CEO of Swinerton
Jeff Hoopes is the CEO of Swinerton Construction, a $5 billion
construction firm. In 2018, Swinerton was ranked #19 on ENR's Top 400 Contractor's List.
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our conversation today, we talk about what not to do when hunting Elk, the best way to waste an MBA,
construction supply chain innovation, how to avoid boom and bust cycles as a general contractor, and the most
important things to work on as young construction professionals.
Matt: Jeff, you grew up in a small town of 500 people and you
made it all the way to the top of a large company. People would be fascinated to hear how it began and how you
Jeff: Well, thank you first of all for having me on today.
It's quite an honor. Yeah. I grew up in a tiny little town called Lolita up in Northern California and
it's a Swiss-Italian dairy community. So, what you did in the summers is you baled hay. We call bucking
hay, and filling the barns, and moving irrigation pipes, and then milking cows. And, you know, that's how
we grew up. And there's, again, about 500 people and if you did anything wrong, your parents knew before
you got home. And it was kind of crazy, right? And then, of course, we still had those phones where it was a
party line, which was really interesting even at that point. And so, you'd pick up the phone and the
whole neighborhood was on your line listening to what you're saying, anyway, so it's kind of funny.
But then ended up going down to UC Davis for engineering, and I went to...Davis is an aggie school, kind of
fit my background. I went over to Cal Berkeley thinking I'd be really good at Berkeley. And I walked
Telegraph Avenue and there's so many crazy people on the street, I just couldn't deal with it, not
from where I came from.
Eric: Not a whole lot of people who had milked cows there.
Jeff: No, no. There were no cow milkers or irrigation changers, but
ended up back at the aggie school at UC Davis and received a Bachelor of Science degree in civil engineering.
Eric: Were you a standout in your community academically?
Jeff: No, no. I was a B+, I barely got into UC Davis. I mean, and
now I couldn't get in. There's no way I'd get in. It's like a 4.2 GPA or something to get
in there. And there's 50,000 kids. No, I was a B+ student, but always loved math. That was my passion. I
was just, I loved trigonometry, and calculus, and, you know, all that kind of stuff. So, I was really drawn
toward engineering and I spent my summers... My uncle was great. He got me a job with Windsor and Kelly
Consulting Engineers and I spent my summer since my sophomore year in high school working with a civil
engineering firm on survey crews. So, I'd be out with a…you know, cutting brush and holding the plumb bob
and they taught me to run the transit and by my junior year in college, I was running my own crews there,
Matt: Oh, wow.
Jeff: So, it was exciting and fun.
Eric: And you bought into it right away. Even as a sophomore in
high school, you were like, "This is what I'm built to do. This is what I'm good at," or
was there any kind of doubt?
Jeff: Through that work experience in the summer, I knew
that's what I wanted to do. I wanted to be an engineer because I was, again, I was really good at math. I
loved math and engineering and math, you know, really run hand-in-hand. And, again, watching all the people
around me and my mentors were all civil engineers. It was a civil engineering firm. So, I said, "I can do
that." And I had a passion for, you know, physical. And that's why I chose civil engineering.
It's interesting to me. I think the number one thing people should think about, especially young people
when they're going through high school and college is follow your passion and what you're really
good at. And I was really good at math and I couldn't do electrical engineering because I couldn't
visualize it. I started out kind of thinking about electrical, but I can't see it, right? It's zero,
one, one, zero, zero, you know, it's... And I couldn't do it, so... But civil engineering, I could
see a bridge, I could see loads on a bridge, and I could see a building, understand the loads and the
foundations and I could physically see what I was doing or water through a pipe. I mean, you could see this.
And so, I stayed with that because that was my passion and I really just enjoyed that piece of the engineering
side of it.
Eric: So, what did your dad do for a living?
Jeff: My dad was a teacher and he taught until he was probably in
his late 30s and then he started... He was always really good with his hands. He had shops all the time where
he had lathes going, where he was making bowls and was making furniture and all that. And then when he got in
to his late 30s and his mid-40s, in that range, he just basically started building custom cabinets. And he had
a small cabinet shop and he built, you know, custom cabinets, furniture, you know, finished carpentry, remodel
type work. And, basically a small contractor. He loved it. That was his passion. He built a project for me
when I bought a home I wanted to remodel, he came in and built me a kitchen with birdseye maple. It was just
absolutely amazing with the fitted glass and all the inlays in the doors. It was really something else.
But he was very talented. He came from a family of construction people and, you
know, I learned...I worked with my dad in the shop and all that stuff, but my grandfather was a concrete
contractor and my father worked for him and my uncles worked for him. And I remember going on the jobs when I
was just a little kid watching my grandpa with a big float, floating the concrete out and wheelbarrowing, and
pumping, and being on the job sites and spending days there with him with my dad helping out, that type of
thing. So, it was kind of in the family just to build stuff, and get my... My uncle worked for us for years as
a carpenter here in San Francisco and really talented. Again, it kind of runs in the family somewhat on the
Matt: Yeah. Yeah. Did any of the woodworking passion get passed
down to you?
Jeff: Not really. I don't have the patience for that. I'd
rather go pour a big mat foundation and put up a tower than do detailed finished carpentry. I appreciate it
and I understand it, but I don't have the patience for it. I really don't. That's a different
skill set. Very different.
Matt: Yeah, yeah. Well, and it's amazing how those cabinet
shops are probably different today than they were for your dad with CNC equipment and, you know, people crank
Jeff: Oh, yeah, yeah. His stuff was one piece at a time, doweled,
everything doweled and glued. And I mean, he did everything by hand and it's a lot different. It was all
custom, high-end home type stuff. But he had a passion for the building, he built homes and always, always
building something. I guess that's where we got it from, is just always using your hands. And, of course,
we had to be there too, right? We had to help.
Matt: Yeah. Right. Right.
Jeff: Learn to swing a hammer when you're 12 years old.
Eric: Right. It sounds like he would talk to you a lot about the
craftsmanship side of things, but did he ever talk about the, like, profitability business side of things and
how to make decisions of customers and jobs to take?
Jeff: You know, the only thing we ever really talked about at that
level was everything he did was quality and he was fair-priced. He didn't overprice his services, so he
had unlimited work. Work just, I mean, people calling, trying to get him to come do more work and I told him a
few times, "You're too cheap because you have way too much work." So, I think he priced his
services fairly, mostly worked for people he knew, small general contractors who'd call him up. So, he
had a great relationship with them and he made a good living at it. He made a great living at it and was
really proud of what he did. I think there's just a lot of pride and, again, the quality of what he did
and the physical aspect of it. He really, it's kind of like me where he really appreciated being able to
build something and of quality and see it when it was done, physically see it. It's pretty neat.
Eric: That is your high school background. You go to college and
you're like, "I can be a civil engineer." You'd seen civil engineers and then you started
to major as a civil engineer. How did it go off the bat?
Jeff: Like I said, I've always had that passion for it, so I
did pretty well with that. I was probably, again, a B+ student. I wasn't an A student. The only A I got
was an A+ in surveying, because I really...I knew what to do there. I spent years and years doing that.
Matt: You taught the class.
Jeff: I taught the class pretty much. Yeah. I got that A+.
Didn't have to do much. But you know, I was a B student and I had a lot of fun in college and, you know,
I got good grades and then got out. You know, got ready to graduate and then began interviewing with
companies. Interviewed with you know, the Bechtles, and the PG&Es, and the consulting firms, and then also
a construction company. And I never thought about working for a construction company because back then, if you
think about it, most construction companies did not come and interview on campus. This is like 1980 and it was
mostly the big engineering firms. So, a company called Guy F. Atkinson which was about the size of Bechtel at
the time, they're doing $5 billion a year back in 1980 and they were doing bridges, airbases in Israel, I
mean, all over the world, dams in Venezuela, just lots and lots of big, heavy civil projects, and they came on
campus and, again, with my background of really enjoying the physical space and being outside on jobs and
doing all that versus the PG&Es and the Bechtels designing pipe hangers for nuclear power plants, it was a
pretty easy decision to go with a Guy F. Atkinson company.
