In a fast-paced business environment, the fear of missing out on the perfect project that aligns with a company’s specialty and growth objectives is a common concern for business development professionals. However, Chloe Smith, the CEO and Co-founder of Mercator AI, offers a solution to this challenge and for you to stop chasing work and target the right projects in prime locations. She articulates how Artificial Intelligence, specifically her technology, works. Also, she delves into the value of AI in business and highlights her vision for utilizing this technology to augment capabilities. Chloe has a strong intuition and vision to start her business. She encourages startup leaders to trust their intuition, sharing her journey as inspiration. Tune in to this episode and set your journey towards business growth today.
Watch the episode here
Listen to the podcast here
How To Stop Chasing Work And Start Targeting the Right Projects In Prime Locations With Great Clients With Chloe Smith
Wouldn’t it be great if you didn’t have to chase work anymore? Instead, you were able to direct your business development professionals towards specific opportunities in your specific target markets and give them the insights they need to develop the relationships with the right people, with the right projects in the right locations.
That may seem like a bit of a wish dream or a pipe dream but that is the topic of discussion in this episode with my guest Chloe Smith. She is the CEO and Cofounder of Mercator AI, a construction intelligence platform that delivers project insights for general contractors and other types of construction industry firms.
The whole idea of her company is to help you to stop chasing work and start focusing through the gathering of the right data and the application of that data to your business development activity on the right projects with the right people in the right locations. Enjoy my conversation with Chloe and share it with other people that you would think would benefit from this. Thank you for reading.
Chloe, welcome to the show.
Thanks for having me, Eric.
There’s a little phrase that we’re all familiar with, FOMO, the Fear of Missing Out. When you apply that to construction companies, what do you mean by FOMO?
Especially with our customers, we primarily target the folks involved or are responsible for business development across general contracting companies. For them, FOMO means the fear of missing out on that perfect ideal project that fits their specialty and the size that they’re looking for in the right market. They miss out on it because they’re too late to hear about it. By the time they catch the wind, it’s no longer viable or at a viable stage for them.
As we’re kicking off here, this is very interesting. I want to dive into that. Give us a little bit about your background in construction and where you’re coming from.
My background is in marketing and advertising. It’s not in the construction space. It’s in the business-to-business space and business-to-consumer. I’ve worked on numerous large consumer brands that both of you and I probably use. I was helping business developers in the marketing and advertising space get up to speed very quickly on new markets.
I’ve been building rapid intelligence tools over the course of my career and coming from a construction family, I saw an opportunity specifically that my father is in his 60s. He’s aging out and taking all these relationships with him. Ultimately, what does that mean for the business that he’s leaving behind? Also, starting to apply a lot of what we’ve done in the marketing and advertising space in terms of mapping markets.
Also, understanding the context of what’s happening in and around a business and applying that to construction so that we’re not left holding the bag but rather seeing how the industry is shifting and changing. Also, what opportunities are coming up or opportunities we may never have seen before and being able to take advantage of those without hiring more people or increasing our headcount or looking at this as a people problem but rather an intelligence problem.
That’s interesting because going back to this idea of business development, a lot of contractors hire a business development guy or gal. They send them out to some association events and they hope for the best. Typically, that business development person doesn’t necessarily have a ton of technical experience so they may have a bunch of enthusiasm. They’re generating a bunch of leads and bringing stuff back but it’s not in my wheelhouse. How can I leverage the data as you’re describing it to make my business development people smarter?
I would also say smarter on that golf course too in our broker conversations that we’re having. When we think about construction and the data that gets produced, we want to think about how that data and where that data’s being produced. The way that Mercator approaches it is we track the interactions that occur over the life cycle of land and the development of land. We then map that back to the construction process, your pre-construction, construction and post-construction.
In terms of helping people become smarter with how they use data to have better relationships or more informed relationships, we got to talk about the fact that data is never going to replace a good business developer. There is something about that enthusiasm and charisma that’s never going to be reflected in data. What data can do is help us be smarter and drive business decisions instead of chasing work.Data can help us be smarter and drive business decisions instead of chasing work. Click To Tweet
What I mean by that is if we’re able to tell you that there’s a viable project at an early stage, at a stage that is early enough for you to come in and start consulting so that you can value or engineer value into the project, instead of having it engineered out at the tender stage, we can do that by identifying who are the stakeholders so far. What’s the work that’s been done? What are the details of that project that we know about?
