Procore is a cloud-based construction management software designed to help every builder and every budget, by offering an easy-to-use platform where you can manage projects, financials, and resources all in one place. It’s used by contractors, owners, subcontractors, and public agencies.
The company founded in 2003, California. In the business for nearly 20 years, its software is currently used by around 1.6 million companies in over 125 countries. It’s known for the best solutions for delays and cost overruns.
The idea was from a techy that has a construction background, Craig Tooey Courtemanche. This was at a time when tablets and smartphones were not yet widely in use, the founder then built a web application for online scheduling and answering questions that could be used by his contractor.
How Does It Make Money?
As a construction management product, would the sensitive housing market cause harm to the company?
According Courtemanche, the company’s product is not used for production homebuilding, but is used primarily for commercial, one-off residential, remodeling, high-end residential and industrial uses which landscape are never ceased to expand. The company is not tied to the real estate bubble, instead, it is positioned to take advantage of the growth in the commercial and high-end residential market.
Generally, Procore generates revenue from licensing, it takes payments for 12-month licenses upfront. With many such as Project Management starts at $375 per month, add financial management would be $549 per month. And Custom Bundle for different project needs.
The Best of Both Worlds
Courtemanche was introduced to the ins and outs of the construction site from a young age. His father always seemed to have a construction project underway. And as watching those projects take shape, he learned pretty much of what are the downsides of this mammoth industry. But growing up, the founder aspired to own his own technology company called Webcage, where he implemented front-end to PeopleSoft, Visa and other big companies.
But the idea of Procore still not came to him till the founder was building his new home for the new family. Back when phone calls and fax machines were the default communication modes amongst owners and contractors, which only ravel the already fragmented workflow of the construction site.
Later, Courtemanche decided to take a year off from his software development company and focus on discovering the needs of the construction market. He visited job sites and learned about the inefficiencies that project managers faced on a daily basis.
And that’s when the Courtenanche’s construction experience combined with the knowledge of software development, seems to be solving a big problem – just like that Procore came to being.
As necessary as it is, the application did not take off right away.
Serve the Market That Was Not Ready
Regardless of how gigantic this industry is, it was slow to take up technology. The founder remembers as he started, he had to convince contractors to let the company set up Wi-Fi on their job sites so they could access his software. The firm had to show most of its early customers how this would make their work and their live better. “I thought the Internet would be everywhere because it was everywhere in Silicon Valley, and it wasn’t,” he says. “The construction industry was going to take seven years to catch up to that”.
But before knowing exactly how many years it takes, especially, facing the financial crisis hit in 2008, holding on to Procore was a big bet he insisted on.
The founder recalls, he mortgaged his new house, along with Steve Zahm – a partner joining the company 2 years after found – cut his salary to zero. Five of all employees were laid off. Shutting down is what investors expected to hear from the startup.
But with less than $5M in funding before the downturn hit, Courtemanche carry on with it, and continued to do so as the company’s rivals one by one gone by the wayside. And it starts getting clearer for the founder, his company is emerging in the sweet spot – as odd as it sounds, this downturn is his way out.
“The landscape of the construction management industry was littered with these tiny companies like Procore that also saw there was a huge opportunity. Every single one of them disappeared,” Courtemanche says. “If it wasn’t for 2009, that landscape wouldn’t have been eviscerated, and I can’t tell you that Procore would’ve been the one that emerged.”
In 2010, the first Apple iPad was on sale and beautifully instrumental with what the company is trying to deliver. In 2012, Courtemanche knew he had made it through when he realized that he didn’t need the next check to make payroll.
In 2014, Procore raised its first capital since before the recession, and started hiring salespeople to sell its software to contractors. And recently in May 2021, fresh off its initial public offering which gave it a market valuation of around $11 billion as well as fresh capital to work with.
Ideal Entrepreneur and How to Choose a Great Partner?
Earlier 2020, Craig Courtemanche stepped up to receive the Venky Entrepreneurial Leadership Award, in which he describes his ideal entrepreneur and the partnership culture Steve Zahm and Courtemanche has nurture during the company’s hard days till what it is today.
