Nomad's journey
After years of drifting,
president finds calling in building Choice Wood
by Burl Gilyard Nick Smaby was always a restless seeker. To the outside world, he may have looked like a nomad who couldn’t make up his mind about what to do with his life. The earliest entries on his resume did not immediately suggest that he was destined for success in business.
Armed with a psychology degree from Dartmouth College, Smaby earned a law degree from the University of Wisconsin in 1975, but had no love for the legal profession.
“I hated the practice of law. I did it for about a year and realized it was not the calling for me,” says Smaby. “So I quit with some vague dreams about someday becoming a writer.”
Smaby moved to Manhattan and pondered writing the Great American Novel. “I lived like a writer, I thought like a writer, I did everything but write,” he says with a laugh. “I rather quickly became broke.”
He returned to his native Minneapolis and found a job at B. Dalton while entertaining schemes of opening his own bookstore. He and a partner opened Donegal Bay, a bookstore and art gallery in St. Louis Park in 1979. Smaby recalls working seven days a week for two years, scrapping and scraping to make a buck, before selling his interest in the bookstore.
Between careers and without a plan, Smaby fell into his next line of work. “A friend of mine was building his own house and asked me if I wanted to help him,” says Smaby. “I said, ‘Why not?’ ” Smaby strapped on a tool belt and began to learn the fundamentals of carpentry.
He soon discovered that he enjoyed the work. “I was absolutely without any training whatsoever, but realized very quickly that it felt good to be building things. It seemed healthy,” says Smaby. “And there’s tremendous satisfaction at the end of the day, being able to look at what you’ve accomplished.”
But Smaby was still something of a wanderer. Newfound contacts in the contracting and building industry led Smaby to sign on with the newly formed Choice Wood Co. in November 1983. The custom residential remodeling firm had been founded by six people including Dale Mulfinger, currently a principal with SALA Architects, and Sarah Susanka, now best known as the author of The Not So Big House.
Today Smaby, 56, is president of the St. Louis Park-based Choice Wood, headquartered amid a warren of older industrial buildings. The six original founders of Choice Wood have long since moved on. With the broader economy sagging, Choice Wood’s business has been booming. Sales were up more than 30 percent in 2002, with revenue hitting $16.6 million. “2002 was far and away our most profitable, successful year,” says Smaby. The company’s diversified business now includes new construction, remodeling, custom cabinetwork, design and real estate services. The company is pushing to expand, eyeing adding a second floor to its headquarters. Choice Wood has 69 employees, including its five partners.
“I feel very fortunate, and it’s not about the money,” reflects Smaby. “It’s about the satisfaction of helping to build a company, getting to a position in life where I have freedom. I have some freedom to do other things that are important to me as well.”
Despite his self-deprecating reflections concerning his unlikely path into the contracting business, Smaby acknowledges that he had the urge to run the show — or at least part of it — from the beginning. “I realized in very short order I wanted to be an owner,” says Smaby. “I guess I had some natural entrepreneurial instincts that came into play.”
Smaby lobbied early for an ownership stake, which didn’t prove to be difficult to obtain. “I think we lost $25,000 on our first job out of the chute, so they were looking for partners,” Smaby says with a wry chuckle.
Smaby had found his calling, but the fledging company had yet to find solid footing. Throughout the 1980s, the company bumped along as a relatively small, struggling business concern. Revenue rose from $250,000 in 1984 to $1.4 million in 1989, but the firm remained unprofitable. “We would have figured out a way to keep going, but it wasn’t fun and it wasn’t satisfying,” recalls Smaby.
Mark McClellan, 50, had zero experience in contracting and design, but did have a banking background in finance. After selling his downtown Minneapolis pizzeria, A Slice of New York, he was casting about for something else to do. McClellan initially approached Smaby about doing some low-stress work for Choice Wood, like driving a truck for the summer, money be damned. But as conversations with Smaby evolved, McClellan wound up joining Choice Wood as a partner and CFO in 1989.
“The turning point was 1989: We restructured the business,” says McClellan. “There were a number of partners that were either not active or didn’t seem to fit the new model. That’s kind of the real birth of who and what we are today.”
The philosophy of the company didn’t change, but McClellan brought better fiscal management to Choice Wood. For example, McClellan encouraged the company to buy its own building, rather than continue to rent space. As the company grew financially sturdier, Choice Wood was eventually positioned to diversify its business. Since the restructuring, the firm has been consistently profitable and steadily growing.
