Bootstrapped with Zebel

Robert Zimmerman: Welcome everyone. We're back at the ConTech Exec Podcast. I am here today with Hamid Hajjan, and he's got a great little company called Zebel I guess. Is Zeebel? Zabel. Zabel,

Hamid Hajian: You got it right first time. It's Zebel yes.

Robert Zimmerman: okay, very good. I was trying to get it right. I have trouble sometimes pronouncing. There's a lot of different names, different spellings. so I do have trouble with that, but today I think I'm getting that one right. so It's not really for me to tell your story, Hamid, because you've got a good one. So I want you to just kind of first off, give us a little background on how you decided to start Zebel and and kind of your y your roots, basically.

Hamid Hajian: Sure. So first about a little bit about my background. I grew up in a family of people in construction. My dad is a retired developer slash G C, also his uncles and throughout my whole childhood I just grew up going to the job site with my dad and at some point started helping him. and that kind of steered me into to this industry. And worked for him for a while and then worked for a couple of companies and in my most recent role before starting Zabel I joined a large multifamily G C slash developer here in the Bay Area called Western National Group. They build a lot of multifamily projects throughout California and I was hired as part of their pre construction team. And that's where I noticed a problem with the estimating process and I looked for a solution and off the shelf, couldn't find anything, and I decided to build a spreadsheet for it, just like many other tools.

Robert Zimmerman: Yeah. Yeah. This story yeah, I know. I just wanted to I wanted something off the shelf but nothing existed. Yeah.

Hamid Hajian: Yes, yeah, exactly. And and and I built a spreadsheet and that spreadsheet turned into a more complex spreadsheet and like got more and more fancy over time. And those couple of years were basically the like the the initial years of R and D behind what is now Zipel. And and at some point I decided to turn it into a company and that was seven years ago. And now we work with A lot of developers and GCs of different sizes across the country, also up in Canada, and we just expanded into South America.

Robert Zimmerman: Well, that's fantastic. Now, rumor has it that you bootstrap this whole thing, never took any investment money. That is no easy task, in the in the world of software. Kind of give me a little background on that. What w you just said, I'm grinding it out, you know, that that's that's what it was?

Hamid Hajian: Yeah, I didn't take any V C money. I I did take some little money from friends and family here and there, that that helped us and supported us along the way. And but No no big money. We never had like a big check coming in or big question in the bank. no no VC money whatsoever. And yeah, that that was a very difficult path. but now I'm I'm happy now that we have turned the corner and

Robert Zimmerman: Sure.

Hamid Hajian: we are a profitable company now and we are now in much better position because we have control and generally speaking it makes a big difference when you raise big capital and versus just bootstrapping because when you're just bootstrapping your only concern is what do my customers want? What do they need so that I can just build that and deliver it to them the way they need it and so that that's the way you stay competitive. But as soon as you receive a a big check, now you have a another big stakeholder which is the institutional investor. that you you have to, you know, be you know, answerable to And that changes some of the the calculus in your decision making. It shows up in at different stages of company building, from the way you hire or fire people, the way you even build your c your customer or your product, the way you charge your customers, how much you increase the cost, because now you need to show a big return on investment for that institutional investor. Once you take it out of the equation, which is very difficult to do, but thankfully we we went through that. Now you have a lot more freedom and you you can afford having a much better relationship with your customers because you do not have that big stakeholder.

Robert Zimmerman: That's an interesting interesting way to to approach it. And I and I I somewhat agree if you stop and think about it. they say the was necessity is the mother of all invention. And a lot of times I feel like we've get into a situation where we're not as innovative when we've got maybe too much money in our pocket, you know? We might

Hamid Hajian: Mm-hmm.

Robert Zimmerman: be able to get a little complacent. I'm not saying that everybody does that, but I'm just saying that sometimes when we've got a little bit too much money going in, it doesn't necessarily drive the innovation or drive the product. to be better. it certainly drives you know, maybe the marketing company to get it out there so we can get a little bit more ROI, get some more users, but doesn't necessarily make the product better. So let's talk a little bit though about the product of kind of what Zebel is is doing for the for the industry itself.

Hamid Hajian: Sure. So Zabel helps GCs and developers build more estimates with the same team. That's kind of high level what it does. How does it do it? I would break break it down into three different pieces. By standardizing their data, automating their workflow, and making their entire team more productive. And everything it starts with data. We help people leverage all of the data that is being locked up in a million spreadsheets in a shared drive or in SharePoint or whatever it's it's say it's collecting dust. And and then every now and then someone goes into the archives and opens it up and finds it's a particular cell in a tab that they needed at that time. But they grab it, they could make a copy of it and paste it into another spreadsheet. And they just keep piling up all of these spreadsheets. And what we Do we turn all of those spreadsheet data into an institutional knowledge organized in a database on the web accessible to the entire team? And that's the first step. And that will fuel a lot of automation of their workflows specifically for pre-construction and estimating. Make it a lot easier for people to create estimates from concept all the way to GMP because everyone is now up. Operating on organized data. They have access to that organized data. They can automate now, they can automate the workflows. And that's how people become a lot more productive. And at the end of the day, it means that the same team now that operates on Zabel can pump out twice as much estimates than

Robert Zimmerman: Mm-hmm.

