Hans Wright on Transforming Windsor Door - EP.290

0:00For us, it's the service and replacement piece is kind of, that's the last kind of piece of the puzzle here. And so over the last two years, we've really built the platform in that direction to complete the circle and just to, to build something that really compounds. And so we're really, from a platform perspective, like that's why I say, I thought of that as a, you know, when we started that direction, kind of that was kind of our startup phase. And we're out of that now because the service and replacement part of the business is scaling rapidly now. It's really cool because, you know, you build something that truly compounds.

0:47like the value creation story is actually kind of years out like it's performing well now and it's creating value now but the real value is like when you start building cohort on cohort on cohort and your install base continues to to feed it it's we're really excited about being in that place and kind of being the only platform that's thinking that way

1:15Alex Bridgeman: Hans, thank you for coming on the podcast. Things Like an Owner is all about small businesses and growing them ambitiously. And you've got quite an ambition for Windsor that I'm excited to chat about. How did you get into this business? How did you find Windsor? And just tell me a little bit about maybe the career leading up to this point. Well, first of all, thanks for having me. It's going to be fun to talk shop with somebody that's in our space. wow so you know my I came into this business through family you know if you had told me at 18 or even 20 that I would have ended up in the garage door space and that I'd be loving it this much I'd be shocked but yes my dad and uncle bought a real small garage door company in Houston it was a truck 2 ,500 square foot warehouse they paid like$25 ,000 for it this is in 1991 they were they're identical twins they're absolutely crazy true like Texans like the Texan wildcatter spirit like comes through fully in them they wanted to own a business together and they I looked at it more as an opportunity to just have some kind of mailbox money.

2:40My uncle was in the oil and gas business. My dad was in a liquor distribution and importing business. And just bought that business in 1991. Through some life events, my dad eventually ends up going to work in that business full-time. and really, you know, kind of rode the housing, new construction housing boom in Texas in the mid-90s and built some really good relationships with some of the regional builders who ended up becoming national builders. And, you know, over the course of, let's say, 10 years, they expanded that business from one location to seven locations throughout Texas and Oklahoma.

3:28my uncle eventually comes into the business full-time as well and yeah and so they scaled that thing I think the first year they owned it it did about two hundred thousand dollars in revenue and by you know oh one it was doing about twenty million dollars in revenue at that point I'm in just getting it going into college the business really from oh one I'd say to oh eight really kind of plateaued. My dad and uncle would tell you that you can't, they would say this now in hindsight, you can't run your$20 million business like you ran your$5 million business. And I think that was a snake that maybe bit them at one time, but they were still, you know,$20 million for a regional garage door company at that time is just pretty sizable, you know, moving quite a bit of volume.

4:16And really in parallel at that time you had Windsor Door, you know, Windsor Door has been around for since 1954 officially 64 as Windsor door itself and and had you know scaled to be one of the largest manufacturers in the country was a national full-line manufacturer with multiple plants 36 distribution centers I think about that same time they kind of they kind of peaked late 90s, early 2000s at about$250 million in revenue. And at that time, my dad and uncle started to buy from Windsor Door, where eventually became one of their larger dealers. So for me personally, I went to a small school, stuck around, ended up going to grad school there and worked at the school for two years.

5:09and then I really kind of got coerced by my grandfather to give it a shot to come work in the family business and you know he he was going through some some health problems at the time and so it kind of tugged on my heartstrings a little bit and so I said I okay I'll I'll come back and we'll give it a try. And, you know, I love it. My dad and uncle shoved me into just a kind of a local sales rep role in a store that had like underperformed for like a decade and happened to be one of the most competitive markets in the country. It was in Dallas, Fort Worth. And so wonderful lesson spent, you know, the better part of, let's say a year being told no.

6:07And this is all like, this is 07. So, you know, you're just kind of trying to find your voice, trying to find how you fit in, how to create value, really learn the business from the ground up and then 08 happens. And, you know, in hindsight, what a, man, what a education to start your career in that environment. And, you know, I, one of the, the lessons that I look back on that I'm super fortunate to have gone through was to be given really kind of a front row seat to the tough decisions that had to be made in 08, you know, when our business declined by more than 50%, right? Even though I wasn't in a leadership position at the time, my dad and uncle made sure that I was present when those tough decisions were being made.

7:02So I understood, you know, the responsibility that we had as a family to the people that supported our business and the tough decisions that were going to have to be made if you were ever going to be in a position of leadership. So we worked through a, I mean, we did some really cool things that helped us not only survive, but really, I would say kind of thrive. Through that time, we opened, we started a wholesaling product out of three different locations. It was diversified our business away from a home builder. We put on a custom product line that really, I mean, really kind of kept us alive and, and allowed us to create some additional value for our home builder customers, you know, you know, for, for years and years and years, we're just installing, you know, the basic white 16 by seven.

