He's not just on the board; he participates and believes in what he's doing. When he does something he does it and puts himself into it. —Chris Gamvroulas, president of Ivory Development
Sitting behind a desk, Clark Ivory, who oversees Utah's top home builder, is surrounded by dozens of mementoes, many of them from the sports arena — photos at the Australian Open, photos of his kids mugging with Jazz players, photos of him with pro golfers, photos of road races, plus a couple of autographed footballs.
So it isn't surprising to hear Ivory, a long-time season ticket holder and sponsor of the Utah Jazz, speak of his company's team and what they are doing to succeed.
Last year Ivory Homes, the company Clark's father Ellis started, built 521 units worth $101.5 million, making it Utah's largest homebuilder, according to data from Construction Monitor. That's larger than Ivory Homes' next two competitors combined. That lead could widen. By 2030 the company forecasts building 10,000 apartments. It's the latest example of how Ivory Homes is adapting to a changing residential economy after boing the state's top homebuilder for more than two decades.
In the world of home construction, which is given to wild market fluctuations, this just doesn't happen. What usually does happen is that successful builders expand into other markets and forget their original focus and expertise. Or they get greedy and overbuild. Or they simply don't survive one of the many downturns of the market.
"It's never been done in any market in the country," says Ivory, the 47-year-old CEO of Ivory Homes, about the company's streak.
"I don't know if there's a group in another industry that has done that here," says Ivory. "Maybe the Millers (in auto sales)."
It's beyond the homebuilding, however, that Ivory is making even more impact.
He has followed his father's footsteps into another arena: volunteering. Clark once told his father that his life was too full to serve in the community the way Ellis did, but Clark eventually changed his mind. During his "free time" he has served on the Federal Reserve Bank of San Francisco's Salt Lake City branch. He is chairman of the board of trustees at the University of Utah; he formerly served as chairman of the Salt Lake Chamber Of Commerce and as a member of the Board of Trustees of Intermountain Healthcare.
"One of the unique things about Clark is that he is not just a leader, but he is leadership in action," said Lane Beattie, head of the Salt Lake Chamber of Commerce.
A few years ago Beattie was worrying about where the next generation of business leaders — "They just weren't as involved," he says — and then along came the younger Ivory.
"He became very actively involved and he personally invited a lot of other young men and women to get involved with us." That group included a who's who of local business leaders — Scott Parson (Staker and Parson), Scott Hymas (R.C. Wiley), Brett Okland (Okland Construction), Christian Gardner (The Gardner Company), Jake Boyer (Boyer Company), Randy Shumway (Cicero Group), Lori Chillingworth (Zions Bank).
At Ivory Homes, it's a team of loyal employees, some of whom have been with him longer than 17 years that have made Ivory Utah's top homebuilder, based on the number of building permits issued.
Even in the current slump in home construction, Ivory is operating debt free and outpacing the competition. For 2011, Ivory tallied some 418 home permits; their closest competitor has 218. A permit can count for multiple units, such as an apartment.
The company has led the market pretty much since Ellis Ivory, the retired founder and Clark's father, began building homes. Ellis had vowed never to enter the homebuilding game after watching his own father lose everything in the business. Instead, he focused on property development for 15 years before accepting a calling to serve as a mission president in England for the Church of Jesus Christ of Latter-day Saints in 1979.
When he returned in 1982 he found himself on the brink of financial disaster. Interest rates had soared and the market had tanked. Builders were defaulting on contracts to buy lots, saddling Ellis with a glut of empty lots and debt from the loans he used to purchase them.
"To recover my investment, I had to build homes myself," he says. "It was the last thing I wanted to do."
It proved to be a blessing in disguise. The company has thrived as a homebuilder, despite the challenge of several national companies who have tried to move in on its turf. As fate would have it, Clark, the oldest of Ellis's seven children, came to work for him at just the right time. Ellis is the entrepreneur of the family; Clark is the manager, and that's just what the company would need.
Ellis had tried to convince Clark not to join him in the family business. When his son Clark finished his two-year church mission in Italy, his father told him, "The last thing you should do is be involved in this business. It's just so tough."
Clark seemed to take the advice. He studied political science at the University of Utah. He interned in Washington for Sen. Orrin Hatch and later as a market researcher for the Triad Center and the state office of economic development.
Despite taking such heavy class loads that he graduated in just three years, Clark still worked 20-30 hours a week. By then, Clark began working again for his father as a salesman, proving himself with anaggressive approach. Instead of sitting around the model-home office, he plied mobile home parks in search of buyers.
"When you're selling new homes you don't wait for buyers," he told his father. "You get half of them yourself."
After a couple of years in sales, Clark decided to fulfill a lifelong dream. He applied to and was accepted by Harvard Business School. He quickly applied academic theory to the family business.
"My first year in school I was already changing how we ran our accounting systems and the way we managed things," he says.
Shortly before starting his final semester, he told his father he planned to make Ivory Homes his career. During the next six months, he arranged to attend classes Monday through Wednesday so he could commute to Utah each Thursday to work as a sales manager for Ivory, flying home each Sunday to return to school and his family.
When Clark graduated in '92, Ellis named him sales manager for the company's southern division over Salt Lake and Utah counties. They decided not to grow the company; instead, they focused on paying down company debt and improving quality, especially after seeing the results of a survey of Ivory's homebuyers in 1993.
"We found out we were not as good as we thought," says Clark. The survey revealed that 13,000 buyers would refer Ivory to other customers — but 1,600 would not. "We learned more from those 1,600," says Clark. "We focused on them. We asked them, what do we need to do to be better? They'll tell you, and we don't take it lightly. If someone is unhappy, we want to know why. It helped us make critical changes."
