8. How Technology Is Changing The Industry With Bob Cain

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Hello and welcome to the Professional Builder Secrets podcast, a podcast by the association of Professional Builders for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales, processes, financials, operations and marketing. Today I'm joined by Bob Kane who serves as a business unit leader for biltools and Bolt cloud based technology products for ECI Solutions. Bob, welcome and thanks for being here today.

Thanks for having me.

Let's get into it, shall we? Tell us a little bit about Build Tools and Bolt and what does your role with ECI Solutions look like today?

Sure, yeah. Build Tools is a product that was designed by a custom builder and remodeler and really self consumed for a number of years before going to market. ECI has acquired the business. So really Build Tools is a product that was designed by custom builders and remodelers for custom builders and remodelers and our role now is to is to now take that to market. Bolt has a real similar story. Bolt was developed by an electrician doing a couple thousand homes a year that work for residential builders and really took that product to market and both Bolt and Build Tools were Both acquired by ECI in 2020. My role is to be the business unit leader for both of those products to bring them into the ECI culture and to grow the businesses.

Bob, you bring 22 years of experience in the residential construction space. What was your background prior to getting into this sort of tech world and in the building industry and what really compelled you to join? You know?

Well, I have a degree in Business Information Systems Management. Really it's a combination of business and technology together and I joined a company by the name of Marx Systems shortly after getting my degree and spent the majority of my time at marx Systems over 20 years working with builders all around the country, mostly on the consulting side of the Marx Systems business, but really just learning how builders operated really help them to scale, help them with their operational processes and procedures and really bringing together all of the functions of a business out to the residential construction industry.

What compelled you to get into the cloud based software industry specifically and what are some of these unique product differentials between buildtools and bulk? You mentioned that they were built by builders for builders. But what are some of those unique, you know, I would say features and functionalities within those products. And what interested you to sort of be where you are today?

Well, the cloud based business is interesting. So I spent a lot of time working with Marc Systems customers and had the unfortunate experience of having to see hardware failures, lack of backups, lack of basic information technology knowledge, that small to medium sized business level without real IT focus. And I've seen some, some disasters where people were not able to recover. And that was back in the day before cloud based Systems. Back in 2012, Marx Systems was very focused on becoming a cloud based product. And today all of the products that ECI looks at and looks at moving forward from a go forward standpoint are all cloud based. When you're in the cloud, you don't have to worry about the backups, you don't have to worry about so much about the security, the hardware, all those things that really caused all the problems that I've experienced in my career. When we look at products like build tools and Bolt, these are products that were engineered in the cloud. They weren't standalone systems that needed their own hardware, they were developed in the cloud. And when you look at products that are developed in the cloud, they have all those benefits that I just mentioned, but they also are developed with the latest and greatest technologies out there, which means that you can do things like develop APIs, which allows different systems to connect together. You can use the most advanced technology available. You can develop software on devices that are really platform independent applications that anyone can basically use with smartphones and tablets and things like that. So really the possibilities are endless when you're talking about cloud based products. And the technology that develops to support them just keeps growing in a positive direction. So this is a real exciting thing for us.

So how does ECI solutions really focus on embracing innovation? Obviously you talked about really keeping the builders at mind when you're coming up with these innovative products, but where do you go to embrace this type of innovation?

I guess so ECI focuses on the SMBs. It really is that entrepreneurial spirit where really that really excites our entire team and our culture is built around it. We have four core values that we live by. And embracing innovation and creating value for our customers really fits right into one of those four. So we do a number of things. We're constantly making sure that we are providing education to the industry and helping our customers in the industry in general with the education side of things and the ability to really look at and embrace change and move forward. And we're constantly looking at the technology solutions that we supply and really thinking about the very specific niche industries that we supply products for and making sure that the technology is going to be the best tool for those industries.

Let's focus on the building side of things. Obviously with association of Professional Builders. They're working with builders from around the world, you know, in Canada, in the US and Australia and New Zealand. What was the industry lacking at the time when you started out and how much has it progressed in the technology space and why should builders be paying attention to this today?

