How to Start a Construction Company that Serves Government Contracts Ep. 38

Because every project means you need to hire more people and then you need to retain your staff. And basically you sell hours, right? It's difficult to escape because one hour is part of a human life with an application. The application is the same. We just need to scale the infrastructure in the background.

Right. But the infrastructure is something that you can plan and it's not at first.

Welcome to Fascinating Entrepreneurs. How do people end up becoming an entrepreneur? How do they scale and grow their businesses? How do they plan for profit? Are they in it for life? Are they building to exit? These and a myriad of other topics will be discussed to pull back the veil on the wizardry of successful and FASCINATING ENTREPRENEURS.

If you'd like to know how to scale and your business and make more profit sign up on my website, natashamiller.co to get on the wait list for my entrepreneurial master's course.

On today's episode, I get to talk to Nure Aiza about his New York city construction company, one of the very clever ways he sources some of his employees and the new business he just launched. Now let's get right into it.

I founded Toll International in 2005, I gave it the name Toll because this is the name of my grandmother.

She passed the year when I founded the company. She always pushed me to become an entrepreneur. And after then with two master degrees and a high-paying job, I didn't want to take the risk, but there was a need in the market or expert resources in the professional services that I provide, which is serving the largest and most complex of the projects, the ones that most people are taken away from.

So I founded Toll International to serve in itself, larger scale capital construction programs and design build mega projects, where I will bring with a real sharp shooter focus, the right resources for the right job.

Your differentiator really is your agile approach to the projects. What is the main differentiator?

Correct. If you ask any of our clients and they will tell you Toll International is very responsive. I just finished an interview with a client. We are creating a data warehouse for the New York Power Authority. Basically they need to create a reporting system outside the firewall. So that the contractors that interface with them can run reports and access data without having to penetrate the firewall.

Because since they're a utility, something happens with the network. The grid goes down. So I know to avoid that they had a very special niche and my product manager working on that assignment is someone who has done this for another New York state agency. So, instead of posting on app and finding candidates.

I go hunt them, find them where they are and bring them to the near projects.

You are a hunter. I know that I have to say this out loud because why not? Didn't we meet at Harvard.

Yes, we met at HBS.

Oh, gosh. I mean, it's not everyone I can say that to. But you're a very smart person. And what you do is not something that I fully understand, but having read your bio and listening to you, talk in class a little bit and looking at our website, it's big time and yeah, people are going to check it out because it's a huge amount of responsibility.

So I want to talk about the World Trade Center project before I want to talk about identifying opportunity and growing and scaling your business. And then I loved what you had said that you wanted to talk about changing the lives of people around you through the organization. So that's three things.

Identifying opportunity, growing and scaling, and changing lives. Let's talk about that before we get into the big project.

Well, I'm an immigrant. I was born in Mexico. I came to the US basically seeking opportunity. I came to pursue education, and then I remained here because of the opportunity that exists.

It was challenging because I didn't have a network in the US so I have to basically create that network. And like you said, differentiate my services, differentiate my person as a professional. Typically it was very difficult to find work. So I will be called on the projects before I started the company. And then after I started the company, after someone else had failed.

So typically the route was to give the opportunity to someone else. And if it was something very challenging, they will botch it. And then they will call me to come and fix it. And I'm doing the right.

So you swoop in like Superman to save the day.

Yes. And actually that's something that moves me, saving the day, fixing something. I'm very orthodox in my approach and laid back and relaxed.

But on the professional side, I'm very orthodox. I follow all the rules and I also do this, which is like an oxymoron with creativity. I always look at different points of view. I like to learn from other industries and see what they're doing so that I can apply it in a way, tropicalize it to my industry.

And this is something I learned by being Mexican, because basically that's where the concept comes from. Tropicalizing. We look at what's been done in the colder latitudes and we bring it to the tropical lot.

And then talk about how you're impacting the people around you through the organization.

Well, I see myself in the people that I hire. Typically, this is people who have an accent or people who come from overseas and from outside the US or from minority backgrounds, even if they are born in the US where they have not had the networks or the access or the education.

And basically if you don't have that access to opportunity. You cannot get the right experience that you need. So I used to teach at the City University of New York and also at Pratt Institute. And basically I started teaching to hire people.

I was going to ask, how did you source these people with that? That don't have access. I heard earlier you used the word hunter, which is real. That's what you are and look at you, you took a job to teach really, to source new talent for your company, right?

Yes. In fact, I look for people who have the desire to succeed in spite of their circumstances. And it's very interesting that I had a father and son in my class.

