Chris Powers - Graduating From The CEO Role

I would really think about who your customer is and then what it's like the day they meet you. Because we talked about it in the investor world, but we have the same onboarding process for our tenants. When you meet our, when our tenants meet us or we've closed a new deal and we're onboarding them, oh my gosh, they get a full suite of here's who we are, here's our team talking to you in a video, here's a demo of how you'll log in online to pay your rent. Here's an example of how to submit a property management request. We— our property manager will be at site and shake your hand in the first 7 days of taking ownership. I think that meeting that owner that you're trying to get to let you manage their property, we need to put more attention into how we meet people because whether they sign up with you or not, you're going to leave an impact on them. And that's the perfect opportunity to do it. And candidly, it's— you're not asking to build a big budget to just put a little more thought about how you meet people. In fact, it might not cost any more money at all. It might save you money over time.

Welcome to season 2 of Owner Occupied on the business of property management. Owner Occupied is a show about property management in the real world. I'm your host, Peter Lohmann, co-founder and CEO of RL Property Management. For season 2, I have a different guest each week and we go deep into conversation about what actually works when trying to build and scale your property management business. Thanks for listening. Now let's go. Welcome back to Owner Occupied. I am thrilled today to introduce Chris Powers to the show, the man who needs no introduction, but I'm going to make him give one anyway. Chris, if you don't mind just taking maybe 1 or 2 minutes for those who may not have followed along with your amazing story and just share a little bit about your background and where things sit today.

Yeah. Well, it's a treat to be on here, Peter. So I am the founder and chairman of a company in Fort Worth, Texas called Fort Capital. And I started this business in 2005, so 17 years ago. And Through an evolution of maybe a couple series of business names and a couple different structures, the company that people know today is a business that buys shallow bay, multi-tenant, Class B industrial throughout the Sunbelt, primarily in Texas. We have a fully vertically integrated team of 31, 32 people. We raise all of our own capital. We acquire, finance, asset manage and property manage. In the last couple years, property management, which I know we'll be talking about today, has become one of the core tenets of our business. And through that, we also now actually manage an active portfolio of about 2 million square feet of third party on top of the roughly 6 million square feet that we own. So we are in the property management business. And yeah, that's a little bit about us.

Yeah, that's awesome. And I want to dive right into property management. So you're managing about 2 million square feet of third-party industrial real estate. I have no idea what's involved in industrial property management. Could you maybe enlighten me on exactly what your responsibilities are as a third-party manager? How is that normally structured? I just know nothing about it.

Yeah, it's a great question. So we can talk about the nuances of it, but from the structure, the things that we do are obviously we make sure the space is well maintained, which means an industrial, that's making sure that the roofs aren't leaking, that's making sure that the properties are clean, that's making sure that trash is being delivered and picked up, that's making sure that tenants are paying rent, that's making sure that there's security if need be, that is making sure that tenants' requests for repairs, if it calls for in the lease, are being met. A lot in commercial are triple net, so we're not always as active as we would be in maybe a residential setting. That's making sure that, you know, from an accounting standpoint, especially with triple nets, that we are doing the reconciliations and we're providing the monthly billing, which is again different than, than residential. That is making sure that, you know, if tenants need to expand or have questions within the building that we're maybe able to offer them. A lot of our properties, they'll call us before they call a leasing agent. That's making sure that we're fighting the property taxes and making sure that our property taxes are as low because in a triple net setting, that matters a lot to the tenant. And so it's really everything that keeps a building maintained and a tenant happy, asking a lot of questions. And we can go into the nuances of why we think that in our space, we're able to deliver a level of service that maybe isn't necessarily achieved everywhere in the market, but I'll stop there for now.

Sure.

Okay.

That's really interesting. So I heard you say that you will fight property taxes. If I understand it correctly, in a triple net lease, the tenant is the one actually paying those property taxes. So you're basically serving your landlord by helping the tenant live there more affordably, essentially. Not live there, but use the space more affordably with the idea that they'll stay longer, maybe have more available to pay in rent. And then Are you normally handling the leasing as well, or is that typically separate?

So it depends on— as we've kind of evolved in industrial, when we first started, we had a lot of tenants that were, that were larger. So let's say anywhere from 10,000 square feet all the way up to half a million square feet large tenants. Those are usually represented by a leasing agent. But lately we've been buying a lot of stuff that where tenant sizes are maybe 1,000 square feet, 1,500 square feet, 2,500 square feet. A recent deal we just bought in Houston, 300,000 feet, it has 120 tenants. It almost functions like a residential property. There's a management office on site. People usually show up and just kind of tour a space and sign a lease. It's very much about as close to a multifamily-like setting as possible. In those cases, what we found is we would hire a leasing agent, but what we realized was the property manager was doing almost all the leasing. And so there are some properties as the tenants get smaller and they're more densely kind of populated in the property where we kind of turn our property manager into a leasing agent.

Very interesting. And those smaller properties are like the contractor condo style that are becoming more popular?

Yeah, a recent term we've kind of come up with, I think I found it on Twitter, somebody said it was like a contractor garage, but yes, It's a small office and 1,500 square feet of warehouse to kind of store stuff.

Yeah, we actually rented one of these a few years ago before we moved into our current space with our bigger warehouse. We rented for like 2 or 3 years exactly that. It was like 950 square feet. It had a tiny little HVAC-controlled, climate-controlled little office area with a bathroom and then a bay door with room for like 2 or 3 vehicles in there. And a couple of the other tenants who were nearby to us, you know, there's like a locksmith and there was a plumber. You know, it seemed like a great arrangement for them because they could just come in the morning, do their paperwork, load up their truck. It was very secure. It seemed like convenient.

Yeah, we kind of joked that America runs through these kind of contractor garages. It's like what you just said, you got your HVAC technician, your locksmith. You know, it's fun to talk about Web3 and crypto and all these things on the internet,. But when it comes to our daily lives, Peter, we need our HVAC done, our plumbing done, our locks fixed. If you go tour our properties, those are the folks that are typically leasing from us.

