KP Reveals His Next Big Ambition

Welcome to today's unpacked podcast and today's episode is brought to you by our amazing sponsors. Building works, a construction and building services firm focused on hands-on project delivery, and Brookwood Group provides strategic advisory, program management, and development expertise for owners navigating complex real estate and facilities projects. For more conversations like this and what's ahead, visit KPReady.co. That's kpreddy.co. Thanks to our sponsors for supporting the show. Let's get into it. Hey Nick, how's it going? KP, good to see you again. Covered fully from the flu. You know a lot of people man down for the count. I'm glad that I earned a table at your dinner party conversation on whether or not I'm healthy. Well I mean that's the whole thing. We're all doing, I don't know, I wouldn't say that we're biohacking, but we all do various things, modern things. Yeah, we're fasting, we're eating a lot of proteins, like all the things, you know, nicotine, like all the stuff that people are like doing. And it creates some divisive attitudes towards like what is healthy. I think the most interesting part of that discussion of what is healthy is like agreeing on a standard benchmark for the right things to measure. Like you look at Brian Johnson from Don't Die, you look at, you know, your standard medical doctor or even, you know, you get into Eastern medicine practices and like everyone's definition of what is, what is healthy is like pretty drastically different. So that's yet always a fun point of debate. I'm like, what are you optimizing for and like yeah, how do you like, you know, some people for instance they might like longevity with Brian Johnson, they might not care about optimizing to be 120. They might just want to optimize for health in their, you know, in their in their in their early years, right. And so how do you, yeah, how do you square that when like the time horizon for, you know, desirable age is drastically different. Yeah, I'm generally kind of a moderation person, right. And don't don't get to stuck on any one thing. But but also like, I mean, if you enjoy being in the gym for two hours a day, by all means, right. But if you add up that two hours a day on your lifespan and how much time is in the gym, there's a good chance like well, you extended your life by so many years, you probably are not winning, right. You probably makes a problem time you spend in the gym. Yeah, it's like the debate on what is even good exercise lifting, running, doing playing pickleball, you know, everyone has a different, you know, exercise regime of interest. And you get oftentimes people get people get ashamed if it's not the right most healthy one. And I think that's like the most ridiculous thing in the world like exercise is should, you know, should be should be fun and something you actually want and look forward to. By the way, all this stuff should be highly personalized, right. Just like how medicine is moving towards high personalization. If you look at like the rare disease things that are happening now because of AI, you're like, okay, we can lower the cost of coming up the cure for a. You know, for a, you know, a rare disease that doesn't hit a large population, it's all becoming highly personalized. So I think about health like I mean, we are all so different mindset biology, you know, I have bad knees from lots of soccer and lots of tennis. I shouldn't be running like no one's going to convince me to be to run right. So no, I think that's, you know, it's all a personal choice and it's all like, but that's why that's why the debates arise right because everybody thinks that their idea is the right idea. 100% yeah, well, we got a fun episode and store today a reveal of sorts, a reveal. One might call it a reveal. But yeah, I think by the time this episode airs, you will have officially launched you knew your new company, your new startup. That's right, which is called zero RFI. That's right. So yeah, keeping under wraps, man, like as much as I publish and we pod and all that, like I think, you know, pat on the back, we've, we've been able to keep our mouth shut pretty well. It's pretty funny. You could probably listen to the last 10 to 20 episodes and immediately map out exactly what what the strategy is and I actually think I'm curious to get this feedback from listeners, but my guess is that there are some listeners, you're going to have a lot of aha moments. Yeah, you can immediately understand like yeah, why you've chosen to do what you're doing and also be like, oh, this is what he's been talking about for the last six months and what he's been like, yeah, and directly alluding to, but yeah, well, first of all, congratulations. I mean, it's I know it's been a herculean effort to get it to this point. The announcement next week is the launches also a fundraising announcement. And so how much money do you raise? 13.8 the PR people say I can round up to 14, but let's stick with 13.8 for accuracy. Okay, 13.8. Good. Yeah, solid. Yeah, bad for a seed round, huh? What's it? What was it like being on the other side of the table raising money as a founder again versus being on the investor side? No, I think it's super interesting in that, you know, it's not like I went and shopped a deal and shopped a deck. This was, I would say like when we talk about our firm growing up and ensuring right when that weird teenage years, I think, I would definitely like to operate the way my partnership with general catalyst kind of evolved right. It wasn't like, oh, let me put a pitch deck together and pitch a bunch of ECs. It was a series of conversations with Paul, Quann and Hamam and Mark, barbaba to just say like, is there there? Is this, you know, is this industry ready for change? And, you know, posing that wild question, right? If you had access to unlimited capital, what would you do? Which I don't know that we've ever asked any of our founders that question. You asked that question. I probably asked that I do ask that question, but it also feels that, you know, when you're not general catalyst, it feels a little disingenuous, right? Like why do you ask KPD have access to infinite