David Millstone and David Winter, co-CEOs of Standard Industries, are working on a top-secret design for a new solar roof that they expect to launch within the year – a new, direct competitor to Tesla’s flashy one, for which there is a multi-year waitlist. For more than a year, researchers at their solar company’s San Jose, California R&D center have been tinkering with the design. Their advantage: Their New York City-based company is the parent of the country’s largest roofing manufacturer, and has already sold well over 2,000 solar roofs with an earlier iteration called Decotech. “We have put more solar roofs out there than Elon Musk has,” Winter says, in a swipe at one of the world’s richest people. Over the next decade, they hope to install millions of these new roofs helped by a price point designed for the masses and an army of certified installers. “If you can crack rooftop solar that is functional, affordable and aesthetic, we think that is life-changing for Europe, the U.S. and around the world,” Winter says. “”If somebody could crack it, it was going to be us.”
Don’t underestimate “the two Davids,” as Millstone and Winter, who are both 44, are sometimes called. Through their family-owned conglomerate, which has $6.4 billion in revenue and Ebitda of roughly $1.4 billion, they’re on a mission to use technology to change the way that people think about the simple notion of having a roof over one’s head. They expect to spend $1 billion over the next several years to get there.
Solar is their biggest, boldest bet, but it’s hardly the only one. Last year, they retooled 10 plants in seven months – an unheard-of speed for an industrial operation – to launch a new version of their flagship asphalt shingles that can withstand hurricane-force winds. This year, they’re working on a prototype for a new 5G roof concept that will allow telecoms to more seamlessly incorporate the technology into its residential roofs. They’ve rolled out new digital tools like 3D modeling and aerial measuring to make their 12,000 certified roofing contractors’ jobs easier, especially during the pandemic. Beyond roofing, they’ve got a massive, related investment arm, 40 North, which has some $5 billion in assets and is betting heavily on industrial innovation.
“We’re at the beginning of the golden age with embracing industrial technology, like with the Internet in 1990 when we had decades of growth ahead of us,” says Millstone.
It looks like the playbook of a VC-backed upstart, but Standard (which has its own related VC arm) is something else entirely. Dating to 1983 when corporate raider Sam Heyman, a one-time member of the Forbes 400 and the father-in-law of Millstone and Winter, won a proxy battle for roofing-and-chemicals company GAF, Standard today is an industrial powerhouse, ranked number 69 on Forbes’ list of America’s largest private companies. The interlinked businesses under the Standard Industries umbrella and related investment operations continue to be owned by the Millstone-Winter-Heyman families; the family is worth well over $10 billion, according to Forbes estimates.
Millstone and Winter, who have run Standard together since 2005 and have rarely spoken to the press during those years, would rather talk about their vision for roofing and being modern industrialists than their wealth.
With GAF’s roofs on roughly one in four North American homes, they have the potential to shake up their staid industry using everything from new materials to sensors and artificial intelligence. “As we’ve begun to reimagine what a roof is, whether it is a green roof or a solar roof or real estate for 5G, we have the ability to reinvent the way that people live,” Winter says.
Standard’s history dates back to the 1980s heyday of corporate raiders, when Sam Heyman made a fortune investing in undervalued companies using Drexel-backed debt. He’s best known for his successful battle for GAF and the chemical concern he spun out of it, International Specialty Products. Though he had four children, none joined the business. So after Millstone and Winter married into the family – Millstone to Jennifer, Winter to Elizabeth – Heyman brought them in.
David Millstone grew up in Bethesda, Maryland, to parents who worked for the federal government. He studied math and philosophy during college, and wanted to be a philosophy professor. He rowed crew at Yale (he met Jen Heyman during his sophomore year through his rowing partner who was her fifth-grade boyfriend) and still loves endurance sports, including marathons, triathlons and ski mountaineering.
In 1999, he cofounded an Internet company that would send online profiles of college students to employers. “If we had been at all thoughtful about this we would have had LinkedIn before LinkedIn,” he says. Instead, they floundered. “We failed in every way a company can, other than going to jail,” he says.
After that, he followed Jen Heyman to New York, getting a job as an analyst at Bear Stearns. “I am slightly claustrophobic and afraid of elevators, and I remember going to the office at 3 a.m. and hoping that the elevator would break down so that I could go to sleep in the elevator,” he recalls.
He soon left and went to law school at Harvard. After graduation, he was about to join Apollo, the private equity firm, when Sam Heyman invited him to join the business. “I asked everybody I respected, all these mentors I had, whether I should do it, and to a person they said, ‘No, it’s a terrible idea,’ but I did it anyway,” he says. “In hindsight, thank God I came in when I did.”
