PlanGrid (YC W12) raises $40M
techcrunch.com
techcrunch.com
Result: a software designed to solve one pain point eventually evolves into a general-purpose solution.
1. It's late enough to the game that it could start as a SaaS company.
2. It's late enough to the market that it can leverage contemporary Silicon Valley financial tools.
3. Mobile computing is now ubiquitous enough that a mobile first strategy is viable for construction...PlanGrid's creation story is based on the introduction of the iPad.
4. PlanGrid has a low first cost (as in free tier) pricing model that allows initial use by construction company employees without incurring a cost against the budget of the projects to which they are assigned.
5. The product was introduced to solve a narrow problem rather than sold a by four legged meat eating sales team as an office suite.
That said, successfully scaling out to a general solution is a different challenge because the number of moving parts increases and the edge cases that can cost a construction company enough money to put them under are exponentially larger. There's a hard copy fallback for drawings at the building department and another at the architect's office and various other copies living out in the wild at the architect's consultants and the contractor's subcontractors. That's not the case with a contractor's internal documentation.
To put it another way, there's a certain tolerable error level to a PlanGrid generated link from a floor plan to a detail because it can verified against the originals and the actual building. The acceptable error level is different when the electronic version is the original and there's no external validation mechanism.
Then again, $40 million is a lot of money to deploy against such challenges.
But that's true about an all digital business. I mean, I'm pretty sure most of Google and Facebook's records are digital only. There are plenty of solutions that exist to make sure that it is backed up and replicated safely.
The trick here is convincing not only the construction companies that it is safe, but their regulators.
If Facebook looses my post of a cat picture, the worst thing likely to happen is that I rant on Hacker News. If a critical deviation gets lost in the shuffle, people die...and lawyers get involved. [1]
[1] https://en.wikipedia.org/wiki/Hyatt_Regency_walkway_collapse...
My takeaways from operating in a "vertical-specific SaaS" are:
1) Lots of value to be captured by making something for specific vertical and then growing within that vertical
2) Owning the data end-to-end is our "network effect" or "secret-sauce" or whatever VC Buzzword they ask about (but is truly valuable)
3) Domain knowledge is critical. We need to know _a lot_ about the beverage product being produced and speak fluently about it to have any credibility and any chance of addressing their pain-point.