Hamid Hajian: how the number of estimates they used to do in spreadsheets. That's kind of high-level what we do.

Robert Zimmerman: I love. Okay. Well, now you may know this already if you've seen any of my any of my other podcasts before this, but I'm a big I'm a skeptic of of estimates myself, and

Hamid Hajian: Mm-hmm. Mm-hmm.

Robert Zimmerman: I'm a skeptic of schedules. just because I've been doing this for a long, long time and most of the time you get close, I will say that. estimate is just that. The thing that most people run into is that the estimate and the budget never seem to line up. especially when you start throwing a schedule into that equation. And I thought it was interesting what you were talking about is you were taking old spreadsheets or, you know, the spreadsheets, maybe the data from that spreadsheet. How do you find that data that's actually qualified to kind of fit into what an estimate really needs?

Hamid Hajian: Okay.

Robert Zimmerman: I mean, some of it's old. I mean, if it's ten years old, I mean can it can it really qualify to fit into today's estimating structure? what do you think about that?

Hamid Hajian: Great question. You don't wanna have a system that's kind of garbage in, garbage out, right? You you wanna make sure that you you feed it with good, clean, meaningful data so that you can make more informed decisions. And all of the outputs you get out of any estimating system is as good as the inputs that you feed into it. So that's why when we onboard a new client, we do two things. One is when we look at their historical data, the first question we ask is before you even get into the dollars of how much you spent on concrete and steel and this and that. is what was even your project? Where was it? How old was the project? And then they say well be we built it in 2020. But the real question is when did you buy that out? Maybe you finished building it in twenty twenty, but you signed the contracts for most of your trades maybe by mid twenty eighteen. And that's really how old your project is. Not twenty twenty, it's twenty eighteen and a half or something like that. And

Robert Zimmerman: Right. You're paying twenty eighteen prices, yeah.

Hamid Hajian: Yeah, that's really to you're looking at twenty eighteen prices. That's that's how you should escalate it based on twenty eighteen, not based on twenty twenty. And right that right there, you're you're looking at like an maybe a ten percent difference between like how you even use that data point. Also yeah, that's

Robert Zimmerman: There's your margin.

Hamid Hajian: exact The other thing, stuff like we look at is like obviously like how big was the project, what was the score footage? But when people say here's the gross score footage of the project, because a cell in the spreadsheet says GSF equal two hundred thousand square feet. But the question is, what's the definition of that? are you tracking that consistently across all of your projects? Are you measuring it the same way or All of these ten different spreadsheets, they were done by ten different estimators, and and worse than that, ten different PMs slash part-time estimators that were pulled in to do that estimate. And they they each of them did their own takeoffs their own way. So that's why it's super important to standardize your data and and come up with a clear definition of what it what goes into gross score footage, what goes into my net score footage, or whatever metric it is that you're doing. And and whenever in doubt it's better it's worth taking the time to go back and do the takeoff on your past projects and because no one has the time to do that we offer it as a service and say send us send us the drawings we'll do the heavy lifting

Robert Zimmerman: would suppose that might be the biggest biggest thing when we start talking about historical data. it's valuable.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: you know statistics have said that maybe we use five percent of our data. we've got probably a ton of data hanging around, but maybe five percent of it really gets used. And it really has to do with bandwidth of the company and the bandwidth of the personnel that would be able to utilize the data. do they have time to go back to those twenty eighteen records and go, what did we do then? And can we is it relevant to this job that we're doing here in twenty twenty six or the one we've got coming up in twenty twenty seven? just the bandwidth of being able to get to it.

Hamid Hajian: The the fact is whether you formally leverage your historical data or not, you use it 100% of the time. But most of the time it's in the form of whatever the estimator remembers of the past projects. That's how how people use their historical data 99% of the time. And they

Robert Zimmerman: Mm-hmm.

Hamid Hajian: may think they're they don't they are not using historical, but Whenever you just reach in your memory of how much did we carry for drywall per square foot in that job like a year ago or six months ago? Or how much did we end up buying it out at four months ago? You are you are leveraging your historical data and but in that case you may not have a database but your estimator is acting as your database. You have

Robert Zimmerman: Yeah.

Hamid Hajian: you have a bunch of walking databases and

Robert Zimmerman: Yeah.

Hamid Hajian: that's really how you're doing it that are not organized, are not consistent and you you don't really have a true database. You have a walking one that any day may just walk out the door and whatever institutional knowledge is in that head is just about to leave.

