Unintended Opportunities

If you have read my book, watched my YouTube channel etc..you already know that I believe that AI is a super cycle and that it’s not about applying AI to existing business models but rather creating new business models that have yet to be imagined. This is where the major disruption to the AEC industry will happen. Everything else is a race to the bottom. “I’m going to use AI to respond to RFPs” is not only unimaginative but also pedestrian. The early applications of AI will be pedestrian, and that’s ok. But being prepared what’s next is less important than shaping what’s next.

For some context, when the internet was commercialized, small businesses were uploading their menus, order forms, etc. You would then print the screen and fax them the sheet with your credit card number. The of course the payment rails started being built out and that’s when e-commerce started to really happen. This was during the dot-com and amongst the e-toys, pets.com, etc a little company called Amazon started to sell books online. In essence competing with Barnes and Noble, etc to sell books. Their core infrastructure was mostly in-house with some co-locating of data centers. Oracle had a full time team on-site to help manage and maintain the infrastructure. They built out a massive infrastructure like many in the 90’s as the internet would change everything. It turns out, that there would be a bit of a pause until smart phones hit. Consumers were no longer tethered to their Gateway computer connected to their TV (remember their cow boxes?). What Amazon figured out was that they had built out a superior cloud platform that could be rented out to others to defer their infrastructure costs. Next thing you know, AWS became a juggernaut.

This is a great example of new business models from the unintended consequences of technology shifts.

Another one is in cybersecurity. My friend and fellow GaTech colleague Chris Klaus saw that the internet was going to be prone to security issues and formed ISS. This was the early days of the internet. They took the company public and shortly thereafter were purchased by IBM. During that time cybersecurity was considered almost a feature of enterprise software and networking. Never was it imagined that between malware and cybercrime that it would be its own category. Creating unicorns like Crowdstrike, Zscaler and many more. That’s not even counting privacy companies like my favorite Onetrust (if you have been to my Summit, you know why).

So as we look at AI and its applications to the AEC industry, there will be unintended consequences. Many of these will be massive, and all will create opportunities for startup founders to build unicorn businesses. Some of these startups may likely come from the innovation departments of AEC firms, they will unlikely come from the incumbent software companies like Autodesk, Bentley, Procore and such.

How do you uncover these unintended opportunities?

Train yourself and your teams on how to be opportunity scouts.

Create a deep understanding of how things work today, then contemplate moving upstream.
You are a civil engineer that typically works through an architect to a real estate developer? Spend more time directly with the developer to understand what they need. I love asking my “magic wand” question. If you could wave a magic wand, what would ask for to change your business and remove obstacles. What if instead of being a civil engineering firm, you became a real estate developer?

Develop a deep understanding of the value stack in the market. If you are designing a water treatment plant, understand the economics of the entire process from reservoir to the tap. Dig deep into all the equipment manufacturers and get an understanding of where the costs and margins of the project are heading.  What if you designed, built and managed the water treatment plant and took a percentage of the water bill from the owner? Then maybe develop applications that consume more water.  Telecom providers partnered with streaming companies. Why? More streaming meant more data usage. More data usage meant more revenue.

Create a customer experience. We are in a time where most AEC firms can’t hire enough people. New graduates and an aging talent pool is creating massive problems. Designing an intentional customer experience can create an ability to leverage your existing resources in their best fit areas and bring in non-industry talent to fill in gaps. When I was in the telecom business, we had layers of specialized talent. The pervasive seller-doer model of AEC would have never worked. Why? The internet was new and the talent didn’t exist. We were inventing new business processes, products and careers.

Capital is the ultimate scaler. I was consulting for a telecom data company. They wanted to sell data to retailers for them to understand cell phone users entering and exiting their properties using a geofence anonymously. They could determine average time being spent at say Home Depot. How much traffic etc? They wanted to package the data and sell it to retailers. My question was that once you sell it to everyone, its value diminishes. Instead, go start a hedge fund, have proprietary data that you can trade against. Not all technology should be sold as technology.

Many of the above examples created entirely new industries. Before the internet was there a big career in UX?

When is the last time the AEC created entirely new industries and careers? The last one I can think of was from my professor and mentor George Sowers. He innovated/invented geotechnical engineering. In the meantime every other industry has created new careers and businesses.

So while you continue to study changes in the market, consider the unintended opportunities. Any founder that is merely trying to digitize a process will likely fail. AI can do that. It’s the ideas that require imagination that will matter.