SM: Do you provide anything other than materials to construction sites?
DR: We provide materials and services. We do not do the construction but we are involved in the design and implementation side. We are constantly educating contractors about the new paradigm in construction.
SM: They are your version of sales engineers.
DR: I think that is a fair categorization.
SM: Where are you at in terms of revenue and the financials of your business model versus other options available to contractors?
DR: On a square footage basis in the US, we sell for under $4 per square foot. The competition is typically $5-$8. We are typically less costly than traditional waterproofing systems. Our average project is six figures, and so far this year we have gone into 20 projects; by year’s end that number will likely be around 50. We just went from five to nine locations.
SM: Are you referring to your office locations?
DR: I mean where we have people and are doing projects. In the US that is Seattle, Northern California, Southern California, Utah, Denver, Florida, Washington, D.C., New York and New Jersey. This week we are doing a project in Texas, so we had to send some folks there. Internationally we have people in Eastern Europe and the Middle East.
SM: What is the thinking in India right now in terms of green construction?
DR: The whole country is under construction, and a lot of it is concrete. Right now China is leading the world in concrete usage but it is eventually going to be India. The quality of construction is below what we see in the US, and that makes quality control challenging. They also use very cheap materials unless it is a high-end project and common roofing mistakes are made while constructing the building. At the high end there is a growing appreciation for quality construction. It is very different when you go to a construction site and see people walking around in sandals and no hard hats.
SM: Your market in India is obviously limited only to high-end construction. Unfortunately, I don’t see the low-end market adopting the high-end materials. The cost structure there just won’t permit it.
DR: True. There is so much construction going on at the high end that it remains a very large opportunity. There are a couple of private equity firms that want to buy a Hycrete India office or do a joint venture with us. We are exploring it because it is a tough country to manage.
SM: How you do business in India is very different, right down to how you get into projects.
DR: The Sun Group, a bunch of ex-McKinsey guys want to help invest in Hycrete India. From my standpoint, India takes a lot of management bandwidth.
SM: It may not be a bad idea to do it as a separate company and leverage others to focus on such a challenging construction market.
DR: If I can get bright people investing in the company it may not be a bad idea. That is something we have to explore more.