AI Is Already Changing Construction
Tools like drones, cameras, apps, and robots can reduce the timelines and waste that have made construction increasingly costly.
Here are today’s highlights:
Why the founder of a five-person architecture firm runs her business from the gym.
The fastest growing company on this year’s Inc. 5000 tries to keep people out of hospitals.
More restaurants are charging diners a fee to pay with a credit card.
Why the heat isn’t slowing migration to the Sun Belt.
Gyms are adding co-working spaces: “Damaris Hollingsworth, founder of a five-employee architectural firm, says the monthly cost at her Life Time gym’s co-working space allowed her to grow her business, which she began with $475 a month for one desk in 2020. The total cost of her space now—which includes an office and several desks clustered around it—is $4,000 a month. Hollingsworth, who designs book stores, coffee shops, and mixed-use buildings, says she has pondered renting more traditional office space. But the upfront cost of setting up a similarly tastefully appointed space with all the audiovisual equipment, conference rooms, and full kitchen would be too much. Not to mention, her employees might really miss the gym. ‘I get to offer an extra perk: If you work for me, you’ll have access to an amazing gym. That is a big deal,’ she says.”
“Gyms were once wary of letting the remote-work masses Zoom from their lobbies and locker rooms. Now, they see opportunity in offering extra desks, offices, and outlets. Some are creating co-working spaces to separate the extension-cord wielders from the spandex crowd. Other gyms are charging extra and offering entire floors for clients to stay and work all day.”
“Luxury health clubs such as Biân in Chicago added 9,000 square feet of space for co-working in June. Members who pay annual membership dues of $4,000, plus a one-time initiation fee of $1,000, can access two conference rooms equipped with Zoom cameras and 75-inch TV screens. Other amenities include swiveling chairs equipped with river views and QR codes for food and beverage delivery.” READ MORE
Will AI make the construction industry more efficient? “Meant as a sly swipe at the inflated hype around artificial intelligence, a billboard at a construction site in Antwerp, Belgium, in June read ‘Hey ChatGPT, finish this building.’ Artificial intelligence, the technology that powers chatbots like ChatGPT, won’t be assembling apartments or erecting stadiums any time soon, but in construction — an industry stereotypically known for clipboards and Excel spreadsheets — the rapid embrace of the technology may change how quickly projects are finished. Drones, cameras, mobile apps, and even some robots are increasingly mapping real-time progress on sprawling job sites, giving builders and contractors the ability to track and improve a project’s performance.”
“The construction industry has long been considered a digital laggard, but architects regularly use digital tools to design projects and create blueprints. Seeing tablets and drones on the same work sites as hard hats and safety vests is common.”
“Now helmet-mounted cameras capture footage of a site to orchestrate when new crews or materials should arrive, and precise sensors can detect whether a new window is a few millimeters off the project blueprint and needs to be adjusted.”
“Buildots, a start-up in Israel that provides project management guidance via wearable cameras that analyze building progress, signed a deal for its first New York project, a mixed-use development in Manhattan. The firm commissioned a study of 64 international building sites, and it found that just 46 percent of the average work site was being used at any time, evidence of poor organization and scheduling.”
“‘At the best construction site we’ve studied, progress varied by 30 percent each week,’ said Aviv Leibovici, the firm’s chief product officer and a co-founder. ‘I think there are massive inefficiencies in this industry.’” READ MORE
The fastest growing company on this year’s Inc. 5000 is CareBridge, a healthcare management business: “The promise of CareBridge is to promote well-being in part by using technology—a two-way tablet in the hands of each caregiver or patient that monitors health signals and connects the patient with appropriate services, 24 hours a day. The goal is fewer hospitalizations or trips to the emergency department, and healthier, happier clients. That, in turn, means lower health care costs. CareBridge pockets some of that savings as income.”
“These clients often have physical, intellectual, or developmental challenges, and require a lot of resources. In the past, many would have been institutionalized. In recent decades, the emphasis has been on helping them stay within their community, either at home with a family caregiver or in group homes with a paid caregiver.”
“What makes CareBridge interesting as a medtech company is that it doesn't have a magical app to cure diabetes or kidney disease, nor is it positioned to earn the kinds of profit margins of a SaaS business, say. Instead, CareBridge is addressing one segment of an enormous industry and is more than willing to accept single-digit profit margins to do so.”
