The following interview is a conversation we had with Chloe Smith, CEO & Co–Founder of Mercator AI, on our podcast Category Visionaries. You can view the full episode here: $4.5 Million Raised to Build the Future of Construction Tech
Chloe Smith
I’m good, Brett, how are you?
Brett
I’m good, and I’m super excited for this conversation. So let’s go ahead and just kick off with a quick summary of who you are and a bit more about your background.
Chloe Smith
Yeah, absolutely. So, as you said, my name is Chloe Smith. As you mentioned, I’m the CEO of Mercator AI. We are an AI powered business development platform for general contractors, like you mentioned, and we basically help contractors identify early project opportunities. We track land development over time into the built world, and we’re able to get our customers involved in projects at the earliest onset, help them reduce time and energy on pursuit research, and ultimately help them unqualify and qualify projects in their pipeline.
Brett
And how’d you get into this business? It seems like a somewhat random business. I feel like I don’t speak with too many construction technology founders. So how do you find your way into the world of construction tech?
Chloe Smith
Yeah, absolutely. So my background is actually in data strategy, to be honest. Actually I have a degree in public relations and then became a web developer, and then from there went into analytics, and then from there went into data strategy and innovation and had the opportunity to work in global marketing, advertising agencies, working as a head of innovation, and found myself building products for our business development teams. And having grown up in the construction space, id always seen my dad come home and talk about his projects and his relationships and realizing very quickly as I matured in my career that all of your revenue is tied up with people. It presents a huge risk to your company.
Chloe Smith
And so as we started building out business development tools that mapped markets, I thought more and more about how could we map the construction market so that we could really help keep the control over revenue with the organization and not necessarily have it slip away when people move to different organizations and so as I kind of started to develop Mercator, one of the things I realized was we’re moving towards a generational shift, especially industries like construction, where we’re seeing more people retire out than come into the industry. And so the need becomes even stronger to help force multiply our teams because there’s fewer of us to do the work.
Chloe Smith
And so we started tackling the problem of how do we make it even more available for the next generation to build relationships in an industry that’s primarily been kind of locked down by these legacy ones?
Brett
Take us back to January 2021, when the company was founded. What were those early conversations like?
Chloe Smith
Yeah, I mean, actually, we founded our company in October of 2020. My co founder and I at the time had, well, we had actually owned a woodworking shop together for four and a half years prior to jumping into building a company together. And during those years, you know, we’d be pulling the 02:00 a.m. Shift at the shop and just talking about ideas and tossing ideas around. And Mercator was one that stuck with me for about two years prior to really jumping and quitting my job and starting Mercator. And when I decided, you know, I think it was time, it was really at the shop where were kind of having a back and forth. And I thought, you know what? I’m 28 years old.
Chloe Smith
If I go after this, I come out of, you know, say I put five years in, I come back out of that experience at the age of 33, and I go back into the workforce. But this time, I’m so much more educated on business, something that I’ve always wanted to learn about. And so it just kind of. It became really clear that it’s time to jump and time to actually make the biggest bet I think you can make, which is the bet on yourself.
Brett
What were some of those early challenges that you experienced? And maybe if there’s any stories that you can tell, something that I see a lot is that being a founder is often glamorized. When you read the. The headlines, it looks so cool, it looks so fun. But the reality is it sucks sometimes, and it’s painful sometimes. Do you have any painful stories you can share from those early days?
Chloe Smith
Oh, my goodness, I love this one. You know, so many people say it’s so great to be your own boss until you realize what you kill. You don’t necessarily get to eat a lot. I would say early day, painful moments. Oof, I’ve got a really bad one. So really early on, I’ve said this many times over, we meandered a lot. We thought we needed to build a website and build a pitch deck, and we didn’t even have a product. We didn’t even have a problem were solving. We didn’t even know were going into construction at the time. And so through that kind of, someone recently said it to me, a drunken walk. We started pitching investors with no real concept of how to do so or why we would be talking to someone or what we would actually do with the money.
