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Business of Home Podcast
Forget efficiency, it's all about flow for Scott Hudson of Henrybuilt
01:01:51
The founder and CEO of Henrybuilt discusses his company's approach to "system" kitchens, where AI makes sense in design and where it doesn't, and why efficiency is overrated.
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- [00:04]
Dennis Scully
This is Business of Home. I'm your host, Dennis Scully. Every week I'll be speaking with leaders and innovators from all corners of the home industry. My guest this week is Scott Hudson, the founder and CEO of Henrybilt. In the early 2000s, Scott left behind a career in publishing and tech to start a design company. Over time, Henry Built became known for high end European system kitchens made in America to an exacting standard. Since then, he's launched a more accessible brand, Space Theory, a software company, Symbolic Frameworks, and a publication called Untapped. I spoke with Scott about the eternal quest to stay connected with customers and follow their lead. Where AI makes sense in design and where it doesn't. And why. For him, efficiency is never the end goal. Flow is foreign. This podcast is sponsored by Ernesta. Summertime projects are here. Get your clients ready for backyard gatherings and downtime on the patio with Ernesta's custom sized outdoor rugs. Expertly crafted with plush fade resistant fibers and elevated designs, each rug is made to fit and delivered in as little as two weeks. Join Ernesta's exclusive trade program today and let their team of dedicated consultants handle everything from samples to quotes, streamlining your process every step of the way. Apply for membership@ernesta.com BOH and now on with the show. So, Scott, I wonder if before we start our conversation, you could tell us a little bit about Henry Built and I want to go back in time and talk about all that led to you you building it. But tell us what Henry Built is today and then we can jump back and talk about the early days when you were thinking about developing all of this.
- [02:11]
Scott Hudson
So Henry built is 24 years old and we're still focused on the same thing we were when we started, which is developing a kitchen that some people call a system based kitchen. What it really means for the end user is that it performs better. So it feels a lot more interactive. It's more developed in terms of the tools that you have to work with. And some of those tools are unique to Henry Built that we've developed over time. It's also sort of systematic in the way that it is made and the way that it aesthetically comes together. So it's still highly variable, but there are a lot of patterns that repeat that make it possible to assure a better outcome and improve the product over time. So kitchens are the core of what we do. And then half of our projects involve most of the house. So we have similar systems for dressing rooms, bathrooms, dining rooms, that sort of thing.
- [03:16]
Dennis Scully
Well, and you're very thoughtful and intentional about the product and the business and how you've built it over the years. I wonder if you could tell listeners a little bit about your background and how you really came to this kind of mindset. It's unusual for someone whose background was in software to suddenly be in kitchen and cabinetry and all of that, but maybe it's not as unusual as it sounds.
- [03:45]
Scott Hudson
Yeah, well, my background background was as a farm boy in North Carolina.
- [03:50]
Dennis Scully
Yes.
- [03:50]
Scott Hudson
And my grandfather's name was Henry, and I worked for him in the summer starting when I was about 11. He was a farmer and a builder. And so he wasn't like a fine maker of things, but he could kind of do everything. And so I learned mostly the joy of making things from him and then went to art school, then got into publishing in New York and did that for like eight years, roughly. But during that time, I still, like. I tried to make all the furniture from my hovel of a loft in Brooklyn and would carry, like three boards at a time on the subway back to the apartment. So I stayed interested in that. And then publishing became software, and I worked in software and started a couple companies in the 90s. And that was relevant to Henry built because it sort of showed me the work was very interesting. But the contrast with making something tangible was very stark. So we bought our first house. My wife and I and all our friends looked at it and said, basically, why are you buying this house? This house is hideous.
- [05:07]
Dennis Scully
And you said, wait until you see what we do with the place.
- [05:10]
Scott Hudson
Yeah, it was a 1921 house, but it had been a rental for 30 years or something like that. And so, yeah, it was in pretty bad shape. But of course, I looked at them and they're like, what is your problem? You don't see the beauty. And for two and a half years, I worked on that every day after work. Then we had our first child and moved to another house, did the same thing. Moved to another one, did the same thing. And so that was really satisfying, but also kind of eye opening, like the contrast with software, which is all about automating and streamlining and speeding things up to anything related to a house, which just seems incredibly archaic. And part of that is satisfying by contrast, and part of it is not. So through that process, that's what led to Henry built. So it was. It was kind of the notion that some of these things that seem so difficult, it's like, really hard to get quality, especially not just physical material quality, but design quality. It's really difficult. And that's when I sort of just discovered the. The European kitchen approach. So companies like Buffy and Bulltop had gone from being furniture makers, cabinet makers, to developing these whole systems that they marketed more like cars, in a way, and that they industrially engineered, which I thought was, wow, that is so smart. And it was something that I could relate to. Like, okay, so there's a tangible product, there's something you can improve over time, and there's something that you can maybe turn into a business that would generate enough income to have a couple kids survive. Yeah. And the whole thing has been really satisfying, but it's also much harder than previous work in software publishing because it's multidimensional and you can't fix a bug in a kitchen from 2,000 miles away.
- [07:20]
Dennis Scully
Exactly. And so, I mean, I know you've talked to me in the past about just how challenging it was figuring all of this out. And it was many years right in development that you were. I mean, so take me through it a little bit. I mean, tell me the early days and the development and what was so hard.
