Going Long: How Procore’s Founder Tooey Courtemanche Built a Billon-Dollar SaaS Empire Over 23 Years

So we're all of a sudden, wait a minute, this, these businesses are surviving. So we're going to go focus on them. And then once everything came out of the great financial crisis, like around 2011, 12 in our industry, it was really interesting. I actually found a document the other day in my archives from 2007 of all of our competitors. And there were like 20 names I don't even remember. And I always, I don't know if you surf, Jason, but if you duck dive under a wave and on a surfboard and you You go underwater, you come up the other side. I always think of that as the great financial crisis, because when we ducked over that wave with 30 other surfers, we're the only ones who came up the other side. Everybody did fall.

It was an extinction-level event in the capital markets.

Yeah, it was an extinction-level event, which gave us this huge advantage too of buying us more time to capture the market share.

Everyone at SaaStr watching, listening, running with your podcast, however you're going to consume this content, we have one of the great SaaS founders who I'm excited Tried to get him to SaaSRay Annual in person before. Things have changed, but we've got Thuy Quoc-Damaj, who is the CEO and founder of Procore, the leading SaaS for construction management. We'll dig into what that means in a minute, but it's great. If there's probably— there's 2 or 3 great vertical SaaS players we can talk about, and Procore might be one of the ones that folks know the least about, although you should know a lot more about, especially because we've got a founder CEO who's been running it for a few years. How long have you been doing it, Tui?

23 years and counting. So yeah, quite some time.

So I want to talk next about how a little bit about the past and mostly about the future, but how it's the platform's evolved. But you don't look tired. How have you done this for 23 years?

I've done a pretty good job of keeping the drama and the concerns and the chaos of the business out of my personal life. And I think that was really critical. And my wife has been very good about this for the last 23 years. When I get home from work at night, I am not the CEO of Procore. I am Tui, the husband who, you know, we talk about everything other than Procore. So it's been a— I've been trying to balance this for a long time.

Balance. Yeah.

But of course she falls asleep and then all I do is Procore until until I can't keep my eyes open any longer. So I, I fake it a lot when I'm at home too.

So it never turned— for a great founder, it never turned— your brain never turns off even after 23 years. It never turns off. No.

And it always gets me wondering, Jason, like someday when they put me out to pasture, like, what am I going to do? Because I think pretty much everything I think about has to do with some permutation of Procore. So yeah.

Yeah.

You're going to have to get a hobby or something.

I wanted to get some quantitative data. My rough sense from the folks that I've interacted with over the years that have gone big and then moved on is 40 to 50% somehow are happy. They're fishing. They're often— a lot of folks go into clean tech and other areas because they think that's more rewarding than business software. I used to think that. I don't anymore. And maybe half are unsettled. They're unsettled. But no, and then I want to talk more, but no, Not even a moment of angst of doing it for 30 years, right? If you, if you're doing it for 30 years or more, right?

Yeah. It's just who I am. So it's just, yeah.

Yeah. I don't think in the earlier days, maybe when Procore started, I don't think we could imagine folks would be running a standalone software company for 30 years doing billions of revenue. There were examples, but it seemed crazy to think about 3 decades, didn't it?

Yeah, absolutely. Yeah. If I had known I was going to be running this long, I don't know. I don't know what decisions I would've made differently, but yeah. And actually people come up to me a lot that they're like, I can't believe you're still running Procore. When are they going to bring in the professionals? And I'm like, I don't know. I'm, I guess it's up to the board.

I don't know. We, I actually, I'm sure there's exceptions. I did this, this analysis a little while ago that of the SaaS companies that IPO, 90% have a founder CEO. And so I just, I don't know. My one bias out there, my one, or I'm just, is thinking anyone could do better than a founder CEO that's all in. It's just so much. We underestimate. They know so much.

I will say this to all of the founders out there too, which is you really want to make sure that you, as much as you want to be the face of the business, you don't want to be the, you don't want to be the totality of the business. And that's why you can't scale to $1 billion in revenue without having an amazing team under you that are doing just phenomenal work.

Yeah.

But some founders conflate themselves as being the business and, and Procore has gotten so much bigger than me over the years that I'm just the, I'm just the conductor.

So I want to dig in on some details, but just give us a landscape of, talk about maybe Procore 5 years in, 6 years in as a platform. Like how much you were able to, what it did, who your ICP was, what your sweet spot, and compare how much that's evolved. Now you've got like a $5 million customer, I think, that you talked about. How has that evolved today as a platform? Not day one, but maybe X years in.

