The need for innovations and sustainability in the construction industry
It is not news that the construction industry is one of the largest in the world, and according to experts, it will reach USD 12.7 trillion by 2022. However, despite its scale, the construction industry is also one of the most unproductive, which means that now, during the 4th industrial revolution, is the perfect time to optimize it.
Unfortunately, sustainability and energy-intensive construction are not always synonymous with each other. The construction industry is one of the largest sources of environmental pollution and users of the world’s resources. However, there is some good news. The construction sector is gradually becoming more resilient despite many conflicting goals and complex challenges.
“Innovation in the built environment has a key focus on sustainability — including new forms of construction that are cleaner and greener and that help to reduce waste.”
The above quote captures the essence of what is happening today. Innovation can play a crucial role in sustainability, especially in the realities of the construction industry, which is actively looking for ways to improve processes and establish working models to ensure environmental sustainability.
The current COVID-19 pandemic has only increased the focus of the global business on environmental issues, including the need to create a greener and more productive construction industry.
Various strategic changes are being made to business models as companies look for product and service innovation to create a more sustainable industry and “build better.”
Today’s interviewee Michael Schmid and his startup Greengineers offer innovative consultancy services in the sustainability and energy-intensive sector for the construction industry. In our interview, we talked about launching a startup in such a complex and new industry as sustainable or green construction. Today, you will also find out if it is possible to finance the company on your own and why “sustainability” is a new trend in the business environment.
Let’s go “green”!
Who are Greengineers?
“Greengineers – is a neutral consultancy startup in the sustainable construction sector,” Michael stated when we asked for the definition of their company and activity.
However, every story has a beginning … And, of course, we asked Michael about the story and the idea of creating a Greengineers startup, or rather a consulting company, as we have already found out earlier.
He started by plunging into his memories: “Greengineers started from a joint project my co-founder, and I had in the university. Our task was to imagine that we founded a startup and pitch our idea in front of our teacher.”
After a short pause, Michael shared with us the details of their first idea: “We dedicated a big part of our project to vertical greening. We wanted to create an eco space with a vertical greening of walls. So basically, the idea was to introduce greening in the construction sector,” stated our interviewee.
Getting closer to the subject, Michael told us the following: “During our project, we got an idea to build our vertical greening system. However, after some research, we realized that many companies are already great at vertical greening. So for us, for two young entrepreneurs, who are not engineers and developers themselves, this market was not compatible. At the same time, we knew that greening in construction is a very complex technology,” confessed our interviewee.
He came to the main point: “Despite all the findings, we knew we had a lot of experience and knowledge that we wanted to share. So, we decided to consult people on how to implement greening properly and later added the whole range of sustainable technologies to expand our portfolio,” stated our interviewee.
How to define a niche for a startup?
After finding out the background of the company’s creation, we became curious why Michael and his co-founder decided to choose this business direction or, better to say, niche.
“Of course, even if sustainability is a popular and important market today, it’s not enough just to have a good idea to earn money; you have to find your place in this market to grow and to become successful,” said the Co-founder of Greengineers. He continued and shared with us an interesting thought: “I think the market has pushed us to the business model we have today.” He summed up his answer and stated: “So, I guess we have found our niche and the way we can create and add value to the sustainable market, our planet, and people all over the world.”
In the end, he added: “We believe that sustainability can save the world, and we created Greengineers because we want to change the world for good.”
“The future is today,” one of our contemporaries said. And the future will be successful for those companies that recognize the need for innovations and their adoption to meet real human needs, with sustainability at the heart of their business.
“We believe that sustainability can save the world, and we created Greengineers because we want to change the world for good.”
How to remain a self-funded startup?
After discussing the idea of a startup and why Michael chose this particular direction of activity, we moved from words to the practical aspects of startup development and asked our interviewee probably the most exciting question: “How did they finance their startup?”
The answer of our interviewee surprised us a lot: “This may sound unusual, but we are fortunate not to have any big investor rounds yet,” said Michael.
This may seem surprising to some entrepreneurs, but not all startup owners look for investors and external funding. If, for any reason, you want to finance a startup without attracting investors, use the personal resources of the team (co-founders) or a bank loan as alternative sources of funding. In support of our words, Michael shared with us the following: “The starting capital was our savings.”
