BuildDirect: A Case Study in Perseverance

Entrepreneurs in technology need to be a lot of things to be successful. They need to be nimble and aware, as technology markets move very quickly. They need to have a high tolerance for ambiguity, which is a fancy way of saying, “If you like to be told what to do and then do it, this job is not for you.” But most of all, they have to be a little naive, a little crazy and have conviction and perseverance.

This month I want to focus on perseverance. And since it’s June – the annual tech-awards season – I want to hand out my all-time perseverance award. I will name it the Weeble Award (those of us from the ’70s know that “Weebles wobble, but they don’t fall down”). Across all B.C. technology companies, the Weeble Award goes to Jeff Booth, Rob Banks and their team at BuildDirect.com Technologies Inc. They deserve our attention and admiration here in Tech Talk for surviving and thriving despite having their company run into the biggest headwinds possible.

Jeff and Rob have all of the traits required to be successful, but might have started with an extra dose of naïveté in 1999, when they conceived BuildDirect, based on their frustration with the fragmented, unreliable supply chain for home-building products, such as flooring. From the beginning, they had a vision of connecting the thousands of manufacturers of building products directly with the do-it-yourself or do-it-for-me end consumer. Thirteen long years later, in the flooring categories they are currently in, they have succeeded in trimming all the fat from the supply chain, thereby offering incredible value for end consumers and their contractors. And the manufacturers love them for their value pricing.

Let’s get back to the perseverance part. As they were building the original technology (sophisticated shipping software for heavy and bulky goods that FedEx and UPS won’t ship) and web store in 2000 and 2001, the dot-com bubble burst, leaving a nuclear winter for capital raising for companies like BuildDirect. They survived by raising money from angels while VCs hid under their desks. They launched in 2002 and behold, the U.S. had a housing boom. Things were very good through 2006 and sales went to the tens of millions. Then, whammo: the worst housing crisis since the Great Depression, which easily could have put BuildDirect out of business. But Jeff and his team kept grinding. And thinking. And examining the incredible amount of data that they generated on the website by offering free samples, keeping shipping costs separate from product costs and keeping excellent analytics.

In late 2009, Jeff had an epiphany after looking at the data. The original vision of the direct manufacturer-to-consumer relationship was still intact, but he went to the manufacturers and said, “Give me your inventory on consignment.” The idea seemed crazy: at the tail end of the worst of all possible times for home-building suppliers, they wanted suppliers to give BuildDirect their inventory, and BuildDirect wouldn’t pay them until the inventory sold on BuildDirect’s website. In effect, BuildDirect was asking manufacturers to fund its working capital.

The clean data from people ordering and then seeing their shipping costs gave BuildDirect a predictive engine that it used to partner with the manufacturers. It literally tells manufacturers how much product to supply, and where to put it in BuildDirect’s eight distribution centres across North America. The demand is there in the data, visible in real time. And the result has been spectacular: nearly 50-per-cent annual sales growth since 2009.

This company, in the category of e-commerce supply chain for housing products, might be singularly unique for being beaten down by the two worst crises to hit any industry in the past 80 years and not just surviving, but thriving. Jeff, Rob and the rest of the team, congratulations! I present you a Weeble Award. (I bought it on eBay.)