Ep 24 — Jordan Madewell: Developer-Focused GC, Franchise Buildouts & Take Five Ownership

SPEAKER_00:Okay. Ladies and gentlemen, welcome back to another episode of American Builders. Today I'm joined by Jordan Madewell of Madewell Construction. Jordan, thanks for coming on. Thanks for having me, Garrett. So, Jordan, you are the president of Madewell Construction. Uh, not a s not a big surprise given it's uh your last name. But let's start with you know the background, like we always start pretty much every episode. Just walk us through a little bit of your career and how you eventually made your way into the construction world.

SPEAKER_01:Uh my career, I started in college working in the insurance financial services business. And I did that for uh just under five years. Um got out of that business, uh, got into building material sales, uh, account manager sales with windows and doors, and then I've worked for concrete and fencing companies, and I've worked for uh kind of backyard um patio, uh outdoor kitchen, that type of stuff. So uh started doing that and then and then uh over the time started doing it on my own on the weekends and and evenings for uh for myself and uh built that uh little side uh business up enough to make the jump and start doing it full time and in 2014 and did that for a little while, just just doing backyard work, just doing little small light remodels, and they just kept growing. And we sold a ton of work in the first couple of years of doing that and started getting opportunities to do commercial

SPEAKER_01:construction, and so that's really where uh my general contracting took off is is in about late 2015 into 2016. Uh we started doing new construction, uh, we did homes and we did uh commercial work. And so uh that's how I got into the construction business uh way back when. And then I've been around it my whole life. My father and grandfather were career contractors. So it's been something I've been, it's been very natural, very, very comfortable for me my whole career.

SPEAKER_00:So and so it sounds like you were kind of self-performing a lot of the work uh at the start of your career, and then the jump into commercial was it kind of like a necessity almost to become a general contractor where it's like, okay, now you know there I've got a bunch of of work contracted out that I can't perform myself. It's now time to start subbing some of this out. Is that kind of the progression that it took or no?

SPEAKER_01:No. Um I have always been really good at relationships and uh developed a lot of really great relationships when I was uh just selling those services for different companies. And so uh a lot of the guys that worked for us at the time or that were subcontractors of those companies um just did maintain friendships with them. And and when I started out on my own, made reconnected with them, and they said, Yeah, anytime you need help, call me. And so, no, from very early on, I was doing uh general work. It was just in a residential application. Um, but no, I've always I've always been pretty good at the administrative side, the sales side, the um the kind of putting deals together, putting, putting projects together, um kind of directing traffic, if you will. But right um uh but no, I've been doing that my whole career.

And we just kind of kept growing it and kept working for different clients

SPEAKER_01:and and building different relationships. And uh that's a lot of what led us into allowing us to level up and do larger projects, different kinds of projects, and then uh ultimately leaping into to commercial construction.

SPEAKER_00:What was that that first commercial job out of curiosity? Just like, you know, what did that look like and what was the transition phase like? Because you're going from residential where you know things are fairly standardized. Recording in progress. Okay. Uh was there a pretty big jump into you know, in terms of how you did how you were operating? What did that transition look like?

SPEAKER_01:Um, I'll explain that two ways. The first thing that was probably big for us is we uh I kind of made that that transition somewhat gradually. Um we went from res very residential homes, that type of stuff, to to uh apartments and multifamily and doing a lot of work on uh remodeling and gutting and renovating some old apartments. Um and then uh reconnected with a couple of friends of mine that are commercial general contractors, and they had bought uh an apartment complex and had hired me to come in and kind of complete the last 25 or 30 percent of it. And um they kind of we were just eating lunch one day and he's he said to me, like, hey, if you can do this, you can do commercial, you can you can do retail work, you can do automotive work, whatever it is. And so it was his encouragement and his kind of guidance a little bit of just I'm like, okay, well, what do I need to do?

And and so he

SPEAKER_01:kind of told me a few things like I needed to, you know, kind of replace myself. I couldn't be on the job all day long. Um, I needed to to find some people to do that. And then he told me to hire uh kind of an estimator slash project manager and just for that guy to help uh me get projects budgeted and estimated and then help help run them as well so I can kind of run the company, uh, so I can go get more sales, uh, so I can meet with clients, kind of do that stuff. And so I kind of did those two things simultaneously. I kept doing work on apartment complexes, I kept doing um subcontract work, even though I was just a general uh for this other GC. Uh, and then I kept uh we kind of started hiring those those people, key people slowly, and and um and that allowed me to go after commercial work just in general.

