Or Lakritz Featured on Construction Futures Podcast

Or Lakritz Featured on Construction Futures Podcast

Listen to the Podcast here.

The following transcript is from the October 20th podcast "Constructed Futures with Hugh Seaton." 

Or Lakritz: Streamlining Subcontractors Purchasing & Inventory with StructShare

EPISODE SUMMARY

Tradespeople get into their chosen trade for a number of reasons, none of which are a passion for paperwork. StructShare is a platform that automates some of the most painful paperwork tasks, and in the process enables much more accuracy and profitability. From automatic invoice reconciliation to inventory tracking and more, StructShare makes the administrative side of running the business much smoother and more efficient. Co-founder Or Lakritz walks us through how it does this.

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Hugh Seaton: Welcome to Constructed Futures. I'm Hugh Seaton. Today I'm here with Or Lakritz founder, Chief Product and Strategy Officer at StructShare. Or, welcome to the podcast. 

Or Lakritz: Hi Hugh. Thank you so much for having me. 

Hugh Seaton: So let's start, like I like to with what Structshare does and how you guys do it. 

Or Lakritz: So, you know, very briefly, StructShare is digitizing the entire procurement life cycle.

Specifically for subcontractors, we take the cumbersome purchase ordering, RFQ, quote leveling processes, and put it on a single centralized platform that connects the field, the office, the warehouse, and the suppliers on one platform. Ultimately provides full visibility to the orders, to inventory, to costs and streamlines all the communication between all stakeholders.

Hugh Seaton: Wow. That's a pretty big vision. So do you think of yourselves as a kind of a workflow streamlining software. Is it more about the data? Is it more about the prices? If you think about what got you guys going, what, what's the kind of core of the product? 

Or Lakritz: So, you know, that's a great question because it's a bit of both.

I think the question, the real question is the order of things, right? So the core thing is really first of all, digitizing and streamlining the processes on the subcontractor side. Providing him a tool to streamline the process, to save costs, to have visibility, real time visibility to what's happening on the field to streamline the workflow itself and the data exchange between the field, the foreman, the purchasing agent to provide very easy approval flows.

And at the end, take all this data in a click of a button to the supplier side. And the side effect of that is having all the data on the platform, and once you have all the data on the platform for the first time, you have visibility to things that you never had, like, costs of materials commonly is between 30 to 50% of every job.

And you know, it's kind of a fill in the blank of a very big hole that until now, they had and StructShare just provides them visibility to control the deliveries, the purchasing, the cost, the material. And only the third stage is really enabling them to get the prices in real time from the suppliers who are now building partnerships with suppliers to bring the inventory and costs in real time, pair the contractor and really provide that value as well.

Hugh Seaton: That's exciting. One of the things we talk about in construction a lot is how slow the industry is to adopt technology. And I personally, I don't know that I buy that all the time. I think when people can see value really quickly, they will adopt it. I joke that no other industry I know of uses lasers and 3D modeling and drones and all.

So there's actually kind of a lot of adoption. It's just has, you have to talk people into seeing how it's going to help them quickly. How do you guys do that? I would assume a lot of your customers are not ENR 400 because subcontractors tend to be a little smaller, so you're not necessarily dealing with a big IT department.

So how do you guys get them to see the value and adopt it? 

Or Lakritz: So, first of all, I do agree with you and when I'm talking about StructShare, I don't really like, in the context of the construction and contractors, I don't call it technology. I call it a tool. It's just a digital tool. And like you need to get your job done on the field and you need to hit a nail. So you have a tool for that. 

The same thing, you need to communicate between the field and the office, or you need to submit purchase orders. So you are not using emails to do that because email is a communication tool, but a general one. You're using StructShare and StructShare is a digital tool to do things that you need to do on a daily basis, but a lot easier, first of all.

And secondly, it makes your job better and it makes your business better by having all the data in hand. Now for your question of how we do it. So actually I think our biggest challenge is not really the adoption or even the conversion from someone that sees the platform to using it. It's getting the attention of taking them from day to day and making them look at the software because once they look at it and they see it, it really resonates with how they work.

We are really, really customer focused. And at the beginning of the company I was just walking from projects to projects to offices to really understand how this workflow works exactly. And we got a lot of feedback and we built a platform in a way that ultimately it's just taking the way they work today exactly, just putting it on a digital platform. Instead of using email and manual entering into the spreadsheet, you are using StructShare and it's automatically making and creating your spreadsheet instead of manually entering the data into your ERP system. The side effect of that is that it integrates into your ERP system and automatically records everything that you need into your systems.

