Jordan Muela - Owning The Outcome

where I realize when it's not working, the problem is me. The first time you identify dysfunction and you gripe about it, you gripe to your friend who's another entrepreneur and it's like, oh man, hey, that's tough. The fourth time you're griping about the same problem, you're the problem. You deserve it. If it's bad, good, suffer, 'cause you keep choosing it. That's what it's like to be in a coaching relationship or to take accountability for somebody that doesn't want accountability. You can never want the result more than the client. That I firmly believe.

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. All right. Welcome to the show, everybody. I am thrilled to have Jordan Whaler here with us as a guest. Some of you who are in the property management business, will recognize that name. He's the man, the myth, the legend behind LeadSimple and Profit Coach. Jordan, thrilled to have you here, my man. I'd like to have you just take maybe 1 or 2 minutes and give a brief background for those who may not be familiar.

Yeah, absolutely. So my background is that I got started in this industry working for a venture-backed HOA management company called Real Manage a million years ago. And while I was working there, we were buying leads from all property management. And I saw that that was potential opportunity. I wanted to get in the game. The gig there was really to be mentored by an entrepreneur that was running the company at the time. And I needed— I knew that I needed to find my thing, just needed to start with something. And his encouragement was, hey, just get started, pick something, it's probably not going to work out, get it out of your system, get your first rep. In. So I saw what APM was doing and I got into the lead generation game for property managers, connecting owners with potential management companies. Did that for a minute, saw that people were saying that the leads were no good. Classic Glen Gary, Glen Ross moment. The leads are no good. Leads are crap. Welcome to the week. People weren't calling the leads. And so I figured, hey, you know what, we could start a CRM company to help them do a better job of sales follow-up. Did that for a while, got into the event marketing space, eventually did a big study on the finance landscape, realized you could grow fast and not make any money. That was a fascinating juxtaposition to me. So explored that, started Profit Coach, did some other stuff along the way. Really, my background is just serving SMBs with a very specific verticalized focus here in single-family residential. Property management. So that's the background and focus for me. And that's what I'm up to.

Perfect. So thank you for summarizing that. So I want to ask you, you've been in the vertical of property management here for a minute, I don't know, 8 years, 10 years, something like that?

12, 13.

Okay, yeah. Okay. So before I was even in the industry myself, and what is it about the property management industry that attracts you? Clearly, you have a diverse skill set, you could have by now picked up and moved to another vertical within SMB or another industry. Tell me a little bit about what kind of drew you into property management and what's kept you around.

Well, I'm SMB first and foremost. That's my primary commitment. I like working with small independent owner operators where you're really close to the outcomes. When I'm working with my clients and something doesn't go well, I feel it not going well. The transference of emotion, the quality of the impact that you're making. I never get a sense of like, yeah, well, you know, we did this thing and the company shut down, but hey, you know, the guy I was dealing with, like he got paid on his way out and he's going to his next gig. No, that's like devastating if the business was to fold. I like knowing that there's something on the line and I like the proximity that my customer has to their customer. And that's what defines SMB. Nobody thinks they're too smart or too good to do anything. You're doing a bit of it all. And I do buy into the backbone of America kind of idea. I am a capitalist at heart, and I believe that entrepreneurs are fundamentally doing good. So that ties me to SMB. Property management, I think I didn't know these things up front, but over time, once you're in it, it's a variety of things. I think first and foremost, the unit economics that drive the business, it's stable. It's stable because it's recurring revenue. It's stable because it's countercyclical, so we think. As far as I go back, I don't go back to really fully understanding what '08, '09 was like. That was really just after that was where I was getting my start. So I think we're about to find out to the degree to which it's countercyclical. But that interests me, being in an industry, selling things to real estate brokers right now at this exact moment feels a little tenuous. I don't know that I would be, I wouldn't be thrilled to have a business entirely dependent on the good times continuing for brokerages right now. That would make me nervous. And the other thing is that it's an adjacency to a bunch of opportunities, hub and spoke model, right? The PM is connected to the tenant, the vendor, the owner. There's a lot of biz dev possibility within it. Those are some things that come to mind.

The recurring revenue nature of property management makes it very similar to SaaS, to software as a service, or kind of tech startup businesses. And I've seen you bring a lot of that knowledge and experience from that world and translate it into the lingo of property management and really deploy for property managers solutions that I think you've seen work well in SaaS. And I think that's been really successful for a lot of property managers. So I love that about your background. You're coming from a tech from a Silicon Valley perspective. And, you know, there's a lot to hate about that world. There's a lot of tooting your own horn, we raised this round VC nonsense, right? But there's also, I think we can take lessons from that world and bring it to the world of recurring revenue property management services. I guess on that same theme, I view you very much in alignment with SMB, as you just reflected on. Where do you think that comes from? You obviously have experience in kind of the VC-backed Silicon Valley world. You have connections there, I know. What do you think internally draws you to the small business owner, Main Street, versus you could have pursued other opportunities? Now, obviously you're in the software world, but I think you get what I mean.

Yeah. I think that it's something I didn't fully understand over time, and that when I was younger in my career, I was more attracted to that hustle and that chase that the Valley represents, where you fall under the impression that gravity doesn't work the same way in this environment. And when I say gravity, I mean economic gravity. Economic gravity is things like living within your means. It's things like you have to add value for customers. It's things like the customer is in control. The customer controls my destiny, therefore I better serve the customer. The juxtaposition of that, the worst-case juxtaposition, this isn't the totality of it, but if we take the dimmest possible view, it's I can just raise again. I want to help my customers, but at the end of the day, this is a game of raising. And if I can get out raising enough capital before I'm even under the requirement to produce enough revenue or profit to demonstrate a successful business, it is what it is. I can have a great a great payday. I think there's some unhealth in that. And over time, in my own experience, what I've come to realize is that bootstrapping as a way of life has wisdom in it. Some of the wisdom is, as you're growing and you're learning how to run the company, bootstrapping represents the edge of your competence 9 times out of 10. The reason that I'm not running a $5 billion company is because I don't know how to do that, and my revenues and my profits are reflective of the level of experience and acumen that I have. Therefore, there's wisdom in being constrained in that.

Yeah, you're not fooling yourself now. Yeah, I think it's one of the hardest things to come to accept as a small business owner is that, you know, there's a saying that's like, the system is perfectly designed for the outcomes that it's generating. And I think in the same way, a small business is generating precisely the revenue and profit that's at the limit of the owner's skill set. Right? So it's—

I love that thought.

It's humbling. It's humbling because growth tends to be slow and very much limited by your own personal growth and education.

So I would extend that out to team members too. When you go down this path of communicating to your team members that we can escape that gravity, and that we can start to solve problems with just money. Like, yeah, the customers didn't give us the money, but hey, I can go get the money, guys. It's okay. I'm going to go get the money somehow. The way that that changes the conversation with your staff is extreme, particularly for a subset of staff members that will just latch onto that. Like, screw the metrics, screw the KPIs. Like, boss, go get the check. As long as we get the check, everything's okay.

No discipline around unit economics is the big one for me. It's like, okay, but this isn't working. We'll make it up in volume, I guess, but you're losing money on every— I don't know.

Yeah.

Okay. One more question on Silicon Valley VC, we'll move on from that. So I've got a blog post, I track the top 10 largest VC-backed property management companies. Is there a place for VC in property management? Is there Do you feel like you could take some money and some tech and throw it at this world and some profits eventually come out the other side? What's your feeling on this in 2022 as we see new records in terms of amounts raised, we see pivots, we see acquisitions? What's your latest thinking on this?

