Podcast episode 164 transcription

​Peter Beaudoin Hosts Mike Bignold

Listen to episode 164 of the Podcast 
​[00:00:00] Peter Beaudoin: Thanks Al. Hi, my name is Peter Beaudoin and I'll be your host of today's Rainforest Podcast. Today's guest is Mike Bignold, the CEO and founder of Cost Certified a Calgary based software company that has turned the construction estimate process into an e-commerce buying experience. So, firstly, Mike, welcome to the show.
[00:00:19] Mike Bignold: Thank you very much for having me.
[00:00:22] Peter Beaudoin: So let's start off by tell us a little bit about Cost Certified and what problem are you looking to solve?
[00:00:28] Mike Bignold: So Cost Certified, primarily the biggest problem that we solve and the biggest benefit that we provide is we give contractors the ability to give homeowners a realtime interactive buying experience.
So we're turning the estimate. Into a point of sale. So we're, front-loading all the data needed so that the consumer, for example, could upgrade their countertop from quartz to, or, from laminate to quartz or from quartz to granite. they could add or remove the bathroom from the scope of their innovation, so that they could afford it better.
And everything that comes with the bathroom, you know, comes out. Add or remove a fireplace. So things like that, so that customer can see the change in the price instantly. so really turning the estimate into more of a quote, point of sale, a configurable quote.
[00:01:15] Peter Beaudoin: Okay, well, and it was, I'd mentioned this to you before the call that like, I'm actually doing a bathroom renovation now and getting those quotes and feeling the inefficiencies of the overall process and having to go to Home Depot, take pictures of the unit and get the product number, putting it into Google and sending it off.
So it's quite an experience and it's quite a workload. I can see inefficiencies in the process. So how do you measure efficiency in this process? Because when you look at it from a contractor's perspectives, there's improvement from a customer's buying experience, like where do you see the biggest benefit in that process?
well, right now, like you said, the process is a miserable, it's miserable for everybody. It's miserable for the homeowner. It's miserable for the general contractor and it's miserable for the subcontractors. So the whole. The whole cycle is miserable for everybody. even the vendors, you know, the vendors are miserable about it too.
[00:02:08] Mike Bignold: So, so we're trying to solve the problem. We started out solving the problem primarily for the general contractor, which ended up solving a lot of problems for the consumer and ended up solving, becoming a problem we can really solve for the subcontractors and the vendors as well. So. there's a lot of risk in construction.
and so, one of the happy accidents of building this configurable tool with all this data, front loaded is that we're able to de-risk the construction workflow. and so we're able to build a system that is, you can trust the system instead of having to trust your contractor. So, that's one of the biggest benefits that we've found through that system.
[00:02:47] Mike Bignold: If you're going to make a contractor use technology, it can't just be a little bit better. It has to be a lot better. So we really have to make the contractor's life easier. and so, you know, you're talking about efficiency. we can drop the time that a contractor takes for doing a quote from four hours to five minutes.
So, it makes it a lot more accessible all with all those upgrades and options already baked in. So. so in terms of efficiency, that's a really big focus.
[00:03:16] Peter Beaudoin: So when the, the contractor comes to your home, is he sort of working with a tablet and just taking stuff off on the tablet? Is that the idea or is he going back and then working from his desktop at home? When you say real time, it really is there when he's in the home, is that it he's able to quote right there?
[00:03:32] Mike Bignold: Ya, and it depends on their process. I mean, it works for different contractors, no matter how they like to do it, they can bring a tablet. It basically reduces a really complex estimate. It could be a new custom home.
It could be a whole house renovation. It could be just a paint job. And it reduces all of those, quotes into just a step-by-step wizard, where the contractor just needs to ask questions and they could hire. There, you know, their son or daughter to do the estimate. They could hire someone who knows nothing about construction, but maybe is really, really good at sales to do it because all they need to do is take some measurements and answer some questions.
