Full Transcript for 196: Aligning Design, Cost, and Business Strategy with Rens Hayes IV

Ren. 00:02:28.879 --> 00:02:29.919 So welcome. 00:02:30.240 --> 00:02:32.800 Likewise, Joe, can't thank you enough for having me on here. 00:02:33.039 --> 00:02:33.680 Absolutely. 00:02:33.759 --> 00:02:34.000 Yeah. 00:02:34.080 --> 00:02:45.280 I'm wondering, just to kind of start off the conversation, tell me what really drove you to start HO and what was that mindset that felt different? 00:02:45.599 --> 00:02:47.199 Yeah, you're taking me back here. 00:02:47.360 --> 00:02:52.719 So I grew up in a suburb about 45 minutes outside of Boston. 00:02:52.960 --> 00:03:03.280 And when I looked at, say, my father or other people in my community that I perceived as successful, they were all small business owners. 00:03:03.520 --> 00:03:10.719 So from a very young age, I had the impression that if I were to be successful, I needed to run my own business. 00:03:10.960 --> 00:03:12.879 Now I know that's not true. 00:03:13.120 --> 00:03:19.199 There's plenty of people that find success in their careers in corporate America, so climbing the corporate ladder. 00:03:19.360 --> 00:03:22.560 I just never was exposed to anyone who did that. 00:03:22.800 --> 00:03:23.360 Didn't know. 00:03:23.439 --> 00:03:26.000 I didn't have a direct relationship with anyone that climbed that ladder. 00:03:26.080 --> 00:03:31.520 So for me, starting my own business was like a necessary step for me to become successful in my career. 00:03:31.680 --> 00:03:37.360 And so fast forward into my professional career, I grew up, my dad's business was steel construction. 00:03:37.520 --> 00:03:41.360 So I was exposed to fabricating and erecting steel buildings. 00:03:41.840 --> 00:03:47.680 And so I said, instead of just like going down my family's business path, I'm going to learn how to go engineer these buildings. 00:03:47.759 --> 00:03:48.319 I like math. 00:03:48.400 --> 00:03:50.319 Let's go figure out how to design them. 00:03:50.560 --> 00:03:52.719 That led me into the world of engineering. 00:03:52.879 --> 00:03:55.840 You have to work for an accredited engineer to get licensed, right? 00:03:55.919 --> 00:04:01.840 So you get a degree, you got to work for three, four years under another engineer to become your license. 00:04:02.000 --> 00:04:05.039 And so I said, I'm going to try to work on the tallest buildings I possibly can. 00:04:05.199 --> 00:04:14.080 So for a firm in downtown Boston, I was done at scale and it gave me uh a really broad perspective of the design and the construction industry. 00:04:14.479 --> 00:04:27.600 And a long way of getting back to launching HO and kind of, I would say the passion or the purpose behind HO is when I look over the design professions, architecture and engineering. 00:04:27.839 --> 00:04:29.920 And we were just talking about this, Joe. 00:04:30.160 --> 00:04:35.680 Design and construction real estate is probably the most mature industry in the world. 00:04:35.759 --> 00:04:41.040 Like people have been designing and building buildings since like every forever. 00:04:41.199 --> 00:04:41.680 Right. 00:04:41.920 --> 00:04:45.920 And which means it's very easy to become commoditized. 00:04:46.879 --> 00:04:50.480 And I think it also puts pressure on the workforce. 00:04:50.879 --> 00:04:57.439 And I saw a general low career ceiling for a large majority of design professionals. 00:04:57.680 --> 00:05:00.879 And that became something I was passionate about, better understanding. 00:05:01.040 --> 00:05:12.879 And part of like our ethos behind HO is giving people an education on how a business runs, not just how to design a building, but what are all the things that has to happen in a business for us to create value in the marketplace? 00:05:12.959 --> 00:05:18.879 And when we can create value to the marketplace, our customers, then there's going to be opportunity within our company to grow at scale. 00:05:19.120 --> 00:05:20.000 That's pretty awesome. 00:05:20.160 --> 00:05:26.000 I'm thinking back on our first conversations and just hearing that mindset. 00:05:26.160 --> 00:05:32.000 Like there's this whole business acumen, and there's a whole like just professional competence, right? 00:05:32.240 --> 00:05:33.839 And merging those two together. 00:05:34.079 --> 00:05:38.000 And it really turned into a unique value proposition. 00:05:38.160 --> 00:05:46.720 And I was just so taken by the engineering mindset that I'm so used to dealing with, which is just let me solve the problem. 00:05:47.040 --> 00:05:56.240 And when we were talking, it was more about okay, that's the baseline of success, is I gotta solve the problem and give you an engineering solution for that. 00:05:56.480 --> 00:06:01.920 But then to level up to all right, what's the best thing to do for this particular problem? 00:06:02.079 --> 00:06:05.839 But also what delivers on what everybody cares about, which is the bottom line. 00:06:06.000 --> 00:06:09.759 So that was pretty unique from my experience. 00:06:09.839 --> 00:06:11.920 So I wanted you to share maybe more of that. 00:06:12.319 --> 00:06:12.800 Thank you. 00:06:12.959 --> 00:06:26.560 I quote from Elon Musk comes to mind, and it's a good way to when I'm communicating within the engineering profession, an engineer's biggest mistake is optimizing something that shouldn't exist. 00:06:26.879 --> 00:06:27.519 Oh, nice. 00:06:27.759 --> 00:06:31.360 We're like creatures of process, we always want to make things more efficient. 00:06:31.519 --> 00:06:34.480 That's like in our core, that's like our human nature. 00:06:34.800 --> 00:06:40.560 But sometimes we're not, we don't see things in a big enough purview to make sure that we're solving the right problem. 00:06:40.720 --> 00:06:45.279 So we can be optimizing something that isn't actually solving the thing that drives the most value. 00:06:45.519 --> 00:06:46.560 Oh my God. 00:06:46.879 --> 00:06:48.160 How often does that happen? 00:06:48.480 --> 00:06:50.319 It's the hardest thing in the world to do.

00:06:50.399 --> 00:06:54.319 And that's where you'll hear me hit that lifelong learning drum. 00:06:54.560 --> 00:07:07.680 And that's to me, is how you build awareness and judgment so that as a subject matter expert, you at least have awareness of all the other things that are at play to give you a higher probability of having good judgment on like what actually has to happen to move the needle here. 00:07:07.839 --> 00:07:11.040 Sometimes it's not very often, is it just structural engineering, right? 00:07:11.120 --> 00:07:12.319 Like that is not the problem. 00:07:12.480 --> 00:07:15.920 It's a part of the solution and like what is the actual problem we're solving here. 00:07:16.160 --> 00:07:16.959 No, absolutely. 00:07:17.040 --> 00:07:18.480 No, I love that quote. 00:07:18.639 --> 00:07:23.920 That's really something I'm certainly going to steal now, too, is doesn't even need to be there. 00:07:24.000 --> 00:07:24.240 Yeah. 00:07:24.480 --> 00:07:36.319 Maybe if you could give us an example of what that process looks like for your team and the what are the questions that you asked to really dig to the core of something and help the design team along. 00:07:37.040 --> 00:07:47.839 I'll start with our design process and kind of coming back to solving some of the root issues, I think, in the design profession. 00:07:48.240 --> 00:07:50.720 Something I learned from the steel industry. 00:07:50.879 --> 00:07:57.120 As a structural engineer, every building I ever did and every spec said the steel fabricator had to be AISC certified. 00:07:58.240 --> 00:07:58.720 Guess what? 00:07:58.800 --> 00:08:00.079 I had no clue what that meant. 00:08:01.199 --> 00:08:02.560 I didn't know what that meant to me. 00:08:02.879 --> 00:08:07.199 It just meant that they were better than somebody that wasn't AISC certified, right? 00:08:07.439 --> 00:08:17.199 And when I was running the steel business, after I kind of had a short stint, after I got my license, I went and ran the steel business while we were doing engineering on the side and eventually launched HO. 00:08:18.399 --> 00:08:23.759 We took our company through the AISC steel certification process as a fabricator and director. 00:08:23.920 --> 00:08:37.120 And what it ultimately was is a written-down documented process from how you estimate work to how you quote work, to how you detail and manage shop drawings, how you fabricate, how you load steel, how you deliver steel. 00:08:37.279 --> 00:08:48.399 Like literally a written-down, documented process of the entire, call it an assembly line with personnel responsible, like positions responsible to quality standards. 00:08:48.480 --> 00:08:51.360 And then there was quality management to the standards. 00:08:51.600 --> 00:08:59.519 And I kind of was like, huh, like how hypocritical of the design profession, because we have absolutely nothing like that in our writing. 00:08:59.919 --> 00:09:04.799 And the light bulb kind of went on when we were launching HO

