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KP Unpacked
KP Unpacked explores the biggest ideas in AEC, AI, and innovation—unpacking the trends, technology, discussions, and strategies shaping the built environment and beyond.
KP Unpacked
AEC's Perfect Storm: Tariffs, AI, & Inflation
In this episode of KP Unpacked, KP and Jeff break down a major theme from one of KP’s recent LinkedIn posts: the perfect storm brewing in the AEC industry. With inflation, tariffs, labor shortages, and rapid advancements in AI and robotics, how can firms stay ahead instead of being swept away?
KP shares his take on why change in AEC isn’t a matter of if—it’s a matter of when, and when is often existential. The conversation dives into how firms can rethink their business models, embrace disruption, and stop treating innovation as an afterthought.
Key takeaways include:
- Why inflation and tariffs are accelerating the need for AEC firms to evolve.
- How AI and robotics are shifting from digitization to true business transformation.
- Why labor shortages are forcing firms to rethink workforce strategies and automation.
- How traditional risk management in AEC leads to outsourcing accountability rather than solving problems.
- What firms can learn from startups and why niche specialization is the future.
Podcast companions are available HERE on our Substack. You can check out KP's latest book "Creating the Intangible Enterprise" HERE.
🎉 Special Offer for KP Unpacked Listeners: Get 55% off your ticket to the 9th Annual AEC Summit on October 29th at the Diverge Innovation Center in Phoenix! Click the link below and use promo code UNPACKED55 at checkout.
Don't miss this opportunity to connect with top minds in AEC and beyond. Tickets are limited—act fast!
Hey, welcome back to KP Unpacked. This is my opportunity to ask KP Ready hey, what were you thinking when you posted that on LinkedIn? It's a little bit of tongue-in-cheek there, but I have this opportunity once a week to sit down with KP Ready and dig into the reason behind the posts on his LinkedIn profile. If we've never met before, my name is Jeff Eccles. I'm senior advisor at KP Ready Company. I am, as always oh, that's actually, it's not true anymore as usual, joined by KP Ready. We've been bringing in more special guests to mix it up a little bit and to still unpack your post, but to get different perspectives from around the world. But I'm joined today by KP Ready, the CEO and founder of KP Ready Company, also the founder of Shadow Ventures and lots of other things going on in the built environment. Welcome, kp.
Speaker 2:Hey, jeff. So now we're having special guests on to talk about my post behind my environment. Welcome KP, hey Jeff. So now we're. So now we're having special guests on to talk about my post behind my back, got it?
Speaker 1:That is exactly right. That is the reason that I started. It's like I'm tired of asking KP hey, what were you thinking? Now I get to ask people hey, kp's not here. What do you think he was thinking?
Speaker 2:I'm glad we're giving a forum for people that want to troll me on linkedin, to troll me live.
Speaker 1:That's fantastic oh, you just wait just when will the next week?
Speaker 2:episode come out it's like the entertainment value on linkedin is not high enough. Let's do it live hey, and it's.
Speaker 1:It's all about my entertainment value, so I don't know if you knew that or not, but that's what it's about fantastic yeah, yeah, absolutely. Um, and and if you're listening to this, if you're not following kp on linkedin and you're, you're maxed out on connections, right, so you would have to follow kp at this point. But if you're not following KP, you need to be. Just go to LinkedIn and search KP, ready. R-e-d-d-y. How many times a day are you posting? Two, three times a day usually.
Speaker 2:Sometimes, sometimes more Depends on what's going on in my life.
Speaker 1:Sure, yeah, that's probably the average, but you post about things, of course. Sure, yeah, that's probably the average. But you post about things, of course, from all across the built environment, all across the AEC industry. Some of those things are insights that you gain talking with CEOs, and some of them are, you know, when you've been on stage keynoting at a conference, or you know from portfolio companies or other things. But people that follow your LinkedIn can gather a lot of insights about designing, building, investing, startup, ai. You know future future of designing, constructing, operating and owning in the built environment.
Speaker 1:So I encourage anybody out there that's listening, that's not following KP, just to go to LinkedIn and follow them there. And uh, and you'll find these posts that we talk about every week. So you know, we, we talked about this, no secret to everybody out there. Probably KP and I put our heads together and we say, hey, what do you want to talk about? Um, what we decided to talk about this week, it's totally current events. Right, there's an aspect of it that's current events, but I think it's also bigger picture thinking. So, as usual, I'll read out the post and then we will start to unpack it. So, if you're following along at home. You're listening to this.
