Week 6: 13 Interviews (84 total):

10 large architecture firms

3 medium architecture firms

Spectrum

Brock Petersen

MS CEE ’15

Nick Hershey

BS CS ’18

Ryan Hammond

MBA ’15

FX Jammes

MBA ’15

John Basbagill

PhD CEE ’13

Automated building performance feedback

for early stage commercial design

Opportunity Size: $105MWeek 9: 11 Interviews (119 Total)

8 Architects

3 Engineers

Trends in Design/Construction

76%

Architecture firms’ use of BIM for billable work

has grown

Building Information Modeling

41%

Green Building /LEED

Green building starts as % of all non-residential buildings

have increased

in 2005

2%

in 2012

64%

in 2005in 2012

* Figures from “2012 AIA Survey Report on Firm Characteristics”, American Institute of Architects

Spectrum Team

Brock Petersen

MS CEE ’15

Domain Expert

Nick Hershey

BS CS ’18

Hacker

Francois-Xavier Jammes

MBA ’15

Product Picker

Ryan Hammond

MBA ’15

Hustler

John Basbagill

PhD CEE ’13, Postdoc ’15

Designer

● Bachelor of science, Building construction, University of Florida

● Five years experience in construction management

● Master of engineering, Civil and environmental engineering, MIT

● Four years experience in engineering design and consulting

● Founded The NHS Network, networking website for National Honor

Society chapters

● Three years experience in web and mobile application development

● Bachelor of engineering, Civil engineering, Vanderbilt

● Two years experience in building energy analysis

● Bachelor of science, Mechanical engineering, Harvard

● Founded Spectrum based on PhD research in life cycle assessment

and computational methods applied to building design

Initial ConceptFailures

0Successes

0

Failures

0Successes

0Customer Segment

maximize returns by

reducing costs“I have many other parts of a project other than

cost that I can adjust...to ensure feasibility.”

cost estimation is a

guessing game with slim

profit margins.

Week -1:

Developer

sWeek 0:

Contracto

rs

“I feel comfortable with cost estimation: the bigger

issue is finding qualified subcontractors who can

cut my margins enough”

gain greater insight into

the energy efficiency of

early stage designs

Week 1:

Engineers“I’m often not included in the early stages of

design. I have more sophisticated ways to measure

energy efficiency anyway.”

realizing artistic vision

while meeting the

budgetary needs

Week 1:

Architects “This could be very helpful!”

Failures

1Failures

2Failures

3Successes

1

Week 2:

Large

Firms

use BIM and use

additional software“We’ll buy when you’re ready!”

Failures

4

Characteristics

1. Tech savvy: use of Building Information Modeling (BIM) software

2. Sustainably minded

3. Negotiated contracts

4. Focus on owner occupied commercial construction

5. U.S.based

Large (employing 50+) architecture firms

Customer ArchetypeFailures

0Successes

0Failures

1Failures

2Failures

3Successes

1Failures

4

UsersInfluencers

Decision

Makers

CEO

CFOPartners IT Manager

Principals

Project

Managers

Project

Architects

Jr/Sr

Architects

Jr/Sr

Designers

Recommenders Tech-savvy, In-house

Architects/Designers

Saboteurs Engineers, Cost Estimators,

In-house Developers

Firm OrganizationFailures

0Successes

0Failures

1Failures

2Failures

3Successes

1Failures

4

106,000 U.S. architects

59% (63,000)

in large firms

50% (31,500)

users

15%

(4,725)

capture

Market Size

● 4,725 architects

● $5,000 = price/year/seat

● 4,725 x $5,000 = $24M

Failures

0Successes

0Failures

1Failures

2Failures

4Successes

1Failures

5

Failures

7Successes

2Low-Fidelity MVPFailures

8Failures

8Successes

3

PowerPoint

Failures

5Successes

1Value Proposition

we reduce the number of

design cycles by aligning

architect-owner views

“Repeated discussion with owners leads to a design that

more accurately meets their needs”

we provide real-time

feedback to help architects

design more efficiently

Week 2:

Iterations

Week 3:

Feedback

“Real-time feedback would interfere with my natural

workflow. I’m also worried it would hinder creativity.”

Week 3:

Budgets“Working toward a budget is part of the process because

facets of the design process constantly change.”

we would prevent rework

by providing more

information earlier on

Week 5:

Rework“Rework accounts for 10% of an architect’s time a

budget.”

