The Art of M&A: Striking the Right Balance Between Integration and Autonomy

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This is it M and A Science is expanding with our first M&A conference introducing the M and A Science Fair this October 5th in New York City. This will not be like any other M and A conference. You know the ones I'm talking about where it's panel after panel after panel until you're bored out of your mind and need to hit the bar for tequila shots to restart your brain again. The M and A Science Fair is built around peer driven conversations in a design thinking format that encourages real collaboration. Bring your challenges, workshop them with your peers and leave with practical solutions you can apply to take your practice to the next level. The M and A Science Fair is exclusively for heads of corporate development and heads of M and A integration. I know it's pretty limited, but we want to make sure this first event drives the best quality networking. We'll probably expand it from there. If you're interested, request an invite@mascience.com Fair again, that's Masscience.com Fair.

I'm Kisam Patel.

And you're listening to M and A Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. Hello M and A Scientists. Welcome to the M and A Science Podcast where we learn from the best in M and A to uncover proven techniques for enterprise value creation. If you're interested in learning more about the products and services we develop to support world class M and A teams or want to get involved with our community of forward thinking M and a practitioners, visit mascience.com and get started by subscribing to our free weekly newsletter for the latest insights and events. Again, that's mascience.com I'm your host Kisan Patel, CEO and Founder of M and A Science. Joining me today is Glenn Sanford, CEO of Exp World Holdings. EXP World holdings, together with the subsidiaries provides cloud based real estate brokerage services for residential homeowners and home buyers traded on NASDAQ under expi. Today we're going to talk about M and A lessons learned from a Founder CEO of a Publicly traded company Glenn.

How are you doing today?

Good Kisan, thanks for taking a break.

From doing deals to have the conversation with me. Can we kick things off with a.

Bit about your background EXP Realties where I was a founder and we became a public company back in 2009 as a cloud based residential real estate brokerage. Ironically, our first big M and A thing was we actually bought a public company so we could merge ourselves into it back in 2013 and then 2018 we went from the OTC to NASDAQ. But prior to real estate, which I got into actually in 2002, I was involved with a number of tech startups and a lot of really small micro cap public companies. I'd been involved in investor relations and sort of some light deal structuring and some other things on some stuff back in my late 20s, early 30s. Now I'm 56, so got a few things done. But anyway, that's a quick little history of my background since then. 2013, we bought a public company. 2018 uplifted the NASDAQ and then just not even a month ago our little public company got added to the S&P 600 small cap index, which was a unexpected surprise. So we've had a nice run over the years.

What's like the acquisition history been like for exp?

We've done a few, we've done some really small ones. They were really Aqua Hire where we acquired a company really for the talent and paid a little bit of money for the acquisitions. I look at our first significant acquisition was a company called Verbella. It's a virtual world for work platform a metaverse before the word metaverse was popularized by Mark Zuckerberg. In 2020 we did a couple more acquisitions. We bought success magazine, 125-year-old brand. And then we also bought a company around the same time, a small real estate search technology company. And then last year around this time, we actually closed on the purchase of a company out of Toronto called Zucasa, a real estate search portal that was at one time across Canada, Consolidated Toronto and then. And now we're re expanding across Canada and into the US So those are kind of our bigger acquisitions, but we had some small ones. And when I say small, I'm talking like million dollars or less that were really more around bringing somebody in that had a small project that they was their hobby project. But in order to get them over, we said hey, we'll buy you and give you a little money to continue to work on your hobby project. But we really want you for this.

Can we walk through some of these deals? I'm curious to learn how did you perceive these as financial opportunities or more around the strategic impact you're looking to make on these deals. And it seems like they vary quite a bit. So I'm only assuming that there's varied reasons and why you made those different acquisitions.