Speaker 1:Let's just say in like 2030 or something like this, go back to about February 3rd 2025, and you'll find this post February 3rd or 4th, something like that. It goes like this perfect storm one inflation and tariffs. Two labor shortages. Three AI and robotics, moving from digitization to transformation and dipping our toes in disruption in the architecture, engineering and construction industry. By the way, if you are a massive industry, it's rarely about, if it's mostly about when and when is typically existential, almost said essential existential. All right, so let's unpack that Obviously in the news in the last, I don't know week or so. Well, going back further than that actually, but action-wise in the last week or so, tariffs. So number one was inflation and tariffs. Number two labor shortages. Number three AI and robotics. What's the bigger picture here, before we start to dig into the specifics?
Speaker 2:Yeah, I think you know we only kind of become innovative when there is kind of scarcity of resources, and sometimes scarcity is manifested in being priced out right. So now all of a sudden, we don't know where things end up. We know it's going to be the tariffs will have somewhere between zero and 50% and impact on prices, right, we really don't know. But it doesn't mean we shouldn't think about it and shouldn't plan for it. So you know, only when you have a scarcity of resources you start thinking about how can we be more innovative? How do we think about it? So I think if you take labor costs, I think if you look at inflationary cost of building materials, I think if you look at inflationary cost of building materials and then you take, you know, interest rates, you throw all that together, it's really becoming a perfect storm in a way that it can be deemed positive. I there's no way you're going to survive if you do things the same old way. There's a there has to be a better way of doing things and you have to be more innovative in your thinking about that. And so I think partly it's that, and I think if we look at these large markets, we know what construction is a massive market. We know there's opportunities for improvement, but it always takes an external force.
Speaker 2:An old, stifled industry like construction is not going to change because they want to change. They're going to change because they're forced to change. And you can't hire someone straight out of school and hand them a field book and a pen and a number two pencil and say, hey, these are the tools of your trade. Nor can you put someone in the field and hand them a manual screwdriver and say, here you go, go screw in. Yeah, there you go. For those of you that don't know what a number two pencil looks like, jeff just held one up. So, as we say around here, jeff is the older and wiser one, so to speak.
Speaker 2:Yeah, I was the same age for a couple of months, a couple of months. But I think this is an industry that change will be an external forcing function, not because there's enthusiasm about change.
Speaker 2:And so I think, when you look, at that and you look at innovation as the big bucket. We've gone from digitization, which is taking things from that number two pencil and piece of paper, and we put it in a digital form. And then we go from digitization to transformation, like, oh, now we're going to do the process differently. So think of digitization as manual into a digital environment, transformation as digital environment plus a new process. And then you look at disruption as a new digitization plus a new process, plus now a new business model. So you start to quickly move that direction, right, you start to quickly move that direction. Right, you start to quickly move that direction. So if we think it's like, oh, we're moving from digitization to transformation, ie we're just going to do it the way you've always been doing it, except now we're doing it on an ipad cute, but we're really moving even faster towards disruption. Cute, so cute.
Speaker 2:Um so I think that's where you're starting to see some interest in the changing business models of the industry yeah, yeah, I mean.
Speaker 1:So I mean you go all the way back to plato, right? I think necessity is the mother of all innovation. I think that's, uh, attributed to Plato. But in slightly more recent years. I remember back a while back when I was doing my internship and I worked for a firm doing my internship. So those of you that are out there that don't know this, my background is architecture architecture school, a couple of degrees, ae and AEC firms for 20 some odd years before going out on my own. But when I was doing my internship it was a little bit of an unusual firm because the two architecture partners in my firm both studied at IIT in Chicago and they had Mies van der Rohe as a professor Right.
Speaker 1:So you know. If you don't know what a number two pencil is, there's more Googling to be done. Who's Mies van der Rohe right and when did Mies van der Rohe die? Basically, the part of that story is these two guys that I worked for were old. Is these two guys that I worked for were old? Okay, they were old. Back then they they had me as a, as a um, as a professor, and we were drawing everything by hand pencils.
Speaker 1:Right now, many of my classmates that were doing their internships at the time. They were using AutoCAD relatively early, um, but they were using AutoCAD, but they were using AutoCAD. We had a, we had a client that you know, a big corporate conglomerate that did a lot of retail, or they, that's all. All retail stores. We were doing tenant improvement plans. Or Jeff was doing tenant improvement plans, right as the intern, he's sitting on the drawing board doing doing sets 10 improvement sets, assuming one store a day by hand, the full set right For 10 improvement plans a store a day.