That's the real America, right? These are the people who are actually making things function. I think a big issue we have in the American culture right now is that even though those folks are making as much, or in many cases more, than a white-collar job just in an office somewhere, the status difference between somebody who's a plumber and somebody who's just any generic office worker is still significant. And the way to think about this is like, would you feel comfortable telling your buddy that your son was going to be a handyman, right? Or a plumber. And I feel like for a lot of people, most people, that's still not true. They would still feel a little bit like weird about that, or they wouldn't want their son or daughter to go down that route. And I would love to see that change because these people are working way harder than you or I do, at least me, I'll speak for myself. And they're making good money, even, but even if they weren't, so what is like, we have to do something about this, I feel like, because those people deserve every bit of respect as the general manager at your local, whatever, you know, office center.

Peter, it is the number one thing I've been thinking about probably the last 6 months. I call it making blue-collar labor cool again. And when you really think of the attributes to it, you get to work outside and work with your hands, which fundamentally as humans, like we were built to sweat and be active and things of that nature. But I'll tell you one quick story, and I know this isn't the point of the whole podcast, but I was playing golf in in South Carolina about a year ago. And my caddy— when you go to these old golf clubs, the caddies are usually these 60, 70-year-old men. You can tell they've been there 50 years. They just fit the role. But my caddy was this young guy in his 20s, looked like he was just off Wall Street. And I asked him, I'm like, what are you doing here? And he said, you know what? I got so sick of Wall Street and working behind an office, I moved home to live with my parents while I waited for my next role. And here I am 3 years later and I'll never go back into an office again. I said, why is that? And one of the many things he said, but the thing he said that stuck with me the most was he said, Chris, I don't think you know what freedom is until you get to leave your office and never worry for a second about answering an email, fielding a phone call or anything. And in the blue-collar world, when work is over, it's over. And to us white-collar guys that sit in an office all day, it's never over. At least mentally, it's never over. And he said, if you can ever experience that in life, you might not ever go back. And again, I don't know how to express that other than as I go through, as I've been thinking through the benefits of how you could make blue-collar labor cool again, that's one of the ones that really sticks out to me that I don't even think we pay attention to.

I've tried to do my part by treating our maintenance techs here on par with the office employees in every way that we can. We offer them the same benefits. Of course they're making as much or more. And but also, you know, we pull them into all the company meetings, we pull them into all the after-hour, you know, the happy hours, and we address them every bit the same way. Whereas I feel like in a lot of property management shops, the techs and like the maintenance guys are kind of in a back shed somewhere and they're not in on all the emails and they're, you know, they may even have like a totally different compensation and benefits package.

I've always admired you for that. I've always admired you for that. I remember you talking about that on my podcast, and I think it's critical. Somehow along the way, we said if your job isn't— if you don't need to go to college to do your job, it's just not important in society anymore. And it's funny, I think there's more people having this conversation now. So we'll see what the next decade looks like.

100%. All right, so moving back to property management, So it sounds like your third-party business has been growing pretty well and it's been an area of focus for you guys.

Yeah, it's not something where we're out, to be honest with you, advertising it to the world and just anybody that walks in. It started out of kind of luck. I wouldn't say luck, but we sold almost a million square feet, about 12 buildings, about a year or 2 years ago. And the buyer asked us if we would retain management. And so we did. And then that buyer kept buying a lot in DFW, and so every new building they buy, we would manage for them. And then a second client came on. And so what we tell people is we're not the cheapest, but we are going to operate it the same way we operate our square feet, and we'll operate it truly like an owner would operate it, because we are owners first, and we're very transparent about that. Our business is doing exactly what you're doing But we think we can do the same for you what we do for ourselves. And so now it's growing pretty rapidly.

My impression going into this conversation was that on a triple net lease, there's nothing for a property manager to do other than collect the rent. But it sounds like there is some opportunities to provide value for the resident and the owner. You mentioned dealing with the trash and security. And potentially helping with leasing. So these are kind of sort of details where you guys have the experience, you've been there, done that, you've got the systems, and that's why you're able to just be a— just like fit like a glove for other folks who need this service.

Yeah. So when you think of that, maybe that property that I mentioned there and all of our properties aren't that way, but has 120 tenants and 300,000 feet. It's not like every tenant has their own dumpster. The whole property would just be dumpsters. So we might provide the trash service, but then we bill it out accordingly. So when you think of maybe shared services where there's one thing that's benefiting everybody, but then a lot of times, again, sometimes we'll provide maintenance to the property. It's not our job to, but if somebody wants us to do the maintenance and then just bill them back for it, we can do that. You know, a lot of it's dealing with tenants. You know, one thing I was going to tell you was these kind of contractor garages or the types of tenants that are in them, they've really been underserved in the commercial marketplace forever. Really, when you really think about it, these properties, as you know, these are not sexy properties. These are the properties you drive by and you'll never remember anything about them. The tenants don't pay a ton in rent. They're relatively inexpensive. And they've been kind of blue-collar America. So these are humble people. I always joke, like, they're not mad that the marble floors are not buffed in the office building that they're walking into. These people want the basic blocking and tackling of what a building has to offer. And so I say all that to say, providing them, like, customer service and thinking of them as a customer, it would sound, especially in the world that you come in, you know, to a residential person, like, well, yeah, that, duh, you do that. But these have been what I call the forgotten tenants forever. Nobody's going out and chanting to get better customer service for your Class B industrial tenant. So our actual head of property management, before he came and joined us, was a high-end custom home builder. All he did was deal with the tenant or the client that needed the most service possible. So we've just really said, how do we take that level of service and bring it somewhere that they're— that you typically haven't seen it. And it's gone a long way. Yeah.

What's also interesting about industrial tenants or commercial tenants is that all the issues that you see and hear and read about with landlord-tenant laws just really don't apply because all of those rights that the blue states and cities are extending to renters That's not generic tenant in the state law. That's specifically, typically around residential real estate, somebody's home. So an industrial tenant, a commercial tenant, everything from evictions to tenant screening to— it's really the Wild West, which could be a good thing or it could be a bad thing depending on your motives, I guess, and how you view that opportunity.

Yeah. I think it's just more landlord— I don't even know if it's necessarily more landlord-friendly, but it's certainly more free market-driven. And I'm not saying that, look, it's a really tough, where we are today in society and with the cost of housing, I understand why the government needs to step in. I don't necessarily agree with everything and there's always unintended consequences. But again, nobody's crying for the industrial tenant that had to pay a little more in rent. But people that don't have a place to live anymore, it's an interesting time to where you're blurring the lines of private property ownership versus, We own it, but the government kind of manages it. So it's interesting.

