How Capital Development turned three business lines into one growth engine

Carly Ward:

Welcome back to “The Building Code”, everyone. I’m Carly Ward, your host, and I have a special guest with us today. Hello, Jordan Coolidge.

Jordan Coolidge:

Thank you, my name’s Jordan Coolidge. I’m a principal customer success manager here at Buildertrend, and I’m super excited that you brought me along to learn about one of our builders today.

Carly Ward:

It’s not your first rodeo, but it has been a couple years.

Jordan Coolidge:

It’s been a few years, but we’re just knocking the rust off today and we’re ready to get to it.

Carly Ward:

So, we are bringing on a really fun builder today, Kevin Nguyen out of Atlanta, founder and owner of Capital Development. Kevin has a pretty unique story. At one point he was using Buildertrend’s schedule to manage his college schedule and started this company as a way to pay off some of his college debt. Seven years later he now has a three division construction business with residential construction, commercial, and design build. And it’s all housed under the same business, which is a daunting task. We don’t hear it very often. Over the last seven years, he has completed more than $75 million in projects, built over two million square feet, again, across those three different divisions. And today we’re bringing him on just to poke some holes and figure out how did he get there so quickly. I also forgot to mention that he is significantly younger than a lot of the builders that we’re typically talking to-

Jordan Coolidge:

Definitely.

Carly Ward:

… at this stage. I want to say he’s in his early 20s, so he has a really great perspective as far as the intentionality within his business, the way that he supports his team and as well as his clients. And so-

Jordan Coolidge:

It’s truly remarkable what Kevin’s been able to do. I can’t wait for you all to meet Kevin and peer into his mind and how he runs his business, both strategically and from an X’s and O’s perspective. It truly is remarkable what he’s done and ultimately what he’ll continue to do in the construction world, for sure.

Carly Ward:

And he drops some really great nuggets that Jordan and I were talking. It’s not groundbreaking information, but I would say in this industry a little bit. He talks about taking time away from his business to focus on really dialing in his processes and figuring out why he’s running this business, and the goals that he wants to have for himself, his team and his clients, along with being very intentional about the way that they involve technology and really just making a really well-oiled machine of three trains running at once.

Jordan Coolidge:

Absolutely. I think it’s a really refreshing perspective to hear. I don’t want to say from someone who’s so young, but it really is a refreshing way to view your business through the lens through which he offers that perspective. I think it’s truly remarkable and I’m really excited for everyone to learn from him today.

Carly Ward:

Well, with that, let’s bring him on in.

Jordan Coolidge:

Let’s do it.

Carly Ward:

Kevin, welcome to The Building Code. We are so excited to have you here. For listeners that might not know Capital Development, just capping things up, you’ve built a company that spans across residential, commercial, as well as design build, which is not a small task. And you built this all in just seven years. And in that time you’ve completed over $75 million in projects, have built over two million in square feet serving both homeowners and national brands. That definitely comes with a huge level of complexity. And what we typically see in builders is they’ve got these big dreams and goals to maybe get to that place, but it’s pretty rare to see builders actually pull that off successfully. So from a high overview level, give us your elevator pitch on capital development, and then also tell us how things have changed a little bit in the last year in business.

Kevin Nguyen:

Yeah. I mean, Capital Development is your one-stop construction company. We cater everything from the client experience and pre-construction, but then we also help them carry through their actual build process and throughout their closeout phases. When I started in the industry I was very hands-on, very involved, and I’ve built capital development in the same way. Of course, we’ve learned that construction now has evolved into such a large business where there’s so many management multitudes, there’s so many different roles that are in the construction company that weren’t in it 20 years ago. And the industry has evolved and changed, and we’re changing and we’re growing with it as well. We’re a younger company, we service with just a younger staff that’s energetic, ready to get after it, and we’re out there to prove people wrong that our generation is capable of working and that we are capable of performing large tasks because we have the resources and the technology right in front of us to be able to do so, to perform so, and to just communicate better.

Carly Ward:

Amazing. And specifically in the last year, what have you seen change the most in your business compared to the previous six years?

Kevin Nguyen:

In the previous year, definitely AI. We’re seeing AI used across the platform with our designers that just need to get us like a quick shop drawing or just something, quick snapshot. But we’re also seeing our email chains and everything change as well. So, the old administrative work that used to take a lot more time isn’t taking as long anymore. So AI is automating, but then also there’s flaws as well that we’re seeing happen with AI. So, wrong notations and just technical error.

