Curiosity Over Ego: Specs & Real Margins

Gabe Joseph shares how getting past ego made him a better builder—leaning into curiosity, standardizing specs, and scaling without bloat. We dig into procurement, margins, architect fit, permitting, and the upstream moves that erase change orders.

https://www.jdbatx.com

Video Notes:
0:00 Cold open — curiosity as the builder's edge
1:01 Gabe's background and Austin roots
6:08 Specs over one-offs: standardization that scales
10:36 Procurement: high-design without high cost
14:27 Margins, materials, and making the numbers work
31:27 Subcontractors: building a reliable roster
40:10 Change orders: how to avoid them upstream
44:43 Permitting & city dynamics (late-stage hurdles)

Find Our Hosts:
Reece Barnes
Matt Calvano

Podcast Produced By:
Motif Media

Transcript

0:00

The only smart thing I've ever done in construction is to continue to be curious about how to figure things out. But the clouds of vape and saying a lot was going to be a problem. But, well, mics are hot baby, so the cloud is vape. Yeah, the clouds of vape. And saying a lot is just par for the course. But this is a family friendly show, builders, budgets and beers is for a, you know, whoever who wants to chime in audience. So, you know, we don't have to be sailors, but, you know, if you little F bomb fly here every once in a while, it's okay, don't, don't let it get too dark. Yeah? Yeah, exactly, exactly. But dude, thanks for jumping on. Appreciate it for everybody that is listening. Hopefully, if you're watching this, you're gonna see the awesome buffalo mount behind my good friend, Gabe Joseph. But Gabe, go ahead and give the listeners a little background on yourself, a little intro, sure. Yeah. My name is Gabe Joseph. I'm a partner in just design build in Austin, Texas, been in construction virtually my whole life in one way or another. But in Austin, the last, last 10 years here, and along with some other partners, we we've got projects in Houston, Austin, Dallas, and looking to kind of expand from there, so a little bit of everything. 100% love it. And I think just for the list, for the listeners, you can tune back, I can't remember how many episodes, but a few episodes, and you can get a little bit of a preface with Thomas Joseph, who is Gabe, his brother. And Gabe just with you, mentioning that, like, you guys are in Houston and, like, expanding all over Texas. Like, when did that start? Because you guys were primarily in Austin, yeah, you know, yeah. No, that we actually, so we went through the process of a merger with a company based in Houston, starting about nine months ago. And so in the last nine months, we sort of expand our footprint across Texas, but then also, at the same time, kind of scaled up our design and engineering operations to fold in some staff overseas in a couple of different countries, and our pipeline volume went up pretty significantly. Went from about 15 to 20 houses a year to around 300 now. So it's been a very, very rapid path to growth and kind of navigating that goes with that dude, nine months. Call it what? 30x growth, somewhere there, yeah, somewhere between 20. Like, how? That doesn't even make sense. How? Like, how do you do that comfortably? And I know that's like, a huge question, but, like, That's just insane. You have, you have 300 units, huh? Go ahead, yeah, yeah, that's right. Now, there's about three between design, permitting and construction. That's the best token. You don't do it comfortably. You do it as uncomfortably as you're willing to admit. Sure, totally. You know what, though, before we get too far, I just want to point out, if anybody can see this, Reese, that beard should be a state park in Colorado. You get, like, hippies chaining themselves to the base that you don't shave it, like, that's just, yeah, exactly, exactly. It's like the mud flap, dude, like the mud flap, you know, this beard gets so much attention. I mean, hey, it's a fine beard. It's a fine beard. They would have to inject me with like, elephant levels of testosterone to produce a beard like that. So I'm jealous, brother, dude, yeah, just, you know, born with incredibly high tea. I mean, it's just, it's more of a lifestyle than anything, just ingesting pounds of red meat a day, just an absolute and just, just corn fed Nebraska beef raised, baby. Yeah, dude, yeah, the beard. I get it. I get it. We, you know, if you get a little uncomfortable, Gabe just going super deep into, you know, the hyper growth scale. And just business magicians that you and your brother are, we can, we can take a slow roll here. No, no, I would say grab is by saying I'm happy talking about anything you want. And if anybody's listening to this, they should take everything I say as the opinion of an idiot who knows very little and is just figuring it out as he goes for a very long time now. So not true, not true, and I'll debunk it with this question, how did you get into construction? I think I've heard this story, just like in the years that we've known each other, but like just to prove that you're not an idiot and you've been in this game forever, and you look at business through a pretty interesting lens. How'd you get into it? Yeah, so my brother and I grew up in a family in upstate New York where our grandfather had been a small builder, Our father was a builder and small developer. Kind of rode the boom and bust wave through the 80s and 90s, and so we had the benefit of being around a lot of experience, but didn't come from an established business. Bootstrap this ourselves. I started off as a framer, and then from there a superintendent, and from there a pm, so kind of, we were able to rise up, kind of through the ranks and put it together more or less organically, but very blood and guts very much. You know, started with bags on and, you know, kind of. Went from there and found out pretty early on, we were much more interested in the business of construction than the, you know, than the nuts and bolts. Like, yeah, I can plumb a wall, but I like doing what I'm doing now a lot better, and I charge the same rate for either activity. So, yeah, totally, dude. I love it. And I think I like, I want to dig in on that, because I think was just the last episode that I did, we were talking about, like, the difference of, like, builders being bags on and like, just drooling over the craft, and then this like, dynamic that happens where you realize, like, it's a business, and like, you really do have to, like, pivot into this