is like this is our differentiator. 00:09:04.879 --> 00:09:15.759 So when we launched, we actually before we launched a website, before we started trying to have outbound sales and drive work, Jeremiah and I sat down and we started writing down a design process. 00:09:16.320 --> 00:09:19.360 If we're going to improve as a company, we need to have a plan, right? 00:09:19.440 --> 00:09:28.159 Like no plan's perfect when you start, but the only way you can actually improve is if you have a plan trying to achieve a goal, then you can reflect and improve moving forward. 00:09:28.399 --> 00:09:40.879 There's also a way we were confident in looking at the market that we were going to be able to scale from small to mid to large size development, which meant our bottleneck was very quickly going to be how are we going to recruit and attract talent? 00:09:41.120 --> 00:09:43.279 And how are we going to get them up to speed? 00:09:43.519 --> 00:09:58.240 So the design process was a way for us to make sure that we had kind of like a path for someone to follow, what to do, and the way that we wanted to design buildings to eliminate waste and have them working towards achieving a goal in an efficient way. 00:09:58.799 --> 00:10:03.919 Fast forward to today, we now we operate our business with open book financial management. 00:10:05.200 --> 00:10:08.240 And I kind of think of business in a little bit of a triangle. 00:10:08.320 --> 00:10:14.720 So in one core piece, you have your mission, your vision, your core values, and your go-to-market strategy. 00:10:14.879 --> 00:10:17.200 That's how you create alignment in a business in my mind. 00:10:17.759 --> 00:10:25.120 Second part of that triangle, that's the design process, the execution framework, your quality management and your training and development. 00:10:25.440 --> 00:10:30.399 That's how you're going to deliver on that strategic execution, that strategic vision of the company. 00:10:30.799 --> 00:10:32.320 That's your operational model. 00:10:32.559 --> 00:10:35.200 The third one is the financial. 00:10:35.279 --> 00:10:40.879 That's the scoreboard on whether that tells you whether your strategy and your execution is actually working. 00:10:41.200 --> 00:10:43.440 So we have open book financial management. 00:10:43.519 --> 00:10:49.519 So our whole team, we teach them the vision, we teach them the strategy, the core values. 00:10:49.759 --> 00:10:51.200 We have the operational model. 00:10:51.279 --> 00:10:54.080 Now they can reflect on whether it's working or not. 00:10:54.159 --> 00:10:56.399 And then we can actually diagnose what's not working. 00:10:56.559 --> 00:11:02.240 If you don't have a plan, you don't have a strategy, like you don't know what string to pull to improve. 00:11:02.639 --> 00:11:06.000 It's really you don't have a baseline to in which to grow upon. 00:11:06.240 --> 00:11:08.799 So that was like a really important step for us. 00:11:08.879 --> 00:11:10.720 I think a trajectory of

our company. 00:11:11.039 --> 00:11:12.320 No, that's pretty awesome. 00:11:12.559 --> 00:11:18.799 And it's something it's so basic to just write it down and have a process that everyone understands, right? 00:11:18.960 --> 00:11:23.919 But it is glaringly lacking in many, many companies. 00:11:24.240 --> 00:11:29.200 Or it was something that was written and then set on a shelf and never looked at again. 00:11:29.360 --> 00:11:38.799 So when you have that plan, and I think what I heard you say is when you're hiring, you can show people how they fit into the plan and how they can really move the needle. 00:11:38.879 --> 00:11:42.799 And then they get to put their finger on the pulse of, hey, am I making a difference? 00:11:42.960 --> 00:11:44.720 So everyone gets to kind of feel that wind. 00:11:45.039 --> 00:11:45.360 100%. 00:11:46.000 --> 00:11:46.320 Yeah. 00:11:46.559 --> 00:11:59.120 So of course, the next step of that is how do you turn that into value for your clients and your other design team members and ultimately people that are moving into these facilities? 00:11:59.279 --> 00:12:00.720 Like, what does that look like? 00:12:01.200 --> 00:12:02.399 Great question. 00:12:03.440 --> 00:12:08.000 Quote from the late Charlie Munger, who's somebody I I follow and admire a lot. 00:12:08.240 --> 00:12:13.759 One of my favorite quotes, and it's something I bring up when I talk about the HO cost index. 00:12:14.559 --> 00:12:17.600 You show me the incentive, and I'll show you the outcome. 00:12:18.960 --> 00:12:21.519 It's human nature to do what's in your own best interest. 00:12:21.679 --> 00:12:27.519 So if we're going to collectively all work together, we just need to make sure that we all understand how our interests are aligned. 00:12:28.080 --> 00:12:30.159 If they're not, we need to align those interests again. 00:12:30.320 --> 00:12:37.200 So when I think of organizational success, you have to have employee success, you have to have client success. 00:12:37.679 --> 00:12:41.120 And when you're doing those well, you can get shareholder success. 00:12:41.279 --> 00:12:43.279 Now all three of those need to be aligned. 00:12:43.440 --> 00:12:43.679 Right. 00:12:43.840 --> 00:12:52.799 So when I think of how am I going to best serve our clients and we're building a national brand, we do work nationally, we're going to open other offices, we're going to go through acquisition. 00:12:52.960 --> 00:12:56.000 But how are we going to make sure our clients are successful? 00:12:56.399 --> 00:13:05.679 To me, that comes back to recruiting and hiring, attracting the right people, and then putting our people in a position to succeed, making sure they actually understand the client's goals. 00:13:05.840 --> 00:13:06.960 That's how we're going to help them. 00:13:07.120 --> 00:13:13.039 So the HO cost index product, the misalignment we recognized in the industry. 00:13:14.080 --> 00:13:17.279 Engineers are taught how to design safe buildings. 00:13:17.360 --> 00:13:20.159 That's like first and foremost, we have to design safe structures. 00:13:20.240 --> 00:13:21.840 There's no question about it. 00:13:22.480 --> 00:13:29.039 But nowhere in the design code, in the building code, anywhere in our education are we taught how to estimate construction. 00:13:29.519 --> 00:13:30.320 We don't understand. 00:13:30.480 --> 00:13:31.919 We're not trained on construction. 00:13:32.480 --> 00:13:43.679 And even if said engineer works at a great company, it has nothing to do with their internal design process, the execution framework, and has nothing to do with the quality management of that process. 00:13:44.159 --> 00:13:49.919 And it has absolutely nothing to do with how the common structural engineers promoted throughout their career. 00:13:50.240 --> 00:13:55.039 What is one of the most important factors to creating success for your client or a commercial real estate development? 00:13:55.200 --> 00:13:55.679 Financial. 00:13:55.919 --> 00:13:57.600 And it was like this aha moment. 00:13:57.759 --> 00:14:06.720 You see very intelligent, smart structural engineers, well-intentioned structural engineers thinking they're designing cost effectively. 00:14:06.960 --> 00:14:07.279 Right. 00:14:07.519 --> 00:14:11.519 The reality is, is if you're not measuring something, you can't manage it. 00:14:11.679 --> 00:14:13.440 You can't improve upon it. 00:14:13.679 --> 00:14:17.840 So I use an example again with our diet. 00:14:18.000 --> 00:14:21.039 It's we all have an understanding of what a healthy diet looks like, right? 00:14:21.679 --> 00:14:24.799 If I asked you how many calories you had yesterday, could you tell me? 00:14:25.759 --> 00:14:29.039 I, for one, would have absolutely no clue. 00:14:29.440 --> 00:14:32.399 I think it'd be up by at least 20%, maybe 50%. 00:14:32.960 --> 00:14:36.720 And we all have people in our life that are really into health and fitness. 00:14:36.879 --> 00:14:40.960 And I actually love I asked this question, someone's like 1632. 00:14:41.679 --> 00:14:44.399 Or like people are very confident about how many calories they have. 00:14:44.720 --> 00:14:48.320 And the only way they could be confident is because they measure it. 00:14:48.879 --> 00:14:54.720 If you ask them, when you started measuring your calories, did you see a 5% improvement? 00:14:54.960 --> 00:14:57.679 And be like, oh my God, like way more than 5%. 00:14:58.240 --> 00:14:58.720 Oh wow. 00:14:58.799 --> 00:14:59.039 Yeah. 00:14:59.200 --> 00:15:05.679 And that became that's like the ethos of why measuring the cost of the buildings we're designing is so important. 00:15:05.759 --> 00:15:12.960 It's because a 5% is such an easy improvement to gain just by simply managing the process and building awareness in how we do it. 00:15:13.200 --> 00:15:19.440 So a part of the HO cost index is we train our team on construction estimating. 00:15:19.600 --> 00:15:28.240 We track the data and then we literally do