And so I would now that I had those pieces in place, I started soliciting commercial

SPEAKER_01:work more actively.

SPEAKER_00:And what does the split look like today in terms of commercial versus residential?

SPEAKER_01:We've gone all the way. Um so I'm probably 90 to 95 percent uh commercial construction.

SPEAKER_00:And you know, looking back on you've had time in residential, now you're fully focused on commercial, you just kind of help me, you know, weigh the pros and cons of it. You know, what I guess what was the decision or the reason behind the decision to go all in on commercial? And you know, if you have advice to somebody who's in a similar situation where they were exactly where you were, they've been doing residential, what would that advice look like?

SPEAKER_01:Um, I went after commercial. I just um I liked the the bigger projects, uh, you know, kind of the old make more money doing the same work. Um, so that appealed to me. Um, I liked that commercial construction is much more contract-based. And so the problem, uh, one of the one of the many negatives of uh residential work is you it's very subject to the homeowner. And the homeowner has either unrealistic expectations or thinks that they can change things without having to pay extra for it. Um, and it just becomes this this back and forth all the time because they feel like they don't have to, you know, set to the same standard when you originally first set the contract. Commercial construction, it's on the plan, you have to build it.

If it's not on the plan or in some kind of project manual or or or um mapped out for you and you sign a contract on it, then then you don't have to do it or you

SPEAKER_01:get paid extra for it. And so I just that appealed to me. It's just much more cleaner, less emotional way uh to do do the business we're in.

SPEAKER_00:So that that's you know, probably one of the big uh catalysts of why, and then just getting to do different things and then getting to do it in different markets and then getting to do it in different states, and so and that kind of leads into the next topic I want to get into, which is your guys's sort of developer focus. You know, if you go to your website, it's one of the main staples you have, it's a developer-focused GC. Talk to that a little bit, you know. I guess in your eyes, what does that mean to be developer focused? What are the what are the attributes of a developer-focused GC?

SPEAKER_01:A couple things with that. Um, the first thing is we a lot of our businesses repeat business through same or similar relationships. And so we feel like we have a really good understanding of what our client is trying to do. We don't often we don't work directly for the tenant or the corporation we're ultimately building for. We work for an intermediary, like a real estate investor or a developer, like a capital partner, like a private equity company, whomever it is. But um, those people uh while they have some understanding of construction or some construction experience, that's not the business they're in today. They're in the business of uh doing a lease, renting to that client, that that corporation, and then either keeping that for long-term rental income or selling it on the open market to another investor. And so they want somebody who understands that.

They want somebody who understands

SPEAKER_01:that a lot of these contracts have timelines and and penalties uh enforced on if you don't hit the timelines. So they just need people who understand how to build quickly. They they need to understand how to build things similarly, no matter if it's in one city or another city that's 500 miles away. And so I think we understand that really well. And then um one of the one of our advantages or or I think that makes us able to do that really well is we've got a lot of trade partners that follow us around or understand what we're trying to do. And so we we try to not reinvent the wheel.

SPEAKER_00:Yeah, I think one thing you mentioned there about building the same thing in different states hits on something we're gonna talk about, which is this franchise model where you're building four franchises. So we'll get on get to that in a little bit. But before we move on, I just want to touch on the fact that you know my previous question was residential versus commercial. Why go why choose to go into one versus the other? And just based on your answer there, it's like a homeowner, they're building a home once every 15, 20 years, whereas a developer, their sole job is to continue to build. And so it's like you have a recurring revenue model, if you will, once you build out those relationships.

SPEAKER_01:Yeah. Yeah. And there are some there are some pros to doing residential work, and and a lot of times you get paid much quickly, much more quickly than commercial work. Uh, a lot of times, uh, if you're having to kind of almost self-finance projects, they're a lot easier to do that. Uh, a lot of times they're less trades involved, uh, maybe than commercial construction. So there's pros and cons to both. Um and and to this day, I still like residential construction. I just uh make our living doing the other thing.

SPEAKER_00:Exactly. Let's talk about one of the other things that's kind of front and center on your website, which is this the idea of having the dependable budget, right? As again, for a developer-focused GC, having that dependable budget is key. How do you think about that, especially in a world where the prices of everything are constantly swinging up and down? What's your guys' approach been for you know setting a budget at the start and sticking to it?