Robert Zimmerman: Yeah. I'm dealing with that right now, actually. I just I just contracted a steel small steel work, a little structural steel job. And I'm sitting there going back thinking in my own head, like, when was the last time I did structural steel?

Hamid Hajian: Ha ha ha.

Robert Zimmerman: You know, and I was like, that's been a while, I really need to go out. So I actually had to go back out and I you know, I rely heavily on my subcontractors to give me the latest and greatest information. So I kinda wanted to talk to you about that. Is this something that a subcontractor obviously can use as well, given giving themselves, you know, a bit of an advantage of going, Hey, we did this, this and this job in a in a s kind of a specialty sense.

Hamid Hajian: yes, they can use it, but we haven't built it for them. the the interface and everything is just curated for GCs and developers. And

Robert Zimmerman: I see.

Hamid Hajian: there is a big difference between an estimating system for built for GCs and developers versus trades or even self-performing GCs. And the the key is when you are a trade subcontractor, you definitely break down your costs into like labor, material, equipment and everything and whatever subcontractor you use.

Robert Zimmerman: Mm-hmm.

Hamid Hajian: and when it comes to your labor part you need to know your your labor hourly rates or your productivity rates and all of that. and that just means you need to organize your estimate in in a different way. You need to even view it in a different way. When when I looked at the market like ten years ago looking for an estimating system A lot of the estimating system out there are built for trade subcontractors or self-performing subcontractors, thinking that, this is detailed enough, so it must be good enough, good for GCs and developers too. But that that's not the case. The moment a GC opens up an estimating software and sees those columns with the header, labor, material, equipment, that's the point that like this is not for me. This is not built for me. I don't get into that level of detail.

Robert Zimmerman: Right, but isn't that the disconnect now between G C's and subs today is kind of that level of detail where the estimates get a little bit glossy

Hamid Hajian: Mm-hmm.

Robert Zimmerman: at the G C level. It's a little bit glossy, probably could use a little bit more detail because then all of a sudden you've got that difference between, hey, estimated price versus bid price. Right, and that's and then then that w that's where the friction starts to come in. I would think that a device that a technology that would be able to communicate on both of those levels, connecting those two together, is gonna be a bit more advantageous, I would say.

Hamid Hajian: Mm-hmm. Yeah, the it is kind of glossy compared with the the level of detail that the subs go to. But even if you give all of those tools to G Cs, they are not equipped with the knowledge to even use it to break it down. Like you you ask a G C to break it down into labor material, how would they know? They're they they're not the the trade. Like how would they know how many crews it take to to install this many square feet of carpet or how long it takes? They haven't they don't have that knowledge. And at the end of the day they just have one line item With a cost code attached to it for carpet. And

Robert Zimmerman: I gotcha.

Hamid Hajian: but what they need to make sure when they're buying it out is to make sure that it whatever number they're carrying includes all of the scope and inclusions and exclusions that they then they need to. That that's all they need to care about. And and that's why we have built the the bid management module that speaks to the estimate, it's connected

Robert Zimmerman: Okay.

Hamid Hajian: to the estimate, but it does have the ability to Break down all of the scope items related to each line item in the budget, each cost code. And once you receive the bids from subcontractors, you will be able to level it against your own bid form. Level them,

Robert Zimmerman: Okay. Very good.

Hamid Hajian: select the one that you want to go with, and once you select it, you you push that budget, that number from the sub, that code, back into your estimate. That way you can trace every number in your estimate. Okay, this was my original estimate, and now I'm substituting that with the selected bit that I got from XYZ subcontractor.

Robert Zimmerman: Right. So I want to talk to you a little bit about that. you know, GCs, you you had mentioned I guess self-performed GC and and you we've talked about the subcontractors a little bit. I wanna kinda get into talking about how estimates have changed and and maybe what you're seeing on the side of we're looking at, you know, labor shortages and things like that. I I do want to touch on that just a little bit. We don't have to be experts, but I I'm wondering, does the estimating process change in today's world? because of we're we're having to kind of factor that kind of thing in. Like do we have the assets? Do these subs that I'm talking to do they have the assets to cover the scale or the scope, to your point of this of this work?

Hamid Hajian: When I joined Western National Group back in twenty fourteen, the company was just ramping up production and working with the largest developer in the state of California, Erwine Company. And and I remember those kind of conversations along those lines with some of the key trades. They wanted to make sure they get the commitment from those trades that they will supply all of the the labor needed for their pipeline. At the time they had a huge pipeline. and their main concern was not just the the c how much is it gonna cost, but also do we even can we get the the manpower to to build the thing. And it was a very real issue and they sorted out by signing these kind of long term agreements with some of the the key trades, like the the framing, the the mechanical, plumbing and those the key trades that make up like half of the budget in the project. And they sorted out that way. And we see the same thing now even the labour shortage is is a key component. we see the same thing even with just estimating itself. pre construction teams. A lot of people are retiring and there's just not enough substitute for for the same number of people. And and I see

Robert Zimmerman: I

Hamid Hajian: that b with our own even clients.

