Eric: Welcome to Construction Genius. This is Eric Anderton. Have you planted your flag? In other words, are you crystal clear on who you are as a company, and how you are going to entreat your employees, your stakeholders, your investors, the subs, or the contractors that you work with, your customers? Because if you've planted a flag, if you understand yourself, then it's going to help you very much in the way that you operate your business and how you go to market.
My guess today is Mike Forsum. He's the president and chief operating officer of Landsea Homes. Landsea Homes is a residential builder in a number of markets, including Arizona, Florida, California, and Texas, and we have a tremendously interesting conversation.
We kick off by talking about the current economic state as we're recording this in September 2022, but then as we get into the conversation, we really pivot into how Mike and his partners have built Landsea Homes, and you're really going to want to consider the conviction that Mike has as to the importance of understanding yourself so that you can build a company of significance and meaning. That's where you're going to get the most value from listening to this episode of Construction Genius. [01:15.8]
Like I always say, feel free to share this episode with other people who you think would benefit from it. Listen carefully and consider, “Is my company a company of conviction and clarity?” because if you are, it's going to help you to grow your business. If you're not, then you are going to struggle. Thank you for listening today.
This is Eric Anderton, and you're listening to “Construction Genius”, a leadership masterclass. Thomas Edison said that genius is one percent inspiration and 99 percent perspiration. If you're a construction leader, you know all about the perspiration, and this show is all about the one percent inspiration that you can add to your hard work to help you to improve your leadership.
Eric: Mike, welcome to Construction Genius. [02:06.8]
Mike: Thanks, Eric. Thanks for having me on.
Eric: Okay, so we're not in 2008 anymore, and what that means is that the whole world isn't burning down and people freaking out, but it seems like the economy is slowly, slowly slowing. What's your perspective on where things sit as far as the residential construction industry is concerned?
Mike: Yeah, I think for our industry, it's probably slowing down faster than maybe others. We've seen a very significant tapering of demand through the summertime. We're experiencing it throughout most of the country where we build. It's kind of coming in two parts really around sort of a psychology of where the market is today from a consumer standpoint, and then there's also clearly the affordability issue that's been created through the recent rise in interest rates.
Eric: Okay, so the psychology of where the market is, and then the affordability, take us inside your boardroom, and as you see the market shifting, how does your company begin to process that and make sure that you are positioned where you need to be to be able to exploit opportunities and minimize threats. [03:09.5]
Mike: Hopefully, and I think all great companies do this, and within our industry, there's a lot of really, really strong companies that are really well-run and I’ve learned a lot coming up through some of them. What you're always doing is preparing for this inevitability. We are a cyclical business. You're always going to have your ups and you're always going to have your downside, your downs. A saying that I use round here is protect your downside because the upside always takes care of itself.
From the standpoint of how we've approached the business is that we do our most to de-risk land, and that is done through options and land banking, and keeping your balance sheet as strong as possible. That gives you the opportunities to, one, quickly maneuver. If you need to maneuver out of some communities or maybe have a different conversation with some of the sellers, as well as having liquidity always at hand, because even though this is a challenging time and the market is shifting, I mean, it's also a great time for opportunity. [04:03.1]
I actually like this period, in some respects as, as demented as that sounds, but it is really much better to be in a market in which is influx and that there's lack of clarity, and it's not something that's being fomented by probably unreasonable expectations in others that may have money that shouldn't have money and are chasing deals. For us, we think we're really in a great position because of our strong balance sheet and our liquidity, and that's what we talk about with the board, which is to kind of say we feel good about where we are today.
