Deep Dive: Building the Brokerage of the Future

0:00 Hey everyone, this is Mike Delprey and you're listening to Context. So this is another long form one. I'm joined with Eric Braramlet. Hey Eric. >> Hey Mike. >> And today we're going to be talking about building the brokerage of the future. So I'll get into Eric and and I'll let you talk more about your history in a in a second, but Eric and I have known each other for a couple years now. And Eric runs and operates and owns a a brokerage in Austin. but we often geek out on kind of everything that's going on in the industry.

0:29 everything I'm publishing and talking about insights you're seeing from the market and and really trying to distill out what we've learned from that and yeah I don't know a couple weeks ago or months ago said hey why don't you why don't you come to Boulder and let's sit down and and spend a you know we'll see how long this is couple hours talking about talking publicly about what we often talk about just privately to each other which is like what does this mean and and what do we do and and really kind of getting to if we were going to start a real estate brokerage today, what would it look like? So, who are you, Eric?

1:02 >> Mike, thanks for thanks for having me. I'd really love coming up to Boulder and getting out of the the hot weather hot weather of Austin. yeah, so I run a brokerage in Austin and and sort of fell into it. I I've been in the business for 23 years and I think I've been serious about building this brokerage for probably five or six years and we grew really slowly at first and and we're not huge or anything like that.

1:23 We've but we've grown by around 30 agents a year for the past three years and we're now at 122 agents today. really proud of it. We operate pretty profitably. All of our agents are are pretty successful and I think that's what differentiates us and and why I like my job so much. >> And one of the reasons I like you and I like talking to you about this is I think if I were to start a brokerage today, which I'm I'm not I have no intention of doing that. But if I were, it'd probably look pretty close to what you're doing.

1:49 >> Well, thank yeah. I mean, thank you. That's a huge huge compliment. if you do want to start a brokerage and you want to partner, let me let me know. >> Right. but you you know you're you're pragmatic, right? It's not you haven't raised $100 million and you know are trying to figure out ways to spend it. You know, it's like a smart business person building a smart business using like smart learnings and tools and techniques.

2:11 >> Yeah. And it's small business and and when you're small business, you really have to to look at what works and you don't have the ability to make huge bets because you can't run in the red for very long. And and yeah, so we've always focused on tracking what works. leaning into that and you know really really keeping blinders on and trying to cut out what doesn't work. And I think that's one of the reasons why you and I get along so well is that we're both pretty obsessed with focus.

2:34 >> All right. So what I what I thought I'd do today for this podcast is break it up into three parts. Right? We're we're answering this question like what does the brokerage of the future look like? And if we were going to start a brokerage, what would that what would that look like? break it up into three parts. So we're going to start with talking about what's broken. >> Sure. right now. You know, I've been analyzing and studying the industry for years. You've been in the industry for years. So, we're going to kind of pull apart what's broken. Secondly, I want to talk about the trends and themes and insights. So, what you know, what are the commonalities between the the brokerages, the companies, the agents that are doing really well right now and what can we learn from that because we need to take that to go into part three, which is the brokerage of the future, right?

3:16 >> What what does that look like? and and we'll talk about tech, we'll talk about AI, we'll talk about recruiting, retention, business model, everything. Sound good? >> Sounds great. >> All right, so let's jump in. All right, Eric, what's broken? >> yeah. So, sort of a total lack of hiring standards, if I had to summarize the fact that all major brokerages use a hiring strategy, masses of asses. >> And and it works, right? I mean, if you recruit in a ton of people, revenue will go up. And when revenue goes up, it fixes a lot of problems. And so it's very easy whenever you want to see your your P&L look better, you know, you pull that lever, bring in more bring in more agents. But what's ignored is that you have a lot of management overhead with every body you bring in. So every agent that's recruited in is going to require relatively the same amount of resources to onboard and to support and then unfortunately to offboard as well. So you're not really looking at your expenses because they're not as easy to see as the revenue that's coming in.

4:13 That's that's the problem that I see with the industry. >> Doesn't that kind of net out at the end? Isn't there more benefit to just having more masses of asses than than the downsides you're talking about? >> Everybody seems to think so, right? But I don't I don't believe that's the case. I think that it's really difficult to build culture when you do that. I think that it is almost impossible to focus. So if you're bringing in any agent who wants to join, then how do you provide effective services for that spectrum? How do you provide really effective services for brand new agents and mega team leads and everybody in the middle? So there's really no focus whenever you are hiring indiscriminately.

4:53 >> What about incentives? Are the are the you know if we're thinking about what's broken in the industry are are incentives aligned or is that an area that's also broken? >> There are a lot of misaligned goals. I would say I'm not sure if you want to drill down to specific incentive types, but there are misaligned goals certainly. >> Maybe not specific, but let's go let's go one layer deeper. yeah, so I would say that the the the industry thought and like the the pushing team building at the brokerage level is a misaligned goal.

5:24 That's a misaligned that's misaligned advice. It helps the brokerage quite a bit and it's not in the best interest of I would say most agents to team build. >> Why? >> Because most agents can make a lot more money as individual agents and have a lot more free time than building a team. It's the same as, you know, the best managers usually were not the best sales reps. The same way that the best coaches in any sport were usually not the best player. So, it's it's different skills.

5:50 And, you know, you really should think hard if you want to build a team, like why are you trying to do it to scale? And if so, is taking on a lot of like other agents really what you want to do? do you hate dealing with clients or do you hate managing people more? That's what I would ask. And that's what should guide you. But the prevalent advice in the industry is that oh, you need to scale by building a team. Bring on agents. You know, on paper it works because on paper you have somebody who's doing, you know, 1015 million and yeah, they're really busy and they wish they had some time back and now they can all of a sudden take on help that there's no upfront cost. They're not hiring an assistant. They're not like outlaying any money so it's less scary. But what they do is they take on brand new agents and they train them and most of the time it doesn't work out. And the times that it does work out, it doesn't work out for very long usually. But it handles recruiting and it handles training for the brokerage.

6:45 >> Yeah, that's not an opinion I've heard before. Usually people are saying, "Oh, teams are good. Teams are good." And it kind of makes sense when you think about it. But it depends what perspective. >> How many How many employees would you like to have under you, Mike? >> Zero. >> Right. Exactly. It's I mean they, you know, they great staff are wonderful. They help you a lot. Great agents are wonderful. They help you a lot. it takes a lot of work to get a really phenomenal agent one or a really great assistant one. And if you're at a point where you need some help because you're already so successful that you can't manage all the business you have coming in, a team might be for you. And also staffing up might be for you. Also, just referring out your excess business might be for you. Like what what is what do you want your business in life to look like? That's really the question that needs to be answered before you say, "Yeah, I want to build a team."

7:31 >> Okay. So, you you firmly think that's broken. >> I think it's absolutely broken. I think that the one-sizefits-all approach of everyone should should grow a team is is bad advice. >> And it's interesting because like you were saying before from a broker perspective, like part of the job of a brokerage is recruitment, right? You want to grow the brokerage, but they're they're kind of outsourcing that to the individual agents. Yeah. Saying like, "Hey, Eric, why don't you grow your team? Grow your team so you go out there and recruit. I don't have to deal with that." Well, in the same way that getting the business is the hardest part of an agent's job, recruiting is one of the hardest pieces to solve for a brokerage. So, if you have something that's solving that for you, it's really difficult to not promote it, right? It's the same reason that you see revenue sharing in in most models today. Most new models today have some com some component of revenue sharing. It's really effective. But I do think that's also misaligned.

8:21 >> How's revenue sharing misaligned? >> It's focus, you know, right? If you if you look at the amount of money you can make from recruiting in other great agents into a firm versus if you had spent that time, you know, prospecting, following up with your clients, selling houses, it it pales. And and whenever you do anything that that distracts your agents, I think that that's a misaligned goal. It's very good for brokerages. Like if you have effective revenue sharing, effective downlines, your brokerage will grow pretty quickly, but your agents will most of them if not all of them will sell fewer homes.

8:58 >> I mean, how how is it broken and who is it broken to? >> Well, it's broken to the agent, right? I mean, you have you've distracted them. If you're an agent, if you if you're bought in, right? If you say, "I'm an agent. My job is to sell houses. I want to sell as many houses as I can, do as great a job as I possibly can." Now, you have another job on top of that. That's that when you meet agents, other agents, you talk to them about how great it is at this brokerage, why they should join.

9:21 Hey, if you want to join, I can help you. And it doesn't end there. >> Once that person joins the firm, if they have questions, they go back to the person that recruited them in, which is that agent. So, it's just it's a big time suck. It's a big distraction. I'm not saying that it doesn't work for anybody. I'm sure there are some folks that it works really well for, but again, it's something that if you promote that very very heavily, it's going to benefit the brokerage a lot and it's not going to benefit most of the agents very much.

9:49 >> what about the professional aspect of the industry? You know, all the part- timerrs, we talk about that quite a bit. >> Sure. >> Broken? >> Yeah, it's absolutely broken. And that was a chip on my shoulder for a long time that I'm lumped in with a lot of folks that are not super professional and are not really great at their jobs, right? a lot of really effective good agents, which I'd like to think I was, they carry that. They're a bit embarrassed that they're that they're in the same, you know, peer group. It's it's the way it is because brokerages hire indiscriminately and then don't train, right? because you can't if you hire indiscriminately, you can't train everyone from top to bottom. But succinctly, yes, that's very broken.

10:33 >> I want to I want to dig in deeper into that because this is something that gets brought up all the time is how casual the industry is, how there's all these part-time agents and they're going away. They're not going away. I mean, I've done research showing they're they're not going away. In fact, we're getting more of them, which is counterintuitive. And I mean, this relates back to the, you know, agent requirements. What what does it take to become an become an agent? there's very few requirements.

10:56 What I want to drill into is like how much does it actually matter? >> Well, yeah, it matters. I mean, it's it's something that should be addressed. It's something that, you know, what can be done about it is really is really the question. Does it matter? Yes, because ultimately it hurts the consumer and it hurts the industry. You know, real estate is compared to the legal profession quite a bit. And one similarity is that people think pretty poorly of lawyers as a whole, but they really like their lawyer. And you'll find the same in the real estate industry that people think pretty poorly of realtors as a whole, but they really love they really love their realtor.

11:30 when consumers stumble upon a bad agent and end up working with them, that hurts the consumer and then it hurts the it hurts the industry. And it's sometimes it's very experienced agents, but more often than not, it's somebody that is either part-time or very new, but the commonality is that they don't complete very many transactions every year. It >> I mean, is there data behind that? Is that true or is that just one of these assumptions in the industry that we all kind of assume to be true but turns out not to be?

11:54 >> What do you mean? Like what the fact that that >> that part-time agents are bad? >> Well, I can tell you with a lot of anecdotal evidence that whenever when whenever I was a really heavy listing agent doing 100 deals a year, more often than not, when we had to deal with a bad agent, they were a part-time agent or a new agent. >> Okay. All right. No, that's fair enough. That makes I mean, in general, if you're going to hire somebody to help you with something, more experience is better than less experience. okay. What broke? What else is broken?