our own full takeoff and measure the cost of our own buildings for comparison and we share that transparently with the whole team. 00:15:29.039 --> 00:15:35.679 Developer, architect, contractors are like we are an open book because our goal isn't to be a hundred percent correct. 00:15:35.840 --> 00:15:39.039 Our goal is to create the environment for cost-effective design. 00:15:39.279 --> 00:15:45.519 Joe, if your team, if the owner has an idea on how to make our structure more, hey, we saw steel framing laid out this way. 00:15:46.159 --> 00:15:47.919 This is a similar retaining wall. 00:15:48.000 --> 00:15:50.000 You have too much rebar here, your wall's too thick. 00:15:50.080 --> 00:15:51.200 Could we look at this one? 00:15:51.360 --> 00:15:54.320 Because our goal is the efficient structure, because that's alignment, right? 00:15:54.559 --> 00:15:55.840 Absolutely. 00:15:56.399 --> 00:16:04.720 There is a unique skill set that you're bringing to the table that kind of started this whole mindset of being a certified value growth advisor. 00:16:04.960 --> 00:16:07.200 And I hadn't run across that term before. 00:16:07.279 --> 00:16:17.200 Maybe if you could define what that is and then talk about how that led to this HO cost index model and how it really starts to build on each other. 00:16:18.000 --> 00:16:25.759 When I stepped away from the traditional engineering field as an employee, I went back and I ran Rens welding and fabricating with my father. 00:16:25.919 --> 00:16:30.559 And at that time, my decision was to I go get an MBA. 00:16:30.720 --> 00:16:34.720 Because essentially I kind of saw my career ceiling in the lifestyle that I wanted. 00:16:34.879 --> 00:16:38.799 I didn't see a path to achieve it without like betting on myself, right? 00:16:38.960 --> 00:16:39.440 Right, right. 00:16:39.600 --> 00:16:48.320 And that was a I do take pride in that decision because like here I am, I felt stuck, but I wasn't about to say, like, hey, I'm still an employee at will. 00:16:48.480 --> 00:16:52.000 Like, if I'm feeling stuck, I got to take it on myself to make myself unstuck. 00:16:52.320 --> 00:16:57.919 I was looking at, do I go get an MBA or do I go help run my father's business? 00:16:58.080 --> 00:17:00.399 And the decision to me became quite clear. 00:17:00.480 --> 00:17:06.960 It was like, do I take a year off of my career, spend$100,000, and not know exactly what I'm gonna do with it after? 00:17:07.279 --> 00:17:17.279 Or like the world, the internet, our access to information is like easier than it's ever been in the history of society, right? 00:17:17.680 --> 00:17:21.519 The internet has like opened up our pool of influence and our access to information. 00:17:21.680 --> 00:17:29.119 I was like, or I could go help run a business, learn by doing, and commit to a daily learning habit to build my own MBA level education. 00:17:29.279 --> 00:17:38.720 And so this is back in 2014, and I committed to audiobooks and podcasts every single day in the commute for 30 minutes to an hour a day. 00:17:38.880 --> 00:17:41.039 Now I commute to Boston, so it gets longer and longer. 00:17:41.200 --> 00:17:46.960 And that foundational habit has been the most important step, I would say, in my professional and personal development. 00:17:47.920 --> 00:17:53.440 And over these few years, we had success, but I literally was chasing the books. 00:17:53.599 --> 00:18:02.480 If I was running into a management problem, a process problem, a sales problem, I just devoured content on whatever I saw as the next bottleneck in the company. 00:18:02.720 --> 00:18:06.079 And over four years, we're breaking through some of these. 00:18:06.160 --> 00:18:08.240 We we grew about 10x in four years. 00:18:08.319 --> 00:18:11.039 It was a fantastic run and a ton of fun. 00:18:11.279 --> 00:18:15.440 But I always felt like we were improving the business from the middle, and it always required all of us. 00:18:15.519 --> 00:18:22.400 So it's like, all right, I go over here and fix process, go over here, fix estimating, fix sales, and then you stop paying attention to one thing. 00:18:22.480 --> 00:18:24.799 And I kind of felt like I was on a seaside, right? 00:18:25.200 --> 00:18:26.720 I know that feeling. 00:18:27.039 --> 00:18:31.839 So I feel like I have all this business acumen, and I'm like, where the hell do you start? 00:18:32.160 --> 00:18:33.200 I don't know where to start. 00:18:33.359 --> 00:18:37.920 Like I can talk about every topic like pretty intelligently, but I don't know how to put it all together. 00:18:38.000 --> 00:18:41.200 And like, what's the A to Z, the design process for building a business? 00:18:41.359 --> 00:18:43.359 I did have the execution framework. 00:18:43.920 --> 00:18:48.160 And about 2018, I got exposed to mergers and acquisitions. 00:18:49.039 --> 00:19:00.720 There was like a point, and essentially I started understanding like that entire industry looks at enterprise value and the value of a business totally different than how I did. 00:19:01.039 --> 00:19:02.480 And I was like, Oh, that's different. 00:19:02.559 --> 00:19:04.000 Like, I gotta really start to put in. 00:19:04.240 --> 00:19:12.640 I started looking at our business and I was like, building this from scratch to 27 years is way more work than just buying a business that's 27 years old. 00:19:12.880 --> 00:19:14.480 Like that's right, it makes way more sense. 00:19:14.640 --> 00:19:16.559 Like the cash flow pace for the purchase. 00:19:16.640 --> 00:19:20.000 Like, this is a great thing if you can do execution in the transition. 00:19:20.559 --> 00:19:22.559 And then I saw what the investment bankers make. 00:19:22.640 --> 00:19:26.720 And then I was like 4% to 10% of a transaction value of a business. 00:19:26.799 --> 00:19:33.839 They're like a so an investment banker, for those that aren't exposed, is like the real estate agent of business buying and selling businesses. 00:19:34.000 --> 00:19:37.839

It's a little bit more involved in that, but at its core, like that's what it is. 00:19:38.319 --> 00:19:40.880 And I'd said, that's a skill I got to develop. 00:19:41.119 --> 00:19:47.440 And I started understanding, like, I got exposed to people that are building holding companies, so they're buying multiple companies that build up a portfolio. 00:19:47.759 --> 00:20:01.519 And I just started networking in MA, and that ended up exposing me to Ken Sangenario, who started the certified value growth advisor program, which is a formal mergers and acquisition certification. 00:20:01.599 --> 00:20:12.960 And that was the framework that told me how to kind of diagnose the current, the present-day valuation and like the strengths and weaknesses of a current organization and then have improvement. 00:20:13.519 --> 00:20:19.519 So it was like the straw, and it's a lifelong learning journey, right? 00:20:19.599 --> 00:20:23.680 Like I don't have everything figured out, but this really connected a lot of dots for me. 00:20:23.759 --> 00:20:30.000 So I had all this business acumen, and what the certified value growth advisor program showed me was how to where to start. 00:20:30.079 --> 00:20:31.759 And that was the mission, vision, values. 00:20:31.839 --> 00:20:32.559 That's the alignment. 00:20:32.640 --> 00:20:35.519 And it talks about the eight core functions of a business. 00:20:36.240 --> 00:20:40.960 And I and this is a long way of answering your question, but this is kind of summing it up here. 00:20:41.039 --> 00:20:49.759 So the eight core functions of a business planning, leadership, sales, marketing, people, operations, finance, and legal. 00:20:50.240 --> 00:21:00.880 Now, the problem with most businesses is they're strong in two or three areas of that business, and they're deficient in the other five or six, but they're blind to those deficiencies. 00:21:01.039 --> 00:21:03.039 So think of the typical small business owner. 00:21:03.119 --> 00:21:06.000 They're good at doing the work, they're good at being an engineer. 00:21:06.319 --> 00:21:10.319 So they might have a real strong suit in operations and execution. 00:21:10.559 --> 00:21:12.160 Guess what they always see? 00:21:12.319 --> 00:21:14.160 The flaws in execution. 00:21:14.319 --> 00:21:14.640 Right. 00:21:14.960 --> 00:21:20.799 But relative to the whole business, their strength is in execution, despite they see their flaws. 00:21:20.960 --> 00:21:24.799 So let's say on a regular 20-person business, you're 90% on engineering. 00:21:24.880 --> 00:21:30.160 But if you're 5% marketing, 10% sales, like you're legal, you don't have an attorney. 00:21:30.400 --> 00:21:34.960 Like improving at engineering doesn't make the business more valuable and scalable. 