And the son was born here. His father was very hard working and he provided for him. So he had a very good education and the father, he was not that educated in the school or academically, but he had a fire on him to succeed and he didn't even speak proper English. He completed all his homework. He never failed submitting his homework and the son who had it easier, he struggled with the class. Because he didn't put in the effort. And he was very cute because the father will make excuses for him. Like he was having a headache yesterday, or he could not submit the homework because of this. So you can see the difference. And that's what I was seeking. And when I used to teach, I have two boys now, five and nine, Hugo and Mattel.

So it's very hard for me to teach because I used to teach 7-10 for people who work and then go to school at night .And I did it for a while. But by the time I got home-

No, your wife and your kids were not happy.

And I didn't get to see them much. So I quit my assignment. I gave it to actually two international employees. They're still teaching.

And they're still recruiting.

Correct.

That is brilliant. On a side note, there's an industry that has a really big challenge in finding, now this is totally random and not what you do, but dog groomers. Groomers that do dog hair cuts and nail trims. And I've been trying to think of a way. To fill that pipeline of people that want to do this job.

That's high in demand and not many people do it anymore. So I'll ask you about that offline. Okay. So let's talk about the World Trade Center project. I knew a little bit about that when I met you, read a little bit on your website. What an incredible situation. Can you tell us what that was about and what your challenges were and what you did to save the day?

Yes. Thank you Natasha. Yes, World Trade Center is there to me, even after so many years, we're going to reach the 20th anniversary of the tragedy. I was living in Virginia back then. I used to work for MCI and the company went bankrupt and I lost my job. So I was going to go back to Mexico. In fact, I have an opportunity to visit the World Trade Center 10 days before. I came with my aunts who are both deceased and my sister who is alive, thankfully.

And then we went back to Virginia. Since I lost my job, I was going to pack my things and leave. I already made arrangements to ship everything to Mexico. And then I learned that they were hiring at the World Trade Center for the reconstruction. So in February of 2002, I started working there as a Consultant for Authority of New York and New Jersey.

It was very challenging, but when I came to New York, I felt at home because you can be anything you want. If you have a talent in New York, the city will appreciate. So I worked at the Port Authority until 2005, which is when I started the company and this was my first esteem - the World Trade Center. Then after 2005, I started the company.

It took me some time to get large projects. So in the meanwhile, I used to train and that's where my practice and experience for teaching started. And in 2008, I was finishing a job at the Department of Environmental Protection. I was not quite done with the project and we had a challenge back at the World Trade Center.

Because in 2008, we lost the New York governors, just like we did recently for similar reasons.

No comment.

Correct. The new governor to appease some of the people, because they didn't see a lot of progress in the reconstruction of the memorial for the victims of 9/11. He promised the families that they will see a memorial by the 10th anniversary of 9/11, and basically,

that way he took them off his back. However, this was not feasible according to the critical part of the project, right? He didn't have the analysis in front of him and so they called me back. I did an analysis and I told them, well, everybody is right. We're kind of finished. This is what the numbers say. And there is another fact because I'm a civil engineer, so I don't focus too much on anything other than the facts.

And I look up what was the lane and it's because we ordered this deal from Belgium. There is an entity within Belgium in the South that produces very high quality of steel. Okay. And this entity is called Luxembourg. It's an area of belt, it's not the country. And of course they produce with the steel and it has a competitive price, but it's far away.

Right? So on the other side of the ocean and they have to be shipped. And it was not ordered rush because we had time. Meanwhile, we have the matter from the governor. And the governor, he was a very good governor, but he was not a construction manager or a scheduler or a fabricator. So he said, well, I already promised it.

You guys fix it. You're big professionals. So I look at the options and then I'm also very creative. I used to play the piano and paint when I was a kid. My parents wanted to give me a VC because they noticed I was a smart side. They didn't want me to go the wrong way. And this captivity helped me because I started looking at options.

And then I also like to listen. And during one of our meetings, I heard that Silverstein was complaining that they were already paying thousands of dollars to store the steel that they have for the towers, it was costing them too much money. And then the water center was not making progress because there was a cost sharing agreement between the different entities, because the foundation is the same for all the buildings or the memorial for the high rises and for the transportation costs and for the vehicle security center.

And he cannot build the towers until the foundation was done. We call the foundation, the bathtubs, the north and south, the east and west. So I posed the question. Why don't we use Silverstein steel? Because we are crying for a steel for the memorial and the steel is a standard piece, right? They need to be fabricated in order, but they are a standard dimensions that you can redesign.

So all you need is to ask the engineers, okay, you're going to work with these pieces instead of these pieces. And everyone thought it was something crazy. Santiago Calatrava is a very famous architect from Spain. He was also waiting for the transportation. You have the staff that's cutting into his budget because time was running and the expenses were increasing and he said, let's do it.

