You are currently viewing Billionaires You’Ve Never Heard of #5: Peter Gilgan: From Accounting to Building Houses

Billionaires You’Ve Never Heard of #5: Peter Gilgan: From Accounting to Building Houses

Peter Gilgan is a Canadian billionaire, CEO, and founder of Mattamy, a home building company.

Since founding the business in 1978, he built more than 100 000 homes.

Today, his fortune stands at around 3.4 billion dollars as these lines are written.

Mattamy is a private company and his CEO is extremely discreet about his private life, so it is difficult to find out how close to reality this number really is.

What is certain is that with all of the homes he’s built, Peter Gilgan is a very rich man.

This is how he did it.


Humble Beginnings

Gilgan grew up in a middle-class family in Burlington, Canada. He had 6 siblings.

His dad worked as an electrical technician and his mum raised the seven kids.

After high school, Peter studied accounting and went on to work as an accountant for Hilbron Ellis Grant, a bookkeeping company in Toronto.

While at Ellis, he enjoyed visiting his clients to find out how their businesses were handled.

He became the confidant of many CEOs. He learned that some companies were managed using fear, some figured it out as they went along, and finally, some were built on inspiration.

His favorite companies to visit were the home builders, and he eventually decided to try it out for himself.

He bought two pieces of land in his hometown and built two houses. Build is a big word, he actually helped on the construction site and learned everything he could – he had no clue what building a home entailed.

He eventually sold the two properties and earned 10% of his investment. Satisfied, he founded Mattamy and kept going.


Scaling

After his first success, Peter was pumped.

He started building entire neighborhoods.

Then the first obstacle hit.

In 1981, mortgage rates were raised to 20%.

Since he was in the middle-class home market, Gilgan lost all of his customers in one day. So he changed his target and sought to build much cheaper houses.

Looking at how they were built, he borrowed cheap material and low-cost construction methods to apply them to traditional middle-class family homes. Doing so, he cut home prices by 30%.

In 1983, the real-estate market was picking up speed again. He built an entire neighborhood with his new methods and sold all of the houses at record speed.

By the end of the 1980s, he had more than one thousand people working for him. He was growing so fast he bought all of the land he could find.

Unfortunately, in the early 1990s, the real estate market got hit again and Gilgan ended up with a bunch of plots he couldn’t sell.

He made himself the promise never to buy land again if he didn’t know why he was buying it.

He still owns some of the land he bought then to this day.


Innovating

The 90s crisis didn’t stop people from moving to Toronto. Land was getting more and more expensive and Gilgan started to think about more efficient ways to use it.

Around that time, Peter took a trip to Los Angeles. He saw how real estate developers dealt with land prices by building on wider, shorter lots, to limit land expenditure.

He studied the idea thoroughly to see if it made sense.

Once he was sure it was right (using focus groups to validate his idea), he began building.

By that time, Mattamy employed so many people in his hometown that the city council let him experiment with land redesign.

He added a garage next to the houses and a porch on the front door.

It worked!

People loved this new appeal!

In 1997, Peter visited a GM car factory. He was impressed at how efficient the supply chain was, especially inventory-wise. The JIT (just-in-time) system enabled the factory to minimize inventory and keep costs to a minimum.

So Peter decided to experiment JIT but for houses by building them…inside. He set up a research factory in a disaffected hangar and built 600 houses.

While the costs were slightly higher, inside building enabled a faster process and better HR organization since the weather was no longer a concern. Blizzard or not, houses were being built and workers were working in a nice warm environment.

In 2007, convinced that building homes inside was the future, he set up Stelumar Manufacturing, a subsidiary of Mattamy.

Stelumar builds factories that build houses on an assembly line. To minimize house transportation costs, the factory can be dissembled and assembled at will, so Gilgan can build his houses near their final location.

While this is slightly more expensive, factories enable Mattamy to build a house in 11 days, decreasing by 86% the classic waiting time of 81 days.

That enabled to gain consumer satisfaction and trust, the features that make Mattamy the largest private homebuilder in North America.


Lessons

Peter Gilgan learned several lessons through almost five decades of building houses.

The first lesson is the need to study carefully big decisions and go all-in on the right option.

Once he understood that wider and shorter lots were good ideas, he started buying all of them at a speed that left his competitors stunned.

The second lesson is that difficult moments and crises aren’t necessarily bad.

The first crisis in the 80s gave him the chance to reinvent house building by building them in a cheaper way than before. The second crisis in the 90s changed the way he was using land.

These two moments defined Mattamy and enabled it to be the successful company it is today.

The third lesson is that your employees are more important than your customers. Peter Gilgan chose very carefully each of his employees and doesn’t offer them a job – he offers them a career. Many of his employees have been working with him for more than twenty years.

He manages his company by inspiring his employees, highlighting the nobility of their mission.

By maintaining employee satisfaction high, he maintains house quality high as well – and happy customers make a profitable business.

Finally, his last lesson is to donate. He gave more than 250 million dollars to charity, and built a new section of the Toronto Children’s hospital.


Conclusion

If you have read the four other articles I have written about the four other billionaires, you probably found out by now that all of them respect similar practices in business.

The first one is control. Mattamy manufactures the houses itself and does not hire external contractors. Everything, from land to design to final assembly is handled by the company.

The second lesson is 10X. Peter Gilgan does not merely build houses – he builds entire neighborhoods. He has a big vision and does all he can to achieve it.

Finally, the last lesson is relentless innovation.

What I admire most about Peter Gilgan is his faculty to learn new knowledge. His training as an accountant never prepared him to build houses and yet, almost all innovations Mattamy introduced came from him.

This is proof that with an open mind and a willingness to learn, you can achieve anything.

Photo by Blake Wheeler on Unsplash

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Sources:

Walikali

The Star

The Globe and mail

Canadianbusiness

Dreshare

Inc

Mattamyhomes

Peter Gilgan Foundation

Forbes

Toronto Life

Wikipedia

CPA Canada