00:21:35.119 --> 00:21:41.279 You have to figure out those blind spots and figure out how to balance the organization because a balanced organization can grow. 00:21:41.440 --> 00:21:42.720 And that ultimately came back. 00:21:42.880 --> 00:21:48.000 So the CVGA program showed me what organizational balance looked like and how to think about it. 00:21:48.160 --> 00:21:52.400 And that led me to become aware of my blind spot in marketing. 00:21:52.640 --> 00:21:53.680 No, that's so awesome. 00:21:53.759 --> 00:21:59.759 And as you were describing all that, Renz, like the light bulb that went off for me is our approach to design. 00:22:00.160 --> 00:22:05.839 Right with this agile mindset is always about putting yourself in someone else's shoes and looking back at a problem. 00:22:06.400 --> 00:22:11.680 And I didn't even think about like looking at the business as a problem like that. 00:22:11.839 --> 00:22:13.839 And you're looking at through all these other lenses. 00:22:14.000 --> 00:22:19.200 Okay, what if someone that wants to move the needle for this business, where do they find value? 00:22:19.359 --> 00:22:23.599 And then you start to ask those other questions and it really ties it back together. 00:22:23.680 --> 00:22:29.119 And now you have a stronger business model that makes it more attractive, but also a higher functioning business. 00:22:29.359 --> 00:22:30.880 And then being able to optimize that. 00:22:30.960 --> 00:22:36.559 So I thank you for breaking it down like that because it escapes me just the like real time right now. 00:22:36.640 --> 00:22:40.400 Like that's a different way to approach the problem. 00:22:40.559 --> 00:22:55.519 And it ties back to like truly what people care a lot about, which is that bottom line change and taking that mindset of okay, the design of a structural system can be analyzed beyond the engineering solution. 00:22:55.680 --> 00:22:59.440 And let's see, like, are we able to move the needle here, here, here, and here? 00:22:59.839 --> 00:23:01.920 And that kind of ties into your cost index. 00:23:02.000 --> 00:23:04.240 And is all that data just your own? 00:23:04.400 --> 00:23:10.000 Or are you looking at a bigger market and sampling from other companies and other construction projects? 00:23:10.400 --> 00:23:13.279 The data for the cost index is largely our own to date. 00:23:14.000 --> 00:23:15.839 We do hundreds of projects a year. 00:23:15.920 --> 00:23:22.000 And then we went back and started like uploading all of that data so that we had a good basis for the comparison. 00:23:22.079 --> 00:23:34.640 Because what we're doing in the cost index is we'll do a full takeoff and then we'll compare the structural efficiency of your building to our database, to whether it's this standard, is this elevated cost, is this more efficient than normal? 00:23:34.799 --> 00:23:37.599 And then we do a breakout to explain why. 00:23:37.920 --> 00:23:51.359 And moving forward, this will become a software application where we'll have a platform for people to be able to submit their information and then start to get feedback and allow us to collect data at scale. 00:23:51.680 --> 00:23:55.440 And to use it as a design tool, like to simply ask

a different question. 00:23:55.759 --> 00:24:01.039 Like your structure on the last 30 buildings that we've done very similar to this was uh 20% lower. 00:24:01.119 --> 00:24:03.839 So you've done something that made it more expensive. 00:24:03.920 --> 00:24:05.519 Why don't we find out what that was? 00:24:05.839 --> 00:24:06.000 Yeah. 00:24:06.160 --> 00:24:27.519 And when I look at even just on your typical building, if you can make your structure just 5% improvement, which again, like if you've ever tried to measure something to improve, a five percent improvements out there, a 5% move on your structure from an efficiency perspective is generally enough to move it about one point on the overall hard cost. 00:24:27.680 --> 00:24:28.079 Yeah. 00:24:28.319 --> 00:24:29.519 So it's substantial. 00:24:29.759 --> 00:24:30.559 Yeah, absolutely. 00:24:30.640 --> 00:24:30.880 Yeah. 00:24:31.200 --> 00:24:33.119 And without having to sacrifice programs. 00:24:33.279 --> 00:24:33.839 Exactly. 00:24:34.079 --> 00:24:42.559 Which is truly the value that you're trying to optimize in every design is how can I make this space usable for the folks that are buying it, right? 00:24:42.640 --> 00:24:45.920 And not losing it in things that I can't see, touch, and feel. 00:24:46.079 --> 00:24:47.519 I just know that it's gonna stand up, right? 00:24:47.680 --> 00:24:52.240 So being able to come up with a great solution on that, that's it's really helpful. 00:24:52.480 --> 00:25:01.759 So is there like you mentioned like a 1% move, like just by uh simple analysis, right? 00:25:01.920 --> 00:25:08.480 And what's the biggest success story that you've been able to accomplish by approaching design with this mindset? 00:25:09.440 --> 00:25:18.480 The biggest accomplishments, if I were to peer reviews, are often like our biggest opportunity to show the difference. 00:25:19.599 --> 00:25:20.000 Right. 00:25:20.160 --> 00:25:23.519 So we launched the cost index product in January. 00:25:23.680 --> 00:25:28.079 So it's really good to show the data and represent the efficiency that we're delivering. 00:25:28.160 --> 00:25:31.279 But the real discrepancy comes when we start to get peer reviews. 00:25:31.440 --> 00:25:33.680 People are like, hey, you're measuring cost there and efficiency. 00:25:33.839 --> 00:25:34.960 Can you look at this building? 00:25:35.119 --> 00:25:37.440 We we don't have a great feeling about it. 00:25:37.839 --> 00:25:47.279 And I will preface this by saying when an owner is asking us to do a peer review, that's not like code prescribed, like safety for a high rise in a city because it's required by code. 00:25:47.359 --> 00:25:50.160 This is like, hey, can you look at this from an efficiency perspective? 00:25:50.720 --> 00:25:54.400 That generally means there's something that's not going well on the job, right? 00:25:54.480 --> 00:25:56.799 I would say it's not quite your average deliverable. 00:25:57.119 --> 00:25:58.240 An eyebrow is raised. 00:25:58.559 --> 00:25:59.920 An eyebrow is raised. 00:26:00.079 --> 00:26:08.319 But I'll I'll provide like one simple example on how easy this is if you don't have these types of tools in an engineering process. 00:26:08.720 --> 00:26:11.599 Just looking at, let's say, a pile supported building. 00:26:11.839 --> 00:26:13.359 We have a pile supported building. 00:26:13.440 --> 00:26:16.640 The overall project was under just under$30 million. 00:26:17.119 --> 00:26:18.480 It's a four-on-one podium. 00:26:18.559 --> 00:26:32.000 And you look at the foundation, and for the untrained eye or even the trained eye that just doesn't have total familiarity and isn't running numbers on it, you're looking at the plan and you're saying, like, hey, this doesn't look totally out of line. 00:26:32.319 --> 00:26:40.720 But in reality, what we were able to identify is that literally there was$305,000 of piles that just were not needed for the building. 00:26:40.880 --> 00:26:42.720 How do you ever recognize that? 00:26:43.359 --> 00:26:47.759 And this comes back to organizational process and systems, right? 00:26:47.920 --> 00:26:49.599 Like we're all human. 00:26:49.759 --> 00:26:51.279 Humans make errors, right? 00:26:52.319 --> 00:26:54.799 Especially if you're a growing professional. 00:26:54.880 --> 00:27:08.799 That's like trying to become an architect or an engineer, that takes so much subject matter expert and years of experience to develop the understanding and connect the dots just from building design, let alone talk efficiency in the business of architecture and engineering, right? 00:27:10.000 --> 00:27:11.680 There's a quote, atomic habits. 00:27:11.759 --> 00:27:12.559 I love this book. 00:27:12.720 --> 00:27:19.759 And one of the quotes in there from James Clear is you don't rise to the level of your goals, you fall to the levels of your systems. 00:27:20.319 --> 00:27:28.480 So it'd be one thing for me to sit here, Joe, and tell you we understand construction costs, we understand how development works, we're connecting the dots, and I sell you. 00:27:28.640 --> 00:27:32.400 It's like we've all been sold something that failed short of delivery. 00:27:32.480 --> 00:27:34.160 And the gap there is the systems. 00:27:34.319 --> 00:27:44.799 The person at the top might understand, but what do they have organizationally that allows an entire team that's 20, 50, 100, 500 people or more to be able to deliver on that promise? 00:27:45.039 --> 00:27:45.759 Right, right. 00:27:46.000 --> 00:27:49.200 And so I don't ever blame like the individual for something like that. 00:27:49.359 --> 00:27:55.279 If you have 300 and$300,000 of piles that you don't actually need, but that's tangible money. 00:27:55.359 --> 00:28:03.440 So it's like we set up the systems to reduce the risk and have the probability, a much higher likelihood that we're going to create a cost-effective building at the end of the day. 00:28:03.759 --> 00:28:05.200 No, that's pretty phenomenal.

