The B&D Interview: David Grounds, CEO and Founder of Dorn Homes
The Arizona-based builder talks about the company’s mission to improve the lives of all those they touch, including buyers and their communities-at-large
Builder and Developer: What inspired Dorn Homes to include energy efficient features in their homes?
David Grounds: So, I’ve been in the business for 30 years and I’ve seen homes poorly built and I’ve seen them lowly built. I feel like it is an obligation when you are a home builder to make the home as energy efficient as possible and as healthy as possible. It’s almost a moral obligation. We have the opportunity to do it. It doesn’t cost that much more to build a home correctly and to make it healthy for the resident. For me, it just seems like the right thing to do. If what we were doing was making the home unaffordable for people, then I get where there would be some kind of tough decision to make. But to make a home healthy and energy efficient, the marginal cost is so minimal that to our company it’s a no-brainer. It seems like a social responsibility.
I feel like it is an obligation when you are a home builder to make the home as energy efficient as possible and as healthy as possible. It’s almost a moral obligation.
Builder and Developer: Where do you see energy efficiency going in terms of homebuilding? Are there any energy efficient features that Dorn Homes hopes to include in their homes in the future?
DG: I think that the thermal envelope. If I had to pick one thing that every builder should consider doing, is creating a thermal envelope. The reason why is because so much energy loss occurs in the ductwork if it’s not in a heated and cooled space. We take our insulation and we run it all the way to the roof line that way all the ductwork is in a heated and cooled space. In the summer, when that attic gets really hot, especially in Arizona and the southwestern United States, it is a crime to let that ductwork hit temperatures that are far in excess of 100 degrees because then when you turn your air conditioner on, it’s blowing hot air. That one change, which is not that much more expensive, is the most important thing. We do it with spray foam insulation which fills every nook and cranny and the technology of spray foam has advanced over the last five years so it is now affordable for most home builders to do it instead of the old fashioned fiberglass insulation products.
The other thing with technology is air infiltration. To let fresh air come in, I think is one of the most important things. Whole home ventilation and air exchange systems expel stagnant air and replace it with filtered, temperature controlled outdoor air. Outdoor air is the healthiest air to breathe, generally, in most places in the United States. So for us it’s a no-brainer to do that as well. To that point, over the last twenty years, builders have made homes more and more air-tight. They have made them into big igloo coolers, which means they are waterproof, but they can’t breathe. If you don’t have a good air exchange system, then people are breathing reconditioned air over and over and that’s not healthy. To have a fresh air intake system and to have whole house ventilation is vital for healthy living.
One of the things we are most excited about is wireless switches and there are a number of reasons for it. Number one: it cuts down on labor. It cuts down on all the wiring and drilling. It cuts down on potential accidents. You wait until your drywall is complete, the house is painted and then you come in and you install these wireless light switches. The quality is better and a resident can control their lighting from a vacation. If they want the world to think that they are at home at 7 o’clock at night, they can turn the lights on in their house from across the country or across the world. It gives the residents a lot more control and power over their house. As inflation is kicking in the country, anything a builder can do to cut costs that doesn’t sacrifice quality is paramount. This is an example where it is a win-win. It is significantly cutting down on labor costs. It is much more technologically savvy. It gives the buyer more control over their home.
Frankly, it’s kind of fun to be able to control your lighting when you’ve got your phone next to your bed. You can press a button and all the lights in your house will go off. Or if you hear something at night that doesn’t seem right, you can get your phone and boom you hit a switch and everything in the house comes on. It’s an example of how technology has changed the way we experience lighting in the home. That same wireless technology is translating into garage doors and heating and cooling and a lot of other things. I think you are going to see most national builders switching to wireless within the next couple of years, I predict.
Builder and Developer: How did you determine the Exclusive Building Science that you incorporate into Dorn Homes?
DG: So for us, it was really about return on investment for the customer. If we could, we would add a million different products to a home to make it the most energy efficient house in the world, but there is a return on investment. When you spend too much money on a house, at some point, it’s not going to be affordable. So for us the balancing act is an empirical analysis of where can you spend the money to get the most return for a customer’s energy efficiency. So that’s how we came up with Organic Home Plus. We identified the low hanging fruit that is not that expensive and yet offered significant home improvement in energy efficiency.
That’s a real general answer to your question on the philosophical reasoning and decisions for how we set up all the different things we offer in the Organic Home Plus, from the LED lights to the carbon monocized detectors to the whole home ventilation to the non-toxic building materials. Those were the things where we felt like if we spent that money that the return of investment for the customer for years to come would be significant.