Eric: It's interesting because the cyclical nature of all businesses, and, particularly, the construction industry, is tied to a number of factors. One of the ones that I'm most interested in is just human nature, where when things are going up, there tends to be a lot of bandwagoning and people thinking it's going to go on forever. We tend to have really short memories. How do you maintain the right mindset as a company when things are going really well, so that when that cycle starts to go down, you're not caught out? [05:00.8]
Mike: We're always trying to keep attuned to the difference between high demand and high speculation. What starts to creep into our business when you're at cycle peaks is you start to see more prospective buyers coming through. They aren't what I would call real bona fide, true homeowners to come. They're there with the idea that this is an investment. This isn't something that they look at as something that's important to them living, the community. “This is going to be a place that I'm going to be for an extended period of time.”
All of the things that we try to build into our value proposition have meaning. When we start to see markets in which those things kind of get pushed aside, and people are just trying to get in and get a piece of the pie while the market is going up, that becomes a little bit disconcerting and we do our best to try to filter through that as we kind of go through that process.
Eric: Okay, then that just sparked the name Blackwater in my mind there, as you were saying that. Let's get a hot take here. From what I’ve heard, Blackwater is going through communities, buying up a bunch of homes, and as a result of that, what you just described is not going to happen as much, because people, I assume, are going to be renting in certain communities, because they can't buy because the homes aren't for sale. [06:10.5]
How does what you just said line up with this movement it seems that's going throughout our country of these large concerns buying up bunches of residential real estate?
Mike: Yeah, this is a new asset class that was born out of the 2008 meltdown. This was a distress played by huge capital shops that came out of New York and looked at it an opportunity to accumulate residential assets at pennies on the dollar, and over time, they've aggregated themselves into some fairly significant well-capitalized billions and billions of dollars, a company that now is in the market along with the general consumer.
I think they're challenged because they're trying to find a way to continue to create inventory for their businesses, when, in essence, that's not what they do. That's not where they came from. They don't have an apparatus to actually create homes, so they have to be out there with everybody else, seeking a way to add to their inventory portfolio. [07:05.8]
So, they're there, and in some ways, it's a good thing, because they're there, in the sense that they're somewhat providing that floor that's never been there before in the residential homebuilding business. As the market goes down and you start to see inventory build up, maybe in some cases, they become, this is my phrase, Eric, take it for what it's worth, but they almost become the Nordstrom rack of our industry.
If we have inventory that maybe isn't as attractive to the homebuyer, maybe it's on the wrong lot. Maybe it's the wrong floor plan. Maybe it's the wrong elevation. Maybe it's located somewhere weird and just taking a while to kind of move it. There's now ability to find a group like that that will take those homes from us, and we're not spending a lot of time, energy and resources trying to move it. Does that make sense?
Eric: Makes absolute sense, and I'd like to just pursue that idea of your Nordstrom rack analogy. As we're going through these cycles, and like you said, you've gone through five of these, there are companies that are able to go through the ups and downs and they stay consistent, and one of the main reasons is they have an internal stability that comes from an understanding of who they are internally, but then also an external stability in the way they go to market, because they understand their value proposition. [08:19.7]
Tell me, with Landsea Homes, what have you guys done in those areas that are going to help you to go through these cycles in your business?
Eric: I think what maybe you're alluding to or suggesting is that I think every company has to have their own North Star. They have to have their own guiding principles and core values. They have to, as we say here, know thyself. When we set off with this company and John Ho and I built it, we were really determined to have real clarity around what our value proposition was going to be and where. [08:49.3]
I think the challenge in our industry, generally, is that, as the market goes up and the market goes down, or there's themes that roll through, if you don't have that mooring, if you're not centered, you have a tendency to overreact or underreact, or chase the wind a bit, and that you're always either behind or playing catch up and struggling, because you didn't have that sort of operating discipline around knowing what you are and what you're about to stay focused on that when the times are good, and then also to stay comforted by that fact when the times may not be as good, because you know you still have something that people want.
Eric: Let's explore that a little bit, because I find this very interesting. How did you and John begin to develop that North Star or that value proposition? How did you go through that process?
Mike: We're really built around our idea of high-performance homes, and I don't want to make this a propaganda message because that’s not what this is about.
Eric: No, it's good. It's interesting. No, but it's interesting.
