Investing in The Future
RedTeam Continues Growth With Its Commercial Construction Software
When Michael Wright started building an Orlando-based commercial construction company with business partners in the 1990s, he was struck by how little the industry used information technology. He had worked as a finance executive for technology, aerospace and consulting firms, and all of them used IT to streamline processes, costs and communication. But in construction, the latest technology still consisted of two-way radios used on job sites.
He started tinkering with an in-house software project that would allow people in the office and in the field at T&G Constructors to follow documents through the system and communicate with each other about them. The project grew into its own company, RedTeam Software, which today employs 85 people, including 40 in Central Florida. RedTeam recently received $5 million in outside funding to expand its reach.
“There was no intent, when we started writing software, to create a product for sale,” said Wright, RedTeam’s CEO. “It was just to create a better experience in managing construction for ourselves. It was really a quality-of-life kind of initiative on our part. It was about handling the real challenges construction contractors face in the industry.
“It was so transfor-mational for us and our business, we thought we should spin this off as a new product. Our mission is simple: helping our construction colleagues have peace of mind.”
As a cloud-based software as a service (SaaS) provider, RedTeam facilitates workflows among all the collaborating parties on commercial construction projects, which are by nature contract-intensive. A single job might involve 40 or 50 subcontractors in trades including plumbing, electrical, asphalt, drywall and other specialties.
“All of these companies are bound by contract documents, so there are a lot of these documents created and managed over the life of the project,” Wright said. “In addition, every project has change orders, which involve contract amendments among all of the contracting parties. Over the life of a substantial project, you could have hundreds of changes that result in thousands of pages of contract changes being produced constantly. One of the core challenges for contractors is keeping those documents organized and making sure they’re accurate. At the end of the day, the quality of your contract documents has a lot to do with how successful you’re going to be as a contractor.”
The software can also help in contract disputes by capturing metadata associated with each document, said Frédéric Guitton, RedTeam’s chief strategy officer. That includes who opened it and when.
“Knowing that is critical because in the case of a dispute — and disputes are common in construction — typically the person who wins is the person who has the most information,” Guitton said. “So passively capturing the maximum amount of information is very important to the platform.”
The software transforms the accountability process and changes the way people interact, Wright said. “On a fundamental level, the platform is tracking behavior. What people do in the context of a construction project matters a lot — and how efficiently they work, and how they comply with the various contracts.”
It also helps inform the decisions of people in the field who otherwise would rely on the finance department to determine how to cut costs or streamline efficiencies. A client company’s chief financial officer pointed out this benefit to Wright.
“This CFO was sharing with me how their project managers are now engaged in managing cash flow on their projects,” he said. “Before, that information was siloed in the accounting department, and they didn’t have enough information to participate in that process.”
Wright had brought in Guitton to help plan the company’s future. Guitton presented him with three options: Stay a mom-and-pop software company and get swallowed up by the market, chase venture capital from a firm that might force the company to take risks outside of its comfort zone, or keep growing organically and look for a strategic partner to bring in cash.
“The third option is a harder route, and that is to be patient and prove you can sell, prove you can retain clients, and find strategic capital,” Guitton said. “That’s the route we chose.”
Central Florida is not a strong market for finding investors, he said. It’s not like Silicon Valley, Boston, New York and Austin, where there’s a natural ecosystem of inventors and investors and “you can pitch an idea in a Starbucks and find
“In Central Florida, you have to actually show you have a viable business and you have to show your ability to execute,” Guitton said. “So we focused on that for 2½ years before actively seeking capital. We got involved in some pitch competitions and activities like that to get our head around the landscape. We knew it was going to take three or four years to get to where we got, and we were comfortable with that. That means we had to run a fairly lean business and be strategic in our approach.”
Guitton spoke with about 225 investment firms before finding the right partner. “I know that’s a staggering number, 225 contacts,” Wright said about Guitton’s estimate. “I will tell you, 224 of them were not the right fit for us or we were not the right fit for them. There is no shortage of investors. In fact, to this day, I get emails just about every single day from investors looking for investments. You have to engage them and find out whether they’re a fit. That’s why we talked to so many people.”
Guitton agreed: “People think it’s easy and it’s not. You have to be clear about who you are as a business, and you have to be clear about what kinds of risks you’re willing to take after the investment comes in. That clarity is critical.”
Wright and Guitton always asked investors for referrals. That’s how they met JettyCove and its founding partner Jamie Nissen.
Guitton recalls the first conversation with the New York-based investor. “The first thing they said when we talked to them was, ‘We cannot afford to lose our investment.’ I remember I hung up from the call and went to Mike and said, ‘I think we’ve found our guy.’ That is critical to us. The No. 1 thing you have to think about when you take an investment is, ‘What do we look like in five years?’ Not the pie-in-the-sky story, not ‘If the stars align,’ but ‘If things don’t go perfectly, do we have a partner who’s going to ride it out with us?’ That’s what you have to manage against. It was not just that he said it, but how he said it. It was genuine. He felt like us. ‘We can’t afford to fail.’”
The fit was good for JettyCove, too, Nissen said. “I think good companies always can find capital, and there are always investors available. I don’t think there are many challenges to finding opportunities. The hardest part is making sure there is a true feeling of partnership between you and the founders of the business you’re investing in.
“I spend my time looking for founders with amazing domain knowledge that have built technology platforms that are mission critical to companies in a specific industry or vertical. RedTeam is exactly that. It was founded by general contractors with unique technical expertise solely focused on building software to improve construction companies’ day-to-day operations.
“This is the reason RedTeam has had so much success and is set up to become a major player in the construction industry. RedTeam’s industry expertise is embedded in the culture of the company and, by nature, their software platform.”
RedTeam is using the investment to expand its reach, Wright said. “It allows us to tell our story to more people. We’ve got a great product, and we’re using it
to build a bigger presence in the market.”
The investment doesn’t change the company’s strategy, just the timeline, Guitton said. “We can do things a lot faster. Speed is critical.”