Letting Go to Scale: The Trap of Ego & The Mindset of An Owner vs. a Top Producer w/Kodi Riddle
Cody Riddle spent 22 years as a top real estate agent before learning the hard way that scaling requires letting go. He talks about moving from producer to owner, confronting his ego, adopting profit-first accounting, and building a team on eXp.
All right, today's guest is going to be a treat. We're going to dig into a business that has come a long way. When I started working with Cody riddle back in 2015, I think the year before, we were just catching up before we hit record 41 transactions. This year, Coty and her, her team will do 130 plus transactions. $2.3 million of GCI with more than 50% profit margin. Cody was telling me recently that she went away on vacation, came back to five commission checks and three appointments set for her. So that is the groundwork on how valuable this conversation is going to be. Cody, give like a minute introduction about your journey in real estate. I know it spans just a few years, so give like a minute. So our listeners, and we will, we will keep listening.
Well, thank you for having me here. I am so honored to be here. Love you to pieces. Started this business in 1999, so been at this for 22 years. Single agent for forever. Husband, wife, team for a brief stint there and then four person team and now a 13 person team. So that's what happened over those years. And it's been a journey.
Yeah, let's get right into it because the conversation today with you and having been involved and challenging you over the years and you challenging me and us, sort of a tug and war about just different mindset shifts that you've had to go through over the years. And we're going to dig into all of it. The first one I want to tackle though is being a top producing agent and playing the game of like tactical real estate and specifically even sellers like you. You play that game at the highest level. How do you mentally go from being a top agent to shifting in your mind to become a business owner? Talk about some of the challenges there.
Oh, that, that was unbelievable because I took tons of pride in being a realtor and then I got my broker's license early three years in and I took tons of pride of being a broker. Um, that's, that's was the language I used. And then I realized, holy moly, like learning how to find out where my money's coming from. Because I just looked at a. As long as my account had money in it, I was happy that I realized I'm not. I don't know how to run a business. I don't even know what that means. But I do know how to be a realtor. So that transition from those two was very, very hard for me, almost so that I quit. How many times did I quit?
A few.
At least Three, I think I quit three times and then came back. But it just because it was painful. It was painful to understand, truly understand the numbers and truly understand what I'm spending on advertising. Like what business owner doesn't look at that stuff? Well, I didn't. It's because I made good money selling real estate. Just keep selling real estate. So, so the mindset had to, I had to go through a lot of pain and I don't know, I don't know if that's the mindset answer that you're asking, but just knowing a person quitting, they went through a tough struggle and I did it three times. So there you go. I had to figure out how to be better than that.
Yeah. And I think it's, it's, it's a little bit of discomfort. I remember, I don't remember where the event was, but I remember you and Bill. We were doing one of the sessions at the intensive workshop was on just like your financial journey, your financial life and in real estate, like the whole industry touts like X number of homes sold and like whatever, like all these top line metrics that have little if any meaning into like are you hitting your financial goals? Are you like less stressed and have more time freedom this year than last year? So maybe talk a little bit about like once you really came to realize that you could disconnect, you know, your production from the money you earn or like your money, like the money you invest in your business or your production has to leave lead to some financial independence. Let's talk about that a little bit.
Yeah. Because I knew very low fear in spending money. None. I was fine. I would spend money on everything. Advertising, spend money, you name it, I would spend. And then when we did it was with you, we did a financial like, how much are you really worth? And I'm selling a lot of houses. And my, how much I was really worth, it came down to we have to actually sell our cabin, which was our second home that we built that was very emotionally attached to both of us. And I mean we had to sell that because our bottom line, what we were actually worth wasn't much of anything. I think it was like $70,000 at the time. And people thought I was successful by all standards. I was, I was selling a lot of houses. But that day and that moment that we had to come back and sell the cabin was did we have to? No. But was it the right call and the smart call and the business person call? Yes, we had to do it. And it has been monumentally different from that moment forward. So the realization that I wasn't as great as I thought I was was hard. And then the next step in making those changes and moving towards putting money away, profit first. I think it was you that suggested that book and we have been through those exercises a ton. That was massive. And then building a team around the proper economic model was big. I'll say that question, I'll talk to tons of realtors and I say, do you have the proper economic model? Do you have the proper economic model? And what does that even mean? I literally, Lars thought that that's the way everybody talks. Like proper economic model. They don't.
