Digging into Construction with the Co-Founders of Rhumbix

The Rhumbix inception story is unlike most in Silicon Valley. It’s a story of two navy veterans on seemingly parallel paths. Before founding Rhumbix, co-founders Zach Scheel and Drew DeWalt both served in the navy, as a civil engineer and a submarine pilot respectively, and eventually crossed paths at Stanford’s Graduate School of Business. In the summer of 2013, both Zach and Drew were working in Northern Chile. Zach was working at a copper mine, and Drew was at a startup that was building a non-collocated solar and pump hydropower plant. They found that they were facing the same challenges of data collection on construction sites and estimating labor costs, which led to a fateful conversation over beers about solving this problem. Soon after the pair returned from South America, they began the ideation for Rhumbix — a mobile platform that is reinventing the construction site by providing real time project data and insights to all stakeholders.

In our latest podcast, Greylock partner Jerry Chen is joined by Zach and Drew to talk about the experience as veteran entrepreneurs, what Rhumbix does, and the future of the massive but slow moving construction industry.

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Below are a few of our favorite excerpts from the conversation. The transcript has been edited for brevity.

"The military is a great training ground for any entrepreneur."

Jerry Chen: Can you talk about being Navy veterans as entrepreneurs? How did it prepare you to be a leader and an entrepreneur? And how do you guys run Rhumbix as a company?

Zach Scheel: I think the military is a great training ground for any entrepreneur. The things you learn from day one are small unit leadership. You learn to have a bias towards action. You get comfortable making decisions with incomplete information in a rapidly changing environment.. with limited resources. That in and of itself is a startup. Going to war is a unbelievable preparation for being an entrepreneur.

Drew DeWalt: When you look at company culture, it is the most important thing at the end of the day and I think that’s what we realized. In an environment when you have limited resources, you want people fully bought in, being creative, and trying to work towards a solution. When we think about one of the things that the military instilled in us, it was a constant, consistent, thoughtful focus on culture. It’s a realization that if you don’t pay attention to it, you’ll have a culture, but it just might not be one that you really are happy with.

Hiring Veterans

Jerry Chen: What can we do to have more veterans in technology or use folks that served in the Armed Forces more as entrepreneurs or executives?

Drew DeWalt: We’ve actually seen this trend move in a really positive direction over the three plus years that we’ve been doing Rhumbix. What we have seen happen is folks are starting to understand it as a competitive advantage because we have had veterans take leadership roles and be very successful. There’s a momentum building and I think a recognition in startups within the Valley and in the investing community as well that if you’re trying to find somebody who is the most knowledgeable on a very specific thing, go to PhD program. But if you’re trying to find somebody who can succeed in a variety of roles and wear different hats, go talk to a veteran.

Zach Scheel: Yeah. In a world where the average tenure at a job is sometimes one to two years, veterans come out of an organization where we didn’t have an opportunity to quit. There was no quitting the job. You get the job done. You take the hill. I think that’s an attitude and an ethos that they bring to the companies and the organizations that they join. I think there’s tremendous opportunity for tech companies to learn how to teach veterans the skills that they didn’t acquire in their early 20s when they were out in the military, but then harness the best parts of what they did pick up from the military to really empower them to lead organizations.

Challenges in the Risk Averse Construction Industry

Jerry Chen: What’s been one of the biggest challenges either technically or culturally or organizationally you’ve seen in selling software to the construction industry?

Drew DeWalt: Quite frankly, it’s a gift and a curse for our company that we are inserting technology in a place where it has never been. It has never been in the field of construction. It’s been in the trailer, in the home office, but not actually out on job sites. In fact, a lot of job sites for the longest time banned construction workers from having cell phones on job sites, from having powerful communication computer devices in their pockets. We’re really bucking that trend in a big way.

Zach Scheel: There’s also a lot of macroeconomic factors in the industry that make it more resistant to change. The average age of an equipment operator is 46 years old. Most of the executives in the companies we’re selling to are baby boomers within five years of retiring. They’ve operated the company on paper for the entirety of their careers and so sometimes they don’t see the need to change. There’s still early adopters out there, it just makes them a little bit harder to find but we come across them. They’re awesome to work with because they see the vision of what technology can do and they’re not scared of it. They’re not scared of “What are my workers going to think?” They’ve built companies themselves around being innovative and trying new methods in a very risk-averse industry. It’s finding people like that who can really show the industry a new way of doing construction.

What Does Rhumbix Do?

Jerry Chen: For the listeners in our audience who are not too familiar with Rhumbix, can you share a little bit about what Rhumbix does?

Drew DeWalt: Rhumbix digitizes the last mile of data collection in the construction industry. Folks are still managing billion dollar portfolios of projects or even billion dollar individual projects, and the raw data that’s collected on construction job sites starts out by somebody writing it on a piece of paper or fat fingering it into an Excel spreadsheet. We digitize that last mile. We provide best in class deep analysis with our data science team on that data, and you can get it into existing ERP type systems clearly. But we also go further to provide that feedback right back out into the field. As data’s coming in, it’s being analyzed and fed right back to the field. You can create a much more agile and proactive environment on a construction site and that really leads to stepwise improvements in productivity.

Jerry Chen: What kind of data are you collecting? How are you organizing the data and then what tangible actions can you do or decisions can you make with this data.

Drew DeWalt: We put a mobile device in the hands of the workers doing the work. We allow them to give us great information. We’re collecting the core data that drives construction job sites. Who was on your job site? How long were they there for? What tasks did they complete and what quantities did they install? It’s that core data. Then we use it to drive insights around things like profitability, trends over time on individual task levels as opposed to waiting a week or two to gather information to realize you had a problem two or three weeks ago. We can drive those sorts of insights and then you feed it right back down to the field so those workers that are actually at the workplace can take small interventions from day to day to improve their job site, improve their performance. When you aggregate that over a three to five year job, the gains are massive.

The Future of Construction: The “Fully Connected” Job Site

Jerry Chen: Where do you think construction as an industry goes from here? In 5 or 10 years, will we have robots building our buildings? Self-driving tractors and cranes? What does that look like in your mind?

Zach Scheel: I’m super excited for the next 5 to 10 years in the construction industry. We’re really at a tipping point in terms of technology that’s being developed and deployed to job sites fueled in part by the realization for contractors that they need to digitize as a part of their future strategy. As I look at the next 5 to 10 years, I think you’ll see a lot of robots and exoskeletons, a lot of tools that help augment the human workers. I don’t think we’re going to completely replace those. I think you’ll have a lot more connectivity of the job sites. It’s a perfect ecosystem for an internet of things deployment. You’ve got materials, equipment, and people on the job site.

Those are three things that you need to track. It’s a highly dynamic job site. The copper mine I was at had 70,000 hours worked daily across 7,000 people. 70,000 hours of effort were expended daily to change that site from what it looked like in the morning and so tons of opportunity to better understand and manage those operations by wiring everything up and having it talk to each other. As I look at 5 to 10 years from now, I think we finally get to that fully connected job site where everything’s talking to everything and that you do have in certain use cases robots augmenting human effort as well as things like exoskeletons helping make the job site a lot safer for humans.