Robert Zimmerman: Yeah. Well yeah I see the you know, you see the very large numbers, some four hundred and thirty nine, some say it's four hundred and sixty-nine thousand jobs in the construction industry. It's a very large nebulous term. But I think that's to your point, is we're seeing it everywhere. It's not just skilled trades, right?

Hamid Hajian: Mm-hmm.

Robert Zimmerman: we're talking about it everywhere. I saw something today, it's like we're short on surveyors. there's surveyors of you know, guys my age retiring out, they're they're they're done. You know, they now we don't have enough survey. Well, guess what? We need a lot of we need a lot of surveyors now because especially in Texas, where we're surveying out these massive data centers and these these areas where we need to get something done or something built. so civil engineers is another thing. a lot of that kind of work. Engineers in you know, structural engineers, all these types of different things. The construction industry is so broad that when we say we're missing five hundred thousand jobs or somewhere around that number. We really are missing it in areas that every bit of it will affect the length of the job, which again

Hamid Hajian: Mm-hmm.

Robert Zimmerman: affects the length, which affects the cost of the estimate, ca the the budget. It affects everything about it.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: And I find it so interesting to wonder how how we're doing in in dealing with it. I th th the cost goes off obviously because the demand is there, but it's like, okay, how much will the market bear when we start to talk about these kind of shortages?

Hamid Hajian: Well, I guess we can hope that with the advancement of technology and improvements in it, we will see some efficiencies gained that will make up for some of that loss. And you know, construction in in general or historically hasn't been the most attractive industry for people to join it. And like my own case, I got attracted to it just because my dad was in this industry. And I saw a path for for my career in it. And but even for me, I stayed on the technology side of it because that was more exciting than the the traditional like superintendent, PM, director kind of path. And it is hard to attract people to our industry and I if I have to bet, I would bet on just technology is gonna solve some of that problem across the board. some of it is gonna be more difficult than others. Like maybe you know it's easier to have a more efficient estimating software than building a human or robot to do the plumbing.

Robert Zimmerman: Yeah. Yeah. Right. yeah, I don't think they're gonna see the humanoid robots you know, pouring concrete anytime soon, but I I do agree with you. I think there are areas, especially in the pre construction phase, that we can certainly work on to shorten the timeline. But you know what I find odd is is that we've always been trying to shorten the timeline on the front end of the project and seldom are able to shorten the timeline in the in the build part. But I think that's a I think that's the wrong way to go about it. And I want to get your opinion because I really feel like that time spent in pre construction, time spent on the plan, the estimate, the detail of that estimate and the detail of the plan, will shorten the time that we spend out there in the field, you know, making guesses or redoing work. And I wanted to kinda get your take on that.

Hamid Hajian: Yes, i on paper, that's how it should be done. Spend as much time up front during pre construction on on planning, kind of like the measure it twice and cut it once, right? And avoid all of the the rework in in the Yeah.

Robert Zimmerman: That's the name of my company. Mt my company is MTCO, is T C O Carpentry. Measure twice, cut once. Yeah.

Hamid Hajian: really? Did I know that?

Robert Zimmerman: My my dad my dad I that was like every time I think we walked into the shop it was like he'd just remind me, Hey, measure twice, cut once. I so

Hamid Hajian: Yeah.

Robert Zimmerman: that's why I named it the way I named it.

Hamid Hajian: Yeah, this same concept applies to not just carpentry trade, like for everything, right? For the whole project. but in practice, it's hard to do that. Primarily, I think the main driver that makes it difficult is the cost of capital. When you're spending time during pre-construction on planning at at any aspect, you know, time of it, any stages of it, that's not free. And and I'm not talking about the the people who are doing the pre construction work. I'm talking about the the capital that's kind of held up in a piece of land or you know, s the the money is already spent on on architects and engineers or anything else. And a

Robert Zimmerman: Mm.

Hamid Hajian: any any minute that goes on, you're kind of accruing interest. There there's there's a cost to that. And and you know capital is not a very patient thing, you know. And

Robert Zimmerman: Right. So you're ta you're saying that the six hundred and eighty five or s seven hundred trillion or billion dollars that are kinda hanging out there in Capex right now on data centers is it's not patient. It's it's not it's not ready to go. Is this is you know?

