Move Over Wood and Nails, Stack Homes is Disrupting the Construction Industry with Sumner Douglas

0:02Who's ready to rock today, Fire Nation. JLD here and welcome to Entrepreneurs on fire brought to you by the HubSpot Podcast Network with great shows like CEO School. Today, we'll be talking about the statement of move over wooden nails. Stack Homes is disrupting the construction industry. To drop these value bombs, I have brought Sumner Douglas into EO Fire Studios. Sumner is a serial entrepreneur and previous early stage focused VC. He is the driving force behind Boom Startup, a top 10 ranked accelerator. His previous founder roles include Sassuma, GlassView and Vutility.com. Today at Fire Nation, we'll talk about aha moments when it comes to an idea for a great business.

0:42We'll talk about disruption in industries and why it's so important and how you can find your disruption lever to pull Fire Nation and so much more. And a big thank you for sponsoring today's episode goes to Sumner and our sponsors. Outbound Squad, hosted by Jason Bay, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Tune in for convos with leading sales experts and top performing reps to help you land more meetings with your ideal clients. One of my faves, the monthly app with Jason and Ethan, where they share hacks, tips, and tricks. Listen to Outbound Squad wherever you get your podcasts.

1:20Sumner, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Hey there, John. How's it going, Fire Nation? It's a pleasure to be with you today. I think, you know, it's a good question to kick it off with. When we think about something like this, I think something that's really kind of unique to being an entrepreneur in a lot of these different places is you have to really not care what anybody else thinks about what you're trying to accomplish, what your goals are with something like this. I think it's a double-edged sword, right?

1:51I think that you need to be really receptive of your team and what your team has to say about a lot of these different components when you're building a company. But when it comes down to taking big entrepreneurial leaps and starting companies with really big ideas from that perspective, I think you really need to really believe in yourself and focus on the goals of what you're trying to accomplish and kind of try and disregard a lot of some of the advice that's been given to you throughout the years so that you can take on a really clear and big picture vision. especially in the entrepreneur world.

2:26I think this is, it's kind of a rule of thumb for me. I think you have to dream big and it means that sometimes you don't need to share your goals and some of the things you're shooting for with people even on your inner circle. Fire Nation, I've interviewed over 3 ,800 successful entrepreneurs and I can tell you one thing. If they thought or cared about what other people thought about them or said about them, then they would not have been in the position to be that successful entrepreneur. And we're talking about wood, nails, and how Stack Homes is disrupting the construction industry today. So let's start off with that, Sumner.

3:03What is Stack Homes and why does wood and nails need to move on over? Yeah, so Stack Homes is a modular home building company, ultimately. So we focus on elegant designs with sustainability focus. And I think when it comes down to kind of, you know, why wood and nails is something that needs to move on over. I think we've been building and constructing buildings for 120 years in the same exact way. Basically, we've been banging nails into wood for 120 years. And I think we need to take a look at how we can kind of really evolve into a newer construction industry from that perspective. I think that affordable housing and the housing crisis in general is one of the biggest crises that we face here in the U.S.

3:47And I think that the modular home solution and factory built, high quality and sustainable buildings can really solve one of the biggest issues that we face in the domestic US. And so I think, you know, in my past, I've founded several different companies, and I've been a serial entrepreneur. And typically, a lot of those companies have been in a tech based industry. So, you know, when I sold my last company, what I was really looking for was to go into a market where we could identify a really huge market that we could change the world with a little bit and really disrupt in a large way. And I think construction has been primed for disruption for quite a long time now.

4:29I think that when we're looking at modular homes and what we're bringing to the table, we're bringing a huge amount of technological innovation and integration into that building process so we can cut down on labor costs and improve the quality of homes that we're producing for the marketplace. Fire Nation, when I'm hearing Sumner chat, it's kind of bringing me back to when Henry Ford said, if I had listened to people, I would have created a faster horse. But no, he said, you know what? It's time to innovate. It's time to start building cars for the masses. And yet back then, people were building homes with wood and nails and they still are today.