Man, you're asking me the hard question now. I think there's room for anybody that's adding value. I do believe that there's room for rollups that understand the market. I do believe that there's a gravity that is counterintuitive to rollups on two levels. It's not obvious to me that the market wants to be rolled up, that you take these units and you stick them all together and it's like a network effect and they want to be stuck together. I experience the opposite. I experience desire for churn, independence. It's like water. You're trying to grasp water. You, you glom all these units together and they just don't quite want to stay stuck together. Churn. I mean, churn's the thing nobody wants to talk about with these big roll-up plays, is how much churn are they experiencing. So that— so there's that side of it if we break into some of, some of the mechanics. Similarly, and you and I have discussed this in the past, but I believe that the discipline required to aggregate the asset class is not obvious from a distance. A door is a door is a door. Stick them together. How hard can it be? The reality is that the nuance in these doors— I mean, let's just assume it's all single-family, right? Let's not even talk mixing commercial, HOA, vacation. Let's assume it's all single-family. In what locations? In what municipalities? You know, furnished, not furnished, and what kind of a regulatory environment? Doing that across a bunch of different markets and trying to get the benefit of tech and scale, which is standardization, that's hard. That's really, really hard. I believe it requires a level of discipline in thesis that I don't know I've seen thus far. If you told me that you're going to manage 10,000 single-family, unfurnished, 1,200 to 1,500 square feet, between $250,000 and $275,000 in price. Like if you get specific enough, I can wrap my head around thinking that there's not going to be a lot of exceptions. But then you're just adding a lot of burden around customer acquisition costs and acquisition strategy. If you don't want to go through that hassle and you just want to take the doors and acquire them and glom them together, I perceive that there is just so much difficulty in building systems and a process to manage all the edge cases based on the non-uniformity in the portfolio. And I think that is really, really challenging. I'm not aware of anybody that's done that. I would like to see it done. It would be interesting to me, but I am not aware of anybody that has done that. And so I think that when we see things that haven't been done, we shouldn't be skeptical for the sake of being skeptical, but we should respect the problem and pay homage to other people that appear to respect the problem, not that have come in with large checks. In many cases, a large check is the opposite of respect of the problem. Going straight to building software, it's like pouring concrete. You pour concrete when you really know what you're doing. That's when you pour concrete. Before that, you use cheap substitutes. I'd like to see more slow roll, hands-on, get your hands dirty before jumping to, hey, we just hired 300 developers, but hey, you know, What do I know? This is one guy's opinion.

Yeah, I love that concept of respect for the problem. And I have a sixth sense for this. I can spend 10 minutes talking to somebody about property management and I can sniff out if they respect the difficulty of what this business really is. Because from the outside, it seems simple. Like, what's so hard about collecting rent? Okay, you got to sign a lease once in a while. Big deal. Oh, you called a plumber? Yeah. Okay, that sounds hard. Right from the outside, it's like, okay, how hard could this be? We get it from the clients too, right? They're like, you're charging how much to collect rent every month? Isn't that electronic? I think going back a minute to what you said about trying to stick these things together, and it's like water, man, there's something there because property management, whatever the opposite is of economies of scale, like, that's what we've got going on here. Every time you add a property, you add a tenant, you add an owner, you add an employee, things get more complicated and there's very few economies of scale to be had. I mean, there's some geographic concentration. Okay. All right. That's fairly minor. Maybe you can negotiate better pricing with some vendors here and there, but I mean, your main cost is labor, so you really don't get any advantage there. I don't know. It's hard.

Agree.

Yeah. Very interesting. Okay, let's move on here. I want to talk a little bit about kind of some themes that I've observed. You and I talk quite a bit. I'm familiar with sort of your progression from— there's a theme for you of moving closer to the customer and owning outcomes. I think you're pretty upfront about that, and it's very evident in the businesses that you've started and that you've partnered with and that you've been involved in. Was there something specific that popped this idea into your head of, I need to be moving closer and closer to the customer, I need to be taking more and more accountability for outcomes? Was this like a book you read, an epiphany you had on a mountain? Was it just generative from the way you move in the world? I'm very interested in this because it's not something I see discussed really. It's not a common theme that you read in every business book, you know what I mean?

I think that every entrepreneur worth their salt intuits that value capture is derivative of value creation. The depth to which you believe that, I think, informs this pursuit. That's probably like the base layer. Above that, what I've intuited gutturally is that pain, felt need, the depth of the quality of the solve, the depth of the satisfaction and the relief that comes from proffering whatever the solution is, that is indicative. It's just, it's the previous statement on steroids. It's your ability to value capture, a little bit of relief. Like, you know it. You know when you're in a transactional conversation, there's no emotion, there's no depth. People want to box you in like, hey, here's a box. It's 2x2 box. Don't jump out. You do A or B. What do you charge? Don't talk to me about anything outside of this box. What's the opposite of that? The opposite about that is like the client is crying and like, you know, they have like, they're about to get divorced and they wanna talk to you about the relationship. And I was like, hey man, like, you know, honestly, like I'm just a vendor. I don't know if I'm qualified to give you, but that would be the opposite of level of disclosure and relational proximity. And emotional proximity is a proxy for impact. Impact is a proxy for, where you're at in terms of meeting needs on Maslow's hierarchy. So for me, it looked like lead generation, right? Lead generation is like, it's one step away from something really scummy and people kind of treat you like that. Who are you? What is this lead? The lead's no good. I didn't pay for this. I want a refund. You know, I'm, what do they say? I'm doing a chargeback. The more often you hear about chargebacks, that's informative of the kind of industry. You're in. So it was like, ah, no, this doesn't work. So maybe if I help them close the leads, right? Like actual real business, a much more concrete possibility. You're familiar with the idea of expected value, right? The more mental math you're requiring people to do in terms of like, am I actually gonna get value from this? You know, in theory they say that a 1% odds of earning $100 is the same as a, 100% odds of earning a dollar. But psychologically, like, if you're requiring people to do a lot of mental math on, like, is this going to create value— the less obvious it is, the more abstract it is. In advertising, this is the idea of going from eyeballs to clicks to selling phone calls to selling appointments to selling contracts.

Contract. I want to come back to the idea of selling contracts, but that, that progression is going from like low likelihood, high volume to high likelihood, low volume.

And I just preferred to be closer to things that were more certain 'cause it required me to take more risks. Eyeballs, here's some eyeballs, you know, God bless, they're cheap, but God bless, good luck. Contracts, I'm selling contracts, I'm not getting paid unless those are like real material contracts. I like taking some risk on myself. I like the pressure, I like the accountability, and I like the quality of the conversation and relationship that you get to have when you've really tested your mettle in that way. It's probably, I don't know that it can be expressed in a financial model, and I even fully understand it myself. I just know it really works for me. There's a thrill in it.

Yeah, I love the idea that you enjoy the challenge and the accountability. Of coming closer and closer and delivering more and more. So what would be the next logical progression then from leads to like, you've moved your way up the value chain, getting closer and closer. So you kind of said it, which would be like selling contracts. I mean, that's kind of a crazy idea in the world of property management where you would actually close the business and then say, oh, by the way, let me introduce you to our partner, you know, whatever. I don't know how you would say that, but Either riff on that or do you have any thoughts on what would be the next logical step?

