An Entrepreneurial Journey in Housing with Kurt Goodjohn, Dvele

Calling All: Entrepreneurs, Innovators, and technology gurus  –this one's for YOU!

Kurt Goodjohn, CEO and Co-Founder of Dvele shares his entrepreneurial journey in housing, his thoughts on incorporating technology in the process and thoughts on a better customer experience... 

Check out Dvele and connect on instagram. 

Many thanks to our partners at the University of Denver for their editing and post-production talents, specifically Lija Miller and Lisette Zamora-Galarza.

The University of Denver Franklin L. Burns School of Real Estate and Construction Management, teaches the full life cycle of the built environment. From integrated project leadership skills to a cohesive understanding of the built environment ––experience the only school of its kind!

"Upbeat Party" is brought to you by Scott Holmes, songwriter from Free Music Archive. 

Transcript

Speaker 2 (00:36):

Hi, this is Dennis Steigerwald president of the housing innovation Alliance, and you're listening to our podcast series. I'm joined today by Kurt Goodjohn co founder and CEO of devel homes out of San Diego, California. How are you doing today? Curt good Dennis. Thanks for having me. Thanks for joining us. Excited to have you here. So you and I have had a chance to talk a few times over the past few months, and you have a really interesting story as an entrepreneur in the prefab home space. So first and foremost, I want to thank you for agreeing to share that story, and then I'd love to get that story out to the rest of our community. Cool. Yeah, I look forward to sharing it. Alright. So why don't you tell us a little bit about how you started your journey in offsite construction or in the home building industry?

Speaker 2 (01:14):

Sure. So, um, my brother and I, we both grew up in Western Canada in Calgary, Alberta, and we grew up playing hockey. We went and got scholarships to the States. Um, I took a computer engineering degree. My brother took an economics degree, but we really, we got brought down there because of hockey. And then, uh, school was kind of a secondary aspect of it, but we graduated, my brother went and played pro hockey and the East coast and in Europe and I got a job working for IBM. And then I, after about six months, uh, got asked to come and work for an entrepreneur and he's, he was an alumni of our school. And, and I really learned a ton from him and I was doing sort of construction, design sales, like you name it. I was wearing all hats for his company and he taught me a lot.

Speaker 2 (01:53):

And, um, my brother actually his wife, uh, and he, they were pregnant with their first child and they decided they wanted to move back to North America. she's from New York. Uh, we're from Calgary. They ended up going back to Calgary and Chris called me one day and um, said, Hey, do you want to start a business? We've always talked about this one. We started. And I said, sure. And well, what are we going to do? He's like, ah, I don't know something in real estate. And I said, okay, well, I'm supposed to be going and starting a satellite office for my then boss to help grow his company. And so let me talk to him. And I went and talked to the two, he was my mentor and friend, and I said, is this going to happen? And his answer was like, I don't know if the timing's right.

Speaker 2 (02:31):

Might be another year or two. And I said, well, I think I'm going to move home and start a company with my brother. And he asks, why I'm like, Oh, real estate. What did that mean? We didn't know. So anyways, we said, okay, we're going to do this. I had a whole life in Boston. I basically fire sold it all, moved back to Calgary. And by that time, my brother had found a piece of property that he thought was well-priced and the deal was, we buy from the guys, the seller and he was going to teach us how to build. So here we go, we're going to start being a home builder. And, um, we got into it and it was during the crazy boom times. And oil was skyrocketing and everyone that had a hammer, it was a trade. And so it was crazy times.

Speaker 2 (03:06):

And we started to learn how to build homes. And we bought these properties in inner city, Calgary, ripped them down and then built new. And we built duplexes, single family built four plexes, like all kinds of stuff. And we got pretty good at it. We actually got really good at it. And 2008 happened, we're carrying a ton of debt and the market collapses and we've built right through it. But it was during that time where we were like, I think we've got this figured out how to build a home on site, but it's really kind of dumb. And in, especially in a place like Calgary is freezing cold half the year, guys will just disappear for weeks on end because literally it's inhumane to work outside. And we started a one night, Chris and I were talking about it. When we were in Europe, we saw modular as very prevalent.