12:23 >> Just the ecosystem in general, right? You you have this this ecosystem where everybody is trying to grab a piece of the commission pie and they're sort of perpetuating the same thoughts because of it. So, you know, vendors oftentimes will have less than transparent agreement with coaches and coaches in the industry. you know, you have the sort of speaking circuit, right? Like there's a lot of there's a lot being sold to agents that is not vetted, is not necessarily effective.

12:52 So, it's really hard. There's a lot of noise out there >> for for agents. Whenever I was a new agent, I had a really hard time figuring out, you know, who do I trust? And I I learned that a lot of the things that were pitched to me were not vetted. they weren't effective and they were pitched as though they were very effective. >> Like training technology. >> Yeah, training tech, you know. I I remember I went to the first conference I ever went to and I've never been to a Tony Robbins event, but I assume they're very similar. You know, everybody's celebrating these huge wins. Like I remember a woman stood up and said she made a million dollars a year before.

13:27 There's a lot of claims that are made that are not necessarily vetted. And then often times people are promoting what what works for them. and you find out, well, maybe it doesn't really work. So, it's just there's a lot of noise out there. It's really hard. That's a side effect of 1099 is that, you know, because there's no like real vested interest in making sure everyone is successful. You don't really vet a lot of the programs that are out there.

13:52 >> Is that the brokerage's responsibility? >> I think it is. >> Yeah. >> I think it's the I think it's my responsibility to help turn down the noise and to help, you know, everyone focus because it's really easy to get caught up in either the latest shiny object that that promises to make your job super easy and to make money really easy. It's really easy to get caught up in in, you know, fear, you know, the latest topic in in the industry that is going to upend everyone's jobs. And at the end of the day, it's usually not going to do very much. And the more time you spend worrying about it, the less time you spend focusing on what is effective. And what's effective is usually pretty boring.

14:32 >> Yeah. No, just let that last part. What's effective is usually the boring stuff. >> What's the best piece of technology in real estate today, would you say? >> I'd say it's the cell phone. Pick up your phone, make dials. That's going to be the most effective piece of tech or landline. If you don't have a if you don't have a phone, get a rotary phone. It'll work just as well. >> Yeah. And nobody's going to go to a session entitled, you know, get a phone, get a rotary phone at a conference, and that's not going to sell tickets. It's not going to get clicks online, right?

15:01 You're not going to go to a Tony Robbinsesque event and jump up out of your seat and pump your fist in the air and said, "Yes, I just got a rotary phone and I'm making phone calls." >> When we interview agents and we ask them what's working for them, one green flag is, "Oh, I know every time I do a bunch of open houses, I get new clients." >> Great. That's worked for decades and it's going to continue to work and it's not sexy and it's takes time and it's not fun. But agents that are say, "Yeah, you know, I just pull this lever and business comes out on the other end and I do it." That's somebody we want to partner with.

15:32 >> Well, that that's one of the things I like from from talking with you and some of the stories I tell other people. you know, when I ask you like, "Oh, what's how have you invested your money in in the brokerage for something that moves the needle?" You're like, "Oh, we we got professional head shots for our agents, right?" And you're a smart like you're a smart guy. We talk all the time about everything that's going on. You know, it's not like you're a dumb dumb who doesn't understand the industry. You you looked at everything and and you just kind of landed on, oh yeah, maybe I'll get professional photos from my agents.

16:03 >> Sort of accidentally fell into that one. I saw, you know, Orly Rip Master's profile and was like, that looks really great. I bet she's really proud of that. And we should probably do something like that. And we did and then it went gang busters. every it makes them very very proud of their profiles and it's something that elevates them and it shows we're willing to invest in the agents and yeah >> was that the brochure she brought to the hub event.

16:23 >> I carried that around for 12 months until we finally designed one that looked really really similar to it. Their branding is awesome and so we said we want to have something that's as good as this and we put it together. >> So just to unpack that for those listening that aren't in our inside story here. so Eric came to a real estate innovation hub event. I mean this was over a year ago. and Orley Ripmaster was another attendee and there's like you know there was 12 15 people in the room so a small group and yeah Orley is with a local brokerage here in Boulder or she was Slipers Smith and Frampton. and yeah I mean she brought this glossy folder of how they were advertising or or promoting the firm and and herself. So when you say her profile that's what you're talking about this actual 8 and 1 half by 11 printed glossy nicel lookinging marketing material.

17:08 >> Yeah absolutely. Not an email, not a JPEG, not a >> They had it online, too. So, they're not they're not wasting it. >> But, but the point is you carried it around with you for a year. >> Yeah. Another really effective one, since we're on the subject of effective techniques, you know, from creating super fans, we took the idea that you shower those they love with love in the way of, sending gifts to kids. So, if you have clients, this is a free one for everybody out there, and they have kids that are still at home, send those kids birthday gifts. they will lose their minds and they will love it and you will get thanks from them. You you'll you they will they will reach out to you about their kids' birthday before you have a chance to reach out to them and say happy birthday. They're so excited.

17:48 >> Yeah. >> And that's not high-tech. It's not AI. It's just care. >> Yeah. You were talking about filtering out all the noise. So that's your job. I mean, I I think what I hear you saying is as a brokerage leader, you need to be really pragmatic and have a strong filter for what gets in and and what doesn't get in because for whatever reason, there's so much noise. >> Yeah. >> I I don't know if it's unique to real estate or not. And I don't know if it's unique to this postpandemic world we're in or not. but it does seem like there is a lot of fear and hype going on out there, right? It's like every three months, every six months, it's, you know, commission lawsuits. That's going to be it. And now it's AI and it it's not a moderate conversation. Like, let's let's unpack this in a rational way and have it. It's just loud, loud, loud, fear, fear, fear. Do you see that?

18:42 >> I I do. I I don't think it's unique to the industry. I think that's probably something that's happened with how we consume media now versus how we consume media 10 years ago or 20 years ago. But yeah, and and you know to pair it what you said in the past like there's always one conversation going on. There's never more than one and there always has to be one conversation going on. >> And so the world is always it's always ending for one reason or another. And you know AI is going to take all of our jobs or we're all going to go out of business because of NAR or I don't know now it's the Zillow versus Compass debate that might be getting long at the tooth. So, you and I were guessing at what the next topic might be, but yeah, there's always there's there are always a lot of distractions out there that you can't do anything about. There's only one move. That's to just like work harder and do a good job for your clients and make sure your pipeline's full and let all that stuff figure itself out, >> right? You're never going to go wrong by just picking up your phone and making some calls.

19:33 >> Focus on the effective. And if if that's sort of your north star, then you're going to see things improve gradually, constantly. >> Yeah. And if you get distracted by a lot of things that you can't control, it it's going to take away from that time that should be spent on effective things. You're better off, you know, going to the gym or taking your kid for a walk than you are thinking about Zillow versus Compass. >> Yeah, it's hard to hard to disagree with that, >> but it's distracting and it's interesting.

19:58 >> Well, I think it's entertaining. >> There we go. >> Right. And entertainment is is a way to feel feelings. People like feeling feelings. People like feeling happy, sad, angry. like it it feels good. >> Angry. That's it, right? You you like to be really passionate about something. And I think that's it's it's in the same lane as getting really worked up about politics. You know, that's that's really what this that's really what this is. And that's why you see the tribal debates around it rather than sort of a rational debate.

20:27 >> I would say one of the biggest disservices a brokerage leader or a real estate leader could do is confuse entertainment with intelligence. >> Yeah. It's distracting. >> Yeah, it's super distracting. And, you know, I'm I don't know. Am I going to want to if I'm an agent, am I going to want to go to the brokerage, you know, led by led by the clown who's fun to watch and hilarious and entertaining, or am I going to want to go to the one who isn't necessarily maybe up on stage or making all these these crazy remarks all the time, but is kind of focused on getting stuff getting stuff done.

21:02 >> So, so our director of ops says that there's a lid for every pot. There probably are agents out there that really like the drama >> and and they they'll be attracted they'll be attracted to that. I would guess that those agents are probably selling fewer homes and probably getting fewer fivestar reviews than the agents that >> just want to focus on what's effective and just want to hear about what's actually going to move the needle.

21:22 >> Well, it comes down to focus again, >> right? >> Yeah. >> Right. >> All right. This is a good It feels like we're kind of wrapping up this what's broken thing and and starting to edge into the next area. All right. So the second part of this is trends and themes and and out of that we want to pull out these insights because if we're going to if we're going to kind of make this meal of a brokerage of the future, if we're going to start a brokerage today, we it has to be more than just our opinion. It has to be based on what's working. Let's figure out what's working. Let's do that. Let's figure out what's not working and not do that. So I think the the best way to do this is really to answer two questions. What are some commonalities of the brokerages that are doing well? And the second question is, what are some commonalities of agents that are that are doing well? I think we probably wait the brokerage one higher, but you know, we'll go like and again, I mean, full disclosure, we haven't Eric and I have not prepped about this at all. and because I don't know, I just feel like being authentic and just talking as as we're going is the most effective way to to tell a story and to get to where we're going.

22:24 >> All right, Eric. So, what are what are some and and we'll both do this. This isn't just me asking you. So what are some common themes, commonalities of the brokerages that are doing really well today and of the past, you know, five five-ish years? >> Yeah. brokerages that are doing really well are communicating their value very effectively to their existing agents and to potential recruits. >> That seems like table stakes. >> It does. >> But there's brokerage out brokerages out there that are not doing that.

22:51 >> Well, the incumbents, right? They've been there for a long time. And that's just what happens to companies that have been around for a while is they tend to rest on their laurels. >> Okay. All right. So, keep going. Say say more. >> So, the a the brokerages that are doing really well, they're able to, you know, get a recruit's attention really quickly and then explain what it is they do in a very short period of time. And they're able to continue communicating that value to their existing agents by focusing on the message and executing that communication really well. That sounds scholarly. I guess I don't mean it to be. but if you look at, you know, EXP, they're doing really really well as a company and it's not hard to understand the value that they're that they're providing, right? They're empowering agents to earn passive income. they're offering really competitive splits and they've communicated that so long that it's just tribal knowledge now. Everybody knows that. M I you know I'm going to come up with examples and and I think we're going to name companies and go through it. All of the ones I know about are going to be relatively big national brands cuz that's what I am focused on and and what I see. But before that, what what are some of the smaller brokerages that are doing well in the space doing it?

24:09 >> It's tough because you're going to have like the scrappy boutiques like me in different markets and sometimes they're going to do a good job and sometimes they're not, you know. I think that the smaller you are, the more important a productive lead program is, like offering leads to your agents. That's a really great way to recruit good agents at a certain point in their career. >> So, you see a lot of guys that, well, you know, one of the hub members who we're going to see tomorrow, Ryan Fitzgerald in North Carolina, he operates a brokerage of, I think, around 40, growing really well, and Ryan's really great at generating a lot of leads, and he's able to recruit a lot of folks that way. Mhm.

