INDUSTRY INSIGHTS
Enscape's Journey: From VR to Industry-Changing Rendering Software

Enscape is a staple in the world of architectural rendering. Rarely do you speak to an architect who hasn’t used it at least once.

But how did it all start? How did we go from VR treadmill to rendering, to large acquisition?

We were extremely lucky to sit down with Moritz Luck - co-founder of Enscape to hear his story.

Read on to learn about:

• Mortiz’s masterclass in entrepreneurship, product development, market strategy and exits

• Mortiz’s advice for founders

• Perspective of exits and acquisitions

• The future of rendering 

• The future of the design stack (hint: consolidation)

• Advise for AEC-Tech startups

Enjoy! 

P.S. It’s a long one!

The Unlikely Origins of a Rendering Revolution

Moritz never set out to change the world of architectural visualization. In fact, when he and his co-founder Thomas started their company, they weren't even thinking about architecture at all. Fresh out of university, with degrees in business engineering and mechanical engineering respectively, they had their sights set on the emerging world of virtual reality.

Their first venture, InReel, aimed to create an omnidirectional treadmill for VR experiences. It was an ambitious project, conceived before Oculus had even entered the scene. But as they pitched their VR services to potential clients, including architects, they stumbled upon an unexpected insight.

This feedback was a pivotal moment.

It revealed a gap in the market that Moritz and Thomas hadn't anticipated. Architects needed fast, real-time visualisation solutions, not slow, outsourced rendering services.

With this new understanding, they pivoted. The treadmill idea was set aside, and a new vision began to take shape. They would create a tool that allowed architects to visualise their designs instantly, without the need for specialized rendering skills or powerful hardware.

This pivot led to the birth of Enscape.

The name, coincidentally similar to their previous use of Unreal Engine, was suggested by Thomas. It marked the beginning of a journey that would transform not just their company, but the entire field of architectural visualisation.

The irony wasn't lost on Moritz. He remembered his initial thoughts about the real estate and architecture industry:

As they developed Enscape, Moritz and Thomas faced a steep learning curve.

Neither had a background in architecture or rendering. But this outsider perspective proved to be an advantage. They approached the problem with fresh eyes, unencumbered by industry conventions.

Their lack of experience in the field also meant they had to listen closely to their potential users. Every conversation with an architect or designer became a learning opportunity, shaping their understanding of the industry's needs and pain points.

This journey from VR dreamers to rendering pioneers wasn't smooth or straightforward.

But it was this very process of pivoting, learning, and adapting that laid the foundation for Enscape's eventual success. Without realizing it, Moritz and Thomas had stumbled upon a problem that would define their careers and reshape an entire industry.

The Rise of Enscape

Enscape's journey from a pivoted startup to a industry-changing software wasn't an overnight success story. It was built on a foundation of customer-focused strategies and relentless innovation.

At the heart of Enscape's approach was a commitment to real-time rendering. This wasn't just a technical feature; it was a revolution in workflow. Architects could now see changes instantly, eliminating the hours-long wait times that had been the norm.

Moritz explains,

But having great technology wasn't enough. Enscape needed to get it into the hands of users. Their pricing strategy was key to this. Rather than maximising revenue per user, they opted for a "no-brainer price" that would encourage wide adoption.

"We wanted to price our solution not at the highest price we could possibly get, but at a no-brainer price where everyone could quickly adopt it," Moritz recounts.

This approach paid off. It allowed Enscape to rapidly build a large user base, which in turn provided valuable feedback for further improvements.

Community building became another cornerstone of Enscape's success. The team recognized the collaborative nature of the architecture and engineering world. They invested in fostering a strong community around their product, with a dedicated community manager leading these efforts.

As the company grew, they faced the challenge of scaling while staying lean. Automation played a crucial role here. Moritz proudly notes, "By the time we merged with Chaos, I think we had similar numbers, but they had twice the people because we automated more than they did."

Perhaps most importantly, Enscape maintained a laser focus on customer happiness. They didn't optimize for financial metrics or acquisition potential. Instead, they concentrated on solving real problems for their users.

