June 2021

Founders, Portfolio

David Rangel

Founder Spotlight: René Morkos of ALICE Technologies

In our very first Founder Spotlight we talked with René Morkos, Founder and CEO of ALICE Technologies.

ALICE is the world's first AI-powered construction simulation platform. We first invested in ALICE all the way back in 2015 and it’s been inspiring and gratifying to see the progress René and team have made in the intervening years.

In this conversation, René talks about:

  • His background, including his time running large construction projects in Afghanistan (as a 22 year old!)

  • Two of the key insights that seeded ALICE and its construction simulation product

  • Starting ALICE as part of an entrepreneurial competition while he was finishing his PhD at Stanford

  • How he has approached selling to large enterprises in a very traditional industry

  • Some challenges he's facing today as he grows his company and starts scaling

At Merus we love companies like ALICE: built on unique insights and expertise, tackling very hard problems, and changing industries (and the world) for the better.

We hope you enjoy the conversation!

(Subscribe to our newsletter and/or our YouTube channel to see future Founder Spotlights)

The full conversation transcript is below (lightly edited for clarity).


David: René, thank you very much for taking the time for this. We really appreciate it. And this is our inaugural Founder Spotlight. So we'll see how it goes, but thanks again. So how about if you could just tell us about your background. Primarily what you did before founding Alice.

René: Yeah. So my background is I'm a construction guy, right? Second generation, Dad was in construction. When I graduated high school, he gave me a good piece of advice. He said, son, do anything you want, just don't do civil engineering. Brilliant! I know what I want to do with my life. Now it's become very clear.

So I studied civil engineering, always liked building stuff. You know, the concept of having, putting something there that wasn't there before, and it being very big and lasting a very long time, outliving you, like really jazzed me. And so I actually would cut class, I'd go and volunteer at the cool projects in town. I'd find the cool ones, right? The big ones, the sexy ones - underwater pipeline and the Lebanese university, stuff like that. And so I would go work on these projects, sometimes for free, sometimes for a couple hundred bucks. I really, you know, built up a lot of construction experience even before I graduated university.

And so that's kind of the background, I guess. On a personal side, my family, you know, my dad's Lebanese and my mom's Czech. They met in Prague when he was studying, they escaped communism. They ended up in Lebanon. So then the Lebanese war broke out. Right. So they spent the first five years with me in the Lebanese war.

So that was, I guess, an introduction to this world. And then we escaped that again, to Dubai. Started from scratch. And then strangely, I decided to go back to a war zone when I was an adult. So when I got my undergraduate degree, I decided to go to Afghanistan as a civil engineer. Yeah. And so I went back, I went to Kabul, I worked for German company.

The slogan of our company was Haro Construction of Afghanistan: take it easy, we will build it again. Yeah, the joke was that it was good business for repeat customers.

David: There's always new business.

René: Yeah. They would blow stuff up. We're like, yeah, It's a bad day for you. I don't know if it's a bad day for us, but we'll rebuild it.

You know? So yeah, I did that for 13 months. Incredible experience personally and professionally. I got to play the role of the master builder. So you can't really do that anywhere else. But I was the chief architect, the chief engineer.

David: And these were large projects?

René: Fairly large, yeah. So the budgets were smaller because the labor was a lot cheaper. But if you were to convert it, I mean, we built a military base, we built the first windows and doors factory in the country. So, you know, if I was to convert it to US dollars, I was building, say, $30 and $50 million jobs. And that's what I was doing, but I was 22. And I was trusted from A to Z. I designed it, I engineered it, I procured it, I built it and I managed it, the whole nine yards. And so I really got to get this really in-depth view of how all these pieces come together. Like if you change the design, what happens to construction and vice versa. And so it was a really cool experience. I got to, I think, manage up to five projects simultaneously. At the peak of it I managed 114 people and learned a lot. I ended up, long story short, doing a PhD at Stanford.

David: So after Afghanistan, you came straight to the U S and that's when you did your PhD.

