Defining the customer-first mindset: How it will benefit builders in 2023 and beyond

Zach Wojtowicz:

Welcome back to “The Building Code.” I’m Zach Wojtowicz.

Charley Burtwistle:

And I’m Charley Burtwistle.

Zach Wojtowicz:

Charley, how you been, man?

Charley Burtwistle:

I’ve been fantastic. I could hardly sleep last night. I was so excited for this episode.

Zach Wojtowicz:

Yeah. Why’s that?

Charley Burtwistle:

Well, today we have a very, very, very special guest, CEO and co-founder of Buildertrend, our boss’s boss’s boss, Dan Houghton, is in the office.

Dan Houghton:

What’s up fellas?

Zach Wojtowicz:

Hey. Welcome to “The Building Code.”

Dan Houghton:

Charley’s full of it, too. I’m sure he slept just fine last night.

Charley Burtwistle:

I rehearsed that a few times in the mirror.

Zach Wojtowicz:

Yeah. I think he’s shaking. Look at him.

Dan Houghton:

Yeah. He’s got the mic.

Charley Burtwistle:

I’m a little nervous. It’s either that or the paint fumes I’ve been smelling all day. We’re repainting the office.

Dan Houghton:

It’s the paint fumes. Why are we repainting the office Charley? Do you know?

Charley Burtwistle:

I do know.

Zach Wojtowicz:

Great question.

Charley Burtwistle:

I know that you’re a pro. That’s a great segue into the topic of the podcast. Buildertrend is rebranding. We’re launching into a new year. But before we get into that, for those of you that may not know, Dan Houghton, could you give a quick little intro, rundown, who you are, and how you got started at Buildertrend?

Dan Houghton:

Yeah. So, I started Buildertrend with two of my good friends, Jeff and Steve Dugger, who are brothers. We started the company 17 years ago in 2006. So, not counting the pandemic, I guess this would be my 17th IBS or 16th IBS …

Charley Burtwistle:

Wow.

Dan Houghton:

Which is pretty exciting. And for me, it’s kind of like homecoming, prom, for the industry where everybody, all the cast of characters, come out. It’s pretty cool because there’s some people and some customers I’ve seen every single year that I’ve been at this show. It’s like a homecoming in some ways.

Zach Wojtowicz:

Do you have any great stories about IBS that you can share on the podcast?

Dan Houghton:

I mean, I think what’s probably the cycle that our industry faces, and which is relevant to what we’re dealing with right now with interest rates rising and affordability issues, but the first year we went might have been the busiest International Builders’ Show in 2006. And so, I was the head of marketing and sales, and we were a three-person company. So, HR. I was the janitor. I did a lot of things.

And so, I was telling Steve and Jeff I know how to do trade shows because of my first career. I did trade shows, and I was a young professional and the trade shows that I was doing were like at Holiday Inns in Cedar Rapids, Iowa. So, I didn’t really know what to expect. We walk into Orlando, and it was absolutely massive. We had this little 10-by-10 booth, and we had that about $30,000 in our bank account, maybe $20,000 in our bank account. And so, going to the IBS was a huge expense for us. It convinced us so much that we were so excited, Steve and I were there, we paid $1,200 for Jeff to come down, which was like 5% of our overall budget for the whole year.

Charley Burtwistle:

Like on the spot when you were there?

Dan Houghton:

On spot because we’re like Jeff, you have to see how incredible this is because if you’re just entering the industry, and you don’t know what’s going on, and you go there for the first time, it’s pretty overwhelming. It’s pretty exciting. You guys have been there, so you know what I’m talking about.

Zach Wojtowicz:

You guys were there. You were like Jeff, you got to get down here.

Dan Houghton:

Staying at the La Quinta Inn.

Zach Wojtowicz:

Sweet spot.

Charley Burtwistle:

In Vegas?

Dan Houghton:

It was the least expensive hotel near … no. We were in Orlando, International Boulevard, which is chain restaurant after chain restaurant after … and we were like the last hotel. You had to walk like five miles to get there.

Charley Burtwistle:

That’s awesome.

Dan Houghton:

But it was really cool. And then, we dealt with the recession a handful of years later and that was probably the scariest moment in my life. I remember showing up, and I think we were in Las Vegas, and we expanded our booth that year. There was no one there. It was just …

Charley Burtwistle:

Really.