business mindset, not discounting that it is a craft, and you're you need to take pride in your work, and you are delivering a very reputation based huge asset investment for the consumer product. But I think that's where a lot of builders, they just kind of, like, they get to these points, like, struggle of they try and scale a business and it flops, and then they just go back into like, well, we're just going to do it all of ourselves. And they can't, like, really get to that hump. So at what point did you and Thomas start to, like, understand that you guys love the business side of construction, arguably more than the craft. It's a really interesting question. And I think, yeah, at some point you kind of accept that, okay, an excellent execution, right? Like, the fact that the House has to be where the building, whatever it is, has to be done to really high level. That shouldn't be the goal. I think, in this business, that should just be the baseline. Like, yeah, you've got to produce an excellent product or nobody's going to buy it. You're not going to go very far. But once you get comfortable with that, then you start, sort of start looking at, Okay, what's next? And then you find that building the machinery around an operation is very similar to building anything you're just doing with people instead of materials. And if that happens to be interesting, then it can be a really, really should pass. So I think that probably clicked. It probably clicked for me about 10 years ago. And we didn't really have the opportunity to start doing it at a significant scale until about a year ago, about fall of 2024 so we kind of had had it in our minds for a long time. Had spent a couple of years chasing, you know, private equity funding to expand. That really wasn't happening at that time or more the point wasn't happening with infill spec developers in a, you know, hot and bubble market in Austin, Texas. So I think, yeah, the seed for that, the thought was there for a long time. We knew that was a path we would like to get on. It just, you know, took a little while to really get, get a little further down. And honestly, man, I'm a I would say there's still, like, every day I wake up, there's no guarantee that anything's gonna work right. Totally we like we're doing, but I could end up working at Home Depot a year for now and just be like the most fucking knowledgeable guy in orange apron in history. Io, art, time believing that that would be the outcome if everything went to shit. But, yeah, it's an option. I hardly have free benefits, dude. It's like, basically full time working on PTO. It's like, Is anyone there? Really not checked in? Yeah. But okay, so I think, like, you made the comment earlier, like, blood and guts, like you guys got the itch 10 years ago, and you got your opportunity a year ago, less than a year ago, right? Yeah, I think that's impressive in itself. Go ahead, to be fair. I mean, we had built up a really solid brand and a really solid pipeline over that 10 years. It wasn't like we went, you know, from zero. We spent most of that period doing, like, two to $5 million luxury infill homes, a lot of customs, a lot of specs, but really, you know, architecturally interesting, high level of execution, high level of detail, really demanding clients, whether it was a spec or a custom. So we benefited from that experience. And what you find along the way with that, especially doing high end customs, which I personally hate, and, you know, would do as few as possible the rest of my life. But some of those clients were fantastic people to learn from. You know, some of them were executives, things like that. That taught us a lot about just, I think, business in general, not necessarily the construction business specifically. But, you know, kind of showed, at least for me, it kind of showed that, yeah, there are levels and levels and levels, and you sort of figure out, you sort of figure out pretty quickly that if you're not the dumbest and broke his guy in every room, you're probably fucking up. Because, yeah, you that's where you learn, yeah, a lot from that totally, totally focus on getting into the into the room where you're not the sharpest tack, which, again, is hard for you guys. I mean, you guys are, you know, you're pretty sharp guys. Yeah, it's all relative. Okay, cool. So 10 years and, like, again, if for anyone that's listening like, you should definitely look up JDB. Joseph design build and Austin, they build an exceptional product has always been interesting. And I might have, like, a bias towards you guys, because towards you guys, because, like, obviously we've been working with you forever. But point being is, like, I'm interested even based on the Thomas episode of like, what you guys are getting ready to do now, right? And I think Thomas's perspective and explanation was great. I would be curious to know, like, how yours differs in terms of going from two. Uh, what'd you say? 15 to 20 units, and it's a two to $5 million product, right? So you're going, you're going from that and then going into the product that you're getting ready to scale. Let's hear a little about that and what we're scaling now. It's different. Instead of being in a large, uh, extremely architectural, single family, it there were some zoning changes in Austin that allowed for sort of medium density sensitive one unit on a lot. Now it's we're able to do three, and we're able to subdivide certain NFL lots into, you know, smaller lots that can each do three. And so you end up with certain pocket subdivisions. So it's sort of, it's like building an entry level version of what we were doing. So still incredibly design focused, high end materials, really interesting looking product. But instead of four to 5 million, it might be between like 750,000 and 2 million at the very high end. So we wanted to do with that. What that zoning allowed us to do was kind of unlock the ability to start delivering this to, you know, a wider audience. Because most people, I think you know, for a long, long time that kind of home building has been pretty inaccessible all but the top, like 1% and that's that's unfortunate, because what you find out pretty quickly is that your cost structure doesn't change all that much with a high design product, if you do it intentionally, and if you are smart about procurement. For instance, we buy about 70% of our materials overseas, direct from wholesalers in other countries and ship it over. Here's, there's a logistics component