Fieldwire: The Newest Trifecta Addition to the Menlo Portfolio
We are excited to announce our Series C lead investment in Fieldwire, a fast-growing, cashflow-positive company that brings increased digitization and cloud-native software efficiencies to the construction industry.
Fieldwire marks the third investment out of the Menlo Inflection Fund and further advances our campaign to be associated with the most compelling trifecta SaaS companies modernizing the economy. We first publicized our “Trifecta” investment thesis with Indio, which targets software companies that:
- Digitize and automate workflows (a wedge into customers);
- Generate important propriety data and, in doing so, become systems of records;
- Leverage data to move laterally, servicing and addressing other workflows and stakeholders in the market.
On closer inspection, Fieldwire fits the trifecta profile nicely.
- The company’s wedge into the market is a collaboration hub that helps construction contractors and workers on the ground coordinate more effectively. The platform includes a mobile app for workers to view project plans and interact with each other using collaboration tools (think Jira). Tasks, schedules, and inspections can all be easily accessed within Fieldwire and linked to plans.
- Completed tasks are documented (often via photos and notes), enriching the plans and ultimately creating a digital system of record—a post-construction “bible” of sorts.
- The data is valuable beyond the construction site. It’s data that owners and building managers “downstream” need for post-construction maintenance, and that project managers “upstream” require to track budgets, approve change orders, and run procurement. It’s data that will ultimately allow Fieldwire to expand beyond stakeholders in the field.
One of the defining features of trifectas—which can make them somewhat contrarian as investments in the early years—is that they can be perceived as going after smaller TAMs. This assessment is both true and false. The initial wedge is often a small TAM; but, the wedge, if chosen correctly, is fertile staging ground from which a company can move into other monetization opportunities, expanding TAM. The metaphor I like use is that of a spiral. The wedge is the center and each concentric ring is new monetization potential (either a new product or another stakeholder) that increases the size of the opportunity.
In the case of Fieldwire, the initial wedge—software sold to construction workers in the field or on site—is a pretty large initial TAM (we estimate over $1 billion in the U.S. alone). And it’s one that is growing quickly with the adoption of smartphones and tablets. So, we are not starting super niche. However, we did not invest just to stay in the field. Our ambition is to eventually tap the potential of the broader market’s myriad of applications and stakeholders, which is worth perhaps tens of billions in revenue.
This leads to some final commentary around the constraints of TAM and its strong influence on our filtering criteria. If we are putting market size (initially) at risk, we need existence proof of strong capabilities in other areas. Specifically:
- Capital efficiency—driven by a highly repeatable sales motion. In other words, if the initial market is small, you better be able to knife through it. The existence proof is CAC payback under 16 months (GAAP basis) with a scaling sales org.
- Strong product engagement—driven by delighting a stakeholder, whose everyday working experience and productivity are transformed by the product. The existence proof is passionate customers who blow you away with their references. Financially, it manifests in stellar gross retention (little churn) and positive net retention (over 120% per annum)—suggesting that a product has some combination of stickiness, value, and growing support in the organization.
- A product centric organization—with an ethos towards moving quickly, often with several initiatives in parallel, testing, failing, and ultimately putting wins on the board. TAM expansion (and long-term growth) can be defined as a function of several, well-sequenced product wins. If product velocity slows down, a trifecta will inevitably tap out. It is also easier to expand your product if your customers already love you; they will come to you to solve their other adjacent problems.
It is safe to say that Fieldwire crushed our filter.
The company came to us early this year, growing at a very attractive pace (100% per annum) and cashflow positive. We rarely see that combination of growth and efficiency in the wild. Underlying Fieldwire’s efficiency is a unique, multi-step go-to-market (GTM) model. Fieldwire figured out how to drive discovery (mobile app downloads) and close with a “land and expand” sales motion. This model allows the company to land small groups of paying customers (or projects) within a larger construction org. and, over time, expand those engagements into larger enterprise deals.
The enabler of this GTM motion is a great product that is both simple enough to consume as a first-time user and sophisticated enough to scale to meet the complexities of the world’s largest construction projects. And the bar is high: construction firms are discerning buyers who have been historically slow to adopt technologies, and construction workers are no-nonsense end users. If a product is not user friendly, they simply will not use it and deployment will fail. It was therefore extremely compelling to us that Fieldwire could spread virally—within construction crews on one project—and then across projects. The references proved what we suspected: viral growth is a result of product delight.
And behind all this is Yves Frinault, Javed Singha, and a founding team whose unique backgrounds in construction and digital gaming have enabled them to build the best product for the field. Their vision and insights will no doubt take us on a much longer and more ambitious ride.
Conclusively, we are delighted to be partnering with Fieldwire and look forward to many years of growth.