The Lazy Leverage podcast LIVE

all these concessions in the headline. You know, I run 40 businesses and work 10 hours a week and I'm a billionaire. From barista to billionaire. And it's just like, I'm unwilling to do that. And that costs me top of funnel.

And I'm like, her Mosey doesn't do that shit.

You want it? We open up Hormozy's YouTube right now. I'm going to puke.

Pull it up.

Screen.

Pull it up.

All right. It's not, it's not, it's not that. Oh yeah, it is poor Mosey. I remember doing this the other day because he's a smart dude, but what you have to do to build top of funnel attention. Okay, here you go. Um, building a million dollar business for a stranger in 69 minutes. 7 days.

I've watched those. That's real.

Give me 20 minutes and I'll give you back 20 years of your life. If you're— it's just, dude, it's just not for me. That's just not for me. I, I understand why you have to do that. I just, I don't— one of the things we talk about a lot is that your business serves you, and I just don't want to do that. I just don't want to do it. I don't want to do anything within a million miles of that.

Well, I got good news for you because YouTube Shorts and TikToks don't have titles. That's not how it works. I mean, like, I guess they do have titles, but that's not how you people like find them. So you don't have to do a clickbait title.

Yeah, it's, it's just more— I— popularization. I like, I like the slow build of an intellectual type popularization, and I just don't— I'm not excited by kind of the lowest common denominator popularization. I just, I don't know why, I'm just not excited by it. It's just a Very personal.

I mean, Hormozy, when he, like a few months ago, did a big dig, a big breakdown about how he tried doing more generic popular business advice and his views went up and his engagement went up, but his conversions went way down. And so he reversed course and doubled down on long-form hardcore business content. And it's gone, gone way better for him since he made that change. Yeah, so I think he's sort of reached the same conclusion.

Um, yeah, I, I guess at the end of the day I can just say one statement, which is I just don't want to do it. I, I don't know.

Do you not want to do—

I don't want to have to play the, uh, the— what's something that has a really short memory? Like the, like the chipmunk?

Goldfish?

Goldfish. I don't have to play the goldfish attention game. I would rather look for these.

Yeah, but like when I said I watch probably 6 hours of Hermosi content a week, like it's all— it's long form. Like it's— yeah, look, you and I have a long-standing debate about Hermosi. I mean, the broader point— I take your broader point, which is you don't want to try to distill things down into 30-second soundbites that sound more impressive than they are.

Correct.

I get that.

Here's 3 things we need to do to take— I just don't want to do that. I just don't find it— I don't enjoy it and I don't have to do it. So it will cost me, no doubt. Okay.

What is up with that guy's stock being down 98%?

I was talking to this guy, Cedric Chin, who's hilariously impressive from Common Cog.

Oh yeah, I read his stuff. Yeah.

Yeah. He's way smarter than I am. Like, he's like, I'm rarely intimidated. I'm intimidated by—

I've thought about joining his paid community thing, actually.

He, that dude is Like, I don't know if— it's just Tim Ludwig got me on them.

I'm a little skeptical on paid communities. Like, do you think there's anything there? Nah, I think I should actually pay money to join a community, or is that just a waste?

They're just probably just going to give you some pen. Yeah, you know, um, and give you different colors. Now, uh, that's a crane joke for those of you keeping track at home. No, uh, the— he was— it's— I mean, we could have a whole episode about it. But what I would say is issuing a lot of equity is the allegation and some fancy accounting to show EBITDA that isn't really real. And they missed some loan covenants and concurrently having a very public-facing, I'm a billionaire type vibes, which is kind of what I was reacting to. I'm not super interested in going through annual shareholder meetings and balance sheets of Canadian publicly traded companies, but I will make fun of somebody who's like, You know, from barista to billionaire, and it was like Canadian dollars for like 3 days, 15 years ago. It doesn't mean he's not successful. It doesn't mean he's not a good guy. I just, that's not my style. It's just, so that's kind of, and there's a lot of people who have a lot of strong feelings about it.

Yeah.

I don't really have particularly strong feelings. I did say we were going back and forth and we had like a good civil exchange. But what I said was, um, uh, you, uh, this plays into a longstanding narrative that I have around entrepreneur porn that just, it triggers me. When people portray business as easier than it actually is. That is just like a longstanding fricking— and this falls right into that. And so that's why I react to it and why I comment on it and make fun of people who talk about it like that. But it absolutely plays into like an existing worldview that I have.

So, I mean, portraying things as easier than they are is one thing, but telling your story is— I mean, you can tell your story like, yeah, of course, but there's going to be one in a million You know, if some things are a one in a million shot, well, there's a lot of a million people in our country and in Canada.

Yeah, I guess so. But would you go on a podcast if your publicly traded stock was down 97% from IPO?

I think that's all these details.

I mean, that's the question, right? That's the question. Talking about, you know, being a—

your success, that's—

well, that's where people are.