Mike: We looked at the landscape of our competitors out there, and they are some real monsters and they do a great job, but we also didn't want to become and we never thought about becoming the idea that we have to be this monstrous company. What we really wanted to be was a company that delivered tremendous value, but also just made lives better for the people that lived in our homes. [10:03.4]
From that standpoint, we took the approach of what are the elements that are out there today that people really care about and they relates specifically to our homes, and that's really where we started to develop our four pillars or our HPH strategy, which around home-automation, energy-efficiency, sustainability, and healthy living.
These were all things, Eric, that there's nothing new under the sun to some degree, although they're evolving over time and there are things there, but I felt like after my 35 years in the business that everybody nibbled around these edges. There were times around energy-efficiency, which is great. There were times where there was some talk around sustainability and some other kind of products that made some sense. But nobody was really saying, how are we stitching this all together? How is this all going to kind of make sense? Because automation for automation sake, just like any of us, right, if it's not making that experience better for you, whether it's in a car or whether it's on the stereo system that you get or whatever, we felt like, let's not do it or let's figure out a way to make it all make sense. [11:01.2]
We had the very good fortune of saying we're dedicated to this idea around these concepts and these pillars, and early on, had support from the board who were tremendous with us to sort of forward higher certain individuals that said, “Go, and let's attack this technology world differently. Let's go to technology conferences that no homebuilders are at and listen to what is going on out there. Let's get ourselves into some of these ideas around healthy living, and the ideas of air and air quality within a house and how we’re breathing,” and those kinds of things that we said, “We're also trying to build this company, so where can you spend your time and energy?”
We said, “Look, we're going to get in front of this as a company from the get go,” and so we hired a couple of really smart, thoughtful architects that have operational backgrounds that I’ve been with for a long time and they set forth to do that, and that's where really our relationship with Apple came from and Apple HomeKit. We were at a conference, they were at a conference. We just stumbled into their booth. It sounds crazy, but that's where this relationship started in which we use the Apple HomeKit as the golden thread that ties all of those component parts that I talked about together on the phone, so that people can experience their home living in a very unique way when they come to us. [12:15.7]
We said that's going to be our secret sauce. That's going to be our differentiator, and we believe that we could really make an impact in the markets in which other competitors who went larger than us maybe had some parts to it. They put it on Alexa there or some things like that and did some things, but they weren't really holistically addressing this thought around how people want to live in their house, and that's what we have tried to do.
Eric: Let me just interrupt you there because I think this is really important. This idea of those four pillars, you’ve got sustainability, healthy lifestyle, home-automation, and energy savings, and those are crystal clear. Was the market telling you that? Did you research the market and you knew that that's what people wanted or did you Intuit that based on the idea that people want a comfortable, healthy, safe place to live? [13:01.2]
Mike: What’s interesting is when you say that last part, the idea that we germinated and came up with this HPH strategy was based around data that was out there. There was also intuition that kind of came into play, obviously, experiences I talked about where we wanted to make sure that we were doing it thoughtfully, instead of just sort of checking off the box.
We really, really wanted to embed it, and we wanted to embed it literally all the way down to how we buy land and where, because that's where it starts. It literally starts there. These thoughts don't come at the end of your architectural design and say, Okay, what are these little bolt-ons we're going to do? It has to be embedded and ingrained into the DNA and the thinking of you as a company, as to do we fully believe in this idea of what we're trying to put out there? We talk about that constantly in our organization. Everything we do is based around this idea, providing these sort of four pillars to our customers and making their lives better. [13:55.1]
What is fascinating is, as we got onto this, it really put us in an amazing position when COVID hit, because when COVID hit, it was about safety and space, and if you think about living and working from home now, automation, if you think about air quality where everybody was worried about COVID and those kinds of things, we were addressing that already through our process. This idea that kind of felt a little fluffy and soft, all of a sudden, became this real hardcore thing for us to be able to go out there and differentiate ourselves against our competitors who were trying to catch up at the time.