Dan Houghton:

It was just vendors, and it was eerie. It’d be like if there was like one person walking around. It was like 10 vendors to one attendee. It felt like.

Charley Burtwistle:

Wow.

Dan Houghton:

If you’re an attendee there, and you liked attention, you were getting plenty of attention, so that was a weird one. 2009 was really weird.

Charley Burtwistle:

So, when did we make the leap to having the RV in the booth?

Dan Houghton:

The RV came from … We stole all ideas, all great ideas are stolen. I think that’s a line from Picasso, and I will use that.

Charley Burtwistle:

T-shirt idea.

Dan Houghton:

That’s right. And so, we actually, TravisMathew, which is a golf apparel brand, I saw them have a bus at the place I play golf for a big event, and I was like, gosh, this makes a lot of sense. We need a backdrop, which are super expensive. They have to usually be custom fabricated, and it’s a unique little niche business that it’s expensive to buy trade show booths. So, I was like what if we get an RV? It cost about the same. It’s unique. That happened roughly, gosh, I want to say five years ago, maybe six years ago, and I think it’s great. If you have to manage the RV, it’s not so great. It breaks down every single year.

Charley Burtwistle:

Right.

Dan Houghton:

So, we’re not taking the RV. This is the first year without the RV in five years.

Zach Wojtowicz:

We swapped the RV for Charley.

Dan Houghton:

Yeah. I mean because the expense of Charley is so high, we had to sell the RV.

Charley Burtwistle:

Yeah. It’s a good trade.

Dan Houghton:

We have not sold the RV. I look out the window every day. I’m like, I wonder if we’re ever going to sell that thing.

Zach Wojtowicz:

We can like Airbnb it in the parking lot.

Dan Houghton:

You know we ripped that thing out guys. It’s just empty. You know?

Zach Wojtowicz:

Oh really?

Dan Houghton:

Yeah. Yeah. If you go in there, it’s like a …

Charley Burtwistle:

It’s not a VIP or anything.

Dan Houghton:

There’s no bed in there anymore, no couch, nothing like that.

Zach Wojtowicz:

What a shame.

Dan Houghton:

Yeah.

Zach Wojtowicz:

Well, speaking of the RV, it was a huge brand staple of IBS, and we’ve got a new brand, so we’d have to rewrap the whole thing. I mean why did you guys decide to update the brand now? Why is this the right time for this change?

Dan Houghton:

We’ve actually probably updated our brand three or four times in the last 15 years and brands, in some way, they need to be updated for a lot of different reasons. For us, I think it was really a series of events with us acquiring really four companies in the last two years and bringing our organization together under one umbrella, one brand, and we didn’t change our name. We really didn’t change much. And so, it was more just a, what I would call, a facelift, a brand lift in a lot of ways.

But we just thought it was time for us to make an updated change, whether it was the color palette and the lettering’s a little different. But I think brand’s important, and a lot of our listeners are folks that are running small businesses, and they’re always thinking about what’s the best way to present themselves. In a lot of ways, we hope the best way we present ourself is through our work. So, if you’re a builder, it’s your product. It’s your home that you build or the project you do, the pool that you put in someone’s backyard. For us, it’s our technology and the other solutions that we provide. But a lot of times, the first time you see someone gets to know you is through your brand. And so, for us, just having a modern, updated brand is really important for the 30,000 clients that we support globally.

Charley Burtwistle:

Yeah. I think that message that you just gave there, you’ve given to us before at town halls and to the company is the customer-first mindset. It’s something that we talk about a lot on the podcast and when we interview customers and home builders, they always have that same mindset, too. Customer first.

So, at IBS you’re going to be talking about some of the product updates we’ve made, specifically shifting from being project management, getting into cost management and the financial side, some of the acquisitions that we’ve made to really be a more holistic solution for our customers. Can you talk about how those moves and the product updates that we’ve been making have been geared toward becoming a better solution for our customers?

