Why Growth Doesn’t Always Look Like Growth with Marcus Larrea | Ep 031

I know you've seen one or more of these. It's two charts next to each other. And on one side is what we expect. On the other side is the reality. And a simpler way to think about that is that so often, and more often than we expect, the right thing to do is to take one step back before we take those next two steps forward. And that's a theme in this conversation today with Marcus Larreya. Not only is he the founder and team lead of Palm Paradise Realty Group, he's also the co founder of an FDA certified medical device company, Stellar Medical. So shares his transition from the medical device industry into real estate. Why that was his passion, why the team model made so much sense to him. Practical things like his first two hires and how he leveraged both of those very practical and tactical things. By the way, some of the language that he uses is R and D, not research and development, but rip off and deploy. And he certainly shares plenty that you can rip off and deploy yourself. And in this conversation, it's an absolute joy. He shares three specific moments where he had to take a step back before taking two steps forward. Maybe actually three steps back before eight steps forward. But it's a compelling conversation, it's a useful conversation, it's a joyful conversation. I hope you enjoy it. Here's Marcus Larrea on real estate Team os.

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. You can your guide to starting growing and optimizing real estate team. Here's your host, Ethan Butte.

Marcus, thank you so much for sitting down with me. I love that we get to do this in person.

Yeah. Awesome to be here. Thanks for having me on the show.

Yeah. So I'm gonna start with our standard opener, which is what is a must have characteristic of a high performing team.

Man, there's so many. You listen to everyone, team leads, and you're gonna get a lot of the same answers. Consistent execution. You got to be a risk taker. You have to be comfortable failing. You have to be competitive. You have to have positive energy. There's so many. The one that I'd like to elaborate on is a competitive factor that I think a lot of people may or may not have touched on. And you know, I was. It reminds me of a story with Michael Jordan from the Last Dance. There was a player on the the Washington Bullets who had a great game against Michael Jordan. And Michael Jordan, literally, it was a Back to back, back to back games. And Michael Jordan literally made up a story about him and destroyed him in the second game. And this guy was like a role player. He wasn't even a star or anything. And it just goes to show, like, whatever your driving force is, whether it's pain, a lot of people say pain is the biggest motivator in life and in competition. If you can find a source of pain to drive you towards success, I think that's a very big factor in not only just a team lead, but to be successful in anything that you do.

What drives you in that way.

There's some deep, dark secrets I could go down, but literally from a competitive standpoint, a lot of it's internal. Just because I make things up doesn't mean I, you know, I respect a lot of, you know, I respect everyone and I'm more than willing to help everyone out. But there's things, honestly, I've done the same thing that, that Michael Jordan did and just make things up about people in our market or people, people I've encountered internally to, to push myself to do better for me and my family. So I think that's something that, that I've kind of. It's a mental challenge within my own mind that's really driven me towards success.

Really good. Have you been competitive your whole life? And what were some of the first things that you started competing at? And we'll get into your, we're getting into your real estate careers where I want to go. But like, when did this kind of spark come alive for you?

It's. I'm, I'm always, I've always been happy. Go lucky. And my, my mom always said I got in trouble because of that, but. So, yes, I've been competitive, but I've always had fun doing it. And I mean, it started with sports being, you know, when I was a kid playing competitive soccer. And throughout high school and college, my focus started shifting at a certain point. It took me a little bit, but started focusing more towards school. And it's always been something in my life that I've tried to, to, to accomplish. I've always had goals, and when I set my mind to something, you know, I'll do whatever it takes to get to that. That point to achieve that goal.

Cool. How did you find your way into real estate? How and when and how did you wind up doing your own thing?

