developing new technology and building a product that’s useful for construction projects.
• How Alice Technologies was able to determine its ideal customer profile.
• Why a product that is useful for everyone shouldn’t be sold to everyone.
• The method that Alice Technologies uses to identify and fix bottlenecks within the company.
• The factors that determined Alice’s price points and go-to-market approach.
• Why startups should be saying no to customers while trying to build a pipeline.

Transcript

Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I'm an ally and coach for many of the fastest growing startups around the world, one of which is with us in the studio today. It's Rene Morkos, the founder and CEO of Alice Technologies. Hello, Rene, thank you for joining us.

Rene Morkos: Hi, Roland. It's good to be here. Thanks for inviting me.

Roland Siebelink: Excellent. And for once, we're both in the same time zone, West Coast, that makes it so much easier. Back to Alice Technologies, Rene, tell us, for those that haven't heard of your company yet, what does Alice do? Who do they serve and what difference do you make?

Rene Morkos: Alice technologies has developed the world's first generative construction simulator. What that means is if you're unfamiliar with generative technology, it's a relatively simple concept. Imagine you draw a cup. The two circles and the plane. And a bigger cup is bigger - you'd redraw it every time the size changes. If your tool is generative, you can change these parameters like height and radius and it redraws the object. That's what parametric regenerative technology does. It's been done in design for 30, 35 years and was a big revolution in mechanical design, architectural design, electrical design, et cetera. It's never been done for construction and that's what we've managed to do.

Roland Siebelink: Interesting. Very good. I'm imagining that this is related to use cases in lots of change requests in construction projects in the costs that actually come from those change requests, as I understand that industry.

Rene Morkos: You've pretty much hit the nail on the head. The change is a change of parameter. Today, there's a delay or the design changes or the crew doesn't show up or I need to accelerate. Do I add a crane? Do I add overtime? Do I add crews? All of these questions, you're crunching them in your head. Let's assume that you're a genius and you've managed to crunch this problem. It's not really crunchable, by the way. A thousand tasks, 14 parameters per task, over 700 days, you're getting the size of the problem that you have to crunch. But humans have got sense. They approximate stuff, but the issue is even if you have the correct answer, you don't have information from other parts of the project. And so, that changed - our system is literally, you can tell the system add a crane, add a delay, re-sequence around the delay, change the design. It is very, very easy to simulate the most optimal way to build something.

Roland Siebelink: Interesting. It's not just a blueprint of the building or the house, it's actually the entire project management plan that is affected by this. It's like project management software on steroids?

Rene Morkos: Exactly. The thing is that the design part is not what we do. The design is complete. You figure out what you want to build. The big question is how do you build it. Today, technology and construction are based on charts. It's a manual process. What we've done is we basically take the design as our input - you put in the 3D model or the 2D drawings - and you then can generate hundreds of millions of ways to build it. When you generate lots of solutions in a computer, then you compare them to solutions generated by hand, you tend to see about a 20% improvement. It's rough - maybe 25, maybe 40 - but that's roughly what you'll tend to see. And with Alice, what we're seeing is roughly 17% faster and roughly 13% cheaper.

Roland Siebelink: How have you landed on your particularly well-suited target group?

Rene Morkos: I have an advisor. I have many advisors. I try to work with a number of people that give me opinions on how to do what I'm supposed to be doing. But I worked with one gentleman in particular called Peter Krivkovich. He is a chief operating officer at a company called AdRoll. And he told me the point of a business is: Find your ICP, figure out how to generate value to that ICP, figure out how to expand to other ICPs or within ICPs. It's so deceptively simple. The question you asked me, where do you get customers? The one thing that I've learned is you've got to be so brutal in identifying your ideal customer. And if your answer is "I can serve anybody or I can serve almost anybody," then go take a look at that. Because that's how we started. The technology works for everyone. It literally does. We've done a $12 million parking lot, $3.7 billion airports, and everything in between. But to answer your question, for us, what we found our sweet spot was infrastructure projects. Now that we've released what we call the Manage product - the ability to update progress and reschedule, re-sequence in real time during construction - we are now starting to see success with commercial builders as well.