Have you ever had issues with folks sleeping in those contractor garages? Is that a problem or do you not care?

Like vacant suites?

No, like occupied ones. Like they turn it into like a little apartment or something.

Yeah, that's happened. Obviously, it's not— we do not allow it. And the city and the states don't allow it. If we catch it, we'll usually say something. We've found people that go in as folks that are fixing cars or doing something to cars and they're running a gambling ring or they're running a poker den at night. Again, on a 1,500-square-foot tenant, it's not like you're hoping to get a AAA-rated credit tenant. You're doing good due diligence, but in a lot of cases, these backfill so quickly that it's just the level of due diligence you have to do on a tenant is less. Yeah, we just busted up a big gambling ring in Dallas not too long ago, which is an interesting one. Yeah.

Oh, wow.

Yeah, that's crazy.

Yeah. Huh. OK. All right. So process and systems, something I've been curious about for a while, and I don't know if this has changed recently, but at Fort Capital, are you guys using any type of custom software, or is this all off-the-shelf stuff?

So we use Yardi. Yardi is like our core kind of accounting. It's the tenant-facing portal. I think it's called Yardi Cafe. So a lot happens there, but on the team side, we use custom software on process and how people know how to do things and how jobs get circulated around the country. And so it's kind of a blend of the two. We use Yardi for a lot of it, but a lot of the custom team things that we like to do happen on our own platform.

Got it. So this is like the workflow process stuff. The way I think about this sometimes, because we do something similar here, is everything with a dollar sign stays in, for us, Buildium. Like rent payments, owner distributions, 1099s, all that stuff. Contractor bill pay, utilities, all that is still within Buildium and is kind of in its own little world. But then all the process and workflow stuff, anything we can pull out of there. Even now we're moving toward like owner and tenant communications. We're trying to get that out of Buildium because once you have it out of there, you can integrate with other software and build, build off of that.

Yep. That's a great way to look at it. And it's, it's workflows. It's, it's anything you can dream up. I mean, I'm actually talking to the wizard of workflows, so we could probably talk a lot about this, but I think that's a great way to put it. I've never thought of it that way. I think we're set up very similarly.

[Speaker:SHAWN_BILLMAN] So I am big on process and systems, and I think from the beginning that's been where I've focused and it's where my brain naturally goes when I see a problem. I'm immediately peeling back the layers and thinking about how can I encode this somehow and make this problem go away or make it— head it off or just automate it. And so I tend to just look at everything through that lens in property management. But one thing I've learned from you and others is the importance of your people. And I think getting A-players on your team and, and dividing up the roles of your— of the work that needs to be done at the company appropriately and getting those right, those right people in the right seat on the bus. I spent a lot of time thinking about these days, and I'm curious to get your opinion on almost the tension between investing in your people and investing in your systems and processes. To take this to an extreme, look at a McDonald's. McDonald's has the most unbelievable processes in the world. They can stand up a restaurant, employ basically minimum wage workers, and deliver a great product and a great experience for the customers by and large. And you can contrast that with You love to talk about deal shops. A deal shop is a small group of incredibly talented individuals who get stuff done. Those are the two ends of the spectrum in my mind. So where do you feel like you guys fall and where are you driving the company toward? Because I feel like systems and process can allow you to get more done with a lower skill requirement, but maybe you lose something in that You might be better off not thinking of investing so much in process and system and just bringing in some really great people who can get it done?

This is such a good question. I will tell you, as I have grown in business as a leader and observed, I think there's a couple of things that are happening. I think what I would consider an A-player has evolved. I think when people hear A-players, they think superstar. Great resume, went to best college, just the guy— it's almost like we think of it in high school. It's like the quarterback of the varsity football team. And I did an episode on my podcast not too long ago, and there's a TED Talk on it about super chickens. And it just talks about if you put like 15 varsity quarterbacks in a room together and try and get them to work as a team, it's a disaster. On paper, it looks great. I just finished reading a book called The Five Dysfunctions of a Team by Peter Lencioni. What I'm learning over time— The answer to your question— sorry, I'm going back and forth— is I'm leaning more towards the McDonald's model. That deal shop is going to stay a deal shop forever. I'm not saying they're not going to crank out good results, but it's going to be with a few people. There's probably going to be a lot of stress in that environment, a lot of one-upping each other. A lot of me, not we. It's impossible to build a scale company if everybody on the team is focused about me. So maybe where my— as I've evolved as a leader, a lot of looking back, I've realized how much of things were about me and how much of it was about we. Looking at the greatest companies I admire and going, what is fundamental to all of them? They've all been able to one, grow, scale, but kind of do it with people that quote unquote on paper aren't your varsity quarterbacks. It's just a bunch of people that love working on the product, love working on a team, are willing to put something bigger than themselves is what's driving them. And I don't think you can build a great company any other way, to be honest with you. And I'm telling you, 5 years ago, I would've probably said, let's stack the deck with more quarterbacks, not stack the deck with more whatever.

I like to think of this as like the generalist versus the specialist. And the bigger your company gets and the more organized you become, each individual role becomes more well-defined. You know what success looks like, you know how to train, you know how to hire. And so when you get that right person for that role, they're not a quarterback superstar, but they may be in the top 5% in the world at reconciling property transactions for industrial real estate. Right? And so, and you just rinse and repeat that for every single little thing that has to get done at a company.

I think people want to specialize more as they grow in their career too. They don't want to necessarily be a Swiss Army knife their whole life and, you know, jack of all trades.