“That's somewhat antithetical to what tech startups do, but the dollars in health care are so massive that the math makes sense.” READ MORE
More restaurants are charging diners a fee for paying with a credit card: “Last year, when food prices rose along with so many other costs, José Theoktisto began to think about how to lower operating expenses at the Venezuelan restaurant he runs in upstate New York. He worked with different suppliers, and he raised menu prices. Then he took a closer look at his statements and found that he was paying $2,000 a month in credit card fees. ‘They pile fees on top of fees, on top of fees,’ Mr. Theoktisto said about credit card processing companies. He said that he normally pays 4 percent per transaction when someone uses an electronic payment method, but that he also has to cover other charges related to credit cards, like a fee for when a customer uses a card from another country.”
“In January, he decided that instead of raising prices, he would add a 4 percent convenience fee to the bills of customers who pay by credit card. He is just one of an increasing number of restaurant owners adopting these policies as inflation cuts into his bottom line and credit card fees rise.”
“For many diners, though, the restaurant check is starting to resemble a CVS receipt. The credit card fee charge can come on top of the tip and various service charges that many restaurants now impose on customers. Michael Thompson, who owns a restaurant, a food truck ,and a truck stop in Klamath Falls, Ore., said he recently ate with his wife at a Mexican restaurant downtown and found a 3.8 percent credit card fee on his bill.”
“‘It really bothered me,’ Mr. Thompson said. ‘I’ll never go back.’ He said he’d never charge these fees at his establishments.” READ MORE
Retail sales grew more than expected in July: “The advanced retail sales report showed a seasonally adjusted increase of 0.7 percent for the month, better than the 0.4 percent Dow Jones estimate. Excluding autos, sales rose a robust 1 percent, also against a 0.4 percent forecast. Both readings were the best monthly gains since January. As the numbers are not adjusted for inflation, they showed a consumer able to keep ahead of price increases that have been prevalent over the past two years. The consumer price index rose 0.2 percent on the month, indicating solid demand.”
“July’s numbers were boosted by a 1.9 percent jump in spending at online retailers, while sporting goods and related stores increased 1.5 percent and food service and drinking places rose 1.4 percent.”
“On the downside, furniture sales slumped 1.8 percent and electronics and appliance stores reported a 1.3 percent drop. Gas station sales rose just 0.4 percent on the month despite rising prices at the pump.” READ MORE
Business are stocking Narcan: “As the opioid crisis in the United States continues to worsen — deaths from such drugs more than doubled, to 105,000 from January 2015 to January 2023, according to federal data — overdoses are now happening with regularity in or around social spaces like restaurants and bars. City officials and nonprofit organizations are working to get Narcan, which became available over the counter in March, to those businesses where it can be immediately useful.”
“To some in the business, keeping Narcan on hand seems an obvious move — like stocking any other first-aid supplies, said Jed Thompson, the general manager of Mean Eyed Cat, a bar in Austin, Texas. But many others feel daunted by joining the front lines of yet another health crisis, after a pandemic they spent verifying vaccine cards and enforcing mask-wearing.”
“‘It shouldn’t be on these bartenders making no money,’ said Ryan Purdy, who works at a Philadelphia brewery that stocks Narcan. ‘It should be on someone trained for it, who is expected to save lives.’”
“[Shreeta Waldon, the executive director of the nonprofit organization the Kentucky Harm Reduction Coalition] regularly visits restaurants and bars to pass out Narcan and train staff on its use, reassuring them that if someone is not overdosing, the spray won’t do any harm.”
“Owners often resist stocking Narcan, thinking that it will invite drug use, she said. At the same time, the workers she is training frequently pull her aside and ask to have a dose for themselves, either to treat someone they come across or in case of their own overdose.” READ MORE
A couple of Portland CEOs have started a side hustle to import wine that people will actually drink: “Surfacing a less recognized wine region is the mission of Erin Graham and Aric Wood with their new import and direct-to-consumer business called Archetyp. It's a side gig for the Portland couple, whose day jobs have brought them to the pages of the Business Journal before — she as president and CEO of OMSI, he as CEO of Xplane, a management and design consulting firm. But while Archetyp might occupy a niche in their lives, and the wine world, it's not without ambition. ‘Our vision,’ Wood said, ‘is to become the cellar door for Alpine wine in America.’”
“While Archetyp leverages the couple's attachment to the region and their business experience, it also takes advantage of a Supreme Court decision in 2005 that cracked open new possibilities in direct-to-consumer wine sales.”