“If you have an idea, the first thing to do is to literally go sit on the beach for a few days and think about your strengths and weaknesses,” Courtemanche says by way of advice to would-be entrepreneurs. “Examine who you are as a person, and don’t fool yourself.”
Examining who you are as a person, in the entrepreneurial standpoint, is pushing yourself but toward the right door. If your strengths are operation and management which somehow make you great at product idea, hire a product technical partner. If you are a product person, be the product CEO and hire someone who is going to be your operations partner. That is the base formula you can see in any giant tech companies. If you try to be everything to everybody, you will not succeed.
Successful CEOs, Courtemanche says, hire for their weaknesses.
For Procore is a global success as of now, Courtemanche is often asked for advice on how he able to look through the outdated of the construction industry to provide its people with the ahead-of-time application.
The founder said he was not knowing all the answer back then. He did not know the 2008 crisis would happen, that there was no Wi-Fi on the construction sites, and when would iPad and tablets emerge to help facilitate his application.
“Don’t assume you know all the answers or know what you’re doing; you don’t,” he advises. That is the mindset – an optimistic look – that would save you later the day, when things start falling apart and you lose control, which is a must running any business.
The way out, to him, is embracing self-doubt.
“Not everyone you see as a successful entrepreneur on TV was sure of themselves the whole way. Ask a lot of questions of many different people; I believe strongly in inquiry over advocacy. Raise enough money; no one ever raises enough money. Assume that it’s going to be harder and take longer than you would ever imagine.”
More form the story, Zahm recalls how he knows Courtemanche would make it through.
Back in the earliest days, When Zahm first chose to work with the company’s, it dawned on both of them there was more just skill to consider in such a close partnership.
It’s not to say that Courtemanche does not have skills, he has plenty – Zahm explains. But what makes Zahm believe and want to pursue this journey, partly because of the entrepreneur in the founder. “It’s really about character, and it’s about the values that person holds, and whether you are on the same page when it comes to the type of company that you want to build.”
When you want to build something with anybody, it’s not about how experience they are. There are many aspects Zahm would consider: How that partner and he wants to run the business and treat its employees, and what things will be prioritized. To Zahm, that is no easy work when it comes to understand other people and their vision. But conversations over times would make it, “It’s very hard to define or pin down. It really consist of having a lot of conversations.”
The founder also stresses on three challenges he is seeing in construction and probably entrepreneurs would face approaching any industries.
The first of all, he says, even though he has this advantage point of seeing a potential global company, there is one challenge that tenfold any other – finding the qualified people.
“What I find interesting is that has become a forcing function to drive the industry to figure out a way to attract and retain great talent,” which is, to the founder, is great because what it is forcing the industry to do is to come up with ways to change the outdated mentality and actually make the environment of working in construction feel like a career.
“Where 15 years ago when I’d walk into a construction company, it was kind of a rough and tumble environment, the first thing that we talk about normally in most meetings with most executives these days are things like diversity and inclusion. That is a huge shift. Because they want a diverse workforce, and a diverse workforce means you actually have a wider pool of people to draw from.”
The next math is acknowledging that this is probably the last industry to go through the transformation from analog to digital and there is fear in that because that’s a big change. Most major industries have gone through this change. It can be painful because doing things the way you used to is no longer a competitive advantage. There’s a lot of confusion and fear around ‘how do we get onto the digitization train in a way that is going actually benefit our business and not tank our business.’ It’s not just the technology, it’s the mental aspect of adopting new ways of thinking and being more competitive.
The last one, is the mindset on a healthy competitive industry. “The five of us are working together on this project, none of us work for and my win is going to be your loss,” the founder explains. You have to recognize that when you are coming together to work on a project, you all are a team, and that team collectively will win and fail together. Only when that mindset shifts, players could see changes in their industry.
The Art of Product Management at Procore
All business is about its product, the stronger the product team the better the business serve its customers. And for how the team has to sit at the epicenter of an organization just to be pulled around, the question of how they manage conflicting priorities is a worth sharing one.