Chloe Smith
I remember very clearly pitching a VC who will literally never take my call again. And she handed me my butt on a platter. She basically tore my deck to bits. She helped me better understand that I need to go talk to a lot more people before I ever put an idea together. And I remember very vividly, like, walking away and then just turning into a puddle of tears. It was a very painful moment, but it also made me realize, like, there were a lot of great questions that she asked that I was unable to answer. I just remember being kind of flooded with questions and not having any ability to answer them. And I just remember thinking afterwards, like, damn, those are really great questions, and I do really need to learn how to answer those and actually go follow through and find out.
Chloe Smith
And so true to me, I actually took all the advice she had given me in that conversation, and I put it directly into practice, and three months later, we had a proof of concept with customers that were gaining value. So painful, but necessary.
Brett
What was the number one piece of advice that really stuck with you there?
Chloe Smith
Go talk to more people. Like, stop sitting at home putting ideas together and not having those ideas get validated by the market. And to be honest, I went out and I did that. But at the same time, like, we didn’t actually truly do that until last year in a really meaningful way. And I would argue that once again, we just started doing this big push to go to market in the states, and I feel like I didn’t even do it last year. I feel like this past few months that I’ve been spending in Austin has really been the first time I’ve put ourselves out there as kind of really pushing is what we’re building valuable, and probably next year I will look back and think I haven’t even scratched the surface.
Chloe Smith
So it’s kind of a forever journey that you’re on to really deeply understand your customer’s problem and make sure that you’re building solutions that aren’t just bluff.
Brett
Yeah, I feel like that’s never done right. You can never just check the box, like, all right, talk to customers. Now we’re good to go and build a billion or $10 billion company. It’s a continuous process.
Chloe Smith
Absolutely, absolutely.
Brett
How do you find those people to meet with? Do you just reach out or cold emails to them? Like, how do you find potential customers to meet with you? And I, what do you say to get them to meet with you?
Chloe Smith
Oh, that’s a good question. And it changes too, right? Because very early on, I had someone who was potentially going to join us as an investor and an advisor, and he had made kind of his entrepreneurial journey in the transit space. And I remember him telling me that he would just go to every single conference and event that he could go to that was free, and he would just sit in the back room and he would do so repeatedly until someone noticed that, hey, who is this guy? And started introducing themselves. And I think at that stage, when I heard that advice, it was really daunting.
Chloe Smith
So it’s so much easier for us to, via email, kind of reach out to people until you realize that when people go to events and they going out to meet other people, yes, it’s daunting because they come with their friends and so they all huddle in circles. I feel like a teenage boy talking about trying to break into a group of girls. But to be honest, it does kind of feel like that when you’re the new person at an event in a community that all knows each other. And I would say in construction specifically, it honestly just took, and I would say Covid actually made this worse. I don’t know about you, but my social anxiety went through the roof during COVID And so coming out made it quite difficult to go to events.
Chloe Smith
And I noticed that once I started to kind of peel that layer and go and put myself in these awkward situations, again, they werent as awkward as I expected them to be. And I started to be able to speak to customers in an environment where they wanted to be approached. And I was able to just rapidly test different messaging and different problem spaces that allowed me to have a much better understanding of what they needed. And I think something that ive only recently learned, which is kind of approaching things from like, a diagnostic approach, which I personally feel is a much more authentic way of not selling, but just understanding your customers problem. That doctor patient approach has been really helpful in being able to really listen and actively listen to what the other person is saying instead of trying to be understood first.
Chloe Smith
And that I would say going to events and being in front of your customer and actively listening is probably the best way to meet your customer and better understand your problem space.
Brett
Tell us about the first paying customer. How did you land that deal?
Chloe Smith
Oof, this one. You know, it’s so funny because you look at it and it’s such nominal amounts, and yet it was such a big deal at the time. Our first customer is actually still with us, which I’m very proud of. Our first customer was a smaller general contractor. We actually had three founders at the start, or potentially three. We never really signed on at created the organization with three founders, but we had someone else who was kind of potentially going to be another founder. And he had introduced us to a company that he worked with, and that general contractor was open to doing kind of early proof of concepts. And I very vividly remember myself and my co founder having kind of put together this kind of proof of concept package that really just outputted a spreadsheet, frankly.
