From Grit to Growth

24. The Power of Collective Buying with Bill Smithers

• Dundee Growth Partners

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At a conceptual level, most business owners understand that more volume should mean better pricing. In reality, turning that idea into something that actually works is a lot harder.

In this episode of From Grit to Growth, Mark Hasebroock and Jennifer DiMotta sit down with Bill Smithers, founder of CBUSA, to talk about how independent home builders discovered the power of collective buying.

Bill shares the story of moving from a large national builder with massive purchasing leverage to running a small custom building company that suddenly had none. That experience sparked the idea behind CBUSA, a network that helps independent builders band together to gain real negotiating power with suppliers.

But the journey from theory to execution wasn’t simple. It required convincing builders to trust each other, suppliers to rethink how they sold, and an entire industry to reconsider how purchasing power works.

The conversation explores the challenges of scaling a network-driven business, navigating the housing downturn, and eventually selling the company during the COVID era.

One takeaway: sometimes the biggest advantage isn’t scale alone, it’s collaboration.

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About Dundee Growth Partners 

Dundee Growth Partners provides E-commerce leaders with the strategy, systems, and tools they need to face growth challenges and scale with confidence. With deep industry experience and AI-powered platforms, we help leadership teams scale in a sustainable way. Interested in learning more? Click the link below to get started. 

SPEAKER_01

At a conceptual level, people understand that if you have more volume and you leverage that in the marketplace, you should be able to buy better. But you know, theory versus execution, there's uh there's quite a uh canyon between those two.

SPEAKER_00

From grid to growth. A podcast for e-commerce, entrepreneurs, and business owners. My experts have been there, done that, and come out the other side. Here are your hosts, Mark Peter, and Jennifer DeVo. Let's get started.

SPEAKER_03

All right, well, we are recording. So today's guest is Bill Smithers, founder of CB USA, and one of the people who quietly changed the economics of the home building industry. Bill figured out how independent builders could band together, gain real buying power, and compete with the biggest players in the country. So, Bill, before we get into the lessons and the growth story, tell our listeners who you are and how you came about building CB USA.

SPEAKER_01

Great. Thanks, Jennifer. I'm um I am a builder by profession and have been in the building industry since 1985. So it's a very long time that uh that I've been working here. I worked for 10 years on the production side of the world with uh a national home builder known as Ryland Homes. Uh Ryland has been acquired several times, and now that that entity is part of the Lenar group. But, you know, during that time I served uh in a lot of different roles, including being a division president with uh them before I left. So um in the mid-90s, um I started my own custom building operation in Northern Virginia. Um, you know, most all of my work with uh the in the construction industry has been centered around the DC area. So um I started that operation with um, you know, really high level of excitement about moving into more expensive, higher spec level products and all that. And part of the impetus for CB USA, in fact, the biggest part of it came from that experience of moving from an operation where we did 500 homes a year and thousands of homes across the country and had very, very good buying power to having an operation that did about 10 homes a year. And, you know, we we were kind of the punching bag for the for the supply channel because we knew we were paying premium pricing for the exact same thing that we were buying at a much larger scale with a production builder. So we um started working together through our HBA uh group of builders, and um, you know, we called it our co-op, even though technically it wasn't a co-op, but we said, hey, if we work together, we can we can buy lumber better. And it was all being done as a volunteer effort, and we had success in the market. So, you know, I was certainly seeing the opportunity there. I was at the same time involved with the National Association of Home Builders and the Builder 20 Clubs, and uh, which is a peer group made up of presumably 19 other companies from around the country whose businesses are like yours. So you really get into the weeds on financials and strategies that are working and that kind of thing. It's you know, it's a it's a really helpful program. And builders in my group were like going, wow, love what y'all are doing in Northern Virginia. Can you come to our market and help us do that? So, you know, these were all building blocks to you know, my my belief and this vision that, man, we could take what we're trying to do in Northern Virginia as volunteers and really build business systems around it and help companies like mine and and members of my 20 club and you know, builders across the country really scale their operations and work together to create a much stronger position in the market and benefit not just their own companies, but uh the customers that they served and have strong alignment with really great manufacturing and distribution partners across the country. So that was the impetus for uh for CBUSA.

SPEAKER_02

Well, yeah, what were those early years like? I'm always interested in that uh the story because on paper, my guess is a lot of this made sense and you had some success. And then as you went to new markets, um Yeah, why don't you share with us what what those early years were like versus you know where where you are today?

