Episode #631 - A Solid Track Record with Victor Menasce, Senior Partner at Y Street Capital

Welcome to this edition of the million Dollar Mastermind podcast. This is where we pick the brains of high achievers from all walks of life and get their hard earned real world insights on winning. I'm your host, Larry Wydell. Well, isn't it interesting the education you get by having these road shows in front of investors and just if nothing else, just to see what questions they would ask because they're going to, you know, if you've got weaknesses, they're going to find them. And if you aren't defensive, like you said, there's no bad questions. No, it's, it could be bad because you don't have a great answer, but it's a great question because it shows, you know, where you need to shore the, the offer up or the opportunity up. And I imagine going through that five times. What, what was the first experience like? I mean, how did you feel, you know, when you, you went out there your first time? I'm sure you, you felt good about it, you know, excited about it, and you, you know, you, you rush in there and the questions.

So my first foray into that was actually within the corporate setting because when there's R and D budget in a large organization, you have all these projects essentially competing for those R and D budget dollars. And so I learned, you know, what is it that would make those, make that this project fly versus that project die? Learned that in that, in that setting. So it was a series of just progression and practice and succeeding sometimes and failing other times and just learning. It's learning through repetition. And that's the process for anything. I mean, even like we're doing right now on this podcast, if you and I were speaking 10 years ago, I probably would be a dreadful guest. I really mean that because I was terrible on video. I mean, if I think back on the very first episodes, I mean, look, I host a podcast, too. I host a daily show seven days a week. If I compare.

We don't have that in the notes. What is this? It's the Daily Show. Go ahead and say what.

Yeah, so the show is called the Real Estate Espresso Podcast.

Okay?

That's right.

I do have that note.

Yeah. And it's a daily show seven days a week. Now, I designed that show for a couple of very specific purposes. Number one, amateurs don't do a daily Show. They just don't. So I want it to be set apart, wanted to have something to offer the marketplace because, look, the world need another show. That is an interview once a week. It goes on for 45 minutes. People who subscribe to podcasts already subscribe to six and listen to five, because that's all they have time for. Right. So if they're going to listen to me, who am I going to kick out from their list? Am I going to kick out the real estate guys that have been doing it for 26 years? Am I going to kick out Joe Fareless? Bigger pockets. Who am I going to kick out? Am I going to kick out Oprah? Like, come on. So I had to design a show that would compete without competing, and I put together a very simple idea, which was produce one piece of quality content every day.

Yeah.

And it's in that process of practice and repetition. I mean, this week we will hit episode 1932.

1900.

Wow.

32. Congratulations. I'm trying to figure out how many years over six years.

We're into our sixth year. Absolutely. Wow.

Congratulations.

Thank you. And into the millions of downloads. So the show's doing well and it's got a very loyal listener base. But in the process of practice and repetition, you get better, you get better, you get better.

And when you started that, how much of a ramp up was that to get up to the professional level on your podcast? Because that's the same thing. You started a project and how much of a effort was that? How'd you go about it?

I had been a guest on a number of shows and I had been guests on folks that hosted a daily show, like John Lee Dumas, entrepreneur, father. He's running this at a very high level. And he was kind of my Roger Bannister moment. That showed that a daily show could be done.

Sure.

Yeah. Right. Roger Bannister broke the four minute mile. No one had ever done it up until that point. And then within a year, like, a lot of folks had broken the four minute mile because all of a sudden it was possible. So for me, John Lee Dumas was that moment was really understanding how he was doing. Now my formula is different and it's fine, but it showed me that it could be done. I designed the show very deliberately and I went into it pretty much cold. The intro music is the same now as it was the day that I started. The intro music is five seconds long. I start talking at the two second mark. People expect a certain level of consistency. The weekday show is just me, five minutes. So it's literally your morning shot of espresso. And then the Weekend Edition are interviews with notable people from the world of investing. And Those interviews run 12 to 15 minutes. Again, it's respecting. It's differentiated in the marketplace. It's respecting the listeners time. It's a tight recording, high production value, so you can listen to it in the car in a high road noise environment. The production value is there. And we're not targeting the rookie audience. We're targeting the sophisticated investor that may own 50, 500, a couple of thousand units of apartments. We have many listeners that are lenders, economists. It's not targeting the rookie audience, so it's speaking very directly to that audience. And we built a loyal listener base. Again, it's just practice.

