I write this letter to share some of the things I’m working on and thinking about. A little about me:
I own and manage a digital product studio in Toronto called August. We design and build digital products. We spend about 80% of our time on client work and the balance on internal projects. I also invest in and build real estate with my two brothers.
some thoughts
We’ve got just under two months to go before our Toronto municipal elections. John Tory will almost certainly win reelection as mayor.
Last week he announced his housing plan, which includes five points to “get more houses built faster”. He frames these five points as pillars, which are as follows.
Expanding housing options by permitting Missing Middle housing, and allowing greater mid-range density on major roads and in areas served by transit.
Cutting red tape and speeding up approval times by creating a Development and Growth Division to streamline the process to get more houses built faster.
Making sure projects move forward and that land that could be used for housing does not sit idle by asking the province to allow the City to enact a “use it or lose it” policy for developers sitting on approved, but undeveloped, land.
Enabling more co-op, supportive and affordable housing by allocating a portion of City owned land to be developed by non-profits.
Incentivizing the construction of purpose-built rental housing by reducing fees and charges, as well as prioritize those applications.
The first point is obviously a good idea and an extension of the ongoing Exploring Housing Options in Neighbourhoods (EHON) program. Its success will really rest on Tory’s willingness to flex his new strong mayor powers, as Council is still effectively captured by local nimbys.
The third point is, I think, a bad idea, while the fourth and fifth are fine.
I’d like to spend a bit of time on the second, as I think that streamlining processes is both desperately needed and low-hanging fruit. There’s no entrenched constituency for slow and cumbersome processes.
Here’s where I would start if I were appointed head of the Development and Growth Division. To keep this short, these steps (other than the first) will be focused to mainly benefit missing middle development.
First, I would engage an agency (like August) to build a digital platform that would facilitate Official Plan Amendment, Zoning Bylaw Amendment, Site Plan Approval, and building permit applications.
This platform would replace emails with pdf attachments, and among other things, track and publish data relating to the nature and pace of City staff comments on submitted materials.
Second, I would increase the site plan approval requirement threshold from any project with five or more units to any project with 11 or more units. (This is also recommendation 12.b in the Province’s Housing Affordability Task Force Report.)
Third, I would recruit as many new Committee of Adjustment (COA) members as needed to ensure that a hearing could always be scheduled within four weeks or less. I would also use my considerable influence to skew the membership selection process to favour yimbys.
Fourth, I would increase the filing fee for any third party appealing a COA decision where the requested variances are approved from $300 to $10,000. (This is also recommendation 27.b in the Province’s Housing Affordability Task Force Report.)
For most missing middle projects, these changes would help a developer go straight from a quick COA decision, with a significantly reduced risk of appeal, to building permit applications, all through a digital platform that would incent, through greater transparency, faster and more reasonable City staff responses to questions and submissions.
business stuff
August: It has now been four years since I launched August. In that time we have grown from a small agency of five people and one client to a slightly larger agency of just under 20 people and just over a dozen clients of various sizes and operating in various domains. Despite those four years, it still feels like we’re very early in our trajectory. Assuming some continued concavity to our growth curve, it’s interesting to think of where we might be in another four years.
Here’s where I’d like to be.
I’d like August to be a $10m a year business with a 30% net margin or better, and not more than 40 people, including all staff and contractors. I’d also like us to have streamlined some of our service offerings and developed a strong brand and reputation in two or three domains—so less of a “we’ll take whatever we can get” approach. I’d like proptech to be one of those domains.
I’d also like Buildstack to be responsible for at least a third of that revenue. (That’s how we’d achieve that revenue and margin with that headcount.)
I think we can get there. In fact, I think it’s more likely that we either get there or go bust than end up anywhere in between. Not like 90-10, but maybe 70-30. And I’d rather get there than go bust.
I worry that this might not be ambitious enough, especially the Buildstack piece, but I’ve taken many Ls over the years so there it is. I’ll recalibrate along the way as needed.
By the way, I’m hosting a party to mark this four-year anniversary. You should come.Buildstack: We’re now two months into our launch and have been making a bunch of product improvements. I’ll post some release notes to our blog here either today or tomorrow for the full list.
I now think that we’re in good enough shape for September to be the month that I really start ramping up sales.That will mostly involve letting companies servicing real estate developers know that 1) we exist, 2) we’ve created a profile page for them, and 3) they can upgrade it to include their website, contact information, and maybe some job postings (more on that later) if they sign up for a paid monthly subscription.
I have no idea how that’s going to go.
investment stuff
FH1* and MR1**: Both of our ongoing projects have seen some important developments this past month but unfortunately none that I can yet share publicly. This is the challenge with real estate development, especially in Toronto: it’s very sensitive. I will have some interesting news to share soon though, so stay tuned.
We also have our eyes on two or three new sites showing some promise. Again, nothing I can share yet, but I would really like to add another bullet to this section.
*Forever Hold 1. A proposed four-storey multiunit rental building in Toronto’s west end that we plan on holding forever.
**Midrise 1. A proposed nine-to-eleven-storey multiunit residential building (tenure to be determined) in Toronto’s west end. We’re starting with a rezoning and will see where things go from there.
stuff I’ve enjoyed
This is some of the content I’ve come across over the past month that I’ve particularly enjoyed.
Article: I’m going to be a little shameless here and plug an article I wrote and had published in The Hub. It’s on my desire to inject our politics with more growth and future orientation. Check it out here.
Book: I re-read Jason Fried and David Heinemeier Hanson’s Rework this month. I had first read it following its release about a decade ago. It seemed a bit simplistic then, but now, with a decade’s worth of hustling to make a buck as an entrepreneur under my belt, comes across as being packed with timeless wisdom. It reminds me that I should probably re-read books more. Maybe one for every four new books or something like that.
Podcast: Limited Supply is my new favourite podcast. It’s essentially two of the best guys you could want covering the direct-to-consumer (DTC) industry doing just that. One host, Moiz Ali, sold his DTC company Native to Procter & Gamble for $100-million in 2018, and the other, Nick Sharma, owns, invests in, and consults for DTC brands. You’d be hard-pressed to find anyone who knows more about the space than they do. (Also, separately, I was recently interviewed on the Toronto Under Construction podcast.)
Video: I’ve got a whole Youtube channel to recommend this month. It’s called American Alchemy and features a series of interviews with weird and interesting people by Jesse Michels, who is himself a weird and interesting (and really smart) person. Jesse works for Peter Thiel as an investor at Thiel Capital and brings that young contrarian silicon valley billionaire energy. It’s already gotten decent traction but my guess is that this channel—and Jesse himself—will be much more popular in 12-18 months.
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And that’s all for now. Here’s to a good and productive September.
Feel free to reply to this email with any comments or questions. I love chatting about everything mentioned above.