Yeah, he's really missing an opportunity to do the whole transparency thing that's worked pretty well for me. Not that I'm anywhere comparable to him, but like, if things are struggling, like if the businesses are struggling, he should talk about that. If the investors are reaching different conclusions than the operating business reality, he should talk about that. Like, you should address it. It's a great, it's a great content opportunity.

Yeah. And I think a lot of my reactions generally are around self-seriousness and kind of like a lack of authenticity. Like, I'm just on a hair trigger with that lack of authenticity. And, you know, somebody saying we're building the next Berkshire, and they're slapping debt on the balance sheet. Again, I don't really know the facts, but my very superficial understanding of what people accuse— I'm not going to go in and read the footnotes of a publicly traded company. I just don't want to do that. So cool. So you were at AppFolio. You do that mainly, as I understand it, to build your ego. Anything other than that as to why you did it?

Why I go to the conferences?

Mostly ego is basically— I think you've shared that privately.

Yeah, yeah, it's the 9 days of being famous, you know.

I mean, it's a huge deal. I need Peter Lohmann in the house talking to the CMO of a publicly traded company.

Yep. No, it is fun though, and I'm very honest about that with people. They're like, is it cool? I'm like, yeah, it's freaking great for the, for the 9 days that I'm like famous. It's awesome.

But 9 days a year, the conference, 9 days a year.

Yeah, 3 conferences, 3 days each. But the— it's very clear to me that if I was encountering that level of sort of recognition in my everyday life, I would instantly become insufferable. It's so clear to me that it would go right to my head.

But, and I'm more insufferable.

More insufferable. It would be more, more, more insufferable. Correct. Correct.

Yeah. Yeah. Now I've talked to Jim a bit.

Yeah. So, but yeah, that's cool. It's fun. I got recognized, um, had some people ask for pictures and stuff like that. Um, but yeah, it was interesting because I got recognized a lot less at that conference than a lot of the NARPM stuff. So that was intriguing to me. I think there's a lot more room to run within the AppFolio ecosystem for my brand and Crane than there is in NARPM. And AppFolio has about 8 or 9 million units under management under their software. I haven't looked at the latest numbers, but I believe that's about where they are. So they're huge. I mean, this kind of— I was talking to somebody who was involved with the conference after the fact, and she thinks they spent $6 million on that conference. That was just a guess, but it was very impressive and sort of showed me what an industry conference can look like if it's done at a very high level. So that was interesting.

So do you want to rehash the conversation we had yesterday when you should have hit record on the phone call, but apparently you don't know how to use your phone?

I do. I want to talk about bake sales. I want to talk about bake sales. So you wrote a great newsletter called Stop Running Bake Sales and relayed a story about a school bake sale where the parents and the teachers and the kids all get involved for a week and they do all this work and they bake all these cookies and they organize all these things and there's all these dishes going back and forth and setting up of tables and huge production of counting the money and all of this effort, you know, hundreds of man, women, and kid hours involved to raise, you know, $2,600 when it's all said and done. And your point in the email was, hey, why don't you just try calling the last 3 donors who made big donations to the school and just ask them if they're good for $5K or $10K?

It's my dad's story.

Yeah. And, and yeah, that actually works. And you told a story about how that happened, and I totally believe that because The, and so the moral of the story, because you always like to have little morals to your stories because you're, you know, like that, is that, uh, don't run bake sales, call the big donors. Basically raise the level of the game that you're playing. Find the one lever that's going to do the work of 100 bake sales for your business, whatever the equivalent is for what you're trying to accomplish. Should I tell that back right?

Yeah, totally right. Yeah.

Yep. So We, you and I were talking about Crane and it's a lot of work to run these membership drives and they're successful. We get, you know, we just closed out the fall membership drive. We reached our goal of 50 new members, which is amazing. Thank you. So we got to thinking about like, what's the, what's the bake sale story equivalent here? What's the call the donor version of Crane? And I don't know if that's about as far as I can go teeing it up. Where do you want to go from here? Yeah.

So I said, Peter, you are on a stage with the CMO, the chief marketing officer of AppFolio, which is a publicly traded company. They like you and trust you enough that they're going to put you on stage with their CMO. If they have a bad interview, they could lose tens of millions of dollars in the public markets. If you are irresponsible with the line of questioning associated with the CMO. Not only that, you slipped something in that they've been paying you for years as a consultant to help them with— do you want to just give 10 seconds on that? Because it's another important fact.

Yeah, I've been consulting for AppFolio on year-long contracts. I'm on my third contract with them about, you know, product, uh, marketing, messaging. Yeah, sort of kind of being a voice to the customer, providing feedback on how they were being perceived in the market, competitive intelligence.

So cool.

Yeah, all kinds of stuff.

Okay. And the— how— if you had to guess what the, what the ICP or the avatar is of Appfolio, is it like the 300-door property manager? Is it HOA? Is it like— what do you think is their like sweet spot?

Their sweet spot's probably like a 1,000-door residential property manager, like basically a slightly bigger version of me, of my management company. Yeah.

And I said, Peter, I think you have— and what percentage, if you had to guess, of AppFolio customers would you say are CRANE members? And I'm intentionally asking you a ridiculous question.

