Modern Method Gunite, and companies like it, are helping usher in a new age of interior surface applicators.
Though the firm only began pebble application in 2003, it isn’t new to the pool and spa industry, having originated in the gunite trade more than 40 years ago. MMG also installs artificial rock and, for a time, was a natural stone distributor.
Despite the company’s relatively new foray in applying interior finishes, MMG and its chief operations officer, Edgar Sanchez, have already made their mark on the trade, with Sanchez rounding out his first year as chairman of the National Plasterers Council. MMG has accomplished this while avoiding the path of many plastering firms, which branch out into renovations.
In addition, the family company is a study in generational evolution, as Edgar Sanchez and his siblings now share a significant part of operational responsibilities with their parents, who own MMG. A firm that started with an emphasis on rock-solid craftsmanship, customer service and innovation now benefits from the younger generation’s formal business education as it expands from its Houston headquarters into Austin and San Antonio.
Local recognition has also come along for the firm: Late last year, Edgar Sanchez’ alma mater, Baylor University, named MMG as a finalist for one of the institution’s Texas Family Business of the Year awards.
Forming partnerships
A key to MMG’s success, Edgar Sanchez says, is the fact that company officials think of local builders more as partners than customers. Indeed, the firm’s decision to avoid entering the remodeling market has helped it establish a base in Austin and San Antonio.
“[Builders] ask, ‘What makes you different?’” says Edgar Sanchez. “I say, ‘I’ll tell you one thing — you’re not going to be selling against me.’”
That doesn’t mean MMG isn’t interested in working on renovation projects. In fact, the company has made it a priority to help builders land those jobs, feeding them renovation leads when possible.
“Now we’re like their remodel arm,” Sanchez says.
When a homeowner wants to obtain a bid, MMG visits the site, measures it, discusses pebble options and takes extensive pictures of the property, including the equipment pad. Armed with this information and MMG’s bid, the builder has all they need to move forward.
Sometimes the builder is too busy to take on the work, but making that contact is still a net gain for MMG, as the mere gesture helps foster loyalty.
“They’ll say, ‘Thanks for thinking of me,’” Sanchez says.
The company has found another way to help its customers build their own business — by putting Edgar Sanchez’ business degree to work. For its top customers, MMG helps with business development, largely by providing information it gathers from its own work for each builder.
“As our own internal measures, we started tracking all kinds of things — how many batches of pebble we apply, how many jobs total, how many jobs did we do per zip code, what color and so on,” Sanchez says. On the gunite side, managers will tally the average number of yards of concrete used per project, and how many feet of steps and benches were shot, among other metrics.
Initially, MMG was keeping these records in order to help analyze its relationship with each builder, but it occurred to Sanchez that the builders could benefit from seeing these figures as well. “In a recent Harvard Business Review article, it talks about how you can’t manage what you can’t measure,” he says.
The statistics might be accompanied by advice on various aspects of the business, such as where to advertise most, based on what zip codes proved most active for the builder.
MMG began providing this service about two years ago for its top 10 customers. But soon enough, more builders found out about the service and requested it. Now, the company provides extensive data to its top 10 builders every quarter, and to its top 50 at the end of the year. Others will receive a two-page synopsis.
“We started doing it because nobody else was,” Sanchez says. “In a market where everybody’s going to switch [subcontractors] for a few bucks, when you can provide something that they don’t have themselves ... then you can deserve a little bit more margin.
“Plus, we are cultivating our own growth. If we make them better, they’re going to sell more jobs and they’re going to use us.”
In addition, the act of analyzing other companies always yields new business lessons that can be applied to its own operations, Sanchez says.
Spanning the generations
Modern Method Gunite is a true family business, with literally dozens of relatives employed and the second generation in training to take over.
Though the company started more than 40 years ago, it became Modern Method in 1981, when Edgar Sanchez’ father, Cesareo, and two partners moved it from the San Francisco Bay area to Houston and renamed it. By that time, Cesareo Sanchez was already a seasoned veteran — in a family of seasoned veterans. He had started with Anthony Pools in 1966, at the prompting of his uncle.