I come from a family where my dad is an entrepreneur. He's had a independent pharmacy for 30 years. So I come from a family of healthcare. My Mom's a pharmacist, My brother's a pharmacist. I'm kind of the black sheep. But in 2009, I was in undergrad and started my first business, medical device manufacturer. We do a lot of work with cancer treatment. Still have that today, 15 years later. I learned a lot from that business. We're fda. FDA certified medical device manufacturer. And I learned a lot with the fda. It's all about systems and paperwork and quality systems management, qsm, and always improving your quality systems. That's like the biggest thing that they look for when you're dealing with FDA. And it was in 2016 when I got licensed. My girlfriend at the time, my wife, now got two beautiful kids together. She was just getting going with a career and just trying to figure out what to do. So I said, let's go get our real estate license. It was something I've always wanted to do selfishly, but I think, you know, I thought at the time that she would do really good with that, and I thought it was something that I was going to do to help support her and her career out. Well, little did I know at the time, but very quickly I discovered Zillow, and it was really awesome. I could swipe my credit card and my phone would ring and I would take people out, I would get them under contract, and it was. It was really easy for me, and it was enjoyable. Little did I know it at the time, I had no systems in place for that because I was busy kind of doing the other thing with the medical device still. And it was, you know, I basically became instantly successful with that model, reinvesting all of my commissions back into Zillow at the time and then organically building a team. Within the first year of me being in the business, we had a team of five agents at the ReMax office we were at, and we're the top team there out of 150 agents. And I knew we had something really special at that time. I'm an entrepreneur at heart, you know, great office. I love the ReMax brand. But for me, I decided to go independent and open up an independent brokerage. And fast forward to today. We have three office locations across southwest Florida. We have an office in Naples. Fort Myers is our main office. And then we have another office in the St. Pete area for an expansion team up there. So with 50, 55 agents as of today, with awesome staff on top of that. And, yeah, it's been. Been a really fun adventure, so it's awesome.

You covered a lot of ground there. So I do want to get to the staff side of things and maybe how that's changed in the growth period since starting your own thing. But I want to double back into this idea of just because I want to knock down any like questions or objections that people have about swiping your credit card and having leads. I would assume, assume that for you generating true ROI and continuing to being able to reinvest in that channel to create some, some real margin on it is in a lead conversion and likely efficiency on that spend. And then the other side of it is probably turning that one deal that you were able to create in that way into two or three or four deals from that same initial investment over the years ahead. Do I have that corre. And do you have any tips for people on either of those two kind of categories? Because I'm sure a lot of people bristled when they heard you say that. But I know that this is how so many people have built successful organizations.

I say this all the time and this holds true for any business. Timing is key. There's a lot of luck and a lot of timing that has to all fall in place the right exact time for any small business. And for me, honestly, if we were to redo what we did back in 2016, today it's not feasible. So, you know, the cost per lead across the board, no matter what the lead source has gone up tremendously and it just worked out and fell into place at the right time for me. And for me also, having the other business as a primary source of income was a massive luxury and blessing that I had personally to be able to reinvest literally all of my commissions, which, you know, I think that's for, for a lot of successful businesses. You, I always use the example of Amazon and Jeff Bezos. You know, in the beginning, if you go back and look, his investors were mad at him for not, you know, distribute doing distributions earlier when they were profitable. But he just reinvested a lot of that profit back into his business and look at where they're at today and it goes back to, to making those sacrifices in the beginning of a company for long term success. So that, that was one of the keys I think back then that I realized and there, there was a lot of challenges along the way and I know that's one of the things that you'll get into, but yeah, that's, that's pretty much it.

I love it. Sometimes this is just a little behind the scenes, especially for folks who've seen or heard several episodes. I Sometimes think about the show as a form of a how I built this for real estate teams in particular. And Guy Raz always winds up asking kind of a question, look, timing type of question. I love that you brought that out on the table and recognize that and have that awareness, the ability to reinvest 100%. I think it was probably super critical to really driving that momentum forward. High level question. You obviously started your team inside of ReMax office, ended up starting an independent brokerage or team Ridge, I should say past, present, future of teams. Like when did team come onto your radar and why did it make sense for you at that time? Kind of. What were a couple of the factors about going out on your own and where do you think we're going with regard to teams? Because I think there's some hype and misconception around all of it. But I also think that there's a very honest promise in the model itself too. So I'd love your kind of like to go with. Around the model itself.