EXP Realty, we started it in 2009. Give you a little History there. We ended up using a virtual world for work platform called Teleplace. They were, they'd raised some money, about 10 million or so in Silicon Valley. It was a startup to provide this virtual world for work platform. Within about a year or so they ended up going out of business and then we ended up using an open source version of their platform for a while. We ended up pivoting to another platform which ultimately it went out of business as well. What we recognized is that we were getting a ton of value for us in using these virtual world for work platforms because we run just to give you a little context. Exp Realty is the largest single real estate brokerage in the U.S. maybe the world. By as a single entity brokerage. Most brokerages, real estate brokerages are franchises. You think about ReMax, Keller Williams, Coldwell Banker, et cetera. But as one brokerage, one owner, no franchise locations, we're the single largest in the country, maybe the world. We operate without any physical offices at all. And we said, how do we support a real estate brokerage to build a national international platform if we don't have physical offices? And how do we make sure that our agents, brokers and our staff are connected? We recognize that a virtual world for business solved for a sense of place, place to go to work, place you could run into people where you could have water cooler conversations and you could actually feel like you're there. And so that was kind of our way to solve that piece. And so we've been doing that for a long time. And when we think about we got a market cap that's in excess of $3 billion. But one of the reasons why we have that market cap is because we figured out a much lower cost to operate than any other real estate brokerage out there. So we were getting tons of enterprise value from using these platforms. The problem was is they couldn't charge enough to their other clients and create a SaaS model where it actually made sense these companies to stay in business. So 2018, when we bought Forbella, we recognized we were one their single biggest customer by far. We were over 50% of their revenues. They were charging us what would be considered market rate SaaS contract fees because they wanted to scale to multiple companies and multiple users and this and that. And so the per user cost was 1015, $20 per user per month. You can think about it from that perspective. And they couldn't get enough users on the platform. Now we were getting, actually we're paying substantially less than that on a per user basis. But Even so, we were their largest customer and we determined that it made more sense for us to buy them, to basically make sure they stayed in business so they could continue to buy, to provide us the enterprise value. It was really around not having to make continual pivots into different platforms as each one went out of business. And then we had to make a move to another one. First one was just to preserve our long term trajectory as a company.

It's making sure that you secure that tech capability that really allows you to scale your agency model as a tech enabled service offering basically.

Exactly. So that was our first one that was fairly sizable. Second one was we did two in 2020. One was a company called Showcase. And what we wanted to do is we wanted to control our website from a search perspective. Consumers search for homes. We were using third party software contracts to actually manage that. And we wanted to bring that service offering in house where we could actually manage the consumer experience and how the leads are generated and how those got channeled to our agents. And we recognized that it was going to be a lot faster for us to build up that expertise by just buying a company and then having them pivot. You know, we spent I think three or four million dollars on that company, but it was really kind of an equa hire in a lot of respects and that we were really acquiring them for their skills and expertise to build out the infrastructure for our future websites.

Is that something you had in your roadmap and then you essentially acquired this team to accelerate development against our roadmap?

Yeah, our experience was we weren't really able to hire in the talent to do what we needed to do in a time frame that made sense and then to ultimately deliver some sort of product in a reasonable period of time. So it was one where it just made more sense to just acquire a team and then retask them on building out that that infrastructure. So it was really a build versus buy. And we said, hey, buy makes more sense.

Got it. So that was a search technology. What was the Success magazine? How did you end up buying a magazine?

The magazine was an interesting one. As a virtual real estate brokerage, one of the things that we wanted to do was put something physical in our agents hands that sort of matched up with where their heads were at as salespeople, independent contractors out there building their own businesses, so to speak. And so Success magazine, a good portion of successful real estate agents have at some point either picked up the magazine, subscribed to the magazine, listened to the CVs that were included in the magazine, et cetera. So part of what? The personal development ecosystem that a lot of salespeople have been exposed to. And so a number of years ago, somewhere around 2018 or so, I had an opportunity to actually start to ship the magazine with a wrap that had EXP on it to our agents and brokers. And we did that every once every three months originally and then it went to once every two months. And it was just a way to stay in front of our agents with something that kind of gave them a sense that we cared about them, that we wanted them to be successful. We wanted to give them just things from a just a mindset perspective. We became the single largest customer of Success magazine because our agent base had grown so much up through 2020. We were in the 15ish,000 agent range at that point. And so we're mailing these magazines to all of our agents. I built a good personal relationship with the previous owner and then we wanted to sell. And so I was like, this would be a really interesting magazine for us to own because we could then leverage that into more personal development deliverables for our agents and brokers and actually start to build up other stuff in that ecosystem that could really help our agents. So coaching and training fits really well into Success. And then we also expanded, we thought about the idea of brand expansion. We thought we could profile our most successful agents. We could create different things that uses. That's where Success brand will endorse our top agents and broker brokers and again give them a tool. So that was the idea and that's how we've been building it out since we've added a co working company to it, we've added a speakers bureau to it, we've expanded it a bit, but it is still an investment. But it is a nice asset to own as a sister company to our realty company because even our real estate agents see it as somewhat of a defensible moat because we have, you know, people like Tony Robbins has been on the COVID multiple times. We can actually go and get speakers for EXP that might not be interested in doing things with xp. But because of the Success magazine tie in, we can get them tied into our real estate ecosystem. So it's a cool thing because anybody who's successful, they'd like to be on the COVID of Success or Forbes or Inc. Or whatever. So it's a kind of a cool magazine to bring other people into the ecosystem.