Uh, what percentage of AppFolio customers are CRANE members?

Yeah. 0.01. Yeah. Okay. Yeah.

All right.

So what I said was What I said was, you are a unique voice in the property management world. And I bet that Appfolio, if I was to guess, it's something with AI. And you were like, oh yeah, that's definitely true. Which is they are trying to get a message out there around them positioning themselves as an AI-forward company in the property management space. And they're not— and thought leaders, and they don't they don't have a lot of avenues to do that, right? They can launch a press release, they can post something on their blog. Not like, you know, there's not that— what are they gonna post something on Instagram? I mean, there's just not a lot that they can do to get that story out there. There's some things, of course, but I said, you— it seems to me like you have an opportunity to skip the bake sale and go right kind of to the nth, which is Hey, AppFolio, I love you guys. I love your product. Obviously, we have a great relationship. I have a complementary product to you, which is Crain, and you have all of my customers that I would have to go run Facebook ads to go find. I'd love to come up with a way to use my voice and my expertise and your existing customers to help you get that AI-forward message out there and in turn help me promote my CRANE membership, which is my baby, which is a great place. It's probably the thought leader of choice for the property management industry. And so I think there's a mutual benefit here, which is you have thousands of AppFolio users who are not members of CRANE who would be great, and I have a very strong voice. So as an example, I would love to do an event series with you called Taking 30 days off in your property management company using AppFolio's new AI feature set. And I— and then you email that to everybody who is between 50 and 700 doors who uses AppFolio and say, free event called Getting the Most of AI to Take Time Off in Your PM Company. And they're like, dope. And you're like, yo, I just blasted an email to 15,000 people in my ICP.

Yep.

So that was kind of like, and it's like, yeah, but how would I even get that meeting? Bro, you were on stage with the person who says yes to that.

Yeah.

Text them.

Yeah. Getting the meeting wouldn't, wouldn't, I don't think would be too challenging.

I think they would be interested, but for a lot of people, they couldn't even get that meeting. Like, yeah, that's great. But they're a publicly traded, you're like, yo, they hired you as a consultant. They obviously value your voice.

Yeah.

Right. Would you rather that or the hourly that they give you? You're like, oh, easy.

Right. So what, what's really interesting to me about this whole idea or conversation is, yeah, it's getting out of that bake sale mentality. It's like, what's the one strategic partner or one distribution channel or one big win that kind of makes all the other stuff just a rounding error, if you got it right, or if you nailed it? And I'm not That way of thinking doesn't come naturally to me. I think it does to a lot of people, and I think a lot of those people are what I, what I classify as like deal guys, deal people. They're always making deals or making a big deal or making an enterprise deal. They're making a, they're making a deal with, you know, they're always making some big deal. And I'm always like, well, that's just my engineer brain is always about like, well, what's the system by which we're going to acquire the 50 Crane members? Let's really refine that. Let's streamline it. Let's tune it up, right? Let's— so, because I'm all about the systems and the processes, and so I tend to negate or just forget about the deal guy type activities, which really can be that—

how Sagan's growing—

huge lever.

That's how Sagan's— that's one, almost 100% how Sagan's growing right now is, is partnershipy BDE, right?

Yeah.

The Marine Corps— it wouldn't be a Lazy Leverage podcast without me, uh, referencing Marine Corps doctrine.

Uh, yes, there's a, there's a, are you going to send me another blurry, too small PDF to read on a plane?

No, I'm going to send you one on pickleball basics. Um, um, uh, the thing I was going to say was the Marine Corps calls this a center or a center of gravity. And the definition I like, which is what's one, one major objective that if accomplished carries along a lot of minor results. And so, you know, in World War II, there was this ball bearing factory that the Germans had, and it was like the weak part of their supply chain for their tanks. And we could literally ruin their entire ability to produce tanks by destroying this one ball bearing factory.

Weak because it was a critical path.

Correct. And it was a single point of failure. And there's the light side of that as well, which is what is the one relationship that if I got this right, running a good webinar and payment links and, you know, or just completely just none of that mattered because I'm, I'm a part of AppFolio. Whenever somebody crosses their 50th door, AppFolio sends them an email that says, we'd like to pay for 3 months of Crain for you for free because the more well-run your company is, the better you're going to get out of AppFolio. Here's your voucher to go join Crain for free for 3 months. And you're like, yeah, we'd give them a 3-month trial. And they're like, yeah. And you're just like, yo, problem solved with one deal.

Yep.

The other one that's like that too is that, is that bank you guys have? Yeah, basically pays for Crain. Like, I imagine there's something in there too where you're like, hey, did you know that you have access to this free thing? And you're like, hey man, Crain will make them better customers. They will churn less, they will have less compliance issues. And all I need you to do is help me spread the word to people who can join Crain for free because of this credit thing or whatever. So there's oftentimes more than one of these out there, but you just need one, you know?

Yeah.

You just need one.

You always wanna have 3 emails out that can change your life.

Yeah. You mentioned that the other day. I like that.