SPEAKER_01:Uh, we have a couple of ways we do that. Um, the first thing is we typically are trying to solicit the same type of work we've done dozens of times. So we kind of know what to expect. Um, the second thing is we try to use uh subcontractors and suppliers that we can rely on across multiple markets. So we kind of know them, we know how they work, we know what it takes to get uh the deals done with them, uh, and and we can rely on their pricing uh historically. And so that helps us turn in pretty accurate bidding. We we try not to buy, uh work with guys that you know maybe they're cheap up front, but then they change order you to death. Um so just working with trade partners we know, like, and trust, I think has gone a long way for us. Um we have an estimating uh group of we got two guys that do that full time and then a couple of other team members that that assist with it.

And so just folks

SPEAKER_01:looking at those budgets all day long, they kind of know what to expect for electrical in one uh type of project, no matter where it is. And so just allows us to call out if something looks super odd or super out there. Um it also allows us to do some value engineering that keeps the budgets in in line that our clients have expectations for. Um, so I think those are big ones. We're starting to implement a little bit of the use of AI, um just to save us some time, but also just to help us uh do our own material takeoffs more if we need to buy the materials and just hire a sub for labor. So that allows us to control some costs. And uh we've got two or three pieces of software that we use to kind of help uh itemize every little part and piece that goes on a project. And so I don't know. Uh I think those things help a lot.

And then the history of just us having built the same types of projects

SPEAKER_01:over and over give us a really good understanding of what it should take, how long it should take, and how much it should take.

SPEAKER_00:It's a very, very clear answer there. It's like you've got, okay, if I've done this a million times, I'm gonna know what to expect. You partner that with you know, trade partners who have done it a million times, that's gonna create some dependability. And then you stack that on with you know software and AI tools that can help you on that end of things. Um, so that's great advice there. I mean, while we're on this topic, what are those like what has the AI experience been like for you? It's obviously a buzzword in every single industry, but what's your you know experience been with it? Anything working, anything not working?

SPEAKER_01:Uh we're still new. Uh the things we've been doing on the estimating side of our business is some software that you can template what you're doing when you do a takeoff. You can uh put in some rules and parameters. So basically, you do thing you do something once on that plan or project, and then it'll it'll um transpose to the rest of the plans on the rest of the of the project. And so that just saves you hours. Um you can identify something on the plan as something specific, and then now it'll it'll quantify that on every single page instead of you having to go do that. So that's those are just really big time savers on the estimating side. Um the project, we're starting to we're starting to look look at um some AI uh tools where you can put your construction schedules in there.

And it'll one, it'll help you see opportunities to shrink in your schedule so you can go faster or make up time

SPEAKER_01:when you have rain delays. Um we're starting to see um I my team, not myself, I'm still learning this, but uh one of the cool things is it'll it'll kind of help you more clearly see your critical path items, where if I don't get this done by this date, it delays the project or I'm behind on this. So just kind of helping be a another set of eyes. Um, and then we're trying to use it with some contract and subcontract agreements just to make them a little cleaner and and quicker to turn around and and protect us and be fair to the the to the uh subcontractor. So we're still in the early stages, but those are three or four of the things we're we're trying to play with in real time.

SPEAKER_00:Yeah. I mean, I think the biggest thing with AI, obviously, you know, our company uses it in multiple different facets. But like you said, the biggest thing is just trying um and not being a company that is stuck in your ways. And everybody's is new with AI, right? And you're gonna try things, you're gonna fail. But the biggest thing is experimenting, and you know, you'll figure out pretty quickly which ones actually make an impact. Um, so that's that's great there. Let's talk specifically now about the kind of franchise build-outs. That's a specific niche to dive into. Walk me through, let's just start with the first one you did. How did that come about? Um, and then just kind of walk me through what it was like to realize, oh, this is a very repeatable process that if we get really good at, we can grow pretty quickly.

SPEAKER_01:Um, so on the construction side, we just we were looking for more opportunities and clients uh that like our real estate developer clients, they need to build something constantly. These corporations that that are franchising their businesses, that is the name of the game with those people. Get more uh locations open, get more uh built out in this territory or market. And so uh, like we were seeing in the real estate developer uh world, these franchisees all have uh development and construction managers internally, and they assist their franchisees in the construction. So we just started trying to connect and contact several of those we thought would be a good fit. And so that's how we kind of got into that market, built several for them, had a great relationship with them, and that's ultimately what kind of persuaded and and uh interested us in becoming a franchisee as well.