Hamid Hajian: It it is patient in in the long term, but w when you look at just one project, that capital needs to see its return or s n needs to see it to be deployed as soon as possible so that the returns will come back as soon as possible. When if you look at it from the finance point of view, let's say you're a developer, you have purchased a piece of land and you think you can get it entitled and all of that. You're going through all of that process. So you so you've already have some big sunk up. And now You want to spend some time in pre-construction to do better planning so that your construction goes faster, smoother, and more efficient. And every day, every additional day that you spend on pre-construction That some cost of capital is accruing some you know interest somewhere. Whether it's it's a it's a loan that you borrowed or even it's your own money, there is a cost associated with that. So you have to there is a trade-off, that's my point. There's a trade-off. You can't just spend an endless number of months and years in pre-con so that you can make the the construction more efficient. you have to balance it. Because there is a true cost associated with not starting the construction faster. And and there's always that pressure of like why things are not going as fast as possible during pre-con. And that's that's where that in my opinion where the friction comes in. But on paper,

Robert Zimmerman: Yeah.

Hamid Hajian: yes, of course, the the better you plan, the the better execution you're gonna have.

Robert Zimmerman: Yeah. Well I think I think it is you you've hit the nail on the head with the the finding the balance of how much time do we spend on pre-con, is that enough time?

Hamid Hajian: Mm-hmm.

Robert Zimmerman: I've talked to several folks who who say, Yeah, there's never enough time. Is I and I also know the same type of folks who would spend forever just making a plan and never execute anything.

Hamid Hajian: Yeah. Yeah.

Robert Zimmerman: Right. So you've you've got one extreme to the end. You've got the ones that say, I think it's close enough, go. And then you've got the ones that say, We're never gonna get there. So there's never gonna be the hundred percent plan. I I guess it's you know, I guess it's the Preetho's law, if you if you can get eighty percent of the result

Hamid Hajian: Yeah. Yeah.

Robert Zimmerman: out of twenty percent of the effort, you're probably pretty good.

Hamid Hajian: Exactly. Let me make a maybe an extreme example of it on one side of the spectrum. When you're at the super early stages of pre-construction, at look, you have a conceptual plan, just a napkin sketch. And at that point you just wanna make a go-no-go decision. Is it even worth spending the more time on this? The true question is not ex I need to know exactly how much this will cost. The the answer the question you're answering is Is it worth spending more time on this project? That that's that's that's all you need to answer.

Robert Zimmerman: Yeah. Yeah. Yeah. Around here we call it is the juice worth the squeeze.

Hamid Hajian: Yes. Yeah, exactly.

Robert Zimmerman: 'Cause you know there's gonna be a squeeze, right? You know.

Hamid Hajian: Yeah, because most of those projects at those stages they they will never get built. Most of them will get shelved. And the estimator's job at that time is to help make that decision. You know,

Robert Zimmerman: Right.

Hamid Hajian: is it is it one of those eighty percent or or the twenty percenters of the projects?

Robert Zimmerman: Correct.

Hamid Hajian: That's it.

Robert Zimmerman: Well, construction is not for the faint of heart at all. you really got to be and w I talk about this often, that you have to be like that silent optimist there's there's that period, you know, kind of right there at bid time where everybody goes Yeah, I'm cl we're we're close, but man, I'm I'm you know, it might be a little bit there might be some unicorn dust in there that we're we've thrown in just because.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: but you gotta do it, right? That's that's construction in itself. It's it is risky and it is hard and the the execution of it has got to be is never going to be flawless, but you're hoping you're gonna get as flawless as you possibly can.

Hamid Hajian: Yeah, it is. I guess life is kinda like that too and construction is no exception to it. that's just what you just said reminded me of my journey when I first started the company. And I had tested and validated the idea in my last job and I knew this is this had already worked on actual real world projects. But taking it out to the market is another thing and selling it to other people. So the hypothesis is It worked for that company and I talked to a few other companies and they said, Yeah, I would use it but Who knows once you actually build it, what you actually end up building, what will

Robert Zimmerman: Mm-hmm.

Hamid Hajian: it look like? what would the the market look like at the at the time you come out to the market with your product? are you already in a recession at that time or the the it keeps booming? You never you don't know any of those things. And interestingly, when I left my job in July of 2019, I thought this is great, the economy is doing great. And I spent about six months to develop the software, the first version of it, or what we call the MVP of it, the minimal viable product. And I even signed up two clients with that with that MVP. And then it was like we are talking about like early 2020. And I thought this is great. I'm on the best trajectory ever. I I have this the background of myself, built the product, already have this, and now I'm gonna go out to VCs and and raise money and they will be just ready to write the check. They're just gonna ask

Robert Zimmerman: Yeah.

Hamid Hajian: how much. And sure thing, COVID happened. And right right around the time I was just planning on going out to raise money and And of course no one is writing any checks, they're just scrambling to even save their own existing portfolios. And

Robert Zimmerman: Yeah.

Hamid Hajian: And I was like, okay, what do we do? I don't want to just give up on it because a new virus just showed up at the wrong time for me. And I ended up just cashing out my whole 401k account and even dipped into some of the savings to be able to just fund the company and I became the the first investor in the company. And

Robert Zimmerman: Invest in safe, yeah.