Roland Siebelink: Okay. Very good. For those listening to this podcast who may be themselves a little bit earlier in their founder journey - or later, however you want to call it - a bit behind you, I'm guessing many will not understand why if the software could be used by so many different target groups, why not just sell it to all of them? I agree with you. Usually, the technology does but the go-to-market doesn't. But from your perspective, can you illustrate a little bit what made you realize that that's actually true?

Rene Morkos: Yeah. Happy to share. Let me kind of set the stage. We have a technology that really does work for everybody. We've run parking lots, high-rises, data centers, oil and gas facilities, wind, solar, you name it. It doesn't care. It eats these projects for lunch. To us, if it can run anything, why not sell it to everyone? Here's what we learned. The truth of the matter is that different types of customers do business differently. Here's a really simple example. In our field, I mentioned infrastructure companies, I mentioned commercial contractors. Commercial contractors tend to subcontract the work. Correct. They go out and they hire smaller contractors that will do the plumbing, that will do the electrical work, et cetera. When you have a product like ours - we hadn't released the Manage product, the ability to manage construction throughout - you're selling something that's a pre-construction tool to a company that subcontracts the work, their response is: "I'm not really optimizing the work at this point. I don't really care about optimizing anything." When you take that same tool and you sell it to infrastructure companies, infrastructure companies tend to own their own equipment. They really care about optimizing it upfront and the bidding. Same tools, same capabilities, but a completely different value proposition to two different people.

Roland Siebelink: That's a great example. Thank you.

Rene Morkos: The thing that we learned - and it seems obvious - the way that you are selling to this type of client is going to affect your pricing, your messaging, your marketing, your customer success, your level of service, your product, what are they focusing on? And the issue is that I don't believe that it is possible or feasible for a human mind to crunch all those variables live across six or seven different types of customers. What's going to kill a small company is a lack of focus. If you focus your company onto a specific type of customer, the messages that you're going to start getting from your clients that are gonna resonate into your customer success department and your product department and your marketing department - everyone else is going to be solving the same problem. If you focus on a given ICP, what will start to happen with the advent of time is that your departments start to become aligned and you start getting closer and closer to that product-market fit.

Roland Siebelink: Absolutely. And I'd say the other reason that startups in particular need to bear this in mind is because trying to crunch all those variables at once doesn't work. Even if you do run three, four, or five business lines, you lose all your agility and that's your big competitive advantage as a startup, to really serve one customer group extremely well and be able to change your product very quickly, compared to all the corporates that cannot do that. You mentioned the alignment between the different departments. You mentioned customer success, products, and marketing. How far is Alice in building up all those departments? And where are you focusing your recruitment, your buildup at this point in time? How do you feel about balancing resources between the product and the go-to-market side of the business?

Rene Morkos: Building a go-to-market engine - to me, the go to market engine is marketing, sales, customer success - takes several years. It's not something where you're going to wake up in the morning, flick a switch, and you're done. There are examples of companies that hit it on Day One and God bless them; 99% of entrepreneurs don't have that experience. To us, we have a fully functioning - each separate department has been up and running and standing on its own feet for six, 12 months. And we've been at it for seven years. Everything has a plus and a minus. But for us, it took us three and a half years to craft the technology. It took us two years to build a product with the right technology. And it took us a year to commercialize it and build up the departments around it. The next question you asked me was about where to focus. Something we've noticed is - we call it the bottleneck, and the bottleneck tends to move around departments. And the way that you can tell where the bottleneck is, is just literally listen to who's currently the one that's being blamed for most of the things that aren't right. It's funny because throughout the history of the company, I remember, "Oh my God, those product guys, they're just idiots. They're completely not understanding what the customer wants." What do we do? Fire all the product guys? Then you sit with them and you start working on the product because the product is where the pressure is landed at this point. You fix it. You fix that issue. Suddenly products are up and running - I'm not kidding you, I remember this clearly, this is an example from our company's history - and it was three weeks later, it was customer success. Those guys were really messing it up. Then you're like: "Wait, but did all of you forget that it was the product three weeks ago?" And then you fix the customer success piece and suddenly it becomes sales. It's usually, in my opinion, relatively quick and easy to figure out where the bottleneck lies.

Roland Siebelink: It's like the weakest link in the chain.