SPEAKER_00:So that is is that the strategy you kind of go for in terms of, you know, if I'm a GC looking at the market, I'm like, how do I get into this? You you go to the franchise or sort of the top of the pyramid and kind of get plugged in with them, and then they'll distribute you out to the franchisees. Is that the route that you would suggest taking?

SPEAKER_01:It that is what I did. I would actually recommend the opposite. Uh I would actually rec because the franchisees largely still have input or decision-making control over who they hire to build for them. I would start trying to find out who that franchisee is in your market and and get in with them or let them recommend you uh as a as a builder. Um, I think that would probably be bear somebody a lot more fruit than the way I was doing it. Um, but yeah, that uh that's what I would do, and that's how I would do it. Uh, I think that would that would get somebody another project much faster than the way I did it.

SPEAKER_00:So that's good to know. Great insight there. Um, you know, we've kind of talked a little bit about it, but you've got the repeatability aspect. Is there anything else that you can think of just in terms of of benefits and maybe even talk if there is a few uh cons, but just the pros and cons of working specifically on this franchise model. So if there's somebody, like I said, who's looking to get into it, you know, what what can they think about in their head on how to evaluate the opportunity?

SPEAKER_01:On the construction side or on the franchise side?

SPEAKER_00:On the on the construction side. We'll get into, you know, for those listening, Jordan did eventually become a franchisee. So we'll talk about that. But right now let's focus on the the specific construction aspect.

SPEAKER_01:I think, I think um again, it just came down to we are a volume-based general contractor. So I'm not doing I'm not doing design build a lot. We we do some of it, but we don't do that a lot. We do kind of street bid, hard-bid, competitive, trying to compete type of projects. And we're trying to do that across multiple states, and we're trying to do, you know, 25 to 35 of those a year. And so I'm making my money on the volume, I'm not making it on the margin uh as much as other GCs might. And so that was really the driving force for us is we needed more clients that were trying to build 50 to 100 locations a year, and we needed to get in in the middle of that.

SPEAKER_00:Absolutely. So now let's dive into the story of of when you decided to become a franchisee. Um, you know, talked specifically to which franchise that is and the story behind that.

SPEAKER_01:So um we were building for Take Five oil change and just had a really good experience with those folks over there and really liked them and hit it off. And and so after we'd built a dozen or so of them, um just some conversations led to uh them saying, Hey, would you guys ever be interested in purchasing a territory? And and we thought, you know, that that appeals to us because as most of you all know, like once you finish your project, your income stream stops. And so having something with recurring revenue every day, people coming in for something they need to have, uh, appealed to us. And and so We we thought it was uh good. We thought it was a simple enough business model. We didn't have to learn a new uh expertise or or hire somebody with an expertise. It was it was oil changes. And so while those can be technical in nature, the path to understand that is simple.

And uh and so I liked

SPEAKER_01:a simple business model. The margins were attractive, um the barriers of entry was was fairly low. So we we that's why we ended up pursuing that.

SPEAKER_00:And what did that process look like in terms of the logistics? Like what is you know the process from okay, yeah, I'm gonna do this, I'm gonna start a franchise to your operating and some of the the learning curves that came throughout that.

SPEAKER_01:Um couple of the things we you know we we had to we had to build and develop our our own real estate for it. Uh that's not always the case, but that's what we we do do and did. And um, so the just the logistics of getting those going. Uh you have to have uh the capital to do all that. And so that can be very intensive for people, or you end up getting a uh you know, a financial partner, and they help uh make that easier for you. So those are kind of the two primary ways we see people getting into it. Operationally, we um we just kind of kept it with like, hey, don't reinvent the wheel again, like I mentioned earlier. And so I hired um a man a store manager from the corporate side from a just another location. And I thought, while I'm learning the business side of it, she can be running the store and she can be hiring the team members and she can be training them, and I'm not having to uh

SPEAKER_01:have that kind of learning curve. I can I can start with her already having all that expertise while I'm learning. And so that's what we did. Otherwise, you have to hire brand new and you have to send them to oil change school and teach them, you know. But we just felt we just felt like that would be the wise thing to do is to hire somebody that already has all that uh under their belt and and kind of make that quicker for us. So that's what we did operationally. And today we uh one one one of our team members or or myself or somebody else uh every uh one to two months goes and sees our locations in person. And then we still do weekly Zoom calls with our store managers, and then we get all the financial reporting comes back through our corporate office anyway. So that's a lot of how we manage the operations side.

SPEAKER_00:And so what was the expansion like? So you started with one store. Where are you at now? And then how kind of quickly did you expand?

