Mesh Quick Snaps - Diamond Construction

Tell us about yourself?

Hi. My name is Jeff Stone. I am a general contractor and developer based out of the East Bay of San Francisco. I've been in the construction business since I was a young child. My mom's an architect, my dad's a builder. I started working in the general construction space when I was about 15 years old. I'm currently a land use attorney and I own multiple companies. One of them is Diamond Construction. We're a custom luxury home builder as well as a multi-family home builder in the Bay Area. Then, I own a software company called Enkasa Homes which works to automate construction and design to brokerage services. And then, finally, I work for West Bank Corporation, which is a high-rise commercial as well as residential builder throughout the world.

What is your background?

Okay, so I'm a second-generation general contractor. My dad started our business 38 years ago. I also worked in the construction defect litigation space as an attorney and I'm a real estate broker. So, we own our vertical from acquisitions, all the way through general construction, and I've been working in this space personally since I was about 15 years old, in different capacities, and currently run multiple businesses of both the construction and the development space.

What are the issues and challenges that you are seeing?

As a law student who worked in the construction defect space, it was so overwhelmingly surprising to me how many unlicensed and uninsured companies work in the marketplace. But it makes sense because it's a more affordable model for them to offer better pricing. The issue to this day of what I've seen in the last 12 years working as a general contractor is that a lot of times, even if someone thinks they’re licensed and thinks they're insured, they're so busy working in the field, they're so busy working on projects that they forget to make a payment, they forget to put something in the postage that the lapse of licensure is where a real liability occurs for a lot of these medium-sized companies. So, it's not only companies that are working on licenses and trying to provide better competitive pricing by not paying taxes in insurance, but it's also just an honest mistake of not actually following through and seeing whether your license and your insurance are in good standing.

Why is license verification important?

The verification of license and insurance for both homeowners and general contractors is important in that in projects that are going through with multiple subcontractors or even one subcontractor, even in a small plumbing project where a pipe bursts, it can cause other consequential damages that were unforeseen, and much more expensive to rehab and repair. Not knowing and having and making sure that that licensed and insured individual can properly come and repair any of those items, it gives you the peace of mind to know that that person is someone you're willing to work with. Otherwise, you're creating some financial exposure that you might not think you are exposed to.

What is the potential liability?

The potential liability is truly endless. And where I say that is if you sign a million-dollar general construction contract with a general contractor, and that general contractor doesn't have a license and general liability or workman's comp insurance, and an accident occurs on their site. What would happen is the homeowner would ultimately be sued as well as the general contractor for not doing their proper due diligence, for making sure that anyone that was working on the site is properly insured and licensed. And in construction where real accidents can incur, all the way to death, the liability and the tortious sort of lawsuits that could come downstream are something that could be very, very significant, and over the value of the underlying contract.

What are the risks?

The potential liability for a general contractor hiring an unlicensed or a lapsed license or lapsed insurance subcontractor is very real. General contractors that are working with multiple subcontractors can sometimes take their eye off the ball because the relationship has gone so far, that they haven't made sure that that person is still carrying the same license or the same insurance. What could happen in that case is that the general contractor’s general liability or work comp insurance might not step in in the case that one of their subcontractors performed work as an unlicensed contractor, because there will be some sort of exception to their own policy. What that means is that's personal liability to that individual, depending on their corporate structure. So, the real liability - as general contractors should see it and the president and any sole proprietors of those companies should see it - is they’re putting up their assets on the line if they haven't verified whether or not a subcontractor is licensed and insured.

What do you need to know?

A weekly report and automated process to know whether my subcontractors are in good standing in both their insurance and their licenses is invaluable. First, it gives me peace of mind noting that anyone who's working on our sites is in good standing. Second - and almost equally as important - is any of those companies that we're working with for future projects and estimating, knowing that they’re licensed and insured gives me verification for any numbers that I put out that are used as the basis of my own estimating, my own bids, which could be a risk if they go out of good standing. So, at least gives you enough comfort that the numbers that you're putting out to future projects are with subcontractors that are licensed and insured, especially new subcontractors that you're just starting a new relationship with.

What does Mesh do for you?

Mesh’s value as a business owner as well as one looking forward is that it automates the onboarding and verification of home service professionals and businesses. As a general contractor and a developer and as a homeowner, you want to ensure that anyone who's performing work for you as a homeowner or as a business is both licensed and insured so that if anything ever goes wrong (which does happen in this industry and space), you're covered as both a homeowner and/or a general contractor. So, it uniquely brings onboarding and automates that home service marketplace that I haven't seen successfully done in other places.

What is the impact to the industry?

Yeah. As a business owner and a person who's worked in the construction industry for 20 years from a legal development and construction background, I couldn't be more excited about what Mesh is providing and where their outlook can go. It's the first tick. The thinking and the business leadership that is approaching this problem will be better and will safely put homeowners, general contractors, and subcontractors in a position in which they know where they're standing. I couldn't be more appreciative and excited for the future of this business and where it goes.

What is the ROI?

To quantify the return on investment, I first asked myself, how well do I want to sleep? As a business owner and a person who goes through the ups and downs and recessions and surpluses, sleeping is a very important part of that business. When you look at the return on investment on that emotionally, itself, this is a no-brainer. And you layer in the cost of labor. I live in the East Bay area of San Francisco Bay where labor is very expensive and office staff can cost us upwards of $120,000 to 150,000 dollars a person. The time that they would spend versus automating this approach and verifying it, but then not with a person in the office (probably more likely to make a mistake in this element), the return on investment from a financial standpoint makes all the sense in the world. But if you look at ROI in both, what is the causally lost potential? If your house never caught fire, you wouldn't take fire insurance out. But once your house catches fire, that's when, and at that moment, you recognize that the ROI is so far above any sort of element of the cost that you're in good shape.