Page 26 - Forbes - Asia (September 2018)

FORBES ASIA
JOB-SITE TECH
telephony sotware business, then taught
himself HTML. By 1993 he was a sot-
ware engineer; by 1996 he’d founded a
tech consultancy.
When Courte manche built the pro-
totype for Procore ive years later, he was
shocked. Construction made up near-
ly 10% of America’s economy, but even
as late as 2002 its workers barely used the
internet. “Holy crap, I’ve been given a
time machine,” he thought.
For a edgling sotware business,
Santa Barbara was no San Francisco. But
what it did have was plenty of well-heeled
refugees from the Bay Area and Los An-
geles looking for a quieter life. One inves- increasingly had access to Wi-Fi. A de-
tor, Steve Zahm, who had founded and
then sold the e-learning company Dig-
“WHO ELSE GETS BUG REPORTING
FROM THEIR CEO?”
italhink for $120 million, joined Pro-
core as president in 2004 (a role he still
holds today). A bigger ish, DoubleClick
cofounder Kevin O’Connor, wrote Pro-
core’s irst institutional check, leading
a $950,000 seed round and joining the
startup’s board.
Procore grew, but more modest-
ly than hoped. here’s a saying in invest-
ing: If you’re early, you’re just as good as
wrong—and Procore was very early. In
2006, four years ater Procore was found-
ed, the iPhone was still one year into the
future and Wi-Fi was virtually nonex-
istent. Procore ran on laptops and re-
quired internet connections, still rare on
job sites. Courtemanche and Zahm were
known to y across the country to rig up
homemade hot spots for clients at a loss.
When Courte manche brought the app
to Sand Hill Road to meet Silicon Valley
venture capitalists, he was laughed out of
town. At Sequoia Capital, a low-level ana-
lyst told him that focusing on one indus-
try vertical was a sucker’s play. “Make it a
social network and I’ll write you a check
right now,” Courtemanche remembers
him saying.
When the inancial crisis hit in 2008,
home building froze in its tracks. Courte-
24 | FORBES ASIA SEPTEMBER 2018
manche mortgaged his house and, along
with Zahm, cut his salary to zero. All but
ive employees were laid of. Investors ex-
pected to hear that the startup was shut-
ting down.
But Courtemanche was stubborn. He
was convinced that construction would
need IT eventually. When it did, Procore
would be ready. Slowly, trends shited in
Procore’s favor. Construction companies
began revisiting their work ows; young-
er workers, who expected sotware to be
part of their job, entered the industry.
In 2010 Apple launched the iPad, bring-
ing a sturdier device to worksites, which
cade into operations, in 2012, Procore
was still small, with sales of just $5 mil-
lion, but growth started to hockey stick.
Silicon Valley inally took notice: In 2014
Bessemer Ventures led a $15 million in-
vestment round, then poured in another
$30 million alongside Iconiq Capital ten
months later.
Procore’s customers were starting to
get much bigger. Managers at Wieland,
a 61-year-old Michigan contracting irm
that operates $325 million of projects a
year, have used Procore since late 2015.
At Wieland’s multimillion-dollar paper
mill project in Wapakoneta, Ohio, team
leaders and managers are equipped with
iPad Pros so they can check drawings
and updates on Procore at all times. Be-
cause Procore doesn’t charge by head
count but by subscription, subcontrac-
tors and partners working with custom-
ers like Wieland end up using Procore
for free and then oten spread it to their
other projects. “We have a motto, and it’s
simple: 100% Procore,” says Rob Krueger,
Wieland’s CEO.
As Procore has added features to cover
things like safety inspections and inanc-
ing, it’s been able to crack some of the in-
dustry’s biggest players, like Mortenson,
a $4 billion-in-sales construction giant
based in Minnesota, which pays an esti-
mated seven igures a year to keep 2,000
employees on the app. Landing these big-
ger customers has allowed Procore to
raise a war chest of $180 million in fund-
ing since 2015, reaching a valuation of
about $1 billion in late 2016.
Construction tech is now red-hot, and
Procore has attracted challengers both
big and small. Sotware giants Oracle and
Trimble each made $1.2 billion acquisi-
tions in the space in the past six months,
and VCs who missed out on Procore are
now backing newer startups. And at least
one rival quietly bid several billion dollars
for Procore in the past and was rebufed,
sources say. Procore declined to comment
on the overture.
Still, thanks to its years of survival,
Procore’s product looks to have a head
start. “I don’t think there are many com-
panies challenging Procore that can hold
a candle to their size and strategy,” says
Derrick Woods, an analyst at Cowen.
In a little clifside clearing overlooking
the Paciic on Procore’s campus, the man-
agement team, sweating in the July heat,
forms a half-circle around Courtemanche
for their morning stand-up meeting. Now
at 1,200 employees, Procore instituted the
meetings companywide several years ago
as a salve for the chaos of its rapid growth.
Later that day Procore will announce a
partnership with Sage, an accounting sot-
ware maker and erstwhile rival. Elsewhere,
cross-functional teams are working on ad-
ditional versions of Procore’s app for prop-
erty owners, subcontractors and enter-
prise-size customers.
hose releases could be the last touch-
es Procore needs before iling to go pub-
lic ahead of an IPO, which insiders say
is likely to come in early 2019. In inter-
nal meetings and with customers, Pro-
core is already acting like a public-com-
pany-to-be, battening down the hatches
for Wall Street to get its irst close look at
the numbers of an ugly duckling startup
turned cloud leader.
Courtemanche says that ater all these
years, he’s not planning to hang up his
hammer once he rings the market bell. As
with his house, the vision for Procore may
grow grander, but it’ll be the same founda-
tion. “I’m a dog on a bone,” Procore’s CEO
says. “I won’t be able to walk away.” F