Chloe Smith
And the day before we had met with this customer because we had other proof of concepts in place and they weren’t working out. And the day before we met with this customer, we looked at each other and said, well, I think we need to pivot. And then the following day we met with this customer and they came back and they said, oh my goodness, you got me in front of like new clients I would have never known about. And they had mentioned that they were able to actually get like tender a project that they would have never found without us. And both of us looked at each other going, well, that’s a 180 from yesterday, what do now? And so we, through that, kind of decided, well, that was all manual work. What if were to automate this?
Chloe Smith
And we kind of put it together, an initial proposal and my goodness, the legal was 21 pages long. I learned very quickly that no one wants to sign 21 pages of legal for a startup. And we had put together this proposal and we had to get buy in from all their other team members. And it took months. It took so many months, and they’d sign like an Loi. We didn’t even structure it in a great way. We signed it as like a letter of intent that they would pay. So, like, talk about setting yourself for two sales cycles. And so off that letter of intent, we pulled together a team of, I think it was three or four developers at the span of six weeks. We built the MVP and launched it over Christmas, like prior to Christmas, no less.
Chloe Smith
I believe it was December night. It was 11:00 eastern for the client, and were literally redlining legal on this 21 page document to sign a $200 contract.
Brett
That’s crazy.
Chloe Smith
And I remember feeling, because this was one of the milestones that I had set, actually, with my husband about, like, when I was going to call it quits to trying out this idea, this pursuit. And I remember this being the milestone as I had to have assigned client by the end of 2021 that I kind of had set for myself. And I remember having it all signed and squared away and thinking, wow, how anticlimactic. Like, I thought this was going to be one of those moments where you cheer and roar. It was going to be amazing. No, it was really anticlimactic. I sat there in a dark room going, it’s done. Okay, that was a lot of work.
Brett
This show is brought to you by Front Lines Media podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit Front Lines IO slash podcast. Now back today’s episode. I feel like a lot of founders have that experience with their first deal. You think it’s going to be like this amazing feeling afterwards, then you sign it, and it’s like, oh, okay, now things just got real.
Chloe Smith
Well, exactly. So. And then you go into, oh, it’s got to work. Okay, it’s got to work for them. All right, so, yeah, that was a whole other bag of nonsense.
Brett
And what’s the go to market motion look like today?
Chloe Smith
Yeah, well, interestingly enough, we’re figuring that out right now. So one of the reasons why we stepped in with sort of a larger presence into the states or a larger plan presence in the states, is simply because the markets that we’re looking to target, Texas being our first market, have a lot more construction activity happening, as well as a lot more competitive, I guess, a larger competitive landscape, especially because it’s national companies that are also stepping in, and then you’ve got local companies as well. And so for us, we’re looking at how do we create a repeatable go to market strategy as we look to expand into Texas being first, Florida being second, potentially New York. And so I actually went down for the last month, I went down to Austin and just pounded pavement just to see.
Chloe Smith
I looked at our customer base, and I recognized that I’m in Calgary, and most of our customers are in Calgary. And so if I want to move into Austin, maybe I need to go to Austin. And so through this journey, I just kind of picked up, moved myself and my husband to Austin for a month, and honestly just attended every single event I could. I knocked on doors, I visited offices, I reached out via email, I cold called, I attended association events. And through that, we’re starting to understand how do we actually position ourselves in the market and what this could potentially look like to do again in another market. And so, still just learning that, I think, is kind of where we’re at, but we’re starting to see strong signals with partnerships that we can do.
Chloe Smith
Partner programs have been really strong for us, especially pr has been really strong for us. Doing things like this actually are pretty powerful. You’d be surprised. A lot of people listen to podcasts, especially our audience, who’s driving around a lot. And so we’re starting to kind of put that program together of what could a go to market strategy look like as we move into the next market and then deploy it and test it and see, okay, where are the gaps still missing?
Brett
And how did you decide on Austin? How do you jump from Canada to Austin?