[00:04:09] Peter Beaudoin: Yeah. So I I'd looked online and I see that you have a demo available for the end customers, right. Even for the contractors, et cetera. So users are able now to go online and see how it works. They sign up for a demo and they'll see the entire process end to end is that correct?
[00:04:25] Mike Bignold: Yeah. Yeah. We've got a really stable product.
We've got,hundreds of customers and, yeah, we're growing at about 26% every month. So, definitely. Yeah. If you, if you're interested, if you're a contractor or subcontractor, give us a call.
Yeah. And where are you available now? Obviously? Cause I I'd seen you. Are you international yet?
We are. Yeah, we're most of our, most of our contractors are in the U S about 80%, probably about 15% Canada and 5% rest of the world.
So UK Portugal, Australia, South Africa, India, Dubai, Singapore.
[00:05:02] Peter Beaudoin: I want to explore that a bit. So just to understand the ecosystem that you have, because when you, you obviously have the contractor and then who it's a, they're a B to C sale, but they're also going into the suppliers. Correct. So you're interconnected with all of the suppliers as well?
[00:05:18] Mike Bignold: We're working on that. So right now, when a contractor gets onboarded, we help them onboard their suppliers as well. So it helps us build out our network. So we get a bit of a network effect, by bringing on our contractors, cause we get their subcontractors, we get their vendors and suppliers. Right now, we're working out some deals with some vendors so that we can have some built-in finishing items and materials items that are shippable that get delivered to site.
The contractor can click to order and they get delivered just in time for installation. So that's what we're working on now.
[00:05:50] Peter Beaudoin: Oh, goodness. If you can get that, given all the supply constraints, that's probably that's ideal right now.
[00:05:56] Mike Bignold: Yeah, definitely. So imagine as a consumer, you know, you can choose the faucet you want, what finishes you want on the faucet. What, countertop you want, what tile backsplash you want, what floor you want and your choice, the contractor, all they need to do is mark it in progress, and then put it in the schedule. And then the item gets delivered to site just in time for them to install it.
[00:06:18] Peter Beaudoin: Wonderful. I just want to know a little bit more about how you were founded and built up. So I guess I see that you were founded in 2016 and you went through the Platform program and as well, I believe the Y Combinator program. So could you tell me a little bit about your, your sort of growth, how you've been growing and, and some of the steps you've taken over the years.
[00:06:39] Mike Bignold: Sure. Well, part of the reason that that we've been able to solve this problem, I think is because my experiences in business and contracting and coding, it's like this Venn diagram that doesn't overlap very often. So that's sort of been my background and my experience. And part of that was that I ran a contracting company up until about 2018.
So in 2016, I had decided that. And I had built this software basically for myself. So I was scratching my own itch at that time. And I decided in about 2016 that I wanted to, you know, spin it off into its own business, but I hadn't sold my company yet. So in about 2018, I had wound down my company and then I went, full-time into Cost Certified and I started, basically, I built it from scratch again.
I just rebuilt it so that it was more scalable and more applicable to many different contractors and not just myself. And then we did a Platform Calgary in September, 2019. So by then we had sort of mostly rebuilt it. And we're starting to think about how to turn it into an actual business. We had some really great early customers locally in Calgary that used it every day, all day long.
they were great beta partners. They gave us feedback every single day. And we just spent, you know, basically two years iterating, listening and iterating, listening and iterating. And then in, only in the beginning of 2021, did we really start selling subscriptions? So in, in March, 2021, we actually started selling subscriptions.
[00:08:04] Mike Bignold: So it wasn't really until last year that we started growing.
[00:08:08] Peter Beaudoin: Okay. And so that's, it's a SAS model. So it's a software as a service and you, you then charge a monthly fee, something like this, is that correct?
[00:08:17] Mike Bignold: Ya, right now we're completely SAS. So right now we're charging based on subscriptions, we've already launched a financing, so, so contractors can get financing for their business.
we're launching payments and consumer financing and a, an insurance product. So this year, by the end of the year, subscriptions should be still most of the revenue, but by the end of next year, subscriptions are almost going to be a foot note.