Yes. When Procore started, we were a, by the way, for those of you who don't know, Procore is a construction management software platform. But when we started, we were a single codebase, multi-tenant, and this is 2002. This is before the word SaaS even came out. You couldn't even had your podcast back then because there was no such word.

I missed I misspelled it the first time I wrote it around 2002. I think I wrote SES.

That's actually a really funny, funny anecdote. I like that. So yeah, so at the time we got lucky that we actually started off as a single codebase, multi-platform architecture, but we were primarily serving the residential custom home builder in high net worth areas.

So think like Aspen, San Diego, Santa Barbara, where we are, 7-figure homes or commercial back then.

Yeah. And in fact, mostly on the west side of LA. So like Eddie Murphy's and Barbra Streisand's house and Ben Stiller's house and these folks that are high net worth that are building these kind of mega mansions. And so what we found was, is that you had the combination of a, of an owner who was probably on the road, who was absent. You had, so you had a distributed team, you had complexity because most of these homes are built like commercial buildings. And so you needed a solution like Procore. So anyway, in the beginning we were very narrowly focused. And so that was our ideal customer profile was a custom home builder serving high net worth individuals.

And what could they pay you back then? What were they paying as project manager?

We had two versions of our product. We had a full version for $195 a month and a truncated version for $95 a month. And then the business model made no sense at all.

And there were enough Eddie Murphy homes to, to get you there on $195 a month?

We weren't making a lot of money, but we also were very capital efficient, right? So we, we, I think in the first 9 years of Procore's existence, we raised $5 million, right? We were always very cognizant of being capital efficient. But yeah, it was not anything that was like going to— we were not going to change the world by any way, shape, or form. But what it did do was it allowed us to really focus on the needs of one particular customer profile that turned out to really matter, which is the project manager. So if you zoom out in the construction world, if you're a project manager on an Eddie Murphy's House or a nuclear power plant or a whatever, a waste treatment plant or a wind farm, you basically are dealing with the same set of problems. They just are different scales and they might have different terminology. So what we had that, that allowed us to over the years, so like year 5, like you mentioned, to start thinking about how do we become a multi-product, multi-stakeholder, multi-geo company. But honestly, we didn't even start doing that until 2016 or '17. So we were like 14, 15 years into it before we even started embarking on all of that. And by the way, that's one of the advantages that we had, Jason, was things— first of all, it was an industry nobody cared about. So we had this— we were one of very few that were in there. And things evolved so slowly that it gave us time to really nail the solutions that we were bringing to market. The iPhone came out in 2007, iPad came out 2011. We'd already been in business for 5 and 7 years at that point before the real catalyst came that drove the demand for what we did. So privileged by moving in a slow TAM, that was, that was huge. Lots of opportunities for us.

And so 10, 12 years in, You're still really an SMB solution primarily, it sounds like.

Pretty much. By the way, during the great financial crisis, which is when everything changed to Procore, was all of our custom home builders went out of business. Like literally every customer we had.

And the world stopped for 8 months. It literally stopped.

Yeah, it was tough. It was tough. But the only customers that maintained that were— that stayed around with us were folks that did both residential and commercial. So mostly mixed multi-use So you moved over utilities. So we're all of a sudden, wait a minute, this, these businesses are surviving, so we're going to go focus on them. And then once everything came out of the great financial crisis, like around 2011, '12 in our industry, it was really interesting. I actually found a document the other day in my archives from 2007 of all of our competitors, and there were like 20 names I don't even remember. And I always, I don't know if you surf, Jason, but if you duck dive under a wave and on a surfboard and you go underwater, you come up the other side. I always think of that as the great financial crisis because when we duck dove that wave with 30 other surfers, we're the only ones who came up the other side. Everybody did.

It was extinction level event in the capital markets.

Yeah, it was an extinction level event, which gave us this huge advantage too of buying us more time to capture the market share.

It's funny, I'm dating myself, but I remember I've written that time up and now it's getting to be a while ago. Yeah, but actually, because I had all the data from Adobe Sign, EchoSign, and our peers, and all that really happened to us— and Procore is so different— all that really happened to us is our churn went up. But actually, it was really interesting. Even in '08 and '09, our gross growth was there. But like the SMB churn was like— because everyone thought the world was over. But for Procore, man, you must have had 2 years where it was awful, like literally awful.