Builder and Developer: How has Dorn Homes been affected by the current challenges facing the home building industry (ex. supply shortages, labor shortages)?
DG: So, for me, it feels like a whack-a-mole game. Every day there is a new mini crisis. Like hey this week we can’t get appliances. Oh this week we can’t get sand for our stucco. Oh this week we can’t get a window. I think what we’ve done a good job at is, because we have trusting partnerships with our suppliers and our trade partners, because we spent years building those relationships, now that we are in this crazy environment, we can lock arms with them. We can partner with them because we trust each other. When they come to us and say “Dave this product just went up 100%,” because we work with them so long, we trust them and we help them. It’s not a battle. It’s a collaboration. We’re in the same boat, we’re in the same direction. We completely trust each other and we manage through it. That I think philosophically is helping us get through this. If you didn’t have these trusting relationships, and you are getting these price increase letters every day, you would start to become a cynic and you wouldn’t even know what to believe. Granted, a lot of builders know this, because of COVID, there’s that terminology “nothing like wasting a great crisis” and I do think there are some suppliers around the nation that have taken advantage of the COVID constraints and you can see their profit margin exploding in certain industries. I’m not going to call them out in this interview, but generally I think everybody is doing their best to get through it.
We’ve had to pass on some of these costs onto our customers, just like all the other builders, and that’s been unfortunate. Luckily, the economy has allowed everybody to afford it. We are hoping with lumber starting to drop down significantly that maybe we’ve seen the worst from lumber. In a couple months, we will be back to something that is more normal. That’s the biggest cost to a home is the lumber. So we are optimistic. We’ve made it through the worst. So if the government stops printing money and creating this inflationary nightmare scenario for the country, we will be okay, but a lot is going to depend on the administration and the feds and what’s going to happen in the next year.
Builder and Developer: What advice do you have for fellow builders amid current labor and supply shortages?
DG: So what we’ve done is proactively met with all our trade partners: the owners, the GMs, the managers and we’ve created roadmaps of what is going to come next. What is the next challenge around the corner that we haven’t even predicted? We do a sensitivity analysis of what’s going to happen when this cost explodes or what is going to happen when this appliance gets shut off. I think what’s helped us the most is constant communication with our trade partners. Staying very close with them and supporting them through this. Being creative on alternative products and brands.
Then, reaching out to our customers in advance and letting them know that we are in a season of delay and in a season of cost increases to prepare the customer. I think customers are willing to absorb a lot of delay and cost increase if we’ve established expectations. So a lot of my job and our team’s job is to set truthful, honest expectations with our customers and make sure that the customer feels like they are part of this team and this solution as well. In summary, it’s constant communication with customers and trade partners. That triangle works together to get through it together so no one feels like they are isolated or kept in the dark.
Builder and Developer: In what ways has the increased demand for housing affected Dorn Homes?
DG: So our sales have exploded. With COVID, I think it’s opened the opportunity for people to work remotely. Over the last 30 years, we’ve specialized in creating iconic, highly esteemed neighborhoods in the really charming towns of Arizona, that includes Sedona, Prescott, Prescott Valley, the artist colony of Tubac, Wickenburg and Tucson. Because we are in those communities and because we celebrate and honor the history of those communities, the architecture, the culture, because our neighborhoods celebrate what’s already there, we don’t try to contract it, people are now leaving for small towns in droves. They are getting out of some of the big cities and they are transplanting to Sedona or Prescott or Tubac. I think there are not that many industries that have benefited from this horrible COVID nightmare, but housing has been one that has benefitted. It’s almost embarrassing to admit that when there are so many people suffering. Granted, we are suffering a lot of trade constraints and inflation. This pandemic has changed the way people work and I think that those builders that are serving in these small charming towns across America have been a big beneficiary of that.
Builder and Developer: What is the “Build Our Home on Your Lot” program? How did that come to be?
DG: So we don’t do that as much as we used to because there has been so much demand for our neighborhoods and because of the trade constraints, we’re trying to make life easier for our trade partners right now. To make custom homes on other people’s lots, we’ve decided to put that on hiatus. We stopped doing that about a year ago. Right now, we are really focusing on neighborhood and community development and building. So we are not currently active in the “Build On Your Own Lot” program currently.
