Tom Ferry on Differentiation and Accountability [FUBCON Session]

No matter where your business is today or where you want to take it, you'll get there faster and more profitably.

With an operating system.

Welcome to Team os, your guide to starting, growing and optimizing real estate team. Here's your host, Ethan Butte.

This episode of Team OS features Tom Ferry, someone who needs no introduction on a show like this one. We recorded it together in person at Fubcon in downtown Los Angeles. And in this conversation, Tom shares two things that every real estate business needs to be focused on right now. He shares an experience that he had in 1996 that turned him onto the potential of the team model. He also shares how and why to turn accountability into carefrontation, as well as specific tips for solo agents thinking about starting a team and tips for solo agents thinking about joining a team. Here's my conversation with Tom Ferry. Tom, to kick us off, I would love to know from you what is a must have characteristic of a high performing team.

Someone that can manage terror and euphoria at all times. Yeah, that would be my answer.

Terror and euphoria. Talk about your last 20 years or so running and building your own organization. What has stayed the same with you through that period and what have you adapted and changed? Like, what's something that you.

Kind of super simple. I think if you're going to start any business, you need to acknowledge that you, you can be one of many. You could walk down the aisle of the potato chip aisle at the grocery store and try and separate yourself from Frito Lay or whatever. And this one, the yellow bag, the black bag, you know, the, the problem is they're all scrambling to try and figure out a unique factor. And I think the biggest challenge right now, what most teams have is they have no unique factors. So, so I say, well, why should I join your team? Why should I join your brokerage? Why should I do it with you versus everybody else? And they say, well, I've got great tech. Well, everybody's got great tech. Well, I've got leads. Well, everybody's got leads, right? Well, we're going to show you, we're going to teach you. Well, everybody's got some method of training. The challenge right now in the industry is there's so much likeness, there's so much sameness. What we need is difference, right? And what's so exciting today? So look at the number of people that are coming in the industry that said, I'm not going to college, I'm 22, I got tattoos, I got a beard, and I want to go into real estate. Right. Like, and they're bringing these fresh ideas and fresh perspectives. The challenges, they're falling in the trap of the same old. And I'm not saying tired and I'm not saying bad. There's just no unique factors. So that's the first thing you gotta figure out. You gotta go into a room and say, everybody is over here, what's over there? Right. And the only way you really do it right is Ethan, you do the second thing, which is you think about the customer. The only thing that matters is the customer. Now a team leader might say, the customer's my agent. The broker's gonna absolutely say, the customer's my agent. And I'm gonna say, no, they're your partners. They're your partners. The Customer is the first time homebuyer. The customer is the 89 year old seller whose real estate agent died 27 years ago. They have no mortgage on their house, they're living in New York City. They don't know what the taxes are, they don't know what the problems are. They want to go to Florida, but they don't know how. And they haven't talked to their adult son in 10 years. So they got no one to rely on. No one became their advisor. Does that make sense?

Yeah.

That spectrum, that's the customer. And if you pour yourself into understanding the pains, the challenges, the worries, the nervousness of your customers, then you can create unique solutions and you can market unique messaging in a way that has them go, he's talking to me, she's talking to me. But instead, what does everybody do in this industry? Like attracts, like, just listed, just sold. Here's my video. I'm dancing on TikTok. I'm making calls to expireds. It all works, but none of it is unique.

Yeah. So you triggered several things for me there. One of them brought me back to terror and euphoria. I think there's terror in saying, you know, can I go over here when everyone's over here? I think that that difference is a big jump for a lot of people. You also made me think about the idea of, you know, just thinking about the younger people. I think a lot of people think that the social media presence and these kinds of things are the differentiator, when in fact they're just the delivery mechanism for the differentiator. So they're doing the shallow version of that.

I don't even think it's differentiation. I think it's almost imposs implied. Now you just got to be there.

Correct.

