How Flexcavo CEO Benedict Aicher grew to $1.5M revenue and 15 customers in 2024.

hey folks my guest today is benedict eiker he's building flexcavo.de a construction consulting business coming from a family business in construction he moved into consulting at mckinsey after his bachelor's and master's now applying a vision of an able intelligent construction using flexcabo benedictuary takes the top yes sure i mean um if you start a company you always want to disrupt in a certain industry and uh you already said it uh my short pitch is always some construction consulting constructions are born and raised in a construction family i was eager to go back into that industry i'm very passionate about to shake things up a bit so just to be clear you are you're writing code software to help construction uh companies what manage projects easier or what does it do in the end we're building a platform to foster enable intelligent construction and we connect two things we connect equipment and technology so yes we're writing code for machinery fleets these machines are on a construction site the only reliable data source on the other hand we operate as well as asset enabled business so we can provide assets too so it's both sides of the business the asset business and the software business is in the end i truly believe that the world belongs to those who build and if you want to be the number one partner for construction companies only code won't bring you far because does flex cabo own a fleet of trucks and power tools and construction equipment indeed trucks not but the typical power equipment so from from small dumpers loaders to large scale excavators we indeed own them interesting how much if you add up the price you paid right the inventory value of everything you hold on your balance sheet how much is that way above 10 million way above 10 million so are you rich i mean where'd you get the money to buy all that equipment uh obviously not equity um we should kick my ex if i um would spend my equity on machines it's depth so it's a structured depth um the good thing there is i mean we all know car financing um it works pretty much the same way so we secure our assets with put options and then we simply have our partner banks that finance our assets and then we use them over a lifetime of four to seven years um we we act basically as a subscription model here and after four to seven years we give them a secondary market and sell them smart and how many unique pieces of equipment do you have like thousands or over 400 on our own fleet um however we manage over 10 000 pieces or units for our clients oh so if someone else owns three dump trucks they can list them on your marketplace and you'll help them find work we're not in a p2p place so we we exclusively work with construction clients and if you're a construction company the typical split would be 60 your own machines 40 rented machines and we help construction companies in the whole process of planning and then executing a construction site from a machinery perspective so you can allocate your machines and as well in that process of allocation you might lack a machine so we can provide you that machine but we're not in the business of p2p where you say okay i have three idle just that's on our business model and so how what do you make more money on renting out equipment or selling software to construction companies i think from from uh i always look at it from a gross margin perspective i mean if you look at the pure revenue side of the business um obviously the renting part is quite strong because you can change charge quite high daily rates for big excavators however on a gross margin perspective it's a 50 50 split so we always aim for growing both sides of the business however you know sas there are different contracts in place and i mean if i would compare uh 1 million stars ar versus 1 million asset ar different gross margins are there and for us in the end russian contribution margins are key to manage auburn interesting okay so let's just talk about sas for a second move away from assets what do the construction companies pay you on average per month or per year to use your software that pretty much depends on the size of your business um obviously if you're a small company um we're going to charge you a simple small monthly fee and then it scales with the number of units you want to manage so let's say um depending on the framework contract it's a certain fixed amount of euros per month per unit and then you can actually opt for further services like telemetrics or others oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your 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the show so traction 1.2 million seed round 3.7 raised they sold 22 of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderprep.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview what is the fix per euros per month per unit it ranges uh between uh 200 and a thousand per month um but then obviously uh the the bigger contribution goes towards the number of assets we manage for the client that we help them manage okay got it so i i'm sure i'm following this yet so if someone if someone has like four dump trucks that they want you to manage for them right so they're paying four units times 200 so fixed euros per month per unit it's a base flat fee basically so no matter how many units you've got the base fee for the software itself and then on top per unit and node for four dumb trucks it wouldn't make sense so for dump trucks you simply can manage them yourself we're out in the business of helping clients with 50 plus units up to 20 000 units currently with the biggest client and imagine you've got 100 construction sites and all need to be up and running because as a construction company your key enemy is downtime and managing this network from a perspective i need certain units at certain places at certain times these days it's mainly done by pen paper and whiteboard and we help them in the process of allocating those machines managing their flow within their network and automating workflows because obviously if you use pen paper whiteboard and a phone you can't really digitize an automated workflow however it's always the same workflow i need a unit i request the unit the unit gets transported it arrives i use the unit and then i'm going to send the unit back to my central location interesting so your sweet spot then are companies paying you like around a thousand dollars a month to manage some number of 50 plus units i would say the typical monthly rate um is about a thousand up to a five digit some it really depends on the number of units i mean if you're a client with what i'm really asking though is what does the average customer of flex cabo have in terms of number of units i'm trying to get like your sweets but i understand there's a range oh sweet spot would say uh our sweet sweet starts with like um yeah a hundred units and then up to uh ten thousand units okay so what would i pay for a hundred units for a hundred units um you would pay depending on what kind of service you would opt for um somewhere in between let's say a five hundred and a thousand five hundred euros per month okay fair enough so call maybe like 2000 usd per month now now if we add up all the units you're currently managing across all your customers how many are you managing currently you weigh above 10 000. wow okay got it so okay cool so and you're is there are there power laws there what is your largest customer manager on your platform how many units a larger customer would say um that customer goes in the high footage ranges um that's managed by us okay so i mean that could be nine thousand we are basically uh it's much like mckinsey there um we don't disclose the numbers of our customers because obviously if you're talking to construction companies uh data security is key concern for them oh yeah i obviously obviously i'm not asking you to name the customer i'm asking you you're of your largest customer how many units they manage on your platform and you said high four figures so i mean i'm just saying that could be eight or nine thousand units from one customer let's say it's somewhere between uh six and nine thousand there we've got the point i mean it's it's fluctuating i mean it's fluctuating basically month per month because they buy units they sell units so as a construction company you don't have a fixed number of units that you're going to opt for for the next years it really depends on the state of your project as a electric government state i mean but the reason i asked that question though is you are very dependent on this one customer there's a lot of concentration risk here true that that might seem that way however we started to market the software fully beginning of that year so we're currently ramping up sales i mean been doing founders sales quite for a long time so if you look at the rental part of the business that has been started um earlier because it was easier to ramp up you simply need to convince the banks to give you debt and then you go on the market and you work with customers they work with more than 100 customers in the rental perspective the software obviously took a while to con to conceptualize and then to code yes we used our own fleeta tested so since february i would say we're in commercial mode and now we're ramping that up i mean um there hasn't been the typical sdr ae set up so we could be hiring a full b2p sales team to ramp up our software sales activities so i wouldn't say concentration risk it's a simple matter of where are you in the scaling phase well there's six thousand units and you're managing ten thousand total six thousand with one customer's concentration risk 60 of the units you manage with one customer obviously that's diversifying over time but that's that's a snapshot of as of today um well yeah that's what i'm asking i understand obviously you're diversifying over time but today there's concentration and then when you say there's 100 customers on the renter side of the marketplace what does that mean like last month 100 unique construction companies rented at least one unit from you correct okay interesting and then put this on a timeline for me benedict when did you guys launch the business so um we started talking about the business 2019 um we went into like uh really working on that 2020 we raised our first in june july 2020 and then we started building the business uh as of uh june july 2020 we raised another round in february 2021 and then recently end of last year we closed our sea drone so that's the equity fundraising timeline and obviously accompanied by our debt and so in 2020 what was that pre-seed round how much did you raise uh we raised roughly um 500 million euros sorry five million 500k 500 would be nice so it's uh 500k euros 650 thousand dollars in your pre-seed round now why did you need that money what makes this expensive to build um we thought about bootstrapping in the beginning to be honest um however you need to have a quick land crap there and it was a simple consideration of speed um we've