I, Steve Zahn, my co-founder and I, we went for 2 years without taking a salary. I sold everything I owned. My wife, thank goodness, didn't divorce me. And, and yeah, but, and I will tell you this, if we didn't have an amazing investor, Kevin O'Connor, who was the founder of DoubleClick, the internet. Oh yeah.

He knew he could go long.

Yeah. And so he basically wrote us a check for $300,000 and basically to keep us alive. And that check alone saved Procore and wow. Yeah. In fact, he's been on our board for 20 years. He's an amazing individual.

It's funny. I look back at that time and just as a case study, I'm like, things weren't as bad as they seemed, but I wasn't, but I wasn't selling to an impacted industry. I was just disaster. I remember probably, I think December 2008, I didn't want to spend. The problem was no one wanted to spend any money. It was like massive deflation. And so we, I took all the points I had saved up. And flew to Hawaii and stayed at the St. Regis on Kauai, and everything was points, including food. And we, I went to the front desk, I'm like, can I pay for the buffet with points? They're like, no one's ever asked. I'm like, our, our global currency has ended, so I'd love to pay for points. So yeah, for 8 million points you could pay for the buffet. And we went, I went out to the St. Regis in December 2008. We were the only people there. Wow. I went to the bartender, right? And I'm like, where is everybody? I mean, it was— people just stopped spending money. They're certainly not going to buy a $5 million custom home in Beverly Hills, are they?

No. And by the way, try raising capital in a market where the real estate is the poster child for the collapse of the economy. Yeah.

Yeah.

Yeah.

So I should know. So 2018, you start to go— so like the GFC brings you into the commercial side from residential. And then, but you're 14 years in before you really go big up all in on what we would call enterprise. And what was that accelerant? What was that? What created that big change?

So we were being pulled into bigger and bigger companies. So the interesting thing about construction is very transient. So project manager, one company goes to work at another one, they bring Procore with them. And so we were getting pulled into bigger and bigger customers and we decided we were going to focus on one particular market. So we chose the Boston metropolitan market, which actually had some of the largest contractors there. And so we, myself and one of our salespeople, we just went knocking on doors and we finally found somebody who would let us in. And, and we basically were able to show them the value of what we were able to provide. We clearly were not enterprise grade at the time. They knew that, but they basically worked with us. And then the thing about the construction industry is because it's so hyperlocal, if you think about it, if you're a construction company and you have a DA bulldozer, you're not going to work 400 miles away because how are you going to get that 25-ton equipment over there? Because it's so local, every— there's a FOMO factor there. So the minute we got one, everyone else wanted to take a meeting with us. And so we just leveraged that to get into all of the other ones. And we would get a pilot project and man, they would rake us over the coals and they would put us up in front of these committees of 50 people that were like judging our software. And yeah, we It— we opened up a whole enterprise market that way.

And you brute-forced it almost. You almost brute-forced it then.

Yeah, but the reason we were successful was because we just made it about the customer. The whole time it was about the customer. They felt as if they were our— their development shop. We were the product organization for Procore.

That transient nature of the project manager where a real estate project will wind up and they'll go to another potential customer and bring you in. That is the secret sauce, right? Word of mouth is the secret sauce, I think, of all software growth. But I feel like today we're putting so much pressure on renewal, so much pressure on customers not to leave, so much drama. We're almost doing the opposite. Are there things that you did to specially incent that, to create some sort of— it's probably not financial, but to create any sort of community, any sort of positive loop so that when they went to the next gig, they'd be even more excited to bring Procore in?

Yeah. So one of the things that because the incumbent software for our entire history, whenever we go into an account, has always been pen and paper or really Microsoft Office. So what happens is when somebody adopts Procore, there's some pride that they're bringing a technology platform into an underdeveloped company. Right. And people feel as if they're in the Procore club.

Right.

And we make them feel that way. We bring them to they go to Groundbreak, our annual user conference, and they feel like they're on the inside of something that's special. And, and that really goes a long way to building that, that, that loyalty and trust with, with those folks. And our best salespeople always have been our customers. They're out there constantly. And also the customers that recognize that if Procore is successful, they're de-risking their investment in Procore. So they're not They want our success is actually going to lead to their success. And that's worked really well for us.

Yeah. When people— sometimes folks don't realize when you're doing a big process change like Crocker is, it might be someone's only app they deploy for a couple of years and do it right. They're a hero. Do it right. They're a hero, right? Do it wrong. Their one big initiative is a miss, right?

