Alexey Dubov is a global entrepreneur who has started several companies. His latest venture, Mighty Buildings, has already raised tens of millions of dollars in capital and has been establishing new construction standards. Alexey has attracted funding from top-tier investors like AltaIR Capital, Foundamental, Abies Ventures, and Khosla Ventures.
In this episode, you will learn:
- Designing your organization
- His other innovative startups
- The two books Alexey says he wishes he would have read earlier
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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About Alexey Dubov:
Alexey Dubov is a Co-Founder and Chief Operating Officer at Mighty Buildings. He is a serial entrepreneur that has developed autonomous robots and robotic systems for various industries. Alexey Dubov is an experienced operator in managing complex product development. In addition, Alexey Dubov is an agile development expert.
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Connect with Alexey Dubov:
Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a really exciting guest that has been all over the world billing and scaling companies. I think that we’re going to be learning quite a bit. I even lose track of how many companies he’s done. It is really remarkable. But without further ado, let’s welcome our guest today. I think that you’re really going to enjoy this one. Alexey Dubov, welcome to the show.
Alexey Dubov: Hi. It’s great to be here.
Alejandro: Originally, Alexey, you were born in Moscow, Russia. How was life growing up in Moscow?
Alexey Dubov: Have you ever been in Moscow, Russia?
Alejandro: I have not, but that’s on my bucket list.
Alexey Dubov: In general, Moscow is beautiful. Growing up there is different in terms of the education system and what is provided to you compared to the U.S. or Europe, Austria, and Germany. In general, the education system is very good. I remember that I told some people: whenever you work hard, you can actually get a very good education for free, but it’s required that you work very hard.
Alejandro: In your case, you worked very hard, and you studied very hard. In terms of study, you studied engineering. Why engineering, and what got you into the idea of solving problems?
Alexey Dubov: I don’t know. Maybe when I was in school. I was very good with physics and math, so that’s how it started. I was two years ahead of the program, and for me, it was very boring. My school was basically connected to one of the top ten universities and institutes in Moscow, but I was shooting for a higher bar. All my schoolmates were like, “Yeah. We know we’re going to go to this institute.” I was shooting for a higher bar. The last two years of school, I was preparing very hard for spacing. An example, the exams to go to this university, and you succeeded basically. I wanted to be an engineer. There was no question to go into other disciplines. It was always about engineering. I decided to do Robotics and Complex Information because, in school, I liked software engineering. Also, I liked physics. But typically, you’re choosing two directions. With robotics, it’s combining both of them. That’s what was very interesting for me, and that’s why I decided to go with Robotics and Complex Information.
Alejandro: Right away in the University, you were already launching your own startup, so did you have anyone in your family that was an entrepreneur or into business, or how did you develop that love for creating and building stuff businesswise?
Alexey Dubov: In my family, no one is an entrepreneur on the company side like that. I’m the first one. It started organically. The second year in the university, I met a guy who was willing to invest in some of the ideas. Later, it was digitizing, basically, and me being in a top university—actually, I think about [4:45] because I saw the opportunity, and I actually had access to top talents who were my classmates. I was pulling them in to become a part of my team. I built my first team with folks from the university where we already had the trust; we had the same schedule, so we were able to plan like, “We’ll start in the morning, then do software/hardware engineering, and then work with customers, etc.” It was exciting.
Alejandro: That first company was in the university, so you actually were quite successful for being the first one because you built it, and then you sold that one. Is that right?
Alexey Dubov: Yeah. It wasn’t part of the university. I was in the university with the guys I hired, but I was selling them an opportunity to grow, to get in first-hand experience of working and doing different things. I think one of the critical skills relating to entrepreneurship is to be able to build a team. That’s #1. Besides all the skill sets that people might have, this is the most needed one and required one to be successful.
Alejandro: 100%. I’m right there with you. We’re going to be talking about that because I would like to get your thoughts on team building, especially when we talk about your latest baby. Before we get to that one, I want to understand what happened after you graduated from university because, at this point is where your incredible shift and moving from one location to another, from Russia to Singapore, from Singapore back to Russia. Incredible! And also, even Germany. Tell us about what happened after your graduation.
