An Entrepreneurial Journey with Jeff Hopfenbeck, Simple Homes

Calling All: Entrepreneurs, Innovators, builders, developers and those interested in off-site construction and the AEC community –this one's for YOU!

Jeff Hopfenbeck, CEO and Founder of Simple Homes shares his journey launching a new company in the construction space (prototyping, fundraising, customer adoption);  and how and why European-style off-site construction is (finally) poised to become a standard way of building in the U.S.

Check out Simple Homes' website and connect on instagram. 

Many thanks to our partners at the University of Denver for their editing and post-production talents, specifically Lija Miller and Lisette Zamora-Galarza.

The University of Denver Franklin L. Burns School of Real Estate and Construction Management, teaches the full life cycle of the built environment. From integrated project leadership skills to a cohesive understanding of the built environment ––experience the only school of its kind!

"Upbeat Party" is brought to you by Scott Holmes, songwriter from Free Music Archive. 

Transcript

Eric Holt (00:05):

You're listening to the housing innovation Alliance podcast in partnership with the university of Denver's Franklin L burns school of real estate and construction management. The housing innovation Alliance is a nationwide community of game changers driving the future of home delivery through crowd accelerated innovation. We represent thought-leaders from dirt to dwellers with a focus on the production builders business environment.

Dennis Steigerwalt (00:34):

Hi, this is Dennis Steigerwalt, president of the housing innovation Alliance and this is our podcast series. I'm joined today by Jeff Hopfenbeck, CEO and founder of Simple Home. Simple homes is a Denver based startup that helps us build those craft better homes to design technology and proven Swedish inspired panelized offsite construction. Jeff and I had a chance to connect last year and I was really inspired about his story of entrepreneurship in the industry, so I think that's where I'd like to start. If it's okay with you, Jeff,

Jeff Hopfenbeck (01:03):

happy to start there and really excited to be here and have this conversation and share a little bit more about what we're up to. Can start with how we started this. So I came from outside of the industry and always had a passion for architecture, design and construction, but hadn't worked in the space. Um, growing up I always wanted to be an architect and I was always sketching, drawing, creating designs, built a cabin with my dad growing up and despite a brief stint in architecture schools or an undergrad, hadn't spent time in the space and my career at dead man, a bunch of different directions. I was in the nonprofit and philanthropic sector and then in the startup space on the accelerator and VC side, and then ultimately and pretty randomly into management consulting, which is where the idea for this company really came about.

Jeff Hopfenbeck (01:43):

I think the spark was really a couple things. One was in the consulting space, I was doing a lot of work in robotics and automation and was really blown away by the transformative impact that we were seeing in other industries, particularly in manufacturing. I guess my gut would have been that all of the potential gains from robotics and automation would have already been there. But what we saw was really amazing. Impacts that were happening on a daily basis and at the same time I was seeing the growing housing crisis that we have here in Colorado unfold and is really happening to in so many communities across the country and the initial spark was really how can we use this technology that is currently bringing down costs in other industries, making American manufacturing competitive and apply that in the humbling space, which then ultimately led me to learn about Sweden, which I think is this really fascinating case study for what industrialized construction looks like at scale here in the U S I think there's a lot of talk about offsite construction, about industrialized construction, about prefab, but ultimately it's a really small part of the market.

Jeff Hopfenbeck (02:40):

The modulars, three ish percent of the market and has been for a long time. Panelized construction is 10 to 20% of the market depending on which study or reading. I think that people see the opportunity, but it's a small part of market. Whereas if you look over to Europe, it's just frankly how you build a house or how you really build just about anything. About six months before I took the leap. I went over to Sweden and really just bugged everyone who I could possibly bug. I spent a bunch of time on job sites and joining factories and meeting with researchers and for some reason everyone was willing to talk with me. You know? I think I walked away from that experience really thinking, wow, this is a better way to build in so many ways in terms of productivity, in terms of time, in terms of quality, in terms of environmental impact, and I've kind of been surprised there's not more talk about here in the U S I think our industry is sort of making this shift towards a more industrialized way of of building.

Dennis Steigerwalt (03:30):

You said something at the beginning there six months before you took the leap. Tell me a little bit about that being an entrepreneur, making this jump to start your own business and an industry that can be as complex as ours. What pushed you over the edge? How did you find your partners? How did you raise capital?

