Dan Ryan, Truth or Dare
In the wake of last week’s Pulte-Centex pyrotechnics, a classic debate intensifies. Will public home building companies–with their access to and use of the public equity and debt markets–weather the ravages of the next 12 months better and jump out farther ahead in market share when business shows its first signs of strength next year?
Or will private companies–comprised of a handful of Teflon wonders who survived, plus a few who played their non-compete clauses like violins during the industry swan dive, and, finally, the ones who financially reconstitute themselves like crabmeat you’d see in the frozen seafood section of the grocery store–come out of this with the secret sauce to dominate the recovery.
Dan Ryan, Photography by Chris Volpe
Here’s a story you couldn’t make up. The Pittsburgh Ryan family of home building royalty gives us this example of why you should never underestimate the power of the private home builders, even though lenders have most of them groveling on their knees, begging for time.
Yes, publics have millions of “other people’s money” to draw down and mark down as they figure out what their footprint should be, and what their cost-base can come down to while the going is tough. And public companies have unfair accounting advantages that basically allow them to deflate the land value of all competitors as they liquidate their own holdings and collect tax carrybacks, only to return as purchasers of some of the same land at cents on the dollar later in the cycle.
Private companies’ land impairments are literal pounds of flesh extracted from real people’s pocket books, frequently guaranteed with the company principal’s own personal wherewithal, i.e. their homes, etc. When they write down the value of land, they’re kissing money goodbye–whether it’s their own or it’s borrowed–and that’s bad.
So, here’s the Ryan story, and it’s about almost getting beaten, but not.
Chances are, Frederick, Md.-based Dan Ryan Builders will make it. If all goes as planned, even the current headwinds in the market will only haircut a little over 30% of his single family new-home volume from peak through this calendar year. He can thank being in some decent locations in the D.C. metro market for some of that fortune.
But that’s not all.
He knows adversity by heart. In the early 1990s, as another home building company we’ve all heard of–NVR–was hurdling into bankruptcy, the fact that the “R” in NVR stood for the company founder, Dan’s uncle Ed Ryan, couldn’t save young Dan his job.
When he tells the story, he says, “I left NVR, and started my own company in another tough moment for housing, during the downturn of the early 1990s.” Then he catches himself. “They fired me,” he confesses. “That was a difficult moment.”
So difficult for Dan that he went over to the home of his father and mentor Jim Ryan–Ryland Homes founder in 1967–for solace and direction. They sat out on the patio of Ryan elder’s home, and each of them looked out into the forest to the southwest. Dan tells his father what he’s been told in a very sensitively handled exit interview. He says, “Dad, they said they didn’t want to let me go because they really like me; they just didn’t think I was ready to run a profit center.”
“Dan, you know that in a downturn, a good company like NVR doesn’t let go of their ‘A’ players,” Jim Ryan tells his son. “They don’t think you’re an ‘A’ player, Dan.”
That’s what Dan Ryan got for comfort the day in 1990 he got fired from his $65,000 a year job. He didn’t talk to his father for a week or so from that moment, and his father got to thinking maybe he’d been a little too candid with his son. Jim recalls the moment in his own career in home building in the mid-1960s, when his own brother Ed gave him a pay cut of $5,000 a year–which prompted Jim to leave Ed’s company and go start his own.
So, fast forward to 2007, when Dan Ryan Builders nets a profit of $35 million, both father and son know in their heart of hearts that brutal honesty was what the moment called for.
In fact, after his father told him that NVR hadn’t regarded him an “A” player, Dan went for a public speaking course and a business leadership course a la Dale Carnegie, and started the job of turning his shyness into the warm magnetism you’ll see in him today.
“You’ve got to be strong to be good; it’s something you’ll hear my dad say often,” says Dan Ryan.
There are more of these stories, no doubt. Stories that blend your biography with the business. Stories of your determination; your perseverance; your tenacity. We’d welcome hearing them, and we feel that if you’ll share them with your industry colleagues here, it would give everyone a sense of the strength it takes to be as good as you are.
Those backyard patio moments make us who we are. Backyard patio moments may be where adversity hits the hardest, but also where character and resilience get their kick start. Why not share yours with your industry?
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