Yeah, I thought about it, man. I had a huge spreadsheet. I spent a couple days out at a cottage in rural California with my buddy Alex Osenenko from Four and a Half fame, and we thought hard about that. It's getting into territory that looks more like franchising. There was a business model of somebody doing this. In real estate that I thought was really interesting for a period of time for a variety of reasons that didn't end up working out. I guess if we take this on the opposite side, I like where you're going. If we take it to its logical extreme, on the flip side, what is a level of certainty that is counterproductive for me to guarantee? You know, what is babysitting? Let's talk about like franchisors. You see some people joining franchisors, not competent, not qualified, shouldn't have gotten in there. And in my mind, I'm like, man, I hope they didn't pay a big signup fee. You know, they did.

I don't think there's any way around it. 'Cause those, they all, they have to because it's so expensive to set up a franchise.

Yeah. Like, you know, and there's a decent chance that they did, but at least in my mind, you know, you would hope, but yeah, probably. In all likelihood that might have happened. And so this person is in the organization now and everybody is staring at everybody else. For the franchisor, they're like, hey man, like, why don't you get better? Like, why don't you be good at your job? And the franchisee is like, well, I'm not good. Why don't you tell me how to be good? That's a kind of a weird dynamic. You can take a level of accountability that is counterproductive because it removes somebody else's agency and obligation And I've been to that side. I've done coaching with somebody where I realize when it's not working, the problem is me. The first time you identify dysfunction and you gripe about it, you gripe to your friend who's another entrepreneur and it's like, oh man, hey, that's tough. The fourth time you're griping about the same problem, you're the problem. You deserve it. If it's bad, good, suffer because you keep choosing it. That's what it's like to be in a coaching relationship or to take accountability for somebody that doesn't want accountability. You can never want the result more than the client. That I firmly believe.

Very interesting. I'm immediately thinking about the same paradigm in personal relationships. If you're constantly finding yourself frustrated and disappointed in the same way over and over, it's time to start looking inward, right? And that can be a difficult thing to come to grips with. So let's take a minute to thank this week's sponsor. LeadSimple. LeadSimple is sales CRM designed for property managers and more. I'm going to tell you about the more in a second, but first, if you're looking for a way to keep track of the leads that are calling, emailing, anyone you meet who's interested in potentially hiring your property management company, you're going to want to use LeadSimple to keep track of them. It's powerful. It's easy to use. It's affordable and allows you to automate your sales process and make sure you never lose track of a lead. We've been very happy customers of LeadSimple here at RL Property Management for over 5 years. When you're ready to move beyond a sales CRM, and this is the most exciting part for me, check out LeadSimple Process. We are onboarding right now with LeadSimple Process, and I could not be more excited. They have integrations with all the major property management softwares, and they have a native integration with Buildium. And as a Buildium customer, that's the part that gets me most excited because it allows us to bring all our data from Buildium into LeadSimple process. And from there, the possibilities are endless. We can automate, we can integrate. There's a Zapier integration. I could go on and on, but I want to again, thank LeadSimple for being the sponsor of today's show. If you'd like to learn more about LeadSimple, you can go to leadsimple.com or feel free to message me directly. And I'm happy to share more about our own experiences in 5 years of using their sales CRM product. Thanks again. LeadSimple. Let's pivot now a little bit and talk about everyone's favorite topic, fees in our industry. It's a hot topic. You and I have talked about it before. I just want to touch on it for a minute from maybe a different angle. I'm very interested in the, the tension between fee maxing, which is charging tenants and owners extra fees, whether it's an annual fee or a marketing fee or tenant benefit package or what have you. Like, there's obviously a limit here, right? So to take it to a totally ridiculous extreme, if you charge every owner a $2,000 annual fee, right, like, you'd have 99% churn, right? So there's obviously some limit. And I feel that the industry is creeping up on this limit over time where, you know, we're raising the tenant benefit package fees, we're raising the late fees, we're raising the application fees. Some people are even getting more creative around like charging fees for applicants who have low credit scores. And even on the owner side, right, we've got the, the pet protection plans, and we've got the annual fees and the marketing fees. And of course, we've always had the leasing fees and those things. So I know you've, you love to quote Jeff Bezos, your margin is my opportunity. Clearly, there's a limit here where someone's going to come in, and they're going to differentiate by saying, we're the no fee property management company, and here's how these other guys are kind of ripping you off and you don't realize it. So I'm lately kind of obsessed with this concept called customer surplus, which is the difference between what you charge and the value that you provide. And obviously, if the surplus is zero, you're not going to get any customers because who would exchange one for one? The idea is that someone pays a dollar in cost and they're receiving $2 in value or $1.50 in value, And every time we add on these fees, we're reducing that customer surplus. So where are we here? Like, and where are we going? I have trouble sort of reconciling in my head this idea that we can just— like, sometimes I meet somebody who's looking at a property management business or any small business and like, oh, we'll just raise your prices. As if that's like the magic wand that no one's ever thought about before. It's like, well, yeah, I can raise my prices, sure, but that's not costless. There's a hidden cost to raising the fee, which is that the customer surplus is now lower. Now, maybe it takes a year for the client to notice, or maybe there was so much surplus there in the first place that it's no issue and they're still getting a great value, but it's not an unlimited solution. So I don't know if I have a question in there, but I'm curious about your thoughts.

Yeah, man, I have a lot of thoughts. I feel like we kind of saw this coming. It's been a slow burn. There were like some John the Baptists that were kind of talking about this 10 years ago and they didn't get that far. There's some guy that's like, I was the feed maxing guy. I came up with that idea. And now somebody else is known for it, but it's really picked up steam over the last few years. It's profound and yet it's not. It's profound in the sense that if you're not making any money, raising your fees can immediately take you to a point of, profitability, and that's amazing. If you've been working breakeven, you know, if your SDE, if your seller discretionary earnings was your paycheck, and now there's actually some real profits, that is profound on the life of individuals. I think what's lost in this conversation is a couple of things. Number one, there's naivete to not look at the big picture and ask, is fee maxing— 'cause it's really, it's a combination of things. Let's say fee maxing, and labor arbitrage, right? If there's anything— if there's a number 2 close to popularity in terms of the zeitgeist right now, it would have to be remote cheap labor. So does anybody think that that's a long-term strategy? We're going to raise prices and we're going to have— we're going to pay our people less. There's a delta. Yeah, like, look, you look at that delta and it's green and it's tasty, it's, it's exciting. But I don't, I don't see how anybody thinks that that's like a long-term strategy.

Yeah, the free market ensures that that's going to get absorbed over time.

Regression to the mean. Yes, 100%. Completely agree. I think the other thing that's lost is profit is necessary, but profit has to be constrained by something. The mental model for me is if you take a business that is really poorly run, you can have it produce a small amount of profit. And that's unsustainable. Really poorly run. What does that mean? Let's just say in this case, it's the most likely culprit, is really poor labor, right? Their DLR is absolutely in the toilet, but they raise prices, so there's going to be some profit there. That is dramatically suboptimal than having a really well-run, healthy market, and let's say a market that's a bit tighter. Let's say it's a lower rent area, but the business is really well-run and the profit has been earned. So I don't want to moralize about this, But I think there's something to the idea of was the profit earned? Did you do a magic trick of just doing something exploitative to your owners, or was this earned? Because I made some really hard decisions. I thought really hard. This is a well-run organization. The quality of the solve needs to be a lot deeper than just feedback thing.

I'm obsessed with well-functioning marketplaces. In an ideal and well-functioning marketplace, a buyer would enter a marketplace of sellers and the sellers would be presented in a spreadsheet, right? And the spreadsheet would show—

Like a mortgage.

