The following interview is a conversation we had with Jack Sadler,CEO/Co-Founder of Part3, on our podcast Category Visionaries. You can view the full episode here: $2.5M Raised to Build the Future of Construction Administration
Jack Sadler
Thanks for having me, Brett. Excited to be here.
Brett
Not a problem. Let’s go ahead and just kick off with a quick summary of who you are and a bit more about your background.
Jack Sadler
Yeah, absolutely. My background is probably predictable for most founders. I’ve always spent my time in product management, trying to find cool ways of building things that would solve new problems, most of the time in a consulting capacity and dabbling in legacy industries. So I jumped around pharmaceuticals and travel and landed in construction, which I found super interesting, Part3 because it was a legacy industry with so much potential for innovation, Part3 because my wife was so deep into the industry for the last ten years and we decided to team up and jump into this. But my background has always been in tech and product management. Before starting Part3, let’s dive right.
Brett
Into the founding of Part3. So I see there’s an interesting time there may 2020, a lot was going on in the world. Was that really the best time to start a company?
Jack Sadler
No, it wasn’t. But in the same time, as well as it being the worst time to start just about anything new with so much uncertainty going on, it was also the catalyst. I feel like it would probably go down in history as a year when I would guess we saw more startups started than ever before. I dont know how many of them turned out to be successful, but it was a great time. We saw in the construction industry where its notoriously difficult to get people to change what they do, people suddenly adopting things like cloud based software and chat tools like teams and slack and Zoom and conferencing tools, and all of a sudden there was a catalyst here for like wow, these people are paying attention to cloud and tech, nows the time lets go for it.
Brett
Thats definitely what it felt like. I think just across all industries, right, theyre like, all these changes, all these trends that were already happening, but maybe they were going to take ten years to happen, and then all of a sudden they happened in like a month, or they happened really, like overnight, which was pretty fascinating. But I think that’s one of, like, one of the positives that really came from the pandemic as much. I don’t really want to say there’s like a positive. Like, I do think that was a positive as it kind of forced the acceleration of technology.
Jack Sadler
Yeah, I can’t imagine where the industry that I care about, the construction world, would be without it. It really did change the game overnight. I mean, when we first started this and we first had the idea it was sort of pandemic was still kind of this thing that might only last a few weeks, were not taking it too seriously. So when were first speaking to folks who are now our customers, there was still an education on what is cloud? Is cloud safe? We have, all of our data is stored on premise. And trying to get them just to understand that cloud based software is okay was such an uphill battle. So if it wasn’t for that catalyst, I don’t know if Part3 would be here. It certainly wouldn’t be here in the state it is today.
Brett
What’s it like being a Co-Founder alongside your wife?
Jack Sadler
No, it’s great. I mean, being a Co-Founder is definitely one of the most fun jobs in the world. So being able to do that and share that journey with your wife at the same time is pretty special. You know, we’ve done everything in the challenging way. Doing long distance relationship and then to starting a business just felt like the next most natural challenge to take on. We do have a third Co-Founder, too, which is awesome. As we often joke, we’ve got a marriage of three and we have to share everything just as much with Corey as I do with Jess. So it’s an interesting dynamic, but I mean, so far it’s just worked out for us. It’s been so much fun to be able to do this journey with Jess.
Brett
What are some of the rules? Is it like no talking about product after 06:00 p.m., like, how do you guys, like, define the rules so it doesn’t blend too much into the personal life? Or is it just all blended together?
Jack Sadler
Yeah, I think there’s nothing like having a couple of kids around the house that will just force you to stop talking about work no matter what. So it kind of naturally means we switch off at 05:00 when you’re sitting down at the dinner table, the kids hear Part3 come up. They’re going to tell us to shut up pretty quickly. So it’s kind of forced distancing from work the second you’re with them, which is great. It works. It helps. It does make evening stuff. You know, you come back down when the kids are in bed and you naturally sort of log in and start solving problems or looking at a customer ticket or talking about a new deal or something like that. But I think we have to find those healthy boundaries. But there was no formula and there was no conversation.
Jack Sadler
It just sort of happened and formed over time.