Eric: It's really interesting because I can sense that there's a great deal of conviction behind what you're saying and there's also this idea of you consistently communicating it internally. Was this something that you've learned over your career as you've been with other builders, or this idea of getting really clear and then vigorously communicating it, was that something you've learned or is it something you've just come upon in your career?
Mike: No, I think I’ve learned it over the years, where I’ve experienced deep frustrations where we talk about things, we kind of touch on them, and then there’s theming, right? They're trendy. They're not something that sticks and that's the part that is frustrating for me as a business leader, because you spend a lot of time, energy and resources, and when you then start to abandon those things that you sort of get behind and rally, the next one comes up and your team starts to say, “Eh, here we go again,” right? [15:18.4]
Eric: Yeah, yeah, yeah.
Mike: “Here's the next big theme. Here's the next other thing.” I’ve been on that side of it. I sort of vowed, and again, with John he's right there with me that we were not going to let this happen, and so we spent a lot of time—again, I hate to keep saying this—at the beginning of saying, let's not do things that we don't think matters to our buyers, to our employees.
Number one is really our employees first, which is because we always feel like, if you have a happy employee, you're always going to have happy customers. You never get it the other way around, ever. It never works. In our guiding values, core principles, we talk about number one as really just creating an environment in which we can have happy and healthy employees first, and then the rest kind of emanates from that. [16:03.3]
This is the same thing here where we said, “Look, let's pick this stuff and let's be smart about it.” Luckily, at that time, John Ho was doing his thesis work in grad school at UCLA, and as the company, we were the sponsor of the project and it was amazing timing because it was a chance for us to say, “Look, we have ideas around these things that we're talking about automation, healthy living, sustainability and energy-efficiency, but does that matter? Does that really matter? Are they going to pay for it?
Mike: Will they pay for it as well? Right?
Eric: Yep, it's very good.
Mike: Those, you had the idealistic part of it, but you also have to have the practical part of it. Using those two concepts together about where we want to be big thinkers—we want to be thoughtful. We want to follow through in what we believe in—but can what we do for a living support those kinds of ideas at this place in time?
We were lucky to be able to get a really great team and have resources that went out into the field, went to Arizona, went to Texas, went to Florida, harsh environments, and did an amazing assessment, and that's really where HPH was actually birthed. It was actually in that process and that project that John put together that we defined it. We're always clarifying and doing things, but that's really where we defined those four pillars of HPH for us. [17:18.5]
Eric: So, it was somewhat of a process, but it also seems like you began from the premise that we want to be clear on who we are and we want to be able to go to market with something that is both meaningful to us, but then also meaningful to the market.
Mike: Right, and our employees.
Eric: Okay, excellent. I'm curious then, because you used this word earlier about nibbling and I got this image of just being able to plant a flag as a business, and I think some businesses really struggle with this, because they feel that if I plant a flag and make a clear stand for who I am, then some I’ll miss out on some element, some aspect of business.
What did you see in terms of the growth of your company, the success of your company, when you began to clearly plant your flag on this high-performance homes perspective and initiative? [18:05.6]
Mike: You mean when did we start to see that it was making sense to the consumer or …?
Eric: No, not just making sense. You plant your flag and, by doing that, you attract some people, but then you also repel some people, right? Because some people may not be interested in it. How did you guys go through that process of understanding the attraction and repelling part of that?
Mike: Yeah, I think there's relentless communication internally about what we're attempting to do and why. You’ve got to have the why part and you have to really be able to clearly articulate what's in it for them.
Eric: And by that you mean the market, the buyers and the employees?
