Watch Episode 7: Destinations
Proudly produced alongside Bricks and Bytes.
Unconventional
Foundamental breaks the mold of traditional venture capital firms, eschewing conformity and embracing individuality.
Foundamental isn't your typical venture capital firm. At least we don't think so. We've deliberately chosen to break away from the industry's herd mentality, rejecting the stereotypical VC uniform of Patagonia vests and the endless cycle of conferences and networking events.
As Adam puts it,
"Who wants to work for the empire? We're almost like the rebel alliance being applied to VC firms."
This mentality is deeply ingrained in our approach. We believe that to truly break through from good to great, you have to be your authentic self. If you're just emulating someone else or presenting a facade, you might have some success, but you won't break through that stratosphere.
Shub adds, "I gave up several years ago on this feeling that I need to conform to the expectations or the norms of being a typical VC." This liberation from industry norms has allowed us to focus on what really matters: identifying and supporting groundbreaking companies in the construction and engineering space.
Our unconventional approach extends beyond just appearances. We prioritize deep, meaningful engagements over surface-level networking. Adam notes, "We really shy away from big dinners with firms or other funds. I don't think you really extract meaningful value. It's just the usual BS, to be honest."
Instead, we focus on building genuine relationships with founders and creating an environment where diverse thoughts and challenging conversations are not just accepted but encouraged. This approach allows us to identify opportunities that others might miss and to provide truly valuable support to our portfolio companies.
As Shub explains, "If you surround yourself with a lot of those independent, radical thinkers, I think everyone is rising tide, you know? Everyone will be successful for having those individuals around you."
By rejecting conformity and embracing our unique perspectives, we've positioned Fundamental to be at the forefront of the construction tech revolution. We're not just another VC firm – we're building a new model for how venture capital can operate in this rapidly evolving sector.
By breaking industry norms, embracing authenticity, focusing on deep engagement, and encouraging diverse thinking, we've created a unique model that allows us to identify and nurture the most promising companies in the construction tech space.
Our commitment to being differentiated isn't just about standing out – it's about creating an environment where unique thinking can truly thrive. We believe that by rejecting the cookie-cutter approach to venture capital, we can better serve our founders and ultimately drive more significant advancements in the construction and engineering industries.
Vulnerability
Fostering open, honest relationships with founders is key to Fundamental's investment strategy and long-term success.
We believe that true partnership with founders goes beyond. It requires mutual vulnerability. We actively seek to create an environment where founders feel comfortable being vulnerable and sharing their challenges openly. This approach, championed by Shub, is a cornerstone of our investment philosophy. Shub explains: "What I try to do is not so much 'Hey, you know what, I'll now interrogate you and I'll see if you cave.' The idea is to say, 'Hey, you know, can you and I be as close as siblings?' Because that's kind of like a safe space you can get to with a sibling."
This emphasis on vulnerability isn't just about building rapport – it's a strategic advantage. By encouraging founders to be open about their struggles and weaknesses, we can provide more targeted and effective support. As Shub notes, "If you can't demonstrate to me that you can allow yourself to become vulnerable as an act of showing that we are partners, then I'll probably also have to operate from a distance because you're not allowing me to get closer to you."
Adam acknowledges the power of this approach:
"What he's describing and what he's accomplished of inviting someone new to be so vulnerable about shortcomings – that's very hard for anyone to do. It's usually 'I just want to sweep things under the rug' or maybe 'I'll give you a varnished version.'"
This culture of openness pays dividends, especially during challenging times. Shub explains, "Keep in mind, regardless of how the journey is going now, eventually over a long period of operation, there'll be at least one or two times where the news will get very, very bad. If you only choose to present that bad news to me when it's unavoidable or if I'm hearing it from the outside world, frankly, at that point, I will have no choice but to assume the worst."
By fostering these open, honest relationships from the start, we're better equipped to navigate the inevitable ups and downs of the startup journey. This approach allows us to act quickly and decisively when challenges arise, without wasting time on posturing or negotiations.
Vulnerability plays a crucial role in our returns strategy. By creating a safe space, encouraging openness, building trust, and navigating challenges together, we foster stronger, more resilient partnerships with our founders.
Our approach to vulnerability isn't just about being kind – it's a strategic advantage that allows our founders and ourselves to build deeper, more productive relationships in an environment that rewards critical discussions to find optimal decisions under imperfect information. By encouraging founders to be open about their challenges and weaknesses, we can provide more targeted support and navigate difficulties more effectively.
