"Construction just seemed very fulfilling,” says William… (Christina House, For The…)
The gig: As founder and chief executive of Sunrise Co., William Bone has been developing master-planned golf-course communities in Palm Springs and other resort areas since the early 1970s. The company has built 13 resort communities and constructed more than 14,000 homes, two resort hotels and several office buildings, shopping centers and hotels.
A seed is planted: Bone's interest in construction grew from working in his teens for his father's material salvage business. When he was an undergraduate at Stanford University, he interned for a home builder. "Construction just seemed very fulfilling, when in some businesses or professions you work in, you can never visually see the results of your work," Bone said.
Sweat equity: After graduating he bought a piece of land in his hometown of Bakersfield and undertook his first development, an apartment building. It was an opportunity to find out whether he truly loved being a developer. "When I did it, I hired all the subcontractors on one condition and that is they hire me back as a laborer, so I could see how you dug the ditches, how you poured the concrete and how you actually hammered the nails and put on the roofing," he said. "By the time I got done I knew I liked it."
Harvard-bound: Next, Bone entered Harvard Business School, which provided him with connections but left him yearning for a chance to roll up his sleeves. "Harvard Business School was a finishing school for corporate executives and not for entrepreneurs."
Post-graduate studies: Bone went to work as an assistant to Guilford Glazer, a large commercial real estate developer in Beverly Hills, and traveled the country. "I took his job [even though] it was the lowest-paying job offer I had, but I thought it was the best opportunity, because he was an entrepreneur and I could work directly with him as opposed to being in a real big corporation, where you would be way, way down somewhere."
Moving toward independence: Through Glazer, Bone met Kemmons Wilson, the founder of the Holiday Inn chain. Bone helped find and develop hotel sites for Wilson and then began putting up his own smaller-scale commercial properties around those hotels. Wilson helped finance those developments. Bone then began developing homes.
The desert beckons: A business partner came to him with a proposition. "He had a piece of property in Palm Springs that he had designed, and it was going to be a small planned unit residential project: a gated community with tennis courts and swimming pools.... I had some experience in home building, and so I liked the idea. There was really nobody down there doing much of anything like that."
A learning experience: "I didn't do any market research, I just drove around and looked at what was there.... We developed it and we struggled through it. I learned a lot and I got a lot of experience. I didn't make a lot of money on it, but at least it got me started down there."
A formula for success: He fared better with his second project, selling 239 homes in nine months. "The key difference was that I … started to utilize market research. This was probably the most important critical step in my success. Up until then, I was a struggling young real estate developer trying to get ahead, and we would do any kind of project that would make sense."
Replicating success: The next year, he sold 1,000 homes. He then took his model to Las Vegas, San Jose and Scottsdale, Ariz. "The architecture is identical, everything is identical. We just went over and cookie-cuttered them, and they worked just fine."
Golf course building: In 1973, Bone realized that he could build the same kind of homes on golf courses and charge the same. "I thought, 'People will go nuts over this,'" he said. "They were very, very profitable. We had no real competition. Because we were the only ones in the market with a product like ours at a price like ours, we owned the market."
How to distinguish yourself: "You have to have a better location, better architecture, better landscaping, better amenities. I am a product guy. I believe the product is very, very important, and the product isn't just the houses, it's also the services.... A lot of people are financial guys and not product guys."
Value leads to volume: "If the highest-quality car in the world was the best value, a Rolls Royce or something like that would be the highest-selling car in the world. Or if the lowest price was the best value, the Yugo would be the best. But it's not, it's a Toyota Corolla, or something in between. Between price and quality, the consumer says, 'Bingo! That's the bull's-eye, that's what meets my needs.' "
Keeping safe in a tough business: "Low-profit-margin projects work in good times. In bad times you lose a fortune. You've got to have a big profit margin. That is your best insurance policy against losing money. It is a shock absorber. I watched a lot of guys do low-profit-margin projects, and they do fine in good times and in bad times they are upside down."
Create your own fun: Bone enjoys tennis, golf and water sports, though he says he is not particularly good at any of them. "The most important thing about all these activities is who you are with and second, where you are. And how you are doing is least important. If you reverse that order it will drive you nuts. Because your golf game isn't very good most the time and your fishing isn't very good. You can't control how you are doing. The weather isn't always very good, but if you are with some people you like to be with, in a great place, you can have a lot of fun."