Interview conducted by Margot Montouchet, research associate with DesignIntelligence
Whether expressed in running the regional office of large firm, launching a traditional small practice, or branching out into new product and service offerings, entrepreneurship is integral to the world of architecture and design. In the first installment of the DesignIntelligence Profiles in Entrepreneurship series, researcher Margot Montouchet interviews Matt Ostanik, an architect who founded two software companies and a design business incubator.
Margot Montouchet (MM): Can you give me a brief summary how you came to where you are now?
Matt Ostanik (MO): Sure. I graduated from Iowa State University’s architecture program and worked for an architectural firm in the Des Moines, Iowa area for a number of years; eventually getting my license.
Even before I got licensed, one of the things I and other young intern architects got to spend time on—among many other fun things of course—were construction administration and submittal and shop drawing reviews. The firm I worked for did institutional, educational, and public sector work that typically involved a lot of CA documentation. I spent a tremendous amount of time reviewing and correcting submittal and shop drawings. I found that process to be very frustrating. At the time, it was almost entirely paper-based, and there were six, eight, 12 copies of every document.
Let’s say I’d spend eight hours on a door and frame schedule submittal—reviewing it, marking it up and making corrections to it. Our firm’s policy was to hand-transfer our markups and revisions in red pen to the other copies of the document. So I would easily spend another eight hours copying my notes over and over again to the other copies. It was very inefficient and I was thinking, “They didn’t tell me in school this was a part of the job.”
MM: They probably still don’t!
MO: Yes. And I knew there had to be a better way to manage this process. I was fairly certain, at the time that my firm must be one of the few that was still doing it that way and everybody else had a better solution. I spent a lot of time asking other architects and contractors how they managed their submittal and shop drawing process. Almost without exception, everybody was doing it the same way. Everybody hated it, but that was the way it had to be. That’s the way it had always worked.
I also spent some time looking for better solutions. I had heard about people marking up drawings electronically. I also knew the importance of the accountability chain—tracking which party has which submittal and maintaining a detailed submittal log that shows where everything has been in the past and next steps.
An idea came to me one afternoon while I was marking up shop drawings: create a website that does all that automatically for you. It could keep the log, track the exchange, notify the next parties and also allow you to exchange and mark up PDFs electronically. I spent time looking for an existing product that could do that. I found there were other similar websites or services on the market, but most of them were very expensive and felt awkward to use. They also weren’t designed from an architect’s perspective.
Around then I was working on an MBA part time. My career goal, at that time, was to be a principal in an architecture firm and I thought that an MBA would give me additional business skills.
Through one of my MBA classes I learned about a business plan competition for students across public universities in Iowa. It was sponsored by a local entrepreneur. I’d never written a business plan in my life, but I decided to describe my idea and submit it. I ended up being one of three winners selected that year. That was about a year into researching and working on the idea.
When I won the competition, I received $5,000, which seemed like a lot of money at the time. I used it to hire a local web development firm to build the first version of the submittal system. If you know anything about web development costs; you can’t get very far with $5,000. Thankfully I found a firm that was willing to work for equity in the company. It was really risky on their part because I was just a young architect with no clue about technology or how to build a business. Later, it turned out to be a good investment for them—as long as they didn’t mind waiting seven or eight years to get a return.
I signed up four architecture firms in Iowa and Minnesota to try the initial version of the website on some projects. I gave it away for free to test and get feedback . The feedback was very positive and enough to convince me to quit my job and focus on growing Submittal Exchange full time. Or maybe a better way to say it is; it was enough for me to convince my wife to support me in quitting my job. because she was the one who had the stable income and benefits to see us through that time.
MM: What did you learn about entrepreneurship from building Submittal Exchange that might benefit architects and designers?
MO: There are multiple answers I could give to that question. One answer is that entrepreneurship is incredibly hard. Success rates for new businesses are not terribly high—and there is a reason for that. It’s incredibly challenging. While I think anybody has the potential to be a successful entrepreneur, it’s not a good fit for folks who are not comfortable with risk.
It’s a very lonely journey when you are building your own business. There’s not a lot of support when you’re creating your own thing for the first time. You have to find, hire or recruit any support you need. It can be very challenging.
