November 11, 2025 • 48 mins
Builder and tech veteran Per Pettersson discusses how project management and financial clarity are essential for success and efficiency in the construction industry. Drawing on his experience, he shares strategies for better planning, cost tracking, and communication to deliver projects on time and improve client satisfaction.
https://www.linmakconstruction.com
Show Notes:
Background and Introduction of Per Pettersson (0:00)
Transition from Tech to Construction (6:46)
Challenges and Opportunities in Construction (11:33)
Financial Management in Construction (22:01)
Lessons Learned and Industry Insights (39:13)
Final Thoughts and Advice for Builders (45:01)
Find Our Hosts:
Reece Barnes
Matt Calvano
Podcast Produced By:
Motif Media
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to builders budgets andbeers. I'm Rhys Barnes and I
(00:04):
started this podcast to havereal conversations about money
in the building industry, thewins, the mistakes and
everything in between. I believebuilders deserve to feel
confident about their finances,and that starts by hearing from
others who've been through ittoo. This industry can be slow
to change, but the right storiesand the right tools can make
profitability feel possible.
Let's get into it.
(00:34):
Alrighty, Per mics are hot.
We're rolling. Thanks forjumping on on the show, on the
pod, super excited about thisepisode. You're an absolute
wealth of knowledge. Soeverybody who's listening, get
out your notepads. But pear,before we jump in business per
usual, give the listeners alittle background on Per
(00:55):
Pettersson,yeah. So from a construction
standpoint, we've had ourcompany. We started about four
years ago as a formalconstruction company, and we
build primarily spec, do alittle bit of custom work we've
done. I counted up this morning,we've done 24 spec houses over
the last four years, and then ahandful of custom remodels and
(01:17):
couple of new construction sothat's construction side. Prior
to that, grew up around theindustry. My dad was developer
to departments, landdevelopment, things like that.
As I was growing up, he got outof the business while I was old
enough to start working in thebusiness. So my experience
learning from him was around ourfarm and projects and property
(01:39):
maintenance, things like that.
But prior to construction,formerly, I was in an analyst
worked in the tech industry, weflipped probably one house a
year, and I just got I startedto hate sitting behind a desk
all day and dealing with all themeetings that come with large
(02:02):
businesses totally so startedconstruction company really saw
an opportunity to focus onrunning a better business, and
from that standpoint, mean likeproject management clarity,
financial clarity. Because whatI saw, my wife has a interior
design company. What I saw fromher working with with
(02:23):
contractors, and then just otherpeople I know that have dealt
with it is there's just so muchlike, I'd say, lack of
information in the industry, orjust misconceptions on how
things work. You know, you askanybody, they always have a
horror story of working with acontractor. You know, they
didn't show up on time. I didn'tknow when they're coming cost
overruns. They didn't tell mewhat it's gonna cost all those
(02:43):
things. And coming out of a froman analyst background, you know,
information was key, and thoughtabout, you know, how we can
bring that over into theconstruction space.
Love it. And, yeah, I think thatwas like initially, because you
are an adaptive customer. Like,when it was like, I don't
(03:05):
remember this being like, achallenging sales cycle, in the
sense that you were pretty quickto recognize and see the value
of adaptive. And then whatalways stood out to me was like,
you basically self onboarded theproduct. And I think at that
point, that's when I was like,Wait, who is this? Like, para,
like, and then I was like, Ithink I looked you up on
LinkedIn, because you were atMicrosoft,
(03:27):
weren't you? Yeah, it was five,five years at Microsoft. Five
years analytics consultingbefore that, for Microsoft,
Costco, some other tech retailcompanies, yeah. So
like, you like, and that's justlike, further to your point of
like, coming from, like, theanalyst background, the tech
background, the tech background,and the opportunity to bring
that perspective into buildingthe product that is homes. So I
(03:51):
think that's super interestingone question. So you mentioned
that your dad got out of thebusiness as you were entering
the business. Yes, we don't haveto go super in depth in it, but
I'm just curious, like, Why didyour dad jump?
I think he was just wanting toslow down so he everybody joked
(04:14):
growing up that my dad was mygrandpa. He was 5052 when I was
born. Oh, cool. He'd been in thebusiness for a while before I
came along, makes sense. And sohe had started off in
residential, doing working foran uncle when he came over from
Sweden, back in the 50s. And so,yeah, yeah. Hence the weird
(04:36):
name.
I love it. Great name. Goahead. Yeah. So he came over in
the 50s, started working for anuncle, got into doing into doing
remodels, then some customstuff, then few spec homes, and
then got into apartments. Andthat was his kind of bread and
butter. Was building apartmentcomplexes. And he built and
owned several of those, and thengot into land development. And
then it just got, I think,really. Difficult on the
(04:59):
development side around Seattlearea, and then he kind of hung
up the hat on that kept hisapartments, but then got into
other business ventures. And sohe he wasn't a hands on
contractor, I'd say, sinceprobably the late 70s, early
80s, and so he still hadcommercial properties that I did
maintenance on. And then we werealways building something around
(05:20):
our farm that we grew up. Aroundour farm that we grew up on,
whether it's, you know, addingon to the house, building
another barn to put stuff in,whatever it might be, totally
just the classics. Yeah, goahead, I was
just gonna say that's so. Imean, it's like, not like, he
like, exited for any otherreason than he'd been in the
business forever, and he wasprobably ready to enjoy some
(05:41):
retirement, or, well less of afull on retirement, I don't
imagine probablymore. It was never a retirement
there. It was always doingsomething. But I think the only
downtime he got was he broke hisback a couple of times.
Gee, what?
The little safety plug? Whereyour harness? He fell off two
stories off a roof, landed on astack of lumber, broke his back.
(06:04):
What? Yeah, yeah, that was thesecond time. First time was a
plane crash. And then third timewas, he was 85 and he was like,
20 feet up trim trees, and felloff the ladder. So,
holy shit. Okay, be safe atheights, yeah, but also, be
safe. But also, I mean, thosepedersens are just resilient
(06:24):
humans. Yeah, can't, yeah, wecan't keep them away. Yeah, they
bounce back. That's right. Okay,cool. So I think, and going back
even more into your background,right? You mentioned that you
were always kind of handy,obviously, you, and this is,
this is a tale as old as time islike, typically, people that get
into construction, have sometype of family tie in the
(06:45):
construction, right? Your dad'sa contractor. You went in the
tech world. You came back intoconstruction because you saw the
opportunity. Okay, you'dmentioned that you were flipping
a house a year, effectively,when you were in tech. But what
was kind of the launching pointfor you doing a flip a year, and
then you gain the conviction tofull time, send it in
(07:08):
construction.
So it been probably for aboutfive years I was scheming on,
how could I actually make theswitch? Because they joke about
the golden handcuffs of it'sreally hard to leave a company
like Microsoft, and so trying tofind an exit strategy that made
financial sense for the family.
And so coming out of covid,Seattle was growing quite a bit,
(07:31):
and actually a bank mortgagecompany that I worked for for a
number of years reached back outto them to find out what they
were doing on the lending sidefor construction loans. And
found out they actually hadstood up a program where they
were helping acquire and permitproperties and then basically
assigning them or selling themto builders or developers to
(07:53):
build out. And then they had afinancing program set up where
they would partner on the deal.
And so they put up a lot of theequity required, you know, you
think a typical constructionloan at 75% LTV. So, you know,
we'd have to come in with 25%whatever the finished value was,
which Seattle market is quite abit. Yeah, yeah. And so they,
(08:18):
they had a separate investorpool where they would partner on
that equity portion. And so itcut my port, like my cash up
front, down quite a bit, butstill kept a pretty healthy
profit share out of the deal.
And so worked with them to tryto find the right spec deal. And
once I got that locked in, thatwas really the kind of the
(08:38):
starting point to feel confidentenough to start doing my own
thing. You know, if I justjumped over and, you know,
started trying to build abusiness, doing remodels and
things like that, it'd be takequite a while to build back up,
was my concern. And so having apretty solid pipeline of new
build projects lined up was, wasreally the key,
(09:01):
yeah? I mean, that's smart. AndI think, like, even more so. So
you came out of covid, and thenit was like, So you worked in
mortgages too, yeah, yeah. Wasthat, like, consulting tech, or
were you, like, actually, no.
So, out of college, sold carsfor a little bit. I was terrible
at it.
Hell yeah. Oh, Bear betterson,the car salesman, I love it.
(09:25):
And through that, met thepresident of a mortgage company
here in Seattle area, and so gotkind of recruited over there to
do home loans. Got partnered upwith a gal that was really well
established in the business, andso worked with her through, you
know, that financial crisis of2007 2008 oh, wow, cool. Time to
(09:47):
start selling home loans. Butyeah. And so then, after about a
year and a half of doing that, Iwas tapped by the the CEO to
stand up a marketing department,because we'd grown from about 30
to about 300 employees. Dang.
And so we didn't have any formalmarketing department, and so I
was tapped to kind of found thatand kicked that off, and spent a
couple years doing that. Andthat's where I realized, like
(10:09):
the data side of things was washuge, and how we could start
leveraging that. And so that'swhere I ended up getting into
analytics consulting, and leftthe mortgage company. And so as
that mortgage company, they theyhad restructured over the last
would that be 15 years, and gotmore onto the construction side
(10:31):
of things. And that's how Iconnected back up with them.
So Got it, okay, very cool. Ihad no idea that's a cool part
of your story, and even then,okay, so it's like, there's
just, like, kind of this trendof like, like, a stronger
business acumen in your journey.
Yeah, right. Like, like, sellingcars. Like, for sure, I think
(10:51):
that's like, just sellinganything is like, a pretty like,
normal way for business peopleto get into the business world,
going into mortgages, learningthat, understanding that 2007
2008 really hard to sell stuffthere. Then you get tapped to do
marketing. Then you go on yourown and lean into the data
analytics side, consult there,work for Microsoft. Then you
(11:12):
reach back out to the mortgagecompany, and that's when you
find the conviction to actuallygo into specking homes full
time, yeah? What is that? Yeah,for sure, definitely full
circle, I think, generally, likejust going back into the
opportunity that you saw tobring more, call it business
(11:33):
acumen to this vertical orbusiness Lane being
construction, what were some oflike, the glaring opportunities
that you saw initially? Like,call it on your first spec, or,
like, right when you entered,I'd say the biggest one on the
project management side, just asI talked to other builders and
(11:55):
looked at projects, and youdrive around town, you see what
projects are taken you know,when they started, how they're
moving along, realized theproject management side you
could do, I felt you could do alot better than what a lot of
folks were or a lot of builderswere doing. Not to knock any
builders, but I think there's,there's some that definitely run
projects smoother than others.
