Guy Saxelby co-founded EarlyTrade in Sydney in 2018 after late payments inside one of his own businesses cost him employees. What began as an early-payment marketplace for large Australian enterprises found construction during COVID, and in 2023 Guy made the industry the company's sole focus. The model is unusual. Subcontractors offer a discount of their own choosing on invoices that have already been approved. General contractors pay early using their own idle cash, earn the discount as a return, and no lender sits in the middle. Since inception, the platform has processed roughly $10 billion of invoices across more than 200,000 subcontractors. In this conversation, Guy and I unpack why construction has more bankruptcies than any other industry - and why cash flow is usually the culprit rather than bad building. We talk about pay-when-paid, how risk gets pushed down the supply chain, what a subcontractor's cash cycle actually looks like, why good general contractors say no to more work than they take on, why the large ERPs haven't simply built this themselves, how an outsider with an Australian accent earned credibility in one of the industry's most relationship-driven markets, and why Guy believes changing construction's legal plumbing is a fool's errand.
Construction has more bankruptcies than any other sector. Almost none of them are about bad building.
Guy Saxelby is the co-founder and CEO of Earlytrade, a marketplace that lets subcontractors get paid early on invoices that have already been approved. The sub names a discount, the general contractor pays out of its own idle cash and earns a return on money that was sitting in a money market fund, and no lender sits in the middle. He started the company in Sydney in 2018 after late payments in one of his own businesses cost him employees, went all in on construction in 2023, and moved his family to Denver to build the US business.
The arithmetic underneath it is the part that stayed with me. A subcontractor pays their crew every seven to fourteen days. They buy materials sixty days before the project starts. They do the work. Then they wait sixty to ninety days for the invoice. Who's funding that?
We get into:
Links: Earlytrade - https://earlytrade.com | Guy Saxelby on LinkedIn - https://www.linkedin.com/in/guy-saxelby/
00:00 Show kickoff
00:24 Meet Guy Saxelby
03:19 What Earlytrade is, and how it started in Sydney
04:53 How COVID pulled the company into construction
06:02 Why Denver
08:01 Australia versus the US on payment terms
10:43 Construction supply chains are starving
11:16 Risk falls down the hill
12:15 Pay when paid
13:36 How the marketplace actually works
14:56 Dynamic discounting versus a fixed rate
16:42 Selling to the GC, serving the sub
17:13 The pitch to a general contractor
18:21 Is it only for desperate subs?
19:26 The sub's cash cycle
21:01 Why good GCs say no to work
21:53 The ideal customer profile
26:00 Sitting on top of the ERP
27:41 Objections and misconceptions
30:26 Why the ERPs haven't copied it
34:50 "Who are you? You're a foreigner"
38:18 Change the system or design around it
39:44 Fifty-one sets of rules and a fool's errand
44:33 Private equity in construction 4
6:59 The $10M wall and venture in contech
50:54 AI at EarlyTrade
55:04 Ten years out
58:11 The ten-year vision for Earlytrade
59:57 Who Guy wants to hear from
1:00:47 Scared money don't make money
[00:00:00]
Jason Jacobs: Welcome to BuiltForward, the podcast exploring where construction is heading over the next decade, and how AI and other emerging technologies will and won't transform the industry. I'm Jason Jacobs, a longtime startup founder, investor, and the host. Let's get into it
As I've been making the rounds learning how the construction industry actually works, one theme has surfaced over and over again. Not bad workmanship, not lack of demand, cash flow. Even profitable contractors can find themselves in trouble if they have to wait months to get paid.
Today's guest has spent the last several years building a business specifically around that problem. Guy Saxelby is the co-founder and CEO of EarlyTrade, a marketplace that lets subcontractors get paid early on invoices that have already been approved. Instead of borrowing from a bank, subcontractors offer a small discount in [00:01:00] exchange for getting paid sooner, while general contractors put their idle cash to work earning a return.
No lender sits in the middle. Guy is a chartered accountant who started EarlyTrade after late payments in one of his own businesses cost him employees. EarlyTrade began as a general early payment marketplace for large Australian enterprises before finding construction during COVID when demand for liquidity surged.
Guy made construction the company's sole focus in 2023. Since then, the company's processed roughly ten billion in invoices, grown to more than 200,000 subcontractors on the platform, and expanded into the US where Guy is now based. In our conversation, we unpack how the model actually works, why construction became EarlyTrade's focus, what contractors often misunderstand about cash flow, and where Guy thinks construction finance is headed over the next decade.
Guy Saxelby, welcome to BuiltForward.
Guy Saxelby: Thank you
Jason Jacobs: Thanks for coming. Yeah, as I told you [00:02:00] before we, uh, started recording, um, uh, you know, you're a, you're a super credible, um, construction tech founder and, um, although I've done some stuff historically in prior lives, I'm, you know, I, I'm, I have no credibility in construction.
I'm in the early stages of building it. And you, this is episode two, and you're a, you're a pretty good guest. So thanks so much for, uh, agreeing to be a guinea pig and coming on my little show.
Guy Saxelby: Oh, look, as I was saying before we started, I think it's amazing that people like you are, uh, are compelled to work in construction. I think it's a great industry and, um, yeah, let's have some fun
Jason Jacobs: Yeah. I mean, I-- And as we talked a little bit before we hit record, I, um, I'm loving my entrée into the space, and I'm learning so much every day, and I'm talking to so many interesting people. And, um, I still feel very much like an imposter, so I'm treading carefully and, uh, you know, certainly not coming in with, uh, w- you know, coming in with all questions and no answers.
But, um, [00:03:00] but this is a, a primary vessel for me to learn, so, um, is, is talking to people like you. Um, so maybe to kick things off, we can kind of start there. So, um, so d- so, uh, give me the, uh, I don't wanna use the word elevator pitch, but, uh, you know, the 30 seconds on, uh, on Early Trade and what you do.
Guy Saxelby: Yeah, sure. Um, so EarlyTrade founded in Sydney, Australia, 2018. Uh, we started off with a thesis that, you know, maybe we can, um, solve late and long payments. I think it's a, a problem that affects all types of businesses and sectors. So, um, I teamed up with my co-founder who was running advanced data analytics at the Australian Stock Exchange, and we built this, it's like a capital market, but for short-term cash flow with no lenders.