Failures

6Failures

7Failures

8Successes

2

budgets constrain artistic

vision. we provide

budgetary leeway

Failures

4Successes

1Product-Market FitFailures

5Failures

6Failures

8Successes

2

“Rework typically accounts for 10% of our time and budget.”

Mark Smedley

Perkins Eastman

Mark Herman

Cannon Design

Lloyd Ramsey

DLR Group

Charlie Williams

LPAKat Park

SOM

Market Size

$105M

Failures

0Successes

2Failures

1Failures

2Failures

3Successes

3Failures

8

$2.8 Billion

10% Rework

$350 Billion Commercial

Construction Cost (US/Yr)

$28 Billion

8% Architect Fee

$700 Million

25% Large Architects

$105 Million

15% Captured

value-added resellers are

an effective channel

Aside from AutoDesk, most architectural software

providers do not sell through VARs.

although cost-inefficient,

direct sales are the best

channel

Week 4:

VARs

Week 4:

Direct

Sales

The majority of architectural software providers

use a direct sales force.

we hoped to innovate in

the space by leveraging

the web for leads

Week 5:

Online

Given our relatively small initial market (~1000 architecture

firms). We can directly pinpoint the firms we want to target

and who in those firms makes decisions.

Failures

8Successes

3ChannelsFailures

9Failures

10Successes

4

BuildSpectrum.com

Users 74

Emails 4

Conversion 5.41%

Users 58

Emails 4

Conversion 6.90%

Users 66

Emails 6

Conversion 9.09%

Sustainability Operational Costs Materials Costs

Failures

7Successes

2ChannelsFailures

8Failures

10Successes

4

Failures

10Successes

4Customer Relations

Webinars, trade shows,

conferences, industry

events, demos

Support and updates will

be our primary way of

keeping customers

Week 5:

GET:

Various

Week 5:

KEEP:

Support

Referrals will be a key

growth mechanism

Week 5:

GROW:

Refer

All of this information was confirmed.

Successes

5

Failures

10Successes

3Customer RelationsSuccesses

5

Keep

Product Updates

Dedicated Support

Get1. Awareness

- Trade shows

- Website

- Social Media

2. Consideration

- Webinar

3. Consideration

- Demo/Trial

4. Purchase

- Direct (Inside) Sales

Force

Grow

1. Unbundle

- Separate cost and

environmental

estimation

2. Cross-Sell

- Sell along with BIM

software

3. Referrals

Failures

10Successes

5Revenue

$5000 per seat per yearWe heard mixed reactions to price, but

$5000/seat/year seems to be a reasonable price

$50-$100/month for service

Week 6:

SaaS

Week 6:

Service

Increasingly often, service is included in SaaS

models, so we will probably have to include it.

Failures

11Successes

6

Successes

6Successes

7Successes

8Successes

9Failures

11Left Canvas

Resource: Project data

Partner: Developers and

industry partners

Obvious software development is needed for a SaaS

business. To build the software, we need project data.

Week 8:

Software

Dev

Week 8:

Customer

Dev

Resource: Webinar

Partner: SOM Architects

Week 8:

Marketin

g Webinars are a perfect platform to disseminate information

on a new product, and SOM offered us a spot.

Resource: $500k

Partner: Grant agencies

Week 8:

Fundraisi

ngWe should not raise $500k at this point. It is much smarter

to raise less and build something small

Failures

12

Customer development critical at ALL stages.Resource: MVP feedback

Partner: Industry partners

Gensler

30+ large architecture firms, including:

Failures

10Successes

5PartnersFailures

11Failures

12Successes

6Successes

9

Final BMCFailures

12Successes

9

Revenue Streams

Subscription SaaS

-Pay Per Project (Small/Medium Firms)

-Pay Per Seat (Large/Very Large Firms)

Service (Customer Support) fees

Consulting

Selling Data for Market Research

Key Partners

Data:

-Architects

-Cost Estimators

-Contractors (DPR)

Industry Partners:

-Architects (SOM)

Software Development

-BIM Platforms (Rhino)

-Co-creation Team

-Stanford Grad Students

Marketing

-Architects (SOM)

-BIM Platforms (Rhino)

Key Activities

Obtaining/updating data

Software Development

Customer Development

Designing UI/UX

Fundraising

Customer Relationships

Get:

- Direct Sales

- Webinars

- Online Advertising

- Trade Shows/Conferences

Keep:

- Service and support

- Expanded product offering

Grow:

- Network effectsKey Resources

Advanced Payments

Webinar Platform

$500K seed funding

Cost Data and BIM Models

Channels

Web

Direct Sales

VARs

Customer

Segments

Project

Architects/Project

Managers employed by

Architecture Firms

-Medium/large (50+)