that took some figuring out, but it the thesis is that'll allow a much broader audience access to, you know, high quality, architecturally interesting, really well built homes, not just in Austin, but, you know, Dallas and Houston, and eventually other markets as well. Really, the goal is to get this we're trying to grow this up as big as we can. We think the demands there, we think the timing's right, and then it's just, you know, the test is, can we do five years worth? What would take an operation five years to do successfully? Can we do it in a year, year and a half? So that's sort of our Manhattan Project. Yeah, dude, I love it. I'm super stoked to follow this along. Um, I think even like, going back to like, again this, this pivot, to me, is just like, insane, like, a nine month window. Obviously, this isn't just like, wake up one day, figure it out, and we go, like, you guys have this 10 year precursor of, you know, building up a reputation understanding how to do things right, get to a position to where you are now. But like, when you're you made it kind of like the procurement side I'm sitting here, like, you guys are working direct with wholesalers. Is that the right term? Yeah, manufacturers, not wholesalers, direct with manufacturers overseas. Like, I imagine the only way to get into that conversation is with a level of scale and volume, or can like, is that something that other builders should be looking at doing? Could you have done that as a 15 to 20 unit a year? Guy? Yeah, we could have. We just didn't know. Just didn't hadn't figured that out. That was actually introduced to us by a couple of our new partners that had been doing it on the commercial construction side. And the more we got looking at it, we said, yeah, you can do this. And, I mean, it's a little easier to do at scale. There are certain minimums that some of these factors will participate in, but it unlocks a whole new level of pricing. It unlocks a whole new level of of options. I mean, they'll, they'll, literally, these factories. Can custom build just about anything you want. Some will do it on a one off. Some you might need to buy 10 or 20, and some have really high minimum orders. But, you know, in construction, by way of trying to tie it back to, you know, financing related discussion, you can only beat the subs up so much, and you can only, you know, kind of chisel so much, and everybody ends up with this same five to 10% you know, target zone of a reduction in cost. We were able to get a 40% reduction in our build costs over the last six months and deliver an equal quality product just by handling procurement differently. Now it's complicated. You have to deal with factories in other countries. You have deal with time zones, the language barriers, the shipping, all of the, you know, the tariffs, everything that goes into that. But you can do it. It's not, I'm not the smartest guy in this business. And, you know, we've been able to gain a lot of ground very quickly looking at how to do that, how to expand on that. We had a lot of good advice, and a lot from partners who had done it before. Totally dude, but a 40% call it discount, yeah, that's worth figuring it out on absolutely, yeah, absolutely. Big Deal Go ahead. Yeah, no. I mean it all. It all translates to, you know, healthier margins and the ability to, you know, to underwrite projects that just probably wouldn't work any other way. So it's a tremendous advantage. And yeah, I would encourage anybody to look at my, you know, sense of it is that most people probably won't, but I think it's definitely the wave. I think it's the wave of the future in construction nationals are starting to do it, and pretty much everybody else should be looking at that, if they're not already, dude, yeah, 40% that's that's insane, I think. But that's where it goes into, like, the hard part of it. But like, even when you're thinking about it from a time spend standpoint, it's like, Dude. 40% savings on and maybe, is it a 40% on all material or just like a bulk of it, how? Say we had a budget that, just for conversation, say it was$100 a foot in Austin with all local vendors and suppliers, that becomes a $60 a foot budget. Now that's not really, I'm just tying it to a metric, but of course, yeah, yeah, no, it's significant. And that's probably more exaggerated in hot markets like Austin, you know, like Southern California, parts of Florida, places where construction costs are just incredibly inflated because of, you know, demand and everything else that drives them up, most of which is just profit that goes straight to the subs and vendors. But, but you find out pretty quickly that's mostly all it is. It's not really what those really what those things cost. So anyway, okay, so, but no, this is I've never heard this take before this. I think this is huge for the listeners. Obviously, it's gonna come with a pain in the ass, but I'm looking at this student like a 40% net savings across the board. Hire someone, hire a team of people to figure it out, right? And we're not the only ones doing it. I mean, for sure, we're not the first ones doing good for that. There are others. I mean, I believe there's even other groups just in my market that are doing that happen for a while. So, yeah, it's you start. I think the biggest, I think that the only smart thing I've ever done in construction is to continue to be curious about how to figure things out. And you know, in doing that, you find all kinds of interesting stuff. If you are willing to just quit fucking around and really see if it's something that, you know, you can do it. And I think, unfortunately, that's a limiting factor A lot of times, which is in this business, and probably every other but definitely in residential construction, there's a tendency to just sort of do things the way we've always done them over and over and over. And it's very slow to change, and it's very slow to adapt and embrace, you know, a new idea or a new technology, whatever it is. There's still guys walking around fucking job sites in every city in America with yellow legal pads, writing down notes about how to do things. Nothing wrong with it. But, you know, there's a couple of better options that have come along the last 40 years. So totally, yeah, of course. Well, dude, and it's hard to kick, you know, those white monster energy drinks and cigarettes at 5am from the gas station. That's, yeah, I get, I get a little sentimental the smell like, you know, diesel fumes and Marlboro reds