They don't, yeah. So I want to, I want to spend a little bit of time and ask you a question specifically. So in, in that transition from just head down, selling a lot of homes, thinking it's going to end up in a good place to where you are now, like true business owner. You know your numbers, you know your profitability, you know how your net worth is increasing, you know your monthly expenses, personally and professionally. You are truly a CFO of your personal and professional life now. But go back to where you weren't. Is it a combination of ignorance and ego or is it something else? Because some people just don't know what they don't know and once they learn it, they're like, okay, well now I get it. And in our industry, traditional success is all about ego. Like people are driving nice cars that they can't afford, they're doing photo shoots in houses that aren't theirs. And it's just this weird sort of image advertising, ego driven industry. So for you specifically though, was it ego or was it ignorance or a combination of both.
And you wonder why the public has such a distaste for us in their mouth. Because it is an image driven thing. I am going to confidently and comfortably say mine was a combination of both. Ignorance was massive for me. I remember you would talk top line profit margins and I was flat out embarrassed. I had no clue what you were talking about. So ignorance for sure. And the ego part, I'll admit to that, definitely. But I gotta say, the minute I knew that it was ignorance and I knew that I needed to learn something different, I, I learned it. So there wasn't a ton of ego in my way because I am, that's why I'm in business, to provide a better life for my family, pay for college, for my kids to, to have a fabulous be a grandparent. Now I'm far from that right now, but that's like to have that for my little grandkids whenever they come along. Like that is what I'm doing this for. I drive a freaking frickin Ford or a Pilot, a Honda Pilot. Like none of that stuff matters to me. But having money in the bank and having that comfort and the reason that is, is to pull, to get away from being afraid. Like, like I'm, I am flat out. I worry a lot. And I worried a lot through this. Anytime something the industry would give me something to worry about, I did it times 10. So when the big Zillow, realtor.com companies and oh my gosh, they could take away and make us irrelevant, I worried and I panicked and I freaked out and I was like, no, I just got to get my head down to sell more houses. And so fear was the, the thing that drove me to making the bigger changes. And then trust, I had to have trust in what I was doing. So I'm calling ignorance for me. 80%, 20% ego.
Okay. So when you, when you start to, you know, expand your business and bring people in and you know, get things off of your plate because you can't do it all. Let's use the example of maybe like when you shed buyers off of your plate and you just focused on the listing side because that's all you do now is pretty much listings, right?
Correct listings and recruiting. Yeah.
So let's, let's talk a little bit about like the mindset of, you know, you can do it better, you know, controlling and the fear around that.
I can even go back before that to just an administrator. Right. My first admin, I could do all of that better than her and it would make me crazy and so I would just do the work. And then it's painful actually thinking about it because of how naive I was and how afraid I was that she just flat out couldn't do it as good as me. Then I learned the rule, if they can do it at 80% the level that I can, that is good enough. And I think again, I think that was a permission based thing that I got from you that said just, just hand it off, 80%. And then you told the story about some agent who thinks that they need to do all that data entry into mls. Like that's just putting boxes, filling in boxes, right? Like no, I knew I didn't need to do that stuff, but talking to the client and running that stuff, oof. I was really worried about it. And then once I handed it off, she could do it even better than me, right? Like, I really had. There was the ego. I had too much ego, that I was better than anyone else, surrounded by idiots. And that's the message I'm sending off to everybody. And then I realized, no way. Get out of your own way. These people do it better than I do now. And that did not come easily. So even today, I'm still learning how to be better at that. And then what's the difference? Like, is it. Are they really great, or did you do a bad hire? That's a tough one for me today. But back then, it was just flat out fear and ego that I could do it better. Fast forward to finally letting go of buyers. The reason and the way I did that was to honor the people on this team. I recruited them, and I promised them I would not take another buyer out, that they would all be given the efforts of my 20 years in this business, or 18 years, whatever it was, I would give that to them. And I honored that. And I'm out. I'm out for sure. And we have an agent, brand new in the business, and her first buyer was a $1.2 million buyer. And we happily gave it to her, and she was ecstatic and loves this team. So that came out of honoring my team. Holy. And now I'm just looking for the person that's going to come do my listings. So if you have anybody that wants to go, be my listing agent, please.
