Bill Wagner is passionate about growing business while creating great experiences for employees. Bill generates growth by applying cutting-edge best practices from the worlds of science, marketing, and economics in a way that scales into all companies la...
Bill Wagner is passionate about growing business while creating great experiences for employees. Bill generates growth by applying cutting-edge best practices from the worlds of science, marketing, and economics in a way that scales into all companies large or small! He currently leads a SaaS enterprise construction software and services company with all employees trained as Scrum Masters. Learn why this investment has paid dividends for Penta Technologies, Inc. and the customers they serve.
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Today’s episode is sponsored by Bosch RefinemySite. It’s a cloud-based construction platform. Bosch uses Lean principles to enable your entire team, from owners to trade contractors – to plan, communicate, document, and execute in real-time. It’s the digital tool that supports the Last Planner System® process and puts it all together in one simple, collaborative ecosystem. Bosch RefinemySite empowers your team, builds trust, creates a culture of responsibility, and enhances communication. Learn more and Try for free at https://www.bosch-refinemysite.us/tryforfree
Today’s episode is sponsored by Construction Accelerator. This online learning system for teams and individuals offers short, in-depth videos on numerous Lean topics for Builders and Designers to discuss and implement, just like on this podcast. This is tangible knowledge at your fingertips in the field, in the office, or at home. Support your Lean learning at your own pace. Learn more at http://trycanow.com/
Today's episode is sponsored by the Lean Construction Institute (LCI). This non-profit organization operates as a catalyst to transform the industry through Lean project delivery using an operating system centered on a common language, fundamental principles, and basic practices. Learn more at https://www.leanconstruction.org
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Felipe Engineer 0:00
So Bill tell me you're in Wisconsin right now.
I am. I am inside the city limits of Milwaukee, Wisconsin on the southwest side.
Felipe Engineer 0:09
I hear some accent. Have you spent any time in Illinois as well?
Yes. I grew up in Bridgeport in Chicago, and I definitely have a very thick Chicago accent.
Felipe Engineer 0:21
Yeah, you did. Bridgeport. Man, it takes me back.
I'm on cloud nine right now with the White Sox being in the playoffs for the first time in 13 years. So yeah, good day for me.
Felipe Engineer 0:32
So are you are you from Chicago? I mean, you grew up for but how long were you there?
Born on the south side was delivered in Evergreen Park. Lived in bridge our dad lived in lived in Bridgeport until my mom got remarried when I was in fifth grade, and my parents still live on the far southwest side about a mile west of Midway Airport. Okay, so all the way through to college. And then I went to Marquette University in Milwaukee and I stayed up here, but they haven't been able to get me to get rid of the accent or convert to being a Packer fan. So...
Felipe Engineer 1:09
That's not going to happen. There's just some things that are just poor taste.
Welcome to The EBFC Show, The Easier Better for Construction podcast. I'm your host Felipe Engineer-Manriquez. This show is all about the business of construction. Today's episode is sponsored by...
Bosch RefinemySite is a cloud based construction collaboration platform that applies Lean principles to enable your entire team to plan, communicate and execute in real time. It's the digital tool that works in tandem with your Last Planner system process and puts it all together in one simple, collaborative ecosystem. This easy to use platform is available in English, German, Spanish, Portuguese, and French and can be used on desktops, tablet and mobile devices. According to Spencer Easton, Scheduling Manager at Okland Construction, "RefinemySite, in my opinion, is the best cleanest tool on the market for last planner." Here's what our users have to say. We've looked at three other digital scheduling platforms and none compare to the straightforward approach refined my site takes from milestone planning all the way down to daily tasks. This program gives every general contractor and their trade partners meaningful collaboration, accountability and KPIs. Register today to try RefinemySite for free for 60 days.
Felipe Engineer 2:42
Today's episode is sponsored by Construction Accelerator.
The design and construction industries come up with and build great things. But we also build in waste in how we do those things, in our interactions in our contracts in our logistics. So what does this do for our bottom line, or our next project, the best firms maximize their value by removing that waste, and only doing what's essential to the work what makes them money. Construction Accelerator will train you to see the waste and give your teams the Lean tools and experience to remove it immediately. All online. Construction Accelerator is made up of three to nine minute videos that can be watched again and again, in the field, at the office and at home. All broken down by topic. Need to learn pull planning, we have videos on the process, how to set up a room and how to kick off a team need to set up a target value delivery project. We discuss all the aspects of TVD especially cost. Or maybe you just need to brush up on five as well. We have videos on that as well. You can download and print reference materials to use on site to immediately translate watching into doing subscribe today at trycanow.com. Let's build an industry not just a project.
Felipe Engineer 3:58
Today's show is also sponsored by the Lean construction Institute. LCI is working to lead the building industry and transforming its practices and culture. Its vision is to create a healthy and thriving industry that delivers outstanding project outcomes every time for everyone. Check the show notes for more information. Now to the show.
Welcome to the show, Bill Wagner. Bill, a fellow South Sider from Chicago. Living in... shhh...Wisconsin. Yes. Oh good. Yes. We're not gonna hold that against you, Bill. Because sometimes you got to get out of the city. I myself had to flee for opportunities, so I know exactly how that could happen. Bill. I'm so glad to have you on the show. You've got an amazing team of people working with you. Penta Technologies?