Also, who are those stakeholders? What else are they working on? What kind of relationships have they had together so far? Is there an opportunity for you to bring a lot of value to that project and engagement? Is it the right time to have this conversation or should you be having more of a nurturing conversation versus a let’s go after some more conversation? Ensuring that instead of picking up the phone and saying, “What do you have going on,” have meaningful and purposeful conversations at the right time.
I pick up the business journal and read, “Contractor X is doing business with Developer Y. They’re building this killer project and that should have been me.” What are the main data points and gaps in people’s business intelligence that exist that cause that to happen again and again? What are those main points that if I can get clarity in that area, that’s going to help me to make sure that I’m surfacing all of the opportunities?
This is a good exercise for your readers. At this moment, what are your triggers? What would signal that the project is at an early viable stage for you? That’s going to be different from company to company. However, in your specific example, by the time it hits the construction journal, everybody knows about it. The challenge there is if my understanding of the market is all up in my brain, how are you able to identify trends and signals of early work?
We do that by taking people out for drinks and trying to find little breadcrumbs of opportunities but if you don’t even know who to bring out to a drink and who to take out, then how do you know that you’re in front of the right people at the right time? That’s where that exposure, those data points when we talk about a land transaction, who’s buying land if that’s the kind of stage that you’re interested in, that might be your trigger.
When somebody buys land in a specific area and is getting it rezoned, I need to have a conversation with that individual because I need to be able to show them, “We can support you,” whether that be on your pro formas or in terms of what kind of interior you might be using. We’ve got a lot of modular construction customers that are on our platform that find projects early on at those stages so that they can help to inform how are we going to build the thing. As a result, how is that going to impact our pro formas because we engineer all the electrical into our walls? You may not need as much electrical as you thought you would need but you need to shift that money elsewhere and that’s how you’re going to get your return.
Let’s talk about some of those trends and signals. Let’s assume for the moment that I’m a general contractor. I’m building commercial buildings in the geography that I’m in. What are some of those key trends and signals I should be looking at on a regular basis regardless of whether or not I have a software package to do it or whether I’m just aware of it? Give me the top 3 or 4 trends or signals I should look at.
If you’re going to do tenant improvements in commercial space, you should be looking at leasing changes and when real estate goes on and off the market. That’s a good signal. You should be looking at potential land transactions, if that’s something that you’re interested in at that early stage. Sometimes that’s too early for some folks in the mid-market. Look at that rezoning municipal hearing stage. Especially for our public projects and commercial private projects as well, that rezoning stage is supremely important because it’s a good indication that there’s work happening. We’re investing money here.
Also, looking at utility changes. Sometimes it’s a little late. It depends on the type of business that you are but utility changes is a great opportunity to understand when are we feeding new utilities to a site. When are we doing early work? Also, you’ve got your permitting process. Depending on the stage that you’re interested in, that permitting process can be a good indication.
Some of those are micro trends that you’re talking about there. They’re very local and specific to a project type. If you’re not able to answer this, it is fine. For instance, Amazon looked to convert a bunch of their office space that they’re not using into other usages. That is an indication of a broader macroeconomic change. What are some of the macroeconomic trends that I, as a contractor, need to be aware of and monitor that will then filter down to the microlocal projects that I’m going to be focused on?
This is something that we work on at Mercator as well. It’s further down in our product roadmap but certainly, looking at external factors and policy changes. That’s huge. Locally, we’ve had massive policy changes about payback periods. You look at interest rates and the labor force. It is going to be a big one but a lot of this is what your audience already probably knows about.
The trends are impacting their business but also the business of the developers they work with. If we’re seeing that there are massive layoffs happening and high vacancy rates, those buildings need to be repurposed. We were talking with a group that was exploring vacancy rates in our local downtown and understanding if we’re seeing vacancy rates that are higher than usual, will we still need to repurpose those buildings? How are we going to repurpose them?
Also, starting to speak with the property management teams and the owners of those buildings to understand, “How are we going to shift and be proactive about that?” A lot of what you see in the news can help you have better conversations with your developers and clients about what we do next knowing that these are the factors that are coming at us not in construction but rather generally on a macroeconomic scale.
What are the biggest mistakes that contractors make when they have the information that you’re referring to but then they use it incorrectly or they don’t leverage it in the way that they should?