went at five in the morning on a job site. Oh, man, take me back. But yeah, that's right. That's right. Take back to your roots. Down. Yeah, love it. Fifth grade was a lot of fifth grade stardom, young up in upstate New York, cool. Okay, so I love it. So that's, like, that's a huge takeaway, um, the 40% margin on the procurement side. What are some of the other big things that you've learned just working with these guys in Houston? Like, what would you say is probably the biggest, like, most impactful side, aside from this? I imagine this has got to be up there, the procurement side. You know, I think the thing that we're that we're seeing in terms of how to grow that volume, you know, more or less exponentially, is that so much of it has to do with the strategy and not the tactics. And I think most builders I know focus way too much on tactics. It's the nuts and bolts, it's the type of insulation, it's the type of HVAC system and all. That's fine, but that doesn't answer the question of, how do I assemble a team and build a lot of these in cities I don't live in that I'm probably not going to see all that often. How do I make sure that still meets the standard and the expectation of the of the operation? And yeah, we start thinking about it that way, then it becomes more of a puzzle of, who do I need, where do I need to put them? What systems, what processes? How do I standardize this? How do I run this efficiently? And I'm not doing it alone. I, you know, I direct the residential construction, the architecture, the engineering and some of the strategy side, you know, at the partner level, but I'm not taking credit for I have a lot of help from a lot of really good people. And that's, that's the first thing is get really good people in place, put them in the right position, and trust them to do well. Doesn't mean don't watch them. Everybody needs that, but do it alone. And that took a long time to let go of that idea that I'm just I'm the authority. I know better than everybody. I'm going to do it all myself. That doesn't work beyond a certain threshold. Works really well. If you're gonna do four or five projects a year, and, you know, deal with the clients yourself. Nothing wrong. It can be a good lifestyle business. But if you want to expand, you gotta, you gotta open up totally. And I think that's like, everyone says that. That's like, you know, that's like, I believe just very basic. When I say basic, it's like, it's, it's the it's the advice that makes sense, right? The processes, the systems, hire great people, let it go, trust your people. Stuff like that. You mentioned, though that you had real quick. It's let go of total control over everything. It's not let. Go in the sense that you still got to be I don't believe there's a way to do this if you're not on all the time and grinding all the time and putting in the hours paying attention to everything, like people got to believe, right down to the guy swinging a hammer, that you see everything that's happening right or wrong, if you give that up, if they think you're fucking off on a boat or a golf course, i Good luck to you, because I don't think that's gonna I couldn't do it that way, dude, but that's what I wanted to know, is like, what does that actually look like? Right? That looks like for me, on average, like 60 to 70 hours a week in the control tower, watching everything all the time. And some of that's company cam, some of that's build your trends, some of that's we're actually developing an internal software they'll bring a few of these things together. It's a lot of communication, and it has to be efficient. You have to I've got in a given day, I have a team of architects in Mexico, team of architects in the Philippines, team of engineers in the Philippines, construction team in Dallas, Houston, Austin, and then the staff here in the office with me. So that's not bragging, that's not flex, just saying, okay, that's the reality. So you better be organized where that's going to get fucked up real quick. And not that everybody needs to do it that way. It's just a really cost effective, efficient way that we've adopted to it, to get all these pieces to land at the same time when you on the land, but, yeah, that's a lot of is, it's similar to air traffic control. It's just makes you smash into each other, yeah, okay, okay, when what was that? What was that growing pain for you? Because, like, Were you the guy that was, like, I know everything, like, I've been doing this forever. I'm the authority. And, like, what was kind of total, total idiot, and that's probably the that's probably the biggest failure I've had in my career, is it took me a long time to mature enough to where I could listen to other people long enough to hear what they had to say instead just immediately shutting them down, being like, no, no, that's dumb. I know what I'm doing. I built a million square feet, blah, blah, blah that I regret. That that was a bad attitude to have for a very long time. I think I started opening up to it when the market kind of turned down here in Austin a couple of years ago, we kind of had to look around go, Hey, that didn't work. Things are slowing down. And there is a sobering moment where you kind of realize that it doesn't matter. I think this is a real threat for everybody. It doesn't matter if you build the best house, and you paid the most attention, and the execution was flawless. You had good relationships with your staff and your subs and everything else. It might not matter at all. The market might just turn against you, and you still lose, even if you made all the right decisions, even if you played all the cards right, you might still get hammered. And that can happen, and it's out of everybody's control. So when that happened, there's a tendency to look inward and say, All right, what did I screw up? What could I have done differently? You know, what? What do I think I fucked up? Talking to my brother a lot, talking to other people. Hey, what do you think about this? And certainly made, I think we all made mistakes in that period, and, you know, continue to make mistakes forever, but, but, you know, I think a market downturn has a way of driving introspection that's that's pretty beneficial if you're open to, you know, being honest about it totally it may be an expert in failure, yeah? Well, I think, like, just beautiful that. Like it It sucked. And I actually know it sucked. I think I was talking to Thomas, like, during that time, like, during that