Mike: No, it’s the market. No, it's really with the team. It's really with the team first. The team first, because, especially at the beginning, although we believe that we are now kind of past that, but at the beginning, where it all comes down, Eric, at the end of the day, in our business is in the land residual. You have revenue, you have costs, and that's what you can pay for the land. [18:57.2]
Everybody has different parts of that and the cost of capital may be different, and this house may be more expensive to build or whatever it may be. But at the end of the day, you’ve got to compete. We're out in the public market. We have to have margins. We have to have returns. We have to be an attractive investment for the investors. It's just reality. It's the way it works and this is how we get to stay here and there shouldn't be anything wrong with that, and there shouldn't be anything wrong with saying, Why not? Can we have it all?
What I come back to is go back and drive it down into the core essence of who we are, and if you have a land team, and we have really good land buyers, who come in and say, “This is what we can pay for your land. These are the reasons why,” but this is who we are as a company—if we're in your master plan community and we're representing this value proposition, and there is a strong and deep belief in what we're trying to do and we are now driving customers who really believe in that as well that our absorption rates will be there or better than our competitors—we should be in a position where we can buy that land appropriately, even if it's maybe a few shekels less than our competitor who is not doing that. [20:00.2]
But our land team has to understand why they have to go out there and really drive that message to them and make them know what's in it for us. What's in it for you is you've got this quality company that is delivering a value proposition that has not been seen before in our industry that is really addressing the needs of homeowners in a unique way, but in a way that there's a strong value proposition around it and you want to be associated with us. I mean, we're good for you to be here.
That's really kind of, I guess, one example of sort of that intense focus of where you're driving the cost through to make sure that, at the end, your value proposition is appropriate on the outside of it.
Eric: That's excellent. I think it's really excellent just to hear the hard work that you guys have done to identify who you are and who you serve, and how that's then helping you to build the processes and the operations of your business.
I'd like to pivot slightly. I've got a bit of a bias here because I do work with a lot of commercial contractors. As you go into a community, what are you looking for in the contractors that you partner with, when it comes to building your homes? [21:06.0]
Mike: I get a little emotional when I talk about our trades because I come from a family of trades. I believe heart and soul that they are our partners, literally. I mean, they are what make us go and I believe that, I don't know, they are remarkable people, our trades. They will move heaven and earth for us when we need them to. They are fundamental to how we compete out there.
When we go into our marketplaces, almost the first people we reach out to are our trade groups, the framers, the concrete, the plumbers, the HVAC. Those are the ones, at the end of the day, who are going to make or break us in terms of how our relationship is with them and how we are able to execute. [21:50.8]
When John and I started our business, one of the fundamental core values and principles we had is that we are going to pay our trades on time, every time. On time, every time, no matter what happens. On time, every time. If we've asked them to do work for us and they did it, they get paid, because once we break that covenant, once that relationship has somehow become unbalanced, all of that goes through your system and now you've kind of got a dysfunctional sort of toxic relationship, and you're constantly in a situation where you're chasing the last little penny on somebody and you're not building on anything. You get no synergies. You get no anything, because these relationships are going in and out.
I started in this business as a purchasing agent for Kaufman & Broad. I know their value. I know how important they are to us. I know that they're gifted, skilled people that they are a stakeholder in our company. They're not an enemy. They're not somebody out there we're trying to get into a binary relationship where they lose, we win. We have to win together.
Another thing we've done here is that we also believe that our trades need to make money. They've given us a fair bid, we've accepted it, so from that standpoint, we also have a duty that when they come onto our jobsites, they have to be ready. We have to make this a place that is going to be productive for them, just like we want our sites to be productive into flowing. [23:14.5]
To ask somebody to come on, get them there, have their teams there, and then show them a line of houses and not one is ready for them to go to work in or to properly go to work in or to safely go to work in, and then to, suddenly, make them the bad guy in that, we will not do that. That's the difference.
