How Hendricks Churchill found the perfect blend of design, architecture, history and business

0:03This is Business of Home. I'm your host, Dennis Scully. Every week I'll be speaking to leaders and innovators from all corners of the home industry. My guests this week are Heidi Hendricks and Rafe Churchill, the married couple behind architecture and design studio Hendricks Churchill. Rafe came from a family of builders and was already running a successful firm, but it wasn't until Heidi switched careers from art world PR to interior design that Hendricks Churchill truly came together. Since then, their ability to preserve architectural history while infusing it with a vibrant new life has won them a regular spot on Eldecor's A-list and earned them recognition throughout the industry.

0:54I spoke with Heidi and Rafe about why mutual trust is more important than any contract, their new hospitality venture, and why too many firms get obsessed with revenue and forget all about a more important metric, profit.

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3:01You grew up very, very close to one another, right, in Connecticut? That's right, yeah. I like to joke that Rafe was the boy next door, but we never met until that summer we graduated college. And I want to hear that story, but it seems so unusual to grow up in homes built by your fathers. And when I was reading some of your new book, Heidi, you mentioned that your father had less of the technical skills that one might perhaps want to have to build a home. Is that right? Yeah. Well, you know, he was an artist through and through. So he just was never daunted by trying to figure something out. He just had where there was a will, there was a way.

3:49So he had answered an ad in the local newspaper that you could buy land for a dollar an acre as long as you had a house built there within a year. and the reason why they needed it built within a year is because the person selling it needed the town to put in a road and they would only put in the road if there was a house there so so this is how small the area is that we are talking about yeah so he had a dollar and he was like okay i can do that he didn't have many more dollars but um then he just started trying to figure it out, how he would make the, there is no foundation. He just sort of did a concrete slab and then he just started framing it and then he ran out of materials.

4:36So he started using those felled trees and then he started, but he kept the bark on. And I mean, it's a very organic structure. It was funny because he would start to fund his project by bartering, you know, He was like of that whole bohemian school where you had people like Jackson Pollock, a contemporary who would trade paintings before he was discovered for groceries. And that's not unlike what my father was doing in good old Woodbury, Connecticut. He would be like, hey, I can do a portrait of your kids. Or why don't I do a sign for your diner? And he would just have credit around town from these types of barters and at the hardware store in the lumberyard.

5:19So he built this house. It did take longer than a year, but it was our only family home the whole time up until they passed a few years back. And he built it and my mother moved in shortly after and just furnished it. And it sounds like it was sort of cobbled together, but it really wasn't. It was actually, there was definitely a strong aesthetic there that was deeply layered, rich patina, wonderful artwork. Very little of their own was hung on the walls, but just all of their friends or stuff that they would find. And so it was just sort of like this emporium that we sort of took for granted growing up.

6:03They had five of us kids running around in the middle of the woods there. And when I came of age to start having sleepovers in, you know, like third, fourth grade, I would go to these people's homes and I'm like, wait a minute, what? Where's your fish pond in the living room floor? So your sense of reality might have been a little bit altered from what you grew up with and what you discovered the rest of the world was like, Which must have been disappointing for you when you got out and discovered other people's homes. It must have come up pretty short. Well, you know, as a proper tween, I was embarrassed by my family home.

6:40Right, right. So you went through that period as well. Yeah, exactly. Those other houses had central plumbing and electricity and air conditioning. Oh, that. TV, you know. Yeah. Running water. Depending on the age. Well, so then, Rafe, so tell me about the house that you grew up in. And so your father, your multi-generational builder family, right? Well, I think we moved like seven, eight, nine times when I was a kid, you know, always renovating a house and then selling it. So the last house that my father did, so the last house was this large barn house, right? So it was a timber frame barn that was taken down and then rebuilt or erected on this new foundation.

