Avoiding Huge Tech Mistakes With Fewer Risks With Scott Ellison

As innovative approaches continue to find their way into the construction industry, extra care must be taken in integrating the latest technology into your projects. By doing a quick test for every pitch that you get, you can avoid tech mistakes and ensure the smooth flow of work. Eric Anderton chats with Scott Ellison who talks about the right way to embrace brand-new technologies without only considering speed but also quality and costs. Scott talks about the importance of empathy and collective wisdom in furthering the construction industry. He also shares about the fruits of going on a sabbatical, detailing his experiences of trying saltwater fly fishing.

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Avoiding Huge Tech Mistakes With Fewer Risks With Scott Ellison

Assessing The Worth Of Innovative Tools In The Construction Industry

How do you know if a construction technology solution is right for your company? My guest, Scott Ellison, has a quick test that you can use every single time someone comes and knocks on your door and pitches you the latest and greatest technology solution so that you are very clear on what to look to adopt and what to avoid. That is just one aspect of our conversation as we dive into the world of construction tech. Scott’s perspective is very interesting because he’s a consultant, investor, and advisor to multiple built tech startups. He comes from the point of view of looking at the industry, thinking about the particular needs of the industry from a technology perspective, and the solutions that may be able to help us in construction be more efficient, safer, and build more profitably.

I know you’re going to enjoy my discussion with Scott. I want you to stick around to the end. He introduces himself at the beginning and mentions a sabbatical that he took in his career. At the end of our conversation, I get into a little more detail about that sabbatical. We discussed some of the great places that he visited and some of the activities that he took part in, particularly, fly fishing for bonefish in saltwater. That’s an interesting part of our conversation. I know you’ll enjoy that. Feel free to share this with other people that you think would benefit from the discussion. Thank you for tuning in and enjoy my conversation with Scott.

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Scott, welcome to the show.

Eric, it’s a pleasure.

I’m bringing you on because you have deep experience in the whole arena of construction tech. I’d like you to give a quick introduction of yourself to the Construction Genius audience.

It’s an honor to be part of the show. I have been a listener have some companies that I’ve been involved with who are big fans of yours. Thanks for having me on. My background is not in construction professionally or at least it wasn’t until the past few years. I’m a recovering strategy consultant. I was at a growth equity firm for a number of years. I took an early mid-career break and traveled for a couple of years from Antarctica to Mongolia and got my pilot’s license. I’ve been doing CFO consulting, investing, and advising here in San Francisco. It doesn’t necessarily mean those are the companies that I spend time with, particularly in the past few years. The intersection with the built world for me is a personal one.

For the longest time, I have had a number of family members who are general contractors, real estate managers, and investors. For many years, my professional life and my personal life didn’t seem to intersect much when I’d get together with uncles and in-laws over the holidays. I also should mention that one of my formative jobs growing up was working in a hardware store, but this was before Home Depot and when the hardware stores in local towns were general contractor supply stores. I absolutely loved that environment. I loved the people.

I loved the fact that I could drive with my new driver’s license and see projects that I was involved with. Obviously, it’s on a peripheral level but at least seeing like I just talked to this GC and they came in to buy X, Y, and Z supplies. It was with a bit of excitement a few years ago that I started seeing some fundamental trends. We’ll get into them and your audience is well familiar with them at this point, but it’s the ones that I thought were likely to change the way that tech was thought about in the sector.

We can go into detail on that but that led me to focus almost all my time on what I think of as a built tech. It’s where technology intersects the full design, construction, and then building operations continuum. I’d say probably 2/3 of my time, I’ve been spending in construct tech. There’s an enormous amount that can be done that I think should be done and needs to be done. It needs to be done in such a way that it’s not just tech being offered to the sector. There are tools that can be used in such a way that they make the job of a general contractor or contractor writ large more effective.

Let’s talk about that a little bit. I know from the perspective of a construction company owner, I have folks knocking on my door all day with the latest and greatest app or technology or something like that. Number one, there’s a sense of overwhelm. There can be a sense of fatigue and a sense of almost numbness when it comes to, “What should I do to improve my company and put some of these tools in my toolkit?” Describe that fatigue as you see it from an outsider’s perspective.