Yeah. So the team model became very evident to me literally probably within two months in the business. When I mentioned about swiping my credit card, taking people out, getting them to, you know, the property and getting them under contract. That to me lasted like two months and I realized I had a problem and I had to do a drawback and build the systems out. It probably took me about six months to cut back on my spend and then build the systems and then move forward again. But it became very evident to me that I needed to put systems in place again. Synonymous with my other business, medical device manufacturer. And for any business to succeed, no matter what industry, you have to have systems in place. And that was something I saw back in 2016, that very few teams had systems in place. So that's a huge advantage. With my background, I thought that we could get this done. And I discovered an awesome network of people. My coach, John Sheplak, amazing person and the network of people within real estate that I met and become good friends with a lot of these people that had those systems in place. So we call it R and D, rip off and deploy. And that's what we did at the end of the day. And I had that awesome luxury through coaching. But with regards to the future of teams, I say this all the time to agents. We're in a society, I call it the uberization of society. And it started with Netflix and Blockbuster. Most people, I think everyone knows the case study of that at this point where Netflix came along and Blockbuster had the opportunity to Buy them out. And they thought they weren't a threat. So Netflix ended up continuing on with their business model of dvd. To your door in two days, you open your mailbox and your DVD would be there. That now has evolved to, you want to watch a movie, you pick up your cell phone and press a button, and your kids are entertained. You're entertained. It's instant gratification. With Uber, you order an Uber, if the Uber's 30 minutes away, you're going to cancel the Uber ride and try to find one that's closer. With your groceries. You know, there's apps out there where your groceries will show up to your door. You shipped all the time at home, and you know, they're at our door in an hour or two. So it's all about instant gratification. And in the real estate space, you know, Zillow's done a great job of that. Realtor.com has done a great job of that. There's a lot of, you know, big portals out there that. That's their main goal. How fast can you get to the customer? And as real estate with within a local level, if you're an individual agent, you can only service at a proper level, maybe one or two clients like that at a time. And that's not scalable without a team. So that's the future of this business. And it's been very evident. If you look at the team production at a national level versus individual agent production at a national level, they're completely opposite ends of the spectrum. Individual agent production is declining massively and team production is increasing at a massive rate. So that's only going to continue to get further and further apart with team team production versus individual production. And that's. That's the future of the industry.

Yeah, I agree with that. In general, it's one of the reasons we started this show. Real estate. Team os. OS is operating system, and operating system is everything behind the curtain that allows the agent to be out there as efficient and productive as possible. And when you're solo, it's just hard to have much behind the curtain. You. And, and with that, I would love for you to share. You know, when I think about the os, I think about, like, people, processes and technology, like, as kind of categories. When you think about the growth of your own business, what have been a few key either people or systems and processes that you've implemented, or tools or tech that you've put into place. When you think back about, like, gosh, I couldn't have gotten here without that lever. What are a couple things that come to mind.

Yeah.

And kind of where were you at that time?

So I would say one of our first hires was a transaction coordinator. It was kind of a do it all transaction coordinator slash ops manager. That was a key hire because we were developing the systems at the time as well. So you know, everything that we were doing with that first hire we tried to document so that way we could start building these systems out. That took me realistically about a year to make that first hire. After we went independent, about six months actually after we went independent and very quickly we hired a marketing person because you have to be on social media and that's one thing. It's like do as I say, not as I do because I personally have a love hate relationship with social media myself. But it's a necessary thing that you should be doing if you're in this business. And so we hired a marketing person to help me out because that was one of my weak points. And now our social media is awesome. My personal one could be better. But our business page is amazing. We're consistently pushing out two pieces of content five days a week. And that's a non negotiable. Been doing that for probably about three years now. And then that's kind of cool too because all of our agents on our team have access. We share our raw files and all the copy with each one of our agents so they can put it as original content on their pages because it gets more views. So that's been a really, really cool part of our business. And then it's just grown from there. We have eight staff members now. Ops manager, Managing Broker, Marketing manager, Recruiter, Transaction coordinator, Listing coordinator. So it's, it's really cool how we've grown from an admin standpoint and support standpoint for our agents.

That's awesome. Give me again like high level agent to staff ratio.

Yeah. Probably about eight agents per staff member.

Okay, cool. And is that, has that been steady over time or has that changed?

It's fluctuated but we've always been between that. I would say 7 to 11 range. 7 to 11 agents per staff member.

Yeah.

And that's what I've found when in talking to other people it's typically falls within that range.