It's so funny. The back in the 2016, '17, and '18 timeframe, we walked into a firm. They wouldn't have an IT department. The last software that they bought was their ERP solution. It was like 15 years ago. They didn't know how to buy software. And so we had to teach them how to buy software and then have them buy, buy software. Now it's a completely different world today. Like, they're— it's— the industry is really misunderstood. It is a highly complex industry that is very data intensive. And people think of construction as guys sitting on the I-beam whistling at people walking by. That is not the construction industry. Construction industry is extremely complicated with these complex workflows and lots of liability and low margins and lots of stakeholders, right?

You have a lot of stakeholders in it. I think I was reading your Analyst Day or your— it's 10 stakeholders per deal, wasn't it?

Yeah. So there's— so, well, if you think about it this way, an average construction project, a commercial project, probably has 30 trades on it. And all of those folks— so you have an owner, you have GCs, you have the subcontractors and some other folks. All of those folks are people that we sell to. There's a, there's an opportunity for us to be selling to all of these folks. We call it the triple TAM because on one project we can have 3 different cohorts of stakeholders that are customers, which is really good for Procore because of the nature of construction is very collaborative and all teams, all of these stakeholders, they work for different companies, but they all share the same workflows. And so to be able to tie all that together and to de-risk it for everybody is really advantageous.

Do you have any, in any of the functional areas, do you have any pods that service the different stakeholders or is it the same teams, or how do you get smart with each of those different groups?

So we do. We, uh, several years ago, we basically changed our go-to-market motion to be very focused on— and a hyperscaler building a data center is really different than a subcontractor that is, you know, operating a backhoe. So we had to make sure there's very people that could talk the talk. The good news was, is that we— one of our secrets was we would because the industry is so big and we have millions of users on our platform, we were able to pull the best users into the organization. And then we go into a sales opportunity and you bring with you a sales engineer who's actually an ex-project manager from the field. And as much as our sales reps can represent Procore really well, the moment that the sales engineer who's like, hey, I used to sit in your job, in your chair, and I used to do Procore and I used it this way and it saved me that, all of a sudden the game changed for us is that bringing in the, the resident experts into the deal really made a big difference.

Yeah. I wanted to ask about that. Wyatt, your chief product officer, came to annual last year and I forget what he said his background was. He might've been a carpenter too or something like that. He was straight out of the industry, wasn't he?

His dad was a, he was a contractor in Colorado. So he worked for him for years, but Wyatt's fame is he's a DJ. He's, he traveled the world as like a very famous DJ. The, where we, yeah, he's got an interesting background.

So let's just spend a minute. Then we can move on. But the domain expertise topic for vertical SaaS in general is a nuanced one. And so to go enterprise, you're actually going out, you're doing the sales with your sales lead, right? You're going in the office convincing them that super domain experts, you're bringing in SEs and solution experts. Now, how does that— what have you learned and how has it changed over time? How is Procore a big enough brand now you can get away with hiring some kids out of college and then not really understanding what construction software is?

Not really. It actually has nothing to do with the scale. It's just the complexity of the problem space that we're solving for.

Yeah.

What's really interesting is, and if I was a— if I was one of your listeners and I was building a business, brand is one of those things that is highly misunderstood by founders. But our brand in the United States is ubiquitous in construction. Everybody knows Procore. We We are the, are the market leader. But when we enter into a new market, like when we go into UK, Ireland, we go into the UAE or whatever, you have to remember, and as a founder, you cannot forget that no one has a clue who you are, right? So you were the life of the party and then you go to another party and no one knows who you are. You got to remember that the playbook is completely different for entering new markets because you really do have to build your brand intentionally. And in the vertical market like Procore is, you have one chance to make a good impression with your brand. And if you make a bad impression, you're essentially doomed in that market. So we are very intentional about how we go to market in new geos. And what's really interesting is that so we sell into 11 markets today in particular, but we actually have people using Procore in 160 countries. So because of the fact that this SaaS solution So what we're doing is we're building brand in all of these different areas, building stakeholders that are really— they love Procore. So by the time we actually go to market in one of these new areas, we have a foundation, a brand. But we— but building brand has to be very intentional. It takes a lot of boots on the ground and there's no shortcuts.

But so when you go into these deals today and you have a big brand, but it's only in the US and it's only— it's— it has its limits, is your point. You're bringing in It's okay to have a sales rep that has come out of Salesforce or B2B environment because you've got the SE that is the industry expert and does the salesperson, because these are sophisticated problems with sophisticated workflows. I don't want to talk to a sales rep that knows nothing other than price, do I? What value does the sales rep add at Procore if in these sophisticated conversations?