24:46 >> So, he's scrappy. And I mean, I I say scrappy as a compliment, right? Like that's what we have to be whenever you're a local boutique. >> The phrase that comes to mind right now for me is compete where you can win. >> I love that phrase. >> If we're talking about brokerages, big or small, kind of you know, being able to effectively communicate their value. I'm thinking again of of Orley who we were talking about earlier when she was at Slifer Smith and Frampton you know about her recruiting process like she you know we're talking low hundreds of agents and but but she knew that and and that's a local brokerage right she knew she can't compete against Compass on the national brand thing or the technology standpoint right she can't compete against EXP on passive income or splits Right. But she knew that she could compete on that personal local knowledge and we've you know this this firm is been in the operating in this area for like 50 60 75 years like so long.

25:48 >> So for her that the recruitment goal was always getting a lunch meeting with whoever she wanted to recruit. And it might be next week, it might be next month or it might be next year, right? The timing is all going to vary and depend. But it was all about getting that lunch meeting cuz that's that's where you could like most effectively compete where where she could win on that local communication aspect. >> Yeah. Yeah. She she's on the ground. She knows who she wants to talk to. She knows who her customer is, who who the agent is, and and it's really hard for a big brand, a national company to do it at scale. You kind of can't, right? You can't have 200 Orleys. You probably can only have one, >> right?

26:26 >> Yeah. Compete where you can win. She was really good at that. And you're I forget who but somebody once told me like you know their their brand is when they walk into a room right it's if you're having that recruiting meeting or whatever like when you enter the room how you're how you're dressed how you carry yourself what you say you know how you how you engage with people like that's your brand and that matters right it matters for the again I'm thinking about the local smaller scrappy independent brokerages so yeah so let let's kind of talk about some of the bigger ones. I mean, you mentioned you mentioned EXP, EXP, like basically what are some of the commonalities. So, the commonality here is that you know, companies that can effectively talk about their value prop are doing well. You mentioned EXP already is doing that. I'll add Compass into the mix. I I think I've talked about this on a podcast before, but they are just communic effective communication machines, right?

27:21 >> It's truly impressive. They're very very good at communication. >> Yeah. And whether you like them or not, that's not what this is about. This is about are they effective communicators? Absolutely. They kind of pick one thing, the the machine is able to coalesce around that message, make it really great, really compelling, and then that's kind of all anybody talks about for 12 months. >> Yeah. So 2025, I think everyone knows that private exclusives are the value that that Compass is providing. And again, like doesn't matter if you like it or dislike it. It it you understand it. Everyone understands it. And they've done a great job of communicating that value to their agents and helping their agents communicate that value to their customers.

28:01 >> Yeah. And you know what? If you're kind of sitting back wondering why Compass sued Zillow, maybe this is it. >> It helps communicate the message. >> Yeah, it sure does. It sure does. other I mean, I'm just floating around. I mean, on the other side of the coin, and again, it's, you know, I went through this with the Red Fin podcast with Carrie, which you told me you listened to before. God, it it's hard to to critique, you know, and and present feedback. I'm not you know, I'm not a negative person, and it's I don't want to be the guy in the on the side outside the ring, you know, just kind of saying, "Oh, what about this?

28:34 What about that?" but we got to do it. >> Sure. >> You know, I think about the incumbents. I I think about Remax and Keller Williams. And I I just kind of shrug my shoulders. I'm like, I don't know what their value prop is. I don't know if they're communicating it to who where. Like I pass a billboard on on my drive south to Golden and it says ReMax, you know, your most trusted brand in in real estate. And there's a new balloon. It's it's new. It's still a balloon, but it's new. Like they have a new logo. you know, there's a lot of leadership turnover there. and then yeah, KW again, this is outside looking in and looking at the external communication.

29:11 I'm not sure. I mean, they've you know, new new leadership, new CEO, new owners coming in. So, there's there's been a lot going on there. So, I think it'd be unfair to say there's there's an inconsistent message. But, I think if you if you zoom out and to maybe the five-year time frame, KW's communication values definitely pivoted from tech to training. And you're nodding. so, we can tell that. But, you know, if you're looking at EXP and Compass on one hand and Remax and KW on the other, it seems like night and day.

29:46 >> Yeah. I think what can explain it all pretty well is just sort of the circle of life, right? Like businesses rise, they do great for a while, and then somebody sees an opportunity, they take the great idea that that business had, they do it maybe a bit better, maybe a bit different, and it's really tough for that incumbent business to reinvent theself. You can't find a lot of examples of businesses doing that. So they have, I think, almost as hard of a job to come back and reinvent themselves as they had growing in the first place.

30:12 It's tough. It's really, really tough. And the leadership has already made all their money, so who's motivated? You better find great new leadership who really care. >> Mhm. >> So, you know, if I were betting on it, I wouldn't bet that it would probably work out. Like you said, this is tough to critique, but there are a lot of examples across industries of businesses rising, doing great for a while, and then somebody else taking the throne from them.

30:36 >> Well, listen, it's not rocket science. If you're executive leadership at KW or ReMax, like the the equa or anybody else, but the equation's really simple. You know, step one, compete where you can win. >> Yes. >> Figure that out. And that it sounds really simple and you might be able to figure it out in an afternoon or a couple weeks, but it's not, you know, you don't need to hire a consultancy for six months to do that.

30:55 >> The difficult piece is that they are operating profitably, right? And so there's a big risk. You're taking a pretty big shot to try to make big gains. So if I work if if I'm leadership at ReMax, am I betting my career on this big shot? But >> it's not going to be a big shot. The point here is what what's the commonality the trend here? They need to effectively communicate their value prop. >> Okay. >> Step one, they need to figure out where they can win where you can win.

31:25 >> Okay. And this I don't mean this to be a condescending question to ReMax, but like what is the value prop? I guess that's the crux of the problem is I don't >> I mean let's let's just call it trusted brand. >> Okay, great. So lean into the brand. I think that's good, but that's one piece of many that agents are are looking for. So I guess the big why why my mind im immediately went to well they'll have to take a big shot is that I look at that as saying yes given they have a great brand they need to lean into that but what else >> I don't I don't know man I think that's it like you said I mean you have the innovator's dilemma you're a really big incumbent like anywhere in Coldwell Banker they're not going to come out and say we're the most techdriven tech forward business in real estate nobody's going to believe that it's BS >> and and they aren't but you know just as an example so stick with stick with whatever it is. And if you think trusted brand is enough to move the needle, I mean, it has to be realistic. Like communication can't just be in the ether. It has to be realistic. So you take trusted brand, you figure it out.

32:23 Okay, we're going to stick with this one thing. And it took me, you know, 15 seconds to come up with that. So maybe this is not the beall endall. And then you need to effectively communicate it. So that just means sticking with a consistent message over and over and over and over. Right? If you take the compass example, this is the one thing we are going to talk about nonstop all the time for a year. >> Yes. No, it's a great point. And I think that my skepticism that trusted brand could move the needle is probably incorrect. Well, like absolute skepticism. I think that if you leaned into trusted brand and really communicated that enough and long enough that you would see it you would see it move the needle in a positive direction and they're not doing that. That is that's where their strength lies. Keller Williams training. Everybody knows that Keller Williams has great training. Lean into that. Yeah, absolutely. Absolutely.

33:07 And it it again, it sounds scholarly and it's not necessarily rocket science, but so many again, we're talking about trends and themes and insights. So many companies get it wrong. >> Yeah. >> They they don't do it. And I think they they try to be everything to everyone, right? Like Remax, they thought they were a tech company four or five years ago when they acquired Boug and they did all that, right? And KW thought they were a tech company with Command and this billion dollar investment, right? If you if you remember all that stuff, they they started to try to be everything to everyone. That's problem number one. And then problem number two is not effectively communicating it. And you know, we were talking about my stack of propaganda books in the corner, but you know, a lot of effective communication comes down to very, you know, simple statements said over and over and over and over again.

33:58 >> Yeah. So, I think to bring back one of our favorite words, focus, right? like the the lack of focus is probably the culprit and bringing focus in and leaning on effective communication would be the way to go. >> Yeah. Okay, cool. That was a fun one. what other what are what are some other trends? What are some other commonalities we're seeing with the brokerages that are doing really well? >> So, right now and and we talked about it as a problem, but brokerages that have really effective recruiting systems are doing really are doing really well. So to use EXP and Compass as examples again, they're both great at recruiting and I'll bring in a third. I mean, Real is hot on EXP's heels. So we'll see if EXP can continue growing, if they can defend their position. but you have to the company's doing really well at Salt for recruiting.

34:47 >> Yeah. And that's not a coincidence. It's not a coincidence that our answer to the first question was kind of compass and EXP and the answer to the second is Compass and EXP. These go hand in hand. And that goes back to your, you know, problem of what's broken in the industry. it just comes down to agent count more often than not. So, if that's true, then recruitment is kind of the most important aspect and and retention, but really recruitment.

35:10 >> I don't know that people are paying a lot of attention to retention. And that's sort of hypothesis I have is that you can solve for recruiting if you focus on retention. But we can talk about that when we talk about the brokers in the future. So the you know recruiting machine what I what I love about Compass and EXP is their their recruitment solutions are both interesting and novel and totally different. >> Agreed. >> So EXP has you know in short right EXP has the multi-level marketing downline system where you kind of recruit your friends and recruit your friends. you know basically means every single one of their agents is a recruiter.

35:48 >> Agreed. And I again I forget what the numbers are, but if you just do rough math, I think at the time it was, you know, maybe they have like 70,000 agents. A certain percentage of them are are actively, you know, recruiting, call it 10,000. >> Yeah. >> I mean, EXP has 10,000 people doing recruiting. Name another brokerage that has 10,000 reach >> and they're all thinking about it. So even those that are not actively recruiting, it's still on their mind and it's still coming out of their mouths whenever they talk to folks.

36:15 >> It's powerful. Like in your how many recruiters do you have in your 120 agent brokerage? >> One. >> One. Right. In most brokerages of the size, you have the answer is point something 3.5. Right. It's it's Jerry and he also does these other things. And when he gets some time, he's he's maybe looking at a list or calling some. >> He's the sales manager who's also in charge of, you know, creating presentations and taking coffees.

36:38 >> So So that's huge. That's like a 10 I mean it's more than 10x, but but effectively for argument sake, like that's a 10x difference. You have the status quo and then you have boom this incredible new model and system. >> Well, what what I love about the system is that they've been able to incorporate it into their culture. So So culturally, everyone at that company wants to recruit and and they all are certain that it's going to help their business.

37:02 So like you said, you have 10,000 active recruiters and 70,000, you know, 60,000 other passive passive recruiters. And that's why their numbers, they recruit an insane number of agents every year. There's there's a great related to that. There's a great culture. I've been to some of their conferences, the EXP cons, and it's like one big crazy family that just loves each other. It's great. I'm I haven't been to a KW event. I imagine it's the same. I don't know.

37:27 >> I think Yeah, I think it was a lot of that was probably inspired by KW. And that speaks to, you know, when we're talking about downlines, we're talking about revenue sharing, we're talking about the practical value that the brokerages provide, but then you have to have that component of emotional value. How many EXP clones are out there? I don't know. But I know that there is at least one indie broker in every market that wants to just copy that model and launch it and they do >> and then they go nowhere.