Penta Technologies Incorporated.
Felipe Engineer 4:52
I've met Laura and Justin. And we've had some good chats about one of my favorite subjects of all time, Scrum. Ladies and gentlemen were probably not even seconds into the show at Scrum has already been thrown down. Yeah.
Yeah, we are. We are. We are all about it at Penta.
Felipe Engineer 5:14
I love that.
Yeah. The the entire company is Scrum certified as a professional Scrum Master, including myself. I've gone through the class, I've passed the test. Every single person that works at Penta Technologies has done it as well. So we're, we're true believers.
Felipe Engineer 5:34
Amazing. That's proof positive that everyone in a well run organization understands Scrum. And I got that feel right away. Laura and Justin both definitely had the knowledge and the experience and and the excitement. That's the other thing too. How many people listening? Yes, are as excited as me and bill right now talking about Scrum at work. Right? Think about that, ladies and gentlemen, you're missing out.
If you're not, you should be right like, and we'll make the argument over the course of this conversation for why you should be as excited.
Felipe Engineer 6:07
So Bill, go ahead and tell all the beautiful people listening to the show. People, we love you and your support and Bill and I appreciate you. And if Bill says anything that you want to find out more about, hit us up in the comments and let us know. I'll make sure we answer all those questions. Go ahead and Bill, introduce yourself.
I am Bill Wagner. I am the president at Penta Technologies. I've been with Penta for just about four years. Penta Technologies actually marks my return to the construction industry. Because way back in the day when I had more hair, I started swinging a hammer for my uncle's general contracting business on the South Side of Chicago. So I love the industry. I love the industry almost as much as I love talking about Scrum.
Felipe Engineer 6:55
Oh, man, that is that's that's like that's a show first ladies and gentlemen.
Yeah. Well, I mean, you know, what's what's interesting to be, you know, when I was working in construction, when I was in high school in college, I had no idea what Scrum was right? Didn't really exist 30 years ago, but we were doing Scrum on the job site every day. We were doing short interval scheduling. We were iterating. We were having transparent conversations about the work we were engaging in every day. And so now 30 years later, I'm at Petra Technologies. We're all about Scrum, building software for the construction industry. Everything sort of come full circle for me in a pretty tight timeframe. Right. 30 years start to finish. And I'm right back where I started, which is great.
Felipe Engineer 7:47
Yeah, you started working in the industry, just as Jeff was, was making Scrum, putting the final touches on that and making it beautiful and perfect. And so I think your whole organization is has been trained by Scrum.org, which is Ken Schwaber's company - just beautiful. Ken co-creator Scrum Inc. Powerful Ken Schwaber. I just saw him earlier this year bill on the anniversary of Scrum. I think they just celebrated their 25 year anniversary. I might be wrong in that 25.
I think you're pretty close. Because you know, Scrum started, because a bunch of software developers realized that just like on a construction project, nothing happens exactly as you planned it. So you can't plan the entire building out in a set of blueprints, and then magically expect the thing to spring into being exactly as designed. It's the exact same thing in software, right? You build a piece of software, you're probably going to do a whole bunch of things you've never done before, you're going to have to learn, you're going to have to react to things that don't go as intended over the course of the project. And Ken and those guys that wrote the Agile Manifesto got a lot right about how to think about that type of work, which I think is why Scrum has lasted for 25 plus years. And why it works as a system, not just for software development, but for lots of other things in business.
Felipe Engineer 9:19
Absolutely. I've personally used it in education, research, construction, project management, work with the trades. it just...like I told JJ it works everywhere.
Felipe Engineer 9:32
And so Bill, you're working at Penta. You're a software company dedicated to helping construction professionals. I told you know your colleagues, Laura and Justin caught my attention went to your site, and we'll put a link to their software site in the show notes so everyone could go check them out. I told Laura, the thing that really jumped out at me is that you guys really, really do understand what project managers what their work is and what they're struggling through. So and I told her, it's like, it really shows in your site a lot of software companies out there Bill, you go to their site and it's kind of generic. Why? How did you guys get so special and targeted with construction project managers?