And so we started servicing all sorts of businesses, large procurement businesses, food and beverage, uh, utilities, waste [00:04:00] management. And then during COVID, we, um, in Australia, I don't know if, if you remember, but they locked us down so hard. Like, they shut everything down. We couldn't leave our houses for, like, 23 hours a day.
Uh, the only two reasons you could leave your house was to do exercise and to do essential grocery shopping. So basically, all of Sydney turned into people wearing activewear, walking around with grocery bags. It was pretty sad, actually.
Jason Jacobs: That, I mean, that, that kinda sounds like how I walk around, uh, in, in, in my normal life today.
Um-
I, I should also tell you, by the way, I live... So, I mean, this dates me, but back in 1996, I spent six months living on, uh, Coogee Beach in, in, uh, you know, just outside of Sydney.
Yeah
Guy Saxelby: snobs in Sydney will say that's not actually a beach, it's a bay. But I'm not one
of
Jason Jacobs: Coo- and that, thus the Coogee Bay Hotel, right? still there?
Guy Saxelby: it is.
So yeah, so during, during COVID, um, construction was considered an essential service until the [00:05:00] government actually shut it down. Um, we had a number of general contractors come to us to see if our technology could help them pay their subs early. Um, so we, we launched with a couple of them, and it worked really well, like a factor of about eight times better than some of our other programs.
And so we basically, you know, we started signing more construction clients, and then eventually in 2023, we made the decision to vertically integrate and focus just on the construction sector. Um, and, and, and there's plenty of reasons why it works so well for our product. But, you know, then after that, what unfolded is we started to sign more construction clients.
Obviously, being sector-focused in one market, you know, led us to international expansion. We expanded into the UK, we expanded to US in 2024. I moved my family out here, as did my co-founder in 2025. Sold my house in Sydney. Everything's gone. There's [00:06:00] nothing
to
Jason Jacobs: where do you live now?
Guy Saxelby: I live in Colorado. We're based in Denver
Jason Jacobs: And, um, and w- and why did you pick Colorado, um, coming into the US? And also why, uh, why come into the US, um, to begin with?
Guy Saxelby: US is the biggest construction market out there. Um, uh, uh, why Denver? Denver is-- Denver's got a lot of good schools, great outdoor climate and lifestyle. Housing is affordable. And then after CO-- uh, during CO-- like post-COVID, a lot of people migrated away from big city centers into it. So there's, there's a growing tech talent ecosystem there.
It's, it's not Silicon Valley expensive. Um, and so what we found is a lot of young families, young people, they come out of school, they can afford housing, they stay, and they build a lifestyle there. And it's, it's, it's time zone-wise, pretty good time [00:07:00] zone from London and Sydney
It's a great hub. I mean, our, our clients are, uh, spread across the country, and so being on either coast hurts us in terms of getting into market and, and shaking hands.
And, um, you know, it doesn't hurt that I'm a, I'm a big skier and I like to ski. So, uh, that helps
Jason Jacobs: So, um, so how big is the team today, and is it a, is, is it a distributed team, and how much of it is in Australia versus Denver versus somewhere else?
Guy Saxelby: Yeah, we, we're distributed. We've got a small team in the UK. We've got, uh, about fifteen, twenty people in Australia and a-- and about fifteen people in the US. We just raised a round though, so we're hiring, and we'll probably be... So we're about thirty-seven. I mean, we've got about six job offers right now out.
Um, we'll probably be fifty by the end of the year[00:08:00]
Jason Jacobs: Mm-hmm. And, um, w- what's the same about the, the US construction market relative to Australia, and what's different?
Guy Saxelby: Yeah, good question. Um, it's what's different that makes it really interesting. Um, so, so our product effectively is early payments. So the window of opportunity to pay early is anchored by the payment terms. In Australia, those are regulated to thirty days, so there's only really a thirty-day early payment window.
That's where we started the company and the product, and it was pretty successful there. In the US, there's none of that. There's no regulation. It's effectively regulated by the free market. And so, yeah, you can pay people in ninety days. Will you attract and retain the best tradespeople? Maybe not. Um, but there is no real, um, limit on what payment terms are.
There's also... Australia, about two-thirds of the construction [00:09:00] volume is public spending, so government building infrastructure, things like that. In the US, it's about the opposite. The private sector is the dominant sector. So that means there's a lot of private businesses and, and, and family-owned businesses that, um, that are running their firms and, and, and those, those owners are more receptive to saving money for their families, right?
The government isn't that receptive to s-- to saving money. And so our product saves our, our customers money and gets cash into the hands of the subs faster. Um, and so, and also obviously the size, right? The size of the US, um, and the number of firms out here is, you know, um, probably an order of magnitude bigger than Australia
Jason Jacobs: So, so if I'm hearing right, it sounds like not only is the US a bigger market, but it's also a market that, uh, has less, um, regulatory protections around not abusing payment terms, which means that, [00:10:00] um, uh, that there's more flexibility and demand for early trades offering and a bigger market to serve
Guy Saxelby: Yeah. Yeah
Jason Jacobs: Yeah.
Got it. And so in a world without EarlyTrade, and, and maybe we'll, we'll take the, the US market since it sounds like, you know, directionally that's where more of the attention from the company is, um, going. Although correct me if I'm, if I'm, uh, um, if, if I'm mishearing. Um, uh, but, but, um, what, what does that payment landscape look like in a world without EarlyTrade?
And then what does it look like, um, for companies that do adopt EarlyTrade, um, as a service?
Guy Saxelby: Construction supply chains are starving. Um, the construction sector is the-- has the most bankruptcies out of any sector, all due, all due to cash flow issues. Um, general contractors [00:11:00] make net th-three to five percent net profit margin, um, and they hold about thirteen percent of their revenues in cash. Um, the subs make about fifteen to twenty percent net profit, and they can't access affordable working capital.
So, um You know, and, and it's not, it's not due to any one bad actor. It's, it's just a structural, um, way the industry works. There's a, you know... So, so, so risk, risk falls down the hill. It falls-- Shit rolls down the hill, right? Risk falls down and is pushed down the supply chain. And so the owner, the person, um, who owns the development, who's engaging the general contractor, they will push as much risk onto the general contractor as possible, and then the general contractor, uh, will do what they can to push the risk to the subs.