capital? Definitely, yeah, definitely. Sometimes it kicks the bruise knee of the founder who's struggling to raise money when you give them 100% unlikely to occur. Yeah, I'm trying to make payroll, we be able to. So I think the process, I would love to say like, oh, I, you know, it was a classic founder process. I think it's, it is a process that I would say, I don't know that it was unique to me. I think in the world of second or third time founders, I think it's, it's a fairly common thing. Like, hey, you've been successful. You know what we're doing. What do you want to do next? Right. I think that, I think that's that was kind of like a similar conversation that a, you know, a, a, a, a, a, a, three-year-old founder would get. Right. So I think it wasn't that different. I think it was super different than like the conversations we have at Shadow Mentors was founders or we're talking to. Right. So no, I think, you know, when you look at that, I think it's what's interesting about that collaboration, and it's the first time I've experienced it, right? I'm not saying, okay, this is how it works. I'm saying this was my, this was my experience, but I understand similar to other experiences. I think when you haven't decided what you're doing, but you're very, you have strong conviction about the problem sets that you want to work on. To be able to have early conversations with the VC to shape and mold the idea. I think it's really the ideal way of doing things because I think otherwise, you know, someone pitches us for an idea. It's a binary outcome, right? Either we're interested or we're not. Either yes or no. So you know, this was like a couple of your process, right? A relationship building and conversations and, you know, sharing thoughts back and forth and, you know, seeing companies get funded and asking the question like, well, you know, why did they get funded by so and so? Like, why did that make sense? Why did it not make sense? Like what blind spots are they missing? But I think, you know, it's a definitely a different process. But I will say this, I wish founders would come to us sooner, right? Like before you quit your job, come start talking to us. Right? And it might, it might be the trigger job for a year while you're talking to us. But I think the outcomes are probably better because we understand kind of what the capital markets look like and availability capital and trends and all that. And the founder can iterate the idea because I think this idea of for our industry specifically, there's other industries, you know, let's go build an MVP and see what happens. I've said it before. I don't think MVP's working on industry very well. I wish more people could experience it, right? Which just means you have to have conversations earlier. And those conversations may go nowhere, right? It might be someone calls us, "Hey, I'm thinking about leaving my company. Can we start chatting?" You may end up like, "Hey, there's nothing to do or you're not the right person to do it," or, you know, whatever it is. Yeah. I'll add to that, I think, that, you know, for an investment firm for a VC that has to be a mindset that you also take. Because I'll admit, like, you know, there's so much that we see, right? There's so much inbound and, you know, people reaching out about ideas and LinkedIn messages and introductions from other investors. And so you get a lot of noise. And some of them are like, our good matches for our industry and are compelling. And others are just like, not a good fit. And you're just like sifting through, you know, the paperwork of telling people, "Hey, you know, this is what we do, not a good fit," probably, blah. And you kind of get worn down by that process. And so there's sometimes like, I'll get an end bound from someone and they'll be at that stage. And admittedly, I'm not as open as I should be to having that conversation of like, "Hey, you're at so-and-so reputable AEC firm or so-and-so-rebutable tech company and you want to start a construction tech focus startup." I have to remind myself, like, those are the types of conversations we want to have, even though it's super early. And there's no immediate action that's going to be taken. And I think for any VC that have found their perspective, founder talks to and is trying to work with, like, I would vet for that. Like, try to see if they're open to doing that and open to basically brainstorming the idea with you a bit. And, yes, sparring, because I think like, you do get a lot of, there's both the relational benefit of getting involved early and getting someone's opinion you respect. And then also, we get to see you move, right? We get to see how much progress you make in 30 days and 90 days. That tells us a lot in terms of, when you compare that cycle to a two-week diligence cycle when you're running a fundraise process, like, it's night and day, the difference in terms of comfort that the VC can have. No, I think we also like one of the red flags. If we took about the use case of a founder leaving a corporate to go to a startup, then one of the flags we always have is like, hey, they've been working at a corporate with PTO and that, like, are they going to be able to work in a startup situation? And, you know, if you can hold down your 40-hour week job and work on your startup 60 hours a week, you're starting to show us, right? You're starting to show us that you have the grit and requirement to, like, once you quit your day job, you'll come on board and run like a startup versus, you know, running like a corporate person. But I think, you know, part of the challenge is, you know, catching people where they have conviction about the what, but not about the how. And I think too many people show up to us where they already have, you know, I remember when we first started this process, Hamlet was, you know, were similar ages. I think I'm a little bit older than him, but, you know, he kind of coached me on like, hey, you, you know a lot. I'm not going to take that away from you. But the thing you need to watch out for is acting like you know nothing, right? Just keeping an open mind to not knowing everything. And we iterated, we iterated several times on our thinking. So I think I did a pretty