3D Prints Express TimelineDigital ID Link 3D Prints 4-sided mktplcManufacturing Express 2-sided mktplc for Architects Workflow modeling Pain Points Collaboration Ambiguity Wireframe Design Groups & Thought Leaders Tech Adoption LH Side of Canvas Rev Model Cost Structure Willingness to Pay Income Statement
Modeling Marketplace, Market Size Calculation of $10 per hour margin: 1$5 billion Estimated Cost to Firm: $3,500 annual seat license for AutoCAD 2$3.5 billion $4,000 per workstation (HP Z820 workstation; 2 year depreciation) Average salary of $60,000 20% general and administrative costs TOTAL ANNUAL COST: $78,600 3$500 Divided by 2000 hours per year million TOTAL HOURLY COST: $40 per hour Average Hourly Rate of Freelance CAD Drafter: $30 per hour Source: Average of 5 interviews + 20 postings on oDesk / Craigslist1 250,000 CAD drafters * 50 weeks * 40 hours * $10 per hour 2 70% of revenues from architecture / manufacturing 3 15% of part 2
Programming Process Flow Concept Tools People Pain Google SketchUp 1 Sr. Architect Converting sketch Schematic Rhinoceros 2 Jr. Architects into 3D model Revit ~1 Engineer NavisWorks 2 - 3 Sr. Architect Integrating models DesignDevelopment Revit 2 - 6 Jr. Architects from each team 2 - 3 Engineers (Arch, Eng, Dsgn) Revit 2 - 3 Sr. Architect Labor intensive to Instruction 3 - 8 Jr. Architects add all specsDocumentation 3 - 4 Engineers Construction Sources: Perkins & Will, H.O.K. ~ 1500 employees
"You cant exportwork Jr. Architectsdo. Thats whatmakes themarchitects!"- Susan Ubbelohde,Architect,Consultant,Professor
Google Doc Like Collaboration CAD talent *improved design Typically Conflict! *Didn’t like it – Deleted Real time!Architect -avoid multiple versions -avoid overwriting each other *Approved design! Expedited!
Existing ProductsSaaS 3D modeling platform Universal file support• Store and access files on the • 3D model viewing, cloud measuring, sectioning• Multi-party and remote • File sharing and sync collaboration • Documentation of• Documentation of collaboration process collaboration process • Communication tools• Secure infrastructure • Remote collaboration Neither of these has been mentioned in our 50+ interviews with architects!!
What We Did• Went to UC Berkeley School of Architecture to recreate the problem – In process, we recruited our domain expert• Built a landing page and used web tests to validate the value proposition – Team needed to build something even if they weren’t 100% sure what they were building
Thought LeadersMario Guttman Eric Freed Phil Read Federico Negro Jim BaldingDeveloper of “World’s best “THE Revit Guru” Partner, Case ANT Grouparch+tech green architect” Designproducts Industry Architecture Syndicated in 33 Blogger/Author Blogger/Writer ConferenceLeading BIM industry OrganizerExpert magazines Global product Prof. manager Architecture Prominent30+ years Speaks at 40+ AutoDesk Columbia Consultantarchitect exp. conferences/yr(Partner P+W)
Technology Adoption Small Engineering Firms Architecture Firm ATechie ArchitectsDomain Bloggers Small American DesignThought Leaders Consultants Architecture Institute GroupsBIM Managers Firm B ArchitectsSr. Architects Small Contractors Architecture Firm C Acquire Activate Keep Grow
Metrics that Matter Metric Target ValueTotal Reach 10,000 (initial)Conversion to Landing Page 40%Conversion to Sign Up 20%Conversion to Paid 20%Willingness to Pay $200Gross Margin 65% (determined by WTP)CAC $375LTV $3,120Retention Rate 80%Breakeven Users 420 (depends on WTP)
Is this a viable business? Quantitative reasons Qualitative reasons Large Addressable market Positive Initial feedback$400+ million from thought leaders in industry Low Breakeven Opportunities in adjacent420 paying customers out of markets60,000 architecture firms in Structural engineering andUS design CAC quickly covered Possible product extension1 project opportunities High marginLTV ~ 8*CAC
Will we pursue this after the class?• Need a High Fidelity MVP to test: Reach into target market of TLs through Twitter/ blogs Conversion rates Willingness to pay• None of us have technical skills to build the Hi Fi MVP SolutionSet offers to do it for $90,000• At this point we have decided not to continue with this business
Thank YouTo the Teaching Team, Mentors, and other teams!
Final Market Sizing Trends supporting collaboration 1. Pressure to be cost competitive to compete for tenders • 59.2% of revenues are spent on wages 1$7 • ~10.0% of revenues is spent on equipment and software billion • Firms are searching for ways to balance workloads, reduce labor costs, and speed up production of projects 2. Increased use of technology • Increasingly complex designs are requiring architects to use advanced 3D modeling technologies 2$2.1 billion 3. Demand for more value-added services • To combat declining margins, architectural firms are adding services such as pre-design planning, interior design, and engineering to become vertically integrated 4. Growing demand for environmentally friendly design 3$420 5. Growing trend towards outsourcing by firms million • 11% of firms have outsourced labor. • Trend is more pronounced for firms with revenues >$5m 6. Low concentration in architecture industry • 63% of firms in industry have less than 5 employees • 4 largest firms account for less than 5% of total industry revenues 7. High unemployment of licensed architects • Per AIA, 105,596 licensed architects in US • Per BLS, 71,460 architectural jobs in US; mean salary of $79k1 $9.8 billion Design Software industry (IBIS World) 2 105k licensed architects in US per 3 20% of part 2x 70% revenues for AEC/CAD/Industrial Design AIA, 500k construction mgmt, 262k civil engineers per BLS
Breakeven AnalysisAssumptions• Willingness to pay is subject to further testing to assess demand curve.• We sensitized our breakeven analysis at various price points and used our 40% / 20% / 20% conversion rate targets to get an idea of the necessary size for the “top of the funnel”• Total licensed architects in US = 105,596 per American Institute of Architects Price Paying Customers Top of Funnel $200 420 26,250 $175 515 32,188 $150 680 42,500 $120 1,090 68,125 $100 1,800 112,500
Finance and Operations Timeline $250k -$90kCash -$30k -$30kFundraise Hi-Fi MVP Test Beta Test Final Operational Development $150k 6 weeks 8 weeks 2 weeks 8 weeks 2 weeks 26 weeks
Burn Rate• At pricing of $200, breakeven users is 420. – We are assuming conversion rates of 40% / 20% / 20% which will be tested during Hi-Fi MVP and Beta stages. – For now, these conversion rates are hypotheses.• At these conversion rates, we believe we can get this number of paying users in 3 months. – This takes into account our initial conversion funnel – Assumes a retention rate of 80%.• Our estimated monthly OpEx is $25,000 and gross margins are 65%.• Net cash burn is estimated at $10,000 through first three months until breakeven.
Digital Manufacturing, Inc. -Develop a tailored solution -Facilitator for each customer: between coding, improving -Reduce downtime customer and 1- Fortune 1000 UI, developing of machinery; service persons knowledge base manufacturing cost to implement app 2- MediumWho are our Key savings & service Manufacturing Partners? cost savings. EnterprisesWho are our key -Knowledge base; 3- Small suppliers? -IP, Software prognostics (big Through which Manufacturing Platform: Opentok data) for real-time Channels do our Enterprises monitoring and Customer -Cloud based signaling preventive Segments 4-Small Job server maintenance. want to be Shops reached? -Knowledge base -IP development -Webservices For what value are our customers really willing to pay? How do we make money? -Sales & Marketing
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