This customer-centric approach extended to their product development. Rather than trying to predict what features architects might want, they listened and responded to user feedback. This iterative process allowed them to continually refine and improve their software.

The result was a tool that not only met the immediate needs of architects but also changed how they worked. As Moritz puts it, "Everyone came up to us and said, 'Wow, this really transformed, changed the way we work.'"

Enscape's success story is a testament to the power of focusing on user needs, fostering community, and continuously innovating. By solving a real problem in a user-friendly way, they didn't just create a successful product – they changed an industry.

Moritz's Advice for Founders

Moritz's journey with Enscape offers a wealth of insights for aspiring entrepreneurs, especially those in the AEC tech space. His experiences highlight the importance of adaptability, customer focus, and strategic thinking.

One of Moritz's key pieces of advice is to optimize for customer happiness, not just financial metrics.

Flexibility is another crucial lesson. Enscape's success came from a major pivot, moving from VR hardware to rendering software. Moritz encourages founders to be open to change based on customer feedback. "We had some discussions with them, and then we realized that they need a different product," he recalls.

When it comes to marketing, Moritz advocates for a methodical, experimental approach. "You start on the first page, you end on the last page, you see what works and then you focus on what does work," he explains. This strategy allowed Enscape to identify the most effective channels for reaching their target audience.

Interestingly, Moritz suggests considering both monthly and yearly pricing options. This approach provided Enscape with different types of feedback and user behavior data. The monthly option served as an extended trial for some users, while yearly subscriptions offered more stable revenue.

For founders worried about entering a market where competitors already exist, Moritz offers reassurance. Enscape wasn't the first rendering tool on the market, but it succeeded through innovation and customer focus. "You can learn from the mistakes of others," he points out. "You can see what's working and then you just copy that and you focus on what your differentiator is."

Community building is another area Moritz emphasises. In the architecture and engineering world, fostering a strong community around your product can be a powerful growth driver. Enscape invested heavily in this area, recognizing the collaborative nature of their target industry.

Moritz also touches on the importance of staying lean and automating where possible. This approach allowed Enscape to scale efficiently, maintaining a smaller team compared to competitors while achieving similar results.

Perhaps most importantly, Moritz advises founders to focus on solving specific, deep problems rather than chasing broad markets. Enscape's success came from addressing a particular pain point in architectural visualization, not from trying to be all things to all people.

Finally, Moritz highlights the value of educating the market. Sometimes, customers don't even realize they have a problem until they see your solution. "Oftentimes what I realized with solutions, people don't even know that they have a problem until they find the solution," he reflects.

These lessons, drawn from real-world experience, offer valuable guidance for tech entrepreneurs. They underscore the importance of staying close to customers, being willing to adapt, and focusing on solving real problems in innovative ways.

Moritz's Perspective on Acquisition

Moritz's experience with Enscape's acquisition offers valuable insights into the often-opaque world of tech exits. His journey challenges some common assumptions about startup goals and highlights the importance of focusing on building a great product rather than chasing an exit.

Interestingly, Moritz and his team never started Enscape with the goal of selling it. "We didn't start a business to sell it," he reflects. "You start a business because you have fun doing it. You want to work on an interesting project." This mindset allowed them to focus on long-term value creation rather than short-term gains.

Enscape's exit story is unique in that it involved two separate events. The first was selling a majority stake to a local private equity firm. The second, which came just a year or two later, was a merger with Chaos, a major player in the 3D visualization space.

When it came time for these exits, Moritz found that certain metrics became crucial in acquisition talks. Churn rate, for instance, was a major point of discussion. "Churn was a number, you know, we had this license model where we had the monthly and then we had the yearly licenses," Moritz explains. The complexity of their licensing model made churn calculations challenging, leading to significant debates during negotiations.

Another key factor was the cohort analysis of user growth. Potential acquirers were keen to understand not just how many users Enscape had, but how stable and growing their user base was over time.

Moritz's experience also highlights the difference between financial and strategic investors. While financial investors focused heavily on metrics like annual recurring revenue and the "Rule of 40," strategic investors had a broader perspective, considering how Enscape could fit into their existing product ecosystem.