decent job of not being like, I've been here forever doing this and blah, blah, blah, you know, that, but I think we have some founders that come to us like, I was at X, Y, the construction for 20 years. I know everything. And, you know, call it the beginner's mindset or whatever. You know, whatever the latest book is telling us about these ideas. I do think that was some great advice that Hamlet gave me to say, like, you know, I recognize you know your stuff, right? Also, don't get stuck. Right? Don't get stuck. Yeah. That's really good advice. Yeah. Yeah. Let's talk about what zero is. We haven't covered what you're actually doing yet. So yeah, walk us through the, walk us through the idea. There's obviously a lot to take into on the business model. But yeah, what is zero or RFI? Yeah. So we are a human first AI scaffold owners representative. So the idea is we will go to owners and help them get their buildings scouted, designed, built, and operated and managed, right? So full lifecycle from beginning to end. So if you're thinking about building a building, you hire us and we run you through the floor. Life cycle, which means we have people. It's not go to this website. However, our general belief is that our team has a set of tools in their toolbox that they get to pull from to do this analysis to move quickly, right? To move quickly. And I think part of it is we have not seen anyone really be the owners ally for the full lifecycle, right? In other words, worrying about operating costs before you design it, like thinking about all these things. Sophisticated owners tend to do it themselves. But if you're not building a building every day, it's very difficult for an owner. And so I think for me, people, when I look at how did we end up here, right? It's a little bit of all the ideas that have come before this that I finally felt like where I saw AI trending was that AI being less of this enterprise bucket that does everything and really the ability to have to create fast old tools for every situation to like create transparency and quite honestly, like there's such an asymmetry of information between owners and their designers and contractors and product manufacturers to kind of level the playing field for the owner. And I don't think anybody's focused on that. I don't think anybody's focused on that at all. And that's where when we talk about all this construction productivity data and all that, you know, the problem is the only people really suffering from this lack of productivity are these owners, developers, and then society writ large. I don't think the industry is actually suffering from it. If you ask an architect, has this lack of productivity affected you, they're benefiting from it actually? Go more out, right? If you ask a contractor, are you benefiting from this lack of productivity? They're doing fine. Right? They're getting paid. So I think what it takes, and because of the fragmentation in the industry, you have to have an entity substantial enough to drive this behavior. And it's very hard for an owner that doesn't do these things every day and doesn't have the tool sets. And go out there and look at AI tools. There's 100 tools for how to do pre-construction. There's 100 tools at AI for scheduling. If you think about the weaponization of AI, right? How's the owner going to deal with this? Like all those tools are not driven. The goal of a pre-construction AI tool is not to give the owner a better building or a cheaper building or a faster building. It is to enrich and reduce risk for the contractor. Theoretically, I think we talked about our previous podcast about kind of a little bit of a prisoner's dilemma if they actually could reduce costs by 30% is a GC could really share that with the owner. Or is it more to your point like, well, who's ever flinch as far as try to? Whoever that contractor is that bids 30% below everyone, that could drive the behavior. But we haven't seen that, right? And I think I wrote a book 15 years ago now or longer. I can't remember 2011 to 15 years ago that was called "Bim for owners and developers." And if you read that book, my answer then was if owners and developers own the BIM process and orchestrate this, they can win. They can have a cheaper, better, faster building and they kind of win. Instead, what happened? That never happened, right? The architects used it, the contractors used it, and generally speaking, the owners of things, zero benefit, or very little maybe in facilities management at tiny, but developers have seen no benefit from them. If you ask a developer about BIM, they're like, yeah, my architect uses it. What do you want to know about it? Right, but my view of BIM when it first came out was, oh my gosh, owners can now have a level playing field of information because they don't have to know how to read drawings. Right? They can see the 3D, they see what they're getting. And I used to say, this is kicking back from years ago, right? When I looked at BIM, the largest purchase ever made unseen with no performance criteria, with no understanding of total cost of ownership is a building. In our own consumer mindset, if you came to my car dealership and said, I want to buy a car and I started sketching some stuff on napkins and said, here Nick, buy this car, it's only $100,000. You'd be like, well, what color it is, like you'd ask all the questions, right? I know. I don't know, sign here, it's $100,000. And then by the way, I can't tell you how many miles per gallon it takes. I can't tell you what the maintenance is. And then when I deliver it, you're unhappy with it. And it was also, instead of $100,000, it was $200,000. There was a staff that my PR team shared with me. I was like, oh, that can't be right. And I was like, it felt as aggressive, right? And it was a McKinsey report or a DeLoi report, you know. But they said that most construction projects are over budget by 80%. And I saw that and I was like, oh, that must be a typo. That's gotta be a typo. - That sounds right to me. - I thought it was aggressive. I thought it was like, yeah, yeah. - That's a lot. I mean, if tomorrow your bills went up 80%, are you living that life? Like how do you plan? - A problem. - Yeah, right? It's