Speaker 1:And eventually we moved from the pencil to AutoCAD and I would argue that we really didn't make a whole lot of advancement right To to your point earlier, jumping from digitization forward, right, we didn't make a whole lot of advancement right to your point earlier, jumping from digitization forward, right, we didn't make a whole lot of advancement. We didn't even get that much faster because we started adding in more and more. That probably wasn't even necessary. And then we went from AutoCAD to Revit sorry for those of you that are outside of the Autodesk suite, but we went from Autodesk or AutoCAD to Revit and I would argue that we really didn't make many advances. I think we added in a lot of things that maybe we didn't necessarily need to add in without gaining too many improvements in the process. Did it get more efficient? Maybe, but I don't think we got any faster. So I think that's super interesting and I think one of your points- when you're talking about inflation and tariffs.
Speaker 2:But efficient for who? Even if we say that this digitization process and evolution became efficient. Efficient for who? Maybe the person on the computer?
Speaker 1:Yeah, well, I think that's it. I think that's exactly it. Now I can copy, I can do an array command and I can copy that window 50 times, rather than drawing it 50 times. But that didn't flow downstream anywhere.
Speaker 2:So you can make the same mistake 50 times.
Speaker 1:Yes, you could potentially. Yeah, if you didn't have good blocks or good families or whatever. Yeah, absolutely. You're just exasperating the situation. Tariffs right now? Right, If tariffs drive the cost of goods and services up, which would then, by extension, drive the cost of construction up.
Speaker 1:A lot of what happens now, and we're seeing lots of comments on LinkedIn and other places, other forums, mastermind groups, et cetera, where hey, now you know, the client's budget was 10 million dollars on this project they're, they're expecting some escalation and cost or whatever does. Does their budget, do they have the budget to absorb that escalation? Well, no, they're putting it on hold or they're going to revisit it next year. You, you know something, right, there's something that's happening because there's a limit there. So, when we look at how to operate, you know, on the on the architecture, on the design side or the construction side, understanding the realities of our clients on the owner's side, how are we going to respond to that? It's not by copying a window or making the same mistake 50 times faster. Right, it's, it's to your point. There's got to be a fundamental business model change there if we're going to continue to serve clients.
Speaker 2:Yeah, that was interesting. You know we had our friend Mark Teixeira on one of our mastermind group talk speaker series and you know Mark being a real estate developer talking to our folks, you know he was asked what do you look for in your AE firms, your contractors? He's like people that can solve problems. It's a very simple point of view. He didn't say someone that can draw plans faster. He didn't say someone that can give me a Revit model with great family. None of those things, right, solve problems for me. Come in and solve a problem for me.
Speaker 2:So you know, if an owner had a $10 million budget and price of goods go up, in fact a lot of firms charge a percentage of project. In fact a lot of firms charge as a percentage of project. In fact they're increasing their fee. But there's a downstream effect that says if a window costs 20% more, well, guess what? The person designing the window is charging you 20% more. So there's actually an incentive for a lot of the services businesses that inflation is good because they're not charging their, they're not paying their employees that much more, but they're charging a lot more. So that's one of those weird dynamics I always say like, even like with recruiters. It's a really weird thing, when you hire a recruiter to work for you, that they get paid a percentage 20% of the person's salary. Why would they negotiate? There's no incentive for a recruiter to say, hey, the guy wants $250,000 a year, but I think I can get him for $200,000.
Speaker 2:In fact the opposite is sometimes true, right, sure, yeah, so there's not incentive alignment. But if a cut line comes back and say, hey, I only had $10 million to build this building, comes back and says, hey, I only had $10 million to build this building, inflation's driving it through the roof, I just think you can go from, let's say, an increase to $12 million versus $10 million. I don't think you can go from $12 million to $10 million. It has to be rethought, everything has to be rethought to get it back to $10 million. I think that was my point with that post.
Speaker 1:Yeah, yeah, I mean, that's, that's the reality, right? And? And because we're hearing that right, we understand that reality. There's no. The owner doesn't magically now have 2 million more dollars. Are they going to negotiate the design team's fee down?
Speaker 1:Probably, you know there's a lot of things that go into that, but I think what you're talking about here, you know, really pushing the button on the need for looking at business models. That's the importance right of this post. It's same as the point of going from doing a tenant improvement plan, a full set of tenant improvement plans, every day, using a pencil to Revit and all of the efficiency being on the design side let's just say it that way or the production side, something like that. At what point, if you're going to stay relevant, if you're not going to be commoditized, as some people talk about, at what point are you going to start thinking differently about serving your clients, Especially in these types of times? I think there are a lot of people that look around, that are worried about this, that or the other, which is always the case, but I think the key is where are the areas that you can leverage? Where the areas that you can when? When things like this are happening. It's.