(12:16):
And so with the first spec dealagain, and I've been doing, you
know, some little remodels atthe same time. You know, you get
in for a week into somebody'shouse and do something, but on
the spec side, it was justproject planning up front, you
know, getting all the bidstogether, matching that up with
the budget and the pro formathat you have for the project to
(12:37):
make sure, you know, is thisthing actually going to pencil
out. But also just gettingeverybody lined up. I know, last
week, couple episodes ago,somebody was on talking about,
you know, setting projectschedules and how they just kind
of go out the window. I forgetwho that was great episode, but,
and, you know, while that's truethat I think the key there is
(12:59):
just making sure everything'ssequenced in the right aspect,
and you're not, you're notcreating either bottlenecks or
large gaps in the project. Andso especially coming out of
covid, you know, material supplywas, was tough, the supply chain
was, was kind of shocked. And soI really saw the opportunity to
really plan the projects upfront, figure out when we need
(13:22):
everything, who's coming, when,so so that we're, you know,
getting the project done in asquick as time as possible. But
also when you factor in thingslike interest carry like these
projects get really expensive,really quick if you don't run
them as efficiently as possible.
And so then trying to find thebalance of, you know, we don't,
obviously don't obviously, don'twant to cut corners and, you
(13:43):
know, build an inferior productby trying to move too fast. But
just going back to yourquestion, I think the real
opportunity was just running itin in a really well organized
manner, rather than, you know,scratching out on paper. You
know, what happens when callingthe guy a week before framing
starts and asking her, Hey, doyou have time to start next
(14:03):
week? You know, had I given hima month's head up? And they
said, No, we got projects thatare coming up. We can't start
till this date gives me time topivot and, you know, find
another crew, do whatever I needto do to really make sure it
stays on track. And so that kindof dovetails in the financial
side. But I think the initialone is really just the project
management.
(14:25):
I mean, do project managementand financials go hand in hand?
I just did a post on LinkedIneffectively about that and how
that relates into the clientexperience. I digress. Why is it
like, okay, contractor? Well,raised by a contractor flipper
on the side of a tech analyticalprofessional career jumps into
(14:49):
specs, recognizing theopportunity of call it
effective, scheduling, right andproject management. How can
somebody with calling a spade aspade? Such little construction
experience, like fully committedconstruction experience,
recognize that opportunity andexecute on it. And then you've
(15:10):
got project managers andbusiness owners that have
decades of fully committedexperience, just totally getting
owned by scheduling and gettingsubs lined up, yeah? How? I
don't get it? Because, like, tome, it sounds like it's like,
again, the guy that's like, I'mnot a builder, right? Like, I
don't I my, my dad was abuilder. I don't have any
(15:31):
interest being bags on, like,that type of thing. But I just
don't get it. Because you hearstory after story after story of
a project manager calling a subbeating him up, like, god damn
it, I need you here at thistime, and you're going to be
here. And it's just like, well,what if you what if you just
organized it better? What is thedisconnect?
No, that's a really goodquestion. I haven't really given
much thought to it, but I'd sayone aspect just outside looking
(15:54):
in, you know, it's, I came intoit without that, you know,
hardcore constructionexperience, like you said, and
so I had to rely on the otherskills that I had, which was
running a project, tracking thenumbers, just organizing it. And
so I had to lean in pretty heavyon the project planning side to
make sure I wasn't missingthings. I didn't miss
(16:14):
inspections. I had all thetrades lined up. And so I think
that kind of kicked me off froma good start. And I don't know,
you know, I can't speak to tothe other side of, you know, the
20 year veteran that'sstruggling to make the
transition or run moreefficient, efficiently,
effectively. But I think it'shard to get out of old habits,
(16:36):
and it's really easy to getmired down in the day to day of,
you know, especially if you're asmaller company and you're on
site, managing the subs, doingeverything, and then it's like,
oh crap, I got to look ahead twoweeks and figure that out.
What's coming up, what do I needto order? Like it is a juggle,
but I think it's being diligentin time management to make sure
(16:58):
I'm setting aside that half anhour to an hour every day to
check on the schedule, make sureit's updated. Think about what's
coming up. But also the start ofthe project I do this on our
custom ones, is I go in andbuild out the entire schedule
before we even start. And so,you know, yes, it's going to go
to hell. You know, it's theplumber is going to call and
(17:19):
say, Hey, we can't start thisdate, and I got to bring
somebody else in while theplumber is supposed to be there.
And, you know, it's cascade ofissues, but at least it gives
that good, that good startingpoint at the the onset of the
project. Now, I'm just, youknow, throughout it, I'm making
tweaks. I'm not trying to kindof build the ship as or build
the plane as we're flying it. Soit gives me a good foundation. I
(17:40):
think also, you know, coming inwithout the long term
construction experience like I,I had to spend a lot of time on
project management in my otherroles. And so I looked, I
approached it like, you know,it's no different than, you
know, building a softwarefeature or anything else.
There's a set of folks that thathave to be involved. There's a
(18:02):
set of steps that have to takeplace just get those things
lined up, you know. Andobviously there's, you know, the
quality control and the youknow, you got to walk the site
and talk to the subs and do allyour, you know, your setup
meetings and your planning andeverything like that. So that
part's different. But at the endof the day, it's, you know, no
different than building anythingelse or running any any other
project. Other project. That'swhy, you know, if you look at
(18:26):
like a Gantt chart, you know,they look exactly the same,
whether it's construction orsoftware, you know, really any
other business, because it'sjust a set of steps, you know,
one after the other.
Totally, I think, like, and Iliterally just did an episode.
Do you know Paul Atherton athigh Spire? Do you know high you
never heard of Highspire?
Basically, like a businessconsulting Well, a construction
(18:49):
specific business consultinggroup heavily emphasizing on,
like, scalability, raisingcapital, that type of thing. I
think he would actually liketalking to Paul. So if you want
to enter, let me know. But pointbeing, we were talking about,
basically, builders getting outof the way and out of their own
way, rather and, and, andgrasping the identity that is
(19:15):
required to go from being in thefield bags on to the owner,
business owner identity, right?
And I think that's a lot oflike. What my takeaway was is
like, of course, you have abackground in like, product
management, project management,the similarities between the
two, almost it being anadvantage of you not having all
the years of experience andgetting sucked into the minutia
(19:37):
of the day to day that isbuilding a home. Not to say that
you aren't involved, but youwere at least able to come in
with a perspective and place animportance and emphasis on the
project management side that Ithink a lot of builders struggle
with, and I think that primarilyis chalked up to a where am I
comfortable as a professional,and it's really easy to get
(19:58):
sucked into the day to day of.
Managing the project. Bags on onthe project, and not
prioritizing that projectmanagement.
Oh yeah, 100% and I mean, I Istill put the bags on a fair
amount, and we do all our own inhouse carpentry. And just
because I got tired of I startedoff that way, went back to subs
(20:21):
for all the finished work. Nowwe have full time carpenters
that are, they're doing that.
And I'm, you know, there'sprobably at least a day a week
where I'm, you know, bags on, soto speak, field. And it is, it's
tough to separate that, becausethat's fun and it's enjoyable.
And you can see, you know, theend of the day, you can see your
progress, whether it's, youknow, hey, I framed up a wall.
(20:41):
We got that set of cabinetsinstalled, whatever might be.
You go home at the end of theday, and, you know, it's a very
tangible output that you have,whereas, you know, managing the
business, it's not verytangible, you know. And it's,
you know, the end of the day,the end of the week, it's okay,
great. I have a cool lookingschedule, and I made, you know,
200 phone calls, but it's, it'snot that same feeling as as
(21:04):
creating something and to yourpoint of, like, stepping out of
that, you know, bags on. I thinkthat psychological aspect is
really tough, because you'regoing from a tangible to an
intangible kind of resulttotally. And that was one of the
reasons I got fed up with thecorporate thing because there
was no tangible result,I was just gonna say that go
(21:24):
ahead. It was like the entireintention for you leaving
Microsoft was because you weretired of sitting behind a
screen, right?
Yeah. And I loved, I lovedworking on projects, but in
order to make it a sustainablebusiness, I had to find the
right balance of keeping up thebusiness. Computer work, so to
speak, and actually working outin the field, and strike a
(21:46):
balance between that to make itmake sense.
Totally, totally okay. Now thisis great. You mentioned on the
back end of like, the importanceof project management, and how
that is like a direct run intolike tracking project
financials. Where did you startto see like, project management
(22:07):
improvement or projectmanagement slippage impact
financials? I mean those big,glaring opportunities Go ahead.
Yeah.
I mean the big one on the specside of our business is like
interest? Carry, because thelonger it takes, yeah, you know,
we're looking at projects thatare, you know, 800 $1,000 a day
in interest, like, 800to 1000 a day on interest.
(22:30):
Carry, yeah, what's the loanamount on that? So, what's that?
Wasn't it, 75% is all75 and then with, with other
investors, you know, they're,we're paying interest on, on
their money as well, sure. Andso, yeah, we're, you know, we're
up five, $6 million on, on someof the loans. Dang. Like we've
(22:53):
done a couple of 12 unit projector, sorry, a couple of six unit
projects concurrently, 12 unitsat a time, that was a that was a
grind. But, yeah, that's on thebigger ones. That's where, yeah,
the interest carry becomes areally big factor. And so that
one's just a speed aspect, youknow, the quicker you get it
(23:14):
done and on the market, the lessyou pay an interest. I'd say.
The other ones that are kind ofsmaller, but it's, you know,
ordering materials. You know, ifyou get in this, if you order,
you know, say, I need, you know,my mill work pack, you know, my
doors, my baseboards, all thatstuff. If I wait until the last
minute, either I'm paying a rushfee, I'm not able to shop
(23:34):
suppliers that don't have timeto negotiate. And so it might
only be 5% 10% difference on a$10,000 line item, but you do a
bunch of those, and it adds up.
And so the project or themanagement side of it, having
that lead time and leeway tolook at different options and
(23:57):
figure out different solutionsis huge, but also just on the so
that's the material side, but onthe kind of process side of
things, you know, reallythinking through, you know,
who's coming first, what aspectof the build are we doing at
what time? How does that helpsave money throughout the course
of it? Whether you know, I can,you know, in multi unit
(24:18):
projects, I can, you know, getdrywall stock before we do rough
ins, because if I wait, I can'tget a drywall lift in there, and
I have to hand pack in drywallup three stories, because now
there's another building in theway. So just things like that. I
mean, we're, we're able to savea little bit of money here and
there by thinking through, youknow, all the all the steps of
(24:40):
the process beautiful.
