With Matrak, Australia’s Hodgkins Brothers are poised to reshape global construction.
Construction supply chains are multi-headed Hydras that have driven many a job site supervisor to wonder why cave dwellers ever stepped out of the shade to build things.
It was that sense of frustration that drove Brett Hodgkins to build his own solution for his family’s window installation business.
“We’d have all of our guys working in crews of five or six with a crane installing windows. Everyone would have to stop and look around for the next panel when things weren't properly organised on site. Materials would get delivered to the wrong floor or were damaged and weren't reordered, or just not included in the delivery. These communication issues were just really adding up. It was a huge waste of time on site,” Brett said.
“Going back about six years ago I built an app, just for myself, to help keep track of all of our deliveries and materials as they came in, essentially recording every window when it arrived on site. Taking photos of them, recording where we were storing them onsite, and basically just keeping records for myself. This quite quickly led to all the other installers we were working with basically calling me up every single day because no one else had any of this information.”
That was in 2013. Today, Brett’s materials tracking app is the cornerstone of Matrak, the company he founded with his brother Shane. Arguably the hottest startup in the industry, in July of this year the Melbourne-based firm snatched up $3 million in funding, although they were seeking only $500,000.
Last year’s seed round netted the upstart $765,000, and a bevy of excited investors — including angels, venture cap groups, and customers — have loudly signaled their support for technology that is designed to lift the global construction industry to new heights of efficiency and profitability.
Initially built for subcontractors, the Matrak workflow management system gives construction firms an easy, intuitive way to track job materials, upload building drawings, generate reports, and update job progress.
Shane had been working in the window installation industry for years when the app began attracting attention amongst tradespeople. “That was one of the things that spoke to many customers,” Shane said. “There was a realisation that this was something that the industry seemed to be missing. But then I think once Brett started speaking to people, I don't think he had a real idea of what the scale of the problem really was.
“One of the interesting data points we got from the first builders that we spoke to about the system was the idea that the cranes that they used were sometimes costing many tens of thousands of dollars a day, and so if there were missed deliveries because of gaps in communication, it was costing them crazy amounts of money,” Brett explained.
“That was just something people lived with because they didn't know how to solve it. It was to the extent where a lot of suppliers we worked with would be working on jobs not knowing if they were going to make money or not because they historically had no visibility of how work was done. People lived with the idea that they could do a job and if the end of that job, even if you do everything right you might lose money. As soon as we started hearing about things like that we actually realised, ‘OMG, we really have to do this!’ It turned out so much bigger than we expected.”
Once word of the app spread amongst local contractors, it didn’t take long for a major supplier to reach out to Brett and Shane for help to solve the same problem: poor communication and lax materials tracking. “Then, Grocon, who was a builder on that facility, caught wind of the app. We sat down with them and they said, ‘We want something like this for every single trade all the time,’” Brett said.
The timing couldn’t have been better.
“We just happened to be involved in this supply chain with windows,” Shane added. “In Australia we procure 80 per cent of our windows from China, and that meant the communications problems on the building side were manifesting with overseas procurement and there were language barriers involved. That was one of the problems we set out to solve straight away.”
Of course, the Matrak app features built-in translation features. “That’s something a customer asked us to build. In Australia we punch above our weight in terms of procuring materials from overseas,” Shane said. “You really do have an acute awareness of the multicultural nature of every building that you’re working on, and that’s hugely beneficial.”
Chinese manufacturers are embracing Matrak heartily. Shane has spent several months nurturing key relationships and strengthening the bonds between manufacturers in China and customers at home.
“People often ask us, ‘Why doesn't a solution like this already exist?’” Brett said. With job sites bringing multiple companies and tradespeople together on a single short-term job, there didn’t seem to be much sense in rolling out a system to all the stakeholders involved only to repeat the process for a new set of stakeholders in the next project. “Until recently there were never more than a handful of people on any of these projects that had a computer during the day. You just couldn't give a tech solution like the ones you're seeing now 15 years ago.”
“We took the understandable risk of potential customers saying, ‘We've got this $30 million project and we're going to rely on two kids working out of their bedroom.’ It was a difficult thing to sell. It was obviously something that we were willing to do.”
Matrak’s investor list includes lead investor and seed funder Simon Yencken, Superseed Ventures, modular construction innovators Hickory Group International, and the Aussie VC Our Innovation Fund.
When asked how Matrak differed from other investments at the seed stage, Yencken, the former chair of Aconex, replied, “The clarity of the vision and mission of Matrak is refreshing, compared to other similar stage companies. Matrak's mission to become the leading platform for tracking logistics and project progress, is simple and has been unwavering. There is an air of immediacy that is part of the Matrak story. It is easy and quick to upload plans and get going on a project. The project participants see an immediate benefit in speeding up project timelines, reducing errors and rework and saving money. Matrak quickly realized a 'product market fit' — something that has commonly taken other companies much longer.
“Generally, I would say that the overwhelming enthusiasm for Matrak by customers and investors alike is unusual and quite exciting.”
“The venture scene in Australia sets a pretty high bar,” Shane mused. “When we first started we had none of those contacts at all. We intentionally came up with a design that would be useful for people, and then we started taking it to customers. At every step of the way people would get really excited about what we were doing so we knew that we had a good thing. … The virality effect is a business model we haven't seen a lot of in this industry.”
To keep early momentum going, the brothers would switch off on jobs; when Brett needed to work on the application, Shane would work full time to support his brother, and vice versa. “One thing that really kept this going was knowing that regardless if either of us wanted to do it, there was no way the construction industry wouldn’t need to solve these problems. We thought someone should be doing this,” Brett recalled. “Six years have passed, and we don't see any people solving these problems in a meaningful way … it’s honestly quite shocking to us.”
Necessity dictated that to be widely adopted, Matrak’s user interface had to be as easy as possible for everyone on the job site to use. “We asked ourselves, ‘What if we built it in such a way that users can just get up and start using it themselves without us having to hand-hold?’ We didn't have any operational costs or anything at the time, and that meant if we built it to a point and then decided that we needed a break, in theory customers could start using the system and start getting value without us having to do anything,” he said.
“That was our last ditch effort to get the system in place. We were really lucky that around that time we managed to get our first paying customer, and then a few months later we got in with a significant builder in Australia, started getting revenue and then colleagues come out of the blue asking to invest. And that's when we started going after proper investors to try to build and onboard other things.”
Shane pointed to positive early feedback that helped the investment community build confidence in the venture. “One thing I think they liked about us was we didn’t come in with a really strong background in construction, so we weren’t telling them how to run their businesses. We were taking it on as a research exercise to find what it was that they wanted, and trying to implement that. That’s the No. 1 thing that’s led to all our features.”
What builds investor confidence in a startup whose focus is visibility and clear communication? Shane has the answer. “One of the key things we learned early on was to treat investors and potential investors like customers, and really make sure that we’re listening to what they want and keeping that communication really strong. Every single month we send emails to anyone who’s ever expressed interest in us, building those relationships over time is really important to get that initial rounds of funding before you have enough traction to really prove yourself.”
As the brothers Hodgkins focus on scaling Matrak in advance of a round of Series A funding, they are exploring their market fit in Europe and the United States. As part of the Austrade Landing Pad program, the brothers will spend three months in Shanghai, introducing the Matrak solution to manufacturers exporting construction materials to Europe with the hope of impacting new markets.
What happens next? “Lots of growth,” Shane laughed.