It’s such a well-known phenomenon that it has a name in construct tech. It’s app fatigue. Maybe not particularly creative but it describes exactly what you’re talking about. It’s a phenomenon that happens in any sector as it starts to ramp up the adoption of new technology. I like to talk about it with a personal anecdote. I’ve shared this before. We had a big tree come down on our property a couple of years ago. I had to hire a stump grinder to come out and remove the base of it. When they showed up, it struck me that if they had said, “Scott, we have the greatest cutting edge hammer that’s cloud-connected and AI-enabled, and will tell you exactly how to use it as efficiently as possible and connect back into all your financial systems.” I would’ve said, “Guys, you’re talking to the right person. I’m interested in that, but I need this stump out of the ground and that’s not going to help me.”

I think there’s a natural temptation for any founder or any executive team in a construct tech company to get seduced by the technology that they’re developing. It’s a natural temptation. That’s where they’re spending all their time. That’s why they’re excited about doing what they’re doing. Ultimately, the only thing that matters is when they go out to the customer, potentially to the job site. Are they delivering a tool that makes the workers or the particular company more effective? If they are, then there’s a conversation to have. If they’re not, then it’s a science project.

Let’s talk about that at the moment. As a CEO of a construction company, when someone is pitching me a tech app or some built tech product or solution, how can I know fairly quickly whether or not that’s a fit for me?

It’s entirely fair to have a five-minute test. By that, I mean a company, a startup, or the sales representative for the startup early on should be so clear on the ROI or at least the reason why you should try their technology, and that it’s obvious in the first five minutes. If it’s not, similar to the AI cloud-connected hammer, you say, “It’s fantastic. You seem like a smart team and good people but maybe we’re not the best for you right now. Why don’t we reengage in a couple of years?”

As you look at the tech companies that are focused on the construction industry, there tend to be two types. The first type is someone who is from the outside. They have a good understanding of technology. They see the inefficiencies in construction, and they try and bring something to the market. You also have someone who is perhaps from construction and knows some of the pains experientially, but perhaps doesn’t have the technical chops to bring to market something that would be useful. In your experience working with these built tech companies, how do you see that dynamic playing out?

It’s an important dynamic. One of the things that I’m focused on in talking to entrepreneurs is whether they either have a reason to be super interested in construction. Often, there’s some sort of family connection like mine, or maybe it’s even more involved. I can give you examples of that. I’ve had the real privilege to get involved with a company that was started by an individual who is an elite Silicon Valley software engineer. He’s seven years at Stripe out of MIT and would be considered in general one of the best, regardless of sector. This individual did not necessarily have a connection to construction.

What I tested a lot with him early on in talking was whether he had the empathy muscle and the real interest in what the problem was that he was solving as opposed to getting back to this question before, but the problem he was solving as opposed to the technology he was developing. In Adam’s case, I think anyone who’s talked to him, including his early customers now, would say that he does. The flip side, and this is a generic example, is an individual who has heard that construction is a $1 trillion industry and it’s twenty years behind in terms of tech adoption and thinks, “I’m a smart technologist. This should be easy.” That’s a pretty good recipe for disaster early on.

It’s interesting what you say about the empathy muscle. Being an outsider myself in construction, the one reason why I’ve resonated with construction companies over the years is because of the respect that I have for the industry, and the understanding that what they do is very hard, but also tremendously impactful in a positive way upon their communities. It is vital that empathy muscle and that idea of respect for the industry as you’re approaching it as an outsider.

To expand on that, I like to remember frequently and remind company CEOs and founders that I’m involved with that. Humans have been building standalone structures for 10,000 years. I won’t even try to pronounce it, but in Turkey 9,700 years ago. We’ve been putting up skyscrapers for almost 150 years. We figured out how to do it. We know how to build buildings. Unless you’re walking in with something that makes that process better, then it’d be natural for whomever you’re talking to say, “That’s great. We already know how to do what we need to do.”

It’s interesting because there are so many people that see the inefficiencies in construction. They’re always trying to make construction something that it isn’t. It’s not essentially a manufacturing process though there are manufacturing elements involved. It’s funny because I read the same articles year after year about the issues in construction and how those issues need to be overcome, and yet the issues still remain. Your conviction is that the adoption of tech and the acceleration of that is going to increase rapidly in the next ten years. Can you explain why you have that conviction?