Jeff Hopfenbeck (03:43):

I mean, looking back now, it feels crazier than it did in the moment. I think for me, I just really got to a point where it almost felt impossible not to leave and start this company. It was all I could think about. I just knew that I would ultimately regret it if I didn't take the shot. So that's really what led me to leave. And you know, at that point I was coming in with no experience in the industry and you know, looking back on it now, I think it was just incredibly lucky to really quickly after that point, I meet my first co-founder, David Schultz, who's a builder here in Denver and really brings that deep building experience and give literally grew up in the industry. His dad's a general contractor, he's in a builder here in Denver for the last 10 years and we came together and it's been really an amazing partnership I think with the two different ways that we approach and think about the world and it's sort of like compete or success.

Jeff Hopfenbeck (04:29):

And then it was a few months after that that we brought on our third co-founder, John Schwartz, who's our head of design as an architect is really deep on the BDC side of things. Raising money in this space is a little bit different because you're not talking about a scalable app necessarily. It's more capital intensive. It's in some ways less risky and in some ways more risky because there's a physical product associated with that. There's something tangible that's a little bit less of a moonshot, but ultimately moonshots are what venture capitalists are often looking for. And so I think for us the key on the fundraising side was we bootstrapped initially built a prototype effectively out of a garage. We'll make shift factory that we pulled together, assembled that unit in the factory with me, David and a couple of other guys who we pulled in and were ultimately able to do as the Swedes do and get to a weather tight house in a debt.

Jeff Hopfenbeck (05:17):

And I think that proof point was really essential for us as we then went out to raise capital and build our facility, which we did late last year. I mean, I think the sort of lean startup methodology, which has really taken over kind of the tech sector, it's a little bit harder to do in this industry, but ultimately still makes a ton of sense. How can you kind of quickly get to market with something that you can actually test and see and get customer feedback on and ultimately see if it works. Um, before you, you know, go through the effort of raising capital and really building a team and sort of trying to get to that minimum viable product as quickly and as easily as possible.

Dennis Steigerwalt (05:50):

Yeah. And it's incredibly important to have that proof point, especially in an industry where it's a product that's so personal and it's such a significant investment. So being able to get that out there, differentiate yourself, and then get people to come along and kick the tires on it, so to speak.

Jeff Hopfenbeck (06:02):

Yeah. And construction is kind of a no BS industry. And so I think it's hard to ultimately get customer traction as well unless you're actually showing what you've got in a very physical and real.

Dennis Steigerwalt (06:11):

So let's talk a little bit more about your experience in Europe and the U S market compared to the European market. You hear often that these more mature offsite industries overseas and the comparisons to U S what are some of the similarities and differences that you play off of?

Jeff Hopfenbeck (06:25):

I think it is a fascinating comparison because Europe has had an industrialized home building industry for decades in Sweden, 90% plus residential construction has done in factories today. It's just how you build. I think there's a number of reasons why you see that difference. First and foremost, it comes down to labor. Here in the U S we have always had a substantial and cheap supply of labor. Labor has not been a problem and I think the industry has been really addicted to cheap labor in a context where you have cheap and flexible labor, it really makes sense that the industry structure that we have makes sense. If you look to Europe, they have much stricter rules in terms of how you pay employees, how easier or difficult it is to fire folks and so incentivizes people to make longer term investments in their place, which is really what's required in an industrialized context.

Jeff Hopfenbeck (07:13):

They've also not had as much labor in terms of number of people and so that requires a sort of uptick in terms of productivity that we just frankly haven't had to do in the U S today because we haven't had that constraint on the labor side. That's obviously something that has changed in the last 10 years really coming out of the recession. I think that's one of the biggest reasons why you're starting to see more folks take a harder look at more industrialized ways of building. If you look outside of the current crisis and beyond what's happening in the labor market, the other big driver towards more industrialized way of building is really what's happening on the technology side. And so whether that's in terms of software, so just the advances that have happened in terms of band and BDC and how easy it is to sort of use those tools and start to integrate that into folks existing processes or on the hardware side with robotics and automation, doing some net new work in terms of using industrialized robots in the home building context and automation costs have come down enormously over the last 10 years and are supposed to keep coming down in a big way over the next 10 and so those are macro trends that are happening to the market regardless of where we're at in terms of the economy at this point in time.

Jeff Hopfenbeck (08:21):

Obviously, you know, I think all of our worlds have been turned upside down in so many ways over the last four, six weeks as the covert 19 crisis was merged. I think that the technology trends ultimately and the trends we have in the labor market mean that despite what happens in the economy, you're still going to see a substantial push towards more industrialized ways of building. I think for companies like cars, you know it's a question of how do we really clarify our value proposition in this moment, particularly in a moment when labor costs may come down when you see substantial unemployment and then ultimately like what are other ways that we can add value to our customers and which on case builders and developers.

