KP Unpacked

KP Reddy Unpacked: LIVE @ Morrissey Goodale M&A and Business Symposium in Miami

April 01, 2024 KP Reddy
KP Unpacked
KP Reddy Unpacked: LIVE @ Morrissey Goodale M&A and Business Symposium in Miami
Show Notes Transcript Chapter Markers

SPECIAL EDITION!

Join in as KP and Jeff stir it up live from the Morrissey Goodale M&A and Business Symposium in Miami.

Held amidst the pulsating energy of Miami as five trailblazing startups from Shadow Partners incubator present their game-changing ideas. Join us for a compelling discussion where risk-taking in innovation meets the necessity for new incentive models, and where the status quo in construction is not just challenged, but reinvented.

Want more discussions like this? You can connect with KP Reddy at https://kpreddy.co/ and follow him on LinkedIn https://www.linkedin.com/in/kpreddy/

Speaker 1:

You are listening to the Shadow Network with KP Ready, your gateway to innovation in architecture, engineering, construction and real estate, with a sprinkle of startups that are making a difference. In between, check us out on YouTube at Shadow Partners. Never miss a live stream fireside chat or talk that we got going on with the industry's most interesting innovators and leaders every single week. With the industry's most interesting innovators and leaders every single week. You can connect with KP Ready and other innovators in the AEC and CRE industry in the Shadow Partners community. Go to shadowpartnersco to learn more. Today. All it takes is a few clicks for you to make a difference. Welcome to the future and welcome to the Shadow Network with KP Ready.

Speaker 2:

All right, welcome back.

Speaker 3:

This is KP Not looking at each other through a screen.

Speaker 1:

I was like looking at the screen to look at you.

Speaker 3:

I just realized like no, he's right here. I should actually look at him for real.

Speaker 2:

Yeah, if ever you wondered whether or not KP was real, or Jeff was real, or the two of them together are real, here you go. Here's the answer. We are, um, we're in Miami right now for the ultra festival for the ultra festival.

Speaker 2:

We're, uh, we're going to dress just like this to the ultra festival in Miami. Um, after the Morrissey Goodale Southeast MNA and business symposium, um, which is we're at right now, the Mandarin Oriental hotel. Uh, in just over an hour, five of our startups from um, the incubator, the shadow partners startup incubator, will be pitching on stage. Everybody here is really excited. I didn't tell you this, but I walked in yesterday to do the walkthrough and they're like oh, you're the Shark Tank guy.

Speaker 3:

Oh, my God.

Speaker 2:

So they're looking forward to it.

Speaker 3:

Please don't call me that.

Speaker 2:

Yeah, do I have to wear leggings? No, they've dubbed it Shark Tank, but it is exciting because five of our startups are going to be highlighted on stage here and it's going to be kind of fun. At the end, the audience will vote for a best of show or audience favorite, something like that. So anybody that wants to see what's actually developing in terms of AI, how it will affect AEC business models I think this is a pretty good preview of that.

Speaker 3:

I think it's also a good group. Mick Morrissey is considered my friend and we've been working together for the last year and been to these conferences before. It's interesting because there's this, like I said, there's always these new titles, right. So everybody became chief innovation officers. Now they have chief strategy officer and chief growth officer at a lot of these.

Speaker 3:

You know these are the large firms, the NR500 type firms, and many of them growth isn't sales, it's not marketing, it's M&A, right. So the startups are going to be in a room full of a bunch of M&A people from big, big firms and they're also going to be in the room with private equity people. We're buying all these engineering firms, which it seems like once a week, and other firms getting bought by private equity and I think one of the questions all the private equity guys are asking is like, hey, what's your innovation strategy? And so I think it's a really good opportunity for these founders to really partner up and get kind of some distribution and get inculcated into the industry very quickly and, by getting some sponsorship by some of these big firms, that can really help them out in the marketplace. Yeah, it's kind of the ultimate customer discovery.

Speaker 2:

This today it really is. That is not lost Hopefully it's not lost on our founders, but it's not lost on me that you know they come into a room like this, which is next door, so on the other side of that wall, that you can't see if you're on the other side of the screen, but, um, they are in the room, they have the opportunity to be in the room with their customers, certainly maybe their buyers, maybe their partners, and it is the ultimate customer discovery, um, the one of the things that you talk about in your book, which we're like a little over 30 days out, a little over 30 days out of the publication of, or the release, I guess, of KP's latest book, and you talk about those intangible organizations and you talk about how AI changes business models, how it needs to change business models, and we've been doing some customer discovery work for clients, some advisory work around that One of the things. This is fresh in my mind because I was on one of those calls with our client earlier this morning. I don't think we learned what you thought. We were, not you, but the client, what you thought we're going to learn.