Also, it’s part of our core value and the guiding principles that we have, which is that our trade groups are partners and stakeholders, and how they go, we go, and that's where we want to be and that's how we want to differentiate ourselves. When COVID hit, we paid them all the way through. We didn't ask for any discounts. We helped them with all of their COVID training. We did everything we could because their teams usually are really paycheck-to-paycheck, right? They didn't have the luxury of going and hanging out in some place, and you can't build the house remotely, right? They're the ones that are, literally, essential workers, out on the sites. We had to be there with them. We needed to be a part of that, right? [24:06.7]
We just couldn't disassociate ourselves from that standpoint, and they were just miracle workers. I put them right up with everybody, worked incredibly hard, whether it's a grocery store clerk or somebody that's in a consumer-facing business. They did that stuff. Anyway, like I said, I can get pretty emotional when I get around talking about the trade groups and who they are and what they really are, in essence, they are as people. They're amazing, really amazing to me.
Eric: It's interesting, because as you've been talking here, Mike, you've got your employees, you've got your trade partners, you've got your investors, you've got your customers. These are all people that you are presenting a value proposition to.
Eric: Yeah, and it's interesting for you. I'm curious as to when there are, because everyone has an interest that they're interested in, and then even if you have the right intentions, when you bring multiple people together, there's that competition that occurs or that conflict that occurs. As the president of your company, what do you do when you see a conflict between those parties that you have a responsibility towards? How do you handle that? [25:04.7]
Mike: One, engage into it. Lean into it, number one. I think what you probably have heard is an undercurrent of a theme where it's always about communication. You've got to always be communicating, and at multiple different types of levels, whether you're communicating outside or communicating internally, or even between departments or within our customers.
I mean, we just had a very lengthy two-day customer care summit in Phoenix and we dug into the customer journey, and, really, what are the touch points in which we should be communicating with them? Because we want them to know that we're on this journey with them. They're not alone. But we also have to let them know that there's a part that they play in it as well, and I guess, again, just sort of this level of communication is really important.
When you've got this conflict, I always say there's two sides to each story and the truth is somewhere in between, and that's what you're trying to get to. What you usually find is that there's a little bit of that and there's a little bit of this, but if we can kind of know that by being a little bit selfless on either side because we're both waiting for the other one to come over to meet you, it's never going to happen. [26:08.3]
It's really also trusting, trusting the other party, believing that if there's a part in which you have to become vulnerable, that you're going to be protected. That goes back to, again, our core value around our trade partners, which is that there are going to be moments when you're kind of raw out there a little bit, but we have to have trust and faith that when the time comes, we're going to be there for each other, and that's proof in your convictions and that's living out your truth, and doing the right things you should be doing.
That's the kind of company you want to be, because when the market gets tough, things get sour, and it's really easy in big corporations and divisions to take it out on trades and to kind of throw them under the bus. I have seen it over and over and over again, and to recover from that and to try to repair those relationships, it's ridiculous. That little thing that you can do right now to repair it pays huge dividends when you lose that trust and faith down the road when you're trying to kind of get back together again.
Eric: It’s interesting. Mike, you've been in the business now for 30 years, in the homebuilding industry. As you look back at your career, what would you say was the pivot point that set you up for where you are now involved in the leadership of Landsea? What was the pivot point there? [27:14.8]
Mike: I don't know if there's one pivot. I mean, as I said earlier, Eric, I come from this business, so I have sort of an innate feel for it and a deep appreciation for it, although, I'm an immigrant son and we were just basically slave labor on all of our construction sites that my dad was a part of, and so I didn't have a strong affinity for it when I first got out of school. I actually went to work as a commodity trader in Chicago for a couple years.
Eric: Where did your family come from?
Mike: Southern California.
Eric: No, no, but where did your dad come from?
Mike: He's Swedish. They're Swedish.
Eric: Oh cool.
Mike: I always bore our teams by opening up saying, “I'm a third-generation Swedish carpenter,” and they all roll their eyes and go, “Here we go again,” but that's the joy of being in this business for a long time. People have to sit at a table and listen to me for a while.
