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Innovating In Sustainable Building Materials: Hycrete CEO David Rosenberg (Part 7)

Posted on Tuesday, Jun 16th 2009

SM: How big is the TAM in the US?

DR: The concrete market is a $300 billion market. If you slice that into waterproofing and commercial construction, then that number becomes smaller. One of the bright spots in our business is that our customers are using us in more parts of the structure.

SM: If you slice the market into commercial and waterproofing, what does the TAM come out to?

DR: I don’t have a good number for you, but it is a big number. Right now that is hard to say.

SM: Is there anything I should have asked you that I did not?

DR: The biggest thing is that our customers love us. They have become our biggest advocates.

SM: You are getting good word of mouth within the construction space.

DR: It is so meaningful, because general contractors work on such slim margins. We can affect their bottom line and reduce risks with a high-end warranty. That news has spread fast. Even though the construction industry is down, we are growing significantly this year. The value proposition is very strong. Last year our most meaningful value proposition was risk reduction. This year it is cost reduction. That is really helping to drive sales.

SM: I also just did a story on Serious Materials. It is very interesting to see that materials have started to gain substantial traction in the past few years.

DR: Kevin and I are both fortunate in that we both just had a big raise. Hycrete has an extremely healthy balance sheet. I believe Serious Materials has a great balance sheet as well. That allows us to invest in growth. A lot of players in the cleantech space, with the freeze of capital, may find the overall excitement for the industry drop. There are a lot of inefficiencies in this industry.

SM: You’re right. These are pretty long gestation, capital-intensive projects. Right now the market does not supply a lot of capital and is pretty risk adverse. People who do not have a proven technology are having a hard time.

DR: The time to adoption is so long which does not fit the fast-scale venture capital model. What made us successful as a venture capital model was the ability to create a value proposition that was better, faster, and cheaper.

SM: You also did a lot of the R&D and pilot phase by leveraging family resources and government grants. You waited until you had your ducks lined up before you got into the venture capital cycle. That is a key takeaway for entrepreneurs who are trying to do long gestation projects. You want a proven value proposition for the venture capital phase.

DR: Excellent observation. Even with our first round being focused on durability versus waterproofing, what made the first round successful was the TAM. We were looking to correct the flaw of a worldwide $500 billion industry.

SM: TAM is one of the biggest draws of venture capital, no doubt. I think sales cycle, time required for proof of concept, time to market, and time to validation are big issues investors take into consideration. That is where the cleantech industry has scale challenges.

DR: Good point. I think you have succinctly captured the many issues our industry faces.

SM: Thank you as well. This has been a good story; many congratulations.

This segment is part 7 in the series : Innovating In Sustainable Building Materials: Hycrete CEO David Rosenberg
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