Hugh Seaton: That's great. So do you find that the benefit people like the aha moment is, “my gosh, this is doing this automatically. I don't have to play around with spreadsheets anymore?” Or is it, “Oh my God, there aren't any more mistakes.” Cause you know, I read somewhere that the average rate of errors when people transcribe is 11 percent.

I don't know how right that is. It doesn't matter. It wasn't crazy to me that one in 10 times somebody enters something, especially if it's digits, there might be something wrong. So when you talk to your customers, what do you find is the aha moment? 

Or Lakritz: So, you know, again, it's a great question because it really varies.

The whole point of our platform is that it connects both the field and the purchasing agent and automates AP tasks and manually enters all the data and provides it to you know, that visibility both to the project managers and to the warehouse manager. So it really depends on the companies.

You know, we have one great testimonial that says, “you know, it used to take me four hours to create a purchase order. Now it's a few clicks and boom.” I love that quote. The second is, “I didn't believe that I could have all these costs in hand or in real time, to manage my budget because until now I had to manually enter everything, so I just didn't do that.” 

And identify billing mistakes. This is something that is really, really strong. You know, the state of the industry before digital tools like StructShare is that there are so many purchase orders, so many invoices that you need to process that at the end you select one from 50 to really reconcile it, but there's so many billing mistakes that you just know that you lose money. In addition, waste. We have a great story of one of our customers that just identified after a month that they are ordering the same thing all over again. And then he came to the job site and he saw all the orders, all the materials, just, you know, piled on the side as wasted materials.

So that's another great, great value that we can provide. 

Hugh Seaton: Isn't that interesting? This idea of, of easy visibility into what you're buying, especially given that, you know, thousands of little things and sometimes not so little things that a sub is going to need to buy. Being able to look at them all at once and do searches and so on and so forth has got to be enormously valuable to people.

Or Lakritz: Absolutely. Absolutely. You know, the simple thing of having that in hand, meaning, you know, at the end today the traditional process when you, even if you make the purchase order and you have this standardized process, if you have it on email, you have so much valuable data. You know, you want to know what's the last price you had for a single item.

You need to go to the email. Now you go to StructShare, just search the word. And in one second you have that. You know, it reflects for estimations, it reflects for job costing. It reflects for, you know, the actual budget management. It reflects planning. The business year or negotiating with your suppliers.

It has so much impact on a subcontractor business because ultimately the subcontractor business really depends on the way he operates on the procurement and material management side because, Uniquely or as opposed to the general contractor, or of course, the developer materials take such a big, crucial role in his entire business and job management.

Hugh Seaton: Yeah, so one of the things that happens when people adopt software like yours is they realize that their own processes are not quite as consistent as they might be. Do you find that you're helping people to make their systems, like what they call things or how they are coding things and so on, more consistent, or is that less of an issue.

Or Lakritz: Yeah, so you know, you have the larger, larger customers that already have [those systems]. For example, the most basic of our software is the master item database. So, you have the large customers who already have that and they are coming, importing it very easily and starting to work with StructShare. But you have ones that don't have that, and even the tasks or committing to making that, that is alone making the process more standardized.

And of course, once it's imported into StructShare, you have again, all the data and all the dots connected from the bill of materials to the project, to the budget management and cost management and inventory, and you are able to finally standardize also between jobs, which is you know, commonly in construction a bit siloed.

Hugh Seaton: Yes. How's that for the understatement of the year? Tell me about invoice reconciling. I love that. And you, you guys call it out on your website, but this idea of a hundred percent invoice reconciling, how does that work? 

Or Lakritz: So that is one of our core killer features. We call it. It's, you know, it's really magic for contractors.

Today, the way they work is [that] for every invoice, and I'm talking about hundreds and thousands of invoices every month that they need to process. They download that invoice, you know, from their email. They are putting it in a folder. They're calling the purchasing agent or foreman to collect the data, the delivery data, the purchase order data.

They need to go to the catalog in order to reconcile an invoice. It's so many small tasks from different stakeholders. So again, it's either happening and it's just a crazy overhead. Or it's just not happening and they know that they're losing a lot of money. You know, and it can be another item. It can be mistaken quantities, it can be billing on materials that weren't received at all. And at the end, on StructShare, we automatically route every invoice into their intuitive StructShare account where they can see all the invoices, pair the status. If it's new, approved, rejected, it goes directly to the supplier with notification.

We extract the data from those invoices. We match the relevant purchase order delivery data, all the communication. And by that, we accelerate a daily task from, you know, a few, a few days actually to a few minutes, 30 minutes, and also provide kind of a communication hub where the account payable team, purchasing agent, foreman in on the field project manager can communicate and resolve, resolve the issues very, very fast.