7:59And we had customers that had homes that had been sitting for, you know, at some points is better part of a hundred days, right. Or more. Right. And so we would go in and say, Hey, we have this upgraded product. It's a, and it was really a, we're taking a custom door and facing it with cedar, you know, some kind of value add to it. Right. But we'd go and say, Hey, I'll give you the first one. And I've, I'm, you know, the, this is going to change the look of your home versus everybody else's in the, in the neighborhood. Right. And I'll give you the first one, but every other one after that, you know, you just, you get, you got to pay for it.

8:41Right. And not only it helped, you know, change the elevation of the builder's home, but it also put in the, the Jones effect, right. Where the next homeowner that comes in and buys a house, they want to, oh, they have a cedar door? Well, I want a cedar door too. That really helped us survive that timeframe. At the same time, you had Windsor Doors going through, went through a number of owners from 2000 to 2010. And the size of the business really trumped pretty dramatically from 2000 to 2008. And so... Yeah, my dad and uncle had always wanted to be in manufacturing. I don't think they had a clue what that meant.

9:34But eventually worked out a way coming out of 08 and this is like 2010, 2011, they start to work with the Windsor ownership to acquire the performing assets of that business.

9:47Alex Bridgeman: What surprised them most about manufacturing? You know, it's just manufacturing is such a different discipline than a service business, right? What discipline means in manufacturing is vastly different than what it means in a service business. I'll be honest with you, I'm not sure they really realized that until here in the last five or six years as we've really leaned on the leadership that we were fortunate to inherit with Windsor. And as our team has grown and we have a really, really, really strong leadership team and a really strong group of senior managers. And as that team's really kind of started to come to fruition, I think that's really when they started to understand the vast difference between those businesses.

10:54I would say that was, you know, the difference between the two businesses, I think would be the thing that they would say, in hindsight, caught them off guard the most. The next thing I would say is the regular need for CapEx on the manufacturing side of the business is just, it's just, it's very different than it is for a service business, right? So I think this is the two things that really kind of caught them off guard.

11:27Alex Bridgeman: And what was the state of the business when they took over? And maybe even since you joined, what does it look like? What are the kind of different stages of life through its decline, your family's involvement, and then your involvement and what that all looks like? You know, we'll look at it, you know, as they came together. Right. We'll just say, you know, when we acquired the assets of Windsor door, it was, it was really kind of a, a reset or a rebirth. Right. And really kind of step back. We're no longer going to be, and we still today do not have aspirations to be a full line manufacturer.

12:18We were a niche manufacturer. And that was really kind of the resetting of that was in 2011. So you have that resetting. The business was at$250 million. And 08, let's say it's about 50 million, then 08 happens. And so the first year that we owned it, revenue was$7 million. So it was complete reset. But in hindsight, man, we got$7 million, but the bones of something that you could really build and scale, not only in just the from the physical side of it or from an erp perspective or the brand is the people and the knowledge that we brought over was um as we really started to scale you know that's that's really what we've leveraged and has helped take us to you know where we are today but you know in terms of you know how i think about it in terms of you You know, you look at kind of 2000 to 2008 kind of wilderness years.

13:34And then you have a little bit of a reset in 2011, where we pushed through to 2019 and are trying to find our footing. And both businesses, the installation business and the manufacturing business slowly grew. were not wildly profitable by any means, but slowly grew, starting to kind of find our identity to some degree. And then I would say, you know, for everybody, the COVID disruption or supply and really this, you know, the supply chain disruption to us, we really saw it as an opportunity, right? About that time, you know, that first generation is deciding to really kind of step back. Our leadership team starts to really kind of take shape.

14:27And we start to really, I'd say, really kind of professionalize the business and then start to think about it in terms of, you know, what is it that we can become and what do we want to become? You know, the supply chain crazy really created an opportunity for a lot of people. And you can see it in our industry where the bump, a lot of people really benefited from. But, you know, I think we had this unique perspective that we had been through. Like, you know, we were at that time very heavily tied to new construction residential. So we've lived through these hard cycles before and we know that it's not, you know, this is not going to last forever.

15:09And frankly, we're probably pulling forward some demand where the backside of this could be painful and prolonged. So immediately as we're going through this run up, as the price of steel goes from$500 to$2 ,000 a ton, our team is thinking long term. And how do we ensure that this real hard period that we went through right before the COVID bump, how do we build something that's more enduring and more durable on the back end of this right and that's really i mean and still today i mean that that's really when you think of like the first principles of how we that that's it build something that is durable and enduring for a very long time with a deep and wide moat.