Yeah, it's a good question. When I started out really the Internet was fairly new. 56k modems were leading edge technology and it was constantly just trying to connect from one computer to another, one server to another, just waiting for that dial tone connection. Everything was very slow in field, connectivity was lacking. So construction systems in general really didn't exist from a standpoint of being able to do things in the field and communicate to the back office. The industry has evolved and technology has evolved and that biggest factor of that has really been the Internet. The speed of the Internet, the availability of the 4G, 5G and go forward type platforms out there, smartphones, iPads, devices. From a technology standpoint, those are the things that didn't exist that are really helping us today. From an education standpoint, what the association of Professional Builders is doing is phenomenal. It's really teaching people how to run a business, how to sell, how to manage, how to, how to do things in the construction industry that are really leading edge best practices. So a lot of those things were lacking from my standpoint when I first started and I'm really excited to see the evolution of where we are today.

And speaking of evolution, I guess what were some key applications that made significant impact to your business when it came to the building industry? You talked a little bit about that digital sort of change. You know, builders today now have to be sort of better equipped with the digital concepts and applications. But what were some of those milestones that has really changed and made an impact business?

Yeah, really the game changer was the Internet and is the hardware devices that can take into account using the Internet to be able to help people and businesses move forward. So it's the Internet and all those devices, the smartphones and all of those types of things and they really have been game changing milestones to really help us move forward. If you think about what's happening in a home builder environment, you know, the home builder is Meeting with a buyer and then they have to go and communicate with people that are not direct employees to go deliver on the expectations and scope of work that they agree to with that buyer. So really, that builder is constantly working with people and communicating with people that are not direct members of their team. So they need a means of being able to do that. Things are always changing throughout the entire process. And if you think of this like a normal work environment of going to an office, the office is always moving because it moves based on the project that we are talking about. So it is a very mobile industry that involves a very high level of communication. So the advancements of the Internet and these devices have been huge. And then if you tie into the best practices that have been evolving and the types of systems that have been created to support them, that's been phenomenal and really excited to see that.

What are some of the challenges that you face in your industry today and does it correlate to the challenges faced by residential home builders as well? You know, you talked about having products for them as well and built by them, but I'm just curious to know what the challenges are between the two industries and if there's any similarities.

You know, when you think about cloud based systems, the customer signs up and there's sort of an instantaneous connection with the software that they're signing up for. The way that we partner with our customers is on a subscription model. So our customers pay us every month and we provide products and services to go along with it. If they're not engaged in using our products every month or they're not paying for it every month, that presents a risk to our business. So anything that would cause that is a risk. If you look at the construction industry today and what's happening, there are some risks out there and there is some concern out there. And so some of those things are supply chain disruption. It really started to come into play with everything we're dealing with with COVID and it's going to take a minute to really unwind some of these supply chain disruptions. Prices have gone up as a result of that and I'm not sure that they're going to just drop and go back to and normalize to where they were prior to Covid. There was a labor shortage going into the COVID crisis, the pandemic, and that labor shortage still exists today. When you think back to the Great Recession that North America really ran into and most of the world ran into in the 2007, 8, 9 and 10, in that era, a Lot of people left the industry from a labor standpoint, and they didn't really come back. They went and they worked at department stores, big box stores, and found other ways to use their expertise. And then when you look at the education over the last decades, parents were not really pushing their kids to go be trades experts and start their own trades business. And so that trade shortage was there prior to the pandemic. The supply chain disruption started during the pandemic, and I'm not sure that there's much of a sign of that normalizing from a pricing standpoint afterwards. Interest rates are still low. But certainly if you start tying some of these risk factors together, I think our industry definitely has some risks associated with it. And that risk could impact a software company like us that supply software on a subscription basis.

It sounds like what you're saying is that the challenges that pose on the residential space can potentially impact some of the risks that you take on as well. Would you say that the post Covid era is a bit different from the recession in 2008? It sounds like in some ways there are similarities, but in other ways there's also differences between them as well. Is that correct? Would that be a fair assessment?

I think it is a fair assessment. I'd like to be able to say that we learned from the Great Recession.

Fair enough.