And…communicating and directly notifying the suppliers if there's any issue on the invoice. So, taking this very long process with a lot of manual processes, reviewing errors to really simply taking a digital automated process. And at the end we also sync the data of the invoice directly to the accounting system in order to reduce that manual work as well.

Hugh Seaton: That's amazing. And, and how easy is it for the sub or for their team to set this sort of thing up? 

Or Lakritz: So that's the amazing thing…it's really, really nothing. The only thing they need to do is to upload their invoices, kind of sample invoices from the vendors. Then our AI machine learns the structure of these invoices and we are immediately able, the system is able to identify the structure of the invoice from the relevant supplier and extract the data and make it happen. 

Hugh Seaton: Yeah. I love that. And I think for those who are listening who haven't worked with that, the kind of AI you're talking about is, unless I'm mistaken, you're teaching the system where to go look for things.

So it's great technology, but it's also not risky technology. This is very well established solid technology that you're building on where you're, you're teaching the system how to recognize the documents that come in. 

Or Lakritz: Yeah, absolutely. You know, to really not, not taking the, the AI word and and making it too much of a heavy word.

It's really simple. At the end, you have the invoice, which has a specific structure. So you are showing the machine what the structure is and then, you know, they can kind of remember for every next document that has the same structure, how to extract the data. So it's pretty simple. It is magical for someone that today does it manually and spends so many hours in order to do it.

Hugh Seaton: Yeah, I mean, as someone who's built some things that aren't this, but use some of the same technologies, that technology is, is well understood. It's a pain in the neck to do so congratulations for getting it done. It takes a lot of work and a lot of testing and a lot of trying, but I'm really excited that you guys have been able to do that.

So the another point that you guys bring up on your website is instant field ordering and PO processing. How does that work? 

Or Lakritz: So that's, again, the best example of how we just mocked the way they work today. We have a great story where we are with one of our first customers. We came with our mobile app and a cool kind of eCommerce experience and everything, and we showed them the purchasing agent and he said, “Wow, man, that, that's so cool.”

But nobody will use that. So we asked, “Why not?” And he said, “Look man, they are used to texting me, they're used to emailing me. They're used to sending me notes, you know paper notes with pictures. Now you are giving them kind of an Amazon experience but that's not what they're used to.” So, At the end, again, ultimately what we are doing, we are giving him the foreman, the people on the field, very easy ways to create their list.

We are enabling them to select items directly from their master catalog with categories and subcategories, which is easy to navigate. We are enabling them to select items directly from the bill of materials, which is something very crucial because it dramatically reduces the probability for mistakes or for ordering materials that are not specified for the job.

We are also enabling them to, you know, in their own language, to put the items that they need. And quantities and StructShare will translate these items for the purchasing agent and match them to the master catalog. And, you know, by having everything on a cloud platform, it goes directly to the purchasing agent. They're notified in real time, clicking a button, seeing everything StructShare is able to automate the cost coding, phase coding, and putting in prices. So really taking this process from a few hours of generating and creating a purchase order to a few minutes. The purchasing agent just needs to review it, and he can click a button and it goes directly to the supplier, either as a purchase order or by another click just sending it to multiple suppliers, as in a request for quote. 

Hugh Seaton: Yeah, I love this. So, and I got to say, the reason people get into these trades is not because they like paperwork. So being able to take that away from them, my stepfather was a plumber and, you know, one of the least favorite parts of his job was having to do all of what you're describing.

And he was a smaller one and it wasn't the same as some of your subs, but it's the idea that they, they're in this cuz they like to solve one kind of problem, not a paperwork kind of problem. 

Or Lakritz: Absolutely agree with you. That's really our experience as well, and we are trying to help them from one side, remove and eliminate all this unnecessary work from the other side, really ace their job and trust the platform to be able to do what they really want or what they really need in the best way they can. 

Hugh Seaton: And find margin points, right? I mean, in an industry that isn't famous for massive profit margins, every 1% counts, doesn't it? 

Or Lakritz: Absolutely. Then and again coming back to the fact that purchasing materials for a subcontractor is such a crucial thing, that it wasn't addressed until, you know, recent years when we started the company and we started, running in a New York job site and asking, “how do you do procurement? How do you do purchasing?” 

No one really knew what we were talking about. So we try to simplify things. “How do you do purchase orders? What is a purchase order? How do you order materials from your suppliers and communicate with them?” So then it's like, “okay, this is, this is something that is very important.”

We are doing it every day. So how can you help us? 