time, not in a good spot, but as you guys do, you made it, you persevered, and now you're like, coming out like an incredible lag. Yeah, you got good yeah, you got to be resilient. You got to be able to get through those times. I think you learn a lot more in the down markets than you do in the up markets. For sure, totally my question is, is like, is this just like fluffy wishful thinking never gonna happen? Or can you take that type of self awareness, introspection, consideration without the burn. Or do you think that the burn is a necessary component to changing how you do things or looking? I mean, I like to think there are people smarter than me that were able to do that without having to go through an absolute ass whipping for me that, you know, Yeah, I sure it's possible. Sounds a lot more comfortable. Yeah, okay, yeah. So the short answer is, yeah. I think going forward, it's a thing that, you know, you just want to be watching all the time, the same way you'd look at a P and L or a balance sheet or a budget, you know, at a regular interval, you probably at some point, if you're going to be if you're going to try to grow and if you're going to try to lead a bunch of people, you need to be really aware of of what you're doing and how you're impacting them downstream. Because I can't take credit for anything we're doing. I have an amazing team of really smart, really capable people, and without them, none of that would work. And partners too, and without them, none of this would would work. So it's it's. Is not so much me. It's, it's a collection of other people that are able to make those things happen. Totally, totally. You've been talking about the team a lot, and I've like, actually, like here in the last few weeks, months, I've been working with them a decent amount, and I've got to know them, and they're certainly sharp. You've got a good team over there. I talked to a lot of builders. You've got, you've got a good squad. How do you find them? How does that whole thing work? I I like picking a team. I like the GM. You're the recruiter, huh? Of doing the draft? Yeah, I, you know, it's a funny thing is, I think there's a, there's a tendency to pick friends and relatives and things like that. And we've certainly got a few of those mean shit. My brother's one of the parties, and I didn't draft Thomas the record. Thomas drafted me as the is the origin story. He started me on. So you were in DC, weren't you? You were in DC? Yeah, yep, was in Washington. Salt was going on in Austin, and moved out a month later. So it was just that strong of a market at that time. But, you know, I think in evaluating people, you're looking at a skill set, you're looking at personality matches, you're looking at experience, but you're really looking for sort of core attributes more than anything else, like, yeah, they have to have experience doing whatever that is, but you really have to look at all, right, is this person a grinder? Is this person lazy? Is this person going to put in, you know, is this a whatever it takes person, which is what I'm always going to gravitate toward, or is this a do as little as possible and hide from the, you know, hide from the job kind of thing, and the sort of why, of what they're of what they're doing, is a lot more important in a lot of cases, like, I've had people that were, you know, curious, hungry, you know, wanted to figure it out, wanted to get better, wanted to learn the job, but didn't have a lot of experience, who've turned out to be great. And I've had people had a lot of experience that turned out to be terrible, because once they saw the expectations and the workload, it just spooks. So on paper, they were fantastic. But reality is, you know, paper tigers. Okay, so in that, like, I imagine there's, like, just, there was a lot of learning that happened over the last 15 years, of hiring great people, hiring awful people. Like, when you're talking about the attributes, I mean, it sounds like the grinder thing, like, that's not, you can't just, like, ask someone in an interview, like, how many hours do you work in a week? Because they're going to tell you 80. You know? How do you do it? Well, one, one thing that's always worked is ask people about work life balance, and tell them to express as a percentage. Most people will reflexively tell you the truth, and it's usually going to be a lower number than you want to hear. But that I, if I were to go back and graph it, I'll bet you that question has been answered honestly 90% of the time over the last several years. And then right answer, boys and girls, anybody that says less than 70 is probably not going to do the job you want them to do. So, you know. And it's and it goes up from there, but yeah, that's a really good litmus test for how somebody, how hard somebody wants to, wants to push on something. Yeah, I think that work life balance is, like, it's a super hot conversation now, whether it sounds like in construction and tech, really, wherever, and like, there's been, like, such a priority on, like, what is work life balance? And I think you mentioned it earlier, it's like, it has to go back to the why. But I think, you know, when you do, if you hear someone that's like, oh, it's all about work, life, balance, I've got to do this, that and the other it's like, what are you really doing? Probably no business works that way. But what you find construction, more than anything, and I love this about the business, is that you you get, you do get a lot of people that are just, you know, doing a job and this snap, but most people that you meet that are in it are really it like they wouldn't do anything else or they couldn't, you know, we're a bunch of goons that are virtually unemployable in any other line of work, but they can take it, and they can handle the heat and the weather and the unpredictability and the variables and All the things that go with this, this business, that it's kind of hard not to get into that, right? It's kind of hard not to, not to find that interesting. And then it, to me, it just becomes an efficiency thing, like I don't, I don't think you need to be demanding your you know, staff work 80 hours a week if they can get it done in 40, great. It's more about hitting the targets consistently and getting the outcome. And there's a for us, we try to keep the emphasis on the outcome while following a process, and not just, you know, steps for the sake of steps, like it's got to be, it's got to be toward goal. Totally. Dude, I love it. I