Speaker 2:

This is why we do the work right. We do this, we talk to the people, we ask the people and we get the real reaction. We don't make assumptions and so, being in a room like this, whether you're an engineering firm or you're one of these startups, this is invaluable. Yeah, as you try to bring something to the market or or pivot, or you know, look at, look at a new business model you know, and it's fascinating, right, if we it seems like such a simple idea go talk to customers.

Speaker 3:

It seems like such a simple idea, like you know, like we've. You know, I feel so dumb sometimes saying, like, well, you need to go talk to the market, you go talk to the customers. And it's amazing how founders don't do it. But then, like some of our advisory clients, which are multi-billion dollar companies, they forgot, they've forgotten how to talk to their customers. They live in a little silo, they go to conferences and they don't actually talk to customers.

Speaker 3:

And I, I think you know, if we can, you know, one of the things I cover in my book is this idea that, like, ai is going to help you really optimize all the mundane work, right? So what are you going to do with all that extra time? And my position is spend it with customers. Figure out that next product, next service, like really engage with them in a deep way, versus like, okay, we went to lunch and great, you know, we'll go build another product and not really ask for their feedback. So it really frees you up to be creative and really accelerate how quickly you launch products and services.

Speaker 1:

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Speaker 2:

You know we didn't talk about this because I didn't tell you this, but as I was doing the customer discovery work for a client, one of the comments from the people that I interviewed was that there needs to be speaking of that mundane work. The tools, the AI tools, are going to come in and take care of that, and you'll see that as you, whether you're live here now and you see the pitch here in about an hour or you join us next Friday, on the 29th. We've got the virtual demo day. You'll see all nine startups from this cohort, but you'll see these solutions that they take care of the mundane work, they attack decision making, they attack risk management. They attack all these things as tools.

Speaker 2:

But one of the people that I was interviewing for the customer discovery work said that we have to have these tools, just like you just said. We have to have these tools so they take care of this mundane work, and then we can shift and focus only on profitability, only on the things basically our our highest and best use, if you want to say it that way and on the things that are going to make us valuable and profitable, and I think that's a big testament to this idea of shifting of um, of business, business plans and um and looking at the AEC business, AEC industry in a new way yeah, it's kind of interesting.

Speaker 3:

I was at the airport and someone and I see this sometimes I'm not I'm no, by by no means any kind of like celebrity, but every once in a while I see someone staring at me and I'm like they're about to come over, um, and so the guy comes over and he's like man, you're KP, aren't you? And I'm like, uh, last I checked, yes, I am, what's up. And he's like man, you're KP, aren't you?

Speaker 1:

And I'm like last I checked. Yes, I am, what's up and he's like.

Speaker 3:

I love your posts on LinkedIn. And I was like really, and I was like that's funny. I've never seen you comment or like them, which is odd. It seems like if you like them, you would actually comment or like them right, Click a button.

Speaker 3:

Like that encourages me. He was like how do you find time? Is it just a discipline thing? And I said you know what? I have the good fortune that I get to talk to 12 to 20 people a day, whether it's through advisory work or startups. Like I just I get a full plate of new information every day and it's almost like journaling, right? If I don't get it out, I can't actually process all the info I get. It was like how do you manage to do that?

Speaker 3:

I'm like I feel like everybody should do that. Like if you're building a company, like I'm building a firm and we're building, you know, shadow partners, if I'm not talking to 12 to 20 people a day, I don't feel like I'm I'm learning. I'm not learning stuff about the market. And I told him and he's a startup founder and I said what do you do all day? And he was like oh, I'm doing this. I was like why don't you spend more time with customers in the market? He was like I don't know, like it's just hard to make time for that. I'm like that's the only you with creating good content. You know, I think founders that create good content clearly are engaging with the market and customers.

Speaker 2:

Right.

Speaker 3:

In a very granular way and it changes. You know what they're thinking, it informs them, and so you know I don't have that many original thoughts. I just repeat everything I hear all day.