- [07:42]
Scott Hudson
It's hard to wrangle a lot of things that are normally dealt with separately and as one offs into a system. It's just really difficult to figure out how to do it. And we kind of started with the small things and worked out. Initially, we were building furniture pieces and having people purchase them to some degree, not directly on the web, but through web marketing. That was one advantage of my background. And that quickly became like, it was obvious that furniture was going to be way too difficult. You don't really have investment story. You don't have a functional story. The decision is made based on pretty whimsical things that you can't really control. So the kitchen was so fascinating because it's so complex. So whenever something's complex, you have an opportunity to compete. So we started creating the system with two things, like what is in the drawers and how do they open. That was it. So the pulls that we designed really early on are still some of, like our most commonly used products. They're integrated into the front in a way that just signals that this is a different thing. And then you open the drawer and you see components inside that help you organize. That's all it was. And then we worked out from there, like, okay, so what are these rules? Some of them are aesthetics. Some of them are functional that we can tie together. And you want this extensible system, so you have to distill the chaos down to some incredibly simple rules. And it Just takes time. And then there's the whole aesthetic side of it. And at the same time, I had decided because I had spent so much of my time in the software world raising money, that I would bootstrap the business and I would not raise money. But it was so hard. And it wasn't until we started in 2001, 2002 really is when we became operable. But it wasn't until probably 2010 that we had something that we could say, this is really systematic. It took that long. Someone else may have been able to do it faster, but.
- [10:00]
Dennis Scully
But not at the level of quality and detail that I insisted upon, says Scott Hudson.
- [10:05]
Scott Hudson
Yeah, no one, no American company has yet, so it must be pretty hard.
- [10:10]
Dennis Scully
Yes. They've seen what you've done and they say, let him do that. Let him. Let him.
- [10:14]
Scott Hudson
Like that.
- [10:15]
Dennis Scully
Yeah, let him figure that out.
- [10:16]
Scott Hudson
Yeah, yeah. But it's now it's a really successful business. We have 120 employees, we have 600 projects going at any one time. They're all over, mostly North America, some outside.
- [10:29]
Dennis Scully
And somehow it works well. And so was there this moment that you saw the product was where it was going to be good enough to be understandable to the people that were going to be specifying it. And it was so different and clearly better than what was out there. I mean, could you sense that at a particular time?
- [10:52]
Scott Hudson
Yeah, sometime between 2012 and 2015, things accumulated to the point where when we moved into our showroom on Crosby in Manhattan, people would come in and they would say something to the effect of, wow, you guys have really grown up. You know, you finally reached this level. And so it was different then. It became much easier to sell the product line, convey what it was. But it's still challenging because as you grow, you grow into a new market. You grow outside the early adopter or most informed buyer group and into another one.
- [11:31]
Dennis Scully
Exactly. So, I mean, in the beginning, it seemed like you had these. You almost had, like a cult like following where people were just so into your process and the level of work that you were doing. Right. And I mean, and I don't want to say that you had groupies, Scott, but you did have a lot of people who just sort of admired you and your approach and how you would explain what you were doing. And so it's interesting that they say, oh, you've really grown up. And we can. We can see how it's evolved. And those are the people that had been paying attention for quite a while.
- [12:02]
Scott Hudson
You know what's funny about that? Though between 2015 and 2022, let's say we grew so much that we kind of forgot that we still needed to do that same thing. And it's becoming much more like it used to be in the early days in terms of the way that we're interacting with our clients. So one of the hardest things in our industry is to focus on the end user. And it depends on your product type. But if you think about how much of a designer maker's energy goes into just talking to another designer, if you make rugs, you know, you are probably spending an enormous amount of time talking to designers who specify them. So the contact with the homeowner becomes less and less so as we. So as our projects get larger and there are more parties involved and there. There are very sophisticated architecture and contracting firms involved, you can get distance from the client, but it's the client who really has the emotional connection. I mean, you could be the best supplier in the world to a contractor, and the client may have no idea who you are or what you did. And if you're detached, then you don't get that feedback loop. And it's in the feedback loop that people become really attached to what you're doing because you understand them. They appreciate that a lot. It's kind of uncommon. And then you fold that back into the product, and they see that and they feel like they're part of the business. And that that's still really important, even at the scale that we've gotten to.
- [13:44]
Dennis Scully
Well, it's interesting that you mentioned Buffy and some of the other, what I think of as sort of the big European kitchen brands. And Bulltop was such an impressive. I mean, really impressive brand. And they had so many little components that you could add to that system. It just seemed endlessly complicated on some levels. But did they all keep up? Did they. I mean, to the point that we're just making about continuing to evolve, I don't feel that they play the role that they did a decade or so ago. I don't know what your sense is.
- [14:21]
Scott Hudson
I mean, they're really impressive companies. The most surprising thing about it is that no one else in the US Basically picked it up as a way of approaching the kitchen, which I think, like, culturally, they're just. They come from such a different place. As we grow, we are still deciding to only sell our product ourselves. No dealers, no representatives that don't work for the company. I think it's really hard to expand what you're making. So Buffy has done a great job of acquiring a Couple of other companies and expanding what they're doing. But if you want to continue to make your own product, which bulltop is, you either have to limit it or you have to have some secret weapon that enables you to keep expanding it and keep making it more malleable so it can be more personalized.
- [15:20]
Dennis Scully
Well, I'm curious to your point about American companies not picking up that model per se. It seems as if there have been a lot of cabinet companies, I think, of Form Kitchen, which seems to have struggled recently, and some others that have tried to give you the boxes or give you some great doors and some hardware. And they've kind of come at it more from almost a component perspective rather than a system perspective. And I don't know if that's what's held some of these companies back.
