Podcasts about james so

In this episode of the Building Texas Business Podcast, I spoke with James Dieter, Chairman and CEO of Principle Health Systems. James shared his journey from orthopedic and interventional pain specialist to healthcare entrepreneur. Motivated by inefficiencies he witnessed firsthand, he created a more efficient healthcare model focused on mobile diagnostic services. Principle Health Systems has now conducted over 3.2 million mobile lab tests in 2024, demonstrating the success of his patient-centered approach. James opened up about leadership challenges and the importance of self-awareness when managing strengths and weaknesses as a CEO. By redefining Principle Health's mission, vision, and core values, his team created a unified direction that improved employee satisfaction and strengthened company identity. His insights on strategic partnerships showed how the right team can transform an organization. We explored their innovative "daily DON" program, an AI tool that helps Directors of Nursing prioritize patient care in long-term facilities. This technology enhances clinical decision-making while serving as a distinctive marketing asset for the company. James also discussed the Texas healthcare landscape, including Medicare conditions and reimbursement rates. Throughout our conversation, James shared practical advice on informed risk-taking and learning from setbacks. His experience navigating the healthcare industry offers valuable lessons for leaders and entrepreneurs looking to make an impact in this complex field. SHOW HIGHLIGHTS I explore James Dieter's journey from an orthopedic and interventional pain specialist to a leader in healthcare entrepreneurship, emphasizing his efforts to address inefficiencies in the healthcare system through mobile diagnostic services. We discuss the transformation of Principle Health Systems, highlighting its achievement of conducting over 3.2 million mobile lab tests in 2024, with a focus on patient-centric care. James shares insights on balancing strengths and weaknesses as a CEO, stressing the importance of self-awareness and strategic partnerships in building a thriving organizational culture. We delve into the development of a strong company culture at Principle Health Systems, driven by redefining mission, vision, and core values, which has enhanced employee satisfaction and strengthened company identity. The episode covers the innovative "daily DON" program, an AI-driven tool that aids Directors of Nursing in prioritizing patient care, which has been recognized for its impact on clinical decision-making and marketing. We examine the challenges and opportunities in the Texas healthcare landscape, including favorable Medicare conditions and low reimbursement rates, alongside the growing role of AI in insurance claims processing. James reflects on leadership and problem-solving, emphasizing the need for quick decision-making, informed risk-taking, and learning from setbacks to drive business growth and sustainability. LINKSShow Notes Previous Episodes About BoyarMiller About Principle Health Systems GUESTS James DieterAbout James TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Chris: James, welcome to Building Texas Business. Thanks for taking the time to come on the show. James: Glad to be here. Thanks so much for having me. Chris: Yeah. So let's start at the beginning. Just tell us a little bit about your company and what it does and what it's known for. James: Yeah, so Principle Health Systems has evolved over the years. When we started out we really had multiple directions. We were going in just as a healthcare services company. So a little background on me. I started out in orthopedics and interventional pain. I was really just dedicated to practice inpatient, outpatient and surgery. So going through that for my first decade of work, I saw a lot of inefficiencies in the healthcare, outpatient and surgery. So going through that for my first decade of work saw a lot of inefficiencies in the healthcare services sector, specifically in the Southeast region of Houston where I worked. So I wanted to build a better system right. Our lab results took too long to get back. Our pharmaceuticals weren't in stock at the pharmacies we'd send our patients to. Mri results took too long and started to, through my entrepreneurship journey, go out and started to build little sectors of where I could have influence really over my own practice to have a better outcome and through that over time started over 20 businesses in the first 10 years Just had numerous pharmacies, laboratories, diagnostic facilities, did three surgery centers. I was involved in one large hospital system and then got to a point where I said, hey, let's wrap this thing together, let's put it together. I want to have really just one source solution where we could come in and work with physicians and provide a host of different services. That went fairly well. The service level was outstanding. The most difficult aspect for us was really the payers actually having reimbursements without being contracted with certain individuals. From there, we really, about six, seven years ago, found a niche and that was called long-term care. So we define long-term care as skilled nursing facilities, assisted living facilities and home health facilities and we provide laboratory and diagnostic services to those guys. So, in-house, you call it your house if you live in a skilled nursing facility or assisted living facility, or at home, but we provide mobile diagnostic services. So we go out and we offer