Speaker 2 (03:43):

I said, well, why isn't this done here? And we started to look around and there are modular factories all over the place. We took our next project and it was a fourplex. And we said, well, why don't we build this as modules? So we went, we, we flew out to a middle of nowhere, Manitoba, one of the provinces in Canada. And we met up with a factory that had been around for 50 years. Is it, Hey, we want to do this. And it was a high end fourplex project. They'd never done it before, but they had great craftsmen. And, um, it was a, is a Mennonite, uh, group that just really did awesome work.

Speaker 3 (04:13):

Well, they said, yeah, we can do that. And we got it going.

Speaker 2 (04:15):

I know we built our first project with them and there's a lot of learning lessons. They really didn't know what they were doing in a lot of respects, Chris and I definitely didn't. Um, but we learned a lot and we decided, okay, well, let's do another project to these guys. And we did, and kind of the same issues happened. So we said, well, maybe we should start looking for another factory. And so we traveled around in Western Canada. We actually talked to a factory in Idaho as well. And we ended up choosing a factory that was Canadian again, because we didn't want to also throw in the whole cross border issue. And it ended up being even worse. So we, uh, we had two projects going with this new factory and we called them up one day and said, Hey, there's four trucks coming down there.

Speaker 2 (04:52):

We're picking up the modules and we're going to finish it all onsite. And so we did that and, um, we did finish those homes on site and we kind of had to pause and say, well, this original plan of us, we're going to be the design and marketing end of this. And we're going to sub everything out to existing factories and build modularly. It's not going to work. There's no factory out there that can do what we want to do. So we said, well, let's start our own factory. And, uh, we did, we got good at building just traditional insight. We stopped that into the modular world. We knew it wasn't going to work. So we hit the brakes again and start our own factory. That was interesting. Um, we had no money. There was a ton of excitement and interest in what we were doing, but we were just brutally under capitalized.

Speaker 2 (05:27):

So kind of had to hit the brakes there again. And we were going to try and raise money and we just couldn't. And so we decided let's pull in the reins, let's just build one house at a time and let's figure it out. And that brings us to like 2013 timeframe. We're almost out of business for almost dead. And we just had one more client that wanted to build this cool house with us. And we said, well, here's our situation. They trust us. They believed in us. And they said, yep, we still want to do with you guys. And we did like a cost plus contract with them. And one home turned to two and two to four and flash forward two and a half years after that, we got acquired by a public company. And what that did is it allowed us to take a short step back and look at all.

Speaker 2 (06:04):

We had gone through a lot of ups and downs early. We'd accomplished something that I don't even think we knew at the time. One of my advisors, his name is Fred Carl. He called me up and he met Chris and I during our previous company. And he said that, you know, Kurt, I think he should come down and check out this factory in Southern California. I know you're selling Carolina. I think you should look at it and see, see what you can do. It's kind of a diamond in the rough. So Chris and I hopped on a plane, flew down to Southern California when looked at this factor and instantly we're were like, okay, this is a diamond in the rough, it's a great way of putting it. There's something here. They were struggling. And we just sold our company and Chris and I said, well, let's do this again.

Speaker 2 (06:40):

So we went and approached that factory. And, um, now that we know how to run our own factory, the business model was that okay, we're going to take all of her knowledge and all of her experience and all the inner workings. We kind of had a bit of a appreciation for some of the issues that happened when we were trying to sub it out to existing factories. We didn't really know what we were talking about then, but come through all of this and selling our factory, we said, okay, let's, let's build a technology layer. And the only way they can really scale this as if we drive all these processes through technology, our previous company, we built some amazing homes. There are structural steel, they're all custom. But if we were just focusing mainly on Western Canada and we were focused on building an amazing house in a factory as modules, but when we sold it, we were able to look at it and say, okay, well we were onto something.