And so, that was my first job out of college. Again, following my passion, again,
that's kind of my theme when I talk to my kids and young people is that it's always about following
what you wanna do and what you, you know, what excites you. That's really the key to this whole thing,
because if you're excited about what you're doing, you're gonna do really well. If you
don't like what you're doing, you're not gonna do well. It's pretty simple. So, I followed
that, the Guy F. Atkinson and I went and worked on the Dumbarton Bridge here and in the Bay Area, the San
Francisco Bay Area as a field engineer. And I did all the layout surveying for all of the embeds and
connections and got everything lined out for the superintendents and the concrete crews, because we did all
real self-perform work at the time, and that was really exciting building a big bridge down there. It's
a...Dumbarton's down by the San Mateo Bridge in the...coming out of Palo Alto area.
And so, that was exciting. And then I went up on to a nuclear power plant and was
transferred up after the bridge was done up in Hanford, Washington, which was a WPS one and four and we had
the general services building contracts. And back then that was $1 billion contract. Now, it'd probably
be $15 billion or $20 billion to build a nuclear power plant. And there was, I think, there were 600 of us up
there on that job. And that was a little bit overwhelming. That was more like a big job you'd have
Bechtel do or one of those big power plant... And there was a lot of people there and it was fun. Just a lot
of young people.
Matt: Yeah. What was it like going from being right in the Bay Area
to up in Washington on that project?
Jeff: It was really different. You know that... When you're on
a smaller job, like I said, the bridge, I was the guy out there doing the surveying and responsible and, you
know, checking dimensions, doing all that. And I get up on this job, I'm a...hundreds of engineers. You
get kind of pigeonholed, so you're gonna do as-built sys month, and the next month you're gonna do
form design, and the next month you're gonna go do quality inspection in the field. And it was... You
kind of get pigeonholed into different things because there's so many people, it's massive contract.
And I started thinking to myself at that point is, you know, "I know the engineering, I can do
this." And then the guys I really admired were the guys that ran the job. The project manager was
amazing. He's an older guy and he managed these 600 people and this huge, you know, back, again, a
billion-dollar job back then. But he managed that.
And I really had a lot of respect for him. So, I spent time with him, meeting him,
talking with him, and I convinced myself. I did some study and I wanna go back and get a master's in
business because that's one thing that happens. And I think it's not good. What is happening is that
in engineering programs, they teach you engineering. Where I got out, I knew nothing about accounting,
finance. I knew nothing...communications, written, verbal, nothing when I got out of engineering, right? I was
an engineer. And so, that was a problem, to transition from being an engineer to managing and running a
business. How do you do that? And so, there are some steps you really got to think about. And I've
convinced all my kids to go back to get their executive MBA at a minimum or their full MBA depending on
You need to adjust your brain a little bit. You...to go from engineering to
technical. When you get out of school, you're technical, you know everything, right? You can design a
bridge, you can design steel, concrete, all that. But you don't know how to manage people. You don't
know how to communicate with people. You don't have the basic business skills to run a business. So,
it's something to really think about. I taught a class up at, a leadership class, at UC Davis a couple
months ago. The dean had called me up, asked me to come up and that was one of the statements I made to the
kids, is when you get out of school, you really don't know anything, you know? You know, equations and
you could run a computer, right? But you have to learn how to apply it and how to move on in your career.
And so, we talked a lot about that class, about graduate degrees, taking business
classes or organizational behavior classes. And I still remember that in the MBA program. I went and did a
full two-year MBA. Probably the classes I hated the most were the organizational behavior classes, right?
I'm thinking, these guys are nuts, man. HR, these people don't know what they're talking about.
Just tell them what to do.
Eric: Spoken like a true engineer.
Jeff: Yeah, I was. I was a perfect engineer, right? And said,
"Oh, it's great." It's like, "You people are nuts. Just tell them this is the way it
is. It's black and white." And I wish I would have paid more attention in those classes because
those are probably the most important classes they could ever teach you in the MBA program, is organizational
behavior and communications, and dealing with people because that's what business is, right? We all have
technical skills, but then how do you step from those technical skills into the management skills and the
ability to manage people and relationships and all that? And I think that's where a lot of people miss
and going back for that MBA provides that for you. Even though you graduate, you don't know what you
learned, yet it does ingrain those things into you and your thought process.
Eric: Is there a specific example when you were on the Washington
project that you said, "Oh, this is why I need more skills." Like you talked to somebody and you
didn't understand what they were talking about with regards to the business or was it just a general
understanding? Do you have a story from a moment when you realized you needed something more?
Jeff: Well, I was talking to the... Like I said, I had a lot of
admiration for the project manager running this project, again, running hundreds and hundreds of people and
doing this, and I was sitting there talking to him, and he's talking about his return on the project, his
gross margins, net margins, you know, on it like a business person, balance sheet, what's the cash flow?
He's talking about all these things. I have no idea what the guy's talking about. You know, balance
sheet, what's the overhead? I mean, just, right? It goes on and on. I didn't understand any of it
and I said how, to myself, "How can I go run a business if I can't read a balance sheet?" I
mean, I don't even know what they say, or an income statement. Right? And so, that's when I decided,
"You know what, it's time for me to go back and get that piece of an education I don't
have." And it's something to really think about for engineers and that's why these executive
MBA programs are so important. People go, "Oh, I don't need it. I'm doing fine in my
career." But if you wanna really run a business, you got to be able to understand the finance side of it.
And, again, the management leadership side of it. And engineers, most engineers don't have that.
Matt: Was there a point when you were just doing the engineering
that it clicked that you wanted to go run a business? I mean, at what point did you decide, "I don't
wanna be just an engineer, I wanna actually run a business?"
Jeff: It didn't happen until after I got my MBA. Well, it
clicked in my head. I always wanted to, you know, be part of a business and that type of thing, but it
didn't really click until I decided one day that I wanted to... I was working up in Sacramento and I was
a project manager on a job and I was running a project there for Hewlett Packard up in their Roseville plant.
And one day I said to myself, "I don't wanna drive back down to the city. I wanna start my own
division." And I go, "I can do this." I was 27, maybe 26. And I said to myself, "I'm
just gonna go out and get some business and I'm gonna start up my own division." And it just kind of
clicked one day. It was weird. It's just like mostly because I didn't wanna go back to the city and
fight the traffic, I think. So, I had, I said, "I'm gonna do my own deal." So, I picked up the
local business times and started reading it and trying to figure out who's doing deals, you know, what
developers were developing buildings. I picked up a second phase of the Hewlett Packard plant that we were
working on. The next phase was about $80 million. Nice project. And then I picked up a couple of medical
projects up in Fairfield, Sacramento. And then one day, I just picked up the phone and called this developer.
His name Roger Duke and Duke Development. He was a big shot in town. He had some really cool office buildings
he was going to develop downtown Sacramento. So, I just called him up and invited him to lunch and he said,
"Okay." Cold call. I mean, it's complete cold call. I didn't know what I was doing, 27
And so, I show up at his office and he looks at me. He thought I was a lot older.
And he kind of looked at me like, "What are you doing here? You know, you're just a young
punk." And he was probably 50-something years old, build big belt buckle and jacket. And I mean, it was
pretty funny. So, we went and had lunch and he asked me that question. He says, "What are you
doing?" He says, you know, "What do you wanna accomplish here?" And I explained to him, I
wanted to start my own division, my own business, you know, as part of Swinerton, but have my own group there.
And he says... He admired my... I think what he said, something like, "I admire your guts," or
whatever it was. But he couldn't believe I'd call him up and take him to lunch at my age. You know,
and he was one of the hot shots in town. It was pretty funny.
Anyway, it just hit that point where I wanted to build my own business. I had the
skill set to do it at that time. And the downside of that is about a month later, 1989 hit and about every job
in California stopped in a matter of a few weeks. That was a savings and loan crisis. Remember that every
savings and loan shutdown and all the work stopped in vertical construction. And so, I didn't end up
building my business as I wanted to and had to go back to the city and go to work, so... But it was quite... I
think that's the point, again, where I decided I wanted to set up that business. It's just, here it
is. I can do it. I'm ready. Let's, set it up and that's how it started.
Matt: I'll go back a couple steps. Do you remember who paid
for the lunch?
Jeff: I paid for the lunch. He tried but I mean, I did because I
had invited him.
Matt: Yeah. I can see.
Jeff: He tried. Because I was the kid, right? And he goes,
"I'll take care of it." I said, "No, no, I got. I got it." And I took care of it. It
was pretty funny. He was pretty impressed, I think, that I even convinced him go to lunch with me.