SPEAKER_01

Yeah, there there was um there was a lot of uh us painting the picture of what could be and getting people to get on board that train. At a conceptual level, people understand that if you have more volume and you leverage that in the marketplace, you should be able to buy better. But you know, theory versus execution, there was uh there was quite a uh canyon between those two. So our early years and the first cities we went to, the first city outside of DC that we went to was Houston, Texas, and had a really good group of builders there uh who believed in what we were doing. We're we're you know, we're still figuring out the way that we could go about doing it, but supply partners were not on board with it. You know, for them, the concept of wow, all these people that I deal with individually and tell each one of them they're getting my best price, if they all get together and start talking about that, that's gonna create some uh some friction and some challenges. And, you know, the input I got from many of those partners was hey, that might work in Washington, DC, but this is Houston, Texas, and that is never gonna work here. So with the support of our builders, and that's the key piece of it, and that's what we've said about our network from day one. It's not it's not what CB USA does or some magic that we create. We have a system and a team and a process that can deliver amazing results, but it only happens when our customers buy into it and support it and and deal with the pushback we know that they're going to get when they go public in the market and say, okay, this is the way we're going to now approach our purchasing. Wow.

SPEAKER_02

So you you had to convince builders, um, individual suppliers, and and folks like yourself to all come into this collective group. Is that correct? See, it's like a three-sided marketplace where Yeah.

SPEAKER_01

And you know, there's even other facets to it because we deal directly with manufacturers, but we don't buy from them. We buy their products through distribution partners. So it's like another spoke on the wheel. But um, I mean, a big part of what we were able to do successfully was, you know, first of all, we believed with with all of our hearts and with a you know high amount of passion that what we were doing was the right thing and that we were going to get the results. So getting people to buy in at that level was was really important. And that applied to distribution partners, manufacturers, and and builders. But you know, what what what we felt our role was to not just create the system that they could use uh to make this work, but we wanted to prepare them for what was going to be coming at them.

SPEAKER_00

Yeah.

SPEAKER_01

And you know, I mean, we would share the comments that we would hear from from vendors that we were talking with. It's like they're telling us that you all will never work together, that if we have 20 of you sitting in a room together, the 20 of you can't even agree on the time of day. So there's no way you're ever going to work together to to you know follow the same procedures and adhere to you know one vendor, one price list, that kind of thing. So that was uh that was a rallying cry for for the builders. And uh, you know, and for us, there they're the cr the criteria for who was a good fit for CBUSA was critical to our success because we couldn't, even though we're supporters of the HBA and in all areas, we couldn't do what the HBA does, and and that we couldn't just let anyone in. And it wasn't that we were trying to be jerks, it wasn't that that we were trying to exclude people, but people had to understand what we were doing and realize that group buying is not a spectator sport. I mean, you've got to be in the game because if you're not, you become the one that the the the market points to and says, Well, that company isn't supporting it.

SPEAKER_03

Yeah.

SPEAKER_01

So, you know, we had to you had to have a good reputation in the market. Um, you had to be able to kind of park your ego, and you know, for a lot of companies that was difficult, and you had to pay your bills on time. And those those are kind of the three components of how we looked at builders and said, look, if if if those fit for you, then you're a fit for us. And you know, we would tell builders in in many cases, look, I I I I get it. You've run your business because you know you think you're the most awesome person in the market and everybody's given you the best price. That's fine. You can do that. But you you have to have faith that we know that you're not getting what you think you're getting. And if you can, if you can put your ego aside and realize that you can be stronger by working with your peers, then this is going to be a really good program for you.

SPEAKER_03

When did you know you built that bridge across that canyon you talk about from theory to execution? When did you know that you really had something here and that maybe you even needed it to push, push and go a little bit faster?

SPEAKER_01

Well, that that's I mean, that's that's a great question because we, you know, through contacts that I had initially through my Builder 20 Club, we got we got uh fair number of groups together quickly, seven or eight markets where builders were like, Yes, we want to do that, and you know, we'll try to do it. And we were funding this privately. You know, we had we had a small group of investors to to say, I'm you know, my my poor business partner, my building company was I was like, all right, you got to do that building company. I'm gonna go do this. But you know, we're gonna be doing this together. He was a shareholder in CB USA. But as we started to get more markets uh on board, and our our job, part of our job was to, we always say, we go tell stories. We talk about what's working in one market, what's not working in another market. We would knit these companies together. We'd let builders from Houston talk to companies in Wilmington, North Carolina, and that kind of thing, and you know, build that, build that synergy. So I think um one of the biggest early successes we had was in the Raleigh market. And to to date, Raleigh has been our number one market for a lot of different reasons. But we had decided that we and there were some pretty good-sized builders there, and there was one vendor, one supply partner that dominated the market. They had probably 70% market share, so they were the gorilla. And the group that we had together, they just, you know, they got it. They understood what we were trying to do. And we would always say, hey, think about how that vendor buys. Do they just go to one partner and just, you know, have have it on faith that they're getting the best program? No, they they bid things out and they, you know, they they do what's best for their company. So this vendor that just totally owned the market, when we said we're putting our first bid in place for lumber, they gave them the Heisman. They said we're not doing it. And these these companies all together said, okay, well, we're not buying from you. And literally overnight, this big vendor lost a huge chunk of business. I mean, you know, hundreds and hundreds of home starts. And, you know, we we think we did a good job of preparing the builders for what would be coming at them. We'd have like the top 10 things that your vendor is gonna tell you uh, you know, as to why you shouldn't do this program. So when they dug their heels in and said, and you know, it made them mad that they're like, you know, hey, we want you to do this to help us be more competitive in the market. And you're saying you're not gonna do that. So when they dug their heels in, and this this vendor had to had to step back, and they ended up coming back to us and saying, okay, now we want in. And and they never reached that 70% market share again. Amazing, yeah. Even even you know, 18 years later, they've still never gotten back to that 70% market share. Because the the group was like, Wow, there are other great alternatives in the market. How how did we not see that before? Right.