a problem. We can't deal with eggs being 10 bucks a dozen. You know, like, so I'm thinking, they're going, you know, this was just yesterday, it was fascinating because I was like, oh, it can't be 80%. I know it's bad guys, but are you sure in that being a little bit, you know, aggressive to get the press's attention? They're like, no. And they sent me a screenshot of where it was cited from. I was like, wow, it is that bad, right? So I learned something new yesterday. It's, I thought it was bad. It's like horrific, right? So, but I think that's ultimately what we're trying to do is if every other industry, and to your point, I've been throwing around little breadcrumbs, right? Why is it that every other industry, that technology has had a deflationary effect in that product or service, but not in construction? And so, you know, my general thinking is, like, we might be that, we might have that answer. It can, how can we not, how can we have better predictability, right? So, you know, my view of the world is risk management is a human job, uncertainty is a great job for AI. So, if I'm understanding correctly, the decision to be an owner's rep was primarily to deliver, to deliver either a lower-cost option to the owner and/or better services for the first time, knowing that if you built a product that still made strides to improve the overall construction process and the overall AEC process getting something built and developed, but you're selling into the individual vendors, it doesn't allow you to actually impact, in a lot of ways, maybe indirectly, but it doesn't allow you to directly impact the owner experience who is the customer, right? Is that the right way to think about it? Yeah, I think the right way to think about it is a couple of things, like, you know, owners don't build off enough that they're going to get up to speed on a set of tools, right? So, it's, there's never really a good opportunity for a self-service model. I think the other thing is the experience is horrible. I mean, I wrote an article about this about how do we bring joy back to this profession from an owner's perspective, right? I mean, if you're a school principal and you just got approval to build a brand new middle school, you should be excited. They're excited at the very first meeting. And after that, it's nothing but bad news. And it's bad news delivered very cold, right? It's like, well, that's what things cost. Yep, sorry, you can't have that extra class drink, because it's not going to work. Oh, you can't do it. It's basically a bunch of like, you know, no, you can't do that. And it's like horrible, right? It should be very different. So I think there is also like the customer experience in this industry has not been, has not changed, or been reshaped ever. So we think it's not just about predictability of costs and schedules and getting what you want, you know, getting what you paid for. It's also like, why can't it be, you know, fun along the way, right? It's, you know, someone was talking to someone and they said, you know, there's not a kid out there that does love Legos. Almost every kid out there loves Legos. And if you've never built a building, you kind of like, it sounds like a great idea until you do it. I've told my wife, it's like, we will never build a custom house because we will probably not end up together at the end of it. We a custom house for someone else, right? It's not fun. It's painful. It's brutal. So I think that's another part of how we're looking at it is like, why can't it be fun and interesting and collaborative and all that? I think you said it human first with AI scaffolding was how you describe zero. We'll talk me through your definition for that. What does that mean? So if you're building a hostel, I'm going to deploy people in your office like to work with you. And really that that team is backed by a set of AI tools that they can pull out of the toolbox as needed, when needed. And so we're not trying to take away, you know, it's kind of interesting, you know, once we fully launch by this time, you'll probably see a hundred job opening. So we're not this like, let's get rid of people, and AI does all the work. What we're saying is let's enable people with deep tools that removes the asymmetry of information and puts it more in their position. And they're just better equipped to handle things. Look, if you get a hundred, if you're a project manager on a project and you get a hundred pro core notifications, 50 emails, and all the reality is you cannot, you know, you cannot take that information and make sense of it. There's just no way. And that's where a lot of this asymmetry of information started was a lot of the technology that allowed the vendor system to create lots of content quickly. Right? In other words, here's a set of drawings. Here's a set of PDFs. Here's a bit of model. Take a look, review it, get back to me tomorrow. We need to make decisions. In other words, I'm going to wait till the last minute to send you a deliverable, and that deliverables could be a hundred sheets. I'm going to wait till the last minute, like, hey, you need to approve that change or else the project stalls. Well, I haven't looked at it because it's buried in 400 notifications. Right? So there hasn't been a good way to ingest, because I would argue a lot of that, you know, like we were talking about a simple idea, every project on medicine construction, there's a daily report that is published. It actually has a lot of great information. And if it doesn't have a lot of great information, you can ask for that information, right? You think owners are reading those daily reports. You think the current owners reps that are dealing with all this paperwork are looking at those things? No, they're not. So that's where from day one, if you look at the compounding effect of asymmetry of information, it just compounds along the process. Right? We go from three watercolor pictures of what the project might be to stacks of submittals to just all kinds of, you know, so it's the beginning of the end, right? It doesn't get better through the process. It just gets worse. Yeah, yeah. We've talked about how in the future AI has the potential to break the billable