Yeah.

I think that's a core, and you're already on third base with, with, uh, with AppFolio.

Yeah.

The, the other thing too that I also said that I've learned in my, in a previous career as well that I just mentioned in passing, but again, just to like step up the ambition, is why couldn't you become the best practice community of choice for AppFolio? Other than the fact that you don't use AppFolio. Other than that, but that could be a part of the deal, right? That could be a part of, you know, yeah, I mean, everybody's got a price. But what I mean is, you know, you are not in conflict with their core value proposition. You're not stealing customers. If anything, you're making their customers better and more engaged. They're a publicly traded company who's constantly looking for ways to push the limit, reinvent themselves, and stay at the top of the industry. Crane is a wonderful strategic partner for Appfolio to stay at the cutting edge of property management.

Yep.

What would that have to look like?

Yeah.

Like, what would that have to look like? And that's not you selling to Appfolio. That's you basically them opening up the kimono and you also opening up the kimono, you know, and just saying like, yo, we're in this together because we have a mutual benefit. Just another way, like, thinking about it.

Yeah, there's— it's such a good thought. It's a great reminder that I need to pick my head up out of the systems and process optimization. Like, I already sent this big long email about how we're going to run the spring webinar and like the spring membership drive with like 20 things we can improve. And, you know, I was getting ready to like dive into that, but yeah, like these, these larger leverage points of attack are not to be ignored. It's like they have a lower success rate, but when they hit, it's like 100x impact.

A lot of times as well, I think they're not mutually exclusive.

A lot of—

meaning you're the only one who could work on this AppFolio deal, but I bet Danny could execute on a lot of the things, you know, letting people put a deposit down on membership during the webinar. Peter Lohmann does not need to be involved in that, but you're the the only one who can find yourself in San Francisco near the AppFolio office and you call on the CMO to say, hey, I just put some ideas together. I would love to just spitball with you about some ways we might like get in bed a little bit better because I just, I had so much fun at the conference. It was so great interviewing you. Would you guys like to do a sole sponsor podcast and you guys pay to promote it? And I'm the, like, there's just so much, obviously you, you, you have such a unique voice in the space. You don't need to be the one piping in, you know, go HighLevel to your new webinar. Like, you just don't need to do that.

Yeah.

Right. You know, so, so yeah, that's, that's my take on, on bake sale.

And I wonder what the version of that is for like RL Property Management too. There's probably some non-bake sale activity that somebody—

who has your customers?

Yeah, that's a good question. There's not a clear— it's not so clear there for a local services business, you know.

I mean, there could be. I mean, it could be the acquisition of a competitor. Yeah, silly example. It could be wrapping your arm around more strongly with other Ohio-based property managers who don't serve your geography. And, you know, you realize that if you just have these 5 people, they might be able to, you know, they're there, you just have to think hard about what's that center of mass? And what is your, what is your restraint? And then what are some ideas against that restraint? Cause you're not going to, you know, have this big deal on flipping units cause that's not your constraint. Who gives a shit? Right. So like you have to also layer this in with our longstanding discussion about the theory of constraints.

Yep.

You know, so yeah, like for Sagan as a silly example, we have a deal right now that's ripping with, uh, an employer, basically an employer site where when they want to find somebody after they kind of like post the ad or whatever, it's like, do you want help with this? One-click opt-in to Sagan. And they're happy because it keeps their people more active. And we're like, thanks for the traffic.

Yeah.

As an example.

Yeah. All right. Anything else on the bake sale mentality? I got another fun topic.

Um, anything else on the bake sale mentality?

I would say you're so smooth with like the spitball and the ideas. Like you're just, you're so in that mindset of how to make it a win-win and right language to use and like, You were telling me on the phone, like, oh, you got to be ready with the idea. Like, you can't be like, oh, let me get back to you. Like, you have to be ready to have that conversation.

That's from a previous— that's from a previous call. I'll tell the short, you know, sanitized version of the story, which is, you know, somebody would come back from, you know, the equivalent of a sales meeting. It's, oh my God, I had the best sales meeting. And the boss would say, awesome, how many millions of dollars did you sell? And they're like, well, I didn't sell anything. It's like, Well, then you didn't have a good meeting. Mm-hmm. Right. And so it's like, I had the best meeting with AppFolio. It's like, awesome. How many emails are they sending out on your behalf by the end of the week? Oh no, no, no. They just said they were super interested. Like when somebody like shows you green lights, you need to have done the homework to be able to go all the way to fucking conception. Like all the way. When, when you, cause so often when you're in that room, the CMO is like, Peter, we'd love to do something with you. Do not say. Let me go think about it, because that's a fleeting opportunity. Because as soon as he walks out of that conference room, he's getting hammered with other ideas. It's like, hey man, why don't you loop me into your social media manager right now and let's get a long-form pod with the CEO right now on the calendar and we'll use that to create a newsletter to kick off the new— like right now. But you have to have done that thinking. You have to be ready to have the order form signed. You can't say I had a great meeting and then you're like, fucking, let me email you later.