love it. Um, what? Almost nothing about construction I'm getting off in the philosophical weeds on here. Man, sorry about that, dude, there's no room for apologies on builders budgets and beers. We're just having a conversation. I think this is totally applicable. I mean, what do you think the cost of a bad hire is? We want to rope it back in. Depends, right? I mean, if. It's a superintendent, probably not so bad, if it's a CFO, catastrophic, yeah, really depends on the person. I've had both those experiences. So let's hear about those. Well, I mean, I think as much as you want to share, how about that with Okay, so with a bad financial person, obviously the risk of, like, you know, fraud and theft and those things go up, and we've had to deal with that in the past with a superintendent, you know, field construction management. Most of those expensive mistakes are going to be, you know, errors in judgment or things they just didn't understand and know how to do. So, you know, I would say the the tricky part about residential construction, separate from commercial is, you know, the average mistake somebody's going to make is probably between 10 and $30,000 you can only afford to take so many of those hits on a job. So my rule is, everybody gets one, and if we can't make you better, if we can't improve people after that, well maybe they aren't a great fit, but I'll tell you honestly, I've had very little turnover, very few people who have ever quit. I fired a lot of people, but I've had very few people quit, and I think that's probably more credit to them than me. But yeah, it's expensive. I was gonna ask like, what do you think? What do you think is because I like building for like, the big JDB brand in Austin, or do you think it's that they get to work on really cool stuff? Do you think it's you think it's you and Thomas culture? I don't think it's me. I think it's culture, though. I think, you know, if you want to get in this, This especially applies to the growth factor before that. You know, obviously the entire business is run, is run by people. And I think there's the mistake is to put the emphasis on the nuts and bolts and the materials and the subs and all that. What I always have told people is that, you know, this is the home team, and everybody else is that's excluding clients. Obviously, everybody else is the enemy. Everybody else is trying to take something away from this business. And so our position has to be defense first and then offense. Literally, the other 90% of the time because your friend, they're trying to take something away or trying to take more for them than they are for you. I turn over about half our subs every year, mostly, really, oh yeah. I don't believe for a second this idea that you have to have long term friendly relationships with subcontractors. That's just not true. Let's dig that's like the total opposite of what I hear. I want to hear it. I might be a little contrarian on this, but what I found is that half our subs are long term relationships, great people who run, well run businesses. The other half are people who maybe are good or technically good, but they run a shitty business. And that's the most expensive mistake. It's usually not somebody you hire directly. It's people leaving things out of the bid or hitting you with, you know, change, or, does it make no sense? Or, you know, who just have no financial system or acumen whatsoever. I mean literally, like, invoices written on the like, ticket book. They use it, you know, Sonic, it's crazy, yeah. But so I don't, I don't have any, and the reality is, there's a lot. So there is no need to keep them and to, you know, to work with them, and to, you know, be friends with them, and all of this stuff. I think that's actually counterproductive. Every city has a huge volume of capable, qualified people that can actually do the work. You just gotta find it. So I think that, like, as contrarian, it might sound like at face value, that's actually, like, probably a really good takeaway is, like, basically what you're doing is you're just holding the people you work with to a standard, yeah, right, standard of operating a business, yeah. And like, why would you trust enough? Like, you look at, like, the average, I'm going to pick on drywall guys. You look at a drywall company that has like, their girlfriend running QuickBooks because she took a two hour class, and that's the entire operational structure of that entity, and you're gonna trust them with a few million dollars worth of work. Like no other business does that, except for residential construction. Commercial construction doesn't do that. Everything is buttoned up really tight, and so, yeah, to me, it's like, well, just because other people in the market do that, is that smart? Like, does that really make a lot of sense? I've never gotten past that, that viewpoint. So totally, dude. I think again, the reason why, like, I'm, like, supportive of the idea is because I think that's where it needs to go right. Like, in order. Like, you look, you talk about these labor shortages and like, the cost of buildings going up, and like, these builders that are winning are taking these, like, more serious approaches is, like, I think it really does kind of fall in the GC to hold someone accountable. Like, I'll use an example. Like, I know a builder that builds up in, up in, like, a very like, it's not a metropolitan area, it's a rural area, and their sub market and vendor market isn't super dense, so, like, they are kind of held to, like, whoever's gonna do it's gonna do it. But dude, there are stories that I hear of like, an $80,000 excavation invoice that wasn't even. And, like, put together, like, the general contractors to build the invoices for this sub, and then they won't even come in and pick up a check. It's like, the check is here for you. You gotta pick, we gotta check for six months on the desk. It turns into an office running joke of, like, when is this guy gonna come and pick up the check? Right? Yeah. And it's like, you can't have that, you can't support that you can't, you can't enable that. You got to be like, dude, figure your shit out. Yeah, that's right. You're a business. You should be looking after your business's interest first, and part of that is, don't associate with non businesses that just happen to have, you know, a truck and a phone and a magnet slapped on the door. That doesn't make them a business. That just means they, you know, how to paint or whatever, but yeah, to