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The biggest challenge for the financials is that it's not just a game of numbers; it is a game of operational context. What is happening on site right now?
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What does that mean for the numbers? No financial system today takes that into account.
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Welcome to Builders Budgets and Beers. I'm Reece Barnes, and I started this podcast to have real conversations about money and the building industry, the wins, the mistakes, and everything in between. I believe builders deserve to feel confident about their finances, and that starts by hearing from others who've been through it too. This industry can be slow to change, but the right stories and the right tools can make profitability feel possible.
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Let's get into it. All righty, mikes are hot. Doctor Dollar is back in the seat. It's been a back, baby. I'm back. It has it has been a long time, Reece. It's been a long time. You've gone on to do great things with this podcast.
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Yeah. Well, you know what? We've got we've got a healthy little audience of listeners. They seem to be getting value out of the pod, at the very least, maybe some entertainment. But that's what we're here to do today. For everyone that doesn't know, I'll give you just a little brief intro. You should know Matt Calvano, co-founder, CEO of Adaptive. We're gonna have Matt on the podcast, and guys, we were kind of talking about this a little bit before we recorded, and we're we're just going to run the same playbook that I do with all the other guests because I think Matt is going to have a perspective on construction accounting coming from his real estate private equity background, obviously being deep in the in the construction tech world for the last five years, half a decade.
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So we're just going to run this thing from the top. Matt, do you have anything that you want to add before we start going?
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No, I don't think I have anything random to add. Let's get into the discussion.
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We like random here on BBB. We like random. Yeah. But okay, so let's fire it up with the with the question here. Okay, and then we'll just use this to like kind of guide the conversation.
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The question is, from your point of view, what is one conversation that needs to be had more regarding construction accounting that isn't being had enough?
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So, the one thing I've come to appreciate running this company over four years, which is basically is focused specifically on construction accounting and finance, is that ultimately construction accounting is an extremely collaborative job between accounting and operations, or between accounting and the field? And I think this is what makes it the most unique and and honestly the hardest. So if you think about most businesses, accounting is not actually that collaborative with operations, right? Take our business for example, software. We have an outsourced accountant who basically does all of our accounting and doesn't have to talk to that many people. And why is that? Well, it's because our business is pretty recurring. We sell the same product or product sets over and over, right? At a certain, you know, a couple different pricing levels. Our costs are pretty recurring. We have, you know, mostly kind of salaried employees and then software costs. So an accountant joins Adaptive. Recurring is the key word. They learn, okay, how do you price your products and what are your expenses, and they can do all the coding and update our financials without really talking to us after that because it's the same every month.
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Totally.
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In construction, nothing's recurring.
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Nothing, nearly nothing. Yeah, not nothing. I mean, sure, some things are recurring, but basically nothing's recurring.
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It's it's project based. Every project is generally bespoke.
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You have different vendors. You have different customers. You have different pricing models, and then you have different levels of progress happening on site. Different unknowns popping up, blah blah blah. So it's impossible for an accountant to do the job without closely talking to and working with the field on an ongoing basis.
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Right, that is honestly what I think makes the whole thing so challenging. A lot of people talk about construction accounting. Oh, whip, yeah, whip, so complicated. Lien waivers, retainage, all that stuff can be learned. It's not actually that complicated. You can teach someone what is retainage, what is wip, what is lien waivers, and they could learn it and then not have to ask you about it every month.
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What they can't learn is like whether the project is on schedule, you know, whether the subcontractor is actually 30% complete. Like that requires constant collaboration. That's what makes it the hardest. So that is something I actually don't hear people talk about a lot, and I and I and I don't think people really like have solved for it either. Because if you look at the way people built their tech stacks, it seems like they kind of choose between either like financials live in the project management system.
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Or financials live in the accounting system, and then if it's in the accounting system, it's like maybe the transactions are right, but the budgets are wrong. And if it's the in the project management system, it's like the budgets might be right, like change order getting processed, but none of the actual transact like transactions are really delayed or wrong, or like there's a bunch of kits, whatever. And I don't think people have really like honed in on this issue as much when they've designed their tech stacks, and what ultimately ends up happening is what I see is people have one or the other situation. So it's either like you know everything's in Sage or everything's in Procore, or they try to integrate them, and then there's a bunch of issues with the integrations, and then still say they even say someone is like perfect stack, Procore Financials fully integrated with Sage Intacct, very modern integration works. Still, there's a bunch of work happening outside of the system.
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Like yes, some tool for AP, some tool for expenses, some tool for payroll, billings oftentimes in Excels you can modify it to clients format, etc. So there's just this like really scattered workflow for a very collaborative process that I see, and I think if the industry just focused on consolidating into a system that works for both the field and accounting, it would clean a lot of things up. So, sorry for going on a long, a long sales pitch. What are you apologizing for? Leads to leads to Adaptive. Welcome this episode sponsored by Adaptive. But that that that is what I think is the issue.
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Honestly, it's why I'm so excited. A lot, a lot of what we're working on.
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Yeah. No, there's there's no there's no room for apology because I think that that is very well said, and a couple other pieces here. I mean, so I think you made a comment of like I think if the industry could essentially just like get a product or even remove the product, right? A process that enables field and office communication, right? A lot of this confusion and errors and missed margin would disappear, right? I was literally just talking to someone in Boston HQ this morning, sitting here. I'm like, why is it? I mean, we're calling contractors all across the United States, getting into Canada, right? And it's like we're talking about wip, we're talking about agents, we're talking about you know AIA style formatted draws, we're talking about all these gaps and all these great things that are going to help contractors. But it's like one of the most common drivers for a contractor to take a look at adaptive is when they hear what we're doing with AP.
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Okay, when they get into the sales cycle, they start to understand much more robust.
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It's not just an AP tool. We've got it's really more of a cash flow management, visibility, reporting tool, right? But my question to you is: You're not a contractor. You're a CEO executive of a software company.
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Why? Why are the other products struggling with this so much, why is this such an opportunity and such a lag in the current tech stack today? Because I'm sitting here and I'm like, how does and we can just call like, you know, pick any product. Why is AP so hard to ace? Right, something is similar and so many tools out there for AP automation. Right, why is it so hard for a bigger product to ace? Something like AP.
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Well, I would separate this out.
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I I would say I would I would separate out. So let's put AP to the side, for example. I would I would I would think about what is like the core source of truth for you in your business, right?
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So we talked about that earlier.
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Ultimately, like in construction accounting, the core system of record is whatever system of record holds the project financials, the the budgets primarily. Like that's what you've chosen as your core source of truth. That's where you believe the budgets will be updated and kept accurate.
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Again, I I think that the the tools that do that are great systems like project management.
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Like Procore is a great product, right? And and Sage Intacct is a great accounting product. I think the core issue is that when you think about what's happening in the product discussions at Procore or Sage Intacct, they are talking about who's their core user. For Sage Intacct, it's the controller or the CFO, and for Procore, it's the project managers, the VP operations, stuff like that, right? And so the product is designed to work very well for whoever their target persona is, and does a lot of things well.