So I love telling this story. And it's gonna take me a couple of minutes because we got to get it, we got to get into DeLorean together, we got to go all the way back to 1968. So Penta has been developing software for the construction industry since 1968, when our founder who ran an industrial coatings business, now painting bridges cleaning out tanks for large industrial plants. He got hooked up with a computer scientists from the Milwaukee School of Engineering and Milwaukee, and a consulting CPA to the construction industry. And they had the crazy vision to leverage mainframe computers to keep track of job costs to try to do better estimates. And that that turned into a very successful business. Obviously, being focused on job costs using mainframe computers. The thing that was right next to keeping track of the job costs was managing payroll for construction companies. And in the mid 80s, we had 1000s of customers all across the country. We were renting mainframe time from Ross Perot's company. And we would run your paychecks run your job cost ledger and spit the data back out and deliver it to your doorstep. Right. So from the very beginning, we came out of a construction company, we were laser focused on this idea that if you're doing a better more granular job of vacuuming up, what is actually happening inside your business every day, you can use that information to make smarter decisions in the future. And so, we did that in the 80s. In the 90s, we pivoted to a Windows based accounting system that is now used by around 100, very large, very complex specialty contractors, typically, the more difficult the business, the better fit we are for them. So companies with a complex organizational structure, union, non union payroll, a lot of traveling labor force that are working outside of their home Union Local, we do that really well. And in the last five years since I joined the company, we've started to expand our footprint in terms of the solutions we provide the market, we're really focused right now on the labor productivity piece of construction, with our product, Struxi, which is kind of a labor project management tool for the job site. And we're a month or two away from bringing the very first cloud based construction payroll calculator to market. And we're going to offer that as a component of other people's software that serves the construction industry. And so you think about this ability to tie the cost into the forward looking plan. We're really excited about being able to arm project managers with that short interval view of what's happening on the job. And because we have the ability to get to what a fully burdened hour of a given labor will cost in the future. We're really excited about turning the corner and being able to help project managers predictively plan what's going to happen in the future. And I think we're we're this close to it as an industry. And I'm excited about Penta playing a part in that transformation.
Felipe Engineer 13:41
That's a beautiful thing, Bill. I mean, my listeners know that we've got right now it's 2021. We have over 1 million unanswered jobs in construction that we can't fill due to lack of skilled labor out there. We had a lot of people that we lost during the last economic downturn of 08, that didn't come back into the industry when we contracted. So we definitely need ways to better understand the labor costs we have retain the workers that we have and support our men and women that are running the projects, because it's not easy. Forecasting is one of the things that a lot of the more sophisticated clients often complained is not done well on a construction project sites because of how they receive capital and financing for the project. So I think this is a this is not an I don't want to say silver bullet, but I just kind of said it.
Yeah. You know, I mean, behind every silver bullets, a lot of hard work, right. And I think the idea that you can leverage data to make smarter decisions in the future. It's already happened in a lot of industries. And so you know, I told you a little bit of my story. I started in construction as a kid I left, it took me 30 years to come back. In the intervening time I worked in healthcare, e-commerce, I worked for ABB, one of the largest electrical engineering companies on the planet for nine years in all of those other industries, because there's not as much variance in the work being performed, they got a head start on construction in their ability to leverage data to make smarter decisions. Because the work is so much more repeatable in a factory, right? Or in a distribution center. And I think the construction industry, because it is a service business, right? You don't hire a specialty trade contractor to hand you a finished building or a finished HVAC system, you hire them to perform the work. Because of that, I think we're all a little bit too in love with our existing business process, right? Because your existing business processes, how you won business against your competitor, so you really don't want to mess around with it. And what we're trying to do what all these construction software companies are trying to do, what the capital markets are doing by dumping hundreds of millions of dollars into construction technology companies right now is get the trades people to realize that embracing software as a toolkit to make your business more efficient, make the labor you already have more efficient, it's a necessary next step in the evolution of this market. And I think we're we're right there, we're at a real tipping point, which is something that I get really excited about.
Felipe Engineer 16:39
And Bill I saw on your site, you have a lot of different solutions available for even EPC industrial construction, other construction, self performing concrete, can you tell me a couple case study like stories? Perfect.
So one of our favorite customers is a company called Liftco out of Cincinnati, they're right now I think they're either one or two. In terms of revenue for concrete contractors in the United States, unbelievably progressive company, the executive leadership team is very forward thinking very bright. They've got really diverse experiences and skill sets from outside the industry. And they do a great job leveraging our accounting product, to keep track of everything at a really granular level, right. So they're, they're squeezing every last point of margin out of their projects. Because they know what works. One of the things that we've recently did with them was we armed their people with a tool that allows them to keep track of labor productivity, not on a monthly or weekly basis, but on a daily basis. And so now, they're you're not quite yet in front of all the bad things that can happen on a construction job that might cause you to lose time or lose money. But if less than 24 hours elapses before people know about it, as opposed to a week, or 29, or 30 days, think about how much better equipped you are to respond to those things. And, and so working with them, we have a really strong case study with those guys were keeping track of the labor every day, you know, by employee by cost code. And what kind of production happened inside those cost codes for those units of labor that day. They're poised to get in front of this. And when you talk to their VP of IT, and he's also their special projects guy, he talks about it, this analogy is so good. He talks about, you know, six years ago, what we would do, we would go to the driving range, we would buy the large bucket of balls, we'd hit all the balls out there. And after we hit the entire bucket, we pick our head up and look and see where they all landed. And the only opportunity you get to tweak your swing is on the next bucket of balls, the next project. He said what we're doing now, because we're taking this much thinner slice using the software. We're hitting one ball at a time, every day. And every day, we get an opportunity to tweak our string, our swing. And the thing that we're going to work on together. Next is how do we turn this into the golden tee video game where you can point the arrow where you want to hit the ball and the computer software tells you what club to hit what employees to put on that task on that cost code tomorrow, and then it's really easy. You just got to follow the swing path, and you'll hit the ball exactly where you predicted you could hit it. And that's the type of thing that required them to open up the business process that I talked about earlier. They needed to embrace some change inside their business. But the payback on that shift It was almost immediate for those guys. It's one of my favorite case studies from the last couple of years.