So if everybody's there, then Everybody's there. So you can say, oh, I'm going to be controversial or I'm going to dance more. But like, I think the challenge is, I'm tongue in cheek when I say that. It's. If you actually surveyed your customers, if you went online and you said, tell me what you're thinking about with your house, tell me what your concerns are. Do you like your neighborhood? You know, when you bought that house during the pandemic, you know, there's a study that says like 43% of people that bought a house during the pandemic made a mistake because they got rushed into it. Right. They had a 650 house. They wrote 825 offer of 30 to get accepted, and now they're second guessing themselves. If you just take the time to get in the minds of the customers, they will throw money at you because you're speaking their language. Does that make sense? So being on social is great. Making phone calls is great. Emails is great. Open house is great. Everything is great. But that's table stakes. Look, why is Zillow dominating? Because they speak to the customer. They go direct to the customer and say whether it was the debacle of want to sell your house to, you know, the couple. Remember the, remember the, the ad that they did with the guy in the military on the laptop communicating with his wife and, and the daughter? Right. And okay, I'm not sure. What do you think? Hey, baby, I got to go, right? Like I'm in the middle of a war. Close the laptop and then he shows up. Or she. They go to look at the house and they open the door and there he is sitting there. And it didn't say anything about real estate. It just said, find your way home. Yeah, right. And people. I cried when I watched the video. I cried mainly for real estate agents because there was just no way they were going to compete with that. But they can. They can if they put the focus off themselves and put the focus on the customer.

Yeah. All those table stakes are just means to reach people with.

Right.

A reflection of themselves. Back when did. When did. You've been working with the top performers for a couple decades. When did teams and the team model occur to you? Like, oh, this is a thing.

1996.

Okay, what happened in 1996?

1996, my dad was doing a workshop and my dad's a legend and it's 1996. So I'm 26 years old and I'm sitting in this room and names like Walter, Sanford and Freud, Candelario and Dodie Donahue and so many others. And. And back then, so someone that's new was. They'll have no context where those people are, but these guys and gals were all doing 100 transactions a year in 1996. And when I went to Freud's, because I met them all and we were doing these little masterminds. And when went to Freud's office, Freud's office was like a doctor's office. And I walked in and I was like, well, it's kind of cool. Candelaria Real Estate, right? Not too far from here in Los Angeles. And. And then a whole bunch of meeting rooms. And then back here was like the back office. Transaction management, you know, listing, marketing, all that. You know, all the sausage making, if you will. But over here it was little conference rooms. And what Freud would do is he'd go out and knock on doors three hours every single day. His geographic farm was Los Angeles. And he would just knock on every door. Hi, it's for a candelario. English or Spanish didn't make a difference. I'm out here. Market updates, blah, blah, blah, blah, blah. And then he booked five or six appointments every sing day. And they would come to his office, his office. And Freud didn't check him in. The gal at the front desk checked him in. And then somebody else walked in and said, hey, before Mr. Canelaria comes in, I want to just verify you guys are thinking about moving the next three to six months. And at this point, you guys are kind of thinking you want, you know, 450 to $500,000 to sell your home, like literally like a doctor's office. And then Freud comes in and says, hey, it's Freud. Okay, let me look at the chart. Okay, so he's probably listed for 475. And let me ask you. And he just. He would do like a professional presentation. They'd never seen the house might as knocking on the door, but knocked on every door in la, so he had no idea what it was. And that's when I said to myself, oh my God, that's it. That's the future of real estate. And. And we've been talking about it ever since.

It's awesome. You made me think about front of house, back of house. Yeah, you know, you said doctor's office. I could see the doctor's office. I kind of heard, you know, someone receiving you at a restaurant, for example, and you keep the back of house, back house for a reason. I feel like where it gets messy from a customer experience perspective is when you Bring people to the back of the house.

Right, Right. And they see where the sausage is made.

Yeah. It's like this.

That's a bad metaphor, right?

Yeah, yeah. It's like that's just not what the experience is supposed to be.