- [15:53]
Scott Hudson
I don't know. I think it's a completely different. It's the opposite approach from what we are doing. Like you're saying, so we're focused on the whole outcome and the end user's experience. It's not that we don't care about the door, you know, we do, because we really do. But it's not. It's not about, you know, something looking a certain way. It's about something looking beautiful. But it might have many different forms. And so that is part of the hard part, is it's easier if you're only addressing part of the problem. If you're trying to erase the whole thing, it's really sort of insane, you know, because you're dealing. You're dealing with 15 plus different materials. You're dealing with lighting. You're dealing with things like how do you integrate stone and acrylic and leather and all these other complex things into a production flow that actually works at a quality where it's hard to find. It's hard to find suppliers that can come up to a level of precision that companies like us are creating. It's really difficult. So it makes sense that people would specialize. And I think software is super important to company who's trying to systematize and pull together lots of different products into a system that works well together. We wouldn't be here if we hadn't focused also on software.
- [17:24]
Dennis Scully
Well, and so, I mean, to the earlier discussion about your background, do you feel that that was one of the key advantages that you had, that you had the software experience and also just that, that mindset?
- [17:36]
Scott Hudson
I think so, yeah. I was just lucky, you know, I mean, it's. It is becoming more. Even more important with AI and people are becoming more comfortable with communicating and making decisions through the Internet. But it's also becoming really complicated, you know, so being able to design that experience and control that experience through software is super important. So is being analog. It's like the two things you have to put together are opposites to succeed.
- [18:12]
Dennis Scully
Well, so talk to me about that. I mean, the analog part is, I assume, the craft and the construction, and as you were saying earlier, all the materials and how it's all being put together.
- [18:24]
Scott Hudson
Yeah, there's the analog part of building things and where you introduce technology and where you don't. And that makes a big difference because the things that people touch, if you believe there's some kind of soul transmitted, you know, from. And I think there is. It's a. It's a. Makes you feel crazy to talk about it. But when people touch something that has had a lot of care put in it by an individual human being, it's different. Especially if the process of getting it has also been personal, you know, so that's why. Back to that end user, homeowner contact. But the analog part of marketing and analog part of marketing and selling is in some ways becoming more important. I'm not the only one that's saying this, but when you can't tell if what you're looking at is real or not online or you don't know if the information you're getting is correct, then it comes down to, I look this person in the eye and I talk to them, and do I trust them and are they helpful and will they be there for me?
- [19:31]
Dennis Scully
Well, that's why so many designers talk about almost a hesitancy sometimes to show a rendering to a client, which is an image that often can be so perfect, or that a client can get sort of locked into thinking they're gonna see this exact thing, rather than understanding it's a representation of.
- [19:51]
Scott Hudson
Yeah, there's a possibility that's gonna distort our entire ability to communicate.
- [19:57]
Dennis Scully
Is that one of your concerns?
- [19:58]
Scott Hudson
Well, I actually think it's refreshing that technology is driving us to react to it by coming together in person. That's how I see it.
- [20:07]
Dennis Scully
So you feel like that's what's happening as a result? Like you were just saying, the need to see someone in the eye and kind of really suss out, is this person someone that I can really trust and work with and going to deliver?
- [20:19]
Scott Hudson
I think for a decision like this, it's going to become more and more important. And so it's sort of a competitive decision to make. Am I Going to really focus on everything being digital and never seeing people and being able to, you know, create renderings and not have to photograph real things. Or am I going to a little bit reverse course, you know, and build my organization around one to one contact? Which sounds insane. It sounds like how inefficient is that? But it's not by itself. You're still using the Internet, of course, to create awareness and engagement and all that, but it's one of the ways, if you can put people in markets, real people, in a way that they can interact around something that's this expensive and this fundamental to a home, then you can avoid a lot of other types of marketing potentially. So the right combination of digital and analog marketing seems to work really well. And I'm sure it's different for every business, but when it works, it's also way more satisfying to have that one to one relationship.
- [21:32]
Dennis Scully
Well, and I think that's what so many companies in the home industry find. I mean, funny enough, the home industry is notorious for being sort of technologically behind and really. And so they can't rely on their great website because many of them don't have a great website. So that can't be the primary. Right. And so they need the relationship and they need that seller being with that designer or with that end user. And so the relationship does play such a huge role.
- [22:03]
Scott Hudson
Yeah, that's not a particularly new point.
- [22:06]
Dennis Scully
Or idea, but it's interesting that you're seeing that in response to where you are imagining AI and technology taking us.
- [22:14]
Scott Hudson
Yeah. Well, I think a lot of companies were saying we won't have an open to the public showroom during the pandemic. You know, they were saying everything will be by appointment, we can move to wherever we want to. And it's a little bit of turns around. That's not the case.
- [22:30]
Dennis Scully
Well, and over the years you've experimented with different price points and different offerings. I mean there was Space Theory. Right. Was, was another extension. And tell me how that. And that was an effort to lower a price point and create kind of a different offering. Yes. And there was another one, I'm forgetting Viola or something years ago.
- [22:52]
Scott Hudson
Viola Park.
- [22:53]
Dennis Scully
Those were sort of experimentations, right. With different, I mean, what's worked, what hasn't, what have you learned?