So we spend a considerable amount of time enabling our sellers as to how to understand not only the technology, but the problem space that we're solving for. I actually just went through our, our new enablement bootcamp. I'm like, if I'm going to do it, everybody else do it. Well, by the way, lots of pressure on the founder because everyone saw it. I got, I nailed it, but I was very, I was a little nervous on that front. But the thing that we find interesting in our world is we definitely could bring people, sellers in who've sold elsewhere because we really do think that selling is the skill that's needed in order to build the foundation of how we're— we've tried bringing in people from the industry and teach them how to be sellers. It doesn't work that well.

Even in the early days, didn't work well.

It worked well enough. We probably could have done better. Yeah. By the way, you have to bring the right seller profile into the right account. Like we used to hire— we would occasionally hire people from one of the big tech companies and put them into a small opportunity and they would railroad the conversation and the prospect would be like, get out of my office. I don't— this— I don't buy— I don't want to be bullied by you, Mr. Name-that-big-name sales rep. So there's a lot of nuances to all of this, but we do find you got to hire salespeople that understand sales and teach them construction. The thing that I tell all of our new hires is that as insecure as you are walking into your first meeting with the prospect, you have to remember from their vantage point, They're insecure because they don't understand technology. So it's the— you're— it's not going to be a one-sided conversation. You're going to bring the expertise around the, the solution space that we provide for and the, and the products that we deliver. And they're going to be experts around their problem space and how they can use our technology. It demystifies the whole thing, but it takes a lot of effort. One of the things I wish we had done better earlier is to really invest in enablement. It became a cottage industry in this business where people grew their own knowledge base based on their experiences and all, which is great. But we didn't have a standardized process until several years ago. And I wish we had done that earlier.

Much earlier, probably, right?

Much.

Yeah. I see too many— I see too many folks in specialized spaces thinking that they can shoot from the hip because they came out of selling sales tools. If you're a sales rep and you sold sales tools, you have a sense what the buyers They want the higher off and it's just, I do believe the best in sales can sell anything, but I'm not sure the mid-pack in sales can sell anything without training. I think they need a lot of help. Right. Yeah.

And I think the problem was, is that our best sellers were, had been grown up in the business and they really understood the space. So we bring on somebody else expecting that they would just do it and that would not work. So yes, it's, it requires some thought and investment.

Can we talk about a topic that's super interesting to me when you're, when you are a vertical like Procore, which is market share?

Yeah.

You called out, it was pretty fun. I don't know a lot of public companies do this. It was fun. You called out, I think in your analyst or whatever presentation, your win rates versus your top 3 competitors. You said you had 63% win rate and then 86% into greenfield. I want to unpack that, but at a meta level, took me a little while to have it to be smart here. How much market share do you think you can get if you really own a whole vertical like Procore? You've got like 10 products, right? You're automating 10 stakeholders up and down the stack in terms of functionality, right? From invoicing to management to everything. You are the ERP for the industry, right? Can you get 80%, 90% mark— what should the goal— what are you quietly telling the team behind you? Can you get 100% market share? Versus Marc Benioff for years has been claiming he has 18% market share, right?

Yeah. So our industry is really unique. And by the way, one of the biggest things when we're raising capital back in the early days was everyone was very concerned about TAM. And I'm like, look, the— back then it was like the global construction TAM was $11 to $15 trillion. So let's say it's $13 trillion. Look, we believe the vertical software is a winner-take-most opportunity.

Yeah.

This is such a big vertical that it's almost an irrelevant conversation, right? So if I was serving a vertical that had a very limited TAM, I would be talking a lot about is it a winner-take-most and how much, what percentage can we get? Procore doesn't need to get to 80% in order to be the most successful company on the planet, right? We have visions and goals to get there, but for us, it's— it always comes back to the customer. And I think one of the reasons when you ask, like, how do I sustain this? Is because every day for me is centered on our customers. If you just focus on your customers, you will get the market share that you deserve. But don't focus on the market share to try to get the customers, if that makes sense. It's— and so we've always focused on the customers and then we wake up and we look around, we're like, oh, we have a certain percentage of the market, but we don't conflate it the other way.