Um, how long did it take for youto get to that standpoint?
Because I think, like, I thinkI'm picking up what you're
putting down with the drywall.
Example. Basically, it's like,we've got to get material up to
the unit that we're drywalling.
And. And we can't explain it alittle bit more, I'm envisioning
(25:04):
like, like, some of a boom lift,yeah, I think, yeah.
And the the denser area wherewe're building some of our
projects, so a lot of the newconstruction that we're doing is
considered infill development.
So we're taking an existing lotin in Seattle area or general
area, but existing residentiallot tearing it down, building,
(25:26):
you know, two, three houses inits place. And so site access
becomes really tricky. And wemight have a site where, you
know, one unit is back behindthe other one, without an alley,
without street access withoutanything. And so by the time the
ones go up in front of it, wecan't get any equipment to the
ones in back. And so, you know,after the first project of doing
(25:49):
that, and I kind of boxed myselfin, we had to really rethink how
we how we approach or how westagger out the trades and
deliveries and things like thatto make sure. You know, we don't
we can keep it moving as quickas possible, but we don't
exclude the ability to useequipment and speed things
(26:09):
along. And so like the drywallexample, we had one project
where the drywall would liftwould reach the building, but if
I built finished framing thehouse in front, I couldn't reach
it. It's like, once I got housein front, up to the first story,
I could still reach over the topof it to get to the one in back.
And so we, you know, scramble,get the roof on, get get the
(26:33):
house papered, pack all the dryget all the drywall delivered.
So we pause framing for a coupleof days, get all the drywall in
and then go back to framing thefront line. And so that way we
can, we're reaching over houses,reaching around houses to get
things done, yeah, trying toreach around over with
deliveries, with, you know,sometimes it's paint, you know,
(26:56):
we're building five feet off aproperty line. So I got to think
of, you know, how can I get alift in, or get ladders in for
the painters so they can dotheir job efficiently? And so
just a lot of those little,little things that, you know, if
I were to take a moretraditional approach of, like,
we're just gonna frame the wholething, then I'm gonna get the
plumbers in for the whole thing,you would miss out on some of
those, those opportunities.
(27:19):
Yeah, okay, so no, and thatmakes total sense, and that's
where the project management andthe financials go hand in hand,
for sure, because it's likeyou're sitting there on, like,
call it like a first project,and you aren't thinking about
this stuff, which I thinkthere's a lot of builders out
there that are intrigued by specbuilding, right? And if you're
(27:44):
not thinking that many stepsahead, it gets really expensive,
really quickly, yeah. So I thinkthat, like, you just explaining
that is, is helpful. Because Ithink when you are going into a
spec build, really, the pressureis coming from, like, the
interest, right? And like, howfast can I get this thing off my
books? Well,yeah, and then yeah, and then
thinking through of, like, Okay,if I, you know, I'm delayed a
(28:05):
month. Well, now the house iscoming on the market, and, you
know, Thanksgiving, which, youknow, nobody's shopping at
Thanksgiving, Christmas time. Soyou know that mad scramble of,
you know, getting a day, youknow, hitting your financial
targets, and then getting it onthe market at a time that you
know the market's receptive toshopping, essentially, and so,
yeah, um, okay, because customsites cut clients really like
(28:30):
that, that management aspects,they know what's happening when.
Andtotally okay. So even in terms
of Okay, so the projectmanagement is a huge win. You
again, you had mentioned, likeplaying in this into the
financial side. Whatopportunities Did you see to run
a construction company betterfrom like, a financial process,
(28:54):
we understand the projectmanagement wins. We understand
how that starts to, like, bleedinto the financials. But what
was the financial opportunity?
Call it the financial opsopportunity.
So I it kind of kicked off withso my wife has the interior
design company, and her workingon projects and just getting,
you know, upset, because a lotof the design aspect comes into
(29:16):
play at the end of a project,right? Like, that's when you're
installing the tile, the lightfixtures, the, you know,
plumbing fixtures, furniture,everything. And so seeing those
budgets get cut from her becausethe projects were coming in over
budget, you know, just made methink of like, Why? Why are
(29:36):
these things coming in overbudget, and then you're having
to cut corners at the end of aproject? And you know, that had
nothing to expect on the customside, but just trying to think,
like, Why? Why is thishappening? And talking, you
know, friends, acquaintances,things like that that have had
projects. You know, it came downto poor financial planning and
(29:57):
then poor communicationthroughout the project was kind.
Of the crux of it. And, youknow, to oversimplify it, it's
like we didn't know where ourmoney was going. And, you know,
I blame that 100% on on thecontractor. You know, it's not
the customer's fault. You know,a customer might build, you
(30:17):
know, remodel, new build,whatever might be, might do, you
know, 123, in a lifetime. And asbuilders, we're doing, you know,
multiple a year. You know, wewere the experts on on how that
runs and what's it going tocost. And so the excuse of, you
know, hey, it costs more than wewe thought, you know, I get that
(30:38):
to a certain extent. You know,five, 10% makes sense. But when
you know, you hear people thatare cutting out their dreams
because now we can't afford thenice fixtures that we wanted,
or, you know, we had to tap intoour savings because we didn't
know it was going to cost, youknow, 20, 30% more than we were
quoted. Like it just, I it was abig opportunity to be, I'd say,
(30:59):
more kind of honest and upfrontwith customers on what was
happening. And so the from anoperation standpoint, for me, it
it was okay. How can we, and Ididn't really understand cost
coding and all those thingsbefore I got into the business.
But just for I want to touchon that, but keep going. Okay.
(31:20):
Outside his perspective, islike, I need to know where all
the costs are going. And thenworking on that first bank
budget, it's like, okay, I needto be able to say, you know, how
much am I spending onfoundations, how much am I
spending on lumber and mill workand finished carpentry and all
those things. And it only madesense that if I have to say how
much or draw against theseexpenses, I better be able to
(31:42):
figure out what it's going tocost me across all these
categories. And you know, thebank is a lot less flexible
than, you know, going to acustomer whose house is torn
apart and saying, Hey, I need$10,000 you know, another 10
grand or I'm not gonna be ableto finish your house. You know,
if you go to the bank and say, Igot, you know, I need another
1050, 100 grand, like it is amountain of paperwork that you
(32:04):
got to go through to justifythat cost. And so, you know,
organizing the financials insuch a way on a project from the
bidding standpoint, all the waythrough to completion was, you
know, appeared to be a hugeopportunity, and then, yeah,
taking on that first specproject where it was, you know,
kind of blank slate. Here arethe plans. Here's the site.
(32:26):
What's it going to cost to buildit? You know, I had to do a lot
across all the cost codes andfigure out, you know, every step
of the way, what this thingcost.
Totally, I the point, and thenthat's, that's great because, I
mean, frankly, like, that wasthe motivation to build adaptive
was our co founders, they wereworking with spec builders and
(32:48):
Phil spec builders down inAustin, and they were initially
going to build a tool for, like,speculative builders to identify
the most ideal lots. Oh, andAustin, yeah. And then they,
like, quickly found out thatthere wasn't, like, a huge total
addressable market for it, like,not enough spec builders
(33:09):
effectively, to sell it to orbuild that product. But as they
were working with thesebuilders, they started to, like,
understand, like, Okay, what'spreventing you guys from, like,
scaling or getting financing onthis? And then they started
looking at books, and they'relike, and they're, like, all
their books were a total mess.
And like, they couldn't paintthat. They couldn't paint that
financial picture for banks tohave conviction to lend them
(33:29):
money or threeCost Codes of labor, materials
and subs. It's, there's not,yeah, there's not the financial
clarity that a bank's gonna wantto see totally, totally. And I
think the financial clarity andlike, you bring up Cost Codes
again, and you'd mentioned, likeat the beginning, you didn't
quite understand Cost Codes.
(33:50):
Again, I'm not a builder, nor amI a CPA. I've just been working
with builders for like, almost10 years when it comes to
construction software. Call itwhat, what was the learning
curve for you, or what was, whatwas the difficulty in
understanding cost codes foryou? It
made a heck of a lot of sense.
(34:12):
Okay, so it did make sense.
Oh yeah, it made it made senseright away. I just never
encountered the because I hadother little businesses over the
years that I spun up just as,you know, side projects, and had
to kind of do the accounting on,but yeah, starting my company
like, I had to stand upQuickBooks. I had to figure out
how to organize that. I had todo the whole whole thing. And so
(34:37):
what, that's where I startedresearching the, you know, just
construction financing ingeneral. And cost codes kept
coming up. And then you see thewhole big list of the, you know,
the, what is it? Nine, you know,the nine cost groups and
everything. And there's divisioncodes and stuff. Yeah, the,
yeah, the nine, you know,hundreds and hundreds of cost
(34:58):
codes. I'm like. This, thisseems way too much. And so
that's where I started thinkingthrough, basically just looking
at the steps of the project andbeing like, Okay, we have all
our dirt work, you know, we haveall our rough construction, we
have utilities. And startputting together a list that
made sense, and really thataligned with the bank draws, the
bank budgets that they wanted tosee, and that was my starting
(35:21):
point for it. But it made, forme, it just made a lot of sense,
and I've definitely refined themover the years, like I used to
have, you know, for each costcode, I had materials and labor
and subcontractors, and thatwas, you know, it became too
much to try to enter all thatinformation in, and so I had to
find the right balance of whatgives me, you know, enough
clarity to understand where I'm,you know, how projects are
(35:43):
running, where I'm going over,where I'm going under, where I
can improve, but also not makeit so cumbersome that when I'm
entering it in, like it, it'sthe right thing, because you
can, you can definitely gooverboard on the cost codes.