Dennis Steigerwalt (08:57):

When you and I talked a little while ago, you had mentioned about you're seeing an interest in 80 use. I know that this is a trend that's getting traction across the country and certainly more so in the Denver area. Can you tell us a little bit about your experience there?

Jeff Hopfenbeck (09:08):

Started with 80 years. David, my co founder, he had actually built his home building company really on 80 years and on the growth of 80 years over the past few years here in Denver. So it's where we've gotten our start. We've actually, most of the stuff we built so far have been accessory dwelling units and I think that is a trend that is definitely going to persist for a few different reasons. One is it's just where the land is in most us cities right now. We don't have cheap and plentiful land, which we did decades ago and so the available empty land is in folks backyard and so that's really where the opportunity is and I think cities have seen that as well and have been willing to make it easier for homeowners to effectively become developers and the landlords by building an ADU in their backyard.

Jeff Hopfenbeck (09:48):

I don't see aid use as the biggest or the number one solution to the housing crisis that so many places are facing, but it's an absolutely a tool and I think it's a trend that you're going to keep seeing both because of overall market dynamics but also as folks look towards more intergenerational living. And I think perhaps we see coming out of this crisis and increased focus on family, a focus on having family that's close to home and not in really distant assisted care facilities. And I think we've all been through that and having a loved one who's aging in place in your backyard who can help out with your kids and everyone within the family can be there for one another I think is something that's powerful and you know, I would hope is something that we continue to see coming out of this current moment.

Dennis Steigerwalt (10:30):

I really get behind the social and economic flexibilities of of adding these accessory dwelling units to a property. I think there's a lot of upside potential there. So can you tell us a little bit, you mentioned partnership with developers. I think there's a few developers in our community that you've been working with. Is there anything you can share with us in some of those projects?

Jeff Hopfenbeck (10:44):

The one I'd love to talk about today is you know our apprenticeship with mixtape neighborhoods who's a leading regional home builder here in Denver and we are just thrilled to have them as partners. So they've got a 50 year history or long Colorado's front range. I felt that 8,000 homes, a real focus on sustainability and on quality. And so we delivered our first house for mixed Dane about a month ago, just about a 2,700 square foot single family house, plead in about two days of crane work and five days of wrap-up work afterwards. And as of right now we're on track to build that 85 with them over the next couple of years.

Dennis Steigerwalt (11:16):

So as a young entrepreneur, is there any words of advice you have to share with our community or maybe any hard learned lessons want to roll out or you'd be willing to share with us?

Jeff Hopfenbeck (11:25):

I think the biggest learning for me along this journey, which is something that I think has been core to my career, is just really the importance of community in creating anything. I think the myth of a solo entrepreneur goes it alone and fights against everyone do ultimately succeed is really a myth and most great companies or acquire a massive community of people to get off the ground. And so that's a, you know, obviously investors, but it's also mentors and just random people who might have coffee with and get ideas from people in the industry outside the industry. Like it really does take a village. And so I think there's sometimes a hesitation to reach out and ask for help, ask for feedback, but ultimately that's how great things happen. That's how great companies get built. Specifically here in Colorado, that's part of the magic of our entrepreneurial community is that we have that there's a lot of people who are willing to help out cross different industries across different sectors, whether you're in tech or healthcare or Intacct or construction where we are, people are willing to pitch in, help out, make connections, share their experiences, share what worked here, what didn't, and ultimately work together to try and make everyone's company succeed.

Dennis Steigerwalt (12:35):

I recently heard this saying it was a collaboration is the new leadership, and I think even more so given our current economic and social situation, I think this really stands out that, you know, we're going to come out of this with much stronger relationships than we've ever had in order to be smarter people and better businesses. You know, I really appreciate the time you've given us and the thoughts you've shared with our community. Any parting thoughts or final words?

Jeff Hopfenbeck (12:54):

No, I think, and really just want to thank you and the team for having us.

Dennis Steigerwalt (13:00):

All right. Well, we're looking forward to having you join us and thanks again for your time today, Jeff, and have yourself a wonderful day. Thanks, Dennis. 

Eric Holt

On behalf of the housing innovation Alliance and the university of Denver, this is Dr. Eric Holt. Thank you for being part of our journey. This is where innovation calls home.