He was a late stage co-founder for the company so the idea wasn’t his. But in general ideas come from two different sources. The first is industry insiders who have been working in their field forever and eventually start their own business to do a particular thing in a better way.
The second source is industry outsiders who see a better way to do something that others haven’t seen.
Their co-founder, Kyle, fell into the second category: he decided to create Raken after recognizing that the construction industry lacked a reporting tech solution that could alleviate major pain points. So Kyle set out to fix that with Raken.
As a CTO with a rich history in software development, management leadership and previous CTO roles, how did Sergey know he wanted to join Raken?
He met Kyle about a year into his 2-year earnout from his previous company. At that point, Sergey knew he wanted to join another start up. He knew he had three choices: he could form his own start up, join an existing one or stay with a corporate job.
He had a specific approach to evaluating opportunities, and it is based on his experiences as a mentor and advisor through incubators and accelerators. His system is more like that of an investor and it examines three areas:
- Look at the idea.
- Look at the market.
- Look at the people involved in the company.
Raken checked all three boxes for him.
Next we talk about how Raken has changed before discussing the viral component of the app. How did they use it to bring in subcontractors?
It’s about realizing how the market is broken down. If you look at the market itself there are about 21% of the general contractors and 79% of the subcontractors – and that is exactly how it breaks out on job sites. 20% of the work is done by general contractors and 80% is done by subcontractors/someone else.
From the decision-making point of view, general contractors typically makes a decision in terms of software used to track the project. But they also have lots of subcontractors and these subcontractors if they like the software on one job they are going to take it and recommend it to other future job supervisors and general contractors.
And that is the viral component: subcontractors are required to use Raken by one general contractor, they like the experience and then recommend it to future general contractors on new job sites.
Raken saw linear growth of general contractors using their app, and exponential growth by subcontractors.
We transition into Sergey telling us how they keep harmony when they disagree, his company PushPoint which was sold to CapitolOne, why it’s important to be physically and mentally fit in order to run a successful business. And we wrap up with his thoughts on the SoCal tech scene. Listen in to hear our take on those topics and more on today’s CTO Studio.