If you strive to remain self-funded, remember a few rules: Keep your expenses overhead very low. Be creative – find ways to do more with less. For example, how Greengineers startup did: “We hired some engineers who were young students ready to work almost for free in the beginning because they were our close friends,” said our interviewee.
Another rule is to find ways to generate cash income very early on. Let’s find out what our interlocutor thinks about this. “We are not making a lot of money, but we want to keep our growth organic. So far, we are completely living from our savings and projects,” shared Michael with us.
Starting a self-funded company without investors can bring many benefits that outweigh the disadvantages, such as no external oversight and the need to compromise with shareholders, and a quick change in the direction of business when you deem it necessary.
“We are not making a lot of money, but we want to keep our growth organic.”
A long-term interest in sustainability
Construction companies and individual clients are paying more attention to green technologies, sustainable solutions, and energy savings than ever before, and it is worth noting, not only for the environmental benefits but also as a result of the net profit savings they will ultimately receive.
After discussing the financial side of the startup development issue, we asked Michael about the business model they chose for their startup and the clients they prefer.
“We are doing both B2B and B2C”, said our interviewee. He shared with us some details: “We offer our services both to construction companies who want to do a sustainable project and to private clients, for example, families, who want to build a new house with the greening.”
Michael continued and added the following: “Regarding our preferences, our clients must have a long-term interest in sustainability.”
What about customer geography? “Our clients are mainly located in Germany and Austria, but we are planning to expand our business activity in more European countries,” stated the Co-founder of Greengineers.
Regardless of what project you need to implement or what type of construction you are planning, it makes sense to use the services of a qualified sustainability consultant, such as Greengineers, for example, to ensure the highest quality work with the lowest possible overhead.
“First generation of customers”
Of course, every entrepreneur dreams of building a business and developing it to an incredible scale. Who hasn’t imagined themselves to be the owner of Apple or Microsoft? However, the thousands or millions of clients you think of are not as important as the few near-volunteers you started with. After all, they are your “first generation of customers” and, of course, the most important.
Therefore, our topic about clients and business models often does not end with one question, and we always ask our interviewees about the story of their first client.
The Greengineers startup was no exception, and Michael, in turn, shared with us the following interesting story: “It was a fund and, of course, they wanted to create an extraordinary and innovative sustainable project. So, we were working together on two buildings, and the fun part was that we put all innovative sustainable technology in one project. As a result, they could use this project for marketing and try which technology is the most sustainable.”
The reason to build and to live sustainably
“The greatest threat to our planet is the belief that someone else will save it.”
Indeed, sustainability is not only a tribute to trends; it has become a business necessity. But beyond its positive environmental impact, green business is also a pioneer in social change. In recent years, events worldwide have inspired people to be more aware of the environment. This way of thinking has spread to business as well.
Thinking about this, we asked Michael why, despite the complexity of the “green business” niche, they think that now is the best time for their startup to exist?
“I guess sustainability is a big trend, at least in Europe,” stated the Co-founder of Greengineers. He noted the following: “I don’t know if you feel it in Ukraine, but in Germany, you can feel that it’s getting hotter in summer; I mean, you can feel how the climate changes. That’s why it’s important to do something in sustainability right now,” stated our interviewee.
In the end, he added another critical thought: “Politics and laws in Europe are dramatically changing. That’s the other reason to build and to live sustainably.”
Diversity in a startup team
Having discussed the relevance of green business, we moved on to the next question. We asked our interviewee about his recipe for a unique and unstoppable team; in other words, what he values most about his team?
“Our team consists of ten people and includes engineers, architects, and experts from different fields,” started Michael. Further, he shared with us his secret of a successful team: “It’s inspiring to work with our team because we are very diverse,” stated our interviewee and explained: “it’s not so common in the construction industry to have both men and women working together.” He added: “We are also very diverse in age. In Greengineers, we have both very experienced people and young students.”
The main reason for building a diverse team is to increase the productivity and creativity of a startup. By bringing together experts from different fields, backgrounds, nationalities, and age groups, you get a team with unique abilities and potential to create truly effective products and services.
“It has been proven that more diverse companies are often more innovative and creative.”
Rethinking success metrics in the time of Coronavirus
The COVID-19 pandemic has fundamentally changed the way we do business and how we measure our enterprise’s performance and success, especially related to startups. Today’s startup owners should apply the following mindset: “Slow and Sustainable” instead of “Fast and Furious.”