And, you know, things aren'tgetting categorized the right
way. Because, like, you know,for instance, we have framing
material. That's my lumber,that's my hardware. And, you
(36:07):
know, you see some guys thatbreak it out into, you know,
four or five different costcodes, or the same thing for
foundations, it's like, okay,there's concrete, there's rebar,
there's, you know, labor,there's all these other aspects
of it. And, you know, I get abill from my, you know, a sub,
and it's, you know, they don'tbreak it out. So how the heck am
I going to break it out intothose different things? So I
just had to simplify to thepoint that it made that I could
(36:30):
track it or, you know, input itproperly, but also gave me the
clarity. And so, yeah, justcircling back into question,
like, how did it work, gettingstuff on it? It's like, yeah, I
just had to find a way to that Icould align my books with what I
want to do, which was provide,provide enough financial clarity
for myself, the business, thebank, and ultimately, customers
(36:53):
on the custom side that you knowthat made sense and they felt
comfortableWith totally I think this, like
Costco is, I mean, to yourpoint, it's just, it's tales all
this time people making CostCodes something that they're
not. And they're like, Well, Iwant to use cost codes, and I
want to know what the cost ofevery board, yeah, and how much
they spend on two by fours, andhow much they spend on rebar.
(37:16):
It's like, that's not really thepoint of cost codes. And to your
point, if you get cost codebloat, you're not going to use
them consistently. It's notgoing to paint the picture that
you think it is. And really, theentire goal of cost codes is for
you to understand more of thelike the progression the costs
and the income of theprogression of the project.
(37:41):
Yeah, and I use it, yeah. And Iuse it quite a bit on, you know,
on the kind of the flip side ofthat, on estimating out the next
project. Because, you know, Idon't go down and do take offs
at the material level, level forframing and siding and all that.
But each project is different.
So it doesn't matter, you know,if I spend, you know, $5,000 an
engineered lumber on one job,that's not going to easily
(38:02):
translate over to 5000engineered lumber on the next
job, depending, you know, it'sgoing to be a completely
different build, engineereddifferently. I just need to
know, what am I paying my lumbersupplier for? You know, per
square foot, and you know thataverage carries over. But at an
individual material type level.
It doesn't really, it doesn'tmatter, you know, now if I was,
(38:26):
you know, say, if I was mysiding supplier or my siding
sub, and I was running, youknow, their books, yeah, it's
going to matter how many nails Iuse and, you know, how much
flashing I use, things likethat. But at my level, you know,
kind of combining all thosecosts together. I just need to
know what the siding costs, andthen I can track it. You know,
(38:47):
if we're, you know, if we'regoing up a level, or using a
little nicer material, or, youknow, something like that. Can
make adjustments, but I havethat base cost at a fine enough
level that we can track theproject, but I can also kind of
bid out and project out the nextproject, and then understand,
okay, that's this level offinish, and then I can make
(39:08):
adjustments fromthere totally, I guess. And this
is just might be a side comment,but I am curious, just with your
background in tech, like you seesoftware products out there that
will go down to, like, the itemlevel of tracking, right? It's
like in builders, and there's,like the cost catalog job tread,
(39:30):
they have like a third level ofcategorization.
Oh, yeah, yeah. Why? Yeah, yeah.
Are you a job track guy? Areyou? Are, you're a resio guy,
aren't you?
I finally landed on resume. Whatdo you use? First, a long
history of trying other ones.
Okay, cool. But to that pointlike, Why? Why are, why are
(39:53):
software companies doing it? Iunderstand from like, a sales
standpoint, like, it's reallyeasy and fun to sell. But then
what's the application? Shouldhave it. What value does it
actually bring to the builder?
I could see, I could see, if youdo a lot, a high volume of
smaller projects where, youknow, you miss a shower valve on
(40:14):
a bathroom remodel, that's alot, you know, larger percentage
of the cost than missing ashower valve on, you know, a
full new construction house. Andso if you're doing, you know, if
your bread and butter is, say,bathroom remodels or kitchen
remodels, I could see a world inwhich that granularity makes
sense. But at at the scale ofprojects that we're doing, I
(40:38):
just don't like it doesn't, itdoesn't matter, like I need to
look at aggregate costs ofacross categories, not the
minutia of of every littledetail. And I could be wrong on
that, but, I mean, that's,that's my guess, yeah, yeah. And
also, some people, you know, Isaw this, this happen in over
(40:59):
the years, in different roles,where folks that feel or that
are busy counting something,doing something, making, you
know, making something, whetherit's Hey, I made the most
detailed estimate I have evermade, and it took me 10 hours.
They're going to feel reallyproductive for those 10 hours.
But really, if you was that, wasthat activity worth the effort
(41:25):
at the end of the day, or was itjust busy work? And I saw that
like on the marketing side whenI was working at mortgage
company, we have loan officersthat would go out and spend
hours and hours and hours makingthese flyers, and they come to
me and say, hey, you know pair,you know, can you, can you sign
off on this marketing? Sign offon this? I just made the best
flyer ever for this open house.
Like, well, how much time didyou spend doing that? Oh, you
(41:45):
know, I spent all day doing it.
And, you know, I had to go getthe photos, and I cropped and
just right, and I did all thisstuff. Like, you could have gone
out and met, you know, had lunchwith a realtor and followed up
on three leads during that time.
Like it was, it was a wastedeffort, but they felt really
busy, and so they thought theywere doing something really
good, totally, you know, I couldsee that playing a factor. You
know, you make a extremelydetailed estimate, you feel
(42:09):
really good about it, but wereyou any more accurate than if
you took some some larger swingsand made some broader
assumptions, probably not, youknow, maybe it was two, 3%
better, you know, or closer tothe pin. But in the grand scheme
of things, was that, was thatthe best use of your time
(42:30):
totally, I and that's that was,frankly, like, going to be my
comment towards even, like, the,call it the kitchen and bathroom
modeler that's trying to go,like, down to the screw on an
estimate. And it's like, butlike, while that might be a
bigger hit on, like, a plumbingfixture, like, even when you
consider the time that goes intobuilding out these catalogs and
(42:50):
these products and, like, tryingto leverage them in a way that's
going to be beneficial. Like,can you really afford to be
doing that?
No, no. I mean, I tried to. IThe first product I had. It was
builder trend, the first one Ihad. And it was, you know,
they're selling the costcatalog. And, yeah, I started to
go down that path of starting toenter products in. It's like,
(43:11):
this is absolutely ridiculous.
Like, I'm going to spend weekstrying to enter in all the
different, you know,permutations of products that I
might use, materials that Imight use, and it's going to go
out the window in six months,when all these prices get
changed 1,000% then you'reupdating that, it's just like,
Yeah, okay, you'd haveto have a full time person just
trying to keep track of all thatto make it make any sense.
(43:34):
The expensive part of softwareis not the cost of the software.
The expensive part of softwareis the cost of the overhead that
it takes to maintain thatsoftware in order to see value.
I'm gonna put that on a plaque.
I've sold a lot of software.
It's dude, it's the truth, it'sthe truth. And, like, I think, I
(43:54):
think a lot of builders areblinded, and that's why I had
mentioned like these, like thosefeatures. And frankly, like a
lot of these products, they canbe fun to sell, because idea of
them is incredible. It's like,God, I could do all this stuff
in there, and this could help medo this, and that I could get
down to the penny on this. Andit's like, but you're not
considering the 40, $50,000 ayear person that you should have
(44:17):
in that seat, and if it's not asingular person, there's gonna
be 40 or $50,000 in in manhours. Oh yeah, keeping it up to
date across the team right towhere to your point is, like, is
this the best use of time? I wastalking to another builder just
recently down in the south shoreBoston, and he was like, Dude, I
just did something like, help mekeep on track. Like, I need,
(44:40):
like, a project managementsoftware or something like that.
And I was like, Okay, well,like, what is your actual
problem? He's like, I just,like, I need, like, my phone is,
like, blowing up with text, andthere's documents getting sent
to me, and, like, organizing allof this. And I'm like, Okay,
well, this is a one man show,and he's doing like, three specs
a year, right? And, like, allthe information. Is already
there, and is the best move forhim to go in and then, like,
(45:02):
start just translating data intothis, into these, like, types of
software, I don't know, maybe,but when you think about the
application of it, it's like,Dude, you're gonna get an admin
some like, for this truly, totake time off your plate, you're
gonna need to get someone that'sgonna be doing this translating
for you. Oh, yeah, yeah.
And you know, those are gettingback to financially. Those are
(45:24):
indirect costs. So if you lookat a you might improve the
profitability of a singleproject, because now your track,
your costs are just a little bitbetter. And so at a project
level, your margins might get alittle better, but now you've
added in a, you know, a person's$50,000 and that's not going to
direct costs. So depending onhow you manage, you know, the P
(45:46):
and L like, it's going to crushyour business, unless you're
making up for that somewhereelse, you're going to have to
increase your margin so much.
And it might make sense, and itmight work, but is it? Is it
worth that extra cost?
So it's, it's the effective timespend conversation. And frankly,
like, that's like, kind of agood way to wrap up the
(46:06):
conversation, which was like,project management, impacting
financials, and you seeing theopportunities to win in this
business. Um, yeah, no, Per, Ithink this was great. Like, I,
like, I, we had started thisrecording. I appreciate you
hopping on, because I do. Ithink you're a wealth of
knowledge for everyone outthere, if you want to, if you
want to find Per, hisconstruction company is called
(46:30):
Lin Mak is it Lin Makconstruction?
Lin Mak constructions, l, I, N,M, a, k, yeah.
Check out. Check out Per'swebsite. He, actually, he's done
a webinar with us talking aboutlabor, tracking labor, so that's
gonna be in our Help CenterOnline. But per, I appreciate
(46:51):
you like, I like I mentionedjumping on. Do you have any any
words of wisdom that you wouldleave builders with more so than
you've already provided?
I Yeah, I mean, I don't. There'sso many people in this industry
that have so much moreexperience than I do, and I, you
know, definitely try to learn asmuch as I can from them and the
podcast and that. So, you know,my little bit though, I'd say
(47:14):
it's just run better, run greatprojects, manage projects well,
like as an industry, we havesuch a bad reputation. You know,
there's so many great buildersout there, and it's not a bad
industry, and but you just hearso many horror stories like, run
good projects, be upfront withcustomers, be honest with
customers. And I think the moreplanning and more planning that
(47:37):
can be done, and the more, thebetter the communication is,
like, it's just going to uplevelall this. And so that's just
spending more time and effortdoing that, I think, is huge.
And if you don't know, like,learn how to there's so many
resources out there to onproject management, you know you
don't have to go to some courseor construction management
(47:59):
program to do it. Like, there'ssome great tutorials out there
and great info.