And let's talk about how you, when.

You.

One thing is you go to school, you get your education, and another thing is you get out in the real world and you start getting another version of an education. But it's another more serious thing when you start raising money. And it's great that you're, you know, you can start inside the corporate arena and have that protection to be able to start getting your first lessons, you know, fighting for that piece of the budget that one of the biggest, most hotly contested real estate fights in business is organizations inside a company fighting for real estate on the home page of the company. And you know, the turf war, you know, I gotta, we gotta have that part. You can't take that from us. And so that's how the world finds out about us. And so getting in there to where you, you learn, you know, you survive those battles and you graduate out, how did you go about these lessons? Because I get the idea you learn fast. And you know, it's like one thing is, you know, fool me once, you know, but you don't like to get, you know, like, if I get beat once, it's like Nick Saban. It's like if you, if you fail, get the lesson, you know, don't fail and lose the lesson. And so one time you could, you could kind of put up with it. But how did you go about cataloging these lessons right from the beginning as you started fundraising and putting yourself in a position? Because really that's the secret. I wrote a book called Serial Winner, which is how certain people go from one success to another to another. Where most people dream of having a big success and they never do it. And if they do it, luck up once, they find it hard to repeat. But there's other people just seem to roll on from one to another and they make it, you know, they've got a system about it. But the, the thing is, the great thing about that is bigger doors open, you know, because you won those earlier battles it opened up the opportunities for bigger things down the road. Like you say, you're on your way to becoming one of the. The biggest people, biggest companies in construction and investing and the real estate development market. And it's fun, it's fun to move up, but to do that, you gotta be organized. And that's what your book shows that. So how did you go about getting yourself to say, I want to get these lessons and make them stick?

Look, I don't want to over varnish it. We make plenty of mistakes. We do. And I've made plenty of mistakes along the way. If I look at the first four or five years of my transition into real estate investing, I counted more failures than successes and said, oh my God, you know, this deal went south. That was a waste of two years of my life. And so we, we certainly had those too. And we also today absolutely have a learning culture. You know, a lot of people talk about it. Very few people do it. We were actually talking about it in our staff meeting today where team members have been watching the way we conduct things and they say, you're not perfect. You make mistakes, but man, you create systemic fixes for those mistakes quickly.

There you go. There you go.

Right?

Yeah. And talk about how you do that.

It's understanding what was the root cause of the issue. And sometimes it's an individual, but it rarely is. It's usually because someone wasn't set up for success or you had the wrong person in the wrong role.

Yeah.

So if you look at most failures in business. Yeah. Occasionally there's a strike, a lightning strike that happens, but most of the time the failure is attributable to having the wrong person in the wrong chair most of the time. So if you recognize that or, or there is some systemic failure, like who owned getting this particular deliverable over the finish line? Well, nobody. Okay. Well, we found the problem. Or who owned getting this deliverable over the finish line? Everybody. Well, that's the same as nobody. We found the problem. You know, it's not rocket science. Oftentimes the fixes are really, really simple. Or how do. How does this deliverable get from A to B? It just doesn't get there magically by itself.

Right.

What connects the dots? If there's nothing connecting the dots, it's not going to work.

Yeah.

Right. So it's understanding that from a systems perspective and making sure that the flow of communication is there to make it happen.