Of course, we inquired about our interviewee’s opinion on this matter and asked how Greengineers measure the success of their startup in the current situation on the global arena?
Michael admitted the following facts: “On one hand, “success” is to be still alive and have an excellent growth rate due to the current situation in the world with the economic and COVID-19 pandemic.” He noticed: “We made a little profit last year, which was an awesome goal for us.”
On reflection, he also added the following critical thought: “On the other hand, in a larger sense, “success” is to see that we are building sustainable houses,” stated the Co-founder of Greengineers.
“In a larger sense, “success” is to see that we are building sustainable houses.”
COVID-19 and its impact
Having touched on the subject of COVID-19 and the pandemic, we could not help but ask Michael how the situation is developing for Greengineers?
“For us, it is mainly about social aspects,” stated our interviewee. He emphasized the following: “I mean, we take the situation seriously and are strict about keeping distance and wearing masks. So, of course, it affected our daily life.”
However, he highlighted the following: “But if we are talking about the business side of this question, of course, compared to other businesses like restaurants and so on, we are not affected that much.”
In 2020 and 2021, COVID-19 has seriously disrupted global business. No industry was immune, and companies worldwide had to adapt and adjust their goals and strategies. We still do not know the final impact of the pandemic on the business and construction sector. But in 2022, industry experts expect many companies to come forward with a commitment to sustainability.
Every startup strives to grow
Concluding our conversation about aspects of startup development, we asked Michael the last question, mainly, if Greengineers plans to grow and what goals have they set for themselves for the next year?
The answer of our interviewee showed that despite the difficult economic situation, the Greengineers startup seeks not only to stay afloat but also to develop further and expand their activity. Michael stated: “Everyone knows that 90% of young startups fail in 2-3 years, so for us to still be alive in such a critical time is already a win. But of course, we have plans; we want to start another 15 construction projects this year.”
Trying to increase market share, increase profitability or increase the number of employees, every company, and even more so, a startup strives for growth. To do this, despite any conditions, you need to learn how to solve complex problems and find creative ways forward in the process of growth and expansion of the business.
Are startups immune to business risk?
No startup is immune to business risks, including funding problems or legal issues. However, no matter how hard you try to avoid risks, sometimes the success of a startup is not entirely dependent on your actions and decisions. We asked Michael what, in his opinion, the threats and obstacles Greengineers can face?
“There are many things, of course, which can scare young co-founders at the beginning of their path,” started our interviewee. “However, the most threatening one is that COVID-19 pandemic can lead to a massive economic crisis, whose consequences we cannot imagine,” stated Michael.
Our next question was about competitors. “Regarding the competitors, the whole sustainability industry is a very new subject,” noticed the Co-founder of Greengineers. He explained his statement by sharing their strong points: “We don’t have any strong competitors at the moment. The way how we treat sustainability in building projects is unique. Of course, we have companies on the market which are doing some similar things, but for them, sustainable consultancy is just an additional service,” added Michael.
“The way we treat sustainability in building projects is unique.”
“Often, when you think you’re at the end of something, you’re at the beginning of something else.”
Traditionally, we asked Michael a few personal questions, and one of them was about alternatives to developing a startup. However, judging by his answer, our interviewee is a genuine entrepreneur.
“Probably, my alternative is to start another startup,” Michael confidently stated.
Advice for young entrepreneurs
Ron Conway once said: “Any time is a good time to start a company.”
At the end of our interview, we decided to find Michael’s opinion and asked for advice.
He shared two valuable thoughts with our audience:
“It’s never too early to start. Remember that networking is the most important thing you can do as an entrepreneur.”
“If you fail, it doesn’t mean that you are a bad entrepreneur. Never stop believing in what you are doing.”
Over the past decades, the construction industry has earned a reputation for lagging in adapting to change and innovation, in particular. Fortunately, today, we see how this concept began to recede into the past. Construction companies make a conscious effort to meet the needs of their customers, which often means green building.
With the proliferation and emergence of sustainable technologies, it is not surprising that construction companies and private clients are willing to consult with experts in this field, such as the startup of our interviewee Michael, the Greengineers.
Green construction is already not just far from a fad. It is where the construction industry is heading right now, and it’s likely to overtake the old unsustainable construction practices the world has become accustomed to.