Eric: Yeah, you ever do work for him?
Jeff: Yeah, I actually, we did some pre-construction estimating and
we got awarded a office building to build downtown and that's one of the office buildings that got shut
down like everything else in 1989. And that was it. I never got a chance to build it. I don't know if it
ever got built. I ended up coming back to San Francisco and then down to Los Angeles after that. So...
Eric: How do you go from being a project manager to getting the
leeway to build your own book of business?
Jeff: You know, it's interesting and it depends on what
company you're in, I think. Here we're pretty entrepreneurial. And a little bit about Swinerton.
We're an employee-owned company and we have, we're about 50% ESOP and 50% individual shareholders.
But it's all owned by the...which is about 500 of those. So, it's all owned by the employees, right?
And so, we look to our employees here to look for opportunities for business. You know, basically,
getter-doers. They go out and they build relationships with clients. They bring in work, they do the work,
they go get more work, or if you see an opportunity for new business... We've had people start up offices
in Portland. Now we're one of the largest builders in Portland. We had a young man go over to Hawaii.
We're now the second largest builder in Hawaii and they just basically started those businesses for us.
So, we look at our employees to really take the initiative to build the business.
So, to go from a project manager... I'll give you another idea of how it works here, is that we had an
operations manager in San Diego and they came to me one day and said, "I've got an idea." I
said, "Let's hear about it." And they said, "A client called us and they want us to help
them manage a solar power project." And I go, "Solar power project." And they said, "Yeah,
they don't know how to use cranes and put these panels on the roofs and fix all the stuff and they asked
if we could help them." I said, "Well, yeah, let's go check that out. There's gotta be
something there in renewable. And this is about seven, eight years ago when it first began.
And so, we went over and did some time studies on the job and got the cranes and we
help this client with the work. And then we really did a lot of research on that business and the young man
who brought it to us wanted to start up a renewable energy business. And we said, "Okay, let's do
it. Let's figure it out." So, we interviewed all kinds of companies and I got involved and we looked
at the panel delivery process and the purchasing, and kind of put a business plan together. And last year,
we're the largest solar power plant builder in the United States, third in the world. And we are the
largest EPC, they call it, engineering procurement construction company. We put in place over a gigawatt worth
of power plants last year in place and over $1.3 billion in construction value. And that's from an idea,
one of our employees, that had kind of a crazy idea over a cold beer and we decided to…you know, we put effort
into it, studied it, listened to him, and then came up with that business model and went forward. It's
been very profitable.
And those are the types of things we look for as an employee-owned company, is we
look for opportunities to start businesses. We're always open because we're willing to invest,
right? And so, by me going into my boss and say, "I wanna start a business in Sacramento," you know,
you have to invest.” And we're willing to do that as an employee-owned business because we're
investing for the long term, right? We don't need short term gains because we're not
publicly-traded, right? Our people are willing to invest four or five years into something and start from
scratch to make something work.
Matt: So, you like employees coming to you with ideas saying,
"Hey, I got this wild idea." And you're willing to just sit down and listen to it?
Jeff: Absolutely. We do it all the time and I mean, we have all
kinds of crazy ideas come in the door. We actually call them Swinerton labs sometimes where we actually have a
lab set up and we'll study it and we'll put together business plans and we have another business
unit called Waste Energy we've been working on where we're taking animal waste, converting it into
energy. And we've got some three plants we're working on with that. So, we're always looking at
the next opportunity for the business and to grow it because general contracting, if you're just a
general contractor, it's tough to make a living. It is really tough. I mean, the fees are kind of fixed
and the overhead continues to grow and your margins are getting squeezed. Everybody as a general contractor,
has their margins are really squeezed right now, and if you're gonna make any money in this business, you
have to do it by moving into other pieces and forms of business with greater margins.
Matt: Let's go back again and talk about how you got hired on
at Swinerton because you've got a fascinating story there. Can we go over that?
Jeff: Sure. So, I got done with an MBA program and I went out and
interviewed with BCG, Boston Consulting Group, McKinsey, Andersen Consulting at the time. You know, I was
gonna be a hot shot consultant, right? I thought, "Oh, that'd be cool." And go run companies
and, you know? When you get your MBA you can do anything, right? That's how you think. And so, I
interviewed all these guys and got a couple of great job offers. So, I was in San Francisco interviewing with
McKinsey which is still here as a international consultant and Andersen Consulting at the time now which is
Accenture. So, I was walking down the street, I finished up my interviews, I was walking down the street. I
see this high rise going up. It was so cool. It's called One Front Street. It was built for Shaklee,
which was a kind of a vitamin company back 30-something years ago, Shaklee. And then tower cranes are up. I
mean, the steel was going up, the skin was going on, kind of aluminum clad thing. It was really cool. And
there was a sign on the street there, it says, "Swinerton and Walbert Builders" and it had a phone
number. So, I wrote down the phone number and thinking, "Man, I think I'm gonna call these
guys." Because, again, it's that passion thing, right? And I loved to build, but I thought I'd
be a great consultant, and make a lot of money. But building it is, like, this is awesome. You know, again,
follow your passion type story.
So, I went in the building next door and went to the payphone, and back then we
didn't have cell phones, and put in probably a dime, I don't think a quarter yet, probably a dime,
and called. And somebody answered upstairs and I said I'm so and so, and I'm in town and can I talk
to your HR director. So, they sent me over to their attorney who's also the HR director at Swinerton at
the time named Bill. And I tell him who I am and he asks where I'm at. I said, "I'm at 100 Pine
Street." And they go, he goes, "Well, that's our building." I said, "What do you mean
that's your building?" He said, "Well, we're upstairs." I said, "Oh, that's
crazy." So I said, "Well, do you have a few minutes?" He said, "Yeah, yeah, come on
up." So, I go upstairs in Swinerton Walbert and the receptionist takes me to…over to see Bill and Bill
talks to me for about five minutes and somebody walks by the door and he calls, "Hey, Joe." You
know, a guy comes in and he hands me off to him, and then I get handed off to somebody else, and then I get
handed off to somebody else. But before I left, I had a job offer.
Eric: Oh, my goodness.
Jeff: And it was... Yeah, it was crazy. They offered me a job to
be...work in estimating, to start in estimating. And I said... I knew nothing about commercial building,
really some heavy civil, but...so I went to work in estimating for, you know, minimum six-month commitment and
they offered me about a third what I was offered at McKinsey and some of these other company consulting
companies. And I took the job.
Eric: I was gonna say, you get your MBA, go the consulting route,
and then get a job in estimating.
Jeff: I know. I got jobs. It was really... It was crazy. It was
really a downplay on my education and everything else. And I swear at the time, consulting gigs were like $80
grand and they offered me $21,500, to live in the Bay Area and I didn't know how expensive it was here. I
didn't think that far ahead. I just knew that I wanted to build. I just had a passion for it. I just love
to build, right? And so, I said, "You know what? I'm gonna do this." I'm gonna take the
lower pay, I'm gonna go starve, and I'm gonna follow what I really wanna do. And that's a tough
decision sometimes. It's really hard, especially for a young person, right? Get out of school and, you
know, you gotta make that decision. So, I took the lot less pay and decided to follow my passion versus being,
you know, the hot shot consultant.
Matt: Did your dad ever have any input in any of these decisions?
Jeff: You know, he helped me with the MBA program to make that
decision. We had lots of discussions about that because he is a well-educated person and he thought that would
be a good move. But beyond that, the job choice was mine. He didn't influence much. I just told him what
I was doing and he kind of shook his head. I was probably too embarrassed to tell him. Yeah, you know, after
two years in the MBA program, I get a job back being an assistant estimator or whatever it was at the time in
San Francisco. But, again, I truly believe in advice I can give. And I give the same advice to my children, is
if you follow your passion, you're gonna do better in the long run because you'll enjoy your life.
It all falls into place. If I would have been a hot shot consultant, you know, flying all over the country for
10 years, I might not have had a wife at the time, and children, or whatever. Right? It changes. Not being
around is a big deal.
Matt: How did some of those family decisions play into your early
Jeff: Big piece of it, again, of the decision to take that job was
I had a child and I was married, and we had... I had more of the discussion with my wife than my dad for sure.