I think it's a brilliant idea. He approved. Right? So it took him to approve for the others to also follow because the one thing with common sense is that is the least common of the senses. And usually it makes you go against the wind. And I was very young, right? I'm 47 right now. So this was when I still didn't have all these gray hair. And we did an analysis and we will use that steel.

We will make it, right? We were still two years before the deadline and the engineers reviewed it and said, well, we can do it. Whoever decided about this, this is the solution. It takes a lot of commitment to change the direction, but if it is the right direction, it is worth. So we did it. We finished one day before the 10th anniversary of 9/11, and then Patterson became my friend because of that, he will give me like a restaurant recommendations.

He will open up and tell me about his time at Columbia University. He is legally blind. So he told me about how he completed his studies, where the students will read to him. And he told me about, "You know nothing about this". And I told him, "why do you say that? Because I can see?" He said, "No, because you went to MIT."

At MIT, you don't need the students to read to you. The books read to you.

Wow. Okay. So back to the World Trade Center, you finished that the day before the deadline, the impossible deadline. Was that really what catapulted Toll International into what its future success would be? Is that the foundation?

Yes because then we interfaced with the MTA. And as soon as we were done with that project and I was already waiting for a five-year project with the MTA, they already have my contract. That contract became a 10-year contract because they renewed their five-year agreement. We're still working with them after so many years. Then the Port Authority of New York and New Jersey, which is the owner of the World Trade Center site, has given us about 30 contracts since then, 17 of them are currently active.

Is your company a minority owned, certified minority owned business?

Yes. We are considered a minority owned business because I'm of Hispanic origin.

And does that play into getting your government contracts? Does that really help you?

Well it helped me get started, because when I started, I will get a subcontract, right? They will not give me a prime contract and what the World Trade Center was to turn us into a prime contract.

Now, when it comes to a state government, we're a prime contractor. With New York City we're still a subcontractor. And for some reason, I didn't know when I did this analysis, this was going to be like this, but it turns out to be that we are very lucky on the state contracts. And with the city, we're also very lucky, but not as a prime, more as a subconsultant.

So looking at what you were trying to do fourth quarter of last year to prepare for growth for this year, was there one strategy that you were really leaning on to help scale and grow toll international?

Well, one of the things that prevents growth is the finance, right? And there is no finance, there is no romance.

So basically I look into embarking the flow of the cash in the company. Most of our clients are government, even though we also work with private sector, as long as they have big products, right? Because the products we work on are very large. So most of them are government. We work with utilities and we worked with industrial organizations.

And healthcare because their facilities are expensive. So during the pandemic, I have my projects stopped. Some of them went back after a period because we were considered essential business because we work on infrastructure, but the cash flow is not very good in terms that we submit an invoice. And in some instances you get it paid two years later.

Okay. Let's just stop there because that is a huge number. So in my industry 45 to 60 days to get paid is a long time. How does two years enter into, like, how does that happen? Is it because they have such strong buying power that they can negotiate that payment term?

We invoice the last Friday of every month so that we get paid weekly.

However, when we are a subconsultant and we don't have the direct relationship with the prime consultant, we cannot accelerate that, right? Because we cannot even talk to the client. On the state contracts. We get paid quickly because we have that direct relationship with the client. We understand the process.

And the first thing we do is we put a small invoice at the beginning so that we measure the time it takes to get paid. It breaks some type of inertia, right? Because without any invoicing, no one says from the beginning so that when the big invoices come in, we are already set. On the subconsulting contracts, it's not possible because even though we still invoice the last Friday of each month, many times the prime contractors, they are global organizations.

And they are in the stock market so their access to capital is very cheap. And they only invoice twice a year.

Did you just say twice a year?

Correct. They accumulate six months worth of invoices, and then they send one big invoice because they have one billing person going from site to site.

I think they need your creativity and your insight on how to fix that.

Although it's to their advantage, I have a feeling so back to your strategy for growth, you need more capital, you need more access to cash. What did that look like?

So basically doing the analysis for growth, I realized if I want to work at the, grow at a certain speed, I need more money. I am the larger business.

It's not that you become richer, you actually require more money. So I say, okay, I'm going to flip all the profits of the business back into the business so that I can grow it fast. Let's see how fast can I grow? And if it is not fast enough, classic, what's going on? I need to borrow money. Then I started borrowing money.

And still, when you are behind on the cashflow, it affects you. So what I thought during the pandemic, we had a lot of time to think and a lot of time to brainstorm with the staff, we need to do something very easy and practical. We need to get paid first, but there is no government agency that is going to pay you first. And we said, okay, let's work in the private.