David Winter, meanwhile, grew up in the New York City suburb of Rye, the eldest son in the fourth generation of a family of real estate developers. His great grandfather, an immigrant from Poland, started as a painter of tenements and eventually became a top developer in midtown Manhattan. After college at University of Pennsylvania, where he double-majored in political science and economics, Winter went to work in the real estate group at Morgan Stanley, knowing he would soon join his family’s business. After he married Liz Heyman, who he met through family friends, Sam Heyman asked him how they might work together. He started doing risk arbitrage for Heyman while continuing to work at his own family’s real-estate firm alongside his father, Benjamin, with whom he is very close. “I effectively pulled double duty,” he says.
In 2009, when Millstone and Winter were both 32, Heyman died unexpectedly after complications from open-heart surgery at age 70. The company was struggling, and they stepped into the breach. The global financial crisis had strained the balance sheet and GAF was dealing with a long asbestos-related bankruptcy. The group’s revenue when they took over was around $3 billion, but Ebitda was just $250 million. “There wasn’t a lot of David and I sitting around wondering what we wanted to be growing up,” Winter says. “The things we had to do were pretty clear.”
Over the next two years, they dealt with the litigation, recapitalized the balance sheet and sold off the chemical company to Ashland for $3.2 billion. Ultimately, they reconfigured the operation into its current form, adopting the bland Standard Industries name as a nod to the company’s earliest history as Standard Paint Co. more than a century ago. That name, as well as the alphabet soup of company names like GAF, BMI and SGI, may have helped to keep it under the radar. Even some developers, one step removed from roofing manufacturers like GAF and its chief competitor, Owens Corning, pay little attention to whose materials end up on their buildings. “It’s not a brand like a dishwasher, roofing materials are roofing materials,” says billionaire real estate developer Jeff Greene.
Though Winter divorced in 2012 (and has since remarried and split up again), he and Millstone continue to divide operations 50-50. Co-CEO arrangements have a rocky history, but Millstone and Winter insist it works for them. “In any family business, you have to put the business first or you’ll look up in a few years and it will stop being a business,” Winter says. Execs who work for them tend to talk about David and David, rather than one or the other.
In 2016, they made a big splash, spending $2.3 billion on the acquisitions of European roofing companies Icopal and Braas Monier. Those two deals not only created BMI, they also were the first big moves of 40 North, Standard’s related investment firm (though the two are so interconnected that they were completed by Standard).
Today, 40 North has its sights on another big target: W.R. Grace, the specialty chemicals maker with 2020 revenue of $1.7 billion, down from nearly $2 billion the previous year. “The math and the numbers and the value destruction frankly speaks for itself,” Winter said in December. Its initial bid in November 2020 was rejected. In January, it upped its offer to $4.3 billion, or $65-a-share in cash, a proposal the chemicals firm said it was “willing to discuss.” In April, it again increased its bid, to $70-a-share, as the two sides continued to talk. If Millstone and Winter win the business, it would in some ways bring it full circle to before they sold off the specialty chemicals operation that Heyman had acquired as part of GAF.
Not all of 40 North’s investments are meant to change Standard’s operating businesses. Its largest position, by far, is DuPont, where it built a stake, recently worth $1.6 billion, largely in the first quarter when its shares were pummeled by the spreading coronavirus. But its venture arm, 40 North Ventures, is betting heavily on startups with its roughly $200 million portfolio. It has invested in 15 companies including 3D printing firm Carbon, electric bus maker Proterra and Everactive, which makes battery-free wireless sensors.
Across the industrial landscape, new technologies are changing old-school businesses. Within factories, AI-enhanced software is helping factories become more productive, while sensors are changing old-line businesses, from elevators to construction. Materials science has opened up new options for products like roofing that haven’t changed much in decades. Millstone and Winter, who graduated college in the 1999 tech bubble, bring a Gen X view to an old-school industry. “A lot of the changes have to do with the generation that we were born into,” Winter says. “It was personal to us.”
One of the biggest deals for the future is solar. The residential solar market in the United States has grown over the past 10 years from almost nothing to a total of 19.1 gigawatts of solar capacity, according to data from the Solar Energy Industry Association. And its future is bright thanks to the declining cost of photovoltaic cells, a solar investment tax credit and a push by the Biden Administration.
So far, though, integrated solar roofs, as opposed to rack-mounted solar panels, are just a speck of the total, too small for the trade association to even track. Tesla, with its sleek black tile version that Musk has called “a killer product” has the most buzz and the longest wait list. But Tesla’s rollout has been slow and rocky. Millstone and Winter hope to gain with roofs priced for the masses and easy installation by its army of contractors. That’s a big bet, and one that might make it harder for Standard to keep flying under the radar going forward. Says energy investor John Tough, managing partner of Energize Ventures: “I wouldn’t bet against Standard, that’s for sure.”
Header image of Standard Industries’ David Winter (left) and David Millstone on the roof of the Chrysler Building in New York City. Standard’s Siplast division replaced these setback roofs with red granule surfaces that mimicked the original quarry tiles in 2000.