“Sourcing directly brings obvious benefits to consumers and helps Archetyp achieve its goal of turning people on to something fresh and new in wine — and not trophy wines. ‘They're meant to be shared with friends around a table,’ Wood said. ‘They're not meant to be sold off in an estate sale or saved for 20 years. They're meant to be consumed.’” READ MORE
Amazon built a data center in Virginia that uses as much energy as a major city: “Just a few miles from the $5 billion second headquarters that Amazon is raising outside of Washington D.C., the tech giant is in the midst of a far larger, and less conspicuous, building boom. The company is in the process of developing $87 billion worth of data centers, a push that has already made it the biggest player in the world's largest data center market in northern Virginia. The featureless, warehouse-like structures are easy to miss on the sides of highways or tucked unassumingly amid suburban neighborhoods. Data centers, including Amazon's, play an increasingly central, but unseen role in modern life, housing the digital infrastructure that powers critical functions such as e-commerce, autonomous vehicles, video streaming, and, now, artificial intelligence.”
“There is a flipside, however, to their now ubiquitous presence in places like northern Virginia. The facilities consume quantities of power so vast that they have begun to tax entire energy grids and could exacerbate the climate crisis.”
“PJM Interconnection, a regional transmission operator whose territory includes Virginia, forecast that the state may have to double the size of its grid in the next 15 years — growth that would put its electrical capacity on par with all of France. The growth will cost billions of dollars and could leave rate payers across the state with the tab.” READ MORE
LOCATION, LOCATION, LOCATION
Despite the heat, people are still moving to the Sun Belt: “When it gets hot enough, as it has across the South in recent weeks, barefoot toddlers suffer second-degree burns from stepping onto concrete. People who fall on the blistering pavement wind up with skin grafts. Kids stay inside all day, ‘trying to survive.’ Windshield wipers glue themselves in place, and the ocean transfers heat back into your body. One electric blackout could bake thousands to death inside their homes. You would think people would flee such a hellscape expeditiously. But as record-breaking heat fries the Sun Belt, the region’s popularity only grows. The numbers, laid out recently in The Economist, are striking: 12 of the 15 fastest-growing cities in the U.S. are in the Sun Belt. Of the top 50 zip codes that saw the largest increases in new residents since the start of the pandemic, 86 percent were in blazing-hot Texas, Florida, and Arizona.”
“This unstoppable appeal of Sun Belt cities rests on three factors: These places tend to have less expensive housing, lots of jobs, and warm winters. None of these is sufficient to attract people in large numbers, but together they seem to generate an irresistible force, sucking up disaffected northerners and Californians like a fiery tornado.”
“These days, you don’t have to wonder how the other half lives. You can open up Redfin and see how much house you can get in Dallas for less than your New York rent. The median home price in Los Angeles is $975,000. The median home price in the Phoenix suburb of Chandler is $520,000. Once you have this knowledge, it can be hard to evict it from your mind.”
“Not all hot, affordable places are created equal. Austin became a pandemic boom town, but Midland, a West Texas city that’s just as warm and even less expensive, did not. This is where a complex mix of economic growth, human capital, and a certain yuppie je ne sais quoi come into play.”
“The Sun Belt cities that have soared are mostly in states with low taxes, which helps attract businesses. But many are also home to prominent universities that churn out highly educated workers. They’ve successfully created ‘agglomeration economies’ of lots of similar types of companies in close proximity. Austin has the University of Texas, an Apple campus, and throngs of upwardly mobile Californians and New Yorkers who have fled high house prices. Midland, well, does not.” READ MORE
THE 21 HATS PODCAST
When Business Owners Burn Out: This week, Shawn Busse and Jay Goltz discuss a recent Business Journal report that a lot of business owners are feeling burned out. Why is that, and what can owners do to avoid it? And have either Shawn or Jay been there? Plus: Shawn brings us up to date on the leadership transition he’s initiated, and—believe it or not—Jay has had another revelation about ESOPs. Also, do business owners need better regulation or no regulation? And which regulations are annoying Shawn and Jay the most right now? For Shawn it’s the nightmare of having employees in multiple states and having to figure out and comply with the various rules of each of those states.
“Today, nailing the fundamentals means you need to have an employer brand. You need to have clear communication in the hiring process. You need to articulate your values and your mission and your purpose. You need to actually coach and elevate team members so they grow in the role.”
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Thanks for reading, everyone. — Loren