René: Yeah. I mean, I like to joke, I got tired of getting bombed, right. So it does get tiring. Believe me. So I kind of stopped. Okay. Well, you know, I should get an education, where am I going to get an education? Let's go to the US. So I went to USC, got my Master's, got accepted at Stanford for my PhD. And then basically showed up in the US. Did my PhD at Stanford, did what they call colloquially an Industrial PhD. And so I was doing six months on, six months off. Again, I didn't want to be in school for five years. You know, so I did a bunch of research. I got interested in a number of topics that led me to develop ALICE.

David: And the PhD was in what specifically?

René: The PhD was in artificial intelligence applications in construction.

David: Focused on construction from that point?

René: Yeah. So, the thing is I knew I wanted to do a PhD, that was the plan. And so when I was in Afghanistan, I was like: do I want to do a PhD in concrete? Do I want to do a PhD in structures? Do I want to do a PhD in construction management? You know, I was managing jobs and I was like, oh, this is really cool. I want to go learn how the pros do it. And what's interesting is I have this moment in Kabul where I was building these landing strips for F16s. A simple, stupid project: slabs. You know, exotic destination, exotic client, but nothing really...

David: Simple construction...

René: Yeah. I mean, it was a slab, and it was in 24 pieces, you know? And the question was like, how do you build it? And so I had, you know, 30 people and I was like, okay, if I do A then B, maybe I do B then A. Then I remember sitting there thinking... I clearly remember this. It was like 6:00 AM, sun's rising. It's really cold, freezing. And I'm like, man, I gotta be like stupid. I can't figure this thing out. You know? And then yeah, years later I started working on the PhD and AI and algorithms and all this. And I was like, actually it turns out it's not an easy problem. It's a relatively complex little problem. And so that was, I started researching how to develop algorithms that will solve that sequencing question. And then the other thing that I started developing was algorithms. I got interested in space usage and construction sites. And so it's again, this kind of rare kind of insight, which is that you suddenly see something in a different way. And so I was on a project in Amsterdam, looking for a topic. Every PhD student needs a topic. That's kind of the big, you know, big stress for the first couple of years. And so there, the project was I think, six weeks late, 50,000 euros a day in damages. And so I get up and I look out of the window. And the guy is going, like, I can't work any faster. I can't work any faster. And I look outside and there's six people in a hundred thousand square feet of space. And it hit me like a lead brick. Every project I've ever seen has been empty. And literally, drive down the road, look at any construction project. It's never crawling with people. There might be, you know, a pocket of work. And so I was like, holy cow, construction sites are empty. So I started measuring it, and figured out that 3% of construction space is used for construction. So 97% is free. So it was like, great, other fields, if you're looking at manufacturing, have asset utilization of 60%, 70%, 50%, that's kind of regular. Three is really low. So I was like, okay, all I’ve got to do is increase space usage, right? Show that it reduces construction duration, if I'm scheduling more things concurrently. I got my PhD.

David: Interesting. And so it's, it's a combination? Well, we'll get to ALICE in a second. We already are sort of, it's a combination of usage of space in the right way, together with the sequencing of all these things?

René: Yeah. There's two moments. I wish there was one, right? Everybody's like, oh yeah, one moment. I'm like, there were two, I mean, shoot me. But there were two, it was that moment, sunrise in Afghanistan, trying to figure out how to sequence 30 people to build a slab the fastest.

And I kept thinking, there's got to be an algorithm. I mean, it has to exist, you know? So I went to USC, I kept looking for it. And I was like, well, I mean, I know Stanford's got to have it. Stanford is the place, like if anybody's got it, Stanford has it.

And so I went to Stanford looking for it. And then, you know, simultaneously I sort of discovered this space usage thing. And as I started working on the space usage thing, the two clicked right there.

David: That's super interesting. And so did you start Alice with these insights right out of the PhD? Or did you actually do something in between?

René: No, no. I had the misfortune, so to speak, of bumping into a gentleman called Peter Hsing who totally derailed my life plans. Yeah I was lucky. I was working on this PhD and I entered the BASES competition. And I kept thinking this was dumb. I kept thinking, oh, you're going to make the classic engineer's mistake. You're gonna really focus on the one thing that you're working on and you're going to think that's the idea that the world needs. So don't do that. So I actually looked at every other idea I could and somehow I kept coming back to this. Every time I'd run it by folks, they're like, no, that's your best idea. And so then I entered the BASES competition, bumped into Peter, and Peter was like, Hey, this is a really good idea.