7:31And he took a year off from work. So it's kind of ambitious, right? So I don't know anything about the finances, but he used his regular crews and his regular subcontractors, some of which were family, some were friends, some were guys on the payroll. and it was seven days a week. And he accomplished a lot in that year. And we eventually moved in. In the meantime, there were five of us. So my mom, dad, and three boys, one of which was eight years younger than me. So it was ambitious, but it was a timber frame. It was an old barn. It had solar panels on the roof and I worked on it for a little while.

8:16That didn't go particularly well. now which part rave i mean well the boss was really difficult to work for so he had slightly unreasonable expectations for a 12 year old boy and um so my brother did it my brother stuck it out for the summer and i opted out and went to work somewhere else but yeah you know it's uh you learn a lot about your parents when they take on a task like building the family house you learn a lot about their their goals as individuals and also their marriage and you know who excels at what and you just see a lot of things going on that other kids don't see and and at such a young age how how did you process that so what did it reveal to you and and how did you uh it revealed uh you know that maybe they shouldn't have been building that house um it was it was a stressful time right financially stressful my father was away you know he was gone at work seven days a week and these were long days you know he was still young so he had it in him and then once it was finished my mother loved it because she got to furnish it, which was a great opportunity for her because she enjoyed that.

9:40But ultimately, you know, they were living beyond their means. And that house was a big step in that direction. And I think that the most important thing that my brother and I learned, and maybe the youngest brother, Ben, he wasn't old enough to really remember it. But Seth and I learned exactly what happens when you live behind your means like that and when you're putting so much on the line and it's a lesson that we try to carry with us today because um the family part is far more important than the square footage of the house i want to give listeners a little bit of of a a sense of a of a timeline with uh each of you working individually and then realizing oh why aren't we Why aren't we really working together in a much more official way and starting your firm roughly eight years ago, let's say?

10:39But I feel like part of that story, is it the Litchfield house that was part of it? I had been partners in a construction company with my brother that then started to shift towards design build at least my half of the company. my brother was still working for numerous architects and doing construction business as usual then i started to create more of a hybrid so as i moved in that direction you know we had some pretty good opportunities that the first two major opportunities well one was a townhouse in brooklyn new york and the other was a farmhouse a new construction in Sharon, Connecticut. And so we started that project and that was moving along.

11:28And the owners also wanted to start their country house. So that started. So because we were doing these two projects at the same time, we spent a good amount of time together and they were living in an Airstream camping trailer on the property of the country house. But during that time that they were coming around, they were taking it all in, right? So they were like, oh, you know, look at this place. Heidi, you did this? And then they would look at everything. And then one day they just said, hey, Heidi, you want to help out with the townhouse project down in Brooklyn? So then Heidi got involved with that.

12:08And then that just kind of snowballed. But anyway, fast forward, there we are coexisting with these two separate firms and we're overlapping on more than half of my projects, I think at that point. But my clients more frequently, more often would say, is Heidi available? We'd love to talk to Heidi about this or talk to Heidi about that. So in my mind, it became a good idea to officially merge the two firms for a number of reasons. One, you've got a household running two separate businesses. Plus together, the sum of those parts, although only two parts, is so much better than kind of cobbing it together, like, you know, taking bits and pieces from each when convenient.

13:07So in this new model, it was basically always collaborating. And not every client goes for the full package, but every client benefits from the full package, which I think is the most important part. You know, some people may not want to commit to so much up front, meaning, you know two contracts but uh you know heidi gets involved in our projects early space planning use of space rough furniture plans which then inform the lighting plans uh and without those early conversations there's uh well there's a lot of change orders that's that's when things happen later sure when you know and every electrician is going to tell you oh the decorator showed up or Now we're moving lights.

14:03So, you know, we don't have that problem because we talk about this early in the process. And I want to know what the whole Heidi is. I want to understand the whole Heidi package, what you get for that, because sign me up, I think, for that. But tell me, Heidi, about your... Yeah, you know, I'll back it up a little bit. So at the time, I was working as a publicist for Art and Architecture News, and we were based, I was working for Ruder Finn. And before that, I was working for art museums in the communication department. And I was completely happy doing that. I loved it, especially because we got to work on some really amazing projects with architects, starkitects, we called them, like Frank Geary, Diller Scafidio, back then, eventually became Renfro, Daniel Liebskin.