“He’s the one who started teaching me that it was very hard work but ... if I take advantage of my capability, I can learn the different phases and get whatever I want,” Cesareo Sanchez says. He moved to the Bay Area company, Peninsula Gunite, in 1969, when his brother told him of a foreman opportunity.
The move to Texas presented more career opportunity, and by 1989, Cesareo Sanchez and his wife Carmen owned Modern Method outright, after buying their partners out. Though the Sanchez children began working in the family business at early ages, they weren’t going to get management positions on a silver platter.
After Edgar earned a Bachelors degree in entrepreneurship from Baylor, he wanted to join his parents. He figured he could implement some ideas he had developed for MMG while doing case studies and class projects in college, such as developing an employee handbook.
“Before I graduated, I identified lots of little holes that I thought needed to be plugged,” Edgar Sanchez says. “My parents were gracious enough to pay for college ... and I was going to pay them back by fixing a few of these things. And I thought it would be a great place for me to learn.”
His mother, however, didn’t think this was the right path. She worried Edgar would feel a sense of entitlement and miss the opportunity to learn from different companies. “She was very adamant that I go work somewhere else,” Edgar Sanchez says. “I literally had to show her a game plan of what I planned to accomplish the first year.”
His one-year strategy included several human-resources-related projects, such as setting up 401k, profit sharing and health-insurance plans. “At that time, in the late 1990s, that was pretty revolutionary,” he says.
The one-year plan was completed in six months, and Edgar Sanchez presented new projects. “I kept coming up with more and more things to do as a means of justifying my need to stay,” he says.
Edgar’s sister, Karla Escobar, followed him to Baylor to study human resources. Carmen Sanchez put her daughter through the same initiation — present a plan and implement it. She now serves as the firm’s human resources director. Cesar Sanchez, Jr., serves as vice president of operations.
Going to the surface
One of Edgar Sanchez’s major projects and responsibilities became the running of MMG’s pebble division The company decided to create its first pebble crew by training existing employees, with the manufacturer’s help.
This was a win-win prospect for those crew members ready for something new and different. “[That made it] easier to teach them, because when they want it, it’s easier,” Cesareo Sanchez says.
That first crew has grown into five, with a sixth and perhaps seventh planned this year. The key to training, Cesareo Sanchez says, has been to work each novice hands-on from the start. Then they can work a little more independently after three to six months. “But we keep them under a supervisor for a good year before we really let them do the work themselves,” he adds.
MMG has long avoided hiring experienced tradesmen from other companies, and it mostly adhered to this while building its pebble division. “You can teach people to trowel but you can’t teach them to be a good chemistry fit,” says Edgar Sanchez. “There’s not a person in our company, to this day, who knows how to trowel from a previous job.”
While MMG’s gunite division was well-established in the area, breaking into the interior surface market wasn’t easy.
“We got thrown out of offices, literally,” Edgar Sanchez says. “I hadn’t experienced that before. We were Modern Method! If you were selling gunite services, they would open the door. If you start talking pebble, it’s everything you can think of — ‘It’s too rough, you don’t know what you’re doing, how do you turn guniters into plasterers?’ Once you finally convince them, they say, ‘It’s too expensive.’”
About a dozen builders signed on the first year, and more came around as the product became popular locally. Yet the increase wasn’t an accident or even simple word of mouth. If a particular builder client refused to try pebble, MMG might court its biggest competitor. “I’d surround them by people who push pebble so they wouldn’t have a choice,” Edgar Sanchez says.
He might put a special promotion in place — for instance, offering to add a sparkly abalone shell additive to the pebble on all spas. This allowed the builder to offer value, and when homeowners saw the effect, they wanted it on the whole pool, raising the ticket for both contractor and sub.
“And because [builders] were excited about the promotion, they were always talking about it,” Edgar Sanchez says. “Then that builder I really wanted to get was finally calling me [for a meeting].’” Ten years later, MMG’s pebble division has nearly 200 builder accounts and has become one of the strongest Pebble Tec applicators in the country.