Then we start doing outreach to fortune 500 companies who have similar projects to the ones that we work on and then when we are most valued and they will all say 60 days, You have to be able to wait 60 days. Okay. We're able to do it. Well, we don't want, so how do we get our money in advance? And then I look at my accounting and I say, okay, who gets their money in advance?

And guess who gets the money in advance? All these myriad of companies who sell applications, right? Sale subscriptions? You give them the money before they even give you a as mine. They want your credit card number before they give you anything. Oh, wait, if you don't pay in advance, they just block. I cannot do that with my clients. They will blocklist me, right?

I say, okay, what we need to do is develop applications and sale subscriptions, but this is not something that we knew how to do, right? There's this solution is simple, but the execution is the difficult. So we learn. And I started talking to people who have done it, many of them in EO. In fact, I have my own global bridge with other EO members who have developed applications.

One of them says, do you do develop applications on the platform? So I say, okay, in addition to being a civil engineer, I studied IT. I learned how to do it. And we are releasing our first application. Um, the application is going to be finished this month. It's called Libera and it's basically Uber for doctors.

Amazing. So your strategy for growth is to start a whole new, basically a whole new company. Is it under Toll International?

I debated if I will do it within Toll International, or are you going to be a separate organization? And I realized the culture is very different. From a tech company from a company that provides professional services.

So another organization exists for this purpose and the holding company is called ICAN. And basically ICAN first brought up Libera. And this is a problem that I think if I threw out 25 years in the construction industry, your trucks to load the dirt out of a project, never come on time or enough. And sometimes when you don't have any dirt to load, you have a hundred trucks that showed up because they got confused or you have trucks from another project that got the wrong location.

So I say, okay, how come some issues with Uber, with Lyft, but it's not this type of issue, right? Maybe they are waging the corner. That's not bad, but it's very reliable. So I'll create something similar and what we are doing this, and we are doing this in 1000 trucks at a time. So basically this also helps people.

Many of them are from a minority background that drive one truck. They may or not be the owner of the truck, but it's all they have. And they don't always have jobs. They wake up at 4:00 AM and they go see that the truck with the radio and with the cell phone waiting for the phone call for a gig. Sometimes they have nothing.

Sometimes they have two or three and they don't know what to do. So they basically, they say yes to everyone and then they only show up to one. So it's a life that is not easy. They cannot take vacation because they are afraid of losing the gigs. Construction is done during the summer, and then the snow clearing is done during the winter.

So they don't want to take a vacation because if they get a gig that pays for the bills, so with Libera. What they can do is they can plan when they work, why they don't work, because the contractors who are going to work with us are going to present the loads that are available with the different shifts. The truckers that are going to be able to select what shifts they want.

And that's theirs. If they want to cancel. They can remove themselves. And then someone in the wait list will come in. Another problem that we're solving is the disputes. The truckers have the feeling that they're being underpaid for the projects are short pay because they probably did more trips or more hours.

And the contractors, they never know where the truckers are. So they don't know if they're working or not. Or if they are coming back for a second cycle, a cycle is basically one pick up, one delivery. So they always think that the truckers are taking a break somewhere. And with the application, all of this is removed because one third of the trips results in disputes.

Additionally, we are serving women, female truckers, 17% of the truckers are women.

17%? That's surprising.

Correct. So basically the female truckers, they have a need for clean back. They cannot go to the bathroom just anywhere. So they usually go on a gas station. They know which ones they go, but many times they don't know. So with the application, we're going to be able to pinpoint where the rest stops are that are approved.

And we have a ranking system for the rest of stops and also for the truckers and for the contractors.

So are you starting this business? First of all, I can see that it's a passion that you're excited about it, but I, you starting this business in part to fund the cashflow for Toll International. Will you keep both going?

Well, right now, Toll International is funding the business

The business is going to create value and the scale globally. So that it becomes business of its own. Um, that Toll International contact alone is difficult to globalize professional services firm, because every project means you need to hire more people and then you need to retain your staff. And basically you sell hours, right?

It's difficult to escape because one hour is part of a human. With an application, the application is the same. We just need to scale the infrastructure in the background. Right. But the infrastructure is something that you can plan and it's not at first.

We learned so much from Nure about supporting immigrants, building a business that has to wait two years for payment sometimes, and how he used his creativity and need to build a new company

For more information about. Got on my website, natashamiller.co. Thank you so much for listening. I hope you loved the show. If you did, please subscribe. Also, if you haven't done so yet, please leave a review where you're listening to this podcast now. I'm Natasha Miller and you've been listening to FASCINATING ENTREPRENEURS.