Yeah. It would show the quality of the service. It would show all the fees annualized to some standardized number, right? So the idea that we're just going to slide in these fees, right? We're just going to sneak them in there and And not even that they're not disclosed, but just like—

They're not understood.

Right. It's telling that the answer's not, we'll just raise it from 8% to 9%. No, no, we're going to do this pet protection program or whatever it is. It's not going to last forever. Consumers are going to catch on and they're going to start to normalize across all the fees.

I don't know. I think so. I think this gets back to a very market-based belief. When you say normalize, I don't think we're going to see Bankrate for property managers. You know, Bankrate, you Google and there's like 20 mortgage vendors.

I thought about making this for my local market. I thought about making like a page that was like property management fees in Columbus, every company, every fee they charge, like standardized.

I thought about, I thought about doing it when I was in lead gen, but I thought people would hate me. So how am I going to get paid? Like, it's not a popular position.

And I would have like referral links to my competitors in case someone chose them or something.

The market isn't quite sophisticated or efficient enough to facilitate that. But yeah, you're absolutely right. That level of transparency doesn't exist. So what's going to happen if that's not going to happen? What's going to happen? What's going to happen is like this unknown invisible market of the hand. It's just going to happen. People are slowly going to figure it out. Maybe they can't even coherently articulate it, But it's slowly going to, to move. Money is like water. It moves. Command flows to the worthy, and so does money.

Yeah. And what's interesting about our capitalistic society or capitalism as it functions today is these things take time. Yes. I remember my partner and I used to work at an engineering firm, and we felt that it was dysfunctional. We felt that it wasn't providing much value to to the actual customers. And we ended up leaving, but that company went on for years, just momentum, right? They were paying employees, they were taking profits, and it just went on and on and on. And we were just like, it was shocking to us at the time, like, why isn't the market correcting for this? Like, why aren't the customers seeking out either a lower priced or a better value competitor? And this, this, I felt like in my mind, I feel like this This building should just implode. Capitalism should just crush it like a can in a vacuum.

Do your job, capitalism.

Yeah. But the answer is it just takes time. In a well-functioning marketplace, and the bigger the company is, the longer this takes. There's just momentum.

I love this topic, by the way. I just got to park on this for a minute and say, you're talking about the consequences that every Austrian economic-minded person, so people that subscribe to a Milton Friedman or an F.A. Hayek, Derivative of that philosophical perspective about the involvement of the Fed in the economy, they then invest their personal finances.

What do they do?

They buy gold, all these hedges, and it's a disaster and they make no money because even if that macro perspective is right, if you're trying to time it on a timeline, that's the mysterious nature of the market. That's why the Oracle of Omaha, the wisest of all, Buffett says, "No matter what, no matter what you think you know, You don't try and time things. You don't come up with arbitrary timelines. It's the market moves and the market moves.

100%. Okay. Before we move on from kind of pricing fee theme here, the benchmarking study famously put out by you and a few other folks in the industry, and, and now was— it was kind of like the foundation of what became Profit Coach. It's getting a little long in the teeth now. I feel it's is it got to be 4 years old maybe? I'm so curious to see what an update to that would look like. And what is the median DLR today versus then? What is the profit? What is all those, all the benchmarks that we've been working off and striving toward as an industry? So curious if you have anything to share. If not, that's fine, but I thought I would ask.

Yeah, so it's in committee right now. We did that study. And we honestly, in large part, we did that study to— I got to just be honest, a big part of that was satisfying my own personal intellectual curiosity. I was obsessed with this idea of like, wait, you could grow a business because that was my whole thing was growth. I was into the growth shtick for years. You could grow a business and you could make no money. You could really aggressively grow a business and make no money. I already had my head wrapped around asset value accretion and it's accretive and you sell it, big exit like in tech, 10x revenue multiples, that makes sense. But when you're running a service business, the idea of running a successful service business and making no money, it just seemed borderline impossible. Had to know. So for me, that was at least the seed germ around my own personal intellectual curiosity. We did it, got great results and attention, but we ultimately decided to partner with Narpon because they were the best distribution platform. To get that information out there. And so we've continued to do that. We're partnering with NARPM again. While the study was what we did, what NARPM did was codify the NARPM accounting standards, which were kind of the undergirding chassis of the same. And we're in committee doing another updated version, larger sample set. I'm sure there will be some new questions thrown in. The data pool will be interesting. I'd like to think that in some small way, we have had an impact on the industry. I'd like to think—

There's no question. Yeah, there's no question. Now, is this as simple as just clicking a button on the Profit Coach Master CRM? Because the data is, for a lot of customers, is in there. Now, I don't know about data privacy, whatever, but—

Yeah, so two things. Number one, that actually, it's like, I mean, this is champagne problem, but that, and this is something we haven't fully worked out, but that data, we can't just use that data, right? I hope that's obvious. We can just use that data and pretend like this is the industry. The data is bent, that data is bent towards people getting coached towards profit for multiple years. So that would be pretty depressing for the rest of the industry to be held to that standard. So we're definitely having to work outside of that. And there's a lot of data normalization that is required. Not everybody has their data clean, even if they have tried to get on the NARPM accounting standards in the past. And this is the difference between a study versus a survey. Survey, easy, fun, memes, graphics, get it done in 30 days. Steady, grinding.

$20 gift card.

Yeah, steady, grinding, ugly, unappreciated. But ultimately the data quality is just dramatically higher. So the mapping and the normalization you have to do in the underlying data, that's where the money's at.

Yeah, well, hopefully the NARPAM accounting standard being rolled out fairly broadly in the industry is going to make this easier because you're at least working from some kind of a standard.

Yeah. Which still has a bias, right? The truest bias, I don't know that we'll achieve. The truest bias would be to a group of people that have never even heard of NARPIM. That would be interesting to me. And I just, for what it is, full transparency, we're not going to have access to that. And it is what it is. That's still going to be some great data.

Awesome. So let's chat about LeadSimple. So LeadSimple, for those who aren't familiar, it started as a CRM, a sales CRM for the property management industry. And more recently, you've launched LeadSimple Process. So maybe share a little bit. I'm curious myself, why that specific product? I feel like there's a lot of ways you could have gone. You know, you could have done a maintenance coordination software, or, you know, there's a lot of different products that you could have built on the back of LeadSimple. What was attractive to you about Process? And are you feeling good about that? How's the market reacting? Maybe chat a little bit about that.

Yeah, well, I should have called you first, man. You would have been a good, good guy to talk to about getting into this. Back to what I said before, like, I love to go to the ground, to practitioners, to people that are, that are in it. And per my concrete metaphor, it is determinative. We've laid a lot of concrete. We could change things, pivot. Yeah, I could go bust up a bunch of concrete, but a lot's been laid. So your starting point matters. In our case, we were already in on the CRM game, which means we had the database capacity, we had comms coming back and forth, and we had a database to contextualize the historical communication. So from that starting point, adding the processes made a lot of sense because we immediately had a leg up to people who were already doing that, which was context. It's not just a glorified checklist, it's a checklist in the context of what's been happening in your previous communication with this person. I will say it's been a serious lift, you know, back to respecting the problem. I've had to learn that lesson over and over again in this specific area. Changing processes is hard and people like me are in the position to not provide full disclosure. It's easy. Our software's great. That software, they suck. Ours is great. You get set like 2 weeks, baby. We're gonna have your thing humming. They're completely delusional. Really hard. And software's great, but do you want this? Is this an organizational priority for you right now? Is this really important? Do you have staff allocated to this? If not, the best or the worst software is not determinative. What is determinative is clarity organizationally about the level of priority and a commensurate commitment of resources. And if you have that, you could probably figure it out with a number of different softwares. I happen to think that ours is exceptional, but it's facilitating and having that bigger conversation, which is why we got into the consulting side of the business. That's where the money's at and what it takes to actually get benefit from this.

