Technology Q&A: What Happens Next?

An interview with Buildertrend CEO Dan Houghton following the company’s acquisition of CoConstruct.

authors Patrick O'Toole | March 17, 2021

Q: Tell us about the merger and how it came about?

A: As you know, Buildertrend and CoConstruct occupy pretty much the same space. If you look across the board, we’ve got roughly 17,000 customers. CoConstruct has about 6,000 customers. The two companies both are really locked in on the residential construction piece.

We have co-clients, and what I’m going to say is about Buildertrend. We’re a combined company as of today. But Buildertrend has a little bit wider, horizontal focus in the construction industry. So, we serve specialty contracting, remodeling, homebuilding and commercial contractors.

The core focus for CoConstruct has been primarily custom homebuilding and remodeling. But if you look at both of those two segments, a big part of our product set and our customer base lives in that small- to medium-size contractor.

Buildertrend CEO and co-founder Dan Houghton will lead the merged companies.

Both companies started in 2005 and 2006. We somehow bootstrapped our way and survived the recession. And in a lot of cases, we were the last two companies standing. We were like Forrest Gump with the shrimping boats. Honestly, that’s what it felt like. It was harder than hell. A lot of our clients shifted from being custom builders to remodelers during the Great Recession, and a lot found that there was more steady business in remodeling.

So, fast-forward to where we are today. Our two companies have built incredible businesses, and the combined organizations now have 750 employees. Buildertrend had 555 or 565. Adding to that, CoConstruct just acquired a group purchasing organization. We absolutely love that business. It has a huge opportunity.

When you can take a now-combined 23,000 customers, that’s a big number If you think about how many homebuilders or remodelers show up at the Remodeling Show or IBS, we’ve got a huge market share of the customer base in the United States—that’s why we love this opportunity.

And this is the headline quote, in my opinion: We are on the cusp of transformational change. It’s kind of putting a flag down and saying, “Builders and contractors have gotten a bad reputation, but the fact is a lot of them run some of the best businesses I know. Just because they’re small doesn’t mean they can’t be mighty.” So, we’re stoked. It’s pretty cool.

Q: What is your message for the larger audience of remodelers reading this interview? Maybe they are a Buildertrend user or maybe they are a CoConstruct user. The bigger group uses neither. What’s the message about this acquisition? What should this mean to them?

A: The message is, “We’re the industry standard. We want to support this industry and it is a great industry, and we want to make not only our prospects, but our customers more successful.”

The fact is our customers make more money than folks who are not using technology like Buildertrend and CoConstruct. There is data that shows if you’re efficient in the way you change orders, how you schedule jobs, how you communicate with your customers, you’re going to get more jobs. Your jobs are more profitable.

And as we look at our industry taking advantage of digital transformation in their businesses, you don’t have to be some big 10-, 20-, 30- or 50-person company to take advantage of technology. It’s affordable for everyone. And it’s affordable for the folks who have 100 employees.

Q: In terms of the software itself: Will they remain separate or will you merge them?

A: That’s everybody’s first question. They will run in parallel until further notice. The reality is the two platforms do a lot of the same things—some of them in different ways. Buildertrend has advantages that CoConstruct doesn’t have. CoConstruct has advantages that Buildertrend doesn’t have. That’s obvious to anybody who looks at them.

The cool part is we’re going to do an evaluation of both platforms and see how we can take the best out of both and see how that looks. So, we’re not committing to sunsetting one platform or anything like that. The goal is for us to figure out how we can potentially take advantage of both platforms and get them to the right customer. There’s no doubt about that too.

CoCamp, an annual gathering of CoConstruct users in 2019. Buildertrend and CoConstruct users tend to skew younger than industry average.

Q: Would you say the user groups of both softwares are younger than the industry average? Second, do you plan a big annual gathering of users?

A: I would say I was more concerned 10 years ago than I am today about the future of the industry. I think a lot of things have changed in the last 10 years. You can look at the last year what we’ve dealt with in the [COVID-19] pandemic—there is a revival of young entrepreneurs who see opportunity.

