If your entire experience shopping at home improvement stores is defined by Home Depot and Lowe’s, the first thing you’ll notice when you walk into TreeHouse, a green home improvement retailer in Austin, is the pleasant lighting. There are no buzzing fluorescent bulbs overhead, no towering racks of products tilting to the ceiling. Rather, everything is human-scaled and decluttered, with an open, easily navigable layout and an abundance of natural light.
Products are arranged not by function–lighting, painting, plumbing, and so on–but divided into “design” and “performance” categories, and then organized by themes: air, water, daylighting, energy. In each area of the store, members of a highly informed sales staff are on hand to discuss projects and solutions. Maybe you came in just to replace an air-conditioning unit, but have you thought about insulating your attic and sealing your ducts? The vibe is less do-it-yourself and more let’s-do-it-together.
It’s the brainchild of Jason Ballard. Growing up in the pine woods of southeast Texas, Ballard was aware of both the beauty of the natural world and of the damage humanity has done to it. One of the most biodiverse areas in the lower 48, the forest has been thinned out by timber harvesting; it’s also not far from the Gulf Coast’s oil refineries. “I had a very Huckleberry Finn kind of childhood,” Ballard, whose grandfather was a refinery worker, explains. “A lot of time in canoes, in the woods, on the water. But I saw this other thing, too–the desecration of the landscape, and the unhealthiness it created in communities.”
Ballard resolved to make a difference; the question was how. After studying conservation biology at Texas A&M and working in sustainable construction in Colorado, he realized that the building sector was an overlooked, and underestimated, source of environmental devastation. Buildings in the United States are responsible for more energy and water consumption, landfill waste, and toxic exposure than almost any other source. And while the commercial building industry has made admirable strides to become more environmentally friendly, with comprehensive standards systems such as the LEED certification program, the residential building industry has not largely due to the incredibly fragmented nature of the industry. “You have to deal with the buildings that already exist, so almost every remedy has to be a bespoke remedy,” Ballard says. “Architects don’t always talk to builders, who don’t talk to subcontractors.” Ballard, who’s now 34, realized that he could have the biggest impact by “helping, as fast as possible, to transition us into a way of sheltering ourselves that doesn’t ruin the world around us.”
Together with a team of investor cofounders, Ballard launched TreeHouse in 2011 with the stated aim of “making homes thoughtful, sustainable, and healthy.” Ballard and his partners opened a 25,000-square-foot store in a former Borders with a design that was, essentially, a standard home improvement store that sold cutting-edge, eco-friendly products, like the Tesla Powerwall, Nest Thermostat, and Haiku/Big Ass ceiling fans. “There was no trusted brand or resource for all the products and services that would be necessary to rapidly transform the way we build and take care of our homes,” he says.
TreeHouse earned industry and press plaudits for its novel approach: Dwell called it a “new kind of a hardware store,” and Grist dubbed it “Home Depot with a green conscience.” Sales were on an accelerating curve, up 21% from the first year to the second, and 75% in the third year. But Ballard soon realized that the current version of the company, even at a national scale, could never hope to adequately serve its mission. “When we first launched, the only good analog for how to do this was Home Depot and Lowe’s,” he says. “But as we got into it, we realized that business model was built to solve a very different set of problems. People will come in to buy a lightbulb or two, or replace a window. It was going to take a thousand years to make any progress toward a radical change.”
There are about 135 million homes in the United States, the vast majority of which require more than LED lightbulbs and nontoxic paint to be less environmentally destructive: They need solar installations, kitchen remodels, all-new insulation materials. “Our first insight was that home improvement products sucked,” Ballard says. “We got about two years down the road and realized that was only half the problem–home improvement services sucked, too.”
In-home services are not exactly the remit of Home Depot or Lowe’s: This was a market space TreeHouse could enter. Ballard and his team decided, “for very missional reasons,” to reorient the business toward tackling big projects, installing UX and design people at the leadership levels and hiring highly trained floor staff who could relate the company’s “narrative” so as to convince customers that investing several thousand dollars into, say, a home energy retrofit was a wiser financial decision in the long run than replacing lightbulbs.
By nature, Ballard dreams big (at one point, he told me “we have to effectively retrofit every building in America”), which is a prerequisite for leading the kind of company TreeHouse hopes to become. “It almost has to be industrial in scale,” he says. As an example, he mentions FedEx. “You can’t start an overnight delivery business with one airplane–it’s not going to change the way we think about delivery. You need a whole fleet of airplanes. The minimum viable product is gigantic, because the scale of the solution has to match the scale of the problem, and the problem is effectively universal with regard to shelter.”