- [22:59]
Scott Hudson
Yeah, Space Theory has worked really well. So the idea with Space Theory was to create what you might call, if you're inside the business, an edited down version of henrybilt, just for the kitchen and figure out how to create the same kind of system performance feeling for 30 to 50% less than Henry Gold. So we have lots of repeat clients, some of which have had Henry built then Space Theory, then Henry built or Henry built in the main house, Space Theory in a cabin. But it's also, it is less expensive. But that's not really the main point. That's actually not what most people end up caring about who are approaching us. So we're still evolving how that works. Like whether it's a part of Henry Built or a completely separate thing. And that we're sort of leaning toward making the two brands as close as possible because they share the same values, but still keeping the price distinction and still keeping the. Making it clear like you have options here and it just depends on what you're trying to do.
- [24:06]
Dennis Scully
So not, not spinning off Space Theory, not making that its own brand and having its own locations and all of that. Keeping it, keeping it with Henry built.
- [24:14]
Scott Hudson
And more or less.
- [24:16]
Dennis Scully
Yeah, yeah, we're still working that out. We haven't.
- [24:20]
Scott Hudson
Well, an example would be like if you were going to go into a city like Denver, you would probably want to lead with Space Theory, not Henry Built because the average home is 6, $700,000. Maybe the sophistication of the market's not there for a system approach. So putting it something like Henry built in Denver is such a stretch for so many people. So it's almost like you might put one in the foreground in one situation and the other brand in the forest in the foreground. Different one, but they're still connected to each other. People might come in the door for one and end up actually using the other one.
- [24:58]
Dennis Scully
So. And then there was. I'm. And I'm forgetting what symbolic frameworks was, but that was some software or something.
- [25:06]
Scott Hudson
Yeah, yeah, it's still there.
- [25:09]
Dennis Scully
Okay.
- [25:10]
Scott Hudson
I mean Space Theory is really important to Henry Built and vice versa. Space Theory is in the ground floor of the stable building in Dumbo, which is the most public facing showroom we've ever had.
- [25:22]
Dennis Scully
Well, so we should talk about that because. And that's just happened. So let's talk about that because this Dumbo operation, so moving from Zoho and have you completely moved out of that space?
- [25:32]
Scott Hudson
We completely moved out of our Space Theory showroom on West Broadway into Dumbo.
- [25:37]
Dennis Scully
Yeah.
- [25:38]
Scott Hudson
And we're in the process of moving Henry built. So it's a whole building and we're able to be on the top.
- [25:44]
Dennis Scully
So this is Dumbo in Brooklyn for listeners who might not know. And so tell me about that, how long that's Been in the making and what's the thinking?
- [25:54]
Scott Hudson
Yeah, it's been in the making for a year. And because space theory is more price accessible, it made sense. But it's actually, even in the course of about six weeks which we've been open, changed our whole perspective toward being more public facing on the ground. Because despite the fact that thousands of people walk by there, let's say 100 a week, come in, and they're very aligned, for some reason, people don't want to walk into a showroom that has very few things in it that look really expensive. So you open the door and you get 20% more people in, but they're still pretty aligned. And we're looking forward to having Henry built and Space theory in the same building. So that's kind of what I mean by. And putting them really close together, separating them in this case by floor. But they're really symbiotic.
- [26:46]
Dennis Scully
And prior to that, are you suggesting that because Henry built was. Was public facing, but it wasn't screaming, it wasn't in the middle of some shopping center? Right. It wasn't.
- [26:57]
Scott Hudson
Yeah. I think most people, if you told them, yeah, that's public facing, most people from other parts of the world would go, are you kidding me? I would never go in there. Uh, first of all, I can't even find a street.
- [27:12]
Dennis Scully
It wasn't the easiest to find. Yeah, yeah, you had to be determined. But, but I assume many in the trade were determined to, to find you, and they did.
- [27:23]
Scott Hudson
Yeah. But back to that end user point, the designers, architects, contractors are super important partners to us in the process. But if you're not talking to the end user, you're losing touch.
- [27:38]
Dennis Scully
Yeah. And again, that's one of the big challenges in all of this. And so much can happen along the way. And designers talk to me so much more today about how much longer everything is taking. I mean, out in California, how much longer permitting is taking and construction is taking. All of that. Right. And all costing so much more. And I'm assuming your material costs have gone up dramatically with or without even the whole tariff equation. And I don't know how that's been showing up in your world.
- [28:14]
Scott Hudson
Yeah. The primary material that we use, of course, is wood or a wood product. And that went up between like 50 and 65% in the couple years after Covid. It has come down some. The people that we work with, the companies that we work with, we've worked with for a long time and they, you know, they have a lot of integrity and so their costs Came down, our costs came down. That was good, but not back to the original. So we actually lowered our price, our price last year from its high also.
- [28:50]
Dennis Scully
In response to those material costs coming down?
- [28:52]
Scott Hudson
Yeah.
- [28:52]
Dennis Scully
And do you regret that decision now, Scott, with the tariffs and everything else, or.
- [28:57]
Scott Hudson
No, no, not really. I mean, we might have to raise them again if things go badly. But I'll give you the numbers. We had raised our price 25% between 2020 and 2022, and then we lowered our price last year 15%. So that's about in line with what those major material categories had gone up and down. But fortunately, I think that didn't happen for everyone. It's like a volume long term relationship situation like that where you can negotiate or work those prices back down.
- [29:35]
Dennis Scully
And when you made the decision to lower the prices, did you announce that far and wide? Did you reach out to everybody who had in some way been on the fence and say, hey, I've got some great news. In this crazy climate, guess what? We've actually brought some of our prices down.
- [29:52]
Scott Hudson
I mean, we don't broadcast our pricing anytime. We let everyone know, of course, who was in the process. And unfortunately it doesn't help the people who just bought because we're actually pricing our product based on today's costs, but in the future. So we only buy one big category of component to our product line from overseas and that's from Austria and it's pretty big. If that goes up, then we're going to have to raise price immediately, but it's not actually going to save us until a year and a half out. So we will kind of eat nine months of increased costs at least.