I would edit your statement a little bit. I don’t know how fast it’s going to increase. I don’t know if it’s going to be rapid. My bet is that the tech adoption curve is going to be steeper in the next ten years than it was in the last twenty. How much steeper? I don’t know. Even if it’s a little bit steeper, there are going to be some interesting companies built because there’s so much low-hanging fruit that can truly deliver value along the way. If it is rapid and it is a steep adoption curve, someone and any of us who are involved with tech companies in the space are going to be thrilled in a decade. Maybe it will be, but I think we always have to be intellectually honest and say, “Maybe ten years from now, the Scott and Eric of 2033 will be talking about the same dynamics.” It’s possible.

In terms of the low-hanging fruit, I do think that is a tremendously important perspective to have when you’re looking to adopt tech. It is to hit that low-hanging fruit. In your view, where are some of that low-hanging fruits in terms of tech adoption in the industry at the moment?

I’ll come to that in a second, but I wanted to mention one other thing regarding tech adoption. It’s really easy, particularly for smart people who are used to solving complex problems, to walk into a space and say, “This, that, and the other are inefficient ways of doing things.” Particularly in Silicon Valley, putting on my tech investor hat, there’s the famous saying by Zuckerberg at Facebook Meta, “You need to move fast, break things, and disrupt everything.” That’s all good. By definition, as a startup company, you’re disrupting something.

I’ve come to believe that you need to have respect to disrupt a ratio greater than one in this sector. There are some things that can be disrupted. Quite frankly, there are other things that it doesn’t matter if you, as an entrepreneur, think that there’s a better way of doing things. Going back to we’ve been putting up skyscrapers for 150 years, that’s how things are done in the industry. Figuring out that sweet spot of where you can disrupt and where you have to say, “I respect this and this is how the industry goes about things,” is important.

Where do you think that sweet spot lies?

It’s different for every company.

Can you give me an example of maybe one from a GC perspective and one from a sub?

I’ll give you an example that always makes me chuckle when I think about it and did originally when I heard it. One of the companies I’m involved with is building a new platform for streamlining the purchasing materials process in the sector. As many of your audience know, things are still done on fax machines. The reason they are is because fax machines happen to be efficient and everyone has one in various construction supply stores. It gets the job done. In the early days of this company’s evolution, they were looking at that and saying, “This is absolutely ridiculous. Can you believe this industry is still using fax machines?” They then realized this dynamic. The CEO of this company describes what I described as gentle disruption.

They realized, “There are certain things that we can’t disrupt.” One of them, in their case by the way, was that suppliers gave customers sports tickets. That happens in any industry. It’s been happening in the construction forever. They realized that they had to make it easy for that exchange to still happen. If they were going to ask someone, no matter how great the app on their phone was, that was going to streamline and take things away from the fax machine, and put it in a format that is much more efficient and enjoyable. They also realized that there are certain things about this process that we better include, even from a theoretical standpoint and say, “That doesn’t make sense.”

Do you see a time when all of these apps are consolidated under maybe 5 or 6 software platforms that dominate the industry? Do you see it going that way, or will there still be this dispersion that we’re seeing at the moment?

I don’t know. It certainly could go that way and a lot of people would predict that. Not to talk about my book, but another company I’m excited about that I’ve been involved with for a year or so was started by a team who has an incredible tech background. They built the intelligence layer inside that runs Alexa now before starting this company. What they’re doing now is building what they certainly wouldn’t describe as middleware, but it’s a piece of software functionality that allows a variety of point solutions to more effectively and quickly interconnect so that you avoid the problem that currently exists in the industry of data islands.

These packets of data end up getting isolated and you end up being less efficient after you’ve adopted three pieces of software than you were before you did. I hope that there’s a middle ground, not 5 platforms or 3 platforms. We all know the names of the leaders now. I don’t think the industry is going to advance if we don’t solve this data island point solution problem. There might be something in the middle, which would be exciting.

When you are seeing construction companies trying to take on a new piece of technology, what do you think are the biggest mistakes they make that could be easily avoided if maybe they were a little more thoughtful?

A lot of firms are getting better at this. The sales process in construct tech is twofold. One is the office, and then two is the field. Let’s talk about a head office or maybe even a regional office. That’s the natural place to think about where you need to sell. The reality is that construction workers can get creative about why they’re not using a particular piece of technology or why this technology broke, it’s not reliable, and it’s making things less efficient. Now we’re late on this project.