labs, x-rays, ultrasounds, echocardiograms and ekgs in the home. So you bring it to the patient. Bring it to the patient, that's right. That's right. And last year, 2024, we performed over 3.2 million lab tests mobile. So, with a large amount of those being for stat tests, right? So tens of thousands of stat tests per month where somebody needs something in four to six hours and we get us turned around for them. Chris: Okay, so it sounds like the inspiration for you was maybe frustration born out of frustration, for sure, and a gap in our healthcare delivery service, so he's shedding more light on that. I mean, you've mentioned this entrepreneurial journey. I mean most physicians and doctors don't have that. So what was it for you that you kind of took frustration and turned it into action? James: Yeah, I mean just a matter of you know, I'd have a patient that was really suffering right, specifically on the interventional pain side. This is not uncommon. You have a patient who's in a very bad position and you're already jumping through hoops with insurance companies. So it might take three to four weeks to get something approved. And then you're in, then you set them up for surgery. Well, you, the assumption is okay, we're going to have the lab work back, we're going to have the MRI back in time, and then it just wasn't happening. So you're pushing off surgery, you're pushing off procedures and just over time it's just a great deal of frustration. At the end of the day, the mission was always to help the patient, and if it's all about the patient, we've got to do something different here. And that was the biggest frustration for us was just the delays and turnaround times on the imaging and laboratory specifically, but then also getting medications, you know, sending patients out and having sometimes three, four, five phone calls come back up. The pharmacy didn't have my medication, the pharmacy didn't have my medication, the pharmacy didn't have my medication. So that's when we started opening up our own pharmacies back then as well. Chris: So just there, right, you said we. Who did you partner with? How did you go about finding a business partner? If that's the case, going about setting up a business, because you don't just turn on a switch right. There's planning, there's financing. Entrepreneurs in any industry, in all industries, go through that when they're starting a business. Let's talk a little bit about that journey in the beginning, of how you got it going and some of the lessons learned in that process. James: Lots of lessons learned in that process. You know, speaking of that, we call it chewing glass, right, okay, I? heard that one. So much of it's just a grind right and just figuring it out. But as far as partnering goes, I've had numerous partners in different individual business units over the years. When I formed Principle Health Systems in March of 2016, I had to get really specific on who am I going to allow on the bus, who do I really want to partner with on the bus? So I pulled away from certain partners, left goes, let go of certain businesses and then brought some together. So, in total, I believe we started out with there were three of us on day one that we brought in, you know. But I had different skill sets, right. I mean, I was trying to always try to be very honest with myself about where are my weaknesses right. I'm I would say I'm highly visionary. I like to think big. I like to have that 50,000 foot view of where we're going, set goals, set mission, set vision. Big culture guy. I love to talk about culture and instill culture throughout the organization. Chris: We'll get to that in a minute. James: Cool yeah, but just frankly, I would say weaknesses are on details, right. So I've just always been someone who likes to move forward and not analyze every aspect of it. So partnering with some people that were strong in an analytics and detail side of the business was really important for me, and I still have some just phenomenal business partners today in that regard. Chris: That's great. You touched on two things that I think are very common, some of which when we're advising clients. The first is choosing your partners right and being clear about expectations, documenting what the deal is on the front end and making sure you know that where everyone's going and what the roles are. The second is understanding, especially when you're the leader, your weaknesses in hiring around that, because you can't do it all and you're not going to be good at everything, and so I think everyone that I've met that's been successful has that self-awareness Right. How did you go about getting comfortable letting go of some of those job responsibilities and whether it was a good hire or a partner that you chose. James: That's a tough one. I mean, some of it was truly difficult to let go of. And then other pieces. You know you tend to be good at what I would say you tend to enjoy what you're good at. Sure, yeah, and that's one of the so to really convince yourself like, let's go spend more time at what we're good at, more time at what we enjoy, I would say I didn't focus so much on letting go as focused I wasn't spending so much time focused on what I'm not good at as what I was good at right. So it was just a matter of, by virtue, of spending more time on what I enjoy, doing less and less of what I don't enjoy. And that was easier for me to let go. It was almost to to to let it slip to let it slip away rather than to give it away and know that because you weren't giving it attention. Chris: someone needed to Right. James: Right. And then you