And it's funny too, the home building industry has always been just a little bit behind other industries from a technology standpoint. And I think that what ended up happening during this pandemic is I think that the home building industry really surprised some industries. It really put focus on technology and communication and figuring out how to stay alive and push forward. And really it looked at as the type of business that was needed because people did need to move into these types of homes. They did want to move forward with projects and continue to push for housing that was needed. The biggest difference is, I think, from the last crash to this one, where leading up to the last crash, there was a lot of investment type of buying that was happening. That created a bubble and a price bubble that couldn't be kept up with, and it started to exceed demand and the bottom dropped out. In this scenario that we're dealing with right now, we definitely have some issues with supply chain disruption and labor and things like that. But the buying side of it is still very strong. There are still people out there that want houses to live in, and they want the type of product that residential builders today and remodelers today are able to provide. So the demand has been very Very strong through this crisis.

Why do you think builders are challenged with margin erosions today? What's causing this? Is it industry adoption? Is it sort of a human entity? Is it a mindset situation or is it a circumstance? I'm just curious on what your take is when it comes to margin erosions. I hear this being brought up by so many different builders from different parts of the world, as well as, you know, the association of Professional Builders as well.

Yeah, you know, it definitely is one of the interesting symptoms of this current situation. I talked to a builder the other day that let me know that they are doing everything they can to predict where demand is going to be and where their costs are going to be next month and the month after. Because living currently right now in the houses that you're settling, sometimes that's, you're kind of past that point. So what you want to be able to do is you want to be able to predict where things are going to be. And the whole business of general contracting is to really be able to understand your cost, apply a markup or some gross margin or a cost plus model and then go out and deliver the services and achieve that. The situation that we're in right now is that the unknown for the first time in a while, as long as I can remember it, the pure unknown really does have to do with the cost model, which is the foundation that everything is built on. So I think that in a cost plus scenario, you know, builders are figuring out ways to put things in their contract to protect them from the rising cost, to protect the margin erosion and some of the completed product deliverable type models and methodologies. What they're trying to do is look forward and figure out what their costs are going to be in a month, two months, three months, or at the conclusion of project and price the end result of the product accordingly. Now what that's doing is it's actually creating a scenario where builders are making a lot of money on houses that they settle one month and losing a lot of money on houses that they settle the next month. Which again is the first time I'm seeing this type of activity that's, that's as erratic as it is, but the demand is still strong enough that they're still able to project, predict and raise prices to be able to move forward. So they are seeing margin deterioration, but they are able to continue to raise the price and make it up. And the current economic conditions, at least as far as that I've been able to witness the study, are creating a demand that is Strong enough to support that at this time.

Bob, I would assume that you're around builders because of the products that you service and also because of the fact that it's a subscription based model. And being that business unit leader, you're probably around insights from the builders and people on the front lines. What are some of the pressures and challenges that builders are facing today that you're hearing about either pre or post Covid now and what are your thoughts around them? Like, do you see any common trends or sort of common challenges? You lead it to a few issues like supply chain and rising commodity prices and material shortages. Can you elaborate a little bit on that as well?