Speaker 2:It's opening something up right, it's opening up opportunity somehow how do you think the industry thinks about you know about changing the business model well like do you think like? Do you think there was a special meeting called it some big architecture? Oh my gosh, inflation. Hey, we need to huddle up and figure out how this is gonna be a problem no, I don't think.
Speaker 1:Well, yes, I think there's a meeting, right, I think there's a meeting that says what are we going to do? I mean, we've had lots of meetings like that over the I mean essentially every 10 years, right In these, in these cycles that we've typically had. We have lots of meetings like, oh, the economy is down, whatever the, whatever the driver is. But most of the time and I don't, I don't have any evidence that tells me that on a on a wide, widespread scale I mean, there are definitely individuals, individual firms and such that are looking at it differently, they're having different conversations, but I don't have any evidence that tells me that a large number of firms are saying how do we change our business model?
Speaker 1:Most of them are saying, saying, you know, what about our line of credit? What about hiring freezes? What about efficiencies? How do we crank things out faster? Who's who's on this client to make sure that they, that we do some value engineering or something like that to keep the project on track, or something you know, I think they're more damage controlled than they are. Forward thinking. You've got to do that, I suppose, with current events, current projects, but looking forward. Maybe I'm just feeling a little pessimistic today, but I don't see a lot of innovative thinking in terms of how are we going to change this business model.
Speaker 2:Yeah. And so what do you think? How do we think that matters? Right, how do we think about? You know, we can say I can make my, uh, my post right on the, on the linkedin, about all this stuff. Um, you know, we can have these conversations, but if no one's thinking about it, I mean we have, we. I mean, isn't someone? Doesn't someone have to be thinking about I? I mean, I'm in the fortunate, unfortunate situation, right, I'm foundation, I'm in the financial services business, right? So jobs, data, interest rates, inflation, terror, like this is my day, this is like half of my day, is just the consuming of this. And so if you're the leader of an AEC firm, do you have to be consuming the same information? Maybe not at the cadence and the depth in which I do, right, but at some level. And if you look at it and you come to my conclusion, hey, this is a perfect storm, you're just going to stay the course. To stick with the boating analogy, you're just going to stay the course.
Speaker 1:I mean, that just sounds obtuse right, right, no, I, I think obviously, the most innovative thinkers out there are thinking about this differently, but I, I do think this is, you know, I've been, I've been talking about this for a while now. I mean, I started doing my commodity, as this commodity does talk, back in 2014 or 15, something like that, you know, talking about that, talking about the speed of the rate of change increasing and why firms across AEC are being commoditized. And here we are, 10 years later, essentially, right, yeah, the that rate of the speed of the rate of change is just blinding. Now it's gotten so much faster. You know, we've got so many tools, um, but I, I think the natural inclination is to go back to that. How do we, how do we, crank this out faster? And I think that's the wrong question, right? I think one of the problems that we have in the aec world is and and you see this right, if you, if you look at the proposals from anybody on the design side, the architecture of the engineering side, many times led by the architect they're going to do their fee breakdown, with about 60 of the fee based on delivery of construction documents, right? So this is the quote. Unquote the value that we're creating, or at least that's the way we're invoicing, and that's the wrong thing. Right To Mark Tashira's point I need problem solvers.
Speaker 1:I was trying somewhere here in my notes I have written down exactly what he said, but he said get really good, put your best problem solving hat on, or something like that. What problems, what new problems, are architects and engineers and contractors going to solve for their, for the clients, for the customers, and how do you think differently about what an architect is or what an engineer is or what a contractor is? Because we talk about this all the time and you have it in your, in your post here. Number three was AI and robotics. You can put 3D printing in there. There's lots of other things that you could put in there, right, in terms of emerging technologies and different ways for project delivery, design delivery, delivery. You know design delivery, but but how? How are you fundamentally changing the solution that you're providing for your clients? Because you know they're and you talk about this all the time right, we can outsource things. There's all kinds of models for getting the things done faster, and that's certainly things that clients talk about.
Speaker 1:Oh, I need, I've got a and you'll. Maybe, in response to this. You'll bring up the what is it? 18-month or 19-month data center example. Okay, that's incredibly accelerated in terms of design and construction of a data center, but that's only one piece of the equation, one part of the equation, right? How are we, how are you serving your clients in a way that's radically different than feasibility study, schematic design, design, development, construction documents, construction administration, because all of those things are being commoditized. Now there's so many different ways, so many different tools that are going to if, if, at the end of the day, you're basing it on a, on a percentage of construction cost and or trading hours for dollars, that system is suddenly very, very broken no, and I think that's, and I think it is difficult, right, it's difficult to when you're running a big ship.