Carly Ward:

No, and that’s huge. And that’s why Jordan and I are so excited about the recent acquisition of BizJet AI, that we’re going to start embedding AI directly in platform to hopefully eliminate from some of those errors that you’re getting from other integrations such as Chat, Claude, things like that. So, we’re really excited to see what the next evolution of Buildertrend looks like with us bringing on this acquisition. So, I want to take a little step back and go back to some of your formative years, because before you started Capital Development you were going through college and using Capital Development as a way to pay off school. So, at what point did you realize you’re really going to take this thing to the next level and not just be residential and not just be commercial, and like really span across like the whole construction field?

Kevin Nguyen:

For me, it completely changed when I started realizing what I was building wasn’t just for me. I realized that I was building homes for people, and that’s in the essence of someone’s home could also be their business. It could be their house, it could be their beach house down in Florida, it could be wherever. But to them, what home meant was a pretty big thing. It was a big deal, because the value of home is a place where you feel safe. It’s a place that is yours. It’s a place where you feel comfortable building a family and building a life around it. And when I was in my college classes and I started thinking about what it looked like to go work for someone and work for another construction company, and how I felt like it would be a disservice to some of the clients that I currently have that entrusted me with their projects. And for me it was, “Hey, I’m going to run with this, because I think I have a real shot of this and I’m very passionate about it.” And it felt religiously I was in a place where God wanted me to be, and it allowed me to push through so many obstacles that I didn’t even know I had, and build a company and have employees to where the vision just became bigger than I could have ever imagined. The vision outpaced the resources there, and I was like, “I can really take Capital Development to the next level and build a company that’s people forward and technology advanced.”

Carly Ward:

So I’m curious, did you start off with just staying in the residential lane or just commercial, or did you tackle all three at the same time?

Kevin Nguyen:

So, I started off in the residential market. I was a door knocker. When Capital Development started, full transparency, I would knock on a door and say, “Hey, your mailbox is rotting away. Can I replace your mailbox? I got to make college tuition and I got to be able to pay rent.” And then, those mailboxes turned into deck remodels, deck remodels turned into bathrooms, bathrooms turned into kitchens, kitchens turned into basements, basements into custom homes, custom homes into commercial developments. So for me, it was very small-minded and then it just became bigger and bigger and the projects got bigger, and I started just enduring more conversations and learning more.

Carly Ward:

So, what I’m hearing from is all these opportunities like slowly started presenting itself to you. And I think Jordan and I both often see those opportunities come to people, but there’s this fear of like, “Well, I already know what I know. So, maybe I just stay in that lane.” And I think it’s really incredible and obviously a testament to you and your whole company that you’ve been really able to run at those three lanes and do it successfully. Getting into the meat of it, typically we’re seeing builders stay in that one lane and they’re doing it really, really well. But to be able to do all three under one roof is daunting, and it requires really intricate and dialed in systems, not just being like super ambitious. And so, I’m curious from your perspective, walk us through a week of what it looks like from your perspective when you’ve got a custom home builder, you’ve got a retail build out, and then you’ve got this huge design build project all running at once. What’s the hardest part about that from managing the people to the money, the communication, all of it? Break that down a little for us.

Kevin Nguyen:

So, it is very different. And there was struggles and there was friction points at the very start, but what I’ve learned is everyone’s good at something. And everyone has their own capabilities, they have their own field. A pitcher isn’t going to play in the outfield. And I’ve learned that about my team and I’ve learned who really performs well. So we normally, a week of Capital Development, if we have a custom build and commercial development’s going on at the same time, we split our team up into different divisions and we run the production meetings very separately. Our residential branch guys are guys that play to your emotions very well. They’re normally guys that already have kids, have a family, know what it’s like to come home and have the inconvenience of not having a nice mudroom. So, those are the guys that pay attention to those kind of details and are great husbands too, because the wife ultimately makes the decisions in these custom home builds. So, normally these guys are catered to working service based with these clients. And I’ve explained in the residential field for us, we’re a lot more selective with our clients. We select clients that understand that, “Hey, our builds have a dynamic timeline. That timeline goes up, it goes down, it goes up, it goes down. It changes on many multitudes, but the level of quality stays the same no matter what.” And those are our residential guys. The guys that are very keen about quality, keen about versatility, and also pay attention to our client’s lifestyles. We want to make sure that if we’re going to build residential, we’re going to build it to fit their lifestyle because it’s a custom build. Across our commercial platform and our commercial field, those guys are our movers. They’re known for making business happen. In the commercial realm, when a client doesn’t open on time they lose money. They lose marketing dollars, they lose opportunity, and they lose time spent on a project. And normally they have loans facilitating these projects as well. So, we understand that time is of the essence. So, guys that are on our commercial side or our production guys. They’re fast, they pay attention to quality, but they also know that there’s a timeline and they know that they got to cut throats to make things happen. And that’s how we’ve directed it. So, normally we start off our Mondays. We do our production meeting on Mondays, which sets off our week. So production meeting, we’ll start with our residential guys, go over the residential spiel, what needs to be done, and then we completely 360 flip a switch into commercial. We go into purchasing in the commercial side, start thinking about logistics, subcontract labor, and then we facilitate in-house crews even more on the commercial side than we do the residential side. From then, we go through about our week and then we get to our Wednesday leadership meetings where that’s where our commercial and our residential guys get together. And it’s pretty funny how they’re actually able to compliment each other very well and go hand in hand. So our commercial guys, we’ve learned that they’re very fast at cleaning up job sites, getting it ready for client walks. Our residential guys are like, “Hey, if you guys are freed up we’re going to move you this way.” And I let my leadership team take direction and it’s like a war room. That’s the room where they’re like, “Hey, I need this guy. I need this guy. Get me this guy over here.” And then, we finish our week and we roll into Friday reports where even our laborers, whether you’re on the residential side or the commercial side, all of our reports are structured the same. It’s a work in progress form, all of our guys fill it out and then upload it to Buildertrend.