Yeah. And, you know, we've talked before on your show about the transition from, you know, as the property management company owner, I have to shift, or there is a shift happening in the industry from my job is to manage property to my job is to manage the systems and processes that produce the results that our customers need.

Yes.

LeadSimple is definitely— LeadSimple Process is a big part of that mindset shift. And I think folks who are younger in the industry are going to kind of be drawn to that like moths to a flame because they've grown up with digital native tools and they're just grokking this idea, I think, a little bit more, more instinctively. They also don't have lifetime of answering phones, signing lease renewals, and doing the hard work that is actually managing property. Old habits die hard. I agree.

I think that some of this is a natural time evolution-based shift. I remember talking to an entrepreneur, actually I wasn't talking to, it was something I read. It was Jason Lemkin, the guy that started, I think it was EchoSign that was bought by Adobe. And he pointed out that when you start a new tech company 5 years after one of your competitors, you have the benefit of being able to say our tech is way more modern, but your competitor can push back and you did nothing to earn that. All you did is show up 5 years later. So I think that to some degree this shift is not enlightenment, it's just happening. If you start a property management company 5 years from now, the pool of people that you pull from will be sufficiently oriented towards being digital-first natives. And it's not something you earn, but it's just like, it's the culture you're in, and that's a natural and healthy shift, and that should be rewarded and leaned into. But not every owner is going to choose to cross that chasm. There are many who resist it and will retire successfully without bridging that gap. But I do think the bar for adopting technology is going up., and it represents an opportunity to get way more leverage than was possible in the past. Leverage was always hard. Leverage always came from hard one-thought, but the possibility for leverage via technology is so much greater than it was in the past. I don't know how you can justify not fully maximizing that.

Yeah. I mean, what's that classic Naval bit about the 3 or 4 types of leverage. You've got people and then code and media. Capital. Yeah. So we've always had people as leverage in the property management world, but we'd like to get some code going in there as well. And you and I have talked about the difficulty in encoding something that's not clear in the analog world. Code is not a magical fix. You have to actually be able to write it out. I think what's fascinating is you can study computer science and never use a computer because the computers are just solving what's written in a human-readable language at some level, right? There's nothing magical happening in that box. It's following a set of instructions that you've pre-programmed. And the same thing applies in the property management business. If you can't clearly define and articulate the boundaries of who your customer is, and how we handle lease renewals, and what happens if the owner doesn't approve an increase, right? Like, these kind of real-world things that are like, you can't just wave a wand and a computer fixes that, right? Like, you have to actually answer that question, right? Like, what happens if the owner doesn't approve the lease increase? Do we just do it anyway? Do we like, I don't know. So yeah, big challenges for the industry because historically it's resisted kind of taking this all the way back, resisted consolidation, resisted standardization. I think that's a big part of why putting these blocks together, they tend to fall apart again, is because property owners gravitate toward the property management company that's like custom fit. It's like a glove on the hand, right? Yeah. I don't have the answer yet.

What it's like goes back to what are you solving? For? Are you solving to try and manage 10,000 units? Or are you solving for just quality of life? I want to manage 1,000 units and I want it to be easy. And I don't want people yelling at me, certainly, but I don't want people yelling at my staff, or at least like less, at least as little as possible. I don't want to be cutting checks for screw-ups, not because the money even matters. It's not that much money, but it just, it's painful if we can reduce errors, if we can make people's lives easier, if we can add predictability into the business, that is a worthwhile and worthy goal to me. So we shouldn't look at this tech as being relegated to people that have these wild ambitions for disrupting blah, blah, blah. Like it's for us, it's for the everyman. That's low-code, no-code. That's off the shelf. That's retail. Now it used to be, and for some folks it still is, I'm hiring 300 developers. That's noise. That's distraction. Don't conflate that with thinking that you have to do that to get the benefit.

Let's take a minute to thank this week's sponsor, Appfolio. With Appfolio Property Manager, all of your business-critical workflows from marketing to leasing to accounting and work order management can be completed on one powerful, easy-to-use platform. You know how important it is to me that your data is transparent and easily accessible. And that workflow and process automation is at the forefront of property management software design. Some of the features built into AppFolio that customers love the most are online payments, rental applications, maintenance requests, text messaging, virtual showings. These things are all built into the platform. You can have a central repository for all your data and workflows, meaning less back and forth and more transparency. AppFolio automates the back office, including manual tasks like accounting, so your team can focus on what matters, like growing your business and delivering great customer service. Every customer receives ongoing support with options for self-serve training, video tutorials, how-to resources, instant chat, and phone support by appointment. AppFolio goes out of their way to make sure you have a great experience using their product. Let me read a quote from Karina Lyons at Concept Property Management. She says, AppFolio has allowed us to streamline our workflows so we can focus on what's most important: our relationships. Thank you to AppFolio for sponsoring the show. Let's get back to it. I love your example of 1,000 units versus 10,000 units and what's the end goal here. So I've been thinking a lot about the idea that as a business owner, you get to choose your level of involvement in the business. And let me caveat that by saying, yeah, you're going to have to work pretty hard for a few years in the beginning, and you're going to have to level up per our discussion earlier and kind of earn that right to choose your level of involvement. But with enough effort and a little bit of reading and maybe hire a coach or two, most property management company owners, I think, could get to the point where they're managing a few hundred units, maybe up to 1,000, and they're working a few hours a week in the business. That is 100% doable. We've seen it done. I'm sort of slightly on that path myself. And you contrast that with someone who's going for broke, someone who is adding units by the thousand. They're going multi-state, they're making their own software. And someone like that is in the office 50, 60 hours a week grinding, growing, and trying to get to the mountaintop. Right. Very interesting that in our industry there's such a wide array of choices. And I don't see a lot of discussion around Hey, maybe you should think about what you actually want. And by the way, there's a few options here. There's different levels of involvement you can have with the business you own. That's something that is not an option as an employee, right? And it's also not an option with, say, an investment. If you're an LP in a fund or you're investing with a a real estate group or something, or even if you own equities on the stock market, when you own a business outright like this, you can select. It's like a select, like a slide, right? You can zero to 100%, pick where you want to be. I'm fascinated by the trade-offs there and sort of like what is ideal for each person and what are the trade-offs we're making as we slide from zero to 100 and back?

Yeah, I think that just to go totally abstract here, what is essential about the human condition? I think there's something about misery, suffering. It is the default state for the human condition. And also dogmatism, absolutism, one right truth, one rule to ring them all. So the way that shows up here is twofold. I remember being with somebody that I respect and I appreciate, young hustler, reminds me of myself. And he was really pressing me on like, who's the best PM? This guy's a big networker. So he's like, who's the best of the best? Give me the name. Tell me the guy. And he proffers this guy who's like loud and brash and runs a social business, but he's mostly just loud and brash. And I like this guy. I didn't know him that well and I didn't have a ton of time to elaborate and I just didn't get into like, that's a really low quality question. Just ask a better question. Tell me more. Give me some criteria, some conditions, some categories. When you make up that there's only one, you amalgamate a bunch of stuff and you get the best of none of them. When you parse it out, you get to see that, yeah, there's one person who's working 35 hours a week making $300K and it's a job. They own a job, right? You ever heard entrepreneurs say that like in a very condescending, yeah, that schmuck, he owns a job.