Yeah, I mean, one of those things, when you think about a supply chain disruption, I mean, if we can think back to what happened at the beginning of the pandemic just from a consumer standpoint, there were shortages of things that were important to us in our life. When shutdowns first started happening, you couldn't buy toilet paper anywhere. Next thing there was a meat shortage that became a lot scarier. So we've seen some of those as consumers. The building industry has been seeing those all along and it hasn't really stopped. So a builder, they may sell something to a consumer and then realize, take appliances for example. Realize that whatever the appliances were that they agreed to and contracted with, they can't get anymore. They're on backorder with no sign of when they're going to be replenished. So now you have to kind of audible pivot, move out and find a different set of appliances. So now take that and extrapolate it out to your countertops, your flooring hardware, things that are going into the houses. And there's a lot of theories on why that's happening. And some of it is kind of like the toilet paper theory or the, you know, the meat theory. In the toilet paper theory, there were a lot of people that just bought up a supply of what they wanted to have because they knew a shortage was coming. And then there was an impact on whether commercial delivery slowed down and restaurants slowed down and all these different impacts that went down the chain. You're seeing all the same things in the building industry with trying to get these supplies. You have bigger builders that are out there that are buying more supplies and storing inventory than you have seen in the past. That's just not part of any size home building that has been in an area that I've been able to see. So you're seeing that and you're also seeing supply companies that for Whatever reason cannot keep up. You know, they had to shut down plants. There were issues that have happened. So it's real similar to what consumers are seeing. Builders are feeling it with what they have to supply for the end result, products that they build. So definitely challenges with that. As far as the labor shortages, they existed before and they still exist now. I think that builders have been trying to overcome that by becoming a better builder to work for. And part of being able to go through and become a better organization, like working with organizations like the association of Professional Builder, is to really learn how to be that better builder, learn how to be that builder the trades want to work for. And there's a lot of things you can do to do that and partner up with your trades. And one of those things is really having a system that makes it easy to do business with. Having a system that tells the trade exactly where they have to be, when they have to be there, what they're going to do when they are there, how much they're going to be paid, something that's going to help them get paid faster. So really, I think it comes down to the builders are seeing the same type of things that consumers are seeing in everyday life. And the way that they're trying to overcome that and mitigate that risk is doing things to be easy to work with, which is something that's important for any business to do. That's how I think they're going to be able to get through this crisis.

On a side note, were you one of those consumers that stocked up on toilet paper as well? We had the same issues here in Australia. I'm just curious if you were one of those guys that had to stock up as well.

You know, in the beginning, I kind of laughed at it, and I was not. As things went on, you know, you're at the store and you see toilet paper, you got to grab it. That's probably common for what's happening today in the building industry.

Yeah. And on a most ser note, it's interesting you talk about systemization as well, because the association of Professional Builders come up with an annual report. They call it the Sourcei report. They had one for 2021, and it's the state of residential construction industry annual reports. And they basically surveyed over a thousand different builders from different parts of the world. And, you know, it was interesting because one of the key issues and snapshots was that builders want to systemize their business in 2021, which really echoes and validates a lot of the things that ECI Solutions offer as well. So it's an interesting perspective when you talk about systemization as well. Now I've got a question for you. From a perspective side of things, is the home building industry the last frontier?

Yeah, you know, I. I actually think that it is. And it's interesting when, when you word it that way, when you look at home building and you think about business, home building really takes the pillars that you need in any successful business and it brings them all into light. And you can do it at a very small business level or a larger level, almost like a manufacturer. In order to be able to run a successful home building business, you need to have finance and you need to understand what's happening with the finances. You have to have marketing, you have to have sales. There's an operational component, there's a field based service type component which is building the house and servicing the house. So there's definitely. Now we're talking about inventory. Right. So there's really just about every component that you would think of and learn about from a business standpoint. And you take all of those components and you bring it into a business where you are outdoors the majority of the time and your office is always moving from project to project. There is a relationship aspect to this, from a builder to buyer and a builder to contractor relationship to actually get things done and get it done efficiently. So there are not a lot of things like this left. We are on a global supply based manufacturing distribution channel manufacturing. You know, there's multiple channels for just about everything that happens today that's produced from food through clothing. But when you look at the actual construction of a home that is in the actual location that it is being built using very localized trade labor having to pull together supply that created and it was created and communicated based on all of these variables that are together. I look at it definitely like it's the, like it's the last frontier. I don't think there's another industry like it right now that you could even say that with.

How is the building industry embracing this new age technology? You're in this world right now where you're bringing, you know, simplification and new age technology to different builders. Do you believe statistically that there is a high number of builders that are now embracing this change and if so, what are they doing to embrace it?