-Commercial project

Firms

-CAD proficient

Value Proposition

PA/PMs:

-Data gives confidence in

meetings with clients

-Prevent costly rework

-Facilitate higher quality

design

Principals:

-Enhance firm brand and

can upsell

Feature:

Reliable local costing

Cost Structure

Salaries- 3 Founders, 4 Product Engineers,

1 PR/Marketing

Product-Servers, Data Licensing, Support, Advertising

Overhead-Rent, Utilities, Equipment/Software,

Conferences and PR, Other Expenses

Failures

7Successes

2High-Fidelity MVPFailures

8Failures

12Successes

9adapt.tech.cornell.edu

2015 2016 2017 2018 2019

Testing

Product

Revenue

IP

HiringLead

Developer

Developers x10 Developers x20 Developers x40 Developers x80

Sales & support x10 Sales & support x20 Sales & support x40 Sales & support x80

Partnerships

Fundraising $500K seed $1.5M Series A $3M Series B

Marketing partners

Initial licenses x750

Co-creation team

Data partners

Patents: rule sets,

visualization methods

Develop beta version Develop V1.0 Develop V2.0

Beta testing Testing V2.0Testing V1.0

Develop V3.0

Testing V3.0

Develop V4.0

Testing V4.0

Licenses x1,500 Licenses x3,000 Licenses x6,000

Profitability

Failures

7Successes

2Business Strategy

Timeline

Failures

8Failures

12Successes

9

Webinar

This week Fundraising: 7 grants, competitions, VC pitches

May 1 White paper: data visualization methods

This week Recruiting software developers

Ongoing Additional interviews with high-fidelity MVP

Failures

7Successes

2Next StepsFailures

8Failures

12Successes

9

June 1 Initial prototype completed

Questions?

High

Conceptual

Design

Construction

DocumentsDesign

Development

Construction

AdministrationBidding

LEVEL OF COST

UNDERSTANDING

project

goals set

initial design

selected

Current design process

Spectrum

initial design

completed

Low

REWORKUNINFORMED

DECISION-MAKING COST ESTIMATION

CD complete CD complete

COST FEEDBACK

10% TIME

SAVINGS

DESIGN PHASE

within 21%

of actual costs

$2.8B

ANNUALLY

design refined

Quantifying our VPFailures

12Successes

9

Failures

10Successes

5Failures

11Failures

12Successes

6Successes

8

In most classes,

failing 50% more often than succeeding = F and

In Lean LaunchPad,

failing 50% more often than succeeding = A

and

Current Design Process

Architect

refines design

Budget exceeded• architect wastes time

reworking design

• owner and architect pay

rework fees

Architect refines

design to meet budget

Conceptual

Design

Construction

DocumentsDesign

Development

Construction

AdministrationBidding

Pre-

Design

Architect and

owner select

design scheme

Building owner

defines budget

and project

objectives

Cost estimator

performs first

and subsequent

cost analyses

Building owner

defines budget

and project

objectives

Architect and

owner select

design scheme

Architect

iteratively

refines design

with cost

guidance from

Spectrum

Cost estimator

performs

subsequent

cost analyses

Budget Met• architect saves time

reworking design

• owner and architect save on

rework fees

Conceptual

Design

Construction

DocumentsDesign

Development

Construction

AdministrationBidding

Pre-

Design

Spectrum Design Process

Spectrum

Sample Project

Quantifying our Value Proposition

Schematic

Design

Construction

Documents

Current Fee Allocation Scheme

Construction cost = $50M

Architect’s Fee (as percent of construction cost): 8% = $4M

Revised Fee Allocation Scheme

15% = $600K

(3.6 months)

Cost /

Duration20% = $800K

(4.8 months)

Design

Development

35% = $1.4M

(8.4 months)

Construction

AdministrationBidding

5% = $200K

(1.2 months)

25% = $1M

(6 months)

Design

Phase

Project duration = 2 years

Schematic

Design

Construction

Documents

15% = $600K

(3.6 months)

Cost /

Duration20% = $800K

(4.8 months)

Design

Development

25% = $1M

(6 months)

Construction

AdministrationBidding

5% = $200K

(1.2 months)

25% = $1M

(6 months)

Design

Phase

Spectrum

SAVINGS

10% = $400K

(2.4 months)

Interview source: Mark Smedley, Perkins Eastman Architects, February 11, 2015

Financial Timeline

The Rook

Breaking Bread

LoveTap

● FREE

● Drove 190 unique users

● All self-identify as architects

● Conversion rates:

