1Mby1M Deal Radar 2012: EADOC, Oakland, CA

EADOC, LLC is a profitable, $1 million-plus cloud computing company that provides a Web-based construction management application for the $1 trillion construction industry. EADOC is used to manage complex commercial and industrial projects with a large number of stakeholders, including facility owners, project managers, contractors, architects, engineers, subcontractors, and consultants. Currently, more than $4 billion in construction projects are being managed with the use of EADOC’s application.

Eric Law, who has a B.S. in mechanical engineering from California Polytechnic State University at San Luis Obispo, founded EADOC in February 2006. Law saw a gap in the construction management marketplace. Some products focused on scheduling, others on document management, and still others on finance. EADOC uniquely integrates document management with cost control functions.

Law called upon his experience working as a project engineer for a large contractor on commercial and industrial projects and combined it with his experience in the software industry to come up with the idea for a Web-based collaborative construction management application. He built the first prototype that was used for demonstrations to potential clients, which EADOC’s software engineers used to build the application that launched with the company in 2006. Since that time, the company has acquired 100 customers that account for more than 8,000 users.

After building the initial prototype, Law quickly found it was cost effective to give demonstrations online through Web conferencing tools rather than jet around the country to meet prospective clients. Today, EADOC sells by telephone and Web conference almost exclusively. In the beginning, Law focused on public utilities, municipalities, and districts (facility owners) to win deals in the complex commercial and industrial segments. This led to wins with builders and agency construction managers (firms that focus on job management on behalf of owners.)

EADOC is the only product on the market that integrates document management with cost control. Some of the company’s competitors, Procore, for example, focus only on the residential sector. Others are the “big gorillas” that focus more on different construction management activities. Oracle Primavera, for example, leads in scheduling. Aconex focuses only on document management. Autodesk Constructware was an early competitor until Autodesk discontinued the product. Interestingly, EADOC’s biggest competitor is often the Excel spreadsheet because many people still use that tool for project management.

Customers save tremendous amounts of money on printing, distribution, shipping, and so forth when they use the EADOC’s software to manage projects. Using the software also helps them save time, keep projects on schedule, and mitigate project risk by keeping all participants on the same page throughout a project, which reduces delays and incidences of costly miscommunication.

The company’s pricing is based on the value of the project, not per-seat, per-month. EADOC prices as a percentage of the product value. Projects in the $50 million to $150 million range are common. For example, for a one-year, $5 million pump station that requires 20 users and 5 gigabytes of disk space would cost $11,500-$5,500 for the subscription and $6,000 for setup and training. For a two-year, $20 million office building project that requires 40 users and 20 gigabytes of disk space, it would cost $21,000 for the subscription and $6,000 for setup and training, or $27,000 total. A three-year, $90 million water reclamation facility project that requires 100 users and 100 gigabytes of disk space would cost $61,500 for the subscription and $6,000 for setup and training, or $67, 500.

Spending estimates are an important measure; however, construction projects tend to be unique, so it’s difficult to come up with a bottom-up TAM, said Law. According to McGraw-Hill Construction, the nonresidential building market in 2011 was $154.8 billion; the 2011 nonbuilding construction market was $122.9 billion. The 2009 nonresidential construction spending as it applies to EADOC was $58.5 billion for manufacturing, $14.1 billion for public safety, $38.5 billion for transportation, $102.9 billion for education, $45.1 billion for health care, $25.5 billion for lodging, and $18.9 billion for amusement and recreation.

EADOC has been bootstrapped with revenue from sales, starting with a $50,000 capital contribution from Law. The investor community was not receptive to a construction management software story in 2006.

A lean startup, EADOC is not planning to raise any capital at this time. Law and his team also have no exit strategy in mind. Instead, they intend to focus on increasing business in EADOC’s core segments by cultivating strategic partnerships with vendors such as those that sell building information modeling software and post-construction facilities management software in order to increase exposure.

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This segment is a part in the series : 1Mby1M Deal Radar 2012