Speaker 2:back to our perfect storm analogy you got a huge ship, you're running through the ocean and you're in the middle of a perfect storm, right, like changing course, changing direction, you can see the storm ahead of you. It doesn't mean you can move the battleship and change course that much quicker Sure.
Speaker 2:And so I think, when you look at startups and I think, unfortunately, we talk about startups, we only talk about tech startups. But I'm now getting hit up by people, engineers especially. They're like hey, we're a company, we're a company, we're pretty comfortable, that's the best we have to use storm protection. So you've got people jumping ship from the big battleship into these dinghies avoiding the perfect storm and are trying to figure out what's next.
Speaker 1:Right, our early and mid-career mastermind group. We've got a mastermind member who's the head of VR for a large I would say a large engineering firm and actually she asked Mark to share a question right During you know when, when he was the guest mentor for for that mastermind group. She asked him about the role of VR and real estate investors, real estate developers. Asked him about the role of VR and real estate investors, real estate developers, and you know I thought his response was great and it you know I've thought about that some more right, it helps it, you know, if you are providing VR for your clients and allowing them to see the quote unquote, see the design, maybe in real time, as you're designing. You know, I was thinking through that. It can help them make better decisions, faster decisions, perhaps, right, and there's some, there's some human in here too but perhaps fewer mistakes, fewer reworks, fewer changes, you know. So, at some point down the road, oh, I didn't realize, that's what this is going to look like, or something like that. Right, that's a. That's a small way. I think that technology can be incorporated to serve clients better. Is it more efficient? Well, you know, point A to point B, maybe not, but none of these projects run, you know, in a completely linear fashion. Know, in a completely linear fashion, so the advantage of not coming back with RFIs or change orders or, you know, accelerating the decision-making process, which is always a huge when you, when you look at the uh, the Gantt chart of uh, of design and construction, there's always this huge gap that's in there from time to time for decision-making, review and and and comment, and you know everything else. We need to get the, the uh, uh, the client to make a decision on this, sign off on this, and it's going to take them four weeks to do it or something like that.
Speaker 1:Well, probably not. If we're showing them, sitting them down in a chair and showing them through VR what this is going to look like. Maybe that four weeks went to four hours or something like that. That's value, right, when you look at a developer's Performa and interest carry being one of, if not the largest line items in their Performa, if you take that four weeks down to four hours, that's huge. It's a huge value to them by bringing in new technology, if you will, vr is not that new, but, um, I think there's a lot of different ways that we can look. Some some of it are are pretty, pretty functional. Um, you know, pretty process driven like that. But I think there's there's other things out there. Are you seeing in terms that that excites you? Um, in ways that you think, yes, this, this could, and maybe it's not the battleship, maybe it is the dinghies or whatever's in between a ding and a battleship, but what? What excites you?
Speaker 2:yeah, I think what you're seeing is, um, I think, when you talk about these new firms is being focused on a specific product type, like I met with a firm today. They're very focused on industrial and they're thinking about everything from, like, site selection to operations and maintenance for an industrial facility, right, and I think that's super fascinating. So I think, if you think about the generalist design firms, the generalist construction firms, while they might break out into some studios, they still are not. If that's all they did all day and every person on that job site, this is all they did was 250,000 square foot warehouses all day long, and then they had to manage them after the fact. Right, they might come up with a different way of thinking about it. Um, I think we I think you and I were talking about like, um, this idea of like, every building design is a unique design and it's all custom. It's like this artist thing, right, and then we were talking about like andy warhol, who he actually mass produced all his art, right yeah, we're talking about my meeting this week.
Speaker 2:Yeah yeah, I think it's really similar. I think, if you think about it, if you can focus in on a project type and just nail down from beginning to end what that looks like, I think there's lots of room in there. I think there's lots of room, there's a lot of quote-unquote risk In our industry. There's this weird dynamic People hear risk and they're like, oh, we need to hire someone to manage it. They never think about mitigation of risk is actually putting people. It's like a human shield, I'm going to build a human shield. They don't think about, oh, how do I actually mitigate risk? Right?
Speaker 2:So if you think about that, I mean, I love job site safety as a conversation because there's zero winners. If there is a death or an injury on a job site, there are no winners, there's no win-lose proposition, right. And so when you think about an owner let's say financing, owner design, all the way down to quote-unquote the guy swinging the hammer right is there. Are the people upstream is? Is the owner worried about that guy swinging the hammer right? Does he have the right tools? Is he following the right safety? Maybe? Maybe, I mean conceptually, if you ask them at a coffee shop hey, do you care about your workers' safety. Of course we don't want anyone to get hurt. Nobody wants that, and so. But what happens is it gets.