And that's just the way it works. Um, I've got a lot of friends who've founded companies, [00:12:00] uh, that wanna try and change that. I think that's more difficult than actually creating a solution that works within the system, um, that is created. But effectively in the US, another difference is pay when paid or pay if paid.
So a GC, uh, is not obligated or required to pay a sub until they've been paid by the owner. And so it's not that the GC doesn't wanna pay. The GC wants to get... GCs make money when they work fast. Any delay or, um, or, or slowness erodes their margin because they gotta sit on the site, they gotta manage it for longer, they gotta replace people, blah, blah, blah.
So they wanna, they wanna get stuff going quickly. Um, but the windows of which owners are paying GCs is getting longer. That's what we're observing. Um, maybe it's just a way of protecting themselves or, um, holding onto more money, I'm not sure. But, um, no matter the relationship the trade [00:13:00] has with their GC, they can't influence payment earlier because the su- the, because the, the, there's no money, um, until the owner pays them.
And so, um So, so, so this is kind of how the industry exists today. Um, with EarlyTrade, the way it works is, um, if you've got a good balance sheet, if you're a strong general contractor and you-- and it's competitive and you wanna, uh, attract and retain good subs who prioritize you, money fixes problems, right?
And so, you know, what you'll do is you'll effectively, um, you'll launch EarlyTrade to your, to your sub supply chain. You'll invite them to use it. We onboard the subs, educate them on what they do, and then it's really over to them. And so every time there's an approved invoice that comes through the system, so the work's been done, it's been approved, um, they can see it in EarlyTrade, [00:14:00] and they can request early payment by offering a discount of their choosing.
So the subs set the terms as well as the GCs, and we just facilitate this early payment negotiation at scale on our platform. Um, and so, uh, since it's-- since inception, we've processed ten billion dollars of invoices. Have I lost you again?
Jason Jacobs: No, no, I'm here. Um, no, I was just laughing because it, it sounds like, um, so it, it sounds like instead of having a fixed structure like, um, you know, if you pay 30 days early, it's X, if you pay 60 days early, it's Y, if you pay 90 days early, it's Z or, or something like that. It sounds like it's a marketplace where the s- the sub is kinda testing like how much do we need the cash early and also, um, uh, how, um, uh, like, um, uh, how, how little pain can I, can I get that cash?
And then it's, it's, it's kind of an auction. Is it-- Am I hearing right?
Guy Saxelby: That's right. It's a dynamic, dynamic discounting model [00:15:00] where supply and demand drive the price. The GC sets how much cash they wanna make available, and then the demand is how many subs. Now, they still offer what you just said, which is a linear discounting model, right? That's, you know, two percent discount for ten days early.
You know, it's based on the time. Um, those aren't really used that much. Um, and so the difference with our system is, you know, the amount of subs that adopt it and the amount of early payments and savings ex-- it creates is a, is a multiple of what a linear discounting model can create. Um, because there's other factors like why should it just be two percent for ten days early?
Like that's quite a high price, right? So anyone that isn't willing or doesn't have to isn't gonna use it. But that's not to say they might offer point seven percent for a ten-day early payment, right? And so you're losing all the people who might offer, um, more, and you're also losing the [00:16:00] larger subs who are never gonna trade at two percent discount, but-- And they're doing twenty million dollar early payments, but they would trade at something that's closer to their cost of capital.
And so that's kind of what our marketplace allows. It allows all types of businesses and trades to, to get access and trade at a rate that they feel is fair.
Jason Jacobs: And then you, you just, um, for, for anything that's processed via early trade versus just traditional payment, you just take a, um, know, like, uh, take a cut essentially?
Guy Saxelby: Essentially, it's a gain share, so we share in the savings that is created
Jason Jacobs: Got it. And so, um, so which one of those are you selling into? Are you selling into the sub or to the GC?
Guy Saxelby: We're selling to the GC initially. The GC is our customer. Um, and then, and then we're selling into the sub. So, you know, the sub is the user. You know, we've got over two hundred thousand subs that use the platform, and they're the ones requesting early payment. And [00:17:00] the GC is the one making the early payment.
But we don't bill the subs. It's free for them to use. Um, we bill the GC
Jason Jacobs: And what's the pitch to the, to the GC?
Guy Saxelby: The pitch is, do you want to deliver better project outcomes? Um, because your supply chain's starving, they're finding predatory products to finance themselves. Why wouldn't you just offer a flexible payment option for them? They can use it whenever they want. And by the way, you're sitting on thirteen percent of your revenue in cash in a money market fund earning three percent.
You know, the general, um, the average APR return on cash deployed in our platform is fifteen to twenty percent. So you're enhancing your returns in a non-forced way, and you're attracting and retaining the best trades by offering them flexibility in their payment so they can actually deliver and grow.
Jason Jacobs: Uh, so this is, uh, yeah, I think the caveat to my questions is that I don't, I don't [00:18:00] come from this world. And so a, if a trained ear says, like, you know, "This guy's not asking sophisticated questions," it's like, well, you know, duh. Like I, you know, like I'm not, I don't come from this world. So I just wanna start there.
But, um,
Guy Saxelby: pretty sharp, by the way. You're actually getting to the heart of it quite quickly
Jason Jacobs: oh, thanks. Um, so w- well,
Guy Saxelby: There might more
explanations
Jason Jacobs: it. But, uh, no, but my, my, my question is, um, if you-- there are certain products like, um, like if you're, uh, like a subprime mortgage, let's say, right? Um, where, um, it is for people without the credit scores that can attract, um, attractive rates, but, but at least they can get a mortgage so they can be a, a homeowner, right?
And so what my, my question is, um, I mean, you mentioned attract the strongest, um, subs, but is it, is it almost inverse that the, the more d- the, the more a sub demands this, the lower the, the, uh, the, um, the more prec- precarious their financial position?[00:19:00]
Guy Saxelby: Look, that's, that's a common misconception and obviously subs that need it, you know, uh, use it. But the, the majority of the volume comes from the subs that are growing and, and the easy-- the easiest example to explain that is, uh, our busiest high volume periods are summer. And why is that? It's because the whole country is under construction during summer.