Jordan Coolidge:

Love that, honestly. I think it’s really interesting to think about the inner workings of maybe not three separate businesses but three separate wings of your business, if you will, and trying to keep all of those on track. It sounds like that’s something that you’ve obviously been able to do fairly well in a fairly short amount of time. I mean, when you think about the lifespan a lot of companies, seven years isn’t a crazy mature timeline, so kudos to you and your team for setting some of that up. And I think really to build on that, what I wanted to ask about is when we think about residential, commercial, design build, those are three very different clients that you’re serving. And you’ve talked already about how important managing expectations and creating the dream home for some of your residential clients, keeping clients happy on the residential side looks a little different than the commercial side, I at least can imagine. As you’re judging or as you’re being judged and evaluated across these different sectors, how do you keep your team fluently working in the same direction and all steering the entire boat that is Capital Development in the same direction across all three sectors of your business, if you want to call it that?

Kevin Nguyen:

Yeah, I think it boils down to it really just being communication. Communication is a huge part of my team, and the culture we have in our environment is great, because everyone that we’ve hired to come onto our team is all like-minded. And we all understand that there’s a vision and there’s a goal, and that the goalpost may always be moving and it may be ever-changing, but everyone is required to push the sled and get us to that goalpost. And if one person falls short, then we all fall short. So, the team environment that we’ve built here at Capital Development, and it’s crazy to think because I never though that I would have such a wide age range of people working for me being so young in the industry, but it’s really cool to see people that can get behind the vision. And when I tell them like, “Hey, this is my dream for the next three years, and here’s all my goals for our next five.” And it’s really refreshing to see them say, “Hey, we have the same exact goal, we have the same exact vision. How can we get there together? And let’s be open, let’s be transparent and honest.” Because there’s been times where there’s things where in industries I don’t know. Design build, yes, it changes every single day, but so does the commercial. So does the residential side. So, it is very refreshing to see it when I have guys in my team that are essentially my designated no guys. They’re like, “Hey, no, we can’t do that. We’re not capable of that, Kevin. Let’s take a step back.” And then, there’s also guys that are like, “I think we could do this, I think we could conquer it. It’s my job to figure out how, I’ll get back to you.”

Jordan Coolidge:

So, I think one part that stands out as you talk about that is the level of intentionality that you have from the hiring and talking about the kickoff meetings that you have each week. Sounds like you’re very intentional with how you set up this system and how your business operates, which clearly is a testament to how you’ve been able to build what you’ve been able to build. But thinking about how you’ve built that, I can’t imagine it felt perfect from day one as you scale these different challenges. So, I would love to hear was there anything that potentially broke the business or where you maybe questioned going down this path before you actually found the system that you’re working with today that allows you to be so efficient?

Kevin Nguyen:

