Thursday, April 7, 2011
Interview with Todd Jerry, Marmol Radziner
Story by Benjamin F. Kuo
Many local entrepreneurs might know Todd Jerry, formerly a venture capitalist at Anthem Venture Partners. Todd is now Chief Operating Officer of Marmol Radziner (www.marmol-radziner.com), an architecture and construction company, which recently installed a eco-friendly mobile home park project in Santa Monica which was focused on applying clean and eco-friendly technologies to the pre-fab building market. Todd has a unique view, having worked both on the venture and high technology investing side at Anthem, as well as the architecture and construction industry now. The prefab building area has seen some recent venture capital interest, most recently with Blu Homes in Boston, which just scored some new venture capital. We thought we'd learn a bit more about the practical barriers in taking many eco-friendly technology innovations into the market, plus the contrast between the construction and architecture business and the high tech investing world..
First, explain what your company is all about?
Todd Jerry: Marmol Radziner is a leading architecture and construction company. It's been around for about 20 years. We were established in 1989. We're unique in that we are a design and build firm, we do both architecture as well as construction. We're somewhat vertically integrated. We've got a range of services – from architecture, landscape design, and interior design to the construction side as a general contractor. Within that have own custom cabinet shop, our own metal shop, make our own furniture, and as an offshoot of that, started exploring developing modular, prefab homes in 2005. That's developed into new business in and of it self.
Explain the clean technology/green angle here and what this has to do with the prefab business?
Todd Jerry: From a green standpoint, there are probably three main benefits. Modular prefab is the largest one, because it has substantially less waste than usual homebuildling techniques. By building in a factory, you are able to order materials to size, and you're not just chopping up lumber on site and throwing it into a trash bin. You also have your workers all coming to the same location, not 20 guys driving in trucks to a job site and using up all that fuel. Plus, by building in a controlled environment, you're able to save more materials. We estimate it's 40 percent less wasteful than building on site, where you often see big dumpsters of wasted materials being taken away. The second are where it's more green, is the materials we use, and everything that goes into the house have been selected to be more sustainable. Examples of that, would be formaldehyde-free materials, using formaldehyde-free wood for cabinets, formaldehyde-free insulation, toxin free adhesives, and so on. Our wood flooring is FSC certified, we use high efficiency, low-E windows, low-VOC paints. We're trying to select materials which are more sustainable. The third, is green systems or energy efficient systems. On many of our projects, we are installing solar electric or solar hot water systems. Many of our clients choose radiant heating in floors, and tankless water heaters. One of our projects uses geothermal heating and cooling. We're also trying to implement systems that are green and lead to less energy consumption.
What was the project in Santa Monica about?
Todd Jerry: The City of Santa Monica owns a mobile home park on Stewart Street, called the Mountain View Mobile Home Park. Two years ago, they put out an RFP to provider of modular and manufactured housing, to design modern, green manufactured houses--which are traditionally referred to as mobile homes. The intent, was to completely upgrade the inventory of that mobile home park, and do something unique for the mobile home market--making them both modern in design, and also to integrate various green features. It's a truly interesting product. At the same time, it's targeted toward low income households, so it had to be affordable. We partnered with a company specializing in mobile home manufacturing, Golden West Homes in Perris, which is a division of Clayton Homes, the largest mobile home manufacturer in the country--owned by Berkshire Hathaway. Marmol Radziner provided the design for the modern, green mobile homes at affordable price points. We think they are the most unique mobile homes every designed and manufactured.
You've got a background in venture capital, how did you end up in architecture and construction?
Todd Jerry: I joined the company in early 2008. For me, it was a couple of things. One, is I wanted to get some real operating experience coming from an investment background. This was an opportunity to use my background as mechanical engineer. I started at Chrysler Corporation, in the automotive business-- one of the biggest manufacturing industries applying technology to how to make manufacturing efficient. Personally, I also had lots interest in architecture and design. What was interesting to me was that housing business is single largest segment of consumer products, yet there had not really been any innovation in building homes for maybe 100 years. I saw the opportunity of taking one of the largest markets and attempting to change and revolutionize how houses are built.
It seems like a big jump from high tech venture capital to an industry like that, how has that transition been?
Todd Jerry: It's obviously a very different business. A lot of times in investing in technology business, you spend lots of time on things that are innovative and revolutionary. It would take a few years to develop and change things, and once you developed something, there would be a paradigm shift and a big jump in value. Whereas, in home building, it's much more tangible -- it's dollar in, and dollar out. You're buying materials and applying labor to them, and having contractors. It's very different, in that it's difficult to find scale building anything one-at-a-time. It's a different kind of value creation. That's why we did the project in Santa Monica, because there's lots of opportunity working on projects where you have larger volumes and more repetition.
What have you learned from venture capital that you've been able to apply here, and vice versa, which you might say would be helpful in venture capital?
Todd Jerry: I learned from venture capital which I've applied here, is if you want to apply innovation and try to get to scale, you have to change how something is done. In home building, everything is pretty incremental. What I've learned here, which I would take back to investing in companies and working with startups, is how to apply the nuts and bolts of business. It's been hands on for the last three years or so in hiring, firing, managing cash, and making sure I have an understanding on how the business is running. Also, given that the homebuilding segment was seeing some difficult times when I first got involved, though it's now again starting to grow, towards the end of 2008 it was very much about survival in a very tough industry. We successfully survived, and based on what we did and learned, I think that could be applied to different business models which have some early signs of being successful.