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For example, like Procore can do like RFIs very well, submittals very well, right? And Sage can do multi-entity like financial statements very well. Both of those jobs can kind of live purely with accounting or purely with operations. The financials job lives with both, and so if you have systems though that are being built by people who only think about one of those.
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Persona is always the product to be lacking. It's like you choose this. Totally, that that's that's the issue. So it's not that these are bad products. I think it's that they've like designed their companies around serving certain people within the companies, and then these workflows are very collaborative. That that's that's the the financials in particular is very collaborative.
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Totally, totally, and that seems like quite limiting. So, like from a from a software provider standpoint, right? Is like picking one persona. You use the Procore example with like the operations field people. You use Sage Intech for like the accounting people. Are you essentially saying that like that's one of the bigger differentiators of adaptive? Is that we are taking into consideration both of those profiles and reducing the friction that they both experience in regards to construction accounting.
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Yeah, yeah, that's that's what the company's always been founded around. When we when we originally looked at the at the opportunity in this space, that was the core issue we identified. We started and just went workflow by workflow, thinking about okay, how can we get data from the accounting side and from the field side to to get the job done and make it work for both people? So yeah, yeah, yeah. That's what I'd say.
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And so that's that's maybe from a from a software perspective, maybe what the what why the systems have struggled. I think the second reason, maybe why this this space struggles a little bit, is that owners of businesses like often don't seem to think about the like workflow, you know, like very thoroughly around how they're going to keep the system updated, right? So they, I was talking to a prospect yesterday who was telling me about their company and they bought Sage 100 Contractor and the the high level executive is like oh great look at Sage 100 Contractor has all the fields that I need I can you know log change orders I can log bills I can log expenses. I can log payroll. Look, all the fields that the whole database is there, right? Yeah. Okay, great. Now, like, hey, team, use it.
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Yeah.
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It like ignores the reality of like all the work is in keeping that database updated. Like all the workflow, all the you know paper passing back and forth, all the why doesn't this thing have a PO yet? All the are you sure the subcontractor actually completed this work? All the what cost code is this for? All the like lack of controls. This field person logs in, puts a change order on the wrong job because this is the interface is old and they get confused. And so like while you have this great database where everything can end up, they don't really think about like what's the actual process for keeping this thing updated, similar, you know, similar. I could draw a parallel to our sales side, our sales process, right? Our sales team. There's all this information we want to get collected in HubSpot in our CRM, and theoretically, HubSpot has the perfect database. Yeah, but then I look at the reports, and all the shit's wrong, right?
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Because, like, what's the actual process for updating it? Our sales team's doing demos all day long. They're getting meetings booked from the website, from the outbound team, from accounting partners. Who's filling in all the fields in the database? What's the process for doing that? What's the process for checking it's accurate?
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What's the process for allowing changes? That's the other thing I think is I see a lot of owners who don't spend a lot of time actually thinking about what's their what's their process to do all this stuff.
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Totally, I mean, I think you nailed it, but I think like does it need to be thought about by the owner? I'm essentially trying to figure out like, is this is it just like a shortcoming, like a lack of leadership, which I doubt is what you're insinuating? I'm just trying to figure out, like, why isn't that more of a priority from owners? If you have an answer, why isn't it more of a priority for them to track their workflows and like before they're making these software decisions? Instead of just evaluating from a standpoint of is this a piece of software that I can put all my information in?
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To is this a piece of software that's going to reduce the steps and the friction in my team's current workflow or process? I don't. So here's what I'll come up with right now because I can kind of draw back to my experience in the sales process.
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The only reason I know what the issues are, kind of in keeping the CRM updated is because I do sales. If all I was looking doing was trying to look for reports, I probably wouldn't appreciate all the nitty gritty details that go into the process of like keeping a CRM updated.
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Correct.
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And probably what's happening a lot of the times is that owners started their business a long time ago. They used to be in all the details, and they had a full deep appreciation for the workflow. And then the company gets bigger, and they are you know doing different things, and maybe not as much in the weeds of getting a cost approved, or tracking a timesheet, or you know what it's like when a PO.
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Isn't in the system for a cost that needs to be processed. They just forget about these things, right? It's it's easy to forget.
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It's hard to remember all the details. It's probably probably one of the main drivers, I would say.
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Yeah, just just guessing, kind of empathizing from my own experience.
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I think this is perfect.
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And then the other, yeah. I mean, this is kind of a separate separate. Actually, let me pause there. We can talk about that.
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I'm kind of just just going on and on about everything I learned about this space.
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That's what people want to listen to in the episode. They they want to hear the perspectives of other people. So that's perfect. And I mean, I think that's extremely valid, right? It's not as much of like a who's right, who's wrong, why isn't the software working, why don't I have my reports? As much as it is, is like as you grow in a business, you start to lose sight of, or maybe even not prioritize the appreciation of what the day-to-day execution actually is, and then you start to empower people to make decisions on buying software, and they're evaluating it from one standpoint, or you're the final decision maker as the owner saying yes, green light, this sounds good, and then all of a sudden we get a new product and it's not filling or checking the boxes, and we've just like got a bunch of eye rolls from the team, right? A bunch of people are like, just another piece of software that I have to update, I have to learn, I have to understand how it works, and it's not actually doing anything for them.
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Yeah, yeah, beautiful, beautiful. Okay, so and your go ahead. Do you have something?
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Well, that that was what I you kind of started to touch on a little bit. So so what have we covered in this conversation so far? We talked about this is a collaborative job, yep.
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But the systems might not be designed around it, and then a lot of times when owners are buying, they think about does this have all the fields and forms? Like can I theoretically keep my system updated, but don't think as much about the process for doing so. We've talked about that, and then the, I guess the third. If if you get to that point, then it's like, all right, I'm a busy business owner. I don't have the time to be in the weeds of the process every day. Well, how could I then drive improvements in my process? Probably be to empower whoever manages the process to go look for technology that could help them. That's what we do, for example, right? Like our we hear it even on the phones, like even like AI committees, like that was a thing. It was like that's I think I think the committees is a little bit of the problem because then you reintroduce the issue of of you have like a a set of executives who are not involved in a lot of the day to day and can't fully appreciate the day to day in detail, like the people who are doing the work here, trying to decide on software buying decisions, rather than letting it be a little bit more bottoms up, giving your team budget to try things and go experience things.
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Sure. Okay.
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So that's another thing we see in the sales process often, right? Is we will talk to a controller, say, or or a CFO who looks at the product and says like, "Wow, this is amazing. I would love to use this, but then they can't get the they can't get the buy-in from their owner, even to just like get on the phone and see the product, right? And so I think there might be a little bit of a culture, not just in construction, but we're probably more broadly across the economy of of like we don't let our teams procure their own technology. We have a centralized like technology buying function. I'd probably more like encourage employees in my company to say you want to buy some tech. Like, what is the success criteria? What are you expecting to be true? Okay, go ahead and buy it. Negotiate a monthly contract or something, so you're not paying a bunch of money up front. And then we'll check in in three months and see if like what you thought was true is actually true. Just let it let it be simple that way, rather than like let me get involved, let me try to understand everything, like let me sign off, let me overthink it.