Jeff: And we talked about being home, because the consulting gig,
you're gone one to two weeks at a time. It wasn't that easy to fly around back then. Not a lot of
people did it, right? You flew out for a two or three-week assignment and you came back for a weekend, you
went out again. And with a child already, it would have been really, really difficult on our family to be gone
at that age in the mid-20s, right? It would have been really tough. So, that was part of the decision, is
being able to support the family unit and keeping it together and going home every night. That was a big deal
versus... And that's one of the bigger factors too that played into that decision to, you know, go with
Swinerton versus the consulting gig.
Eric: Do you remember like the first six months when you were
learning the construction building process? Did you love it right away? Did you take to it or did you kind of
long for some of the civil engineering stuff that you had been doing?
Jeff: The first six months in estimating, I did learn a lot. You
know, what metal deck was and what all these pieces and parts where, and how these towers went together. So,
that was exciting to learn that. But it was a little bit tough because I had… I kept thinking that maybe I
should have done this consulting gig. I could save the world, versus sitting at a desk with that 10-key,
right, and a spreadsheet or back then you're using these 10-key and a ledger sheet to do your estimates
with. But, finally, after about six months, they asked me if I wanted to go out and run a project and I said,
"Sure, I'd love to." And so, I ended up on a two-building office complex over in Martinez and
it was close to home and everything and I was gonna be on the job with the superintendent, just he and I and
the project manager was in the main office. So, I kind of got put out there with the superintendent and an
admin assistant and went and built my first office complex, two four-story buildings. That's what it was.
That was exciting because I just got thrown to the wolves.
It was great because my project manager got reassigned to another job and I was
basically the project manager after about two months and ran that whole job myself with the superintendent.
And that was challenging and exciting. And every day was a, you know, kind of a new adventure and that was
real exciting. So, after that first six months in estimating, that was a nice change.
Eric: You were hooked.
Jeff: I was hooked. Yeah. I was in it, man. It was fun. It was fun
to build, watch it go up.
Matt: Then you have the period where you're building the
business in Sacramento. And then from there, savings and loan crisis happens, building kind of stops. And then
now, so then where does your story pick up from there?
Jeff: So, I had finished up Sacramento and, again, all the deals I
put together, which was about $250 million worth of work, just, you know, all stopped within 2 weeks. I mean,
I got a call from everybody that said we're gonna put it on hold because basically, every bank quit
lending at the time. And it was pretty much pretty scary, actually, '89, '90 and there's a lot
of projects going up that stalled and things like that went on.
Matt: Are there any major lessons that you take away from that
period of time or that experience?
Jeff: That's a great question. I think as a individual, from
that experience, is I should've been more diversified in the work product. And I've learned that
over the years. So, even though the private work stopped at that point, you know, the office buildings and
that type of thing, the institutional work went forward, the federal work, the state work. And I think the
whole company as a whole and myself, we should have been more diversified, which has been a lesson learned for
me over the years. It's like living through the great depression that everybody saves money in their
mattress, you know, all that kind of stuff. It's similar in construction where you wanna be diverse
enough, so if one market stops, you can then have other work in other markets that you can concentrate on and
grow. For example, you know, right now, education's booming because of all the bonds that were passed,
you know, the last four years and it's finally picking up and going full blast. And we're starting
to see multifamily slow down. So, we're pushing big assets and lots of people into the education market,
the medical market, you know, those kind of markets and pulling people out of the slowing markets. So, it was
a lesson learned and that, that's kind of the diversity question of work product, was a big lesson
learned at the time.
Matt: Yeah. Okay. Okay. You can keep going with your timeline. I
just wanted to throw that in there real quick.
Jeff: No, it's good. I think what happened again there, that
time period, was we had a lot of private jobs got in trouble right? Financially. So, we had...it was getting
difficult to close jobs out, get paid, that type of thing. And our CEO had come back into San Francisco to
finish up some projects and our CEO, Dave Grubb at the time, asked me if I could go down to LA for six weeks
and help out our team down there to close out a bunch of jobs and projects that needed to get closed to get
paid, because it was tough to get cash back then. Everybody was struggling. So, I said, "Sure, I'll
go for six weeks." So, I packed my bags up and I went down, you know, Sunday night through Friday
afternoon and then we'd drive back up to the Bay Area for five hours.
But that's how we did it. We really didn't fly around much back then. So,
I'd go down and work all week. So, I helped close up a whole bunch of projects there as far as managing
the projects. And after about, oh, I don't know, it was probably going on 10 or 12 weeks, the CEO came
down and was talking with me and asked me if I wanted to stay and run one of his special projects groups
there, there's tenant improvement, as the operations manager. And I said, "Sure. Why not?" I
got a nice promotion, I get a chance to have a business unit of my own like I was trying to do. And I said,
"Sure, I got nothing to lose." So, they put me in charge of this unit and we had about, I don't
know, 35, 40 people in it. It wasn't huge. And we started just looking at all kinds of different work. We
started doing some small public work because the market had really slowed down, tenant improvements, lobby
remodels, whatever we could do to make a living.
And after about six months, we were making a lot of money. And we had turned...that
group had never made much money. And all of a sudden, we're making really good money. So then about six
months later, after the first year, the CEO came to me and said, "You know, we're struggling with
the overall office here. There's no more high rise office buildings. We're not quite sure how to
push the business forward down here and get more work. And you seem to be doing a good job with what
you're doing. Would you like to run the whole place?" And I said... It was a strange, strange day.
And they said, you know, "What do you think?" And I said, well, I said... This is how I answered.
It's kind of screwy. But I said, "I've got nothing to lose. This is great. Let's do
it." That was my answer, right? I've got nothing to lose. There's no downside here. So I said,
So, I think I was 31 or 32 at the time and ended up taking over. They gave me a VP
title and took over southern California, the whole region down there to run it. And I don't think they
realized how old I was because I was kind of bald and they thought I was older than that, and they didn't
even know the age at the time. I probably would've scared them if they knew I was 31 years old. But,
anyway, ended up running that whole group down there and we ended up starting to turn some pretty nice profits
and we started doing more and more education. Again, we moved from that private side and I moved the company
into education, Cal state, UC, K through 12, medical, aviation, you know, where the money was basically and
followed the money into these markets and begin building that skill set to do that work. And we turned...we
became the most profitable group in the company during those years. Just by kind of, again, being diversified
and following the money into the markets where it was. We would've stayed where we're at in
commercial office, we would've just shut the business down. There was nothing there.
Eric: Did you get any push back from that decision? I mean, change
in the nature of the business or was it pretty hands off, let you do what you were doing?
Jeff: Well, I think they appreciated what we were doing because we
had to change the culture, right? The whole culture before that was high-rise office negotiated, big
developers, not taking on a lot of risk, GMP contracts, small fees. And so, we really had to change the
culture where we decided that we're gonna do public works, lump sum bids, self-perform everything it can
and take on a lot more risk, but, again, higher fees, right? Whatever you made you capped. And so, it took us
a while, but we changed the culture especially in southern California. And then the rest of the company began
to look at that work also because they saw the success of that unit. And so, we began to change that culture.
And then we had some really nice profitable years even in the downturn. The early '90s were really tough
for real estate. And after the savings and loan crisis, no one lent money for anything. So, we kind of
changed, again, that culture to being more proactive and aggressive and not afraid to go bid projects.
Eric: LA versus San Fran, what are your thoughts at the time and
Jeff: So LA is very different than San Francisco. They're
night and day, the difference in the markets. So it took me a while to get used to it down there, jumped in.
Everything in LA is fast, you know, deal a minute, you know, you can make your...have a friend in one day and
make deals, right? In San Francisco, it takes 10 years. It's really a difference in the culture.
It's probably like Boston and New York or something. I mean, it's just totally different lifestyles
and the thing there. But for me, it worked out okay because, you know, we were just a bunch of young guys just
hustling and finding everything we could do and make a living. So, I stayed down there through about 1990...
Stayed down there until '96 or '97, 7 to 8 years in that range. And had, by then we had three
children, three boys. And we were out living in, outside towards Westlake, Agoura outside of town.
I didn't live downtown. And we decided at that point that it was just time to
come back to the bay area. That's our home up here. And then we, you know, everything we had up here, we
have a ranch up north and, you know, we grew up in the, in the northern California area. So, they asked me to
come back to San Francisco and do a similar thing we did in LA, which was changed the culture a little bit,
become more aggressive, look at public works, you know, really continue to push that change, looking for
market opportunities, and looking for new business opportunities up here. So, that's what I did '96,
'97 when we came back up here and began to grow this organization in San Francisco.