Yeah. I mean, full transparency there, yeah, I learned a lot of lessons and I’ve paid for a lot of mistakes. And I’m a firm believer and you learn from … There’s never really any failures, it’s just lessons learned. But yeah, early on in the business, day one, I had this big vision about how I was going to do things. And it was completely different coming from … I was a project manager before I was anything else. I was a project manager at a local residential remodeling and custom build firm where I learned a lot from that builder. And there’s a lot of things that he did that I was just like, “Huh, that’s weird. I wouldn’t do that if I ran my business.” And when I started my business I went, “Oh, I get it now.” And that was completely 180 for me because I had to turn around and think, “Okay, you know what? I am going to do things differently, but there are certain things that are, at the end of the day just business.” So, things definitely had to change and lessons had to be learned for me to get to where I am. I think the biggest mistake I made was just growing too fast. I though my solution was hiring a bunch of people without having the right qualifications, without having the same mindset, the same skill set. They might have the experience or they might have the willingness, but they may not have that balance between will and skill that I needed at the time. And I thought it was going to be super easy, and it was, “Hey, get the company work trucks, get them all the tools they need to be successful.” And what I learned later on was it’s the systems that you have to have in place when you bring people on. If you don’t have systems to follow, you can’t manage your expectation. And for me, no one taught me what an SOP was. I was an 18-year-old kid fresh out of high school that thought he could take on the world. So, no one really taught me what an SOP even meant. So for me, it was the first three years in business, we didn’t have an SOP. We didn’t have a structure, we didn’t have Buildertrend, we didn’t have the right processes in place, we didn’t have kickoff meetings, and nor was there even structure around meetings when we did have them. So, that was something where it was a wake-up call for me. And I spent two weeks off in my career where I didn’t take on any projects, stopped all my work and said, “I need to sit down and think about what Capital Development means to me and what it means to manage a project to perfection to me. Let’s write that down, let’s get that in writing, and let’s rebuild the business the right way.”

Carly Ward:

No, that’s huge. And it’s impactful to hear that you actually took the time to spend two weeks doing that, because so many builders that we talk to on a regular basis, they know that they need to take that but it’s a matter of, “Is it urgent and important or urgent and the can that I can kick down the road for a little bit?” And go through the struggles of like, “Well, I know I can get it done but I know I’m feeling a little pain behind it.”

Jordan Coolidge:

Yeah. And I mean, on top of that, and Kevin, I’d love to hear your thoughts, it’s something that needs to be revisited as you continue to grow and as your business changes, as the market changes. There’s always things probably changing what optimal means, I suppose, which it sounds like you definitely have the ambition to continue doing that, Kevin. But yeah, I guess are there any specifics as you’ve watched the market change or just businesses change in general that have allowed you to refine that system? How have you approached that from a leadership perspective?

Kevin Nguyen:

Yeah. As AI kind of came on, and that was something that I had to work on process, because I mean, the biggest thing I pride myself on here at Capital Development is yes, I’m a younger builder, but that’s an opportunity for me to say, “Hey, I can be better at technology and I can be better at advancing in technology, and I can advance quicker.” So, we actually built our own data tower that stores a lot of our AI automations and our AI data, and a lot of our camera systems for our onsite cameras as well. So, it actually automates you to where it’s like, “Hey, the front door is left open,” and the visual camera can actually see that and automate that into the process. And the way that I just try to keep up with trends and market changes is I do a weekend every year where I leave my work phone and I leave my personal phone at home. I rent a cabin out in Blue Ridge, Georgia here and I disconnect. And I just sit down and I write what I’m thinking in my mind. I truly dive deep into the thought process and write down the struggles that my company is having now, because they’re inevitable. In any business, you’re going to have struggles, you’re going to have friction points, you’re going to have challenges, and you’re going to have barriers that you’re going to have to cross. So for me, it’s just disconnecting from the real world. I send out a notice to all my clients and tell them like, “Hey, this is my weekend. I’m going to refine process in business.” And that’s where it’s like, “Hey, I’m going to work on things.” This year, for example, when I went to Blue Ridge I focused on how am I going to use AI to build prompts so that my project managers, my site supers can build better data logs and better emails. Coming back, it created communication to just be symmetrical across for our clients and it gave us a metric that we could measure.

Carly Ward:

Do you think that you would be as successful as you are now had you not taken those times and weeks and those moments to really reflect and look back and refine some of these processes?

Kevin Nguyen:

I’ve thought about that a lot, and a lot of builders have told me they wish they would have worked on process more. So, I definitely feel like I wouldn’t be as successful as I am without it, because I think in this industry you’re always running around. It is always 100 million miles an hour. This guy needs material, this client wants to hop on Zoom, this designer wants to meet on site to go over selections. You’re always moving, and to be able to just take that step back and just look at it from a third person, 10,000 foot view for just a second, it gives you a lot of insight on [inaudible] and the adjustments that you need to make as a leader. So like 100%, every time I’ve come back from that I feel refreshed and I feel like I’m in the right position to lead, because you do experience mental fatigue. I mean, as a CEO or as anyone that’s a leader in their industry, or a leader of their company, or a leader of people, you’re going to experience that level of fatigue where it feels like everything is just so hazy and you’re in the middle of the weeds, and you can’t seem to find your way out. So, just being able to step away from it, I mean, you come back 10 times stronger.

