For more than a century, Standard Industries has been a leader in the roofing industry. Now, the company's co-CEOs David Millstone and David Winter have announced that they are going to launch a high-tech solar roofing material that can compete with Tesla, which will bring a sea change to residential construction.
Standard Industries co-CEOs David Millstone (right) and David Winter (left)
Standard Industries co-CEOs David Millstone and David Winter are working on a top-secret design for a new type of solar roof that will compete directly with Tesla's solar roof, and the waiting list is years away.
For more than a year, researchers at Standard Industries' R&D center in San Jose, California, have been revising the design. Their strength is that their New York-based company is the parent company of the largest rooftop manufacturer in the United States, and Decotech, the solar roof they designed earlier, has sold more than 2,000 of them.
"We actually built more solar roofs than Musk," Winter said proudly of the world's richest man. Over the next decade, they hope to install millions of such new roofs for the masses with the help of a large number of qualified installers and calculated prices.
"If you can make practical, affordable, aesthetically pleasing rooftop solar, we think it will change lives in Europe, the United States and around the world," Winter said. If anyone can build such a roof, it must be us. ”
Don't underestimate the "two Davids," the nickname that 44-year-old Millstone and Winter shared. Through the family-owned conglomerate, which has annual revenues of $6.4 billion and Ebitda of about $1.4 billion, their mission is to use technology to change the simple way people think about roof "tiles." They expect to spend $1 billion to achieve this goal in the coming years.
Solar energy is their boldest bet, but not the only one. In 2020, they retrofitted 10 plants in 7 months – a speed unheard of in industrial operations – to launch their new version of asphalt shingles that can withstand hurricane-grade winds.
This year, they are working on a roof for a new 5G concept that will allow telcos to seamlessly integrate technology into residential rooftops. In addition, they have introduced new digital tools such as 3D modeling and aerial surveying to streamline the work of 12,000 roof contractors, especially during the pandemic.
In addition to the rooftops, they have a huge investment arm, 40 North, which has about $5 billion in assets and is betting heavily on industrial innovation.
Standard Industries' GAF Energy division is working with the Port of Los Angeles and Westmont Industrial Distribution Center to fund a large-scale solar project with 50,000 solar panels
"We're at the beginning of a golden age of embracing industrial technology, like the Internet in 1990, when we had decades of growth," Millstone said. ”
This may seem like a script for VCs supporting startups, but in fact it's another story entirely.
Dating back to 1983, Sam Heyman, a prominent corporate predator and then a member of the Forbes U.S. 400 Rich List and also millstone and Winter's father-in-law, won the battle for the agency of rooftop construction and chemical company GAF. Standard Industries grew into an uncompromising industrial empire, becoming the 69th private company on the Forbes list.
Standard Industries' interconnected businesses and related investment operations continue to be owned by the Millstone-Winter-Heyman family, which Forbes estimates is worth more than $10 billion.
Millstone and Winter have co-led Standard Industries since 2005. They rarely give media interviews over the years, preferring to talk about their vision for the roof than their wealth.
About a quarter of households in North America have GAF roofs installed, and they have the ability to use everything from new materials to sensors and artificial intelligence to shake up this stodgy industry.
"As we start to rethink what rooftops are, whether it's green roofs, solar roofs or 5G rooftops, we have the power to revolutionize the way people live," Winter said. ”
01
Enter a family business
Standard Industries' history dates back to the heyday of the "corporate predators" in the 1980s, when Sam Heyman made a fortune by investing in a group of undervalued companies with drexel bonds. He is best known for his successful struggle for GAF agency and the chemical company he spun out, International Specialty Products Inc.
Although he has four children, none of them have joined the family business. After Millstone and Winter became members of the family—Millstone married Jennifer, Winter married Elizabeth—Heyman brought them into the company.
David Millstone grew up in Bethesda, Maryland, to federal government workers. He studied mathematics and philosophy during college and once wanted to become a professor of philosophy. He worked as a rower at Yale University (he met Jennifer Heyman through his rowing partner in his sophomore year). He still loves endurance sports, including marathons, triathlons and ski climbing.
In 1999, he co-founded an Internet company that sent online profiles of college students to corporate employers. "If we thought about it a little more thoughtfully, we would launch it before LinkedIn," he said. "However, contrary to their wishes, they have been struggling with difficulties. "We've had all sorts of failures that a company can fail, except going to jail," he said. ”
He then followed Jennifer Heyman to New York and landed a job as an analyst at Bear Stearns. He recalled: "I was a bit claustrophobic and afraid of elevators. But when I went to the office at 3 a.m. to work overtime, I was desperate to see the elevator break down so I could sleep in the elevator. ”
David Millstone, Co-CEO of Standard Industries
Soon after, he quit his job and entered Harvard Law School. After graduation, just as he was about to join private equity firm Apollo, Sam Heyman sent him an invitation to join Standard Industries.