00:28:05.359 --> 00:28:13.440 And going through that, of course, the next layer of questioning is okay, so I'm able to save money on the structure. 00:28:13.519 --> 00:28:17.039 Like, how am I affecting the way the building looks and feels? 00:28:17.200 --> 00:28:18.480 Am I giving something up? 00:28:18.640 --> 00:28:21.599 Like it can't be all nothing, could it possibly? 00:28:21.759 --> 00:28:23.599 And I don't know, can it? 00:28:23.839 --> 00:28:24.559 Yeah, like so. 00:28:24.640 --> 00:28:27.920 When we're looking here, how we think of structure and cost, right? 00:28:28.000 --> 00:28:30.960 Like architecturally, you don't care how many piles are under the building. 00:28:31.119 --> 00:28:33.599 You just want as few piles as possible to make it safe. 00:28:33.759 --> 00:28:34.960 Yeah, I don't want it to fall down. 00:28:35.119 --> 00:28:40.400 And when we look at this, is and you're trying to we're measuring structure efficiency. 00:28:40.559 --> 00:28:44.880 That doesn't mean we're trying to make sure every building is the cheapest possible building. 00:28:45.039 --> 00:28:50.240 Like we're not just building boxes with no detail, like developments don't need to be the cheapest. 00:28:50.319 --> 00:28:53.920 They need to drive the best yield off, especially in commercial real estate. 00:28:54.160 --> 00:29:03.519 So if we're not wasting money in the structure that's hidden, we're giving your team more budget to create the design and the environment that's driving the yield for the development. 00:29:03.839 --> 00:29:04.319 Right, right. 00:29:04.480 --> 00:29:05.440 That's how we think about it. 00:29:05.680 --> 00:29:05.920 Yeah. 00:29:06.079 --> 00:29:08.400 So the payoff's kind of a win-win, right? 00:29:08.480 --> 00:29:11.119 And you don't have to over-detail something and get out of control. 00:29:11.200 --> 00:29:14.559 It's just break it down to the most simple components and do it right. 00:29:14.720 --> 00:29:14.880 Yeah. 00:29:15.200 --> 00:29:16.160 That's alignment. 00:29:16.400 --> 00:29:16.720 Yeah. 00:29:16.799 --> 00:29:17.119 Yeah. 00:29:17.359 --> 00:29:27.839 And speaking of that, the two things I've learned in professional services, architecture and engineering, up to 20% of the knowledge worker's time is spent on rework and scope creep. 00:29:29.839 --> 00:29:31.359 I would say that's a conservative number. 00:29:31.440 --> 00:29:32.160 It's probably a lot of people. 00:29:32.400 --> 00:29:33.039 Conservative number. 00:29:33.440 --> 00:29:40.960 So think about a lot of companies chase revenue and headcount as like success factors in business. 00:29:41.039 --> 00:29:50.480 But if you think about that number, majority of businesses would find much more success by optimizing their current team and process. 00:29:50.640 --> 00:30:04.960 So if you can eliminate rework and scope creep, so we think about when we partner with our developer team, our contractors, even our other sub-consultant engineering, what we're trying to

do is bring our best foot forward, front loading all of the important critical decisions. 00:30:05.119 --> 00:30:06.720 Let's talk about the elephant in the room. 00:30:06.799 --> 00:30:09.279 Let's talk about the hard details that really move the needle. 00:30:09.519 --> 00:30:12.240 What are the things that could make or break this development? 00:30:12.400 --> 00:30:13.680 And let's hash those out now. 00:30:13.759 --> 00:30:17.920 So we don't have to design for nine months and then turn around to find out something doesn't work. 00:30:18.079 --> 00:30:18.559 Right. 00:30:18.799 --> 00:30:28.480 And if we can bring cost data to those questions and conversations, the likelihood of us making good decisions as a design and development team are significantly greater. 00:30:28.640 --> 00:30:29.519 And what is that doing? 00:30:29.680 --> 00:30:32.160 That's reducing our risk of rework and scope creep. 00:30:32.319 --> 00:30:32.559 Yeah. 00:30:32.640 --> 00:30:32.880 Yeah. 00:30:32.960 --> 00:30:33.279 Yeah. 00:30:33.440 --> 00:30:36.480 And wasting everyone's time and trust, right? 00:30:36.640 --> 00:30:45.279 And when you go down a long path of resolving a problem that's like, oh, if I'd have just turned it 10 degrees, I probably would have been on the right track all along. 00:30:45.519 --> 00:30:50.000 So asking that question early enough is is pretty powerful stuff. 00:30:50.480 --> 00:30:51.200 Exactly right. 00:30:51.440 --> 00:30:51.759 Yeah. 00:30:51.920 --> 00:30:58.880 It reminds me also of one of our mindsets in in every meeting that we start or every design process. 00:30:58.960 --> 00:31:01.519 It's how do we make decisions that stick? 00:31:01.759 --> 00:31:03.200 And decisions that stick. 00:31:03.440 --> 00:31:03.680 Yeah. 00:31:03.839 --> 00:31:09.440 And it's about giving everybody the information that they need to believe that's the right path. 00:31:09.680 --> 00:31:17.759 And the whole story of, all right, now I've spent nine months and I've gone down this path and eh, whoops, and now I got to change it and kind of redo it. 00:31:17.839 --> 00:31:21.519 And not only have I wasted that time, but that trust kind of layers into it. 00:31:21.680 --> 00:31:28.079 And if I'm able to address that earlier on with this cost index mindset that, hey, you know what? 00:31:28.160 --> 00:31:29.680 We know how this plays out. 00:31:30.240 --> 00:31:33.519 We can see the the outcome of this now. 00:31:33.680 --> 00:31:41.039 And if we make some early decisions here, we're actually going to optimize everything and really bring value to the entire process. 00:31:41.359 --> 00:31:49.599 And I just can't say how many times, how much that's so energizing for me to hear from an engineering partner, right? 00:31:49.759 --> 00:31:51.440 Someone that's really paying attention to it. 00:31:51.839 --> 00:31:53.440 I appreciate that very much, Joe. 00:31:53.599 --> 00:32:01.440 If I were to bring like an example there and helping make decisions, it's like, we don't want columns in our lobby. 00:32:03.039 --> 00:32:07.599 And before you like as an engineer, maybe like it's a transfers are expensive. 00:32:07.759 --> 00:32:08.720 Yeah, we get it. 00:32:08.880 --> 00:32:10.559 Like we don't want columns. 00:32:11.039 --> 00:32:19.920 Now our team has the data and the information to be like, hey, to get rid of those two columns in your amenity space or lobby, it's gonna be about$250,000. 00:32:20.319 --> 00:32:22.400 It's gonna be about$200,000. 00:32:22.559 --> 00:32:26.960 And now it that's a measurable data, whether it's perfect is not that important. 00:32:27.039 --> 00:32:31.680 But then they might go like 100% that's worth it, or be like, oh, whoa, that's way more than I thought. 00:32:31.839 --> 00:32:34.960 Like, right, what can we achieve this for under 100 grand? 00:32:35.200 --> 00:32:37.039 Then it's worth it, or it's like, you know what? 00:32:37.200 --> 00:32:40.799 That column in the lounge, that seating area next to the couch won't be so bad. 00:32:41.119 --> 00:32:42.160 Spend that money elsewhere. 00:32:42.400 --> 00:32:42.960 Yeah, yeah. 00:32:43.039 --> 00:32:46.000 Then we can have a conversation about all right, what's the right balance? 00:32:46.160 --> 00:32:50.640 You know, now that you've assigned an actual value that turns it into reality, right? 00:32:50.799 --> 00:32:55.039 It's like, oh, that that is a motivational number, right? 00:32:55.279 --> 00:32:57.119 And you have a different mindset to it. 00:32:57.359 --> 00:33:14.559 As long as it's an abstract thing that the structural engineer will just solve, and then you get to the end and you go through this value engineering process once you've gotten some budget information back, and you're like, gosh, if I'd only, well, if I'd only done that on day one, I didn't have to ball all this up and toss it aside and start all over, right? 00:33:14.720 --> 00:33:19.440 Because maybe you should listen to me next time is kind of what I'm hearing out of that. 00:33:19.599 --> 00:33:19.920 Yeah. 00:33:20.079 --> 00:33:21.119 So that's pretty cool. 00:33:21.359 --> 00:33:21.599 Yeah. 00:33:22.160 --> 00:33:30.640 Even the conversation about where columns are and like efficiency of design and it's always a trade-off. 00:33:31.279 --> 00:33:39.920 You're layering in the cost information, and you mentioned some software analytics that may find their way into this process in the future. 00:33:40.240 --> 00:33:44.559 How is that technology helping set your team up for success? 00:33:44.720 --> 00:33:47.839 Like, where do you see that going and what's next? 00:33:48.160 --> 00:33:49.920 What's next for the cost index? 00:33:50.400 --> 00:33:56.880 The cost index and integrating in technology to allow the data to help inform better decisions. 00:33:57.279 --> 00:34:04.640 I look at what we're doing more or less as like getting ahead of where technology is going to take the industry. 00:34:05.200 --> 00:34:11.440 And it might give us a