5:09So why is cars, why is that such an innovation? And why are we still doing the same thing with our shelter, with the structure that we live in. There's so much opportunity in today's world for things to be done better, more efficiently, more effectively. And that's what I love about what Stack Homes is doing. But I wanna hear about the real aha moment, Sumner, because when we actually go to the moment that you said to yourself, Stack Homes has to exist, we can learn a lot from that because a lot of my listeners right now have yet to have their aha moment. And I want them to really picture what that looks like or those that have, they can really understand, hey, what should maybe the next steps be to make my dream, my aha moment a reality?

5:50So tell us the story of the aha moment, the idea that you had for Stack Homes. The aha moment really came because I had spent, you know, previous to this company, I had spent about seven years as a venture capitalist looking at hundreds and thousands of different new and innovative technologies out there. I had created a lot of software and done a lot of ones and zeros. And for me, I really wanted to do something super tangible. I just think that that ones and zeros and creating software really wasn't creating a lot of passion inside of myself. And so when I was looking for a new industry, I was looking for something that I could really change the world with ultimately from that perspective.

6:31And when I looked at Stack Homes, I had seen all these really, or when I looked at the concept of Stack Homes, I had seen all these really innovative kind of construction technologies, but still a lot of them had not been introduced really into the modular world. They've been floating around there, but hadn't been integrated into the industry. And so, you know, I really sat back and started to design these houses from a sustainability perspective. And then I started to create the way that we could really ultimately build in the future and said, you know, how can we meet the needs of affordable housing?

7:04how can we produce in mass scale ultimately from that perspective. And so we've been able to bleed some really interesting cutting-edge technology into how we produce. So we have some unique methodologies out there where we can basically take cold-rolled steel and, for lack of better words, kind of use a 3D printer to print the entire structural package of a home in about 30 minutes and panelize that home. and we can actually use laser systems to kind of guide the assembly of that home on the inside of the factory to create a much more kind of advanced way of constructing buildings that has a huge advantage to it not only from quality control but also from sustainability and from the type of home and the speed of delivery that we can reach with a lot of different people out there.

7:53Fire Nation there's a lot in what some they're sharing that I think you can take away and apply to your journey, to your story. And we're going to really be diving into a few things specifically. I really love, love talking about disruption. We're going to be diving deep into that when we get back from thanking our sponsors. Have you ever thought about starting a completely new business from scratch? Maybe a nonprofit or a bakery serving up the most chocolatey croissants. Yum. Whether you're starting a new business or growing one, if you want it to be successful, you need the most talented people on your team.

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9:41HubSpot gives you everything you need all in one place. Plus, with fast activation, HubSpot makes it easy for the entire team to get up to speed, saving you precious time. And best of all, you can try before you buy. No commitment, no hidden fees, not even a credit card is needed to sign up. Get started for free at HubSpot.com. That's HubSpot.com. Sumner, we're back and you did a good job right before the break of breaking down modular construction and the benefits of it. But I even want to go deeper here because I want really Fire Nation to understand the benefits of modular construction. I want them to understand why you saw this to be such a good idea.

10:19I want to see what you think the future looks like in your area of expertise. Dive into those things. Yeah, so I think some of the benefits of modular construction, I think integration of technology into building methodologies is the number one thing that I'm really bringing to the table that a lot of other companies aren't really going into from that perspective. I think when it comes down to modular construction, there's so many different benefits to it, one of which is the quality control, two of which is the sustainability factors of it. I think that I'm a bit of a sustainability freak, and so I've always wanted to design and build homes that were meticulously thought out for kind of the way that you're using those spaces and the functionality within them.

11:01But I think when we go down to kind of like the hard-hitting facts about, you know, what can be better about modular, well, let's exactly break down what modular construction is. Modular construction simply means factory built homes. It means homes that are transported to the site and then installed on a permanent foundation. So it's a lot different than what a lot of people would have maybe misconceptions about from some of the other type of homes that have existed out there, kind of these rundown homes that are not really built in high quality. With modular construction, we're held to a much higher set of standards than some of the HUD housing or the twin homes that you might see out there from that perspective.

11:40So we're taking that type of a model and we're innovating on it to deliver a much higher quality product. So we're building with exclusively steel frame on the inside of these things that make them extremely strong, extremely durable, extremely long lasting products from that perspective. We can produce them with a much lower impact to kind of waste out there. So when we look at waste production overall in construction right now, 34 % of the waste that is out there in the marketplace, or at least that is being generated on an annual basis in the domestic U.S. is coming from the construction industry.