This being one of them, this isnow adding to the great
resources that are available. Ilove it. I love it. Per, you're
awesome. Thank you for coming onfor the third time again, I need
to work on this. Like,Midwestern goodbye. You know,
(48:20):
it's like people like, they saybye, and then they start talking
again. Yeah, you just keepcoming back. I know, I know. I'm
terrible at this. I can't getaway from my roots. Have a great
rest of your week. Excited toget this one released for the
for the audience, and as always,if there's anything we can do,
don't hesitate to reach out.
Sounds great.
Thanks. Reese. Take care,awesome, see you Per.
Welcome to builders budgets andbeers. I'm Rhys Barnes and I
(00:04):
started this podcast to havereal conversations about money
in the building industry, thewins, the mistakes and
everything in between. I believebuilders deserve to feel
confident about their finances,and that starts by hearing from
others who've been through ittoo. This industry can be slow
to change, but the right storiesand the right tools can make
profitability feel possible.
Let's get into it.
(00:34):
Alrighty, Per mics are hot.
We're rolling. Thanks forjumping on on the show, on the
pod, super excited about thisepisode. You're an absolute
wealth of knowledge. Soeverybody who's listening, get
out your notepads. But pear,before we jump in business per
usual, give the listeners alittle background on Per
(00:55):
Pettersson,yeah. So from a construction
standpoint, we've had ourcompany. We started about four
years ago as a formalconstruction company, and we
build primarily spec, do alittle bit of custom work we've
done. I counted up this morning,we've done 24 spec houses over
the last four years, and then ahandful of custom remodels and
(01:17):
couple of new construction sothat's construction side. Prior
to that, grew up around theindustry. My dad was developer
to departments, landdevelopment, things like that.
As I was growing up, he got outof the business while I was old
enough to start working in thebusiness. So my experience
learning from him was around ourfarm and projects and property
(01:39):
maintenance, things like that.
But prior to construction,formerly, I was in an analyst
worked in the tech industry, weflipped probably one house a
year, and I just got I startedto hate sitting behind a desk
all day and dealing with all themeetings that come with large
(02:02):
businesses totally so startedconstruction company really saw
an opportunity to focus onrunning a better business, and
from that standpoint, mean likeproject management clarity,
financial clarity. Because whatI saw, my wife has a interior
design company. What I saw fromher working with with
(02:23):
contractors, and then just otherpeople I know that have dealt
with it is there's just so muchlike, I'd say, lack of
information in the industry, orjust misconceptions on how
things work. You know, you askanybody, they always have a
horror story of working with acontractor. You know, they
didn't show up on time. I didn'tknow when they're coming cost
overruns. They didn't tell mewhat it's gonna cost all those
(02:43):
things. And coming out of a froman analyst background, you know,
information was key, and thoughtabout, you know, how we can
bring that over into theconstruction space.
Love it. And, yeah, I think thatwas like initially, because you
are an adaptive customer. Like,when it was like, I don't
(03:05):
remember this being like, achallenging sales cycle, in the
sense that you were pretty quickto recognize and see the value
of adaptive. And then whatalways stood out to me was like,
you basically self onboarded theproduct. And I think at that
point, that's when I was like,Wait, who is this? Like, para,
like, and then I was like, Ithink I looked you up on
LinkedIn, because you were atMicrosoft,
(03:27):
weren't you? Yeah, it was five,five years at Microsoft. Five
years analytics consultingbefore that, for Microsoft,
Costco, some other tech retailcompanies, yeah. So
like, you like, and that's justlike, further to your point of
like, coming from, like, theanalyst background, the tech
background, the tech background,and the opportunity to bring
that perspective into buildingthe product that is homes. So I
(03:51):
think that's super interestingone question. So you mentioned
that your dad got out of thebusiness as you were entering
the business. Yes, we don't haveto go super in depth in it, but
I'm just curious, like, Why didyour dad jump?
I think he was just wanting toslow down so he everybody joked
(04:14):
growing up that my dad was mygrandpa. He was 5052 when I was
born. Oh, cool. He'd been in thebusiness for a while before I
came along, makes sense. And sohe had started off in
residential, doing working foran uncle when he came over from
Sweden, back in the 50s. And so,yeah, yeah. Hence the weird
(04:36):
name.
I love it. Great name. Goahead. Yeah. So he came over in
the 50s, started working for anuncle, got into doing into doing
remodels, then some customstuff, then few spec homes, and
then got into apartments. Andthat was his kind of bread and
butter. Was building apartmentcomplexes. And he built and
owned several of those, and thengot into land development. And
then it just got, I think,really. Difficult on the
(04:59):
development side around Seattlearea, and then he kind of hung
up the hat on that kept hisapartments, but then got into
other business ventures. And sohe he wasn't a hands on
contractor, I'd say, sinceprobably the late 70s, early
80s, and so he still hadcommercial properties that I did
maintenance on. And then we werealways building something around
(05:20):
our farm that we grew up. Aroundour farm that we grew up on,
whether it's, you know, addingon to the house, building
another barn to put stuff in,whatever it might be, totally
just the classics. Yeah, goahead, I was
just gonna say that's so. Imean, it's like, not like, he
like, exited for any otherreason than he'd been in the
business forever, and he wasprobably ready to enjoy some
(05:41):
retirement, or, well less of afull on retirement, I don't
imagine probablymore. It was never a retirement
there. It was always doingsomething. But I think the only
downtime he got was he broke hisback a couple of times.
Gee, what?
The little safety plug? Whereyour harness? He fell off two
stories off a roof, landed on astack of lumber, broke his back.
(06:04):
What? Yeah, yeah, that was thesecond time. First time was a
plane crash. And then third timewas, he was 85 and he was like,
20 feet up trim trees, and felloff the ladder. So,
holy shit. Okay, be safe atheights, yeah, but also, be
safe. But also, I mean, thosepedersens are just resilient
(06:24):
humans. Yeah, can't, yeah, wecan't keep them away. Yeah, they
bounce back. That's right. Okay,cool. So I think, and going back
even more into your background,right? You mentioned that you
were always kind of handy,obviously, you, and this is,
this is a tale as old as time islike, typically, people that get
into construction, have sometype of family tie in the
(06:45):
construction, right? Your dad'sa contractor. You went in the
tech world. You came back intoconstruction because you saw the
opportunity. Okay, you'dmentioned that you were flipping
a house a year, effectively,when you were in tech. But what
was kind of the launching pointfor you doing a flip a year, and
then you gain the conviction tofull time, send it in
(07:08):
construction.
So it been probably for aboutfive years I was scheming on,
how could I actually make theswitch? Because they joke about
the golden handcuffs of it'sreally hard to leave a company
like Microsoft, and so trying tofind an exit strategy that made
financial sense for the family.
And so coming out of covid,Seattle was growing quite a bit,
(07:31):
and actually a bank mortgagecompany that I worked for for a
number of years reached back outto them to find out what they
were doing on the lending sidefor construction loans. And
found out they actually hadstood up a program where they
were helping acquire and permitproperties and then basically
assigning them or selling themto builders or developers to
(07:53):
build out. And then they had afinancing program set up where
they would partner on the deal.
And so they put up a lot of theequity required, you know, you
think a typical constructionloan at 75% LTV. So, you know,
we'd have to come in with 25%whatever the finished value was,
which Seattle market is quite abit. Yeah, yeah. And so they,
(08:18):
they had a separate investorpool where they would partner on
that equity portion. And so itcut my port, like my cash up
front, down quite a bit, butstill kept a pretty healthy
profit share out of the deal.
And so worked with them to tryto find the right spec deal. And
once I got that locked in, thatwas really the kind of the
(08:38):
starting point to feel confidentenough to start doing my own
thing. You know, if I justjumped over and, you know,
started trying to build abusiness, doing remodels and
things like that, it'd be takequite a while to build back up,
was my concern. And so having apretty solid pipeline of new
build projects lined up was, wasreally the key,
(09:01):
yeah? I mean, that's smart. AndI think, like, even more so. So
you came out of covid, and thenit was like, So you worked in
mortgages too, yeah, yeah. Wasthat, like, consulting tech, or
were you, like, actually, no.
So, out of college, sold carsfor a little bit. I was terrible
at it.
Hell yeah. Oh, Bear betterson,the car salesman, I love it.
(09:25):
And through that, met thepresident of a mortgage company
here in Seattle area, and so gotkind of recruited over there to
do home loans. Got partnered upwith a gal that was really well
established in the business, andso worked with her through, you
know, that financial crisis of2007 2008 oh, wow, cool. Time to
(09:47):
start selling home loans. Butyeah. And so then, after about a
year and a half of doing that, Iwas tapped by the the CEO to
stand up a marketing department,because we'd grown from about 30
to about 300 employees. Dang.
And so we didn't have any formalmarketing department, and so I
was tapped to kind of found thatand kicked that off, and spent a
couple years doing that. Andthat's where I realized, like
(10:09):
the data side of things was washuge, and how we could start
leveraging that. And so that'swhere I ended up getting into
analytics consulting, and leftthe mortgage company. And so as
that mortgage company, they theyhad restructured over the last
would that be 15 years, and gotmore onto the construction side
(10:31):
of things. And that's how Iconnected back up with them.
So Got it, okay, very cool. Ihad no idea that's a cool part
of your story, and even then,okay, so it's like, there's
just, like, kind of this trendof like, like, a stronger
business acumen in your journey.
Yeah, right. Like, like, sellingcars. Like, for sure, I think
(10:51):
that's like, just sellinganything is like, a pretty like,
normal way for business peopleto get into the business world,
going into mortgages, learningthat, understanding that 2007
2008 really hard to sell stuffthere. Then you get tapped to do
marketing. Then you go on yourown and lean into the data
analytics side, consult there,work for Microsoft. Then you
(11:12):
reach back out to the mortgagecompany, and that's when you
find the conviction to actuallygo into specking homes full
time, yeah? What is that? Yeah,for sure, definitely full
circle, I think, generally, likejust going back into the
opportunity that you saw tobring more, call it business
(11:33):
acumen to this vertical orbusiness Lane being
construction, what were some oflike, the glaring opportunities
that you saw initially? Like,call it on your first spec, or,
like, right when you entered,I'd say the biggest one on the
project management side, just asI talked to other builders and
(11:55):
looked at projects, and youdrive around town, you see what
projects are taken you know,when they started, how they're
moving along, realized theproject management side you
could do, I felt you could do alot better than what a lot of
folks were or a lot of builderswere doing. Not to knock any
builders, but I think there's,there's some that definitely run
projects smoother than others.