Carly Ward:

Honestly, I think that’s, I know we’re not done, but I think that’s one of the most impactful things that our listeners will probably take from this today, because everything that you just said I know is so, so relatable to anyone really under the construction umbrella, but definitely from a leadership and owner standpoint, really allowing yourself the time to be able to focus on those things when there’s all so much happening is so critical. And it also goes back to making sure that you have the right people and the right teams in place in order to be able to support that time, to be able to step away and really dial things in. So again, clearly a testament to you and the great team that you’ve developed over the last seven years. I do want to pivot a little bit, we’ve kind of focused on the strategy behind Capital Development and like some of the production processes. I want to talk a little bit about the sales process and how it differs amongst these three different lanes within your business. So, we’ve talked about the fact that you’ve gotten into commercial, but you’ve actually worked with some pretty well-known national retail names like Cold Stone Creamery, for instance. Also, alongside working with residential homeowners to build these beautiful custom homes, and those sales conversations, I have to imagine, are very, very different. And you alluded to it a little bit before as far as the production processes. And with residential, it’s not a fluid timeline. And then with commercial, it’s a race to the finish as quick as we can. So, looking at that sales perspective, are there any common threads between commercial and the residential that you’ve been able to find and dial in?

Kevin Nguyen:

I think it all boils down to within our sales process the same common denominator that’s between residential and commercial is the quality of work. A lot of my guys will pay attention to quality and they’ll notate things that add to timeline, because quality has to be first. If it’s a product that we’re going to put our name on, we’re going to get behind it. And then, we really express with our clients that we’re transparent. I know that I’m still learning, I know that I’m learning every single day, and I know that my company is still growing and still learning. And from the very start of every project, whether it’s a residential custom build or it’s a commercial build out, I tell my clients, if it’s a project I haven’t done before, I tell them, “I haven’t done this level of project, but I’m going to learn it, I’m going to refine it, and I’m going to get the right people in place.”

Carly Ward:

No, and I want to dive into that a little bit further, because again, you kind of alluded to it earlier with how you’re setting expectations for each of these individual clients, and they have different budgets and different goals from a national brand perspective versus me, I just want to get into my home by Christmas. So, how do you work with each of those two clients to really set the expectations and continue to set them throughout the whole build process?

Kevin Nguyen:

Yeah. So, on the commercial timeline I tell them that we are going to build our schedule out based off of what we know. Now, obviously there’s going to be demands and there’s going to be friction points, so we’ve built a schedule timeline and it’s an automation that we have. So, every permit department we know is so different, and we know what our KPIs are and we know our metrics behind passing inspections. So we know that, for example, in our local county over here, we’re not the greatest at our MEP inspections. So we tell them that, “Hey, these are going to have three weeks of lag time and you just have to anticipate it.” If we beat them sooner, awesome. That gives us more time to work on some of the more nitty-gritty details, maybe add more blocking, but your timeline still stays the same from the date we set it from the very start, from the commercial side. Now on the residential side, I tell them from the very start to set the expectation, “If you have to make a decision between a tile and you have to stick with that tile for the rest of your life, how long would you want me to give you to make that decision?” And they’re normally like, “A week.” And I’m like, “Well, that’s a week without my guy working.” And then he has to coordinate how to install it. Proper installation, he’s going to have to coordinate how he’s going to cut it, how he’s going to trim it out, how the edges of the tile are going to look on your finish sides. So, those are all details that have to go into play. So, very early on with a residential client to set the expectations, I normally explain the full process behind building. And I tell my clients, “By the end of this, you’re going to know how to build a house yourself because of the conversations we’re going to have and the level of communication we’re going to have. And your timeline has to be dynamic because of that, because at the end of the day you’re going to have to live with these decisions forever, and I want you to be happy with the decisions that you make and the decisions that go in your home. Ultimately, I just have to install it. I don’t have to live in that home, but you do and it has to fit your lifestyle.”

Carly Ward:

I think that’s a really beautiful concept, because I think a lot of the times, especially in residential, it is you’re trying to work with clients really dynamically so they do have that perfect home that they’re super happy with when they get in, but there’s also that push factor that’s like, “We got to get to the deadline. We’ve got electrical coming in,” and all of those different elements. So, I think that’s really thoughtful and intentional that you still have a goal in mind, you still want to get them in as quick as possible, but not at the expense of them having to make a decision quickly that isn’t really fully thought through. So, I really appreciate that aspect.

Kevin Nguyen:

Yeah.

Jordan Coolidge:

Communication is key. It truly is key in really any residential or any commercial residential design build. Communication’s key, whether it be internally, externally. It really is a big difference maker for builders, for sure. I am also going to switch gears ever so slightly. I enjoy talking numbers and learning about how things work from an X’s and O’s perspective on the dollars and cents sides of things. And so, as we talked about your business running 75 million, I think it was two million square feet in build so far. I mean, that’s a huge amount of scale for just a handful of years. I’m curious, where are you most at risk to lose out on some of those projected margins when you’re running these projects? Comparing and contrasting that across all three sectors, where are the risks to lose out on some of that revenue?