Eric: Let me ask you this. Who would you say was a key mentor for you and what did they teach you as you were coming up in the industry? [28:03.8]
Mike: The unbelievable blessing of being associated with some really remarkable bosses that had such high levels of confidence in themselves that they allowed a knucklehead like me to go off and take on some responsibilities and get things done for them. I would never trust me, but they did. They trusted me and taught me a lesson in terms of just a little bit of, hey, you’ve got to give people enough rope out there to go do their thing and you’ve got to trust them.
I can tell you that if there's one thing in there, it's been really lucky going from my first boss, Mike Geddes at KB Home, and when I was in offsite procurement with him. He was not a guy much older than me, but he was incredibly confident in himself and super gracious about allowing me to go out, stretch myself, all the way through to I think even John Ho. I would say that working alongside him and what we're trying to do together, and the trust and faith we have with each other to go do our part, but then be supportive and be there and help each other get through it, I think that's another one. [29:03.3]
But I’ve had Bruce Karatz at KB. I had Chad Dreier at Ryland. I had John Peshkin on the board of Pulte. John, an amazing person as well, taught me a lot, super smart, but, I mean, I hope I taught him a few things, too. But I have just been really, really lucky, Eric, to have really been around remarkable people in this industry a lot.
I’ll give my father credit. He is an incredibly hard-working, detail-focused person who really taught me about quality, who taught me about finishing a job, who we learned so much from, the physical nature of the business because it is a physical business, had deep appreciation for that and what that takes to do that time and time again. I have a great father and really great mentors.
Eric: Let me just ask you this. Let's say I'm in a company. Now, did you start in the field? Did I hear that right, Mike, when you came into the business?
Mike: I came in, as I said earlier, in land development, but on the procurement side, and so I was an office guy, but with my father, we were always on that. [30:01.5]
Eric: What did you focus on in your career that brought you from just coming in on the procurement side to be able to be where you are now, the president and COO of Landsea? What do you think has been the key that has brought your career to that point?
Mike: Curiosity. I think that's the main thing. It’s curiosity. I think inside me I was always wondering how all this comes together, and as I was doing one part of it, I always had the curiosity of “How does this fit into the bigger picture? How is this meaningful to what we're doing, this part?” I knew I needed to do it and I needed to do it well, but I was always looking to see, okay, does this make sense? Okay, then that next piece and then that next piece. I’ve always had a strong desire of sort of the bigger picture and how all these spirit pieces come together in kind of a unified way to move a company forward and to be successful.
Eric: As someone, we’ll say, in a role of tremendous responsibility and probably pressure to one degree or another, what sustains you on a Yeah, and it's interesting for you. I'm curious as to when there are, because everyone has an interest that they're interested in, and then even if you have the right intentions, when you bring multiple people together, there's that competition that occurs or that conflict that occurs. basis to enable to go through the challenges that you face as a leader in your organization? [31:01.3]
Mike: Today, I have, I’ll say it again, a great partner with John Ho and we believe we're really on a really special mission together in what we're doing and that's really exciting. I mean, I'm probably more pumped up now than I’ve ever been in my 35+ years doing this, because I am my best self I’ve ever been by virtue of these experiences that I’ve had over the years, pluses and minuses, and lots of failures along the way.
Mike: Lots of great highs, and then just being surrounded by really committed and dedicated building professionals that, in many ways, are my friends, and we're on this journey together and we all have a unified thought of this mission that we're trying to accomplish and sounds kind of out there, but it's really true. It's just the people you associate yourself with are really, as a collective body, this energy source that comes from it, as opposed to being low.
As a little digression, there was a period where I went over into private after Taylor Woodrow merged with Morrison Homes, became Taylor Morrison and were there, and I went over to private equity for a period of time as an investor in our space, and I’ll tell you every single day I missed homebuilding. I missed the team. I missed the purpose. [32:10.7]
The idea of what we do, this noble calling of being a homebuilder, is so compelling, and just from that idea that just being just here to make money for money's sake and you're an investor and kind of a little bit of a lone wolf, and you're kind of looking for these opportunities, there's just something about being a part of something bigger than yourself that's moving forward in a positive way. It’s just incredibly compelling to me.
