Built on Happiness: Meet Pro Builder's 2023 Builder of the Year

He’s happy because a member of his team gave a shout-out (“kudos,” as they’re known internally) to another staff member for helping a customer use an electric-vehicle charger in the company’s parking lot.

He’s happy because 20 years ago he left a lucrative career as a hedge fund manager to start a construction company in Rehoboth Beach, Del., with the sole, unwavering mission of putting happiness at the core of the business (see Finding Happiness).

Such is the story of Schell Brothers, our 2023 Builder of the Year. By all conventional measures, the luxury production home builder is the epitome of financial success: a projected $455 million in home building revenue in 2023 against 525 closings across three divisions, destined for a top-75 rank in Pro Builder’s annual Housing Giants list.

But Chris doesn’t really care about any of that. In fact, he considers financial success to be a pleasant outcome of finding, nurturing, and inspiring happiness in his team of 276 employees and their families, and for Schell’s customers, trade partners, affiliates, and the communities the builder serves.

Happiness at Schell Brothers isn’t just a lofty mission statement, it’s a real strategy that’s put into action all day, every day. “I don’t think most people really buy into our culture until they experience it on a personal level,” Chris says.

And once that happens, whether it’s through packaging and delivering food to local families during the pandemic, seeing a child’s face light up in Schellville, laughing until it hurts at one of the company’s events, or creating “ecstatic customers” (ECs), among countless other examples of happiness in action, “They buy into it because it’s a more fulfilling and happier way to work,” Chris says. “It becomes a sort of self-reinforcing system.”

More About Schell Brothers

John “JD” DiStefano carries that flag to the field as one of the company’s two production managers in Delaware. His job is to oversee construction, but DiStefano’s true vocation is to support his team (including trade partners), while exemplifying Schell’s customer-first approach and continuing to learn and improve. “I’m here for them because that’s just who we are,” he says. “I always strive to be better, or to make the team or the company better.”

His crew of senior and junior construction managers, plus an in-house construction quality-assurance team, notice and appreciate the difference from their past experiences with other builders—a mercenary environment where construction managers hop from builder to builder to maximize earning potential and run their communities like fiefdoms.

“I’d been building houses for 20 years for other builders and I barely knew my coworkers,” says senior construction manager Mike Honeysett. “Here, these are some of my best friends. We go on vacations together, hang out on the weekends, and grab a beer after work. That just doesn’t exist elsewhere in our world.”

That camaraderie and communication occurs in and across departments at Schell. In fact, it’s vital to the builder’s goal of earning ECs. A good example is Schell’s extensive use of “Getting to Know You” notes from the sales team, which are logged in Heartbeat, the builder’s proprietary software platform (see The Pulse of Schell). These notes give the design team vital insights into buyers who are coming in to finish making selections for their new homes and through construction, orientation, and warranty.

Designer Matty Adler recalls one instance when a note was particularly helpful in preparing for a client who was concerned about pricing. “He came in pretty hot right off the bat,” Matty says. “But after he left that day, he bought a second house across the street from his for his parents.”

But camaraderie isn’t only reserved for the workday; it also is nurtured through a range of events that are all about fun and family, and it extends into community volunteer opportunities for Schell associates to bring happiness to a wider audience.

Schell’s Project Kudos began as an internal gratitude forum expressed on Heartbeat as well as in company meetings and at company events. It has since expanded to include the public. At many community events, anyone can write a shout-out on a Kudos-branded sticky note and paste it to the side of the Project Kudos bus, or take a photo within a Kudos-branded frame.

Other outreach opportunities include participation in canned food drives and, during the COVID pandemic, purchasing, boxing, and delivering food staples to hundreds of families in need, which Schell employees did for months.

Schellville (see photo, below) is another example. Initially just a half-dozen tiny, Christmas-themed homes built by Schell for a larger holiday charitable event, it is now a Schell-branded village and theme park that draws tens of thousands of visitors to its annual Enchanted Winter Celebration and other seasonal events, with all proceeds going to local charities.

“It’s so nice to be part of something so much bigger than just building homes,” says sales consultant Alli Perry, herself the beneficiary of Schell’s kindness. A month into her tenure at the company, Alli’s rental apartment flooded (which Schell’s warranty department fixed without hesitation). And when she was in a car accident, the company paid for her to get medical attention before her insurance benefits were activated. “I’ve had that level of care since day one, and it’s unreal,” she says.

But that’s in Delaware, where happiness is deeply rooted. As the company expanded to Richmond, Va., in 2017 and to Nashville, Tenn., in 2021—largely to provide more career advancement opportunities that would help the company retain rising-star employees—the home team faced the challenge of successfully transferring, translating, and embedding Schell’s mission and culture beyond the beach.

