Welcome to the 23rd episode of our podcast with Chris Kelsey from Cazza!
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Martin: Have you ever thought about starting your own business but you felt, maybe I am too young for this or maybe I am too old for this? Today we have a very young entrepreneur here on vn-parco. Hi, Chris! Who are you and what do you do?
Chris: Hi, I am, I guess you could say an entrepreneur, I am the founder of, previously Appsitude which I sold, and now I am the CEO and Co-founder of Cazza Construction Technologies.
Martin: Tell me about your entrepreneurial journey, so the company that you started before, what were they actually doing and the second question would be how did you grow this company that fast?
Chris: It was an App and Web development company and later we moved on to doing marketing as well. Essentially if someone had an App idea, our team would build it for them and then later on we ended up helping, besides building it we also had a marketer.
In terms of how we grew it, initially what happened was I went on Craigslist at the mid-end of December 2014, and I looked at people posting Ads, sending their App ideas and then I also posted an Ad offering App development services. I did it more as a test just to see if anyone would actually be interested in doing it, like wanting to pay for the service. Then within, I would say around 10 days of messaging the first person, I was able to close my first development contract for US $16,500.
Martin: Wow, cool stuff.
Chris: I got my first contract and what I did was, I had originally spoken with the developer and designer before to have the project to do it, and I managed the project essentially. Over that few month period we ended up having the App out and then we got more contracts as well during that time. But throughout that, every time we got a new deal, I would hire another developer or 2 depending on how big the App was, some of the projects were a lot bigger than others. Over time we just kind of kept expanding and then we had over 60 employees when we were acquired.
Martin: Cool stuff. Chris did you get paid only in cash from your customers or did you negotiate some kind of deal where you had some cash and equity component?
Chris: Later on we began doing an equity component. Initially, I hadn’t really thought about it but then after some of the projects we ended up doing really well, I was like maybe we should have equity as well.
So we started Appsitude accelerator, which actually is like we partner up people that had App ideas and then they would get to work with our team directly in exchange for like a lower… They wouldn’t have to pay as much or sometimes I would cover their entire development cost to work on a project with them.
Martin: Why do you think those customers decided to purchase this web design / app development service from you instead of all the millions of other companies who are basically providing a service in the same segment?
Chris: One of the things I think happened, I mean to put it in perspective with the first client that I got, and I noticed this a lot, a lot of them were very surprised that I was 17. I was 17 when I had started it. A lot of them were surprised to see that a 17 year old was running a company.
Essentially what happened was, to put it in perspective, initially we worked on those first few projects which did well, and then in terms of like getting downloads and everything, some of them did, definitely not all of them. Then, because we established the portfolio and everything, people begun going: “Oh, like you guys, this project which did really well, can you help us with this?” And that is when we actually moved into more like marketing. But I think in terms of why specifically us, I think that when it comes to app development, it has one very big with personal connections; what I mean is if you are the first person they know. That they think this is the guy who does the Apps, they will often go to you. I felt that it helped a lot our business, and then also I felt that, I actually think that my age was a big advantage.
Martin: Because this is not what I would have expected, what does the typical customer look for? Is it more like a 20 year old as well or is it more like a 30 or 40 or 50 year old person?
Chris: It is actually varied. I mean we have had people that, we have worked with like a high school student before and his dad was a lawyer that paid for it. And then we have worked with, I think the oldest person we have worked with is like 80 or 82 or something like that.
Martin: Wow. What type of App did you develop for those guys? Especially for the 80 year old guy?
Chris: One of them was kind of running fitness App for like old people. It was like a group of lawyers from Michigan and they just, they gave us a huge budget for it, like they offered the budget and, we built it and everything and they didn’t even actually have it, like published publicly, they just use it privately with their friends. It made me realize, like I began to realize like I think the Apps are kind of a status symbol for people, just to say that they have their own App, and I think that was the reason why they did it.
Martin: If I am thinking about why somebody would have worked with you, is it more that your App would have been more effective, more beautiful or that you have been cheaper?
Chris: I wouldn’t say cheaper. In the beginning I tried to see if I can compete in that way and I realized that that is not really a great way to usually have a long term business… I think that my goal was more the quality-efficiency route and being able to help give proper guidance.