Felipe Engineer 20:07
Bill, I really liked about that story. Number one, the analogy is spot on. I mean, like, yeah.
He's a really smart guy, I could pay him enough for that story, right.
Felipe Engineer 20:18
But that's the average. And the typical for even small construction companies all the way up to the big players at the multibillion dollar level, a lot of estimating is done. And really big swings does to stay the analogy, with very large buckets of balls and adjustments often are not made until projects are at handoff points or complete. And then when a job's in flight, just getting that feedback from 30 days to weekly to a daily. I mean, it sounds like a dream. To do that type. I only know of like two construction companies, two general contractors that self perform and do costing and update reporting on a daily basis. It's just very rare. It's so rare. And just to think that you can reduce that variation. And know like what people have the skills to come in, and course correct on that, on that location of where the balls are getting hit over the work is how the works being put in place. I mean, that's something that is like, invisible.
Well, you talked about Justin, who's a member of our team earlier, Justin was a project manager for Bechtel. And one of the interesting stories he tells is he built a spreadsheet that would allow him to realize when he was getting behind on a phase of a project. And when he was the thing he would start looking for is how many man hours is it going to take to get that work done on time? And how large is the space that I'm going to ask 14 laborers to inhabit for the next week to get that work done. And he do that at some point, it becomes untenable, right? I can't put 10 electricians in that 10 foot by 10 foot room. And so now I got to figure something else out. And the only way that you get to that level of control over your project is to take it as thin slice as possible. And to be looking at it on a regular basis.
Felipe Engineer 22:17
It's intuitive. And it sounds like you you're nailed it with having to change their current processes. That's the real tough, that's a tougher challenge.
Yeah, you know, one of the things that I still see way too much of is project managers, project leads, foremen who log what happened weekly? And the question that I asked 100 times out of 100 when I run into people who tell me that that's the way things are being done. Do you really remember what happened on Monday morning, because if you don't, if you don't have perfect photographic recall, of all of the things that unfolded over that, probably 60 Hour work week for yourself, and maybe up to 30 people. It's a creative writing exercise, and you're fooling yourself with bad data. And, you know, we we just had a thing recently happened that I think a lot of people should go look up, Autodesk and FMI just released a research paper on the cost of bad data in construction. Their estimate is that the construction industry lost almost $2 trillion in 2020. Just because of bad data....
Felipe Engineer 23:28
Oh, that's like making my stomach hurt. Just thinking about that.
That's two Facebooks. That's 2 trillion. Like that's a hard number to conceptualize as a human being. But I'll make it easy for everybody. The good structured industry lost enough money to buy Facebook twice in 2020. Just because we're doing a bad job of capturing, organizing, and leveraging the data we generate. And this is all happening while the amount of data being generated by the construction industry is exploding. The the stat they said is over 75 There's a I want to get this right through just 30% of the people they surveyed, said that they have 75% More data today than they did three years ago.
Felipe Engineer 23:39
You've got the massive increase in Internet of things. You've got everybody's got a recording camera recording device in their pocket today, which we didn't have before. 5G is a reality now. And so you got even faster data transmission we're creating. I don't even remember but I've heard statistics and we create more information every day than recorded history.
Within that - massive opportunity. Because if you know how to sift through the data for insight, there's gold there, you just have to know how to break out the pickaxe and mine it and and I think you know I keep talking about how we're at a real inflection point. In this industry, that's one of the things that makes me most excited to work in this market is I feel like these types of inflection points are rare in a given human being's life. I was lucky enough to live through the .com boom, back in the mid to late 90s, when I was just out of college. And now I get to live through something very similar in the construction industry, where I feel like we're the technology is finally catching up to the users. And I think this stuff is starting to get easier. And it's starting to get democratized. And it's gonna be really interesting to see who the winners and losers are as it relates to being able to wield this new toolkit that's available to everybody.
Felipe Engineer 25:43
Now, you're totally right. And people coming into the industry now, like even the tradespeople are coming in at a much higher level of technology usage than ever before. I kind of remember even like, six years ago, on a very poor cell phone that I only want to mention the carrier, what type of phone it was. And I remember the the person that was coming to do some kind of plumbing stuff had a cell phone, that was like 1000 times better than my, my company issued phone. Like, it's just so easy for people to get, like the latest and greatest tech now. And you can do a lot like they were they organize their entire workforce, on their whole plumbing team was all like using text messaging for where to go every day. And I thought, man, When's that going to come to us?
And that amazing. I was at the AGC it conference a month ago. And there's a panel discussion about network infrastructure and construction companies. And the Bring Your Own Device concept got brought up. And all the guys on this panel who are all technologists at large GCS and specialty contractors? Well, I would I would never do a bring your own device policy. I don't, I don't think we could manage the risk. And then I sat in that exact same room a day later, when we ran show of hands, how many people are working in an IT department that employs less than five people. And 90% of the hands in room shoot up. And I'm sitting there as a president of a technology company that does accounting software that embraced Bring Your Own Device two years ago. And now like my infrastructure, people inside my business, don't worry about managing individual hardware devices. They worry about network security. And the great thing about this is for less money than if I was supplying everybody with their laptops and their tablets and their phones, everybody in our business has the latest and greatest technology at their disposal. 24/7. And it's like stuff like that. I think it's it's really easy to gloss over it. But what a powerful concept and what construction companies are doing that right now. Right?