Dan Houghton:

Yeah. I mean it’s incredible. Customer first is absolutely the identity of who we need to be and what we are as an organization. And if you make your customer successful, they’re going to make us successful as employees of this organization. And so, really, the updates that we’ve made is we’re pouring in over $100 million in the last 24 months and R&D into this platform. And so, the platform’s big. We have 30,000 customers that we’re supporting. We’re the industry leader in what we do and if you want to be the industry leader, you have to act like it, and you have to bet on the R&D piece to continue to make your customers more successful.

And so, a lot of what we are doing is enhancing the features that we have and also adding the things that our customers have asked us for, for a long time. For example, we acquired a best-in-class takeoff solution that we fully integrated. We are jumping way heavier into the estimating and the cost solutions for a lot of our clients and a lot of our customers use agnostic accounting solutions like QuickBooks and Zero. And so, really, we have to pick up where they leave off on the financial solutions, and everybody knows that if you want to run a good business, you have to know your numbers and you have to know them well and you have to live by them. And so, we are trying to make sure our customers have the best tools in front of them to be as successful as possible, be a profitable, growing business.

Zach Wojtowicz:

Yeah. I mean you were talking about your first IBS. When you think about the product and how it’s changed, is it just mind-blowing? I mean …

Dan Houghton:

It’s absolutely mind-blowing. I mean what it shows is one, how far we’ve come, but how far our customers have come.

Zach Wojtowicz:

Yeah.

Dan Houghton:

One of the benefits of the way we’ve developed this solution is it wasn’t Steve, Jeff, myself or anyone else that worked in this organization. Whether it was 17 years ago or today, that’s really driving what I would call innovation for our product. Our customers are driving innovation. Just today, I was reading a ride along. It was a super long outline. One of our product researchers went down to Austin, Texas, rode along with one of our customers, and they really documented from the time they got to their building. This is what their office looked like. This is how they’re set up inside their office to this is what they have in their cars. They went onto the job sites, and they talked about how our customer uses our solution.

Look. It’s not perfect. Nothing is perfect, and they just saw moments. While they’re in the truck, what would be better for a project manager within our platform? And those are just little tidbits that we’re picking up. But when you have 30,000 customers, they’re not tidbits. They become kind of loud cries when you have multiple customers asking for one update or one solution. So, we have the benefit of having some of the best customers in the world driving our product innovation, and our goal is to meet their needs and work as fast as possible to make it happen, essentially.

Charley Burtwistle:

That’s interesting, and we actually have a couple of people at Buildertrend that were customers before, and I always think that’s interesting, and they were so frustrated that Buildertrend could or couldn’t do something. They’re like well, I’ll just go work there and fix it myself. I know we had one buddy on the podcast, Zach, who’s like daughter I think worked here. He loved Buildertrend so much, when she started looking for a job, he’s like you got to go work at Buildertrend. I love what they’re doing over there. So, we’re even getting a couple in-house plants to come in.

Dan Houghton:

Yeah. Yeah.

Charley Burtwistle:

Come straight from industry.

Dan Houghton:

She moved here all the way from Houston, too. We’re in Omaha, Nebraska, where our headquarters is. That, to me, is a really nice compliment from our customer who is telling his daughter to go work for a company that supports his business, and he supports our business, obviously. So, we’ve got a lot of cool stories like that, former users, and I built my first house 18 months ago, so I got to experience this …

Charley Burtwistle:

As a customer.

Dan Houghton:

As a customer. In fact, our first customer built my house. I didn’t interview any other customers. I thought gosh, this builder, ADC Homes in Omaha, Nebraska, if it wasn’t for them and a few other builders that helped us get our start, we wouldn’t be here today. So, they built us a home this last year. It finished up last year, and it was really cool experience to go through it from the homeowner’s perspective.

Gosh. Our customers have such hard jobs dealing with people like me who expect everything to happen right now …

Charley Burtwistle:

Right.

Dan Houghton:

And it’s not an easy industry. But I can’t imagine building something, whether it was a small project and remodeling a closet in a bathroom or building a large, custom home, and then taking a step back saying our job, for example, was a design build and saying gosh, we created this. We kind of imagined it, and they completed it …

Charley Burtwistle:

Right.

Dan Houghton:

And they walk away from it really never to deal with it again, outside of some warranty issues that every builder has to deal with. But they have such special jobs, and I’m an old man who’s got kids now. Your home is the best part of your life, so it’s really cool what our customers do.