seen a lot of contacts in the states and other countries and we said okay we've got the concept before we actually raced around we we had lois we talked to customers so we we pretty much knew what we need to build and then it was a simple consideration of how quick do we need to be in terms of execution to make a land grab and not allow other players in the market to try to figure out their own solutions because obviously if you're in a construction space and you're attached to machines oms could do some things other rental players could do some things so we decided we need money from the start basically from pre-seat phase to quickly ramp up the team the initial money was mainly spent on on tech and how much did you raise in your seat round cdr was in total um five million um euros uh and in between we had an angel round with 1.5 uh okay sorry sorry so again 650 000 raised in 2020 in early 2021 you did an angel round of 1.5 million or about two million usd yeah yeah and you recently did a series a round for first six million usd here is a serious c depends how you call it we call it series c because precede angel around the interval was a convertible and then a seed or if you may call it series a you could call it series a in september 2021. and most folks most most folks in their seed round these are selling 10 to 20 percent of the business were you guys sort of in that same range i mean a market uh market usual delusion there market usual dilution you said yeah yeah okay cool so it's called like 10 or 20 i mean so something between like a 15 and 20 million valuation is what you raise that on yeah i mean okay if you take the market usually that's the right number yeah great and then fast forward to the the september round right so six million um how much of this is you raising capital so that you can support your debt facility versus you raising capital to invest in like engineering to build the software i mean that facility is basically paid off by our machines so we don't use equity to cross-finance machines um we calculate basically an adapt coverage ratio and our machines have a typical depth coverage ratio between 1.5 and 3x on depth so the depth service is paid off by the machines and then the machines as well cross finance with the gross margin our operations there so to be clear the asset value of your machines is 3 million bucks you can raise a million in debt it's a 3x covered ratio no i mean um when we talk about revenue power i mean if you look at the revenue of the assets we always calculate how much on top of the debt service are we actually making revenue that's a 3x so basically the reminder can be used to finance operations there i see i see okay cool and then i guess going back to the overall business you signed up your first customers back in 2020 how many today are paying to use the platform how we are today um there we've been walking in the range between um 10 and 20. okay got it so cool so okay now the con the concentration risk makes sense then right it makes sense that you've got one customer that makes up like the bulk of your inventory and then what we opted for is we opted for a co-creation i mean obviously we can sit in berlin and design a nice software and then try to launch it and make customers use it however construction works differently so you really sit on a table of construction clients talk to them try to figure out what are the pain points and then co-create a software that is used by the construction fox because if you talk to the cfo to the ceo they might like the software however the real user of that is the nd4 man on a construction site you need to understand how they tick because if you simply sell a software in the after sales and customer success you will fail and they will turn if the foreman doesn't want to use your software that makes sense so just to be clear again two revenue streams you got 15 customers that pay you to manage all of their assets you know whatever equipment things like that they pay on average call it two three thousand bucks a month you then have another model where you rent out that equipment and you make a spread you know a margin on on the on the rental of an excavator for a day correct and i mean i see they are not like they are not uh models in the end you could look it like that you have asset only customers you have software only customers but our goal is always full service customer you manage your machines your own machines via our platform and we supply you with machines because for construction companies it's way more convenient to switch capex topics now if you have 15 customers paying 2000 bucks a month that this is just on the software side that would put your monthly recurring revenue about 30 000. you mentioned earlier your gross margin profile is 50 50. right so assuming the margin profile in software is 80 85 that means on the rental side of business you're doing somewhere around call it 700 800 000 bucks in a run rate today in terms of new rentals per month is that about accurate i mean it's an average number there um and i said the the target split is 50 50. i mean it depends on seasonality construction is seasonal so in the winter months you have low utilization on the assets in the summer months more but i would say on average um that's that holds true but yeah so when you add up both your your monthly recurring sas today plus your rental volume monthly you're doing something like 60 70 well 80 90 000 a month right now in revenue um no i would say no it's it's uh monthly revenue is above that so monthly