know, obviously just helping to build folks up I mean, we have right now an unbelievable director of human resources who was in project management at one point and just understanding the value of different people in the organization that you already have built trust and rapport and you believe in them. and then to find, hey, I really think they'd be good at this and then move them into these roles to fill gaps was so important and just finding, really analyzing the people that are around you to understand what are they great at and what might else they do from where they are today, that could be a greater opportunity and bring greater value to the company and organization. Chris: Yeah, so you touched on culture, let's go ahead and go there. Anybody you talk to at a CEO, entrepreneur, business owner, leader will say, right, culture's king. We believe it a hundred percent. We talk about that constantly around here. It's just part of our DNA. We believe it 100%. We talk about that constantly around here. It's just part of our DNA. So everyone goes about it differently. Let's talk about how you have gone about building the culture at Principal Health. How would you describe it first? And then, how have you gone about building it and nurturing it? James: Yeah, so great question. I mean, starting out, I couldn't tell you when we started the organization what was our mission, what were our core values. I couldn't even tell you what they were. There was something we came up with. I think two of us came up with one day, in a couple hours, some marketing stuff yeah marketing stuff. We hung it on the wall, just like you would expect right from most organizations to do most organizations do. And we had a phenomenal, you know, I would say the top 20 people in the organization just had a great relationship together and I would say that we thought culture was very strong. Four years in we polled the entire company and it was pretty, pretty terrible. I mean, it was like a 60% satisfaction, maybe even in the fifties, and we were kind of horrified like wow, we thought we had this great culture and everybody loved this company and it was. You know what it was. Well, I decided a couple of months later I did an offsite. So we did a two day offsite and kind of big hotel room, you know, or I guess I said conference room, with these big windows overlooking clear lake, and you know it know, the whole idea was like let's think big, and we brought in just management. So I think there was 46 managers at that time in the organization and we all came in the room we said, hey, we're here for two days to figure out three things Our mission, our vision and our core values. And we're going to sit together and this isn't going to be the C-suite telling everybody what we're about as a company. We as a people, as a community, are going to discuss what is this company? Who are we Not? What are we? Who are we? Chris: And what do you want to? James: be Exactly, and we did come up with a BHAG. We ended up throwing in a BHAG as well there. But where do we want to go? Classic Jim Collins. So we did get through that two-day period and we came out with a really strong mission, vision, core values. Our mission is to improve patient outcomes and experiences. Relatively simple, very difficult to do in healthcare. We decided our core values would be URPHS Principle Health System the acronym I should say is URPHS. Understand the mission, respect everyone. Patients are our purpose, happy to help and step up. So and we talk about simple, right, exactly, I would believe at this point, 90% of any you know we're approaching, I think, right, right, 500 employees today. I would think 90% of those folks could tell you that and not just tell you what they are, but give you examples of how they've done those things. We live culture. We no longer talk about it. We did that in the beginning. Now we live it. It's brought up in every management meeting. It's brought up in all the leadership training sessions, all the offsites and it's kind of what I call the North Star. So we look at culture as the direction. If you're not sure about a decision that you're going to make in any regard. I want you to think about the North Star. Is it in alignment with, are you walking towards, the culture, are you walking towards the mission of this company? And that helps to drive behaviors so important. Chris: I mean, that is the true key to the kingdom. I think the word I would use is it sounds like your culture has become institutionalized. Right, it starts out where it is you as the culture cop or maybe the C-suite, and getting it deeper in the organization. But once you've done that and everyone knows it and everyone lives it and everyone can hold each other accountable to it, then you've got a true directional tool To your point. I think the more you can tie behaviors to those values that's when they become real the more you can tie behaviors to those values. That's when they become real. And so when you're praising people because whatever they did connects with these two of our six or whatever number is of our values, it becomes real to them and they know how to repeat it A hundred percent. James: Yeah, I'm fairly unapologetic about the culture, so I would say it's even unusual Some of the things I'll say when I'm in management meetings or even when I do a quarterly coffee and conversation. So I meet with the entire company. It's usually takes six or seven sessions, but I go company wide, we bring the big groups and I'll sit down with the entire company for an hour every quarter and what I'll typically say