[00:08:45] Peter Beaudoin: You tell me a bit about the contractor financing? Cause that that's interesting. I mean, that's, in a way that's a side element, but very integral to the component. So how does that work?
[00:08:54] Mike Bignold: Yeah. Good question. So the primary process that we're trying to do is we're trying to become an escrow service for the construction project. So what would happen is that, you know, say there, you know, a customer has accepted a project, we're building there, you know, we're doing a renovation for them.
So then the GC sent them the quote, they accepted it. The GC has. You know, maybe 10 subcontractors on the job. So this the subcontractors say the plumber would then say, okay, they would mark off their items as complete. So they'd have it set of items, you know, install the sink, install the tub, install the faucet.
So they would check off those items. One by one, as they completed, then it would go to the general contractor. They would have their, they would do their job, which is quality control. So then they say, oh yeah, you're done or no, not so fast. And then the check mark goes to the consumer and the consumer gets their checkmark.
And then when the consumer checks they're there, that they're satisfied, the money goes directly to the plumber. So instead of going to the GC and lump sums or the GC, you're hoping the GC then writes 10 checks to their subcontractors. The money goes directly to the plumber. So the GC doesn't have admin to take care of the plumber gets paid and every subcontractor will tell you a story about when they, they weren't paid on a job.
[00:10:07] Peter Beaudoin: Slow payment, it's the kiss of death in business.
[00:10:10] Mike Bignold: Even no payment. Oh goodness, goodness. All the time. every single one will have a story for you. And then, and then the consumer, and then all three, all parties are secure that the consumer is going to pay as well. So it's all, it's a secure process where you can trust the process instead of trusting your contractor.
That's the most important thing? the, the objection we hear from that is that the contractors then don't have these lump sums to use for marketing and use for, hiring a receptionist or whatever it might be, which they really shouldn't be using the deposits to pay for. I mean, that is really almost not their money.
So they shouldn't be using that for marketing or for whatever they're doing. So what we do is we've given them we've launched Cost Certified Capital, which allows them to get financing so they can get financing for their business. They can, they can pay for the receptionist for their marketing, for growth, for whatever they need in a legitimate way without using the deposits for the job.
So that's, that's sort of the purpose behind Cost Certified Capital. And we wanted that launch before we launched the escrow service.
[00:11:13] Peter Beaudoin: Okay. And then for branding. Cause when I think of this. If I'm a, if I'm a shopper now in the market, if I go to a contractor, I want to know, Hey, are you powered by Cost Certified as an example. I mean, what's your branding strategy then? Are you trying to get the Cost Certified brand out front to go look, these are the contractors we support. How does that work?
[00:11:35] Mike Bignold: That's exactly right. And that's actually how, how the name Cost Certified started is that we wanted contractors to be cost certified. You know, we wanted them, it's like a certification for them.
So we really believe that the consumers in the market are going to demand that their project is done through Cost Certified, because it's really the only way that they can be sure. That they're safe because the last thing they want is to pay full price and then to have liens on their house, which happens all the time and Cost Certified prevents that.
So Cost Certified eliminates that danger. The, we also are building in insurance, so every job is going to be insured and protected. They know that the subcontractors on the job are going to get paid. and the best subcontractors are also going to demand to only do work through Cost Certified. And we came through this realization when, you know, we were renting a house on Airbnb and we knew a friend who was renting a house and we thought, well, let's just, you know, let's do a deal outside of Airbnb.
just to save a little bit money, you know, cash deal. And he said, no. And he said, no, because he wanted to be protected. being in the Airbnb ecosystem. And that really clicked something for me, where I realized that consumers in construction are going to be the same way there. They're just not going to want to do a project outside of Cost Certified.
[00:12:53] Mike Bignold: And actually we're already seeing that we're already seeing that customers, once they receive a Cost Certified contract or an estimate from Cost Certified a quote, the, they are much more likely to book that even when it's a little bit more expensive than a quote from a contractor that doesn't use Cost Certified.