Cool. Tell me a little bit more about. Because I feel like this is, you know, in terms of really good R and D. I think that's why folks watch or listen to a show like this is to, to rip off a good idea. And I think this, this idea of someone is generating this Content. And instead of just putting it out on a brand page, let's put it somewhere like just go one step deeper on this process. Is this sitting in a Google Drive. And in team meetings you periodically remind people that it exists. Like, what is this system for sharing more of your content?

So we use, we use Slack internally and we have a marketing channel within Slack and our marketing coordinator puts the raw file with the copy and all the tags and everything already there. So it's literally just copy and paste it into your Facebook or Instagram account and it's all in Slack. And we actually remove a lot of the content from the slack channel after 48 to 72 hours. Because that post might not be relevant. Yeah, in 72 hours. So that, that's been something we started doing probably about four months ago and it's. We're getting really good feedback from our agents and they're getting a lot more likes on, on the post now instead of sharing it.

Love it seems like a really nice value add. I also appreciate that you're saving people time and mental energy by removing things that aren't appropriate. So if I go there, I always have things that are useful, really smart. I love it. I hope it continues with this momentum for you. Paradise is an acronym for your core values. I would love for you to run through that really quickly. Like when did this occur to you or to other folks around you? What are those values really quickly and what role do they play in the success of your organization?

And I got this from my coach, from one of my coaches. You got to have principles in place not only for yourself personally, but for your team and all the decisions that you encounter. You should be able to look to your principles in order to make the right decision, move forward within your company. And paradise stands for principled, abundant. We act, you know, we have a spirit of abundance, abundance of marketing, of leads, everything within our company for our team, Real for R. You have to be authentic, right? Accountability, diverse, innovative service. We do a lot of work within our community and not only within the community, but service to each other on the team where we call it coopetition. There is no competition on our team. It's coopetition. And then E is for education. Always be learning.

How do you keep them alive? You know, it's a lot for. I think. I mean, I knew you would remember them, but I wonder like, you know, would the, you know, the seventh high producing agent on the team be able to recite them and if so, how, like, how do you keep them alive?

So I Think that's a challenge, especially when you have, you know, 50 agents plus. I think that's a challenge to have everyone memorize them. I mean, they're internalized in our culture. I would say by leading by example, you would hope that people on the team are also, whether they know it or not, they're, they're living by those, those principles because that's, they're instilled through action, I would say at the end of the day and through our leadership.

One of the things you and I talked about maybe a week or two ago was this idea of calm through the chaos and the idea of not only letting the appropriate people know what's really going on internally as a leader. And I internalized that as we were talking about it kind of as a parent. Right. Like, um, fortunately this hasn't happened in our household. But you know, let's just say there were really intense financial troubles. You know, the parents don't want to welcome, you know, 8 or 12 or 2 or you know, 14 year olds into that conversation. Create, you know, because they don't have the context, they don't understand it all. And frankly, that's not something that, that you need them to be participating in. And I feel like it's the same way inside an organization. You know, there's like an editorial decision making layer on like who to let what parts of the conversation or who to give access to different parts of the challenge of the conversation. So I know I said a lot there, but you know, I would love for you to share from your own experience in building this business and really even, you know, building this business while you had another business. Where did this language come from? And, and maybe share a couple of examples of it.

Yeah, so this kind of goes back to some of the challenges we face as a company. And you know, I have a saying that I came up with back when I was younger, going through some stuff and it's I am strong. I'll carry you through rough waters. Show me hell and I'll give you serenity that I think as a leader you have to be able to manage your mental state. It's very important. And you have to be able to guide people from, from a state where they don't want to be mentally to a state of positivity. And there's going to be some things that come along within your business and people's personal lives and whatnot that not everyone needs to know. What you don't know doesn't hurt you as long as it doesn't affect you and as a leader, you have to manage what pieces of information you should be sharing with him. And that goes to your admin team, to your staff, your agent, population, the customer, when you're dealing with issues that come up in a transaction. And one of the things, too, I mean, if there's an issue that arises, don't let people know until you have a solution, hopefully. So that way you can at least provide an idea to resolve the problem and come up with a plan. So that's, that's a challenge. And, you know, you're not going to get it right every time, but that's definitely something that you need to be able, as a leader, you need to be able to manage. And, and we've had to. We've had a couple of big, big things go on in our office that for me personally, you know, one of the things that I was. That I learned is the team's like a family and our team is a family. And it's fair to say that there's. There's dysfunction in families. Right. So it's just, how do you manage that dysfunction?