Felipe Engineer 27:58
Not not any that I know of, right?
Yeah. And so I think the wave is, is hitting the shore right now with all this stuff in our market. And I'm excited to see what unfolds because, you know, you get out from under having to give everybody in your company, a three year old cell phone, and you let them bring their own stuff and provide good guidance for how they should keep that stuff secure. That the 22 year olds that are coming out of college, they know this stuff already. It's not hard to teach them. We the number of construction companies I talked to when when we talk about software, and you say, Well, you know, the vast majority of our guys out in the field, they don't have smartphones, they don't have email addresses. 90% of the people above the age of 13 in the United States have a smartphone right now. I'm willing to bet that the vast majority your field labor, they have email addresses, they have Facebook accounts, they have smartphones, right? You're just you sticking your head in the sand that this is what's happening around you. And I'll tell you what a 22 year old who grew up with social media who had an iPad in their hands when they were 10 years old. They're not gonna want to fill out a paper timecard every day. And a lot of construction companies are asking them to do just that. And so, you know, to your point about how do we get the young folks into this industry, how do we get them excited? I think we have to meet them where they are. And they're a lot more advanced than I think we realize.
Felipe Engineer 29:35
Hey, real quick!
Construction is one of the only industries that's become less productive over the past six decades. 60% of construction job cost is labor. 80% of construction projects are over budget. 60% aren't on time. STRUXI replaces paper time sheets and manual data entry with easy to use software How much are inefficient job sites costing you? One of our customers estimates they'll say millions per year with struck see, read the case study at our website struxi.com. That's struxi.com. Software for hard work. You can also visit us at World of Concrete in Las Vegas come January.
Felipe Engineer 30:27
Oh 100%. And having grown up and almost injured my hand on taking handwritten notes and converting it to software. Yeah, it's so painful. And there's so many errors like it's yes, when you're transcribing something second hand, your chances for mistakes are higher. And if you're, if you're using software, and you can simplify the input drop down menus or checkboxes, you're greatly reducing the errors and your data is going to be so much better. I think, Bill I think for memory 2018 2019 numbers, United States construction history was about 3 trillion a year 11 million workers. So if I use your 2020 number, that means two thirds of everything we did was wasted, which again, makes my stomach hurt just a little bit. Yeah.
And you know, I mean, you see these these research papers, right, McKinsey did their efficiency of the construction industry report back in 2016. They're intentionally provocative, but there's definitely a vein of truth running through that stuff, right. And so you can argue over the number, there's fuzzy ways to get at the number. But the problem exists. And I don't think anybody would argue that we don't have those problems as an industry. And what's great about it is those problems, if you want to be an optimist, which I am about it, it, it's a huge opportunity. It's unprecedented. I mean, if we can all put $2 trillion back into the industry. Right? There's there's your infrastructure funding that we're all waiting with baited breath to see come from Washington, DC, right?
Felipe Engineer 32:09
Right. It would transform everything. It also wouldn't make it the industry to attract people worldwide bill about one out of six people work in construction. And I was just spending time at a conference this week. And I bumped into three different people that I spent time talking, it was not a construction conference. But three different people out of a dozen people that I met left the construction industry five or 10 years ago and didn't don't want to come back. And they asked me what I do is like what I'm doing, I'm working to stop people like you good people from leaving our industry. And keeping you inside with the with the transformation capabilities that you have with your technology. And technology is inevitable like we people, yes, if you're out there thinking that it's not there, go walk your job site. And we could point out technology all over the place. It's everywhere. And now it's there, because it's got to make it so that we can get the work done easier. With less effort. There's only so many hours in the day, there's no reason to work so incredibly hard for so little yield. Let's use the technology and software to help us. So I think that's one of the cool things about your company's approach. And I think I heard something in addition to bringing your own devices that you have a very unique office location working from home policy.