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Yeah, it's a great question. So I think I've always gravitated towards the investor side of the business. It's always been part of my value add, but I think The thing, going back to systems and processes, we said, look, we're starting to onboard 20, 30 investors a month. We're having the same conversation over and over and over. So at high level, we just identified here's like the 20 things we always have to share with people unequivocally. And oh, by the way, we got to a point where not everybody was gonna be a good fit for us. And not, a lot of people email me, hey, put me on your list. And I say, well, it's not, that's not how we do it. And we might not be a good fit for you and you might not be a good fit for us. So as much as that's designed to inform the investor, it's also on our end designed to go, is this somebody we even want to let on the list? There, there's things that are happening during that process that we're taking note of going, this isn't gonna be a person, or we'll put 'em on the waitlist or whatever. But we really said, and it started with, you know, there's this chicken and egg debate in real estate ownership is who's your customer, the tenant or your investor? Oh yeah. And the truth is it's a forever battle. There is no real right answer, but I've always looked at it as the investor because I know if the investor's my customer, one of the things I have to deliver to them is great returns and deliver great returns, I have to treat the tenant well. It's just regardless, I just said, we want to treat If you just said, how could I treat our investors the best? That starts with their introduction to us. The day they meet us is when our relationship has started, whether they ever invest a dollar with us or not. And if they even, like you just said, and thank you for the compliment, but if they leave that first meeting with us wowed, it's like going through the Chick-fil-A line and they tell you, my pleasure, you've started in a great spot with them. And so we said, they're important to us. We're solving our problem of redundancy and having the same thing over and over. If they will go through this process through us, one, we know they're going to be a good fit for us. Two, we know they're educated and we still offer them, hey, we're happy to get on a phone call with you, but just go through this process first. And what we realized is it ended up saving us hundreds of hours. They got a much better experience. And over time, we just kind of tweak it and add to it as we get questions asked or something's missed. Let's add that to the onboarding process so that we don't have to go through that again. And so it's iterated over time, but it started, and I'll just stop my rant with, how do we make them feel so important from the first time we meet them?

Yeah, I love it. And you know, you're known for doing the annual gifts for those who are kind of in your sphere, which is awesome as well. This is again an area where like my brain is just natural, is not naturally oriented towards people. People and their experiences and their concerns. The engineer in me is just like, I view the system as primary and the people, I'm just like, yeah, we'll get some people in there to take care of that. It's like an afterthought for me, which is horrible. It is something I'm working on because people are what it's all about. They're what make life worth living. So yeah, that's super cool.

Well, when you think about it and a lot of everything in your life, the greatest memories you have in your life, and I can't speak for you, But I would imagine they're associated with an experience you had with somebody, even if it was leaving Disneyland. You left because as a kid, you remember being with Mickey Mouse or whatever, with your parents who took you. It's not that you remembered how great that, you know, you got through the ticket line or all these different things. And so it's just this constant evolution of me going, it is all about the people. And, and being relevant. And what makes you relevant? You actually don't have to spend a ton of money to be relevant. The book thing has been great. We've been doing it 6 years now. So if you've been an investor with me now, you have a whole shelf in your office. It's just Fort Capital books. Yeah, yeah. So anyway, it's just little things, always thinking about the other person on the other side and, and what might bring value to them.

Awesome. Yeah, I think that's really great advice. So Along the lines of your GP business and your investors, and I posed this question to Moses, I want to ask you as well because it's something that really interests me. A GP business is, in my mind, something that you couldn't really sell, sort of to contrast it with a Main Street small business. Like my property management business, I get on the phone today and have a couple interested people who would I'd be able to transition this business and then I could kind of ride off into the sunset. I have no plans to do that, but a GP business is very different. You're setting up not only these relationships with investors, but you have all these agreements that have these long duration component to them. Do you worry about that at all? Do you love this? How do you think about this?

I think that is changing. So it is a sellable business. It hasn't always been. And there's a lot of variables and levers that make it more sellable or more not. There's the obvious ones like, can the business sustain itself without Chris being alive? That's the same case for every business. Can, can your business go if you— if we all get hit by the proverbial bus? It seems like every business owner is going to die by getting hit by a bus.

Well, my business could make it 5 weeks. I know that now.

Now, congratulations. That's awesome. I'm so happy that you did that. Again, I think it starts with the idea of if you walk into the GP business thinking all my GP is for is to kind of keep a couple people knitted together so that our deals work out, no, you're not going to build a sellable business. But if we take a Blackstone, for example, Blackstone is a GP business. And trust me, they're very sellable. What I think is starting to happen is— we're very unabashedly honest that we are an operating company that is for-profit. We're not trying to just charge just enough to keep everybody employed and the lights on. We are a for-profit business. I've been very vocal about what a profitable business gets you: training, bonuses, I mean, all the things. You can invest in technology. So as time has gone by, and I would tell you in the last 5 years, there started to become a lot more transactions. Who your investors are, if you have institutional capital that's going to be paying you fees for 10 years, you have a fixed revenue stream. It's a very predictable model. It's not quite SaaS, but it's pretty close. I mean, when Harvard Endowment's paying you 2% on a billion for the next 10 years guaranteed, that's worth something to somebody. When you have a GP that's getting into deals, that's worth something. So if you can combine the two, a very profitable operating company that has a proven track record of growing, maybe you're scaling across states, you're scaling across asset classes, and then a track record of getting into deals, that is becoming a lot more appetizing to folks. I can leave it there, but I would say I truly believe they're sellable. I think they're going to become more sellable. And the truth is, if I was wanting to get into industrial in Texas right now and I was up in New York, I could go hire some people and put them together and hope to find starting deals, or I could go try and buy a piece of Fort Capital or buy Fort Capital. The question is, what are you getting? Well, in our case, you're getting an $800 million portfolio with management fees that are baked in for as long as we choose to hold the assets. We're under no mandate to sell ever, and our fees don't decline over a period of time. You're getting relationships already built. You're getting a for-profit operating company that's throwing off EBITDA, a proven track record of doing X amount of deals per year, proprietary software that we've invested in. So you're getting all the things a regular business would get. So I would just end it by saying, I think it's the only industry where people enter it not thinking, I'm building a sellable business, because they're always thinking about the deals. All my upside's in the deals. Well, that's very true. But you can have both. You just have to think about it that way.

Yeah. Fascinating.

I love that.

It's very insightful. And I would guess that it's going to trend in that direction for sure. I mean, just like everything, like the financialization of the world basically is going to leave no stone unturned in sort of unlocking that value and creating a marketplace for buyers and sellers of all different types of businesses and assets.

So, yep, very cool.

I agree. So Perfect segue. I wanted to ask you about your transition from CEO to chairman. So those who were listening carefully when Chris introduced himself, he's not founder and CEO, he's founder and chairman. So you obviously have stepped back in some capacity from the day-to-day operations of Fort Capital. When was that and sort of what went into that decision? And then how did you actually find the right person and make that happen? Because of course, That's the dream, right, for many, not only real estate folks, but small business folks in general, is to step back from the day-to-day operations. Very rarely do you see it done. So I'm sure you've had some lessons learned, and I'd love to hear you talk about it a little bit.