when it comes to culture is that it's up to you to you know we can't police it from management. It's up to the people to police the culture. So one of our core values is respect everyone. So if there's someone who's not respecting everyone, I expect that the people of the company will kick that person out, go after them, make sure they don't work here, and I'll literally look out and I regularly look out across when I'm talking to the whole team. Chris: And I tell them. James: If you really can't say that you're here for the patient, if you can't say that you're really here to serve our mission, I was like I really don't want you here. I was like I prefer you to quit. I was like we will replace you and I would prefer to go without somebody for a short period of time. I'm unapologetic about it. We truly believe it. That's what we're about above all things. The rest of it, because at the end of the day, in our business, if we do a really great job treating patients, everything else will follow. Yeah, the doctors want to work with us, the facilities want to spend time with us, the payers will respect us. It's really about the patients. So we put patients first. Everything else comes next and if you can't get behind that, we don't want you. Chris: Yeah, I think that's a great point. Some of the words we use here, right. We're passionate about our mission and our values, which means they resonate in our heart and our gut. Right, we just it's in our fiber. If they don't resonate with you, it's really okay, because it means it's not the right organization for you, right there's a different organization out there that you're going to be happier with, you'll connect with and we'll go find someone that connects with us. Happier with you will connect with and we'll go find someone that connects with us, because they're going to be the better performer, the self-policer, the self-motivator. They're going to be the ones that connect with for us, similar to patient care, client service, right and mutual respect amongst everyone. So I agree with you it's okay to tell people if you don't connect with this. Actually, I use it in interviews when I'm interviewing someone. Here's who we are, we're very clear about it. And if you don't connect, it doesn't make you a bad person 100% doesn't. It just means it's in the right organization for you and there's a gazillion other organizations. Advert Hello friends, this is Chris Hanslick, your Building Texas business host. You're a Building Texas business host. Did you know that Boyer Miller, the producer of this podcast, is a business law firm that works with entrepreneurs, corporations and business leaders? Our team of attorneys serve as strategic partners to businesses by providing legal guidance to organizations of all sizes. Get to know the firm at boyermillercom and thanks for listening to the show. James: There's another team, there's another team that'll work just well for you. Yeah, totally. Chris: No, let's switch a little bit because I want to get back into kind of the business I'm always interested to ask about, like innovations and technologies I mean no-transcript. James: Yeah, I mean, you know, obviously, with the increased levels of compute, you know, now you have the large language models, you have artificial intelligence and that has already made an impact for us. So I would say that we are the next 18 months are going to be very interesting, but we are already using automation from AI that is changing the way we do things and I can give you one example in particular. Well, two really good examples. One in the back office, we have a team of I believe it's three ladies total. Still we had three ladies that would handle all of our facility invoicing right and it's very complex. We have the decipher between patient to patient each day who's part A, who's part B and how we do the billing, and some of it gets billed to facilities. Some of it's billed to without getting too much in the weeds. Some of it gets billed into the insurance company and we've been able to quadruple our volume with still having the same amount of people and not have to scale payroll because of implementing automation techniques through AI that help to decipher where those go. These get scanned in and it all gets brought up. Still have a little bit of a you know, a people component to it. But, just you know, we would be sitting here with and one division. It's just a great example, because that one division would probably be 10, 11 people, yeah, and the cost increase Exactly. Chris: That's an amazing statistic. James: So that is kind of a back office area that we're really focused on going. Where else can we, where else can we look at the bringing in this technology to help as we continue to scale, so that we don't have to just keep hiring bodies? which is you know, from a real estate perspective even difficult. So we're, you know, we're, we've been tapped out on space for two years and we're it's been very challenging. Where do you just put you know, where do you keep putting people Right? So, but on the I guess I'd say on the actual business, well, that's the back office on the front of the house. We've got a program. We call it the daily DON. So, right, so it's a DON is a director of nursing. A lot of the facilities we work within, you know, skilled nursing facilities, assisted living facilities, they have someone who really oversees the house. They're the clinical expert in there that makes sure that all the patients are taken care of. That's called the DON. So we have a form that's. Thousands of these go out every morning