Among other things, Clark wound up firing half his staff to improve service. In the early '90s, customer satisfaction was 74 percent. Within a few years it climbed into the 90 percent range and in the last few years it has reached into the upper 90s.
By 1999, the company found itself at a crossroads. In a seminal moment in company history, Ellis told Clark that he had had enough of the stress that came with enduring 35 years of roller-coaster rides through the market cycles; it was time to pay off all remaining debt and run the company at a moderate level instead of striving for growth. He believed the market was going to turn again — "It always does. I don't want to go through that again."
Clark's response: "Dad, I'm 34 years old. Let me run with this thing. It's a great time to grow the company."
Ellis retired and turned the company over to Clark. The company began to grow steadily, setting company records in home closings from 657 in 2003 to 1,202 in 2006. Revenue soared from $100 million in 2000 to $470 million in 2007.
"I was wrong," says Ellis. "The company was the strongest it had been in a while."
It was seven of the hottest years in the American housing business, but by 2005 Clark suspected that a day of reckoning was coming.
"I was paranoid," he says. "I always had in the back of my mind my dad's warnings that this is a cyclical business. I watched it carefully."
Preparing for downturn
Clark noticed troubling signs despite the boom market. He met people who had nothing to do with the housing business were buying homes and flipping them. He foresaw the ruinous effects. As early as 2005, he began to prepare Ivory writing a company memo that addressed — "Why Ivory will be well positioned when the market cools;" and "Who will fail when the market cools?"
In 2006, Clark was appointed director of the Federal Reserve's local branch, tasked with reporting on the housing industry. Still fearing the worst, he researched surrounding markets. He visited two of the hottest housing markets in the country, in Las Vegas and Phoenix, and found ghost towns — subdivisions that were largely unoccupied. Builders were building so many houses in their hurry to exploit the escalating home prices and easy credit that supply was exceeding demand and home prices were skyrocketing. Speculators were swooping in to buy houses and flipping them for a profit a couple of months later — which meant builders were competing against their own customers. It was unsustainable.
Demand couldn't keep up with the supply, resulting in ghost towns of weedy lots, which drove down the value of homes that were actually occupied.
When Clark returned, he went to media to sound a warning. The Deseret News headline: "Builder blasts speculators."
"I wanted to tell everyone that there was a problem," he explains. "There were some builders and developers who said, 'What is he trying to do, hurt our market?!' I wanted to slow this thing down."
Clark began preparing his business for the downturn. He chipped away at the debt that Ivory carried and by 2009 the company was debt free. He also refused to sell homes to speculators, requiring homebuyers to occupy their new home for at least a year or face a penalty.
"In 2006, when everyone was ramping up, I was ramping down," he says. "In our best year, 2007, most builders were falling down because they weren't selling homes. They were competing against speculators. They were competing against their homes being sold on the market again."
The bottom line: Ivory was well positioned to handle the housing downturn.
"Clark is extremely disciplined in how he thinks through things and how he acts on them," says Chris Gamvroulas, president of Ivory Development. "In 2005 and 2006, he was sounding the warning bell about the overheated housing market and the damage speculators would do to our market. A lot of intelligent people saw the same signs and probably knew they needed to behave differently, but when it was really important to act, it took a lot of discipline not to buy land and sell to speculators. There was incredible pressure to do both. People would call trying to sell us land. We'd say, we're just not buying, and they'd say, 'Are you crazy!?' But Clark had that willingness and discipline and we were able to avoid much of the impact of the downturn."
In some ways Ivory has returned to the '90s by not overreaching. Following a philosophy long espoused by his father, Clark says the sales force is "king," he asked what his sales people needed from him to be successful. They said their biggest problems were customers who were unable to buy houses because of credit problems and buyers who couldn't buy new homes because they couldn't sell their old homes.
As a result, Ivory hired two employees to only help customers repair their credit, which means helping them manage their finances, pay bills on time, consolidate debt — a process that takes anywhere from a month to a couple of years. So far they have helped 100 families clean up their credit and buy homes. They also launched a program to help buyers lease their old homes when they are unable to sell them.
"When you don't have debt, and you're not having to put out fires constantly, then you can focus on more productive things like this," says Clark.
A few years ago Clark, still looking ahead, laid the groundwork for the company's next venture.
He began buying a variety of properties opportunistically and when he had enough of them he launched ICO Construction, the commercial arm of Ivory Homes. One of the first things he did was to sign former Harvard classmate Jim Seaberg, who was a partner at McKinsey & Co., as ICO's president. Seaberg had worked in the high tech field and invested in commercial real estate.
"Clark is a relationship-builder and he stayed in touch with me for 20 years," says Seaberg. "When I got here, I was able to build on the relationships he has built in the community and hone the strategy. He allows me total autonomy."
Under ICO is land development, construction and property management. Mostly what they will do is build apartments — some 10,000 of them in the next 20 years.
Commercial real estate is seven times more volatile than home building, but Seaberg is undaunted. "People who do it well tend to perform fine," he says.
Besides that, Clark and Seaberg reason that the sister companies will balance one another because the home-building and commercial real estate industries tend to be counter-cyclical — when one is down the other is up. Also, the commercial business partners nicely with the home-development side of the business, sharing construction and land-development expertise.
"We wanted to do something that is complementary to what Ivory Homes does," says Seaberg. "The rationale is that it is adjacent to what we know and it creates a base of home owners. All of them will be a resort-like experience with on-site amenities and the benefits of ownership without the things people don't like, such as yard maintenance. All of the apartments will be Class A quality, like Ivory homes. There is a permanent class of renter who likes the resort-like experience."
Gamvroulas believes that is the hallmark of Clark's career. "He's not just on the board; he participates and believes in what he's doing," says Gamvroulas. "When he does something he does it and puts himself into it."
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