The Acquire Podcast Ep. 8: Billboards, donuts, and QR codes: Flexbase is building awareness
- Flexbase’s CEO Zaid Rahman and head of growth Joey Randazzo join us on the Acquire Podcast.
- From blanketing one city at a time, putting up billboards off highways, and shipping mysterious donut boxes – their awareness campaign is doing new things.
Welcome to Acquire, Tearsheet’s Marketing Podcast. I’m your host, Rebecca Cohen, Head of Tearsheet Studios.
In today’s episode, I’m joined by Flexbase’s Zaid Rahman, founder and CEO, and Joey Randazzo, head of growth. Flexbase is a payments platform for construction companies. We’ll be diving into their standout approach to brand awareness – from blanketing one city at a time, putting up billboards off highways, and shipping mysterious donut boxes to roll out the Flexbase card, a credit card that meets the unique needs of the construction industry.
The following excerpts were edited for clarity.
Zaid Rahman: Hey, I’m Zaid, founder and CEO of Flexbase. Real quick background about myself: multiple time founder, have done a couple of companies, and my entire family is in the construction space. I’ve been trying to solve this problem for a long time, and I’m very fortunate to be working with an incredible team, especially on the growth side, to help us launch this.
Joey Randazzo: I’m Joey Randazzo, I am head of growth at Flexbase with a group of other growth executives. We’ve got a pretty awesome growth team that works holistically to build what we’ve built and continue to build. I’ve got a pretty strong background in content, SEO, and all things digital. And then we’ve got a pretty holistic growth team from the traditional to guerrilla, strange marketing tactics, to social media, and kind of all the above.
Newcomer to an old problem
Zaid Rahman: We’ve been actively building this for about a year and a half; we started during the pandemic. It’s a funny story of how things came along: I’ve done a couple of tech companies prior to this, and neither were in construction, or construction tech, or fintech – but rather in the education software space.
But I’ve been thinking about launching a new solution to solving the problem of cash flow in construction, the stars align during the pandemic, and here we are.
For perspective, my father runs a midsize construction company in the Middle East and he’s been part of some very significant projects that a lot of people have seen. Both my sisters are architects, my uncle runs an architectural consulting firm, so everyone in my family is in this space. And growing up, I would hear a lot about the problems.
The unglamourous side of construction
The one that I would hear all the time was cashflow problems: specifically not having enough cash to pay suppliers on time, which are oftentimes purchases which are personally guaranteed. Occasionally, this leads to not being able to make payroll, which as a business owner can be an issue that causes quite a bit of heartburn.
The construction space is one of those industries where the entire economics is lopsided. In most industries, you start your work by being paid in advance, and then incrementally every couple of weeks. In construction, it’s the complete opposite. In fact, my thesis is that most construction companies are either broke, or one degree away from being broke.
And it’s because of two reasons. First, construction is the only industry where if you start working today, you’re not going to be paid for 100 days on average. In that period, you’re not only holding all the risk of paying your workers out of your own pocket, but you actually buy the materials for your client, oftentimes by yourself. So you’re basically funding the project, while these big owners are getting paid by banks, and so on.
On the other side of this problem, most construction companies don’t have access to good credit. Oftentimes, people confuse credit in construction with real estate developers; if you’re a big real estate developer, let’s say you’re building a 50 story tower in Manhattan, you pretty much have unlimited amounts of funding because your credit is tied to the asset. In the worst case scenario, the bank can just take over the asset. Whereas if you’re one of the dozens and dozens of companies that work on these projects – a little plumbing company, a little roofing company, a little HVAC company, or you may be even doing tens of millions in revenue – you still don’t have access to that much credit.
For example, one of our customers has $25 million in revenue, they’re based in Texas, their clients are all tier 1 government agencies, and they always get paid. Their revenues are $25 million, and yet their credit card limit is $25,000 – literally a fraction of that total revenue.
We think that discrepancy needs to be solved. There’s a significant challenge where most banks don’t know how to underwrite these construction companies, and that’s one of the problems we’re trying to solve.
Narrated from the future
Joey Randazzo: I think our feature commerical was an interesting representation of this industry. You see little kids with their toy trucks going around very excited about the construction space, building things, and excited to contribute to building the world; it’s fun to go in the sandbox, play, and build things.
But when that translates into a career, it’s a little more stressful, and it’s a little more heartburn than going out and having fun building things. It’s ‘I don’t have the cash to pay my employees who need to put food on the table for their children.’ That’s not fun.
So I think it’s an interesting idea that these children are excited about building things, but speaking as adults like, ‘I’m excited to be a construction business owner and have to chase down people to pay me on time.’ It connects with the audience at a deep level to think, ‘Wow, do I want my children to enter this industry? How can I solve this problem? Or how can I be a part of the solution to this problem so that I don’t have that heartburn, and future construction owners of the world don’t have that heartburn as well?’
So we’re running this on multiple channels, OTT (Over-the-Top, or online streaming ads) for watching Hulu or TV on their smart TVs, and also on social media on organic and paid social channels, as well. We’ve found that a lot of people find it quite comical, but it also resonates at a deep level.
The commercial project is credited to one of our other growth executives, Anthony, who’s a genius when it comes to video, so he was the mastermind behind that project. He’s got about 800 more ideas at that level that we’re excited to implement. He’s very creative and touches people at a level that is quite interesting.
Addressing the pain points
Zaid Rahman: Going back to that thesis where most construction companies are broke, we looked at the problem and asked, ‘What is it that these companies really need? Do they need more software? Do they need better banking?’ And what we landed on was that most construction companies are really desperate for liquidity. And so that’s what our first product solves.