hour for specific vendors that are operating, you know, with the billable hour infrastructure, like engineering, like architecture in many cases, like the owners rep model. Do you think that, do you already see that happening? Like when you're building product and interacting with, you know, your first acquisition, which we should cover in a second, but do you see that infrastructure is breaking down or do you see opportunities to break that entirely? Or do you think that remains intact for a bit and it happens more gradually? Well, I think it starts to break. I mean, hopefully, I mean, look at it as much as I'd like to be the winner takes all in this business, right? Hopefully other people like see what I'm doing and copying me, it would be a good thing for the industry, right? I think one of the biggest challenges when we talk to engineering firms, architects about building by the hour, I think some of them disingeniously say, like, oh, I wish I didn't have to build by the hour. I think they actually like it, right? 'Cause when you build by the hour, there's a lot less accountability to the deliverables. You just build hours, right? But I think there is a much larger segment that does want to get away with it. When you ask them, why can't they do that? They say because their end customer will not let them do that. And so if you look at the whole RFP system and how your rate sheets and all that, that is because owners kind of don't have a choice. They don't not have to evaluate, right? They have to make everything apples to apples, apples, and it's a procurement process. Our hope is there's this idea called in a qualification-based selection, QBS, it's a joke because at the end of the day, all the engineers and architects know it's really just gonna be a price, right? So if you think about that, us as an enlightened owner, if you're a GC and you show up to me and you say, like, hey, here's what I want to do. I'm gonna 3D print this, I'm gonna modular that, I'm gonna have robots over here. I'm gonna be like, tell me more, right? My team is gonna be like, tell me more, help me understand this, right? A traditional owner or owner's rep is like, I don't even understand the words you're saying. Please just give us a bid, right? And so I think a lot of the, you know, a lot of people take my words as like, I'm trying to beat up the industry. what I'm saying is I'm going to clear the road to do things better. Actually, it was going to be a good work. Yeah, I was going to ask you about this. So your intention primarily, first and foremost, is serving the owner and delivering a better experience overall for them on time on budget, getting closer to the experience they want. But yeah, like the other side of that is, how do you better serve the AEC industry and the real estate industry? So yeah, do you think about that from a product standpoint? Is that a product driven exercise or is that an organizational change that you would make to support the industry better? How do you think about that? Yeah, I think there's a couple of things. If you're a carpenter and you're going to come do framing and you show up with a camera, like, sorry, move along, sir, I need someone with an L. There's just certain things. So I think the owners have actually many ways because they have to, they're trying to reduce the variables of risk. They tend to default to like, here's the way we've always done it, right? Which is fair, right? When you're, when you, when you don't have a lot of choices, that's what you come down to, right? So it ends up being apples, apples, what's the price, right? So I think my approach is we actually have a program we'll be announcing that we're launching. That really allows people that want to serve our owners, get the opportunity to interface with us in a different way, right? In other words, if you are more tech forward, there will be a benefit to working with us because we can tell, right? You know, it's kind of like if you talk to most owners reps right now, it's like, hey, what are you doing with the BIM model, like, it's submitted? Yeah, we look at it, like, we know nothing, right? Then you do nothing with it. Whereas, you know, we might be like, hey, if you're going to submit a BIM, here's how we want you to submit it. And we, in our AI, we'll actually check it. So you better deliver something good, right? Don't, don't put garbage in there. So I think my view is, you know, the example I use is, if you look at what Walmart did to their, for their supply chain, everybody thinks about Walmart and say, well, they got the best prices out of all these people, which is true. But a lot of the way they got their best prices is by giving them a vision and insights into their own business that they didn't have before. They didn't know, right? I don't think there's any drywall contract right there. Don't want to 30% of the drywall into the dumpster. That doesn't help them at all. They don't, that's not helpful to them. They don't want it. I mean, the good ones, they don't want that. So it might, in fact, be through our program that, hey, here's some tool sets you want to think about implementing. And if you can go do that, we'd love to give you a shot at the next jump, right? So I do think that, you know, while I'm kind of saying like the owners, you know, like, yes, the owners are first and they are who we all work for. But the owner's ability to give feedback to their ecosystem, to their vendor network about what good looks like and what is better to start to look like. They can't, it's just not realistic, right? So I think even there, you know, I had an engineer tell me it's already joined our program and said, look, we deliver when we do structural engineering, we deliver it three ways. Reinforce concrete, steel and wood, because we want the client to have optionality, our competitor does not. And when the owners looking at selecting structural engineers, we get no points for providing such optionality, they literally come back to us and say, well, it's going to be, you know, everyone else like bid on it for reinforce concrete, just change your price to. I'm a denominator. Yeah. Yeah. Yeah. So let's take let's, you know, let's take creativity, ingenuity