I think one of the keys over the next decade is going to be the companies who figure out whether we got to sell to both sides or at least think about both sides. How easy is it, whatever it is that we’ve developed, to use by someone who quite frankly is not interested in going to training for two weeks to figure it out? There’s a real high bar on eliminating friction before you can hand a piece of technology to someone in the industry and say, “Go use this because it will help you do the following things.”

One thing I like about you that I can pick up is that you’ve said I don’t know a couple of times, which I appreciate. What I’d like to ask you though is what do you think are a couple of the tech angles that perhaps are not big news right now that could be bigger news and have a higher impact in the next few years?

If we look out towards the latter part of the decade, I’m a believer that we’re going to increasingly see the adoption of technology like small robots and small drones, and other hardware and other technology that’s not going to replace workers. I know that’s the first place that people’s mind goes. Perhaps it’ll be some of that. I don’t know but more importantly, it’s going to help change the job of a construction worker. I’ll give you one example. There’s a company. I’m not involved with them but I know the CEO. I’m intrigued about what they’re doing. They are developing a robot to streamline the drywall installation process. Anybody who’s ever put up drywall in their own home knows that the taping, mudding, sanding, and the whole process is messy.

These people were wearing masks long before the rest of us were in the last couple of years. What this company has developed is a robot. It does not do the job all by itself autonomously, but one that in essence needs a human driver. Someone who’s there using it, but using it to be more efficient at what they’re doing. In a world that has a huge gap between the number of workers that are needed and the number of workers that we have, I think part of the excitement over the next decade is seeing the job description of a lot of construction jobs start to change in such a way that it’s a lot sexier to say you’re a robot driver than a drywall and mud installer.

Whenever someone starts complaining about the replacement of workers through technology, we’ve been talking about the worker shortage in construction since I can remember. That is not something that should be an issue. We should be pushing against that because there are plenty of opportunities for people in the industry, even if there is a wholesale tech adoption. Because of the nature of construction, it’s not going to take away people. It’s going to be like what you described, where you have people who are more efficient because they’re using these tools that are being brought to the market.

I like to think about what are the new types of tools that have been introduced to the sector over the past 4 or 5 decades. Battery-powered equipment and power saws in some cases. At each point, you could have said, “That’s so efficient. It’s going to take someone the jobs.” Perhaps, it did in some cases, but in many more cases, it made things more efficient and a more enjoyable work environment.

As an investor, when someone is pitching you a new technology or when you’re looking at the makeup of a company in terms of the ones that you want to make a bet on. I like the fact that you said, “I’m betting on these things or I believe.” There’s art and science involved here. There are no guarantees. What do you look for as an investor in those companies in that you want to invest your time and money in?

There’s a fundamental level of skill related to whatever the company is developing, whether software or hardware. That’s relatively easy to test for. It’s the other thing that I believe will end up determining the winners over the next decade. We mentioned it before, which is the empathy muscle. You could have the greatest technologists in the world but if they don’t have the empathy muscle in construction, they’re not going to last very long.

I’ve spoken with some friends about a thought experiment that sounds hyperbolic at first, but it’s more accurate than not. All of us have encountered ChatGPT over the past few months. It’s my belief that if you took in a thought experiment the ChatGPT technology, which is extraordinary technology, holding aside ethical judgments and everything else, and you dropped it into a generic construct tech company and said, “You can use this, but the only place you can use this is construction.” It would be possible, and perhaps even likely to screw that up if they messed up the go-to market. Meaning it’s an incredible technology but if they didn’t think about how this can make things better, more efficient, and more productive, they’d end up with a shell of technology that never went anywhere.

It’s fundamental for my discussions in the industry. The place where construction companies make money obviously is in the field with the work that’s put in place. The companies that are the most successful at technology adoption in the construction companies are the ones who go to the field and ask the guys and the gals in the field that are doing the building. What do you need to be more effective in doing your job so that you can make more money? Taking those answers and providing them with tools that fit that from the tech sector.

That’s part of it. One of the things that makes me bullish about the sector in the next ten years is that there’s an undeniable change in terms of generations that’s happening. The family members that I alluded to before are the ones that are graying out and leaving the industry. I love them and it’d be great if we could freeze time, but that’s not going to happen. What’s happening instead is that if you’re in the middle of Gen X or younger, you grew up as a digital native. Nobody has to tell you why paper and pen or even fax machine is less efficient. Nobody has to make that sale to you.