Alexey Dubov: More into Germany, it also happened more or less spontaneously because we built this retail solution to distribute each of the content before this content on-demand and the streaming service. It was in 2007, 2009 when we were developing this technology. The big question was about the right management, basically the protection of the corporation and the digital corporation, because this space was not developed at all. For most use cases, people were using optical discs like CDs and DVDs. We developed the solution that allowed you to prerecord this content on-demand. Basically, you go to this retail store saying, “I want this movie; I want this music, and it was prepared for you with the digital train with everything like within three to five minutes. That was a solution. Which, Trinity was not very popular in Russia and Moscow due to not very legal sources. By that time, we were mostly focused on gaming because the gaming industry was just booming with electronic arts. We had very good partnerships in Russia. They suggested to try what we were building outside of Russia and go to Germany. That’s how we ended up presenting our solution on Gamescom—the first Gamescom in 2009. The thing is that when we show this machine to retailers, I remember one guy from the Czech Republic was actually back to our booth on the second day and said, “I can just go to the bank and get like 20,000 euros to you right now if you can book one of these machines for our location. It’s like where you see the market is pulling your product to monetize, so it’s needed on the market. When we decided, “What do we need to do now? We need to open an entity in Germany and start production and build these units for the European market. That’s how we started in 2009. We started Trinity Innovation and Marketing. It was an extension of our company from Russia, which was the trade market, which is like R&D because R&D and [9:21] is way more affordable compared to Europe and the U.S. That’s how this transition happened. People, for the first half a year or year, I was still traveling a lot. It was like 1:00 AM in the morning from Berlin to Moscow. And for three weeks, for a month, depending on the scope and etc. We bought this African/Germany basically; only it took longer. As usual, when you’re going to the market you have various plans, but then the reality, there’s vacation, military, and all these European market and German specifically [10:09 – 10:20]. They say in Germany: good things require time. That’s the meaning. In Germany, they refer to put more time into good things to profit or think about it. Our aggressive plan was to allow everything within a year and a half, which ended up throwing out only basically the beginning of 2011, where we started getting some money from this network of a chain of machines that we distributed. In 2012, we soared. I went to one of the most popular media exhibitions in Austria. I realized that the section indicated for innovation fully allowed digital content and copyrights, [11:09] systems, digital right mentioned. I realized that basically, they all had forwards providing success for digital content on demand. In two months, we decided to roll our chain of recruitment back with all these retailers. In some cases, you just need to see the trend. We were pushing a lot for these solutions to become the [11:39]. Whenever you see that the trend is going against your business model, and we realized, even though it’s streaming in these locations, it might work, for instance, in airports or stations similar to a train station in Germany. That might work, but it’s going to be a temporary solution. Until the network—5G right now and 4G previously, we’ll be able to provide the same service. We decided to fix what we had right then, reach out to all our retail partners and see if they’re on the same page, and we realized they also see the trend, so it’s understandable. Let’s just do it. So we pulled the trigger. We pulled back to all the manufacturers like it was an internal investment because some of the parts were more expensive to sell later than to chase initially. Basically, by that time, I got curious about how light influences our health. This aha moment was when I was working long hours. In December in Germany, there is a period where there is almost no sun. I was curious and reasoning about the light. I realized that there’s a lot of research and results done in terms of how light actually influences our health. But no one was able to digitalize it and combine it together in something that can be consumable by a customer in the residential lighting. That’s what we started with, [13:38] Institute in Germany. I reached out to them, and I met with a couple of folks there who were interested in doing this desk research and other light activities for the topic. That’s how we came up with this SVET, the first health-friendly light bulbs. We were focused on replicating the natural light, extending the ballast of the light that can be produced. One thing that is important is how you dim the light because, with LED, there is complexity. The lower you go, the flickering will happen, which is very bad for our eyes and is great fatigue. So we focused on these metrics. We were able to achieve remarkable results and created ID. I still hold this ID with one of the organizations and some licenses to organizations.
Alejandro: This was actually the segue for you to get into Mighty Buildings. It was going from one company to another until you were able to land on your current baby, so tell us about Mighty Buildings, and what was that process of incubating the idea and bringing Mighty Buildings to life?