Kevin Nguyen:

So, the risks definitely lie, on the commercial side, our risks lie within timeline. A lot of these franchises that we have contracted with, they’re not doing just one with us. They’re doing multiple. So, normally when you see a Chick-fil-A or a McDonald’s go up, for some reason they’re building a bunch of them three miles down the road, and that’s a very similar aspect in the commercial realm in the capacity that we work and the clients that we have. So, normally they lose out on timeline and that’s where we are most at risk, because then they start doubting our capabilities of handling more projects and handling more facilitation. So, something that we’re doing to really combat that is to, one, I’ve told my team like, “Hey, you just got to carry today, today. Worry about tomorrow, tomorrow.” And that’s the aspect of commercial. You can only carry today, today. And if you’re carrying yesterday’s burden today, okay, then something happened. We need to readjust. And that’s not only how we’re managing the risk there, but our biggest risk is timeline. The biggest thing they care about is like, “Hey, we need these doors to open so that it can start making us money, because this is our business too, this is our lifeline as well. This is how we’re putting food on the table for our family.” So for us, it’s making sure that our franchisees and our clients are knowing that we take care of them very well and we protect their timeline. So, on the commercial side we’re running night shift crews as well just to combat the X’s and O’s there. We know that running an extra eight-hour shift helps highlight the day and helps push through, and helps us get ahead of timeline when we’re falling behind. Now on the residential side, we are most at risk when we’re not listening to our clients. We can hear a lot of things that they say, but when we’re not actively listening and hearing the concerns, and acknowledging the fact that they have these concerns in this area, it’s important to them, as it should be, because it is their home. And when we’re not actively listening and we’re not taking into account, it becomes bigger issues for us later on. And then we get to a point in the build where people call it the I hate you, you hate me, we’ll love each other again at the end.

Jordan Coolidge:

So along those same lines, I mean, when we think about how different these jobs would look financially, it’s like a commercial project probably costs a lot different than a lot of these residential homes that you’re building. How do you keep track of which facets of your business are most profitable? How do you track those? I think you mentioned earlier, you try to keep the systems fairly parallel from one place to the next. How do you evaluate the profitability or lack thereof comparisons across the different portions of your business?

Kevin Nguyen:

Yeah, so it’s all measured differently. It’s still old school. We run everything on an Excel sheet, so residential has their own division where we manage, okay, this is how we performed on this project. And then, projects become metrics for us. So, basically it just becomes stored data and we use that stored data to help us compile our pricing and how we’re pricing out projects to be profitable. On the residential side, I have to be cost plus. That’s really the only way that I can maintain a project that one, my company is still making money to do. But two, also we’re staying ahead of the curve and clients have that transparency that they ever so want. You don’t want Nancy picking out a $15 a square foot tile when you only budgeted her out for five and she doesn’t know that. So, to be able to actually communicate transparently there, all of our residential projects are cost plus. And that’s a rule that when I started the business, I had no idea what cost plus was. I was like, “Add it to my Home Depot cart, double down on it, go do the work, get paid.” So it’s very different now, because now we actually have an accounting staff that sits behind our residential projects and helps manage those residential projects and stay ahead of the curve. Commercial, we are fixed price. A lot of these loans are pulled six months before we even start the project. So, it’s a lot different. So, we have to understand that, hey, there’s costs associated. So, instead of having just a project manager on the project like we do for our residential projects, we have a project engineer who helps procure the project and helps make sure that we stay on budget with every single project. And that project engineer normally is able to work with our estimators early on in the process and identify what’s going to cost us money, what’s going to cost us a lot of time. In commercial, we know we struggle with kitchen hoods. Kitchen hoods are vastly different. So, our project engineers normally get ahead of the curve and start negotiating pricing early on.

Jordan Coolidge:

Out of curiosity, on the residential side you mentioned you have a project engineer on the commercial side who deals with some of those financials. Are there financial, I don’t want to say incentives, but goals to keep these jobs in a particular budget on the residential side? I mean, obviously it’s cost plus but you still can’t blow the budget out of the water unnecessarily. How much of that responsibility falls on your project managers?