We often see people mass email and mass market. I want to create a world where we never send up mass emails to people. It is so impersonal. It’s such a critical component in construction. We do work with people we trust and you can’t develop that trust in a mass approach. You have to do it strategically. That means being very insightful about what that person’s dealing with. What are they focused on and able to be tailored?We at Mercator AI work with people we trust. You can't develop that trust in a mass approach. You have to do it strategically. Click To Tweet
We’re in a world where automation is king. Being able to do things in mass is supremely important but in reality, construction and business development will always be a person-to-person role. We can be more effective and efficient but it will always be person-to-person. That’s important because we are people building work together. That is an incredibly collaborative process and that requires a lot of trust and understanding of each person’s motivations as they go into a project.
That’s interesting because what you’re doing here is articulating the limitations of technology. It’s tempting for someone to come in and say, “I have the technology pill that solves everything.” What you’re saying is that there is a utility for the technology but there is also a limit to it based on the human aspect of business development and interaction that’s so vital. With that in mind, your company is Mercator.ai. AI is Artificial Intelligence. What are you doing with artificial intelligence? How does that work? Give us a little insight. I’m a dummy when it comes to artificial intelligence. Give me a fifth-grade explanation of how your technology works.
I’m five versions of artificial intelligence. Something that we all have to come to and understand is that AI is mass pattern recognition. We’re recognizing patterns at a scale and at a level that we as human beings can’t do. When we think about how AI is applied at Mercator, what we’re doing is taking all of these disparate activities, events, changes and touchpoints that exist throughout the land development life cycle. We are stitching all of those together using that mass pattern recognition to understand these activities and events that have occurred at the same time about the same topic and environment to be able to say, “This is a project.”
It’s a very different approach to how we’ve done this in the past. If you look at traditional tools in the space, a lot of it has to do with people picking up the phone and saying, “Tell me more about this project.” Whereas we are detecting projects and as a result, we are detecting what stage they’re in. As a result, we’re then able to pull together a graph of who is working with whom on what, where, when and for how much.
What’s the typical size of the general contractors that you work with revenue-wise and that kind of stuff?
We typically hit the mid-market, anywhere from $50 million to $500 million in size. We have some larger clients or customers that are in the billion-dollar-plus range. We also have some smaller customers that are in the $50 million range. Primarily, we’ve been focusing on the mid-market, mainly because this is a group that has been underserved by massive enterprise tools and smaller tools that they’re able to tackle or bring in because of the cost of the software.
We also look at them as an opportunity to grow them. There’s a huge opportunity if you use a tool like Mercator to be able to step into a brand new market where it would’ve normally taken 4 to 6 years to set up an operation, boots on the ground and relationships. Step into a market and within the first year, have cashflow positive on that initiative.
It’s been a huge opportunity for us to be able to service that mid-market. As we grow here, we’ll also be providing additional toolings like competitive intelligence and more market insight tooling. We’ll ultimately transition into more risk detection where we’re able to understand how litigious companies are or if are they paying their bills.
Speak to competitive intelligence as you guys are considering that. What are some key aspects of competitive intelligence that as a general contractor, I need to be laying hold of?
We all wonder why we lost that project and who we lost it to. Understanding who won the project that we lost is first off critical because it helps us to understand, “Who are we losing work to consistently? Who’s potentially stepping in and starting to a larger market share?” We know that our developers can sometimes be fickle and our relationships last 3, 4 or 5 projects and then they step back into the market. They want to take a look around and see if there are other partners that are a better fit.
Understand when those indicators are starting to happen. When are we starting to see other companies step in or step into our territory or even take over some of our relationships? Those are a lot of the indicators that we need to start looking at. Also, understanding how are they positioning themselves? How do they position themselves in that RFP that’s different than how we did it? Also, where can we win where they can’t?
Going back to this idea of technology implementation, I’ve spoken to a lot of folks about this over the years. In your experience, you don’t have to name names but speak specifically to your company, why is it that someone who would hear your pitch would get the logic of it? It’s fairly simple logic. If I’m getting it, I’m sure my readers are getting it. Why is it that a technology implementation fails?
This is one of the hardest things for new technology. One of the reasons why it fails is because it’s not easy to use. I once listened to a keynote from the folks at Fieldwire and they said one of the main reasons why they won in the very early days is because their tool was dirt simple to use. They focused on that user experience first and foremost, knowing that they didn’t have all the features. It wasn’t perfect. It wasn’t all there.The hardest thing for new technology and why it fails is because it's not easy to use. Click To Tweet
They made a concerted effort on making sure that the implementation of the usability of the platform was very easy and that somebody could come in and get a value very quickly. That’s something that we are as an industry risk-averse. To take on something brand new is time and energy that could be spent elsewhere where we know it’s going to be making money. Making sure that usability in that first experience is very quick to get value and be able to perceive value is supremely important.