Hugh Seaton: Yeah, that makes a lot of sense. And so I have to ask, what trades are you currently set up to help? 

Or Lakritz: So in general, StructShare is agnostic to the trade. We are working today with 12 types of trade. If it's mechanical, electrical, plumbing, drywall, roofing, concrete, HVAC, fire alarms, flooring, and more.

Really there's no specific trade. I must say that there is, from our experience, a lot of value from the trade that is ordering more repetitive materials. But in our few product launches, we have we, we will have in the next quarter two that will be solved as well.

Hugh Seaton: That makes sense. So as, as you think about, the value that you're providing, we've talked about a lot of different pieces to it, and it seems like the future of that value is, is the data, right? We've talked a lot about the process. We've talked a lot about automating things and, you know, making things go from days to hours.

How are you finding people become more and more comfortable with the data they now all of a sudden have? Or is that something you're just, just starting to see? 

Or Lakritz: So, the data is always valuable. Actually, we just returned from a conference we had with some of our partners at Gray Bar, the distributor and I met their the director of technology at at Elektri.

And we just talked about that, the fact that at the end [it’s] data. Really, really important and cool to discuss, but the challenge construction is facing today is how to get this data, how to collect it. So like you're saying, from one side we kind of found a solution of how to collect the data and we have the initial value of having this data in hand, like inventory management and cost management and job costing and being able to better manage your cash flow. But there's a lot of opportunities that we are just starting to scratch. For example, we are now announcing a partnership with the company Billd.com, which is a financing company. That can help a lot in the cash flow problem in construction, especially for subcontractors, which have ridiculous terms of payments. And the data is one big, big piece that could be helpful for risk management, for financing for insurance as well. 

So, you know, it's starting with what we can provide directly to the subcontractor at the day to day, but it will grow to a massive opportunity to help the entire industry if it's distributors, manufacturers and partners for the subcontractor to better plan their activities and work and better serve their partners, the subcontractors.

So there's so many opportunities in that space as well. 

Hugh Seaton: Yeah, that's exciting and it's an enormous industry. Is there a particular size that you find is, is, who adopts the most? 

Or Lakritz: So, I'll tell you the truth, we started building the platform, when we launched the, in the beginning of 2021, we were really focused on the one to 30 50 million.

Meaning the SMB small mid market. But in the last few quarters we are dramatically growing. Also on the large customers mid-market and also corporate. We have customers from 1 million to 200 million in annual revenue. The way we built the platform is very flexible and configurable according to the project.

So really any size of subcontractor can use it. So you know, it really depends on the process of the contractor itself and not on the size. 

Hugh Seaton: You know what's interesting though? I keep hearing that, that larger contractors are often interested in platforms that may have thought they were geared towards smaller contractors, but because it's a good product and it's solving a real problem that they're saying, Hey, you know what, Maybe you thought you were making this for smaller companies, but I really like this. So I am not surprised to hear that and I'm, I'm happy to hear it. I think, you know, we've got a lot going on in the industry and a lot of different competitors and a lot of this and a lot of that.

A good solution can scale no matter what size the company. 

Or Lakritz: Yeah, absolutely. And you know what's different, at least from my experience between other industries in the sub specialty contractors space, is that because of the project structure, the workflow themselves are very, very similar between the small one and the large one. Because at the end, the projects are siloed and you have the back office. So the structure is pretty similar. It's just that the scale is bigger, but if you are taking a large contractor is kind of, you know, looking at him as a lot of small contractors. So this workflow management tool, like it fits the small contractor, it will fit the large contractor if you have the flexibility on the admin and configuration side.

Hugh Seaton: That really does make sense. And it's funny how that scale works in this industry because of the point you just made, that a lot of times projects aren't as big as the company and even within a project, there are workflows that get repeated over and over again. They don't necessarily need to be a hundred million dollar workflows even if they're in a big project.

Or Lakritz: Exactly. 

Hugh Seaton: So how can people find out more about you and, and what's a good way to get engaged with StructShare if this is the sort of thing people hear about and they want to act on. 

Or Lakritz: So, you know, on the general media channel LinkedIn our website StructShare.com we have a very strong integration and partnership with Procore Technologies.

So we are featured on their marketplace. And of course I'm open to get the reach outs from anyone and would love to chat. 

Hugh Seaton: Excellent. 

So we'll make sure that in the show notes, people are able to find you and find the company. Well listen, Or, this has been great hearing about how you guys are solving this problem and thanks for being on the podcast.

Or Lakritz: Thank you so much for the opportunity, man. Really enjoyed it.

 

 

 

 

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