Under the new structure, Smaby functioned as the lead salesperson for the firm, McClellan handled business operations, and partner Chris Jordan — with Choice Wood since 1984 — oversaw production, serving as the lead foreman in the field. Although Choice Wood has grown substantially since its 1989 reorganization, some things never change: “We have one salesperson,” says Smaby. “And that’s me.”
Today, the firm touts itself as a premier, high-end design-build firm. Choice Wood is no longer simply a remodeling company, drawing about 50 percent of its revenue from new home construction. While contracting is the main business, Choice Wood’s staff also includes several architects and designers.
In 1992, Choice Wood added its own custom cabinet and millworks operation, bringing aboard cabinetmaker Andy Berg as a partner in the firm. The fifth partner, John Greely, who oversees production, joined Choice Wood in 1998. McClellan also has a real estate broker’s license so that the firm can offer real estate services through its Choice Properties subsidiary.
In the process, Choice Wood has won the admiration of its business colleagues and collaborators. Tom Meyer, a principal with the Minneapolis-based architecture firm of Meyer, Scherer & Rockcastle Ltd., has enjoyed forging a good working relationship with Choice Wood while watching the company grow. “They have grown and evolved and changed and done all the things that a business has to do to survive and prosper and found their way over a long period of time,” says Meyer. “And through it all they’ve hung onto a core identity as well.”
Meyer says that Choice Wood has a reputation for top-notch craftsmanship, good communications, reliability, and standing behind their work. Meyer personally hired the firm to do an addition on his home. MS&R and Choice Wood frequently work together on projects.
Meyer believes that Choice Wood has responded tactically to business challenges. “A lot of small building firms tend to be pretty static, they just like to build projects,” says Meyer. “I think Choice Wood has been more assertive and more adaptable to things that come their way and making things happen. They strike me as always being resourceful.”
Clients of Choice Wood are effusive in their praise for the work of Smaby and company. Choice Wood is currently building a private suburban residence for Bob Ulrich, chairman and CEO of the Minneapolis-based Target Corp.
After looking at several prospective builders, Ulrich selected Choice Wood and has no regrets. “They have an outstanding reputation among high-end people. They really have access to excellent craftspeople,” says Ulrich. “I just think they’re terrific: they’ve kept on the schedule and the quality of work has been fantastic.” Ulrich praises Choice Wood for maintaining good client communications, being “top-notch professionals,” and being willing to go the extra mile.
Bruce Sanborn hired Choice Wood for a substantial project on White Bear Lake in Mahtomedi. The project called for taking down an existing home and putting up a 6,000-square foot home, plus a garage/carriage house, which includes an art studio.
“They’re delightful to work with and their craftsmanship is terrific. They really did a bang-up job as far as I’m concerned,” says Sanborn of the project completed on budget in the fall of 2001. “What we wanted to accomplish with the look worked, because it does have the feel of an old lake house.”
Sanborn was chairman and CEO of the St. Paul-based North Central Life Insurance Co., his family’s business, until the firm was sold in 1999. Sanborn also relishes the personal connection that he established with Smaby. “I actually enjoyed working with him so much we went on a golf trip last year,” says Sanborn. “They’re an awfully good bunch of guys.”
On the strength of such testimonials and word-of-mouth referrals, Choice Wood has never done much marketing. “We don’t advertise and we never have,” says Smaby. Many of its projects have been profiled in design magazines such as Architectural Record, Architecture Minnesota, Midwest Home & Design, and others.
The firm also has an ongoing relationship with the PBS program “Hometime,” which has featured numerous Choice Wood projects on the air. One of Choice Wood’s strengths is giving new and remodeled projects a classically traditional feel: Even Choice Wood’s new projects look like they’ve been around for awhile.
Smaby says that one of the keys of the company’s success is that each partner can play to his own strengths, and that the partners assiduously stay out of each other’s way. “It continues to evolve,” says Smaby of his company’s identity. “For us individually as partners we’ve been able to put our energies into things we’re pretty passionate about.”
Looking to the future, Smaby expects the firm to diversify further into real estate and may begin to develop its own projects. But Smaby doesn’t plan to stretch himself or Choice Wood too thin. Says Smaby, “I don’t think we want to mess with our core business.”
www. paradeofhomes.org. Shawn Nelson, New Spaces: 952.898.5300; shawn@newspaces.com. Nick Smaby; Choice Wood Co.: 952.924.0043; www.choicecompanies.com. Mark McClellan, Choice Wood Co.: 952.924.0043; www.choicecompanies.com. Tom Meyer, Meyer, Scherer & Rockcastle Ltd.: 612.359.3222; thomas@msrltd.com