Not initially, in the beginning it really was just building Apps, and the idea of doing more, like I said the marketing advice and doing actual accelerator came like mid, earlier to mid this year, 2016. In terms of the selling points, I think that the selling point often was, just kind of… I think when the people talk to me and they kind of see what we have done in such a short period of time, they assume… Because the thing is, if you are building an App for someone it is building a business, essentially in all the cases we did it, they would go: “Okay, if you can already build a successful business and you are 17 or 18 or 19, then you probably can help give me good advice with my App”, or that kind of thing.
Martin: If I summarize then it is basically you have identified an untapped demand which was basically on Craigslist, so almost nobody I assume or as I understood was going after this type of demand you did. Second thing is you tried to help them develop an effective App which will fulfill their objectives, and then based on that you had some kind of track record and scaled it from there.
Chris: Yes, and also initially, the thing about Craigslist was, it actually wasn’t very necessarily untapped, there actually was a lot of people posting. I would actually post Ads just to see how many people would message me so if I said I had an App idea and I would get like 50 emails in over like a 3 day period. But the thing that I realized is a lot of them were just bad emails, like there would be I can build your App all over case letters and that’s it. It was really crappy emails.
I remember the first client had gotten he said to me, “You are the first person that actually sent to me a coherent email.” I was actually kind of surprised. I realized, at least with Craigslist at the time the barrier to entry was actually so low, it was what people were sending out that even if you just wrote a normal email, you could stand out.
Martin: Cool stuff, great. Chris, now you have sold your business, why did you sell it?
Chris: I had a side project called The Cazza which I think I said earlier that was kind of really growing on me in terms wanting to do it. So when I had the chance, when I had an offer to sell I decided to do it. I was planning to do it, to stay with it a lot longer but I realized that I really wanted to do Cazza like 100% now. So it just made sense.
Martin: Great. What is Cazza?
Chris: Cazza is a construction technology company that focuses on construction automation. So essentially we are making construction faster, more cost effective and more environmentally friendly.
Martin: What is so unique about this kind of business? Is it some kind of technology game where you have some kind of IP’s so nobody else can compete with you in this kind of segment for cost effectiveness, speed etc.? What is your unique or secret source?
Chris: We are 3D printing houses.
Martin: Yes, but others could do this as well. So the question then is, if you are trying to automate the construction work by 3D printing houses, what keeps others from doing the same what you do, so basically acquiring the same customers and delivering on this construction automation?
Chris: By always having the best technology.
Martin: How do you make sure of that? Are you having some kind of IP or do you have some kind of exclusive technology partnerships?
Chris: Yes to both. I mean from an IP perspective yes, building also from partnering with the right people as well.
Martin: How did you get about this kind of business idea? At what point in time did your entrepreneurial bug bites you again and said: “Chris, I need to do this kind of business.”
Chris: I will give an example, my original goal of Appsitude was to be able to have a company that I could then have money to sell/fund a bigger dream project of mine and I think that, I don’t know how young I got it but I always envisioned myself in like a creator or a builder to some regard.
So what happened was I began realizing we could do a lot of things with this technology, I begun seeing us like building cities and doing a lot of cool things and like building the future, whether building a house or building entire cities and communities and everything in between. That became one of my visions and really kind of passion project I guess you could say that ended up becoming what it is now today.
Martin: Chris, what is the current status of projects that you could deliver on? So could you rebuild the Trump Tower for example?
Chris: Technically right now you can actually build buildings with our technology, but it is not as cost effective yet for buildings. So you can save up to 90% of labor costs for houses up to three storeys. But when you start building buildings, we are not releasing the technology until next year, for actual building.
Martin: Okay. Now the question is, I understand that it saves up to 90% of labor costs, but from my perspective, I would be rather interested in what are the initial installment costs of creating this building and are the total lifetime costs so to speak? And how does it compare to alternative solutions?
Chris: I don’t know a lot of details in the Trump Tower because I have heard of it but I don’t know how tall it is or anything. I mean from a comparative cost perspective, the reason I gave percentage because it varies completely on a case by case basis, because buildings can be built in many different ways. So you are saying can I give a cost example of how much cheaper it is or? Sorry I just want to make sure I understand.
Martin: Sure, what you are telling me is that you are saving x% which is quite high like 90% or so off the labor costs. But labor costs is only one component of the total costs, for example, for initial installment or total cost of ownership. Because if I would be thinking about whether there are several alternatives how I could construct my building.
First I could go to, let’s call it a traditional construction company. They hire some people, put some stones above each other and then there is a house. And then it will continue to live for 30 years or so with some kind of operation cost, etc. Then I can calculate how much are the lifetime costs for this type of building over those 30 years.
