Economic Analysis of Bluebeam

In this paper I will be analyzing Bluebeam, a company I am very familiar with, having spent the
last two years working for Bluebeam. I will be analyzing Bluebeam by; talking about Bluebeam's history,
providing an insight into the company culture and current objectives, looking at Bluebeam's financial
information, and finally providing some recommendations on what Bluebeam should do to be
successful.

Helping build our world. This is the general slogan that Bluebeam uses on many of their
messaging. This is expanded upon internally to mean that Bluebeam helps the people who build our
world. Revu, Bluebeam's flagship product, started off as the brainchild of some engineers working and
Nasa's Jet Propulsion Lab in Pasadena. Initially, it was an addon to adobe to help compress the
complicated digital renders from CAD software into a 2d blueprint that could then be printed. It was
quickly updated so that it would take that PDF file and allow you to view and work with it digitally,
removing the need to print. This addon was such a great product that the engineers decided to make it a
standalone that operated using PDFs a universal file format. And in 2002 they launched Bluebeam
targeting the Engineering industry. Shortly after companies in Architecture and Construction also found
the value Revu. The company continued to grow and in 2014 Bluebeam was purchased by the
Nemetschek group, a large German conglomerate that owns many digital construction software. Since
then Bluebeam has increased its international focus as they created offices in the UK, Sweden, Germany,
and most recently in Australia.

Internally Bluebeam is best described as a Multinational small business. While Bluebeam has
seven offices and over 500 employees, they still place heavy value on the little things that keep
employees happy. Bluebeam provides employees with benefits such as 4 weeks of paid leave, paid
training, and travel for seminars and other learning opportunities, all the way down to standing desks.
Bluebeam knows that as a part of the technology industry the industry employee turn over is higher
than others. These benefits are small compared to the shared internal vision though. Most employees at
Bluebeam truly do feel and believe that Bluebeam and the product Revu really help the way the word is
built. One of the best things that Bluebeam does is higher and retain good employees. The reason that
most people stay with Bluebeam is the vision the Revu helps the men and women of the construction
industry do their job more efficiently and cheaper leading to better pay for them and more time with
their families. Bluebeam does this by providing carefully crafted "employee events" these events can
range an open mic with a client talking about the benefits of Bluebeam, to their most recent event type
which was showcasing some of the teams and their interactions with clients and big ventures they are
undertaking to help improve the construction industry. Additionally, Bluebeam practices what they
preach. One of the issues with a lot of tech companies is that their products may make your life easier
but the employees who work there have the opposite experience. Bluebeam encourages having a
healthy work-life balance. One of my favorite ways that they did this was every day before a
government holiday they would close the office at 2 pm telling everyone to go home an that they would
still be paid for a full workday. This made holiday weekends even better as it meant that Friday was a
half-day of work, which is awesome.

Next, let’s look at what Bluebeam actually sells. The core product that Bluebeam sells is Revu.
You can download a free trial of the eXtreme version here. The simplest way to describe Revu is that it is
a PDF compression, markup, and editing software for the AEC (Architecture, Engineering, and
Construction) industry. It allows for different stakeholders on a project to be able to work on the digital
plans for a construction project. This replaced the need for print outs saving time and money, as well as
increasing information accuracy. Revu is sold in a few different formats, Standard : the basic for of Revu
that settles more users needs, Revu CAD : the version with a few additional features that are very useful
for engineers, Revu eXtreme : the most complete version with a tone of additional time-saving features,
Revu is also sold in larger orders as Enterprise : For larger companies, it comes with some IT control
features to control all of the licenses you own, and Open License : for even larger companies who want
to customize their copies of Revu even more. Included in all versions are some of the features that make
Revu so "sticky" that employees have said that the Revu is one thing that they cannot work without. The
core feature is the trademarked tool chest, where you can save all of your markups and comments.
Think for a second that you are an electrical engineer reviewing a blueprint, it saves an enormous
amount of time if you don't need to make a whole new comment each time there is an error. As with
many successful businesses Bluebeam has also added an additional optional purchase to the license of
Revu. With your purchase of Revu, you can buy an annual subscription of maintenance for about 1/3 of
the price of the standard license. With maintenance you get additional technical support from Bluebeam
via a call/email line, additionally, you get the next years upgrade. This maintenance model creates a
repeat purchase as well as creating a "stickiness" as if your maintenance lapse you will need to buy a
new product license, which for larger companies is very expensive. Bluebeam has two additional
products but both of them are free with a purchase of Revu. The first is a product called Studio. Studio is
like google docs for Revu. It allows you to take your documents outside of the office and share them
with people all over the world at no additional cost, all of the competitor products require you to pay on
a per page base for the same service. This product removes the need for so many meetings to get simple
tasks done to make sure that everyone is using the correct version of a doc and that information is
shared. The final product currently available is called Drawings. An extension of Studio Drawings allows
you to take the plans from Studio offline anywhere you go on almost any device. This means that as a
construction worker you no longer need to head back to the office to check a plan you can just look at
your phone or tablet. The final project is publicly known but is a project being released fully in the
future, Atlas. Atlas is a geolocating markup program for the AEC industry. With Atlas, you can leave
geotags on a construction site with more information that someone can view from their phone. For a
better understanding feel free to watch this short video demonstration here.