Shivan Bindal, Director of Product Management talks on how he and the team manage to make it at Procore.
To Bindal, there is the science of product management and then there is the art of product management. And things like dealing with human, fostering collaboration, and instrumentalizing everyone to the same drumbeat really entail more art than science.
And this piece of art requires you to understand motivations when individual priorities conflict across the organization. Who is driving the priority, what is driving them and why they are even at the table – why do you need them and why do they need you? These right questions, in his expertise, would take you to many win-win scenarios.
And the general formula for this math is mutual benefit – what is a priority for you need to also be a priority to your stakeholders. But if that is not the case, then you need to reevaluate.
Competing priorities always take you to battle – which is worth fighting for. But make sure you are talking to the right person. If it’s a marketing specialist, they may have a harder time understanding the strategic value of what you are working on compared to someone who has a broader view of where the company and product line is going. Everybody has their own angle!
Another aspect of managing conflicting priorities is identifying what it is you are trying to achieve. Any organization once in a while has to deal with the question of whether to build a new feature or fix the technical debt. At what point should you go back and fix things or is it better to just focus on building the next shiny thing?
At the company, Bindal says, he and the team use a very simple model that a mentor of his taught him called ARC or Acquisition, Retention and Consumption. In brief, it’s about asking yourself, “What am I trying to accomplish?”
Get your whole organization to agree upon that statement, “In this phase we are trying to push this, we are trying to encourage more adoption of this model!” With the same purpose, identifying priorities would make more sense and also in communicating these prioritization decisions to stakeholders.
The Size of the Problem Doesn’t Really Matter
How they build products at Procore? The team starts by discover problems they need to solve, then they ideate and design. Engineers, user experience, quality assurance and product management folks are all co-located and focused on a specific problem. The size of the problem does not really mater, it’s about the impact.
Next, you plan out the problem spaces you want to solve over the next three, six, nine or twelve months like a roadmap. At the company, they plan roughly a year into the future, so at any point they can get a twelve-month overview of what they are doing, according to Bindal.
“I would say we have higher confidence in the roadmap items that are three months out compared to the ones that are nine or more months out.”
What Is a Message Your Product Team Should Take Note?
Stakeholders are important in an investment standpoint, and as much as experienced they are. However, it’s your job to serve the best product for your customers not stakeholders. When there is a no, try not to accept it but rather take time to consider. To get outside your four walls and go back to the fundamental of problem discovery and validation.
While validating what your stakeholder told you, try not to get lost in ROI calculations or total cost of ownership calculation all the time. And again, these essential questions would get you where you want to be:
Does the problem exist? Is it pervasive? Is it part of the core competence of your company or your product, such that you should invest in solving it?
If they are answered affirmatively and if you can be confident that your sample size for the validation was large enough — then you are in a good place to embark upon solving the problem.
Speak the Language of Your Customer
Offering software, it’s the company’s job to make sure its voice relevant with contractors and owners. And it started off by continuous effort in understanding your customers, along with how well it can translate what it is doing to customer’s language.
In this case, Jim Sinai – SVP of Marketing at Procore – tells what makes the company stand above its competitors and how in an industry such as construction, users can relate with a software product.
For example, AI is a category of platform service. And when you are selling application platforms like Procore, there is no secret that there are two things that matter the most – uses cases and customers.
What you should really zone in on was not talking about how the AI works or why the AI was special. Although companies did do that in the technology circles to earn credibility, but in other cases, you need to focus on delivering the right message to the right person by telling what AI unpacks for users.
And then we, you know, paired that with the story of the customer that will get up and say why they’re using AI to run a better story.
The Bottom Lines
While the trend in the market is growth and big debuts and IPOs are part of the narrative, not every story in construction technology is about victory just like SoftBank-Backed Kattera who is closing down for aiming at apartment building. There are hundreds of elements that determine whether or not a new business will survive a of which are rooted in the original idea and timing. And if there is anything to learn from the long-run success of Procore, it’s about the right idea at the right time.