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That's exactly where I was going to go. Is like tactically, like how would you motivate owners of construction companies to start thinking about this? I think it operate more like tech companies, more like us. Yeah, right. Like we, we. I don't have my engineers defend all the software they want to buy to make engineering faster. They just, they just buy it, and then we talk about what it's supposed to do, what it's supposed to improve. If that's happening, great. If not, okay. Almost all the products they buy are not heavy upfront annual commitments. They're like monthly pricing. So you go with vendors that are like confident enough in their product to let you try it, and you just trust your team to like try new technology to improve their workflow. I think that's that's the primary difference between industries like construction industries like a technology company. In a technology company, we have like 40 different software vendors we buy software from probably more, right? Yeah, because our our team is allowed to buy stuff that makes the job proficient in construction. I think that it's software is bought way less frequently. It's bought in like a very controlled manner. Yes, this is great. There's there's a lot of like anchoring. To the to like whatever system you bought 20 years ago, and like let me stuff everything into this, and like everyone working this system.
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Yeah, there's some good reasons for that. We can get into if you want, but I think that might be another another issue.
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I I love that point because that's like actually a piece that, and like just for the sake of the theme of like essentially like how do you change or mold like a buyer psychology, right, or even like a buying decision psychology within a business, and that's one thing that you hear in construction over and over again. Like you look at what are the most successful products in construction software: Procore, Autodesk, right? All these like big, all-encompassing products, right? And then like as soon as the construction company starts to get up on three products, four products, seven products, 10 products, whatever it is, that's where they're like, God, we just need everything all in one. Everything's got to live in this all in one place. Blah blah blah blah blah. Right, and there's obviously logic to that, and there's good reason for that. Going back to the, this is a very collaborative business.
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It makes sense for it to all be tied in, but I think really what you're saying is is like you're urging or motivating the construction leadership industry to think about this a little bit more of like what is the task at hand, what are the problems that are that are preventing production, and then how do we go out and find tools that are going to reduce that friction and increase production?
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Yeah, yeah, yeah. So, so yes. I mean, as we're, I'm just thinking about this as we're talking it through. So, as we're talking through, it's becoming a little bit more clear. Like, what's the core point? I think the core point is not like you should buy tons of tech and you should have boys buying a zillion different tools. That probably creates more problems.
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I think the core point is like you should let employees try tech more frequently and encourage them to try technology more often. Like I said, try to buy, encourage them to demand monthly pricing, right? So that can be canceled, and they just get to try products.
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You missed success criteria, and I think that's the big one. You empower your team to try tech under the thinking of what is the success criteria that I'm anticipating with this trial, right? And I think that's where you start to elevate your team.
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I've done dozens of episodes on BBB talking about like leadership and operations and empowering teams and all this stuff, and like that's really where you start to look at the individuals, and you're like, okay, this person keeps bringing up these problems, right? I'm gonna give them, to your point, a budget or the autonomy to go out and be like, hey, go find the tool that's gonna like prevent this from happening.
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Document what the problem is.
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What is today, and what is this thing supposed to prevent and accomplish? And then go out and do it. Go out and try it.
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Yep. Yeah. Yeah. Agreed. Agreed.
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I mean, if you want to attract like talented people, right?
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They want to generally the talented people want to be as efficient as possible. If you only buy tech like once every five years, it's highly unlikely that you have the most efficient tech. If you if you are forcing whoever you've hired to use whatever you bought five years ago, they're probably going to get frustrated, right? So there's just like all these other problems. People think of people kind of like dismiss maybe the technology, but I mean, talk about even my friends who work in finance now are extremely annoyed that like their friends in more forward thinking finance firms are allowed to use like Claude and ChatGPT in their workflow, but when I, you know, the companies that are a little bit more stubborn, a little bit more privacy obsessed, et cetera. Oh no, you can just use Microsoft Copilot, and it sucks and like doesn't work well. And they see their friends doing all this other cool stuff, and they feel like they're falling behind.
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Creates all these issues, and I also think that this type of buying behavior from the from the customer base inspires companies to kind of build a little bit shittier products.
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They they all are focused on selling you the dream during the sales process because they want to check all your all your boxes, and then they're also forced on incentivized to try to get you to sign a big annual contract up front, so you have a bunch of money committed, and then you're forced to work through like all the issues that they didn't actually cover in the sales process. And so it's just a totally different buying dynamic in this industry than it is for developers and engineering. In develop, in if you're selling to an engineering team, you expect that they're going to want to try the product. You expect they're going to be highly resistant to upfront annual pricing, and so the best product wins. You know, totally. In a buyer, in a buyer base, it's not expected to try a lot of attack. It's expected to put you through a big, long sales process. You want to crank up your price as much as possible, and you want to sell the dream. You want to lock people in, and best product doesn't win. Best, you know brand wins or something.
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Totally, best best sales process wins, biggest brand wins.
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Whatever it is, it's it's just a different dynamic. I mean, it's really interesting to think about these different market dynamics in terms of how people buy technology across industries. But totally, totally. Well, and I think you know this wraps all back. Into like just generally focusing on like construction accounting, construction finance is extremely collaborative between the back office and the field. So you should you should like just start thinking about how do you empower the individuals, and even if it's not getting up to 40 pieces of software, that's probably not necessary in a construction company, right? But how do you identify the one person or the three people in your org and say you guys have been bringing up these problems, or in q4 we're going to give you X budget to go out and we expect you to use it with this criteria? I think it makes a ton of sense. Now, not to pivot a little bit, but we have some big news to talk about. Yeah, we have just successfully raised a Series B.
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I'm not going to steal your thunder. I want to hear you talk about it. Talk to us about about why we raised it, how we raised it, who we raised it from, kind of the story, and help people understand what we're going to end up doing with that capital and why that's a big deal for for our customers, the industry, and prospects. Yeah, so we raised 30 million bucks. Now we've raised $57 million on our on our little four-year journey here in space. Very exciting. The firm we raised it from is a specialist in software built for specific industries.
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You know, it's called Vertical Software. He, the investor Dave Yuan, and then also Andrew Walsh. Dave is on the board of that company, Toast, which I'm sure you've seen in the restaurants and you probably used it. Yeah, the legal software Clio and had also invested in ServiceTitan and a number of other vertical software businesses. So, someone who really understands a lot of stuff we're just talking about now, probably way more than we do. From seeing across multiple different industries, right?
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And yeah, really excited to be working with them. Also, our existing investors, Reopt. So exciting stuff. Team has grown now. We have over 65 employees at the company. We have offices in New York, where I am in Boston, where you are. Yeah, I see you're you're a Red Sox fan now. That happened quick, easy.
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Hey, I've been I've been a Red Sox fan since I moved out here in 2017. I did I did take a step back. Now I'm back. Yeah, full support. Go ahead, go ahead.
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Yes, yes. And so yeah, it's exciting. I mean, building business is fun. Like everyone in probably listening to this podcast is building a company, right? Like we serve entrepreneurs who built their construction businesses.