37:53 >> Yeah. >> And it's because they don't have any of the emotional component which EXP has been able to build. So kudos to them. >> So that's EXP's recruiting model. Compass's recruiting model which I'm sure many people are familiar with is you know raise a lot of venture capital and throw money at the problem. >> 100%. we you know and again oftent times people they they you know we talk about compasses success and people will come up to me and they'll say like yeah but and I'm like what what but like it doesn't it you know there's no like umpire referee blowing a whistle and saying no no you can't do that it doesn't count >> you know if if you raise a billion dollars in venture capital and you want to use that to recruit go for it use it use it to recruit and it worked for a while and to be fair they stopped and like momentum has still continued so I think It was innovative and I didn't see it at the time. At the time, I was certainly one of the skeptics that said, "Oh, great. Of course, you can go throw a bunch of money and bring agents over, but the contracts are written really well and it's a monetary investment into bringing in a producer and then you just know that statistically x% are going to stick around and you're going to continue to partner with them for a number of years and it's going to work."

38:58 So, it becomes really just a math problem and it works really well. Now, you obviously have to have value that you can communicate to the potential recruits, and they're very, very good at that as well. But throwing money at agents to get them to move over whenever you have a contractual obligation to stay for a certain period of time works. Agents that are good don't like to move around. They have to have a big reason why they want to move around. If you're busy producing, you don't want to disrupt your business and move to another firm. So, if you have somebody for three years, good chance that most of them you're going to have for much longer than that.

39:28 >> Interesting. That's a good insight. And when I when I think about when I think about this, I often use the soccer analogy or European football. Like there's very famous rich clubs like Real Madrid building these Galacticos and just throwing money at the problem like we're going to buy the best players. There's nothing wrong with that, right? The league can come up with its own rules around, you know, how big the salaries can be and and whatnot, but like that's a model. I mean, even the New York Yankees, >> yeah, >> you know, that that's that's a model.

39:58 You go out there and you spend a lot of money. You buy the best players and you you hope for the best. >> Well, and it works. You build an iconic brand and then it perpetuates at that point. You know, one more point not to not to digress, but you know, Compass bought a lot of indie brokerages and it and they were throwing a lot of money. Well, in retrospect, that was really smart because indie brokerages don't sell for very much. You know, you sell for two to three times NOI. So, you're seeing a return on your investment year three usually.

40:24 >> Mhm. >> And it perpetuates. >> Yeah. Oh, and I mean, the same is especially true right now. Yes. >> Like there is a with the private exclusives aspect. I mean there is this >> wonderful flywheel effect that just kind of keeps going and going and going. >> Yeah. >> So they're in a great position. Oh, here's an interesting thought that just occurred to me again going off the soccer or football analogy. you know the other way historically some great teams have been built is is with youth, right? The youth teams like Manchester United kind of when Beckham came up through that was famously through these >> you know the youth team that they were that they were developing. So back to our comment around, you know, training, I I wouldn't necessarily say, hey, that's the KW thing, but when we're taking insights out of this, you know, what's what's the youth team model where it's homegrown talent?

41:10 >> So there there maybe there's an opportunity there. I don't I don't see very many effective programs because the failure rate's so high in in real estate. No matter how great your training program is, a a person has to have the drive. They have to have they have to have it, right? So yeah, if somebody can come and learn how to take somebody from real estate school who just got their license, get them going and then keep them, that is an opportunity. And and Sean at Corded would tell you that a prime target for recruiting are agents who've been in the business for 2 years because most of them move after the first two years. For whatever reason, they get antsy and they move. So there's a couple of problems to solve. It is how do you train them effectively and then how do you keep them after they after they're trained?

41:55 Yeah. >> I don't know anybody that's doing it well. Interesting. Yeah, I think Yeah, we're kind of skipping ahead, but if I was going to start a brokerage of the future, I would definitely be thinking about that. >> We can talk about that then. >> Yeah, >> I I won't. >> Okay. >> Yeah. >> All right. What What else other commonalities of the brokerages that are doing doing well? I mean, business models are pretty varied, right? Again, if we're looking at Compass and EXP and Real, you have I mean, very very I want to say very similar, but also very different business models.

42:25 >> Wait, here's a commonality between them. and KW and probably real. but between Compass and K Compass and EXP certainly, you know, the the emotional value is is there. You know, you have events that agents attend. They feel part of something. They feel part of I hate the word work family, but they if you were to ask them, they'd say they feel part of a family. So So the brokerages that are successful do that really well as well. KW does that really well right now, and I think that's probably the glue that's holding them together.

42:52 >> Is there anyone not doing that? I'm not really sure because I see when those events are held and I don't really think a lot about who's not doing that. I do know it's critical. I do know that. >> Does ReMax have an event? Does Coldwell Banker >> I think Remax does. I've seen some you know I don't know if Coldwell Banker does. I would be shocked if they didn't. I don't know if anything's executed very well. You know, Remax, yes, because there's I know some some good Remax team leads, great guys, and I know that they're going to events. A lot of times these events are big rah raw things where they're, you know, getting awards.

43:25 I mean, all of them. That's a big component of it. So, yeah, I'm certain Remax does. I don't know about Caldwell Banker. I'd be shocked if they didn't. >> Well, it's not a it's not just a tick box either. It's it's how is it produced and and what does it look like? I mean, you you look at, you know, for some of these other companies like Compass and and EXP. Again, social media isn't the beall endall, but if you look at the photos, there's a lot of different people, not corporate PR, but a lot of people posting photos, and it looks like a great party in Las Vegas. I would say that social media is a pretty pretty good measure of how successful an event is. If people are posting and they look really happy, >> that's like you said, it's not the end- all beall. That's not the reason that you do it. But if you had a successful event, there's probably a lot of stuff on social media about it.

44:04 >> Yeah. Well, there's there's big incumbenty brokerages out there. I've haven't seen anything from their events, you know. >> Yeah. So, back to what should they do? Well, communicate value and lean into their brand and host some good events. up to up to this point, I I kind of would roll my eyes if I think about these events, you know? It's like, oh my god, like more awards and another reason to go to Las Vegas. Like, kill me. I don't want to I don't do that.

44:30 >> but you know, so we we recently did some research, me, you, and Sean. And I don't know, by the time this airs, that'll probably be out there. I'll probably send an article out and we'll probably have you guys did another podcast on it, but it it really answered this question. What do agents really want in a brokerage and and why do they move around? and there was what were the it there was like emotional what were the two?

44:53 >> It was it's emotional value and practical value. >> Okay. Yeah. So, emotional value and practical value. A lot of brokerages talk about practical value like we have tech teams, we have leads, we have all this stuff, right? but the emotional value is like feeling like you're listened to and you're heard and you're part of a family and you there's help when you when you need it. I mean, the long and short of it is emotional value is a lot more important than practical value.

45:18 >> Yeah. I I don't I don't know that I'd agree that it's more important than the practical value. I think it's more ignored and it's and it's as important is the way I look at it. I could be wrong, but that's okay. >> It's it's much harder to communicate emotional value. Very easy to communicate practical value. Yeah. But those live events tick the emotional value box. >> Yes. It makes people feel like they're part of something. Yep.

45:39 >> Which is important. It and and I think that's what this research shows is that quantitatively and qualitatively it it may be more important than we realized. >> I think there there's a big opportunity there. Yes. >> Yeah. Okay. So that's that's a cool trend theme insight learning out of that one. So back to the back to the business models, you know, EXP and Compass very similar in the sense that they operate like a brokerage. Yes. You know, they a brokerage takes X% provides Y value and the agent gets, you know, 100 minus X% of the commission. so it's all the same like they make money as a brokerage and some have splits and some have caps and whatever desk fees, tech fees.

46:18 it's all the same but very different in the sense that you know of EXP and Compass one of those companies is totally cloud-based the other is 100% in the office. the splits are are quite different in in terms of the structure and whatnot. The brands are different. I mean you couldn't if if you're saying real estate brokerage in the US you couldn't pick two companies more different than EXP and Compass. >> Yes, I agree. But there are a lot of commonalities.

46:46 >> Yeah. any anything else in that any kind of through lines that you've seen big company small company in terms of like the business models >> I guess I can't overemphasize the importance of recruiting right and so the commonality is with a when you say big we've talked a lot about big brokerages but the small brokerages and the teams that do really well they have recruiting handled and a lot of times it's handled through leads programs like we said like we talked about earlier yeah I guess I'm just repeating myself >> you know the other the other thing with business model is Side is another company.

47:18 >> Yeah. >> And you know, Sid's model is brokerage in a box or like a white label brokerage. Yeah. Where you know, you could stand up the Eric Braramlet team, it's your name on the sign, your logo, it's all customized to you, but they're just in the back end handling that. they've seen some really great success and and growth. And just the research I put out last week, I mean, they've they've grown quite a lot, okay, over the past five or six years. like definitely within the top 10 fastest growing big big brokerages out there. So there's something resonating there. And if you distill that down, it's it kind of comes down to just choice for an agent, right? There's not one sizefits-all here. There's a lot of different models. And the way I've always thought about side is thinking about the agent life cycle, right? If you again not all agents but maybe you you're new to the industry you go to Keller Williams and then you jump to Coldwell Banker and then you go to Compass and you're like super successful then what and and you want your own thing.

48:15 >> That's the point is if you want your own thing so the the percentage of the market that wants their own thing that's what side serves really really well. Yeah. And and yeah, you know, and that what is that percentage? I don't know. It's less than 10%. Maybe even less than that, but you know, less than 10%. Okay, great. Like you need a solution for that. And I think they're able to able to do that in a way that's different and interesting than like, oh, just stay at Compass and start your own team or or do, you know, do whatever.

48:42 >> Yeah. So, they found their niche that's not being filled by the other by the other brokers and it works. I think it's equally interesting to think about what we're not talking about like the commonalities of these businesses. We haven't we haven't said tech or AI once. >> Oh well yeah I don't know that there's any company doing that really well. Sorry to be smart memy but it's there there's a lot of like your idea that tech works really well as a recruiting tool is insightful and and Compass did a great job using tech as a recruiting tool. Mhm.

49:11 >> I don't know that anyone is really looking at adoption and seeing like how much are agents actually using these platforms. So much so that EXP kind of threw up their hands and said, "Hey guys, guess what? We now have I think three options for you and just pick whichever one you like >> for the CRM." >> For CRM CRM is the most important piece of tech for any agent. And you know, rather than them saying like, "Hey, this one works really well and here's how you use it." No, here's three. Pick from them. Figure it out. Because the agents were already doing that. they were already going outside of what was provided in order in order to pick the best, which leads me to believe that there's no like great piece of tech out there. You know, there's not one end all beall CRM out there. It it's absolutely true. I I will say that EXP has done a great job of reducing their opex per transaction and that's noteworthy and that's I' I've looked at those numbers before. So are you talking about the administrative work in the back end?

50:07 >> Just total operating expenses per transaction they run through the system. >> Okay. Yeah. There's really exciting tech right now in the way of that we can hit the Chad GBT API and you can do some really insanely awesome things with very minimal programming. Like if you want you know 3 years ago we played around with the idea of using OCR and then coding all of this stuff in order to extract the right information and have automations and whatnot and determine if a compliance package was correct. We've now played around with taking that same contract package, giving it a really minimal prompt, and saying, "Is this contract package correct?" And it it gets it right about 90% of the time. So, I think that that AI there is really exciting, but it's not sexy at all.