The lesson we learned though, during that late '89, '90s is diversity of
business. That was another lesson learned, right? So, diversity of product, but also diversity of geography.
If you think about it, markets follow each other. For example, this last 2008 crisis, '07, '08 and
then '09, '10, San Francisco was the first city, the bay area, it was the first geography and city
to come out of the recession. And they were 18 months to two years ahead of LA, or Seattle, or anybody else.
In 2010, this town was booming. And we had 45 tower cranes up in town and most cities didn't have
anything going on.
So, we've learned that geographic diversity is important because there's a
cycle in real estate and LA follows 18 to 24 months from San Francisco. So, they follow out of the recession
and into the recession. So, multifamily now has been slow for a year or so in San Francisco, but in LA,
it's been fine, and now just beginning to slow. So, in Seattle, the same thing. So, it's kind of
interesting watching those geographic cycles. So, from what we learned, we had San Francisco, LA we had a
small presence in Denver, and began to grow Denver. We started offices in Portland, Seattle. We were in
Phoenix for a while down in... We bought a company in San Antonio, Lyda Construction, and Salt Lake City. We
put an office up in Salt Lake City. So, we started expanding geographically for that kind of recession-proof,
I guess, is the word where you try to flatten the real estate curve. And so, we geographically did that. And
then by product too, we really started to look at new opportunities in, you know, civil... We bought a small
civil company, trying to diversify that product line. I guess it, you know, you think about it in all of this,
this whole real estate business or this construction business, the more diverse you get, the better off you
are as far as flattening, you know, that real estate curve, right? So, the real estate market, the beta-curve,
right? It goes up plus one, minus one. And what you try to do is flatten that cycle out. So, you're
steady with revenue, steady with profits and you're not going boom-bust all the time like the real estate
market. And that's been our goal over the last, you know, 15 years, is to diversify enough that we can
have, you know, we don't have big layoffs and we don't have huge hiring spurts, but we're
really steady in everything we do as far as diversity of work, diversity of geography, diversity of
industries, that type of thing in order to minimize that real estate curve impact on the business.
Matt: When you're starting the new offices, do you have the
people and the culture and then you decide to start the office or do you say, "Hey, we need to start an
office in this location," and then you go try to find the people and build the culture?
Jeff: That's a great question. So, initially, we started by
buying companies. Salt Lake City was Bud Bailey Construction and San Antonio was Lyda Construction and Phoenix
was Connelly Construction. My advice to anybody that hears me on this podcast is don't buy a company. I
bet you we're 1 for 10 in successes because culture is such an issue. If you think about it, the company
that's trying to sell is because they want out of the business, right? Either there's an individual
that owns the company that is too old to manage it anymore and just wants their money out, or there's a
family that's in dispute or a problem. So, you think about it, every company you're buying,
there's a reason they're selling it. The only way these companies work or any business works is to
have the top leader. You need to have a leader in place to run the business. So, if your top leader's
leaving, it's really difficult to plug somebody in their place and have them run that business
So, we've tried all kinds of different things and, you know, you talk to all
these consulting, or these investment bankers in construction. They all tell you, "Oh yeah, just buy
companies and focus on the culture, you'll be okay." My advice is never buy another company.
It's just, it doesn't work. So, what we've done, our successful groups, is that we've
taken typically, like in Hawaii prime example, right? We've grown to be one of the largest builders in
the state, is we had an individual who is from Hawaii, had grandparents live there, and he was, culturally fit
really well. We brought him by himself and we set up a small shop and we ended up getting one big box deal and
did it. And then all of a sudden, you know, we hired some people and we built it from scratch. And what
happens by doing that, it is our culture. It's easier to focus on your culture growing one person at a
time, right? So, you bring in your key leadership and you build one at a time and that person's part of
that company already, right, that...and then you slowly grow and you keep...continually input your cultural
aspects into that company as far as employee ownership, benefits, owner meetings, all those things begin to
get ingrained and it moves slowly. To go in and buy a company with 300 employees, it's like… I mean, how
do you do that? Just doesn't happen overnight. You can see it. You see these big roll ups. I don't
know how they do it. You see these big engineering roll ups where they buy 15 construction companies and then
they throw them all together and they look great because they have this big growth and they're publicly
traded. And they get this big growth. But after about four or five years, they realize they're losing
money. It makes no sense to put them together because they just don't fit. They don't even talk to
each other. So, and then that's when they start selling the assets off and you go through the cycle. And
I mean, it's really crazy. You just can't throw all these different companies together and expect
them to work.
Matt: What are the qualities you look for in that leader that you
feel comfortable building an office around?
Jeff: What's happened here is that most of our leaders come
from within the company. They started within a few years out of college here and have spent several years
working with us. So, again, they have the culture, they get it, they understand employee ownership, they
understand working and helping each other and not afraid to ask for help. And our main rule here is don't
hide the cards. If you have a problem, ask for help and we'll help you. And stay out of trouble. If you
hide the cards and we find out later you're in trouble, you didn't let anybody know that's when
you're really in trouble. But we have these young folks and we ingrain, you know, all these things into
them. And then when they're ready… We know who they are. I mean, we watch them all and talk to them. We
give them opportunities to work on tasks force and committees and we challenge them so we know how
they'll respond in situations. And then we take that person, we, you know, like George, he's the
right guy to go to Hawaii and we put them into Hawaiian and then supported to grow that company. And, again,
it started with one person and now has, I don't know how many, 150, 200, people and plus 300 or 400
So, we support them, we mentor these young people, and then we give them the
opportunities and that's another reason you grow, right? If you only had two offices and you had 50
people that wanted the job at the top of those offices, they all leave. It's interesting. One of the
reasons we grew, again, is we have lots of talent. And these folks want opportunities to run companies, so we
just took a...we just opened up an office in Charlotte last year and we took one of our top performers from
Denver. Really bright young man and as fact, I was on the phone with him this morning, really early from
Charlotte and we put him into Charlotte. He picked up his kids and wife and moved to Charlotte and he's
running that shop and doing a great job. And he's mid-30s. He's been mentored along the way.
He's been here for 10 years or 12 years since college. I mean, that's the kind of person that we
look for to plug into those leadership positions and they're very loyal.
Eric: So, somebody who knows the culture, that you know well, you
feel comfortable with, you have a good working relationship with, those are the types of things.
Jeff: Exactly. Like this morning he had a question, he called me at
6:00 a.m. and we had a discussion and, you know, if I have a question I pick up the phone and call him and,
you know, we have open discussion to what's going on and then move people in. We moved two or three other
key people in there to support him. But that's how we work. Right? Again, to go buy somebody, I hear it
all the time. Don't do it. That's my only advice. You know, don't do it.
Eric: That's good advice.
Matt: Do you have any formalized leadership training program there
or is it all just kind of on the job?
Jeff: We have several leadership programs here. We have what we
call Swinerton University and there's a, you know, a whole agenda of classes to take and we have career
paths. It will show you, if you want go into the field, if you wanna go into project management, if you wanna
go into leadership, here's the steps, here's the classes you need to take, some online. We have
foundations programs, structure programs, leader builder programs. So, we teach all the basic skill sets in
order for these people to become leaders. And that's part of our Swinerton University program. And
we're changing it all the time, right? Upgrading and adding, you know, communications programs, you know,
things like that all the time.
Matt: So, let's go back to the career timelines. So, you move
back up to the Bay Area. You're gonna do similar things that you did in LA up there. And how does that
portion go and then what does that lead to?
Jeff: Well, it was good. We built San Francisco back up. Very
profitable in both groups now. And we had a retreat, an executive retreat. I was invited to come along and we
had a discussion on we're growing, again, trying to set up offices elsewhere and geographically changing.
At the time, we probably had five offices, maybe in that range. And mostly localized business development
people, localized…you know, everything's pretty localized. There wasn't a lot of interface between
all the groups at the time. Everybody kind of did their own thing. And we had a retreat and the CEO asked me
if I'd wanted to become the director of national sales. And I go, "Well, we don't do national
sales, so what's that mean?" And he says, "We need somebody to go out and work with all the
national clients and, you know, feed work to the offices." And I said, "Well, sounds kind of
exciting. I got nothing to lose." He's heard that speech before. And kind of exciting. And so, I
said, "Yeah, I'll be glad to do it."