Zucaso was another tech play.

It was, yeah. So that we acquired last year. So that was Our last big acquisition, what Zucasa represented for us was a second brand that we could scale up to actually do lead generation and then monetize those leads through our agent base and actually create another revenue stream. It's really the one that's designed to be accretive. The other ones were more to reinforce different parts of our value proposal. But in the case of Zucasa, we actually bought it because they already had an already existing lead generation platform that they had matured in, primarily in the Greater Toronto area, the gta. But they had one time been owned by Rogers Communications and Rogers had invested, I think over 10 million a year for multiple years in a row, just marketing and branding that property across all of Canada. So it was actually a well recognized name in real estate in Canada. And so we see it as a great way to create leads for our agents through a portal that consumers already recognize in Canada. We have 6,000 agents in Canada. We can give them another way to get new inbound business and then we can actually monetize those leads.

What factors do you consider when looking at potential companies to acquire?

The one that's probably most important is cultural fit, meaning that they want to be with us for the right reasons. It's a lot easier when in the case of Verbella, we were already their single biggest customer. Even though we acquired them, it wasn't like we actually asked them to do anything different the next day or change their team up or any of that stuff because that was very much a known quantity. We didn't micromanage them, et cetera. Zucaso was similar, showcase was similar. Success was a different. We didn't initially have the cultural alignment in that because we were fundamentally not in that sort of looks at the magazine business. Didn't quite understand it as well. It had been structured in a way that was structured for sale and then trying to actually do that business that was probably our roughest conversion was because we really didn't have a continuity of leadership in that transition. Their previous CEO, that he was the one selling the business and he wasn't staying on, he wanted out of that business. And so we didn't have truly the expertise in house or even on the team to run and scale that business. So that was a tougher acquisition. The brand is great. We were able to start leveraging that right away, but in terms of just figuring out what we do next and how do we do that took us two plus years, probably figuring out what we were going to do to actually work with the existing brand for success. So a big thing for us is making sure that we've got a culturally aligned ecosystem. Certainly not trying to compare myself to Warren Buffet, but one of the things I like to do when we bring on a company is to leave the team intact and to allow them to continue to build, maybe with a slightly different focus than they previously were on. But the idea is not to bring them on and then micromanage them to a entirely different business. That's worked really well with Rubella. It's worked really well on Zucasa. It's worked reasonably well with the showcase team, and that's because it came with the talent already in place and they wanted to be with us.

So it's more of like a partial integration you're doing where you tie in some of these core backend things, but then you're essentially letting this team having their autonomy to a degree.

We really like the idea of aligned autonomy. And so obviously there's some payroll systems and some HR stuff that kind of gets handled. So from a corporate perspective, there's some accounting stuff that needs to get done to match up with the accounting side. But the actual operation of the business and the decisions and the strategic initiatives and all those types of things, we tend to believe that's the secret sauce that these teams bring in. If we had the expertise in the house, we wouldn't need to acquire them. So why try to micromanage what they're working on in a virtual world? For business, we're fundamentally a real estate brokerage. There are certain things that we need the platform to do for us, but they're not unreasonable. Things are what any customer would need for the platform to be useful, whether it be private sound regions or the ability to support more avatars or what have you. But those are just general. Just requirements from a. And so we're actually a customer in some respects of a company that we own in house.

When you mention Culture, some of these businesses you've had a partnership with, they've been a big customer of theirs. I can sense you'd probably have a good sense of their company culture from that. But are there any of the deals where maybe you didn't have that foothold that you had to really figure it out what their culture is like and how do you do it?

I mentioned success was one of them. We didn't really have a good sense of it. We were very much arm's length from all of the internal staff at Success, and the acquisition opportunity came up and there was a need from the owner to do a Fairly quick close. We didn't get a chance to really do a deep dive on the internal team dynamics. So it went really from the time we met the internal team till the time we completed the acquisition was probably maybe 30 days. And that was literally hands off from the previous CEO. He helped for about 30 to 60 days. And then he was like, I'm selling this for a reason and I'm going off to do my own stuff. So. Wow.