What was your example about like going on a date and it's like, it's like, well, like, let's go hook up.

And you're like, let me think about it. It's like, you gotta be like, you have like, you have to be ready to consummate when you hit straight green lights. Now, if you hit a yellow light or a red light, you back off. But so many times I feel like people lose momentum or whatever. I had the best meeting with AppFolio. Awesome. What price are they buying you for? Like, you need to be prepared to go all the way if you get that person's ear and not be like, we're considering raising and they told us that they'd love a look. What? Like, hey, yeah, we'd probably just take $20 million for Crane right now. Oh, that's it? Oh, we actually— oh, let me— hey, let me just text our CFO. I think he's down this— you have to be ready to go there. Like, at any— I've had a lot of opportunities that I've been able to generate just because I'm ready with what the pitch is, or specifically what the ask is.

Yeah. And that's why you're, you're like top 1% at that. Like, you know precisely what's in balance, what moves the needle for you, what moves the needle for them, the right language to use, the right asks, the right amount of pressure to put on without being obnoxious. Like, that is your skillset for sure. Like, I, I can, I can usually come up with that stuff if I kind of come back to my office with my whiteboard and I kind of pencil it out and the pros and cons and, you know, text back and forth with you about it. But you're just like, boom, you, you, it's so good.

It's all, you know what it is? It's all backwards planning. From my old, from my old life. It's all backwards planning. So it's like, okay, if I want to do a deal with AppFolio, what has to be true? Okay. Number 1, I have to have an ask. Number 2, it needs to be worth it for them. Number 3, it needs to be worth it for me. And number 4, I need a clear next action and somebody at the working level to work with. These 4 things have to be true. Okay. And then I start basically saying, okay, I can get this one done over email because, okay. And then in this meeting, all I really need is these last 2, which is a working level point of contact and a Yeah. What's in it for them with 3? Like, and so for me, it's all comes from backwards planning, which is okay. If I want to do a deal with Peter, what does that need to look like? Okay. I need this. Okay. And then I can get this one like that. And this one I can get from somebody else. I actually don't need to ask him for that. Like, so to me, it's all backwards planning. That's just an old habit.

Yeah.

Yeah. So, okay. Second topic. Um, when you, when you don't put a lot on a shot from the baseline in pickleball, you're going to have the net taken on you and you're gonna have a lot of trouble.

Or when your, your, your backhand is weak.

Yeah. When you switch hands.

Switch hands. Yeah. I gotta work on that switch in the hand.

You definitely gotta get, you gotta get that back, that driving backhand done. So Peter and I play pickleball.

So, okay.

What was the second topic?

So the rule of 40.

Never heard of it. Honestly, I never heard of it. I know most of these random rules.

I've never heard of this. So it's a SaaS thing. So in the SaaS world, you start a SaaS, software as a startup, it's a software company, a software as a service. Yeah. Service, not startup. Yeah. So basically the rule of 40 is what VCs or what investors want to see to show that your company is doing great. It's on the right trajectory and it's investible. And the rule of 40 says that your net profit plus your annual growth rate has to add up to at least 40. So if your company is growing 40% per year but not profitable, you're great. If you're growing 20% per year and you're 20% net margins, you're great. If you're growing 5% only but you're 35% net margins, you're great.

Margins?

Net margins.

Interesting.

Yep.

Oh wow, okay, so Sagan's investible. No comment.

Sagan meets the rule of 40. Yeah. And so It's a soft— it's a software thing, it's a VC thing, but I think it could be easily applied to basically any small business as a health check or a way of understanding, are you meeting some kind of a minimum threshold of this being a going concern of interest and worth your time to mess with, right? So we think about RL. So RL, you know, we, we got it I don't know, I could probably do this math. We run about 18% margins, so we would need to— we would need to be growing by at least 22%, you know, revenue, which for you is like 120 net units a year. I do that math faster than I could. So you look at revenue though. So I think we're gonna go from $3.7 to— I think we're gonna go from like $2.7 to like $3.2. Okay.

$500. Yeah, that hits it.

Yeah. So I think I might— $500 divided by $2.7.

How can you grow revenue without growing doors? Maintenance?

No, we did grow doors.

Okay.

Yeah. But you can grow revenue without growing doors by adding fees and adding protection plan. Yeah. Yep.

Yeah. It's, you know, it's— I think actually the way that it's often— I think I would, as you were talking, I was like, how could this apply to somebody running like a harder business? If you think about your time as an investable asset, when somebody's like, yo, I'm running a power washing franchise and I don't know if I should keep doing this or, uh, switch to consulting, I'm like, rule of 40. You need to either be netting 40% or growing 40% a year or some combination of those two, or else you're playing a bad game.

Exactly.

Like, that's probably how I'd apply this to guys, some guy running like a kitchen company or Yeah, like you have to be growing fast or netting a shitload. But if you're doing neither of those, sounds like a fucking slog. Like bad game selection.