As you're telling the story of the new agent with the $1.2 million buy. I remember one of my first buyers was like, an hour and a half from my freaking house. A HUD buyer. It was $100,000 home, and they got three homes under contract because they were all crap and they all failed inspections. And luckily, it was a HUD deal at the time, which they were doing, like, 5% commission. So I remember I was so happy. Um, the things that we do that our agents don't have to do, uh, you know, we build these teams in part to make it easier for our agents to succeed, which you have definitely done. Uh, we. Let's. Let's talk a little bit about in. In real estate. And I just think, in general, you know, we. We fall prey to comparing ourselves. We compare our insides to other people's outsides.
Compare.
Because we don't get to see, like, the actual, you know, what it's like to be that person. You know, they may have a crappy marriage. They may be estranged from their kids. They may be physically unfit. They may, you know, be so far from their creator. Yet they sell more homes than us. You know, we're like, oh man, I'm going to, you know, I'm less than. Somehow talk about your struggles in the, in, in, in the comparison game and, and how you overcome them.
Yeah, this one, this is, this is a tough one for me. And because you would, in your coaching piece, you would tell me stop doing that. But, but it drove me like I was, I was really good to find the best of the best in my marketplace, find out what, where they are, compare myself to them and set that commitment to beat them. That was the competitive side. And it works for people like me very, very well. To a point. Then what I found, and this was my biggest revelation that happened literally just this year. And that is when you are constantly comparing. You're looking, you're looking up the mountain right at where you're going, how you need to get there. And what you fail to do is turn around and look at how far you've come. So, oh my goodness, I have come so far. I have done a really good job. And to take that moment and to pat yourself on the back without the accolades. Right. I don't have some broker telling me how amazing I am. Like, it's just, I don't have that. I'm not. And kind of, you need that a little bit sometimes. So you have to do it for yourself and look at where you've come. And that's been monumental for me. To sit inside my confidence now and to sit inside the knowledge, these 22 years of real estate experience that I have in this brain and to be able to share it and provide something of value to people because I have done pretty well. And so I still fail or fall into the comparison game periodically. And my horror story is my biggest thing I learned in real estate is I lost. I actually let go two agents that I didn't want to be in the same room with these people. So I had to let them go off my team. Very big producers providing a six figure net to me, so over $100,000 to me, and I had to let them go. And they went, both of them went to the person that I compared myself to regularly. It was heartbreaking. And I let them go. So it's like, what did I care? I cared. I cared deeply. I learned what I created in them and why I had to let them go was because of me. And it was the hardest lesson, but the best one. Right now, the team I have is a very different team, but it's because I'm coming from a Very different place. So hard, hard lesson that started with comparison and then just ends with, okay, confidence and love and just giving. That when you do that, guess what comes back at you, right? Confidence, love and more giving. So it, it's been. I actually have chills on my neck because it's a cool journey that had had to happen.
You know, the traditional, even sort of quote unquote successful real estate teams, you know, they, they, they aren't really surrounding themselves with people that are, you know, of a core value fit or, you know, they don't abide to any kind of economic model. You know, before we hit record, we talked about two big businesses, you know, two, two teams that we know that, you know, they're running marginal profit, but nobody would know because nobody talks about it. Right. So it is the compare. Like I would take your business over like the 10 teams that you put on a pedestal because I know their economic model is crap. I know they're probably. They don't travel as much as you do, they don't have. Their net worth isn't increasing like yours is. They're not. You know what I mean? They're just so far out of whack with sensible business and financial practices that I just wouldn't, I just wouldn't do it.
And I don't. Where does that come from for them? Where does that belief get stemmed? Because I just had a great conversation with this guy the other day and he says to me, he says, I'm. I want to sell my business eventually. Like, I want to sell my business. I said, okay, phenomenal. So talk to me, you know, what's your number one thing? I'm recruiting. Okay, great. What are your splits?
80.