- [30:38]
Dennis Scully
Right. Because of how your whole cycle works and.
- [30:40]
Scott Hudson
Yeah, yeah, yeah. To sell kind of arcane inside stuff.
- [30:46]
Dennis Scully
Well, and what's the big component that's coming out of Austria?
- [30:49]
Scott Hudson
It's all the drawer slides. And there is no alternative that is comparable in quality. So that's not going to be made in America unless it's made by them.
- [30:59]
Dennis Scully
Well, what do you think of the notion of trying to bring so much? I mean, your production is in America. You're the kind of company that the administration seems to be encouraging. I mean, do, do you think that a lot of manufacturing can realistically come back to the, to the U.S. i.
- [31:16]
Scott Hudson
Do think it's possible that things could come back because of automation. I mean, I know that there are foreign companies who want to have manufacturing in the US and there are. This has already been happening already with car companies and other types of companies. And that's good. It's morally questionable to farm out all your low margin stuff to other countries. Arbitrage on the difference in the economies. It's healthier for us to have a mix of people who are doing lots of different things. And manufacturing is much more interesting than people think it is. So there's so many reasons that we should be making more things here. I think the, the thing that you can turn anything into a commodity and you can, if you're super creative, you can take a commodity and turn it into a non commodity. By the way, Germany has so many products like they make melee dishwashers and everybody wants one because it's the best and they sell it at a premium. They pay their workers well.
- [32:26]
Dennis Scully
Well, and that's one of the things to your point about how interesting the manufacturing process can be, that perhaps we've undersold or under marketed. Right. This whole idea of encouraging people to come into this profession.
- [32:41]
Scott Hudson
Yeah. Well, I specifically think when design and manufacturing are done by the same company, then you have design, you have engineering, you have sales, you have marketing, you have all these different jobs plus manufacturing. And you're learning a ton from doing them all together.
- [33:00]
Dennis Scully
We're taking a quick break to remind you about Ernesta. Immerse your clients in elevated design with Ernesta's curated collection of custom sized rugs. With unlimited complimentary samples, exclusive trade discounts and personalized support from a dedicated team of consultants. Ernesta makes it easy to explore options and bring your creative vision to life. To apply for membership or learn more, visit ernesta.com boh and now back to the show. Scott, earlier we were talking about your marketing efforts and I wanted to come back to that because you made somewhat unusual move in that you essentially paused at one point your traditional marketing and put that budget into untapped. If I remember the design journal that you launched through Henry built and for people who aren't familiar, it's an editorial project that explores the built environment through history and culture. I wonder why make that shift and what you were thinking about marketing and connection today and what feels like it's working in this complicated environment.
- [34:13]
Scott Hudson
Well, word of mouth I think is for us because we have so many clients that we've worked with over the years. So you take, let's call that 10,000 people, all of those people have friends. And if you take all of those people, it's probably more like 30,000, 40,000. If you talk about families and you imagine that some ratio of those people both becomes they become repeat or they Tell their friends. And that's pretty good math compared to a lot of the other options that we have. So if you crunch the numbers on digital advertising, you can spend a lot of money and you can still be unsure exactly who you're reaching and you're starting from scratch. There's nothing like a personal endorsement. You get lost in the weeds. You can't control. Especially as AI starts to control ad placement, it's like what's happening, you know. Right. And they're even changing your language at times. You know, it's. It's kind of extraordinary what happens on Google. So that's getting seemingly less and less controllable. Although the pitches, it can be so targeted, you know that your ad.
- [35:28]
Dennis Scully
Well, exactly. That's the cell that they tell you that you're going to see exactly who is interacting with. But I don't really believe that.
- [35:36]
Scott Hudson
Yeah, I think it's a little like stock picking. Right? You think, Okay, I understand all this stuff and I know that this is a good decision, but you really don't know where their head is. And so the people that you. Especially as you get to the point where you have had a lot of clients or you have a lot of clients in a given year, the math just works really well if you can figure out how to have the right interactions and make sure that you're staying connected to the client all the way through and beyond. So things like writing content that your clients will appreciate even after they've moved into their home and lived there, some of that can be about using the product itself, making it better. You've lived here for 10 years and you need to do some repairs. It could be very kind of mundane, but really helpful. Oh, wow. Okay. Can improve how this works for me. But other content, like some of the content and untapped.
- [36:33]
Dennis Scully
Yeah.
- [36:33]
Scott Hudson
You know, people read sometimes only a story or two and they. It changes their sense of what they're doing and designing a house or living in a house. So like Edwin Heathcote wrote about door handles. Really good, really interesting article about how important they are outsized, you know, and it's written for. Anyone could read it and understand it. It's not a inside baseball kind of story. And I've had people say to me, I read that story about door handles and it just really made me see things differently, see things in my home differently, appreciate them. Or they'll read something about craft and objects and suddenly they're aware of things that they weren't aware of before. And so they. They appreciate them more, but they Also make better decisions. And I think that the reason we started Untapped was a little bit of desperation. It's like very few publications seem to be writing like this. Recently with Untapped, we started a feature called the House I Grew Up In. And the idea there is, let's just take it back to the people who are reading and designing homes and talk about something very personal and real and talk about what it was about the house you grew up in that had a long lasting impact on you. It could be anything and people. Everyone that Tiffany has spoken with has said, yes, I want to do that. There's a lot of interest in reflecting on that. And it's fun. Maybe it has a Facebook ish element almost, but it. But it's focused on making you think more about not just like, which pillow am I going to buy, but what are the things that really matter in a home. And creating that kind of awareness and focus among people that we work with makes a really big difference. The conversation changes and the quality of the outcome changes.