If you look at the analogy in another space, let’s say the startup space, before Brex and Ramp, which are corporate cards for startups, basically nobody wanted to give credit cards to startups. In fact, Amex would say, ‘Hey, you need literally millions of dollars in revenue in order to get a no-personal guarantee corporate card.’ This analogy resonates with the problem I’m describing in the construction space, where you have companies with tens of millions in revenue, and yet they don’t get high limit cards.
So just like Brex and Ramp, we’ve launched the same for construction: a high limit corporate card with no-personal guarantee – but the headline feature is 0% interest for 60 days. On average, you’re getting paid in a two to three months time period, so if you have 60 days to pay back, that’s a major benefit and advantage to your cash flow cycles.
But first, Houston
Joey Randazzo: Houston is one of the largest markets for construction – top 10 in terms of total build out of dollars for construction. We wanted to hyperfocus city by city, almost like dominate a city and allocate our dollars there from a marketing spend to really blanket Houston.
We can spread out those dollars across the United States, but at the end of the day, we know that from a customer journey perspective, that’s not going to be enough to really have them be touched multiple times by Flexbase.
Particularly for a new credit card, we knew that we were going to have a pretty large hurdle. It’s a big step for someone who’s never heard of a company to say, ‘Yeah, I want to sign up for a credit card with Flexbase.’
So our hypothesis was that we can go deep in Houston – people seeing out billboards in Houston when they’re driving down the freeway,delivered donuts to construction companies in Houston in Flexbase branded boxes, radio, OTT, localized social media marketing at a multi channel level of targeting specifically plumbers and electricians in Houston.
We went super deep in Houston so that we could touch people multiple times. What we discovered is that the majority of our lead acquisition came through the Houston market; people continue to find us nationwide, but we discovered that it really resonated with people seeing us on multiple touchpoints.
People reached out saying they saw our billboards, which is a very rare thing from traditional marketing and it’s really hard to determine acquisition for traditional channels such as billboards, but we were able to get that data at a granular level of knowing that people saw multiple different marketing channels of Flexbase in Houston.
What’s great about this approach is that we have a formula. We know what worked well and what we could optimize, so now it’s about picking up and dropping it in other cities with relative ease, which makes our nationwide campaign pretty straightforward.
Who the F is Flexbase
Joey Randazzo: We started with a really robust and granular list of the ideal customers, down to the revenue per year numbers. Like plumbers in the Houston area were between one and five million in revenue. A lot of the ones below worked out of their homes, actually, and we didn’t want to deliver donuts to someone’s house – it’s a little strange.
So we built a super robust and granular list, then filtered it down to our top 100 within that list. And then we designed the box to be pretty provocative. So on the front, it says, ‘Who the F is Flexbase’ and there’s a QR code – which is how we knew exactly which company was scanning the QR code.
Then we had somebody deliver it, of course, to their office, and we only chose companies that had a physical office space. We delivered donuts at a cadence of ten companies per day, and we discovered that there was about a 75% scan rate of the QR code.
It created a ton of engagement. We designed the box to speak to that to just be really provocative and have people just be like, ‘Why? Why in the world did some company send us these donuts?’
Zaid Rahman: Ultimately, what startups should really care about is what a single customer actually wants. So we really focus on that down to the specific messaging that goes into social ads. One of our colleagues created, you know, 5 permutations of a social ad, and we noticed that the one that was resonating the most simply said ‘0% for 60 days’. So that goes back to the value prop that the customer really cares about.
By trying all of these strategies to ultimately grow brand awareness in a very rapid amount of time (we’re talking 12 weeks), you can see pretty amazing results.
Our hypothesis is that higher brand awareness, leads to more trust, leads to more adoption of the product. So I think in this particular product’s case, we might have gotten the hypothesis extremely right.
Technologists solving money problems
Zaid Rahman: We’re building a lot of software, we’re building AI for underwriting so we could underwrite companies with data and use no human intervention whatsoever to calculate risk. We’re also building a lot of customer facing products that are software products.
Our next big product that’s going live within the card space is Flexbase Enterprise Cards, for companies that are spending one to five million dollars a month on a credit card, which is insane. We have folks who spend tens of millions of dollars a year on AmEx, but just don’t have the sort of expense management with all the granular controls you’d expect in the construction industry.
We have a number of things in the pipeline. One that I can talk about is the ERP product called Flexbase Payments, which basically automates and manages most of your billing. Because in construction, one of the challenges is chasing our customers to get paid, and then figuring out who to pay after your customers pay you – pay when paid. So we’re building a tool that will automatically manage both collecting payments and paying vendors and subcontractors.
Most SMB construction companies don’t really have sophisticated finance teams, so with us acting as their sophisticated finance team, they can achieve so much more growth and focus on what they’re good at, which is building.
The day-to-day of it all
Joey Randazzo: There’s just so much opportunity in this space. We have hundreds of construction companies knocking and banging down our door, wanting to get onboarded as quickly as possible. The most exciting part is that we have the faucet turned on at 5%, and the growth is rapid, so we are very, very excited about turning on that faucet to a higher degree, and building a brand that every single construction company in the United States and potentially the world knows about.
Fom the growth side, we just had an offsite in Miami last week where we strategized the next 3. 6, 9, and 12 months, and we have some pretty audacious goals that we’re excited about waking up in the morning and executing on those.
Zaid Rahman: Fundamentally, as technologists, we get excited about all these products, software, and all the magical things we can do with underwriting. But ultimately, the thing that drives me personally at Flexbase is first of all, that I’m solving my own family’s issues. I’m solving my father’s heartburn from when I was growing up, and that’s a personal thing for me.
But also, when I see our customers get really excited and talk about how this will literally put food on their table and help them grow their businesses; ultimately, we’re helping these construction companies not only thrive today, but we’re actually giving them the firepower to grow their businesses ten times over the next several years. And that is a really, really exciting mission to be associated with.