Speaker 2:There's layers and layers and layers of protection to mitigate risk versus going to the root cause and say why do we make this? Workers like, like, why is a person doing this? Maybe why isn't a robot doing it? And so I think there's this massive disconnect. And so I think where the opportunities are evolving is, you know, owners have decided like, oh, we're going to defer to the professionals, we don't want to say anything that creates risk. The designers have said, oh, it means and methods, that's not us, that sounds like a lot of risk, right. Contractors have said, oh, we don't actually do work anymore, we just manage work, right. So now we have all these layers of people that have decided like, oh, it's not my job until it's, until it's eventually someone's job, right, yeah. And so I think that's where the opportunity lies yeah, I think that's really interesting.
Speaker 1:Yeah, I, I don't know if it was in that same conversation the other day, the andy warhol conversation, but recently we were. We were talking about something and I'm a thesis advisor again this year. This comes up a lot. You know, if you've got a student that's that wants to focus on architect as developer as a model and somehow work that into their thesis as a model and somehow work that into their thesis, I think the architect as developer model really kind of vibes with what you're saying. Right, because it's why don't more architects act as developers? Well, it's because of everything that you just said. Right, well, our risk managers and our contracts and this, that and the others, and they've completely forgotten how to mitigate risk. They, they aren't making the leap from. This is the way we work and we know no means and methods and everything you just described. Right, we can't do these things. But they haven't, even they haven't taken a step back and said, okay, well, how, what if? Haven't taken a step back and said, okay, well, how, what if? What if I acted like a developer and I and I built my pyramid of companies, so to speak, underneath an umbrella? You know, the same way that a developer would, and we've got separate business entities for this, that you know all, all the all the risk mitigation techniques, and I always thought this back back in the day when I was doing this and when we were doing designing and building and developing, um, my view was, the more we control, the safer we are, right. Now somebody else is saying, oh, the more you control, the more risk you're taking on. Yes, and I get to oversee, right, and I get to, I get to make sure we're doing it right. Basically, I get to make sure that that things aren't falling through the crack. There's this continuity in having all these things together and also opportunities for us to innovate. You know, maybe we deliver this in a different way. Maybe we use a robot to to tape drywall or whatever. Right, that wasn't around back when I was doing that.
Speaker 1:But I think if we were to go back and say, hey, what if we took a vastly different approach to the way that we do business and we took a bigger chunk rather than a smaller chunk? Historically, we're taking smaller and smaller chunks and we're giving more and more away, siloing more and more Is there an opportunity to go the other direction and then be able to say you know what we're going to do this for job site safety, we're going to do this for efficiency on installation and finishing of finishes, drywall, paint, et cetera. We're going to do this. You know, we're going to make these different decisions that in the siloed world we couldn't do, that. There's too many, too many people that have to sign off on this, that and the other. So maybe, maybe that's something, um, because it's. It definitely gives us some flexibility. Definitely, you know, the more we can own, sure, the more risk, but the more we can own, the more decisions we can make.
Speaker 2:And maybe that's the thing that we need to be able to. Innovate is take more out of the decision-making tree.
Speaker 1:But you know, here's a simple use case, right case.
Speaker 2:That's very relatable If you're cleaning. Let's say you had someone that cleaned your house. Every other week they come and clean your house.
Speaker 1:That would be fantastic.
Speaker 2:And you're paying $200 a time for them to come clean. And then they show up one day day and they install a Roomba. They basically say like, so I'm going to charge you $200 a month. Uh, cleaning, right, because I'm still doing all these other things, but at least the floors I'm not worrying about it, right? And the next day they, the next time they show up and they put in the bathroom version of a Roomba in your bathroom. At some point you're like why am I using a cleaning service? Right, in our world of commercial construction? It would be like well, I don't want the risk of my building not being cleaned. Right, I need to subordinate that risk. And all this stuff is coming out. Can you imagine your landscaper showing up and dropping off one of these lawnmowers? Have you seen them?
Speaker 1:Husker Barna has them, whatever you just put them on, they just kept grass right.
Speaker 2:You pay a landscaping guy like 300 bucks to come do your lawn or whatever it is people pay. I don't have lawnmowers. Inflation is probably like $300 these days. Pay, I don't have inflation. It's probably like 300 these days. The guy just shows up and drops, drops off this bot and like that's just, and he charges you the same amount of money. As a consumer you would say that's insane. I'm just gonna. I can go buy one of these for 600. It'll pay for itself in two times right you could yeah in our world of construction.
