This is the first post in a series dedicated to highlighting small and medium-sized enterprises across the country employing technology in new and innovative ways.
“Innovation” may not be the first word you associate with the construction industry, but three-year-old EquipmentShare makes a strong case for a reframing of that narrative. The company, which is headquartered in Columbia, Missouri, and has a presence across the urban centers of Texas as well as Jacksonville, Florida, connects contractors with a platform to rent and lend equipment on a peer-to-peer basis, empowering them to earn income off of equipment that would otherwise go unused. More recently, EquipmentShare added telematics and equipment utilization services to the mix. We interviewed Willy Schlacks, EquipmentShare’s co-founder and president, to learn more about technology disruption both within the company, and in the industry at large.
Courtney Duffy (DisCo): How has the construction industry, as well as the needs of its participants, changed as we’ve entered the digital age?
Willy Schlacks (EquipmentShare): Construction has traditionally been a tech-averse industry, slow to adopt new technologies and reliant on pen-and-paper or otherwise manual processes. But just like many other industries, construction companies have been forced to do more with less. Contractors and other players in the space have been looking for ways to find efficiencies, cut costs or otherwise boost their bottom line and are turning to technology to do just that.
The biggest benefit that technology brings to the construction industry is the ability to capture and use data. Technologies like telematics are enabling contractors and OEMs (original equipment manufacturers) to capture data from their equipment–something that wasn’t possible before–and use that data to more intelligently manage their maintenance schedules, hours of service and more. There are so many applications in the construction industry for data that can all be used to drive efficiencies, productivity and greater safety.
DisCo: EquipmentShare has been described as “the Airbnb” of the construction industry. Why is this an apt description, and what role can the sharing economy play in related fields?
EquipmentShare: At a very basic level, you can compare our peer-to-peer construction equipment marketplace to an Airbnb for the construction industry, but there’s a lot more complexity to it because we’re dealing with mobile assets in a B2B marketplace. As contractors ourselves, we often faced the frustration of having to source equipment for our projects and debate between purchasing a machine that may only get used a few times a year (and requires maintenance, upkeep) or renting that piece of equipment for a sizable fee.
The construction equipment rental industry is a $40 billion industry, and makes their profit from contractors who aren’t properly utilizing their assets. And what we found was that contractors own about three times as much equipment as rental companies, meaning that there’s a ton of inventory out there–it’s just not being tapped. Our goal when creating EquipmentShare was to build a marketplace that helps contractors better manage their assets and asset utilization by “sharing” equipment with other contractors. Lenders, those offering equipment on the site, win by increasing their asset utilization and generating extra revenue, and renters win by being able to get quality equipment at better rates than traditional rental companies offer.
One important lesson we’ve learned as we’ve applied the sharing economy model to the construction industry is that trust is a key factor in our success. To bolster that trust and provide contractors with more tools to better manage their assets, we built a telematics platform, called ES Track, which gives users real-time data about the location, usage and health of their equipment. This level of visibility is crucial to developing trust in a B2B marketplace such as ours.
DisCo: What technology does ES Track rely on to solve the problems it tackles?
EquipmentShare: ES Track is the only telematics solution built specifically for contractors with mixed fleets, meaning heavy equipment assets and other vehicles like trucks. With ES Track, contractors get a detailed look at the status of their equipment – from location to health to usage. This advanced level of info empowers contractors to better manage their fleets and make smarter business decisions. For example, contractors can minimize the downtime of their equipment by taking a proactive approach to maintenance, identifying potential maintenance issues to avoid a critical breakdown. With this type of data, contractors can also easily identify underutilized assets and decide to rent or sell idle assets.
DisCo: Do you have any metrics you can share to illustrate the impact of your technology?
EquipmentShare: Across the board, we’ve seen that our telematics technology is helping contractors in a number of ways. On average, our customers see vehicle utilization increase by 15-20% and their total productivity increase by 5-10%. Not only does ES Track drive greater efficiency, but it gives greater control over their fleet, making fleet management simple.
DisCo: How can the construction world (and similar industries) optimize technology down the line, and what sorts of technology policies would make that easier?
EquipmentShare: The construction industry and other related fields can best optimize technology by using it to automate previously manual processes – especially those that have a direct impact on reporting and compliance. There are lots of regulations that impact the construction industry, many of which are tracked by hand. Technologies can help automate reporting and keep digital and precise records can offer immense value.
We’re seeing this happen right now for fleet managers in the construction industry. Today, heavy equipment operators are required to keep logs that track their hours of service, and most do so with paper logs. But starting in December of 2017, drivers will be required to use electronic logging devices to track those hours. Telematics solutions, like ES Track, are replacing those paper log books with digital solutions that can track hours of service and so much more data.
Courtney Duffy is a Research & Innovation Fellow at CCIA and an MBA Candidate at Dartmouth’s Tuck School of Business. Follow @cduffy90