Right after they say something about a lifestyle business.

Yeah. Yes, exactly. You know exactly what I'm talking about. And the reality is that is such an amazing outcome. I mean, how many people would love to own a job autonomously working that kind of time, making, you know, $250,000 a year? It's like, wow, we're talking some lotto stuff. Only in America. Something about our pathos looks at that and it's like, oh, that sucks. And then you have everything in between. And when I see people stuck in the business, it's hard to have that conversation I struggle with it as well, just to reflect on that it's self-reinforcing. I have met a number of operators that I come to find out they don't own it. They just run it. And I'm never going to meet the owner. He's out there somewhere. I'm not informed to the arrangement, but he's just out there somewhere. So how did he get to do that? What permission did he get? And the answer is he just did it. He didn't like earn it. It wasn't like over 10 years I finally got to the point where I earned it. He just did it. Those are just the parameters that that man or woman enforced and imposed upon the business. And the reason most people don't do that is back to the idea of like human suffering. Like life is supposed to be hard. Of course I can't delegate. I'm not supposed to be able to delegate, right? If it was easy, anybody could do it. And this can't be easy because it's been really hard for me, so it shouldn't be too easy for anybody else. There's some kind of a trap in there that keeps people in it.

There definitely is. And this, this, you know, the phrase limiting beliefs is really coming to the forefront of my mind. The idea that there is a magnetism to The 40-Hour Workweek that is unbelievably strong, especially as a prime earning years male, right? Yeah. It's like everything around you is telling you that you should be at work from Monday through Friday, 9 to 5, at least. Right? And so the idea that you're just gonna not do that is kind of radical. Sacrilege. Right. There's not a lot of path to follow. Right. And there's some crazy guys on the internet who are doing it. Right. And there's also a lot of guys who kind of look like scammers who are also saying that they're doing it. So you own a few businesses and you've moved over time, your level of involvement has scaled up and down between them. I'd love to hear a little bit about, is there any centralization whatsoever? Do you guys share an HR person? Is there any sort of overlap there? And then also there's this concept of you get a salary for what you do and you get an equity share or an owner draw, whatever you want to call it, for what you own. That tension is so visceral in a small business with multiple owners because there's just not a whole lot of those dollars flying around that you can just say, "Oh yeah, yeah, you make that and then I'll get whatever's left. No big deal." Right? So maybe, obviously don't go into specifics, but I'd love a little bit of your thoughts on both of those things. Yeah.

So in terms of the structure of the businesses, my focus has been probably opportunity I don't know if it's been partner first or opportunity first, but I've leaned in really heavily when I saw something that felt like it was obviously needed by the market. I'm really into obviousness. If something's not obvious, my interest in like, yeah, I think I could make it work. Like, you know, I think I could probably talk people into— no, I want it to be like obvious.

Like sell into a hungry market.

Yeah. Put it out there and people are like, I'll take two. Great. It's, it's a, it's a layup. It's about the boat that you're in, not how hard you're rowing.. And so when I had started new businesses, in most cases that's what I was looking for. And in some cases that's ultimately wasn't there and it's caused me to pass on a number of opportunities. Partners are big. The right person, the right competence. They've got to really have the technical hard skills and deeply understand the thing because I can't, I can't be the ops guy for 5 different businesses in terms of shared resources. This hasn't been traditional holdco. This hasn't been traditional Buffett-esque find a float machine, pull the returns back up to the organization, recapital allocate in the most capital efficient way. This hasn't been that. They've been separate entities with separate cap tables with me as a common owner. And so because of that, any sharing has been informal and of course, information, wisdom, tips, SOPs, manuals, all that sort of stuff, occasionally fractionalized labor, et cetera. That's been more what it's looked like.

Yeah, it makes sense.

The other question that you asked about, I'm not sure I totally grokked the other question around potentially competing interests and—

Sure. So to put more of a finer point on this, how do you set the salary for somebody who is maybe both an owner and working in the business? And then, but maybe like in another business, you're an owner, but you're not working in the business and like your partner's working, like that can get really tricky because, you know, I have a partner, we both together own both of our businesses 50/50. He's in one, I'm in the other. To throw in another wrench, they're vastly different sizes, right? Like one is 5 times the revenue of the other just because we just bought this really small business. But, you know, he's working just as hard as I am, but he should— he make 1/5 the salary because the business is 1/5 the size? Like, I don't know.

It's— yeah, first off, 1,000% agree. Really tricky, complicated. I mean, you're asking for a fight to not think about this. One thing I'm fascinated with is cognitive effort relative to impact, the alignment The lack of alignment is crazy. Minor petty detail like hand-wringing, hour, what do you think? I, you know, I gotta talk to this person, double opinion. And the answer is it doesn't matter. Just stop talking about it cuz it doesn't matter. Something really important, pricing, in this case, comp structure, your operating agreement, very little time. It's tax efficiency, very little time spent. You know, you just can't wait to stop thinking about that cuz it's just, it's too hard. It's too abstract. The term for this, I believe, is called the bike shed effect, is the term that I've heard. The story goes something like there's a committee meeting and they're a committee over a nuclear plant being built, and a bunch of plans are being presented over some really significant and fairly complex details. And there was a small minor issue on whether or not they do or do not tear down a bike shed on the property. And guess what dominates the meeting minutes is the issue of the bike shed. It's human nature. So it's really important. Think hard. Resources, defaults. I'm all about defaults. Every problem has been solved before. Slicing the Pie is the book that I would recommend reading. Slicing the Pie. Practical mechanics. Pay yourself, intend to pay yourself a market-based wage. You will not always be able to, and then adjust accordingly. So the ideal here is whatever the market-based wage is, is what would it take somebody else to do this job? Let's say it's $100K. The business doesn't have $100K. So what do you do? Well, you could accrue that as a loan or you could swap equity. When I have been 50/50 with other partners equally involved in the business, it's simpler. None of it matters. Nobody gets paid. Everybody gets paid a lot. Everybody gets paid nothing. There's parity. When I'm a silent— I'm more not quite silent, I've never been a fully silent, but when I'm a less involved owner, it looks like making the choice of would I prefer to embrace dilution or would I prefer to see this person get paid a market-based wage? And it's not just my preference, it's a mutual conversation. But those are basically your options. I could say, hey, the business doesn't have the money, so we shouldn't be paying you that. And I could say it was some righteous indignation, but the fair retort is, Like, no problem, let's adjust equity accordingly. And I'm, I'm amenable to that. That's kind of the axiom of how I would parlay that. Perfect.

Love that insight. So a great phrase you said a couple of minutes ago was, it's not how hard you're rowing, it's the boat you're in. That might be a Buffettism.

I'm not sure.

Invariably.

Invariably.

I love it. So this is keeping me up at night sometimes recently. Property management is a very hard business operationally. Very difficult to scale as we've just spent 45 minutes discussing. So something you and I have chatted about back and forth here along these same lines is working on things that are high impact and high leverage as a filter through which we evaluate opportunities. When you're evaluating opportunities, when you're thinking about your hours in the day that you're spending, what are some of the things that you're looking for or that you're looking at to understand the quality of the rowboat that you're in?