- [38:34]
Dennis Scully
Well, I'm wondering to that point what your publication Untapped and the writing as you've just described that exists there says about who you imagine is your customer and what you've learned over the years about. And I ask that question in part because if you were to pick up most shelter publications today, there's a heavy, let's call it, English kitchen vibe that seems to be very popular at the moment. Right. There's lots of skirts that I see in kitchens. I don't think that's available on Henry built kitchens. There's a lot of other elements. So I mean, I'm wondering who you see your customer as and how that is connected to the marketing or the creative work that Tiffany at Untapped is creating.
- [39:25]
Scott Hudson
Well, earlier in the conversation, we were talking about the European companies that started this approach of thinking about a kitchen as a system, designing it as a whole thing. And my theory is that the reason that they did it and we did is sort of a group of cultural things like we had a fast food and still do era. We had an era in which it was unfashionable to do work in the kitchen. Everything was pre processed. This, oh, wow, you can microwave this thing, TV dinners, all that. Right. So in that culture, why would you care about the subtlety and the aesthetics of food and making food? And then you combine that with what happened in the early 2000s when people started focusing on really cooking with raw ingredients and getting good at it and appreciating the Subtlety of it. It's a little bit like, okay, we finally caught up with where the Europeans maybe were in 1950 and never left as much as we did. I don't want to overemphasize it or idealize it, but the people that we work with are at that point, and part of it is the general design awareness in the culture and the sort of famous Steve Jobs quote that design is about how things work. It's not just about how they look, which it sometimes seems like the shelter publication world has forgotten. And the people that we work with are in that mindset generally when we meet them. But it's interesting. It's a challenge to work with them in a way where everyone stays in that mindset as they move through. Because it's so overwhelming. The process is so overwhelming, but there's very little that they could pick up and read that would remind them that that is what is really important. So that's one reason that we did untap.
- [41:17]
Dennis Scully
As a way of re centering them in a way.
- [41:20]
Scott Hudson
Yeah. And ourselves and everybody we work with, even if it's a small group at first.
- [41:24]
Dennis Scully
Right. Which it was. Right.
- [41:26]
Scott Hudson
Yeah.
- [41:27]
Dennis Scully
And that's why when we were talking earlier about, not that there was a breakthrough moment per se, but there. But there was a period where you could feel the momentum shift and that more people were coming to appreciate and understand what you were all about.
- [41:43]
Scott Hudson
Yeah. And I think that was related to design and food culture evolving to a point, you know, where. Where people kind of had a moment where they went, yeah, this stuff matters. It's not so esoteric that it doesn't matter to me. And I want that in my home. I want that kind of home.
- [42:02]
Dennis Scully
And I feel that. And this is going to segue into another conversation around this same topic, but I feel as though part of what you tried to represent for people was efficiency, that it wasn't just great design, but look at how much more efficient it will be when all of these aspects or things that you're interacting with are all sort of thought of in a very efficient manner to make the whole process of whether it's cooking or just working in the kitchen so much easier. And then you extended that into lots of other parts of the home, too, because you wanted it in your kitchen, but then you thought, I want this in the rest of my home as well.
- [42:43]
Scott Hudson
Yes, sort of. But just to take a different tack, I think efficiency is a very kind of American way of looking at it. I think it's really about flow, you know, and that feeling of mastery in your environment, in order to get flow and to get that feeling of mastery, there has to be a certain level of organization or precision in the way that things are set up. But that's not the goal. The goal is the feeling that you get when you can talk to your friends and know exactly where the tools that you need to make this really great food while socializing. That's a great feeling. Or look, our kids clean the dishes and empty the dishwasher and they just put everything back in the right place. How did that happen? That's cool. So it's not that efficiency isn't important, but it's not the end go.
- [43:34]
Dennis Scully
Well, the reason I was talking about efficiency is because one of the things I wanted to ask you about is that I know you have feelings about how sometimes our industry as a whole is not the most efficient industry. And I wonder if you can elaborate on some of your thinking about that.
- [43:54]
Scott Hudson
It's mostly about are we able to spend our time on things that are important? You know, so are we spending too much time with each other in the design community and not enough for their clients? That's a real problem in a business because the tendency is to market to your design partners constantly. I'm not saying that's not enjoyable or fun or sometimes meaningful, but the ratios often way off. And we have conversations about this all the time in the company trying to refocus. You know, let's talk to our. The people who are living with our product more.
- [44:33]
Dennis Scully
Right.