Now alternative 2, which is basically Cazza, how much would it cost similar building, I am just getting some kind of ballpark to build the initial building and then how long would it maybe live, would it be living longer, shorter? Because then I would compare the total cost of ownership for a building with traditional means of construction and then with the one of 3D printing.
Chris: Yes, so putting it to perspective we are 3D printing currently with concrete and the concrete mixes that we have are able to cost far less to produce than typical concrete but it is still durable so it is still hurricane proof and everything that you would expect typical concrete to be, besides saving on the material costs as well because the concrete mix and the way that it works with the technology. I mean it would be a typical building for the most part. If you are talking about houses, I prefer to focus on houses right now because we do not really have the technology for buildings until next year. But specifically for houses it is difficult the ability of what a normal concrete house would be.
Martin: Great stuff. Are you currently already in the process of talking to potential customers and partners? Or are you only focusing currently on making the technology work?
Chris: We are launching, we are going to begin to actually selling the technology in December 2016, this year. Mostly we have been talking in terms of forming partnerships with real estate development companies and construction companies that want to acquire the technology. Some of the things that happened was, we are mostly just forming these partnerships right now across the world.
Martin: Why are you trying to sell the technology where you could also try to target the end customers directly? Why did you decide for being a a technology provider and targeting the middle man? And selling technology versus selling houses?
Chris: That is just the market that we want to focus on because we think it is a simpler business model. I mean we could change that maybe. But right now we think it is just easier to focus on it.
Martin: Good stuff. Where do you think Cazza will be heading towards maybe in the next 4-5 years? So what is your vision?
Chris: Our vision definitely is to spread this technology across the globe, just do some cool things with it. I mean, really, even though it is a business (I know it very well financially), for me at least it is more about the impact it has in the world because from an environmentally friendly stand point. For example construction today causes a lot of air pollution and water pollution and there is a lot of construction waste.
This method of construction that we have developed, it eliminates most of that because there is not tons of dust in air and everything, it is just pouring out the concrete and the different materials that are required to build the house. So I am looking forward to seeing, one being the environmental impact that it has in terms of helping the world, and also seeing the structures and buildings and everything that people do with the technology.
Martin: Are you also foreseeing using different materials so instead of concrete you are using for example some kind of other regenerative materials like wood, hanf, maybe even some other kind of more garbage products like plastic or something like this?
Because I have seen several videos on YouTube for example where they take lets the garbage of plastic and press it and then build a house out of it. So do you foresee yourself doing something like this? Because if you have the technology for the 3D printing, would it be also useable for changing the material input for example?
Chris: Yes, we will be doing that. We already are researching new materials and our concrete mix is already like kind of a new material the way that it works, but yes we have been looking at different materials and we have some that we will be announcing. I don’t know when, how soon yet but it is more about passing it from a protocol perspective.
I don’t think in the US people would, I am sure there are exceptions with a lot of people wouldn’t like the idea of building a house made of plastic or recycled materials, so it would be very, kind of more niche specific, at least in the beginning. But the main thing that we care about with the new materials is that the houses are safe to live in, in regards to, if we are not using concrete, we are doing with something like plastic, we need to make sure that it is safe for people to live in. Not necessarily just from a durability stand point but you want to make sure that if it is recycled materials that they are safe materials to actually live in.
Martin: Chris, if I am looking at your prior company, it seems to me that the major customer acquisition channel was Craigslist, what do you see at the major customer acquisition channel for Cazza?
Chris: Just to clarify I don’t think it was just Craigslist, it was Craigslist in the beginning, for the first year which is what got us started and helped a lot throughout the way, but later on it just became from more networking and kind of travelling and then meeting people who would reach out to us because they knew that we were building Apps and we had clients from around the world, just from news articles that happened about us and things like that people would reach out, so it wasn’t just Craigslist.
Our new channel for Cazza, mostly it is just going through our personal network and reaching out to the people that we know, because the thing is through Appsitude, I made friends with a lot of people from all over the world, and some in very high places. So it has allowed us to just kind of show them the technology now and it is just a matter of them doing a few things here and there and then we have it out there.
Martin: Good stuff, Chris. Thank you so much for your time and for sharing your insights and I wish you all the best for the next 18-19 years.
Chris: Thank you Martin, you too.
Martin: Thanks, awesome Chris. Have a great day.
Chris: Ok, sweet.
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