50:47 >> No, I was going to say what you just said is like the most boring thing I've heard all day, but that's that's the point. >> Yeah. >> It's like that's going to move the needle, right? I have this image I I show with the hub stuff. I heart boring tech. >> I love it. I want to get a bumper sticker. >> Yeah. Yeah. >> But it's it's true. I mean, you just said the like most boring thing ever.

51:06 And I I you know, I'm trying to stay focused, but that's what is going to move the needle right now when we're talking about AI. It's not, you know, some sort of AI chatbot 24/7 that's, you know, going to that's fun and interesting and entertaining, but it's not going to move the needle. >> Well, here's something. Agents want to get paid quickly. And the friction point is that agents don't like to put in contract packages that are true, you know, that are complete. Well, if you can automate the process and tell them immediately when they submit it that this is correct or it's not correct, then it just probably saved them at least 24 hours because you don't have to wait for Jan from compliance to come back and look at it manually.

51:40 >> You can build this out to a way that you can have automated approval. Hey, the machine said it's green. Go ahead, here's your DA and you can get instant they call them CDAS elsewhere. So, that is exciting in so much as that removes friction. >> Yeah. >> and I'm sure your eyes are probably glazing over and thinking that this is some boring boring stuff. >> No, it's it's not. I think Oh, but back to the op like you know I I see a lot of tech and AI especially now one of the applications as as an opex buster.

52:10 >> Yeah. >> So it's going to bring your opex your operating expenses down. EXP historically has done really well at that. They're opex per transaction and I've done that. So like search Mike Delp Party OPEX per transaction, you'll get some of that. EXP is magnitudes lower than some of its traditional incumbents. And what does that mean? It means EXP is able to do more business for less money. Their expenses are lower and then they take the savings and they give it to agents effectively through those profit share programs which helps the recruiting flywheel. Yes. Get more and it just keeps going. Like that's a great model. Like just sit and think about that for a minute. Compass has something if we're talking about, you know, those two big brokerages because those are the biggest ones, the biggest growers over the past 5 years. Compass's opex per transaction is magnitudes higher than EXP.

52:59 >> I didn't know that. >> Yeah. Yeah. It's like I mean I I want to I want to say EXP is like call it maybe like 900 bucks and Compass might be like 4 to 5,000. Do you know is EXP are they are they offshoring a lot of the the admin work? >> I don't know slash it doesn't matter maybe. >> No, no, no. I I it does. I mean the reason I feel like it does matter is that that is the like like offshoring work is the first step before you move it to AI and and I don't look at offshoring in a bad way at all. You look at a lot of things that if you can do it 100% behind the computer, you can often have more human beings working on it in an effective way for much much cheaper.

53:38 you can build the systems that you can then use AI to make even more efficient and more true and correct by the way. So my gut is they probably are and I think it's a smart move if they are. I think any company that's not doing that should really if you have operational expense problems that should be the first thing you look at. You shouldn't go straight to say can AI fix this because there's going to be a slew of tech providers that promise you the world and don't deliver. But if you can build systems that you know a smart VA can handle. I mean, that's a really interesting point because that's this incredible competitive moat that EXP has, you know, cuz you're saying, "Oh, if you're not offshoring offshoring, you should."

54:16 That's hard to set all that up, you know? >> Mhm. >> But it pays dividends. >> It pays dividends, but you know, I guess what I'm saying is EXP is already doing that. They're doing it at scale. Their costs are going to be lower. Like, you're just going to be playing catch-up with them. So, their costs are lower. they're going to have more profit to play around with and more to be able to push to agents. So, doesn't that just kind of that cycle keep continuing?

54:38 >> Yeah. But I would argue that it's irresponsible not to follow that path because they can't go lower than zero. I mean, they can only get their expenses down so low. And if you have, you know, state side workers doing it in a very expensive way, that's a problem to fix. That's not something you should say, "Oh, well, they've already handled that. They own that." You know, you should say, "Oh, wow. Like, they have an efficiency that we aren't exploiting. We should exploit it." But yeah, but but it's turned into I mean, how do you compete? It's turned into something you have to do and I'm not sure it's going to like it will give you a financial advantage, but you're playing catch-up.

55:09 >> Yeah. And you don't want to be second to like you don't want to be second in innovation that you're using to like build your brand. >> Well, it's smart. I mean, if you're looking at it strategically, it's a really smart move from EXP because it's forcing everybody else to do the same thing. They have a head start. They're probably going to just win in terms of getting the opex per transaction low because they're the biggest.

55:32 >> Yeah. >> So they have the scale advantage there, but they're like you said, they're forcing everyone else to do it. >> Yeah. I mean, I could argue that technology in general is forcing everyone to do it. You know, the flattening of the world that occurred 15 years ago, that's when it really started. And if you weren't offshoring starting 15 years ago, you should have started 14 years ago. Now it's going to move towards true effective AI that's really just going to gain efficiencies.

55:56 And if you're not looking at that now, you should. Yeah. Because you'll be playing catch-up two years from now. >> All right. The la I don't know if it's the last, but another kind of trend of the companies that are doing well that I want to mention is is about leadership. You know, I I think there's a commonality here. If you think about strong leadership, concise communication, agility, the ability to move fast, make decisions quickly. I think if you look at the companies that are doing well and not so well, there's there's some pretty clear insights that leadership.

56:28 >> Newer companies generally have more ambitious leaders who are willing to take bigger risks. And I think that's what you're seeing right now. >> Well, they're typically founderled. >> Yes. >> Right. So, you know, Leo's the CEO over at EXP, but Glenn, the founder, is still very much involved, right? >> Robert, founder of Compass, still he's the CEO. So, you know, you you have these founder-led businesses with, you know, say like, you know, they're both public companies, so they have to kind of report to the street and and deal with shareholders and and all of that.

56:57 But in terms of the board, you know, I I get the sense that they're able to to move relatively quick. >> Agreed. They have a lot of trust. They have a lot of leeway. And going back to the circle of life, at some point they won't and a newer company will come along who can and who's nimble. But you're you're completely right that they have strong leadership. I could even argue very charismatic, strong leadership that people are inspired by >> and that is helping them succeed. No question.

57:20 >> Yeah. So the leadership component very important and then and that that agility, you know, fast decision making and and you kind of said this a little while ago, you know, the leadership or founders have already made their money. >> Yeah. >> Right. So, like what's the what's the incentive for you know just some of the big incumbents anywhere, Berkshire Hathway, Remax, Keller Williams, what's the incentive for them to change? >> Gary Keller doesn't need any more money.

57:45 He's fine. >> You've heard it here first. >> yeah, and well, and now private equity is coming in. So, they they are able to drive that company differently. >> Well, and there's an opportunity because private equity always looks for efficiencies to a fault at at many points, right? like private equity will look at things and say this is too quality like we're we're losing we're missing out on profit because we all know that private equity is generally looking at a 3 to 5year exit so they're trying to make the sheet they're trying to make the books look as good as they possibly can in that short period of time so I wouldn't be excited about private equity coming into a lot of these companies >> right >> yeah no that's that's true that's true >> your customer satisfaction score is way too high you hear that from private you hear that from private equity >> really >> yeah Great.

58:31 >> Okay. What else? You got anything else? >> Well, do you want to chat about commonalities of successful agents? >> But yeah, what are you what are you thinking? >> Focus 100%. >> Okay. >> Yeah, that's it. And you know, I we the best goal for any agent, not any agent, but the best goal for most agents is to work 100% by referral close to home. If you have if you're an agent and you're new to the business, a great goal is that five years from now I'm going to work 100% by referral and 10 years from now I'm going to work 100% by referral within five miles of my house. It's a great business and a great life and there's a pretty direct path to it.

59:04 >> Does that happen a lot? >> Yeah, absolutely. The agents that are focused, the agents do a great job, the agents that don't, you know, that aren't distracted by a lot of noise, they they absolutely get there. You know, there's agents that play golf three times a week and that's how they get their business. >> But it took a lot leading up to that. They didn't just go to the golf course on day one and immediately have business.

59:22 >> Yeah. Huh. All right. So, focus again. Focus, focus, focus. >> Yeah. And compete where you can win. >> Yep. All right. Well, there's our Cool Cool. Those are our ingredients. You know, we're we're going to make a meal. >> We're going to make a meal of this in terms of what what the brokerage is. We start, but we got all the ingredients out. All right. The last part of this conversation is, you know, we we got putting the meal together. What does what does a brokerage of the future look like? here. You know, I don't want to say like the brokerage of the future looks like this, but maybe it's more of, you know, if we were going to start a brokerage today, >> this Yeah, this will be fun. Like my you'll hear me perk up. I love this topic.

59:57 >> All right, so you go ahead, start. >> Okay, so I think that the easiest fix whenever you're running a brokerage is to focus only on the top 20%. And to just completely ignore and don't recruit. sorry. You're saying that's what you would do or that's what people do now. >> No, no, no. That's what we would do. That's the easiest fix. Like when we look at the problems, which we didn't talk about a lot of like day-to-day issues that brokers run into. We didn't talk about, you know, operational costs, but you'll bring your operational cost way down. you're going to bring your I mean revenue per agent. That's a metric a lot of people don't track is revenue per agent. Another metric a lot of people don't track is like the take-home per agent. Like are do you have happy people working for you? M >> and when you have happy people working for you, it makes it easier to manage them, you know, better culture as well.

60:44 And so if you want to just pick one rule and say, okay, we're just not going to bring in the inexperienced agents, right? Be it new, they're inexperienced because they're new or they're inexperienced because they're part-time, however you want to label it, if they're in the bottom 80% of production, then that minimum doesn't allow them in. >> That would be rule number one. >> Okay. So really really selective in terms of the recruitment and and turning the tables on this masses of asses >> 100%. Like the opposite of masses of asses, right? Like like saying that I think that's wrong. I think that there are a lot of hidden costs that are associated with that philosophy.

61:18 >> Okay. Well, let's stay on the recruitment and retention standpoint. So that's that's your filter for recruitment or your filter for your target. What h how would you or how would we do recruitment? >> Recruiting. Yeah. So, you know, I look at it in the same way like what made me successful as an agent was doing a great job for my clients and then it turns into this flywheel of referrals. So, what's worked really well for some of the brokerages with MLM revshare models is that they have their agents recruiting for them. Well, I don't like that model because I think it distracts the agents from what they do best, which is serving their clients. So, that would sort of break that rule. But if you're doing a great job for your agents as a broker and then you're showing care and you're doing that systematically operationally, then you will get referrals from your agents and it turns into this sort of like I've called it recruiting super fans or there's a book ninja selling and I've called it like ninja recruiting. I think that that I don't think I mean I know that that can work really really well. I don't know if it can scale. I don't know if we ever get past like if you and I are opening a let's pick Boulder because the weather's nicer. I don't know if it ever grows past that market. But >> yeah, that's the thing. I mean, if we're talking about starting a brokerage, we have to think about what our goals are.