12:14And with modular construction, we're able to build houses in a way that reduces our waste factor to sub 10 % on each one of these builds. So that's going to have a dramatic effect on kind of not only the current population, but the future of kind of what happens with construction in a large way. I think, you know, quality control is a major factor that we have out there when we're looking at stick build out there in the field ultimately you'll be holding to weather and moving your your materials out there in the finiciencies that kind of that that are involved in part of that process you know you're dealing with sleet and snow and rain and different things that ultimately affect the quality of that product once it's once it's been installed in your home and because we're building in a controlled environment it enables us to really improve the quality control and improve the materials that we're using on the inside of that.

13:06In addition to that, we really have, you know, we've taken on a couple of passive home kind of inspired projects as well. And so we've been able to bring some kind of cutting edge sustainability features and higher R values than what you would, which is an insulation value in homes. So higher insulation values, which just make these homes tremendously more sustainable than a lot of the homes that exist on the market. On top of that, the timeline, right? So with modular homes, we can build your home to completion in six to nine weeks. Most people are hard pressed to get a footing and foundation in place in the time that we can actually assemble and build your entire home.

13:43So I think timelines are considerably important, especially in the marketplace today where there's a huge demand in a lot of different areas. Structural integrity is a big component of this because of a lot of the steel that we're building with a much longer run type of material that will last for a much longer period of time. And I think cost is a significant problem that we see in this marketplace too, and especially scope drift on projects where you start with initial price and then the price ends up being double or triple by the time you're done with that project. Because we're building these homes in a controlled environment, we're able to really effectively control that cost and inventory that goes into those different builds and stick to the original price that we gave you when it came down to kind of building and ordering the home that you're requesting from Stack Homes.

14:33So many powerful things here. And I mean, the one thing that jumped out was towards the end, I mean, the cost drift. I mean, living here in Puerto Rico, man, that is the one huge pain point that everybody deals with is, you know, it starts with one thing and then it ends up, you know, so much time later, but then so much higher cost later, that cost drift just happens and happens and happens and you're stuck because you're like halfway through a project, three quarters way through a project and it looks like a hole in the ground now, but you obviously know you need to finish it. So your hands are tied and that's so painful.

15:01And that's one thing that I always talk with Fire Nation about some there is disruption. They need to be thinking about disruption in industries that are old and tired. We've already talked about some ways that are very obvious how you are disrupting the construction industry, but let's really focus on that. What is the thing that you are disrupting in the construction industry that really makes you over the top fired up? Yeah, I mean, I think there's a lot of different things that we're kind of disrupting in this construction industry. So when we founded the company, ultimately, it was really founded off the principles of kind of additional dwelling units or ADUs.

15:38So ADUs are something that have been a hot topic, especially throughout the Western United States. We've been kind of following a train of legalization and in kind of permitting changes throughout the Western United States that really open up kind of an ability to increase density in downtown areas and add second investment properties like Airbnb properties to your existing home from that perspective. And so that's really why we that was the core reason or one of the reasons why we founded Stack Homes from that perspective. And so we've been able to rapidly expand into that market. But I think that became a really unique product for us.

16:14And what we ended up doing was designing these floor plans that not only could you use from an additional dwelling perspective, but you could also combine to create full scale custom homes. You can stack them on top of one another and create a truly modular product out there. So there's a lot of homes that call or a lot of home companies that call themselves a modular home company. But, you know, I think the very word modular implies kind of a multifunctional building methodology, ultimately. And that's really what we've created. So we've got these units like 320 square foot, 480 square foot, 640 and 960 square foot models.

16:50And all of these different units or modular units can be stacked on top of one another's with walkways and breezeways and glass enclosed staircases to not only create an ADU, but create a full scale custom home. And even further than that, we can actually create full scale multifamily builds. So our 960 is one of our most popular models. It's a two bedroom, two bathroom with 24 foot sliding glass on the front of it. So it's got a really nice indoor-outdoor living experience, ultimately. And we can stack that all the way up to six-story to create full-scale, off-the-shelf development. So I think that that's one of the things that's really been inhibiting for a lot of development throughout the western United States is really building every building to a custom standard, ultimately, from that perspective.