Speaker 2:

I pattern recognize what I hear all day and I try to put it into cogent thoughts and post it, which isn't hard. Yeah, you know that idea of creating content which is really important for startups, as you mentioned their website, their social media, whatever they're doing. That's the great irony, right you? You have as many conversations as you can with your customers, potential customers, etc. And then you synthesize that into comment or into content, and so now you're hearing what your customers care about and you're talking about what your customers care about, and there it is. I mean, there's, there's the cycle, right there.

Speaker 3:

Yeah, and I think if I didn't write it on link, write it down on LinkedIn, I'd write it down in a word doc. Sure, like I just you have to like how on LinkedIn. I'd write it down in a Word doc. How do you synthesize and process so much information?

Speaker 3:

Or Tumblr Right or Tumblr on my MySpace page, but I do think my blogger page, I do think Is Seth Gooden still a blogger yeah, I don't know, but I do think. I think he still has an AOL account. But I do think that if you, if you're not getting so much information on a daily basis that you have to process and synthesize, that might be a sign you're not doing it right.

Speaker 2:

It's um, maybe I'm starting to show my age so literally as the old guy in the room a couple months.

Speaker 2:

A couple months older, yeah, um, one thing, and this is you know, if you're going to jump into the Shadow Partners incubator at some point, please don't come in and tell me about and this is going to sound like the old guy, but don't come in and tell me about your eight years experience, your 10 years experience or whatever. First of all, I start to feel really old. Second of all, it doesn't match up with anybody you're trying to sell to. And third, whatever your experience was, even if it's 12, 15 years experience, think about the acceleration, the acceleration of change. How much of that experience that you're relying on to build this new tool to push forward into the future is even relevant. But you know, it does stir up in me. It's like you're just a baby.

Speaker 3:

There's a little bit too, when people talk about how much experience they have, I'm like well, you'll have no problem, you have so much experience, you will have no problem doing customer discovery. You'll know like you are mature enough to understand.

Speaker 2:

You know the importance.

Speaker 3:

right, you know the that doesn't always resonate with them. It does not. It's like I know.

Speaker 1:

And.

Speaker 3:

I do think you know, especially when we work with these engineering firms. They're engineers, well, how do you know? Like I mean I know. So that's not you know. The I know effect is but I think it's been, it's you know. And I think, as we continue the incubator and kind of move to more of an evergreen model, I think it's going to be really, really interesting just to see how these startups evolve, since they're not just in for six weeks, they'll kind of stick around for a minute.

Speaker 2:

Yeah.

Speaker 3:

As well as the corporate startups, right, and we're seeing more and more corporate startups that are trying to understand how this all works. Right, because you know I always joke around like none of these engineering firms invented anything. Engineering, yeah, engineering. Like they're just doing what's been done for 100 years, yes, and so they never really have had to launch something new and different and educate their. You know, they all respond to rfps because the customers know exactly what they need to buy. Yeah, otherwise they couldn't. You know, startups won't respond to rfps because everything they've created has never been invented.

Speaker 3:

Right, it's new, and so I think even some of the corporates having to build this new muscle. It's so fascinating and interesting and they're realizing they have to. It's something they have to do, not just because of ai, but because of innovation. Like, you can't if all you're gonna do is tell your customer I'm using ai to do what I've always done, but faster, like great, so that means it'll be cheaper, yeah, so it's a massive race to the bottom. So I think they've really got to start thinking about this stuff. So we're pretty excited to have some of those corporate startups in our incubator too.

Speaker 2:

Yeah, that's going to be a lot of fun. And I was responding to a post on LinkedIn the other day. It was one of those where I typed the response and deleted it and typed it again and deleted it. It went through several cycles of that, but it was architects. So if you don't know, that, that's my background. And they were complaining said AI, ai still thinks architects make blueprints. We should talk about this more lately. You shouldn't talk about this more First of all. If it that's probably your client saying that, but but you should go out and do something about it. You should go out and um I don't think that's a hallucination.

Speaker 3:

I think that's what architects do, is they make blueprints? Yeah, they take big models, complex big models and flatten them out into blueprints.

Speaker 2:

Exactly? Why do we build these digital twins and then print it out on a 24 by 36 inch piece of paper? But whether it's architecture, engineering, construction, all three operators, it doesn't matter. With many people, I think, there is this resistance to change, but then the delight in complaining. You know, this is what people still think. This is what. Yeah, I mean, you keep doing this because this is the way you've always done it, which I think is the most dangerous phrase that we have in our society right now. But, to your point, an engineering firm didn't invent anything. They didn't invent engineering. They didn't even invent the process that they're using. And we have nine in our cohort now. We'll have, you know, once we turn to the evergreen model, as you mentioned, we'll probably have dozens. Once we turn to the evergreen model, as you mentioned, we'll probably have dozens. Um, you know, as it, as it starts churning, they're going to be inventing the new business models no, I think that's the thing.