There are kind of two layers here. One is your own internal mental state to use. I think that was the exact language you used. And then, you know, who has access to, you know, behind the curtain into A, the situation, and B, how you're thinking and feeling about it. For you, what are some of the ways that, you know when you find yourself in a tough situation, which team leaders do all of the time, what are some of the things you rely on specifically to reset yourself or to manage that situation effectively just within yourself? Setting aside this idea of who has access to the challenge and the ideas behind it.

Coaching, I depend a lot on coaching because we all, I think, need reassurance at some point in our lives, no matter how confident you are. And I think, you know, professional athletes have coaches. You hear the analogy all the time. So why don't we, as professionals have coaches? Everyone should have a coach. At least one a good athlete will have, you know, just for their body. They have a massage therapist, the physical therapist, chiropractor. That's just to, you know, take care of their body. So when you're, when you're, dealing with a professional in the real estate space, I mean, we have a leadership coach, team coach, and then we do a lot of different events throughout the year and bring in other people to give their voice on how things can be done. But I think going back to coaching, though, I think that's what I look to make sure I'M making the right decision, someone to hold me accountable. That's been huge for me.

I appreciate the investment in coaching in the team. It's something I hear from high performing teams all the time, perhaps even to the extent of, you know, we have a lot of investments and expenses and one of the last ones we would ever, you know, really look to, to give consideration to, to reducing or eliminating is in coaching. It sounds like you're of a similar mindset. Was this something that you had all along or did you go through an experience and say like, oh, you know what, I'm going to talk to a buddy of mine to figure out how they dealt with it. Oh, this coaching thing, let's maybe I'll go into like when did this occur to you?

Funny story, I used to be very anti coaching. Um, I think the first coach I had, it took a lot of convincing by my aunt who is a coach and she does a lot of work with women, does amazing stuff. But I had, she convinced me to, to go with one of her coaches who used to work with Tony Robbins. It was like a life coach and it was an okay experience. I did it for about, you know, six months maybe and was like kind of fell off. And then another six months went by and this was all around the time I got into real estate. Another six months or so went by and then a good friend of mine in the industry who I look up to greatly, Lori Reeder, connected me with John Cheplak and I started coaching with him back in October of 2019 and been with him ever since. And it's literally like, you know, he's. A lot of what we've done in our business has been because of, of him and the network people. A lot of the systems we've implemented, the hires we made, it was kind of again going back to that R and D concept and then just tested out different coaches from there for the team to provide the team more value.

For folks watching or listening on YouTube or your favorite podcast app. Lori Reader was our guest on episode two. John Cheplak was released maybe a week or two after that. So just go back to the beginning and you can check out conversations with those folks. And I agree with you. Like I've now of course, course those are just two off the top of my head. But the community of folks that you get introduced to through that commitment is just super, super powerful. And one of my goals here in sitting down with someone like you is to start drawing some of these connections and to every week introduce people that other Folks can either learn from in a one off experience or I found that most people who sit down in a chair like yours are like, yeah, reach out to me. I'm happy to help because a lot of people help me along the way too.

For sure.

Yeah. Did you seek any? Not, not necessarily a coaching experience, but you know, I, I think your challenge is somewhat unique, so I don't need to dwell in it too long. But this idea of having a business and starting a real estate business alongside it, how long did it take for you to resolve any of the tension between, you know, split commitment, split focus, et cetera? Like, how did that go for you? Like, when did you realize, like, okay, I'm now I'm a little overdrawn and I need to make some decisions. Like, how did that go for you? Because I think other people have gone through something similar whether or not it's running a medical device business.