In other sectors like technology and software, which is where I lived with Submittal Exchange and still live with some of the new things I’m doing now —over time a lot of public dialogue grew about what it takes to be successful in building technology companies. There’s a certain degree of public fascination with it. People like to hear stories and talk about it and dream of new technology ideas. But there are also a lot of great support networks: there are a million different conferences you can go to, or competitions you can participate in, blogs to read, videos to watch, or mentors and other experienced folks that can help you.
One of the things that struck me as I built Submittal Exchange, and later worked for a larger company that acquired it, is that there’s a lack of that same type of dialogue in the architectural and design-oriented space. There’s not zero—there are people like Mark LePage at Entrepreneur Architect that do a great job of speaking about it. Certainly DesignIntelligence speaks about it. But there is definitely not the same level of dialogue about entrepreneurship and building businesses in the design space as there is in other spaces, particularly in technology.
What’s weird about that to me, is that architecture and design is such an entrepreneurial profession. There are so many sole practitioners and people who start firms, or become partners in firms at various points in their career. And yet everything is so closely guarded. There’s a lack of open dialogue around what it takes to be successful as business people. Part of the reason I started Charrette Venture Group is to fill that void in the profession. The lack of sharing and dialogue about entrepreneurship holds us back and hurts the future of our profession as a whole.
MM: Do you have any idea why architects and designers aren’t talking about these things?
MO: I think a lot of people who go into this field—not all—go into it because they are interested in design and not in business. So there’s some natural bias against it.
With that said, I think there are a lot of people in the field who have natural business talent, but may, or may not, realize it because they may not have enough exposure to these topics. I think there’s an egregious cultural aspect of architecture and design where we want to be creatives who are separate from business, or we are somehow above it.
I think there are competitive issues as well. If you’re working in design, you’re probably in a tightly competitive space and are worried about giving away your secrets to competing firms. While I understand the competitive concerns, I also think the market is big enough and the opportunities are broad enough to support everyone.
There are some limits to what you can do as a whole industry working together, but certainly we can get the profession to talk more about what it takes to build good businesses and how we as a profession can be more creative, more entrepreneurial, and more successful. All of that in turn makes the profession of architecture and design stronger.
Whenever you get architects together, there are common concerns no matter where you go in the country. Things like, how architects do not get enough public credit for their work, or how we as professionals are underpaid for the value we create on projects, or—I hate to say it—how contractors are taking over and all architects will end up working for construction firms someday rather than architecture firms.
Those are all valid complaints, but I feel they are self-inflicted. We as a profession have helped to create the conditions for those problems by our own aversion to running successful businesses and performing at the same level as our colleagues in construction. That is why I feel so strongly about the need for our profession to improve on the business and entrepreneurship side; being better entrepreneurs, better business people, and better sales people for the value of what designers do will allow us to work against many of the shortcomings that face our profession today.
I don’t mean to disparage the architects out there who are great businesspeople. There are many architects who have built very successful firms and are phenomenal businesspeople. You can certainly find stunning examples of that and they should be commended for their efforts. The challenge is that those are the exceptions and not the norm.
MM: Let’s talk about the Charrette Venture Group. What exactly is it, and what do you hope it will bring to the architecture and design professions?
MO: Charrette Venture Group is a new company that is focused on supporting entrepreneurial designers. And it’s for the reasons I mentioned earlier: there’s a vacuum in the profession, a gap that is not being fully filled. I created Charrette Venture Group to explore more ways of helping people who are in the process of building or growing their own firms.
The ultimate goal is to serve as an investment group that helps growing design firms. Investments can be in the form of capital, or they can be technology, mentoring and business advice, marketing and business development support, or other expertise and resources to help the firms run more successfully. There are other companies who do management consulting for firms of course, and CVG is not that—we are focused on being a long-term partner who takes a stake in both the risk and the reward of their success.
In the technology space, it is very common to have business plan competitions, and I have participated in several in the past. But in the architectural space, there are many design competitions, but not many competitions focused on other topics. So I decided to launch a business plan competition for architects that are starting their own design firms, as a way to help those architects with their business plans and also to generate more conversation around what it takes to create and execute on a successful plan. We have now done two of those competitions: one in 2014 and another in 2015. We had over 100 people register each year across the U.S. and Canada that are either planning on starting their firm or have started their firm in the past five years. We awarded a $10,000 grand prize to the winner of that competition two years in a row now.