Let’s say someone has purchased your product and they’re implementing it. For whatever reason, it doesn’t work for them. Why is it that it doesn’t work for them?
It’s been a couple of reasons. One of which is they don’t have dedicated team members and that’s where smaller teams are not a good fit for our platform. It’s important that you have somebody who’s dedicated to spending that time in Mercator.
You’re talking about specifically a dedicated BD person.
A dedicated BD person or coordinator. Oftentimes, that hub and spoke model is the best model because you have somebody who’s in there on a regular basis shooting out opportunities to other individuals that are tailor fit for them. Another reason why somebody wouldn’t be able to succeed in our platform is if they’re unwilling to see a shift in their process. Technology adoption has to be a two-way street. There’s only so much they can do and it has to come from the individual that they see this and self-qualify as they see this as a problem and they want to find a solution for it.
What is the main shift that someone has to make to be able to leverage your technology most effectively?
Stop looking at AI as something that’s threatening your job and start looking at AI as something that’s augmenting your capability.
Why do people think it’s threatening their job?
It’s because we don’t understand it. Early on when we were introducing our product, we’ve only been in the market for about eighteen months. We’re a very new product. Early on, we’re positioning ourselves from an AI perspective and that proved to be very difficult for the industry to take on because they felt like, “I don’t understand the technology and how it could potentially either threaten me or do away with me or potentially replace me?” That becomes very challenging. We want to put our backs up against that instead of embracing it.
Look at it as there will never be anything better than a fantastic business developer. Data can’t build relationships. You’ve got to shift that. That starts to shift the perspective where you’re starting to look at, “How can I use this as a condiment or something to augment me? Something to make me faster and smarter and drive business decisions instead of chasing work. How can I use technology in that direction?” That’s the shift that we’ve noticed that our customers are making and they’re going, “I see this as something that’s going to help me make better decisions faster, instead of something that’s going to take over my role.”
There are two key points there. This is interesting. One is that data can’t build relationships but it can help identify the relationships that you want to build perhaps.
Also, augment you with the information you need to build them with higher quality.
What’s interesting too is that other phrase that you mentioned. It is this idea of chasing work because it seems like many times contractors get into this mode and they think this is the way it’s done. “I’ve got to bid for work and if we bid enough work, our hit rate will be X. Eventually, we’ll get some projects in the door.” It sounds like from what you’re saying, the data that you guys can bring to the table is instead of chasing work, you can be way more targeted and intentional in the work that you’re going after.
Also, being proactive about those opportunities and conversations.
What do you think is the biggest mistake business development people make when they are trying to build relationships with their target market?
Everyone’s busy, especially in this industry. We’re constantly so busy. Our heads are down in the work that we’re doing. Coming to a conversation and asking, “How can I help,” versus being able to support with, “I understand what you’re doing and what you’re trying to achieve. This is how I can support,” and coming up with solutions instead of a question, that’s a mistake that we make.
I wouldn’t say it’s a mistake. It’s an approach, especially in a world where there’s so much. We’ve got notifications coming in left, right and center. Our inboxes are crazy. For somebody to reach out and say, “I can help in this specific way,” simplifies your client’s jobs so much for the better. I truly think that’s where we’re trending towards in terms of our relationships. Who are the people who understand my needs and can provide me with solutions and ideas that I didn’t even think about? Instead of asking me, “How’s it going? How can I help,” and me having to ideate on your behalf.
Where do you see the use of AI in the construction space in a few years?
I would hope that we are at a space where we’re taking a lot of this new generative AI. We are no longer interacting with tools from the perspective of, “I’m bringing on this tool and I have to learn it. I have to integrate it into my workflow. I have 3, 4, 5 or 10 different tools that I have to figure out how they all work together,” but rather say, “This is what I would like to do.” We have technology that can seamlessly incorporate and support you.
You think about an invisible user experience. I have a degree in Public Relations and we talk about the fact that amazing PR is PR that you’ll never see. In AI, it’s very much the same. Phenomenal AI and phenomenal execution of AI is AI you’ll never see because it is so seamlessly incorporated into how you work. For example, being able to ask natural language questions and get the answer that you need. Not all the data, not every single version in which you can slice and dice it so that you have to figure out what you want to look at but rather you ask a question, get the answer and move on with your day.
