In this episode of The Real Estate Podcast, Kevin Vandenboss speaks with Marc Minor, CEO of Higharc

Guest:

Marc Minor CEO of Higharc

Host:

Kevin Vandenboss

Real Estate Expert at Benzinga

Twitter: https://twitter.com/KevinVandenboss

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Transcription:

In this episode of The Real Estate Podcast, Kevin Vandenboss speaks with Marc Minor, CEO of Higharc

Kevin Vandenboss: Tell us a little bit about your company and what exactly you do.

Marc Minor: Thank you. So Higharc is a web platform for home builders. We automate a whole lot of different parts of the process of building and bringing home to market so that builders can offer better homes to home buyers.

Affordability is a really hard problem with new home construction because of the sheer amount of waste. That's hard to wrap your hands around. In the process. So there's something like 5% of every house. Um, in terms of its sales price, that's lost to avoidable waste. And that comes in the form of materials that you didn't need to order, or that were wasted on site as well as process delays.

So our software automates lots and lots for home builders across the whole cycle of building a house. And in doing that, we help them tighten up the operation and deliver better. 

Kevin Vandenboss: what got you into this space? what's your background? 

Marc Minor: Actually I came at it like a lot of folks who start technology companies out of personal experience and frustration.

So I was actually building a house and like most folks who experienced these, I was pretty frustrated with the lack of clarity.

lt’s very difficult to know what you're going to get before you get it, how much it's gonna cost. So I realized that a lot of the work I was doing in 3D printing in terms of the digitization of manufacturing actually could apply really nicely to home building.

Kevin Vandenboss: How have the adaptions been like?

Marc Minor: You probably know our industry is one of the least sort of advanced in terms of its adoption of technology.

Spends less than 1% on R&D compared to  3% to 5% in other industries that are similar. And it's not for lack of trying though. So most of the technology that's out there is 30 to 50 years old. We're one of the first platforms to come along that kind of delivers on the promise.

So we've seen actually a pretty significant interest across the board, not just from kind of the obvious, real large builders but also from very small mom and pop builders who are struggling to manage growth across the United States. 

So it's been really encouraging for all of us to see the interest in the industry in digitization, obviously housing prices skyrocketed and all of a sudden things are slowing way down. 

Kevin Vandenboss:What is the market  going to look like in the next 3, 5, 10 years? 

Marc Minor:The average time it takes to build a new house has gone up significantly over the last 2 years.

A lot of builders when they're doing well, they're looking at 90 to 120 days for a new home. My home, which is a custom home, took nearly 2 years. So, and there's a lot of reasons for that, but we're really focused on automation using technology, especially the web to replace paper and kind of manual tasks that gum up the gears of the entire process.

Home building's kind of death by a thousand cuts, buyers experience that too. There's not a silver bullet solution. It has to be a kind of holistic effort to clean up how you do business. And so that's where we step in on the process. And the technology side is by helping home builders to kind of cut out a lot of that kind of stuff.

Obviously, there are other important tools that the industry needs to take advantage of, those include mechanization of labor where it makes sense, as you probably know, we've got a huge labor problem and they also include new ways of thinking about financing and the build- to- rent phenomenon.

We've had everyone from the sort of usual suspects around the United States approach us. And then some surprise potential customers come out of places like France, the UK, Australia, Japan. So while we're not going global right now, there's a global demand for what we're doing. 

We've really focused on some of the highest growth markets in the US. So we really love Texas and Florida. And obviously the Southeast more broadly is a real strong growth market.Pacific Northwest is pretty awesome market in terms of the homes that are built. California's one that has a lot of development. It's the one that we've kind of avoided at the moment, just because of some of the regulatory hurdles. Otherwise we're open for business pretty much anywhere that builders. 

A lot of our customers are small businesses. You can be doing 50 to a 100 homes a year right now, and you're going to get a lot of value out of the kind of automation that we provide. You can get tools that allow you to not only compete with the nationals, but often offer a better experience without having to bring on a huge amount of people onto your team.

And that's kind of the power of using automation to operate your business. 

Kevin Vandenboss: IIs there any way for me to utilize this or do I have to find a builder that's already doing it, or can I say I'm building a house, I'm gonna hire my contractors and this is what you're going to use to kinda manage the process?

Marc Minor: We started the business focused on providing tools. Someone in your position and today, if you wanted to use Higharc as a home buyer, you would encounter it on a builder's website or in a sales center on a big touch screen.

If you have ever configured a car on the web that's the kind of experience you would get from us today if you're working with a builder. So, we automatically produce these car light configurators for homes, and what's so incredible about them is they are actually the real home that's gonna be built with all of its various possibilities. It's not just like a representation, which is usually wrong. It's the real thing. And that's because the same data that we use to generate that experience for you, we actually generate the B. Automatically as well. So the same thing that gets built is the thing that you're shopping for.

And that's a, typically a very big disconnect. What buyers see is very different than what they end up getting, less than 2% of all homes are led by architects. It's an unfortunate statistic, and there are many reasons for it. Obviously, economics is a big one. One of the main reasons we started the business was to extend the reach of that kind of consideration design thoughtfulness to regular people. And over time, it's gonna empower folks like your audience who are out developing their own, their own assets to be able to operate without having to become a full-scale builder. For example, there are a lot of other opportunities when you can use the software. To automatically produce things like blueprints and sales materials and online experiences.

The opportunity for digitization of home building is the same opportunity that every other major industry has already taken advantage of. If you look at manufacturing and the way that product development companies have been able to improve their products, and their offerings, because of the way they simplify how they manage data.

That same opportunity is available for home building, whether it's you're building a single one off home, or whether you're building like 10,000 homes a year, the cost of building a home versus purchasing one.

Kevin Vandenboss:What is that comparison right now? 

Marc Minor: So when you think about cyclicality in our market certainly  there is some cyclicality for the most part, though  we are in this place where supply is pretty under.

We need something like 25 million new homes per year, just to keep up with overall growth in the world. Costs in construction generally are a function of demand, more so than it is a function of the input. and it usually commands about a 20% premium, something like that on what you would  for an existing home.

I think the opportunity for builders is to comp is to compete more with existing homes by being able to reduce their own costs so they can keep their margins the same, but have a lower entry point for the home. It's one of the reasons why entry-level homes have been such a big category over the last 5 to 10 years.

Kevin Vandenboss: Where can our audience find some more information? 

Marc Minor: Sure. Go to Higharc -and reach out to us in the, get in touch section.