Yeah, I did it. I officially made the announcement, I believe it was February or March of 2021, so about 18 months ago. It had been in the works for probably a year before then. Again, I think if I'd been asked this question a while ago, I probably would've answered it a little bit differently. I don't think I was ready to be a CEO, to be honest with you, if I'm really sitting back now. What I mean by that is I was really passionate and good about getting the thing going and creating a vision. Where I started to falter is when the business became more kind of monotonous, which is what happens to all great businesses. They become boring. And not boring in a bad way, but boring in that we wake up, we do this every day, and we just try and do it a little bit better. There's no moonshot ideas. We're not trying to take over the world anymore. Like, the business is working. We have a product-market fit. And I was young. I mean, to be honest with you, I've never worked for anybody. I'd never really managed anybody. I just kind of managed people along the way. And I would give myself, looking back at now, great people in our company, and I'd give myself like a D or a C on a— I mean, I was not great at it, which you typically find in a founder situation. They're great at building a vision and getting people on board. They're not good at the details, and I was not one of those people. And so now I'll caveat that, and maybe the only pat on the back I'll give myself is I think I had the humility to understand that and know that the best thing I could do for the company was get out of the company's way., and you'll see people stay in the same position for 20 years. And I think our friend Brent Beshore, who a lot of folks know, he always says small businesses don't stay small on purpose. I don't think the company would be near as large as it is today if I had stayed there. I, I don't. Wow. I, I actually know it wouldn't. Now I could look at that as, am I a failure? Which I think a lot of people, especially in a founder kind of DNA, would look at that as like, well, you're a failure. If you couldn't have done that. But it's back where I take the conversation at the beginning. I'm thinking about myself. I'm not thinking about the team. And I did say the day I gave the team the announcement, I said, "This is my way of showing what I feel like is best for the business." I wasn't ready to be a leader. I mean, I was 30-something years old. I had never had any training, and I had an incredible partner and an incredible team, and I just kind of saw these patterns that, you know, maybe I'm just not the greatest to be a CEO. And I think we glamorize the CEO role. The executive chairman role is becoming a lot more common now. I've actually seen it all over the board. CEO of Flexport just stepped down. Now he's executive chairman. CEO of Cadre just stepped back. He's now executive chairman. And I think what executive chairman says is, I still love the business. I still want to be the face of the, or help be the face of the company, drive business, get back to what I did as a founder early on. But structured in a way that I'm not getting in the way of the day-to-day machine. Because Peter, I am probably your worst nightmare in the sense that if you let folks like me do too much, I show up every day trying to break the machine and then restart it again. Let's just break it and build it back better. In EOS, they call that a visionary. But we had an amazing team. I knew we had product-market fit. I was unhappy. I don't know how else to say the word unhappy and didn't know why. And if there's one pat on the back I would give myself that I encourage anybody listening to this, and the funny part is I've had this conversation with so many CEOs out there that are miserable, but they think that they're failing if they admit that they're not good at their job or they don't even know what their job means. CEO is such a weird title. You go on Twitter, it's easy in 140 characters or 280 to say, "A CEO does this, capital allocation, culture setting." Cash in the bank. Yeah. It's the easiest answer. It's not bullshit because it's real stuff you have to do. But anybody that's been the CEO of a small to midsize business knows whatever you can write in a 240 tweet, you need like 24,000 characters. And so I would end that by saying, if you're out there and you're listening to this and you are thinking, man, I'm the CEO, that's the title we've all been told we need. There's more people out there than you would ever imagine going, I maybe not fit this role because the irony of it is once a machine becomes repetitive, it actually takes a completely different skillset than what a big visionary needs. And so to find a Jeff Bezos that can go from zero to as far as he— those are unicorns that can just evolve. I would end my rant by saying being on the sidelines for 2 years and witnessing what's happened at Ford and really paying attention, everything I've been I think I could be a CEO again. I would do it probably totally different. Some of that's maturity and wisdom, having kids, seeing lots of situations. You know, I think we lived the 2000s thinking that a 25-year-old was capable of being a CEO because we saw it from Mark Zuckerberg. I literally just had this conversation with my partner this morning in our meeting. I almost think now you have to be in your mid to late 30s, early 40s to truly say you can be a CEO, not because you've worked that long, you've just seen life happen. You've had kids, you've managed people, you've seen how people react, you've seen thousands of patterns of behavior that you just don't see when you're young. And so I don't even know if I answered your question, but for me, it was a lot of being comfortable that I wasn't the guy anymore. And I will tell you this, there's been plenty of days in these 18 months where I'm like, I wish I was the guy again. I've had to relearn because owning a company is different than running a company. There's days I don't agree with what the CEO's going to do. I don't say anything. I'm not saying I'm right. I just don't agree. You have to learn not to say something. He's either the CEO or you're the CEO, but you're both not the CEO. He's incredible. We talk all the time. I've learned so much from him. I continue to learn from him. I'm no longer ashamed that I couldn't, I couldn't do it on my own.

That's awesome. So he's basically— is, is he an integrator? Like, he fits that profile?

It's kind of funny, he's like, we kind of— he's a visionary integrator. He's got a little bit of both in him. I would tell you he's a visionary by birth, he's an integrator by training. Like, he's, he's 10 years older than me, he can do both. But he would lean towards the visionary side.

Okay. And so with him in the day-to-day, I think the natural question is, what do you do all day? How do you think about your involvement as you're sort of observing the business growing and running and decisions are being made? Obviously, you chat with him quite a bit. I'm sure you guys have regular meetings where you go over various details, but are you still Is it still a full-time thing for you, not as the CEO, but for Capital in general? I know you do have some other investing activities, which I want to ask about, but I'm curious what takes up your time and your thoughts these days.