I pay them 80 and I get 20. Okay, so what's your profit margin then? He didn't know his profit margin, but he had to sell. He himself sends. Sells a ton, a ton of homes. So the final question I asked him was, how are you going to sell your business if you are the number one money maker? No one's going to ever buy your business. It isn't worth anything. After that was said, the phone was silent and he couldn't get off the phone fast enough with me. And he didn't want to have the further conversation. And I was truly there to help because I can help him now based on the stuff that I learned. But I called him out in a way I didn't even really mean to call him out. I just asked the right questions and could not believe the answers. Shocking.
Yeah. And just so everyone Gets it, you know, So a business conversation. In any business, I can ask three questions to a business owner. And like at the end of those three questions, I'm either like leaning in because there's something I can gain from and learn, or I am like stepping back. And so for anyone that doesn't realize it, if you're paying out 80%, how much do you have left? 20%. Out of the 20% you have to cover leads, administrators, overhead, phone, rent, Rent. You know what I mean? So you are not making any money. I promise you that could guy is losing money on his business and he's making up for it in production.
But he was very, very proud of all the agents that call him to be on his team. It's like, well, of course they do. You're.
Yeah, sign me up. Yeah.
So when people say, yeah, you know, I can, I can recruit. Have a lot of people like listen it, listen, let's just have a real conversation so that we can get from point A to point B a whole lot faster. But it took me how long? Six years. So listen to me. Right. Preaching to the choir. Because it's a hard space to peel back the layers and be vulnerable to know what you don't know.
Yeah. Really good. Any current mindset or leadership challenges that you're going through right now?
My fear of letting go is still there. Sure. Letting go of piece by piece. And so that's for sure there. And then the second bit. I think the biggest thing to answer any problem I have is to continue to recruit. Right. Recruiting agents and having those conversations. And so that is the piece that is, I guess if there's going to be a challenge, it's that I got to keep recruiting. You can't stand still very long in this business. Right. You got to keep doing. And that's the biggest. Keep doing. And I got to find my listing agent. Like I alluded to earlier.
Yeah. So your next steps are you're at a buyer's and you're looking to just get down to like referral. High end listings, essentially.
Yeah. Or just not listings at all. I'll give that to the team too. You just gotta find the person who wants that piece. And so, and I, it could be someone on my team. They're just, they, they love buyers, they are loving them and they are thriving in it. And even in this market, that's so tough. And they're still doing great. So. Yeah, I need to find a listing agent and need to continually recruit.
Yeah. Awesome.
Do you know any teams that don't have to do those that don't have to recruit regularly.
No, I mean there's the, the only way to stay level or two out of your business is to have just a never ending stream of talent.
Right.
It's like the sports analogy. You know, they, they win the super bowl, but all season they were looking for talent. They're like in seventh and eighth grader football games now looking for the, the players that are going to, you know, play on the Panthers or whatever. So it's, it's the same, the same stuff. Talk a little bit about. I wasn't planning on this, but I want to talk about it. You, you have pivoted your business, you went independent to KW to exp. Talk about what you see foundationally. You know, we talk about EXP being a platform to put your business on so it doesn't like change the way you do business necessarily. It's just a better platform. So talk a little bit about your decision to join exp.
Yep, that was a no brainer for me. The only reason I went into from independent into Keller Williams. I'm going to blame you here. I just needed to find a broker, right? Paying a cap of 16,000, 20,000, 23,000 to do the broker duties at that stage of the game was an absolute no brainer. I don't want to do that stuff. And so stepping into exp I have that broker to do all of that. Take that piece off in my cap. $16,000 all day, every day. But what exp I feel that is that recruiting thing that I was talking about. Let's say this agent is phenomenal, but they just aren't. They don't want to be on a team or they don't fit the team model. They don't want to do that side. Well, guess what, I can still help you exp. I don't want to swear here, but truly it's changed the game from agents being a holes to one another to being supportive, contribute, contributing, lifting up. That's been the change there. Because it doesn't matter if you're on my team, I can still lift you up outside, help you with everything. And guess what? Yes, I benefit in all the stuff that you'll benefit from it. I get to benefit too. So Keller Williams puts me on a pedestal to teach their classes and to go in and do their ignite, I think it's called. And I'm sitting there going, what am I doing? Love the idea of giving back, but those are hours out of my day that I took away from my Own team. So forget that, get into this space, still be that contribution, help agents, lift them up and get paid handsomely for it. So that's a business mind, right? That to me was a very easy choice.