Kevin Nguyen:

A pretty good bit of it. So, the way that we have structured our team is full transparency. I grew up in an industry where I never really knew what the builder was making, I knew I just had to manage the project. So, I do an open book with my team. I show them every single number that goes into the project and I show them our baseline. And I tell them, “If you guys are able to find cost savings and you guys are able to make a higher profit because you did a better job managing the project, you did a better job managing the expectations, and you’re better at setting the tone, the pace, the standard, and you did all those things,” those cost dollars made don’t go to me or they don’t go to the company. They get split amongst our project team. So, we do a quarterly review. When we perform well on projects and we finish projects before a deadline, we finish projects at a higher profit margin, this combines residential and commercial. So, this is the one area where it does clash. So, we set these bonuses at a certain amount of what we think we’re going to make, and then that dollar amount gets added onto every quarter based on how we perform on projects. So, if one of my project managers is looking in Buildertrend and he sees, “Hey, on my HVAC I actually was able to get the cost down lower because I used a different sub and I managed expectations.” And that money that we had set aside for issues and problems, we didn’t have to use it. Hey, that now gets split amongst the project manager, gets split to our site laborers, gets split to our site superintendents, to our tile installers. So, it creates a dynamic where it’s like, “Hey, when the project manager wins, we all win. So, help him out and have his back.”

Carly Ward:

Well, and you empower your team to own the process instead of you holding all the weight on your shoulders and trying to micromanage across your team. And like you said, everybody’s winning. And I’m sure that’s paying out huge dividends across the team and just keeps them working more efficiently and finding those from the residential side, but they’re not shy to take on a change order if it’s going to equate to some incentives. So, I think that’s really incredible and we’re hearing more of that across the industry, but it’s great especially from a builder like yourself with three different departments to be able to implement that across the team successfully and have everybody catch on. I want to start to wrap things up and think towards the future, think high level. For other builders out there that might be starting to look at adding another division or maybe they actively are doing so, from your perspective what do you think the one determining factor is that will keep these businesses scaling and thriving versus going back into that one lane mentality?

Kevin Nguyen:

Yeah. I always tell someone when they ask me this question, and this question can be asked many various different ways, and I tell them to pick three things. Pick three things to execute every single day. So, that’s every department. So, if you’re looking to expand in every single department and you want to excel in them, your brain can only understand so many things. That’s why ABC is just three letters. One, two, three is three. So, that’s the rule of three. I tell people to pick three. Pick three things that you’re going to excel at today and carry that today, and that’s what’s going to push you forward in any industry and people are going to take notice. A lot of my franchises will notice across my projects that I work on for them, I accomplish three tasks a day per project. And then in sales, I accomplish three follow-ups every single day. Processing for my team, I accomplish three admin tasks that benefit my team a day. So, I just do the real three for every single division I have in my company, and I normally try to stick to that, and I don’t try to overachieve and I don’t try to do less. So, it’s the rule three. As long as I finish three in each department every single day, I’m accomplished, I feel successful, and I feel levelheaded and not overwhelmed.

Carly Ward:

Three departments, three tasks a day. You don’t have three kids, do you?

Kevin Nguyen:

No, I don’t.

Carly Ward:

Not yet.

Kevin Nguyen:

No kids yet. I do have a bunch of kids, but it’s a part of Capital Development.

Carly Ward:

It’s under the three divisions.

Kevin Nguyen:

Yeah.

Carly Ward:

Taking a look back over the last several years, I guess the last two years specifically, what’s a decision that you’re making actively today in the business that you could have been making two years ago that you wish you would’ve, and that’s really impacting you specifically but all three departments as a whole?

Kevin Nguyen:

I would say operations assistance. I’ve learned that my PMs are really good at what they do, but there’s some lower priority tasks that other people should be handling for them to be successful. And I’ve put them in these leadership positions and it’s not fair that I have an executive assistant and an office manager but they don’t have the same thing. And that is one thing right now that we are adding to our company that I’m just really excited about. We’re building the process behind it, and it’s almost really refreshing to hear from our PMs like, “I do need that additional help. Sometimes my mind does slip because I am only human.” And it’s like, “Hey, I get it too. I’m human. Sometimes I forget to send an email after a call,” and X, Y and Z, but having that extra person to just help assist and have that next level of just communication as well with someone that’s not directly me. Because the PMs are so used to just reporting to me about, “Hey, I have this and that and X, Y, and Z.” And now offering them an operations assistant that can help them facilitate, help them solve problems while they’re actively on site fielding the project and being two weeks ahead of the schedule while having an operations assistant be right there, then and there and present is super important. So, I’m really excited for it. I wish I did it two years ago, but I don’t even think I knew what that position meant two years ago.

Carly Ward:

Well, how cool for your team to feel so supported that it’s not just, okay, work as much as you can to meet maybe a goal that might not be attainable, but really empowering them to go the distance with the right support. We don’t hear enough of that in this industry.

Jordan Coolidge:

Not at all. Not at all.

Kevin Nguyen:

I just want everyone to feel like they’re an owner of the company. That’s my ultimate goal for Capital Development is for everyone to look around and be like, “I don’t know who the CEO of this company is.” Because everyone acts with that same level of ownership, and that’s my vision for what Capital Development could be.