Speaker 3:

Right like they will invent new business models. You know it's interesting, um, having built companies in the telecom space and in other spaces, when and not to like, you know, the minute you say innovation, you have say apple, I guess. But having built companies in the telecom space and in other spaces, when and not to like, you know, the minute you say innovation you have to say Apple, I guess. But the biggest innovation Apple had, I think, with the iPhone, was actually the idea that you weren't really doing business with the telecom, you weren't really doing business with AT&T anymore, you were doing business with Apple and Apple had the relationship with you and the telecom became the plumbing. So none of us actually care like, other than when there's an outage because of solar flares Do we care about? None of us care about our carrier.

Speaker 3:

We used to care, in fact, like our phones would have logos from the carriers on them and we used to care about it fact, like our phones would have logos from the carriers on them right and we used to care about it, and one of the business models that apple really did a great job with. You know you have an iphone. You're either iphone or android. This is the deal now nobody says anything about their carrier, right at all like it's just plumbing. It got commoditized and, um, apple kind of took that away.

Speaker 3:

They took that power away from the telecoms and now we can switch our phones over from like we don't care right and I think, with these startups, one of the things is really getting there and encourage them to say like, don't, don't focus on existing business models and practices, and um, I think that's worse. The larger corporations in engineering and construction really have to rethink.

Speaker 2:

Yeah, they definitely are. I mean going back to that customer discovery work for our client. That's more than half of the people that I talked to mentioned. Within the next three years, five years, maybe less than that we are not going to be this anymore.

Speaker 2:

We're going to be this different business model. It's kind of striking to hear that come out of the mouths of leaders of innovations and big engineering or firms and construction firms, but they, they get it right. It's not. It's not an acceleration of a process, it's not an efficiency play. I mean, all of that will happen, but, like you said earlier, it's a race to the bottom, it's mass commoditization.

Speaker 2:

It's accelerated commoditization. But what does that allow us to do? Then you know, if you're a civil engineer, if you're a mechanical engineer, if you're an architect that designs R and D labs, whatever what, what's the next thing?

Speaker 3:

And I think you know, and I think there's a massive misalignment. Right, if you ask a, you know we're in Miami, so I see a lot of developers. Right, if you ask an office developer, what are you like? What is this project Like? I'm building an asset that generates cash flow. They don't even consider it a building. It's an asset, it's like a factory. It's an asset that creates cash flow.

Speaker 3:

If you ask the contractor, he's building a building. If you ask the AE firm, what are they doing? They're building plans and specs. So you have three parties that are working on the same project. They can't even align on what it is they're actually delivering. And it's the idea that a design firm is like well, what's your deliverable plans and specs? Contractor, what's your deliverable building owners? The developers like cash flow, cash flow, y'all. That's what I'm, that's what I'm building here. I'm building an asset that generates cash flow and until there's alignment, I mean that's going to be the opportunity for a lot of startups and founders to say it turns out, all they care about is cash flow, and we're not even asking the right questions to understand that.

Speaker 2:

Yeah, texture friends out there. What you really need to understand about that is when you were talking about the misalignment and when you were talking about the fact that you've got two of the three parties are focused on blueprints, or building, and one's focused on cash flow. Right Two are focused on commodities, focused on commoditization. That's not generating anything beyond the deliverable for them, beyond that final invoice, I guess, and you look at that and you go okay, plans and specs. I can hook up with any number of these startups that go to our incubator and say, okay, how can we develop plans, specs, faster, cheaper, whatever, and no client's going to pay me more for doing it faster.

Speaker 3:

No, and think about that. When has an architect or an engineer or a contractor ever gone to the client and said if we implement this new technology, I can increase your noi by 50 bps? They wouldn't even know what I just said. They wouldn't even know. That's the vocabulary of finance, right? That's that's the they're like.