But it worked out.

Yeah. We've kept the magazine going. There has been definitely some hiccups along the way, but we've never missed an issue. Always got the magazine out. The magazine being great quality in that whole process. We've added other products and services, turned over a lot of the team, and so now it's actually a much more culturally aligned team than it was obviously, when we first acquired them.

I mean, is there things now that you learned that you would do proactively to understand the company's culture?

If I was to go back and look at it, we were buying a brand and a history and we wanted obviously the magazine to continue to be published. But I'm not sure what we would have done differently if we would have had more time. It would have been good to get to know the team over the course of, say, six months to a year in some casual manner as their single biggest customer. I could see that would made sense. Understanding who's there, what's there, build some strategic alignment in the shorter run before we actually pull the trigger. I think that would make a lot more sense because then we could actually have more, what I call continuity of leadership. It's really important that teams come together around leaders and they adapt to that leadership style and they become quite comfortable and they have an affinity over time to that leadership style. And then when you change it, no matter what it is, it takes time to change that dynamic. One of two things we could have done differently would have been to have that leader stay on for at least a year or two to help in the transition, or us get involved a year prior with an idea of a future acquisition.

Yeah. Sort of seating in an early to know your people so you understand the culture. Fit. Tell me about this reverse merger that you did, that you went public through a reverse merger. What was the reasoning behind the decision?

We knew what we wanted to do as a company. We knew that we wanted to distribute equity to our agents and brokers. We made a couple really unique innovations in the residential real estate industry. We were the first company that basically wanted to build a nationwide Platform that was entirely virtual, no physical offices. And we recognized that high speed Internet in 2009 was pretty ubiquitous. We had 3G on our phone, we had Internet in our homes for the most part. And Internet was just going to get faster and faster. This is comparison to say 2002 where it was dial up Internet and you had to go to an office to actually get a fractional T1 or whatever, something high speed. So high speed was really reserved for the downtown office where the fiber had been run, et cetera, et cetera, really hadn't got out to the households. And if you had high speed Internet, it was an ISD online that was the high speed back in the day because you now had high speed Internet. We said why do we need physical offices? This is all stuff now we're talking about pretty much regularly. And now after Covid, companies can't even get their employees to go back to the office because fundamentally they're like why would I go back to an office? Working from home actually makes sense for me. And we said that that's the future because of what high speed Internet is going to do. So we launched the company with this cloud based model. We innovated also around the way agents are compensated. Really we took a page out of network marketing in terms of aligning around how agents can get compensated on not just their own personal production, but on the production of agents and brokers that they introduced to EXP and the agents and brokers that those agents introduced to exp. So we've got what we refer to as a seven level revenue share plan. So you can think about as a seven level network marketing comp plan. And that was pretty unique as well. Between those two things, we had a lot of cost savings because we were fully virtual. And so we're able to pass on some of that savings in the form of an aligned compensation plan. And then we wanted to actually have our agents be shareholders in the company. We were hopeful that the JOBS act, which was supposed to provide for more opportunities for unaccredited shareholders in a company, but the rules and regs around that just took a long time to actually mature. And we gave up at the end of 2012. We're saying we're not going to get to that. So what other way could we actually distribute equity to our agents? Well, at the time we were only 300 or so agents. We're doing not a huge amount of revenue. It was 7, $15 million a year in total revenue. We were way too small to be a be a public company through A traditional IPO process. We didn't want to raise money, we didn't want to give up a whole bunch of equity to the marketplace. I had been involved with a number of small public companies back in the late 80s, early 90s. I said we should buy a public company. I've been involved around public shells. And so I contacted a buddy of mine who had done a lot of things on public shells and he agreed to help me find a shell. We found one, cleaned it up and then we bought it for the single purpose of, of sharing equity with our agents and brokers. So that was the whole concept. We went through that process. We bought the shell, we cleaned it up for the better part of about six or seven months. Then we merged ourselves into it and then we still cleaned it up for another almost a year because we still had some legacy shareholders in the public company that were not fundamentally bought into the new model. So we wanted to get them out. And then at the end of 2014, we actually started to issue equity to our agents and brokers. 2015 was like the first year we doubled in size. So we went from 400 agents to over 800 agents. Then we went from 800 to 2400 and then 2400 to 8000. And so we went on this sort of hockey stick curve of growth. And the reason why was a combination of the way we had structured our line compensation model and equity. Nobody had offered equity in the residential real estate space before because we were actually giving our agents equity. Just that single ingredient was huge for us. So it probably cost us a little over half a million dollars to actually become a public company. But at the end of the day, it was the best thing we could have done. It was the single biggest catalyst to our rapid growth as a company.

