Executive Corner: Doug French, Stylecraft Builders

Across the country, big builders such as D.R. Horton and LGI have been getting a lot of attention lately for thriving with business models that target first-time buyers amid a housing recovery driven mainly by move-up customers. But Stylecraft Builders is more than holding its own with entry-level clients in central Texas, having generated $75.4 million on 430 closings last year, up 41 percent and 23 percent, respectively, from 2013. The builder expects 2015 revenue to grow by 23 percent.

Q: What’s happening in your market, where first-time buyers accounted for 85 percent of Stylecraft’s closings last year?

A: That’s the product we build, and that’s the buyer we are going after. You can no longer get the $30,000 to $35,000 lot—or it’s very difficult to get now—and in some of our key markets we’re no longer able to deliver homes under $200,000, but in others we are. My dad’s philosophy [Randy French, president] is that we want to be more of a niche builder. We’re not going into neighborhoods and building the exact same product as every other builder. There are a lot of custom builders in our markets who do a really good job on delivering for the move-up buyer. But we saw big demand for the first-time buyer that wasn’t being met, and that’s primarily in Bryan and College Station. Then we took that business model across central Texas. You read a lot about student debt and how that hampers first-time homebuyers, but in most of our markets—Bryan, College Station, Huntsville, Brenham, Waco—we have a lot of college towns. College education is relatively affordable, especially at Texas A&M and Sam Houston. The kids going to those schools and staying around in those towns are not as burdened with debt.

My dad saw the niche. We design the lots, we design the product, we really went after it, and it’s been successful. We dress up our houses a little bit with strong elevations, granite countertops, and separate showers. A lot of stuff that people would consider an upgrade is standard in our product. That’s one way we are able to differentiate ourselves from the herd and the larger national builders in some of our other markets. We are a little more expensive than they are, but we try to sell value.

Q: Half your management team is younger than 40. What advantages or challenges does that present when running your company?

A: I am about to turn 32, but I probably look like I’m 25. I really enjoy the energy that they bring, and it’s one of those things ... when you don’t know any better, you’ll try anything. Our guys are really hardworking and they bring a good energy. One of the drawbacks is that most of our guys were hired right out of college or out of a different industry, so they have to learn from experience. Sometimes you have to learn things the hard way, which is through mistakes. We try to minimize those, but as with any maturing company, there are lessons to be learned. As long as we’re learning from our mistakes and progressing, that’s all we can ask. I think the pros outweigh the cons just from the energy that our young employees bring.

Q: As a young chief executive, how do you establish your credibility and authority with an older generation?

A: All my co-workers have been gracious and have taught me a lot. But it can be awkward. I worked in the warehouse for my father when I was 14 and 15 years old, and a lot of the same employees are still here. It used to be me working in the warehouse and then the warranty van, and now those same employees who were here then are reporting to me.

But it really has gone well. Everyone is humble and very gracious. I always took the attitude that the only way I’m going to gain respect is by going in there and working harder than anyone else because I looked at being the son [of the owner] as almost a con rather than a pro. Instead of having instant credibility, in my mind, I felt there was doubt. So I had to work that much harder and had to prove myself that much more. PB