Brett
For those listening in who don’t know anything about construction administration, which I would say is probably 99% of the audience, can you go ahead and just paint a picture for us of what this category looks like, what the competitive landscape looks like?
Jack Sadler
Yeah, it’s interesting as well, because 99%, you’re probably rounding out down there. Very few people know what this is. But that’s why it’s so fun, right? Like, if you’re going to create a category, why not create one that’s been given the least sexy name in the world? Construction administration software. But really, what? Construction administration is through the lens of designers. So architects and engineers, you know, mechanical, structural, civil, and the rest of the consultants that design buildings and structures, like landscape architects and interior designers and all of those folks, what we’re doing is we’re helping them manage all aspects of construction from their perspective. There’s a ton of tasks and responsibilities that they take on managing designs, managing contracts. That goes on way beyond once the contract has shown up and started digging a hole.
Jack Sadler
So what we’re trying to do is create a category that actually arms all of those designers with the tools, the data, and the information they need to manage the build phase as well as they can.
Brett
Is that category called construction administration, then, or is there a different name for the category?
Jack Sadler
Construction administration is the name of the phase, and that’s actually where the name Part3 comes from. We kind of did a hat tip. We’re a Toronto based company and under the Ontario association of Architects. Part one is kind of like design and documentation. Part two is that tender and bidding phase before construction. part three is construction administration. So that’s where our name comes from. And that is a well known term for the phase. But the category of construction administration software is non existent. There’s nothing. If you google it, I’m pretty sure you’re going to find us. So we get to create it. We get to tell the market, what it’s about, what it means. And then we get to position ourselves not only as the leaders of that category, but the folks out there defining it, which is awesome.
Brett
Yeah, I think that’s a dream position for category creation. And I think that’s also, if you look back at some of the most famous category creators, that’s probably what was happening in the market. There was this established discipline that was already there, but that discipline was just using non purpose built tools. They were just using whatever off the shelf. And then all of a sudden, someone comes in and says, hey, I’m going to service the hell out of you. I’m going to build purpose built tools, and we’re going to help you be successful in a way that you only we can because it’s so unique to this role. Sounds like very similar for you, right?
Jack Sadler
Yeah, 100%. And we could only have done it because we had Jess on board who sort of lived and breathed that problem and that pain for so long. And in between us being able to partner a little bit of design thinking and a little bit of technology know how with Corey, were able to bear up and sort of figure out how to solve that problem with tech. But, yeah, it was such a niche category, it’s quite a difficult one to go after. It’s quite. It’s. It’s underserved for good reason. We sort of touched on that when you asked about COVID Up until the last few years, there’s really not been enough demand for it as well because folks were quite happy to work on the spreadsheets and operate in sort of the legacy model. But, yeah, that’s all changed now.
Brett
Why do you think that is? Why was the construction industry so slow to adopt technologies? Is it just stuck in their ways and it’s hard to change? Or what was that reason?
Jack Sadler
I think there’s a few reasons, but I think it’s always important to kind of empathize with the folks on the inside. You know, it’s really easy to stand out here as a guy that’s in tech and say, like, you should be changing faster and updating faster. But the reality is when you’re in construction, people’s lives and safety to worry about. You’ve got hundreds of millions of dollars moving hands. You’ve got huge waterfall style projects that you can’t agile. A construction project, it’s very traditional by nature. And I think once you find the model that works at that scale, it’s really hard to change it. It’s really hard to update it and make it more effective and more productive.
Jack Sadler
And then you end up in these patents where we’re relying on all these documents moving around, and then you end up building regulatory processes and legal processes that are based on that documentation and that back and forth. It makes it really difficult for anyone to want to change the way they work and for anyone to be able to change the way they work. So it’s totally justifiable how construction ended up in this industry. It’s not justifiable now to sit back and kind of rely on that. I think having shifted to cloud based software, seeing the advent of AI technologies and everything that’s coming, it sort of forced the need, and we are seeing better adoption. In fact, we’re probably seeing the opposite problem now, where most folks in construction would feel like they’re getting app fatigue. Suddenly there’s new startups everywhere.
Jack Sadler
The biggest players are coming up with new ideas and purchasing startup, rolling them into their existing offerings. So we’re kind of now starting to see this influx. Construction tech kind of feels like where fintech was ten years ago, maybe 15 years ago, where you’re starting to see this influx of new innovation.