This culture of openness and vulnerability sets us apart in the VC landscape. It allows us to build partnerships that go beyond surface-level interactions, enabling us to truly add value to our portfolio companies and drive innovation in the construction tech space.
Contrarian
Foundamental thrives on diverse perspectives and challenging conversations to uncover unique opportunities in construction tech.
We here at Foundamental don't just accept or even tolerate differing opinions – we actively seek them out. We thrive on them. Our investment philosophy is built on the idea that contrarian thinking is essential to identifying truly groundbreaking opportunities in the construction tech space.
Adam explains, "I think you have to be contrarian and right. You know, it's not just to be contrarian for contrarian's sake. Being contrarian wrong is still wrong. You have to have both variables in the equation." This approach allows us to look beyond the obvious and identify opportunities that others might miss.
Our commitment to contrarian thinking is reflected in the diversity of our team. Shub notes, "Patric and I are at the extreme ends of personality types, and Adam interestingly enough is like the bridge – he's exactly in between." This diversity of perspectives leads to robust, often heated discussions about potential investments.
These intense debates are a feature, not a bug, of our investment process. Adam explains, "If it's unanimous – that's when it gets really heated. Because if he [Shub] sees something really special that for whatever reason I just didn't see, that becomes really heated."
While these discussions can be intense, they're crucial to our success. Shub adds,
"We kind of have these interesting dynamics where we, I mean figuratively speaking, go at each other's throats in terms of the intensity of the discussion."
This level of engagement ensures that every investment decision is thoroughly vetted from multiple angles.
However, maintaining this culture of contrarian thinking requires more than just assembling a diverse team. It demands a unifying culture that respects and fosters differing viewpoints. As Shub explains, "I think you need to have a certain unifying culture or at least a certain respect for viewpoints and a process that enables all of it. Otherwise, I think to maintain contrarian or a set of contrarian personalities or different people who have differing views for any length of time, you need a unifying culture to enable that and to respect and foster that."
Contrarian thinking is embedded in our investment discussions. By seeking diverse perspectives, encouraging heated debates, challenging assumptions, and identifying unique opportunities, we're able to make bold, informed investment decisions that set us apart in the VC landscape.
Our commitment to contrarian thinking isn't just about being different for the sake of it. It's a strategic approach that allows us to identify and invest in truly innovative companies that have the potential to reshape the construction and engineering industries. By fostering an environment where diverse viewpoints are not just tolerated but actively encouraged, we're able to see opportunities that others might miss and make investment decisions that go beyond the obvious.
This approach has allowed us to build a portfolio of companies that are pushing the boundaries of what's possible in construction tech. We believe that by continuing to embrace contrarian thinking and fostering a culture of robust debate, we'll be well-positioned to identify and support the next generation of industry-changing companies.
Evolution
We believe Foundamental is poised to lead the next wave of innovation in construction tech, viewing the sector as ripe for transformation.
We believe we're at the cusp of a major transformation in the construction, engineering, architecture and supply chain industries. Despite the progress we've collectively made over the past six years, we see this as just the beginning of a much larger revolution.
Shub emphasizes this point: "In spite of all the things we have said, I think the game has only just started for construction tech or AEC tech. In my opinion, what we have done over the last six years or so has allowed us to build up a position of privilege and unfair advantage where, I mean, at least in my worldview, it's our game to lose now."
However, this position of advantage doesn't mean we're resting on our laurels. We're acutely aware that the game is still evolving, and we need to stay ahead of the curve. Adam uses a baseball analogy to illustrate this point:
"You always use the baseball innings analogy. It's like we're not even in inning one – we just got into the parking lot. So there's many, many years to come."
This perspective drives our approach to identifying and supporting the next generation of construction tech companies. We're not looking for incremental improvements, but for companies that have the potential to fundamentally reshape the industry.
Shub predicts: "The most likely set of disruptors or incumbents or new generation of incumbents in this industry will actually not look like groundbreaking firms. They'll seem like firms which are more or less doing what the incumbents are doing, but a little bit better, a little bit faster, a little bit cheaper, a little bit more efficiently. And that's what has allowed them to scale and take market share rapidly."
We see the current moment as analogous to the early days of the internet revolution. As Shub puts it, "Imagine that it's 1995 and someone told you that you've been handpicked to become an internet entrepreneur. It's the opportunity of several lifetimes ahead of you. If you know what you're doing, you can keep building and building and building over and over again."
We see the industry as being in its early stages, with rapid growth and transformation on the horizon, presenting a long-term opportunity for those who can navigate this changing landscape.
