“I chose Bolster because of your philosophy of “radical transparency”, what does that mean?”
We’ve had a lot of opportunity to think about what transparency means this past year. And what it means to be radical about it.
To Bolster, Radical Transparency means the scientific way about which we are being transparent and the extreme efforts and lengths we will go to ensure owners can see deep into the cost of their renovation project.
We’ve discovered that architects, engineers and contractors are unintentionally operating in such a way that makes it extremely hard for owners to understand what actions are being performed on their project and how they are being charged for them. To be transparent in home renovation therefore requires being able to untangle and quantify each and every atom of action and cost which takes a commitment to digging deep, making new connections, then analyzing, interpreting and communicating these in such a way that our customers believe and are empowered to make smart decisions from.
In mathematics, the term radical is used to mean “of the root of a number or quantity” and “denoting or relating to the roots of a word” while in chemistry it means “a group of atoms behaving as a unit in a number of compounds”. In both it really means indivisible so it’s fun and somewhat encouraging to note though that the phrase, in scientific circles at least, really means “indivisible transparency”.
What's been really interesting to see this year is that as we have increasingly broken out and made visible the unit actions and costs on our customer's bids (many of whom are passionately engaged lawyers, executives and financiers with strong analytical skills) we've naturally invited new insights, questions and feedback from them which has helped create an efficient process for product development not to mention a community of users passionate about helping to create a new body of knowledge and way of renovating homes.
Incidental to this we’ve also seen many of our ambassadorial customers turning their homes into mini showrooms so that new customers can learn first-hand about their renovation experience with us. This is something unexpected that we’re really enthusiastic about and plan to nurture.
It is easy to search for love in all the wrong places when you’re an entrepreneur. We enjoyed our seed phase but found the Venture Capital path to be exhausting and unsuitable. We were constantly being told to stop trying to solve an impossible problem and “go build something small and simple that you can use to grow fast and raise capital”.
The issue with this approach, aside from wimping out and not tackling what needs to be tackled, is that it meant halting our natural curiosity about why the traditional renovation process does not work and no longer challenging the status quo. Even scarier was the possibility we'd succeed at doing something mediocre which I think can be really hard to fix or improve upon later, even with tons of money, as a product, culture and brand harden.
Alternatively, if you fail early on at trying to do something extremely challenging, you can come back even smarter and potentially achieve something truly great.
Fortunately, we eschewed the advice of investors and stuck to our guns, attacked the renovation process and set about building a new renovating operating system. And it is because of this determination and perseverance that earlier this month, Bolster officially joined the porch.com family!
With over $100M raised and a nationwide demand platform that in the past 12 months has delivered over $2Bn of potential new business to professionals, the Seattle based home services platform offers Bolster the resources and infrastructure to achieve our original and continuing mission to transform the major home renovation process and experience for owner and professionals alike.
Bolster will continue to operate as an independent entity under the Bolster brand and be led by the same founding team but with a few key changes: we’ll be advancing the business model by becoming the General Contractor and internalizing various activities including design and pricing to help speed up and simplify the pre-construction process for our customers. This improvement also has the added benefit of enabling us to offer Extreme Accountability (the counterpart of Radical Transparency) via the first ever on-time and on-budget financial guarantee on every project and up to its full value - all at no cost to the owner.
Porch was the right fit for Bolster for a number of reasons – both companies share similar values and believe we can transform the relationship we have with our homes in exciting and positive ways.
We’ll be releasing statements to the press shortly to announce the relationship, stay tuned!
Inclusion and equality
My cofounder, Anna Karp, and I often talk about what it means to be a woman in this industry and what can be done to inspire lasting change so it is safe and welcoming to a lot more women.
Various events have conspired this year to reveal the horrendous sexual harassment and pay inequality that women across many industries are experiencing. And while the allegations have come mostly from the entertainment and media industries, there is plenty of anecdotal evidence to suggest it’s just as bad in other industries, including our own.
Earlier this year, I learned about a women working in a large design-build firm in New York with revenues of $100M+ who, upon the company being acquired, was revealed to be earning $150K per year while her male counterparts were both earning $600K. To add insult to injury, the acquirer added only her to a Key Person insurance policy as her contribution to the operation proved critical and theirs, well, not so much.
Here’s the thing about this – Bolster's performance data strongly suggests that the skills required to be a successful general contractor (financial management, sales and marketing, customer service, communication, negotiation and project planning & management) are gender neutral: we have no evidence to support men being able to do any of them better than women (to state the obvious GCs are not required to lift heavy things, only coordinate things like suppliers, trades, finance etc).
We also have evidence to suggest that the best performing general contractors are those who come from outside the industry (from management positions typically) rather than "up through the trades”. This is possibly due to a higher level of education being acheived by outsiders and implies that being a successful GC, at least when you start, is independent of past construction experience which men in the industry, and I think society in general, typically uses as a [false] argument for renovation being and remaining a “man's industry”.