That's, that's helpful. That's— if your TAM is mega, right? You were criticized at first. But now you're accessing so much value, your TAM is mega, right? You're tapping into trillions. You don't have to sweat it as much, right? I asked Andrew Bilecki from Klaviyo of this. I don't know if you know Klaviyo. He's one of the best and they're at a billion growing 30 or 40%, but they have 80% market share on the Shopify ecosystem and that's big. But you got Shopify ecosystem as big as it is, it's not as big as all of global construction. So I asked him this question, he's like, why shouldn't you get all of it? But as big as that, that is like a mid-high TAM. But if you really think of that multi-trillion, it's so big. That's not your issue, is it?

Yeah, actually our issue is focus, right? It's if you're— if you have a narrow TAM, you basically know what to do. And with us, because there's so many different types of owners out there, so many different types of GCs and so many different types of subs and projects and geos and international regulations and everything else, the question for us is always You— where do you put your next dollar to work? And that's really my job as the CEO is capital allocation. And how do we actually— how do we actually do that in a disciplined, strategic, focused way? That's the hard part. It's not being limited by a TAM.

It's funny. So Procore is what? It's over $1.2 billion in ARR, right? And so I don't know what your gross margins are, but let's call them 80 roughly. So you've got a billion to play with a year. That's your job is to, like, but, and yet it goes so quickly. It goes so quickly. Yeah.

It is always funny how no matter how much revenue you make, you're always constrained.

Oh yeah. Uh, yeah.

And I think about the amount that we put into our product each year is, it's just hundreds and hundreds of millions of dollars into R&D.

Hundreds of millions.

Yeah. And, I just, you think about back in the day when we had million to put into R&D maybe. But the amount that we actually got done, it's all, yeah, it's everything. That's the one thing I always tell people that I mentor as founders. I'm like, it never gets any easier. It just gets different.

It's funny on the 300 engineers or $300 million versus $1, I've noticed that no matter how big you get, every release has 3 to 4 Lighthouse features. One GD, like when we were at a mil, we had a million, we could do 3 to 4 Lighthouse features a quarter. Now granted, they weren't enterprise grade and they didn't do much. And today it's 3 to 4. Quarter per quarter.

But your point is that yes, when you get to scale, enterprise grade adds so much complexity.

So much.

Yeah. It's, uh, yeah, it's, I have so much respect for the engineers at Procore and the product people at Procore that do all that work. It's, uh, by the way, I've re-engaged my, my programming chops over the last, like, couple of months. I've been just writing stuff in Python like crazy, just trying to add—

That's why you put, you went DeepSeed local. You put it, you installed it locally on your laptop, right? Yep.

Yep. Yeah. Uh, I, yeah, so I like to write just a bunch of programs that, that leverage the LLMs, but also look at Procore data and then try to make sense out of the data in our system.

So when was the last time you coded before that?

I probably took almost a decade off.

Yeah.

Yeah. I was busy running Procore and frankly, my, it's not my, it's not my best skill. So I wasn't really, there was no demand for it. This is more fun for me. Like I just realized I really enjoy programming.

Yeah, I think it's a, I really think it's obviously more important for a CTO, but man, if the CEO is still a little bit of a hacker, that's a good sign. Yeah, I get this is what I found the best VP of Eng CTO I ever worked with. The best one I ever worked with. My first startup, we got acquired for a billion and the company that bought us made him their VP of Eng. Like they picked him out of the target. And what I learned from him is don't hire anyone where the first line in their bio, whatever, wherever it isn't hacker. He said, I don't care how deep they are in their— and I found this like every time I interview engineering leaders and it's strategy or product, no, hacker. I want to see someone that's always a hacker.

Isn't that the whole thing with the Deep Seat company was that founder only will hire people with no experience, right? Because he doesn't want them to bring in their predisposed biases. And there's something really interesting to be said for that.

All right. So maybe let's wrap on AI just for fun. But before we get there, a very tactical topic where I think we're all— we've all learned a lot the last couple of years is strategy and timing on going multiproduct. Right. And I think I read again, your average customer now uses 3 to 4 products. Right. And the bigger ones are like 5 to 6. Meta Learnings, did you go earlier there? Did you sequence it properly? Would you do it different? Because I find you have to almost move faster today than when you had one handful of competitors that died in the great financial crisis. So what have you learned on how quickly and deep to go here in vertical SaaS?