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Building a company is fun, right? It's it's full of ups and downs. the The most fun part is like when you when you hit the next milestone, get the growth milestone, now you can dream even bigger. And I think yeah, we're we're dreaming bigger.
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We're going to continue to stay focused on finance and accounting. We think that there's a lot of improvement.
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We're just kind of walking through that to be had there. I see teams today with all the issues we've covered on this podcast already. Ultimately, it shouldn't be that hard for someone to set a budget and know like where they're at relative to the budget. It shouldn't be so hard for people to agree on how much, like, is owed, right?
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Like, people shouldn't just get work done and get paid for the work that they get done. There shouldn't be a need for all these like lean waivers and disputes that are happening in the industry. People fighting each other. Like, there's so much of this stuff just wastes everyone's time, and I think that everything we're doing on the product side is going to fix a lot of that stuff. So that's what we're working towards. So ultimately, it's just if you're a business owner working with us, what I want to be true is you know you know at all times how the how the financials are progressing on your projects.
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You know what types of projects make money? What types of projects don't? You know which employees you know tend to have budgets that go awry based on not getting change orders processed fast enough, or maybe the issue is more managing the schedule, et cetera. Like you can kind of you have a really sound understanding of the financials in your business and then what's driving it. So that's what that's what we're working towards. That's what I think is really exciting for the company.
00:29:06.059 --> 00:29:30.859
Beautiful, beautiful. I obviously agree. I think from some closing remarks, I want to know what you think is the most valuable feature or function of adaptive. Now I know I'm asking you to pick like you know a ton of features, ton of functions, this and the other. But what do you think is the most valuable?
00:29:31.670 --> 00:29:36.980
And then actually, I'll ask the second question once after you answer this. What do you think is the most valuable feature or function of adaptive?
00:29:38.299 --> 00:29:45.640
I hate the word feature or function. What do you want me to call it? What do you want me to call it? I I just feel like you start talking to a menu of features.
00:29:45.700 --> 00:30:03.720
It's so boring. I think the coolest concept in Adaptive that we rolled out recently, which I think is the is is going to be the future of all all these financial systems run. Is like I said earlier, the biggest challenge for the financials is that it's not just a game of numbers. It is a game of operational context. What is happening on site right now?
00:30:03.930 --> 00:30:29.480
What does that mean for the numbers? No financial system today takes that into account, right? No financial system is like reading your scheduling software, seeing that a schedule has slipped, and and seeing at the same time that no one has updated the cost forecast, right? Nobody is reading the daily logs and seeing that there was a delay on site, right, and recognizing that it's going to impact the cost forecast, right.
00:30:30.079 --> 00:30:48.519
Nobody is seeing that there was like some note in the daily logs that says that there was a scope requested from the customer when they were on site visiting, scope change, and noticing that no change order has been processed, right? There's all this value in a lot of this stuff that is being captured today for the financials.
00:30:44.589 --> 00:31:05.309
Ultimately, these are all the things that people hold meetings to discuss and then determine the financial impacts themselves. So, with LLMs, that's something that's possible now, right? You can train an LLM to scan that information and train it on what it might impact in the financials to start executing a lot of those workflows. That's the main thing we're investing in right now.
00:31:06.990 --> 00:31:22.099
It's only turned on for us a subset of our customers. It's we're calling it project context. We'll pull it in from Procore. We'll pull it in from your email inbox. We'll pull it in from your site notes. We'll pull it in from your scheduling software. We'll pull it in by directly texting the field team.
00:31:22.160 --> 00:31:35.839
They can just text updates to us, etc. And then we're using that as like the the fuel to execute a lot faster finance and a lot more accurate financial workflows. I think that's the coolest concept we're working on, and I'm very excited about that.
00:31:36.890 --> 00:31:58.240
I love it. Anti meeting pro action. We don't want people taking these meetings just to talk about percent complete and what happened on a job site, so we can get a real-time view into WIP. We want this stuff pulled at the point in time, surfaced to the individuals, and prevent the forensic accounting and wild goose chasing that is typically required to understand what's actually happening.
00:31:59.049 --> 00:32:26.150
Correct. Yeah, yeah. I mean, if I was if I was running, I'll just answer your question now around like feature functionality of how I would use Adaptive. I was running setting up a construction business from scratch. Yeah, some setting up a construction business from scratch. I have basically four main sets of plans. I have you know contracts, schedules, drawings, and budgets. I'd pick best-in-class products to manage each of those workflows.
00:32:24.019 --> 00:32:33.440
Basically, like what's the plan, what's the actuals, how often is it getting updated, and so think about adaptive for budgeting.
00:32:30.230 --> 00:33:10.380
You load in your budget, and then what are the two things you need to track? You need to feel really good about tracking. What are the costs as they happen, and what is the progress as it happens, things like the daily logs, etc. So I'd want to have budget costs flowing in directly from credit cards, AP, and payroll at all times as it's getting processed, right? Just straight into the system, super streamlined, no lag happens, gets in there immediately, and then progress. So I'd want wherever my budgeting system lives. I'd want to pull in daily logs. I'd want to pull in the schedule. You can do this through integrations. It's very easy now, or through exports, etc. Boom. So now I have the two
00:33:10.470 --> 00:33:18.660
costs and progress flowing in as it happens. If you don't feel like you have good daily logs or whatever process today, you're not capturing good information.
00:33:19.230 --> 00:34:03.269
You can use the capabilities we have to now to go text the field or call the field. They can just talk to the system, give a quick update. Boom! Now, if I have this flowing in constantly, that's when you can start to build your oversight agents or your reporting agents on top of both of those. Right. So, like every day, agent runs what's over budget, what in the project context signals some sort of financial impact. That's how you keep change orders and variances updated in the system, right? So then you have steps 12341, budget, two costs, three progress, four agents that run the checks. Now you can trust that the budget is updated constantly, and then everything else will flow from that, right?
00:34:00.369 --> 00:34:10.829
Your work will be accurate. Your cost forecast will be accurate, etc. That is what I'm most excited about with adaptive.
00:34:07.559 --> 00:34:18.570
It's just like a clean system that takes everything into account, runs autonomously, make it easy, make it simple. That's what we're doing.
00:34:19.139 --> 00:34:22.550
You heard it here first, everybody. I love it, Matt.
00:34:22.610 --> 00:34:36.139
Thank you so much for jumping on. Always love hearing your perspective, and and you know we're lucky to have you, big guy. Thanks for leading us to the promised land. We have we're lucky to have you too, old Reese. All right, I'll talk to you later. It was good coming back. You bet. We'll see you, dude. Bye bye.
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The biggest challenge for the financials is that it's not just a game of numbers; it is a game of operational context. What is happening on site right now?
00:00:06.269 --> 00:00:11.250
What does that mean for the numbers? No financial system today takes that into account.
00:00:11.599 --> 00:00:46.865
Welcome to Builders Budgets and Beers. I'm Reece Barnes, and I started this podcast to have real conversations about money and the building industry, the wins, the mistakes, and everything in between. I believe builders deserve to feel confident about their finances, and that starts by hearing from others who've been through it too. This industry can be slow to change, but the right stories and the right tools can make profitability feel possible.