Half the country is frozen over in winter, and so you'd think that if subs needed it, like when they're-- when it's winter and there's not a lot of work, they'd use it more in winter. But no, they use it when there's lots of work on. And you gotta remember, subs are paying their labor every seven and fourteen days, okay?
And then they have to procure the material sixty days before the project starts. Then they deliver the work. Then they wait sixty to ninety days for the invoice. Who's funding that? Like, how are they going? Like,
Jason Jacobs: So, is, is, is cash flow management, is that like, again, this will [00:20:00] show my ignorance to the trades, but, um, but is cash flow management just like a, like a massive-- Like what percentage of the contractors are, uh, um, are extremely stressed about cash flow management? Is it 100? Is it 50? Uh, I, I'm just trying to get an order of magnitude.
Guy Saxelby: St-stressed is the-- stressed is the wrong word. St-stressed is a portion of them who are about to go out of business. They're all stressed about it. But the, the... Look, so stressed is the wrong word. Have you heard the saying, "Cash is king"?
Jason Jacobs: Yeah
Guy Saxelby: Yeah. Like, it is everything to a sub i-i-- and, and a general contractor.
The whole industry runs on ca-cash. And when there's no, when there's no cash, nothing, nothing moves, and it's a domino effect. And so while some of them might not be stressed, they manage it in a very disciplined, methodical way. And, you know, this is kind of what industry, what, what builders will say: general contractors are risk [00:21:00] managers, right?
You almost wanna be more careful what work you take on versus what work you say no to. And so a good general contractor will say mo-- say no to more than, um, than they can take on. 'Cause if you look at what a general contractor does, it, it, it wins the job and then coordinates and manages all the subs and takes a three to five percent margin for doing that.
Now, if the subs aren't delivering or there's cash flow issues, that, that margin can easily, easily erode, and they can actually be, you know, there, there could be a claim against them and they'll actually owe money. So it is incredibly important part of how the industry runs. And, um, and I think it's, uh, a huge inefficiency to our productivity that we can't get cash flowing faster down the supply chain
Jason Jacobs: And, and in terms of the typical customer profile, is this a pain that's felt [00:22:00] up and down the stack in terms of size of contractor in commercial and residential? Um, uh, and then same question about your ability to deliver. Like I know certain solutions below a certain threshold, you know, like they might have the pain, but it doesn't make good financial sense for you as a vendor to, to be able to deliver under, under a certain threshold of, of size.
So, um, yeah, I gu- I guess maybe speak to each of those a- as you think about the, the right customer profile.
Guy Saxelby: Yeah, absolutely. So the predominant base of our customers are commercial general contractors. Um, the average revenue profile of one of our customers is five hundred million in revenue. But we work with general contractors that go all the way down to fifty million of revenue. Um, we've got a handful of multi-billion dollar clients as well.
Um, we are starting to work in civil [00:23:00] contracting as well. So stuff in the ground, bridges, you know, um, tunnels, that sort of stuff. A lot of that, uh, uh, their profile of supply chain, they do a lot of self-serve. So whereas the commercial general contractors sub out eighty to eighty-five percent of their revenue.
So the low-hanging fruit for us is, you know, helping and, and getting as many subs on the network as possible. And so you go after the ones that sub out the most first, i-i-if you can, if you can understand that. Um- What was the other part of your question?
Jason Jacobs: Uh, th- so, so you talked about, um, who you serve, and I guess the other part of my question is, are you serving there because that's where the pain's most acute, or are you serving there because that's what makes the most, um, uh, sense in terms of the, the, the, the resourcing required to deliver, um, from an early trade standpoint?
Guy Saxelby: No, it's not. It's not about the resource. [00:24:00] It's about where the demand comes from, right? So, um, if you think about it, if, if I'm a civil contractor and I... It depends on the sizing, right? But if I self-serve, so if I do eighty percent of the work myself and I only sub out maybe twenty percent of it, I still use subs, but it's not as an acute problem for me, uh, as if I was a commercial general contractor that subs out eighty percent of the work.
I'm very reliant on those trade partners to deliver. I wanna make sure they're looked after. And if they have-- and, and if they have cash flow problems that I don't know about and they go under, well, I could have prevented that by offering something like EarlyTrade. So it's really where the demand has come from, from, um, from the market, and that's what we're tapping into.
Um, but we wanna, you know, land and expand, right? So the strategy is to really dominate the construction sector. And then there are other adjacent sectors that we [00:25:00] really like, um, which I probably won't say publicly yet. But, um, what we really like in the built world that still serve the same, the same sort of mission, but it's not just like a general contracting client, right?
'Cause this technology
Jason Jacobs: mentioning the names of the sectors, can you say what it is that you like about them? Or does that give it away?
Guy Saxelby: Not really, no. It's, it's built world stuff. So people building actual stuff, um, industrialized supply chains, right? Um, and if you think about what we do, we're really arbitraging the cost of credit down the supply chain. So, um, you know, there's a lot of industries where the customer is actually the smaller business than the supplier, right?
Um, we want the customer to be the bigger business and then their suppliers to be small and medium businesses. That's, that's, that's what we look for at a high level.[00:26:00]
Jason Jacobs: Uh, and in terms of the, the access to actually participate in this from either side, is it embedded in, uh, you know, a Procore or, or one of these larger kind of systems of record? Is it, is it standalone? Like what are, what are the mechanics of it?
Guy Saxelby: Yeah. So we sit on top of their existing ERP, um, that feeds us data, um, that allows us to run the market. When trades are agreed, we feed back data to the ERP, which automatically adjusts the payment times and payment amounts, and everything's automated. So instead of paying Joe Bloggs in thirty days for a hundred, you might be paying them in two days for ninety-nine
Jason Jacobs: Uh, is, is there any involvement needed from the ERP approval, integration, or, or can you just work across everybody?