No. I think every real estate agent should read the book, the original biography on Maria Montessori. Right. In the Montessori school system, that was the origin for what Walt Disney created. With Disney, you. It was all about the experience. Right. You think about Disneyland. It's all about the experience. And some of us can remember, like, A ticket rides versus B ticket rides. Like, you know, all that kind of stuff. But the client doesn't really care. What they want is communication. They want certainty. They want you to solve the problem in advance and then tell them that there was a problem and you solved it. They don't want to call you and say you misspelled something on the online ad. They don't want to say, hey, that photo of my master bedroom didn't look right. And they certainly don't want to hear, we're not going to close on time. And they don't care about the appraisal. You know what I mean? Like, but all that stuff, every good agent knows all that stuff is why they get paid so much money. It's because they're solving all those problems. So what's fun right now, and I know you see this, too, what a lot of agents are doing now is they're thinking about what are all the touch points where something goes wrong in a transaction, and then they're either creating a thing of Gia Silva, who's a local agent, Long Beach. The client gets like 17 videos during the transaction from her. Hi, it's Gia. We're now at day 24 in 17 days, where that's a D. And this is what's going to happen. And we've already solved for this. And this is what's going on. And, like, she's doing it all in video, all automated, following the escrow process. The customers love it. And then they write these glaring, positive reviews. And what's shocking is it's 2023 and the vast majority of agents still aren't doing it right.

See what your contacts are doing on Zillow. Monday, December 8th. Join follow up Boss for a sneak peek webinar where you'll be among the first to see how to get Zillow searching, browsing, and saving insights for the contacts in your database directly inside. Follow Up Boss So when a past client of yours gets that late night and extra bedroom would be really great right now. Kind of feeling you'll know before anyone else who's showing high intent to buy or sell insights about what's happening right now. So you can deliver a personalized touch at scale. See what your contacts are doing on Zillow. Monday, December 8th at 1pm Eastern, 10am Pacific. Learn more and sign up through the link in the description below. You're in your podcast app. Check out the description of this episode right down below. It's the first line and the first link. Now back to the conversation. It's so straightforward. I mean, what you basically broke down there with a great example, is setting expectations, right? Delivering on expectations, communicating proactively. And if you're getting a call that's problematic, they go. Because 90% of the time, you could have headed that off with proactive communication, 1000%.

And everybody watching knows every escrow has challenges and not almost none of them are in the agent's control. Right. But it doesn't mean that we can't be trying to proactively solve the problem or get ahead of the curve. Right? Like, it's all of that. So I want to just make sure the person watching, well, he doesn't know. Like, I get it. Like, I run a business. I understand.

Yeah, accountability comes up a lot. I hear the word a lot. I think it means a lot of different things to a lot of different people. When I say accountability in this context, team leader, let's say, or broker, owner. What comes to mind for you and how do you generally kind of advise people into a. Into a healthy form of accountability?