17:38But we really are bringing development to the forefront of the company with our multifamily products and enabling people to buy fully off the shelf development products across the board. Wow. Do you service Puerto Rico? We will be soon. I've actually been looking at a really interesting project in your neck of the woods that's got 20 overwater bungalows that they want us to take on. And I like to take on these really innovative projects. So I would love to love to come down and do some work in Puerto Rico. That sounds like a good deal for you and me, John. Oh, I love it. Well, listen, brother, I've got an empty lot right next to me that I purchased a number of years ago that is just begging for something beautiful to be put there.

18:17So, I mean, let's have a conversation. Maybe we can bring a little video crew and get everybody pumped up about stack homes down on the island and what it can bring. And of course, when you have an island of three and a half million people, a lot of them living in poverty, I mean, there's a lot of opportunities here that can really improve some pretty difficult housing situations, especially, you know, on an island that can deal with hurricanes every, you know, three to five years that can really disrupt people's lives in a pretty big way. So this is really exciting stuff, Fire Nation, when you can have an idea, a concept and really impact so many people in so many meaningful ways.

18:52Sumner, what do you want Fire Nation to walk away with, with all the things that we talked about here today? I think when you take a look at the modular market in general, ultimately, from that perspective, I think you need to look at it as probably the most viable solution to solving one of the biggest problems we face. Right. When I founded this company, I wanted to change the world ultimately. And I know it sounds a bit corny from that perspective. But that was really the goal is to kind of start a new company in a market that was ripe for disruption. And I think that the modular, the way that we produce in modular really has the potential to largely disrupt the housing market and to solve a lot of the different problems that we're facing, whether it be number of homes or the quality of those homes, the sustainability of those homes, and really kind of meet the needs of the people from that perspective.

19:41So I think, you know, modular is a good solution for not only increasing downtown density, which is going to be a pivotal part of how we kind of like face a lot of these housing crisis issues, but also creating really affordable housing solutions. So, I mean, I think we've taken on another project here where we're going to be delivering 150 to 300 homes over the span of the next three years. specifically for kind of a homeless solution in Salt Lake City, which is going to be a super exciting project for us. And I think ultimately, don't discard some of the components of modular building. I know that it's not something that you've seen from a traditional perspective in a lot of different cases, but I think that it offers a great outcome for a lot of different people.

20:22And at the end of the day, we really kind of offer a supreme product that is a truly luxury and modern home that has a lot of amenities that you can't just get through traditional construction. Fire Nation, exciting times with exciting technologies. Sumner, where would Fire Nation go to connect with you to find out more about your company? What is your call to action? Yeah, so you can come check us out on stackhomes.com, just S-T-A-C-K-H-O-M-E-S.com. You can see our website, see all of our kind of floor plans there. You can also follow us on Instagram too. We've got a lot of really interesting videos where you can kind of see our crane in.

21:01So that's one of our clients' favorite days is when we are, you know, finishing manufacturing and bringing these on site and the entire home gets installed in about a three-day period and craned in. So I think there's lots of really interesting content for you to be able to connect with us on. I love that. Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with SD and JLD today, so keep up that heat. If you have any direct questions for Sumner, find this episode on the podcast listening app. Put up below, post a comment, get the conversation rolling.

21:35And of course, eofire.com, type Sumner, S-U-M-N-E-R in the search bar. The show notes page will pop up with links to everything. Sumner, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thank you very much, John. I appreciate it. Thank you, Fire Nation. Hey, Fire Nation. A huge thank you to our sponsors and Sumner for sponsoring today's episode. And Fire Nation, are you ready to rock your very own podcast? Check out our free podcasting course and I will teach you how to create and launch your podcast for free.

22:13Freepodcastcourse.com. Freepodcastcourse.com. I'll catch you there or on the flip side. outbound squad hosted by jason bay is brought to you by the hubspot podcast network the audio destination for business professionals tune in for convos with leading sales experts and top performing reps to help you land more meetings with your ideal clients one of my faves the monthly app with jason ethan where they share hacks tips and tricks listen to outbound squad wherever you get your podcasts Antibritis