Brett
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Brett
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Brett
Launching your own podcast, visit frontlines.io Slash podcast. Now back today’s episode. What are you doing to stand out a landscape that’s becoming more and more noisy by the day?
Jack Sadler
That’s a tough one. I think, in general, like knowing how to get loud and where to put your voice is difficult. What we’ve done is we’ve tried to stay really focused to the problem we care about. We’re working with architects, with engineers, so we only need to speak from their perspective. We don’t need to get sort of washed out in the broader construction landscape. And then what we do is we just make sure we only speak about problems we’re passionate about. So there’s a lot of conversations in architecture on things like sustainability, on things like energy efficiency and harbor neutral buildings. And those are really important conversations to have that I’m not qualified to be a part of.
Jack Sadler
So we make sure we speak about business model innovation, the use of technology, and the use of things like AI in the industry, and we just make sure we have a specific voice on as few things as possible that we’re passionate about and they’re relevant to our problem space. And I think most people find that quite refreshing. We’re not going around talking about things that really theoretical and hard to understand. We’re just talking about stuff that we care about and that we really understand.
Brett
Well, when it comes to the category playbook, what does that look like? What are you doing to go out there and create this category and define the category and of course, eventually own the category?
Jack Sadler
It’s definitely a mix of product and marketing strategy. And I think on the product side we follow a platform strategy. I think what we’re really trying to do here around construction administration is create the de facto platform that connects every one of these professionals that’s involved, because so many different folks get involved, from the contractor, to the architect, to the engineer, to the owner or the financier of the project, to product reps and so many lawyers and folks like that, project managers. So the platform strategy is first about making sure your core users have a fantastic user experience and solve a problem really well.
Jack Sadler
And then as you get more of these secondary users in all those other folks that come in to perform specific jobs, mostly free users, we’re just trying to make sure over time they’re able to invest data, invest time in the platform that turns into happy and sticky customers and repeat users, that turns into a platform strategy that can convert those folks from free collaborators into customers. So we’ve got a platform strategy that really speaks to the problem. Space marketing at that point is just making sure that voice is out there to really make it clear what we’re doing and why. So all we’re really doing is making sure we are big advocates for the problems associated with construction admin.
Jack Sadler
So we’re trying to help prove the value of the architects and the engineers that are running these projects and show why they need more support, why they need more tooling and more technology. And then that kind of leads into us being able to piece this platform together and partner that strategy from marketing to product, if you like. But I definitely feel like most of this starts and ends with the product strategy, as opposed to a pure market and credit market strategy.
Brett
And can you paint a picture for us of what type of growth and adoption you’re seeing today?
Jack Sadler
Yeah. So we give you a couple of years worth of history, probably the easiest. We started in 2020 and we got our first customer November 2020. So we’re talking right at the end there. But in 2022, the first year, having raised up pre seed round, we increased top line revenue by six x. And in 2023 it was a little over 2.5 x and were looking to do that about again this year. So were seeing some really strong metrics, particularly on the sales side. As a company, we close about one third of every qualified deal that comes in. So our sales metrics are pretty spectacular. But what we really love seeing is the fact that we’ve proven stickiness or product market fit so well.
Jack Sadler
When we raised our seed round earlier last year, which was led by Chicago Ventures at the time, we actually had a net revenue retention rate of 175%. So for those listening, I’m sure most people know what NR is, but for those that don’t, net revenue retention is literally just a fancy metric for if you had $100 coming from ten customers after a year, how much was those ten customers worth? If they were worth $110, great, you’ve gone up 10%. So our net revenue retention of 175 put us in a pretty spectacular category and it meant we could grow really fast from customer growth, just from land and expand strategies, people adopting it using our new projects, growing the firm, new employees coming in. So it’s basically meant our sales metrics have been supplemented massively by inside sales with the rest of our customers.
Brett
If we think about the plan for 2024, what are some of your top priorities and what’s keeping up at night?
