Autodesk CEO Andrew Anagnost explains the strategy behind acquiring Spacemaker

'Culturally, they're the right company. Vision and strategy-wise, they're the right company.'

Autodesk, the U.S. publicly listed software and services company that targets engineering and design industries, acquired Norway’s Spacemaker this week. The startup has developed AI-supported software for urban development, something Autodesk CEO Andrew Anagnost broadly calls generative design.

The price of the acquisition is $240 million in a mostly all-cash deal. Spacemaker’s VC backers included European firms Atomico and Northzone, which co-led the company’s $25 million Series A round in 2019. Other investors on the cap table include Nordic real estate innovator NREP, Nordic property developer OBOS, U.K. real estate technology fund Round Hill Ventures and Norway’s Construct Venture.

In an interview with TechCrunch, Anagnost shared more on Autodesk’s strategy since it transformed into a cloud-first company and what attracted him to the 115-person Spacemaker team. We also delved more into Spacemaker’s mission to augment the work of humans and not only speed up the urban development design and planning process but also improve outcomes, including around sustainability and quality of life for the people who will ultimately live in the resulting spaces.

I also asked if Spacemaker sold out too early? And why did U.S.-headquartered Autodesk acquire a startup based in Norway over numerous competitors closer to home? What follows is a transcript of our Zoom call, lightly edited for length and clarity.

TechCrunch: Let’s start high-level. What is the strategy behind Autodesk acquiring Spacemaker?

Andrew Anagnost: I think Autodesk, for a while … has had a very clearly stated strategy about using the power of the cloud; cheap compute in the cloud and machine learning/artificial intelligence to kind of evolve and change the way people design things. This is something strategically we’ve been working toward for quite a while both with the products we make internally, with the capabilities we roll out that are more cutting edge and with also our initiative when we look at companies we’re interested in acquiring.

As you probably know, Spacemaker really stands out in terms of our space, the architecture space, and the engineering and owner space, in terms of applying cloud computing, artificial intelligence, data science, to really helping people explore multiple options and come up with better decisions. So it’s completely in line with the strategy that we had. We’ve been looking at them for over a year in terms of whether or not they were the right kind of company for us.

Culturally, they’re the right company. Vision and strategy-wise, they’re the right company. Also, talent-wise, they’re the right company, They really do stand out. They’ve built a real, practical, usable application that helps a segment of our population use machine learning to really create better outcomes in a critical area, which is urban redevelopment and development.

So it’s totally aligned with what we’re trying to do. It’s not only a platform for the product they do today — they have a great product that’s getting increasing adoption — but we also see the team playing an important role in the future of where we’re taking our applications. We actually see what Spacemaker has done reaching closer and closer to what Revit does [an existing Autodesk product]. Having those two applications collaborate more closely together to evolve the way people assess not only these urban planning designs that they’re focused on right now, but also in the future, other types of building projects and building analysis and building option exploration.

How did you discover Spacemaker? I mean, I’m guessing you probably looked at other companies in the space.

We’ve been watching this space for a while; the application that Spacemaker has built we would characterize it, from our terminology, as generative design for urban planning, meaning the machine generating options and option explorations for urban planning type applications, and it overlaps both architecture and owners.

The reason we were interested in Spacemaker is: One, we really like the team. We think they’ve hired a fairly exceptional team. And they’ve built a fairly dynamic culture of how to deploy that talent in ways that creates a lot of impact.

Two, in terms of actually doing something and solving a real problem with a cloud-based platform, and with artificial intelligence and the things associated, they were actually solving a problem that our customers were telling us that they wanted solved, and they actually liked the way they were solving it.

So it wasn’t just a great team with a great idea and some great technology, they actually solved the problem. And I think this is really important. You can play with technology all you like, but if you can’t find the intersection of either creating a whole new opportunity or market or solving an existing problem in a completely new and disruptive way, then you really haven’t created something useful. They’ve created something useful.