us, we've always treated as a business first, which means take care of your people first. And by the way, that doesn't mean I'm not endorsing being, you know, like cruel to the subs. I'm not. I think you got to be ruthless, you got to be honest, but you don't have to mistreat them. I think that's probably a mistake as well, and I'm guilty of that a lot, a lot of stories, and sometimes it's necessary, but most of the time, it's more easier to just say, Look, this guy's a loser. Just get rid of him and get somebody else. Yeah, totally. To like, just like, play like devil's advocate here. Do you think that like, it like that is a theory, a logic, a perspective that should be exercised or applied in sub and vendor dense markets. Or do you think that that should just be like status quo for everybody, regardless of what your sub talent pool is? Go ahead, it's a good distinction to make, right? I mean, I think if you're, if you're in a town and it's, you know, 50,000 people or less, yeah, there may only be five plumbers that do what you're doing, and so you do have to be a little more diplomatic about it, but if you're in a larger market, there are hundreds of people available to do this that are probably all about the same. And the reason I said is, you know, subcontractors are primarily what we refer to as labor pimping, right? Those aren't their guys swinging a hammer. They're just subbing the contract out to another crew who's then just coming in, and you're just paying the spread on that, and so kind of, I think, in all things, just looking deeper, am I paying a labor pimp, or are these the actual guys that own it, and looking into that, and kind of peeling those layers off to get down to the root of it, not only is that healthy pricing, you end up getting better response and easier management out of it. So well, they have more skin in the game. They care more. Yeah, exactly. And it, you know, separates lien rights and all these other things. So yeah, that's, let's take us an example of what I mean by looking at it really, more as a business and less as a lifestyle. Totally. So what is, what is subcontractor relations look like as you're going through the scale period, dude, because you're not running the same guys that you were, maybe you are, but like, there's not enough of them. You need more of them, right? You need to have a deep bench. And honestly, at this point, there's a few layers between me and the subs, and so I'm not interacting with them hardly ever. I'm really just reviewing contracts pricing at that, you know, at that point, but I would say that, you know, at even at the level of doing, you know, 10 to 20 a year, having as an owner, having, you know, that layer of project management that that kind of buffer between you and them is incredibly important. It just frees up a ton of bandwidth. It frees up your ability to make decisions clearly. Decisions clearly. You don't get over reliant on personal relationships with these guys. You know that's Yeah, I think that's a must have. Keeping that separation, keeping it as as like siloed, and having no imagination about the dynamic between builder and sub is pretty critical. Too often your mind gets blurred. Yeah, I think it's easy, like you'd mentioned, like the smaller, like dude doing like 15 to 20 units at the product that you guys are delivering is, like a really big business and residential construction. You talk to the guys that are doing like five to eight units, that are doing 10 to 15 million and top line, like, I feel like that's still really easy for them to get involved with, like subcontractors, day to day, controlling that stuff. Do you think that go ahead? I think it's, ultimately, it's a choice, right? It's, do you want to that's, that's a business. There's nothing wrong with it. Is that where you want to be, right? If you want to stay at that level, if you're comfortable with that, do it. If not, I take, I give the same advice I'd take, which is, Quit fucking around and look at a bigger picture. And you'd be amazed at how, you know, you'd be amazed at how many people aren't working up to the capabilities they currently have, just because it's what they've done. And so they just keep sustaining totally and this kind of goes back to the initial question of, like, do you think that it requires a hardship, for lack of a better term, to like, get out of that just cycle of bullshit? Or do you think it's just true one thing, dude? Like, sometimes guys are just like, dude, I'm doing 10 million in top line. Hopefully I'm clearing a 10. 10% net on this. Like I'm making plenty of money. This is I can buy trucks, I can take big vacations, I can send kids to private school, whatever, right? Yeah. I mean, I think, if people are being honest, the whole business is hard shit, right? Like you're combining all the elements of production, logistics, entrepreneurism, in a wildly variable market with a lot of, you know, in predictability, city inspections and financing and third party clients, all these things. So none of it's easy. And so if it's all going to be, you know, hard anyway, why not look at a bigger target? I had a really interesting conversation with a guy who was a project executive for like, the third or fourth largest commercial GC in Texas. These guys built stadiums and schools and things like that, and his personal pipeline he was managing was about one and a half billion at that time. And I said, What's the hardest part? Like, what's the most difficult thing at that scale? And he goes, Oh, man, it's getting people to pay change orders, and it's getting the office to not screw up the accounting. It was all the exact same stuff that at that time we were dealing with as a small builder, and that's going shit so it never gets any better. And he goes, Nope, it's like this all the way up. And that's depressing, in a way. It's also encouraging, because it means that, you know, there are only so many, so many pieces involved in that, in that business, then you just start figuring out how they work, and keep figuring it out. And you know, hopefully we'll get there, yeah, for sure. I mean, there is, like, there's certainly some peace in the fact that, like, the problems that you can anticipate a massive company having, you're already dealing with, so you can get really good at figuring out how to prevent them. Yeah, that's, that's really, it's how fast can you solve problems, and, more importantly, how many of them can you anticipate and eliminate before they present