62:24 And I think you and I are similar in the sense of we we'd kind of be happy with a one market brokerage, smallish focus on quality over quantity, right? We're not trying to build a billiondoll national brokerage. >> Yeah. Well, that boils down to like what are your personal goals? And I know that one of your personal goals is less headache and more time at your cabin. I have the similar goal. So, >> Right. Right. Okay. Well, we we need to call it out because, you know, we're starting a brokerage and yeah, we're doing the podcast, so we can kind of do whatever we want here, but this isn't the beall endall. And you know what? If you want to disrupt the industry and build a multi-billion dollar national brokerage, the the answers are probably going to be a bit different. But I think the the insights and learnings will be similar. you know, as you were talking about that, I I kept thinking about quality, right? We're building a a quality brokerage. And I was talking about or I was thinking about other business models and we haven't talked about this before but there is a sense of these like co-op employeeowned Yeah. models out there. So up you know north just a little bit is in Colorado is the group. Yep.

63:28 >> And and they I don't know the specifics but you know they play around with this co-ownership model. >> and then another hub member I don't know if you met him Todd. >> I did. I said it on his on his his presentation. It was great. Super interesting. >> Ensemble. Yeah. >> Yeah. That's in I mean Again, I'm I'm probably getting this wrong, but if you want to join, if you're an agent, you need to like write a check for 10 grand.

63:49 >> Mhm. Good filter. >> Yeah, it is a good filter. So, there's I I really I I can't say, oh, you know, we're going to start a brokerage, it's going to be this or that, but I'm I'm interested in those other two models. >> Yeah. So, the group North, I think they're Fort Collins, right? Yeah. >> Yeah. That's actually Ninja Selling was born out of that out of that brokerage. And yeah, it's I respect the heck out of it. I don't know that the co-op model is for our brokerage. We'd have to talk about that some more. I do know that fair compensation is whenever you have fair compensation, people stick around.

64:20 As soon as people think that the compensation is unfair, they leave and our brokerage would focus a lot on retention. >> So, I think fair comp's very important and co-op models certainly certainly feel fair and are fair often. >> Yeah, transparency. I forget where it was, but I was just chatting with someone. Oh, you know, maybe it was Tim from Homeward. He was he was sharing his story through the some of the ups and downs over the past couple years.

64:45 And I think he said it, you know, at some point we just opened our books to our employees. You know, we weren't hiding anymore. We're just like, and not that he was ever hiding, but you know, you're just opening up the books so everybody understands the P&L and and you get a lot of really powerful buyin from doing that. So, for our brokerage, I'd want to do as as close to that as we could as as comfortable. And I like whether it's a co-ownership model or a buyin model, just being transparent.

65:12 >> Yeah. I think that everyone wants fairness and equity, right? So, what what I've seen it not work is whenever no one knows what anybody else's splits are, >> right? And so if if you know, hey, you know, Jan gets this better split because she is produced at this level and that's why she has that split and I can get there one day if I just do this thing, then people are generally okay with that. >> If they think that there's favoritism, then it becomes toxic incredibly quickly and, you know, run away from that.

65:42 >> I I would I would push us pretty hard to look at some of those alternate models, the co-op, okay, >> or or an ensemble type model where people have to buy in. We can agree that it needs to be fair comp and that it needs to be you know somewhat exclusive. >> Yeah. And open book, transparent. So trying to minimize the amount of conversations you get from agents that are like I I want more money. Pay help me pay for this marketing or do this, right? If you can just point to something and say, "Here's our numbers."

66:10 >> A friend of mine was negotiating his comp. He's a he's in the tech industry. He was negotiating for a CPO rule and we were talking over like a beer and he said, "Look, man, it just can't be distracting. The comp just can't be distracting." What he meant was it needs to be high enough that he's not concerned that he's being shorted, right? And so if you have comp models that are you know, opaque, that are you know, hard to understand, not transparent, agents are going to worry about it. And the more time they spend worrying about it, the less time they spend on their clients. So, it goes back to this sort of north star of like does it help them with their clients? And if you have a fair model that's transparent, yes, it does.

66:47 >> Minimize distractions. >> 100%. Focus. >> Focus. Yeah. I think our brokerage, we'd have to sit down and and do this focus filter on everything. Think about what are the things that agents think about today that we don't want them to have to worry about. >> 100%. >> Yeah. >> Yeah. Minimize distractions, reduce turbulence, move disruption. >> Yeah. And that's part of the promise. >> Yes. >> Right. Join our brokerage. write write us a check for 10 grand or or whatever it is, you know, join. But the the idea is, yeah, maybe maybe it's not radical transparency. Like, everyone knows everything, but it's very clear. It's not opaque. It's transparent. You've got it. I've got it. It's all the same. So, we're not going to worry about it. It's not going to be distracting.

67:27 >> Well, I think it's important from leadership, too, to explain the why, right? Whenever you you'll build trust when when people question things, that's normal. And whenever you've explained to them the logic behind decisions a number of times, they kind of quit questioning it and they get back to focusing on what's going to move the needle for them. >> All right. What else? What what what's our tech strategy? >> yeah, it's to do what works, right?

67:49 To focus on what's going to move the needle for the agents and to remove distractions. >> Well, we got to think about where we want the needle to move, right? cuz you mentioned this this like 5year goal 100% referral and then you know 5 years after that like within 5 miles of my house or something like >> is that the goal >> for everybody if that's what they want I mean I think you need to understand what everyone's goals are and if they have different goals as much as I said that you know teams are not good for a lot of agents even most agents they are good for some and if we want to choose to support teams then we need to know that that's their goal I would choose to support teams when the goal is right when they're doing it for the right reason and yeah so someone that wants to build a team, someone that wants to produce 50 million, 100 million, they're going to work outside of a 5 mile radius. But what you're going to find is that a lot of agents want to just work close to home by referral. And those teams also also want to generate a lot of referrals from their SOI. So techstack right now in most brokerages doesn't do a lot for SOI, right? And it should, your tech stack should look at soi really hard, if not primarily.

68:54 >> Interesting. So we're we're limiting to the top 20%. >> And we're focused on in general folks that are working off their soi, their sphere of influence >> or helping them get there. >> Right. So we're working backwards from there. So any sort of tech solution that we have has to flow back into that. >> Yeah, I think so. Is it too prescriptive to ask what that could do or what that looks like or well I mean so you can look at to go back to ninja selling or to go to creating super fans you know you can understand the strategies there and then say how can tech help us do that better >> right it can't make the calls for you it can't you you know you're not going to automate gifting to a point that the agent never has to do anything and their phone just rings with with business but it can help the agent know when those events are happening it can can help like automate gifting. It can help them do a much better job, not lose track of things, make sure that they can do it more quickly.

69:51 >> That's what the tech needs to do. >> Yeah. Okay, that's smart. Do we hire any tech people? >> You know, I I can speak to what we do, which is Yeah, we do. But I think that if you can find off-the-shelf solutions, you should always go with an off the off-the-shelf solution rather than build your own. If you find something that does what you want to 90% and as long as that 10% isn't critical, then you don't need to reinvent the wheel. You need to just use it. Why have you hired tech people?

70:14 >> Because there were missing pieces. >> Yeah. I mean, the most obvious was I mean, to go back to like tracking kids birthdays, that wasn't anything that we could do with an off-the-shelf solution effectively. I mean, there were like these weird workarounds to make it work. >> So, whenever you have something critical that works really well, like, you know, truly caring for your sphere of influence, then you probably should spend some money on it. Like real money, like not just trying to throw a cheap solution.

70:40 >> Are we 100% focused on sphere? Like what if what if an agent joins and they want to buy leads from Zillow? >> Yeah, you should f I mean you should absolutely allow them to do that. So the what we always say is that if your sphere of influence will generate enough sales for your business, then you probably don't need to worry about anything else. But if it doesn't, then you have to augment that. And the idea of only using your sphere of influence to augment and grow it, it takes a long time. So you know, whenever I was 24 years old, my sphere of influence was a bunch of other 24 year olds. Nobody was buying houses then, right? Right? So, we had to figure out something that would work and went to dig digital marketing.

71:13 >> So, if someone needs to buy leads, if they need to host open houses, anything they need to do to build that book of business, we should support it as long as it's effective. >> What about training? >> It needs to I mean everything needs to be looked at critically like how effective is this? because it's easy to say we want to train on every we should train for social media and we should train for open houses and we should train for Zillow leads and we should train for this and you just don't have enough time in the day and it distracts the company and it also distracts the agents. So I think you have to look at what are the most effective things they can do what's critical to their business and if it sits in that 20% use a pto principle if it sits in the 20% that's going to move 80% of their business then you should probably train for it if it won't then you can say guys look that's great but you can find training for that elsewhere >> how do we do training is that YouTube videos or are we doing like a onetoone mentoring isn't mentoring like the gold standard here >> I don't I mean I I think that that's almost impossible to do onetoone mentoring unless you have a program so I've been very interested ed in putting together some sort of mentorship program, but they're very complicated and it's something that, you know, I think that would probably have some pretty big wins, but would be a pretty big effort. If we looked at it and said, "We have two years to push out this mentorship program to monitor it, to make sure it works, to fix it as we go, then that would be an effort that's probably worth doing, but it could fail." So, you have to be willing to say, "Hey, we got to scrap this whole thing after 18 months if it doesn't work."

72:38 >> I want to reinvent training. I mean, I just think any sort of when I think about training in this space, it just seems like a boondoggle. >> You want to reinvent it. >> Yeah. Yeah. >> Yeah. So, I think that focusing on your agent like who you're who your ideal agent is, who you're bringing in solves a lot of that. So, if you look at how are we going to prod you know, how are we going to provide training for a brand new agent? How are we going to provide training for an agent who's been in the business for 5 years and can't figure out how to generate enough business? That's really hard. But since we've already drilled it down to agents that are in the top 20%, that is probably something that you could that you could bite off.

73:14 >> What what if there's what if we hired a full-time person and we had a that that's all they did training >> in, you know, no like we're not cutting corners. They're they're in the office just like everybody else and we've hired this person. That's all they're doing. And then we have a a boot camp program with a capacity, right? You can do 10 people through it at at once and that's all this person does. >> Yeah. So, I would say bite-size approach would probably be better, you know, because if you have a boot camp, then you're going to have redundant training for everybody in in the class, like you're making them sit through a week or two weeks or whatnot.

73:46 >> but I think that if you have if you have a training program that they can go in and take what they need when they need it, either self-paced learning or a lot I mean, we love when people are are doing things in person for the same reason that you and I are sitting here. You collaborate a lot a lot better. Yeah, I think it's a great idea. >> Well, I'm I'm saying it's like it would be oneon-one. So if I'm the if I'm the person doing training and you're the agent, yeah, we would meet, you know, x number of hours a week and I would help you however I possibly could. I would tap into, you know, best best-in-class resources.