Exactly. Game selection. I was reminded of that reading the intro to $100 Million Money Models by this author. I don't think you know him, but he was talking about like how he started with gyms and he was like running gyms. And then he ran into some guy and he explained how he like started gyms. He's like, dude, you shouldn't be running gyms. Like, what the hell are you doing? Like, bad game, bad, bad vehicle for your skill set, you know? 10 out of 10 execution in a 3 out of 10 vehicle.

The— I was revisiting a conversation we had a few episodes ago that I really liked about, uh, what you were saying about, um— oh man, I just had baby brain. Let's move on.

Yeah, terrible. That sounds such a great setup. I was all excited.

Wait, let me— wait, let me pull up my phone because I'll look at the episode and it'll jog my memory, dude. Okay, I was up a couple times last night. Um, okay, the episode was the last one we did, the crane break. We were talking about vehicles, dude. I don't remember, honestly. I'll come back. My brain's freaking wiped.

So the rule of 40. So yeah, and I think it works, right? Because now service companies generally don't—

oh, That game selection or vehicle selection, in the same industry, there are multiple vehicles. So running a gym, you could also sell gym equipment. You could create a SaaS. You could create a vertical community just for CrossFit gym owners. You could run a media company that just creates like— but the idea that that saying, well, I'm in the restaurant business and the only thing I can do is sign a big lease and make 20% after food costs and labor is wrong. And you were talking about, it's such a great, like, that was, I was like, that's such a good point that every opportunity, there's 20 different vehicles. So even if you're in a bad vehicle right now, you're right next to a good one, even without switching the industry.

Right. That was, that was your point. Network and contacts and stuff. Here's how I think about this. You can go up or down. You can compete with your vendors. So look at your vendors and see how, how is their quality of life? How is their profitability? Are my vendors meeting the rule of 40? Or you can compete with your customers and look at your customers and say, how are my customers doing? Are my customers meeting that rule of 40? How do, how would I like their quality of life? Are there annual conferences? Do they have people flying in on private jets or is everyone taking Southwest? Right. So it's like up, down from where you're at, because you're probably very familiar with your vendors and very familiar with the customers. So that's a great place to look at sort of other things you could—

or you can go horizontal, or, hey, I'm really good at running this membership-based gym, but there's no money in it. But in a day spa that does Botox, those people are crushing and growing like a weed, and it's basically the same as a CrossFit gym. Like, so you could also go across, which is the same business model but in a different, uh, different vertical. That's another. So yeah, I just, I remember hearing you say that and I was like, that's such a cool, because I feel like we have some people who are like, well, I'm in the, I'm in the power washing business and that's just, you know, I'm stuck here for a little while. And it's like, yo, I can think of like, so just using your example, um, uh, your customer might be, uh, commercial property management, which could be a great extension of your power washing business. It could be, uh, training and equipping and wholesaling power washing equipment, which might be a better business. It could be different home services that service the same customer set. Like, you're right next to the exact— there's just, there's like 15 vehicles immediately adjacent to you in all directions. So don't feel like you're stuck in remote home cleaning.

You know, competing with your customers is a time-honored tradition, right? Think about, think about a subcontractor on a job site, some guy carrying wheelbarrows for a concrete contractor. Yeah, he's like, all right, my customer's my boss, I want to be a concrete contractor one day. So he starts his own concrete contracting His customer is the GC. Well, I'd like to be the GC, not just the sub. So he eventually becomes a— becomes a GC. Who's the— who's the customer of the GC? Well, that's developer, the developer or the architect or whoever. And it's like, all right, well, now I want to become a developer. And who's the— who's the customer of that? Well, it's the investor. So it's like, well, I want to become an investor. So you can work your way all the way up and eventually you're just allocated. You're basically Warren Buffett.

It's actually Sagan's big— one of Kevon and I's big question right now, which is as we look at Sagan, We've become very familiar with adding value via a particular set of tools. And one of the big questions we have is, and we've done it now in many, many industries, one of our big questions now is, do we want to pick one of these where we see the biggest opportunity and instead of being a vendor, go acquire or compete? Because we're like, dude, we know that veterinary clinics, these, we've done it 5 times. The other 5,000 are slow adopting. Let's just blow it out in veterinary clinics. Using our exact same toolset that we've already validated? It's a very open question for us right now.

Property managers classically compete with their vendors. They— but property managers classically will start, you know, a— some type of a property management service or software and then start showing up at NARPM not as a customer but on the trade show floor. That's essentially what we've done with Crane, even though we're kind of sneaky about it. Yeah, but yeah, I mean, and you never see— I talked— I've talked about this a lot, but you never see anyone going the other way, right? You never see a vendor on the NARPM trade show floor be like, you know what I really want? I want to be a property manager. How do I get one of those attendee badges? I don't want to be a vendor.

Right.

That's because they see it's tough business. It's tough.