themselves as something that's actually going to be expensive, whether expensive, whether that's time, money or both. Yeah. So I get this is a much more like, maybe philosophical discussion about the construction business, and not so much the technical details. But I think I spend a lot more time thinking about this than I do the spreadsheet and the bid and the budget, and you know why the why the framer didn't show up today, because all that's going to happen anyway. Totally. Gabe, you do not need to apologize again, because a like, I think that's what makes the show good, is like, kind of getting like this, like perspective that other builders carry. We talked enough about finance. You don't have to worry about this. We're not here to check boxes. We're just here to hold warm conversation, Gabe, and also, it's fantastic everybody should use adaptive. I actually didn't pay me to say that. He didn't bribe me to podcast invites, and he's not holding anybody hostage. So I think everyone feels like, obligated to lose some little plug, like I'm like, doing my best to get people that don't use adaptive on the podcast, just so they don't feel, Oh, plug it. Yeah, I do. I had, I had a guy on yesterday, and he still felt the need Tyler grace. It's gonna be a great episode. And he's actually, like, the polar opposite of, like, what you're doing. And I respect the hell out of Tyler because, like, he's like, you're gonna have to listen episode. You said that. You're a devout listener. You'll hear it. Um, but point being, huh? I'll totally listen to it. Yeah, you gotta listen to it. But he even use adaptive and he like, like, they're like, What? 30 minutes into this thing, and he just, like, tried to give, like, a shameless point. I'm like, Dude, you didn't even use the product. You don't have to do this. Okay, so, okay, we'll wrap this up. But okay, on the philosophical threat you had mentioned, like some of the things that you're focusing on, the business standpoint, but what role did you fill compared to what role did Thomas fill? Who like, like, what like, who like, what, tell me, like the personalities, like the gaps, the roles and the company all that stuff, like, how do you and Thomas, like Jive together in this thing? Yes. So we're brothers, which means we fight 50% of the time, but nobody there's no bleeding, nothing is thrown. No i Our initial setup, Thomas moved out to Austin, started the started the business, by way of running into somebody that was building specs and saw the margins, and they were really good, and managed to meet an investor who put up the money and got one going, and then got a couple more. And then he called me up and said, look at these numbers. This is what's going on here. And I said, You're full of shit. Those aren't real. You can't do math. And that turned into a conversation, but turned out he was right, and so he convinced me to move out here, and it was the best decision I ever made. And our rules have been historically, that he would handle, really sales, marketing, fundraising, investor relationships, which is massively important. It's more important the construction side for a development company. He would handle that, and I would handle the operations. So I would handle construction management, I would handle the staff. We would both kind of manage the strategic decisions of the company, the vision where we wanted to go, being aligned, and that's incredibly important, and we really never had any disagreements about that. We don't get into fights about important, big picture things. We get into stupid fights about how many windows should be on one wall when we're when we're working with the design. So it's nothing, you know, really damaging but, but that was kind of our roles then and now. It's just sort of a bigger version of that, right? I'm overseeing construction, design, engineering, permitting, all that stuff, and he's working on all the acquisitions. He's built a really, really forward thinking sales and marketing operation. We're using a lot of automation in everything we do. We're using a lot of the kind of available AI tools really trying to build the operation to be capable to scale to 500 or 1000 homes a year. So he's got his hands full with that side, and his personality is perfect for that charismatic, warm, engaging people like him. And I'm the exact opposite, which makes me really qualified to run construction, but not great at sales. And I've always benefited from a partnership. It's hard to be one, for one person to be everything, and so we've always played upon our strengths of having kind of complementary skill sets. Yeah, you're like, you're like, the great American bison just grazing on the planes, just easy to chew on ass. What's that? Is it easy to shoot slow on my feet, you know? Yeah, and Thomas is just like the the trophy white tailed deer. Just Right, right. Eat gallivanting. Yeah? Exactly, exactly. No, I love it, dude. This was great. You don't need to apologize, because I think you brought a lot, like, a ton of great perspective. I think you guys journey is incredible. Again, for the listeners, you definitely need to listen to Thomas's episode as well as Gabes, because they're obviously, like, running the same business, but they all like, two totally different episodes. Definitely a group that you're going to follow along to. Gabe, do you have anything that you want to share with the with the listeners before we before we sign off here, any you know, any words of wisdom, more so than you've already shared, any tips, tricks, anything like that? Nope. Go figure it out. Go figure it out, baby. Go figure it out. And thanks for having me on. This was fun. It's good. 17 is good catching up. So let us know next time you're in Austin. Yeah, 100% 100% you guys gonna be staying in Austin? Headquartered there? Forever, forever. Nice. Mothership. Yep, the mothership. Okay, cool. Yeah. I'll definitely let you know. The bride and I moved up to Boston, so we're not, we're not near as close, but I actually do think I'm gonna be down there in like, November. So yeah, in San Antonio, Austin, area. So I will, I'll let you guys know. I might make it a longer, longer week, and we'll get together some Terry Black's, get some Terry Black's. I'm sure you love Terry Black's, sure, yeah, right down the street. Why not? Hell yeah, hell yeah, brother. Alrighty, well, dude, you you enjoy the rest of your week. Appreciate you for jumping on and we'll just chat soon. Alright, man. Soon later. See ya.