14:52I mean, really amazing projects. And when I wasn't at work, I was at home with Rafe where we would be buying little fixer-upper cottages that we would be working on ourselves. I mean, my first Christmas present from Rafe back then was my own tool belt where he had embroidered my name in it. So we would cash our paychecks and we'd go to Home Depot and then we'd get to work on these little fixer uppers. And each time we would finish it, we would then sell it. And then we'd be in the market for something with a slightly higher price point because we would do quite well with the turnaround. So when I wasn't working, I was just obsessing over, you know, learning everything from Rafe about how to build.

15:41But then I was also pouring through magazines like World of Interiors and LDC4 and Architectural Digest. And I never even realized just how obsessed I was with it. And then when our daughter was born, I had left the firm because I just wanted to be home with this little creature. And I couldn't imagine traveling as much as I had been. And that's when I met Matt and Jesse while Rafe was designing their homes. And that's when they started spending more time in our home and said, geez, we really like the vibe you have going on here. Can you come do it for us? And I was like, yeah, sure. Let's try it.

16:22This seems like it's going to be fun. I still marvel over how much that learning curve wasn't drastic. You know what I mean? Because as a publicist, you learn how to create a budget and stick to it. You know your way around a spreadsheet. You know how to channel ideas and work towards a greater goal. And then nights and weekends, I was working with Rafe on, you know, floor plans and, you know, lighting and paint and tile. And so really, there were just a few more technical things I had to figure out along the way. But that and my innate ability as most designers for spatial planning and putting things together in your head, it moved along pretty easily.

17:06And it didn't take long before I realized this is maybe what I should have been doing all along. because to this day, it doesn't feel like work. It just feels like just who I am and what we do. And oh my God, you're going to pay me too? Maybe we can edit that part out. Exactly. We don't want to make her sound too eager to take on projects because I know that's not the case. Yeah, I mean, it's sort of, I will say that one of the other things Rafe's joke reminds me, one of the other reasons why it was so successful for us to merge is that he has a really strong business sense that I struggle with.

17:51I love being in the trenches of the design work and the process and moving the progress along. But then to also be thinking holistically about a business and a business plan and the future of that business, that eludes me. Yeah. Listen, as it does so many, and that's why it's so challenging. And that's why in many ways, it's remarkable that we even ask that of creatives to say, oh, by the way, you also have to effectively run the business side of this operation, right, as your business gets going. and and and i want to talk to rafe about his his business sense but but first take me back we said we tell the story about how the two of you were together professionally you grew up in practically the same place and then didn't meet really or i mean didn't get together until much later in in life tell me how that happened we were both living at in our family homes after college After graduating college, Rafe was on his way to grad school and I was on my way to New York City by way of couch surfing, trying to find a place to live.

19:01So during that summer, I was home working for my parents' business, which was they made hand carved gold leaf signs. So I would often be doing that out in the backyard. and Rafe was brought by our house one day because our house, as we mentioned earlier, was sort of like this very organic job site that some project was always going on there, whether rock wall fountains were going up or... But that's not where we met. Oh, wait. There's a deeper story that we're going to get. We met in the parking lot of a liquor store, just like every great American love story. there's the american story we've been waiting for yes ron howard directs the story of ron howard would like this i'm hanging out in the parking lot of a liquor store uh with three guys that i grew up with jeff jim o'day brand mac paoli and uh this white jeep comes driving in way too fast bouncing in every direction and there are these two two kids driving it uh one of them i knew heidi's brother gi and uh and then there was this gorgeous woman young woman driving this thing and i look at paoli and i'm like who's that and he and mac and i've known mac for many years and he's just like, Churchill, way out of your league.