It's not a full-time job. It's becoming less full-time by the day. I meet with Jason on Monday morning from 9:00 to 11:30, and that's my one meeting of the week on the business. We'd have a long quarterly meeting, which is a day-long meeting, and then we have two kind of 2-day retreats. I have dashboards so I can see how the business is doing always. They can call me anytime they want for anything they need, but I try not to make and force myself into a situation. And so really, if we're raising lots of capital, if we're talking to big lenders, I'm still on, from a financial standpoint, very involved, maybe the most involved. But day to day, I read, I think about the industry, I mean, honestly, it's pretty boring. I'm not super involved, but I'm very current on what we're doing. I want to be a support system to Jason, so I want him to always know I'm available. It's lonely. Being CEO is lonely. I don't care what anybody says. It's lonely, and I want to be a support to Jason. But I spend a lot of time right now, which we can talk about, but I'm gearing up for whatever my next thing is. I don't know what that is. It doesn't have to happen tomorrow. But I've learned how to be an owner to Fort. I'm continuing to learn. It's an incredible business that I'm fortunate to be a part of, but I'm excited about maybe starting something new or buying something and getting my hands dirty again.

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In that first 6 to 12 months after you did step away as the CEO, did you experience stress or anxiety or fear? Maybe not fear. I guess what I'm asking about is, it's a tale as old as time, right? The analog here is like retirement, right? People retire and then they're aimless and they feel like they don't have a purpose in life and they become depressed and I don't get that vibe from you at all, but I am curious, did you experience any sort of feelings in that direction?

Yeah, I, I would say the one good thing we did was when I said I spent a year before we made the announcement, we hired an executive coach. When we first hired him, it wasn't, how do I transition out? It was just, why am I unhappy? How can we actually make my role as CEO better? And through that process realized, no, this is probably the right move for you. So I had, you know, some training, and I was also— had a lot of good people that have either sold businesses or moved out give me a lot of wisdom to what you just said. Like, my whole identity, Peter, was tied up in this business since I was 17 years old. And I could talk about the personal implications that had on being a husband and a father. And but when I said my identity was in my business, you can imagine that creates tough spots in other areas of your life. So part of it was starting to learn how do I decouple myself from that? What is my purpose on this earth? Business is great, but it's not everything. And so the answer, the answer to your question is it was a learning experience. No matter how much I was told, there were definitely days where I was like, man, I really miss this. But again, I think a lot of it was, it was just a me thing. It wasn't like, oh, the business would be better if I was there. It was more like, I need something to do., and this is my company, and so I should just go back in and break the machine so we can all fix it again. I never did get to the point where it was like, that business needs me or else it would not be doing as well.

And that's humbling.

It just is. Like I told you, I don't think Fort would be anywhere close to where it is today if had I not made that move. It really, for me, was 2.5 years ago, but it was official a year and a half. For me, it's given me the last year, I have spent a lot of time at home. When I say at home, working on my home life. My kids aren't going to be young forever. I feel like my wife and I got to get married again because I spent so much time at work and focused on work. I've taken up hobbies. I've just kind of done a lot of things that I neglected for a long time. It hasn't made me love wanting to work any less. I still go to the office every day and keep my mind active. And, you know, I say all this like I'm some old guy. I'm only 35 years old, which is the crazy thing.

Yeah, you've got a whole second, second act and third act, likely.

I do. Yeah. And, and I'm finally at a point where I'm giving—

I just had a baby last week. And congratulations again, by the way.

It's so— I appreciate it. It's amazing. But I'm excited about the next chapter. I have no idea what it is. If you're listening to this and you have some good ideas, reach out. I'm actually dating a little. I'm starting to meet people that are in business. I've never gone out going, "What could I do next?" I've got a list of ideas and some obvious things, but that's exciting. But I would tell you, it took me a year and a half, a year, year and a half to learn what it's like to own your business rather than run your business.

It's two different skill sets. [Speaker:TREY_LOCKERBIE] Very interesting. I appreciate sharing that very personal journey and story. I imagine you must get overwhelmed with requests for your time. Hey, can I buy a coffee? Hey, you know, the Twitter DMs. I mean, I can only imagine how many you get. The emails, you know, people contacting you through every different which way. And I've never seen— you have not gone down the route of here's a Calendly link, it's $500 an hour. You haven't really sent any digital products that I'm aware of. So you must have given this some thought one way or the other, and I'm curious You always seem like a person who's super generous with your time. You've been very generous to me in the past with your time, but there's no way you could fulfill that for everybody.

How do you think about that these days?

Yeah.

One, we are all products of people that gave us time, whether that was your parents, somebody in work, whatever. And nobody is self-made as much as we like to think we are. I will tell you, I don't have a perfect answer. The answer is, I've chosen to go really deep with people that are close to me. I would much rather live that life than give everybody 30 minutes. I can't do anything for anybody in 30 minutes. But Peter, I can do— we've been on each other's podcasts. We've met at Reconvene. We've talked several times offline when I needed help with thinking through property management 3 years ago. That's a relationship that I could see going on for many, many years. I'm not saying I— but I can't have that with everybody. And so, The first answer is recognizing that. I do say no to a lot. And as far as charging is like, I just operate under the notion that if we all want to equate it back to just dollars, I think I'll make more money doing things for free than by charging a couple hundred bucks for an hour. And to be honest with you, it makes a relationship feel very transactional. It's not an actual relationship. It's a transaction. Now, you might pay for it and become good friends with them, and then you guys keep talking and you build a relationship. But to me, it's always felt very transactional. And candidly, nobody I've ever loved, respected, or admired charged me for their time. I've never had a mentor that started with like, "Yeah, it starts with $500 payment and it will move on from there." Not to say that's not a bad thing. I'm not shaming it, but it's how I've always looked at it. It's how I would kind of was brought up through the system. As far as Twitter DMs, I typically will take like one day a month or week and just like plow them out. It's gotten worse over time. If I've never responded to you, I'm sorry. But I'm also pretty ruthless with my time. I mean, you know this, you just took 5 weeks off. As you get older, and again, I'm not old, but you start realizing more and more that time is finite. And when you have kids and stuff you want to do, I started looking through everything. I was like, I can take this call or I can go home an hour early, pure and simple. And that alone will make you go, yeah, I probably don't need to take that call. The other part is I'm lucky to have a podcast. I try and get a lot of stuff out on the podcast. And some people I'll just say, hey, why don't you just go listen to this podcast? Or it's kind of what we talked about with onboarding investors. You hear from me, there's videos of me, I'm talking to you. I got to have that conversation 2,500 times last year and it took me 2 hours. 'cause I just repeat it. It's one conversation recorded. So that's also been a benefit. But I've never met anybody that's great at it other than they get to a point where they're okay telling people no and not feeling like that's hurting somebody's feelings. And somebody said to me this way, like, if you emailed Elon Musk tomorrow, would you ever expect him to get back to you? No. I'm not saying I'm Elon Musk, but I also wouldn't expect him to get back to me. But that's the case for even somebody downtown. There's a lot of people I don't expect to get back to me that I admire. I don't know. I think the cell phones and emails have made everybody so accessible that it's got to become a better part of our culture that sometimes you're just not going to hear back from me.