to all of our facilities and it's an AI program that picks out the most important things that happened the prior day. So here's, you know, bobby Sue had a stat test performed at X time and here's the result. Here's a critical result or whatever is most important. They kind of have a clinical mind and says, hey, this is where we think you should pay attention to your patients today. These people are trending in the wrong direction. These people if they're doing just fine, they're at the bottom of the page. The things that are most important are highlighted at the top of the page, but it's really helping us provide better healthcare diagnostics for our providers so that they can treat the patients better. So it's right, in line with our mission, but it's really just automation and again, it would take an army of people to do this. Chris: Yeah, that's really cool stuff. I have to believe that is also, if not already, will become a huge marketing tool. Oh, it's a big marketing tool. Right, people are worried about the family mergers they're putting in there, where they're really going to get care, because, you already know this, your industry doesn't have a great reputation as a whole. No for sure. James: And so the more you can say no, this is what we do to make sure we're taking care of your loved one, yeah, so there's a huge journal publication called McKnight's and it is the, you know, the premier publication for the long-term care space and you know, all over the country, the daily DON. We actually won a bronze medal this year against thousands of applicants for innovation. So it was actually yeah, we were awarded. Chris: I guess that was 2024, but last year yeah, close enough, yeah, so let's talk a little bit just about, you know, being in Texas, being a business, primarily in Texas. What are some of the advantages that you have experienced being here, not just in Houston, but taking advantage being in Texas? For us is related to the Medicare Advantage plan, right so? James: or, excuse me, the MAC right so? Different Medicare has Medicare administrative plans and they actually carry out Medicare's will in an area. Texas has a MAC that is somewhat more favorable than the rest of the country. Now there's a few states that share that, but just in general, for us, from a standpoint of clarity they're a little bit more clear. There's a lot of bureaucracy that goes on in just getting paid, so this might be surprising to people outside of health care, but today I believe we are paid on 61% of the business we do and we're actually probably one of the really high end. We've run studies on this and we're we are, better reimbursed than most companies out there in our space, and so we still, you know, roughly four out of 10 patients that we treat, we get paid $0. Chris: It's just fascinating to me that it's that poor it is very poor. James: However, we are in one of the more favorable areas, so I can only imagine if you don't have a lot of clarity and guidance on how to bill, it just becomes more and more challenging for you. Chris: Yeah, this may be one of those, but I'm just interested as you kind of look out going forward, what are some of the challenges or headwinds you see maybe coming at your industry? Some of the challenges or headwinds you see maybe coming at your industry, lots of changes going on in Washington right now will have an effect, I'm sure, on your business but maybe also affect what goes on at the state level. James: So one thing you're kind of worried about as you kind of look out, I would say just one of the concerns, and I mean I think again, everybody likes to point the finger to the big bad guys and I really look at them more as a partner than they're not a, you know, an adversary to us or more of a partner. But the insurance companies have become more active in utilizing ai to to identify discrepancies within chart notes to deny claims. So that's something where, you know, recently went to, one of the conferences I attended was for health care payers and they have booths set up, you know, trying to sell to the health insurance companies of how to use artificial intelligence to identify the to not pay. They're already not paying much and you know they're now. In reality, the reason they are not paying is because the notes are lacking in something. So, rather than paying a person to go and evaluate each note, which is very expensive, you think about the health insurance companies if they have to hire thousands of people to evaluate the charts, or they can use AI programs to evaluate the charts it's going to save them money and hopefully that money gets passed on to the consumer. So I actually don't think it's a long-term a bad thing, but I do expect in the meantime it's going to just decrease even further, decrease the amount of claims that get paid. Chris: Right, it sounds like it would be incumbent upon companies like you to kind of push back a little more in the short term. James: to be able to take advantage of those efficiencies later. Absolutely yeah, and I look at it from our perspective. We're in a really good spot. We're pretty developed to where we can handle those kinds of headwinds. Chris: So let's switch again a little bit. Just talk about leadership. How would you describe your leadership style? How do you think it's evolved over the past, you know, 12 to 15 years since you've kind of been moving forward with this company? James: Yeah, I mean. So starting out with a group, I think, start with five people and 500 folks. So leadership looks very differently as business scales. And, to start right, I mean I