Guy Saxelby: Yeah, we [00:27:00] integrate with the ERP. Um, we've got turnkey API integrations with many. It's a big part of our business. Um, and so, uh, yeah, you just really configure the ERP to accept EarlyTrade, and then we work through the ERP that way
Jason Jacobs: And i- is this primarily a CFO sell, or who's, um, who tends to be the decision-maker in- inside these, um, these larger VCs, um, from an early trade standpoint?
Guy Saxelby: Yeah, it's someone in the CFO's office and, um, increasingly someone in the operational side as well that's responsible for delivering these jobs on time and, and on budget
Jason Jacobs: And w- uh, what are the biggest, um, m- misconceptions or objections that you, uh, you know, either heard in the early days or are hearing now and, um, uh, and, and how do you respond to them?
Guy Saxelby: Early days, people thought we were factoring. [00:28:00] Um, there's no lender in this at all, right? So there's no, there's no, uh, credit risk, fraud risk or settlement risk. We don't touch the funds. We let the GCs pay on their own AP rails. Um, that's come up-- that, that comes up less and less now. I think people are understanding the model a bit better.
Um, misconceptions are, you know, the, the construction industry has grown up not paying early. So sometimes it's a foreign concept for them to go, "Hold on, why would I pay them early?" You know. And really, you know, if you take a long-term macro view, if you can mitigate as much of the risk as possible, which we have in our platform, um, then paying early allows you...
Like, if you're paying forty percent of your supply chain early, you know, you're gonna have a well-funded subcontractor [00:29:00] base that's delivering on time, that's gonna be able to hire when they need it, et cetera, et cetera. Now, our, our platform allows, um, the general contractor to switch on and off who they want this to go to.
So they can choose, they can-- we call it eligibility criteria. They can exclude certain projects, certain subs, and certain owners if they think that they pose a risk. And so by giving them the controls to control that, like, you know, we just show them the product and they're like, "Okay, so if I don't want it to go to these guys 'cause they're dodgy, then, um, then I don't, like I won't, um, I don't have to give it to them."
And you're like, "Yeah, that's fine." Um- Yeah. The, the other conception with-- the other misconception which you touched on is it's only the desperate ones that will need it. Um, and that's not the case, and we can show that through, um, like through, through our network, and we can show them like [00:30:00] the subs that offer the most and use it more.
Well, in fact, they haven't gone out of business. Um, the ones that use it the most are the ones that are growing and have lots of work on. Um, far, far, uh, larger segment than the ones who, um, it's their last option to use. And so, um, those are some, those are some of the objections we handle.
Jason Jacobs: Uh, and I'm sure you, you were asked this by investors, um, along the way, but if you integrate with ERPs and the ERPs are big and have all these resources and they just look at this ... I mean, maybe it's not a button, but I'm picturing like an EarlyTrade button. You know, like a, it's like, you know, link up with Facebook Connect.
No, it's like, you know, use EarlyTrade to f- foster early payment, right? It's like if I'm a big ERP, it's like I could put one of those buttons and it could be called, you know, like ERPTrade instead of, instead of EarlyTrade. Um, but I'm sure that under the hood there's a lot [00:31:00] more to it. Um, can, can you touch on, um, uh, whether that question has come up, how you've answered it, and then what goes on under the hood that you feel like gives you some d- defensibility from, um, being copied by some of the incumbents?
Guy Saxelby: Yeah. Well, I mean, just starting with the facts is normally the best way, which is we're partnered with many of the large ERPs, and we have been for many years, and they haven't tried to replicate or copy us yet. Um, although it is validating if, if there are bigger players coming into the space. Um, you're right in what you said.
It's not as easy as pushing a button. It-- There's a lot of work that goes on in managing the subcontractor relationship, getting them on board and getting them training, and that's a moat. It's a challenge as well as an opportunity because it's a, it's a moat. Um, I think the crux of it is the big ERP players are really set up to service the general contractor, [00:32:00] and a lot of the large ones are quite concentrated at the top end.
You know, the top four hundred ER-- uh, top four hundred, um, GCs. You know, we, we specialize in the mid-market, um, and so the ERP, uh, market penetration is much more fragmented, so there's a lot more ERPs servicing that. Um- And so even if they do offer something, it's only to a certain portion. Um, but for me, you know, these ERPs are set up to service large general contractors.
They're not set up to service subs. At the end of the day, we're a subcontractor platform, you know. So while the GC is our customer, it's the sub we live and die by if the sub sees value in it, wants to use it, and wants to keep coming back. And so, um, you know, I think it's, it's a strategic asset that we've built such a large [00:33:00] subcontractor network.
I think it's a strategic asset that, um, the users at all the subcontractors and general contractors are fairly senior in the CFO's office. Um, and, uh, I don't think a lot of the ERPs have, um-- Well, I know they don't have massive, um, massive sub, uh, sub products and offerings that can really scale into the network because the way the industry has traditionally viewed it coming from, you know...
I mean, I don't wanna say any names here, but like I said before, put like give it to the largest player and make them push it down. Make them push it and force it down so that the, so everyone else has to accept it. Um, that is an old school way of thinking, um, in my opinion. And I think the real power in the network comes when you get critical [00:34:00] mass of the subs, 'cause they will vote with their feet.
They will work with you or not based on what solutions they have. And it's a harder journey to get there, right? Building a marketplace is difficult, right? But once it hits scale, much more efficient than a B2B SaaS business in terms of gross margins and EBITDA. But also like on-once you own regions, you can, you know, that's where the flywheel really takes off.
And so while it might be a longer, a longer journey to the promised land, um, I believe that if we get it right, this is much more powerful than asking clients to mandate people to use it. 'Cause I tell you one thing, subs hate being told to do something and then have to pay for it
Jason Jacobs: So it, it, it seems like there's a, uh, there's a bit of chicken and egg in terms of, [00:35:00] um, you know, sometimes fresh thinking can be borrowed from other industries and can be quite advanta- uh, um, advantageous in an industry. So if you take construction, like there's a piece of it which is like, "Is this an idea that can help me?"
Right? But then there's a piece of it that is like, "Well, you don't come-- You know, why you? Like, you don't come from this world. Like, you're saying it can help me, and while, while it might make sense on paper, like I don't trust it because it's coming from you, and you haven't been steeped in my world for decades."