chance to have an influence or impact the direction of the industry and software. 00:34:11.679 --> 00:34:18.880 We do spend, I would say we look at like a pool of our investments as kind of like venture capital investments within our own company. 00:34:18.960 --> 00:34:24.320 So we've had like developers working with us to optimize Revit since 2017. 00:34:24.480 --> 00:34:27.199 We're building out a process for wood design now. 00:34:27.280 --> 00:34:34.719 Like we're working towards like how do we automate and how do we provide more value with less time using technology? 00:34:34.960 --> 00:34:38.079 We're making those investments from a design process standpoint. 00:34:38.320 --> 00:34:46.320 Where I think the industry is going as a whole is we're not just going to be providing design models at some point in the near future. 00:34:46.400 --> 00:34:49.840 We're going to be providing buildable models, like ready for shop drawings. 00:34:49.920 --> 00:34:58.880 There might be a little touch-up for the fabricator, the contractor specific, but in general, I think technology is going to allow us to move to a buildable model. 00:34:59.039 --> 00:35:01.119 You're already seeing it come out in mass timber. 00:35:01.199 --> 00:35:03.360 That's a little bit simpler of a building. 00:35:03.519 --> 00:35:06.559 And right now, the technology is almost there in steel. 00:35:06.719 --> 00:35:08.559 They're just in two separate softwares. 00:35:08.800 --> 00:35:09.599 Oh, yeah. 00:35:09.840 --> 00:35:10.320 Right. 00:35:10.800 --> 00:35:14.480 I think about the redundancy in the design and the construction world. 00:35:14.719 --> 00:35:15.119 Right. 00:35:15.360 --> 00:35:26.960 We create, we design and design software, move it to a BIM model, then export to 2D drawings, and then that goes out to a bunch of subcontractors who build their own models, break it back down to drawings, and then send it back to the design. 00:35:27.199 --> 00:35:30.239 It's a very redundant and arduous process. 00:35:30.480 --> 00:35:32.800 Historically, I understand why that happened, right? 00:35:32.880 --> 00:35:36.800 If you think back 20 years ago, we didn't really have the technology for that to be efficient. 00:35:36.880 --> 00:35:37.039 Right. 00:35:37.199 --> 00:35:38.960 And even today, it would be really hard. 00:35:39.119 --> 00:35:40.559 Like that's a big engine. 00:35:40.639 --> 00:35:43.760 That's a lot of responsibility under one company to manage. 00:35:43.920 --> 00:35:46.480 So it makes sense that it goes out to these subject matter experts. 00:35:46.719 --> 00:35:49.679 I think technology is going to allow that to become more centralized. 00:35:50.000 --> 00:35:51.280 There's a big part of that question. 00:35:51.360 --> 00:35:53.679 Like, this is a hot button for a lot of designers, right? 00:35:53.920 --> 00:35:59.119 What circles back to risk and who's assuming responsibility for that at this point? 00:35:59.199 --> 00:36:00.960 And does that scare you? 00:36:01.360 --> 00:36:01.920 Risk? 00:36:02.239 --> 00:36:09.440 Having a sole source like that, where you, as a structural engineer, are making a buildable model that's essentially shop drawing level. 00:36:10.000 --> 00:36:10.719 I don't think so. 00:36:10.880 --> 00:36:12.559 I think I understand the risk averse. 00:36:12.719 --> 00:36:16.559 I think that part of the world and the industry is gonna kind of figure itself out. 00:36:16.639 --> 00:36:20.480 And I think the contract structure might change, right? 00:36:20.800 --> 00:36:23.199 It could become more like design build. 00:36:23.440 --> 00:36:29.440 People in Europe have said that like design teams take things to like design development, and then from there on out the contractor owns it. 00:36:29.519 --> 00:36:43.199 Because if I'm a commercial real estate developer, I definitely don't want my design team that might have like a million or a few million dollar contract collectively taking all of the risk when I'm paying a contractor a hundred million dollars to build a building. 00:36:43.360 --> 00:36:46.639 You want the risk with the capital and you want that to be aligned. 00:36:46.800 --> 00:36:53.360 I think we're gonna find a way where that's gonna work itself out and how the contracts are structured. 00:36:53.519 --> 00:36:59.440 Because with technology, who are we gonna be saving time and money and reducing risk for? 00:36:59.679 --> 00:37:01.199 Probably the contractor. 00:37:01.360 --> 00:37:01.760 Yeah. 00:37:02.000 --> 00:37:06.159 So if if you can save them enough money, they're gonna be willing to take on the risk. 00:37:06.400 --> 00:37:07.039 Right, right. 00:37:07.360 --> 00:37:09.519 They just have to have confidence in the process. 00:37:09.840 --> 00:37:11.440 Yeah, and buying into it. 00:37:11.840 --> 00:37:12.239 Yeah. 00:37:12.480 --> 00:37:17.599 No, just agreeing that fundamentally, hey, this actually brings total value if we're aligned. 00:37:17.760 --> 00:37:17.840 Yeah. 00:37:18.079 --> 00:37:20.079 You're willing to take risk if there's a return. 00:37:20.320 --> 00:37:24.400 Whoever you're generating the return for is going to be willing to take the risk at some point. 00:37:24.639 --> 00:37:25.199 Absolutely. 00:37:25.760 --> 00:37:27.039 It's just going to be a change. 00:37:27.199 --> 00:37:27.519 Yeah. 00:37:27.840 --> 00:37:36.400 And on the other side, Joe, with AI, I heard I am not this big tech person, like Jeremiah, Shranik on our team. 00:37:36.480 --> 00:37:40.400 Like we have people that are much more savvy when it comes to technology. 00:37:40.559 --> 00:37:48.639 But there was one example that really resonated with me with AI that kind of gets my wheels turning on how this might impact our industry. 00:37:49.679 --> 00:37:53.760 When you are just coding software, think of a fitness watch. 00:37:53.920 --> 00:38:00.639 It's pretty easy to understand how somebody could code all of the inputs for that fitness watch to recognize when somebody is

walking. 00:38:00.960 --> 00:38:10.719 Frequency impact of that, heart rate, like you can pretty much predict all of the potential variables in that to program something to start measure when somebody's walking. 00:38:11.119 --> 00:38:13.360 You could do the same thing when somebody is running. 00:38:14.960 --> 00:38:19.679 But how could you do that for the fitness watch to recognize when somebody's golfing? 00:38:20.159 --> 00:38:21.760 It seems virtually impossible. 00:38:22.000 --> 00:38:28.000 They might walk, they might run, they stop frequently, they twist their body, they don't walk in a straight line. 00:38:28.239 --> 00:38:34.000 There's so many that their emotion, their heart rate's variable throughout the round based on pressure, all these sorts of things. 00:38:34.880 --> 00:38:44.400 It seems reasonably impossible to be able to predict all of the variables and then for it to be able to distinguish what's golf versus some other activity. 00:38:45.440 --> 00:39:00.400 With AI, you could have a thousand golfers wear a fitness watch doing golf and now take all of that data and plug it into a language model, or not a language model, but an intelligent model, AI model, and have that machine learning model. 00:39:00.559 --> 00:39:01.280 Thank you. 00:39:01.920 --> 00:39:13.840 Uh, plug it into that data into a machine learning model and for it to be able to predict when somebody's golfing with a pretty high probability of success because it's looking at all the data points at a rate that we as humans can't do. 00:39:14.079 --> 00:39:14.559 Right, right. 00:39:14.880 --> 00:39:20.320 So that to me tells me that data is gonna be a major arbitrage going forward. 00:39:20.400 --> 00:39:25.920 It's like who has proprietary data and how are they able to position that in a way that provides value to others? 00:39:26.159 --> 00:39:31.440 And that to me is an interesting, there's gonna be a lot of interesting opportunities with that in every field. 00:39:31.760 --> 00:39:36.239 You can see it changing everything that we're doing right now, real time. 00:39:36.400 --> 00:39:40.239 And it doesn't have to be something, oh, maybe this is happening in the future. 00:39:40.400 --> 00:39:42.159 No, it's happening right now. 00:39:42.320 --> 00:39:55.440 And so when you're thinking about like some of those trends and innovations, like the data for structural analysis, it goes way beyond just the cost of the members and kind of how am I detailing that out? 00:39:55.519 --> 00:40:02.000 Like, what are those other things that you're seeing of data points that might be uh of value to your process moving forward? 00:40:02.320 --> 00:40:03.760 Data points for us. 00:40:04.079 --> 00:40:15.119 I am focused on definitely like the cost of things and how do we optimize and front-load data and decision-making trees to like put us all in a position to succeed. 00:40:15.360 --> 00:40:28.800 I saw um, I think it was a new version of chat GPT that this really made me think more on like site design and say the underwriting process or building a pro forma for a potential development site. 00:40:28.960 --> 00:40:37.280 The chat GPT example was a son sitting, uh a father sitting down with his son over a math problem that was like a geometry problem, a triangle or something. 00:40:37.599 --> 00:40:47.039 And it was through language, it was able to ask Chat GPT to like ask a series of questions to help his son learn how to solve the problem, but understand the fundamentals of geometry in it. 00:40:47.280 --> 00:40:51.440 And so it could start to iterate and think through like how to solve the problem. 00:40:51.760 --> 00:41:02.320 And so I think it's conceivable to think that a machine learning model is going to be able to do that with site plans, tech, local building, zoning code, like much faster than we all can. 00:41:02.480 --> 00:41:15.440 And then can it look at a site and connect all of those variables to start iterating on potential site plans and developments that could conceivably work with a probability rating and cost behind it just from a performer level? 00:41:15.599 --> 00:41:20.000 Because every developer has to build a unique performer for every single site that they look at. 00:41:20.159 --> 00:41:23.360 But are they going to be able to do that with intelligence in the near future? 