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Let's get into it. All righty, mikes are hot. Doctor Dollar is back in the seat. It's been a back, baby. I'm back. It has it has been a long time, Reece. It's been a long time. You've gone on to do great things with this podcast.
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Yeah. Well, you know what? We've got we've got a healthy little audience of listeners. They seem to be getting value out of the pod, at the very least, maybe some entertainment. But that's what we're here to do today. For everyone that doesn't know, I'll give you just a little brief intro. You should know Matt Calvano, co-founder, CEO of Adaptive. We're gonna have Matt on the podcast, and guys, we were kind of talking about this a little bit before we recorded, and we're we're just going to run the same playbook that I do with all the other guests because I think Matt is going to have a perspective on construction accounting coming from his real estate private equity background, obviously being deep in the in the construction tech world for the last five years, half a decade.
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So we're just going to run this thing from the top. Matt, do you have anything that you want to add before we start going?
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No, I don't think I have anything random to add. Let's get into the discussion.
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We like random here on BBB. We like random. Yeah. But okay, so let's fire it up with the with the question here. Okay, and then we'll just use this to like kind of guide the conversation.
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The question is, from your point of view, what is one conversation that needs to be had more regarding construction accounting that isn't being had enough?
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So, the one thing I've come to appreciate running this company over four years, which is basically is focused specifically on construction accounting and finance, is that ultimately construction accounting is an extremely collaborative job between accounting and operations, or between accounting and the field? And I think this is what makes it the most unique and and honestly the hardest. So if you think about most businesses, accounting is not actually that collaborative with operations, right? Take our business for example, software. We have an outsourced accountant who basically does all of our accounting and doesn't have to talk to that many people. And why is that? Well, it's because our business is pretty recurring. We sell the same product or product sets over and over, right? At a certain, you know, a couple different pricing levels. Our costs are pretty recurring. We have, you know, mostly kind of salaried employees and then software costs. So an accountant joins Adaptive. Recurring is the key word. They learn, okay, how do you price your products and what are your expenses, and they can do all the coding and update our financials without really talking to us after that because it's the same every month.
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Totally.
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In construction, nothing's recurring.
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Nothing, nearly nothing. Yeah, not nothing. I mean, sure, some things are recurring, but basically nothing's recurring.
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It's it's project based. Every project is generally bespoke.
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You have different vendors. You have different customers. You have different pricing models, and then you have different levels of progress happening on site. Different unknowns popping up, blah blah blah. So it's impossible for an accountant to do the job without closely talking to and working with the field on an ongoing basis.
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Right, that is honestly what I think makes the whole thing so challenging. A lot of people talk about construction accounting. Oh, whip, yeah, whip, so complicated. Lien waivers, retainage, all that stuff can be learned. It's not actually that complicated. You can teach someone what is retainage, what is wip, what is lien waivers, and they could learn it and then not have to ask you about it every month.
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What they can't learn is like whether the project is on schedule, you know, whether the subcontractor is actually 30% complete. Like that requires constant collaboration. That's what makes it the hardest. So that is something I actually don't hear people talk about a lot, and I and I and I don't think people really like have solved for it either. Because if you look at the way people built their tech stacks, it seems like they kind of choose between either like financials live in the project management system.
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Or financials live in the accounting system, and then if it's in the accounting system, it's like maybe the transactions are right, but the budgets are wrong. And if it's the in the project management system, it's like the budgets might be right, like change order getting processed, but none of the actual transact like transactions are really delayed or wrong, or like there's a bunch of kits, whatever. And I don't think people have really like honed in on this issue as much when they've designed their tech stacks, and what ultimately ends up happening is what I see is people have one or the other situation. So it's either like you know everything's in Sage or everything's in Procore, or they try to integrate them, and then there's a bunch of issues with the integrations, and then still say they even say someone is like perfect stack, Procore Financials fully integrated with Sage Intacct, very modern integration works. Still, there's a bunch of work happening outside of the system.
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Like yes, some tool for AP, some tool for expenses, some tool for payroll, billings oftentimes in Excels you can modify it to clients format, etc. So there's just this like really scattered workflow for a very collaborative process that I see, and I think if the industry just focused on consolidating into a system that works for both the field and accounting, it would clean a lot of things up. So, sorry for going on a long, a long sales pitch. What are you apologizing for? Leads to leads to Adaptive. Welcome this episode sponsored by Adaptive. But that that that is what I think is the issue.
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Honestly, it's why I'm so excited. A lot, a lot of what we're working on.
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Yeah. No, there's there's no there's no room for apology because I think that that is very well said, and a couple other pieces here. I mean, so I think you made a comment of like I think if the industry could essentially just like get a product or even remove the product, right? A process that enables field and office communication, right? A lot of this confusion and errors and missed margin would disappear, right? I was literally just talking to someone in Boston HQ this morning, sitting here. I'm like, why is it? I mean, we're calling contractors all across the United States, getting into Canada, right? And it's like we're talking about wip, we're talking about agents, we're talking about you know AIA style formatted draws, we're talking about all these gaps and all these great things that are going to help contractors. But it's like one of the most common drivers for a contractor to take a look at adaptive is when they hear what we're doing with AP.
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Okay, when they get into the sales cycle, they start to understand much more robust.
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It's not just an AP tool. We've got it's really more of a cash flow management, visibility, reporting tool, right? But my question to you is: You're not a contractor. You're a CEO executive of a software company.
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Why? Why are the other products struggling with this so much, why is this such an opportunity and such a lag in the current tech stack today? Because I'm sitting here and I'm like, how does and we can just call like, you know, pick any product. Why is AP so hard to ace? Right, something is similar and so many tools out there for AP automation. Right, why is it so hard for a bigger product to ace? Something like AP.
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Well, I would separate this out.
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I I would say I would I would separate out. So let's put AP to the side, for example. I would I would I would think about what is like the core source of truth for you in your business, right?
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So we talked about that earlier.
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Ultimately, like in construction accounting, the core system of record is whatever system of record holds the project financials, the the budgets primarily. Like that's what you've chosen as your core source of truth. That's where you believe the budgets will be updated and kept accurate.
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Again, I I think that the the tools that do that are great systems like project management.
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Like Procore is a great product, right? And and Sage Intacct is a great accounting product. I think the core issue is that when you think about what's happening in the product discussions at Procore or Sage Intacct, they are talking about who's their core user. For Sage Intacct, it's the controller or the CFO, and for Procore, it's the project managers, the VP operations, stuff like that, right? And so the product is designed to work very well for whoever their target persona is, and does a lot of things well.
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For example, like Procore can do like RFIs very well, submittals very well, right? And Sage can do multi-entity like financial statements very well. Both of those jobs can kind of live purely with accounting or purely with operations. The financials job lives with both, and so if you have systems though that are being built by people who only think about one of those.
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Persona is always the product to be lacking. It's like you choose this. Totally, that that's that's the issue. So it's not that these are bad products. I think it's that they've like designed their companies around serving certain people within the companies, and then these workflows are very collaborative. That that's that's the the financials in particular is very collaborative.