and drive it to an RFP, which is basically what mediocrity. So I think in many ways, we are, our, our, the change rate just won't be in like governance oversight data and all that it's that feedback loop of like, hey guys, have you thought about this. Our data shows that to do to do. Here's a tool you might want to go use from a third party like I mean, we already have one deal right now where we recommended one of our portfolio companies that shadow like, hey, go work with them, because that'll help you get the data we need back. And then we're like, I'm not going to let her cheaper faster. And by the way, it's probably going to help you execute the work. And they were like, I've never heard of this. You know, I've never heard of this. It's like great good opportunity, right. And they got very excited. And I think they got very excited to because they're because we're looking long view of like the lifecycle management. And that data is going to help us maintain your building better. Oh my god, you're right. That's so good. Let's do it. Right. So I do think the change rate within the ecosystem of AC. I think it's going to be very all this money that's been put into innovation in these firms. And they haven't been able to get much differentiation. I think we're going to start moving that along. To bring it back to the name, you were just alluding to, I think the ultimate goal, which is a zero RFI state for the industry, which I think, you know, in theory, that gives you a way more predictable schedule. You do a lot more predictable cost structure. But yeah, like what does that, what is zero RFI mean to you? And maybe like, maybe talk me through the time frames of which you're thinking like that's actually achievable. Yeah. So I think like it comes back to what I built several years ago back in 2005, which was we did constructability analysis, doing bit using them. The whole idea is if we used them to try to build the building before the contractor was hired, we could find all what we called then was virtual RFIs. And we put them all in discrepancy reports. So the idea was before you put it out the bid, go clean up all these constructability issues. And you're more likely to get better bids. So that's a good idea. So let's simulate construction, not just review the drawings for detail issues and misspellings and all that right. But actually, based on these plans and specs. Can I build this right now the problem with that back then was it was very manual right. And there was a body of knowledge and construction that you don't have to be as prescriptive right I don't have to tell you how to swing a hammer. I don't have to tell you where to put the nails right that's kind of your job. And what I found is with AI the ability for AI to determine what what is not built constructable against an inference model that says, well, the contractor knows how to use it drill. Right, that's commonplace. Whereas before it was like, I mean, we had to act like the contractor knew nothing, which means we had 30,000 RFIs. And then in practical, you know, half of those were like, I mean, if you're a contractor, you know what to do here. It doesn't have to be as explicit right. So we always used to say errors are easy omissions are harder because they don't exist to be corrected. They have to be inferred. And when you go down this this trap of like inference and inferring things. It means you have to have a certain level of knowledge to be able to infer them. And back then when I was doing it, we didn't have that. We had a bunch of experts sitting around like, I mean, we're to drive all contractor be able to understand this. I don't know man. What do you think? It was like debates, right? And you'd have someone say like, I mean, if they're any good, they should know what to do. Right. It's like, well, that's not how to like, what does that even mean? Right. So I think the mission of zero RFIs that everywhere along the process. You're operating without questions. Right. I don't have to ask you for information. It is there. It persists. It's available. It's clear. Do the back to your point on the on the drywall contractor. Are the are the models good enough today to infer correctly on the knowledge of the average sub that you're working with? Not alone. I mean, that's why we we've spent I mean, we've been in stealth mode for over a year now. Right. We haven't been in market or which been building heads down building stuff. Right. And so, and I will say that versus a year ago to today, the LLM's out of the box are doing some things that we, you know, we spent a lot of building that now it just does. Right. Which is fine. I mean, I always say, you know, when I talked to Barry or CTOs, like, our biggest risk of technical debt is that whatever cloud releases, whatever in thought for releases tomorrow that we just got done building. You know, gets up a bit that's that's why it's, you know, that's why we're bent her back. You know, these things will happen. But I know I think it out of the box. I don't think you'll ever see it per say because I think it's this is where understanding how to take. You know, this, this is a true thing, although overstated a lot of times in our industry, every project is different and unique. Right. So when you look at that, can an LLM determine if you're on your fifth identical waffle house. Can the LLM decide to understand what's happened? Right, what's happening in terms of, well, it looks like there's your fifth waffle house and I found all these problems, right? 'Cause I learned off the first four. I do believe that a lot of what we've built is really driving, how do you think, how do you look at every project being unique and creating inferences? Not two airports or not alike. If you look at a new construction versus an addition versus renovation, there's lots of unforeseen conditions, right? But some of those, finding those unforeseen conditions are kinda known, like here's what you should be looking for, right? I don't see the, I mean, look, if we could just operate and just pay anthropic $300 a month per head, I'd be thrilled, right? There's nothing wrong with that. I think we're far, far away from that. And maybe never, right? 