Eric: That's tremendous. Tell us a little bit more about Landsea?
Mike: Landsea is this scrappy little company trying to make its way in the world, very excited. We were formed, I don't know, about eight years ago when Martin Tian, a large Chinese homebuilder, came to the United States and wanted to kind of expand his company and make it more of a global company. He is a really forward-thinking person, a really tremendous businessman, but more than that, he's of the highest quality and character as a human being, really cares about people and wants to do the right thing and has been doing the right thing. [33:06.0]
He was the one that really sort of fueled this, and then came John and then came me. Then, really, when I got on board, it was really this idea of sort of pivoting away from what is the regional origins of Landsea Homes, which was really high-rise in gateway cities of New York City, Boston, L.A., that doesn't really fit well for the way that new home residential home-building happens here in the United States.
I was the one working with John and we kind of pivot ourselves to become more of a horizontal homebuilder, and then we said, “Okay, how are we going to go about doing this?” and, really, we said, “Let's just go to these markets that we have experienced,” and you were saying earlier, Eric, about planting the flag and we said, “We're going to go to these certain places. We're going to plant our flag and we're going to concentrate our capital in a small little area that made us sort of outpunch our weight, look a little bit bigger.”
Fusing ourselves all over the place, we said, “We're going to be the largest homebuilder right here in this area,” and so we kind of built up this sort of critical mass and energy around that approach and that's generally what we've been doing. I mean, obviously, we're much smaller than our large peers, but in the areas in which we operate, there's a sense and feel that we're a much bigger homebuilder than we really are. [34:11.6]
That's been kind of the way that, strategically, we've been building the business. We've gone from that. We went to Arizona and we became one of the top five homebuilders in the Phoenix market. We're now the top five homebuilder in Central Florida, California in the Bay Area. We're one of them in the core Bay Area. We're one of the top homebuilders there, and then in the Inland Empire, Southern California, and now we're the same thing there, and then in Texas, we're growing.
So, we aspire to be a national homebuilder with a meaningful presence, but we don't want to be the McDonald’s of homebuilders either. That's not what we're really looking to do. We want to have big impact in the markets in which we choose to operate in and build great homes for people.
Eric: That's great, and how can people get in touch with you if they'd like to?
Mike: You can get into firstname.lastname@example.org. email@example.com.
Eric: Excellent, and the website is LandseaHomes.com as well.
Mike: Yep, it is. [35:00.3]
Eric: Excellent. Tremendous, Mike. You've been very generous with your time. I really appreciate the insights that you've shared and it's particularly interesting about how the conviction that you have around who you are as a company and how you relate, both to your employees and to your various stakeholders. I really appreciate you joining us here on Construction Genius here today.
Mike: You bet, Eric. Thanks for your great questions and thanks for having me on. I had a blast.
Eric: Yeah, awesome.
Mike: Okay. All right, thank you.
Eric: Thanks again for listening to this episode. I hope you enjoyed my conversation with Mike. Feel free to check out his website, LandseaHomes.com. What's your takeaway from our discussion here today? Hopefully, you'll be going to market with conviction and with clarity.
If you lack that conviction and clarity, I encourage you to get into a room with your senior leaders and ask yourselves the questions: “Why do we exist? How do we behave? How are we going to be successful? What's most important right now?” These are fundamental questions that you must answer if you're going to be successful. [35:54.8]
By the way, if you need some help with answering those questions in terms of having a facilitator, a sounding board, someone who can help tease out the answers, clarify them for you, that is exactly what I do with my clients. Reach out to me on my website, ConstructionGenius.com/contact. Put your details in there and we can have a short conversation. I'll contact you. We can book in 10 minutes. We can figure out if or how I can help you.
Thanks again for listening to Construction Genius. Feel free to share this episode with anyone who you think would benefit from it, and I’ll catch you on the next one.
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