Man, this is great. This is the section of the podcast where I get to talk to myself rather than to the audience because I need this wisdom that I come in and out of each day. I'd say one proxy for me is the level of emotional hook that I have towards something. Am I hooked By something, and I don't mean like, am I fascinated? I mean like, am I emotionally amped up? That's a good flag to me that I'm likely to invest a lot of time and my finite precious emotional energy, which is way smaller than even my cognitive capacity, and not spend it well. So that's always a flag for me. Like if I find myself getting worked up and upset, it's just like to sit back, calm down, go outside, go and walk, take a deep breath, like whatever can calm me down and just reflect. Does this matter? What if the answer is just pass or relent, give in, just do whatever I can to not have proximity to it? I don't do well with proximity. Here's one thing I would say. I haven't become the Zen master that can be in a noisy train station and close my eyes and meditate. If you put a hard, juicy problem right in front of my face, I'm very tempted to solve it. So for me, distance is important. Like, turn Slack off. Damn Slack. Those notifications, that beep beep beep, that dot dot dot. Someone knows how to ignore that, and it doesn't even enter their consciousness. It's not me. I hear the notifications, I want to go look. Turn it off. Working without internet is really helpful to me. Going to a coffee shop. Time box parameters is another one. Like, working somewhere without my power adapter. So I know that my laptop is going to die within a certain period of time. And then the last one, this one's wild. You and I have talked about this one before.

I will have—

I will work collaboratively with other people about things I really don't enjoy. Legal. When there's legal review, I'm calling my co-founder who's very focused, a really focused, productive guy, and we're working on that together live. We pair on it. Pair programming is a thing and we effectively pair. For legal. I pair for writing. I have my head of marketing, Brynn. We get on the call, she's doing her work. I'll ask her questions, but for the most part, I'm literally just sharing my screen and just working. And 2-hour time block, and that's about how long it takes me to draft a newsletter. The accountability of being there with access to ask a couple of questions is a forcing function. That work is really important, but I resist it for some reason. And the same stuff with compliance. I'll actually have— I employ my sister from every week actually to get on for a couple hours to, to work on similar stuff. We just work on the stuff that I like least. I share my screen and it's collaborative. So those are some hacks for how I work through the stuff that I don't like. But back to your original question about how I assess what is and is not worthy of time, it comes down to me, is this within unique ability? Am I doing something because I have the title and I feel obligated to do it? I've avoided a lot of that, gratefully, I really have. But there's still times where that comes up. Or is this something I'm being asked to do because I'm just exceptionally good at it? So stream of consciousness, I'm figuring it out.

Sure. Okay. But I'll push back a little for fun. So unique ability, love the concept. If your unique ability is handling a shovel, you could be digging ditches, or you could be working at the White House, right? Like, how do you look at your environment, the businesses that you're involved with, the people you're involved with, the goals that you've set for yourself, the striving that you're doing every day? How is it possible to objectively evaluate that on a scale of 1 to 10 in terms of potential outcomes given maximum effort, right? Like, you could be giving maximum effort— back to the rowboat thing— you could have a level 10 skill set and you're in a level 2 opportunity. I don't know. Maybe it's a waste of time to try and evaluate because you're in the fishbowl trying to— it's difficult, right?

Yeah, it is for sure. I mean, I think ultimately it comes down to upside for me. You can tell when you're in a situation where the upside is capped, it's incremental, it's linear. You can tell when you're in a situation where it's uncapped, it's logarithmic. So the delta between peak and the trough of the wave, how bad it can get versus how good it can get, I want as big of a delta as possible. And I've had opportunities where I could just feel like this was a cash grab, I didn't believe in it and I felt— this is the challenge of playing the long game and this is also the challenge of cash flow versus building something that's purely accretive, i.e., paper money. You can find yourself in a situation where you're overly tempted to make short-term decisions because your cash position is poor because the things that you're working on are not cash flowing well and you start making irrational decisions. I've been in that situation. Before. And it's, it's a gross feeling. And you can feel in other times where you're working on something that has a huge amount of potential and it's not going to make you any money in the short term, but you can just feel like the upside on this is massive. I like working on things that have a very high degree of upside. This is Nassim Taleb barbell theory. Two sides of the barbell strategy are on the one hand, don't die. He doesn't ride bicycles because there's a possibility he can fall off, bump his head. The risk just isn't worth it.

Is that true? He doesn't ride bicycles? Yeah. Wow.

I didn't know that. So that, like, you know, he probably doesn't skydive either. That's one side. Don't die. Like, really focus aggressively on your downside, maximal downside protection. And then everything else is focus on maximal upside, like 1,000x upside wild. Don't focus in the middle. For him, the middle is the fatal area.. And I'm generally amenable to that idea as well.

I want to pivot to something a little bit more practical and tactical for property management business owners. You've got a fantastic podcast episode called Your Leads Are Not a Growth Strategy, where you discuss at length in an epic rant about how trying to get more leads and figuring out where the leads coming from and where can I get you know, higher quality leads. Like, that is not a strategy. That's not a growth strategy. That is not a marketing strategy. So 100% agree with that. I think for most small business owners, marketing is about as far away from their area of expertise and experience as you can get. And I would probably put myself in that category, especially when I started. Like, so the type of person who's going to go and start a company like just the, the skill set on like the DISC profile or, or any of these other— it's just probably 180 out of phase from like a full-time marketer who's really, really good at their job. And so I think small business owners are really in a pickle here because they don't have a huge budget, right? They're, you know, margins are tight, small business, it's not a native skill set. And when you look at the landscape of vendors, solutions, software, services, agencies, whatever. First of all, a lot of them are really expensive. Few of them own the outcomes, right? And there's a lot of, there's a lot of fear, rightly or wrongly, on the part of the entrepreneur. And there's a lot of kind of scammy, works for a while, SEO, just click here and all your problems will go away type stuff, right? And of course, to make matters even more confusing, Marketers are really good at marketing, so they're marketing themselves and their business very effectively, and it's confusing for a small business owner. So what's the move here for a small business owner who buys into the idea that more leads is not a growth strategy, admits to not being an expert or having any experience in this area? What do we do? What's the move? It's just like a really difficult thing, I feel like.

Man, you teed that up well.

I can see why you're doing this.

I prepped a little bit. That was a hell of a tee-up. Yeah. My thoughts on that are a couple of fold. I'd first say contextualize, orient. What are you solving for? I've heard people tell me, "I need to double my business because I want to double my profits." And the answer was, man, you could double your— Given that you're not making much profit, you could easily double it and stay the same size. It would be dramatically easier and way less headaches. So what are you solving for? Why do leads matter? Does the existing business function well? If the answer is no, then just stop there and there, like forget the marketing thing, go back, tighten it up, improve it, dial it, make money, make it profitable, make it efficient. If it is, and or for whatever reason you're hellbent on growth, then you've got to ask yourself, what are you willing to bring to the table? There are times where what you want requires a level of sacrifice that you're not willing to offer. You know, what do you do then? So what will this require of you? You have to ask, am I looking to build a competency or am I looking for an outcome? When you go to an agency, you're not looking for a competency, you're just looking for an outcome. You know, you do it and that's, and agencies feel that, which is why you pay a lot. The most expensive question you can ask is how do I insert highly impactful, open-ended, broad outcome. How do I grow my business? Man, that's an expensive question. An affordable question is like, how do I do link building from.edu domains? I've done that before. I hired a vendor one time to do that for me and it was great. And like, I knew exactly what I was looking for. I paid him, you know, he charged me decent money. I was happy to pay. It was a great win for everybody. How do I grow my business? Man, that's just an ex— that's a McKinsey level question. So you can ask yourself, how much competence do you want to develop? If you're really looking to outsource here, then you are going to get victimized, and appropriately. The market is going to recognize your lack of acumen and lack of willingness to wade through a series of unpleasant details and punish you accordingly. The folks that are willing to actually develop the internal, the personal, and then the organizational competence have the best shot of having a big win here. And I don't want to bastardize the who, not how. I really do believe in that. But there's a certain level of ownership as a business owner, if nothing else, on an economic customer acquisition cost. There's a level of understanding that is abstracted from— there's a level of understanding of marketing that is abstracted from marketing about marketing. And it's financial, it's mathematical. You at least need to know that. That's the minimum floor. Above that, I'd say my experience is that marketing should represent the philosophy of the organization. How do you wanna market? Do you wanna market through crappy, scummy SEO keyword-based articles that somehow generate leads? Do you feel good about that? Let's say that works. Do you wanna do that? I don't. A, I don't think it works, and B, I don't want to do that. Or do you want to market by adding value? And if you're going to add value, how as a business owner can you say, but I don't want to be involved? We're going to add value for the consumer. That's how we're going to market. Fundamentally, that's what I believe marketing is. But I don't want to be involved. It just doesn't pencil. It doesn't make any sense. You're going to have some junior person handle that.

