Ryan Kelly and Bobby Runyan don’t want to say their five-year plan to achieve $50 million in annual revenue will be easy. But the two 30-year-old co-founders of KHB Construction have a roadmap and few doubts.
The Modesto, Calif.-based design-build firm is what you get when you pair one “ultra competitive” entrepreneur with a self-proclaimed adrenaline junkie—with an extra edge of Millennialism. KHB Construction opened in August 2020 and projects nearly $6 million in revenue this year.
How will the duo achieve their lofty $50 million goal? Five locations across California all reaching $10 million in revenue. And yes, that’s just their five-year plan. Kelly says the company’s “big, hairy audacious” goal will be a first-of-its-kind publicly traded, nationwide company.
“There's massive holes in the market for what we do,” says Kelly, KHB’s CEO. “And we already have product market fit. Proof of concept is there. People want the service we have to offer.”
But they’re taking it one reverse-engineered roadmap at a time.
Racer Meets Fitness Junkie
When the two met working at a fast casual chain, neither realized their similarities right away. A large one would be their interest in competition, with Runyan as a semi-professional race car driver and Kelly as a sponsored Spartan Race competitor. A larger one yet would be their past experience working in construction under bad employer after bad employer.
It comes as no surprise that their mindsets would lead them to envision running a business on their own, and a better one at that.
“Just like any great business that starts, we thought we could do things differently and better,” Kelly recalls.
But the largest similarity between the two would be their “wild hair” attitude and dislike for working for others. Kelly approached Runyan, now CFO, with a business model for high volume, quick turnover jobs. To that, Runyan said, “You’re crazy, we’re not doing it.”
Two years later, Kelly came back with a different business model and a future of what the company could achieve. This time, Runyan said, “You're crazy. Let's go.”
A Generational Approach
There are several known—and often stereotyped—characteristics of Millennials.
A Gallup report found Millennials job hop more often than any other generation, typically leaving a workplace due to having little reason to stay at a job. It’s about passion, it’s about being rightfully compensated for their time, and it’s about company culture. Another important characteristic: the generation was the first to experience the internet for the majority of their life and all that comes with it: social media, influencers, the list goes on.
So what do you get when you have two Millennials open a construction company? KHB.
KHB’s mission is to empower their team members and provide clients with a seamless, inclusive process. (Note the first promise: empowering the team.)
“Without the employees, you don't have a business, and without the business, we can't serve our client,” says Kelly. “At the end of the day, if I have to choose between one or the other, I'm going to take my employees back every single day of the week.”
One of the first acts of differentiation was offering all employees health insurance, competitive pay, and bonuses day one, even if it meant sacrificing paychecks. KHB now offers 401K as of this year.
Next was KHB’s approach to digital content. Reputation and referrals build a construction business, and for a young company with young owners, having a shortage of past projects make it a harder sell. That’s when the digital native-advantage came into play.
“We were putting out, consistently for the past two years, over 100 pieces of content a week, through all the different channels,” explains Kelly. “And it created this market dominance really fast. It made our three-year-old company look like we've been around for 30 years. We just had more content, more authority online than any other contractor. And that's exactly how it opened up doors for us that wouldn't have been there.”
Kelly also has his own podcast, Above Industry Standards.
The name Above Industry Standards is a strategic choice, as Kelly hopes to interact with more contractors and thought leaders to elevate the industry. The company’s pricing structure aims to act as a differentiator as well.
“We’re a no change order contractor and we’re a no markup contractor,” says Kelly.
Of course, if the client initiates it, they move forward with a change order, but KHB operates on a fixed-price method with a “no change order guarantee.” If there are changes needed, KHB eats the cost, explains Kelly.
Kelly explains the company feels so confident in their pricing because of its thorough pre-construction phase, which goes through KHB’s five internal quality control processes. This includes a 3D LiDAR scan, subcontractor insight and quotes, site visit with explorative work, and numerous meetings between sales, design, and production.
The online content documents projects in progress, insights for potential and current clients, and reviews. Some manufacturers have even noticed, partnering with KHB for content and paying in exchange, edging KHB into online influencer status.
But on the jobsite, KHB wanted more experience than the 30-year-olds could offer. To obtain this quickly, Kelly and Runyan are strategically acquiring other companies.
The company bought a flooring business this year, launching its KHB Flooring division, and will soon welcome more design in-house through the purchase of smaller design firms. A second office is in the works.
“We've spent a lot of money to get to where we're at now. And we're just approaching that eight figure mark as far as revenue sold between the acquisition and KHB, and to do that in three years is pretty impressive, in my opinion,” says Kelly.
The next move for KHB is to build out an internal franchise model using their current location as a test. With market studies completed in nearby states, the team already has its eyes on the prize: $50 million, and five locations in five years.