'Cause when you think about every project, every building being a new idea, how much of the existing corpus of data is really gonna help you inform how you build that next new thing. Everything's a mark on fall, man. - Is that? - Everything's a mark down fall now. - Yeah. Well, I think it's like, you know, in the legal profession, right? One of the things that's, and this is where things are different, right? In the legal profession, there's this thing called case law. It's open-source. It's published, right? So if AI can read all the case law and start to determine like what is, what has precedence, what doesn't, even here's how you should argue, right to win. That's probably fine. It's probably gonna get, get there very quickly in the next six months, even, right? But what when there's a new case without precedent, without enough direct precedence? That's a big question everyone has. Just a mark down filer skill for that, right? Yeah. How do you scale this thing? So human first owners wrap with some AI embedded, yeah, what's the processor scale? - Buying companies. So we were part of, - You're straightforward. - What's that? - Sounds pretty straightforward. - Yeah, straightforward. We're part of GCSEI, AI roll-up strategy, right? And so our go-to-market is buy companies. But I think unlike PE, we don't have a, oh, we have to flip this company in five years or else. We're not operating with any of that stuff. We're basically like every green, right? So there is no, we have to sell exit by a certain date. That's not the priority. We also think, so I think we're competing against private equity that's trying to buy these firms. I think if someone wants to sell their firm in retire, we're probably not the right partner. If you're a firm that sees where things are going and realizes I don't have the technical resources to do this myself, I don't have the capital resources to triple my business in three years. So we become an ideal partner in those situations. But I think if you look at it, there's a strange thing and we studied it. I mean, we've definitely been studying a lot. It turns out that owners, reps, once they get over 50 people, the quality tends to go down. The capabilities tend to go down. So there's a lot of great 50 person firms that are very passionate about delivering excellence to their customers. And in fact, it not grown over 50 by design because we just, there aren't enough good people to do this. Our point of view is, I don't need everyone to be expert level. They're getting a lot of help. So when you look at some of these big commercial real estate firms, the sad thing that they say is, KP, you're so fixate on people being able to read drawings, half of our people can't read drawings. I'm like, well, that sounds horrible, given that you're doing construction management. And they're like, well, it's not important. And I just cannot live what I don't understand with that. What do you mean it's not important? It's like, I'm going to be a food critic, but I have no taste buds. I don't understand. It doesn't compute anyway for me. So I think what the tooling we're building is, I think maybe you're great at finance, maybe you're great at customer relationship management. You actually try to do what's best for your customers. Maybe you're great at managing a meeting. The maybe reading plans is not your strong suit. That's what RAI does for you. Let's talk for a minute about how this all relates back to shadow ventures and the benefit potentially to every current portfolio company, the future portfolio company, personally pretty excited about the opportunity for a pretty big distribution advantage. So you had to tell everyone how you think about that. Yeah, I think most of our companies, right? They're seed, pre-series A, series A, right? They're early. If you talk to most of them that are selling to contractors, to et cetera, everybody's trying to chase like this enterprise agreement. And so if you're a startup and you go directly to the owner, one, the sales cycle is long. Getting a hold of the head of construction at Genentech or somewhere, it's hard. Takes a long road. Inevitably, they'll say, oh, that's what you do. You should go talk to our contractor. That's what you do. You should go talk to our architect. So they get redirected down to the ecosystem because for these owners, once again, apples to apples, right? They're not going to bring technology to the table. They can only influence, hey, go talk to my GC. He might be interested. So we think we're going to create a massive distribution opportunity for our startups and other startups, right? That makes sense for the owner to kind of standardize on some things, right? And I think that's what's kind of exciting because I've seen so many of our founders, they say things like, yeah, if we could get to the owner, here's this new dashboard we have. If we could get to the owner, this is how this would benefit them. And they get zero attraction to the owner. Because if you think about it, if you go hit one GC, that GC can bring you into 100 projects in the next 12 months. In that same amount of effort and customer acquisition cost, you can go see one owner. While at the same time, they're one product. They may or may not even care about using the tools. That's not their core competency. Right. We've never used this before. We don't know. I mean, I'll introduce you to our contractors if they want to do it, sure. Yeah. So I think that's a little bit of breaking the mold. And I've already talked with some of our founders that in the past had pitched me like, hey, we want to go to the owner because we think we can add value. I'm like, does that deck off? Let's talk about how you can add value to the owner. Yeah. Because in many ways, we are becoming the mega owner, right? Yeah. So you leave in the investing game or you-- You leave it us behind. How are you pulling off all the extra effort here? You tell me how I'm doing. You are still young at heart and more energetic than most people my age. So yeah. The good news is, if I was going off and doing something in aerospace, totally different, right? I'm in the soup. Right, I'm in the soup. And whether it be startups, and I will say the only thing that