I really do. When I think back to when I first entered the industry, the acceptance of something like this was much, much, much different. When you would have a conversation with a business owner that was in this industry, even though they had all of the pain that technology like this solves, they could not rationalize. Many of them could not rationalize actually making it work for them. Some let me know that it was kind of like talking to a dentist about going and sitting in the chair at the dentist's office. They knew they needed it, they know they needed to keep up with it, but they couldn't bring themselves to move forward and do it now. Fast forward to current times right now and you have web based systems like Build tools and Bolt. Everything's in the cloud. There's no software to install, there's no hardware to maintain. There's a lot of data that is preloaded and it was built based on the best practices of businesses that have been successful in this industry and products that have been used by hundreds and thousands of customers. That's the majority of the products that ECI has. So I definitely think that those that are jumping in right now and adopting systems like this and taking advice from companies like the association of Professional Builders are far ahead of where this industry was even 10, 15 years ago. Right now we're in a much better place to be able to adapt this type of technology and move forward. I'm seeing a lot more success with it. And builders are coming in with the right expectations too. They're coming in and they're understanding that there is some work to do and there is some change management that needs to happen. And they're really reaping the rewards of making an investment of time and effort and financial into systems like this.

What are some of the current technological advancements in the building industry that, you know, most builders will have to adapt to? We're hearing things like 3D and modular. But what are you hearing on your front lines that builders really need to be paying attention to moving forward?

Well, I think that, you know, the blocking and tackling part of it is, is knowing your costs. And that's what we were talking about from an industry standpoint. I read an article recently where there was a survey that went out at the end of 2020 and there were thousands of builders that took a survey and there was a question on there that asked how many of them were implementing technology or had implemented technology to scale their business and the answer was 32%. So there were only 32% of the builders, the construction managers, the field based builders that were out there that answered that question, that yes, we're making changes to do this. And of those 32%, they agreed that they were only using about 2% of their total budget to put towards systems like this and other IT related items to help scale their business. So there's still a lot more work to be done here. There's still a lot more that we can do. So from a technology standpoint, I think that, you know, one of the things that we really need to focus on is the blocking attack. You know, the issues that are in the industry right now are really those issues that you need to understand your cost. You need to look at historical cost, you need to be able to predict cost moving forward in order to be able to run a successful business. Now, some of those things that you should definitely be paying attention to, in addition to that are managing changes in your change orders, really being able to eliminate variance in your schedule, having a better relationship with your trade partners out there, eliminating dry runs, and becoming a better builder to actually do business with. From a technology standpoint, systems like build tools will enable you to be able to quickly put documents and images and store them all in some in a place in the cloud, and then put a QR code out on the job site. And people can walk up to the QR code and just show their camera at the QR code and instantly they're understanding all of the documents that are involved and everything that they need and the schematics and the drawings and everything that they need to be able to do anything on this house. That's a real simple way of putting technology in place to communicate on a larger scale. There are certainly things that we are excited about as technology experts and technologists and looking forward, and those types of things are really machine learning, artificial intelligence, and how those types of things can really help us understand trends. When you look at something like the medical industry, the medical industry right now is using AI and machine learning to be able to look at the way that cells react when medicine enters into the body, when certain vitamins go into the body, when diseases take place. And machine learning and AI is being used to be able to progress preventative cures and preventative behaviors for society. And so I think that the real exciting thing from a technologist standpoint is how can we take the blocking and tackling data that systems today are storing and keeping track of to get through the current economic conditions that we're in and get through this pandemic and improve communication? How can we get more builders in here running their business and trusting this data and learning from this data and becoming better business people from this data? And then how can we look at that data to help us understand futuristic trends, to be able to Keep a sustainable business moving forward. And if enough builders do that, we're in for a real nice run here as an industry.

It's interesting you talk about QR codes because I remember many moons ago when people first heard about QR codes, people frowned or looked upon it a bit differently, but in many ways now, you know, it's become a health check in. In Australia, you can't really go anywhere without checking in with the usage of a QR code. And someone recently joked and said, even my grandma knows how to use a QR code. So it's interesting when you talk about the simplicities of even having a QR code on a work site or a building site and what that can bring, you know, in real and accessibility. It's really amazing to hear some of that innovation on the front lines now. I believe that Covid has changed the industry long term, especially from a digital perspective. Every industry had really shaped up their digital presence in the last 12 to 16 months. Almost anyone that worked in an office environment started to rely on digital technology. How has Covid changed the building industry long term in your perspective?