Chloe Smith
Well, so here’s a funny thing, I believe, and I’m probably going to butcher this, but the national bird in Texas is a crane is a joke that they often say because there’s just so much construction activity. And so when you look at now coming from an oil and gas town, Houston and Dallas are very oil and gas. And so they’re very. They take themselves quite seriously. It’s a bit of a different vibe than what you get in Austin. In Austin, you find yourself with quite young leaders at the helm of these construction companies. Another reason why we kind of were drawn into Austin and into Texas in general. And by the way, that’s not a slight at all to Houston and Dallas. They’re just larger centers and have that kind of sophistication as a result.
Chloe Smith
But a lot of our investors that are in construction, their lp’s also operate in Texas. And so it just kind of started to become a really interesting place for us to explore. And as we started to explore the different markets, Austin really stood out as one that’s massively adopting tech as well as a young leadership, and then also a kind of a smaller, more tight knit market that had access to these beautiful mega centers because they call it the golden triangle, right? You got Austin, Houston and Dallas Fort Worth. And that kind of, if you operate in one, you typically operate in the other two.
Brett
Trey, how do you think about your ICP today? And what was that journey like to identify and determine? Yep, that’s the ICP that we want to go after.
Chloe Smith
Yeah. So, and this, I think every founder is going to come to this in a different way simply because of their space or how their product is built, our product, because, you know, you can kind of think of us as like, Spotify for construction. We have all the construction data. Our users don’t bring any data to the table. They can instantly start using our tool. One of the challenge that we have is about what data goes into that kind of salad, if I want to call that model, what data goes into that at the forefront. And so that really helped us kind of hone in on who we should be talking to first.
Chloe Smith
Came down to, as we map out the construction process in terms of the data gets produced, there were certain datasets that were actually easier for us to get and start standardizing. And as a result, that kind of led us towards an approach that kind of singled out general contractors, maybe subcontractors, building product manufacturers and real estate brokers as kind of the first audiences. Now, ideally, you want to narrow down even further from there. And so as we started selling to these audiences, what we started to notice was just who was gravitating towards us and who was paying, frankly, like, go where the money is, right? And so we started to look at what is the makeup of our customers who are staying with us and who are using our tool on a regular basis and getting that value.
Chloe Smith
And as a result, it really kind of boiled down to those gcs. And it wasn’t by design that, I mean, our proof of concepts early on did touch a wide variety of stakeholders across the construction process, but the gcs were really the ones that were able to really action the data very quickly. And so that’s why we started to build for them. And then last year, we stopped selling, actually entirely after we raised our seed round. And we focused in on a group of beta general contractors, like a beta group that we built specifically for general contractors. And through that, we actually learned to refine that ICP even further down to, you know, our customers need to have, at minimum, a business development person on their team. Now, it’s a little bit.
Chloe Smith
We’ve built tooling to better support that if you don’t have a BD person on your team. But at the time, it was very much you needed to have a BD person on your team, because that also signaled to us that you are investing well beyond your current scope of work into generating new work. So, for example, companies that have just project managers that are doing their BD, once they get busy, they need to go be project managers. They can’t be BD anymore. And so as a result, just trying to find the right customer, that also doesn’t churn right seasonally based on volume of work, things like that. We also recognize that our customers definitely needed to have a focus on AI. I can tell you, I’ve had a couple of people tell me that AI scares them.
Chloe Smith
So we’ve had to learn certain customers might be later adopters than others, which is okay, but that real mandate and focus on innovation. And Aihdenhe did play a big role in defining our first kind of ICP structure, because those customers had a willingness to partner with us on innovation. And so the use case might not have been absolutely clear, but they were able to help us actually further define it because they were so interested in being early adopters.
Brett
As I mentioned there in the intro, you’ve raised about 4.5 million us to date. What have you learned about fundraising throughout this journey?
