Sebastian Jacob, left, and John Reid, of Faber Connect, founded the company in 2017.Darryl Dyck/The Globe and Mail
In their younger days, Vancouver natives Sebastian Jacob and John Reid worked as carpenters but often lacked a reliable way to find consistent work.
“It was either going off of Craigslist, where you really didn’t know what you were getting into, or through a family friend or an uncle in the industry who knew someone looking for an extra hand,” Mr. Reid says.
In 2016, both found permanent roles with food delivery platform DoorDash – which connects local restaurants with gig economy delivery drivers – and quickly identified that construction and trade workers could benefit from a similar solution.
“We learned a lot about the marketplace model, the two-sided gig economy business model, and kind of applied that logic to the construction industry,” Mr. Jacob says.
“We wanted to give anyone a chance to find a job in construction and make it super easy to apply,” Mr. Reid adds.
After just a few months at DoorDash, the pair left to found Faber Technologies in 2017. Their platform, Faber Connect, applied the two-sided market model to the construction industry, connecting general contractors and subcontractors to non-unionized carpenters, labourers and other skilled trade workers.
After gaining some traction in the Vancouver market, the co-founders began considering opportunities to expand, and their research ultimately pointed south.
“We mainly started with Texas because of data from across the U.S. showing that it’s not only one of the largest construction markets but one of the fastest growing, so that represented a big opportunity for us,” Mr. Jacob says. “The other big flag for us is that it had the lowest construction union membership rate in the country, which gives us an easier way to get a foothold in the market.”
Adapting a product for a market on the other end of the continent, even a tech product, isn’t as easy as flipping a switch or adding a few lines of code, but the opportunity was too big to ignore. Starting in 2019, the co-founders say they spent months engaged in reconnaissance, research and paperwork, taking frequent trips to Texas to explore the market. Unfortunately, they soon discovered their success in Canada didn’t count for much on the other side of the border.
“At the time, we had about three years under our belt of business history and revenue and business volume,” Mr. Jacob says. “When you go into the U.S. and try to get insurance policies – general liability policies and insurance that construction companies require us to have just to work with them – those insurance carriers wouldn’t look at our Canadian business history as a reference point.”
Launching in the American market felt like starting all over again, Mr. Jacob adds, and required paying “extremely high premiums” to insurance providers just to get started. The company also had to translate its entire platform into Spanish and hire its first Spanish-speaking staff member.
“It was essentially a pay-to-play scenario upfront, but now that we’ve established business history, it will be much easier launching additional states or additional cities,” Mr. Jacob says.
Faber still relies on the Vancouver market – where it facilitated jobs for more than a thousand workers last year – for about two-thirds of its volume. Still, the company sees Texas – where it placed 500 workers in 2021 – and the surrounding region as a primary source of future growth in the short and medium term.
If all goes well, Texas is just the beginning. The co-founders say many of the platform’s enterprise customers also have operations in surrounding states like Oklahoma, Louisiana and Florida.
“We’re trying to leverage that referral network to build our business in other states,” Mr. Reid says.
But now that they have a foothold on the American market, the pair are still trying to determine just how many boots on the ground they need moving forward.
“One thing that we haven’t figured out yet is how much of an actual physical presence we need to have in these launch markets versus doing remote launches from here,” Mr. Jacob says. “There are pros and cons to each scenario.”
Opening an office or hiring a few staff in each additional market would be costly, Mr. Jacob explains, but it’s a lot harder to establish relationships and respond to potential problems from Vancouver.
“Establishing physical locations in the market they operate in, that’s a must,” says Steve Yallouz, the interim associate dean of business administration at the British Columbia Institute of Technology’s School of Business and Media.
“I recognize there are some capital expenses involved in establishing yourself, but that kind of commitment is what you need to get started,” Dr. Yallouz says.
Only one of Faber’s 16 employees is in Texas, with the remainder operating from Vancouver. Dr. Yallouz believes more will be needed as the company establishes its presence in the region.
“We look at online businesses as being borderless and having the ability to reach further abroad at little or no cost, but I still think there’s an element of personal connections, understanding the working culture of the area that can only be achieved by having a presence in the area,” he says.
“If you go much beyond the border states of Texas, the culture changes again – whether you go west or northeast or even the deep south, there are different cultures and different ways of doing business that might require a longer-term physical presence.”
In the short term, Faber’s co-founders plan to continue leveraging the company’s initial investment into a U.S. expansion. Still, they plan to grow their presence on both sides of the border gradually.
“Long term, we hope to continue growing in Canada as well,” Mr. Reid says. “And hopefully be a powerhouse in the construction technology market in the next five to 10 years.”