Company building in the building industry
Your own company as a start-up forge
An innovative idea, a good business model paired with a detailed business plan and necessary start-up capital: this is how start-ups got started at the turn of the millennium. Almost all of them no longer exist; the „Dotcom bubble“ (or „New Economy Bubble“) swept them off the market in the early 2000s. Exponential growth was the goal of these Internet companies. Many went public immediately after their foundation to raise further capital. A marketable and developable product was rare. The gold-rush atmosphere of that time was often followed by unprecedented crash.
Started as a garage company, to the celebrated Unicorn grown up and sold with an immense profit after some years: This is the dream of many startup founders. The history of Spotify Zalando, Uber, AirBnB or Twitter and PayPal shows that it is possible. And many are carrying the Gene to success. The aforementioned companies have long since ceased to be start-ups, but are now fixed market players. To make this possible, partners like WallWorks when starting up – but differently than usual.
Startup means: earning money. But not at any price
Today, nothing has changed in the basic parameters of a start-up: 1. innovation, 2. good business model, 3. realistic business plan and 4. necessary capital resources. Everything else however fundamentally. At least for those who want to be successful in the long term and place their company on a broad foundation. Nevertheless: a start-up must continue to be successful quickly. Especially when a venture capitalist (VC), a venture capitalist, joins the company. The VC often offers capital on a scale that a bank does not provide – but with the danger that business decisions are only made in a profit-oriented manner, thus putting the product in the background.
In recent years, more and more established medium-sized companies have been relying on their own innovative strength and founding start-ups. This is just as true for the construction industry, which is still in its infancy, as WallWorks founders Georg Stampfl from Vienna explains. His company supports medium-sized companies in the construction industry to transfer their own innovation approaches into new startups. WallWorks has resources and entrepreneurial know-how, plus a broad network of specialists who are necessary for the various tasks involved in setting up a start-up. WallWorks is a Company Builder.
Company Builder pave the way
The main difference to classical start-ups, where innovation tends to come from individuals or institutions, is the structured and repeated establishment of several start-ups in close cooperation with established companies. In this case, the start-up is promoted directly from the company. In terms of the construction industry, this means: In the first step, a construction product manufacturer develops an idea together with WallWorks in an iterative and customer-centered manner; in the second step, a team is assembled for implementation – but only if the project shows promise. Georg Stampfl: “Within an established company structure it is difficult to initiate new topics. There are rigid procurement processes, extensive reporting hierarchies, a brand legacy and other innovation blockers. An established company is like a well-oiled machine. In your own market, you can operate in an increasingly optimized way and you are constantly getting better. But when it comes to new customers or new markets, suddenly different processes, different company structures are needed there. So you need a sandbox, a play and test laboratory where new things are simply tried out.
WallWorks has identified the construction industry as a highly exciting sector for company building: The digitalization of the industry is just beginning here. There is a lot of potential in tools that accompany this process. And German SMEs in particular are willing to invest in their own innovations and spin-offs. A view across the Atlantic towards USA shows how many venture capitalists are already investing in the construction industry. Katerra is currently the best known example. The Californian company is pursuing the idea of producing a building similar to a car. The goal is clear: to move forward and become number one in the construction sector, globally, through prefabrication, digital planning and maximum efficiency in the construction phase.
Georg Stampfl identifies four advantages of a start-up spin-off from a company:
1. Access to talent: Finding entrepreneurial, digital talent is becoming increasingly difficult. We are currently in an employee market. The demands on employers are very high. So what is the goal, the reason why I should work there; what does a company offer me besides the salary?
2. Speed: A new product, service or business model can be developed and tested much faster. Nowadays speed is more important than company size – so “Speed is the new scale”.
3. Risk reduction: The reputation of my brand remains intact, even if the project fails. Projects with no chance of success are quickly terminated without burning money unnecessarily.
4. The possibility to combine the best of both worlds: In other words, financial resources, existing distribution channels, customer access and market presence of the parent company are combined with the speed and agility of a start-up environment.
High reject rate – high probability of success
Not every idea that companies come up with at Georg Stampfl has what he calls “venture” potential: “But WallWorks drastically increases the probability of success. We want to establish two or three ventures in the coming months. These must then be successful. The ratio is about 1 %. That means that with 300 suggestions and ideas, there are three that actually have the potential for a successful spin-off.
To be successful in the construction industry, a Company Builder must combine two essential factors. In the B2B sector, the industry focus is elementary. Only through this specialization and deepening in a specific area can the necessary expertise be built up. The second point is the entrepreneurial experience, says Georg Stampfl: “That was a gross mistake of the first Company Builder. Inexperienced people were put on it. What is needed, however, are experienced employees, seniors, a good mix of people with extensive industry-specific expertise and people with experience in building new companies. The focus is clearly on the product. We relieve the teams of issues such as administration and recruiting and create access to corporate and investment partners. This allows our teams to concentrate fully on product development. The financing is secure and there is always a potential exit scenario, e.g. for one of the corporate partners in the project”.
Your own success is measured by the success of the start-ups
Company Building is already developing in many areas and shows above-average Success rates. The construction sector is now entering the scene and company builders like WallWorks and Georg Stampfl will have a lot of work to do in the foreseeable future. Nevertheless, their business and the competition is tough: “Our success is always measured by the success of the start-ups we develop over the first three years. We are still quite new in the market and have defined a main goal for the next twelve months: to start the first promising projects and continue to build a good partner portfolio. We are already working on two projects at an early stage. And then there is, so to speak, a sub-target. We need talent at WallWorks. We want to be highly attractive to talented people. It’s the same as in the construction industry: It’s not just the tools we use, it’s who operates them!
Tim Westphal
Author and industry expert, specialising in architectural journalism on topics requiring explanation and complex building stories.