How did your capital structure evolve? Because from what I remember in prior conversation, you started off bootstrapping, maybe raised some private capital and then as a public company it easier to raise money. What did that journey look like?

So 2008 to 2009, so I had a team based brokerage, meaning that I had a real estate team. And instead of affiliating with a real estate brokerage, which in 2007 we were running a team inside of Keller Williams. We decided in 2000, late 2007, to actually separate from Keller, but run it as our own brokerage. And so we had a great 2007, we had a great first half of 2008, and then the second half of 2008, the housing market collapsed. And so we raised about 150,000, 75,000 we borrowed, 75,000 we took in and sort of friends and family. And that got us into 2009. And then in 2009 we retooled the entire business and launched Exp Realty in October of 2009. That was our big fundraising that we did. So it was just a friends and family round. When we bought the public company, we had some of our accredited agents and brokers, accredited shareholders where they we gave them an opportunity to buy some of the equity necessary for us to buy the public company. So in that I think there was 2 or 300,000 that they invested in helping us buy the public company. And then after that, I think in 2018, we did a another accredited round with some of our agents of brokers where they were able to do a small private placement into exp. We never went out to institutions to raise money. So we've taken no institutional capital that we put directly into the treasury of the company. And there was some fundamental reasons around that. I wanted this company to ultimately be totally aligned with our agents and brokers. I felt when you go and you raise money in a more traditional sense, whether you're public or not, those companies that put money directly into the treasury, they're going to want to have you answer more directly to them. So we just resisted that. Now we have a lot of institutions that own our stock now, but they bought it through the public market. We didn't, quote, unquote, ask them to. We didn't go and pitch the company to them. It showed up. We screened for the ingredients that they were looking for in a company and they bought and sold and done the various things that they do. And so we're just part of their marketplace of stocks they look at. But we're not beholden to them because they somehow helped us get to where we're at.

Very cool. Non traditional. Can we talk about your experiences with board of directors and shareholders? Can you share some lessons you've learned about managing these relationships, shifts and maintaining control over your company's vision?

There's definite rites of passage for founder CEOs and a lot of the founders, founder CEOs don't make it through the rite of passage. They get eaten up on their path to where they ultimately want to go. But either they don't have the experience, the fortitude, crisis of confidence, whatever, to get through that. And the challenge is, of course, when you start a company and you're a young entrepreneur and you, this is your baby, you haven't been exposed to the greater business world. I was exp fortunately in my 20s and 30s I got exposed to actually a fair bit of the challenges that come with companies and the egos and the attempts by various folks to steer companies in certain different directions. Not fundamentally in for the benefit of the company and its mission, but for the benefit of the shareholders on a short run basis to create a bump and get out and do those things. I got exposed to a lot of that short termism back then. And so in 1998 I wrote a business plan for a company called e shippers.com 99. Finally got in front of some folks that wanted to put some money into it. And in 2000, just before the dot com collapse, we raised a small round $1 million but was on a Toronto Venture Exchange company and I ended up being a 25% shareholder in the company that I founded. I built a really great business plan. I think it actually was still would have been successful. But the guy who put the money in said he with the gold, makes the rules. And I bought into it. I was in my early 30s, even though I was on the board. He put the money in and what I didn't realize that he really was all about blowing up the stock. He wanted to create this next party to get it in front of stockbrokers who had promoted to their clients. And then he wanted to sell his stock, et cetera. And so he wouldn't even write a check to put furniture in our offices. I formed a relationship with a company in Fenton, Missouri just outside of St. Louis. And they were offering us office space and they were a strategic partner. He decided that we needed to locate in Phoenix, Arizona because he liked to golf. So anyway, I got a really bad experience in that whole thing. So I actually didn't want to answer to shareholders and board of directors. And I actually had made a religious decision. I'll never answer the shareholders on board of directors again. But obviously in order to achieve the goals of what we were trying to do with exp there was a need to actually become a public company, have a board of directors and ultimately our agents are shareholders and then we've got shareholders on top of that. So I mention all that because as you're growing a company, you end up picking up the most pedigreed directors you can put in your company. That's part of sort of the window dressing of the company. Especially when you're trading on the over the counter market, we end up going through that. And then I also wanted to bring on executives who were more tenured in the space than I was. I literally had to fight off a quasi hostile takeover of the company. And I had to actually basically get stock, collect enough stock to actually change the board mid cycle between shareholder meetings in order to ultimately redirect the company back in the direction that I thought was most important, which is creating a very agent centric, long term solving a big need for real estate agents in the industry. And so I had to go through this whole process, but it was tough because I was the junior guy. I'm in my mid-40s as the first company that has reached any sort of size of this nature that I've been involved with. I'm working with folks that have been CEOs or CEOs of investment banks and have sold companies to hedge funds and served on in senior roles at major Fortune 50 companies. And then I'm this guy coming up and I haven't had that experience and so I ended up having to fight my way through that, which if I didn't have the ability to do that through the shareholdings that I was able to pull together, I fundamentally would have lost control of the company.