Alexey Dubov: The credit for the initial idea belongs to my co-founder, Dmitry and Slava. I actually met them in Singapore back around 2015. Back then, Slava was running his hardware, early-stage fund to support early-stage startups, basically in hardware. It was like bridging ideas from Europe to all around the world, and connected them with VCs in Singapore and Hong Kong, and allowing them to see the production in China. We made a good connection there. Slava supported one of my startups. Another that we started about that time with Antoine is this lens clock. It’s more like a small wall clock. The idea was that whenever you go to any room, and you know there is a clock, you will glance at it to get information instantly. The idea was to add additional information on this with a display, but not change the clock face with hands, which we designed to read very fast. With this, in 2017, Dmitry’s previous startup was about 3D printing. He transferred a lot of knowledge from his previous startup. I remember it was June 2017, and all great ideas start in a bar drinking a cocktail or a beer. That was the case. Honestly, it wasn’t like the stage of creating the idea, but Dmitry was telling the story of printing something big. It wasn’t Mighty Buildings. It wasn’t about buildings. It was just an idea, so what we can print, where we can validate this. He introduced it to me. I was busy fundraising for Glasslock and we were shipping our first batch of like 3,000 units, so we were pretty busy. Later on, when Slava joined forces with Dmitry, and they were about to go to VC, that’s the moment when I joined because, at that time, we realized that to go from Glasslock to fundraise an additional round was an accomplished result. By that time, there was a lot of speculation in terms of hardware startups, in general. They were [17:44] and other stuff if you remember them.
Alexey Dubov: That’s like in practice, in general, how VCs were perceiving hardware startups without digging deeper into the platform vision, and the platform vision wasn’t there. We were crazing it. We also built a relationship with the next time with one of the world-leading clock manufacturers. Right now, they took over Glasslock, and it’s a product you can appreciate. In December 2017, I joined forces with Slava and Dmitry and went to IC. That’s the moment where the initial idea was to validate the market [18:32]. Back in 2017, ’18, it was very early. Right now, everyone knows, “It’s [18:38] market.” But back then, it was only hundreds of permits, but we saw this initiative, so we started validating the customers. We visited in backyards building a process of how we qualify them, how we designed, how we collect deposits, and what we can do from a regulator standpoint. All that was done while Mighty Buildings was in stealth mode. That was very important because we saw in multiple instances where people were trying to do something with 3D printing construction, but there were no actual results, no buildings, no communities built with 3D printing. When we thought about the reasons, we understood that the regulatory—technologically, you can print the structure. But from the regulatory standpoint, no one was willing to sign off on these and say, “We can accept the liability.” That’s where we decided to engage regulatory organizations very early. We started working with Underwriter level to UL, which is one of the world’s leading certification authorities in the world. Based on our work, we created a new standard, which is Euro 3401, introducing edited manufacturing full construction. What we did with Mighty Buildings in stealth mode is we opened a new category for the industry. Right now, we’re the first one and the only one who is certified under this category. On top of that, what UL did was, they also added [20:21]. Mighty Buildings changed the industry from being in stealth mode while delivering products to customers. The first delivery happened early last year in early February. We were delivering units even during the pandemic because we considered it an essential business. We see delays right now due to the pandemic with some permits and entitlements, but—
Alejandro: Everyone has seemed to. So that the people that are listening get it, what ended up being the business model of Mighty Buildings? How do you guys make money?
Alexey Dubov: Right now, we make money from the unit that we produce. We serve the customers. On the other hand, our scalability factor of the business model is to provide developers with a solution that can be easily—my manufacturing here in [21:23] is a product of [21:25], meaning that if you think about 3D printing, you don’t need to change the process if you go from one design to another design. This is an expensive thing whenever you do it onsite, or you do it with traditional [21:41] because you need to change the whole assembly process. We don’t need to do this. Another thing is, our material that we developed in technology is superior to traditional materials. We built with synthetic stone, where compared to steel, we have a better [22:03] efficiency, our materials act with an air barrier. We manage all these subsystems that applied to transitional construction sites, and we simplify the process of their assembly because we can print very complex integrated geometry interior, exterior, and it’s all connected with traditional 3D printed parts, just to hold them together. It’s a very different efficient process. Comparing, for instance, to automotive and aerospace industries, the case to go for those industries was changed by composite materials. The car you’re driving most likely is 90% something built with composites because they’re more efficient, they’re more sustainable, they’re lighter, and they are stronger, which is the same with construction. Our business model, right now, I divide them into B2C revenue stream and B2B revenue stream. The goal is always to introduce the efficient process of homebuilding to customers be it a commercial builder or be it a multifamily residential building.