And I think you and I, we thought similarly about exp. We had sort of pushed it away for some amount of time. And then once you start to think about your business in terms of leverage and you slow down and you actually look at EXP and you understand leverage. Like you, like if you want to just sell homes forever into your 70s, then you should, you could do that anywhere. You could do that at exp, you could do it at kw, you could do it at whatever. But if you really understand leverage, it's hard to ignore exp. So talk a little bit about that and I want you to talk about the mastermind that you've launched and how you're going to give back there. But talk a little bit about, you know, how you see the business a little differently where like it was only your team, now it's like local agents and then it's folks around the, around the world.
Yeah. Well, I'm going to first say exp. When I first looked at it and I don't know, like whatever the logo is, the logo didn't much care about it or for it didn't care about multi level marketing, didn't even want to talk about that. Like, give me a break, like all that stuff, whatever. Then how did you just describe it slowed down and actually looked at it. That is when the light bulb went on. Because I talked to people and agents all the time to join my team. Not everybody wants to be on my team. Not everybody is a good fit. That's where the conversation ended before exp. Now the conversation doesn't have to end. And that being the case, put, put EXP aside, let's just contribute to the industry that has made me a living for the past 22 years. Again, want to share this stuff that's in my brain. So let's just help agents, let's contribute, let's bring them, let's make them better. Because if, unless you're hiding under a rock, you should be pretty worried right now as a realtor, you better be making changes to stay significant and to stay relevant and to stay of value to folks. Right? So if you don't know how to do that, find someone who does to help you get there. So that, that's a big deal to me and I think that that's where the shift in EXP I get to do That I can do that with my team, which is, I told you, 12 people, 13 people. I can do that with my local market. We're number one in Cave Creek, but we have a whole valley here with. With millions of people, tens of thousands of agents. And then, guess what? It doesn't have to stop in Arizona. I can talk to a realtor where you live, Lars. I can talk to realtors in my hometown, Montana. I can help and contribute to their lives and benefit from that. So it's a win. Win. I don't know anywhere else where I could do that.
Yeah. That's awesome. So what's the mastermind? What's the best way? Two things. Talk about the mastermind and what you're going to do there, and then talk about the best way. Because this is not any sort of exp pitch. This is the value about mindset and the whole shift. Yet if you're at a point where you've shut down exp and you want to talk to somebody who's been independent, been with kw, now sort of sees the value of exp. Who plays the game of real estate. I don't know anyone playing the game of real estate at a higher level than Cody. So I do think people can reach out to just to have a conversation about exp, but talk about the mastermind.
For a minute, a hundred percent. And I thank you for allowing me to do it where I just now created it. It's called Elite Real Estate Mastermind on Facebook. It's Facebook page and an Instagram page of the same name. And it's just about contributing and lifting agents up and helping them stay valuable, differentiating themselves. And how can I help you get from where you are now to where you want to be? And it's time. It's time for me to give back. It's time for me to step into that space and allow it for people, because I can.
Awesome. Really, really cool.
So they can just reach out on there.
Yeah. And then what's. Do you check your Facebook Messenger? What's another good way to get in touch with you one on one?
Yep. Facebook messenger for sure. We check it all the time. And then, of course, you can just reach out to me with an email. Codytheriddlegroup.com if you'd like. Happy to chat.
Awesome. All right, Cody, this has been really good. I appreciate your vulnerability around just the comparison game and the mindset challenges that we all go through. I just wish there were more open and honest conversations about the challenges. You know, every point of your journey, like none of it's easy. Like, it's all about choosing your hard, and I really do believe that. So I appreciate you and all you've done and the way you continue to push me and push yourself to do more in the industry. So, yeah, many thanks. If you're at the point in your journey where you want to have a conversation or you think this world might be a good fit for you. Real Estate B School. The B is for business, so we focus on helping you make that shift from agent to owner in your business. And there's a whole bunch of different stages you'll go through and you'll be challenged every step of the way as Cody was. Much love, Cody. Appreciate you.
Thank you too, Lars. Back at you.
See ya.