16:03So how did that happen? The first thing that happened, price of steel runs up from$500 a ton to$2 ,000 a ton, like overnight. Huge constraint. We're still a small private family-owned business. The constraint that that put on working capital for us, I mean, we're at that time, again, very heavily tied to new construction home builders. So you're buying raw materials, and then getting paid from the, you know, in the builder community somewhere 45 to 60 days, right? And so huge constraint on working capital. And so for our team, you know, we sat back and we're like, okay, this is, this is a real challenge.

16:47How do we communicate it effectively, communicate our challenge effectively, build trust while doing it, and then mutually come up with some kind of solution for everybody that's involved in this. Us, our suppliers, our employees, our customers. And we really leaned in very heavily to this concept of transparency. And I would say that leaning heavily into transparency, not only saved us in the immediate term and allowed us to work through some real tight cash constraints as the price of steel was running up but it built out these like this kind of new model for how we were going to operate first with our customers but then i mean i could go off on a tangent but the like the value in making transparency one of like the core principles of how you do business and i can't i just it's it's been a just a breath of fresh air for us right for that to be a core principle But we leaned into it first with our customers and eventually what it led to was us bringing the entire supply chain together.

17:59I mean, we were, I mean, largest home builders in the country, us as a supplier, steel supplier, hardware supplier, freight carrier, all in one room, trying to find a way to optimize the supply chain to make sure that nobody was playing a zero sum game. And that, I mean, to put yourself in a position where you're in a place where everybody's playing to win together was incredible. And so a lot of the architecture and how we interact with suppliers and customers on the home building side of the world today, we still do. And we're kind of born in that time when price of steel was going crazy. so as that's going on and we're starting to scale our business we you know we got business started to throw off a fair amount of profit and you know my dad and uncle i had you know have to give them a pat on the back like they never really pulled real meaningful money out of the business and it was always reinvest reinvest reinvest and so as we see like you can see it in the garage door space, and I still think this today, you saw a massive amount of consolidation on the manufacturing side of the business around 08, right?

19:19And we have half the number of manufacturers that we, or maybe less than half the number of manufacturers that we did in the early 2000s. And that capacity, when it came offline, it's not like those presses or those roll formers went into other plants. In maybe one or two cases, I can think of where that happened. But for the large part, they just went offline or were bought and mothballed. And so, you know, you saw structural capacity problems in our industry. Number one, we also see, you know, the way that we manufacture, you know, the core product is like largely the same as it was in 1985.

19:58You know, everybody's got some level of automation and, but no real like game changer type stuff, right? And so we said, all right, well, there's a constraint here that's like, it's structural. How do we solve for it? How do we, you know, for our business, for our customers? And we started to work on a plan for a high speed, fully integrated production line that was really going to just change. Just, number one, engineer all the things we hated about our product and our customers hated about our product. Engineer that stuff out. And then number two, just dramatically increase our throughput, our quality, and give us the ability to endure in times like this where we're, frankly, in a housing recession.

20:51So that project starts and it ended up being a two and a half year project from conception to delivery. And so that line's been running since April of 24 now. And what did that look like if I was walking around April 23 and then you took me around today?

21:16Alex Bridgeman: What things would you point out? I assume a lot. Well, you know, if you think about the way that a garage door is manufactured in a lot of places in our industry, this is not everywhere, but largely, you look at a lot of processes or parts that are done offline, right? And then they're gathered and assembled on a roll former, which is kind of like the assembly line where they're roll forming the sheet. And then there's a lot of people and number one, everything's the whole thing's in line. So it's, you know, one painted coil of steel to galvanized coils of steel in line, the bottom rubbers extruded on the line, like it's all in line.

22:04And so it's raw materials to finish good in line with a very significant amount of automation and robotics on the line. So, and you can walk through our plant today. We still have those legacy production lines are still running and still supporting another part of our business. But yes, you could see it today and it's dramatically different, but it was necessary. So as that project is taking shape and is coming to fruition, we start to have the same time you start to see a lot of consolidation on the services side of our business. And so those, you know, the usual suspect consolidators are kind of out there calling on our independent dealer base.

22:52and in a matter of 18 months, I had two of our larger independent dealers reach out and say, because we spent a lot of time with them, most of our independent dealers are supporting one of our national builder programs. And so these guys reaching out saying, hey, I've been approached by X, Y, and Z. And in both cases, these are 30-year-old businesses and very well-known regionally, one of them nationally, with just excellent reputations. And these guys reach out to us and say, hey, we're not sure what it is you're doing here. It's kind of Windsor Door and an installation company. But we really believe in your culture and we believe in what you're doing.