Our position at the forefront of this evolution brings both opportunities and challenges. We need to continue anticipating new opportunities that represent vertical singularities for us, while also expecting and preparing for intense competition.
Adam advises entrepreneurs in this space: "Don't get discouraged. Be patient, allow things to unfold. Don't be too rash and move in haste. I think that's probably the number one misstep I see founders make – they don't allow proper time for things to unwind."
At Fundamental, we're committed to being more than just investors in this evolving landscape. We aim to be true partners to the entrepreneurs who are building the future of the construction and engineering industries. By combining our industry expertise, our contrarian thinking, and our commitment to supporting founders through both successes and challenges, we believe we're uniquely positioned to help shape the next generation of construction tech giants.
Authenticity
Foundamental's success so far is rooted in staying true to its core principles and resisting the pressure to conform to traditional VC norms.
At Foundamental, we have come to realize that authenticity is not a buzzword, but a crucial factor in our standing and longevity in the venture capital world. We've built our firm on the principle of staying true to our unique approach, even when it goes against industry norms.
Adam emphasizes the importance of this authenticity: "If you're not you, you know, I can only be myself. Everyone else is taken. And I think if you do, I think when you become, you know, to really break from being good to great, I think you have to be your authentic self."
This commitment to authenticity extends beyond just personal style. It's about maintaining the core principles and strategies that have made us successful, even as we grow and evolve. Adam warns against the dangers of deviating from this path: "Why we create the wheel or, you know, if it's not broke, don't fix it. Or, you know, raising a huge mega fund that kind of is not successful to the model that's made you successful."
We're acutely aware of the pressures that come with success in the VC world. There's often an expectation to scale rapidly, diversify into new areas, or conform to industry standards. However, we believe that resisting these pressures is crucial to maintaining our edge.
Shub explains: "I think it's important for us to know that the game is evolving. We need to keep anticipating what new opportunities may represent vertical singularities for us. And also, with any opportunity that's there for the taking, to expect competition and intense competition."
This doesn't mean we're not open to growth or change. Rather, it's about growing in a way that aligns with our core values and strengths. Adam notes:
"When you start coloring outside the lines of your firm's thesis, the structure, reaching for just for the sake of reaching, I think that's when it becomes very dangerous and you start seeing just a decayed nature of those funds and firms."
By staying true to our first principles, resisting conformity pressure, growing in alignment with our values, and maintaining our unique approach, we ensure that our growth strengthens rather than dilutes our unique position in the VC landscape.
Our commitment to authenticity is not just about preserving our identity – it's a strategic advantage. By staying true to our unique approach, we're able to offer something truly different to founders in the construction tech space. This authenticity allows us to build deeper, more meaningful relationships with our portfolio companies and to identify opportunities that others might overlook.
Shub reflects on the importance of this authentic approach: "I think if you surround yourself with very smart, capable, determined people that would have convictions that will, you know, challenge you... you need to have diversity of thought. I think that is very critical and crucial to the success of Fundamental."
This commitment to authenticity extends to how we interact with founders. We don't try to present a polished, corporate image. Instead, we show up as our true selves, quirks and all. Adam notes, "I think for myself and I think Patrick, I think we're very open and comfortable with presenting our unique authentic self."
By maintaining this authenticity, we believe we're better positioned to weather the inevitable ups and downs of the venture capital world. We're not chasing trends or trying to be something we're not – we're focused on building long-term value in the construction tech space.
As we look to the future, we're committed to growing and evolving in a way that stays true to our core principles. We believe that by maintaining our authentic approach, we'll be able to continue identifying and supporting the most promising companies in the construction and engineering sectors, driving innovation and transformation in these crucial industries.
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Ep. 7: Destinations
tl;dr
Unconventional: Foundamental embraces breaking VC norms, embracing authenticity and deep engagement over superficial networking, fostering an environment where innovation thrives.
Vulnerability: We encourage open, honest relationships with founders, creating a safe space for sharing challenges, enabling more effective support and decision-making.
Contrarian: Our diverse team thrives on challenging conversations and differing perspectives, helping us uncover unique opportunities in construction tech.
Evolution: We view construction tech as ripe for transformation, positioning ourselves to lead the next wave of technological innovation in the sector.
Authenticity: Our success is rooted in staying true to our core principles, resisting pressure to conform to traditional VC norms as we grow and evolve.
Crafted Proudly In Partnership With Bricks & Bytes
This video and associated content was produced alongside Bricks and Bytes. Please support the amazing work they are doing for the AEC founder community by visiting their full Super Series page here.