Going Green from the Ground-Up: Cornering the Market in Sustainable Home Building

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TreeHouse
TreeHouse is a sustainable home-building store in Austin, Texas.

With changing consumer choices and a shift towards sustainable products, one thing that doesn’t always come to mind is our own homes. From the paintbrushes to the flooring, most conventional home-building products are built cheaply, with dangerous chemicals and unsustainable resources. In response to this gap, Jason Ballard opened up a now-successful sustainable home-building store called TreeHouse with a friend. Found in a sunny lot in Austin, Texas, TreeHouse offers a preselected range of sustainable products, demonstrations, and services, all while creating space for like-minded companies—making the world greener, one plank at a time.

What sets Treehouse apart from the other primary home-building retailers on the market like Home Depot? Haven’t other companies tried to go the ‘green’ route?

TreeHouse is certainly not a discount store, but we don’t see ourselves as a premium retailer, nor are we trying to be. If only two percent of all homes become sufficient or sustainable, then we are not moving the needle. So while we would love to be top-end in terms of quality, we would love to be middle market in terms of price, because you can have the greatest impact through volume.

A number of other companies have tried to do what we are doing, but they have always approached it as small, boutique-style mom-and-pop stores. This means customers will get boutique pricing and then the companies force themselves into becoming an overpriced niche and close up quickly. It has been one of our clear goals from the beginning to lower costs across the industry, and not just for us. We are not the first ones to have the idea of sustainable building, but are the first ones to put it together in a viable way with a long-term business model.

You said you came up with the idea for sustainable building products when you were living in Colorado and working in sustainable development, but then you met Garrett Boone, your main investor and the founder of the Container Stores. How did that happen?

Garrett was one of our earliest investors—we were basically at the beginning of the road, and we were hearing a lot of no’s from potential investors. The recession had just started and a lot of medium-sized businesses were going out of business. During a lot of the rejections, some people would still have suggestions for people we could to talk to, and his name come up. Garrett was really enthusiastic about the idea—he told us it would be hard, but he moved from an investor to a primary investor, and then eventually the chairman of the board. He is the owner of one of the most legendary retailers in America, so to have him as a mentor to navigate the waters of opening up a new product category, we couldn’t have a better guy on board.

When you are talking about lower costs for sustainable products, is that referring to products or a reduction in socio-economic costs on a larger scale? How can you accomplish that with so many low-cost (unsustainable) goods available?

Yeah, I believe all of that—what’s holding things back on a larger scale is that people feel like they can’t afford these things today. So we have to lower at-the-shelf product costs. To accomplish that, we need volume. One little boutique store buying 20 products a month is not going to change things; TreeHouse needs to be a large footprint store, be moving truckloads of products, and that is how you get the economies of scales that are needed.

It seems like there aren’t necessarily a lot of local sustainable home-building products on the market—so where are you sourcing them from?

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TreeHouse
Jason Ballard speaks at the 2015 Annual Magazine Release Party at TreeHouse.

So TreeHouse has a ‘product filter’ method with four different elements. One is sustainability (product life cycles), health (using the red list chemicals), quality (how does it perform), and responsibility (we partner with other responsible companies), and the products are measured by where they fit in there, which offers choice to consumers. Then, in purchasing supplies, we first try to buy local products in the category we want. If nothing is available, then we’ll try within a 500-mile radius, then the entire country, and if not, then finally we will look abroad. However, we value the local concept, and so TreeHouse does everything we can to find the various products as close as possible.

So TreeHouse is essentially a middleman between consumers and suppliers in a novel niche market—have you found that suppliers have also increased while your business has been open? What impacts do you think you can have on consumer choices?

Yes, there has been an increase, and in many cases of our network, that’s a direct result of TreeHouse’s impact. For instance, there was a wool installation company that is about to come to market, but part of the way they got funding was showing their investors a product order from us. This shows that there was demand for their type of product. If they hadn’t been able to show that a company like TreeHouse was already interested, then they would have never been able to be funded and open this type of new sustainable company. We hope to continue creating a footprint for sustainable products and have a positive impact on generating other new companies, ultimately creating a whole new sustainable community all in the service of making homes and the planet better.

In terms of customers, in our first year, people that were coming in were not even aware you could get things like recycled carpets. The second year, we were expanding and still finding ourselves, and during the last year of operations our sales have doubled. So the interest in these types of products is definitely growing, which is positive.

Of all the places you could have picked to open up your flagship store, why Texas? Have you noticed an increase in the radius of your customer base at all?

We did market research and thought about opening up in Boulder since we were there, but all the signs pointed to Texas. Some people claim that green building term was coined in Austin in 1992–1993, so there’s a long history of sustainable thinking here. The state has favorable policies, the market is large enough, and so the basis of awareness already existed. And then the cherry on the top, both myself and the other co-owner is from here, so it was perfect.

Ninety-five percent of our customers are from Texas, but people do come from far away to access these products—if you really want to build your home with green ideas, there’s nowhere you can really go. The other day, when we arrived to open up, there were customers that had driven in three hours to come to the shop. That’s not happening every day, but it is happening more and more, so it’s a good sign.

What are lessons you have learned during the past three years of TreeHouse being open?

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TreeHouse
TreeHouse offers a pre-selected range of sustainable products, such as non-toxic paints.

I would say that what I’ve learned is that when we do something that we are most proud of, making choices that are better for the environment, community, or social responsibility, they have always gone well for us. In our range of product selections, we were offering a choice of conventional products. Over time these goods, which we were the least proud of, ended up being the worst-selling products in every category. So by the end of the first year, we just abandoned the idea—it was something we never wanted anyway. So every time we make a decision like that, whether it’s customer service or product selection, the truer we stay to our values, the better it has gone financially, which is not something the world tells you. The world is telling you that people are unthinking, price-sensitive, and don’t care about sustainability. People do really think about value and quality and have philosophies and ideas about what a good life looks like.

The other discovery (from an internal operations perspective) is in terms of the people we hire—their CV may say one thing, but we have a values-driven hiring process instead. Some people have great resumes but are not a great cultural or value-based fit, and so we have learned to value that over their resume. This also lowers turnover rate.

We’ve also tried to be unafraid of change and unafraid of failure. We are changing in response to seeing what works best, as fast as we can. We are invested in this internally because we really believe in what we are doing—but it’s a lot of hard work!

So what’s next for TreeHouse? What about the industry of sustainable home-building products in general?

We want to continue to grow internally first—find better ways to do things. For instance, our new rainwater harvesting program or a zero waste program to help homeowners reduce their waste stream. We are also interested in geographical growth—getting it into other cities.

For the industry, I would love to re-imagine forestry for North America. Trees are an incredibly renewable resource, and wood is one of the most multifaceted building materials available. So that could be TreeHouse developing a sustainable forestry program or investing in other companies that are operating that way, or perhaps creating our own division. Right now, there are no large-scale, exclusively sustainable forestry operations in North America, which is a real shame. There are places like Germany, which is a great example of what healthy forestry should look like, but they have not caught on here unfortunately. It’s all an issue of scale—when TreeHouse has 100 stores that are all ready to buy sustainable wood products, we can change the landscape of sustainable forestry and hope that other people follow suit.