Tri Pointe Homes, Townes at North Salem in Apex, N.C., priced from the low $300,000s.
Photo courtesy of Tri Pointe Homes
What’s in a name? Specifically, a new trade name, which is what a $3 billion-plus, publicly-traded top 20 homebuilder has announced this week, to signal it’s shedding its past persona and embracing a technologically-mapped future?
On the surface, it’s a nuanced tweak for Irvine, CA-headquartered Tri Pointe Homes (NYSE:TPH), from its prior corporate moniker, Tri Pointe Group.
However, it’s below the surface where the corporate name-change story lies. Hidden, perhaps in plain sight, is why it matters—and not just for a $300 billion new-homebuilding and residential development business complex passing cautiously through the pandemic’s perilous middle innings.
The move also tells of a deeper, more pervasive sweep of implications, as a pre-, mid-, and post-pandemic host of industry players dead-reckon a scary isthmus from a bygone economy market success into a bedimmed future of work and equity-creation. Many of these players will beeline, if they can, as directly as possible to Wall Street’s darling of the moment, technology, to tap into the .
Let’s explore Tri Pointe’s trademark evolution from two access points. This way, we’ll grasp what retooling the corporate identity means among institutional capital investment market-makers, and we’ll also get a glimpse at a more endemic system of stakeholders—manufacturers, land sellers, distributors, subcontractors, employee team members, and critically, consumers –TRI Pointe’s strategic leadership has in mind as it maps its way forward.
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The Valuation Rush
Today, four critical market maker-breakers—Wall Street, the supply channel, the policy complex, and Main Street—unambiguously reward company brands whose outer-facing personalities and whose inner workings match up well to the following five traits:
- A friction-reducing customer experience
- A machine-learning, technology and data core
- A harmonized product development, functional, and operations system
- An intellectual property moat
- A regenerative business culture
The more programmatic, standardized, asset-light, and iteratively problem-contextualizing-and-solving a business model shows itself to be, the more stakeholders in the investment, policy, supply and distribution partner channel, and consumer markets embrace it and reward it.
Now, who’s taken a look under the hood of publicly-traded homebuilding enterprises lately? Clearly, what does not jump out in that look at the structural pillars of these businesses are any of the characteristics above. In the minds of most vested and invested players, homebuilders are chained—lock-step together as a peer-group to an old-economy business-model narrative, cyclically-challenged-by-association as, at heart, land speculators. Some of the smarter ones realized in the past decade that a one-two punch of asset light nimbleness and deep, locally-scaled clout would allow them to free up big chunks of capital that languished and invited risk, and reallocate those resources instead into more predictable lot inventory turns responding to the pull of demand.
So, Tri Pointe, whose founders christened a fledgling homebuilding start-up in 2009, the nuclear-winter darkest days of the Great Recession, is moving back to the future in its renaming. In 2014, Tri Pointe triggered a minnow-eats-whale moment, as it acquired five crown-jewel regional home building companies—Maracay Homes, Pardee Homes, Quadrant Homes, Trendmaker Homes, Winchester Homes—from Weyerhaeuser’s WRECO unit. Each of these five operating brands had earned reputations as market outperformers, both among consumer homebuyers, as well as key real estate and construction partners.
Asset Lighter
Now, its goal is to shed shackles of its organization—essentially as a holding company model, undergirded by a portfolio of branded regional operators, each with a locally-driven land investment, product design, manufacturing, and retail formula and functions, each trying to scale share of those regional footprints.
Tri Pointe’s strategic leadership—chief executive officer Doug Bauer, chief operating officer Tom Mitchell, and chief marketing officer Linda Mamet—intends the change in self-identification to release trapped value, on Wall Street, among the company’s 1,200 employees, among vendors, and among consumers.
Bauer’s statement on the name change contains explicit and implicit clues, not just of a corporate strategic pivot, but of a secular inflection point for the market-rate housing investment, development, construction complex:
“Our merger with WRECO and the acquisition of its five regional homebuilding brands in 2014 transformed us into one of the largest home building companies in the country, and the multiple brand approach we inherited has served us well over the past six years,” said Bauer. “During that time, we successfully established an overarching vision and culture across the company while fostering the long-standing, trusted relationships our local leadership teams have forged over the years with land sellers and trade partners. That pillar of operating as the best of big and small, with local expertise and relationships backed by company-wide financial resources and powerful technology platforms, will continue to define Tri Pointe Homes as we look to the future.”