(12:16):
And so with the first spec dealagain, and I've been doing, you
know, some little remodels atthe same time. You know, you get
in for a week into somebody'shouse and do something, but on
the spec side, it was justproject planning up front, you
know, getting all the bidstogether, matching that up with
the budget and the pro formathat you have for the project to
(12:37):
make sure, you know, is thisthing actually going to pencil
out. But also just gettingeverybody lined up. I know, last
week, couple episodes ago,somebody was on talking about,
you know, setting projectschedules and how they just kind
of go out the window. I forgetwho that was great episode, but,
and, you know, while that's truethat I think the key there is
(12:59):
just making sure everything'ssequenced in the right aspect,
and you're not, you're notcreating either bottlenecks or
large gaps in the project. Andso especially coming out of
covid, you know, material supplywas, was tough, the supply chain
was, was kind of shocked. And soI really saw the opportunity to
really plan the projects upfront, figure out when we need
(13:22):
everything, who's coming, when,so so that we're, you know,
getting the project done in asquick as time as possible. But
also when you factor in thingslike interest carry like these
projects get really expensive,really quick if you don't run
them as efficiently as possible.
And so then trying to find thebalance of, you know, we don't,
obviously don't obviously, don'twant to cut corners and, you
(13:43):
know, build an inferior productby trying to move too fast. But
just going back to yourquestion, I think the real
opportunity was just running itin in a really well organized
manner, rather than, you know,scratching out on paper. You
know, what happens when callingthe guy a week before framing
starts and asking her, Hey, doyou have time to start next
(14:03):
week? You know, had I given hima month's head up? And they
said, No, we got projects thatare coming up. We can't start
till this date gives me time topivot and, you know, find
another crew, do whatever I needto do to really make sure it
stays on track. And so that kindof dovetails in the financial
side. But I think the initialone is really just the project
management.
(14:25):
I mean, do project managementand financials go hand in hand?
I just did a post on LinkedIneffectively about that and how
that relates into the clientexperience. I digress. Why is it
like, okay, contractor? Well,raised by a contractor flipper
on the side of a tech analyticalprofessional career jumps into
(14:49):
specs, recognizing theopportunity of call it
effective, scheduling, right andproject management. How can
somebody with calling a spade aspade? Such little construction
experience, like fully committedconstruction experience,
recognize that opportunity andexecute on it. And then you've
(15:10):
got project managers andbusiness owners that have
decades of fully committedexperience, just totally getting
owned by scheduling and gettingsubs lined up, yeah? How? I
don't get it? Because, like, tome, it sounds like it's like,
again, the guy that's like, I'mnot a builder, right? Like, I
don't I my, my dad was abuilder. I don't have any
(15:31):
interest being bags on, like,that type of thing. But I just
don't get it. Because you hearstory after story after story of
a project manager calling a subbeating him up, like, god damn
it, I need you here at thistime, and you're going to be
here. And it's just like, well,what if you what if you just
organized it better? What is thedisconnect?
No, that's a really goodquestion. I haven't really given
much thought to it, but I'd sayone aspect just outside looking
(15:54):
in, you know, it's, I came intoit without that, you know,
hardcore constructionexperience, like you said, and
so I had to rely on the otherskills that I had, which was
running a project, tracking thenumbers, just organizing it. And
so I had to lean in pretty heavyon the project planning side to
make sure I wasn't missingthings. I didn't miss
(16:14):
inspections. I had all thetrades lined up. And so I think
that kind of kicked me off froma good start. And I don't know,
you know, I can't speak to tothe other side of, you know, the
20 year veteran that'sstruggling to make the
transition or run moreefficient, efficiently,
effectively. But I think it'shard to get out of old habits,
(16:36):
and it's really easy to getmired down in the day to day of,
you know, especially if you're asmaller company and you're on
site, managing the subs, doingeverything, and then it's like,
oh crap, I got to look ahead twoweeks and figure that out.
What's coming up, what do I needto order? Like it is a juggle,
but I think it's being diligentin time management to make sure
(16:58):
I'm setting aside that half anhour to an hour every day to
check on the schedule, make sureit's updated. Think about what's
coming up. But also the start ofthe project I do this on our
custom ones, is I go in andbuild out the entire schedule
before we even start. And so,you know, yes, it's going to go
to hell. You know, it's theplumber is going to call and
(17:19):
say, Hey, we can't start thisdate, and I got to bring
somebody else in while theplumber is supposed to be there.
And, you know, it's cascade ofissues, but at least it gives
that good, that good startingpoint at the the onset of the
project. Now, I'm just, youknow, throughout it, I'm making
tweaks. I'm not trying to kindof build the ship as or build
the plane as we're flying it. Soit gives me a good foundation. I
(17:40):
think also, you know, coming inwithout the long term
construction experience like I,I had to spend a lot of time on
project management in my otherroles. And so I looked, I
approached it like, you know,it's no different than, you
know, building a softwarefeature or anything else.
There's a set of folks that thathave to be involved. There's a
(18:02):
set of steps that have to takeplace just get those things
lined up, you know. Andobviously there's, you know, the
quality control and the youknow, you got to walk the site
and talk to the subs and do allyour, you know, your setup
meetings and your planning andeverything like that. So that
part's different. But at the endof the day, it's, you know, no
different than building anythingelse or running any any other
project. Other project. That'swhy, you know, if you look at
(18:26):
like a Gantt chart, you know,they look exactly the same,
whether it's construction orsoftware, you know, really any
other business, because it'sjust a set of steps, you know,
one after the other.
Totally, I think, like, and Iliterally just did an episode.
Do you know Paul Atherton athigh Spire? Do you know high you
never heard of Highspire?
Basically, like a businessconsulting Well, a construction
(18:49):
specific business consultinggroup heavily emphasizing on,
like, scalability, raisingcapital, that type of thing. I
think he would actually liketalking to Paul. So if you want
to enter, let me know. But pointbeing, we were talking about,
basically, builders getting outof the way and out of their own
way, rather and, and, andgrasping the identity that is
(19:15):
required to go from being in thefield bags on to the owner,
business owner identity, right?
And I think that's a lot oflike. What my takeaway was is
like, of course, you have abackground in like, product
management, project management,the similarities between the
two, almost it being anadvantage of you not having all
the years of experience andgetting sucked into the minutia
(19:37):
of the day to day that isbuilding a home. Not to say that
you aren't involved, but youwere at least able to come in
with a perspective and place animportance and emphasis on the
project management side that Ithink a lot of builders struggle
with, and I think that primarilyis chalked up to a where am I
comfortable as a professional,and it's really easy to get
(19:58):
sucked into the day to day of.
Managing the project. Bags on onthe project, and not
prioritizing that projectmanagement.
Oh yeah, 100% and I mean, I Istill put the bags on a fair
amount, and we do all our own inhouse carpentry. And just
because I got tired of I startedoff that way, went back to subs
(20:21):
for all the finished work. Nowwe have full time carpenters
that are, they're doing that.
And I'm, you know, there'sprobably at least a day a week
where I'm, you know, bags on, soto speak, field. And it is, it's
tough to separate that, becausethat's fun and it's enjoyable.
And you can see, you know, theend of the day, you can see your
progress, whether it's, youknow, hey, I framed up a wall.
(20:41):
We got that set of cabinetsinstalled, whatever might be.
You go home at the end of theday, and, you know, it's a very
tangible output that you have,whereas, you know, managing the
business, it's not verytangible, you know. And it's,
you know, the end of the day,the end of the week, it's okay,
great. I have a cool lookingschedule, and I made, you know,
200 phone calls, but it's, it'snot that same feeling as as
(21:04):
creating something and to yourpoint of, like, stepping out of
that, you know, bags on. I thinkthat psychological aspect is
really tough, because you'regoing from a tangible to an
intangible kind of resulttotally. And that was one of the
reasons I got fed up with thecorporate thing because there
was no tangible result,I was just gonna say that go
(21:24):
ahead. It was like the entireintention for you leaving
Microsoft was because you weretired of sitting behind a
screen, right?
Yeah. And I loved, I lovedworking on projects, but in
order to make it a sustainablebusiness, I had to find the
right balance of keeping up thebusiness. Computer work, so to
speak, and actually working outin the field, and strike a
(21:46):
balance between that to make itmake sense.
Totally, totally okay. Now thisis great. You mentioned on the
back end of like, the importanceof project management, and how
that is like a direct run intolike tracking project
financials. Where did you startto see like, project management
(22:07):
improvement or projectmanagement slippage impact
financials? I mean those big,glaring opportunities Go ahead.
Yeah.
I mean the big one on the specside of our business is like
interest? Carry, because thelonger it takes, yeah, you know,
we're looking at projects thatare, you know, 800 $1,000 a day
in interest, like, 800to 1000 a day on interest.
(22:30):
Carry, yeah, what's the loanamount on that? So, what's that?
Wasn't it, 75% is all75 and then with, with other
investors, you know, they're,we're paying interest on, on
their money as well, sure. Andso, yeah, we're, you know, we're
up five, $6 million on, on someof the loans. Dang. Like we've
(22:53):
done a couple of 12 unit projector, sorry, a couple of six unit
projects concurrently, 12 unitsat a time, that was a that was a
grind. But, yeah, that's on thebigger ones. That's where, yeah,
the interest carry becomes areally big factor. And so that
one's just a speed aspect, youknow, the quicker you get it
(23:14):
done and on the market, the lessyou pay an interest. I'd say.
The other ones that are kind ofsmaller, but it's, you know,
ordering materials. You know, ifyou get in this, if you order,
you know, say, I need, you know,my mill work pack, you know, my
doors, my baseboards, all thatstuff. If I wait until the last
minute, either I'm paying a rushfee, I'm not able to shop
(23:34):
suppliers that don't have timeto negotiate. And so it might
only be 5% 10% difference on a$10,000 line item, but you do a
bunch of those, and it adds up.
And so the project or themanagement side of it, having
that lead time and leeway tolook at different options and
(23:57):
figure out different solutionsis huge, but also just on the so
that's the material side, but onthe kind of process side of
things, you know, reallythinking through, you know,
who's coming first, what aspectof the build are we doing at
what time? How does that helpsave money throughout the course
of it? Whether you know, I can,you know, in multi unit
(24:18):
projects, I can, you know, getdrywall stock before we do rough
ins, because if I wait, I can'tget a drywall lift in there, and
I have to hand pack in drywallup three stories, because now
there's another building in theway. So just things like that. I
mean, we're, we're able to savea little bit of money here and
there by thinking through, youknow, all the all the steps of
(24:40):
the process beautiful.