Charley Burtwistle:

That’s cool. Did you have any experiences using Buildertrend that you’re like man, we have to go back and fix this?

Dan Houghton:

Oh yeah. Totally. Totally. I was shooting Scott Vonderharr, who’s on our product team, messages all the time. I’m like this doesn’t make any sense. This doesn’t make any sense. I mean that’s the reality, and that was my perspective.

Zach Wojtowicz:

Yeah. Well, I mean, if someone has pull.

Dan Houghton:

Yeah. I don’t know if they were listening.

Zach Wojtowicz:

We’ll send him this episode and be like Vondi got a shout out on the pod. We need you to listen. Read those texts from Dan.

Dan Houghton:

Yep. Yep.

Zach Wojtowicz:

And it’s amazing how we’ve evolved beyond just project management. I mean you touched on that. I mean talk about hitting all the scope in our product.

Dan Houghton:

Yeah. The core, originally, was a project management solution at the heart of it, and it’s just expanded so far from, obviously, the cost that we just talked about and the estimating and proposal generation, marketing solutions like websites that we offer our customers. We acquired this wonderful, wonderful business called CBUSA, which is the largest residential GPO, so we’re supporting our customers and their purchases.

So, we basically group our customers up, and we have some of the strongest buying power in residential construction, when you put all our customers together. And so, there’s opportunities for us to save our customers money on their materials. We’ve got an incredible amount of data that helps us help our customers make better decisions. And so, there’s just a lot of good things that are happening within our platform that go well beyond project management software. But at the core, I think when I listen to someone supporting a customer or even doing a demonstration, a sales demonstration, a lot of what they’re talking about is just the day-to-day managing their business, which encompasses managing a project.

Charley Burtwistle:

Yeah. The CBUSA, that’s big friends of the pod.

Zach Wojtowicz:

They are.

Charley Burtwistle:

Bill Smithers and Ryan Lipchek on here. So, if anyone’s curious about CBUSA, we have a couple episodes dedicated solely to that to check out. But you mentioned the data part, that’s something …

Dan Houghton:

Oh. Here we go. Here we go.

Charley Burtwistle:

My ears perked up. Yeah. One thing that we do that’s really, really interesting to kind of keep a pulse on the economy is we actually survey our builders on a cadence, and there’s a lot of uncertainty right now. Really, the past couple years there’s been a lot of uncertainty. But something that we’ve found is that going into 2023 is that our builders are more confident in the amount of leads that they’re going to have coming in and the ability that they’re going to have to manage those leads and get projects done and make money compared to a non-Buildertrend user. I guess why do you think that is, and what should people be excited about, if they’re Buildertrend users, to prepare and stay on top of whatever may happen in the economic realm?

Dan Houghton:

Yeah. Well, our research shows that our customers, Buildertrend users, are more successful than non-Buildertrend users. And so, I think that’s really a reflection of committing to your business and best-in- class operations. And so, not everybody gets there on day one.

Charley Burtwistle:

Right.

Dan Houghton:

You’re not going to sign up for Buildertrend and all of a sudden be magically …

Zach Wojtowicz:

Warren Buffett.

Dan Houghton:

Yeah. Warren Buffett or a seasoned builder because you signed up for the software. The commitment to it, the training on it. A lot of times, I got a message from a customer today who signed up in 2012 and 10 years into the solution, they’re still learning new ways to use the application because we’re always updating, and we’re always adding things to it. He sent a note of thanks and gratitude, which was really sweet to get.

But I think when you know your numbers, and you feel confident about how you’re operating your business, you’re always going to have more confidence in the good times and also the bad times. And so, look. No one here can, really, no one here’s a fortune teller. But when you’re operating a business, as a leader, you basically try to operate to multiple outcomes. So, if certain things are happening, if you sign up three contracts versus one contract in the first quarter, are you prepared? How are you going to do that? How are you going to scale? How are you going to pull back if you need to pull back? And when you have systems in place like Buildertrend, it gives you a huge advantage on how to really prepare a business.

And look. It doesn’t matter if you’re in construction, if you own a restaurant, if you’re leading a software company, preparing for outcomes is how you really forecast and how you plan around all scenarios, and I think a lot of our customers have the luxury of doing that because they utilize solutions like Buildertrend and other good technology tools.