Um, how, how, how do you guys, um, break through that chicken and egg in the, um, earliest days, and what are your thoughts in terms of construction of founding teams, in terms of the importance of, um, coming from the world that you're selling into?
Guy Saxelby: Yeah, that's such a good question. Um, really, really difficult in the early days because they say exactly what you said. They say, [00:36:00] "Who are you? You're not-- You're a foreigner, firstly. Uh, secondly, you're not from construction, so you can't fully speak the lingo like I can, and you don't have that experience."
Um, so in, in, in the US, we had the Australian case studies to lean, lean on, and then you obviously get, "Well, it's, it's different here, right? It's different here." And, um, and so what we did is we, we aligned ourselves with high-integrity people. Um, people who are credible, who, who were smart, early-adopting type, innovative people who had credibility in the industry, and they understood the model, and they thought th-this is gonna work.
And so we leveraged their networks and helped, um... A-and then, and then a lot of the early customers were very forward-looking, uh, tech innovative type CFOs who, [00:37:00] um, who could see and make-- and, and they had the confidence in their thinking to say, "This is, this is worth trialing." And, and those were our first ten, twenty customers in the States.
And, um, they're all good friends of mine, to be honest. And, and now we have, um, enough customers, case studies and subs that we just say, "Well, go talk to this person. Go talk to that person, go talk... Understand it." And so, um, I'm very loyal and, uh, and affectionate to our customers because they advocate for us a lot.
And in this industry, that means, means a lot. But we're also-- We've also run, uh, we've had-- We're coming up to our third year now, and we've got, you know, many, many successful programs. So we know how it works. We know how different regions in the States work. We actually, um, we're assigning customers that their, their subs are already on our platform with [00:38:00] other general contractors, so they can directly ask their own supply chain, "Hey, you use this?"
"Yeah, yeah, we use it. We use it with him and her and whatever." And so, but it-- And it's still difficult, but it's getting easier the more, um, the more we build the network. I hope that answered the question
Jason Jacobs: It does, yeah. And r- I mean, relatedly, and I guess this is less Earlytrade specific and more just generally, um, the, the state of the state in construction, but it, it-- I wanna go back to something you said a little while ago, which, which was, um, that it is you have friends that are trying to, um, change the way things are, where you're trying to work within the way things are.
I, I don't know if I got that exactly right, but it was,
it was
s- something to that, to that effect. And I'm thinking about that a lot as an outsider coming in because, um, the, you know, construction seems like it has operated same way or similarly [00:39:00] for a prolonged period of time, and for good reason, given, you know, it's the physical world and the stakes are high.
And I, um, I, um... But at the same time, if you started from first principles today, it seems like a lot of the workflows, um, you know, could be streamlined and, and would maybe look different than, um, than they do today. And then the question is, is it, is it better to try to revamp the workflows, right? Or to just tune the ones you've got because it's too hard to change, right?
Even if they would look different if you started from scratch today. So, um, first, like, am I getting that right? Does that match your observation? And, and how do you think about that as an innovator?
Guy Saxelby: This is a big topic, right? And, and, and personal circumstance comes into it as well, right? So, um So with my-- So the way I think about it is good luck to you if you're gonna try and change [00:40:00] the legal frameworks that run construction. I don't think you're gonna do it. I mean, I, I'm not gonna be able to do it with my resources yet.
Maybe that's a second and third business. But that, th-these, these are s-different state rules. So there's like fifty-one different types of rules. They're, they're interlocked with old payment systems. There, there's, there's fragmented, um, uh, software platforms and ERPs and, um, you know, accounting systems and, um, and it is such a mess.
It is hard enough employing and selling to customers in fifty states and employing people in different states than it is trying to change every state's rule, right? So, so I just don't think it's realistic. And as a, as a founder, I'm an optimist, but that's gotta be tested with rational reality. And so, um, [00:41:00] now maybe if I was on my third business and I had a billion dollars, maybe that-- maybe this is a noble cause to try and do.
It's not really where my skill set lies. This is lobbying and legal, um, legislative changes. And you're gonna be, uh, you, you, you're never gonna be making anyone ha-- You're gonna be making some people happy and other people unhappy. And so I just think it's, um, it's a fool's errand to try and work that way.
I think what has kept technology out of construction is these sorts of things. It's every project site's different. Every state law is different. Um, every... You know, even subs can't even get, um, access to good insurance policies 'cause every subcontract is different. So every insurance policy is, um, custom, right?
And there are, there are firms I know trying to solve that problem. I think that'll-- I think that's a great [00:42:00] area as well. But, um, it's just so different. It's not widgets like in the manufacturing industry or the retail industry, uh, you know, um, you know, or the, or the software industry. It's very easy to scale that because it's...
But the, the complexity comes with all these different rules, risks, legal frameworks, procurement models. Um, and so once you get into the detail and you actually like deep dive on it, it, it's so complex that it's overwhelming. And so why actually try and change it? Why not try and find something that, you know...
And that's-- this is how we went along designing EarlyTrade. We wanted to design a system that was non-invasive, that provided a financial benefit without being a financial product So we, we, we, we don't sell a financial product, but we still provide the same benefit as a loan. Uh, so we don't need to be regulated.
We're currency agnostic. Um, [00:43:00] we don't put an intermediary between a general contractor and a sub, which they hate. They hate that so much. Um, we don't touch the money. Like, it's kinda like, why did you-- why did everyone like Uber in the day? You connect your card up, you press a button, car comes in, you get in, you get out.
No frictionless, right? Like it's a rudimentary example, but the reasons our customers and users like us is the technology is not there. It's invisible to them. They just click a button, and the cash comes into their account next day. So, you know, we, we have tried to design an architecture that is so non-invasive.
There's no, no one stepping in. No one's really taking any, any, any material risk here. And so if you mitigate all that shit out, um, you're more likely to have people go, "Okay, well, I don't have to worry about that. I don't have to worry about that. I don't have to worry about that. Okay, I'll, I'll trial it.
Oh, that's [00:44:00] pretty easy. I didn't have to go through a, an approval process. I'm not, I'm not taking debt on, so I'm not risking any property in my business. And the money just turns up in my account, and I'm in control of what price I set. And if the market is higher than what I'm willing to pay, I don't participate then.