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Totally, totally, and that seems like quite limiting. So, like from a from a software provider standpoint, right? Is like picking one persona. You use the Procore example with like the operations field people. You use Sage Intech for like the accounting people. Are you essentially saying that like that's one of the bigger differentiators of adaptive? Is that we are taking into consideration both of those profiles and reducing the friction that they both experience in regards to construction accounting.
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Yeah, yeah, that's that's what the company's always been founded around. When we when we originally looked at the at the opportunity in this space, that was the core issue we identified. We started and just went workflow by workflow, thinking about okay, how can we get data from the accounting side and from the field side to to get the job done and make it work for both people? So yeah, yeah, yeah. That's what I'd say.
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And so that's that's maybe from a from a software perspective, maybe what the what why the systems have struggled. I think the second reason, maybe why this this space struggles a little bit, is that owners of businesses like often don't seem to think about the like workflow, you know, like very thoroughly around how they're going to keep the system updated, right? So they, I was talking to a prospect yesterday who was telling me about their company and they bought Sage 100 Contractor and the the high level executive is like oh great look at Sage 100 Contractor has all the fields that I need I can you know log change orders I can log bills I can log expenses. I can log payroll. Look, all the fields that the whole database is there, right? Yeah. Okay, great. Now, like, hey, team, use it.
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Yeah.
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It like ignores the reality of like all the work is in keeping that database updated. Like all the workflow, all the you know paper passing back and forth, all the why doesn't this thing have a PO yet? All the are you sure the subcontractor actually completed this work? All the what cost code is this for? All the like lack of controls. This field person logs in, puts a change order on the wrong job because this is the interface is old and they get confused. And so like while you have this great database where everything can end up, they don't really think about like what's the actual process for keeping this thing updated, similar, you know, similar. I could draw a parallel to our sales side, our sales process, right? Our sales team. There's all this information we want to get collected in HubSpot in our CRM, and theoretically, HubSpot has the perfect database. Yeah, but then I look at the reports, and all the shit's wrong, right?
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Because, like, what's the actual process for updating it? Our sales team's doing demos all day long. They're getting meetings booked from the website, from the outbound team, from accounting partners. Who's filling in all the fields in the database? What's the process for doing that? What's the process for checking it's accurate?
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What's the process for allowing changes? That's the other thing I think is I see a lot of owners who don't spend a lot of time actually thinking about what's their what's their process to do all this stuff.
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Totally, I mean, I think you nailed it, but I think like does it need to be thought about by the owner? I'm essentially trying to figure out like, is this is it just like a shortcoming, like a lack of leadership, which I doubt is what you're insinuating? I'm just trying to figure out, like, why isn't that more of a priority from owners? If you have an answer, why isn't it more of a priority for them to track their workflows and like before they're making these software decisions? Instead of just evaluating from a standpoint of is this a piece of software that I can put all my information in?
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To is this a piece of software that's going to reduce the steps and the friction in my team's current workflow or process? I don't. So here's what I'll come up with right now because I can kind of draw back to my experience in the sales process.
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The only reason I know what the issues are, kind of in keeping the CRM updated is because I do sales. If all I was looking doing was trying to look for reports, I probably wouldn't appreciate all the nitty gritty details that go into the process of like keeping a CRM updated.
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Correct.
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And probably what's happening a lot of the times is that owners started their business a long time ago. They used to be in all the details, and they had a full deep appreciation for the workflow. And then the company gets bigger, and they are you know doing different things, and maybe not as much in the weeds of getting a cost approved, or tracking a timesheet, or you know what it's like when a PO.
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Isn't in the system for a cost that needs to be processed. They just forget about these things, right? It's it's easy to forget.
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It's hard to remember all the details. It's probably probably one of the main drivers, I would say.
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Yeah, just just guessing, kind of empathizing from my own experience.
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I think this is perfect.
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And then the other, yeah. I mean, this is kind of a separate separate. Actually, let me pause there. We can talk about that.
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I'm kind of just just going on and on about everything I learned about this space.
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That's what people want to listen to in the episode. They they want to hear the perspectives of other people. So that's perfect. And I mean, I think that's extremely valid, right? It's not as much of like a who's right, who's wrong, why isn't the software working, why don't I have my reports? As much as it is, is like as you grow in a business, you start to lose sight of, or maybe even not prioritize the appreciation of what the day-to-day execution actually is, and then you start to empower people to make decisions on buying software, and they're evaluating it from one standpoint, or you're the final decision maker as the owner saying yes, green light, this sounds good, and then all of a sudden we get a new product and it's not filling or checking the boxes, and we've just like got a bunch of eye rolls from the team, right? A bunch of people are like, just another piece of software that I have to update, I have to learn, I have to understand how it works, and it's not actually doing anything for them.
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Yeah, yeah, beautiful, beautiful. Okay, so and your go ahead. Do you have something?
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Well, that that was what I you kind of started to touch on a little bit. So so what have we covered in this conversation so far? We talked about this is a collaborative job, yep.
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But the systems might not be designed around it, and then a lot of times when owners are buying, they think about does this have all the fields and forms? Like can I theoretically keep my system updated, but don't think as much about the process for doing so. We've talked about that, and then the, I guess the third. If if you get to that point, then it's like, all right, I'm a busy business owner. I don't have the time to be in the weeds of the process every day. Well, how could I then drive improvements in my process? Probably be to empower whoever manages the process to go look for technology that could help them. That's what we do, for example, right? Like our we hear it even on the phones, like even like AI committees, like that was a thing. It was like that's I think I think the committees is a little bit of the problem because then you reintroduce the issue of of you have like a a set of executives who are not involved in a lot of the day to day and can't fully appreciate the day to day in detail, like the people who are doing the work here, trying to decide on software buying decisions, rather than letting it be a little bit more bottoms up, giving your team budget to try things and go experience things.
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Sure. Okay.
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So that's another thing we see in the sales process often, right? Is we will talk to a controller, say, or or a CFO who looks at the product and says like, "Wow, this is amazing. I would love to use this, but then they can't get the they can't get the buy-in from their owner, even to just like get on the phone and see the product, right? And so I think there might be a little bit of a culture, not just in construction, but we're probably more broadly across the economy of of like we don't let our teams procure their own technology. We have a centralized like technology buying function. I'd probably more like encourage employees in my company to say you want to buy some tech. Like, what is the success criteria? What are you expecting to be true? Okay, go ahead and buy it. Negotiate a monthly contract or something, so you're not paying a bunch of money up front. And then we'll check in in three months and see if like what you thought was true is actually true. Just let it let it be simple that way, rather than like let me get involved, let me try to understand everything, like let me sign off, let me overthink it.