Zach Wojtowicz:

Yeah. Some of my favorite experiences with customers are when they come to us and maybe they’re a $1,000,000 company. And then, they’re able to leverage the systems and processes that future-proof to unexpected, and all of a sudden, they’re $3, $4, $5 million companies, and we’re growing right there with them. It’s just so amazing to hear those stories and experiences, and we hear it all the time. IBS is what I look forward to because it’s so much about getting to celebrate not only our success and where we’re going but our customer success, too.

Dan Houghton:

Yeah. I’ve had the luxury of being part of this business, which has gone from no revenue to we’re going to be probably north of $200 million in revenue this year. And what’s interesting about it is, and I’m on the board of a couple other companies, you cannot scale without process.

Zach Wojtowicz:

Yeah.

Dan Houghton:

I mean, I don’t care what kind of business you have, whether you want to open up that second restaurant, or you want to go from $2 million to $4 million or $4 million to $8 million, it is not possible unless you have process, process around your people, process around your systems. And that’s where most businesses that I’ve worked with, or I’ve seen, whether they either do all the right things, and they do get the opportunity to scale, or they just can’t get past that front door. That’s usually because people can’t get out of their own way, and they’re not willing to invest in solutions and processes that will help them scale the business, and it’s no different for the construction industry.

Charley Burtwistle:

It is funny. Sometimes Zach and I will be on here, and we’ll be talking to a home builder or remodeler, and they’ll be complaining about something that’s going on in their business or something that Buildertrend fixed and then Zach and I look at each other. We’re like we just came out of a meeting here at Buildertrend about trying to fix that same issue. Completely different industries but at the core of running a business, a lot of the principles kind of remain the same.

Dan Houghton:

Yeah. I think it’s interesting, from my perspective being an operator, because look, we’re all Buildertrend people, so we can sit around here and swing the Buildertrend flag all day long.

Charley Burtwistle:

Right.

Dan Houghton:

But it doesn’t even really matter. I mean, in a lot of ways it’s commitment.

Charley Burtwistle:

Yeah.

Dan Houghton:

I mean we are invested in millions of dollars’ worth of software to operate this business. And my whole thing isn’t … Zach, I think you were in a meeting the other day presenting some software. It’s like what are we expecting to get from this? What do we have to put in this? How much effort? How much time and what is the ROI going to be on that or at least what are we projecting? It doesn’t matter if you’re a team of one or a team of three or a team of a thousand like our company is, it takes commitment to scale. Easy to buy. It takes commitment to scale your business. And again, it doesn’t matter if you’re buying Buildertrend or you’re buying some other software solution. If you’re not committed, you won’t scale.

Zach Wojtowicz:

Well, we’re coming up on time. This has been an engaging conversation. It’s always great to get to talk to a leader at Buildertrend, and I was going to point out that you also have hosted the podcast, so I feel like we have big shoes to fill.

Dan Houghton:

I’m not really sure if whatever I’ve done is considered hosting.

Zach Wojtowicz:

But one thing I wanted to leave off on, well two things. One is what do you see for Buildertrend in ’23 and what can you tell our builders or what are you most excited about for them and their industry in ’23?

Dan Houghton:

Well, I’d say what we are doing is we’re investing, again, like I mentioned earlier, north of a $100 million dollars over the last 24 months in R&D. And so, the product’s going to get better. It’s always going to get better, and I think the advancement and the investment we’re making right now, we’re going to see strides and updates in our product that it’s going to feel like we’re moving really, really fast.

One of the things, our job is to make sure we don’t outpace our customers. So, we got to update our customers on what’s happening and so, there’s not all these changes coming, and they don’t understand it. So, I’m really excited about all the updates. I mean there’s going to be tons of stuff on the financial side that you guys already mentioned. And so, a lot of good stuff around CBUSA that we mentioned as well.

This year, ’23, is going to be, I think I would say the first six months are going to be really interesting. One of the things that we’ve got going on in the market still is the supply and demand issue. And so, if you’re looking for a home, whether it’s an existing home, there’s just not a lot of supply out there, so I always think that’s an advantage to our customers. When there’s not a lot of supply, that means people are thinking about, okay, if I can’t go buy it existing, I want to build something new. So, I think that’s a real positive.