You just understand it. It’s intuitive. If you go down to the Millennial and the Gen Z cohort, they’re mobile natives. They’re social media natives and they’re used to doing everything in life on those platforms. There’s certainly an aspect. I agree that talking to the workforce is important but also talking to the right people in the workforce who don’t have the “This is how we used to always do it, and therefore that’s how we’re always going to do it twenty years from now.” It’s talking to people who are open-minded about a better solution.

It’s interesting that you say that. I’m thinking about my kid’s age. My oldest kids now are teenagers but they’re going to be the ones who are the AI natives or the ChatGPT natives. The whole way that they look at their environment is going to be driven by that technology and interface. It’s very interesting to think about. As you’re looking at AI technology, and I know there’s a lot of complexity here, what do you think are some of the practical applications of AI in construction?

The first one that jumps to mind, and I apologize for bringing up companies as examples that I’m involved with but I’ll even name this company. It’s Document Crunch. It was started by two individuals who were construction attorneys. One for three decades and one for maybe a decade. What they realized was that they were constantly asked the same questions by the field related to risk management, insurance policies, and contracts over and over again. It was the same thing and slightly different. There was a different name on the project, but it was the same question.

They also realized that the people who were having the biggest impact on risk management, insurance, and contracts weren’t sitting in their chairs back in the home office, but were out making decisions on the front lines. What they’ve developed and it’s early, but they’re getting terrific feedback from the industry and doing very well, is a platform that democratizes risk management and democratizing the understanding of insurance policies and contracts, all those different things that none of us like to read, even if we spend a lot of time doing it in investing or legal work. Their fundamental value proposition is to say, “Let’s push the intelligence out as far as we can and stop having this ivory tower in the back office.”

Just so the audience knows, I had Josh on the show, episode 217, Understand Your Contract: Safeguard Your Rights and Maximize Your Profits. The thing I love about Josh as you said, Scott, is that he comes from the industry so he knows the pains. He’s one of those guys who has that empathy muscle. I think that’s vital when it comes to everything that we’re talking about here.

Josh is a superstar. I’m a big fan of everything you’re doing. He’s building a great team as well.

I want to take you back to earlier in the interview. You mentioned something I thought was pretty interesting. You took a sabbatical out and you traveled from Antarctica to Mongolia. I want you to tell the audience a little bit about that. It’s something that we think about sometimes when we’ve been in business for a while. It’d be nice to get away for a couple of years. What led you to that sabbatical and the things that you decided to do?

I had the financial flexibility because I had been working incredibly long hours for over a decade coming out of undergrad, basically to pay back loans. We can talk about that as a whole another topic as to why the workforce may be changing in the sector too. Holding that aside, I had financial flexibility. I was not tied down with family or a wife at that time. The firm that I was at was changing the work that was being done. I realized that right at that point, it was an inflection point for me that I could do a variety of different things. The path of least resistance was to continue investing and working for firms.

Thankfully, I had a couple of folks that I had conversations with. I said, “I’ve got this wild idea that I’m thinking about doing.” Both of them had 25 years plus on me at that time. They said, “If I ever had the chance to do it, I would’ve done that in a heartbeat.” Quite frankly, I don’t know too many people that would not do it. If you can get over the fear of doing something a little unconventional, go do it. You won’t look back. They were right. No doubt about it.

You traveled from Antarctica to Mongolia. Were you flying there?

No. I was coming back occasionally to San Francisco which is where I lived. I ended up getting my pilot’s license here. I wasn’t flying in Antarctica. That would be fun. In fact, my brother went down a couple of months ago and flew in. I was traveling more conventionally.

What was the highlight of those travels?

Part of what I was doing was fishing. I loved to fly fish. There were many different highlights from the people I met. Ultimately, that was the highlight. Being in some incredibly beautiful places around the place. I have both real pictures and pictures in my memory of extraordinary spots all over the globe.

Why do you like fly fishing?

It’s an excuse to get out into some of the most incredible places. Trout tend to live in beautiful places. The same is true on the saltwater side. It ends up being a cool excuse to get outside.

Saltwater fly fishing, I didn’t know that was such a thing. Educate me a little bit here.