74:17 >> Well, then you look at, so it can get pretty expensive, right? I mean, how much does this person how much are we charging this agent in terms of split and how much, you know, are we paying this person and they're getting one-on-one? Like how many hours a week are they getting? So these are tough these are really tough decisions because what you're saying I mean everybody wants to provide the best service they possibly can and the agents want a fair split as well. So you have to so then it's going to pull on the simplicity also right like you want splits to be simple and understandable. So at what point like where does the agent choose what they're going to pay in and then you go into this model of like okay well you going to make them pay for the training well now they're going to look at the coaching industry which we really kind of don't want them to do that because we don't know what they're being coached on. So there's a lot I mean to unpack that's probably going to take longer than we have today. But I will agree that training is important but it should be really analyzed and and you know the best systems are simple systems and I think that you should challenge every every additional step in any system right like okay we're going to add this thing because it sounds really good what's the overhead going to be over 6 months 12 months 2 years can we afford it so that it' be in your scenario you know $120,000 a year salary for this trainer that trainer has 40 hours a week. How many hours a week is this boot camp? How many can they perform? What's the cost going to be per agent? It's a lot of things to unpack.

75:39 >> Yeah, it is. All right. Well, I we don't have to do it now, but I I would want to unpack that. And maybe it's less I I think it's less training and more of mentoring. >> What ends up happening in great brokerages with great culture is that you get a lot of peer collaboration. M >> and what you'll find is that agents are more receptive to training from their peers than they are from the top down anyways.

76:04 >> Yeah. >> So if you can build a culture where things are done relatively the same way >> and the training a lot of it takes care of itself. >> We kind of have that with the the hub online community. >> I moved I moved ours to circle as well because of that. >> Yeah. Well I mean it's not just the platform but it's the people. >> Well agreed. Yeah. And I wasn't say but because that was so good >> we looked at it and said wow this organization's great. Yes. That's what happens.

76:27 >> So, we have a I mean, we have a small number of people, a hundred, >> and they're all like-minded. They want to learn and share and grow. There's there's a culture behind that. >> Well, and the other quality is that they're all vetted. So, if it was if it was a huge tent and it was a thousand and anybody could get in, what would happen is that in that online community, there would be a lot of bad advice and there'd be a lot of bad ideas and then I would tune out. You have good the the best folks will tune out whenever >> incompetent people start becoming loud.

76:54 And so that's why the vetting process on the way in is so critical. >> Okay. Well, that's I think we got to interesting insight and learning out of that. I would I I like that. I like that because I I think I mean I think training and mentoring coaching is really important right now. I'm getting this sense that you know people are kind of like you said just jump in the pool and learn how to swim and it's a math problem.

77:15 >> One other interesting point before we move on from this and it's some it's why I'm very interested in mentorship as well. most experienced agents want to provide mentorship at some level and that's why teams feel so good to go start a team. A lot of times they're trying to scratch that itch of like imparting wisdom. I do it. I love helping people, right? >> So you're satisfying both ends. If you have peer collaboration, if you have senior agents that are mentoring agents that need more help, it can be incredibly satisfying. And then you have to figure out like does money change hands? What does that look like? But it's something that could be very rewarding.

77:46 >> Yeah. All right. So what about our communication strategy? Compete where we can win. Yes. >> How do we do that? >> yeah. So are you talking about like our overall communication strategy? Like how do we impart communication or what are we going to communicate? >> What are we going to communicate? We got a what you know 100 agent brokerage in Boulder. >> Yeah. I mean you just look at what Cipher does and just follow that. I know.

78:08 >> Sort of like so compete where you can win. one unique one unique advantage that you have as a as a boutique is the is the local cred, right? So there there's a percentage of agents that really love local and Boulder is very similar to Austin. That's a higher percentage in towns like this. People are really proud of where they live. So you really want to lean into that. You want to lean into, hey, we're local. We always will be.

78:32 >> you need to lean into culture because no one like the big guys can't compete with a local boutique in terms of culture. just can't do it. You know, even if you're amazing at scaling culture, it's still going to get watered down the bigger the you get. So, you want to lean into that stuff. >> Yeah. I I I would want to focus on high quality, hightouch, you know, this concierge style serve. Again, our audience here is agents. It's not consumers, right? Yeah. So, we're we're kind of what do we say to agents?

79:00 >> Well, the good news is that the messaging we deliver to agents also resonates with consumers. Consumers want to know who they're working with. They care the most about the agent, but they want to make sure that the brand's aligned. Like, if we had some weird misaligned, like, you know, if if a lot of consumers EXP was very heavy-handed and the consumers were hearing all about this passive income and whatnot, that might not be great, right? But, but they're smart. They don't. And so, with us, every piece of messaging that we're delivering to the agents, the consumers will also, it will resonate. It will resonate with them. to steal a piece from, you know, the study that we just commissioned. You know, we're big enough to back you, small enough to know you.

79:38 >> That's something that the big guys, they can say it, but people won't believe it like they will with a local brokerage, >> right? I'm trying to figure I'm how does this all distill down like what's the message? And I maybe that's too big of a ask for us kind of thinking right now shooting from the hip >> to the to the agents. What's the message? >> Yeah, I don't think it's local cuz that's non anybody can compete. I'm also local. I'm also local.

80:02 >> Well, limited though. I mean, most of the time local is also small is also I mean I mean really small, right? A lot of times local is disorganized. A lot of >> You know what? I like what you just said. Big enough to back you. Small enough to know you. >> Yeah. >> Okay. So that again, we're not going to get graded on this. So that's >> we've started using it around the office. It works pretty well.

80:21 >> Yeah. >> Yeah. >> Yeah. All right. So something in that and and highlighting the the quality aspects of what we have and and then you know in terms of communicating that out I mean that just that that if that's the concept we go with that needs to get distilled down into a nice concise message. Maybe that's it. Maybe it's a version of that but but that's it. Like for the next 12 months we don't talk about anything other than that >> than that.

80:43 >> That's the recruiting message. That's that's it. >> Yeah. >> I mean I'm going to veer into a pet peeve. whatever the name of the brokerage is and the signs can't be stupid. I mean, this is a sign that people are going to choose to put in in front of their half a million million dollar house. I've seen some stupid signs. >> Agreed. No, I I remember you I think you posted about it on LinkedIn or wrote an article about it, but yeah. So, so brand's important and I think Compass is a good testament to that that when you have really solid branding, people really love it. So, the branding, it's too easy to have a great brand. It's also very easy to let that brand run away. So, you have to have some brand standards and like you said, no stupid signs. We can agree on that.

81:26 >> Or or logo. >> Exactly. >> Yeah. You know, we talked about leadership and agility and and whatnot. I So, I we just we need to come back to that. Whatever the leadership structure is, like if we were starting this, I'm I'm hesitant to say like, oh, we're we're co-CEOs. Yeah. >> Why why have two when you just have one? Like basically what we need to optimize for is fast decision-m. Yes. In in my opinion. So if we think about investors and are we raising money from someone and and do we have a board it again I'm naturally hesitant to do any of that.

82:00 But for for that and leadership really I would just optimize to speed. >> Yeah. So you have to have one decision maker then at that point. You know everyone needs to know their role. You can't have you can't have two chefs making two different recipes even if they're similar. >> Right. Right. That's important, you know, because I think there's probably a lot of people out there that are going to, you know, start a business with a buddy or two, right? And anytime I I see the phrase co-CEO, I I roll my eyes and groan out loud. I mean, it's just >> What happens if you disagree? Are you going to go is it go to a vote? You both have one vote. What What happens?

82:30 >> It doesn't Yeah. So, figure that stuff out earlier, you know, maybe swallow your pride and just get one person to be able to move fast. make the make the decisions. And you just got to like the other thing is you got to trust each other and and kind of like the Jim Collins thing, you got to make sure everybody's you got the right people on the bus and in the right seats. So you just got to be able to follow through and make sure you have the right person in in each job.

82:56 >> Well, you and I can argue over who gets to be CEO and we're both going to argue that we don't want to be that CEO. So >> yeah, maybe we hire hire someone. >> You know, we we talked about the research about practical and emotional. We should touch we should touch on that. Yeah. So, we've talked about practical a lot, right? And that's I think that's this is a good example of why everyone sort of goes to practical. It's easiest to communicate. It's easiest to think about. You know, if you ask 10 people what is culture like what is culture?

83:25 You're going to get 10 different answers. We would have to build a great culture. Would you agree with that? >> Yeah, absolutely. How? >> Well, and what is a great culture? I think that's the first question you sort of have to have to answer. >> Yeah. >> So, you know, what's our mission? What are our core values? even though there's one CEO, we have to agree on those core values. And I think once you have those core values, you then have, you know, a north star on how you how you do things.

83:49 >> I mean, is that all just pretty straightforward like what you described, I can kind of imagine that and map it out, right? You go through an exercise, you write some things down, you print out some posters, boom, >> I guess. I mean, core values can be lazy and weaponized. They can also be really, really good. They have to mean something. So, you know, one of them would probably be something to do with focus. I would I would think we both agree on that.

84:08 >> Yeah. You know, I'm thinking about actually focus is really interesting. Maybe that's the >> it I think it's it's very interesting to me that if you lean into focus, you actually are a market differentiator in in the brokerage world. >> Yeah. No, I I like that. I and I think that would appeal to people. Focus. And that can be getting rid of all the noise and the hype and just focusing on what matters. the other thing that comes to mind when you're talking about this is I'm thinking of compass as an example. you know whatever like so whatever our culture is and our core values are I think we got to look at the compass example in terms of how that's communicated and put up like every every office you go into you know there's posters on the wall there's t-shirts there's banners and email signatures like it's freaking everywhere you know it's everywhere so I think it's not enough like when I got back in the day when I had my own company you know we had core values and I don't know what I did with that. I probably printed it out and hung it above the printer or something like that, right?

85:11 >> but to do it again, it's like you're making t-shirts, >> you're putting posters up, you're talking about it every single week in every all company, all hands meeting. >> Agreed. I don't think you can I don't think you can overemphasize it. And I think that you look to Compass's communication style and you say, "We want to emulate that as much as possible." You know, we want to make sure that everybody knows what we're doing. We want to make sure that everyone knows what the goal is. If focus is the goal this year, then focus needs to be the goal this year. Or maybe that's a core value and it's emphasized.

85:41 It's evergreen. We're always emphasizing. >> I think Yeah. Think long term. I think so many people are hesitant to just kind of keep saying the same thing over and over again. They they want to change. They want to do something new. >> Yeah. So when I started writing a newsletter years ago, I tried to make it different every month. And then I was I was like, well, I don't even need one this month because we've already said everything that's important. And then you say, well, I made a commitment to write one every month. And so you start recycling stuff and you realize that no, repetition is very important and people want to hear the same messaging.

86:11 Especially we've talked about seasonality in the market so many times whenever we talk about how to advise clients >> and we can't talk about it enough. >> in our meetings I I don't know how many times I've thrown up on the screen that the the question to answer is how do you com you know how do you win in any market? That was a quote you had on LinkedIn. Yeah. >> And you can't throw that up there enough. So, if you're trying to do something new all the time, you're probably doing a disservice because successful strategies don't change very often, >> right? No, they don't. And and I think if you're if you're thinking about your team, they they need a very clear strategy to follow, that's not changing.

86:46 >> So, there's a long like the there's delayed gratification on everything that agents do. Like, if you go out and do what works today, you have to do that for at least a few months and then you're going to see results a few months after that. So it it's it's it's a coaching opportunity in terms of helping them understand that you're not going to see immediate results. It's going to take time to build this and yes, stay the course. No, don't worry about this new shiny object. A couple of years ago, it was the predictive analytics, right?

