INDUSTRY INSIGHTS
How BuildingConnected Was Sold for $275m

Dustin DeVan is one of the construction tech OG’s (or Mafia as we like to call them).

Alongside the founders of companies like Levelset (Scott Wolfe), PlanGrid (Tracy Young & Ralph Gottee) and others, Dustin exited his first tech company for a substantial sum.

BuildingConnected was founded in 2012 and six years later, sold for $275m.

How did Dustin do it? And what is he doing now?

It all started with gambling…

Dustin DeVan's journey to construction tech stardom began in an unlikely place: the world of online gambling.

As a college student, he paid for his education by mastering the art of casino games. This unconventional start would later fuel his entrepreneurial spirit and risk-taking abilities.

After college, Dustin found himself in the construction industry, working as a scheduling engineer for Bechtel. It was here that he first identified the problems that would later inspire BuildingConnected. The preconstruction process was a mess of disjointed systems and inefficient communication.

The Spark of an Idea

While working on a $150 million prison project, DeVan experienced firsthand the challenges of managing bids and subcontractor relationships.

He realized there was a massive opportunity to streamline this process. But having an idea wasn't enough. he spent years refining his concept before taking the leap.

In 2012, DeVan made a bold move.

With only $5,000 in his bank account, he quit his job to pursue BuildingConnected full-time. He convinced two friends to invest $75,000, giving him a short runway to prove his concept.

The San Francisco Advantage

Dustin credits much of his early success to being in San Francisco during the 2010-2019 tech boom. "San Francisco was the only place in the world that I could have made BuildingConnected successful," he says. The city provided access to capital, talent, and a network of like-minded entrepreneurs.

Fact: Dustin raised $250,000 by pitching random dudes in coffee shops in downtown SF.

A Unique Go-to-Market Strategy

BuildingConnected's path to $50 million in annual recurring revenue (ARR) was unconventional. They started with a completely free model, focusing on getting 1,000 active general contractors to use the platform.

This took two years of intense focus.

Once they achieved this milestone, BuildingConnected had a powerful network effect.

Hundreds of thousands of subcontractors were now using the platform to view bid invites. Only then did they start introducing premium features.

The result?

An astounding 93% cohort retention rate. Once a general contractor used BuildingConnected for three projects, they almost never stopped.

Lessons for Construction Tech Founders

Dustin’s journey offers valuable lessons for aspiring construction tech entrepreneurs.

First and foremost, solving a real problem is crucial.

Dustin’s industry experience allowed him to identify a genuine pain point, rather than creating a solution in search of a problem.

Patience is also key. It took years for BuildingConnected to move from idea to execution, with him spending considerable time refining his concept before fully committing.

Location can play a significant role in a startup's success.

Being in the right place at the right time provided Dustin with significant advantages, especially when it came to accessing capital and talent.

The power of network effects cannot be overstated. BuildingConnected's free model created a massive user base before monetization, making the platform incredibly sticky and difficult for competitors to replicate.

Finally, focusing on retention proved to be a game-changer.

The high retention rate was a key factor in BuildingConnected's success and ultimate sale to Autodesk. By creating a product that users found indispensable, Dustin built a company that was not just valuable to its customers, but highly attractive to potential acquirers.

The $275 Million Exit

In 2018, Autodesk acquired BuildingConnected for $275 million. Dustin cites both offensive and defensive reasons for the acquisition.

BuildingConnected had built a network-based platform that would have taken Autodesk years to replicate internally. Additionally, the acquisition prevented competitors from getting their hands on this valuable technology.

Life After BuildingConnected

Dustin didn't rest on his laurels. After a brief stint as CEO of an indoor air quality monitoring company, he's back in the construction tech world with his new venture, Ediphi.

Ediphi aims to revolutionise the preconstruction process, building on his extensive experience in the field. He sees an opportunity to create a comprehensive platform that addresses the fragmented nature of current preconstruction solutions.

Lessons from a Second-Time Founder

Dustin’s experience as a second-time founder offers fresh insights. He notes that the landscape has shifted significantly since 2012, with increased competition balanced by greater investor interest. This new environment requires a different approach to building a successful company.

With Ediphi, Dustin is thinking on a grander scale.

His ambition to build a publicly-traded company reflects his belief that there's room for another major player in construction tech, particularly in the preconstruction space. This bold vision demonstrates the potential he sees in the industry.

The post-pandemic world has reshaped how companies operate, and Ediphi embraces this new reality. Unlike BuildingConnected's San Francisco-centric approach, Ediphi operates with a fully distributed team.

This shift showcases the viability of remote work in the tech sector, even for complex, industry-specific solutions.

Reflecting on his experience with BuildingConnected, Dustin acknowledges the importance of balancing rapid growth with operational efficiency. While BuildingConnected's growth was impressive, he believes there might have been opportunities to optimize spending.

This insight informs his approach to scaling Ediphi.

Perhaps most importantly, Dustin emphasizes the crucial role of co-founders. He stresses the importance of finding partners who not only complement your skills but also elevate you as a person. This human element, often overlooked in discussions of tech startups, can be a key factor in a company's success and the founder's personal growth.

The Road Ahead

The construction industry is ripe for innovation, and there's still plenty of room for new solutions. The next generation of construction tech leaders can follow in Dustin’s (and the so-called Construction Tech Mafia…) by adopting the tactics shared by the top founders on Groundbreakers. Check out the full episode HERE.

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