After some early stumbles in Virginia, which resulted in a change in management, the happiness mission gained traction through action. “When I present the challenges we face to Chris and the leadership team, there’s no second-guessing my decisions,” says Virginia division manager Tricia Smith. “It’s more like collaborative problem-solving. That’s where it first started to translate for me.”

Lessons learned in Richmond were then applied to Nashville as that operation ramped up. But while Tricia and Nashville division manager Jon Beaver were allowed to refine their approaches to best suit their respective markets, sacrificing Schell’s core culture was never an option. “As we’ve continued to grow, we’ve been very cognizant of preserving the impact of our mission,” says Schell’s corporate sales director Jamie Hastings. “We can’t lose the ability for everyone to feel like they matter.”

Operating Outside the Norm

Mike Honeysett is happy, but not because he browbeat a trade partner for a back-charge or pulled rank to get a crew from another community to meet a deadline on his job. He’s happy because he works for a builder where those things simply don’t happen, where construction managers not only talk to one another but also communicate with their colleagues in design, sales, IT, warranty … and even with customers.

“It’s different here because we all work together,” Mike says, “whereas with other builders, everybody’s out for themselves and nobody’s trying to help the other guy find what they need for their houses.”

For 20 years, Schell Brothers has made a successful business of operating outside the status quo of its chosen industry—collaborating with competitors, hiring people based on character rather than industry knowledge, enabling buyers to personalize their homes to an extreme, building brand awareness over product marketing, and promising employees they would keep their jobs no matter what just two days into pandemic lockdown, to name a few.

“A lot of what we do is different because we sincerely put people’s happiness ahead of profits,” says Chris, whose natural risk-aversion rarely overrides doing what’s right—usually regardless of cost. “We go into everything being extremely optimistic, so we end up doing what’s needed to make things happen instead of waiting for things to get better.”

“A lot of what we do is different because we sincerely put people’s happiness ahead of profits.” —Chris Schell, co-founder and CEO, Schell Brothers

Such was the case in 2007-08. Still in its relative infancy and a far cry from the top tier of production builders in the Delaware beaches market, Schell Brothers watched other builders in its market duck and cover to ride out the recession. “All the big guys were slashing prices to survive, and we knew we couldn’t compete head-to-head with that, nor did we really want to,” recalls Jamie, who had left a national public builder to join Schell.

Convinced there had to be buyers who wanted and could afford Schell’s niche of higher-end, higher-priced production homes, the builder went against the industry tide. “Our thinking was, it may be a smaller market, but let’s capitalize on it,” she says. That strategy also enabled Schell to hone and prove its extreme personalization approach to production housing by betting on an untapped void between option-strained production and truly custom home building experiences.

As a result, Schell emerged from the recession with greater market share, an enhanced reputation, and a wealth of land holdings that further boosted its presence in and around Rehoboth Beach.

Going against the grain applies to hiring practices, too. Chris is legendary for dismissing someone’s lack of home building experience in favor of their character, smarts, sense of humor, and willingness to shed old habits and embrace a culture of collaboration, community service, and, above all, happiness. “I walked into my interview with a tie on and my résumé in hand,” recalls Dan Matta, now the company’s director of warranty. He’d left a teaching career to join a lifeguarding buddy in a startup building business to which neither brought any construction skills or knowledge. “The first thing Chris said was, ‘Dude, lose the tie,’” Dan says. “Then he took my résumé, crumpled it up, and threw it away.” Chris hired him on the spot.

Hiring Jon Beaver to run Schell’s operation in Nashville was less dramatic, but it further underscored the company’s hiring custom of prioritizing cultural fit. A VP of global engineering for Eaton, a multinational, $20 billion power-management company, Jon discovered an appreciation for a less-hectic work life during COVID and reached out to Chris, his Massachusetts Institute of Technology fraternity brother, to see if there were any opportunities to join him at Schell.

Chris not only brought Jon on as a division manager but entrusted him to pick Schell’s newest market—but only after Jon moved his family to Delaware for 10 months to live and breathe Schell’s culture and learn its systems.

In addition to the builder’s commitment to happiness, Jon was impressed by Heartbeat. “The tools and software they had with Heartbeat were better than what we had at Eaton in a lot of ways,” he says. “I thought, ‘Hey, they have some stuff figured out, so I won’t be starting from scratch.’”

While Jon guides the Nashville division to eat up 700 build-ready lots and boost production to two starts per week by the end of next year, Tricia’s team in Richmond is gaining a deeper foothold in that market. Her division will close 76 homes this year, making it into the top 10 of a highly competitive market while selling at a price point roughly $150,000 higher than the next-largest builder—a Schell pricing trademark. “Next year, I think we’ll be pushing over 100 closings, maybe 125,” she says.

And while Schell’s contrarian bent has caused a few hiccups, there really isn’t any other way the company wants to operate. “We’re confident in who and what we are,” Jamie says. “The biggest thing is to make sure our culture always will be what makes us unique and propels absolutely everything else.”

And that makes Chris Schell happy.