00:41:23.679 --> 00:41:23.920 Yeah. 00:41:24.000 --> 00:41:24.239 Yeah. 00:41:24.320 --> 00:41:33.599 And giving you options that say, hey, this may be the lowest cost, but this may not be getting me something that's intangible at on this particular design problem. 00:41:33.760 --> 00:41:37.519 And I can balance those when I see all those choices out in front of me, right? 00:41:37.599 --> 00:41:44.079 This here's the potentiality of everything, and here's the numbers associated with each one of those. 00:41:44.239 --> 00:41:54.400 Now let's pick the right one to solve this problem for this client and talk about it in a whole new level of information that gets you a better result. 00:41:54.559 --> 00:41:55.840 That's really exciting stuff. 00:41:56.239 --> 00:41:57.519 And I yeah. 00:41:57.840 --> 00:42:00.400 I'm more of like a deep strategic thinker. 00:42:00.559 --> 00:42:01.920 I am not this tech person. 00:42:02.000 --> 00:42:08.079 So, like, this is me understanding or just assuming, hey, machine learning, just like you just dump it in there and it figures it out. 00:42:08.239 --> 00:42:17.519 I'm by no means like the leader in the AI, but these are the things and the examples that I've kind of been exposed to and thinking about based on examples that I've heard. 00:42:17.840 --> 00:42:21.119 Yeah, and I'm actually watching some other folks. 00:42:21.280 --> 00:42:28.559 I mean, we're at the University of Florida and there's lots of startup companies that are addressing how AI can inform the design process better, right? 00:42:28.639 --> 00:42:36.880 And there's some that are looking at just like physical

manipulation of a site plan, for example, just following the rules. 00:42:37.119 --> 00:42:51.599 But you can see just right over the hill this other piece of information that you're talking about, which is okay, now let's bridge everything together and set up the parameters for success and then evaluate that against the cost data and show how it all comes together. 00:42:51.760 --> 00:42:53.119 That's like we're right there. 00:42:53.199 --> 00:42:54.239 Like exciting. 00:42:54.480 --> 00:42:55.840 You can taste it, right? 00:42:56.079 --> 00:42:57.599 It's just on the edge. 00:42:57.920 --> 00:42:59.920 The design process is a great place to start. 00:43:00.079 --> 00:43:11.199 So you talk about how it seems so simple in concept, but I think when people are looking at like, hey, we got to design a process and a training model, it's like, I have all of these other fires that like need to be put out immediately. 00:43:11.280 --> 00:43:13.920 And this seems like a mountain to build. 00:43:14.960 --> 00:43:18.719 But in reality, it's an ever improving and growing process. 00:43:18.800 --> 00:43:27.920 And if I were to give advice on how to think about building a design process, it's just document the chronological series of decisions that you make when you start a job. 00:43:28.079 --> 00:43:32.159 So the next pass that you do, just think about it like what are the decisions that I have to make? 00:43:32.320 --> 00:43:34.639 And then what are the options for all of those decisions? 00:43:34.719 --> 00:43:37.280 And that starts to build the framework of your design process. 00:43:37.519 --> 00:43:37.920 Absolutely. 00:43:38.000 --> 00:43:38.159 Yeah. 00:43:38.480 --> 00:43:40.639 Thinking about how AI could change that. 00:43:41.679 --> 00:43:48.559 What if all of the architects at Walker architects, you could just record their screen. 00:43:49.760 --> 00:43:59.760 So the screen starts to record all of the things that they do in the order in which they do it, and then starts to connect and figure out whose way is more efficient to help start to build that design process. 00:44:00.400 --> 00:44:02.000 I think it's a pretty cool thing to think about. 00:44:02.159 --> 00:44:05.679 I think it's going to contribute to the efficiency and the way we approach things. 00:44:06.000 --> 00:44:06.480 Yeah, yeah. 00:44:06.559 --> 00:44:08.000 That'll freak out a few of our folks. 00:44:10.079 --> 00:44:19.119 But sometimes you have to like separate yourself from being in the moment and being able to objectively look at that process and say, hey, you know what? 00:44:19.199 --> 00:44:20.079 There is a better way. 00:44:20.239 --> 00:44:25.119 It feels like I'm making progress when I'm spinning my wheels over here, but maybe not. 00:44:25.199 --> 00:44:32.000 And maybe if you just like let the top spin over there while you're focused on solving the actual problem, maybe get there a little quicker. 00:44:32.079 --> 00:44:32.320 Yeah. 00:44:32.480 --> 00:44:34.960 And realize some of those optimizations. 00:44:35.840 --> 00:44:44.239 So like kind of the natural progression of all of that is okay, I get this design and I get this really cool building and it's optimized for today. 00:44:44.480 --> 00:44:52.079 And a part of the big sell and the big value towards a really thoughtful design is, well, that's for today. 00:44:52.320 --> 00:44:53.840 What about tomorrow, right? 00:44:54.000 --> 00:45:03.360 How do I integrate in this ability to let structural design and architectural design evolve and change as people's needs evolve and change? 00:45:03.519 --> 00:45:06.639 And I'm curious how you've asked your team that question. 00:45:06.800 --> 00:45:09.119 Like, how easy is this to manipulate? 00:45:09.199 --> 00:45:15.599 Or am I setting up a fundamental structure that just allows kind of a framework for things to happen within it? 00:45:15.760 --> 00:45:17.440 Do you guys talk about that a lot? 00:45:18.079 --> 00:45:25.599 This comes back to certified value growth advisor education I got and like where do you start in your business? 00:45:26.000 --> 00:45:33.119 And what that taught me is the whole strategic planning process really starts with a mission, a vision, and your core values. 00:45:33.360 --> 00:45:36.400 The mission defines why you exist, right? 00:45:36.719 --> 00:45:44.159 It wants to be short, concise, and memorable at HO, our mission, a better experience for our team and for our clients. 00:45:45.039 --> 00:45:48.079 Now, to some, you might be like, that's a little vague. 00:45:48.320 --> 00:45:56.400 How that has meaning is how you actually use that and refer to that when you're answering questions, making decisions, and communicating to your team and clients. 00:45:56.639 --> 00:46:09.440 That's really coming back to our kind of passion is like elevating the career opportunities for the structural engineer by teaching them business and showing them what growth looks like and growth being the result of delivering value to the marketplace. 00:46:10.079 --> 00:46:13.280 That's our core one vision is defining where we're going as a company. 00:46:13.360 --> 00:46:15.039 So we're building a national company. 00:46:17.119 --> 00:46:21.519 Core values drive decision making and organizational behavior. 00:46:21.920 --> 00:46:22.719 We have three. 00:46:22.800 --> 00:46:25.039 Again, you want them to be short and concise. 00:46:25.440 --> 00:46:28.960 Embrace growth, be a partner, and be responsive. 00:46:29.199 --> 00:46:32.960 So when we come back to your question, Joe, embrace growth. 00:46:33.199 --> 00:46:38.960 What we mean by that and how we convey that is like, are we willing to challenge the way we do things? 00:46:39.840 --> 00:46:40.239 Right? 00:46:40.400 --> 00:46:45.039 Are you willing to take constructive feedback and consider like, is there a better way? 00:46:45.199 --> 00:46:51.199 Our process, how we approach things, the problems we're solving, the clients we're working for, the

areas in which we work. 00:46:51.440 --> 00:46:59.679 But when we start talking about our growth, that we're building a national brand and we're gonna scale nationally, we're gonna open multiple offices, we're gonna grow through acquisition. 00:46:59.840 --> 00:47:05.920 That's also challenging everyone here to be willing to grow and be comfortable, right? 00:47:06.239 --> 00:47:11.280 So when you look at that individual, technology development is inevitable. 00:47:11.760 --> 00:47:15.119 So if we're gonna become the company, like that's like checking a box. 00:47:15.199 --> 00:47:17.599 Like we have to be expecting that. 00:47:17.679 --> 00:47:21.119 And to be adverse to change means that we're not gonna grow. 00:47:21.280 --> 00:47:27.199 Because if HO doesn't get any bigger, there's not really any career opportunities for the people that work here. 00:47:27.440 --> 00:47:27.920 Right. 00:47:28.480 --> 00:47:39.360 But if we're all building a skill set and investing in ourselves and our own personal growth, like we're gonna deliver more value, the market's gonna demand more of us, and we're gonna want more because we're capable. 00:47:40.159 --> 00:47:40.719 Definitely. 00:47:40.880 --> 00:47:41.119 Yeah. 00:47:41.280 --> 00:47:44.880 And people are gonna seek that out and making that happen. 00:47:45.039 --> 00:47:50.719 That it really ties the whole conversation back together. 00:47:50.880 --> 00:47:52.559 Really, it's about your people, right? 00:47:52.719 --> 00:48:00.320 And when people are performing at their highest level, you're able to translate into real value for our clients. 00:48:00.480 --> 00:48:02.400 And it's very inspiring, Renz. 00:48:02.559 --> 00:48:03.679 I'm not gonna lie, right? 00:48:03.760 --> 00:48:04.639 It's really cool. 00:48:04.800 --> 00:48:14.159 So I I just your mindset towards constructing a business and and looking at it through these other lenses and getting a better result. 00:48:14.320 --> 00:48:15.280 It's very inspiring. 00:48:15.519 --> 00:48:16.320 Thank you so much. 00:48:16.480 --> 00:48:21.440 I would say I've learned from a lot and it it comes back to that foundational habit, right? 