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That's exactly where I was going to go. Is like tactically, like how would you motivate owners of construction companies to start thinking about this? I think it operate more like tech companies, more like us. Yeah, right. Like we, we. I don't have my engineers defend all the software they want to buy to make engineering faster. They just, they just buy it, and then we talk about what it's supposed to do, what it's supposed to improve. If that's happening, great. If not, okay. Almost all the products they buy are not heavy upfront annual commitments. They're like monthly pricing. So you go with vendors that are like confident enough in their product to let you try it, and you just trust your team to like try new technology to improve their workflow. I think that's that's the primary difference between industries like construction industries like a technology company. In a technology company, we have like 40 different software vendors we buy software from probably more, right? Yeah, because our our team is allowed to buy stuff that makes the job proficient in construction. I think that it's software is bought way less frequently. It's bought in like a very controlled manner. Yes, this is great. There's there's a lot of like anchoring. To the to like whatever system you bought 20 years ago, and like let me stuff everything into this, and like everyone working this system.
00:20:05.970 --> 00:20:11.130
Yeah, there's some good reasons for that. We can get into if you want, but I think that might be another another issue.
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I I love that point because that's like actually a piece that, and like just for the sake of the theme of like essentially like how do you change or mold like a buyer psychology, right, or even like a buying decision psychology within a business, and that's one thing that you hear in construction over and over again. Like you look at what are the most successful products in construction software: Procore, Autodesk, right? All these like big, all-encompassing products, right? And then like as soon as the construction company starts to get up on three products, four products, seven products, 10 products, whatever it is, that's where they're like, God, we just need everything all in one. Everything's got to live in this all in one place. Blah blah blah blah blah. Right, and there's obviously logic to that, and there's good reason for that. Going back to the, this is a very collaborative business.
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It makes sense for it to all be tied in, but I think really what you're saying is is like you're urging or motivating the construction leadership industry to think about this a little bit more of like what is the task at hand, what are the problems that are that are preventing production, and then how do we go out and find tools that are going to reduce that friction and increase production?
00:21:20.700 --> 00:21:34.880
Yeah, yeah, yeah. So, so yes. I mean, as we're, I'm just thinking about this as we're talking it through. So, as we're talking through, it's becoming a little bit more clear. Like, what's the core point? I think the core point is not like you should buy tons of tech and you should have boys buying a zillion different tools. That probably creates more problems.
00:21:35.509 --> 00:21:53.019
I think the core point is like you should let employees try tech more frequently and encourage them to try technology more often. Like I said, try to buy, encourage them to demand monthly pricing, right? So that can be canceled, and they just get to try products.
00:21:54.069 --> 00:22:11.700
You missed success criteria, and I think that's the big one. You empower your team to try tech under the thinking of what is the success criteria that I'm anticipating with this trial, right? And I think that's where you start to elevate your team.
00:22:11.880 --> 00:22:33.920
I've done dozens of episodes on BBB talking about like leadership and operations and empowering teams and all this stuff, and like that's really where you start to look at the individuals, and you're like, okay, this person keeps bringing up these problems, right? I'm gonna give them, to your point, a budget or the autonomy to go out and be like, hey, go find the tool that's gonna like prevent this from happening.
00:22:34.910 --> 00:22:37.910
Document what the problem is.
00:22:34.910 --> 00:22:43.720
What is today, and what is this thing supposed to prevent and accomplish? And then go out and do it. Go out and try it.
00:22:43.778 --> 00:22:50.108
Yep. Yeah. Yeah. Agreed. Agreed.
00:22:43.778 --> 00:22:52.449
I mean, if you want to attract like talented people, right?
00:22:50.138 --> 00:23:39.679
They want to generally the talented people want to be as efficient as possible. If you only buy tech like once every five years, it's highly unlikely that you have the most efficient tech. If you if you are forcing whoever you've hired to use whatever you bought five years ago, they're probably going to get frustrated, right? So there's just like all these other problems. People think of people kind of like dismiss maybe the technology, but I mean, talk about even my friends who work in finance now are extremely annoyed that like their friends in more forward thinking finance firms are allowed to use like Claude and ChatGPT in their workflow, but when I, you know, the companies that are a little bit more stubborn, a little bit more privacy obsessed, et cetera. Oh no, you can just use Microsoft Copilot, and it sucks and like doesn't work well. And they see their friends doing all this other cool stuff, and they feel like they're falling behind.
00:23:35.929 --> 00:23:51.878
Creates all these issues, and I also think that this type of buying behavior from the from the customer base inspires companies to kind of build a little bit shittier products.
00:23:48.249 --> 00:24:43.538
They they all are focused on selling you the dream during the sales process because they want to check all your all your boxes, and then they're also forced on incentivized to try to get you to sign a big annual contract up front, so you have a bunch of money committed, and then you're forced to work through like all the issues that they didn't actually cover in the sales process. And so it's just a totally different buying dynamic in this industry than it is for developers and engineering. In develop, in if you're selling to an engineering team, you expect that they're going to want to try the product. You expect they're going to be highly resistant to upfront annual pricing, and so the best product wins. You know, totally. In a buyer, in a buyer base, it's not expected to try a lot of attack. It's expected to put you through a big, long sales process. You want to crank up your price as much as possible, and you want to sell the dream. You want to lock people in, and best product doesn't win. Best, you know brand wins or something.
00:24:43.538 --> 00:24:47.259
Totally, best best sales process wins, biggest brand wins.
00:24:47.409 --> 00:25:46.480
Whatever it is, it's it's just a different dynamic. I mean, it's really interesting to think about these different market dynamics in terms of how people buy technology across industries. But totally, totally. Well, and I think you know this wraps all back. Into like just generally focusing on like construction accounting, construction finance is extremely collaborative between the back office and the field. So you should you should like just start thinking about how do you empower the individuals, and even if it's not getting up to 40 pieces of software, that's probably not necessary in a construction company, right? But how do you identify the one person or the three people in your org and say you guys have been bringing up these problems, or in q4 we're going to give you X budget to go out and we expect you to use it with this criteria? I think it makes a ton of sense. Now, not to pivot a little bit, but we have some big news to talk about. Yeah, we have just successfully raised a Series B.
00:25:43.089 --> 00:26:19.319
I'm not going to steal your thunder. I want to hear you talk about it. Talk to us about about why we raised it, how we raised it, who we raised it from, kind of the story, and help people understand what we're going to end up doing with that capital and why that's a big deal for for our customers, the industry, and prospects. Yeah, so we raised 30 million bucks. Now we've raised $57 million on our on our little four-year journey here in space. Very exciting. The firm we raised it from is a specialist in software built for specific industries.
00:26:16.559 --> 00:26:47.980
You know, it's called Vertical Software. He, the investor Dave Yuan, and then also Andrew Walsh. Dave is on the board of that company, Toast, which I'm sure you've seen in the restaurants and you probably used it. Yeah, the legal software Clio and had also invested in ServiceTitan and a number of other vertical software businesses. So, someone who really understands a lot of stuff we're just talking about now, probably way more than we do. From seeing across multiple different industries, right?
00:26:49.630 --> 00:27:08.190
And yeah, really excited to be working with them. Also, our existing investors, Reopt. So exciting stuff. Team has grown now. We have over 65 employees at the company. We have offices in New York, where I am in Boston, where you are. Yeah, I see you're you're a Red Sox fan now. That happened quick, easy.
00:27:08.700 --> 00:27:16.170
Hey, I've been I've been a Red Sox fan since I moved out here in 2017. I did I did take a step back. Now I'm back. Yeah, full support. Go ahead, go ahead.