TreeHouse doesn’t disclose exact revenue numbers, citing its status as a privately held company. But it did reveal that in 2015, sales at the revamped Austin store were up 200% from their first year. It also brought in more than $17 million in new investments. The company has two more stores in the works: a futuristic building in Dallas that purports to be the country’s first net-zero energy commercial building, and a big-box retrofit in an undisclosed suburban location, also in Texas. But the “long-term vision for the company is to be much more than just a brick-and-mortar operation,” says Graeme Waitzkin, TreeHouse’s VP of ops and tech. “If we’re to achieve our mission of changing as many homes as possible, we need to be an all-encompassing home improvement company.” To that end, TreeHouse recently launched e-commerce on its site, does in-home consultations, and eventually hopes to move into construction.
Ultimately, TreeHouse will have to shift the current home improvement paradigm–it will have to, in some sense, create the market space that it hopes to fill. “We struggle with the identity relationship between us and Lowe’s and Home Depot, because in some ways we’re in the same mental space from a customer’s perspective, but we view ourselves a little differently,” says Aaron Moulton, the VP of creative and design. “It’s more about projects, less about hammers and nails and traditional DIY things.”
The newly launched online store doubles as a testing ground for conceptual experiments. “We can play with mental frameworks for delivery,” Moulton says. “Right now, it’s labeling and organization, how to categorize things.” E-commerce launched with two of TreeHouse’s most successful retail categories: Smart Home (“Internet of Things” products like the Nest Learning Thermostat) and Healthy Home (circadian lighting, water and air filtration, healthy cleaning and cooking products, and indoor plants).
“We look at the industry and see that no single company knows enough about homes and how they work,” Waitzkin says. “Online is the next natural step. We’re just scratching the surface of how technology will enable us to not just be everywhere our customers need us to be, but how and why we’re different.”
A larger technological infrastructure will also provide TreeHouse the thing every tech company craves: data. There’s an inherent tension between scaling up and tailoring services to individual homes, but Moulton believes that information can shrink that gap, and tighten the feedback loop between diagnosing and addressing a given home’s inefficiencies. “As we scale, we can start collecting more and more data about people’s homes–we can do more robust pattern recognition,” says Moulton. “That allows us to get a little more bespoke to the location, the different types of homes in that area, the microclimate and accordant building science, etc.”
Eventually, TreeHouse wants to be nationwide, with stores in different types of localities (they’ve toyed with the idea of an ultra-small TreeHouse in Manhattan or San Francisco), a strong digital presence, and localized, flexible teams of contractors, designers, and builders. That will, of course, take some time: During a fundraising round last year, Ballard told every potential investor that he didn’t want their money if they wanted a quick exit. “I would think it a massive success if we can get ourselves into position to effectively touch every home in America in 20 years,” he says. “But that’s not light speed . . . there’s a physical world to contend with.”
Ballard’s zealous enthusiasm appears to be contagious: Its latest fundraising round was led by Container Store founder Garrett Boone and GameStop founder Gary Kusin. Kusin, whose CV includes stints as CEO of FedEx Kinko, director of Petco Holdings, and a consultant for TPG Capital, told me that TreeHouse “may be the biggest business opportunity I’ve run across in retail in my lifetime.”
The Dallas store, scheduled to open in late spring, is a model of what it looks like when TreeHouse flexes its muscles. On a recent tour of the site, Ballard pointed out some of the eco-friendly construction methods used for the store: the concrete walls, poured on-site and then tilted up into place; the rainwater barrels outside in what will be the outdoor/gardening area; and the sawtooth roof, with multiple roof planes that allow more sunlight to fill the store and provide a greater surface area for solar panels.
Large clerestory windows will reduce the lighting load–and solar batteries will take care of it after sundown–and integrated fans with heat sensors will kick on to move airflow through the store, removing the need for HVAC. To the extent possible, all the building materials are local, and the design borrows from a Texas residential, rather than a commercial, aesthetic. If all goes according to plan, the 35,000-square-foot store, designed in partnership with Lake Flato Architects, will have no net energy costs. It will also anchor a wholly revamped shopping center, which will include a coffee shop, taco joint, juice bar, yoga studio, and an open air courtyard.
In every way, the project is representative of the TreeHouse philosophy. “Our buildings are not incidental to our brand: It’s not just beautiful, but highly functional,” Ballard explains. “The point is to provoke the industry–we are going to prove it’s possible to run a commercially successful business while caring about aesthetics, caring about ecology, and caring about human health and well-being. We don’t think green, sustainable building will be niche. Our whole mission is to normalize it.”
[Photos: courtesy TreeHouse. Renderings: Lake | Flato Architects]