Rene Morkos: Absolutely. And the weakest link is whichever one you need to work on at this point. What we've done as a company is we've all sat down, and then what I've said is: "Look, guys, this bottleneck is going to move. At some point, you're going to be the one that looks like you've completely screwed everything up. You're responsible for everything not working." Let's also understand that that's going to happen now. And that bottleneck, by the way, has landed on me. But let's all understand that that's happening. And when that happens, let's try to not listen to our instinct, which is jump the person that this turned on but realize we all need to pitch in and help that current department not become the bottleneck. You know that once you do that, it's going to move somewhere else. When that happens, let's all do that. I think that's been really, really effective for us.

Roland Siebelink: A little bit deeper on that go-to-market, how do you actually approach those potential customers? What are some things you found that really work? Because I know a lot of the audience is struggling with those very tactical questions. We know our target group is, how do we actually get in contact? How do we start selling to them?

Rene Morkos: There's a simple exercise I would recommend. Draw a three by three grid. And the three by three grid is, on the X axis, you've got price, which is high, medium, low. On the other axis, you've got the level of service, which again is high, medium, low. And you've got to look at your product and there's a couple of questions that you want to ask. If your product is something that someone can literally log on, click the button, and use it … Great, if that's the case. Then you have a pretty low level of service, which means that you can charge a low amount. For us, for example, we know that it's a high level of service. Our product is not a simple, press the button product. It requires training. It requires some handling, some support. Our level of service is high. That said, don't forget that we invented a technology; it didn't exist. For us, two and a half years to invent the technology, two years to build a product. What does build a product mean? We had a year where the mantra of the company was usability, ease of use, automation, make it easier, make it easier to make it easier. Reduce the amount of time required to set up our system. But the reason I'm mentioning this is that if you have a high level of service that's required, then you probably want to be at a high price point.

Roland Siebelink: Can you talk a little bit about the traction you've experienced so far? Whatever you're comfortable sharing with us in terms of how the company's been growing.

Rene Morkos: You hear product-market-fit, product-market-fit. I've been hearing it for a few years. When you have it, you know it. We increased revenue 3.5X in 12 months.

Roland Siebelink: Very good. Okay. That's a sign of product market fit. But I agree with you, it's never an absolute black and white. You just get to get better and better at it, if you're lucky, of course, and good and competent. That's very good. Another question, Rene, is how do you think about building the pipeline for the business? Rather than just the go-to-market strategy, how do you actually build up a steady flow of deals coming in all the way from initial leads to closed contracts?

Rene Morkos: It's a great question, Roland. Here's one thing I can guarantee, if you build it, they will not come.

Roland Siebelink: I wish more founders understood that, Rene. Did you know that from the outset or was that a hard and tough lesson you would have to learn?

Rene Morkos: I think I learned it. I wasn't the first that learned it, I wasn't the last, I was somewhere in the middle. One of the things is I've had a group of advisors around me. When those advisors tell me something, I can't tell you that I listened the first time. But maybe, six months in I'm like, "Wait a minute, maybe there's a point here." I think that's the key thing. You've gotta realize that having a great product doesn't mean that you're going to have a company.

Roland Siebelink: What are some of the things you've learned or picked up from your advisors over the years on how to actually build your pipeline?

Rene Morkos: Identify an ICP. Literally, pick something. Pick a size of company, pick a type of company, pick a type of project, something segmented and say, "Hey, this is what we're going after." And then we say no to everybody else. That's the most important thing; you've gotta be brutal. The question you gotta ask yourself as an entrepreneur is how many times a day are you saying no. How many opportunities have you said no to? And if you're saying yes to everything, that's wrong. I can almost guarantee that. You should be saying no fairly regularly. "Sorry. You're not the right size company. We tend to focus on companies that are this size." and it's not personal. Me, I would love every single person in the whole world that's in construction to access Alice. That would make me happy. But you have a business to run. If the company is bigger than this size, I'm going to give it one point. If the company is this, I'll give it two points. If I'm talking to the VP of construction, I'll give it three points. You create some system where you need six out of eight points to continue. It turns a lead into a marketing qualified lead. Then they move forward and we asked them, "Do you guys have a project, do you guys have a budget." These are things that people that have done this, it's relatively straightforward for them. Then you move it to sales qualified leads. Marketing hands it over to sales.