00:27:16.380 --> 00:27:26.750
Yes, yes. And so yeah, it's exciting. I mean, building business is fun. Like everyone in probably listening to this podcast is building a company, right? Like we serve entrepreneurs who built their construction businesses.
00:27:27.799 --> 00:27:39.380
Building a company is fun, right? It's it's full of ups and downs. the The most fun part is like when you when you hit the next milestone, get the growth milestone, now you can dream even bigger. And I think yeah, we're we're dreaming bigger.
00:27:40.279 --> 00:27:48.549
We're going to continue to stay focused on finance and accounting. We think that there's a lot of improvement.
00:27:48.579 --> 00:28:07.829
We're just kind of walking through that to be had there. I see teams today with all the issues we've covered on this podcast already. Ultimately, it shouldn't be that hard for someone to set a budget and know like where they're at relative to the budget. It shouldn't be so hard for people to agree on how much, like, is owed, right?
00:28:03.630 --> 00:28:41.170
Like, people shouldn't just get work done and get paid for the work that they get done. There shouldn't be a need for all these like lean waivers and disputes that are happening in the industry. People fighting each other. Like, there's so much of this stuff just wastes everyone's time, and I think that everything we're doing on the product side is going to fix a lot of that stuff. So that's what we're working towards. So ultimately, it's just if you're a business owner working with us, what I want to be true is you know you know at all times how the how the financials are progressing on your projects.
00:28:38.569 --> 00:29:05.250
You know what types of projects make money? What types of projects don't? You know which employees you know tend to have budgets that go awry based on not getting change orders processed fast enough, or maybe the issue is more managing the schedule, et cetera. Like you can kind of you have a really sound understanding of the financials in your business and then what's driving it. So that's what that's what we're working towards. That's what I think is really exciting for the company.
00:29:06.059 --> 00:29:30.859
Beautiful, beautiful. I obviously agree. I think from some closing remarks, I want to know what you think is the most valuable feature or function of adaptive. Now I know I'm asking you to pick like you know a ton of features, ton of functions, this and the other. But what do you think is the most valuable?
00:29:31.670 --> 00:29:36.980
And then actually, I'll ask the second question once after you answer this. What do you think is the most valuable feature or function of adaptive?
00:29:38.299 --> 00:29:45.640
I hate the word feature or function. What do you want me to call it? What do you want me to call it? I I just feel like you start talking to a menu of features.
00:29:45.700 --> 00:30:03.720
It's so boring. I think the coolest concept in Adaptive that we rolled out recently, which I think is the is is going to be the future of all all these financial systems run. Is like I said earlier, the biggest challenge for the financials is that it's not just a game of numbers. It is a game of operational context. What is happening on site right now?
00:30:03.930 --> 00:30:29.480
What does that mean for the numbers? No financial system today takes that into account, right? No financial system is like reading your scheduling software, seeing that a schedule has slipped, and and seeing at the same time that no one has updated the cost forecast, right? Nobody is reading the daily logs and seeing that there was a delay on site, right, and recognizing that it's going to impact the cost forecast, right.
00:30:30.079 --> 00:30:48.519
Nobody is seeing that there was like some note in the daily logs that says that there was a scope requested from the customer when they were on site visiting, scope change, and noticing that no change order has been processed, right? There's all this value in a lot of this stuff that is being captured today for the financials.
00:30:44.589 --> 00:31:05.309
Ultimately, these are all the things that people hold meetings to discuss and then determine the financial impacts themselves. So, with LLMs, that's something that's possible now, right? You can train an LLM to scan that information and train it on what it might impact in the financials to start executing a lot of those workflows. That's the main thing we're investing in right now.
00:31:06.990 --> 00:31:22.099
It's only turned on for us a subset of our customers. It's we're calling it project context. We'll pull it in from Procore. We'll pull it in from your email inbox. We'll pull it in from your site notes. We'll pull it in from your scheduling software. We'll pull it in by directly texting the field team.
00:31:22.160 --> 00:31:35.839
They can just text updates to us, etc. And then we're using that as like the the fuel to execute a lot faster finance and a lot more accurate financial workflows. I think that's the coolest concept we're working on, and I'm very excited about that.
00:31:36.890 --> 00:31:58.240
I love it. Anti meeting pro action. We don't want people taking these meetings just to talk about percent complete and what happened on a job site, so we can get a real-time view into WIP. We want this stuff pulled at the point in time, surfaced to the individuals, and prevent the forensic accounting and wild goose chasing that is typically required to understand what's actually happening.
00:31:59.049 --> 00:32:26.150
Correct. Yeah, yeah. I mean, if I was if I was running, I'll just answer your question now around like feature functionality of how I would use Adaptive. I was running setting up a construction business from scratch. Yeah, some setting up a construction business from scratch. I have basically four main sets of plans. I have you know contracts, schedules, drawings, and budgets. I'd pick best-in-class products to manage each of those workflows.
00:32:24.019 --> 00:32:33.440
Basically, like what's the plan, what's the actuals, how often is it getting updated, and so think about adaptive for budgeting.
00:32:30.230 --> 00:33:10.380
You load in your budget, and then what are the two things you need to track? You need to feel really good about tracking. What are the costs as they happen, and what is the progress as it happens, things like the daily logs, etc. So I'd want to have budget costs flowing in directly from credit cards, AP, and payroll at all times as it's getting processed, right? Just straight into the system, super streamlined, no lag happens, gets in there immediately, and then progress. So I'd want wherever my budgeting system lives. I'd want to pull in daily logs. I'd want to pull in the schedule. You can do this through integrations. It's very easy now, or through exports, etc. Boom. So now I have the two
00:33:10.470 --> 00:33:18.660
costs and progress flowing in as it happens. If you don't feel like you have good daily logs or whatever process today, you're not capturing good information.
00:33:19.230 --> 00:34:03.269
You can use the capabilities we have to now to go text the field or call the field. They can just talk to the system, give a quick update. Boom! Now, if I have this flowing in constantly, that's when you can start to build your oversight agents or your reporting agents on top of both of those. Right. So, like every day, agent runs what's over budget, what in the project context signals some sort of financial impact. That's how you keep change orders and variances updated in the system, right? So then you have steps 12341, budget, two costs, three progress, four agents that run the checks. Now you can trust that the budget is updated constantly, and then everything else will flow from that, right?
00:34:00.369 --> 00:34:10.829
Your work will be accurate. Your cost forecast will be accurate, etc. That is what I'm most excited about with adaptive.
00:34:07.559 --> 00:34:18.570
It's just like a clean system that takes everything into account, runs autonomously, make it easy, make it simple. That's what we're doing.
00:34:19.139 --> 00:34:22.550
You heard it here first, everybody. I love it, Matt.
00:34:22.610 --> 00:34:36.139
Thank you so much for jumping on. Always love hearing your perspective, and and you know we're lucky to have you, big guy. Thanks for leading us to the promised land. We have we're lucky to have you too, old Reese. All right, I'll talk to you later. It was good coming back. You bet. We'll see you, dude. Bye bye.