You said there is something very interesting. The best PR is the PR that you don’t see. A little tangent here. Tell me what you mean by that and how that might apply to a construction company.
What’s interesting here is whenever you see a PR scandal, it’s because something went dramatically wrong. When you think of amazing PR, we don’t often think about it because it’s something that’s a part of your day-to-day. I do think about how we’ve so quickly adopted a lot of our technology and these invisible user experiences, whether it be your Alexa or Google Home. You’re talking into the ether to turn your lights on or whether it’s a voice to text.
You’re driving in your car and writing a text message to someone or recording a voice memo, being able to very quickly interact with your phone through prompts that you’re not necessarily touching your phone or interacting with the actual device. You’re saying, “I’d like to send somebody a message and this is the message I’d like to send them.” It’s very simple things like that.
What’s the biggest mistake that you’ve made as a startup CEO? What did you do to fix that mistake?
I’ve stopped calling them mistakes and I’ve started calling them learnings. Early on, shift over to finding what problem we were solving with our technology. I spent a lot of time listening to advice. To be honest, my intuition has been the strongest driver of this vision so far. Probably more of a learning than a mistake is trusting other people’s perspectives when in reality, I had a very strong vision and intuition and that’s what I’ve been trusting.
Why do we tend to trust other people’s opinions as opposed to our intuition?
I started the company when I was 27 years old. You’re young and you often think you have older people around you who know better than you. That’s a big part of it. I was also a woman in a very male-dominated environment. That’s played a big role. “Am I good enough? Do I know enough to trust my intuition?” What I started to realize though was more and more you would come back to what decision you make in the end.
Ultimately, it was the decision you knew to make right off the get-go. You then went and asked a whole bunch of people. External validation is something that we always look for in our ideas, especially in a space that is incredibly risky. When you’re starting a company, it is incredibly risky. You’re constantly looking for some signal, especially in a place where there’s no boss. There’s no one person ahead of you who’s got all the answers. You’re coming up with the answers on the spot.
What is that core intuition that you have?
It’s a vision of what I believe the world needs to look like, what it should look like and how I want to shape it. Also, the legacy I want to leave and what is possible, especially having known. This is something that’s very unique to us and is not a common thing for a tech company. Oftentimes, people start companies because they were in the industry. They decided to step out, do something very specific in that industry and solve a problem that they specifically saw. We saw a very broad problem and then went and applied it to a specific industry.
What that’s given us is the ability to see beyond, “This is how we’ve always thought in construction. This is how traditionally we’ve always perceived the world.” Also, taking a perspective from cutting-edge marketing and advertising has always been kind of the cutting edge outside of probably video games in terms of data and data usage. Taking that perspective to construction is driving home my intuition. I’ve seen it work and what it can do. I want to help my customers see it as well and realize it and the industry to realize it ultimately.
You’re taking what’s worked in another industry and making the analogy into construction. As you’re doing that, I’m sure you’re learning a lot. The core is the idea of chasing work. That’s a phrase that we hear again and again in construction. What it sounds like you’re driving at is making business development decisions and activities more intelligent, focused and specific. Tell us a little bit more about how people can get in touch with you here, Chloe.
You can check us out at Mercator.ai and request a trial. We’ve got a huge wait list but we want to hear from your readers, especially if they self-identify with the problem. It’s always great to be able to engage them and understand how they want to be able to solve it and they can help shape how we develop this product over time. We’ve only been in the market for a few months. It’s a very new product. If there’s anybody out there reading who’s interested in helping shape it, please do reach out.
You’re looking for those mid-market folks of $50 million to $500 million. That’s your sweet spot so people are clear on that.
Yeah, but we also were able to handle customers that are larger than that as well. Much smaller than that would be a bit more challenging, especially when it comes down to resource capacity.
Chloe, last question. You were out of Canada. What city?
If I’m in Calgary, what’s the one restaurant I need to hit? I’m in the construction space as well so it’s likely not a vegan or a vegetarian one.
You’re in good hands here in Alberta.
I’m thinking barbecue or something.
You got to go get a fantastic steak at CHARCUT.
Chloe, I do wish you the best. Thank you for joining us here on the show.
Thanks for having me, Eric.
One thing I like about the interview with Chloe is that she understands the limitations of technology but also the usage of technology. Go out to the website Mecator.ai and check out the work that she is doing in helping construction companies to identify the right projects with the right clients in the right locations. Please give the show a rating or a review wherever you get your shows. As always, thank you for reading.
- Mercator AI