- [44:35]
Scott Hudson
It's not so much an efficiency thing. It's more of a, are we able to focus on the right things? And the amount of time that is spent reinventing the wheel when you're renovating or building, especially building a house, is insane because we've done so many projects with so many different people in firms, you hear the same conversation over and over and over, and a lot of them are getting to the same outcome eventually. If you can figure out how to shortcut some of that work so you can get to the higher level, so you can sort of get away from. For example, if you start with a question, a Q and a process with a client and you ask them, what do you. What do you like? What do you need? What do you want? You get a shopping list sort of things, but not necessarily any wisdom. If you show them photographs and you ask how they feel or just. You don't ask anything, you just show them photographs and let them talk, you'll learn a lot. You can kind of intuit where they're coming from and what they want in their home. And then you can go back and interpret that without so much conversation, if you're good at that, and get farther, faster and sort of consolidate or combine a lot of things at once and move forward faster. And I think all the great designers and architects do that, but the industry, the organization of teams. So like at Henry Built, we have, we have about 120 employees and we have probably about 20 architects, people trained as architects and industrial designers. Really smart, really dedicated, really hard workers. Really easy to get dragged into. This thing that we're talking about where you're just sort of constantly changing details. Let's make the doors 10ft. Let's make the doors 8ft. Like, oh, well, what about, can we think about walnut or oak or. It's just like overwhelming the details. So something like AI. The beauty of something like AI visualization is that it just gives you this thing that is holistic because you said a few things that you like. So that's what it's doing. It's kind of generalizing and using patterns to come up with images that are sometimes amazing. They can be really beautiful. They don't necessarily fully match what a client wants, but that's kind of what I'm talking about, like being able to synthesize things really quickly, use technology to do that. When you can get away from having the same old conversation over and over again and really focus on the higher level of refinement that it takes to create something really exceptional. The short term AI tools that we have are really exciting and helpful. The long term might be totally disastrous.
- [47:44]
Dennis Scully
I think there's little doubt of that at this point. But I keep trying to stay positive and say, but right now, I was having a conversation with someone the other day. No, it's the tractor. We're just giving farmers the tractor. And look at all of the efficiency that was created. And I was like, yes, right now it's the tractor. Until that tractor actually comes for that farmer and eats them alive, which will eventually happen. But right now it is a wonderful tool. And I mean, the interesting thing, going back to your point about getting people together in a room, often you discover that often clients, through no fault of their own, don't have the language to talk about design or style or time periods in design. They don't have that. But if you show them a bunch of images, they can tell you what they like and what they don't like, regardless of whether it turns out to be modern or classic or whatever. Period. Right.
- [48:47]
Scott Hudson
Yeah, yeah. They'll focus on what matters to them.
- [48:51]
Dennis Scully
Yes.
- [48:51]
Scott Hudson
One thing that's exciting about AI, even maybe in the future and maybe the process of maybe at first we think, oh my God, it's going to be horrible. And the closer we get to it, the more we realize we can actually control this. Maybe that's how it will work out. We'll see is it's going to automate a lot of the onerous work in architecture firms and design firms and companies like ours. It is just going to happen. And that is in most, I think, organizations, that's probably 70 or 80% of the work. But the cool thing is to me is that because we have, we have a software team slash sister company, they're using it for coding. So they're, they're eliminating a lot of kind of repetitive work and coding with software, but they're also using it to see patterns and data. So we have, we built our own CRM workflow tool. We have all this data. Salesforce does a similar thing. The difference is we have control of the whole thing internally, but they're able to take that data and find patterns that might take us days to find. And I think the same thing happens in designing. Designing well is about pattern recognition and pattern refinement. Not mostly the sort of logistical, administrative details that we have to do that take up 90% of our awareness. So I think if you can find the patterns and make the client understand the patterns that you see at a high level, then you can get much farther, faster, and you can actually create new, call them archetypes or patterns that are fresh and more relevant to how we live now. But you have to see the pattern first.
- [50:54]
Dennis Scully
I wonder, in sort of wrapping up the conversation, the kinds of issues that come up within the makers alliance, for example, I take it that's still an active organization where you gather and a bunch of people who are makers in the industry. What are some of the issues? Is AI a hot button issue or what does come up in those meetings?
- [51:18]
Scott Hudson
It's a great organization. The topics are really wide ranging. So everyone who's part of it is a owner of a company and they're mostly design and they're design and manufacturing companies. It's everything from how do you price, how do you market, how do you produce and improve your margin or create a margin. I think everybody is focused on AI to some degree. I think it's generally positive sort of curiosity at this point.
- [51:53]
Dennis Scully
I'm also curious in going back to something that you talked about earlier, your decision to not take on investors or venture capital. Maybe you've taken on friends and family over the years. I don't. I don't know. You can tell me. But I know it was important to you to not go down that route. And I wonder what you feel you've learned from that experience. Do you feel great about that experience, decision over time? Or do you think, God, I'm. I'm so much older now than I would have been if I had just taken, you know, $10 million and had some organization help get me to where I am today? I mean, how do you. How do you think about it and do you feel it was the right decision?
- [52:41]
Scott Hudson
For me, it was the right decision because I had experienced having split focus. Because once you take money, you really have a big responsibility to those investors and you have to think about them, what they are trying to achieve. If you're primarily focused on growth, then there are definitely times when you might wish you had more capital.
- [53:02]
Dennis Scully
So that's my last question. How do you think about growth? Is that important to you?
- [53:09]
Scott Hudson
Yes, it is important. You may have run across a book that was written a long time time ago called Small is Beautiful.
- [53:20]
Dennis Scully
Sure.
- [53:20]
Scott Hudson
By an economist named Schumacher. And it's really a great book because it kind of explains why small is beautiful and why scale can be so dangerous. But we're in an economy where without growth, it's really hard to create advancement, to create new opportunities, to create higher income, and to some degree to have. Have just a vibrant culture because you're bringing fresh people in. So it's tough to figure out how to get that without any growth. On the other hand, it's more important. I think it becomes more important to focus on profitability at some point, at least for us, because that also generates opportunity. So you can imagine staying at the same size, but using that profit to improve. Whether it's improving benefits and compensation for people who work for the company, or it's going into R and D so that you can create new things and maybe new companies and you don't have to be so focused on growth. Maybe 10 or 15% growth a year is perfectly fine. Maybe that's the most healthy thing to do. Over time, that generates a large company.