Okay, so let me try and summarize here. So fix the existing business. If that's not in order, start with that. Next, define what you're solving for. Are you solving for revenue? Are you solving for profit? Are you solving for some unit count or some other metric? Like, get clear on that with yourself. Then get clear on what you're willing to sacrifice or what you're willing to bring to the table. Like, how can you— nothing's free, right? So, okay. And then You say, are you looking to build competency or are you looking for an outcome? So this is interesting because I feel like if a small business owner was like, hey, I'm not good at accounting, it's not a skill that I natively have, but I know it's important to the business and I recognize the value of having clean books. Okay, there's tons of great solutions out there, right? Like you can hire an accountant, you can hire a bookkeeper, you can do fractional CFO. There's Every spectrum, every price point, very affordable, high-quality options available. And there's no moralistic, "Well, you should really..." I mean, you need to know accounting. I mean, come on. Have you looked at the NARPIM accounting standard and really internalized that? What, are you just going to outsource this? Okay. This is part of being a small business owner, dude. You got it. Have you read Accounting for Dummies? So you're killing me. But it sounds like what you're saying— I'm not saying you're wrong— is, listen, marketing at its core is about who the business is and the value that they're providing to the customer. And if you can't articulate that and bounce that around and, and like develop some competencies around how you're going to take that to the marketplace, you're dead to me. Like, that's not an option, and you should just go hire someone who's going to overcharge you. Is that a cynical version of what you're saying? Probably.

There might be a conflation of terms here. I think that you're asking me more broadly about growth and I answered you about marketing. The reality is I'm involved enough on the growth side that these semantical definitions are meaningful to me. So to me, sales, advertising, marketing, these are very different things. And I'm talking about marketing advertising. I feel more about that like I do about the accounting stuff you were asking me.

About—

I don't know about Facebook ads, pixel tracking. I mean, I know enough to be dangerous, but I'm not in that stuff technically. I would feel comfortable outsourcing that. I would still need the tier 1 knowledge that I mentioned around customer acquisition costs, the basic mechanics to grade whether or not it's actually working. But that is more transactional. That is fundamentally transactional. Marketing is a long-term communication-based strategy about facilitating a quality of conversation that is sufficiently interesting to capture attention, to invite people into being educated such that when they make a decision, you've set the buying criteria and they choose you. That's a big conversation. I don't know how you outsource that.

Well, I think you're probably right. I feel that that's a pretty high bar for a lot of small business owners to really internalize what you just said. Take it to heart, set time aside for it, study it, learn it inside and out. Go on a mountaintop, think about who they are, their ideal customer, how they're going to bring value, and then how they're going to initiate a conversation around that. And then maybe go build a content piece or something. Okay, let me take this from another direction. Bring it back to the practical tactical. Books, podcasts, where do you learn about marketing if you're a small business owner who's, who's trying to go down this path? Yeah.

So the thing you just said, it's a heavy lift. Hell yeah, it's a heavy lift. And you don't have to do this. I think that responsible guruism— let's take another cynical view and just, you know, put me in that category— responsible guruism is to tell people when to embrace the guilt trip. You don't have to do what I just said. You could do advertising. You could focus on a couple of small channel niche strategies. You could do all property management. You could do manage my property. There's a lot of different ways to skin the cat, but what doesn't make sense is to posture in this alpha, me grow big, fastest, you know, big growth man and avoid that.

That doesn't work. Got it. I agree with that.

But if you want to pick some tactical stuff, you know, referrals, realtor referrals, and just be all in on that, like you can make that, you can make that work. So the higher the slope, the higher the rate, The higher the climb, the more you have to imbibe and the more you have to learn. The lower, there's less. So the back to sometimes what you want requires more than you're willing to sacrifice. And the answer there is either to— I mean, in that specific situation where you're not willing to sacrifice is to modify your expectations.

Yeah. My partner and I have a saying, how bad do you want it? Yes. How bad do you want it? You really— you want it that bad? Do you really? Are you sure you want to own and manage 1,000 units? Really? What are you willing to give up? Are you willing to work 60-hour weeks? Are you willing to invest your life savings? Are you willing to give up equity? Yeah.

There's nothing wrong with lowering— even as I say it, it's so loaded, man. It's like it's a trip. I was about to say lowering your ambition. Is that the term? Maybe clarifying your ambition, clarifying what you really need to be happy. There's a flavor of entrepreneur that all they need to be happy is to be whipped like a dog on an ongoing basis and the path towards achievement. Like, that's— that is the reward. And if that's you, great, keep doing it. There's a lot of folks where that's not what they need. What they need is like some cash flow, some time with my kids, a couple, you know, a couple of vacations to Cabo. If that's you, sometimes you got to look back and you got to right-size your, your identity. I think a lot of it just comes down to right-sizing your identity to what you personally really want versus what you think Gary Vee wants you to be doing with your life.

Yeah, love it. Love it. I think we're going to end it there, Jordan.

Hey, man, this is a pleasure. As always, I've enjoyed getting to know you. I like the information you're putting out. And my parting reflection here is this. You and I were having a conversation about what you feel like has been the disproportionate reward that you've received from writing and facilitating interesting conversations, sharing your thoughts. And I've experienced the exact same thing when I went from running LeadSimple and being a vendor and a guy behind a booth, you know, would you like my business card, to then putting on PM Grow. It was like a quantum shift in how I was perceived. And it was a lot of work, but it was consistent with my thesis of playing the long game. I think that what you're doing about writing and clarifying your own thought, I'm not saying it's easy, but what I will say is that it's— when it's done well, it's done well because it's not performative. Like, you're not trying to put on an act. You're talking about things you know and that you understand, and you're clearing your own— clarifying your own thought. And people respond disproportionately that someone would have the presence of mind to write clear-headed thoughts on these issues. I really do believe that that is dramatically more accessible than most people perceive it as, and it has disproportionate rewards. You're living it, you're experiencing it. I salute you for that endeavor, my man.

Thank you. Really appreciate those kind words. If people want to learn more about you, your journey, hear more from you, where can they do that?

You can shoot me an email at jordan@leadsimple.com and you can go to www.profitablepropertymanagement.com to check out the podcast.

Can't say enough about your podcast, Jordan. It's literally changed my life through folks that I've met, kind concepts I've been introduced to. If you're listening to this and you have not listened to any of Jordan's episodes and you're in the business of property management, or even if you're not, you are in for a treat. Go all the way back to episode 1, start there. You will love it. Thank you, Jordan, so much, and, uh, we'll see you later. It's a pleasure, my man. 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.