Um, how long did it take for youto get to that standpoint?
Because I think, like, I thinkI'm picking up what you're
putting down with the drywall.
Example. Basically, it's like,we've got to get material up to
the unit that we're drywalling.
And. And we can't explain it alittle bit more, I'm envisioning
(25:04):
like, like, some of a boom lift,yeah, I think, yeah.
And the the denser area wherewe're building some of our
projects, so a lot of the newconstruction that we're doing is
considered infill development.
So we're taking an existing lotin in Seattle area or general
area, but existing residentiallot tearing it down, building,
(25:26):
you know, two, three houses inits place. And so site access
becomes really tricky. And wemight have a site where, you
know, one unit is back behindthe other one, without an alley,
without street access withoutanything. And so by the time the
ones go up in front of it, wecan't get any equipment to the
ones in back. And so, you know,after the first project of doing
(25:49):
that, and I kind of boxed myselfin, we had to really rethink how
we how we approach or how westagger out the trades and
deliveries and things like thatto make sure. You know, we don't
we can keep it moving as quickas possible, but we don't
exclude the ability to useequipment and speed things
(26:09):
along. And so like the drywallexample, we had one project
where the drywall would liftwould reach the building, but if
I built finished framing thehouse in front, I couldn't reach
it. It's like, once I got housein front, up to the first story,
I could still reach over the topof it to get to the one in back.
And so we, you know, scramble,get the roof on, get get the
(26:33):
house papered, pack all the dryget all the drywall delivered.
So we pause framing for a coupleof days, get all the drywall in
and then go back to framing thefront line. And so that way we
can, we're reaching over houses,reaching around houses to get
things done, yeah, trying toreach around over with
deliveries, with, you know,sometimes it's paint, you know,
(26:56):
we're building five feet off aproperty line. So I got to think
of, you know, how can I get alift in, or get ladders in for
the painters so they can dotheir job efficiently? And so
just a lot of those little,little things that, you know, if
I were to take a moretraditional approach of, like,
we're just gonna frame the wholething, then I'm gonna get the
plumbers in for the whole thing,you would miss out on some of
those, those opportunities.
(27:19):
Yeah, okay, so no, and thatmakes total sense, and that's
where the project management andthe financials go hand in hand,
for sure, because it's likeyou're sitting there on, like,
call it like a first project,and you aren't thinking about
this stuff, which I thinkthere's a lot of builders out
there that are intrigued by specbuilding, right? And if you're
(27:44):
not thinking that many stepsahead, it gets really expensive,
really quickly, yeah. So I thinkthat, like, you just explaining
that is, is helpful. Because Ithink when you are going into a
spec build, really, the pressureis coming from, like, the
interest, right? And like, howfast can I get this thing off my
books? Well,yeah, and then yeah, and then
thinking through of, like, Okay,if I, you know, I'm delayed a
(28:05):
month. Well, now the house iscoming on the market, and, you
know, Thanksgiving, which, youknow, nobody's shopping at
Thanksgiving, Christmas time. Soyou know that mad scramble of,
you know, getting a day, youknow, hitting your financial
targets, and then getting it onthe market at a time that you
know the market's receptive toshopping, essentially, and so,
yeah, um, okay, because customsites cut clients really like
(28:30):
that, that management aspects,they know what's happening when.
Andtotally okay. So even in terms
of Okay, so the projectmanagement is a huge win. You
again, you had mentioned, likeplaying in this into the
financial side. Whatopportunities Did you see to run
a construction company betterfrom like, a financial process,
(28:54):
we understand the projectmanagement wins. We understand
how that starts to, like, bleedinto the financials. But what
was the financial opportunity?
Call it the financial opsopportunity.
So I it kind of kicked off withso my wife has the interior
design company, and her workingon projects and just getting,
you know, upset, because a lotof the design aspect comes into
(29:16):
play at the end of a project,right? Like, that's when you're
installing the tile, the lightfixtures, the, you know,
plumbing fixtures, furniture,everything. And so seeing those
budgets get cut from her becausethe projects were coming in over
budget, you know, just made methink of like, Why? Why are
(29:36):
these things coming in overbudget, and then you're having
to cut corners at the end of aproject? And you know, that had
nothing to expect on the customside, but just trying to think,
like, Why? Why is thishappening? And talking, you
know, friends, acquaintances,things like that that have had
projects. You know, it came downto poor financial planning and
(29:57):
then poor communicationthroughout the project was kind.
Of the crux of it. And, youknow, to oversimplify it, it's
like we didn't know where ourmoney was going. And, you know,
I blame that 100% on on thecontractor. You know, it's not
the customer's fault. You know,a customer might build, you
(30:17):
know, remodel, new build,whatever might be, might do, you
know, 123, in a lifetime. And asbuilders, we're doing, you know,
multiple a year. You know, wewere the experts on on how that
runs and what's it going tocost. And so the excuse of, you
know, hey, it costs more than wewe thought, you know, I get that
(30:38):
to a certain extent. You know,five, 10% makes sense. But when
you know, you hear people thatare cutting out their dreams
because now we can't afford thenice fixtures that we wanted,
or, you know, we had to tap intoour savings because we didn't
know it was going to cost, youknow, 20, 30% more than we were
quoted. Like it just, I it was abig opportunity to be, I'd say,
(30:59):
more kind of honest and upfrontwith customers on what was
happening. And so the from anoperation standpoint, for me, it
it was okay. How can we, and Ididn't really understand cost
coding and all those thingsbefore I got into the business.
But just for I want to touchon that, but keep going. Okay.
(31:20):
Outside his perspective, islike, I need to know where all
the costs are going. And thenworking on that first bank
budget, it's like, okay, I needto be able to say, you know, how
much am I spending onfoundations, how much am I
spending on lumber and mill workand finished carpentry and all
those things. And it only madesense that if I have to say how
much or draw against theseexpenses, I better be able to
(31:42):
figure out what it's going tocost me across all these
categories. And you know, thebank is a lot less flexible
than, you know, going to acustomer whose house is torn
apart and saying, Hey, I need$10,000 you know, another 10
grand or I'm not gonna be ableto finish your house. You know,
if you go to the bank and say, Igot, you know, I need another
1050, 100 grand, like it is amountain of paperwork that you
(32:04):
got to go through to justifythat cost. And so, you know,
organizing the financials insuch a way on a project from the
bidding standpoint, all the waythrough to completion was, you
know, appeared to be a hugeopportunity, and then, yeah,
taking on that first specproject where it was, you know,
kind of blank slate. Here arethe plans. Here's the site.
(32:26):
What's it going to cost to buildit? You know, I had to do a lot
across all the cost codes andfigure out, you know, every step
of the way, what this thingcost.
Totally, I the point, and thenthat's, that's great because, I
mean, frankly, like, that wasthe motivation to build adaptive
was our co founders, they wereworking with spec builders and
(32:48):
Phil spec builders down inAustin, and they were initially
going to build a tool for, like,speculative builders to identify
the most ideal lots. Oh, andAustin, yeah. And then they,
like, quickly found out thatthere wasn't, like, a huge total
addressable market for it, like,not enough spec builders
(33:09):
effectively, to sell it to orbuild that product. But as they
were working with thesebuilders, they started to, like,
understand, like, Okay, what'spreventing you guys from, like,
scaling or getting financing onthis? And then they started
looking at books, and they'relike, and they're, like, all
their books were a total mess.
And like, they couldn't paintthat. They couldn't paint that
financial picture for banks tohave conviction to lend them
(33:29):
money or threeCost Codes of labor, materials
and subs. It's, there's not,yeah, there's not the financial
clarity that a bank's gonna wantto see totally, totally. And I
think the financial clarity andlike, you bring up Cost Codes
again, and you'd mentioned, likeat the beginning, you didn't
quite understand Cost Codes.
(33:50):
Again, I'm not a builder, nor amI a CPA. I've just been working
with builders for like, almost10 years when it comes to
construction software. Call itwhat, what was the learning
curve for you, or what was, whatwas the difficulty in
understanding cost codes foryou? It
made a heck of a lot of sense.
(34:12):
Okay, so it did make sense.
Oh yeah, it made it made senseright away. I just never
encountered the because I hadother little businesses over the
years that I spun up just as,you know, side projects, and had
to kind of do the accounting on,but yeah, starting my company
like, I had to stand upQuickBooks. I had to figure out
how to organize that. I had todo the whole whole thing. And so
(34:37):
what, that's where I startedresearching the, you know, just
construction financing ingeneral. And cost codes kept
coming up. And then you see thewhole big list of the, you know,
the, what is it? Nine, you know,the nine cost groups and
everything. And there's divisioncodes and stuff. Yeah, the,
yeah, the nine, you know,hundreds and hundreds of cost
(34:58):
codes. I'm like. This, thisseems way too much. And so
that's where I started thinkingthrough, basically just looking
at the steps of the project andbeing like, Okay, we have all
our dirt work, you know, we haveall our rough construction, we
have utilities. And startputting together a list that
made sense, and really thataligned with the bank draws, the
bank budgets that they wanted tosee, and that was my starting
(35:21):
point for it. But it made, forme, it just made a lot of sense,
and I've definitely refined themover the years, like I used to
have, you know, for each costcode, I had materials and labor
and subcontractors, and thatwas, you know, it became too
much to try to enter all thatinformation in, and so I had to
find the right balance of whatgives me, you know, enough
clarity to understand where I'm,you know, how projects are
(35:43):
running, where I'm going over,where I'm going under, where I
can improve, but also not makeit so cumbersome that when I'm
entering it in, like it, it'sthe right thing, because you
can, you can definitely gooverboard on the cost codes.
And, you know, things aren'tgetting categorized the right
way. Because, like, you know,for instance, we have framing
material. That's my lumber,that's my hardware. And, you
(36:07):
know, you see some guys thatbreak it out into, you know,
four or five different costcodes, or the same thing for
foundations, it's like, okay,there's concrete, there's rebar,
there's, you know, labor,there's all these other aspects
of it. And, you know, I get abill from my, you know, a sub,
and it's, you know, they don'tbreak it out. So how the heck am
I going to break it out intothose different things? So I
just had to simplify to thepoint that it made that I could
(36:30):
track it or, you know, input itproperly, but also gave me the
clarity. And so, yeah, justcircling back into question,
like, how did it work, gettingstuff on it? It's like, yeah, I
just had to find a way to that Icould align my books with what I
want to do, which was provide,provide enough financial clarity
for myself, the business, thebank, and ultimately, customers
(36:53):
on the custom side that you knowthat made sense and they felt
comfortableWith totally I think this, like
Costco is, I mean, to yourpoint, it's just, it's tales all
this time people making CostCodes something that they're
not. And they're like, Well, Iwant to use cost codes, and I
want to know what the cost ofevery board, yeah, and how much
they spend on two by fours, andhow much they spend on rebar.