Yeah. And it's created the idea that just because you can reach somebody, that they owe you a reply, which is not exactly correct, I don't think. Something I heard someone say once is like, early in your career, you should never say no to like a meeting or request, a phone call, a coffee, whatever. But then at some point you need to transition to being extremely judicious with your time. And for me, it's been hard to figure out that line because I'm certainly not early in my career, but I also get messages and DMs and people who want to meet up and I'm like, I'm really interested in what this person is doing, and I feel like we really hit it off. But then again, you know, I really need to stay focused on what's going on at RL Property Management, or whatever my focus is at that moment. So it's an interesting, you know, dichotomy that, that we face, especially sort of mid-career.

And I don't think— I, I'm totally with you. And it's not a like, hey, what are you doing for me lately type of thing, or like, how can I make this, this call worth it for me? One thing I always lean back on is some of the most interesting things in my life, if you really traced back to how it occurred, it's not like it was obvious. It happened because I picked up the phone or I showed up to that thing and I met this person who introduced me to this person who— And somebody said, we don't really realize it, but we're good at recognizing patterns. And he calls it mining for gold. He's like, you kind of know when you're mining for gold subconsciously. You kind of know you're putting yourselves in the right spots, and over time you kind of know when you're not. It has nothing to do with the status of somebody else on the other side of the phone, because some of my favorite calls now are from like a 23-year-old kid that'll reach out to me on Twitter like, I know you're not going to respond to this, and I'll email them back immediately and be like, I'm available for the next hour, call me. And they're like, what? But don't you get more pleasure out of somebody that's excited about life than somebody that's already, you know, 20 years in? I'm not saying they're not great too, but there's something about talking to someone that's so naive that's a lot of fun.

Yeah, now I know why you took my call, so that's good.

Yeah, I'm just kidding. I reached out to you. I needed your help.

Something I've been really enjoying recently, and I forget who I saw this from, but like I used to be somebody who Everything had to be scheduled. It's like, you want to talk to me, you got to get on my schedule. And I got really aggressive about that in the last few years. But then recently I saw someone, they were like, I'm not scheduling any meetings anymore. Here's how I reply. This was on Twitter somewhere. They were like, anytime someone wants to talk to me, I send them this little blip of text. And it was like, I'm not taking scheduled meetings anymore. This is my cell phone number. Call me. If I don't answer, leave a message and I'll call you back. Kind of like old school, like the way it used to be before, you know, everyone had Google Calendar and everything.

Yeah.

And when I first saw that, I like recoiled in horror. I was like, what the hell?

Like, this is crazy. But that's not a system.

I've been trying it and I really like it because there's times when I don't want to fill up and like block out time on my calendar in the middle of the afternoon. Like, what if I'm doing something else and I don't want to interrupt that flow? But I do want to talk to this person. And there's these edge times, like when I'm driving or when I just happen to have some time and they call and it works out. So that's been an interesting way to switch that up for me.

I love that. I have not heard about it that way, but I think I'm the same way you did. I used to have an assistant that blocked me. I mean, she was the queen of no. And I don't know, over time I was like, I wouldn't even want to reach out to me. It's— I'm miserable to get a hold of. And some of my favorite people I can get a hold of, or I can, you know, they'll let me in quickly. And so I'm going to take some two cents on that. That's interesting. And I think you're right. I think phone calendars on our phone, the computers made our world to where everything is all about efficiency and having a perfectly tight calendar. And we read these stories about Elon Musk's day from the second he wakes up and does work from 4:30 to 4:45 before his cold bath. And then we've kind of lost this like, yeah, we'll just kind of figure it out each day. And that our sense of intuition is correct and we'll know what to respond to and whatnot.

Yeah. My business partner likes to point out that, you know, business still got done before email. Like, you know, we wrote letters and there was like interoffice memos. And there was no expectation that you would be getting a reply within 2 hours because it was impossible. You got a reply in a week, you know, if you were corresponding with a vendor or something. And man, we've really lost something because this expectation of an instantaneous reply really— it creates a, um, well, first of all, it creates like a suffocating work environment where you feel like you need to be on email all the time. And the other thing it does is it, in It sort of inspires laziness on the part of the sender of the message because they know that they can just get a reply and then reply back and reply back and reply back instead of really developing a coherent couple paragraphs trying to answer their own questions. And then, I don't know. I don't know if that makes sense, but—

I'm totally with you. I'm surprised we don't send more voice messages. We still text a lot. I'm surprised that voice messages haven't become a a thing?

I've got a couple friends that that's all they do. That's awesome. Yeah. I'll get a minute and a half voice message and then I'll reply back with a minute and a half voice message.

It's actually kind of nice. Well, I will tell you this, and I think you'll agree with me on this, but if there's one thing I've spent a lot of time on even the last couple years is being an owner and reflecting back on some of what I could have done better, I think we so underestimate in today's world nuance and the tone of how you say something. Like if I say, Peter, I love you. Or if I say, Peter, I love you. You just heard two different things. The amount of time I think we spend burning energy wondering what the tone was of an email or it lacked an exclamation point or a voice message like saves us so much guessing as to what something meant. Even in our marriages, like even at home, we have, I just think a lot of chaos in the world happens now from reading everything through text. You know, we see it on Twitter like 24/7, but if everything was brought back to tone and voice, I think there would be a lot less stress in the world about what people meant. People wouldn't take things so seriously and we could kind of mine through it quicker. And I also think people wouldn't send as much stuff if they were forced to like voice it out. Yeah, yeah, totally. So anyway, that's just kind of riffing. I wanna— we're getting— I do love you, by the way.

Oh, okay, great. Love you too. This is awesome. I wanna, uh, we're getting toward the end here, but I wanna— I don't want to get away without asking you a little bit about your investing. I remember listening to a podcast maybe a year or two ago, like, you're an investor in like Gusto and like all kinds of crazy stuff that has nothing to do with real estate. Is that something that's still going on?