Alejandro: How much capital have you guys raised to date for the company?
Alexey Dubov: Seventy million dollars.
Alejandro: Here, you probably learned the difference between pitching an investor in Russia and pitching an investor in the U.S., Singapore, and other areas in the world. What have you found to be different in the investor mindsets and the concerns that they have different from one region to another as you’re pitching different investors?
Alexey Dubov: In general, framework is more or less the same. I think about it like the maturity of the investor. Let’s say, me pitching and seeing investors in 2008 or 2009 is very different from what investors are asking right now. It’s tied to success stories that are happening right now in the market. Another one is tied to trends that are popular in the market. You look in the segment and say, “What is an A player? What are you changing? What are you targeting to disrupt this industry for 1%, 10%? How feasible is your approach?” In most cases, where and how you’re pitching is basically all about the founding team, at least in the early stages, so before you go to the stage where you need to scale and grow. It’s always going to be about the founding team’s ability to execute, the ability to communicate your successes, and also asking for support and help. That’s very important for all of the investors. They need to see you as a business unit, how you’re being successful in terms of executing your plan and commitments and how you’re able to adapt and adjust for the sake of the success of the company.
Alejandro: You were talking about the team. For example, how many people do you guys have right now in Mighty Buildings?
Alexey Dubov: 125.
Alejandro: What have you learned about team building? What is the biggest lesson that you’ve learned so far? Maybe something around culture or something around people that you got it, and it was like Wow! and that clicked, and it was something you are implementing now moving forward as you’re thinking about the culture, as you’re thinking about team building or building that senior leadership team?
Alexey Dubov: I would say that creating a definition of your culture in some readable form is very important, and be consistent in how you communicate this to other people. For instance, early on, we decided that this was my initiative to virtualize agile methods over the development. That helped us a lot because it also triggers, “We need to focus on calibration, support, transparency, make sure the work is visible.” These are important things because a lot of miscommunication happens, like, “I wasn’t aware that he was doing this too.” “Why? You don’t know where to find this job or find what he’s working on? How often do you synchronize, and what do you do on these calls?” etc. And being able to translate it into a readable form is very important and also constantly communicating. Another part of it is—I wouldn’t say that this is the smallest [26:52], but some people just don’t invest a lot of time in this. They just mentor people. Where I was willing to learn, you dedicate 1:1. For example, as a founder, an entrepreneur, you need, in this case, to be on the side of this person, whoever you are mentoring, because you share common goals. Your success is his success, and his successes and failures are your successes and failures too. It’s more about learning and being open to communication, which is very important. That’s how you can translate this culture over the organization. Of course, it’s hard to whenever you’re going through like hiring 30 people; it takes time. In some cases, a cultural misfit happens, unfortunately. You need to move on.
Alejandro: One of the questions that I typically ask the guests that come on the show is if I put you into a time machine and I’m able to bring you back in time and give you the opportunity to have a chat with your younger self, maybe the younger Alexey that was thinking about launching a business back in school. And you give yourself one piece of business advice before launching a company, what would that be and why based on what you know now?
Alexey Dubov: Good question. I think for me as a 21-year-old, I would say, compared to other people, when I was 21, it was still relevant to understand coach, don’t judge. Also, make sure that whenever you design your organization, design it for two steps and a half because in some cases, building an organization is not going to—it’s tied together with coach, don’t judge because in retrospect, you understand, “This is actually my decision that solved these problems, and I was not experienced. In some cases, engaging people for more experience and also looking for answers is important. Design the organization in a way that you’re going to be two stages ahead—by the design, not hiring people in advance. I’m not saying like adopting the process and organizational operational model to the way that will allow you to scale organically rather than changing the team and position structure as you go.
Alejandro: What is a book that you wish you would have read earlier?
Alexey Dubov: I would say two books: Writing with Candor. Another one is Traction. They’re very good books.
Alejandro: Good stuff. Alexey, for the people that are listening, what is the best way for them to reach out and say hi?
Alexey Dubov: LinkedIn.
Alejandro: Amazing. That’s very easy. Alexey, thank you so much for being on the DealMakers show today.
Alexey Dubov: Thank you for having me.
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