20:36You could never. And I was like, really? Really? Okay. So I went over, introduced myself. Heidi was wearing a Syracuse sweatshirt, which was because she had just graduated from Syracuse. And I was about to go to Syracuse. I had a fellowship to study sculpture, to get an MFA there. um and so what an opportunity right she's wearing this sweatshirt and i've got a fellowship like it's a home run you'll drop that on her my sex appeal was like a couple clicks up so uh you know and everybody played it cool and i pretended i was normal and uh it was all i thought we had a nice connection but then eventually i got invited to go up to her parents house and check out this chimney that was being built which is legit like someone said hey man you got to go check out this chimney that brett's building or geese building or and so i went up there and then one of the guys is like oh heidi's out back you guys just met and i I was like, okay, let's go back.

21:50And I go back and she's like wearing these little cutoff shorts and a tank top and black clogs and like operating a belt sander. And I was just like, smoke it. This is the woman for me.

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22:55So the rest is history after that. You come together and get married. But as we were just describing, it took a while for the two of you to bring your firms together in a meaningful way. even though you were working together on plenty of projects, but in a divided way. And Rafe, coming back to the business sense and how you approach the business, because as you were saying earlier, and we've talked about how you came up, a family of builders, you and your brother had this pretty busy firm, and you had a pretty big staff, if I recall, before you, right? Yeah, Seth and I were partners in a construction company called Churchill Brothers.

23:39And at the height, we had like 28 or 30 employees. And yeah, it was profitable. And we had great work and great opportunities and turned down a few projects because we knew what we were capable of at the time. And we knew to be careful. You know, we had seen, so my father was a builder, my uncle, my grandfather, all of their cousins were in the trades. So I grew up at a dinner table, unfortunately, listening to conversations about the reality of owning a small construction company or being, you know, a carpenter with a pickup truck. My father would not get paid often by people. And eventually, we were all partners in a construction company.

24:34And that's when I really got a good look at how he was running his business. And a lot of things started to become more obvious. When we got into business with our father, we realized that there had to be significant changes in the way that he was not only estimating projects, but then running them and billing. and tracking expenses and timelines. And that was just out of sheer necessity. That was, you know, based in fear, really, right? Because if you're building back then a$3 million house, you know, was a tremendous amount of money, it could ruin you, right, as a small business owner. So, yeah, I spent the, you know, the next, you know, 25 years or 20 years after that partnership, prioritizing the responsibility of running the business.

25:37But the most important thing was being profitable, which I think is still not a priority for a lot of people because they don't understand what profit is. They understand what revenue is, but they don't understand what profit is. So we did well in construction. And I took that business model. And when I left the construction industry and started my own design firm, which initially was a design build firm, I had those financial models built and I knew how to run a company. And so that first design firm was profitable basically after the first month. the first billing cycle. So, you know, as a business owner and a designer, it's hard to separate the two and it's hard for the two to coexist.

26:36I would recommend to anybody that who wants to get into the industry that your number one goal after doing like, you know, your best work and building that network of clients and vendors is to get somebody on board who's got some skin in the game that is financially literate. Like they're the one who's going to tell you there's a hole in the boat. You don't want to find out about the hole in the boat. You want someone to point it out to you. So that person needs to have skin in the game, which essentially means they're a partner. So, and is that how you approached it? So you brought someone in who had skin in the game and tell me what you mean about people being focused on revenue versus focused on profit because there is a big difference there.

27:25Yeah, so to answer your first question or assumption, no, we didn't bring somebody in who had skin in the game. But that's my advice for others. Let me make that clear. My advice for other people is you should do that. Man, I am fried, Dennis.

27:42There was a point. This is the experience of not doing that talking to you. Yeah, there was a point when I would say that I hit the wall. It was too much. Yeah, we hired someone a few years ago, and he was an employee, and he still works for Hendrix Churchill and is involved in other projects that are fairly significant. And we've learned a lot from each other, and we've learned a lot from mistakes that were made in the past. And the revenue versus profit, help me understand that. Well, we just send an invoice out for$50 ,000. That probably sounds really exciting to a young designer, right, to send out a$50 ,000 invoice for the month of September.