So I started working on it. And then one thing led to another, we raised a little bit of money. And, yeah, that's what six and a half years ago at this point.

David: That's great. So, we've already alluded to what ALICE is and how it took form at the beginning at least. If we fast forward to today and you tell me about the product, what your product does, would I be right in just asserting it's this software that optimizes a big construction project through looking at the space, through looking at sequencing and coming up with the best plan for it? Or how is that not accurate anymore, or evolved from there?

René: Yeah, pretty much. I mean, the thing that we've done is we've developed a construction stimulator. That's a big deal. So the software simulates construction for you, right? And it does it very accurately. It models labor and equipment and space and calendars and crews and form work and consumable and reusable and move. You know, everything you can think of. And so then the automatic knee jerk reaction is, oh, but wait a minute, getting a computer to simulate construction, that's gotta be really complicated. Like how would you put all those rules in there? And that's the kicker, that's the thing that we did that hasn't been done before, we've given you a "translator". A way that you can translate these complex construction constraints, scalably. And so you don't sit there and have to input 5,500 tasks. You input 15 recipes and those recipes get multiplied out and connected. And there's this whole system that we developed. So it's these two pieces of the puzzle, this translator that allows you to get what's in your head and put it in the computer in a way that's scalable and checkable and validated. And then the other one was the simulation piece, which takes those rules and crunches and generates lots of simulations. But effectively the statement you made is true. Yes. You take large projects and then run them a lot of times and optimize them.

David: Got it. Okay. You already touched on this when you were telling us some of the background, but how would a company or a manager of a big construction project do that today? Is it just literally them using spreadsheets and trying to think through it? Or is there some not-so-great software? How is the average project being run?

René: Yeah, pretty much what you said. Oh, you'd be surprised. I've shown it to investors who were like, okay, so what's the innovation? Isn’t that how construction works today? No, no, no. There's, you know, bar charts. So Microsoft Project is one that's used. Primavera is one that's used. So these softwares are used, you know, excessively in construction and they're effectively visualization tools. And so what it forces the user or the construction professional to do is really crunch all these things in their head. So ALICE is a substantial step forward. In the sense that you can run it on a computer lots and lots of different times.

David: One thing you alluded to earlier was that this sounds like a complex problem. Something that to a naive person, like me, sounds like: well, do you need these massive machines? Is this a high-performance computing type problem? And you have these super beefy machines in the cloud? Or, actually, you figure things out and it's not so difficult to run these simulations?

René: It's really a great question, David. What we've realized is that, because humans are solving it on paper, effectively they simplify the hell out of a problem. They don't think so. So humans are like, oh, it's really, really complicated. It's very, very complex. But actually for the machines it's usually a medium-sized, lower end medium-sized problem. And so, no, we haven't had to get some massive supercomputers to crunch it or anything like that. We have tested and we know that there's an upper limit to complexity. You can make the problem big enough, such that the computer starts to kind of be like, ah, I can't really handle this. But that was artificially done by us. We have not yet once encountered a single live problem where we weren't able to crunch, where the computing power was the limit. And we've done, you know, a $3.7 billion project, $700 million, $2.6 billion, you know, several projects in the billions and up.

David: Got it. Okay. No, that's fascinating. So, let's again fast forward to today. What does the company look like? You guys have clearly been at it for like six or so years. Give us some sense of type of customers or number of customers or something that you can talk about that gives us a sense of where you are now.

René: Yeah. You know, they say... Edison, right? Innovation is 99% perspiration, 1% inspiration. And so, with us, we've been building a product. It took us about three and a half years to crack the technology. It was like, okay, we've got the combustion engine. We've connected to the car, the steering wheel, and so on. And then from there, the issue two years ago was that you need the mechanic to drive it. The car does not have windshield wipers. It doesn't really have proper seats or whatever the heck it was. And so it took us about two years to iron out the technology to a point where it's usable. It's easy, it's automated, it's scalable, it's not buggy and all those kinds of things. And so today we're working on some of the biggest projects in the world.

We have been deployed on a lot of infrastructure jobs around the planet. We're working with some of the top construction companies: Parsons, Austin Bridge & Road, Takenaka, Bouygues. These really almost household names in our field and projects like the Edmonton Rail, $2.6 billion. We're working on several others. A $600 million highway project in the US, there's a couple of projects in Canada. We're working on a high speed rail project in Europe. So, yeah, we're, we're really global.