Unfortunately, as Bluebeam is held by Nemetschek which is a publicly-traded company on the

European stock exchange we can’t get much insight into Bluebeam’s financial information specifically as
they don't provide specific numbers for Bluebeam only overall performance. However, as a former
employee, I know how well they did in 2019. In their 2019 financial information, Nemetscheck reported
Bluebeam is their leading brand for total sales revenue, not a surprise as they earned slightly over 200
million USD in 2019. While this number is great and shows a large increase over the 2018 number of
closer to 150 million USD, this most important stats for Bluebeam is growth. This is measured mainly in
new seat sales and new seat sales percent change year over year. In 2019 Bluebeam generated around
50 thousand new seats and increase from 2018’s 42 thousand. However, this represented a decrease in
the growth rate of new seat sales down to around 4% from 12% the year before. This is a major concern
for a company with a digital product as new seat sales are equivalent to growth. Additionally, the
revenue numbers for 2019 will be slightly inflated when compared to 2018 as Bluebeam implemented a
price increase and price standardization removing discounts that many companies in the US were taking
advantage of. The overall numbers show that Bluebeam is still an immensely profitable company
however the reduced growth rates seem to show that they have reached a sort plateau. Not surprising
when one looks at the market structure of the AEC PDF editing and compression market.

There are two different market structures for the industry the Bluebeam operates in. The
domestic, US market, and the international market. Inside of the US Bluebeam has a near-monopoly of
the market with around 89% of all AEC companies who
use a Building Information Modeling (BIM) software
using Bluebeam. This combined with the stickiness and
low cost of Revu means that there is little chance of
them losing much market share, pending any major
bugs or other product defects. Internationally the story
is different. The major companies in the US were quick
to adopt BIM technology internationally some major
companies are still using paper to review blueprints (see
image for what reviewing blueprints used to look like).
With this, there has been more chance for competition
to develop internationally creating a more Oligopolistic
market structure. With Bluebeam, Autodesk, And Procore being the largest companies in the market.
There is also while not a high barrier to technology creation there is a high barrier to entry as many of
the large customers in the AEC industries have already chosen a BIM software to use. The non-
cooperativeness of the market can be seen in the messaging and strategies that the companies pursue
and often “borrow” from each other. Which is an interesting thing as both Bluebeam and Procore are
owned by Nemetschek. The continued growth internationally of BIM solutions can be seen in the UK’s
BIM mandate and Sweden’s recent cooperation between large companies who all use Bluebeam. This is
creating a greater need for BIM software and thus creating greater competition between the players.

The current objectives and strategies that Bluebeam

is pursuing are representative of the decline in the growth
rate of new seats. Primary, Bluebeam’s focus is international
expansion. What they attempt to do with this is create a shift
in demand for Revu. They are pursuing multiple methods to
do this. First is by increasing awareness for Revu
internationally, trying to get ahead of the increasing market growth, and trying to get a larger
percentage of that before their competitors. This also has the potential benefits of stealing users from
other companies who are more expensive. Another is that Bluebeam is working with governments to
help implement BIM policies and practices. Not only does this enable Bluebeam to have the good press
of being viewed as the helpful big brother who wants to save everyone time and money, a continuation
of their mission statement, but it also allows them to give hands on to many companies and gain
exposure that can influence a decision on which product to purchase.

Another method this is being explored by Bluebeam is its use of resellers. In the software
industry resellers are third party companies who are given the right to sell seats of a product. The seat is
sold to the reseller at a discounted price and then sold at the same listed price to a user. The benefit of
this for Bluebeam is that they can reach regions that they don't have any sales reps in and the approved
resellers are supposed to provide training and additional support to the customers who purchase from
them. At its core, this sounds good, but it requires policing the resellers and incentivizing them to sell
Revu. The invitation is the biggest issue as the competitor products are more expensive, this means that
a reseller is more likely to spend time trying to sell the competitor’s product as it means more revenue
for them. Bluebeam is attempting to solve this by providing more guidance, creating contests for the
resellers, and policing actions more frequently.