One of the most interesting aspects of Enscape's exit was how it challenged the common startup narrative of optimizing for acquisition. Moritz and his team had focused on customer happiness and product quality, not on making their company attractive for acquisition. Yet this very approach ended up creating a highly valuable company that attracted multiple suitors.

Moritz advises founders to be cautious about prematurely optimizing for an exit. "If you build a successful company, then people will be standing in line waiting to acquire you," he notes. This perspective encourages founders to focus on creating real value rather than chasing exit opportunities.

The Enscape exit story also underscores the unpredictable nature of acquisitions. Despite early speculation that they might be acquired by a major player like Autodesk, their actual exit path was quite different. This serves as a reminder for founders to remain open to various opportunities and not to bank on any single exit strategy.

Ultimately, Moritz's experience with Enscape's exit demonstrates that building a great product and focusing on customer needs can lead to successful outcomes, even if they're not the ones initially anticipated. It's a powerful reminder that in the tech world, creating genuine value is the surest path to success.

The Future of Rendering: AI's Disruptive Potential

As Moritz reflects on the future of rendering, he sees a landscape on the brink of significant change. The advent of AI in rendering is not just an incremental improvement; it's a potential game-changer that could reshape the entire industry.

"AI of course can give you that," Moritz explains, referring to the high-quality, photorealistic renderings that architects and designers crave. The impact of AI is particularly pronounced in the early stages of design, where quick iterations and conceptual visualizations are crucial.

One of the key advantages of AI-powered rendering is its speed and flexibility. "You can generate these ideas quickly and these options quickly," Moritz notes. This capability allows architects to rapidly explore different design concepts and present them to clients without the time-consuming process of traditional rendering.

However, Moritz is quick to point out that AI rendering isn't without its challenges. "What was tricky was the consistency of these AI models," he explains. Creating multiple views of the same building with consistent details and lighting can be difficult with current AI technologies. This limitation makes AI rendering more suitable for early-stage design rather than final, detailed visualizations.

Despite these challenges, Moritz sees immense potential in AI rendering. He believes it could democratize high-quality visualization, making it accessible to a broader range of professionals and even non-experts. "I think every rendering tool has to go with AI at some point because it gets so much cheaper and the quality is just there," he predicts.

Interestingly, Moritz doesn't see AI as a threat to established rendering tools like Enscape. Instead, he believes these tools are well-positioned to integrate AI capabilities. "The current systems are in quite a strong position to also, if they execute well, to also capture this market," he observes. This integration could combine the consistency and control of traditional rendering with the speed and creativity of AI.

Looking ahead, Moritz envisions a future where rendering becomes even more seamlessly integrated into the design process. He foresees a world where high-quality visualizations are generated in real-time as architects work, eliminating the need for separate rendering steps altogether.

However, Moritz is cautious about predicting winners in this rapidly evolving field. With numerous startups entering the AI rendering space, he believes success will come down to who can innovate quickly and deliver solutions that truly work for customers.

Ultimately, Moritz's perspective on the future of rendering is one of cautious optimism. He sees tremendous potential in AI to transform the field, but also recognises the challenges that need to be overcome. As the industry evolves, he believes the focus should remain on meeting the needs of architects and designers, using technology to enhance their creative process rather than replace it.

The Evolution of Design Tools: Envisioning a Unified Future

As Moritz looks beyond rendering to the broader landscape of design tools, he sees an industry on the cusp of significant transformation. The future, as he envisions it, is one of greater integration and accessibility.

"I think from a user perspective, it would be great if you were just in your tool, click a button, there it is," Moritz explains, painting a picture of seamless workflow where rendering is just another feature within a comprehensive design tool. This vision challenges the current paradigm of separate authoring and rendering software.

Moritz believes this consolidation is not just desirable, but inevitable. "A customer doesn't want 50 different tools for 50 things he wants to do," he argues. This push towards integration is driven by user needs – architects and designers want simplicity and efficiency in their workflows.

However, Moritz acknowledges that achieving this level of integration is no small feat. He points out that existing authoring tools often have a long list of priorities, and integrating advanced rendering capabilities might not always be at the top of that list. "Maybe I have 20 more features that I developed first before I go into rendering," he muses, speaking from the perspective of authoring tool developers.