So, I spent then about 10 years on national sales and what we mean by national sales
is, I would go into Memphis, for example, Promise Hotels, which was purchased by Hilton, get to know the
folks. And we ended up doing dozens of Homewood Suites directly for the parent company. And we'd build in
Albuquerque and Portland and Salt Lake City. And basically do multiple contracts or MSA type arrangements with
these firms. So, we began creating kind of a national marketing base of national clients, we called them,
where we're doing work in multiple markets. And that was kind of new for us because we're so local,
right, working local developers, working with local agencies. And we started this national program, and
that's what I did for about 10 years. All over the United States, go to Chicago four or five times a
year, and New York, and St. Louis, you name it, every city in the States, I think, even Detroit a few times
with some a dotcom-type companies, or telco-type companies.
But, anyway, that's what we started to do. Did that for about 10 years. And it
was exciting, but you're kind of being a lone wolf out there too, right? You're on your own out
there and you're not really based anywhere, which made it tough. But we built it up. And then the next
thing we saw was we could do the national clients, but we could also then see the market's coming.
It's like the wave, right? And so, when you're across the countryside, you can see east to west,
west to east, and you can kind of see the wave of work coming. So, we saw that telco hotels coming right
before the dotcom and we ended up flying all over United States, meeting with all these telecommunication
hotels, the kind of the...a precursor to all these big data centers. And so, we ended up building those all
over the United States for some big groups, taking down older buildings, putting in servers, finding the fiber
lines. I mean, we had five guys working nationally with me at that point just for the telco hotels. And we
were building them everywhere just as an example. But you can see it now. We still see that coming. Like with
aviation, you kind of see the markets. It's really interesting. When you sit in your own community,
it's difficult sometimes to see what's going on in the rest of the world. But when you're out
there talking to people and traveling across the United States, you kind of have a feel for what's
You kind of see, again, the wave of the work coming your way. And so, we did that
for about, again, 10 years. We started creating what we call the corporate services account. And what we do
there is we deal a lot with tech companies, corporate users now like the Amazons and these kind of guys where
we work in multiple markets with them kind of on the same basis as national sales. We call it corporate
services and where we, again, travel everywhere with our clients and build for them, no matter where the jobs
are at. And that's been a fun source of business, a good, really fun way to do business too.
Eric: Yeah. So, what areas of building are you optimistic about in
the future? If you looked, like, 20 years down the road, what do you think are the, the growing areas?
Jeff: Twenty years, huh? That's a long time down the road in
this business. But I, I think right now and for the next 10 years, I think aviation is just an amazing market.
Right now, about $100 billion worth of work lined up in that market. And we're working... I've just
about every airport where we have an office and we're continuing to... We just picked up the Long Beach
Airport, new terminal work. We're at LAX doing a rental car facility for $300 million. So there's
lots and lots of work going on right now in that aviation market. I think that'll continue. I think
schools continue, lots of impact and investment in schools and people always vote yes on a bond. You ever
Jeff: As long as it's education, vote yes. And so,
there's always more and more bond money for junior colleges and K through 12. And anything to do with
your children, right, you're gonna vote yes. Give them better facilities. So that's gonna go. And
then medical, medical's changing. There's a lot of medical, healthcare type work. Mostly in
outpatient clinics, you know, overnight care, surgery centers, lots of that kind of work. I don't know if
you're gonna see a lot more massive hospitals like we used to. You might see 100 bed hospitals, or 50 bed
hospitals, but more outpatient or care centers. But you'll see a lot of healthcare work going forward.
And then the data centers too, you see lots and lots of data center work and the
demand for server space. And data storage is continuing to grow with artificial intelligence and you're
gonna see a lot more of that type of work continue. So, those are just, you know, some of the
markets...renewable power will go well for the next three or four years until all the tax credits go away.
Then we'll see what the market looks like. But there's a lot of work gonna be happening in the
renewable energy sector.
Matt: Okay. We have some more to cover on your biographical story,
but we also like to throw in some, like, more personal quick, rapid fire questions. You mentioned earlier the
guy running the business in Charlotte called you at 6:00 a.m. this morning. What time do you normally wake up?
Jeff: I get up every morning, 5:30.
Matt: 5:30. Okay. And so, and it's free… It's known that
you can be called at 6 o'clock, or is this outside of the normal situation?
Jeff: No. Everybody knows I’m in my car by about 6:00, so the calls
start at 6:00 and then they finish up the texts, the texts and calls finish up about 9 o'clock at night
sometimes, you know, in that range. It's a long day and...
Eric: Do you still hate traffic driving into the city?
Jeff: No. No, there's no traffic. Going home, there's
always traffic no matter what. But coming in in the morning, there's no traffic. That's why I do it.
Construction, you know, I’m so used to starting jobs, craft come in and start at 6:30 and we're so used
to, once you've worked on these jobs, you just get up in the morning and go, you don't think much
about it. Right? I'm not gonna sit in traffic. There's no way. I rather go to the office and work
than sit in traffic. So, I think most of our people do that. They just don't wanna fight it. So...
Eric: Overrated or underrated, Philz Coffee?
Eric: Yeah? Tell me why.
Jeff: There's lots... It's too expensive. I mean,
it's crazy. I mean, it is… I think it's like… What is it, $7...
Matt: For a cup of coffee.
Jeff: ...for a cup of drip or something?
Jeff: I mean, that's crazy. I get it for free here in the
office. It's good, but it's pretty overrated. Too expensive.
Matt: Yeah, okay. What's the best book you've ever read?
Jeff: Boy, that's a tough question. Probably… But I read so
much. I read lots of fiction. Right? And because I read a business book, then I read fiction, but probably 7
Habits as far as business. And it was written by Stephen Covey, who I've met several times. I think
that's probably the best business book I've ever read. But I do read a lot. I read a lot of fiction,
historic fiction. I love historic…
Eric: Historical fiction? Like, what kind of authors do you like in
Jeff: Bernard Cornwell. You know, I like his… the Sharpe series
that he did and the Kingdom series he's done that's on TV now. I just, I like history, right? I
learn something through those, even though they're fictional characters, you learn something about the
wars between France and England and, you know, that kind of stuff.
Eric: Yeah. How about like historical fiction TV shows? Do you like
Jeff: Oh yeah, absolutely. Absolutely.
Matt: Do you have a favorite TV show?
Jeff: You might think this is crazy. But I like Pickers.
Matt: Oh, right.
Matt: "American Pickers?"
Jeff: "American Pickers." I mean, you might think
that's crazy, but it's a history show. And, to me, that's kind of crazy, but they have a story.
We find what they have like old Confederate swords or, you know, there's always a... It's a history
lesson. It's more than, anything else, it's a history lesson for me. I think it's pretty cool.
It's kind of funny.
Eric: What's the first website you check every day and
what's, like, the most offbeat website you like to check?
Jeff: God, these are tough questions. The first website I look at
every day is ENR. And the update that comes in every day and there's probably six or seven stories.
There's usually one in there that's of interest to me that talks about a competitor, or a strategy,
or today it was a story on modular homes for the homeless in Los Angeles. And I've got a client
we're working with, doing a kind of a co-development deal on modular homeless housing here in the Bay
Area. We've got a site, Berkeley, then we're gonna co-develop it together and create 33 units for
the homeless. So, we're meeting with the city shortly on that. So, just picking out articles like that,
that give you great ideas.
Eric: Yeah. And then the most offbeat, you know, maybe no one would
expect that you go there, but you like kinda clicking...
Jeff: Of that? Oh, boy. That's a tough one. I'm not very
offbeat on any of that stuff. It's usually... The webpage I'll go to has to do with, what's it
called, The Motley Fool and investment type sites where you're looking for stories and stuff. The Fool
and they have always some great articles on investments and what's happening in consumer goods and all
that kind of stuff.
Matt: That's great. So, you're a bit of a wine
connoisseur, is that right?
Jeff: Love wine. Yeah.
Matt: So, overrated underrated, Robert Parker as a wine critic?
