Frustration continues for builders as hopes die that BuildNet would be able to fulfill their needs for business software systems.

By Boyce Thompson

The latest installment in the home building industry's seemingly never-ending quest for viable business software ended a couple weeks ago when BuildNet filed for bankruptcy protection. I've heard this complaint since I started at Builder six years ago: There just isn't a great, off-the-shelf software package for the average builder.

Frustration rose to its highest levels a couple years ago when the tantalizing potential of the Internet became apparent. I'll tell you this--if builders could find a comprehensive system that would connect them through the Internet to subs, suppliers, and customers, they'd buy it in a heartbeat.

Why doesn't this industry--one of the largest in the nation--have great, widely available software systems? You'd think some enterprising soul would capitalize on this opportunity. Instead, you hear that there aren't enough big home building companies who would buy it to justify the development of such a system. Software companies are wary of reports that rank-and-file builders resist new technology.

The end result is that builders never seem completely happy with their systems. Switching software is common, despite the steep learning curves to get up to speed. I continually hear grousing about lack of technical support, archaic codes, and the need to add additional capability to cover the functions the main system can't perform. The only builders I know who like their computer systems are the ones who developed their own, and they paid dearly to do it.

That's why builders greeted BuildNet's emergence on the scene with something approaching mild optimism. The venture vaulted into the public eye at the International Builders' Show in January 2000. Eventually, BuildNet raised $143 million in investment capital, a big chunk of it from public builders. BuildNet used the capital to roll up the most widely used builder software systems, along with some used by dealers, and promised to Internet-enable all of them. Finally, it seemed, someone was poised to give the industry the software capability it craved.

BuildNet's basic problem was that much of this investment capital was obtained at valuations that the market couldn't sustain. The company's plan was to go public, at a valuation of $2 billion, but the IPO window for dot.coms shut too quickly, in April 2000. By the time BuildNet prepared to file, it was too late.

Meanwhile, the company continued to invest in the Internet-enabling portion of its plan, hoping to attract new investors along the way. Users complained that support for the systems BuildNet bought worsened as key talent was reassigned to this new task. Observers worried about the company's burn rate as it debuted new products at this year's International Builders' Show in February.

Several companies made bids for BuildNet before its filing--Homestore, MH2, and Homesphere, to name a few. Homesphere came closest to buying the company, for $35 million. That deal fell through when two of the software companies BuildNet had bought with stock but hadn't paid for--NxTrend and Unilink--demanded the money they were due. (NxTrend was not included in the bankruptcy filing.)

So here we are back where we started. Several promising new systems are on or about to hit the market. Time will only tell whether these newest hopes answer what is clearly a crying need.