used to take out the trash and do the accounting. I mean I've worked every job in the company personally and in the beginning, worked with a lot of people who were for lack of a better, better word incompetent at what they did, and today, having been able to develop people and hire and bring in and partner with incredible people that are, frankly, better than I am, a lot of things it allows me to go and do what I'm really good at and, from a leadership perspective, I've probably, if I've, believed in you from the beginning. I've always given you. I'm not a micromanager. I don't believe you can't really grow a large company if you're watching over everything going on. So you have to truly, just, I would say, collaborate with those around you and I guess, if I had to define it who I am, I try to be a great collaborator, right. I try to really help, provide as many resources for the people around me as possible so that they can be successful. Chris: That's good. Let's talk about problem solving right. Especially where you are today and probably have been in your role, probably more of what you do is facing issues, and how are we going to work through this and solve an issue, solve a problem? What have you found to be the most effective way to kind of get the information you need to make those informed decisions that you believe would be in the best interest of the company? James: Yeah, I mean. So again, that's something that over time, has become, I would say, much more of a process, right? So now we have data analytics and we have incredible CFO that's been coming in and able to provide information. There. We have all these additional resources, from accountants to lawyers, to folks. We sit down. I like to surround myself with the right group. We try to sit in a room with the right people at the right time and analyze all the information, but very quickly. I do not like the old analysis paralysis. That's not us at all. I move very quick, I like to make decisions very fast and I don't look in the rear view mirror very often. I'm always looking out the front window and just moving forward. So when there's challenges that are hitting us, it's just a relatively. Let's get as much information as we can today, let's analyze it and let's go. Chris: Yeah, I love that because I agree, I think, the idea that stagnation will kill the company right, and so I think you try to get as much information as you can, knowing it's never going to be perfect. But I think the key then is, I agree with the mindset of kind of move quick. To me, the next piece of that is to evaluate the decision as it's implemented, because then you're continuing to learn and gather information. If you're doing that so that you can adjust right, Because the plan goes out the window as soon as you start to act right, so some people will act and then ignore, and I think that's a mistake. I think if you act, continue to analyze and then align behind what you've learned, it may not be a pivot, it may just be a tweak, but you've got to keep moving. James: I totally agree and you really touched on a great point that I like to speak about. Often and it plays a little bit in the culture. I tell people, guys, we've got to make mistakes here. If we're not making mistakes, we're trying nothing new. So I hesitate to say I encourage mistakes, but to some extent I think I did in my last meeting ask for mistakes directly. So the idea here is that it's okay to make mistakes, it's not okay to make the same mistake over and over again. But if we're not trying, we're not growing. If we're not growing, we're dying. So we've got to continue to move forward. And the culture is that if you are focused and I mentioned that North Star earlier but if you're heading towards the North Star and you make a mistake, you're okay, there's no problem If you're doing something new and you're trying something for the good of the company and the good of the patient, that's okay. Let's learn from it. Let's learn from it, let's change course and let's keep moving. Chris: Yeah, that's right. Comfort and complacency aren't good, and I think that that freedom to take risk as long as it's an informed risk, as long as it aligns with our mission and values, is the type of risk you want to encourage your people to be doing and learn from it 100%. So that's good. People always learn from setbacks. So let's talk about a failure or setback you've experienced, and I know there's probably two or three examples from yesterday. James: No, but yeah, I mean, where do we start here? Chris: But what was it you know, and how did you learn from it, and how did it make you better? How did it improve you or the company, whatever the example may be? James: Yeah. I think geez, you know, this is only a tough question because I have so many. Chris: Yeah, I think geez, this is only a tough question because I have so many. You're not alone in it. A lot of guests say the same thing and I can identify with that. James: Yeah, so. I think for one this just comes to mind somewhat early on in our business we had just one massive customer. We had a great deal of revenue concentration in one customer who ultimately had a bankruptcy and put us in a really bad financial position when we lost out on. You know they were way behind on paying their bills and you know such and such. You've heard the story. Chris: Oh sure. So not only did you not get paid. If you were that beholden to them, you didn't have a lot of other things coming in Correct. James: Correct, correct. And just to learn from that example of not letting yourself get too far out over your skis