Yeah. So yeah, we encounter it all the time with recruiting agents. We have a 90 day period where, you know, we get, you got to pay the bills, but you gotta, you know, transition full time into our team within that 90 day period. But for me it was, man, so 2016, I had just started the MBA, my MBA program at the University of Florida. So it was like the Army Reserves. I was going there once a month for a weekend of education, intense education, and that lasted about two and a half years. I was running Stellar Medical, our medical device manufacturer and I was just getting into the real estate industry and it was a lot. Thank God we didn't have kids back then because I wouldn't have been able to do it. But yeah, it was a lot of work, A lot of work and just pushed through it. And to me, the real estate business was a lot more fun because it was, you know, I'm a social person at heart and I was out socializing. I mean, that's what you do in your work. That's part of it. And because it was more fun, I knew that was my true passion. And I slowly started, you know, shifting away from Stellar medical. Realistically, by 2018, I would say we were, I was self. Stellar Medical is self sufficient at that point and I was all in on real estate and have been pretty much ever since.

Cool. Talk about your journey through sales production. I assume you were selling out of the gate and I don't know if you still are or not. So talk about that because that's like, that's the, that's the sub tension in this dynamic.

I've had a lot of conversations with people over the years on when out of production. I haven't been full time in production, I would say in about four years now. The first year I was in the business and did about 40 transactions and haven't done anything close to that since. So instantly within after that first year, I started dialing back. I mean again, I was going to school, so I didn't have, you know, the time there. I was dealing with the other company. But at the same time, that's why I had to build a team out. So the team kind of took over the responsibilities of the production. And again, I was a little bit in a luxurious position because of having that other income source. But you gotta be able to take that leap of faith. Just like you tell your agents to not work other jobs and take the leap of faith into real estate. You as a leader have to take that leap of faith at a certain point. And maybe not for everyone, but if that's what your end game is, man, I tell you what, being out of production allows me to. I'm at the point now where I work pretty much 8 to 5 and I don't work that much on the weekends. Like, yeah, I take calls and everything. But you know, that to me is financial freedom. It allows me to spend more time with my family. You know, we're trying to get my wife out of production now and into leadership, but she loves. It's just, there's a certain point where it's like for me, that was my goal. Maybe it's not for everyone. If production's what you're good at, then stay in production. But yeah, that's, that's been a blessing for me.

I'm thinking right now about that 8 that that team leader who has, let's say, you know, a full time assistant, a part time assistant and two buyer's agents who's wondering, you know, kind of what's next, what do I want to do? And I'm not asking for specific advice for that person, but if you kind of compartmentalize this journey, you know, what st the journey are you on and what were the previous stages? And knowing of course, that every single journey is different.

So the journey for me, I mean, it happened really fast. We did last year 617 transactions and 212 million in our seventh year in the business, my sixth full year in the business. So we had to, we had pretty fast acceleration in growth, I would say, from having no previous experience in the business. The journey is different from everyone. I don't know. There's specific advice that you can give to, to as a generality, but do what you love to do at the end of the day. And you know, don't, don't be pressured into building a team up. It's not for everyone either. It is a lot more difficult than you think it is. You know, you need to have the financial resources to be able to provide for, you know, however big of a team that you want. You need to make sure if you are going to start a team that you have the leads, the marketing and stuff in place to support other people, not just yourself, because you'll end up ruining relationships or disappointing a lot of people that may join your team. So you need to make sure that stuff's in place before you go out and do this because it is a big commitment and you have to love helping people at the end of the day, not just customers. You have to be willing to help people grow, not just their business, but they're in their personal lives as well.

I want to do two things off of that one. I want to double back into systems. But first, I would love to know, as you were bringing agents onto the team, did you know what type of agent you were looking for? Were you pretty clear in your value prop and your ideal person or.

What.

Kind of like maybe did you go through a period of bad hiring because you're like, ah, I thought we needed or wanted one thing or I thought one thing would really work for us. But it turns out, you know, we've been doing it wrong or bringing in some of the wrong people and it's been painful. So let's correct that. Like, what did you learn in that process of bringing agents into your organization?

Yeah. So another thing I've learned, recruiting solves all problems. There's definitely been some periods where we brought on more people than we probably should have just to bring bodies in, which is a bad mentality, honestly. But I learned we got up to a point we're at about 84 agents and we had to scale back. We let agents go that weren't productive, that were costing us money. We let agents go that didn't align with our values. And there was about three, three big times along my business journey for growth where we've had to scale back in order to move forward. And we talked, when we were talking the other day, growth doesn't always look like growth. And the first one was just growing so quick.