SPEAKER_01:Uh we had to purchase a territory of a minimum of eight. Okay. And we have two under construction. Uh, and then we're about to acquire two more. So we're kind of well on our way to finishing out our our required amount for our territory. Um and they just they give you a certain amount of time to uh complete that. And uh once that's done, then then you're kind of up and running, and you just you run your business and you pay your royalties and you, you know, collect uh, you know, pay your people and make a little money in the in the meantime. So that that's kind of been the you know the quick and short of it, and and that's kind of how we've done it.

SPEAKER_00:Very nice and positive experience so far.

SPEAKER_01:Overall, it's been a it's been a great learning experience and it's been a rewarding experience. So we're we're glad we've done it. Uh, wish it was a little closer to Lubbock, uh, where where I live, uh, but the people we've met and and come across in the time is it's been really rewarding and and gratifying.

SPEAKER_00:So that's fantastic. Last thing we'll touch on um before we wrap up is just, you know, you mentioned far away from Lubbock, you've got projects in multiple different states. You know, what has that operation been like going and expanding? I think you're in 13 or 15 different states. It depends on where you're right across all the different projects. You know, what does that look like? And I guess the the first specific question you mentioned you've got the same sort of trade partners that you've been working with. How do you maintain that trade partner network as you're expanding into new geographies?

SPEAKER_01:Um a couple ways. So the way we do it is is multifaceted. The first thing is I have a guy that works for me, and he, if we do a job in Phoenix, that guy travels to Phoenix and he lives there for the duration of the project. Uh, you know, and if that job ends and I have another one in Dallas, he picks up and he moves there. And so I have about 10 of those guys at any given time that work for us, and they uh work for me and they're our site superintendent, and that's all they do. The the second side to that is is most of our projects we have uh uh job site camera. So I have a feed on most of my projects at any given time so I can see them. Um third, inside our office, the project manager or the assistant project manager on that job, uh, they make usually every four to six weeks, um they make a site visit and so they go see the site in person.

Usually it's tied to a couple of milestones on the

SPEAKER_01:job, like trying to pour a slab, trying to dry the building in, maybe setting the HVAC units, or maybe on the completion of the project, but they're they're hitting that job site multiple times throughout the six or eight month uh duration, depending on what we're building. Um and then and then the we're we're having weekly uh communication with our clients. So we're we're usually it's usually an email and some photos and a narrative of what we're doing and an update to our construction schedule, all the way to we have Zoom calls or just conference calls with those clients um just to keep them up to date and what they're doing. And then we have our own internal project meetings where our project managers have to kind of report on what's going on or what they're having trouble with or what's going well. So that's kind of how we manage a lot of that.

Uh, the other side to it is um we try to

SPEAKER_01:hire the same group over and over if they meet the price and they can provide the work uh capable or they have enough manpower. And so, you know, it's not just the low bid, it's it's the lowest qualified bid. And that's once we find some partners that really do those things well, we try to rehire them over and over. And that just that makes our work more predictable. Uh, that makes our uh financial end a little more predictable, and and it just allows us to go into different markets. Uh, I can bring guys with me, or I've worked in those areas before and I'll I'll just hire the same guys again.

SPEAKER_00:Very nice, very operationalized, and I think that's probably kind of been the key to to the overall growth into these states is you know, building a system that scales as you scale. Yep. Well, this has been great. Appreciate you coming on. Um, you know, where can people find you? Whether it's trade partners looking to work with you, clients looking to build, um, you know, where can they find you and and who do you want to reach out?

SPEAKER_01:Um, you can find me on our website. I'm very active on LinkedIn. Um I'm also I've also got um, you know, um, we've got a uh I don't know what it's called, a portal. Sorry. A portal if you want to, if you want to subcontract to us or be a supplier for us on our website. So you can you can put your information in and one of my team will reach out to you. Um you can you can call our offices, our our phone numbers are all over our stuff. So you can call our offices. Uh if a client uh or a customer you know has an interest in us helping them, uh please reach out uh and and I'll contact or one of my other business development team members will will uh uh contact them directly. Uh but yeah, we're otherwise we're pretty easy to get a hold of. And like I said, we're we're all over the the southern United States, but um we build all over the place.

So uh but yeah, appreciate uh you having me on today,

SPEAKER_01:and I hope uh this was valuable to you and your audience.

SPEAKER_00:Absolutely. Thanks so much, appreciate it, Jordan.

SPEAKER_01:You bet.