00:48:21.599 --> 00:48:25.199 Like I came back to am I solving the right problem? 00:48:25.760 --> 00:48:33.039 So, like me becoming a better technical engineer 10 years ago wasn't going to move the needle in what I wanted to achieve in my career. 00:48:33.280 --> 00:48:35.599 So I was like, okay, I got to find what will. 00:48:35.920 --> 00:48:47.840 And that required reflection, self-learning, the willingness to be uncomfortable, the willingness to not be the subject matter expert and to try something new, like posting on LinkedIn, starting a podcast. 00:48:48.000 --> 00:48:53.679 Like these are things that I think are critical to the growth and the scale of our company that aren't like natural. 00:48:53.920 --> 00:48:56.239 Build the acumen in kind of push yourself to go outside. 00:48:57.039 --> 00:48:57.679 That's really great. 00:48:57.840 --> 00:48:59.679 You actually just mentioned your podcast. 00:48:59.760 --> 00:49:08.800 I'm wondering if you'd like to give a pitch for that, because I bet after listening to this, that some people are going to want to learn more about Rent A's and kind of what you have to offer. 00:49:09.119 --> 00:49:11.760 Yeah, my podcast is the design development. 00:49:11.840 --> 00:49:18.000 And I say it's your hub to learn direct from top performers in real estate development, design, and construction. 00:49:18.159 --> 00:49:20.239 So we kind of walk through their journey. 00:49:20.400 --> 00:49:25.119 We share their trials and triumphs, we highlight what they're delivering to the marketplace. 00:49:25.280 --> 00:49:41.440 But ultimately, podcasts and audiobooks were such a great place for me to build for me to grow as a person and as a professional, that it was like so fitting for me be to be able to help showcase like the success and what people do great and the lessons that they learn and share that with the broader industry. 00:49:41.679 --> 00:49:49.039 Cause ultimately, what I'm trying to help other people realize is how valuable it is to learn from the experiences of others. 00:49:49.280 --> 00:49:52.960 If we only learn from our own experience, learning's slow. 00:49:53.119 --> 00:49:53.519 Oh, yeah. 00:49:54.000 --> 00:49:56.880 Can only grow like time is a really a factor. 00:49:56.960 --> 00:50:04.320 But if I can consume some of the best lessons from somebody in an hour-long podcast or a four-hour audio book, like what a gift that is. 00:50:04.480 --> 00:50:08.800 He spent decades learning those lessons and they broke it down into four hours for me to learn from them. 00:50:08.880 --> 00:50:12.559 And now I think differently about how I'm approaching the problems in front of me. 00:50:12.800 --> 00:50:14.719 Yeah, immediately move to the needle for you. 00:50:14.960 --> 00:50:23.440 I'll ask you the same question that you've asked me, which is what is your number one go-to podcast that really you find tremendous value in? 00:50:24.559 --> 00:50:30.639 The number one podcast I probably go to right now is The Game by Alex Hermosy. 00:50:31.440 --> 00:50:38.559 And this kind of comes back to your question about the certified value growth advisor and building a balanced organization. 00:50:38.639 --> 00:50:44.239 That lesson taught me that marketing was a gap. 00:50:44.320 --> 00:50:48.079 And that was something that we were going to have to solve to be able to scale nationally. 00:50:48.320 --> 00:50:54.480 Our industries are very much referred to as relationship business, which means you have to know the client, you have to shake hands. 00:50:55.119 --> 00:50:59.840 That's really hard to do across the country because you can't be everywhere. 00:50:59.920 --> 00:51:05.199 It's really hard to hire the right people and hire the right BD people and build those relationships. 00:51:05.519 --> 00:51:07.039 It takes a long

time. 00:51:07.440 --> 00:51:10.880 And that led me down like studying marketing and sales. 00:51:11.039 --> 00:51:15.440 Russell Brunson, ClickFunnels, and Alex Hermozi, I stumbled across. 00:51:15.519 --> 00:51:18.880 And he is a brilliant mind in marketing and sales. 00:51:19.119 --> 00:51:30.000 And one lesson that really stuck out to me from him and helped lead us to creating the HO cost index is make an offer so good people feel stupid saying no. 00:51:30.320 --> 00:51:30.960 Yes. 00:51:31.519 --> 00:51:41.920 If you can create something for 10 cents, sell it to somebody for a dollar, and it's worth$10 to them, you're going to be a billionaire. 00:51:42.159 --> 00:51:42.639 Oh yeah. 00:51:43.119 --> 00:51:43.360 Right? 00:51:43.679 --> 00:51:43.760 Yeah. 00:51:44.320 --> 00:51:45.199 Really hard to do. 00:51:45.679 --> 00:51:54.960 But that's you want a gap between what it costs you to deliver a service, the price that a client has to pay has to be a big gap, and then it has to be an even bigger gap from the price to value. 00:51:55.360 --> 00:52:02.239 You can have an exponential gap between cost, price, and value, like you're going to have a very successful, scalable company. 00:52:02.320 --> 00:52:05.119 And it makes sales that much easier, right? 00:52:05.280 --> 00:52:08.880 Like selling a commodity for cheap, right? 00:52:09.039 --> 00:52:12.800 If you're going to underprice the underprice the market, like sales is easy. 00:52:12.880 --> 00:52:14.480 You can think you're a really good salesman. 00:52:14.559 --> 00:52:19.760 But then when you look at the overall business, is is that the right clientele and the right way to grow that business? 00:52:20.000 --> 00:52:20.239 Right. 00:52:20.400 --> 00:52:21.920 It depends on the business model, right? 00:52:22.000 --> 00:52:23.840 Like there can only be one low-cost provider. 00:52:24.000 --> 00:52:27.039 There can only be one Walmart, right, or one Home Depot. 00:52:27.360 --> 00:52:30.239 It's really hard to compete with them on price when you're not them. 00:52:30.559 --> 00:52:36.000 And so when I look at the design professionals, I might be rambling here, but this is a really critical lesson to me. 00:52:36.079 --> 00:52:37.119 So I want to share it. 00:52:37.360 --> 00:52:44.320 When I look at the design world, we are just a few percent of the overall investment in commercial real estate development. 00:52:44.480 --> 00:52:52.480 We're such a small number, but we can have such a big influence on the overall value, both the cost and the yield of a development. 00:52:52.719 --> 00:53:07.039 So to me, it is worth it for us to be high cost, high value, because high cost in a design profession literally is a rounding error on like the floor buyout, even if you're 30% above the commodity players. 00:53:07.119 --> 00:53:10.480 And it's like, who really decided that the commodity players set the market anyway? 00:53:10.559 --> 00:53:16.880 It's like, all right, so like tell me about their recruiting, their design process, all of the things organizationally, like, are you vetting them like that? 00:53:17.039 --> 00:53:20.400 Or who is to say that, like, would I trust them to price our project? 00:53:20.639 --> 00:53:29.440 But it's like, I come back to like what's the value we're creating, coming back to the lesson from Hermosy is how do you create an offer so good people feel stupid saying no? 00:53:29.599 --> 00:53:33.599 Then you don't need this oversophisticated marketing and sales engine. 00:53:33.760 --> 00:53:40.880 You just need to get that message in front of as many people as possible and then build like brand confidence with testimonials and presence. 00:53:41.039 --> 00:53:45.599 And so his podcast, the game, breaks down a lot of stuff like that that really gets your mind going. 00:53:45.920 --> 00:53:48.000 Well, I'm gonna seek that one out right away. 00:53:48.159 --> 00:53:50.000 I tell you what, I really appreciate that. 00:53:50.239 --> 00:53:55.840 So, how can folks get a hold of you, Renz, if they want to reach out and maybe work with you? 00:53:56.159 --> 00:54:00.960 Yeah, best place to reach out to me would be LinkedIn, F HazeIV. 00:54:01.119 --> 00:54:02.000 My father's also there. 00:54:02.079 --> 00:54:03.360 He's the third, I'm the fourth. 00:54:03.440 --> 00:54:05.840 So Renz F Haze IV, you'll see me on there. 00:54:06.000 --> 00:54:13.920 I post content very frequently on LinkedIn, Instagram, and then our company website is h-o.engineering. 00:54:14.159 --> 00:54:15.920 And we're actually about to launch a new website. 00:54:16.000 --> 00:54:19.679 So maybe by the time this episode airs, we'll have the whole new website out there. 00:54:19.920 --> 00:54:20.880 That'll be exciting. 00:54:20.960 --> 00:54:21.119 Yeah. 00:54:21.199 --> 00:54:24.079 No, I really found a lot of value in our chat today. 00:54:24.159 --> 00:54:28.559 So thank you very much for carving out a little bit of your time and sharing it with our folks. 00:54:28.800 --> 00:54:29.679 Very much appreciated. 00:54:30.159 --> 00:54:30.960 My pleasure, Joe. 00:54:31.039 --> 00:54:32.000 This is a great conversation. 00:54:32.079 --> 00:54:33.119 Thanks so much for having me. 00:54:33.360 --> 00:54:33.840 All righty. 00:54:33.920 --> 00:54:35.360 We'll talk to you soon. 00:54:38.639 --> 00:54:41.519 Hey everyone, thanks for tuning into design development. 00:54:41.599 --> 00:54:45.280 Real quick before you leave, our goal is to help as many people as possible. 00:54:45.519 --> 00:54:48.000 We're a growing community and you're a big part of it. 00:54:48.079 --> 00:54:49.599 So just click that send button. 00:54:49.760 --> 00:54:54.320 Send this episode to a friend to let them get those same insights that you got today. 00:54:54.559 --> 00:54:55.519 We appreciate you. 00:54:55.760 --> 00:54:56.719 See you next time.