3 things we learned from the largest built tech exit ever

On the most recent episode of Venture on BuiltWorlds One, you saw Greg Grossman from DLA offering tips to companies thinking about their exit. That got us thinking. Just how large was the biggest exit in built technology history? Based on our research, it looks like it was pretty darn big.

Looking at Ritchie Brothers’ $758M acquisition of Iron Planet, Oracle’s $663M acquisition of Textura, or Roper Technologies’ $632M acquisition of ConstructConnect in the past couple of years, it might be tempting to think that the biggest exit was among those players. But it wasn’t. In fact, not even close. 

To find the biggest exit in history, we had to go all the way back to the year 1998. A mere six years after Al Gore famously proclaimed the dawn of the information super highway, the dot com era was in full gear.

AOL and Netscape were merging, and the government was suing to combat the fear that Microsoft — not Google — was establishing hegemony over the internet browser. Palm Pilots were the latest trend. Compaq dominated the personal computer industry. And a mid-sized heavy civil contractor was spinning off what would become the third-largest telecom company on the high flying Nasdaq stock exchange.

The company was called Level 3 Communications, which originated from the spinoff of Peter Kiewit and Sons‘ “non-construction” division, dubbed Kiewit Diversified Group. The company, valued at $9B at the time of its 1998 initial public offering, had no revenue, but it had taken an early lead in developing the physical network on which the information superhighway ran.

In essence, Kiewit, one of the nation’s largest vehicle highway builders had become one of the nation’s largest electronic highway builders, too. Because it was employee-owned, the IPO spawned a legion of what came to be known as the “Kiewit millionaires.” Today, Level 3 is still valued at nearly $20 billion.

What did we learn? Here are 3 key takeaways

1. The greatest built tech success stories don’t necessarily lie on the coasts

Although San Francisco, Boston, and even New York, boast much of the action in built tech today, lower-profile cities around the country have actually produced the majority of the most successful exits. iSqFt, which evolved into a ConstructConnect company (and the aforementioned $632 million exit), grew out of Columbus, OH, and the previously mentioned Textura called Chicago home.  In terms of sheer dollars at exit for built tech, our research shows that the Midwest actually holds the crown.

2. Many built tech exits aren’t actually software

Although there will always be significant focus on apps in the industry, built technology is still very much based in physical products. To date, the industry’s greatest technical innovations have been in areas such as robotics and advanced machinery, where firms such as Caterpillar are spending time in R&D.

We’ve also seen products such as high performing glass and glazing come to market from companies such as SageGlass and View (see more on View Dynamic Glass in the video below), but some of the most impactful innovations are hoping to change the very shape of the infrastructure. Elon Musk might have laid out the vision for Hyperloop and other tunneling projects, but the larger industry is making it all possible.

3. The best exits don’t just come from venture-backed engineers — but from the industry, itself

Kiewit is not the only industry player to have spawned and sold a technology division valued into the hundreds of millions. Earlier this year, Stantec agreed to sell water infrastructure software company, Innovyze, for $270M.

As with manufacturing, healthcare, finance, and other major segments of the economy, there are many categories of technology opportunities associated with the built space. With trillions of dollars of efficiency gains to be had, there are certain to be many big emerging players today and in the near future.