Hamid Hajian: yeah, just investing yourself and I'm glad I made that decision, but it was completely just stepping into the unknown, stepping into the dark, not really knowing what's gonna happen and I was ready to just lose all of that for one K that I just invested in the company and that gave us about less than a year of of of runway and That was just enough time to for us to upgrade that initial product that I had built, turn it into a more professional one, and thankfully we were able to sign up Airbine Company, the largest developer in California, as our first major customer. And and that just paved the way to get the next one and then the next one after that. But I had no idea what will happen in a year. You just have to be faithful and, you know, just go

Robert Zimmerman: Yeah. Yeah. Well you do, you have to go for it. You've got a plan. I I I I like your analogy to it. It's l it's much like life itself. You've got a bit of a blueprint, you know, that you kind of run with. You get to choose that blueprint, by the way. and there's gonna be some hiccups that that are gonna happen. There's gonna be some things that are a bit out of your control. But

Hamid Hajian: Mm-hmm.

Robert Zimmerman: I love the idea that if you bootstrap it little bit and you invest in yourself, it makes actually makes the product, I would say, that much better. I know the time that I spend on stentorian research, one of my other companies and the stuff that I put in there. I try to make the pr I'm focused on the product. I'm not focused on everything else that could be. I'm focused on how do I make this product better, right? Same thing with when I'm when I'm building something. It's like I Don't spend a lot of time focusing on, you know, the check itself. I what I is think about is how do how do I get this done the best that I possibly can so that actually I could can get that next you know, where the the draw is, the check,

Hamid Hajian: Mm-hmm.

Robert Zimmerman: so that it make sure the the client's happy, make sure that the product is there. It makes a big difference, when you kinda go at it from that method rather than kind of the other method of when's the ROI kicking in

Hamid Hajian: Mm-hmm. Yes, exactly. Yeah, it it puts you in a very different mindset, in a very different path and

Robert Zimmerman: Yeah.

Hamid Hajian: of of thinking. the moment every dollar you're spending is your own money that you could have spent on a nicer car or whatever it is. And

Robert Zimmerman: Yeah, whatever.

Hamid Hajian: now it's like, Okay, I didn't I didn't buy that nicer car, so this better turn into an even better car than I would have bought. And

Robert Zimmerman: Yeah.

Hamid Hajian: Th it just changes your your calculus and how you think about things and and even as you grow the team and hire more people, that kind of mindset kind of inadvertently propagates throughout the whole team. without you even knowing it or explicitly asking people to think that way because you just operate that way and it j there's a ripple down effect. Everyone just looks at you see see how you operate, how you spend money, where you spend invest the money in on what to pr produce. they everyone kind of follows the same mindset. That's how you just build that kind of culture that way, unknowingly.

Robert Zimmerman: Yeah. Well you you hope that, you know, everybody that you kind of attract to that to your business kind of runs in that same mindset. obviously if they don't, they they kind of stick out early. probably a good way to, you know, g get a good check on things. One of the things I wanted to cover with you, I often say we we're in as we enter into the age of AI, those types of things and Obviously it's the technology of the future that most people want to use productivity wise, kind of what you were talking about earlier, is we're looking for tools that make us more productive. We don't necessarily have as many people as we need. So obviously need we need something to make us more productive. We're running into a bit of an impasse here when we start talking about like speed to power.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: We we we've seen it happen. The wheels get going, a lot of acceleration, meaning a lot of announcements, a lot of we're gonna go do this, and then all of a sudden, you know, hey, tap the brakes a second, because when you start pouring concrete and steel and you start talking about water and doing all these things, it's a real physical impediment. and up to this point, you know, we talked about it a little earlier, construction and technology may not have been you know, perfectly aligned.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: But now we're starting to see construction and technology. We're gonna have to be better aligned

Hamid Hajian: Mm-hmm.

Robert Zimmerman: in order to get the jobs done that were that are in front of us. These these massive and I'll du I'm just talking about the power. I I could

Hamid Hajian: Mm-hmm.

Robert Zimmerman: care less about the data centers. I mean obviously we're gonna need some of that. I think there's solutions that can be made. But everything needs the power that that we have to do, so we've got to figure out those builds. But I wanna talk to you about technology. Do you think that technology and construction are gearing up, you know, aligning enough to be able to to make all this happen that we've got sitting in front of us, you know, technology of the future kind of thing?

Hamid Hajian: I think it will and but we gotta keep in mind the the the context of how much of the AI is really driven by construction. The other day I saw a report by Think Andreasen Horowitz A seen sixteen A sixteen Z, they had a little nice waterfall chart showing out of every hundred dollar capex that goes into AI, where does that go? And a lot of people think, you know, look you hear there's this like billions of dollars spent in in AI like data centers. But interestingly, only seven and a half dollars out of a hundred dollars goes into construction, and out of that seven 7.5 a dollar goes into like land acquisition. So the true construction cost is like $6.50 out of $100. So like 6%, 6 7% out of

Robert Zimmerman: Mm-hmm.