Roland Siebelink: Because now sales has talked to the clients to understand that there is a concrete opportunity, right?

Rene Morkos: Exactly. Sales says, "Okay, we're going to take a look at this. And we're going to look at what are the key projects that you have. What are the key problems that you're trying to fix? Is there a real opportunity? Is there a budget?" That's what good salespeople do. And then it moves through your pipeline and it gets handed over to customer success. Each of these stages in your life cycle, you have to figure out what are the entry criteria, what are the exit criteria? What are the questions that you need to ask? Who in your organization is responsible for that stage? And then which documents support that stage? For example, in marketing, we have a one pager. What is Alice? Another one, which is how does it work? In sales, for example, we've got common key objections. Here's the stuff that the clients push back on, so here's the answers; we've heard this before. Here's how we fixed it. Here's the case studies about that. Each of those stages is going to have entry criteria, exit criteria, who's responsible documents. Now you can mirror that in your sales force and you start to get something that is relatively manageable. You're going to have a business if you can improve what you're doing. But you need to know what you're doing.

Roland Siebelink: You have to draw the line in the sand first to start from, right?

Rene Morkos: Right. These stages are how we do business. Target these companies. These are the hundred companies we're targeting. Here's the people in those companies we target. Here's how somebody makes it from the first stage to the second stage. For us, for example, we've got nine stages in total; three for marketing, three for sales, three for customer success.

Roland Siebelink: How big do you think Alice could become over the years? Let's say 10 years in the future, January, 2032, where do you want Alice to be?

Rene Morkos: Construction's going through a major revolution. What's happening is there's a new ecosystem that's being built and that ecosystem is going to be based significantly on a new form of currency. That currency is data. Knowing who's building what, when and where, and who can build what, when, and where is going to be the name of the game in the next 10, 15 years. To answer the question, I think Alice 10 years from now will be a key player in orchestrating the global supply chain for construction. That is the way I see it.

Roland Siebelink: Okay. Very good. I will not press you to put numbers on that, but I can imagine that they're going to be very high. How can people help you realize that vision if they're listening to this podcast episode? Maybe they’re interested in Alice. What are you looking for most? How can they help?

Rene Morkos: For us, we want to talk to people that are building infrastructure jobs. Anybody that is involved in building jobs at one hundred million and up in infrastructure or commercial. They should shoot me an email [email protected] Alternatively, look us up online. Alicetechnologies.com. Go to [email protected] Shoot us an email and make the intro. I'm confident anybody seeing it will be "Wow. That's really cool." It's only 98% of the meetings that we ask for that get accepted. People do want to see what we've built.

Roland Siebelink: Very cool. And if somebody is listening and they know me but not Rene yet, of course, I'm also happy to provide the introduction. The other question I do want to finish with is talking about those entrepreneurs that come behind you, what is the most valuable lesson you could impart on them?

Rene Morkos: The one thing that I would recommend that would be useful is don't underestimate how many other people have solved aspects of what you're doing. Leverage that knowledge, leverage advisors, consultants, books - there's just a lot of information out there. Like I said, there are certain things that are unique to your business. No one is going to figure that out. That's why you are doing that business. What does your value add? There's a certain stuff that's not. Pipeline, how do you think about pipelines? What's an SDR? How do you think about marketing? How do you think about sales? How do you commission sales? Those kinds of things, what are the metrics you want to look for? How do you build a product? How do you manage a product? These are things that if you pick up two or three books in any one of these subjects, you'll be like, "There's a pattern here." Anybody that has done this has figured out that these are the things I need to think about.

Roland Siebelink: You don't have to reinvent the wheel on everything, right?

Rene Morkos: I would not. You should not reinvent the wheel on this kind of stuff. You got way too many other fish to fry.

Roland Siebelink: Exactly. Focus on the stuff that makes you unique. I like how you link the two. That's the reason why you're doing this business in the first place. That's very good. Thank you so much for your time and your superb insights, Rene Morkos, founder and CEO of Alice Technologies. It was a pleasure to have you.

Rene Morkos: Yeah, it was great to be here, Roland. Thanks for having me.

Roland Siebelink: Thank you, everyone.

Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.