We’ve also started a business accelerator group connecting 20 architects across the U.S. and the U.K. every other week who are running or starting their own design firms. We work with them on ways to grow their businesses more successfully.
MM: Since you sold Submittal Exchange you founded another company, FunnelWise. What are you doing differently now than you did the first time around?
MO: I think one of the challenges I had as an architect and in architecture school is that I was a perfectionist. I’m probably naturally a perfectionist personality, but that was reinforced through my education.
One of the most important lessons I learned was that in building a business not every detail matters. The CEO of the company that acquired Submittal Exchange once told me, “you can’t be a perfectionist on everything; you need to figure out the key things in your business that need to be perfect, focus obsessively on those, and not worry about those other details.” It was certainly a lesson that took me several years to learn.
Rena Klein, FAIA, is another person in the past year or two who has been really helpful and integral to things moving forward with Charrette. She has authored a book about managing a small architectural practice and is a well-known consultant and speaker. She’s also served on the business plan competition jury.
In one of her presentations for our business accelerator for architects, she’d say that in building your own business, you can choose to be rich or to be king. If you want to be king, then every decision needs to pass through you, and you have ultimate control of every detail. You can take that path but you will limit how fast you can scale and grow and how successful your business is. “Rich” is probably a loaded term, but if you want to be financially successful, and to grow your business, then you need to learn to delegate, build a team and not be obsessively in control.
I think architects struggle with that. Many architects are perfectionists and they take that same perfectionist attitude into their businesses. As a result they limit what their businesses might be able to do.
MM: What other advice you would give an aspiring entrepreneur from the field of architecture and design?
MO: Educate yourself, spend as much time as possible reading about, and talking to, other entrepreneurs whether they are in architecture or any other business—to get their feedback and learn.
It’s a mix, though, just like design. You can educate yourself about design, but then you have to practice to really grow as a designer. The same thing applies to business. You can educate yourself, you can go to classes, but then you also have to spend time in your business applying what you learned, growing the business, to reinforce the lessons.
We see a lot of small-firm architects struggle with spending so much time focused on their work—producing design for their clients—that they repeatedly fail to spend enough time on designing and growing their own business. I understand that, but then I also think it’s a major challenge that holds back a lot of businesses.
I encourage all aspiring entrepreneurs to write a business plan—whether they are thinking about starting a business or they are already a couple of years into it. Sitting down and writing a business plan is a great way to think through everything that goes into your business and to identify areas you need to learn more about. And then you can use the plan as a tool to focus and educate yourself on particular topics, or to find outside resources to help you.
MM: What would you say are the key skills and traits of a successful entrepreneur?
MO: I think you need a combination of things. At a very high level, I would say persistence is the single most important thing. You’re going to have highs and lows in your journey and you need a lot of persistence to push through and keep going. You need belief in where you’re headed. I think work ethic is critical. Starting and running a business is not for the faint of heart, and it always takes more time than you think it will. Then again, if you survive architecture school and you are working in design, you probably have a pretty good work ethic already.
I think you also need a deep sense of self-awareness. Ultimately, as you grow a business, no business can ever be dependent on one person. To really grow a team and grow a business you have to be really critical of yourself and understand what you’re good at, and what you’re not, and to be willing to seek out others that can mentor you, coach you and help you. Then you have to be willing to find ways to work around your weaknesses.
For example: if you’re a fantastic designer but you don’t like the process of going out and acquiring new clients; you need to be up front with yourself about that. Find a partner or a team member who can do the client development work, so you can focus on what you’re good at. On the flip side, if you like the networking and finding clients and you recognize that you’re not as passionate about design—even though you might like it—you need to find a good designer to partner with.
A lot of entrepreneurs make the mistake of thinking they can do everything themselves. While that certainly can save dollars in the short term, over time it’s just not a great way to grow a business. So you need persistence and you must have the self-awareness to know where you need help. Then you can find resources to help you with those weaknesses.
MM: Was it difficult for you to realize that you couldn’t do everything, and you needed to surround yourself with at least a handful of people who could complement you?
MO: It was definitely a hurdle for me, because I’m the type of person that thinks I can do everything. We architects like to think of ourselves as jacks-of-all-trades, that we can learn to do anything. It’s good to educate yourself and enjoy the learning process, but you don’t have enough time in the day to do everything. I can’t overemphasize how critical a good team is to your success.