I have three visuals in my head. Maslow's hierarchy of needs. Douglas, and I'm going to screw up his last names. XY, theory of management and whoever created the four levels of learning. And you have to blend those three together to understand, like XY's theory of management. Think military, right? If. If Ethan is a new soldier, I don't say to him, hey, what do you think? I say, drop and give me 20. Here's your gun. Do 500 pushups. Shoot your gun that direction. Make sure you hit the target. I tell you exactly what to do, because if you don't, you're going to D. And we have people on our teams that X is the requirement. They are, over here, the unconscious incompetent. They don't even know what they don't know. And as they move up, they become consciously comp. Or incompetent. I don't know that. I don't know now what Right. Then you move to the conscious, competent. I know what I know, and I'm pretty good at it. Now you're getting near the why Maslow? Hierarchy of needs, self actualization, self esteem. I know what I'm doing. This is good. Well, if you only have one approach to accountability and you're dealing with all those human behaviors and emotions and where people are at, you're in a massive turnover. If you have no accountability, you're going to have massive turnover. You're going to have chaos. Right? But when they get to the top, it's. It's. Steve, what do you think? You had a bad month. What do you think? What do we need to do? Let's work on it together, man. And you, you don't hold somebody accountable in a rigorous way. You have an analytical conversation. You say, let's go inside the CRM. Let's do a little CRM audit, right? But if you got somebody that's brand new, you got to tell them exactly what to do. And then you have to work on their behavior, which means, hey, I probably need you to have you check in every single day and let's text each other. And, you know, accountability, because I've been doing it my entire life in business, I think I've really been doing stuff like six years old, my parents got divorced and had to say to my older brother, don't worry, I'll make the Beanie Weenies and mom, I got your back. Right? Yeah. Accountability really should be thought of as carefrontation. I care so much about you that I'm willing to have honest conversations about your behaviors and the impact of those behaviors. And if you can take that on and have empathy for the person in the situation where they're at. Right? I don't. I deal with some of the most. I coach the CEO of Home Services. Right? I mean, think about that. Gino Bafari for 31 years, right? The guy has 57 companies. One is Berkshire Hathaway. You know what I mean? Like the real estate company. Like, I don't need to confront him, but I have to have empathy for his situation. I got to acknowledge where he's at. I never tell him what to do because he's at the highest level. You with me on this? But I ask careful questions to get him to think right, to look at things differently. He's always saying to me, bring me new ideas. Right? I just talked to nick, who's the CEO of ReMax. Bring me new ideas. What's going on, man? I want to stay with it. You follow me on this? So is that accountability or am I confronting these incredible CEOs with insights that maybe they weren't familiar with yet? And I can open up the kimono, give them some insight, tell them some books to read, make some introductions to people. Is that accountability also? At the highest level, it is. But my son, who's eight days in real estate, you got to text me every day when you start making your calls. You got to text me every, you know, every day after you made your calls. And oh, by the way, he's got a team leader and he works on one of the best teams in all of New Jersey. Shout out to Jill Biggs. You, you with me on that? If he doesn't do it, he's going to die.

Yeah.

So you got to have a wide range of what you would call accountability.

Yeah. It specific to the individual, in some cases, generalizable at some level, at least tiered at a minimum. And what you really describ me was essentially therapy, which is guiding a process of discovery, diagnosis. And then I'm going to guide you to a process where you get to self solve your own solution 1000%, because that's the only way you're going to see it through is. Is through that level of ownership. Couple more questions for you.

I have to tell you though, it's why I took all my coaches and took them through multiple different therapeutic methods. Because if you don't understand what's going on in the minds of the customer, in this case, our client. Yeah, right. Then you can't really serve them. What are you gonna do? Hey, make your phone calls. They're like, I'm getting a divorce. Yeah, right. My. My wife has cancer. Like, make your phone calls? No, you, you have to understand human psychology to be a great leader, to be a great manager, to do good interviews. You with me? Like, you gotta understand people.

Yeah.

Sorry to interrupt.

No, that's great. Appreciate that. Ad I was gonna ask for a basic tip for and a. So I'm thinking about two. Two classes of solo agents here. One who is actively thinking about starting a team. What would you advise that person or maybe what questions would you have for them?

I would first say to you, read three books. Read the book. The four disciplines of execution. Right. Read that book. Then read Traction. Right, Read that book. They say the same exact thing. They just call it differently. You're going to find the one that you like. It's like driving cars, you know what I mean? Oh, I like this one versus that one. But they're all cars, right? And then I would read the book Measure what matters, right? And the reason why is like for the person that's maybe a little more SC on the disc profile, they're going to go, oh, I love traction. Like, you know, we get these rocks and we do all this and it's great, right?

I have a very clear process, right?