Yeah, sure. So yeah. So March 13, of 2020. I was about to get on an airplane and go visit a bunch of customers in the middle of nobody really know what was going on with COVID. And we had some conversations, I talked to the customers, I said, Hey, look, I don't know what's going on. I'm a healthy, early middle aged guy. I'm happy to take the risk of getting on an airplane, but I don't know what I might be bringing into your conference room. And it was shocking to me that our customers who really wanted to have face to face conversations with me, said no, why don't you stay in the walkie we could have these meetings over Microsoft Teams. And so on March 13, we made the decision to close our office. And we have we had an evergreen lease at the time for our company on the southwest side of Milwaukee. And we decided to start meaningfully investigating. What is it going to take for us to get rid of our physical location as a business? And yeah, a lot of work in a lot of surprising areas, right? Where's the mail going to go? What do we get it? What are we going to do with all the physical records that were bound by law to keep in storage? What about our server room? Right? We're a software company we had a ton of equipment in our server room. And what we did we leverage some of the principles of agile right? We're a Scrum business. said, let's take this thing in small slices, right, we'll start figuring out what we're going to do with the post office box, we'll get a tiger team together. And they'll work in two week increments to start moving the server room up to the cloud. And in March of this year, we went office free as a business. And it's currently, you know, permanent until we decide otherwise, we are a fully virtual business, we have a co working office that we rent in Milwaukee, that is much more affordable than a three quarter of a million dollar annual lease on a giant office space for 100 people. And that the couple of things that happened as we made the transition, we started to pick up a lot of unplanned efficiencies in the work, right, shifting all of the stuff in the server room to the cloud increased our security, right, minimize our exposure to threat vectors with cybersecurity created more availability, for the systems that were running in the server closet, we got more efficient as a business because there were less distractions in the work. Software developers, their job is hard, it requires focus. Context, switching has a huge cost. So if I interrupt the software developer for a two minute conversation, it takes that software developer on average, 15 minutes to get back to where they were before I interrupted them. So we started cutting down on the unintended interruptions in the work, so the work got more efficient, and the biggest one for us. We are now recruiting talent, nationally. And we have a built in advantage when we have to compete for a given person. Because people like the flexibility inherent in working from home, everybody gets an annual work from home stipend, another unintended advantage of that, we actually get tax benefits from that as a business. So we get more of a tax break, not having an office when we did functionally on our books every year. And you know, I'm I'm an extrovert, I like being around people, right? So I am president of a company. But all of those advantages have far outweighed the satisfaction of my own ego when I get to go into the office and interrupt people whenever I want. So it's been a really, it's been a really great thing for us as a business. And I, you know, it's not for everybody. It's not for every business. But I think it shows that the the agile mindset, and thinking about iterating and adapting, we really embrace that. And it's been a huge benefit to our business over the past year and a half. When a lot of businesses that we compete against, I still see them struggling mightily with how they deal with the new sort of working environment that's been forced on all of us because of COVID.
Felipe Engineer 38:09
That's very true. How long is your Scrum transformation or how long ago did start?
We started two and a half years ago. And you know, we first we had to pick a flavor of Scrum we are a flavor of agile, we went with scrum.org, because we felt there was a very lightweight way of getting into it. And the decision we made at the time was everybody in this business is going to go through the training, everybody in the business is going to take the test, because we thought it was very important that everybody have the shared language, and that we raise the floor for everybody. So everybody's got a universal understanding of what we're talking about. And Scrum really gave us a toolkit to reshape the talent inside the business. So we've churned through a lot of people in the last two years. And the Scrum framework of radical candor, transparency, inspection, adaptation, has allowed us to iterate on a much faster time series than if we hadn't done it. And it timed out perfectly, because we had about a year of experience with this new way of thinking about the business when COVID hit. And I think that that year really prepared us to be able to do a lot of unconventional things as we've navigated through these unprecedented business conditions.
Felipe Engineer 39:39
I mean, it sounds everything that we know Scrum to be ladies and gentlemen. So you're listening to Bill Wagner. You got to hit pause, rewind and listen to him one more time. All that happened in a span of less than two years. It can be very quick, very quickly. I mean, you just described things just with your migration to the cloud and the change in your in your location policy for your employees and your ability to attract more talent. I mean, those are three massively different moving parts and pieces of a business that I don't think most businesses can get take care of in less than three years, right?
Well, and we've done all this while we've had a massive pivot in our underlying business strategy, too. So we were very aggressive as it relates to being able to take on change at Penta. And I do like I Scrum has been one of the foundational gang planks of our ability to take on all of that in such a short period of time, it paid for itself almost immediately.
Felipe Engineer 40:39
That is perfect to hear. I love hearing that Bill, like, everyone knows how much I love Scrum, I always get super excited, I gotta like, take a breath, and come back to zero here for a second. About how much I love Scrum, but it's a lot. It's a lot about that. I wanted to ask you to Bill, you know, as you're, you're making this transformation, have you found it, that your company started growing as a result of these changes? Or because of the shift? Okay, so it's just a straight? Yes.
Yeah, I mean, we're a lot more profitable now than we were two and a half years ago as an enterprise, and the arrows pointing up, because we're bringing in two new products to market that I think have explosive potential, not just for our ability to transform the industry, but also our ability to grow as an enterprise. And so, you know, it's one of these things where I've been around long enough that I know how hard it is to thread 18 successive needles with a business. And I, you know, two years ago, when we started a lot of this stuff, I was really nervous, I figured, like, we're gonna miss a few of these needles. And it's, it's gonna set us back and you know, a couple of them might end up having really serious negative consequences. And because we've done it one needle at a time, because we've done it the way Scrum teaches us to do it. I think that that has been a huge part of our ability to thread all of those needles in a row with the office, remaking the face of the company, as it relates to the talent we employ moving things to the cloud, bring your own device work from home stipend, shifting the business into investing into two new products, changing our go to market approach, I mean, all of those things, any one of them taken in isolation, I think would be something that we would have been very proud of accomplishing inside a two year timeline. And we've done all of that in parallel with a relatively small company. And we've done it without having to take on any outside investment to that's incredible.