Jeff: Over. Over. So, here's how we got into wine. About 2005,
my wife was able to stay home with my children, raising three boys and they were all growing up and she
started making wine in the garage. And she did five gallons of Chardonnay in 2005 and she bottled it. She
bought juice, frozen juice, basically and then made wine out of it. It was really good. I was shocked. But
she's a great cook. You know, she can do anything. So, by 2008, we had made our first barrel. We met some
folks. We bought 1200 pounds of Pinot Noir grapes, we made a barrel of Pinot. And she started entering the
wine in wine competitions and she started winning all kinds of gold medals.
Matt: That's all right.
Jeff: Yeah. Oh, it's crazy. So, she goes, "I wanna go
back to school and get my degree in Oenology, winemaking at UC Davis." And I said, "Great. Go do
it." So, she signed up and it took three years and in 2011 when she graduated, we got a bond in winery
and we started our own winery called Monument Mountain Vineyards in northern California. And it started
getting out of hand. We ended up with 10 acres, 10,000 Pinot Noir vines that we were farming. And picking and
you name it, we did it, pruning. Oh, it was crazy, 10,000 vines. And then we built, basically built our own
winery. And so, this last weekend we're working, getting ready to bottle Sauvignon Blanc and Chardonnay,
and then a few weeks we'll do Pinot Noir. So, we kind of evolved into our own vineyard and winery over
the last 13, 14 years.
Eric: So, is there a wine critic that you do respect?
Jeff: You know, not really. Here's how I look at wine. Drink
what you like. That's all the matters. It doesn't matter. I mean, you get over a $30, $40 bottle of
Cabernet Sauvignon and they all taste the same to me, and I drink lots of different wines. I mean, I go all
over the world to drink wine. That's what I do. And just drink what you like. I mean, I've had $8
bottles of Pinot Noir that could compete with $100 Williams Selyem. I mean it's...it depends on where
it's from, and when it's picked, and when it's bottled. And $8 bottles are good sometimes.
Eric: That's great.
Matt: Yeah. That's awesome.
Matt: We kind of picked off the biographical stuff when you were
doing the national account and then something brought you back and you became CEO. So, how does...we get from
that point to the CEO point?
Jeff: So, I was doing the national sales, doing really well. We
were selling, you know, billions of dollars worth of work a year and I got asked to join the executive
committee. So, there's four of us on the executive committee running the business. There was a CEO, the
CFO, COO, and myself doing the national marketing, the four of us running the business day-to-day. So, I was
probably how old at the time, 45, maybe 44, something like that. And so, that's why I joined the
executive committee and kind of came back into the bay area. And at that point, I oversaw sales. I got
involved in setting up all of our offices, acquisitions, you know, that whole process of growing the business.
And then all the strategic initiatives. I was putting all the business plans together with every office, began
looking at, again, acquisitions, new markets, new businesses, that type of thing. And that was kind of my job
along with the other guys. Through that process and that national sales, I ended up knowing about everybody in
the company, which was great. I mean, at the time, we were only about 700 people that I knew most of them
through some process or on a job site and that type of thing, which was great.
And then in about 2000, the recession hit. And then in about 2012, I think, it was,
my partner, Mike Ray, my business partner, decided to retire from Swinerton. And that's when I took over
as the CEO Chairman at that point. And then we began to, I think we were doing, I took over we we're
doing about $950 million, I think, right in that range, you know, an annual basis. And then we began to build
that business this year to about $5 billion. And we've grown it just step-by-step. Again, we're the
largest builder in California now. We've been the largest builder for five years, six years, something
like that. Um, and we just built it through, you know, expanding in our markets. And then also we set up in
the last six years or so, a office in Atlanta, and Charlotte, and Raleigh, and Austin. And now, we're
just recently setting up an office in Dallas, and then we're all over up and down the coast in Hawaii.
And Denver's really expanded too. We had a small shop in Denver and it's been doing about $300 or
$400 million a year. So, it's growing too. But we just continue to build this and then, again,
diversifying into new markets and we're really looking for those new opportunities.
Another thing we've been doing a lot is more and more, it's like I said
earlier, it's hard to make money as a general contractor. I mean, if you're a GC and you get 3% on a
job and your overhead's 2.7, it's hard to make money, right? There's a lot of GCs in that
situation. I think the national average a general contractor makes 1% EBITDA. That's not very good. So,
we've been really trying to figure out how to increase that. Our goal is to make 5% and which should be
500% higher than the normal. And the way we've been able to move that way is we're really changing
up our business model again. We're doing a lot more self-perform. So, we're self-performing drywall,
concrete, finished carpentry. We set up a demo group. We recently purchased a electrical subcontractor, so
he'd be doing all of our electrical work on our parking structures, our tenant improvements, temp power,
all that kind of stuff on electrical basis. So, we're running about 3,000 craft right now, union and
nonunion, depending what area you're in. So, that's helped a lot, that renewable energy business,
you know, at $1 billion a year has really helped us grow both bottom line and top line.
And then, again, we're always looking for new business opportunities. I think
in the next three or four years we'll go into the mechanical business, HVAC-type work to bring that in
line too. And then I think the next biggest challenge in this market is the supply chain. You know,
everybody's kind of focused on pre-manufacturing, prefabrication. I hear that from everybody and
everybody's gonna build boxes and modules and make it cheap in a shop. Haven't seen it work yet.
[inaudible 01:07:20] you know, everybody's talking about it and people come and go out of that business
all the time and so, as work slows down it's hard to keep a factory open.
But I've seen some successes with some wood boxes, some different metal panel
type things. My thinking is this, I don't really like to focus on the supply chain and you think about
the supply chain as a builder is… So we go out to subcontractors and then they go to a broker, and then they
go to a broker, and they go to a broker. And by the time they get to a manufacturer, this thing's marked
up 50% or 100%, right? And it'd be interesting. And the problem is you have right now is this broker
system set up, right? There's all these middlemen in order to get to the manufacturer. Just think if you
could go directly to the manufactory, and buy directly from the manufacturer and have it shipped to your job
site. You could eliminate half the cost of all the materials on the job. It's crazy, right? You think
about that. You can buy, you know, a mechanical blind in China for $1,000, by the time it hits San Francisco
to get installed, it's $5,000. Right? So, how do you eliminate? That's really...I think that's
gonna be the success of our industry over the next several years, is using maybe that block chain type
technology where we set up some kind of internal agreements with manufacturers that supply us directly based
on our schedules and we're able to have, you know, drop ship, its hardware or whatever it is directly to
the job directly from the manufacturers and eliminate the middlemen.
Eric: Yeah. You think information systems have gotten so much
better in so many ways, yet these distributor networks still seem like a part of the way the world used to
Jeff: Exactly. And there's no need for them anymore. They used
to have purpose, right?
Jeff: These middlemen, broker-type, distribution folks, they did
the shop drawings, they did all the engineering work and then they submitted it to the factory. Well, anymore
with them, you know, the AI technologies, all the stuff we're doing, we could do that ourselves. I
don't need the middlemen anymore to do a hardware schedule, I can do it myself.
Jeff: And then ship that hardware schedule off to the manufacturer
and do my purchasing. So, we can eliminate that. I think that's, as the blockchain technology changes, as
these things get put in place over the next 5 or 10 years, I think we can eliminate, you know, 50% of the cost
of the material supplies for our projects. And I think that that would be more of an impact than building wood
boxes someplace, so... But it's an interesting concept and something we're really exploring. We set
up a supply company to do purchasing and trying to break that technology down. So, that's what we
started, just in the last couple of years, is really focused on supply chain.
Matt: That's great.
Eric: That's interesting.
Eric: Any advice you would give a young person in their career if
you had to just kind of sum it up? You kind of hit on some of the points already, but young man or woman in
their career, in the construction industry, what advice do you give them?
Jeff: Well, first of all, follow your passion. I've seen
people that are miserable in their jobs their entire careers. They retire from a miserable job and it's
not much fun. Their life is miserable. Right? So follow your passion, it makes you happy. The other one is
patience. Young people nowadays, I deal with my own kids this way too, is they wanna be operations manager,
vice president when they're 30 years old. You gotta be patient because there's other people in front
of you and there's a process and what you need to do is pick the people you wanna work with and
that's where you wanna be, right? You got a passion. If you're gonna be in construction, pick the
company where you have a great group of people to work with and that respect you and you'll do really
well in your career. You know, be patient. Let other people have their chance to run it and then you'll
get your chance. It's a process, right?