Interest rates tend to drive a lot of demand in different segments in the market. And so, if interest rates go high, I think we’re going to see a soft market. But we’ve also got a lot of customers who spend a lot of time remodeling and on outdoor projects. And so, for those folks where someone’s locked into an interest rate, call it 3.5% percent, 2.5% percent, they may not be moving anytime soon. And so, they’re sitting around thinking about we’re going to be here for another five, 10 years. We’re changing our kitchen. We’re going to update that master bedroom and bath, and we’re seeing a lot of that.

So, I think we’ve got some nice tailwinds. But I also believe the last 18 months, what we’ve experienced is kind of a once-in-a-lifetime phenomenon. I can’t say that word. Sorry. It’s just a weird time. So, I’ve looked at a lot of our business, and I’ve talked to a lot of contractors. I’m like go back to 2019. Think about what your business was in 2019 and orient your mind around that versus what you’ve experienced in the last 18 months because it’s just been like guns blazing. Right? I mean interest rates at an all-time low, this demand where you’ve got people that can move because of remote jobs. There’ve just been a lot of things that have been good for our industry, and we live in an industry that goes up and down. I think we all wish it was just normal.

Zach Wojtowicz:

Yeah.

Dan Houghton:

It just seems like we can’t get there anytime. But I don’t expect anything crazy, crazy to happen, but I do think starts will slow down, obviously, in 2023.

Zach Wojtowicz:

Alright my friend. It wouldn’t be a Building Code episode without the Charley Burtwistle analysis. Right? That was awesome. It was great to have Dan here on the podcast. It is a true honor. He is a busy guy. We don’t get a lot of time to just sit down and reflect with the C level of our company. What’d you think?

Charley Burtwistle:

Yeah. That was an awesome interview. Definitely one of my favorites. And he’s not in the room now, so this is me speaking honestly, not buttering up to him. One of my favorite interviews that we’ve done, and it’s cool just to … I think sometimes we, I don’t know if idolize is the right word, but Dan just seems like a CEO and seems like a co-founder and doesn’t seem like one of us, a worker, a person.

And so, hearing him talk about things that he’s focused on and things that he wants the company focused on, his stories of IBS, it’s like no. He’s just like you and I at the end of the day. He’s focused on our customers’ wants, what’s best for our customers and wants to produce the best product that we possibly can to help them. So, it was cool. It was kind of a refreshing conversation.

He also had a really good t-shirt idea that we didn’t double-click on enough. What was it? All great ideas are stolen.

Zach Wojtowicz:

Yeah. From Picasso quote.

Charley Burtwistle:

Did we fact-check that?

Zach Wojtowicz:

I did not. I didn’t have the gumption to be like I’m fact-checking the CEO right here on air.

Charley Burtwistle:

Yeah. So, maybe look that up on your own. While you’re looking at things on your own, we do have, I mentioned in there the economic report where we survey our customers and some non-customers. That is available, and we’ll link it in the shownotes.

Zach Wojtowicz:

Yeah.

Charley Burtwistle:

So, that’s something that we’ve been working really, really hard on, and there will be a report out that everyone can go and listen to. So, check out the shownotes. Check out the report.

Zach Wojtowicz:

Yeah. Don’t forget to like, comment, subscribe, check us out on YouTube where you can see our faces or if you happen to be in Omaha, Nebraska, you’re always welcome to chat with us. But even more importantly, if you guys have comments about the show, things we talked about, we’d love to hear from you. So, give us a look on Facebook. Check out the group. Charley likes to get in there and stir it up a little bit.

Charley Burtwistle:

Yeah.

Zach Wojtowicz:

You can get a hot take from Charley right there for you.

Charley Burtwistle:

I need to talk to our producers after this. I had someone slide into my LinkedIn DMs today.

Zach Wojtowicz:

Oh yeah.

Charley Burtwistle:

Asking about the podcast. So, you know you can always message us on LinkedIn as well.

Zach Wojtowicz:

Yeah. Absolutely. Alright. Well, thanks for checking us out. Thanks for always being with us. We love you. Have a great rest of your week. We’ll check you in a few. I’m Zach Wojtowicz.

Charley Burtwistle:

And I’m Charley Burtwistle.

Zach Wojtowicz:

See you next time.