My experience is probably going to be irrelevant to the new founders out there because we, to your point, we had so much time to, to figure this out because the industry was moving slow in adoption and there wasn't a lot of technology. I was thinking about this the other day. If I'm a founder today, and especially if I'm doing something in AI, a 24-hour news cycle can change my entire business, right? It can take it from like a huge opportunity to being completely worthless or vice versa. Yeah, I didn't have to deal with that. So just to set the stage, like I had time to get the multi-product and the pricing and packaging stuff done in a way that works. And again, it always comes back to we just met our customers with where they were and we never built a product that our customers didn't ask us to build. And the for Ponderance customers didn't ask us to build. It'd be— it was always very clear as to when you're serving an industry that is completely non-digitized, completely analog.

Yeah.

The first, second, third, fourth, and fifth problem are all very obvious because it's like a— it's like an— it's like a layer of an onion, right? There are certain things in project management that you just have to get right before you do like drones or something. Like you got to get the fundamentals right. For us, it was always very clear.

Yeah.

And then I will tell you that the moving from a single product company to a multi-product company was one of the hardest transitions we had to make. You talk about capital allocation challenges. Now you have to figure out like, where am I going to put my next dollar to work? Is there something accretive across both? It gets much more difficult, but if you listen to your customers, you probably will get it right.

I find today the vertical SaaS companies that I'm closest with, whether it's in restaurants or Salonsoft or others, they're all multi-product by $10 million or earlier. They all have the suite. They all have workflow and marketing and payroll and invoicing and like you've got, like the customers just aren't, are too demanding today. They don't want, they don't want a little piece anymore. It's got all, they, why? Procore has it all. Toast has it all.

Why?

I'm not going to buy one little, like, why would I buy one little piece?

That's, yeah, the era of point solutions is over.

I could, we could do a whole podcast on the evolution of software adoption in, by industry, but yes, it's a good, it was a different era because we just had more, it was, markets were smaller, but we had more, you could do things sequentially. You could listen to customers for a year. And then plan that out. And today the rate of change is so high, right?

In our world too, people used to download apps and job site trailers like a punch list app or a document app or a photo app, whatever. But what's happened to the industry— and this is going to tee you up for the AI conversation— happened to the industry is that construction is so data intensive that having siloed single point solutions is not going to help you. What you really need is a corpus of data, not only your own corpus of data, but you need the corpus of data of an entire ecosystem to basically make sense out of. And that's That's why our business, I think, is so primed for future success, is that we have all the construction data you could ever want. We can help people build better because the patterns are very obvious and it's a complex thing. And right now the industry relies on people that are very— they have a lot of experience in pattern recognition, but they're non-scalable, right? And they tend to be later in their career. And so we believe that leveraging all this knowledge that's in our platform is really going to change the way people build.

Yes. Let's wrap on AI. I find that when I talk to folks that are in very niches, verticals, they're all fascinated, right? But they don't necessarily seem— see the same customer pull that you do in deep tech. And I see a more measured approach. And now this may have changed just in the last week. We're talking about DeepSeq, which, right or wrong, opened our eyes to, hey, maybe we could do 10 times as much as we could do last week.

Yep.

What, tell us what, what you're thinking, what you're working on, and how do the customers think about it? Are they begging you for more AI? Do they want more automation, more workflows? Do they want some part of Procore just to be easier to use because it's 2025? Like, how are you thinking? But also how are the customers, what are the customers asking for?

All of what you just said, but it, by the way, it does start with ease of use. So forget about AI for a second. People need tools that they can actually use. So we invest a lot in our UX kind of investment front. But when it comes to data, what people are asking for is first and foremost, our customers tell us that they can run 50% more construction volume on through their business if they're running on the Procore platform than if they're not. And why that matters is in the construction industry, it's a very low margin business, like 2 to 3% gross margin business. So you're talking about 80%, like imagine running that business like a grocery store. Very difficult, low margin. And so every, every time you can avoid hiring the next person, especially in a constrained market like construction, there's not enough people to do the work. You actually have a competitive advantage. So first and foremost, they want to be— to increase the productivity of their workforce by leveraging technology. But that usually starts with just managing workflows and capturing data and stuff like that, which is fine. But what the industry is waking up to realize is that, wait a minute, A lot of money is lost in construction because mistakes are made that shouldn't have been made because somebody didn't have the pattern recognition that they need. So now that they want to leverage the data that's in the platform, not just their data, but the anonymized data of the world to be able to make these more informed decisions. And now with agents, what they're asking for is they want to take the repetitive work out of their people's hands and put it into the hands of agents so that the people can get outside of the job site trailer, away from the computer, and get back to building. And that does two things. That makes the companies more efficient and it also attracts more people into the industry because instead of being, you know, paper pushers, pencil people, they're actually out building and doing what they want to do. So it's an exciting time.