Upon learning of this idea many skeptics say “ok, love the idea but how does a woman with no experience in renovation go about becoming a GC?” Very good question. My answer to this is "take Emma, she works for a GC called William. Emma spends her days coordinating and managing sales, marketing, operations, finance, HR and admin functions for William while he’s out selling to owners and managing things on the ground. So how could Emma become the GC without construction expertise?” The answer is in the question – Emma doesn't need to work for William, she can simply set up on her own and hire herself a team of Williams like every other industry does!
Today there are tens of thousands of women backstopping their male counterparts, very often being grossly underpaid for the critical business functions they manage, who could down tools, set up on their own and go hire the domain expertise they need to build out a fully operational GC.
One possible hurdle to achieving this and that women face in becoming entrepreneurs in general is the rampant gender bias in the investment community - only 8% of investing partners at the top 100 venture firms are currently women - and so raising capital can be a challenge (this is especially true in construction where scaling and complex product issues make raising investment capital a challenge for anyone). This issue can be totally sidestepped however thanks to the standard practice of requesting and accepting advance payments from consumers to satisfy a project's early cash flow requirements. Managed responsibly, the profit and overhead component of these advance payments are a natural antidote to being dependent on investor capital and bootstrapping a GC business to financial freedom.
In sum, our data and experience show:
- The skills needed to succeed as a GC have no inherent gender bias towards men;
- Domain experience, contrary to popular opinion, is not necessary and may even be an impediment;
- The GC business has a self-funding function that means women do not have to rely on the predominantly male investing community to get started.
Clearly a lot has to be done to help ensure women can feel safe and supported in building companies or taking on good, fair paying jobs but as more women become entrepreneurs and data gets democratized therefore helping to dispel myths about who can do what, there is a huge opportunity for women to enter and reshape the $300B renovation market and become more visible leaders in a male dominated industry.
And, if any one of them should knock it out the park, they may even help positively impact the current Forbes Rich List Ratio of 10 men to every 1 woman which we likely need to get to 1:1 for society to truly achieve any hope of lasting gender equality.
Project Values: Our average project value is currently $408,421.
On budget: As of today, we have delivered projects 99.34% on budget. This means that for every $1,000 of cost we budgeted on an owner’s project, we encountered $6.59 of surprises that our customers paid extra for. While this represents a 91X improvement relative to the market (average cost overrun of 60%/Bolster’s result of 0.659%), we want to get this number to 0% by the end of 2018.
Interesting to note that owner-led change orders (e.g. a better tile or change in the scope of work) to date is running at 8.9%. This means for every $1,000 of cost we budgeted on an owner’s project, the owner spent an additional $88.95 on changes. This is helpful budgeting information for anyone planning to renovate in NYC.
On Time: As of today, we have delivered projects 93% on time. This means for every month we forecasted a project would take, the owner endured our presence in their home for an extra 2 days. We are working towards reducing this delay to 0% but to do so need to better determine the true cause of delays (Bolster, owner changes, bad weather, building architect requests etc) which have to date proved elusive at times.
Soon we will be implementing a tracking system into our change order process that makes it easy to determine the cause or causes of a delay so we can better track our temporal metrics and more accurately forecast and hit project schedules.
Quality: As of today, we have delivered projects to specification 100% and remedied, free of charge, defects or less-than-perfect work in 1% in instances. This means that for every $1,000 of construction work installed we have been asked to repair or replace $10 of it.
This year we’re looking to quantify and track construction quality beyond owner approvals by tying them to ever-improving and objective quality standards. Like these.
User Experience: We currently have a Net Promoter Score of 90. While this is great, it means there is room for improvement. Obviously, being in a mini-marriage with an owner over the course of 6 months to a year creates lots of opportunities to trip up and disappoint but it also means we have plenty of opportunity to remedy issues and delight our customers in a myriad of ways and we’re looking forward to testing several new customer service initiatives this year.
The mission for Bolster is to achieve a 100% on time, on budget and perfect quality and user experience score on each and every renovation project. It’s no surprise that we’ve been told many times that this is simply impossible but when you operate at extreme levels complexity, innovations can evolve in unforeseen ways and so while it is indeed ambitious, it is we believe physically possible to attain (no law of math or physics says it can’t be done) and so 100% across all 4 dimensions is, and shall forever remain, our true north.
To our amazing customers, everyone at Bolster is immensely grateful for the opportunity to serve you – your trust in us with your finance, family and homes is inspiring and your feedback and engagement helps us every day get a step closer to transforming the home renovation experience for everyone, forever.
To our professionals, we know how hard it is to do what you do. You don’t simply deliver much needed medicine to homeowners and their properties, you are the psychologists and surgeons of real estate and we salute you and thank for your hard work and outstanding performances.
To my team, thank you for your inspiring passion and dedication – because of you I continue to leap out of bed every morning.
Build, Measure, Learn!
Fraser Patterson (In)
Founder & CEO