Yeah, you had some very interesting experience with the whole board situation and how you had to navigate it to keep control of the business. And we didn't talk about integrations and I'm curious about challenges that you've come across when you've actually acquired companies, how to integrate them, how have you navigated them to make the outcome successful?

Depends on what we're doing exactly in terms of integration. When we think about Aqua Hire, there is definitely a high degree of integration that we want to put in place. When we bought Showcase idx we wanted them to build out the whole ecosystem from basically our websites and ultimately able to channel those leads to our agents, et cetera. The integration is really the API handoffs of some data between systems. But they chose their tech stack, they ran their tech stack, et cetera. So a lot of the decisions were still done by that team, but there were certain, we call it API type stuff. So there's definitely some tech integrations. Integrations with our teams is really interesting. When you take companies and you acquire them and they have a physical office and then they're integrating with a cloud based real estate brokerage. Where do you meet when you're used to physically meeting, how do you engage with this company? Like I'm up in the Pacific Northwest, I'm up in the furthest northwest corner of Washington state. Before you get into Canada, Our chief strategy officer, he lives in Miami actually our Chief Growth Officer is down there as well. Our Chief Industry relations officer for Exp World holdings, former CEO of Exp Realty. Been with me for 12 years now, something like that. He lives in Boston, Massachusetts. Our CFO lives in Saratoga Springs, New York. Our chief legal counsel in Salt Lake City, Utah. And we all work together really well. Our Chief Marketing officer is in Toronto, Ontario. And then we've got 2,000 other staff and we're all working in our virtual campus every day. So when we acquire a company that's used to physically managing and getting together for their team meetings and people come in the office, et cetera, and then we say, hey, we're going to do all these meetings in world there is a bit of a shift and it takes a while to get them geared to that. I have to keep coming back to the question with them is if you aren't going to get more bricks and mortar in order to scale, which by the way, you're not, in fact you're going to have less bricks and mortar as we go forward, think about how do we scale without bricks and mortar? What is it that we do? Whether whatever part of your business is that you're working in, I try to get them to rethink about that. This is really part of the business that they're trying to solve is how do you scale without physical offices? And if you can start to mentally get your brain around that and that becomes actually part of the thing that you're trying to solve, then actually collaborating, working together using tools like Google Meets Verbella. We've got another platform called Frame VR that we're using, Zoom, Workplace, Messengers, Slack, whatever. You basically start to embrace this whole communication and collaboration tool set. It's the part that if you get it right, it's a beautiful thing to watch. It takes a lot of work for people to sort of buy into that make work, visible culture, Trello boards or Monday boards or collaborative stand ups and doing things in a virtual world and all that sort of ties together. But once it comes together, it's a really neat thing to see work, but it does take work. Getting that integration and getting the cultural piece done. And that's the piece that's probably the tougher part of just what does work look like in a fully cloud based enterprise.

We're a fully remote company too with 50 people. So on a smaller scale, but I see, I understand what you're talking about.

And We've got over 2,000 full time staff and over 88,000 agents and brokers in 24 countries and all fully remote.

One of the largest fully remote companies out there.

We may actually be the largest fully remote company in the world. It depends on how you think about our independent contractors. But our W2 staff, we've got over 2,000 W2 staff. Every team that said you couldn't do it fully remote. And so our accounting team said we got to have a place for the auditors to come and audit the books. They held onto their office for a long time. The marketing team said we got to be able to work together. So they held on their offices for a while, kept on getting rid of bricks and mortar and bricks and mortar, and so now we have none.

