Dedal: accelerating construction industry’s transition

Vlad Chernyshov

Published in

Dedal

11 min readSep 20, 2016

Everything changes…

We have now Facebook, Tesla, Uber, Airbnb…AirPods!

Everything changes, except…construction industry.

What people think about contractors in 2016?

Home improvement is not the most admirable activity out there, right? In 2016 it’s still like this:

OK, why now?

But we are living in a different era. For the first time in history, technology and it’s adoption levels are so high that fundamental shifts in the whole industries, that affect the way people work and getting paid, are possible now.

Uber and Airbnb transformed the supply side much more than they transformed the demand. Those companies did the hard work, and changed people’s behaviour. Hundreds of thousands drivers and hosts enjoy stable and predictable income despite of lower prices:

Also now we have conversational commerce (new iMessage, Messenger, Android instant apps) that can dramatically simplify the way we use services and apps. The time for the construction industry has come.

Happily ever after

We need to accelerate construction industry’s transition to reliable, hassle-free relationships AND make it cheaper. Imagine you can push a button and have a licensed plumber (or electrician or contractor) at you doorstep in under 30 min, who will make a precise general quote (up to x2 cheaper than average) in 15 min for free?

We need to accelerate construction industry’s transition to reliable, hassle-free relationships AND make it cheaper.

There are ~8,000 licensed contractors in San-Francisco alone. Imagine that they all could be requested using an API within a matter of minutes? Given such a platform, you don’t need to rely on personal referrals anymore, because every transaction, every action, every job completed inside a platfrom is being stored and analyzed by AI, which automatically assigns to your job the best closest match. Instantly.

How would that change buildings maintenance? Imagine all kinds of organizations who are responsible for maintenance of every single building in SF like property managers, government, etc. — they just don’t need to have plumbers and electricians on a payroll and now can dramatically decrease expenditures and latency while increasing efficiency and customer service. Contractors get stable workload and enjoy their own schedule. It’s a win-win situation.

AirBnB hosts are having piece of mind while their guests are enjoying fast maintenance. For instance, if there is an urgent fix, guests can request a plumber in under 30 mins using the app, without getting in touch with their host at all, but because the app is location-based, it automatically discovers property location, and notifies and then charges the host after everything’s fixed (of course if that host choosed to opt-in such auto payments). No dealing with toilets, unreliable contractors and angry guests anymore. This will also help vacation rental managers, because they don’t need to have a concierge staff available 24/7.

Let’s take general contractors and other companies. What would managing workforce at construction projects look like? Real estate developers and general contractors don’t have to get speciality contractors on a payroll anymore. They can request as much workforce as they need for their new project (a trade center, a skyscraper, a neighborhood, etc.) on-demand. And scale it just like Amazon scales your EC2 instances.

Obstacles on the way

#1 Current high prices

The average licensed plumber hourly rate in the Bay Area is $100 per hour. Compare it to $25 average US hourly wage.

That doesn’t mean that contractors are greedy. Actually their annual income is pretty like everybody else’s. They just work 30% of their potential workload.

#2 A lot of supply needed

Most people think in order to have under 30 min average contractor arrival time such a platform would need a huge number of tradesmen onboard. Actually every 30 signed up and vetted contractors give us ~3 simultaneously online contractors 24/7, which is enough for 100% availability in the area of ~80 sq.miles. I.e. we need ~100 plumbers onboard to cover entire San-Francisco 24/7. It’s enough to meet the initial demand and then scale.

#3 Existing solutions for hiring contractors “suck” in 7 specific ways

Our story

Falling in love with the industry

Construction industry is the most broken industry in history, it’s huge and it hasn’t changed for literally centuries (in terms of communication, mechanics and social mechanisms). How could I not to fall in love with the industry back then?…This is where the story begins.

I started a full-stack home renovation company in Russia back in 2008, when I was 21. I grew it up to ~$2mln in annual sales and 120+ headcount by 2014. We pioneered a lot of things like pre-fab renovation projects, estimate templates and calculators, we built a transporter-like pipeline for doing home renovation projects from bathroom renovation to full house renovation projects. Usually we had 50–60 such a projects simultaneously. At no extra cost comparing to other companies and general contractors. We created a series of totally free seminars (workshops) for those who do home renovation for the first time or just want to know more. We ran it every 2 weeks and had more than 200 people in the room during each seminar.

Pivot point

But then I realized that we’re going the wrong way. That was not what I dreamed of.

TFW I realized we’re going the wrong way

It took almost eight years to build $2 mln revenue business. You cannot change the industry this way, because typical construction company business model does not scale. It was like a barbershop, but I wanted a company that is designed for growth.

I’ve reminisced one of the religious moments in my life, when I met Jack Dorsey when he was in Russia back in 2010.

Oh wow!!! Jack Dorsey and myself in 2010. You can also see Esther Dyson on the background

That was a time of Twitter’s hyper growth, and I was looking at the man who just changed the way people communicate. This gave me strength to continue overcome countless obstacles on our way.