(37:16):
It's like, that's not really thepoint of cost codes. And to your
point, if you get cost codebloat, you're not going to use
them consistently. It's notgoing to paint the picture that
you think it is. And really, theentire goal of cost codes is for
you to understand more of thelike the progression the costs
and the income of theprogression of the project.
(37:41):
Yeah, and I use it, yeah. And Iuse it quite a bit on, you know,
on the kind of the flip side ofthat, on estimating out the next
project. Because, you know, Idon't go down and do take offs
at the material level, level forframing and siding and all that.
But each project is different.
So it doesn't matter, you know,if I spend, you know, $5,000 an
engineered lumber on one job,that's not going to easily
(38:02):
translate over to 5000engineered lumber on the next
job, depending, you know, it'sgoing to be a completely
different build, engineereddifferently. I just need to
know, what am I paying my lumbersupplier for? You know, per
square foot, and you know thataverage carries over. But at an
individual material type level.
It doesn't really, it doesn'tmatter, you know, now if I was,
(38:26):
you know, say, if I was mysiding supplier or my siding
sub, and I was running, youknow, their books, yeah, it's
going to matter how many nails Iuse and, you know, how much
flashing I use, things likethat. But at my level, you know,
kind of combining all thosecosts together. I just need to
know what the siding costs, andthen I can track it. You know,
(38:47):
if we're, you know, if we'regoing up a level, or using a
little nicer material, or, youknow, something like that. Can
make adjustments, but I havethat base cost at a fine enough
level that we can track theproject, but I can also kind of
bid out and project out the nextproject, and then understand,
okay, that's this level offinish, and then I can make
(39:08):
adjustments fromthere totally, I guess. And this
is just might be a side comment,but I am curious, just with your
background in tech, like you seesoftware products out there that
will go down to, like, the itemlevel of tracking, right? It's
like in builders, and there's,like the cost catalog job tread,
(39:30):
they have like a third level ofcategorization.
Oh, yeah, yeah. Why? Yeah, yeah.
Are you a job track guy? Areyou? Are, you're a resio guy,
aren't you?
I finally landed on resume. Whatdo you use? First, a long
history of trying other ones.
Okay, cool. But to that pointlike, Why? Why are, why are
(39:53):
software companies doing it? Iunderstand from like, a sales
standpoint, like, it's reallyeasy and fun to sell. But then
what's the application? Shouldhave it. What value does it
actually bring to the builder?
I could see, I could see, if youdo a lot, a high volume of
smaller projects where, youknow, you miss a shower valve on
(40:14):
a bathroom remodel, that's alot, you know, larger percentage
of the cost than missing ashower valve on, you know, a
full new construction house. Andso if you're doing, you know, if
your bread and butter is, say,bathroom remodels or kitchen
remodels, I could see a world inwhich that granularity makes
sense. But at at the scale ofprojects that we're doing, I
(40:38):
just don't like it doesn't, itdoesn't matter, like I need to
look at aggregate costs ofacross categories, not the
minutia of of every littledetail. And I could be wrong on
that, but, I mean, that's,that's my guess, yeah, yeah. And
also, some people, you know, Isaw this, this happen in over
(40:59):
the years, in different roles,where folks that feel or that
are busy counting something,doing something, making, you
know, making something, whetherit's Hey, I made the most
detailed estimate I have evermade, and it took me 10 hours.
They're going to feel reallyproductive for those 10 hours.
But really, if you was that, wasthat activity worth the effort
(41:25):
at the end of the day, or was itjust busy work? And I saw that
like on the marketing side whenI was working at mortgage
company, we have loan officersthat would go out and spend
hours and hours and hours makingthese flyers, and they come to
me and say, hey, you know pair,you know, can you, can you sign
off on this marketing? Sign offon this? I just made the best
flyer ever for this open house.
Like, well, how much time didyou spend doing that? Oh, you
(41:45):
know, I spent all day doing it.
And, you know, I had to go getthe photos, and I cropped and
just right, and I did all thisstuff. Like, you could have gone
out and met, you know, had lunchwith a realtor and followed up
on three leads during that time.
Like it was, it was a wastedeffort, but they felt really
busy, and so they thought theywere doing something really
good, totally, you know, I couldsee that playing a factor. You
know, you make a extremelydetailed estimate, you feel
(42:09):
really good about it, but wereyou any more accurate than if
you took some some larger swingsand made some broader
assumptions, probably not, youknow, maybe it was two, 3%
better, you know, or closer tothe pin. But in the grand scheme
of things, was that, was thatthe best use of your time
(42:30):
totally, I and that's that was,frankly, like, going to be my
comment towards even, like, the,call it the kitchen and bathroom
modeler that's trying to go,like, down to the screw on an
estimate. And it's like, butlike, while that might be a
bigger hit on, like, a plumbingfixture, like, even when you
consider the time that goes intobuilding out these catalogs and
(42:50):
these products and, like, tryingto leverage them in a way that's
going to be beneficial. Like,can you really afford to be
doing that?
No, no. I mean, I tried to. IThe first product I had. It was
builder trend, the first one Ihad. And it was, you know,
they're selling the costcatalog. And, yeah, I started to
go down that path of starting toenter products in. It's like,
(43:11):
this is absolutely ridiculous.
Like, I'm going to spend weekstrying to enter in all the
different, you know,permutations of products that I
might use, materials that Imight use, and it's going to go
out the window in six months,when all these prices get
changed 1,000% then you'reupdating that, it's just like,
Yeah, okay, you'd haveto have a full time person just
trying to keep track of all thatto make it make any sense.
(43:34):
The expensive part of softwareis not the cost of the software.
The expensive part of softwareis the cost of the overhead that
it takes to maintain thatsoftware in order to see value.
I'm gonna put that on a plaque.
I've sold a lot of software.
It's dude, it's the truth, it'sthe truth. And, like, I think, I
(43:54):
think a lot of builders areblinded, and that's why I had
mentioned like these, like thosefeatures. And frankly, like a
lot of these products, they canbe fun to sell, because idea of
them is incredible. It's like,God, I could do all this stuff
in there, and this could help medo this, and that I could get
down to the penny on this. Andit's like, but you're not
considering the 40, $50,000 ayear person that you should have
(44:17):
in that seat, and if it's not asingular person, there's gonna
be 40 or $50,000 in in manhours. Oh yeah, keeping it up to
date across the team right towhere to your point is, like, is
this the best use of time? I wastalking to another builder just
recently down in the south shoreBoston, and he was like, Dude, I
just did something like, help mekeep on track. Like, I need,
(44:40):
like, a project managementsoftware or something like that.
And I was like, Okay, well,like, what is your actual
problem? He's like, I just,like, I need, like, my phone is,
like, blowing up with text, andthere's documents getting sent
to me, and, like, organizing allof this. And I'm like, Okay,
well, this is a one man show,and he's doing like, three specs
a year, right? And, like, allthe information. Is already
there, and is the best move forhim to go in and then, like,
(45:02):
start just translating data intothis, into these, like, types of
software, I don't know, maybe,but when you think about the
application of it, it's like,Dude, you're gonna get an admin
some like, for this truly, totake time off your plate, you're
gonna need to get someone that'sgonna be doing this translating
for you. Oh, yeah, yeah.
And you know, those are gettingback to financially. Those are
(45:24):
indirect costs. So if you lookat a you might improve the
profitability of a singleproject, because now your track,
your costs are just a little bitbetter. And so at a project
level, your margins might get alittle better, but now you've
added in a, you know, a person's$50,000 and that's not going to
direct costs. So depending onhow you manage, you know, the P
(45:46):
and L like, it's going to crushyour business, unless you're
making up for that somewhereelse, you're going to have to
increase your margin so much.
And it might make sense, and itmight work, but is it? Is it
worth that extra cost?
So it's, it's the effective timespend conversation. And frankly,
like, that's like, kind of agood way to wrap up the
(46:06):
conversation, which was like,project management, impacting
financials, and you seeing theopportunities to win in this
business. Um, yeah, no, Per, Ithink this was great. Like, I,
like, I, we had started thisrecording. I appreciate you
hopping on, because I do. Ithink you're a wealth of
knowledge for everyone outthere, if you want to, if you
want to find Per, hisconstruction company is called
(46:30):
Lin Mak is it Lin Makconstruction?
Lin Mak constructions, l, I, N,M, a, k, yeah.
Check out. Check out Per'swebsite. He, actually, he's done
a webinar with us talking aboutlabor, tracking labor, so that's
gonna be in our Help CenterOnline. But per, I appreciate
(46:51):
you like, I like I mentionedjumping on. Do you have any any
words of wisdom that you wouldleave builders with more so than
you've already provided?
I Yeah, I mean, I don't. There'sso many people in this industry
that have so much moreexperience than I do, and I, you
know, definitely try to learn asmuch as I can from them and the
podcast and that. So, you know,my little bit though, I'd say
(47:14):
it's just run better, run greatprojects, manage projects well,
like as an industry, we havesuch a bad reputation. You know,
there's so many great buildersout there, and it's not a bad
industry, and but you just hearso many horror stories like, run
good projects, be upfront withcustomers, be honest with
customers. And I think the moreplanning and more planning that
(47:37):
can be done, and the more, thebetter the communication is,
like, it's just going to uplevelall this. And so that's just
spending more time and effortdoing that, I think, is huge.
And if you don't know, like,learn how to there's so many
resources out there to onproject management, you know you
don't have to go to some courseor construction management
(47:59):
program to do it. Like, there'ssome great tutorials out there
and great info.
This being one of them, this isnow adding to the great
resources that are available. Ilove it. I love it. Per, you're
awesome. Thank you for coming onfor the third time again, I need
to work on this. Like,Midwestern goodbye. You know,
(48:20):
it's like people like, they saybye, and then they start talking
again. Yeah, you just keepcoming back. I know, I know. I'm
terrible at this. I can't getaway from my roots. Have a great
rest of your week. Excited toget this one released for the
for the audience, and as always,if there's anything we can do,
don't hesitate to reach out.
Sounds great.
Thanks. Reese. Take care,awesome, see you Per.
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