- [54:35]
Dennis Scully
Sure, it becomes huge.
- [54:37]
Scott Hudson
Yeah. But focusing on doubling sales every year is really not interesting.
- [54:47]
Dennis Scully
Well, it seems very interesting to the PE community, which is part of why I ask, because often when we talk about venture capital, people say, oh, it's just growth for growth's sake. And what is that about, really? And often profitability is not the focus, nor is sort of perfecting the product or, or a lot of other things that are really important, as it turns out.
- [55:08]
Scott Hudson
Yeah, I do think that's changed a little bit. I think there is more awareness in the investment community that the long term return can be higher if you focus more on quality, more on improving the product, as long as you have a good sales system. But generally I hear what you're saying.
- [55:30]
Dennis Scully
Yes. I mean, and I would love to hear more, I would love to hear more firms embracing that notion. And I think with so many of these maker companies, so many of the members of the Makers alliance and others, that is I think part of the challenge. Do I have to grow, do I have to get to scale and how do I keep those key people to your point, employee retention, getting people excited, Do I have to create new opportunities for ownership, advancement, growth, all of that?
- [55:56]
Scott Hudson
Yeah, I do think this is one great thing about Makers Alliance. There is a right scale for most companies where below that scale you can't really succeed. And that is one of the challenges in any industry generating company growth to that level. And then if those companies have longevity and they're led well, they can create some amazing things. So at a level that you can never create it when you're super tiny. So getting to the right scale is really important. And that scale is probably a little bigger than most companies are in our industry. Business of home is focusing on a lot of companies that have been around for a long time and are sizable and you know, it's real industry. But when you're out in the design world, in the making world, there are many companies that will be gone in five years and that's kind of sad. You know, the ones that are doing great work, if they were able to get to two or three or four times their size and sustain it, make it healthy for them to run, not all consuming in their life, have a margin that makes sense, that would be a really good thing. So that's kind of a progress to a point mindset.
- [57:12]
Dennis Scully
So that's why they're not going to be here in five years, because they're not going to get to the scale necessary to achieve sustainability with that model. Is that essentially what you're saying?
- [57:25]
Scott Hudson
Yeah. Well, like take our industry specific industry for example. Part of it is cabinet makers. That's a really tough business. But people have this sort of charm association for that. Right. And the way I feel is like it's not charming, you're just taking advantage of the fact that they want to do this so badly they're willing to do it for you at a loss or at a very low profit and they're not going to be around for that long. It's not good for them and it's not good for the industry either because those are options for buyers that are not sustainable. So it would be great if those two or three person firms got to 15 or 20, whatever. That depends on what you're doing. And that there was more focus on that, more openness to whatever you want to call it. It's not industrialization, but it is systematization of companies so that they can be sustaining to the people who are working in them and not just be, you know, a flash in the pan.
- [58:28]
Dennis Scully
What would need to exist to help those companies get there? Is it a. Is it a Y combinator of sorts in our industry where there's just all of this help and support? Or is it, I don't know, something like the makers alliance or. I don't even know.
- [58:44]
Scott Hudson
There is a connection to the Toyota production approach, which is the willingness to accept a known formula. That Toyota production system, which led to Lean, is a known formula for improving a business that really does anything. But we have the same cultural resistance to it that we do to following design standards or systems. We need to create our own. I'm doing this because I wanted to do it from scratch. So it's not like there aren't answers out there. Maybe we're not all ready for them.
- [59:24]
Dennis Scully
Right. It's so interesting when you see people who resist, as you say, Lean manufacturing, for example. It's just a known fact that this is a very efficient manufacturing process. And yes, it's going to require other people to learn to do different things or do it in a different way, or think about time and your efforts in a different way. But the jury is in on whether this is an effective manufacturing system. Right? There's no debate about that.
- [59:52]
Scott Hudson
Yeah, I think it's the efficiency word. Again, we don't really like that word. And I don't really like that word either. But. But it's actually not. It can be. There is a more soulful version of that.
- [60:06]
Dennis Scully
Yes, that's it. Efficiency makes it sound like you're being forced to eat your vegetables. Whereas flow, as you were saying earlier, sounds spiritual, sounds Eastern philosophy, medicine. Oh, you're. You're in a flow state. You're not even thinking about time or place. You're just, you're just in your activity, whatever it is. So, yes, I need to work on fixing that. Forget efficiency. Focus on focus on flow. That's gonna be the big takeaway message from this conversation. Scott Hudson says, forget about efficiency, Just focus on flow.
- [60:43]
Scott Hudson
Whenever you don't like something, just romanticize it.
- [60:46]
Dennis Scully
Yes. Yes. Make it sound more spiritual, more soulful, more Eastern, less Western. I think that's the answer, yeah. All right, Scott, it's great to get to talk to you. I always appreciate hearing your thoughts on any number of subjects, and I really appreciate you making the time.
- [61:03]
Scott Hudson
Well, thank you for the conversation.
- [61:07]
Dennis Scully
Thanks for listening. If you'd like to keep up with the latest design industry news, visit us online@businessofhome.com where you can sign up for our newsletter, browse job listings and join our BC Insider community for access to online workshops, a free print subscription, and much more. If you have a note for the podcast, drop us a line@podcastusinessofhome.com if you're enjoying these conversations, please leave us a review on Apple Podcasts. It helps others to discover the show. This show was produced by Fred Nicholaus and edited by Michael Castaneda. I'm Dennis Scully. Thanks again for listening and I'll see you next week.