What were maybe once labeled as blue-collar kind of positions or businesses, what we’re seeing with our customers are people who have Ivy League educations or are coming from hedge funds. They’re also coming from second- and third-generation family businesses. All you have to do is get on Instagram. I mean, you get on Instagram, you look at who these influencers are. You look at the projects they’re working on.

You go to these big events and it’s not what it looked like 10 years ago. I’ve been to the International Builders Show for—up until this year—15 years. It is now combined with KBIS, which draws remodelers, kitchen and bath, you know, homebuilders—it’s everybody, right? It’s the industry show. And I’m really encouraged about the opportunity for young professionals.

These are the same young people who live on Instagram, and they live on the kind of the future that is technology-driven. We essentially make money by having this industry be strong. I’m very bullish, very bullish on the next generation.

Q: What is your mission at Buildertrend?

A: Our mission is to wrap our arms around the industry with technology being the backbone, with our software platform being the backbone. We offer insurance to our customers. We offer payment-processing services. We offer marketing services. We offer on-site consulting. We’ll come in and help them actually operate their business.

CoConstruct has some of the similar things. They have Code Camp. We have a builder training university. And what I’ve learned through Buildertrend University is you have to have systems to operate any business. If you don’t have systems, at some point you’re going to have a lot of challenges.

So, software attracts entrepreneurs to our organization, but the way we can help them with the other parts of their business is what really builds this culture of success among our customers and CoConstruct customers; they are the same way.

At Buildertrend and CoConstruct, our goal is to be an industry standard, and it’s an industry standard beyond technology. It’s about education, and it’s getting people to run really profitable businesses because why waste your time. We don’t want our customers to work 14 hours a day. We want our customers to coach their kids’ sports teams, just like anybody wants to do.

So, there’s a huge opportunity for it. Obviously, our industry has been a little bit late adopting technology. But we’re all about educating the industry as a whole and partnering with great groups like NARI and NAHB, folks who support it.

Attendees listen to a speaker at Buildertrend University in 2019. CEO Dan Houghton says education and networking will continue to be a part of the company culture going forward.

Q: When you look at the combined offering of Buildertrend and CoConstruct, where are the perceived gaps?

A: Not a ton of gaps, but I think there’s a lot of opportunity to offer other services. It’s a very fragmented market; so, you’ve got this huge market, and our goal is to bring more visibility to that smaller medium-size contractor, and how do we make them the great business? You know, how do we turn a $1 million a year contractor into a $3 million contract contractor? We can help them with that vision and help them with that process. If we can do that, I think not only will the industry be successful, but obviously our customers will be successful.

Q: Can you talk a little more about how this combination came about?

A: Both companies are born out of the same generation roughly 15 years ago. Donnie Wyatt is the CEO and founder of CoConstruct. I cofounded this business [Buildertrend] with two other folks, Steve and Jeff Dugger, who are both active in the business, and I represent the company as a CEO. And when you go to these shows, as you know, it would be like your biggest competitor—I don’t know who that might be, maybe [another home remodeling] publication or something.

You know exactly who they are, who they’re talking to. And [there’s] some respect, there’s a mutual respect. And in some ways, there’s also a healthy kind of, I want to beat them. I want to be better than them. And quite frankly, I think we both help each other build better programs than if there was just one of us out there.

I’m not sure either of us would have the quality product that we have today because I think we helped drive innovation in the industry. I think the conversation of this really becoming reality is something that has been on our radar for the last four years and where we eventually kind of started having that conversation. And ultimately we partnered up with a private equity firm in December to make this a reality.

And you know, we believe that there is not really a ceiling on this combination, as big as this industry is. And you look out at the big or the vertical market. It is, you know, residential construction. There’s not a ceiling. I mean, it’s just a massive opportunity on all levels. And that’s really what’s driven us to this opportunity, and we’ve had already had the opportunity to meet with everybody from every company. This is 100 percent a growth play, not like a cost-cutting play by any means. QR

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