I wait till it comes down again." You know? So we've effectively created the platform so that it, it, it sidesteps and mitigates all these complex issues of the industry, if that makes sense.
Jason Jacobs: Uh, and it, it, it seems like there's a big distinction philosophically between the, um, uh, you know, call it privately held or, or family-owned, um, f- I guess family-owned, let's say, versus the private equity consolidators that are coming in. Is that rearing its head in your world at all? And if so, are you noticing any distinctions between, um, uh, um, be- be- [00:45:00] between tho- those types of contractors?
Guy Saxelby: Yeah. Well, now you're getting into, uh, a new, um, set of issues, right? So, I mean, private equity isn't that prevalent in construction. Um, and when it is, everyone thinks private equity is they come in, they cut costs, they, they, they get EBITDA bigger, and then they sell. Not in construction. The margins are too small to do that.
And so the way private equity makes money generally in construction is they build up as much cash as possible, and then they sell, they sell the work in progress onto someone else who can actually deliver it. They keep the cash, right? So their incentive is different to a normal family-owned general contractor.
Family-owned general contractor, which are, by the way, the far majority of construction businesses in the US are owned by families [00:46:00] or employees. Um, these are-- They wanna build a sustainable business, and they need profit, and they need good balance sheet to do that. And so, you know, they're incentivized to look after their supply chains and their trade partners 'cause they wanna kind of build up over time.
And, you know, they need to make money and put that on the balance sheet in retained earnings. And so, um But also they, they have a little bit more of a s-- of, um, what's the word? Um, they have a bit more of an appreciation of a dollar 'cause they can see the dollar comes to their family, right? And so whereas a, a private equity corporation is looking to flip a business, right?
So i-i-it's not necessarily a long-term play. So we don't really see private equity that much in, in the construction space.
Jason Jacobs: Uh, [00:47:00] and, um, separate topic, but I'm, I'm actually recording with Kevin Halter later today, um, and I think he's an EarlyTrade board member, and I know he's talked in the past about this kind of $10 million wall in, um, in the trajectory of so- of, uh, venture-backed software companies in construction tech, and, um, w- why do you think that is?
And, um, and is that something that you worry about when you think about s- scaling EarlyTrade? And, and I guess since I tend to ask my questions in groups, I'll lump another one in there too, which is just, um, uh, you know, how do you feel about all the, all the venture dollars going into construction? Um, you know, is that asset class well-suited to this category?
Guy Saxelby: Ooh, good questions. Um, the ten million dollar number is just a, a try-- a tried and tested benchmark, right? If you can make it to ten or more, you, you strip a lot of the business risk away, [00:48:00] right? That product market fit risk, the go-to-market fit risk, you know, um, you're at a scale where, um... So I think it's a pretty good benchmark.
Um, do I worry about it? Um, I mean, as a CEO, I worry about a lot of things every day. So you kinda, your life is just, um, suffering through that really. Um, but I don't have any relationship to that number. I mean, um, that number is, you know, a, a stepping stone on the way to a hundred million. I, I worry about how we get to a hundred million of revenue.
That's what I'm focused on doing. Um, and then, uh, do I think venture dollars into construction is a good thing? Yeah, I do. Um, I think I think it's going through cycles. So I think, um, you know, vet venture can, um, certainly operate in a [00:49:00] FOMO type environment. And, um, and so there's a lot of examples where a lot of money's been put into companies that haven't, haven't succeeded.
But I think, you know, we need to continue learning, and I think the industry is really good at working it out. But, um, it's not-- It is different to normal software investing. I mean, you do have to kind of have an appreciation of how construction works, and there isn't many VCs that have that, in my opinion.
Um, you know, um, but what I see is I see a hollowing out of the middle of venture, certainly in ConTech. I see a lot of people who are willing to back early and, you know, series A. Um, and then there's-- And then you've got these large horizontal funds, Andreessen Horowitz, that sort of category, that if you get big enough, they'll take...
And that's really like big, big checks, [00:50:00] right? Th-there's, there's not as much in that middle layer B, C, D, E. And you have, you have growth equity coming in, um, 'cause once you're above ten, ten mil of rev, you know, you're, you know, you're looking pretty good for a growth equity check, right? And so, um, that's a, that's a different-- That's where you, you sell a, you know, twenty to fifty-one percent portion of the business.
They're actively, um, in the management and board, maybe not management, but on the board. And, um, and, and that, that, that's a, that's an interesting, um, path to take as well. But typically, you have to choose one or the other. Um, uh, it's hard to, it's hard to work with both. But, um, more money coming into the sector to solve issues for construction is a good thing.
Jason Jacobs: Uh, and I, I mean, I'd be re- I'd be remiss if I didn't ask you, um, you know, how much [00:51:00] AI is infiltrating as it relates to your internal early trade business. And then same thing in terms of what you're seeing in the field. Uh, I mean, do you think it's largely hype and, and overblown or early, but it'll be impactful later?
Or are you actually seeing it, um, you know, impact how you're running things and how your customers are running things in material ways?
Guy Saxelby: Yeah. So look, I can speak on the money side and not, uh, uh, for EarlyTrade. Um, I think it is too early to really see huge impact on the industry as a whole, but I, I'm not, I'm not expert at, um, AI for the whole industry. With EarlyTrade, um, one of the main strategic bets we're making with this Series A round is building agents into the marketplace.
So, you know, so these agents will, um, onboard, educate, and negotiate with the subs, uh, because we [00:52:00] literally can't get to all the invoices on the platform ever. Um, and so the humans, which just feels weird to say, the humans triage and prioritize the high-value stuff, which is typically the larger subs. The whole vision is to help the small and medium businesses.
And so agentic AI agents actually doing that, and we've, we've started testing this in small batches, and it's, it's pretty cool to see a sub auto-onboard, uh, an agent auto-onboard a sub, um, take them through the demo, and then have a trade happen, have an early payment request happen straight after that. And, and th- and this is happening now, and, and we're looking to scale it up.
Um, so that's kind of our main use case for it. It's to drive more value into the marketplace for the subs and the GCs. It's to serve them faster and with more intelligence. But overall, it's not an efficiency play for us. It's a, it's a growth play. We can serve more users using ag-a- using [00:53:00] agents. Um- Uh, I haven't seen...