Jeff: I'd say, you know, the other thing I tell young people
is, you know, I wish somebody would've told me this when I started out is, never burn a bridge. And what
I mean by that is people you're working with right now, you know, you sit around a table in a meeting and
there's eight people or whatever, more than likely, one of those people will either be your boss in the
future or your client. And I've had it happen so many times where people would leave us to go to work for
a developer or a, you know, a Facebook or whatever and they end up being your client in the future. And
it's quite a privilege to have them come back and hire you to do their work. And so, you never wanna burn
a bridge, again, with either your employees or the people you work with because, again, they could be your
boss or your client at any time. So, you gotta be really careful with that. And that's... I wish somebody
would've told me that a long time ago.
Matt: Did you ever burn a bridge you regret?
Jeff: Oh, yeah.
Matt: Yeah. Do you have any good bridge-burning lessons?
Jeff: I've got a couple.
Eric: If they're too painful to relay, if you don't have
Jeff: Mostly... No, I don't even wanna say them. Yeah,
everybody has a few bridges they've burned. It's a lesson you just don't wanna do because you
just never know what the future holds. And this is a small business. I mean, I know people clear across the
country and CEOs and from project managers to CEOs and it's a small business, especially in the town
you're in. I mean, in San Francisco, you know, we know everybody here. Been here for 30-something years
and we know, you know, all the people running the businesses and all the clients. You just can't afford
to burn a bridge here in a small town, and San Francisco's a small town. And if you think about it,
Chicago's a small town. So, that's your environment, you just can't afford to burn any bridge
for any reason. You just gotta make sure everybody's taken care of.
Eric: Do you have any way to have like a meeting of the minds of
other top executives at other construction firms where you kind of bounce ideas around and talk about things?
Jeff: We do. We have some good JV partners and we talk all the
time. In fact, I was just in Utah. One of our JV partners called me up and wanted to talk about business
strategies and overhead, types of businesses, and self-perform. So, they asked me to come out. So, I spent a
day with them, flew out and spent a day with them just talking about how to improve the margins in their
business, right? So, we do that. And I do the same thing if I have a question. We've got lots of
different, really great partners that we're able to pick up the phone and talk to them. We have a project
here in San Francisco, it's called Oceanwide. It's a $2 billion office building condo in a Waldorf
Astoria hotel. It's under construction now. And I went and got Webcor, who's a competitor of ours
out here, called up Jes over there, the CEO and said, "Let's do a JV together." And they said,
"Sure, let's do it." And the JV is important because all of a sudden, you know, you need 80
people on a job. And if you have 80 people, that means you're probably out of business because you just
can't have 80 people sitting around, right? So, some of these big jobs, it's important to have
relationships because when you hit $1 billion…these billion dollar projects, we call it the billion-dollar
club or whatever, and you got to have a partner to do these things just for this size of the staff. We could
build it, but it's hard to have enough superintendents of quality, and you need good partners to be able
to do those jobs. And that's why we set up some of these partnerships, and that allows you also to have
those conversations about margins and how they're doing and different strategies. And it's really
The other thing that's helped over the years, there's a... You guys have
probably heard of YPO, Young Presidents' Organization?
Jeff: We have a group that we put together, oh, I don't know,
10, 12 years ago. We call it the OPO, the Old Peoples' Organization where we have eight large
construction companies in this group and all the CEOs attend twice a year and get together, one’s with
spouses, one’s without, and the agendas are wide open. And it's a really a good venue to share and have a
sounding board of people for ideas, right? So, we'll have an agenda, it'll talk everything from
managing cell phones, to HR directors, to finance to, you know, strategies. And that's a great way to
keep things, you know, at a really good level where you're able to send an email out to eight different
CEOs and ask them questions and they'll respond to tell you their ideas or pick up the phone and have a
But I advise that to people as they move up in the company, is get involved in a
group like that. Like join the YPO and become part of that organization. And they have construction networks
for young folks too. And it's... I just had one of my young guys here join YPO. He's 32 and
he's already part of a construction network.
Matt: That's great.
Jeff: And being...you know, changing ideas, and usually it's
with companies that you don't compete with so you can be open with your discussions. That helps a lot
Eric: Who are you most scared could beat the Warriors in the game,
in the playoffs? Are you scared of anybody at this point in time or no?
Jeff: No. With Cousins back, that gives them what they've
lacked for about, I don't know, three or four years, somebody...a big center that can move around. Right?
Shoot threes and post up.
Eric: They looked pretty good the other day.
Jeff: Oh, they're really good. Yeah, I'm gonna... They
play tonight. They have the Sixers in town.
Matt: That's a good one.
Jeff: We go all the time and watch them. It's so much fun.
Matt: Are you going tonight?
Jeff: No, I'm not gonna go tonight. I'm gonna see San
Antonio next week. They come into town, but to beat them, I think Boston's tough. They had a hard time
Matt: Yeah. They had a good game last week.
Jeff: Yeah, last week that was a great game. And Boston's
pretty tough. I'd say Houston's power is nothing. I mean, I just don't see many teams competing
with them right now, with the Cousins and there if he stays healthy.
Matt: Yeah. I don't think so.
Jeff: It's gonna be tough. I think Boston might give them the
biggest run and maybe Toronto. LA won't, LeBron's been out and I just don't see them competing
with them. Portland's a good team.
Eric: Good time to be a Warriors fan, that's for sure.
Jeff: It is. It's been fun the last several years. I've
learned a couple of lessons. You know, our company's set up that it's a group of people that run the
business. Even though I'm the CEO Chairman, I have business partners and what we have, what we do is we
have an executive committee where we have myself and three other business partners, and each one of those
business partners has a different skill set. So, I do most of the marketing, sales, client interface,
branding, you know, all that kind of stuff. Then I've got a partner who's like the chief operating
officer, runs the daily operations. I've got another partner who runs all the self-perform work and then
I got another partner who's our finance, risk management, accounting, you know, all that kind of stuff.
So, it's kind of the four-legged stool where we have that skill set altogether and that's how we
manage our business day-to-day. And the lesson I've learned is that the worst thing you can do, and
I've seen it happen over and over in our industry, is that you have a leader with a big ego and somebody
who likes to make all the decisions and do all this. But the key for us is we do a consensus management here
and whatever gets decided, the majority wins and that's the way it is, and we shake hands and we move on,
right? And you got to make sure that as you begin to move up in the company... And all of us have worked
together for over 35 years, it's kind of crazy. I mean, we've been here, our field guy's been
here for 40 years, started out as 18 years old as an apprentice carpenter.
So, we've been together working for many, many years. But the key here is you
need people around you that aren't afraid to tell you that you're wrong. And that's important.
Don't surround yourself with a bunch of yes men because that's where you get in trouble. If you
never challenge each other, you don't have trust in each other, and y'all go down the same path,
you're gonna make so many mistakes. But you wanna surround yourself with people that can tell you
you're wrong and that challenge you to think things in a different perspective. And by the time
you're done with it, you know, our team and our meetings, we have a pretty good direction of where
we're going and we typically stay out of trouble. It's important, though, to surround yourself in
your business, early, with people that aren't afraid to challenge you and say no.
Matt: How do you respond when somebody tells you you're wrong?
Jeff: You know, I used to get upset because I'm the boss, but
I have such respect for the people I work with. I mean, they've saved me many, many times on tough deals
where they said, "I'll take care of it." And they've stepped in and… You can't do
everything. When you run a $5 billion business, you can't run it yourself. There's no way. I'm
telling you, if somebody tells you they're running it, they're full of it. You need a...you need a
community to run a business of this size, especially in construction with thousands of projects, right? And
so, you got to respect your partners and you got to respect their opinion. And if they say no, that means
there's something there that you got to listen to, because they usually have a pretty good explanation of
why they're not agreeing with you. And there's usually some merit there, right? So, you gotta learn
to say…you know, to listen to your partners. I've seen guys, like I said, with the big egos run these
companies and all of a sudden, they made some really stupid decisions because everybody's afraid of them
and they're out of cash, they're broke, they're selling their business, they're... It just
goes on, and on, and on because they were too afraid to listen to other people, or, you know, people are
afraid not...to tell them no, and they went down the wrong road. And that happens all the time in this
business. So, that's a big lesson learned over the years.