On the domestic front, Bluebeam is still doing its best to improve revenue. One of the issues for
the past few years has been the methods that Bluebeam used to initially gain the large market share it
has domestically. Initially, Bluebeam offered large discounts to many customers to prevent them from
possibly choosing a competitor or to entice them into trying a BIM solution. Over the past 2 years,
Bluebeam has been removing these discounts and standardizing the discounts that are offered so that
fewer one-offs are being offered by the sales teams. The removal of one-off discounts provided to
companies was completed last year which is in part why there was such a large increase in revenue
relative to new seats. This would be the best indicator of possible price elasticity of demand as even
when prices were increased the demand was about the same or had little change. It is a small sample as
there was a small increase and Bluebeam is still viewed as a cost-efficient solution relative to the
competitors. The best way, to test how elastic the demand for Revu is would be to see at what
theoretical increased price point would users stop paying for Revu that change in price relative to
demand would give a good prediction of the true price elasticity of demand.

In connection with this to increase net revenue, Bluebeam decided to end of life Revu for Mac.
This was due to the lack of users relative to cost investment. This means that the devs who were
working on Revu for Mac have now been switched to alternative teams such as current projects, and
some unannounced projects. This is a revenue increaser as it means that there are quicker fixes and
updates to the current products, increasing perceived value, and creating a shift to the right in demand.
Also by adding more staff to future products in development it creates great opportunity for future
growth.
 The broad internal vision for Bluebeam’s future is to be a technology leader in the AEC industry.
I can’t talk about much of the specifics of the plan, but it is something that current CEO John Elliott feels
strongly about. He has often referenced the relationship between Blockbuster and Netflix stating that
Bluebeam needs to be the Netflix to the competitors Blockbuster. This simply means that as a company
Bluebeam is trying to innovate with new tech advancement and features.

Some recommendations that I would give to Bluebeam. Keep focusing on growing internationally. This
is a huge opportunity especially if you can create opportunities by influencing government practices and
policies. In doing this you will hopefully be able to create market-leading companies who can become
champions and lead the way for other companies to become customers. Doing so will create massive
increases in demand for Revu.

Keep focusing on and empowering resellers. They operate as a satellite company, and the ones who
prove their value should be able to operate autonomously. They can reach markets that you would not
be able to and prove service to local customers that would be too costly to invest in. This in my opinion
as someone who worked with the international resellers is enough work to justify the creation of a
whole new department. Regions should be split up by geolocation as well as market development,
Japan has a little different BIM readiness than Panama. Resellers are also your best boots on the ground
and can and should be used as the exclamation point on any marketing strategy in their country.

As a result of the COVID 19 pandemic, in the immediate time and going forward, it might be
worth the time investment into making a slightly scaled-down version of Revu for none AEC industries as
there is the possibility of many companies moving towards a work from home model. Revu with Studio
could be very beneficial for remote business as it provides a higher level of security than other
document collaboration tools like Google docs while also allowing multiple users to work on the same
doc at the same time. This pared with the universal nature of PDF means that everyone could use Revu.

Invest, invest, invest, into future products. Keep up with what the market preferences are and be
careful to avoid fads. If it seems likely that a government is planning on making changes to regulation or
requirements be ahead of it. With how competitive the industry is internationally any slipup or tardiness
would be disastrous. Furthermore, domestically as you sure up your position as a monopoly in the BIM
market the only way that you can create increased revenue would be to provide new products or
features that could justify an additional purchase or cost increase from the customers. And with growing
competition internationally having exclusive features and capabilities is a better way to increase demand
over competitors then having a lower price.
 Finally, don't forget about the companies that helped you get to where you are. Start planning now for
the potential need for a loyalty program as if you spend too much time and money internationally you
risk the chance of losing some of your domestic market shares due to a change in preferences.
References

BIM Standards, Guides & Resources. (n.d.). Retrieved from https://ukbimframework.org/

Cortese, D. (2019, March 8). The Power of Standards. Retrieved July 24, 2020, from
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Goldberg, M. (2018, August 20). Vintage photos remind of the profession before AutoCAD. Retrieved
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profession-before-autocad

Nemetschek Group Annual Report 2019 [PDF]. (2020, March 31). Munich: Nemetschek Group (Investor
Relations).