The last piece here is their mission and their focus. And what they’re passionate about is so aligned with what Autodesk is passionate about. We are in an era where everybody is seeing how machine learning algorithms and the applications of artificial intelligence can do so many negative things, right? There’s so much dialogue about the disruptions that some of these technologies are causing, the negative impacts on how we communicate, social discourse, jobs, etc. When you see someone actually applying artificial intelligence in a way that allows people to create real better outcomes, real positive impact on how we make decisions, that aligns so tightly with what Autodesk is trying to do with these tools and technologies. We really, really wanted them to be part of what we were trying.

You look at those three things, great team, solving a real problem with great technology, and this whole vision of actually using AI for real good … real, measurable, positive better outcomes that we can all look back and say, “Look, there’s a positive impact there.” It’s tightly aligned with what we’re trying to do.

What does Autodesk bring to Spacemaker?

We’re gonna bring them a stable investment environment. VC money is a plus and a minus. Ongoing opex from a stable established company is higher quality in many ways and brings stability without necessarily diluting who owns the company and how the company is run moving forward.

We also bring them access to more and more customers. We can help them reach a much more global audience faster than they could have on their own, and that’s just part and parcel of being a larger company with a lot of customers.

But also, what we’re going to bring to them is the ability to make a bigger long-term impact with the technology platform they’ve built. We love the the product they built today and the focus it has on a certain particular problem. We’re going to continue to encourage them and drive them to build out that product. But they’re also going to have other avenues to extend their technology and other places where they can link their technology to other parts of the Autodesk ecosystem. I think that’s going to broaden their impact and the potential of what they built.

I think there is more directions that can be applied in the future. Absolutely. Otherwise, we wouldn’t be interested if it was just their narrow focus. It’s great, but there’s more there than just that.

What would you say to critics who might argue that Spacemaker has sold too early?

I think that’s a very VC-oriented perspective, because what it’s really about is, are they selling out earlier on the return for the VCs? I think if you look at it through the lens of what the employees and the company are trying to accomplish, they’re going to be able to accomplish more working closely inside of Autodesk than they would have, even if they continue to accept dollars and have their valuation increase. Maybe the VCs might see a smaller return; I don’t think the employees are going to see a bigger net return to their vision. And if you’ve talked to these people, they’re very passionate about what they do. Beyond the return on investment, on what’s happened with the transaction, they believe in what they’re trying to do. And that’s really what’s going on here.

Spacemaker has previously talked about the importance of better urban planning and design; this idea that if you can make tools that allow the world and our environment to be better designed, it’s actually quite a big impact, right?

[With] COVID-19, there’s all this discussion about people are gonna move away from cities and urban planning and all these things isn’t gonna be as important. That’s just not true. The long-term demographic trend of densifying urban centers and densifying suburban centers, and trying to redesign and design these areas so that they’re not only healthy for the individuals that live there, but they’re healthy for the environments that they work in. This is a pressing problem that every one of our customers is struggling with, both from their ability to add value in that process, but also from their customers who are saying, “Look, you know what, you can’t just give me a building solution anymore. You got to give me a sustainable, reliable and wonderful outcome that people want to live in, but also is good for the environment that they live in.”

Do you think there’s anything about the fact that this company has come out of Europe, good or bad?

The ethos they apply from the get-go — and by the way, there’s lots of companies in the U.S. that are doing this — [is that] this is a European high-technology company using kind of cutting-edge algorithms and approaches in the cloud and they start it from an ethical framework that might not be as common as startups in other places. So if you were to ask me what was differentiating here, I think the ethical framework they’re coming in with this here is, “We’re going to use this data to enable this audience to do a better job of what they do every day. And we’re going to do it in such a way that we’re partnering with the customers, and we’re also creating better outcomes, not just for them but for the whole ecosystem of stakeholders,”… and one of the stakeholders is the environment of the area.

That ethos from a technology company probably rose up faster in the European market than it might have in some of the U.S. markets where it’s … more about “Let’s plow through this thing,” and not so much about what is my ethical foundation here and what I’m trying to accomplish.