I've become more biased by, and I think that's my own experience, it's just really pushing founders to think bigger. I think what I'm not saying, I think what the relationship I have with GC is very special, unique. I'm not going to take away anything from that. They're fantastic people. I think what one point you were joking around like, hey, you're going to get competitive term sheets. I'm like, no, man, these guys are my partners. I'm not doing that. They're my guys. I think it has created a bias in me that I want founders to think bigger. I think they can go have these conversations. I had my resume as I-- right, my resume as I-- I think you can go have these conversations with these VCs and build bigger things. So when I see things like, oh, we're a little feature, I'm like, come on, man. And I'll tell you where I've been-- look, I think investing energy in AI, using the tools and understanding how they work. It's like a whole other job. I mean, you know, I'm up at 4am, 4am to 7. I mean, they're writing or coding, doing things, right? And so I find it fascinating when founders are not spending that time. I mean, literally, I've been like, I see founder at Dex sometime like, this is not exciting. I drop the deck in a cloud. But what would it take for you to build this product? It rarely says, oh, it'd be very hard. It's almost like, yeah, this is pretty easy, right? Do you feel that you're insulated by the threat of model improvement and the threat that you're seeing right now play out in the public markets with any software company, some of the SaaS businesses we've covered are trading down quite significantly from where they were. Do you feel that the service's dynamic protects you from that? Do you feel that you're better able to ride the exponent of the models as a service provider? Yeah, I think the services model is a pretty decent mode of sorts, right? like we're actually doing. the work or not competing. You know, we're competing against pro-corporing, Autodesk, right? Like, in many cases, they're already knocking on my door asking about how, you know, as they have things of elite here and there, like, "Hey, how can we be a partner? How can we be a good partner?" Because by the way, you look at Autodesk and Pro-Corp, just to pick on them for a minute, ask them how their owner initiatives have been going. How's them how going to owners has expanded their business? And they'll tell you it's been hard. So it's starting off for a startup. I mean, when pro-corp and Autodesk can't get the owners you know, attention. And they say, "No, it's up to my GC. They manage all our drawings, right? How does a startup even do it?" But we did like change and influence starts there. So I think there's a couple things. One, we're not sass, right? And I've done some demos for people like, "Well, how much?" I'm like, "Sorry, like, that's how it do. That's how this works, right?" So I think we're fairly insulated from that. I think we're in a good spot from an acquisition perspective because the industry has started to understand this dynamic of being bought in private equity. And then I think our other advantage is that most private equity firms may be all, they operate on a three to five-year cycle. And then they have to sell. Right? So for me to convince Nick Durham, at Nick Durham and Associates to sell their company that they've worked on for 15 years, that's very nuanced. Right? It's very nuanced. But going to a private equity firm that already convinced Nick to sell five years ago, right? And make sure, go, "Hey, guys, we're ready to continue your disposition cycle." And they go, "Yeah, man, let's talk." So I think there's been enough seeds planted in the PE world that they're all at their three to five-year cycle that will come along and pick up. Very cool. Very cool. Yeah. Chapter one. To be continued. Yeah. Now, I think it's going to be what I would say is it's been a lot of fun. So far in terms of just working on these things. But I think it's also when you asked about how does this effect shot of ventures. I'm so deep in it. And like my ability to understand what's in market, what AI, like, I know you've been spending a lot of time in AI. But I think my, I'm spending a lot more time. You know, actually building product, it forces a different, yeah, different level of understanding and depth. Yeah. Agreed. So I think, you know, when we look at founders and they're like, "Yeah, we built this unique thing." And, you know, well, what about, what about the LLMs, aren't they just going to do this? Oh, no, man. It's like, I don't know. Like, I don't know if you saw, like, the latest afternoon release from Anthropic. There's some morning release in the afternoon release, right? Like two releases a day of these guys are at, right? And it's like, they don't, they're, there's three weeks behind on like, what's been going on. It's like, I'm sorry to tell you like, Clodger slouched a plug in that does exactly what your entire startup does. So I think we're in a good spot. I feel a bit about it. Exciting stuff. All right, man. To be continued, more to come on on zero or five. On this, on this pod and, and in addition to all the other KPReady editorial content you receive on a daily or weekly frequency. I'm to 157,000 subscribers, man. With so many, by the way, side note, I had a CEO of a construction company send me an email saying, "FAI, fuck AI, right?" It's all like, "Sure, okay, right?" He didn't unsubscribe though. He's just mad. Mad at the world. He's just mad. He's just mad. But he's still had to, he was like, "Was he mad? Was he mad that you were spamming him? Or was he mad about, was he actually all the way around the world?" He's just mad at AI. Gotcha. He's mad at AI. But he's also a subscriber. The send-in, send-in the screenshot with the answer, "I button." I was going to send him, send him a gift bag with some candles and send him a subscription to cloud. Yeah, there you go. Sounds good. All right, man. Thanks. Talk to you soon. Thanks for listening to another episode of KP Unpacked. You can connect with KP Ready Today at KPReady.co. That's KPREDDY.co. And additionally, follow him on LinkedIn at www.linkeddin.com/in/kpready. Until next time. [Music]