Exactly. And for like the D, right, They're going to be like, I totally love the four disciplines of execution, right? Just bang, bang, bang, four things. Follow that process, build billion dollar businesses, right? And then measure. What ma matters is for the techie, right, that wants to like, hey, I want to be a tech enabled coaching company, tech enabled business person, tech enabled brokerage. And they all three say the same exact thing. And what I would say to you is inside each one of those books, what you're going to discover is if you're the founder, you have to find the operator. Now one calls it the integrator. Everybody calls it an operator. Most people call it a coo, right? Probably would call it a co founder. You got to find that person first because what you have is an idea. And ideas are shit. Everybody's got ideas. What you need is someone that can actually execute the idea, refine the idea, finesse the idea into here's our primary objective, here's the KPIs we're going to measure against, here's the team we need to build, here's the expectation for profitability, here's how much cash we're going to need to start the business. Here's how we're going to hire people and deal with all that stuff. You need that person. Because typically what founders do is they say let's build a world class microphone. Yeah. You with me? Yeah. Or they're the founder that can build a world class microphone but doesn't know how to run a business. So you got to find the end of your yang. And if you're unwilling to do that in today's environment, I would say, do you become a really good listing agent? Hire three to four licensed assistants, all of them license and you just like get a driver and go on appointments because that's a team too. And you can make a fortune. Especially if you have a really big personality and a great brand in your marketplace. You don't need to have 25 salespeople, maybe you need two that do open houses for you, have your sister do it and your, you know, your 29 year old son. But the rest of them, you don't need the nonsense because today it is so competitive that if you aren't. If you don't have an operating system, and all three of those books are an operating system, and they all are basically the same. There's not many of them out there. If you got an operating system, then you can go start a team. Otherwise, what do most people do? Hey, you like blue jackets? I like blue jackets. We should start a team. Yeah.

You know what I mean?

Let's take a photo of all of us that looking really good together. But no, no, A team is like. It's like the NFL, right? You need a quarterback, you need a center, you need some wide receivers, you need a slot receiver, you need a front line. And if you don't have those things. And a running back. If you don't have those things, you don't have a team. And in real estate, same exact deal, you got to have the front line. My sales team. Right. My marketers. Right. You got to have your key experts, right? The wide receiver, the running back. You have a brilliant quarterback. Maybe they're ops, maybe they're the sales leader. You need all those things to orchestrate the kind of success that you want. Or you'll put a bunch of people together. You might do a bunch of deals, but you won't make any money because you'll burn through all the cash. Right. Because you don't have that operator saying, we need 38% profit.

Yeah, yeah. There's a lot of. A lot of people get caught in that past from that highly profitable small model you described and getting to where they, where they think they want to go, and maybe they really do, but it's very complex. I especially appreciate your call to those books, in particular to the solo agent.

Yeah.

Who's operating inside a brokerage. Average to above average broker, let's say. But they're, you know, they're day to day trying to be too good at more things than they can be good at.

All the brokerages are great. Yeah, Jonah, mean, I mean, you know anyone that owns a brokerage, my hat's off to you because it is not an easy business.

Yeah.

It's a low margin business with high drama. Right. Like, that's. So you got to give your. Like I hug brokers all the time and say thank you for doing what you're doing. Yeah. So. So the question is, you got this high producing agent or, or average agent.

Even, they might be better off surrounding them to stay with the kind of football team metaphor. And it takes a diversity of skills, talents, positions, playbook, etc, should they join a Team, Correct?

Some. Some.

Yeah. Like. Like, how do you break that down for them? Like, I'm thinking about maybe joining a team. How should I be thinking about that?