Hamid Hajian: 100%. The rest of it goes into the core technology that goes that drives AI. goes into those data centers. The the switch gears, the everything else that goes into that. The core and shell and the concrete and steel. Just a s small fraction of it. And it's most of it is the stuff that construction companies do not build the stuff that Nvidia's of the world builds. And

Robert Zimmerman: Mm-hmm.

Hamid Hajian: those kind of technology companies. So I'm not I'm not worried about like catching up because as much as we like to think that we are like the construction industry, we are building AI infrastructure, but we are just a tiny portion of it. Most of it is all of the equipment that that goes in there.

Robert Zimmerman: Yeah, I get it, but man, I'm telling you right now, you can't make toast without plugging in the toaster, you know? You

Hamid Hajian: Yeah.

Robert Zimmerman: just you can't do it. The socket on the wall put there by the electrician,

Hamid Hajian: Mm-hmm.

Robert Zimmerman: that's everything. That's I mean, that's that's the source and y I what we're running into right now is finding out that those I'll say you know, more physical type of trades, are kind of the end all beat all before we can even get to technology.

Hamid Hajian: Mm-hmm. Yeah, for sure. They're absolutely necessary part of this. my point is they're not the biggest part of it, but they're definitely very necessary. You still need someone to pour the concrete for the foundation before you put any piece of equipment on site. And they you definitely need that and you need to the the interesting part of that is if you look at where they're building all of these data centers, they're usually in the middle of nowhere. And which makes it even harder to supply the the labor. you know, to g to get people to to work in those like really remote areas. And

Robert Zimmerman: I I guess my question to you is this i and just thoughts on it, do you think technology is gonna help that physical portion of the labor move a little faster or or is it more technology is probably should be more focused on kind of pre construction and and and those kind of things?

Hamid Hajian: I think the technology can solve pro problems in for like more like office type works, like pre construction, than it it can do for actual like physical work of installing something and things like that. There's a still this like the the the craftsmanship that that's very hard to replicate by any kind of technology. I know like Elon Musk's of the world they they like to portray the image of no in just four years, you know, we're gonna the number of humanoid robots is gonna surpass the number of human beings on Earth and all of that. I don't believe that. I believe there is still there's this like the the human aspect of this. If you think about we are living in this age of AI in like twenty twenty six, but how many restaurants do you know that that are using robots for flipping burgers? Why is that? Like b at the at this day and age that you th you may think, no, that's the easiest thing for AI to do, right? For robots to do. We send robots to to the outer space and do like intricate operations. How come we can't fill up a burger? Even these some of these coffee shops that make like robotic like lattes for you. They're they're not they're not popular. You don't see as many of them around. You would think like the they they would have been just taking over the whole barista ecosystem, but but they have not. you you still need

Robert Zimmerman: Yeah. Yeah. I think

Hamid Hajian: that.

Robert Zimmerman: Yeah, I agree with you. I wholeheartedly agree with you on that. I think the age of AI, if it teaches us anything, it may just teach us how to be human again.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: because I do feel like we've we've d evolved into technology quite a bit. We're very involved in it and very I don't know, submersed at some and some levels, some people very submersed in the whole thing. And we've forgotten maybe that human element. but I but I think as we kind of move through this phase, we're going to start to see that there's there's so many important parts of the the human development that has to happen. And and that's kind of the last thing I want to touch with you on is I'm sure that you have found in your i in in developing your product that a lot of times it wasn't the technology's issue, it was the processes of the human.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: That, you know, our our physical processes, maybe even our mental processes, how we've always approached something, needs to be adjusted in order for us to even embrace the technology that that's there to help us.

Hamid Hajian: Yes. It it's it's very critical to actually have that understanding. I remember a year before I started Zabel I noticed a company actually here in the Bay Area, they came up with a conceptual cost estimating tool. The basically very thing that I started out with a year later. But they built something that you would call it AI today. And it was a complicated multivariate regression model based on historical data. It was complicated, it was very interesting. At the time, I was actually taking some statistics classes at the MBA program, and I

Robert Zimmerman: Mm-hmm.

Hamid Hajian: what I got really drawn into it. And But after about a year, they just shut it down. And the problem was not because their estimates were inaccurate, because the the average estimators in the construction industry, they would not be able to understand how it works and like how it works under the hood. And at the end of the day, when an estimator presents a number and say this is my estimate, they have to be able to stand behind it and explain every every dollar and cent.

Robert Zimmerman: Right.

Hamid Hajian: And and if you give them a black box and that they can't really look under the hood or even understand how it works, and how can they stand behind that number? Because what if it's wrong? You know, who who knows? They can't explain it. I always say building the estimate is half of the work and defending it is the other half.

