Starting a company during the Great Recession taught Wellbuilt’s founders and partners the importance of operating lean.
By Jim Harris
Scott Lumby and Mitch Kidd admit that the timing of their decision to start their own company could have been better. The two established Wellbuilt Co. in 2008, shortly after the onset of the Great Recession.
Kidd, who had previously worked alongside Lumby at a high end residential construction company in Aspen, Colo., directly felt the effects of the downturn when the company was forced to lay off staff. This led to his moving to New York to work on a project on behalf of an acquaintance. “I thought the economy would turn around in two to three months and I would be back to my former position, but it didn’t,” he says.
Kidd’s work in New York eventually led him to re-establish contact with Lumby, who “was hanging on to his job by the skin of his teeth as he was finishing a 20,000-square-foot spec home” in Aspen, he says.
After forming Wellbuilt, the pair initially specialized in high-end residential projects, all the while remaining extremely mindful of the economic environment they were entering. “Starting a company during a down economy bred our way of doing business,” Kidd says. “We believe in running lean, not overextending ourselves and bringing down the overall costs of running the operation.
“Many people who have only operated during good times think things will go on that way forever, but when you’ve already been through a downturn and know the consequences of overextending yourself; you learn lessons.”
One lesson Wellbuilt learned during the recession was the value of diversification across different project types. The company is still involved in high-end residential developments, but also stays busy doing public and private sector commercial and office projects. “We’ve been able to expand and contract as we have more and less work,” Kidd says. “If we go through a downturn again I think we’ll be quite fine, as we’ve hedged our work across a few different markets.”
In addition to managing the construction of its own projects, Wellbuilt also works for outside development companies.
“We can go in either as a general contractor performing our own work or can work exclusively for developers in a construction management capacity,” Lumby says. “We’ve had good success managing other builders for developers because we’re in the market and we generally have a good understanding of unit pricing and what things should cost.”
The company has 10 employees operating in locations in New York City, Boston and Greenwich, Conn. Much of the construction work involved in its projects is contracted out, and the company hires out equipment rather than investing capital into its own fleet.
Lumby and Kidd are directly involved in all of the company’s projects. “The involvement of the principals have in our day-to-day operations with our site foremen truly sets us apart,” Lumby says. “We’re still heavily involved in our process and making sure things get done to our the high quality standards that our clients come to expect from us.”
The company regularly works with a tight-knit group of contractors, subcontractors, architects and consultants. “We maintain ongoing workflow with subcontractors and, particularly, with architects,” Lumby says. “Our business is largely dependent on referrals, so we need to maintain that relationship and reputation for high quality.
“For the most part, we like to go from job to job with at least a couple of people who know our culture and know that we don’t mess around much on projects – we just get in and get the job done.”
Wellbuilt is “getting the job done” on a number of commercial and residential developments in all three of its
geographic regions. The company has single-family homes under construction in Darien, Rowayton and Greenwich, all in Connecticut. The homes are 3,000 to 5,000 square feet in size.
Ongoing commercial sector projects include an office build-out for online investment service Betterment in New York City. “They are a big future customer for us,” Lumby says. “At their current rate of growth they’ll be out of that building within the next few years and go into something bigger.”
Wellbuilt’s Boston office is overseeing the historic preservation and renovation of a 11,000-square-foot Colonial-style house in Winchester, Mass. ”We acquired this house with the strong intention of preserving the history within these walls, other developers were looking at it to knock it down and get extra lots out of it,” Lumby says.
The house is the former home of James Gilbert Baker, an astronomer and developer of optics systems who is credited with inventing the lenses and cameras used on the U-2 spy plane during World War II.
Lumby sees further diversity and growth in the company’s future. “We’d like to continually diversify in different submarkets within the industry that make sense from a style and profitability standpoint and want to continually grow to the point where we can perform $40 million to $50 million in value of projects a year,” he says.