Felipe Engineer 42:49
It's like Jeff says in the red book more than twice the work and half the time. And like, he says, almost always, if you're not doing it wrong, you should be getting three times the work and the third of the time. And I've seen that, that is an incredible Bill. I think that's inspirational for everybody. It shows you everyone listening, how powerful the framework is, and the framework is like super simple. We're talking about five meetings, yes, understanding three different roles, and then just re redoing it all the time. That's it. Yes. Simple.
Yeah, like get started type agile manifesto into your Google machine, and start there. And after you read through the Agile Manifesto, and the underlying tenets of agile, tell me that that wasn't a powerful thing for you to get into your cranium, right. And once you do that, then you could launch into actually trying to pilot it and implement it in part of your business. It's it's real easy to get started because of the inherent simplicity.
Felipe Engineer 43:52
It is. And then just as you're reading that manifesto, just substitute the word software for working product and construction, everything we do is work in place. And a lot of the solutions that your company has Bill, what I really love about it is the challenge and like and this was the same challenge at Toyota, and many different automobile manufacturers. But I think Taiichi Ohno said it best when he said the only thing I'm doing is shortening the duration from the time that the customer makes an order until we get paid. And what you're doing with your software solution for so many project managers is you're helping ease the burden of all that work that has to be done in order for people to get paid for the work that they do that the value that they create for the clients that they're building for. So anything you can do, I mean, I use software to I have lots of algorithms in play for the type of type of work that I do. That definitely makes my job easier.
Absolutely. And you know, when you adopt that agile mindset, you develop this almost supernatural nose for where the waste is located. And we've talked about how much waste there is in the construction industry. I think you know that that laser focus on transforming the means of production into business value by shortening cycle times, right? That's elimination of waste. And when you get good at it, you almost become allergic to waste, organizationally, which is a really powerful concept. It's, it's one of the main things that I think put Toyota on top in the 80s. And 90s, is because they were able to push that sort of distaste for organizational waste, all the way out to the edges of their entire enterprise. And think about the power of that in 150 person construction company. Yeah, how life would be better if if you could do that.
Felipe Engineer 45:48
And we, we have the benefit Bill, you and I being alive now, because it took them over 25 years to push it out through the organization. And now it's worldwide. They're sitting on, you know, a war chest of, I think, a couple trillion dollars, and they make more money. I've seen this number multiple times than the next three competitors combined in profit every year. I always tell Jeff, like, Jeff, it's not all about market evaluation. Tesla stock value will not always be higher than Toyota.
Right? Yeah, I mean, the the market cap, the the example I always throw out to people is like, look at Walmart versus Amazon. And for years, Walmart did way more revenue and way more bottom line profit than Amazon. But because everybody looked at Amazon as a tech enabled disrupter, the market valued them at 10 to 100x, of what they valued $1 of revenue at Walmart. And to your point, like that's not going to hold up long term. It's it's interesting, though, one of the things I love to talk to construction companies about to kind of tie all this stuff together for them, is if you try to sell a specialty trade contractor to a new owner, how are they going to value your company, they're going to give you some multiple of your annual profit. Imagine if they looked at you like you were a tech powered disrupter of the construction industry. Could you maybe get a multiple of your top line revenue? Right? How much money how much money that Softbank throw at Katerra, when, what Kanterra, was a vertically integrated construction company. And Softbank gave them $850 million, because they viewed them as a disrupter that was going to leverage technology, and leverage some of the concepts. We're talking about business agility, to shake up the construction industry. Wouldn't you like to have a little bit of that shine on your own business? If you're running a construction company? I think that there's a real strong financial case to be made for that. If you look outside the industry, and you look at what's going on with the way people are evaluating companies right now that have the technology as a through line of how they think about the business.
Felipe Engineer 48:09
It definitely gives them some golden wings and elevates what they can get. I think Bill, people are recognizing that technology has been disruptive and transformative. It's not just disruptive. It's transformative. And it allows people to be more adaptive. I mean, we're all I mean, just the way you and I are connecting right now. I think we're separated by 3000 miles and right and an inconvenient to our timezone difference. But we're still able to connect two kids from the South Side, man, what are the chat?
Felipe Engineer 48:48
Yeah, that's a that's a beautiful thing. I mean, it is definitely transforming. And people get to hear this conversation worldwide in over 60 different countries, and they can see themselves in the story. Because like you said, we know if you spent any amount of time in this business, you know that sometimes construction can be just fraught with waste, and non value creating things in terms of the customers perspective, because some of the some of those things, and some of those processes, like you said earlier, are baked in and how we do things because it used to when you work, but what used to work doesn't work anymore. And even Katerra is no longer a business anymore. They got disrupted, what they were doing wasn't sustainable for a lot of complex reasons. Yeah, so but the good news is all those employees that work there are now released back into the marketplace. And now companies that are picking up that talent can stand on their shoulders and push ahead and keep the good things and let go the things that didn't work.
And that's how transformation happens. Right? It's not flipping a light switch. It's one day at a time.
Felipe Engineer 49:57
Absolutely one day at a time and it takes time. I want to go back to your company Bill and pull from you what what's another story of like, if you could share, more medium sized company doing work, like from a project managers perspective, how does your software help them?
