Steve Yates, President – North America at Buildxact, works to develop strategic partnerships with the LBM (Lumber and Building Materials) industry.
An experienced executive, Steve has a deep understanding of the LBM trade environment in the US and around the globe with experience around industry and product innovation. His experience and knowledge gives him keen insight into what’s coming around the corner for construction technology, design and new materials.
President – North America at Buildxact
Can you tell us more about construction management software Buildxact, and how it facilitates the connection between suppliers and builders in real-time?
Buildxact is a construction management software solution that focuses on solving the pain points of the custom home builder and remodeler. Those pain points exist along a continuum that describes the lifecycle of a project:
- From the initial decision to start a project
- To figuring out what goes into a project
- To what the costs are associated with that input
- To how those costs are organized and how the elements of the project are organized
These inform the quote that a builder can give to a customer.
Assuming they win, and 20-30% of the time, they win that quote, so it goes quote to award. In Buildxact, there’s a feature that allows them to manage that expectation and the cost that they established at the beginning of the project all the way through the different stages of the project to completion. Our supplier integration feature is important because these cost inputs are external. The builder doesn’t necessarily know what they are at any given time.
So, when you’re starting a project, and indeed you’re quoting a project to a customer, in order to win the project, the quality of the information, in traditional sources, can be quite poor. It could be past project history; it could be benchmarked index pricing that’s published by different organizations. The opportunity to get real-time pricing from your supplier is a higher quality of information. It reduces the amount of risk that a builder will have in their project.
This ties into the overall purpose of Buildxact to make the residential construction industry simpler, efficient and more successful, right?
Correct. Time is very important to the builder. Building anything in the build environment, particularly a residential home, is a complex process. The quality of the outcome is, in many ways, predicated on the quality of the inputs at the beginning, and so, we sort to reach out to suppliers to encourage them to engage with the Buildxact customers, to provide them the information they need to be successful.
A now realized theory that, if suppliers do assist the builder to be more successful, they’re going to get in exchange tremendous loyalty, and the customers are not only going to be loyal, they’re going to put that loyalty translating to a greater share of the total build going to that supplier. A more successful customer is going to mean that the lifetime value of that relationship with the customer is also going to improve.
Where do you come in with all of this? What is your role, and how do you help push this forward?
When we began speaking to suppliers when we found the market, the degree of distrust in the relationship between the supplier and the builder was high. It’s a generalization, but I think it’s fair to say that most of our builders who asked for price files from their supplier, they were told no. The reason the suppliers were saying no is:
- A – There wasn’t a trust relationship established
- B – Their expectation was that that price file would be shopped around and that the builder would use that price file to go buy materials from somewhere else.
In fact, if a builder asked a supplier to do a takeoff or a build of quantities or requested an estimate, the supplier would often charge the builder upfront, $700 or $800. Then they would tell the builder, “Well, if we’re going to go ahead and do all of this work, it will take seven to 10 days to do it and come back in a week’s time, and if you buy from us, we’ll give you your $700 or $800 back to our trust.”
A process that takes seven to 10 days with a lot of friction, right? There’s a lot of moving parts that need to be resolved. Now, what progressive suppliers realized is actually helping their customers to be successful in their projects is a way of helping themselves to be a successful supplier.
If they provide a level of service to the builders, the builders will actually engage with them, provide information, let them see what they’re doing so that the supplier has more visibility about future demand for the materials that they want to supply to the builder.
My role in that is to convince the suppliers that having a trust-based relationship and a collaborative relationship with the builders is going to result in a better business outcome than having a no-trust relationship. Then it’s just transactional.
How does having this integration set Buildxact apart from its competitors?
I think there are two parts to that answer.
The first part is that McKinsey Consulting Company published a report five or six years ago, and it described, basically, digital adoption. The adoption of technology. It described it against all segments of the GDP, and it found that the construction industry was laggard, both in terms of the adoption of technology and in increases of productivity. Worst of the worst.
At first glance, when someone sees that report, they might look at the construction industry and say, “well, OK, it’s not a sophisticated industry.” Right? They’re just slow to do things.
I think that’s the wrong perspective. I think the fault lies squarely with the technology industry and the technology providers because when the technology providers looked at the industry, they looked squarely at Tupper Town, where all the big builders were. The complex organizations do multiple units a year, and they provide solutions for those large enterprises.
In North America, the census bureau has 35,000 entities listed as residential builders; for example, less than 5,000 of those do more than 10 builds a year. It’s actually 4,600. That leaves 31,000 builders out there that the software and technology industry failed to address. When we found them, they’re all using Excel spreadsheets. Some of them had been trying to use products like Buildertrend, CoConstruct and Procore, but the products are too complicated and too sophisticated, and too cumbersome to become a part of the day-to-day workflow of these 31,000 builders who have much leaner enterprises.
So, back to the McKinsey report, if it were not for Buildxact, no one would be attending to these 31,000 builders. One of the primary costs of entry or one of the primary features that you need to have to address these users is you have to have an easy-to-use product. I think that Buildxact, to the construction management industry, is what Apple was to the PC market. Because it’s easy to use, people are going to engage with it.
The second criteria is you have to have a completed solution in the one platform so that; in order to complete a workflow, these custom home builders don’t have to go out and have two or three or four platforms to complete one workflow. Simple metrics. Easy to use. Comprehensive feature set.
How do you build on the success Buildxact has enjoyed so far? What does the next level look like for the company?
We’re building a network, and the network is not symmetrical in order for the network to have utility, each of the nodes needs to be active. The builder is a node. The supplier is a node. So our job, as a company, is to enable each of those organizations to activate inside of a network and provide greater utility to each other. The more we do that and the more they do that, the more valuable Buildxact will become.
What does the future of technology in residential construction look like?
I use the phrase “applied technology” and as a business owner, an asset owner over many years, I’ve had a lot of experience with software companies trying to sell me stuff.
I think it’s a fair generalization to say it’s the fault of the technology industry that they failed to understand the pain points and the processes inside their intended market, and so they provide half solutions. Buildxact, uniquely, took the time to really understand the pain points and build a product that is one of the best examples of applied technology that I can point to; it really solves problems.
It’s no good coming in and saying, “Here’s a software solution that we developed for the education industry. It’ll be great! Just use it for construction, and you’ll be fine.” Different pain points.
Generally, you have the technology industry that silos itself and doesn’t really understand how to move from the digital space into the analog world where the real application of technology has to occur. If they don’t do that, they don’t really solve for the analog world.
We’re basically building the analog world. We’re building buildings that people live in. If you don’t know how to apply your technology to actually be a service to that, you’re just noise. That’s why we’re growing at over 100% a year.
How can residential builders and remodelers learn more about Buildxact?
Take a look at our website or hear from happy builders using Buildxact.
If you like what you see, book a demo with one of our team to show you how it will work for your construction business, or start a 14 day free trial to try it for yourself.
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