For John Laing Homes’ CEO Larry Webb, the Secret to Success in Any Market Is Catching — and Keeping — the Right People

H. Lawrence (Larry) Webb, 59, has served as CEO of Newport Beach-based John Laing Homes since the firm merged with Watt Homes in 1998. A former schoolteacher with a background in market research, Webb is known for his unique approach to marketing and innovative management style. He is active in NAHB and is past president of the Orange County Chapter of the BIA of Southern California. In 2005, he was inducted into the California Building Industry Hall of Fame. Webb holds master’s degrees in history and in city and regional planning from Northeastern and Harvard universities, respectively.

In 2006, John Laing Homes was acquired by Dubai-based Emaar Properties, and now operates as a division of the global real estate company.

CB: You are head of one of the largest privately owned homebuilding companies in the nation. What is the biggest challenge you face on a daily basis?
LW: You know, I have done this a long time — more than 20 years. I have gone through up-cycles and down-cycles and medium-cycles. I’m convinced that in good times and bad, this business is all about people. I spend a lot of my energy on trying to recruit and hire people, then grow them and keep them challenged. I just know that you can always buy another piece of land, and always build another home, but when you have great people, things work.

CB: Can you walk me through how you went from being a school teacher to working in homebuilding?
LW: I loved being a teacher. I taught high school social studies and coached soccer, basketball, and baseball at this little public school in Massachusetts. First and foremost, teaching really helped me connect with people. When you’re 23 years old and you’re in front of kids who are 18, you really had to learn how to communicate and figure out how to motivate that kid in the back who didn’t want to do anything. I think teaching is a good background. Over the years, I have found that a lot of people in homebuilding came out of teaching.

After about six years, though, I was getting kind of tired of it. I thought I should get a doctorate degree in history and then go teach in college. So I got a fellowship to Northeastern University in Boston. I was teaching undergraduates during the day, and in the evening, I was getting my master’s in history. I did that for two years. Then I realized that I was really just getting tired of teaching. So I went back and got a master’s degree in city and regional planning from Harvard.

CB: Have you always had an interest in planning and development?
LW: When I was in graduate school, I had taken some urban history classes. But big picture, I wasn’t sure what a planner did. It just sounded good. I was thinking of being a city manager of a place like Sacramento, and that I would change the way they are operating. But in this two-year program I was more attracted to the private sector than the public. But even then I still wasn’t thinking about being a homebuilder.

I got out of graduate school in 1980 and got a consulting job immediately in Washington doing market research and financial feasibility. What I found was that the clients I liked the most were homebuilders. I was more interested in them than retailers or office guys or big cities because homebuilders really seemed like they cared more. They weren’t just looking for a report for the bank.

Eventually my wife and I moved to Denver, where I worked for a lot of builders. My biggest client was a company called the Mission Viejo Company, and they were the boys who did the whole town. They had purchased a 30,000-acre tract of land in south Denver and brought California architects and land planners from Mission Viejo. They opened, built all the roads, and built their recreation center. They did all of that and they opened 10 model complexes, and they weren’t successful.

They hired me to tell them what was wrong. I said, “Look, here’s the problem. You rebuilt Mission Viejo, California. But in Colorado, people don’t want pink stucco and red tile roofs. They want shake roofs and they want front porches.” And they offered me a job as director of marketing and product development. I did it for three years — ’85, ’86, and ’87 — and we had a lot of success. I realized this was what I loved.

(Meanwhile), a California builder kept calling me offering me a job. I kept saying “No,” and they kept thinking I was playing hard-to-get. To show you how naive I was, I had never heard of this builder. It was Kaufman and Broad [smiles]. So I came in ’87 to California, where the market was booming. (About five months after moving to L.A.) I was asked by Bruce Karatz to run the Orange County/Riverside division, which wasn’t doing very well. I found it was a perfect time to take over. I was learning on the job but the market was really good. So it gave me a chance to figure out who I was and how I wanted to run a company. It was good training.

By this time the recession had hit, and ’91 through ’95 was tough. I decided to leave, and went to work for a small homebuilder in Orange County named AM Homes running all of Southern California. We did very well. In the recession, we were still having success. I did that for a year and a half, and in October 1992 AM Homes was sold to a company called Greystone, which is still here. They were trying to go public, so they were buying to grow the business. They were just about to go public when, in 1995, John Laing Homes, which was a British company, came to me and offered me a job. They said, “We have problems; can you help us?” I was basically running California for them. They allowed me to plot a growth strategy for them and they gave me a lot of freedom, which I liked. From there it was kind of history.

We grew the business a lot and in the last 12 years we’ve done well. When I got to Laing, they were doing about 300 to 400 houses a year in California and probably about $300 million to $400 million in revenue. Last year we did $1.8 billion. It’s been a lot of fun.

CB: Has there been any one most influential person in your career?
LW: Probably the most influential person to me in the last decade has been Ray Watt. In 1998 (John Laing) merged with Watt Homes, so for the last 10 years, Ray and I have been close. He’s a great guy. He is still extremely active in real estate. I like being around him. He asks very hard questions, but underneath it all he trusts me.

CB: Talk about your philosophy toward managing a business.
LW: I am convinced that it is about people. It’s not about the stones or the sticks or the bricks, it’s about the people. If you can put the right people together, then what you get is a kind of magic.