23:45And we know you'll be a good steward to what we've built and it'll be about our people first. And so the first one to reach out was Lodi Adore. Dave Shado from Lodi Adore reaches out and says, hey, I'd really like you to buy my business. And I'm like, wow, okay. And that really kind of started our journey into like Windsor America. I would say, if you think about, or you were asking, how we think of like the different seasons of our business. From that moment forward, I really think of us shifting from Windsor Door and an independent installation, regional installation company to Windsor America, the startup, where we really started to think differently about what it is we could become.

24:35Um, number one, when an operator like that, that has, I mean, Lodi Door has a phenomenal reputation for service and quality and has for many, many years. And so, and to be honest, to be frank with you, like our installation side of the business, like we've been around great. We have wonderful relationships, but then our service could probably had been a little bit better than it was. And so the first thing I thought was like, wow, we get this wonderful resource to learn from. And at that time, we're starting to, you know, we start to think about, all right, what is this is now going to turn into more of like a platform and what does that platform look like?

25:19and so we you know we put a board in place dave shadow comes on to the board to be a board advisor which is which he still is today and then at that point we really separate the installation and the manufacturing part of the business and and then start to think of them completely separate and we had started to do that kind of 2020 2021 but really committed when we brought Lodi on And then right after Lodi, Jacobs overhead door, same thing. Dave Jacobs reaches out, exact same story, you know, from both of those guys from a like principles and values perspective, like we're completely aligned in kind of what we're looking for and what's important to us.

26:08and so they come on board and then it really starts to to come to mind they're like what is it that this can really become you know we had we had this really unique strategy from a raw materials perspective where we created a lot of control and eliminated asymmetric upside price risk with our steel strategy. So we have for the last couple of years, hedged steel, not all of it, but hedged enough steel to really take that asymmetric upside price risk kind of off the table. It's worked very well for us this year. If you follow steel, it's up almost 40 % since October. So we want to eliminate that asymmetric risk, provide stability.

27:00So we've got a sound raw material strategy we have a high-speed production line that allowed us to really kind of differentiate ourselves in that it really in the new construction installation space and and we're a niche from a manufacturing perspective we are a niche manufacturer dedicated to producing low-cost high quality products focused at the U.S. home builder. We have this as we start to go from just a regional installation company, and now it's starting to be more of a larger regional installation company. But we were at that time starting to talk with Brent Voiles at Voiles Over Door, who had been a long time dealer for us.

27:50And he covered the entire Southeast. And And you can kind of see this platform come to fruition where it's like, okay, we can have a kind of a nationwide install base that we can drive some real efficiency through. But to me, it was like, I always loved the idea of, man, if you can build, and I think you and I had this conversation we talked last time because I know you're a huge Buffett and Munger fan. But man, if you can build something that truly compounds and is virtuous, man, that's a deep and wide moat that you've built for yourself. And it is, and I'm not, you know, I don't think of it from a necessarily like a hard to disrupt necessarily perspective.

28:37I think of it, I think of us going in that direction because it creates independence and freedom for us and the freedom to, to choose what we want to become and how we want to get there. And so that really started to take shape for us as we start to, you know, have companies come into us, which was so flattering and come into us saying, hey, well, can we join the platform? and you start to see, well, if we, you know, we have all of these businesses that have joined on the installation side of the business are, I think the youngest one outside of EcoDoor, the youngest one is 20 plus years old. And so they have this install base that is, we've quantified it, we've organized that data, we know what it is and it is significant.

29:35And so So for us, it's the service and replacement piece is kind of, that's the last kind of piece of the puzzle here. And so over the last two years, we've really built the platform in that direction to complete the circle and just to, to build something that really compounds. And so we're really, from a platform perspective, like that's why I say, I thought of that as, you know, when we started that direction, kind of that was kind of our startup phase. And we're out of that now because the service and replacement part of the business is scaling rapidly now. It's really cool because, you know, you build something that truly compounds.

30:23like the value creation story is actually kind of years out like it's performing well now and it's creating value now but the real value is like when you start building cohort on cohort on cohort and your install base continues to to feed it it's we're really excited about being in that place and kind of being the only platform that's thinking that way how do you utilize

30:52Alex Bridgeman: the installed data over time? Like in what ways can that have this unique, you know, competitive mode or advantage over time for your service business and your manufacturing business? Well, if you think about it from, just purely from the like consumer's perspective, right? So that data and the way that we've organized it, let me backtrack a little bit too, because I completely left out in this process. You know, we looked to, you know, other building products that have actually kind of gotten this right. It's crazy to me that, you know, if you look in our space, like new construction is kind of shunned, right?