Yeah. And that's not just a throwaway thing that the flow of communication, because again, there's Going to be variables. You know, where you have. That's where the adjustments come in. But the adjustments can't come in if you're not communicating regularly and in a timely manner. Because what happens, and I'm having this conversation constantly with my staff, is like every day you get a new layer of information and things need to get done. And so if you don't take care of today's layer, you know, sufficient unto today is the evil thereof. But also you don't want tomorrow's on top of it. You know, like, it may be tough to wipe that out today, get it handled, but you don't want to be handling it tomorrow while you got other things coming in. And it's a different way of thinking, rather than to solve the problem versus to solve the problem and then make the adjustment in the system. So this is unlikely to be a problem. Again, not that it won't, but it's unlikely to. You know, you kind of take. It's like playing golf and you're trying to take the. The big lake on the left out of play. You do things with your alignment and your swing to where you still may pop it in the water because you're thinking too much about it. But you're going to do certain two or three things to try and take that lake out of play. That's the kind of things that we have to do when we're setting up these systems in our business. But the whole idea is to make things easier for us in the future and not have to deal with these things over and over again.

If you look at where probably 80% of senior management attention goes, it's in managing exceptions. Doesn't matter what the business is.

Say that again, because I think that's really, really on point.

I think the vast majority of senior management attention goes towards managing exceptions. So if you got to think about it, imagine if every decision had to bubble to the top of the house. That clearly, very quickly becomes a bottleneck. So how does decision making happen in an organization? Is senior management involved in things that are routine or not? If things that are routine really should just be handled by systems? I mean, think about it. Imagine for a moment if every time a flight was delayed, a decision had to be made by the chairman of American Airlines. It's ridiculous to suggest that, right? So there's a system for managing that exception. But yet, clearly, if a flight leaves on time, lands on time, 150 people get on, 150 people get off. Life is good. That's perfect. As soon as that flight is delayed 45 minutes. Now you've got 20 people lining up to deal with a missed connection and hotel vouchers. The amount of energy exerted to manage that exception is orders of magnitude more than the normal success case. And it's the same in every single business.

Right.

So it's all about making sure you have systems for managing exceptions and making sure that exceptions don't happen as often as, you know, in a way that will cripple the business.

Well, another, that's another extension of having the right people in the right place. Because as much as possible you want to have people in place that can see the obvious solution. Because most problems have obvious solutions. If you're paying attention, you know, you can't. It's not like one of 800 different things we can do. It's either that we're going to go left or right, you know, and a lot of times you got experience going left and right. And so most of them, it's not rocket science making these decisions. Sometimes, you know, there's a Solomon element involved, but not, not all the time. And so if you have people who are thinking and aware that can take those things, make them before they migrate up the, the management chain, it makes it a lot easier at the top. You know, that was one thing I noticed. Victor coming up as a young, young pup and getting around the, the, the top level Fortune 500 CEOs and I was fortunate enough to spend. We were the marketing engine and got a chance to see how people at that level think. Jamie Dimon, you know, it was his sidekick and Bob Lipp and a lot of those high level people. But the thing that stuck out the most about me because you wonder what do these guys do, you know, and what makes them, why are they in that position? But the one thing I noticed from my little vantage point was they evaluated people differently than I did at that stage of my life. That's where I got most of my insights or most of my education was hearing them evaluate people for positions. Because I would get in some of those inside conversations like who are we going to take to run Canada? Who are we going to take to go over here? Who should take this position, things like that, and get in some of that evaluation. That was as far as on the job learning. That was some of the best training I got. And the, the better you are, the, the better your organization's going to run. But that's a skill. It's not to talked about a whole lot.

I find. It's developed. Yeah, it's really developed. And you know, there, there are formal methods for, for developing writers, you know, people. There's this myth that leaders are born. No, they're, they're, they're developed, they're grown. Most of the things that create effective leadership don't come naturally. No, they really don't. At least they haven't for me. I had to, I had to learn, you know, it. That meant four way Feedback from peers, subordinates, superiors, developing self awareness, figuring out where my strengths are, finding people to compliment me, to get their strengths to complement my weaknesses so that I can in fact play to my strengths. Organizational design is about that. It's not just getting good people in right chairs. It's making sure that people complement each other. And the easiest thing to do is to hire people that are just like you. Because the communication is so easy. It's like having a conversation with yourself. There's no contention. It's easy, but it's all groupthink. There's no diversity. People talk about diversity and they think that it's about maybe racial diversity or things like that. Yeah, that's important. But diversity of thought, that's diversity.

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