Robert Zimmerman: You might be I I would say building the estimate might be twenty percent of the work and explaining how it all came together is good probably the rest of it. Because

Hamid Hajian: Exactly. I yeah, go ahead.

Robert Zimmerman: Yeah, I I've built I've built plenty of estimates in my lifetime, right? I've done

Hamid Hajian: Mm-hmm.

Robert Zimmerman: all kinds of bids and done all that kind of work, but trying to explain to somebody how I got to that number and why we're charging what we're charging was a whole nother job in itself.

Hamid Hajian: Mm-hmm. Mm-hmm. And that that's exactly right. The way you you should build the estimating tool is all about being able to defend the numbers and explain the numbers that you put it. It's an at the end of the day you're producing an estimate. It's not the absolute truth. It will you will be wrong. But what matters is can you Explain how you came up with that number. Even if and you will be wrong when you are wrong, you will be able to explain these were my assumptions. And based on those assumptions, I made a sound decision to come up to carry that much budget for my steel. But if you cannot articulate those assumptions and say, you know, trust me, my AI is really good. And it it came up with this number based on these complicated calculations that I cannot explain to you or even understand myself. And I watched that company just in front of my eyes, like they they vanished, even though they were technically very sophisticated. And that was a big lesson for me and I incorporated it into the way we built Sabell was we have to make it in a way that people can understand every single cent and dollar in it. And and that's what's really drawing people into our system.

Robert Zimmerman: Yeah.

Hamid Hajian: And it put me in an interesting position people our customers signed up on it because they were able to understand it and it was not AI. And at the time I was pitching investors, the VCs, they would look at it and say, okay, who's using it? I said this company and that. Okay, that's great. And then the the last question was like, do you do well how about AI? where is the AI? And I was like the reason people use this is because it's not AI.

Robert Zimmerman: Yeah.

Hamid Hajian: And and and they they seem to not get it. That was part of the reason I decided, Okay, you know what? I I should I don't think we should partner with these people. They don't truly understand our customers, our industry.

Robert Zimmerman: Well, yeah, there's a whole and I don't again, there's a whole weird world there of, you know, you kinda watch this stuff where it's that I feel like that that world is the world of valuation. How much is this thing gonna be worth rather

Hamid Hajian: Mm-hmm.

Robert Zimmerman: than what kind of revenue can this generate, right? They

Hamid Hajian: Mm-hmm.

Robert Zimmerman: don't care how much revenue it can generate, they don't care how it'll help. They would just wanna how much is this thing gonna be worth and how can I cash in? Nothing wrong with that, guys. If that's your world and that's the way you want to go, okay, that's fine. I think in the build, and that may be the clash in the build world with tools, right? Tools that you can use in the build world, because what we're looking to do in the build world is generate some revenue. Right?

Hamid Hajian: Mm-hmm.

Robert Zimmerman: We need to generate revenue, and then that revenue, we take out the costs, and that defines what we profit, right? If I've

Hamid Hajian: Mm-hmm.

Robert Zimmerman: got a tool that costs me more. And it helps less, that doesn't do much for my profit line. That's not good

Hamid Hajian: Mm-hmm.

Robert Zimmerman: for me. And so trying to evaluate between kind of that whole black box of how does this black box work? Because I need to know where in here that this thing's going to be absolutely right. Right?

Hamid Hajian: Yes.

Robert Zimmerman: Or at least close to right.

Hamid Hajian: That goes back to our initial conversation about bootstrapping versus raising money. It makes a big difference if you're optimizing to get the next customer or optimizing for raising the next round from VCs. And

Robert Zimmerman: Yes.

Hamid Hajian: One results in building a practical tool that customers trust and use versus building a tool that has all of the buzzwords of the the time in it that allows you to raise the next round. And

Robert Zimmerman: Yes.

Hamid Hajian: and who cares if you're still not profitable, you're losing money, as long as you can raise the next round, that's how you live, that's how you keep the company growing. So very, very different modes of operation.

Robert Zimmerman: Yeah. So we're gonna we're gonna wrap on that one because Hamid, that was a fantastic point. Folks, if you're out there, I don't care if you're a startup, you need to listen to the wise words of Hamid here. Less the lesson here is this. focus on your product. don't focus on your valuation. Don't focus on that next round. I know it's very, very important maybe to have some of that backup money to make that product better, but try to stay focused on that product that'll help the tool, that make the tool that helps the industry first.

Hamid Hajian: Mm-hmm.

Robert Zimmerman: I think you'll find a better pathway there. I really do. I really do. Hamid, thank you so much for joining me today. It was fantastic.

Hamid Hajian: Thank you for having me, Robert.

Robert Zimmerman: Folks, until next time on Contact Exec real talk with real people about real work. we'll see ya we'll see y'all soon.