The opportunity for software to eat the world, transform the real economy, and turbocharge the productivity of real businesses is massive and untapped. But often that will mean building and using software to own the upside, rather than selling it.

Craftwork is a full-service home painting company that uses technology to dramatically improve the homeowner and operator experience. I led a $7 million funding round to keep investing in growth and operational excellence, with participation from Forerunner, Lachy Groom, and YC.

Today Craftwork is expanding organically (opening and growing its own territories) and building systems for scale. Tomorrow, there are opportunities for growth inorganically (buying businesses as a path into market), and as a franchisor (licensing its brand, technology, and operating system).

This is the type of hybrid, real world business that only a rare kind of seasoned founder can build. Craftwork was founded by a team of experienced entrepreneurs led by Tim Griffin who previously built Cloosiv and sold it to Odeko. Craftwork is hiring engineers and, of course, painters.

Really important to highlight something non-obvious that Tim and Craftwork are doing: instead of going out on a buying spree and rolling up companies left and right (scale), they are building something worth scaling (a system).

As a startup, buying a company is just a GTM and biz model wrapper for your product/IP. Build and validate that first.

Some popular theories on why I’m wrong

I got absolutely clobbered in the mentions for this by the various dudes selling courses and consulting. A quick summary of my folly:

Technology isn’t the problem.

IMO this proves my point and why I think owning assets is such a radical idea. Technology ALONE doesn’t solve the problem. It’s a systems problem and the bet is that a combination of product, organizational, and service innovation is much greater than the sum of its individual components. That’s why backing a standalone technology company is the wrong bet.

Buying SMBs is a mid market PE play.

A for effort but C for reading comprehension. Craftwork is not a rollup which the note spells out very clearly! Scaling as a true serial acquirer is super hard and I have expressed my skepticism of that strategy time and time again.

This is the same venture-backed services strategy that failed elsewhere.

I’ll be the first to admit that tech enabled services is really hard because, as some have pointed out and I’ve said before, you basically have to build two companies at once. The only way to mitigate that is to go slowly and build something worth scaling before you start scaling it up aggressively. Time has been remarkably focused and restrained – we’re learning from history.

Why do they need so much money?

Per the above, building two companies at once is really expensive. And until they get to scale, the services company can’t support the weight of the corporate overhead. No pure play or traditional services company should get capitalized like this. But none of my money is going into the services company.

I’m just dumb overall.

I meant fair point.

Do I actually know that this will work and make money? No – of course not! As a venture investor backing novel hypotheses with risk capital most of what I do will not work. The question isn’t “will it work” but rather “is it a good bet to make.”

And the allergic reaction and instant dismissal from the guys who know best at least tells me it’s non-obvious enough to be worth doing. Bullish.

A Special Invitation

I’m hosting a private dinner for founders, operators, and owners building in the real economy for small businesses in February. To request an invitation, please fill out this application. Space is limited.

We believe that empowering long tail, real economy entrepreneurship makes markets more efficient and decentralized, and brings more software into the real world. If you believe the same, I’d love to hear from you.

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