SPEAKER_02

So as you as you scale this, what what was the bigger challenge? People, capital. Um, you know, this is a podcast, really. We titled it from grit to growth. So people that have started businesses, they're gritty, they're scrappy, and then it's all of a sudden things start to work. But there are challenges along the way. And so which ones were your priority?

SPEAKER_01

You know, I mean, capital is always a challenge. We were we were a bootstrap company until the point that we, you know, decided to sell to uh ultimately to build or trend. But we we lived within our means and we, you know, we built and developed and created product, you know, based on what we had available. But you know, I I I would say it was really the you know, our team and the folks that we built, because we're virtual and setup, we don't have a corporate headquarters. Uh, we didn't have everybody seeing each other face to face. So that presented its own challenges as we started. But man, getting the right people and having them believe in what we were doing. And, you know, seeing that that our job is to, we we always said you got to push the rock up hill every day. But when they would get a win, I mean, they would just, you know, you could just feel the fist pumps coming from our team because they know they had helped someone improve their business. So for us, it's really always been about making sure we've got the right fit with the people uh that we have on the team. And that leads to us getting the right fit with the with the builders and the partners we work with.

SPEAKER_03

I love the democratization of that, and it just creates win-wins all the way across the board in reality. So I'm gonna fast forward a little bit. Um, Builder Trend comes into the picture.

SPEAKER_01

Right.

SPEAKER_03

Tell us about that.

SPEAKER_01

It's it's it's an interesting piece of the story, but we didn't actually sell to Builder Trend. We sold our company to Builder Trend's number one competitor, which was a company called Co-Construct. And together, I I knew the owner of Co-Construct, and it, you know, probably it was a deal that was six or seven years in the making. And we finally said, okay, now now the time is right, but let's let's come together. We're just gonna conquer the world. And three months after that acquisition, we found out the Builder Trend was buying Co-Construct. And it wasn't that our our guy there was, you know, being sneaky about it, but he had private equity partners, they had plans for how they could take this to the next level. So, you know, it was a moment of terror for us because we didn't know Builder Trend. And, you know, we didn't we didn't know the people, we just knew them as the boogeyman that that Co-Construct was always going after. So uh very quickly it became clear to us that they were really good people and and they believed in what we were doing. And you know, five years, six years later now, we've uh we've quadrupled in size as an organization because of their willingness to help us look forward and invest forward and and build the team that we need to create a much bigger footprint on the market. So that's why we sold the company in the first place, was so that we could grow more quickly. We knew we weren't going to do it by you know just bootstrapping. We needed to roll the dice and say, we've got to, we gotta build this system to create the results that we want.

SPEAKER_03

And is there ever a right time? Or you know, how do you I know there's a lot of listeners out there, they're like, how do I know when the right time is to exit or sell?

SPEAKER_01

Great, great question. I would say you're never gonna know until after you do it. But yeah, I I think that the you know, when when you know what you have is really good, and you you can see your own growth metrics and particular particularly for us in our industry as we came out of the housing meltdown, which was just a very difficult period for not just us, but everybody. I mean, we we had a network that had 400 builders in it at you know, in 2008, and we dropped down to 199. Wow. I mean, we had people that just like went out of business, so it was it was a really, really tough period, but it made all of us focus on the things that mattered the most, and uh and integrity being a key piece of that. And as we built our way out of that, just like the rest of the industry did, you know, we we knew that what we had was good and and we needed to get it to more people. We were growing, we were, you know, we were comfortable, we were making money, customers were happy, but we're we we kept saying we can be so much more, but you know, we need a partner that that believes in us and sees that opportunity. So I would say for you know folks that are at that at that juncture, you know, certainly you have a a value in mind for your company. And you know, fortunately in our discussions, it was pretty the formula was pretty easy. You know, it's a it's a function of EBDA, multiple of EBDA. So we were comfortable with that. We had some investors that were, you know, at the latter end of their career who thought they'd never get anything back from CB USA. So combination of factors told us that this was the uh the right time and the right opportunity.