○ 5.4%, 6.9%, 9.1%

Failures

7Successes

2ChannelsFailures

8Failures

10Successes

4

Gain Creators

Pain Relievers

Featu

res

Gains

Pains

1. Facilitate data driven

conversations

2. Transparent costs:

facilitates budget/design

vision balancing

3. Rapid design iteration

feedback: improves client

relationship

1. Rapid design option

generation: shortens

design cycle time

2. Capturing parametric

relationships: improves

owner architect

communication

3. Transparent cost

estimation: facilitates

balancing of budget

1. Immediate

cost/carbon

feedback

2. Many design

comparisons

3. Benchmarking

1. Achieve faster feedback

time on design options

2. More efficiently manage

budget

3. Expand design

possibilities

4. Obtain more

client work

1. Delayed feedback

2. Communicate poorly

3. Balancing budget and

design vision

1. Realize client’s

vision

2. Achieve artistic

vision

3. Design code-

compliant

buildings

Failures

4Successes

1Product-Market FitFailures

5Failures

6Failures

7Successes

2

Failures

4Successes

1MVP

“Repeated discussion with owners leads to a design that

more accurately meets their needs”

we provide real-time

feedback to help architects

design more efficiently

1) Iterations

2) Feedback“Real-time feedback would interfere with my natural

workflow. I’m also worried it would hinder creativity.”

budgets constrain artistic

vision3) Budgets “Working toward a budget is part of the process because

facets of the design process constantly change.”

we would prevent rework

by providing more

information earlier on4) Rework “This would save 10% of my costs!”

Failures

5Failures

6Failures

7Successes

2

we reduce the number of

design cycles by aligning

architect-owner views

Business as

Usual

Spectrum

Design Feedback

FeedbackDesign

Intuition

Engineers

Contractors/

Cost estimators

Failures

4Successes

1Industry GapFailures

5Failures

6Failures

7Successes

2

Additional Slides

Market Trends

Technology

Data Availability Sustainability

Technology Sustainability

Shared Data Informed

Decision-Making

Spectrum

Market Trends

Gain Creators

Pain Relievers

Featu

res

Gains

Pains

1. Prevent rework

2. Transparent costs:

facilitates budget/design

vision balancing

3. Rapid design iteration

feedback: improves client

relationship

1. Rapid design option

generation: shortens

design cycle time

2. Capturing parametric

relationships: improves

owner architect

communication

3. Transparent cost

estimation: facilitates

balancing of budget

1. Cost/carbon

feedback

2. Many design

comparisons

3. Benchmarking

1. Achieve faster feedback

time on design options

2. More efficiently manage

budget

3. Expand design

possibiltiies

4. Obtain more client work

1. Delayed feedback

2. Communicate poorly

3. Balanceing budget

and design vision

1. Realize client’s

vision

2. Achieve artistic

vision

3. Design code-

compliant

buildings

Failures

4Successes

1Product-Market FitFailures

5Failures

6Failures

7Successes

2

Gain Creators

Pain Relievers

Featu

res

Gains

Pains

1. Decrease design cycle

2. Transparent costs

3. Improve design

1. Prevent rework

2. Visualize parametric

relationships

3. Transparent cost

estimation

1. Cost feedback

2. Design

comparisons

3. Visualization

1. Efficient design process

2. More efficiently manage

budget

3. Expand design

possibilities

4. Obtain more client work

1. Limited feedback in

conceptual design

2. Efficiently creating

owner’s vision

3. Balancing budget and

design vision

1. Realize client’s

vision

2. Design within

owner’s budget

3. Design code-

compliant

buildings

Failures

4Successes

1Product-Market FitFailures

5Failures

6Failures

8Successes

2

Original HypothesesFailures

0Successes

0

- The World – market/opportunity, how does it operate

- The Characters – customers/value proposition/ product-market fit, pick a few examples to illustrate

- Narrative Arc – lessons learned how? Enthusiasm, despair, learning then insight

o Quotes from customers “we loved it” or “stupid idea”

- Show us – images and demo to illustrate learning = diagrams, wireframes & pivots to finished product)

- Editing – does each slide advance the learning

Theater

- Point me at what you want me to see

- Ought to be self-explanatory

- Use analogies

30+ large architecture firms, including:

Failures

10Successes

5PartnersFailures

11Failures

12Successes

6Successes

7

Failures

0Successes

0Initial Concept

MARCH APRIL

Enhance Communication

Reduce Design Cycle Time