Jack Sadler
Keeping up at night? Yeah, that’s a tough one. I mean, there’s so many reasons for a Founder to have healthy paranoia, right? But most of the things that keep me up at night are sort of broader trends that are hard to ignore and you kind of want to plan around like macroeconomic factors that are impacting you. So I don’t spend too much time worrying about what competitors are doing and worrying about what technology were seeing or new startups were seeing. Most of the time im thinking, have we got enough cash to support the growth we need to go in? Have we got enough cash to maybe add a couple of hires? Are we seeing enough? Are we hitting targets enough to make sure we can justify investing in non revenue generating roles and things like that?
Jack Sadler
So most of the time it’s that it’s just understanding what the macro environment looks like. And you know, right now it looks like it’s going to be another dicey year. It’s not going to be great to fundraise. So you’ve got to bring that into your plants. We don’t want to raise this year. We don’t want to raise maybe even next year. So how do you make sure you’ve kind of got a strategy that supports that growth? And those are definitely the things that sort of keep us up and make sure we’re focused on at least 18 months, two year horizon for them.
Brett
What did you learn from that most recent raise that you did?
Jack Sadler
Quite a lot. I think the difference of doing a pre seed round to a seed round was a big step, and I may have underestimated that when we first started that process. When you are doing the pre seed round and you’re raising so early and at that point you’re talking for us. We had like eight customers and tens of thousands in revenue. So at that point, much of the story is kind of about believing you and investors have to buy into the Founder, buy into the problem space, the total addressable market. But once you get to the seed round, you kind of lose that ability to tell a story of anything as possible because you’re grounded in real metrics. You’ve now got a year’s worth of history since you did the last one to prove what you’re capable of, you’re proving your ability to execute.
Jack Sadler
So doing the seed round was a huge adjustment for us to realize how much more data driven it would be. It turned out to suit us, but we had to make sure were telling that story and telling that narrative really well. And even then were doing it in a really tough time. We closed our round in May, June of last year, so it was a 23. So it was a pretty dicey time to fundraise. I think it was the peak vc pullback time and everyone was talking about recession. So valuations all over the place, it made it difficult to predict where you’re going to land.
Jack Sadler
So we definitely learned a lot, not just in how to speak the language and how to show a good story and how to paint that picture with data, but kind of also making sure data doesn’t ruin a story. You can have a couple of metrics that don’t really hit the mark and don’t stand out if the story still makes sense about where you’re taking the business, where you see yourself going. And for us it was, hey, customers love this product. Customers are sticky, they want more. That was the central point to our strategy for fundraising.
Brett
Seagram, final question for you. Lets zoom out three to five years into the future. Whats the big picture vision here?
Jack Sadler
Big picture is there is a huge opportunity in all things design related or designer related, in the construction phase. There are a couple of massive players in construction you’re folks like Procore, folks like Autodesk who have basically filled the market’s need with all of the software that a general contractor can manage on site productivity. What doesn’t exist is that same kind of operating system for the design team. An architect is probably using a few different tools, but everything eventually ends up in a spreadsheet, in excel, in emails, in chat, in these really legacy formats. There’s a lot of word documents and PDF’s. 90% of what they do is documents, 10% is data. The opportunity is to flip that. The opportunity is to provide this entire industry something that looks 90% data, 10% documents just moving around after the fact.
Jack Sadler
So we want to become the operating system for architects and engineers, help them manage and build all aspects of their project using Part3. We can help show their ROI, we can help them understand what they’re doing right where they can improve, and we can bake in a ton of intelligence into the workflow. So we can actually start to augment their teams and replace all of the manual administration they’re doing today, which believe me, is a lot. An architect spends a lot of time becoming a lawyer or an accountant or a project manager on any given day, and that shouldn’t be the case. We just want to free him up, get him back to design.
Brett
Amazing. Love the vision. All right, Jack, we are up on time, so we’re going to have to wrap here. Before we do, if there’s any founders that are listening in that want to follow along with your journey, where should they go?
Jack Sadler
Go to part3.io check it out. We create a lot of good content and we’d love to hear from you and any thoughts and feedback you have from us. We’re also hiring all the time and publishing free tools and different resources for the industry, so feel free to check it out.
Brett
Amazing, Jack, thanks so much for taking the time.
Jack Sadler
Cheers, Brett. Thanks for having me.
Brett
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