SPEAKER_02

That's great. So there was some confetti and there was some celebrating.

SPEAKER_01

Yeah, totally. Although it was during COVID when we closed the deal. So there wasn't a big party. Right.

SPEAKER_02

You know, so you've you've uh been part of a big company, then you started your own, and you started something that was pretty revolutionary um in a pretty tough industry, by the way. And and then to to really put your thumbprint on on the world and leave a legacy like that is is impressive. And then to to exit on your terms, um you've seen a lot. So the whole cycle, if there's a founder listening that is sitting there kind of saying, Man, I'm really stuck right now, what advice would you give them?

SPEAKER_01

You know, I'd I'd say uh step one, and I've mentioned it a couple of times. I mean, if I if you believe in what you're doing and and and the value that you can bring to your customers, your industry sector, the you know, the partners that work with you, when you really believe that, it it it allows you to look past the roadblocks that that come up every day. And you know, this is part of what we instilled in our team that that you know, you're gonna get the wins, but you got to do the work.

SPEAKER_02

Yeah.

SPEAKER_01

You know, you you you gotta get there. So if someone feels like they're they're stuck, I mean, did we question our business model and our payment structure and all that? Of course. We did that all the time. And we think that was that was part of you know who we were as a company. Yeah. Uh our leadership team is a pretty, pretty small group. We didn't always agree on things. And you know, we also saw that as being one of our strengths, but we trusted each other and we had respect for each other. And it was never like uh, you know, like you know, what what I want to do is XYZ, and that's just what we're doing. We always just said, no, we're gonna, we're gonna dig into this and we are going to get on the same page as to what our strategy is gonna be. So that's all you know. I would say for folks that are in that in that stage, I mean, certainly you need to involve your, you know, your team and your leaders. You can't involve everybody because not everyone thinks, you know, at like a macro level. But you know, you want to make sure that you get that, you know, you get that feedback. And you just you got to believe that where you're going is is is meaningful and sustainable and is going to deliver amazing results to your customers. Because, you know, when all is said and done, and we saw this in the downturn, you know, we we struggled to survive. We had to change our pricing. We had to go back to customers again and again and say, you know, hey, we need to we need to keep your rebound. As operating capital, we will pay you back. But you know, that that was simultaneously one of the lowest points for us as a company because it was so hard. But at the same time, it was like, oh my gosh, these builders just said that we can use their rebate money to run our company. I mean, what an endorsement of the value that we bring to them. I mean, it was you know, it was like, you know, I mean, we're like, you know, feeling our hair turned gray as we're going and doing all these meetings, but one after another, the builder said, okay, we're with you. So that you know, that really propelled us forward.

SPEAKER_03

You know, in a world where we are nonstop talking about AI, I love having a good conversation about the value of human connection. Yeah. And that's really what you've talked about quite a bit here. Is there's just there's a business to be had through human connection. And that's what you did. And congratulations to you, by the way.

SPEAKER_01

Thank you. Thank you. Well, the keys, I mean, integrity, trust, I mean, the culture that we built for our company. We, you know, we we could look people in the eye and just we're, you know, we're shooting straight. You may not like what you're hearing us say or what we're telling you we think you need to do, but we believe it and we're gonna we're not gonna go away. We're gonna keep coming at you and saying this is what we we need you to do. So when when a company would finally acquiesce and go, okay, fine, you know, we'll try XYZ, and then they get a win. I mean, it's just it's just awesome for everybody. Right. And again, that's that that's that doesn't apply just to builders, that applies to suppliers, manufacturers, manufacturers who are like, you know, you know, how do you think you're gonna get all these people to, you know, do XYZ and buy my brand? And when we turn around and deliver a result to them, they're like, wow, that's that's awesome. So it's really cool.

SPEAKER_03

Do the right thing for the whole. Uh, I love that. Well, thanks for having uh um well, you didn't have us, we had you. Sorry, but we did. Thanks for thanks for uh coming on and talking to us. I'm sure their listeners have learned great story from you.

SPEAKER_02

Yeah, great story, great success and congratulations to you.

SPEAKER_01

Thank you.

SPEAKER_03

Happy retirement. Although I know it won't be a total retirement.

SPEAKER_01

My wife is a little afraid if it does become a real retirement. Like, so what are you doing today?

SPEAKER_03

Yeah. Yeah, go do something.

SPEAKER_02

You're still here. Thanks, Bill. Appreciate it.

SPEAKER_00

Thank you for listening. If you like what you just heard, give us a like and leave a comment so that more people can tune in. Or go subscribe on YouTube. To learn more about Mark and Jennifer, visit dundeev.com.