31:39It's kind of a dirty word to a lot of, especially in the, you know, amongst the consolidators, right? We're looking at that. very differently. And we can because you can see other building products who have done well. HVAC has done a very good job of recapturing that homeowner, right? And so, and we have some friends in that space that have done well. One of our friends in that space helped build out a product registration and extended warranty platform that he turned into a services company and eventually sold to Angie. And so kind of spitballing with him, this is almost two years ago. I was like, that's the gap is like, we need to create that.

32:28How do we, we've installed the product. At this time, we weren't leveraging that database. We hadn't organized that database, hadn't done that yet. And so like, well, let's create a, product registration and extended warranty and, you know, and eventually like a service platform to engage the homeowner. And so homeowner and the way it works now, any door that we install. So the name of that program, by the way, is Secure Door Shield. Any garage door we install in a new construction home is soft registered into that program. Homeowner has the option to complete that registration. For completing the registration, they get a free one-year extended warranty.

33:17Includes the opener as well. They can buy up into a program that's five-year and includes dent protection, which we just thought was cool to be able to say, you can dent protect your garage door. And then we've got some service plan options that are also run through secure door shield so we started with that and then as where we brought everybody on to the same tech stack across the org instead of being on 10 different erps and to put everybody onto the same tech stack everybody's on sage service titan ramp for expense management and payables avalera for tax really optimize that part of the business we see this legacy database and we're like, wait a minute.

34:03So we cleaned it, organized it. And then we sat back and thought like, all right, so how do we really, really leverage this? And there are a number of like specific ways that we, we use that data. I think the broad way I would describe it is that it allows us to be prescriptive for the homeowner, right? So we know the life cycle of spring we know the life cycle of uh of a door i mean we know the life cycle of each one of those products and so there are a variety of ways that we engage the homeowner ahead of these events occurring rather than having to just market heavily and just hope that we're top of mind when said event happens, right?

34:57And so it creates an enormous amount of value for the homeowner, right? It allows us, and we're working through, how do we pull that transparency piece that we've done so well with our suppliers and our builder customers? Like how do we pull that into that consumer piece? And we're not quite there yet, but to me, that's going to be one of the things He said, I hope that our team, we've really challenged them to think about how you pull transparency into that piece where you're building trust with that homeowner. And they know that they're getting real value and they know that you've worked real hard to eliminate friction in your business, reduce cost, increase quality, and build something of value that they get to benefit from.

35:52Alex Bridgeman: absolutely i i love it in closing here what are you maybe most excited to see happen this year you've got a big vision for the business but what's the immediate horizon goal that you have that you're excited about this year really watching our service and replacement part of the platform so when you think about you think about you know each part of the value chain manufacturing and distribution, we're operating at scale there, have for many years. Installation, specifically the new construction side of the business, we operate and have for many years and have really leveraged that part of the business up.

36:33That's one of the things I'd say I'm really, really excited about. We are finding every way to remove friction out of workflows, put a high degree of automation into our order entry with our home builder partners through a group called scaffold he's leveraging really he's leveraging an api into all of these builder portals but he's also using a lot of ai to make sure that you're dialing in the right specs and like i said it's eliminating friction it's eliminating costs from the process i'm super excited about that. And then I'm super excited to see our service and replacement part of the value chain and part of that part of our platform really scale.

37:19This year, we've got, you know, we brought on Tiger No from Acadiana Garage Door, who outside of being just an absolute wonderful human being is so sharp and pushing us rapidly to scale that part of our business. so super super excited for that to see that team grow i'm super excited for our manufacturing teams got some additional capital projects we've put in and bob strahan and his team have really found a way for us to have a unique identity in the space and remain a niche performer who just is continues to find ways to deliver value and continuous improvement And yeah, just super, super excited for those things.

38:12And like I said, some of the things that we're doing on the back end of the business with the tech stack and, you know, I don't want to AI wash our business like people do, right? Like there's AI, AI, AI, right? But we are doing some really cool things to remove friction and increase value. not just AI for the sake of AI, but truly deliver value that's really going to impact our employees and our customers. I love it.

38:49Alex Bridgeman: Yeah, there's lots of things that we could talk about afterwards too. I'm curious your thoughts on. Hans, this was super fun. Thank you for coming on the podcast and chat a little bit more. I'm excited for the next couple calls too. This will be a lot of fun. I'm excited to keep just bouncing ideas off each other. Yeah, me as well. It's always, like I said, good to meet somebody who's curious and thinking of new ways to really, you know, take our space to the next level.

39:35Thank you.