Speaker 2 (07:25):

Clearly we were leading the market there. No one else had done really what we did started from nothing built up and sold it. There was no other company that we could see that they had done that in the modern modular world. And so we said, well, let's do this again. But if we want to scale it, we have to develop the tools and the processes, and let's be more of a technology company. And so the idea was, we'd go out there and we'd be this technology layer. And we would be able to go to existing factories, just like we tried in the early days, except with a lot more knowledge. And we would just sit in between sort of the clients, the buyers, and the supply. And we started to look at it. And then when Fred, Carl told us about this factory, Chris actually said, the only way we're going to be able to develop this as if we own our own destiny, we have to have a means of our own production. So we decided to buy a factory versus trying to develop this middle layer and go out to existing factories. And that's kind of, that takes us mostly to where we are today. We are developing that middle layer, both from a customer experience standpoint and what we call the technology layer to be able to drive the process from start to finish and beyond once people have moved into their homes.

Speaker 4 (08:29):

All right. Quite the journey there. I bet there's a lot of stories from you and your brother over the course of grinding this entire business out, right?

Speaker 2 (08:37):

No, there's lots of, lots of crazy stories. Uh, I mean, we were told at one point to just give up, go bankrupt, just move on with life, go get jobs. You have an engineering degree. You can get a great job as a people who tell me and Chris and I, we, we had to grapple with that a lot and we just decided, no, we're not doing that. We're not quitting. This there's something real here. We want to a difference in this world, and this is the way we're going to do it and glad we stuck through it, for sure.

Speaker 4 (08:59):

Right on. So let's talk a little bit about that focus you have around the customer experience. Can you share a little bit of a little bit more detail on the develop vision for what the customer?

Speaker 2 (09:08):

Yeah. So I think I say this is going to sound really bad, but I hate construction. I hate it because the system is so stagnated. It hasn't changed in hundreds of years. And there's such a mentality of, you know, if it's not broken, don't fix it. But in reality, I think it is broken and from many different ways, but from a customer experience standpoint, I mean, Chris and I we're customers ourselves. We built these homes. We bought them from general contractors or even home builders. Chris, before we started all this, he built his own home through home builder. And there are a select few of builders and contractors out there that are amazing that have a ton of respect for them and their knowledge. But the unfortunate thing is there's a lot of companies that compete with them that are not. So people have this idea of building a home.

Speaker 2 (09:52):

It scares the hell out of them because of all the horror stories that they hear. And, you know, even with the best companies out there, the experience can really suck. There's so many moving parts and pieces, and you know, you can be trying your best to do everything perfectly. And if one of those pieces or one of those cobs is kind of falls apart, the whole experience just goes downhill. There's gotta be a better way to give people a brand new home. People expect high quality. They expect professionalism. They expect for it to happen quickly. We live in kind of like, I want it right now world. And so construction is sort of the opposite of all that. And if you take modular and prefab or offsite, Oh, we're going to call it. I mean, we talk about modern prefab, modern modular. You're really able to control a lot of that, all those, those ways where things can go off the rails when you're out in the field and the mud and snow and rain building a home on side, we are able to control that, you know, 90% of it.

Speaker 2 (10:42):

So by virtue of being able to build in a factory, we can offer a much better experience to the client. And on top of that, we're looking at things like if you want to go on and design a Tesla, you onto the website, there's first time you see a brand like Tesla, you're impressed, it's professional, it's intuitive. We think that that same exact model can be applied to home bullet. So from the first time someone hears about devel you come to our website, it's impressive. It's clean, it's smart, it's intuitive. You should be able to walk through and design entire home in your underwear in the middle of the night, if you want to. And you do it on your own terms. So that's the very first experience you get with our brand. Then the middle part, whereas actual production, where you're kind of trying to replace what everyone's afraid of with construction.

