The journey thus far… part 2: The Smart Contract
TLDR
- Following the lean startup methodology isn’t for the faint of heart
- Jefferson, former GC and serial entrepreneur joins the founding leadership team
- Product roadmap informed by operating like a virtual architectural design studio
- Smart contracts are our wedge to build revenue automation for remodelers
- Revonate’s vision is to be a business in a box for construction entrepreneurs
Lean Startup Methodology isn’t for the faint of heart
While I was at Boston University I spent most of my time in Kendall Square, or attending some type of startup event. I was fortunate to attend many sessions explaining how to start a company. Essentially they all boiled down to being genuinely passionate and obsessed with solving one problem. Ideally one you’ve experienced yourself and are uniquely familiar with.
That being said it also means that you’re starting with a blank canvas, even if you’re pretty sure you know what the solution looks like. This effectively means that you’re creating a sales process and collateral over and over again until your latest cohort hits your NPS, usage and/or revenue goal(s). Some experiments fail, but hopefully most don’t and you refine your solution over time.
In short, it’s easier said than done.
Jefferson, former general contractor and serial entrepreneur joins the founding team
Pretty soon after Gabe and I launched Revonate last summer Jefferson reached out. He and Gabe had a lot of mutual connections from their time at MIT together and was looking for his next venture.
Jefferson has built 2 tech enabled construction businesses before and had incredible insight into what we now call our renovation protocol. Having him on the team means we approach general contractors with a payment solution AND valuable assistance managing their customer backlog.
Tradespeople aren’t interested in software and impersonal zoom meetings. They’re interested in solutions and building things- including relationships.
Revonate’s product roadmap was informed by operating like an architectural design studio
Off and on again in 2–4 weeks sprints we sold architectural design packages to leads that we purchased on behalf of 2 GC partners. This resulted in servicing >$2M in total project value, $600k+ in closed projects for GC partners and >$60k in revenue.
This was confusing to investors but we believed this tech-enabled business model was a temporary and necessary mechanism to validate our hypothesis’. Effectively validating that
1) Homeowners would pay upfront to scope, visualize and quote their projects
2) If we helped GC’s make more money they would give us some of it
For these first 24 customers we outlined the project scope, digitized their space, rendered the architectural designs, generated the permit set and completed the construction.
It was exciting to get real revenue, 85 NPS and provide clear value to our inaugural GC partners. But this wouldn’t scale properly without a significant investment in customer success, product and operations.
We needed to start smaller.
Smart contracts are our wedge to build revenue automation for remodelers
The final deliverable from our Renovation protocol was a construction proposal. This was a document that includes an itemized quote, visualizations, permit resources and a complete list of selections required for the project.
At the end of the day all that really mattered was getting these proposals verified and signed by GC’s and their customers.
This was a light bulb moment in that we realized all these GC’s needed from us was an easier way to get paid and set expectations with customers.
Today for a typical permitted renovation project there are numerous transactions across multiple stakeholders and draw schedules are most often employed. This means that the customer agrees to a certain cost upfront and then pays the contractor based on milestone completion. For example, you may start a project with a 35% down payment, and then 15% once the demolition is completed etc… Often change orders and unforeseen issues add to the complexity and lenders track progress on a spreadsheet.
Now instead of sending manual invoices, collecting cash or depositing paper checks contractors can just send them a Revonate smart contract. They’ll get paid automatically as milestones are verified as completed.
The vision for Revonate is to be the platform construction entrepreneurs use to start and run their business
We’ll only work with select tradespeople in a given geography and terminate the contractors that consistently miss milestones. The “verified by Revonate” badge will be a differentiator and competitive advantage that GC’s will use to infuse trust in their process.
As the contractors we support make more money, we make more money.
As their backlog of customers grows beyond what their team can support we onboard more contractors.
This will position us to offer our users passive referral revenue, revenue optimization tools i.e. forecasting and much more. It all starts with using the smart contract to capture a supply of high quality tradespeople.
If you’re interested in helping us on our journey please introduce us to high quality builders, proptech investors and smart people that are passionate about increasing the perception, income and productivity of tradespeople.