The Exchanges

Q So I should know. So 2018, you start to go So two, like the GFC brings you into the commercial side from residential, and then, but you're 14 years in before you really go big, I'm all in on what we would call enterprise. And What was that accelerant? What was that? What created that big change?

A So we were being pulled into bigger and bigger companies. So the interesting thing about construction is very transient. So project manager, one company goes to work at another one, they bring Procore with them. And so we were getting pulled into bigger and bigger customers and we decided we were going to focus on one particular market. So we chose the Boston metropolitan market, which actually had some of the largest contractors there. And so we Myself and one of our salespeople, we just went knocking on doors and we finally found somebody who would let us in and and we basically We're able to show them the value of what we were able to provide. We clearly were not enterprise grade at the time. They knew that, but they basically worked with us. And then the thing about the construction industry is because it's so hyper local, if you think about it, if you're a construction company and you have a D a bulldozer, you're not going to work. 400 miles away. Cause how are you going to get that? 25 ton equipment over there because it's so local every there's a FOMO factor there. So the minute we got one, everyone else wanted to take a meeting with us. And so we just leveraged that. To get into all of the other ones. I mean, we get a pilot project and man, they would rake us over the coals and they would put us up in front of these committees of 50 people that were like judging our sof…

AI assessment note: “we were being pulled into bigger and bigger companies”

Q What, tell us what, what you're thinking, what you're working on and how did the customers think about it? Are they begging you for more AI? Do they want more automation, more work clothes? Do they want some part of Procore just to be easier to use because it's 20, 25? Like, how are you thinking about also how the customer, what are the customers asking for?

A All of what you just said, but it, by the way, it does start with ease of use. So forget about AI for a second. People need tools that they can actually use. So we invest a lot in our UX kind of investment front. But when it comes to data, what people are asking for is, first of all, our customers tell us that they can run 50% more construction volume on, uh, through their business if they're running on the Procore platform than if they're not. And why that matters is in the construction industry, it's a very low margin business, like two to three percent gross margin business. So you're talking about 80%, like imagine running that business, like a grocery store, it's very difficult, low margin. And so every Every time you can avoid hiring the next person, especially in a constrained market, like construction, there's not enough people to do the work. You actually have a competitive advantage. So first and foremost, they want to be, to increase the productivity of their workforce by leveraging technology. But that's usually starts with just managing workflows and capturing data and stuff like that, which is fine. But what the industry is waking up to realize is that, wait a minute. A lot of money is lost in construction because mistakes are made that shouldn't have been made because somebody didn't have the pattern recognition that they need. So now that they want to leverage t…

AI assessment note: “All of what you just said, but it, by the way, it does start with ease of use.”

Q back into Python. You playing with deep seek. What did you have any epiphany? Do you think God, if maybe in a year I could do this with Procore, I could just do something in industry, any AI, uh, don't mean to put you on the spot, but any, we're, we're all seeing so much change. Any, anything you all, any aha moments you had out of all of this?

A You know what I like? Yes. The aha moment is that we're all limited by our ability to prompt engineer. So I think as, as we get better at prompt engineering, we're going to be able to ask these models much more sophisticated questions. And now that you actually get chain of thought, you can actually ask really deep questions and really deep and ask for really deep analysis, which is completely different than just predicting the next word that's going to come up. For me, now that you have these models that are reasoning models that can do this chain of thought, I, I think that everything is going to change. I think the way that, um, I actually think the way construction gets delivered is going to change because a lot of the problem, a lot of processes in construction are built around trying to do risk mitigation because people know that mistakes are going to happen. If you can prevent those mistakes from happening, you can actually reduce all the risk mitigation and actually increase people's profits. So I, I just, I think. Yeah, I just think there's a lot that's coming, and it could not be a more exciting time to be a, essentially, a data company in a Industry that's as big as it, as construction is.

AI assessment note: “The aha moment is that we're all limited by our ability to prompt engineer.”

Q When people, sometimes folks don't realize when you're doing a big process change, like Procore is it might be someone's only app they deploy for a couple of years and do it right. They're a hero. Do it right. They're a hero, right? Do it wrong. Their one big initiative is a miss, right?

A It's so funny. The back in the 2016, 17 and 18 timeframe, we walked through a firm. They wouldn't have an IT department. The last software that they bought was their ERP solution. It was like 15 years ago. They didn't know how to buy software. And so we had them teach them how to buy software and then have them buy, buy software. Now it's a completely different world today. Like they're It's the industry is really misunderstood. It is a highly complex industry that is very data intensive. And people think of construction as guys sitting on the I-beam whistling to people walking by. That is not the construction industry. Construction industry is extremely complicated with these complex workflows and lots of liability and low margins and lots of stakeholders, right?

AI assessment note: “The last software that they bought was their ERP solution. It was like 15 years ago.”

Q out You're doing the sales with your sales lead, right? You're going into the office convincing them that, super domain experts. You're bringing in SEs and solution experts now. How does that, what have you learned and how has it changed over time? Is Procore a big enough brand now you can get away with hiring some kids out of college and then not really understanding what construction software is?

A Not really. It actually has nothing to do with the scale. It's just the complexity of the problem space that we're solving for. What's really interesting is, and if I was a, if I was one of your listeners and I was building a business, Brand is one of those things that is highly misunderstood by founders, but our brand in the United States is ubiquitous in construction. Everybody knows Procore. We are the, are the market leader, but when we enter into a new market, like when we go into UK, Ireland, we go into the UAE or whatever you have to remember. And as a founder, you cannot forget that no one has a clue who you are. Right. So you Or the life of the party. And then you go to another party and no one knows who you are. You got to remember that the playbook is completely different for entering new markets. Cause you really do have to build your brand intentionally. And the vertical market like Procore is you have one chance to make a good impression with your brand. And if you make a bad impression, you're essentially doomed in that market. So we are very intentional about how we go to market and new geos. And what's really interesting is that, so we sell into 11 markets today in particular, but we actually have people using Procore in a 160 countries. So because of the fact that this SaaS solution, so what we're doing is we're building brand in all of these different areas b…

AI assessment note: “Not really. It actually has nothing to do with the scale.”

Q okay to have a sales rep that has come out of Salesforce or B to B environment because you've got the SE. That is the industry expert and does the salesperson, because these are sophisticated problems with sophisticated workflows. I don't want to talk to a sales rep that knows nothing other than price. Do I, what value does the sales rep add to Procore if in these sophisticated conversations?

A So we spend a considerable amount of time enabling our sellers as to how to understand not only the technology, but the problem space that we're solving for. I actually just went through our, our, our new enablement bootcamp. I'm like, if I'm going to do it, let's do it. By the way, lots of pressure on the founder because everyone saw it. I got, I nailed it, but I was very, I was a little nervous on that front. But the thing that we find interesting in our world is We definitely could bring people sellers in who've sold elsewhere. Cause we really do think that selling is the skill that's needed in order to build the foundation of how we're, we've tried bringing in people from the industry and teach them how to be sellers. It doesn't work that well.

AI assessment note: “we spend a considerable amount of time enabling our sellers as to how to understand”