Chloe Smith
In this market? That might not be a nice question to ask, but, oh, man, I have some polarizing thoughts on this, some hot takes. I’ll try to be nice about them. Fundraising. I would say that what I’ve learned to appreciate is founder led funds. So funds that are run by former operators, there’s just a if, you know, kind of a vibe to how they treat their investment, especially when it comes to, like, they understand the struggle that a founder goes through, and they understand that we don’t look sometimes as beautiful on a balance sheet that we should. I would say that one of the things that were incredibly fortunate with is that we had the opportunity to bring on an actual venture firm in our precede round.
Chloe Smith
I learned so much from having that kind of exposure early on, both good and bad, and not about that firm, just in general, about investors. And honestly learning that my investors aren’t just holding the keys to how to make my business successful. I once had a boss, actually, who would put me through what I called vision training. And I remember coming in every day and he’d ask me, okay, what is this product? What is the vision for this product? And I’d go be trying to guess what he wanted me to say, until I realized one day he’s not holding the answer back from me. He’s actually just wanting me to pick a perspective. And I feel that very similarly with investors is that they’re really good at their businesses and what they do.
Chloe Smith
We aren’t supposed to be really good at what we do, even though we’re still learning. And they can help and help coach, and they’re here to help coach, but they don’t hold the answers. And I think such early stage founders just think that the VC’s know everything and it’s not true. In fact, actually, I read an article recently that was just talking about how VC’s don’t get a lot of feedback. Frankly, feels very similar to being a CEO. But I learned that, I also learned the value of maintaining a network and meeting with people on a regular basis and what it actually means to always be raising, always be taking meetings. A lot of the funds that have invested in us have actually been longstanding relationships that we developed well in advance of ever raising.
Chloe Smith
And I would say that those ones have been the ones that I cherish the most because the frankness of the conversations came well before them being investors. And so there was that rapport ahead of time. So when we started working together, it was seamless. And then I also, I’ve screwed up as well. Right. You know, I’ve misstep and tried to force hands in ways that didn’t work out. I’ve come on too strong or been a little too passive. And so learning kind of that balance and learning to respect their business has also been really important. How they make decisions and who they’re accountable for and what they need to report on. And how do I become also a very good partner in terms of an investment. So I’ve learned quite a bit. In this market, though, I’d rather stay out than go in.
Brett
So now let’s imagine that a founder comes to you and they say, chloe, I want to build a construction technology company or a construction technology platform. Based on everything you learned about the space, what would be the number one piece of advice that you’d give them?
Chloe Smith
Oh, you know what, 100%. Go speak with the president of your local construction association and ask them what they commonly hear their members complain about. Not about their membership fees, because that’ll be one for sure, but what their challenges are and really seek to understand versus to be understood. And I think that is something that too often, very early on, we are trying to formulate our own ideas and we are constantly trying to pitch it to people to see if it works. And I would say, go learn about the problems and then from there, bring your creativity.
Brett
Final question for you. Let’s zoom out. Three to five years into the future, what’s the big picture vision look like?
Chloe Smith
Three to five years. Ooh, that’s fun. Well, knowing that startups can explode or implode at any point in time, I try not to think too far out. But I would love to be at a place where we are across the US, maybe even across Canada as well, and we’re starting to build out the next suite of our products. Really, at the core of what we’re building is this incredibly robust, incredibly granular data set of construction activity across all markets and all market sectors and construction. And so being able to build out tooling that would help with competitive intelligence and pre qualification and strategic planning would definitely be taking those steps, or ideally already be launching some of those. So there’s many more back office products to come from Mercator AI and business development is really just the start.
Brett
Amazing. Well, look forward to having you back on in three to five years to talk about all of the progress you’ve made and all the success that you’ve had. We are up on time, so we’re going to have to wrap here before we do. If there’s any founders listening in that want to follow along with your journey, where should they go?
Chloe Smith
Probably LinkedIn. I’m a bit of a social media. I don’t know how to say it, but basically I haven’t been on social media in like five years, so LinkedIn is probably the best you can. Follow me. My name is Chloe Smith. That’s Chloe Smith. And you can also follow our company, Mercator AI.
Brett
Amazing. Thank you so much for taking the time. It’s been a lot of fun.
Chloe Smith
Thanks so much, Brett.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B founder looking for help launching and growing your own podcast, visit Front Lines IO podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.
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