Well, it really took an industry that was kind of a laggard from a technology standpoint when compared to the car industry and other manufacturing businesses. And it really shot the industry forward from a technology standpoint because the only way to survive in this environment was to be able to have communication without needing to be physically in front of people and it needed to be digitized by Google. You really couldn't get by without having a construction schedule so that everybody knew exactly what to do. You couldn't get by without having selections that went into the product that you were building digitized and a way of being able to communicate that builders that didn't have that had to come up with it somehow, whether that was manually typing it into something like a spreadsheet or a document, or using a system like build tools or mark systems or Bold. And so some of these systems out there really, really helped. I think that Covid showed this industry that we can communicate this way. I think people still enjoy being face to face, and that's fine, and still enjoy seeing contractors face to face. But I think what it showed us is that we were able to get back a lot of efficiencies that we were a little reluctant to take that jump into. And I don't think we're going back. I think we're going to continue to strive forward and see what other efficiencies we can gain to progress forward as a. As an industry.

Bob, it's been a really insightful interview for me. And I'm just curious, as a final thought here, what do you think is the state of the residential construction industry space today? What do you think it's evolving or where do you think it's going or evolving to moving forward?

I think it's strong. I follow the builder index, the remodeler index, and all signs for the last three quarters have pointed to that there is a general satisfaction and a builder confidence out there right now that this industry is going to keep progressing in a positive way. There are absolutely variables that could give us blips in this industry. But from my perspective, people that like the home that they live in right now, they are interested in making it better. They're interested in finishing their basement, completing their backyards, putting in a home office because they're working from home right now, we're putting a gym inside their house because they. They know that there's another variant that might be looming around and they're a little concerned. And so I think the people that are living in their current homes right now are going to continue to work with remodelers to make that home work for them in the changing times. I also think there's a number of people that are looking to move to homes that really are their preference, whether that be more space, maybe in a different geographic location, make them feel a little bit more safe. I think that the actual prices of homes are going to continue to rise. I don't think that you'll see the steep jumps like maybe we saw 10, 12 months ago, but you're going to see a continual rise that makes sense in the values of homes. And I do think that supply chain disruption has to regulate. People are getting back to work all over the globe, and I do think that that will regulate itself again. So I think we do have to keep an eye on interest rates because that is the ultimate factor of how much a consumer is going to pay each month. That usually is the biggest buying decision that somebody makes when going into a new home in a very large remodel project. But for the most part, I think all signs point to a very positive outlook on the construction industry for the short term, predictable future that I can.

See for the listeners out there, builders across the world, international listeners as well. Any final advice, especially to the builders who are thinking about embracing technology or aren't in that space yet to actually adopt technology, you provided a really strong statistic, like 32% have started to adopt it, but only 2% are actually having a marginal budget towards it. So what's your advice, your final piece of advice for someone that's thinking about getting on the technology bandwagon?

Create a culture of constant learning. That's something we should be looking at in any industry. If you create a culture of constant learning in any business that you're running right now, you're always open for better things. You're always open for personal growth for yourself as the leader of the business, and you want everybody in the business to grow as well. When we look at those types of things right now and we look at the education that we can provide to our team members and to the industry right now, the biggest thing that you can do is invest in becoming better. And I think the technology goes along very well with that. When you think about products like Build Tools that were developed by successful people in this industry and then used by hundreds of other builders and the product was tweaked to take on all of those best practices, if you can get yourself a good learning organization like the association of Professional Builders, where there's some good coaching and then you can mix that together with a good product and there's multiple in the industry, Build Tools is a very good product. It's one of them. Mix it with a product like Build Tools. Now you're taking the constant learning and improvement in your business and you're taking the best practices of a lot of other businesses that have used this tool prior to you. And then don't stop. Create a culture of constant learning. Do more with the product. Figure out how that product is going to make everybody's job easier so that your team members can continue to flourish in their learning and in their careers and not be held back by administrative weight on their careers. And use these tools and these products to scale and grow the same way we would use tools if we were physically building a house out in the field.

Create a culture of constant learning. I'm going to take that with me. Thank you so much, Bob, for being here today. I really appreciate your time.

I really enjoyed it. Thank you for having me. I appreciate it. It's been fun.

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