Speaker 3:

No, you should do this because it's cool, yeah, because it'll be getting more interesting, but then the developer has to, amongst all the things they're doing, is process out what does this mean to my cash flow model? And I think contractors do a little bit better job of understanding it. I think for me it resonates a lot because when I was an engineer, I had a lot of retail clients, so I had the Walmarts and the targets and the costcos of the world and they were very simple with me. They said every day we don't open up, yeah, there's liquidated damages. You, you know your developer interest carry, yeah, your, your developer owes us money.

Speaker 3:

So, as an engineer, if you don't get your developer in there on time, he gets pinged. And it's because they have inventory sitting around. They have they. They staff up the store 60 days. And when you, when they open up a new walmart, they staff up 60 days in advance and train the people so they're running payroll and they have inventory sitting around and they're paying for that inventory to be in storage somewhere. Yeah, and so you, you can, you work. When you cut your queue with these retail people like Walmart, they're like no, look what I did, it was a hundred grand a day. Yeah, and so you, as an engineer, and you're working for a developer like that, like kid, if, if you cost me a day, you owe me a hundred grand, I'm like my fees are only 50.

Speaker 2:

So open up the AI contract documents that you're using, look at your indemnification clauses Exactly. I'm going to start teaching pro practice class here, yeah, yeah. And when we have those parties that are focused on that, again we can. One of the things that came out of the customer discovery work, or a couple of things one is the beginning point. The end point doesn't change. We've got a client with a need, we've got, you know, an asset. At the end, the question is what's the, what's the path in between? Yeah, and how? How's that being affected by AI or whatever the emerging technology is? And then there was another conversation around the idea of different delivery models where the different players are actually incentivized. There's real incentive, not tied to the commodity, but to some value creation the commodity but to some value creation. So we're talking about different business models at that point than what architects and engineers have followed for about 100 years now.

Speaker 3:

It's interesting the design. They all bring up risk. That's why a startup is going to crush you because they don't care. Their entire day is risk. So it's super fascinating. But I think this could be a good time later today and then tomorrow we have all of our startups and our mastermind group members coming into town, so that'll be a good time to meet all of them. If you're not familiar, we basically started these mastermind groups to get industry people that are really, really want to learn more, they want to learn more from us, and want to familiar. We basically started these mastermind groups to get industry people that are really, really uh, want to learn more. They want to learn more from us. They want to learn more from each other. They want to learn more from startups, and we run these little cohorts and we get together once a quarter. It'll be fun tomorrow too yep, yeah, tomorrow is our.

Speaker 2:

We actually have two sections of our innovation leaders. So, director of innovation, chief innovation officer you know people that are leading innovation and sometimes digital transformation in their firms um, from all over north america coming here to miami for their quarterly meetup and then in I don't remember the date, but in a week or two I'm thinking about the new one that we're launching the new mastermind that we're launching for the construction technology.

Speaker 2:

I think that's in a couple of weeks. But, to your point, the innovation leaders will meet again in person June 22nd, I believe it is. It's a Friday in Denver, so that's coming up. But yeah, a lot of interest, a lot of need for these people peer-to-peer, support each other, learn from each other. We just facilitate the conversation.

Speaker 3:

Feels like we're building an army.

Speaker 2:

We are An army of innovators marching through the streets, army of change. We are.

Speaker 3:

This was fun in person.

Speaker 2:

It was. So now we're real. How about?

Speaker 3:

that yeah, first time we've met.

Speaker 2:

It is First time we've met Two old guys sit in a room in front of a laptop and get on the same screen.

Speaker 3:

Who are those guys in the Muppets? Oh man.

Speaker 2:

Waldorf and up in the balcony right Up in the Muppets, waldorf and up in the balcony right. I forget the other one's name, but yeah, it's kind of like that and you can see that we're the same size. Anyway, with that this has been a different edition, a special edition of KP Ready Unpacked. We didn't really get to one of your LinkedIn posts.

Speaker 3:

We have a backlog. We do. We'll get to one of your LinkedIn posts. No, we have a backlog.

Speaker 2:

We've been busy. We do. Yeah, we'll get to those again next week, but we're live here in Miami at the Morrissey Goodale Southeast M&A and Business Symposium in just half an hour or so.

Speaker 3:

We'll have startups from our incubator on stage.

Speaker 2:

All right, let's roll. Thanks everybody, We'll see you next week.

Speaker 1:

Thank you for tuning in to another episode on the Shadow Network here with KP Reddy. As always, remember, you can connect with KP and other innovators in the AEC and CRE industry in the Shadow Partners community. Go to shadowpartnersco to learn more today. Until next time,

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