The new Shark-Tank moment is Tri Pointe’s restatement of who it is, what it does, and who it wants to be in light of the equity value the enterprise seeks in a rapidly concentrating sector, and in a fundamentally inflecting economic time-period—challenged by year-two of the health pandemic, its economic disruptions, and its concurrent social and educational upheavals.
Unifying under a single brand tent clarifies the company’s position, and sends a message to suppliers, customers, staffers, channel partners, municipal decision-makers, and capital investors alike that—to a meaningful extent—the entity is a powerful and future-focused whole more than just the sum of its feisty, well-trusted parts.
Says, Tri Pointe coo Tom Mitchell, in a statement:
“While advancing in ways that make us more efficient and forward-looking, the pillars that have been central to our success will continue to differentiate us as we expand. Along with being the best of big and small, we are a customer-driven company and consider ourselves to be in the ‘life-changing business.’ We are a premium lifestyle brand that places top value on innovative design and craftsmanship across all price points.”
What he’s describing is the firm’s efforts to leaven itself of the legacy baggage of massive pipelines of owned real estate subject to the shocks and stresses of inflationary, disinflation, and deflation as well as entitlement risk. At the same time, Tri Pointe is positioning itself as—at heart—an even-flow, real-time, predictable model for consistent earnings for each home vertically assembled and marketed, as any new-economy $3 billion-plus public company should.
Channeling An Inner Big Tech DNA
What’s most intriguing, however, is that Tri Pointe, like Lennar, DR Horton, Pulte, and other homebuilders, has begun on introspection to recognize in its intrinsic skillsets and proprietary value an ingredient that’s been there all along, but underappreciated: its chops and make-up as a technology company.
It so happens that this long-standing, challenge-tempered ability to listen to, learn, speak with, help serve, and, ultimately match people to the most expensive durable good they ever tend to buy has embedded within it a good deal of those five key traits mentioned above shared by Wall Street’s belles of the ball these days. Homebuilders’ steep-learning-curve adoption, embrace, and increasing fluency in the omni-channel customer-journey-mapped engagement, nurturance, and conversion process has put them on the front-line of one of the century’s most profoundly valuable conversations of all.
Who owns the consumer? If a home purchase is a consumer’s ultimate proxy for their attitudes, their preferences, what they value, what they’ll pay for, where they want to be, who they aim to be, how they behave, and what they aspire to, then it goes to show that homebuilders—in owning this conversation, are a profoundly deep well of value, not in their current inventory-turn model, but as engines of relational value to other merchants whose products, services, and solutions funnel through each new home and community’s platform.
In speaking about the Tri Pointe name change, ceo Doug Bauer commented particularly on two things with emphasis. One was the role that CMO Linda Mamet plays, not simply in the rebranding, but in the pivot of TRI Pointe from its essence as a land speculator and cycle-timer to a future equity value creation based on the company’s “owning” customer behavior. Technology and data are one key ingredient of the essential shift.
“What Linda has done to marry our customer-driven, customer experience pillar with technology- and data-enabled tools has transformed us into a technology-driven company,” says Bauer.
The Culture Factor
The other key point of emphasis in Bauer’s mind around the name-change takes an original impetus of the firm—to be the best of big and small—and places it squarely in this notion of listening to, learning from, serving, and matching people to a new home as a company cultural cornerstone.
“Our values-system speaks to our culture as it guides our behavior in business,” says Bauer. “We memorialize this values-system with an acronym—HEART—which stands for humility, empowerment, authenticity, results, and team. This has been the Day-1 cultural basis of our assertion that we’re in the life-changing business.”
What old-school corporations that built success in past economies need to do is mine their operational, functional, and value proposition make-up, and perhaps restate their ability to create and regenerate equity as private sector leaders of the future. That’s what’s going on as homebuilders try to meet a current surge of demand among consumers, and at the same time eye with some envy the fortunes of Silicon Valley’s tech powerhouses.