Jordan Coolidge:

Well, similar to where you maybe sat maybe back in a college classroom back in the day, I think everyone kind of hits this point. And not everyone hits this point, but when I’m working with builders here at Buildertrend, I hear a lot of historical context of, “Well, we used to do remodels, now we do new home builds,” or, “We used to do commercial, now we do residential.” As someone who’s been successful at scaling your business and getting into different lanes of revenue within the construction world, for those that might be listening that are thinking about expanding, which I think contextually can mean something a little bit different, but for anyone who’s looking at expanding maybe from one segment to another, what’s one piece of advice that you would share with them? And then, just to piggyback off of that, how does Buildertrend help make some of that vision come true as well? I’d be curious your thoughts on that.

Kevin Nguyen:

Yeah. I mean, 100% in any industry, in any project, in any multitude, documentation is super important. Staying organized keeps you ahead of the curve. I didn’t grow up with the best organizational skills, I was not a good student. I may have went to college, but I was not a good student. So, I wasn’t the most organized with my schoolwork and wasn’t the most organized with my schedule, but I started using Buildertrend to manage my college schedule as well. So, it helped me stay organized. I put my assignments, my essays, my papers into Buildertrend under its own separate project, and what I’ve learned to find out is having one hub and having one place that you can rely on to just store all of your information is super important, because any project is going to have a bunch of information. Whether it’s a text with your homeowner saying, “Hey, I really like rose gold colors,” and just having that documented is super important because you can always have something to turn back to. I didn’t like having a million emails in my inbox and having to look through a bunch of folders to find one set of plans. And in the commercial realm, I get at least 10 plans on the same job site a week. They just change. Whether it’s the architect wants to change something or the franchise wants to change something, and just having that next level documentation is the best advice I could ever give. Document everything, make sure it’s stored somewhere safe and make sure it’s stored somewhere visible. That way you don’t have any he said, she said, or, “What did we mention then?” So now you’re just narrowing it down and keeping it on one platform that can keep you forward.

Jordan Coolidge:

That’s incredible. I’ll be honest, I’ve really enjoyed peeking behind the curtain. I know we talked some technical things, we talked about the strategic side of things, I just want to take a moment to say I’m super impressed with the way that your perspective is on your business and clearly the way that you are very intentional with the way that you treat the individuals that work for you as well as the clients that you serve. I think that’s what sticks out most to me and the common thread through a lot of the things that you talked about was communication and relationships, and taking care of the people closest to you. And again, the people that you’re serving as well. I think that’s a huge testament to the success that you’ve had so far, and I can’t wait to do one of these again in seven years and talk about how you’ve now made it to, we’ll say two sets of three different segments within construction.

Kevin Nguyen:

Yeah, absolutely.

Carly Ward:

No, it’s been incredible. Typically, we’re talking to some more seasoned builders, and I think it’s really refreshing to hear your take on it. And from a technology standpoint, to systems, to supporting your people and delivering incredible work that whether you’re a residential or commercial client, they’re receiving something truly special, very intentional, and they know about the process from start to finish and a lot more at the end, whether they wanted to or not. And that’s huge too, because there’s so many questions that can come along in this process because we don’t know what we don’t know. And the fact that you and your team take the time to thoroughly explain, not just for your own benefit but for mostly the client’s ultimate experience, I think a lot of people can take some pages from your book in that regard.

Kevin Nguyen:

Thank you.

Carly Ward:

Well, again, it’s been great and we can’t wait to have you back on. Maybe it’ll be in three years and we’ll keep that three trend going.

Kevin Nguyen:

Absolutely. I appreciate you guys having me today.

Carly Ward:

Yeah. Look forward to seeing you at IBS here coming up in a couple of months, but look forward to seeing you the next time. Okay?

Kevin Nguyen:

Yeah, absolutely. Thanks.

Jordan Coolidge:

Thank you, Kevin.

Carly Ward:

Well, that was Kevin Nguyen with Capital Development. What an impactful conversation. One of the better conversations that I’ve had here on The Building Code, and how refreshing coming from, frankly, a young buck.

Jordan Coolidge:

Yeah, absolutely. I could take some of what he talked about to my personal life, if I’m being honest. I communicate better back at home, honestly.

Carly Ward:

100%. No, so excited for everybody to have the chance to listen to his perspective, listen to the way that he runs his business, supports his team and his clients. There is a lot of information to be able to take away from this, but a few really great nuggets to take from Kevin and what him and his team are doing at Capital Development. So, appreciate everyone listening today. Feel free to subscribe to The Building Code and download this episode so you can share it amongst your team. Appreciate it, we’ll see you next time. All