28:29but what they're not really remembering and I see it every day whether they're plumbers or designers or architects or hairdressers or barbers is you send an invoice or a bill and you get paid that's wonderful but that's revenue well now you got to pay all your expenses and you got to pay yourself and you got to pay taxes and it'd be nice to have some cash in your tax savings account and your operating account and your escrow account where you keep customer deposits and next thing you know there's not a lot of money left so you have to determine how much of your time is being utilized towards profits and uh and if it's not profitable time what's it being spent on and you have to model that every single week not every quarter but every week you have to you have to look at the billable hours you have to track the time accurately and this is the this was the biggest struggle in building a company is nobody wants to hear every week if you don't log your hours correctly we will not be billing correctly and there's a good chance we will be under billing it's most likely in that case that we are under billing which means we are leaving money behind and working for free working for free is one thing but when a room full of people are working for free and expect the owners of the company to still pay them it's not a sustainable model not even close and you know we know a lot of designers of all ages and all experience and i think that one of the most consistent problems is that they don't prioritize the modeling of their business you know financially because they fear that it it doesn't represent them accurately, right?

30:44Because they love what they do for work. They love their clients. They love the projects and they're living. They're alive, right? They're able to borrow money because they're sole proprietors in the business. The books don't have to be clearly separated from personal draw to, you know, like, I mean, they should be, But the reality is that a lot of people exist nearly co-mingling their funds. And that is not a business model that you can sell. And that's not a business model that you can take on partners with because your finances are not accurately represented. And a lot of people, their companies are devalued because they're not actually aware of what they're making.

31:39They're most definitely not aware of their profits. Well, so with your dad, Rafe, do you think that he – so many big designers have told me that one of the challenges with working for very wealthy clients is they have a lot of lawyers. And often these designers would say, I was always fighting for the last 10 % of a job unless I had really made sure I was getting paid before it was all really, really finished. and I get that. And is your sense that your dad sort of had a bunch of bills that just never got paid because at the end of the job the people said, oh, we're done. Sorry, see ya. Yeah, I would say that his paperwork wasn't thorough and that he probably wasn't as communicative as he should have been.

32:31And, you know, there's a great movie, Mr. Blanding Builds His Dream House, uh which is a playbook of this is what's about to happen here it comes oh my god i can see it there oh god there it is and then they move on to the next one and uh yeah it's all about communication and that communication should be in writing look um builders are one of the most important parts of the entire process and the backbone of the industry because without them there would be nothing to decorate and there would be things wouldn't leave the paper but they're also an easy target right they're easily blamed for some of the problems they are blamed because they can be because there there isn't evidence to the contrary right like emails or you know it feels like it's been around forever, but of course it hasn't been.

33:36If you don't have that paper trail, then it's fair game, right? It's an opportunity. And everyone knows that the secret about contracts that nobody really wants to talk about is that the contracts that builders sign with their clients are worthless because the builder cannot afford to defend it. They really cannot. Whereas the client can easily prove negligence or a lack of approvals or whatever. So it's entirely about trust. And that's why you have to be selective, both sides, the client and the builder. the architect needs to be very careful who they align themselves with both with clients and with builders and and i i think that that is something that that you don't hear enough about people love the opportunity to work for somebody who can afford them it's not always the right client though right it's not always the right person because it does affect your brand i mean if we're talking about business, like the windows that you choose to put in a house, the builder you use to install them, and the client that you work with to develop that project all impact your brand.

35:05And your brand is really the most important thing because without it, you won't be in business in five years. And that's stuff that doesn't really come up in conversations when starting a new business. when you hear people focus on the low bidder, so that's why we're talking to that guy? Because he's the low bidder. Okay, let's all just say that out loud again. Right. And remember that in the ninth month when things are getting a little trickier. Yeah, everybody's got to be there for the right reason. And low bidder is not the right reason. In that same context, being selective about your clients and really knowing who the right people are.