The conversation around the future of design tools inevitably leads to a debate about the role of 2D versus 3D in the design process. While some argue for a complete shift to 3D, Moritz sees a more nuanced future. He envisions a world where 3D models are the source of truth, but 2D plans can be easily derived from these models for those who prefer or require them.

"You can derive something from it," Moritz explains, suggesting that future tools might allow users to seamlessly switch between 2D and 3D views of the same design. This flexibility would cater to different working styles and project requirements.

Moritz also emphasises the importance of data harmonization and interoperability in future design stacks. He sees potential for digital twins to play a significant role, making building information more accessible and manageable throughout the design and construction process.

"Make it so simple to create these twins, make them so accessible that you don't have to wait 10 minutes," Moritz envisions. This level of accessibility could revolutionize how architects, engineers, and clients interact with design information.

Despite his optimism, Moritz is pragmatic about the challenges ahead. He recognises that changing established workflows and integrating diverse tools is a complex undertaking. It requires not just technological innovation, but also shifts in industry practices and user habits.

Ultimately, Moritz's vision for the future of design tools is one of empowerment. He sees technology as a means to enhance creativity and efficiency, not to replace human expertise. As tools evolve, he believes they should strive to remove technical barriers, allowing designers to focus more on their creative vision and less on software complexities.

This perspective on the future of design tools, shaped by Moritz's experience with Enscape and his ongoing involvement in the industry, offers a compelling glimpse into the potential evolution of architectural and engineering software. It's a future that promises greater integration, accessibility, and creative freedom for designers.

Advice for AEC Software Startups

Drawing from his experience with Enscape and his current role as an investor, Moritz offers valuable insights for entrepreneurs venturing into the AEC software space. His advice emphasizes the importance of focus, community-building, and market education.

"Focus on solving specific, deep problems rather than chasing broad markets," Moritz advises. This approach served Enscape well, allowing them to excel in architectural visualisation rather than trying to be a jack-of-all-trades. He believes that success often comes from addressing niche problems exceptionally well, rather than attempting to solve every challenge in the industry.

Moritz stresses the value of building strong communities around products. "We had a strong focus on building community," he recalls. In the collaborative world of architecture and engineering, fostering a sense of community can drive adoption and loyalty. He suggests startups invest in community management early on, creating spaces for users to share knowledge and experiences.

Another crucial piece of advice is to be prepared to educate the market. "Oftentimes what I realised with solutions, people don't even know that they have a problem until they find the solution," Moritz explains. This insight underscores the importance of not just creating a great product, but also helping potential users understand why they need it.

Moritz encourages startups to be patient and persistent. He reminds entrepreneurs that success in the AEC software space often doesn't happen overnight. "It was a tough journey early on," he admits, recalling Enscape's early days. It took time for them to find the right product-market fit and gain traction.

Flexibility is another key trait Moritz advocates for. He advises startups to be ready to pivot based on user feedback. Enscape's own success came from a major pivot, and Moritz believes this willingness to adapt is crucial in a rapidly evolving industry.

When it comes to product development, Moritz recommends a balance between innovation and practicality. While pushing technological boundaries is important, he emphasises that the end goal should always be to solve real problems for users. "What gives them the best value," should be the guiding principle, according to Moritz.

For those concerned about entering markets with established players, Moritz offers reassurance. He points out that being a later entrant can have advantages, allowing startups to learn from others' mistakes and focus on differentiation. "You can copy, where you can see what's working and then you just copy that and you focus on what your differentiator is," he suggests.

Lastly, Moritz advises startups to stay lean and prioritise automation where possible. This approach allowed Enscape to scale efficiently, maintaining a smaller team compared to competitors while achieving similar results. He believes this efficiency can be a significant competitive advantage in the software industry.

Moritz's advice paints a picture of success in the AEC software space that's rooted in understanding user needs, fostering community, and maintaining focus. It's a perspective that encourages startups to think deeply about the problems they're solving and to build strong relationships with their users. As the industry continues to evolve, these principles may well be the key to navigating the challenges and opportunities that lie ahead.

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