I also think it ought to be fun. I want people in our organization to have a balance in their life. I don’t like people who wear working 18-hour days like a badge of honor. For example, when I interview people, I always say, “What do you do for fun?” I want to know that they like to fly fish or skydive or go bowling, because I know for sure if people have a personal life… they are also better employees. People who are miserable personally eventually are miserable at work.

CB: How do you go about hiring the right people?
LW: I work very closely with an industrial psychologist. I use him for several things: I use him to help me evaluate people — will these people work within our organization? And I use him to give the candidate insight into what they do well and what they don’t do well.

One thing that’s clear to me is employees — people who work with us — who are self-aware do better than people who aren’t. You don’t learn self-awareness in college. You don’t learn sensitivity. You don’t learn empathy. They don’t teach those classes. Maybe they should. I know that a lot of things that affect how successful you are have nothing to do with teaching, GPA average, or whether or not you know calculus.

CB: What’s the best piece of advice you’ve ever been given?
LW: My favorite living American is John Wooden, the ex-basketball coach at UCLA. He’s 96 now. He’s got this joy for life. One thing he says is that he never lectured his team about winning a game. He only tried to teach them the fundamentals. I would adapt that to say that I would never talk to divisions just about money. What I care about is doing things the right way.

CB: Can we talk about Emaar, the purchase in June 2006, and how that’s affected the way you do business?
LW: It’s been interesting for me. They really are a global real estate company, and the largest real estate developer in the whole Middle East. I don’t know if you’ve heard of the book The World is Flat [by Thomas L. Friedman] but it basically says in today’s world, with the Internet and the speed of information, from China to Australia to the United States, we’re all connected whether we like it or not. Well, we have the chance to be the first truly global residential real estate company. They are from India to Morocco and they would like us to be very large in the U.S. It’s been a very interesting experience.

On one hand, I’d say nothing has changed, in the sense that they allow me to continue to run the company exactly like I always have. We still have the same commitment to our people. We still do all of the teaching. They are also very comfortable with the direction we’ve grown. The difference is they want us to grow a lot.

They would like us to be five times bigger than we are today. And they would like us to be the largest private residential real estate company in the U.S. — we are currently second. We did $1.7, $1.8 billion last year. Emaar would like us to do $10 billion. So we’re talking about that kind of magnitude. It’s forced us to really look into growing, and we are just about to embark on this big growth program both within California and in a lot of other markets, too.

CB: What strategies for growth are in place?
LW: We’re going to grow in three ways. One way we’re going to grow is in our existing divisions — we want to do more. We have 10 divisions, eight in California and two in Colorado. We would like them all to do more. We have good teams and we want them to expand.

The second thing is that we are probably going to do start-up divisions in some markets. The initial two markets are Phoenix and Houston, and we have already identified people in each of those markets to start companies from scratch. And in Houston, they are then going to look at San Antonio, Austin, and Dallas. So there will be three more after that.

The third thing we are looking at is buying companies. We are already talking to a company seriously in Seattle and that’s a place we’d love to be. And in Florida we’d probably look at both purchasing as well as start-up. So I’d like to think a year from now we would be in Texas and Phoenix for sure, and ideally we’d be in Florida and maybe in Seattle. So that’s been a motivator. If they hadn’t purchased us, we’d probably kind of stay where we are.

CB: Is it a challenge keeping that “small” feeling?
LW: It’s the biggest challenge I have. But I think it all relates to having the right people, people who get the values we have. I’m spending more time with the industrial psychologist meeting these people and making sure they have our values. So here we were purchased and now we’re on this big growth spurt — with a recessionary market.

CB: How is John Laing responding to the current market?
LW: Our response has been somewhat counterintuitive. We are still trying to buy land, whereas a lot of other builders have decided not to. In the projects we have, we want to continue making sales. And we want to continue to excel at customer care. I don’t want our staff to even think of cutting corners with customers. If anything, I think our best advertising would be referral buyers from happy home-owners. That’s one thing we focus on.

We have to understand our buyers better, I think, in a down market than we did even in an up market. Market research is something that’s at the core of our company. It’s very important that each of our divisions is never-ending in its diligence about the market. These houses [Laing Luxury in Newport Coast] are very targeted, and they are for people who can live anywhere. But in the Inland Empire, it’s different. Every market is different. We have a renewed emphasis on market research and on sales.

CB: Is there any one particular product type that is doing better for you right now?
LW: Our luxury division, which is based in Orange County, was very successful last year, and our Inland Empire division has been very successful. They are much more value-driven — single-family detached but clearly more affordable.

Also, we are just about to open our first infill project. We have a project in West Hollywood called Madrone that’s going to be eight stories above retail above three underground levels of parking, and offer 180 condos. We think we are going to do well there.

We are continually trying to reinvent ourselves. We are trying to look for new opportunities.

CB: Any thoughts on where the market will be in six months?
LW: We’re seeing improvement already. The last month and a half [January-February] we’ve had our best sales in a year. I think it’s going to keep improving. But I’m not anticipating that it will improve so much that we’ll have the luxury of not doing all this stuff. I’m just optimistic.

CB: What’s the best thing about being CEO of John Laing Homes?
LW: It’s the people I work with. I love seeing people move into our houses. I love going to grand openings. It makes me very proud. I like our competitors. I like the business.

You’ve seen a lot of different companies. I hope that if you went to any of our communities, you’d say, “Hey, they are really nice people.” That question was easy.