David: That's fantastic. And so I was going to ask you about challenges, but let me start with what I would assume is one, but tell me if it wasn't a challenge. We have found that when you're selling into, one, large, large companies and, two, companies that are part of what I'll call just old school industries, it can be very difficult. It could just take a long time, long sales cycle, but especially because you're convincing them of, hey, you're doing this today in your head and I've got this thing that is better. So, has that been a challenge? And if so, how did you get into all these companies? How did you convince them that there was a better way?

René: Yeah, David, the truth is any field in the world has innovators. There's always, within a company, there will be one person somewhere, on the 23rd floor, you know, in cubicle x, that's like, hey, I want to innovate. And so the question is finding those people. And find those people, empower them, connect them. And that’s the truth even in a field like construction where people say, oh, it's not innovative. I've talked to people, you'd be surprised, some of these names of companies that I've mentioned, have very sophisticated R&D programs, to the point that I've looked at what they're doing. And I was like, wow, that's impressive. You guys have hired a bunch of PhDs. You guys have robotics initiatives, you guys have a number of things that are cutting edge.

David: Got it. So it's just a matter of finding the right people and then working from there.

René: One of the things we've learned as a company that I think has been really important is qualification. Which is saying "no". And so what I mean by that is that let's assume that you find someone that's excited. But they're by themselves. And they don't have the authority to get anything done. That's not the right setup. But if you find the right person and then you can connect them to somebody from their management and that person from management gets the blessings to go ahead. I've learned from my consulting times that you need what I call a critical mass. And that's rarely one person. A critical mass tends to be, you know, five, six, whatever, how many people, right?

David: Got it. No, it's super interesting. So let's look a little inward right now. Especially in the last year. And as you look forward in the next year or two, what challenges would you say you're facing from an operational standpoint, growing your company, scaling it, that sort of thing. We talked a little about customers and how you get them, but internally, what would have been some of your recent challenges or challenges you've seen right now?

René: Yeah, repeatable sales. I mean, we've now reached the point where we've proven out the value proposition. It's the question of getting that flywheel churning. And so, any Googling of “SaaS software repeatable sales” will get you the stage of the company we're at. And so for us, what we've demonstrated is that we can go out and we can find clients. How do we make that process repeatable? And I think that the product is finally up and running. The services are finally up and running. It's a question of getting the sales motion. I think we've got it great in terms of individual contributors on the sell side. I think the sales leadership is where we need to, I'd say tweak, the engine.

David: And as a technical founder, are you spending more time right now on the sales side and trying to close those big deals? Are you spending time on the product? Or both?

René: Almost a hundred percent of my time these days is spent on go-to-market.

David: Interesting. Okay.

René: Yeah. So the days of me really digging into the product or being useful there are gone, unfortunately for me. But nowadays I spend most of my time on conferences, lead generation, that kind of stuff. Yeah.

David: Okay. That's super interesting. Final question. If you were to look out, let's say, I don't know, I'm just gonna make it up: three years. What are your goals for the company or where do you see the company? What is it you think you'll be in three years? What are the big things you want to do?

René: ALICE will be one of the key proponents of digitizing the construction industry. And we've definitely achieved that from a technological perspective. I view ALICE as a platform, almost like a crowbar or a lever. It's something that enables the application of AI, ML, these kinds of tools to our field. And so I hope that the work we continue doing will enable the world and others to build upon this platform. To enable the next level of digitization. That's going to be out there, which I am convinced will be in the supply chain.

David: Yeah. And that seems super necessary. I don't know, again, from a naive point of view, construction well. But it certainly seems that in the West and in the US, these big construction projects just happen so slowly. And there's a million reasons, but I'm sure part of the reason is that they're not run as efficiently as they could be. So something like this could be super, super helpful, I'm sure.

René: Yeah, absolutely.

David: Okay, well, René, thank you very much for your time. This is super, actually very inspirational. I was sort of aware of your background, but not to this degree. So, super interesting. Thank you for spending the time, talking about your background and talking about the company.

René: Yeah. Thanks so much, David, always a pleasure talking to you guys.