[00:13:10] Peter Beaudoin: Yeah, well, absolutely. I can see where the peace of mind you're providing peace of mind, because in most instances you always hear of contractors that do a great job, but are they always doing a great job, but here you have, you know, you are ensuring all your, your processes are protecting the buyer from that.
So that's, that's ideal. I understand that you're looking to raise some funds. Can you tell us a little bit about the raise and what will you be using the funds for?
[00:13:36] Mike Bignold: Sure. Yeah, we, we did, we did a pretty significant raise in September. the largest seed round in Alberta history, I believe, for tech and we are working on doing our next raise a series "A" at some point in the coming year for us, our growth is pretty much almost a hundred percent efficient.
So when we grow our sales and marketing is nearly paid for, immediately and by the sale, by the cashflow from the sale. So our growth is almost self-sufficient. and by, you know, may and June, may, June, July timeframe. We want it to be more than a hundred percent efficient. So really for the, for the funds, it's going to fund product growth.
So we, we have almost infinite options for product growth. I mean, there's, there's just so many options, that we can build into maximize revenue per customer. we can be a sort of a business in a box for contractors and a lot of other service type companies. So, so that's really what we want the money for is growth and marketing, but also for product growth.
So we want to build a product and we want to make sure that our existing products are very well-maintained and always improving.
[00:14:50] Peter Beaudoin: So just to clarify, cause I, I can understand where you've gone into the financing and the escrow, and you've got all this process. So when you say product growth, what product are you describing, I just want to clarify?
[00:15:00] Mike Bignold: Well, we're building new products all the time. So, probably the next product that we want the funding for primarily is for consumer financing. So for construction financing. So Cost Certified really has a really unique advantage when it comes to de-risking network flow. And that gives us a huge opportunity with consumer construction financing.
That's different from the financing to the contractor, this is financing the consumer so that they can pay for their job. So instead of saying, You know, instead of having our upgrade options, that's show, you know, add $2,000 for quartz countertop, it's going to say, add $20 a month, you know? And so then they would pay, you know, an add to their monthly payment.
And so construction financing is really expensive. Typically, you know, private financing you're at 15 to 25%, you might as well put it on a credit card. Banks will have to send someone to site. So banks are reluctant to, to offer construction financing. So because they have to send someone to site to check on the contractors and see what the stage is that those are sort of some of the problems that we eliminate with Cost Certified, which makes our financing much more viable.
we only really need to underwrite the consumer and their credit worthiness.
[00:16:10] Peter Beaudoin: How many people are you guys now, Mike? I mean, and, and how, how, you know, over the next year, how much are you growing?
[00:16:16] Mike Bignold: Yeah, we're 57 people now over that, by the end of the year, we want to have a hundred people in Calgary and a hundred people.
we're opening another office. And so we want to have a hundred people at the other office as well.
[00:16:27] Peter Beaudoin: Great. Is that in Canada? You're opening that office or in the U S cause you said that's your big, one of your biggest markets? So
[00:16:33] Mike Bignold: it is, yeah. And we have some remote workers in the us, but the office is actually in Cape town, South Africa.
[00:16:39] Peter Beaudoin: That's where all your backend processing is done?
no it's done. we're on we're all in the cloud or are, but, we're building a sales apparatus. We're basically duplicating our office here, there, and allow us to blow our unit economics out of the water. There's a really great latent talent pool there, and that we're looking to tap into.
[00:16:56] Mike Bignold: So don't tell anyone, but that's our secret.
[00:16:59] Peter Beaudoin: Okay. It's only between you and I ended the rainforest guests or listeners. So I guess let's, let's look forward. I mean, you're growing and, and, you know, in 24 months, right after your successful raise, you've got to, you know, you get to another, a hundred people by the end of the year, where are you going to be in two or three years?
What's that going to look like?
[00:17:16] Mike Bignold: Well, you know, we want to have a lot of our products built out. We want to have a marketplace. We want to have. Like network effects. We want to maximize revenue per customer. We want to have net revenue retention, you know, like 130% net revenue retention in three years.