We’ve been fortunate to partner with some land owners that have land in some really special places in Arizona and because we have those partnerships with land owners, we wanna leverage that and build communities in those places. So I think we are gonna focus on neighborhood development for the foreseeable future.
Builder and Developer: How has the acquisition of Dorn Homes by American Southern Homes affected the company?
DG: It’s been a dream of sorts. American Southern Homes is comprised of a dream team of building executives that have come from America’s best builders. They’ve left those builders and joined American Southern Homes, which is based in Virginia. It’s a team of people from purchasing, land acquisition, operations, leadership, they are kind of the best of the best in executives from headquarters. They are there to support their builders. They are not there to replace any employees of the building company. They are there to help that building company grow.
They help by providing more capital, more specialty expert support and leadership, more networking. If there is a builder out there that is reading this that has always considered possibly selling their company or partnering with another company, this would be a great time. I feel like the housing market is at such a healthy place right now on valuation. American Southern Homes is not going to come in and change your culture or lay off a bunch of people. They come in and help you celebrate your strengths. If you have weaknesses, they show them off and help you be an even better builder.
So we’ve been thrilled with it and I’m glad we did it. I am a big fan of American Southern Homes. I urge other builders to reach out to them if they’ve ever considered selling their company or partnering with another company.
Builder and Developer: Dorn Homes places a great emphasis on community outreach. How did your partnership with the Coalition for Compassion and Justice (CCJ) begin?
DG: Down the street from our office is the homeless shelter that CCJ operates. It started because we started feeding the homeless in the evenings. We would go to local restaurants and we would buy the food and then we’d go over to the shelter and feed them. What we realized, as you are there working with these folks directly, is that they are great people and what happened to them could happen to anyone. It could be bad decisions. It could be a tragedy in their life, or a death. Depression. Addiction. There are things that happened to these poor people that have led them to be in the homeless shelter. As you get to know them, you realize they are just like we are. They just had some unlucky things happen to them.
So we started feeding them, you build relationships and you realize that you don’t want them sleeping on these concrete slabs every night with a tiny thin foam pad where they are sharing the bathroom and you can’t sleep because there is someone next to you snoring. There is really no dignity. So we met with all of our trade partners, our architect, the city, the land owner and we were able to secure land with CC and built homeless lodges.
With the homeless lodges, which we gave to CCJ, now a small family, and by family I mean a small group of people, share a house and each lodge has six rooms. They share a common living room, kitchen, laundry room and two restrooms. The cool thing is instead of sleeping in some big open warehouse on a slab, you have your own bedroom with a door that closes. You have your own patio. You can sit on your back porch and read a book or play guitar and have hope and dignity. We are trying to help people go from homelessness to dignity.
The great thing is they go to these lodges for a while, they get their feet back under them, they find a job and they are back working. The cool thing is I’m out on the jobsite one day and a gentleman comes up to me and he thanked me. He said “hey I met you when you fed us at the homeless shelter” and now he is a Dorn employee working for Dorn Homes. He’s in an apartment with his girlfriend. He is now gainfully employed and has this big smile on his face. He is back to normal. For me, that’s what it’s all about.
Our company feels like we are more of an outreach organization disguised as a home builder. I think our employees get a lot more gratification from it. Our company mission, for what it’s worth, is not how much money can we make or what is the KPI or how big are we going to be next year, that is not our mission. Our mission as a company at Dorn Homes is improving the lives of all those we touch. We try to do that every day with our trade partners, our customers, our fellow employees, but especially the less fortunate in our community. We are one bad decision away or one bad tragedy away from being right where they are. We try to never ever forget that. That’s our passion.
Builder and Developer: Do you have any plans to expand the work you do in the community? If so, then what would you like to get involved with and/or wish to start?
DG: Yeah there is another organization in Prescott called Stepping Stones, it is a women and children’s crisis center, and we love supporting that. We love supporting the Foundation for Blind Children, based in Phoenix. It is the largest organization of its kind in the Southwest, helping kids with all sorts of challenges, not just blindness. We really get behind those three organizations. We also are involved with the Cancer Society and Horses with Heart, where people with horses use horses as a form of therapy. It helps people who may have mental or physical challenges.
One of our beliefs at Dorn is that there is joy to be experienced when you are involved with something bigger than yourself. Giving back and being involved in several organizations is being involved in something far greater than just us. Selfishly, it gives us joy, probably more joy maybe than it sometimes gives the people we are helping. Hopefully we will never lose that philosophy and we will always try to grow that thinking and that practice.