Uh, so I'm not seeing a lot of innovation coming out of, uh, the big construction company-- the big construction technology companies when it comes to AI. What I'm seeing is a lot of them try and work out what they need to do, seeing a few early acquisitions, um, which look to me like acqui-hires. So they're hiring the, the talent that, that can lead the strategy.
Um, uh, when I talk to CFOs, um, the two things that-- the, the two general themes that they talk to me about is: How do we make more margin? And how can we leverage AI, um, for our businesses? Those are the two things they wanna know about. Um, and those are the sort of the, the hot topics that they're looking at.
I'm seeing, you know, general executive [00:54:00] and employee usage of AI go up. I think everyone's using, you know... I mean, certainly from a company perspective, our engineers are using, like, the different Frontier Labs, um, coding tools. Um, we're rolling out Enterprise, um, Enterprise Claude for, um, our sales and go-to-market staff right now.
You know, um, our customers are using, you know... Uh, our customers are using, um, AI to vet our model and make it make sense. Um, and our investors are using AI. I mean, it's the first diligence round I went through where, um, both sides heavily using AI. Um, so it's, it's, it's interesting. I, I, I think it's really cool.
You can do a lot more with it, and you can, you can get way deeper analysis and insight from it. But in terms of big hits for the industry, I'm not seeing them yet, me personally, [00:55:00] but Kevin might have a different view.
Jason Jacobs: Uh, and if, uh, you know, to put on your futurist hat for a moment, if you look out a decade from now, uh,
w
w- what are the most profound changes that, um, that you think we'll see in construction relative to how things operate today? And, and what are the things that'll probably operate exactly the same?
Guy Saxelby: Yeah, it's a good question. It's hard. Um, look, I wouldn't-- uh, it would be remiss of me not to say robotics entering construction, um, projects. Um, a lot of the large general contractors are investing in and looking at deeply how some of the unsafe work can be done, some of the repetitive, um, work can be done.
I mean, a robot doesn't work a eight-hour shift, right? It, it works twenty-four hours and doesn't complain. [00:56:00] Um, so that's, that's a change that I'm watching closely. You know, you can see Tesla and Optimus building stuff out. You know, a lot of people think that the Optimus robot will be this personal servant.
I can tell you the, the first use cases are, are not serving humans. They are mining the ocean for gold. They're working on the Moon and Mars. They are doing these highly glamor-- unglamorous jobs, um, that we don't do yet. So, um, that's something I'm, I'm pretty, pretty interested to see evolve. I think it's gonna be a very controversial fight with the trade unions and, um, and protecting, protecting workers and, and, and things like that.
So we'll see how that evolves. Um, I'd like the, the-- You know, I read somewhere it's like construction doesn't need more robots, it needs more [00:57:00] intelligence in terms of like the p-- there's so many siloed platforms, you know, either through a major consolidation, um, or through AI solving this data switching problem.
'Cause let's find that, let's find that the cost to develop software trends to zero. Fine. I think everyone can see that. But if you can't move your data from one provider to the other easily at a low cost, it's not gonna help the connectivity of the industry. And so I, I see over the next ten years, um, massive consolidation, either through M&A or actual through, um, innovation, connecting a lot of the systems that allow companies to easily, um, you know, see everything right from, um, right from the basics on a job all the way up to, um, multinational, um, corporations.
So [00:58:00] I look forward to that. I think that will help the industry, help the industry a lot. Um, they'd be just two trends that I'd, I'd point out.
Jason Jacobs: And what about from an Early Trade standpoint? If, if, um, if Early Trade's been successful beyond your wildest dreams 10 years out, um, what does it look like?
Guy Saxelby: Yeah. So our vision or, you know, and what really gets me excited is, um, we wanna build the operating system for payments and risk in construction. And so the first, the first product is early payments and cash flow. But as you work, um, as you work, y-you know, in payments long enough, there's so many other things that impact the payment, you know.
And so we, um, you know, our, our focus right now is building a big network, but there are other products that we're [00:59:00] testing to bring into our network that can offer larger share of wallet, more value to the users, and create a more sticky experience for everyone. So, um, you know, we, we, we will have-- in ten years, we will have well moved beyond a point solution to a, a, a, a diverse product suite platform, and we will still be focused on the same things, which is enhancing prog-- productivity for construction and, and the economy, and doing it in ways where we're removing friction.
We like to remove friction and create seamless experiences. That's really tough to do. Um, and, and while monetizing it. Um, but if EarlyTrade's wildly successful, then I'll know the industry is in a better place than when I found it. And that's kind of what, what, what keeps the, keeps the legacy part going for me.
Jason Jacobs: And for anyone listening that's inspired [01:00:00] by, um, uh, by your, your, your, your vision and, and traction and latest big funding round and momentum and, uh, and just you from, from listening to the show, um, uh, who do you wanna hear from, and how should they get in touch with you?
Guy Saxelby: Yeah, look, um, come, come contact us directly. You, you can do that through the website or through LinkedIn. We've got a lot of-- We're hiring a lot right now, so apply for one of the jobs or reach out, um, if you've got interesting ideas or you think you can, um, you know, um, come and help us on, on our mission, we'd love to hear from you
Jason Jacobs: Guy, uh, this is such a-- It's been such a wide-ranging discussion. Is there anything you'd, uh, uh, that I didn't ask that you wish I did, or any parting words for listeners?
Guy Saxelby: Um, my parting words would be you gotta take risk 'cause scared money don't make money, right?
Jason Jacobs: I feel personally attacked. I, why, why'd you [01:01:00] look at me when you said
that Uh
but playing it safe, doing a podcast all day and not building anything.
But um
no. Uh, Guy, thank you so much for coming on the show. I learned a lot, and, um, wishing you and EarlyTrade every success, and, uh, hoping we can keep in touch along the way as well.
Guy Saxelby: Thanks for having me, Jason
Jason Jacobs: That's it for this episode of BuiltForward. I hope you enjoyed it. If you found it useful, share it with someone building in the industry and follow the show so you don't miss what's next. Thanks for listening and see you next week