Speaker 2 (11:24):

It's all in a controlled environment. It's upfront. Here's the timeframe. Here's the cost. I think cost certainty is a huge aspect of what we do where people get freaked out with construction, because it's usually an unknown until you're done. You don't know how much your house costs until you're done. And so we are working on the site. Costs are still a little bit of an unknown depending on where you are, but we can really nail that factory portion. We tell you, come to us, you say, I want to build a four bedroom home. It says 3,500 square feet. We can do a quick design for you, hit a button using some of the tools that we've created internally and get an actual price for the factory portion that doesn't change. We guarantee it it's set. So, I mean, from a customer experience, that's, that's pretty powerful.

Speaker 2 (12:05):

Certainty is a big thing in construction. So we can give certainty on that. Our timeframes, we're not perfect, but we're getting a hell of a lot better. Every single home that we build is better than the last every experience for a client is better than the last, because we're starting to collect data on how long things take different areas, depending on where you're buying. We've got all this sort of percolating and, and looking at it so that we can give people more certainty on timeframes and then quality. I think the end of the day, you're buying a product. That's how we look at this. So we want that experience for our buyers to be like buying a Tesla or buying an iPhone or buying any product you can think of other than a house out in this world today. You know, what the quality of that product is going to be. And so we're giving certainty of product quality as well. And also those are sort of the three main areas of the customer experience that we've been tackling.

Speaker 4 (12:54):

Okay, well, let's, let's build off that just for a second. So you mentioned the opportunity to bring the foundation manufacturing into the factory, uh, are there what we have the year of our entire community and the industry. Are there any other major barriers or opportunities for innovation you want us to help dig into for you?

Speaker 2 (13:11):

I think the, one of the biggest areas right now for innovation in the industry is a regulation. The biggest hurdles that we have right now are like, well, how's that going to be perceived by local jurisdictions? And for us, one of the biggest hurdles that we have is you think about if you're a home builder and you live in Ventura, California, or you live in Boston, you're focusing on a one geography. You're going to get really good at understanding, get to know the people at the permitting desk type thing. But when you're trying to build offsite and have your production centralized in a factory that then can go out to hundreds and hundreds of different jurisdictions, every single one of those jurisdictions has their idiosyncrasies on what they expect and your drawings are small engineering changes. So I think changing the mentality of the local governing bodies that approve permitting needs to change coming from Canada, we built our last company under a CSA certification, and we could build our homes in any jurisdiction across the country under that one federal jurisdiction.

Speaker 2 (14:16):

So I think that there's a model there that could be replicated in the U S I want to try and move that needle, but Canada's got a 10th of the population. Uh, it probably has one 50th, the number of cities, uh, that you would have to deal with. So it's just a bigger challenge to tackle in the U S but I think it'd be great to be able to have more of a federal standard to building codes and maybe raise the bar on what you have to do if you're building in a factory, when you compare our homes to what the bar is for code or well about that. And then you can start to say, well, if I'm going to build a home here in California, that same home should be able to go in Boston,

Speaker 4 (14:52):

But there should be a more uniform governing body over building homes and getting more efficient. Okay. Yeah. Help to eliminate some of that fragmentation that you experienced at that level. Good call to action for future collaboration amongst our groups. Um, we'll, we'll definitely raise that point as we go forward. This is, this has been a great conversation. I really appreciate you sharing your story, letting us know a little bit about what the Val's been up to and some of the different offerings they're providing to the marketplace and how you approach the customer experience, which you're looking ahead at a, up on the horizon. Anything else, any parting words or anything else that you'd like to share with our audience before we break? I think just keep watching. And we've got a lot of stuff in store here that we're excited to share with the industry, with the market, to our end users. It's exciting times for sure. All right, great. And if anybody listening wants to learn more, can they reach out to you directly? Yeah, absolutely. I mean, just go to our website is pretty simple to get in touch with all of us. I see most messages that come through to me, so yeah. Reach out directly. My email is [inaudible] dot com and pretty easy to find. Okay. Excellent.

Speaker 1 (15:53):

Well with that, thanks again. 

Speaker 4 (15:55):

Have a wonderful day. Thank you very much for having me

Eric Holt (16:02):

On behalf of the housing innovation lions and the university of Denver. This is Dr. Eric Holt. Thank you for being part of our journey. This is where innovation calls home.