revenue is already a six digit uh if we had that software and rental that's great that's great okay so what do you think you can grow at like what percent you think and grow the business this year i mean clear goal is basically um surpassing uh on an overall basis uh the 300k monthly revenue adding both streams up um and obviously i mean from a rental perspective or from the subscription perspective um we already locked in the orders for 2022 with regards to our units we know what unit base we're going to achieve there's a simple utilization game there and execution game and then a software side it's then a function of the b2b sas sales team yep yep and you all know the numbers for for solid series a so bc is going to ask you for serious a for above 1 million ar so that's obviously uh the the hit number for the software yep now if you're doing over a hundred thousand dollars a month in revenue today combined what were we doing about a year ago do you remember a year ago i would say uh we written in the analysis i think from q1 2021 to q1 uh 2022 we grew 18x uh 18x got it so i mean you were doing something like i mean you were almost like 7 000 a month a year ago something like that roughly yeah okay so a lot of growth the past 12 months it makes sense why you've raised the capital you've raised obviously dilution's not a fun thing though right so when you raise six million right i mean you're selling it probably about another 15 of the business there i mean in the end it was a convertible note plus a c drown so uh the convertible was packed through the seat round um but in the end i truly believe if you're building a category leader um everyone will be fine off in the cap table so if you can manage then the illusion and honestly for me it's rather passion topics i'm not thinking about excellent i'm thinking about the passion in the industry i mean born and raised there brothers are civil and engineer fathers doing the family business so i rather care about building a solution that helps really construct clients to build more smarter and that's kind of like my key motivation i understand passion but when you're raising this amount of money you have a board and if you're passionate about doing project a and the board says we hate project a well guess what you can't build your passion anymore you're listening to the board because you give up control that's fair that's very right but there are market average uh things that you can actually then uh try to argument against and in the end i mean what i always tell us about my board is it's fine but in the end it's a different kind of beast the construction industry it is not the typical b2b sales industry it's not fantastic so different different forces are enforced benedict we're at a time here so like quick things just get more kind of are you so founder no no i'm i'm one of two founders so i'm rather on the business founders and did you guys you guys split 50 50 at the start yeah for sure very cool okay that's great and then how many folks full-time are on the team today um last number i would say uh 55 but quickly growing full time how many engineers uh i would say roughly uh 40 of the team are engineers okay got it so called 20 20 of them are engineers that's great and how many folks on the sales team that are you still building that on the system would say on the uh rental sales team we've got uh seven sales team members on the sales team for the uh sas solution we recently made a lot of higher so that team will be as well in the upper single digit range and then both teams growing to two digit ranges within the year okay got it so like 14 on the combined sales team something like that we'll see what happens next i love the combined model let's wrap up here with the famous five number one favorite business book uh how things about hot things number two is there a ceo you're following or studying um yes i would say uh ceo i'm following is um jeff bezos and as well a lot of construction ceos to just keep up with the with the industry number three what's your favorite online tool for building flexcabo my favorite online tool for building flex cable i would say for me it's a slack because communication is key number four how many hours of sleep to eat every night um depends uh i try to get eight uh however i think on average is rather six okay and what's your situation better married single kids single okay and how old are you i'm 30. 30. last question something you wishing you when you were 20. sorry i didn't get that something you wishing you when you were 20. it's um in the end uh you just need to be consistent and i think consistency beats motivation there and being consistent gives you the actual power to reach what you want guys he helps 15 construction companies manage 10 000 pieces of equipment think excavators things like that when those companies aren't using them helps them rent them out he makes money on both sides the renting and also those 15 customers pay about two to three thousand bucks per month to use this technology to make sure they have full utilization he's doing 100 over 100 a month right now on revenue in the combined model up from seven grand a month just a year ago so nice growth they just got done raising your six million dollar series c they've got about eight million nine million total raised to date we'll see what happens next as our team of 55 looks to grow and expand benedict thanks for taking us to the top thank you nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch 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