There are a number of different species that you can go after. One of the best-known is called a bonefish. They can get to 20 pounds, typically more in the 3 to 10-pound range. When you pull them out of the water after you’ve caught them, it looks like someone took a bunch of pieces of a mirror and stuck them together as their scales. It’s an extraordinary fish. What makes it fun is that you have to cast a long way, usually in windy conditions, so there’s a challenge to that. When the fish hits, they end up swimming so fast that it’s akin to lassoing a motorcycle at a red light. All of a sudden, the light changes, and all hell breaks loose. It’s a good time.

That’s awesome. What’s the one place in all of your travels that you would recommend that someone goes to? I asked the tough questions.

Only because there are so many. There’s controversy about traveling to Antarctica because of global warming and the fact that if you participate in going down there and it’s not a science project, then you’re arguably contributing to issues there. Without question, when people ask me about the most extraordinary place I’ve ever been, it’s not even a second thought.

Why is that?

The stunning beauty and pristine nature. Even though the continent has been experiencing a lot of changes, it feels like you’re dialing back 100 years to the way that Shackleton and other early explorers probably saw it.

Scott, as we’re wrapping up here, give your top 2 or 3 pieces of advice to a construction company’s CEO who’s looking to make sense of the tech wave, the tech curve, and how they can most take advantage of that as we get into the next 3 or 5 years.

The first one I’ll steal from you because it’s a good idea. Go out and talk to your workers. Make sure you’re talking to the right ones. There’s going to be a cohort who will be not only tech-phobic but also change-phobic. That’s another dynamic. If you’re talking to the right ones, you’ll pretty quickly get not just about what could they be doing better but particularly with the younger cohort, understanding how are they managing their life. What are they using to do that when they’re off the job site? Are there pieces of that that make sense to integrate into their workflow in construction in such a way that it’s more enjoyable for them and it’s more efficient? You’ve created an environment that’s, in essence, more accepting of the way that they like to live, work, play, and interact.

Tell us a little bit more about yourself. I know you did at the top, but how can people get in touch with you? How can they hang out with you virtually if they want to learn more about what you’re doing and the companies you’re working with?

My LinkedIn is Scott Ellison. There are a few of us floating around, but I’m based in Silicon Valley in San Francisco. You’ll see some of the companies that I’ve been fortunate to be involved with. I always love to chop it up around built tech, so feel free to reach out.

I’m looking at the companies you’re working with. I can see a couple of those that I’m familiar with. I’m glad that you’re working with such high-end folks. I appreciate you joining us here, Scott. Thank you for your insights and I do wish you the best.

Thank you, Eric. Thank you for doing the show. Thank you for sharing the insights that you do and for keeping an important conversation going.

It’s my privilege. Thanks a lot.

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Thank you for tuning into my interview with Scott. Make sure that you go on LinkedIn and check out where Scott is. Connect with him there. Before you bounce away, I want to give you a quick reminder. One of the biggest challenges that construction leaders have is when they move into a new position. Let’s say you’ve got a senior project manager who is technically very sound. You can put him or her on one of your most difficult projects, and they’ll knock it out of the park. You look at that person and an opportunity for them to move into senior leadership happens. They shift up into that senior leadership role. Now they’re no longer project focused, but they’re focused on building a team of people.

That’s a very difficult transition to make, particularly if someone has an engineering mindset. How can you help them make that transition? One of the ways is by getting them an executive coach. Someone like myself who has been working with construction executives for twenty years, who knows the difficulties of making that shift, and who has worked with many construction executives to successfully succeed in a leadership role.

If you’re interested in getting some executive coaching for some of your high-performing leaders who may be having a struggle in making that shift from building projects to building people, go to my website, ConstructionGenius.com. Go to the Contact Me page, fill in your details, then that’ll come to my inbox and I’ll respond to you within 24 hours. We can have a very short conversation about if or how I can help, and we’ll figure out if there’s something I can do to help your leaders to be more successful. Thanks again for tuning in. Make sure to contact me if there’s a need for an outside construction executive coach, and I’ll catch you on the next episode.

Important Links

• Scott Ellison – LinkedIn
• Understand Your Contract: Safeguard Your Rights and Maximize Your Profits – Past Episode
• www.ConstructionGeniusBook.com
• www.ConstructionGenius.com/contact