You know, we won't still want to be growing at a really big, good tick. Maybe we go public, in five years, this is a massive, massive market. It's just, it's, it's just almost endless. It just there's so many opportunities to not to grow to different verticals, you know, integrating vendors and suppliers being like an ad network for materials advertising directly to consumers.
So having a consumers come in and be able to estimate themselves. We've got lots of cool integrations, like with 3d rendering tool, we just launched it with Sidreo. So we just launched us a tool that you can design your own house and then click a button. And it turns it into a quote with Cost Certified just instantly.
so we're, there's so many connections and so many products that we can build. So in three years, you know, we want to own the market.
[00:18:21] Peter Beaudoin: What do you see the hardest part about growing? Cause you guys, you know, if you're running 26% month on month, you said, right, this is significant growth. You've got to sort of ride this tiger.
So what's the hardest part about your growth trajectory?
[00:18:33] Mike Bignold: Yeah. Well, it never gets easier. So every month it's never, it's never like, yo you've reached the stage where you can sit back, it's like, it's the next problem? And things are, you know, the office is bursting at the seams and there's, there's, it's like a game of whack-a-mole.
So we'll, and, and especially earlier on, you know, when we were building out this machine, it's like, you know, we were doing inbound and then inbound crashed. And then we had to, you know, turn on a dime and build our outbound team. And, and then it's like training and suddenly we're doing batches of like six people at a time.
We're hiring six people every week and it's like, you know, what's working, what's not working. And, and then it's like the proportion of customer success. Cause we have a really significant onboarding process. So we have a, a, a really great onboarding team. And so, but it's expensive and it's time consuming and it's and how do we, how do we weigh that in?
And are we, are we getting enough money to pay for that? cause that's part of our efficiency and then what's the proportion of, of those people to our. SDRs versus AEs and the portions never. Right.
[00:19:32] Peter Beaudoin: Sorry, what's an SDR. And AE?
[00:19:34] Mike Bignold: SDR is a sales development rep. So they are doing, outbound, calls, emails, connecting with contractors, our AEs, our account executives.
So they're our salespeople. They, they basically do demos and they sell, and then our CS as our customer success, and they do the onboarding, they do renewals. They make sure that our customers are booking jobs right away. So that, so that's our, that's our goal. And so we never know exactly what the proportion is, you know, at the beginning, what the proportion was of each person.
So we would get bottlenecks wherever, you know, there'd always be a bottleneck somewhere. So it's a game of whack-a-mole.
[00:20:11] Peter Beaudoin: Yeah. So you're obviously busy. You've been at this for a while. What do you do to relax, Mike? I mean, what do you do to take your mind off all of these opportunities?
[00:20:21] Mike Bignold: Oh, not much these days, to be honest.
No. Yeah. A little whiskey after work sometimes.
[00:20:33] Peter Beaudoin: Oh, well, that's good. Well, if you're growing it through these growth rates, you've got to be on top of it. So, no, it's great. It's great talking to you about this. So just a question. If listeners want to know more about Cost Certified, what should they do?
[00:20:45] Mike Bignold: Well, you can find us on our website. the website is in the process of being demolished and rebuilt. So don't judge us too harshly on that, but, yeah, they go ahead and find us, sorry, you can hear, can you hear that? The bell?
[00:20:56] Peter Beaudoin: It's okay. Yeah.
[00:20:57] Mike Bignold: They're making sales here, so they ring the bell. Yeah. Give us a call. They can reach us on online. If there's a, there's a number there.
They can fill in their information. Yeah. If you're a contractor you need to use Cost Certified.
[00:21:08] Peter Beaudoin: Okay. Well, Mike, I do want to say thanks for your time today. Yeah. I look forward to hearing more about your growth in the coming months and years.
[00:21:16] Mike Bignold: Awesome. Thanks so much, Peter. Appreciate it.
[00:21:19] Peter Beaudoin: So if you liked the episode, please subscribe to the podcast and thanks for listening.