87:14 Or hey, these companies said we can guarant we can tell you exactly who's going to buy or sell this year. And I was like, man, I don't think that's going to work and I think it'll probably distract them from calling everybody. So let's probably not use it. Hey guys, you have 200 people in your database. There's 365 days in the year. Why don't you just make a phone call every other day rather than trying to know if 20 of them are going to sell this year to pick up the phone. I'm off on a bit of a tangent, which I do, but I think that focus is a core value. I think that it becomes critical for leadership to reiterate what will work and what's important and it's not going to change often, if ever.

87:45 >> So, why does an agent want to come to our brokerage? >> Well, they're going to come for practical and emotional reasons. >> Yeah. >> Yeah. They won't get this elsewhere. You know, if you go if if you go to coaches, right, there's I I know anecdotally that most of them don't focus on this. And if you go to >> focus on what? >> On repetition, on what on the hard work, right? A lot of times they're they're pitching things that change because they want people to come back, >> right?

88:14 >> you know, so I think that agents want number one stability, meaning that there's not a lot of disruption from their business. Good agents, the top 20%. Right? They want to make sure that things are not going to move around on them a lot. And then those good agents do understand that hey this has worked in the past and reassurance that nothing has really changed is a big it's a big value ad to them from leadership. And why will they come to the brokerage?

88:39 Well, they'll come for those reasons and then they'll come because the tech that we've picked out is phenomenal >> and the splits are fair. >> It's tough. it in a sense we need to convey this message that we're focused on the basics the core the the repeatable fundamental boring things. >> What's fun about this is you're a contrarian whenever you keynote events because you bring up the boring, >> right? Everyone else is selling quick and easy and complicated, right? And so I think that that is another like really making focus a part of the brand and then helping everybody understand that what you need to focus on is really boring. It's catchy. It's crazy, but it's but it's catchy because people have been sold on all of this other stuff for so long.

89:24 >> Well, that's who we'll attract, right? By kind of planting the banner in the ground. You you'll attract people that that want that. >> That's probably who you want around because those are the type of folks that are not going to be big management overhead. >> Well, it's who we want around, right? we're trying to build a national brokerage or or something different. It might be a different set, but I think for us for this, this is what it would be >> 100%. And then the question of does this scale beyond a single market, you know, maybe that's for somebody else to decide.

89:50 >> Yeah, that seems pretty tough. I I don't know about you, but I've seen it, especially with a lot of these prop tech disruptors. They start in one market, they do really well. It's their home turf. Yeah. you know, they know people, they're they're motivated, they they know the space, and then they they mistake that for product market fit as opposed to just a local grind or a local advantage. And then they launch in another market and it doesn't work. It's really hard. They don't know as many people. They don't know the ins and outs of the local real estate market.

90:18 >> So maybe that's it. Maybe maybe this doesn't scale and maybe that's why it hasn't been done at a national level. >> Yeah. Actually, I mean, bringing it to a national level is yeah, I don't know that we do it now, but I think you could take everything we said and say, "Okay, how would I apply this to a national brokerage?" If I was suddenly the you know, the CEO of one of these big incumbents and shackles were off. I could make any decision I wanted. You know, the the board said, "We're going to give you 5 years. Do whatever you want. We'll talk to you. We'll talk to you then." I think you could pull out a bunch from this conversation.

90:47 >> I think that corporations have scaled culture like this. I don't know that a that a brokerage has. There's Have you heard of the law of 150? >> No. Is that like the number of people you can have in your network? >> Yeah, it is. And and people have proposed that that's how large any office should be. That's how large any business organization should be. And then it shouldn't get any larger than that. Well, obviously companies want to grow larger than 150. So, how do you do it? And you end up with these units and each unit has its own culture, but it all needs to align. It all I mean, it's the same culture, just a bit of a different flavor, right? But they're but they're building it on their And then you have someone at national at corporate who's overseeing and you have to have everyone has to be really really disciplined and understand the goal. And if culture is the number one goal and making sure that we're all aligned on focus and we're all aligned on what works and that boring is what works then you're just sort of overseeing these 150 people units and making sure that that they're operating correctly.

91:39 >> You know what else we need to do? We need to make sure that if somebody calls our phone number they get to talk to a human being within three rings. >> That'd be pretty nice. Yeah. I think that that that would lead towards if if it's a consumer first, if it's a people first company and consumer first, you know, it's a big purchase, you probably don't want to be put on hold. You probably don't want to hit a press one for this, two for this, three for this.

92:00 So, communicating care. I agree. >> Yeah. Yeah. Absolutely. Especially now, I mean, in the in this age of AI and chat bots and telephone trees and whatnot, I mean, that's not I don't think I mean, nobody wants that, >> right? >> Right. You want a fast solution to your problem. >> or be transparent like sometimes there are support systems that need to have you know email support only and helping people understand what they're going to get and that they will reach a human quickly just thinking out loud in terms of sometimes you can't scale like you can't have a direct line to the every agent in 150 organiz 150 person organization doesn't have a direct line to the CEO can't do it >> I don't know so I Greg Schwarz CEO of Tommo you know he they're they're in the mortgage space he says like on every preapproval letter he puts his cell phone his cell phone number. He's like, "If you got any problems, you call me."

92:52 >> Okay, that's a bold statement. That's That's tough. >> It is. And just grab your pen. That phone number is No, I'm just kidding. Okay. >> I thought you were >> But but I don't know. You know, this not if if we're focused on focus and quality, the idea that something doesn't scale is okay. >> Yeah. >> You know, and if we're really serious about about things like that, I think it's we got to get radical. you do the opposite of, oh, we're going to put an AI chatbot, we're going to put a automated message in.

93:18 >> Well, I think you have to be realistic as well, and you have to say, okay, does this work, right? Like, can can the CEO answer the phone at 9:00 p.m., you know, for any from any phone call. And sometimes people want to talk to somebody at 9:00 p.m. And you have to have boundaries and you have to say, when will this, you know, you have care and you communicate care, but you also have to be reasonable. And I think this ties in with where we started this kind of co-op business model.

93:44 >> Yeah. >> Because I, you know, we've we've talked about this before, like how do we how do we get agents to call people back and how do we pick up within a couple rings if we were theoretically doing this? and and I think you need you need this like a node network in place, kind of how the internet works, right? If one DNS server goes down somewhere, the internet doesn't fail, right? It just fails over somewhere else. So if if I'm calling you as an agent and you're busy, I I can't get your voicemail.

94:14 >> This So yeah, so this is part of the support system and it and you have to take a hard look at the support system in and of itself. So where do agents go when they have questions? Do they go to circle? Do they go to a phone? Do they go to their peers in some other way? And you take a really hard look at that and then you communicate this is how you get your questions answered. And >> well, you're talking about agents. I'm thinking about consumers.

94:35 >> Oh, consumers is a no-brainer. Sorry, we're on two different conversations. Yeah. Consumers, the phone has to be picked up every time, like even at 9:00. And you can handle that with offshoring you with good offshore people. >> Okay. And I think it comes down to culture. Yeah. >> Right. If you're an agent and I'm an agent, we're and and we both like wrote a check for 10 grand to join this brokerage and we feel like we're co-owners and we own part of it and it's this co-op mentality. If if if you're busy and the phone rings, I'm going to I'm going to pick it up. I'm going to be like we're going to have this culture of we want to help each other out and you're going to be okay with that, right? And I'm not saying that definitively like this binary like you will and I will, but I think we'll be more likely to be in a position where we want to help each other out.

95:18 >> Yeah. I would say so I'm not sure that you need to and this is where you and I would have a discussion about the co-op piece. I think that whenever you're talking about happy, satisfied people in general that are successful, whenever you're happy, satisfied, and someone else needs help, you want to help, right? So, I think that you're just trying to make sure that you have that culture of collaboration and collaboration needs to be a part of it.

95:39 Now, whether or not, like you said, they always pick up at 8:00 when somebody needs help. That's not an expectation, but knowing that there is a network out there that they can get their questions answered. They're hard questions either from leadership, from actual staff, or from from peers. critical part of the critical part of the brokerage. >> Yeah. >> Okay. Good. >> Okay. Is that it? >> I mean, if if if you want to summarize all of it, when you nail all of these pieces, it's the byproduct will be culture.

96:04 >> And so, what's interesting is you lead with culture and then you back up what you tell people your culture is. And then the byproduct is the culture is solidified and perpetuates, which turns into a flywheel. >> And it feels good. Like I'm again, I'm not going to start a brokerage, but if I were, this is this is it. >> Okay? you know, this is it. And I think that's it's interesting because it's not only what it is, but it's it's it's what it isn't, right? It's not AI first. It's not tech first. And it's not because, you know, I'm some sort of fuddy duddy that doesn't believe in tech. It's just looking at looking at the data, looking at the evidence, seeing what's real, seeing the signal, seeing what's actually moving the needle, seeing all that boring tech. And the opposite, you know, I mean, it is it's very clear.

96:47 There's there's very clear through lines with with all of that. So, with everything that I've learned and I've seen and I've know and the the research we've we've done together and the research we've done with other people and the analysis we've seen, I mean, this this feels very easy in terms of where it nets out, right? I don't feel like I'm missing anything or sacrificing anything or compromising something. >> Yeah. I I I think it's relatively simple, but I think it's hard to execute.

97:13 >> Absolutely. Absolutely. On the execution side, I I think it comes down to focus, right? And you know, time and time again from from doing my podcast and talking to people, I mean, it's just outworking everybody else. You can't be like the smartest guy on the block, but you can outwork everybody. And there's some businesses and and people and human beings here that are clearly outworking their peers. >> Yeah. >> And it shows. >> Focus and tenacity go a long way.

97:37 >> Yeah. Focus and tenacity. Absolutely. All right. Cool. Well, I'm I'm happy with that. Again, the the point of this is we're actually not starting a brokerage and I don't expect anybody to to kind of write this down and start this brokerage. >> I don't care if you do. >> I mean, it'd be great, but that's not the expectation. But the hope is that, you know, out of the conversation and just the thought process and the critical thinking, folks are able to take some some key learnings out of that. Yeah.

98:00 >> And, you know, maybe the entrepreneurs one, two, three years down the road that think they're going to come in and, you know, revolutionize real estate will, will will learn something. It's similar messaging that you've had a lot which is that the bor boring is what's missed and and there's not you know if there were a hack out there were a shortcut out there people would be using it and it wouldn't become it would it wouldn't last very long because everyone would start using it at that at that point in time. I think the hack and the shortcut is really it's these compensation plans that that motivate all of the agents to start recruiting for them >> and that's getting pounded right now.

98:35 >> Right. Right. It's a race to the bottom and it's it's tough to make if you're not at scale. It's kind of impossible. >> All right, Eric Braramlet, thank you for coming to Boulder and joining me for this. you've been listening to Context, Mike Delprey. If you want to check out more podcasts or more of my research or join my mailing list, you can go to website at mikedp.com. And thanks for listening. We'll catch you next time.