It's totally, it's totally leverage. It's, they're fine trying to find more leverage, right? And labor leverage is the hardest form of leverage. So that's what they're doing is they're looking for code leverage, media leverage, or capital leverage, in my opinion. Like, that's, um, yeah, I was talking to that Just to go on a little bit of a tangent, I was talking about, because we launched this broker network, we should do a whole episode on that at some point. But, um, uh, and then I'll talk about a Toyota way, small thing. But I was saying, a guy who runs a fairly low-ticket home services business who signed up as a broker, and he's in a very large franchise network, very large. And I said, just so that you're clear about the stakes here, if you do 1 or 2 hires per month, your net is going to be higher than you being a franchisee of this concept. Like, let's use a silly example, a Jamba Juice. What do you net as a Jamba Juice owner? And what risks do you have to take in order to net that?

It's like 70, it's like $70K, I think.

And if you do one $5,000 hiring fee to do an accountant for other Jamba Juices, per month, you will make more while not signing a lease and having no employees. Like, I hope, like, when you start finding opportunity— again, opportunities like that don't last forever, and eventually they'll be price competitive. But for right now, in this particular moment of time, I think that there's going to be a rush to these people being like, why am I not just the guy in the power washing industry that does cold callers. Like, why don't— why aren't I just that guy? It's— I'm gonna make way more money than doing $480 residential driveway cleaning jobs, which is hard as shit.

You'd be amazed how much of the American economy runs on somebody looking around and being like, why am I not that guy? I kind of like what he's— yeah, that seems pretty good. I don't know, let me go talk to that guy, see what he's got going on.

I have long talked— I talked about it again this weekend— I have long talked about I have met people who are more in the creator side of the small business world and was very judgy saying this person is not very smart. And then I looked hard in the mirror and said, that person is making 50 times more money than I am. Who's the dumb one?

Sure.

And went full circle. And next thing you know, I'm writing on Twitter. So like, you know, at the end of the day, you might you might have a nobility in being the one who actually holds the power washing wand, but that franchisor is ripping 10% and is, you know, on ski trips in Vail. So definitely, you know, who's, who's the dumb one, right? Who's the smart one? Who's the dumb one? So yeah, totally.

It's like the old Mad Men scene. It's like, I feel bad for you. I don't think about you at all, right? That's the great—

that's the end of Paper Chase, which is the same thing, which is just want to thank you. You know, he has this like traumatic relationship with his law school professor and he's like, just want to thank you so much. You know, this— I really, you know, I passed the bar and you changed my life. And, and this guy was like his like freaking foil for an hour and a half, and this old professor goes, sorry, remind me your name again? It's just the biggest own ever. Yeah, it's the end of Paper Chase. Incredible movie.

Great.

What else you got?

You said something about you had a Toyota Way something.

Oh, I think we should do a series. I think you and I should read the Toyota Way chapter by chapter. And I think we should probably do an episode on either one or two, depending on how media we think it is. But I think you and I, for example, a line that I've mentioned to you many, many times, go to Gemba, which is go and see for yourself. You and I could have a whole episode about what does go and see for yourself mean in a small business? Does it mean you do ride-alongs? Does that mean you open up Airtable? Does that— how often do you go and see for yourself? And we go to the next one and it's like push, not pull, or pull, not push. What does that mean? That means you don't acquire, you know, and I think if we, you and I went chapter by chapter through the Toyota Way, I think there's a lot of really meaty principles that you and I could have conversations to broaden them out into bigger topics, uh, that it's just— I'm interested in discussing it with you and kind of unpacking these principles because I'm finding them so ubiquitous in my day-to-day.

There's such a deep vein there of bringing the Toyota Way principles into the paperless economy, to use an old phrase, but basically to the modern services sector of small business ownership.

There's a lot of talking to Josh Schultz there because, you know, to run a clean QC process for non-ferrous manufacturing, which is what he used to do, non-ferrous steel pouring, makes the QC process you run for like a unit turning look like somebody like who was trained wrote it.

Yeah.

Right. And all you have to do is pick up a few. He's like, oh no, QC only counts if two different people do it. One person can't do QC and you're just like, oh my God, of course.

Yeah. This is all the stuff from his first day and you're just like revolutionary basic thing.

They're like, John, why are you so excited? This is like, like the minimum wage person at the front desk knows you can't QC your own work. And I'm like, oh, so that's why I love like manufacturing or some of these higher tech stuff because I just, I get like the day one lesson and I have to go like smoke a cigarette. Cause my brain is spinning so fast, you know, with like the implications of that on staffing or, you know, I just love it. I love studying that stuff.

Uh, Josh running Caincast, which is a non-ferrous foundries. I always joke with him that I was going to start a competing line of ferrous foundries. Just, just like, it's such a funny term. It's non— we run non-ferrous foundries. I run ferrous foundries. So what's up?

I used to say, you know, somebody needs to ask somebody. I'd be like, oh, I got a guy. Not a ferrous guy though. We don't trust those guys, but if you need a non-ferrous guy, I got a guy. I used to break his balls all the time about—

just walk around with magnets around the whole factory. I found something ferrous in your factory here. I don't know. You better get your QC guys back out here.

Get out of here. You're banned.

All the tools have to be made out of non-ferrous metals too, for some reason.