And is there even a lot of cases when you talk to real customers, one of the reasons they want the AI is they just can't hire anybody to do a lot of this basic work. They can't hire anyone to do the data entry or the input or just sit in the trailer. There's just the turnover is so high, right? That the people don't even exist. The human Jason M. Lemkin.

I should tell you this. This is that our industry, the construction industry, is probably the most chronically understaffed industry on the planet. People just don't want to get into construction. There's a stigma to it, which I really can't stand. But, but the reality is there's just not enough people to do the work. So it's not even that people are leaving, it's just they're not even there. So yeah, you— it's a necessity because you just— here's the thing, like data centers is a big business right now, obviously, right? Microsoft's going to spend $80 billion on data centers. A lot of our customers are general contractors. As much as they want to spin up a data center business, they don't have— they can't find people to do the work because there's just not enough people on the planet that actually know how to build a data center. Using, you know, products like Procore allow them to do more with less, which is really cool.

All right, last question, then we'll wrap. So you're getting back into Python, you're playing with Deepseek. What— did you have any epiphany? Did you think, God, if maybe in a year I could do this with Procore, I could just do something in industry?

Any AI—

I don't mean to put you on the spot, but any— we're all seeing so much change. Any, anything you all— any aha moment you had out of all of this?

You know what I like? Yes. The aha moment is that we're all limited by our ability to prompt engineer. So I think as we get better at prompt engineering, we're going to be able to ask these models much more sophisticated questions. And now that you actually get chain of thought, you can actually ask really deep questions and really deep and ask for really deep analysis, which is completely different than just predicting the next word that's going to come come up. For me, now that you have these models that are reasoning models that can do this chain of thought, I think that everything is going to change. I think the way that— I actually think the way construction gets delivered is going to change because a lot of the problem, a lot of processes in construction are built around trying to do risk mitigation because people know that mistakes are going to happen. If you can prevent those mistakes from happening, you can actually reduce all the risk mitigation and actually increase people's profits. So I just— I think Yeah, I just think there's a lot that's coming and it could not be a more exciting time to be essentially a data company in an industry that's as big as construction is.

When you talk about doing tasks that we don't have humans to do, when you talk about removing errors from megaprojects, does AI over the next couple of years, does it unlock more budget from the customers, more True TAM? Or is it a push? Like the customers just deserve this stuff, right? I'm not going to pay $2 for every resolution or $2 for every— is it a push? Is it more budget? Do you have a gut where we stand today?

There's two questions in there. One is like, how do we think about monetizing this? And the other question is where— because what I would say is for now, we're not looking to create a product line around this that's going to be separately monetized. Now, that's always open for debate. We really want to get more feedback from our customers before we make any sort of decision on that. But I believe that our industry in particular, once they see the power of AI on their data, unlocking opportunities for them to have higher margin business or whatever else, that to me is going to unlock more budget to be able to do more with technology in general.

Yeah.

And they may end up buying more products of ours because we have more insights that we can deliver or whatever. But so I think they're somewhat distinct, but, but yeah, I think I think every industry is going to start realizing that a dollar invested in some form of AI is going to deliver significant returns. You just have to make sure that dollar goes in the right place.

Yeah, we can wrap on that. That's what I love, which is that we're getting back to our roots where it's a service like we're providing 10x value. Yeah, we're not trying to rip customers off. Not that Procore does, but other vendors. We're not trying to We're growing 8%, so we've got to, we've got to get everything out of our base because we've lost net new logos. There's a lot of that going around today and we're not about providing 10x value, right? I think AI can get us back to our roots where $199 in the old days of Procore, whether it's $1.9 million today, I want to provide $19 million of value or $190 million of value. Like that's how you get a customer for life, isn't it? Yeah.

And I'll tell you, that's why I really appreciate competition, which is it keeps us on our toes. We have to earn our customers' business generally every year, right? So we couldn't be in that business of ripping people off. We have to deliver more value than they're, they're paying for significantly in order to keep these customers. So it keeps us focused on all the right stuff. And yeah, and I think that's one of the success— one of the reasons Procore has been successful is that we've forced ourselves to just be so customer-centric.

Cool. All right. This was great too. Is there anything we missed that you can think of?

And I know I appreciate you and I always enjoy getting a chance to talk to you, Jason M. Lemkin.

All right. This is great.