Speaker 2:It'd be like. It'd be like well, I don't know if the robot I do a good job yeah cutting it. So I'm gonna keep paying the guy 300 bucks because I need. I need a throat to choke right, which is kind of the entire premise of many of the decisions we make in construction. I want to outsource accountability yes, yes, there is.
Speaker 1:There is a culture of outsourcing accountability in the AEC world, certainly. I mean, that's where we are, yeah, but it's interesting, you know, when we're talking about robots and whether it's Roomba or cutting the grass, or taping drywall or painting or something like that. Number two in your perfect storm was labor shortages, right, mm-hmm. So you know, I've got prices going up because of, theoretically, because of inflation and tariffs um, I have the ability, the availability, growing availability of ai and robotics, but there are sandwiched in the middle of your, your post, there is labor shortages, which, hey, maybe I do want that robot cutting my grass, because I can't get a human to cut it yeah, it's.
Speaker 2:It's really interesting when you think about that. Um, in india back in the days, like everything was labor, like just lots of labor, lots of people around the house cleaning and cooking and just lots of people. And and I brought my grandmother to america she'd never been and uh, I showed her like hey, look, here's our garage door opener, which at her house in india she had when they opened the gate right. There's a person that stood there and opened the gate right and, um, I was like, hey, look at this garage door opener, hey door. Hey, I'm a kid. I'm like, hey, let me show you the dishwasher, I'm all right. Like it's amazing, it's magic. She's like what do you do when it breaks?
Speaker 1:I just thought.
Speaker 2:I've always thought it was so funny her view of people being dependable and equipment not like. Oh, what are you gonna do in the garage door opener breaks? You're gonna be stuck in your garage. Then what?
Speaker 1:She's not wrong.
Speaker 2:I was like and I was like, yeah, but what if this guy quits? She's like why would he quit? He needs a job.
Speaker 1:Interesting.
Speaker 2:Yeah, like the idea. And if he does quit, there's 10 other people right. So in her mind there was much more abundance of people and labor than there was of electricity and innovation, so to speak.
Speaker 1:Right right.
Speaker 2:Innovative things just break right. I remember my uncle saying like when power windows first came out and they weren't that reliable in cars, he said I'm never buying a car with power. Windows first came out and they weren't that reliable in cars, so I'm never buying a car with power windows. What are you? I'm gonna get stuck in the car. I get stuck in the car, it's, it's just, it's just one more thing to break. It's just one more thing to break, right, uh, and I can't imagine like rolling down the window I don know, maybe it's something we go back to.
Speaker 2:Well, I think what happens too. As we have a continued proliferation of technology in our personal lives, it will translate into our work lives. I had to see of a large construction company tell me one time that I get better data on my iPad about how my kid's doing in middle school than I do on projects in my multi-billion dollar company, where I'm staffed with all these IT people and innovation people. I still can't get information.
Speaker 1:Oh, what does that tell us?
Speaker 2:Right, but he became more demanding for his teams when in his personal life he was different experience, a different user experience. In his personal life he's like I don't understand. If a middle school, if a public middle middle school, can give me all this information real time, why can my multi-billion dollar company not give me information real time? This is ridiculous. Yeah, so as you see a room at your house or the lawn, automated lawnmower, I mean, I think foundationally you're going to start to see like more demands on, on that stuff right.
Speaker 1:Well, in the movie the perfect storm, things didn't work out so well for the fishing crew. As you look at your post here perfect storm, inflation and tariffs, labor shortages, ai and robotics, moving from digitization to transformation and dipping our toes in into disruption in the AEC industry Any, any crystal ball moments to share anything that that you see on the horizon, that you think is that maybe even you know, because, like I said, I mean there's some component of this that's current events. Um, what do you see in the short term?
Speaker 2:I think you're going to see, just because of how fast ai is moving. I think as much as people are like this AI product is going to help me get rid of engineers or architects or whatever, I don't think that's really what's happening. I'm seeing a level of frustration from the AI providers trying to sell into the industry that are just going to start going direct. They're just going to say you know what? Forget about selling technology to these service providers. I'm just going to go be that service provider and use technology to be cheaper, better, faster, and I'm going to go to the customer with a different business model. Right, it's not going to be the same business model as this previous provider did. Like it might be. Hey, you know what. I'm going to be your design team, but I'm going to be an equity partner in the deal. You're not going to pay me a dime.