So great. You could just say you run a foundry. It's okay. No, no, we run a non-ferrous foundry. But, um, yeah, man. Okay, final, uh, final thoughts, comments, conference stuff. I mean, I was— I'll, I'll start, you can do the second one. You, on the first night I came and joined you, hosted a, um, a dinner for Crane members, and you had a mix of, uh, of existing members, new members, and stuff like that. And it was interesting to see the dynamics play out, which was I think business owners are so used to being in environments where they can't talk about what's really on their mind. And so in the first, hey, how are you all? Cool. How's it going? Oh, what's the weather like in Sacramento? Okay, cool. And then one person's like, are you guys as mad at Buildium as I am? And next thing you know, there's like 6 people being like, oh, we built an API because so many, they're so used to every day going through life, not being able to actually share the fact that they're pissed at Buildium. And now there are around 15 people who are like, yeah, and they gave me a deal. Wait, you got a deal? Who, what was the name of your sales rep? And like immediately. And so I think this live, live event stuff with people who are within the same kind of category continues to be a fascination on like 10 different fronts. So that's my comment was that observation.

Yeah. And there's a, you know, that happens at NARPM too. And I remember vividly my first NARPM conference having a lot of similar experiences. I, you know, there's something happening with Crane that's special and unique. And I, I actually don't know that I could describe it very well. In some ways, I think you and Jordan and some other people who are on the periphery have a better perspective on what's working there. But you and I talk about this a lot. There's no reason that this couldn't work for every single industry. Every single industry should have and will have a version of Crane for them. The model obviously works, so there's obviously a lot to think about there. But yeah, cool.

What do you got? Anything you want to talk about? You know what you should talk about? If you don't have anything to talk about, talk about the pins.

The pins?

How about the pins? Talk about the pins.

I think it's just a cool—

like, there's maybe some general lessons that could be applied from there. It's just a cool—

yeah, so here's a Crane pin right here if you're on the video version. The one I have has a green circle on it, which means I've completed a 4-week crane break, which is a full disconnect from my business. And every new member gets a pin and all the crane partners get 2 pins and they're very coveted. You'll see them around conferences and it's a lot of— it's a great conversation starter and you get special pins as you work your way up through the crane breaks. So you take a 1-week crane break, you get a certain color, then 2 weeks and 4 weeks. Because the mission of Crane is time freedom for property management business owners. And so we've aligned sort of our whole offering and everything we do around leveling our members up to that point of being able to take 4 weeks off. So the pins, I thought when Wolf originally told me this idea of having pins, I thought it was the dumbest thing I'd ever heard in my life. It's turned out to be a genius decision on his part, and I'm glad I greenlit it because members love them, partners love them even more.

Somebody had Folio, like, wear them on stage?

The CEO asked for a pin and got one and wore it on his jet home or something, I heard. But, um, yeah, it's— they're— it's a big deal. And there's something about that discreet but physical token that makes people feel like, hey, I'm in, I'm in something special now. It's not— there is a little bit of like the exclusivity part of it too, but I think it's more about If I see someone else wearing a pin, I know that they're also committed and invested in improving their life and their business, and they're— they have an open mindset, and they're actively working to add something bigger than just a better lease renewal process.

You know what it reminds me of? It reminds me of when Facebook turned the corner, was when you could put relationship status in your profile, and that was what like drew people into conversation because everybody wants to know who's single. Yeah, and it was like Crane spreading kind of more peer-to-peer was you provided an opportunity for them to talk about like some physical representation and what that means, and now it's an entree into a conversation or a relationship.

And there's a weird psychological thing that happens when somebody asks you about something that you paid money for, and I know there's a psychological term for this, but You're never going to say something bad, almost never, because I hate it but I'm wearing the pin. Yeah, it just makes you sound foolish, like why would you spend your money on something stupid? So there's an interesting psychological thing where like Crane members who are wearing the pin I think are more likely to highlight the positive aspects of their experience. Not saying everything's perfect, but, um, it's— yeah, this— it's kind of cool like that.

It was just one of those things where you would have maybe guessed it was going to be impactful as it was going.

Exactly.

And now you're like, yo, this is like— people are like crazy about these. And we had to create a whole new tier. And like, you guys, it's going to be a big part of Crane.

What's, what's interesting though, is that it only really worked because of the preexisting cadence of conferences that we have in this industry. Like, people just wearing their pins around their office at home would be meaningless. So that ties into You know, we're kind of standing on the shoulders of giants in a way. Like, if it wasn't for NARPM and this existing set of industry conferences and familiar names and speakers, the pins wouldn't have worked and a lot of things would have been a lot harder. So credit where credit's due for, you know, them bringing the industry together decades ago in a similar way. Cool.

All right. Well, Peter, where can people find you if they want to learn more or follow along?

Best place is to go to my website, peterlohmann.com. Sign up for the newsletter. That's kind of the cornerstone of everything else that'll lead you to all the other paths you can go down in my world, in the property management world. You can always follow me on LinkedIn too. I post a lot there.

Awesome. Good episode, Peter. Talk soon.

All right, bye, John.