Or tell me a little bit about that. Yeah, that was crazy need to have something to do, Chris. We raised two funds and invested in a lot of startups, and we've gotten into some great ones, and I think they'll do fine. But no, I'm not doing it anymore. And what I've realized over time was if I'm not willing to give something my all, I'm just not going to do it anymore. And Startup investing also, I think, will look back on the last 20 years— people have made a lot of money, but unless you're doing it full-time, it's pretty boring. You write a check and then 10 years goes by and you hope that they sell their company and maybe you get some email updates along the way. I just found it really boring. The most fun part of venture investing is getting into the deal and meeting the people. But really, once it happens, it's the most anticlimactic thing. I mean, real estate's more exciting. You're seeing leases being signed or buildings being built.

[Speaker:BROKAMP] Sometimes one of them catches on fire.

[Speaker:HILL] I know! There's all different types of things. Venture investing is weird. A lot of venture companies don't even report. They live under this deal that because they're building something so groundbreaking, providing quarterly reports might give their secret sauce. I'm in a couple of companies that I've been in 7 or 8 years. They're unicorns. I have never seen one investor. I couldn't even get ahold of them. CEO if I tried probably right now. Now I know we're in them and we track them, but it's about as boring of a business as I could have been in if it's passive. I'm sure if you're doing it full-time and you're meeting founders all the time, it could be more fun. So we took it really seriously when we did it, but I'm not doing it anymore.

Okay, very interesting. It always made sense to me because in your real estate business, you obviously became connected to a lot of high net worth individuals, accredited investors who who have done deals with you already know, like, and trust you and have access to capital. So it's like, well, why not? This seems like a natural extension there. And it seemed like you had a really, really great run there with the companies that you picked. But that makes sense. So the idea of if it's not going to be your main thing, don't do it. What's that thing about? If it's not a hell yes, it's a no. Everything from hiring to what you decide to do with your time.

I think the other thing is maybe more, again, just kind of maturing over time. I think the next decade or two will be defined more getting back to blocking and tackling, like what we talked about, where the opportunities are in the world, energy, shelter, blue-collar labor, things that tech can certainly help amplify, but we've gotten into the clouds in this 14-year bull run. I mean, there's companies being created that are not helping move humanity forward. I think as we live through the time we're living through now and just really kind of getting back, my heart is in the things that I call it like what's making the world really run and get better and help making people better. That's in more of your kind of everyday businesses. That's just maybe more where I've gravitated over time. Venture's fun and it's sexy and it gets all the limelight, but over time, I just, I don't know, I just kind of lost as much interest in it as I started believing in cash flow and profitability and I don't know, things like that. Yeah, making money. I know, so funny.

Yeah, awesome. Well, I'm gonna close with, uh, the question I've been asking most of the guests this season, which has to do with growing a property management company. Now, you're a third party, you know, we spoke about your third-party industrial property management business. It's not something you're actively marketing But as someone who's grown a very large business successfully, you must know a thing or two about marketing. If you were chatting with somebody who had a smaller property management company, maybe 200 or 300 units today, and they were looking to grow it, where would you kind of start in terms of advice or thinking along those lines?

I might take what we already talked about, and I would really think about who your customer is, and then what it's like the day they meet you. We talked about it in the investor world, but we have the same onboarding process for our tenants. When our tenants meet us or we've closed a new deal and we're onboarding them, oh my gosh, they get a full suite of, "Here's who we are. Here's our team talking to you in a video. Here's a demo of how you'll log in online to pay your rent." Here's an example of how to submit a property management request. We— our property manager will be at site and shake your hand in the first 7 days of taking ownership. I think that meeting that owner, uh, that you're trying to, to get to let you manage their property, uh, we need to put more attention into how we meet people because whether they sign up with you or not, you're going to leave an impact on them. And that's the perfect opportunity to do it. And candidly, it's— you're not asking to build a big budget to just put a little more thought about how you meet people. In fact, it might not cost any more money at all. It might save you money over time.

Yeah, I love that. And I love the idea of, of giving the same attention to the residents, to the tenants. For us, as I'm thinking about this and listening to you, my mind is going to the idea that as a property manager, I'm naturally dividing the people I interact with into like 4 groups: clients who own the properties, tenants who live in the properties, vendors who service the properties, and employees who work with me to make it all happen. And like, my brain thinks of those groups as very, very separate. But the reality is all those groups are just made up of people. And all of those people, you have no idea who they are, what, where they might be headed, how they might be able to help you, how you might be able to help them. In fact, we, we had an example one time of a tenant who became a client. He bought a rental property while he was still living with us. This was actually kind of a weird thing because in our system, I kind of got like all messed up because he was a tenant, but he was also a client in our property management software. So I think what I'm taking away from my chat with you today, Chris, is like treat everyone you meet with the same level of respect. Again, this goes all the way back to the white collar, blue collar thing. Client, vendor, tenant, white collar, blue collar, everyone deserves to have a great introduction to you and your business and a thoughtful one.

Yes. And I— we remember those times we meet people and are given such a good first impression. Like, that sticks with you. And again, you're not doing a whole lot. You're just going, here's— I'm putting myself in their shoes. What's everything I would want to know? When you're onboarding a new tenant, you got to think you're taking over. Maybe they're nervous. They have a new manager. Things are going to change. What's going to change? And you have an opportunity in the first hour to say, your life just got better and here's why. Here's what you have coming for you. And you could record that in a video and audio of, you know, you could have somebody make one of those, you know, YouTube videos where there's visuals, like somebody drawing. But I don't know. Yeah. I just think that that first interaction is important.

I think this has been great. I really appreciate your time today, Chris. If folks want to follow along with you and your journey, what's the best best place for them to do that?

On Twitter, @FortWorthChris, or you can follow my podcast, The Fort Podcast with Chris Powers, and listen to my episode I did with Peter Lohmann.

Yeah, that was fun. I'm glad that we've kind of closed that circle. I've been on your show, you've been on mine. Really appreciate you coming today, Chris. This was awesome. Have a great week. Thank you for listening to Owner Occupied. I hope you have enjoyed this episode. If you like the show and want to get connected to the community, you can follow me on Twitter @PSLohmann and subscribe to my email newsletter on my website, peterlohmann.com. I try to share as much valuable property management content as I can on a regular basis. Thanks again for listening and have a great week.

Mm-hmm.