Speaker 2:I'm going to have a percentage of the project, or I'm going to do, you know like, we have a company in our portfolio company One of our port codes is a robot that paints, does drywall finishing and painting. Maybe the owner says you know what, instead of going to the gc and the sub and everyone else, I'm just going to hire you directly. Right? It's back to the roomba analogy why am I?
Speaker 2:going to pay someone to watch a robot. So, um, yeah, I think I think that stuff's happening and I think I think that's where it's going to go, but I think you're going to start seeing these narrow swim lanes around um different building types, because I think it's hard to apply these change principles across every project.
Speaker 2:I mean, I was talking to I was talking to a building product manufacturer yesterday and when I was talking to them, they said I think we want to become a home builder. I'm like, really, and they're like why not? What? What does a home builder do? That's so complicated that we could not be doing. It's like, well, you're going to compete with your customers, like so, like, so, what? I mean? I think that's just what's happening, pete. You know, I think if you take away the focus on robots and AI for a second, I would win the market, because the market is not being served well, and I can do it better and I'm going to do it differently. And I think that's the crystal ball is if you're not leading with your business model, change the rest of it's like you're doing it wrong. Yeah.
Speaker 1:Which I think I cover in my book.
Speaker 2:by the way, we never talk about my book anymore.
Speaker 1:What's the name of your book?
Speaker 2:Book Sales are Slumping.
Speaker 1:Well, I guess we better talk about it Creating the Intangible.
Speaker 2:Enterprise now available on Amazon. Audible, barnes, noble, all the places.
Speaker 1:All the places.
Speaker 2:I mean, I think a lot of. It's kind of interesting too, that book. I wrote it a little, let's just say, about a year ago and almost everything is coming true. Almost everything in it is coming true. True, almost everything in it is coming true. It's fascinating. It's fun to me when I see, whether it's an earnings report or, like you know, I called for the death of management consulting firms. So seeing those issues happening in the market, I'm like, hey, you guys would all read my book a year ago, like you wouldn't be in so much trouble.
Speaker 1:You would know. You would have known what was coming.
Speaker 2:You would know, you would have already known so the low, low price of whatever they charge for my book. You could have known everything.
Speaker 1:There you go. Yeah, maybe I should know what they charge for my book?
Speaker 2:I don't know.
Speaker 1:I don't know either. It's. It's one credit on Audible, that's how much it is. And also we talk about a lot of these things in our mastermind groups, you know, with our innovation leaders or our construction technology leaders or AI, or, soon to be, our sustainability leaders and, of course, our early and mid-career folks. These are the types of discussions depending on the group, of course, and the makeup of the groups, the people in the groups different real-world applications to some of these conversations How's this working in your place? What are you guys doing? That kind of thing. But these are the um, these are conversations that are going on, and we will be headed you and I both will be headed to phoenix and, as we record this, in about three weeks or so, for our q1 uh, one day mastermind event, and we will certainly be talking about similar topics. So this you know, I'm saying that out loud and also thinking this is probably going to publish about that same week. So it may be past tense by that point, but our Q2 one day will be in Atlanta. So you know we can get you hooked up for that one.
Speaker 1:If you're hearing this too late to join us in Phoenix, let me read this post one more time before we wrap it up Again. You posted this on LinkedIn. It showed me four days ago. That's probably February 3rd and 4th, 2025, in case it's not that year for you right now, as you listen, it says perfect storm One inflation and tariffs. Two, labor shortages. Three, ai and robotics, moving from digitization to transformation and dipping our toes in disruption in the architecture, engineering, construction industry. By the way, if you are a startup founder, I love perfect storm slides For such a massive industry. Perfect storm slides For such a massive industry. It's rarely about, if it's mostly about, when and when is typically existential.
Speaker 1:Kp, thank you for joining me again today, as you do every week, to unpack one of your posts. And again, for those of you that are out there, if you're not following KP on LinkedIn, you should be. These are the kinds of things that he posts and these are the kinds of things that we unpack here on the uh, on the podcast and producer Ethan, who's listening intently. He's in the booth right now. If you're seeing this in the video, the booth is right up there. Um producer Ethan will produce, effectively, a podcast companion. He has a production team, so to speak, that's putting together a publication for each one of our podcast episodes now. So that's really cool, and producer Ethan will put in the show notes everything that we've referenced, also the link to get to those resources where you can subscribe and get those sent to you every week. So it's a little bit of a new feature as we're discussing it right now, but exciting things on the horizon. So, kp, thanks again for joining me and everybody out there. We'll see you next week.
Speaker 2:All right, see everybody.
Speaker 1:Thanks everybody.