Back to basics

I decided that we need to cannibalize ourselves and build something completely different and scalable from the scratch. I shutdown the company and returned to coding and experimenting. I have a BS with honors in CS (dropped out of university on my last MS year to start a company), I participated in ACM ICPC 2004 (it’s like Olympic games for developers), I know more than 10 programming languages, and I was able to write a software for everything from microcontrollers to servers since I was 15. Interestingly, but in 2008 I even started a startup called Genome and we even managed to get covered on ReadWriteWeb by Sarah Perez. So that was kinda “back to basics” for me.

Your face when you get covered by Sarah Perez

Revelations

One day back in January, 2016 I requested an Uber, and while riding I was thinking about how to make construction industry cheaper. I asked my Uber driver if he’s glad with his earnings now, and what it was like to be a taxi driver before Uber? He said that despite of the fact that now he earns per mile less than he used to when working on a traditional cab company, but because there is much more rides at Uber, he actually earns more. And suddenly I understood that this is exactly what we did at my previous construction company. We used to pay to our workers per hour much less than they could earn working on their own, but because we had a lot of clients and jobs, our workers used to earn more. Workload is a key to success.

What if?…

And so we started thinking about, well, how do we provide a stable and predictable workload for contractors. Because if we did, prices would be a lot cheaper — up to 50 percent cheaper — and of course the problem of unvetted, incompetent and unreliable contractors will be gone forever. … And so the big question for us was: would it work? Could you have a cheaper prices for a construction jobs cheap enough that it would drive the demand?

Can current solutions get us there?

Unfortunately, current solutions are designed to be like Yahoo catalog for webpages (instead they should be Google for webpages). They do a great job connecting you with some contractor and that’s all. It’s still plain old yellow pages accessed from your iPhone.

Current state-of-the-art in the contruction and home renovation industry

Here comes Dedal

Lots of homeowners, home remodelling enthusiasts, property managers and Airbnb hosts have so many things they need done around the house, and the money is budgeted.

But until now, their only option was to use yellowpages-like middleman services or rely on personal referrals which not always work well, especially when you need an affordable licensed contractor and you need it NOW.

So we created Dedal to offer fast, reliable, hassle-free and cheaper service anyone can use, because it’s very simple.

Dedal offers on demand licensed contractors: plumbers, electricians, handymen and one-click requests on iPhone (Android coming soon). It’s better AND cheaper.

As an Dedal client you’ll get:

Instant location-based dispatching. It means that a contractor arrives to your house in 30–60 min after you hit the request button. And this feature is mostly not for you, it’s for your contractor. Because this allows the Dedal platform to maximize contractor workload and thus minimize prices.
Solid below-the-market pricing model. When using other services, contractor charges you with whatever he or she wants, but when using Dedal you get the same price whatever contractor has been assigned to your job. No negotiations with contractors any more! And it’s cheaper than other solutions.
Only vetted licensed contractors. We want to make skilled trades great again, that’s why we require all contractors to have a valid state license.
Designed for trust. A lot of companies forgot that vetted contractors are no less valuable than customers. It’s a 2-sided marketplace and it’s built on trust. What’s why the platform should be designed for trust and treat both sides equally well. Only a win-win position will lead to success. Dedal implements algorithms and features for building trust between you and a contractor you see for the first time in your life. For instance, you can see on a map all jobs he or she completed within your neighbourhood.
In-app estimates and estimates signing. Estimate is more than just a quote. It contains detailed job description along with quantities and prices per each job.
In-app billing. You pay only after the job is completed, right within the app. No frictions and no cash needed.

Sign-up for Dedal beta here

Our traction so far

…we got 100+ contractors on board in 4 weeks and also rougthly the same amount of customer app installs(of which ~10% became paid customers)

MVP.We already built an MVP (iOS user app, Android partner app, the backend, AWS stack, etc. And it’s fully functional). You may want to sign-up for Dedal beta here http://beta.ded.al.
Team. We’ve managed to get awesome Stanislav Shalunov (co-founder of Open Garden and FireChat) as our advisor.
Traction. We did a soft launch in Novosibirsk, Russia, and got 100+ contractors on board in 4 weeks and also rougthly the same amount of customer app installs(of which ~10% became paid customers) to prove business model.
US traction. And just recently we started getting onboard contractors and customers in the Bay Area and at Martha’s Vineyard and we got 14 licensed contractors inquires and we got 9 customer app installs among early adopters.
International pain.We got inquires from Brazil, India and UK from people who want to bring Dedal there.
Small business. We got a few inquires from small construction business owners telling us that they would like to install Dedal on their employees’ phones to reach more customers.
Positive feedback. We have a big collection of feedback on Dedal, where we were asking two questions: 1- From the scale of 1–10, how likely are you to use this product? 2- From the scale of 1–10, how likely are you to recommend this product to your friends? And we got mostly 7+ for both questions (raw data available upon your request).

Conclusion

If we could climb into a time machine and journey 30 years into the future, and from that vantage look back to today, we’d realize that most of the greatest products running the lives of citizens in 2046 were not invented until after 2016.
Kevin Kelly, Senior Maverick at Wired