So there's. So I'm, you know, I've been doing this for a long time. So there's people that are joining teams today because they got into business, they sold a lot of houses during the pandemic, and now they realize they have no operating system, they have no marketing, they have no consistency. Somebody was feeding them deals, or all their friends were buying a house, and now they're like, wait a minute, nothing's going on here. They're I love Lucy. Remember I love Lucy at the chocolate factory? Ethel. Right. The. The conveyor belt isn't bringing chocolates down anymore, and you got to go to work and go find the chocolates. And for a lot of people, that's hard to do. So if you join a team, it's because maybe they've got the conveyor belt and lots of chocolates and they need you to put the wrappers on and. Right. Do all that stuff. That's called selling houses. So some people are looking at it now out of necessity. And my concern is, is it desperation? And if it's desperation, maybe, just maybe you need to gut check yourself and be honest and say, am I doing this because I'm unwilling to make the phone calls? Because I'm unwilling to figure all this stuff out? And by the way, it's okay. Just. Just be honest with yourself. Like, I knew when I started my business, I left in the morning and I came home with 11 employees, and my wife was like, I thought you were just going to have lunch with your mentor. And I said, I did. And then we leased 3,000 square feet and I hired Aaron McGovern and Steve and this. And she was like, what? Right. Yeah, but see, I knew when I started that I needed all those people for me to be effective because I'm only good at a couple things. So if you can be honest with yourself and say, I'm really good at showing houses, I'm really good at negotiations. I'm really good at that. First time buyer. I'm really good on a listing appointment. Then you fit well on a team. Then it's just economics. But you got to be honest. Is it desperation? Is it necessity? Is it desire? Do you want more time off? There's a gallon. I won't say her name. In fairness, her $20 million producer in La Jolla, California. She joined one of my clients teams. Right? $20 million producer she joined, right? She said, can't hire an assistant. I hire him. They quit. I hear him. They quit her. They quit. This is stupid. You guys have had the same team forever. Can I join you guys? And basically just drag on your resources? That was a smart thing. She didn't go from 20 to 40. She does $20 million a year. She's totally comfortable. Made the economics, you know, the finance side of it work. Right. Team's making enough money to offset the cost. She brings a little more signs to the marketplace. It's now her name and their name. It's a match made in heaven. But it's not for everybody, because most people, A, won't be honest with themselves, and B, they want all the glory.

Yeah.

Like, I don't know, like, I'm having dinner tomorrow night with Tim Grover. Okay. So I was at the super bowl when the Rams won, beat the Beng. And he was up there. He is the trainer for Aaron Donald, right?

Yeah.

So Aaron Donald, right. Ring me. Right? The super bowl guy. Like, and I remember watching because I was on the, like the, like 14 rows down on the 50 yard line. I'm watching the play happen. And I loved it. Right. That team wouldn't exist without every one of those players, without the guys that bring the balls out, without the guys that wash the clothes. Like, it's this orchestration that happens. And the question is, do you want to build that or do you want to be a part of it? And if you could be a part of it, it's pretty magical.

Yeah. Yeah. I really appreciate that you went to the high performer and had a great example in your pocket on that one, too. I'm sure you have more. This has been awesome. I appreciate you making time for this.

Of course.

Love what you're doing. Appreciate you sharing these perspectives. But before I let you go, fun question for you.

Yeah.

And you only have to answer one of these two. What is your most frivolous purchase? Or what is a cheapskate habit that you hold on to, even though you probably don't need to define frivolous. Generally? I guess I would say a little over the top, well beyond need. The value prop isn't maybe quite there.

You're like, I got it.

I just did it.

The ring I bought for my wife when I married her for the third time, she said, I can't even fit it in my pocket when I'm wearing jeans. And I was like, sorry, right? It was stupid. But I love her. And I was marrying her for the third time and I just it was the only way I could figure out how to express without having my kids there, how much she means to me. Right? That would be probably the answer. And then, like, where am I really cheap? I don't know. Okay? I don't know. And it's not. It's not like I'm, you know, I walk up and money falls out of me. But, like, I learned a long time ago that my dad said to me, if you. If you control your health and you control your environment and you control your money, you can do anything. So. So I'm always elevating my standard when it comes to money, right? Like, I'm reading Elon Musk, his biography right now. And his first wife, he said, how many kids do you want? She said, I'd like to have two. He said, I'd like to have four, maybe six. And she said, we would need a nanny. He says, well, then we'll get one. Yeah, like that. That's kind of my mindset. Like. Like, we'll figure it out. We will create enough value for others to. So you're always. If you're always raising your standards, then I don't know. I mean, like, Warren Buffett says, oh, I live in the same house. He also has many houses around the world, and he flies around in a G700. So, like, don't think that just because you see him driving a truck that that is actually how he's living. Yeah. With me on this. I like the fact that he kept his old house, and I like the fact that he kept the old truck, but he's also got a place in Laguna beach in Emerald Bay that is not an old house. Know. Ding, ding. Bill. Yeah. So, you know, raise your standards would be my answer. Yeah.

Awesome. Appreciate that so much.

Yeah. Cool, man. Thank you. I appreciate it.

Thank you.

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