"I've asked everyone I respect, and all my mentors, if I should join the company, and everyone's response is, 'No, that's a bad idea,' but I did it anyway," he said. In hindsight, thank God I arrived just in time. ”
David Winter grew up on the outskirts of New York City and is the fourth-generation eldest son of a real estate developer family. His great-grandfather, an immigrant from Poland, started out as a whitewasher for low-rent housing and later became a top developer in Manhattan.
Winter finished his double degree in political science and economics at the University of Pennsylvania and worked for Morgan Stanley's real estate group after graduation knowing he would soon join the family business. After he married Elizabeth Heyman, Sam Heyman asked him how they could work together. He began doing risk arbitrage for Heyman while continuing to work with his father Benjamin at his family's real estate company.
"I effectively accomplished the dual task," he said. Now, Standard Industries' related businesses include Winter Properties, a real estate investment arm spun off from Winter's family business.
David Winter, co-CEO of Standard Industries
In 2009, when Millstone and Winter were 32, Heyman died unexpectedly from complications from heart surgery at the age of 70. When the company was in a difficult situation, the two of them stepped forward. The global financial crisis strained GAF's balance sheet as they were dealing with a long bankruptcy related to asbestos businesses. After the acquisition of the business, GAF had revenue of approximately $3 billion, but Ebitda was only $250 million.
Winter said: "Millstone and I rarely sit down and think about what we want to do in the future. We know exactly what we need to do. ”
Over the next two years, they handled lawsuits, adjusted their balance sheets, and sold chemical company International Specialty Products Inc. to Ashland for $3.2 billion.
Eventually, they reorganized the business into its current form, adopting the name "Standard Industries" to commemorate The Standard Paint Co., the company's predecessor more than a century ago. The name, like the alphabetical company names of GAF, BMI and SGI, helps keep a low profile.
Although Winter divorced in 2012 (and later remarried and divorced again), he and Millstone have been dividing the business equally. There was a time when the co-CEO's appointment was not stable, but Millstone and Winter insisted that everything worked for them. "In any family business, you have to put the business first," Says Winter. Otherwise you'll find out in a few years that the business will cease to exist. ”
02
Acquisitions and investments go hand in hand
In 2016, they made a splash by spending $2.3 billion to acquire European rooftop construction companies Icopal and Braas Monier. The two deals are the first big move by 40 North, an investment firm owned by Standard Industries (although they are interrelated and both were completed by Standard Industries).
Today, 40 North is aiming for another big target: specialty chemicals manufacturer W.R. Grace, the company's 2020 revenue was $1.7 billion, down from nearly $2 billion the previous year.
Winter has said: "The loss of numbers and value speaks for itself. "Its initial bid in November 2020 was rejected. In January 2021, the company raised its offer to $4.3 billion, or $65 per share. The chemicals company said it was "willing to discuss" the offer. In April, as the two sides continued negotiations, it raised its offer again to $70 per share. In September 2021, Standard Industries finalized its acquisition of W.R.Grace for $4.6 billion.
40 North's investments aren't all about changing Standard Industries' operations. The largest investment held by the company to date is in DuPont, worth $1.6 billion. The investment occurred mainly in the first quarter of 2020, when the company's stock price was hit by the spread of the coronavirus.
Currently, 40 North is betting heavily on startups with a portfolio of about $200 million. It has invested in 15 companies, including 3D printing company Carbon, electric bus maker Proterra and Everactive, which makes battery-free wireless sensors.
Standard Industries is betting on industrial innovation through its related venture capital fund, 40 North Ventures, which has invested in 15 companies, including 3D printing company Desktop Metal
Across industry, new technologies are transforming traditional businesses. Inside factories, AI-enhanced software is helping factories increase productivity, while sensors are transforming traditional industries from elevators to buildings. Materials science opens up new options for roofing products that haven't changed much in decades.
Millstone and Winter, who graduated from college during the tech bubble in 1999, look at the old-school industry through the eyes of Generation X. Winter said: "A lot of the changes are related to the age we were born in, which has a personal meaning for us. ”
One of the biggest trading markets in the future is solar energy. According to the Solar Energy Industry Association, the U.S. residential solar market has grown from near zero to a total of 19.1 gigawatts of solar capacity over the past 10 years. Thanks to the falling cost of photovoltaic cells, solar investment tax credits and the Biden administration's push, the future of solar cells is bright.
So far, however, integrated solar roofs, rather than rack-mounted solar panels, make up only a fraction of the total, so small that even industry associations can't keep track of them. Tesla, which musk calls a "killer product," has a slick black tile version of its solar roof, and it's the most popular and the longest waiting time to go on sale because Tesla has been slow and erratic about the launch of the product.
Millstone and Winter hope to benefit from a roof at a democratized price point and easy installations that benefit contractors. That's a big bet that could make It harder for Standard Industries to grow in the future. Joe John Tough, an energy investor and managing partner at Energize Ventures, said: "There is no doubt that I will not stand against Standard Industries. ”