So for the integration, the key to make integration successful sounds like one. We talked about the autonomy. Creating this level of autonomy so that core parts of the team are intact and you're lining them around the goals. But they have their way of working. But then also this level of transparency, making the work visible seems to be like another key element to get that clarity in how things are progressing.

Yeah, it's the one that I think is going to be even more interesting in the world of AI because right now we want work to be visible so teams can actually see it and be part of it and know where stuff is and how to engage with it, et cetera. I'm really excited about how AI plays into all of this because I think it's going to be able to pick up where there's more transparent and effectiveness in remote teams and be able to provide feedback to call it the C suite or wherever as to where things are running the most smoothly in more real time.

Yeah.

It will give us a less lagging indicator. If the work's visible and your AI can see it and they can see the communication and the collaboration going along with it. It's going to be a really interesting catalyst to even more effectiveness as an organization in organizations that adopt this sort of make work visible philosophy.

Good point. Yeah. A lot of changes coming up with way AI is evolving quickly. Any other lessons or takeaways for a fellow entrepreneur that may encounter their first acquisitions here soon?

Every entrepreneur's got to figure out what their true secret sauce, DNA and repeatable systems are. And then where do acquisitions fall into that? Some companies, obviously their whole business is acquisitions and roll ups. That's their business model. And so there's lots of acquisitions in those models. Others are going to be looking at what are key strategic things that they need to bring into their ecosystem that can continue to propel the mission of the company not so much around skill and technology, acquisition types of things. Some of it's going to be vertical integration type things. But understand why you're doing acquisitions, what is it that you're trying to solve, and make sure that you're really solving for something that has strategic importance long term. Don't do acquisitions for acquisition sake, because that's a cool thing to do. I think we've been pretty fortunate in terms of our acquisition because we haven't had to try to take two big competitors and try to merge them into one. We don't fundamentally buy real estate brokerages. Now. We did an announcement two weeks ago where we're actually offering monies to real estate brokerages of at least 50 agents or more to help them convert to exp. The economics actually look fairly similar to acquisition economics, meaning that if you were to sell your real estate brokerage to another real estate brokerage, you probably sell for what we're providing in terms of financial incentives to move your agents over. But we're basically putting on the front end a cultural questionnaire. And if they don't match up culturally, we don't even go to the next stage, which is then figuring out what the transition dollars would be to convert their agents to exp. Since we put out that announcement, we have hundreds of real estate brokers inquire about what is this program? And now the job is to only bring those that are where there's going to be cultural alignment and that they're actually embracing what we're doing and they want to be here and they want to help us grow as opposed to just looking for an exit and wash their hands and then go on their merry way.

Pretty creative. But the cultural assessment in the vetting process.

Yep.

Hey, Glenn, I know we're hitting close on time here. I gotta ask you, what's the craziest thing you've seen in M and A.

Outside of Elon Musk buying Twitter?

Yeah, outside of that.

I'm in the residential real estate industry and so I see a lot of really interesting acquisitions done in real estate. And what I've noticed is that most of the big acquisitions that I've seen done by big companies, a lot of times they crash and burn or don't get used or whatever. They spend a lot of money buying a thing and then they promote the heck out of it, that they're. They've got this thing and then two or three years later they don't even talk about the thing anymore because they didn't practice what I think is Most important, which is aligned autonomy. Don't acquire and then try to micromanage really smart people because you're really smart people are going to leave and you probably don't have people that actually understand what it was that they were doing to begin with. But why micromanage them real G, you know, anywhere? A number of years ago bought Zip Realty for their tech stack. Now nobody talks about it. There's a number of these sort of acquisition type things that just seem really interesting up front, but they just fail in actually delivering value to the marketplace. And I, I've seen it so many times in the real residential real estate industry. And we've done too, we've done small, little tiny things, really tiny things where we thought, oh that's really cool, let's acquire that and bring that team in and then it doesn't make it. I think that's the biggest thing that I see, it's a challenge, is people buy really big things and then it crashes and burns.

Bigger the deal, harder they fall.

Yeah.

And this has been a great conversation. I learned a lot, helped me become a better M and A scientist today.

Thanks Kasan.

Those of you still with us, until next time, here's to the deal.

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