He turned 92 years old in March and is fighting cancer, but Lee Evans still watches the home building industry as closely as ever. Just before the housing boom turned to bust, he warned his longtime followers that the home-buying frenzy wouldn’t last.
“I called a lot of builders I knew and told them to just stop going crazy,” says Evans in the straightforward manner that has startled and then captivated home builders around the country since the 1950s, when he gave his first management seminar for home builders while working at the University of Denver.
“He was pretty tough,” acknowledges David Weekley, who began meeting with Evans years ago, when David Weekley Homes was closing just 200 homes annually. “He wasn’t the usual consultant who fed back what you wanted to hear.”
But what Evans had to say often was what builders needed to hear. “In the 1950s, builders were wild men. They were gamblers,” says Chuck Shinn of Shinn Consulting, who has worked with Evans for years. "They made a lot of money, but they also lost a lot of money.”
The reason was their inexperience. "In the early 1950s, these guys had just come back from World War II. They began to build homes for the returning vets as they married and started families, satisfying two decades of pent-up housing demand caused by the Great Depression and the War. They were true entrepreneurs, who did not have management training or training in systems or procedures," Shinn explains.
Roger Ladd, whose father fell into exactly that category, agrees. "In my father's case, he was a World War II veteran without a lot of formal education, so he did it through Lee," says Ladd, who owns Brittany Builders in Evergreen, Colo. "If you think of that World War II contingent, they needed some education--they were essentially creating a whole new industry" of production home building, assisted by the G.I. Bill and other government home financing programs.
Evans helped them do that. "When Lee started offering his management training at the University of Denver, he gave the builders the management training and processes that allowed them to price their homes correctly, understand and control their costs, and make and sustain profitability," Shinn says. "He allowed the builders to grow and be successful in a high-risk industry."
It started with business planning, both for the short- and long-term. “Compel events to conform to plan,” Evans says in a phone conversation, reciting a phrase known by heart to his followers. “To do that, you’ve got to plan where you’re going and make it happen.”
He stressed profitability, establishing financial benchmarks for builders that seemed impossibly high at the time. “Back in those days, if you did $2.5 million in sales and if you could take home 5% or 6%, we thought that was just wonderful. That was a nice amount of money for the risk and exposure,” remembers Robert L. “Bob” Smith of Universal Properties in Duluth, Ga. “If you did $10 million to $15 million and you brought home 3%, we thought, ‘Hey, that’s a pretty good living.’”
Then Smith heard Evans speak. “Here’s this man telling me that’s puny!” Smith recalls, his voice still astonished at the memory.
“It wasn’t just about making money,” Evans explains now. “It was about operating a job without waste as efficiently as you could. I’d walk jobs with builders and say, ‘Why are you doing this? Why is all that mess out there?’”
Evans urged profitability and financial discipline for another reason: the boom-and-bust nature of the home building business, where a builder can go from a millionaire to bankrupt in a matter of years if he doesn’t manage his business—and his money—carefully for the long term.
“We’re a high-risk industry,” Shinn says. “We’re highly leveraged and dependent on banks, and it takes us a long time to build a widget”—particularly if that widget production process starts with raw land.
What Evans, now retired in the Rocky Mountains outside of Boulder, Colo., offered was a way for builders to manage those risks responsibly and profitably, and builders who worked with him and his wife Virginia remain deeply grateful today. “We consider it a privilege to have sat at their feet when they were operating,” Smith says.
When Bob Kennedy and his brother and father first began working with Evans in the 1960s, they were completely overwhelmed by the demands of their growing business. “We were all doing whatever needed to be done when it needed to be done. We didn’t know what we were doing or where we were going, but we were working like heck,” Kennedy recalls. “We were on a path to destruction.” Their meeting with Evans, who spent more than a week auditing their company, was a turning point. “He literally changed the whole direction of what we were doing,” says Kennedy, who now operates Homes by Kennedy in Florida.
“There’s not a day that goes by that I don’t think of him and what he would say,” says Bill Jagoe, who was a teenager when he met Evans, then consulting with Bill Jagoe Sr. “He’s a teacher and a storyteller … I think what he’s done is to set a framework [for builders] to sustain profits and run a successful business.” Jagoe now runs Jagoe Homes in Owensboro, Ky.