Category Archives: Business

The cutting room floor

A couple months ago, GuildQuality introduced a new service that helps homeowners or prospective homebuyers find a builder, remodeler, or home improvement contractor. Internally, we’ve been referring to it as Find.

This is a pretty big expansion from our core bread-and-butter service of customer surveying for contractors. Since 2003, the best contractors in North America have relied on our surveying to help them deliver great service. When we launched way back when, we focused solely on surveying homeowners and homebuyers on behalf of builders and remodelers. We quickly found that our information was useful to anyone interesting in learning more about the great companies we work with. So that led to us in 2004 to introduce company profile pages for our members. Over the years, we added more and more to those pages: pictures of work, social media integrations, public reviews. Etc. etc.

We realized that there were byproducts from serving our GuildQuality members that we could repurpose in new and valuable ways. We created member profile pages after we realized that we had a ton of feedback that, if repackaged, was really useful for the prospective clients of our members. We introduced reviews after we realized that we were already going to the effort of prompting a customer to share their feedback in our surveys, and we could easily give them the chance to share a review as well.

Now, years later, we find ourselves with tons and tons of great information from both homeowners and contractors from all over the United States and Canada. We have enough that we can now share powerful information about who’s doing what sort of work in which locations. If you’re in Seattle and need a new home or renovation, we can help. If you’re interested in finding a Charleston remodeler, we’ve got you covered. If you’d like to replace some windows in your Bethesda home, we know who you need to speak with.

We’re really excited about Find. Check it out, and don’t hesitate to share your feedback.

What are your byproducts? What assets are you developing that you’re not leveraging? What are the sorts of things that you’re leaving on the cutting room floor?

P.S. Here are some more ideas about using your byproducts from the folks at 37signals, circa 2009.

Skin in the game

When an employee of a small business acts maliciously or negligently while working on the business’ behalf, the business owner shoulders the responsibility and liability. While the owner enjoys personal liability protections via the veil of the LLC, the business loses it’s profits, pays damages, and suffers in all sorts of ways. In the shorter term that means sleepless nights and painful expenses for the business owner. In the longer term, the owner’s reputation, the business’ reputation, and the ability for the owner to earn a living is impaired. In extreme cases, their livelihood  might be destroyed.

This isn’t necessarily top-of-mind when business owners are considering new hires. Instead, they’re really thinking about all the great things a talented person can bring to the company. But in the back of their minds, they’re still asking themselves, “Might this person do anything really horrible that would jeopardize the strength of our business and/or my personal reputation?”

Nassim Taleb calls this attachment to outcomes “skin in the game.”

In the case of small businesses, the biggest beneficiary of the business’ success is generally the owner or owners, and those are usually the same folks who feel the most pain in the case of failures.

But if a high-ranking politician’s employees cause a bunch of innocent people to die, or if they single out a group for persecution, or if they wreak havoc on our environment through cronyism and misguided policy, then the worst outcome is they don’t get to ride on Air Force One for another term. The more likely outcome is the issue will go away after they deny responsibility or (if it’s too glaringly undeniable) promise to crack some skulls.

The small business owner doesn’t deny responsibility or promise to crack skulls. The small business owner says, “I’m sorry. Here’s how I screwed up. I won’t do it again. Please forgive me.” They do so because they have skin in the game, they are attached to the outcome, they feel personally responsible, and they act accordingly. Sometimes they handle it poorly. Sometimes they handle it well. Rarely do they avoid the consequences for a poorly handled mistake, and often they enjoy a reward for handling a difficult situation with aplomb.

But that’s not how it is everywhere. Wherever people benefit from socialized risk and privatized reward, you’ll see responsible agents avoid the risks associated with bad decisions and (even worse) benefit from immoral acts. It happens in government. It happens in finance. It happens to our environment. It happens with war. It happens in education. It happens in agriculture. It happens in health care. Even in small business, it can happen. It happens anywhere people don’t see it for what it is and prevent it from happening. And when the insidious dynamic finally weasels its way into a society, leaders must have the courage to root it out and eliminate it before it metastasizes.

Regulation favors big business

Goliath would have avoided this fate if the Philistines had successfully pushed through sling licensing legislation; the prohibition against underage sling use; and sling design review, permitting, and inspections for sling construction.

Megan McArdle‘s Daily Beast article on the internet sales tax reminded me of the following opinion piece I wrote for Remodeling a couple years ago:

Are you an advocate for greater regulation of the remodeling industry? If so, add your name to the list of business owners duped into arguing for more competitive advantages for giant companies, more sprawl, continued erosion of quality and craftsmanship, less professionalism, less competition, and less innovation.

I’m always surprised to hear small business owners take up the torch for increasing barriers to entry, tightening licensing requirements, and adding to the bureaucratic burden associated with building, improving, and maintaining homes. While many are simply out to limit their competition (understandable, if perhaps a little underhanded), the great majority of entrepreneurs who advocate for a more stringent regulatory environment have noble intentions: they seek to encourage sustainable building practices and protect the interests of clients. But before you accept that the annoying hassles associated with more regulation are worth it, consider the following few arguments.

There are always horrible unintended consequences. Take the example of the Environmental Protection Agency’s Renovation, Repair and Painting rule: It encourages people to leave older, walkable, in-town neighborhoods in favor of newer, car-dependent, suburban homes. This not only accelerates the rate at which we consume undeveloped land, but it will likely end up killing more people in auto accidents than it will save from lead poisoning.

One’s ability to pass a test has no correlation with one’s ability to serve a customer. The top complaints of remodeling clients (in states both with and without licensing) are service-related, and not measured by a licensing test or a building inspector: things like miscommunication, failure to show up, failure to complete the project on time, messy job sites, and dishonesty. Even worse than being a useless measure, regulatory credentialing confuses customers by bequeathing a stamp of approval on someone who may have done nothing more than pass a test or follow a prescribed process. It elevates the unqualified contractor to the same level as the most qualified contractor.

Regulation is corporatism masquerading as consumer advocacy. This is why large companies — who almost always struggle to innovate — favor regulated markets. Case in point: I recently listened to an analyst present his thoughts on which regions hold the greatest opportunity for the nation’s largest construction and real estate companies. “Look for markets with especially stringent regulatory requirements,” he counseled, “because that’s where you’ll have the least amount of competition from small businesses and new businesses.”

And what’s going on in the least regulated segment of our economy? Not surprisingly, our technology sector attracts our brightest entrepreneurs and remains one of the few areas where we outperform the rest of the world in the quality of our services and our pace of innovation.

So the next time you hear someone say our industry needs more restrictive licensing or more prescriptive building regulations, remember that they might as well be saying that the nation’s largest homebuilders need more protections against nimble competitors, that future entrepreneurs should enter different industries, that small-businesses need more challenges, and that customers need to pay more for less.