We work with a mid sized electrical contractor here in town that works on a lot of really progressive projects, right? They, they did all the electrical install at the new arena where the Milwaukee Bucks just won their championship. And their VP of Operations, really smart, really progressive guy, he brought in lien consultants to work with his project leads to root out the waste in the work that these electricians were doing every day. And for those of you that don't have a lot of familiarity with the electrical trade, you know, electricians are kind of like your one man show, I can do it. All right, little CEO of his own pile of work that day, right? One day, I might be pulling wire, I might be knocking together conduit, another day, I might be doing low voltage control work. And so there was a lot of fragmentation in the way their business would tackle the work every day. And it started with a three ring binder with these consultants. So at the end of every day, hey, every electrician, take five minutes out before you leave, and write in the binder, what you got done that day. And then somebody is going to take that binder and digitize it. And now we're going to have a data set. And now we can go through and look at it. And so we're a little bit closer to what's actually happening other than the way they used to do it, I'm guessing, which is have a project managers show up once every couple of weeks and walk the job site. Okay, these couple areas of the project, I'm good, oh, my gosh, what is happening over here, we're behind this is a mess, there's a ton of rework that's going to happen. We're missing pieces and parts right now that they're taking that thinner slice. And they didn't use any technology originally to get started. But then once everybody got comfortable with thinking this way, once all those electricians realized, okay, like, these guys are wanting to make sure that we're tackling the work in the most efficient way possible every day, hour by hour, when we came in and layered our technology on top of that, to digitize that three ring binder, suck all that information in their accounting system. And to be able to do more forward looking reporting on that stuff. It was a really powerful transformation in the business, we just recently deployed our latest piece of job site software to their job sites. And it's not the type of thing that's having to be driven top down into the job site, these guys on the job site are hungry for the next digital tool that's going to make doing that thing a little bit easier. And you put it in their hands. And it's amazing to see how fast they figured out how fast they ate, do it. And it's because these guys were really smart about ramping into it and not trying to eat the entire elephant in one bite.
Felipe Engineer 53:15
That's a beautiful story that that whole process of I mean, that's one of those necessary wastes that we have to do to track as unfortunately, we can't just say there's my work pay me there has to be some way to get the data in verify and then get get paid. So I love that you're streamlining that and making it simple and supporting and I love bonus. I love hearing electrical contractor back in my old hood, I guess in Wisconsin part of my head because we used to go there for some cheese.
The other the other thing with these guys, I mean, like your electrical tradesmen and women, they're they're really smart, like electrical is not the the place where you go if you want to shut your brain off for eight, nine hours a day, right? And getting each individual empowered to take ownership of being productive. That is a really powerful concept. And then once you do that, should anybody be surprised at all those guys and ladies are looking for the next tool that's going to make them more efficient? Yeah, I mean, I love to tell the story like I'm old enough when we got rid of cords for drills on job sites. Now, as a 16 year old I do that cordless drills existed. And I go to my uncle who ran the general contracting business. I mean, Hey, Casey, we should probably pick up some of these cordless drills. It's a no brainer, he cut that check immediately. And from that day forward, no more extension cords getting tripped over on the job site. And you know, back in the late 80s, early 90s cordless drills were not very good. You would tear through batteries every hour and a half. But even still, even with those technological challenges, we were so much more efficient with a couple $1,000 worth of Skill 12 volt drill drivers in our tool belts, than we were using the old, you know, corded hole shooters that we use to lug around. And then think about what it's like to be up on a three storey ladder, having to reach over to put a drywall screw in is something that the drill now weighs 1/3 of what it used to. And you're not having to get 150 foot extension cord like that. That was technology, technology, disrupting the job site. And it happened instantly. And so the challenge I put the people's like, why can't you do that with a piece of software? It's the exact same thing. And we have lots of Yeah, we have lots of examples. I just gave you a ton of companies that are doing it very successfully. And guess what? Those guys are beating you if you're not doing it, they're making more money, and they're winning more business right now, as a result of making those types of decisions.
Felipe Engineer 56:05
Right? There are only so many jobs that you can chase. But if you can do better with the resources you have and use the creativity of your workforce, you can do more jobs. Absent less effort. That's agile baby. Yes, Bill 100%. It has been my pleasure having you come on. And I think we we met the threshold for talking about Scrum. I am delighted you just you made my day. I'm going to just float around for the rest of the day thinking about all the cool things you guys got going on with agile in your organizations and the companies that you're serving. Thank you so much for being on you get the last word, Bill.
Yeah, thank you so much for giving me the opportunity to talk about this stuff. I hope everybody that's listening found it valuable. I'm easy to find on the internet. So if you want to engage in a conversation after the fact everybody you should know where to find me. Just stick it in Google or LinkedIn and I'll be there.
Felipe Engineer 57:00
I'll make it even easier than that Bill will have a direct link to in the show notes people as promised, always delivering easier, better and faster with Bill Wagner.
Very special thanks to my guest. I'm Felipe Engineer-Manriquez. The EBFC Show is created by Felipe and produced by passion to build easier and better thanks for listening. Stay safe everybody. Let's go build!