for one, but also just to diversify, not just the customer base. We were actually diversified in our revenue and how we were paid, but it was all one customer. So you've got to diversify your revenue base and your customer base and not have too much concentration. That was a really early on lesson that just comes to mind. That, I feel like, was still one of the most painful. I think I laid off 40 or 50 people that day and it was just a tremendous. That one scarred me pretty bad. Chris: Layoffs are never easy. Those are ones you'll remember. James: Yeah, that one still haunts me, so again I've. Which mistake would you like to talk about? Chris: we could do a whole show. Yeah, you really could, but yeah so kind of you know, bringing this more to a close, any advice you would share with our listeners, entrepreneurs and business owners out there that you know, if there's one thing you're if you're thinking about, if you've just started the journey or you're thinking about it, here's one or two things that you would kind of want to pass along. James: Yeah, I mean I just, you know, from an entrepreneurial standpoint, I had a one of my, one of my father's good friends when I was a young kid, you know, probably high school. He told me at one point he said, hey, your business really isn't going to fail unless it runs out of time or money. And just kind of keep that in the back of your head, because I can think of at least six or seven times that we were done, you know, and I had to sit there and go well, hold on, you know, we haven't completely, we're not completely done because we haven't run out of time or money. And that was how, you know, I spoke about chewing glass earlier. I think you know one of my buddies, he's a new entrepreneur. I always I tell him ready, shoot, aim. You know, at some point you can analyze all the data. And if you do analyze all the data, you're probably never going to start Right, because the odds are of starting a new business are challenging. Chris: For sure, as everyone says, it's not for the faint of heart. James: It For sure, as everyone says, it's not for the faint of heart. It's not for the faint of heart. And everyone will run into a lot of problems and challenges. And that's why because if it was easy, everybody would do this Correct, and so just I would. Just it might sound a little silly, but just don't give up. I mean, if it's something you believe in, if it's really a great cause, if your heart's in it, just keep your head down and push on, because you will be successful. Chris: That's great, and perseverance and grit is what it takes if you're going to be a true entrepreneur 100%. But the ready shoot aim is kind of like you were saying earlier, in decision making, at some point you got to make a decision, absolutely you got to go. James: Yeah, I see that as just a big mistake that folks are making over and over again is sitting around just waiting and by the time they actually make the decision, the opportunities passed. Chris: yeah well, let's, we're going to close with some more fun stuff. Talk a little bit more about texas, any favorite vacation spots within the state. James: Things you like to do in your spare time you know we have a little piece of land up in west texas so we're out in the lakey area okay it's kind of kind of over there by Garner State Park for those that know the river and just absolutely love. We go out there probably every month. You know I have two boys and a little girl so I spend a lot of time out there. The family makes it out there every now and then, but I definitely try to grab a boy and go out there every month. How fun is that? We just go and shoot guns and hang out and, you know, take the kids and their friends over to the Garner State Park, dance and do all that kind of stuff. Chris: God's country over there. James: It is God's country. It's fantastic. That was my favorite place. Chris: It's just beautiful out there, yeah, so any like books or anything that you've read lately that you might pass on to a listener as something to go spend some time reading or learning from. Reading or learning from. James: Jeez, you know I'm actually doing 10 books with my kids right now, so there's nothing new and exciting, but they're all you know. I've got them reading Seven Habits of Highly Effective People, so that was the book they read last week. They're reading a book a week, so this week they're on the Five Dysfunctions of a Team Peter Lencioni. Chris: Yeah. James: So those are kind of what's going on. That's what's on my mind at the minute. I like it At the moment, yeah. Chris: And teaching them young. James: I love that, yeah, I mean well, they're 15, 13, not too young. Chris: Right. James: But kind of when I was reading those books and trying to. So a bunch of oldies but goodies. Yeah, we're going through right now. Chris: We're doing Rich Dad, poor Dad world from that perspective. Last question do you prefer tex-mex or barbecue? James: barbecue, all right, yeah I guess you can't go out to lakey and and not have barbecue in that area or on the road trip to and from no, I mean I it's. Chris: That's a tough question I always save it for last and everyone says the same thing. It's a trick question what's yours? People turn that on me and I think I it's a tough one that they. You know, once it's turned on me and I think it's a tough one Once it's turned on me, I realize how unfair it is. Yeah, I think my answer has always been I love barbecue, but my go-to is probably Tex-Mex more than barbecue. James: So if I was going to say Tex-Mex with a margarita, that might go above barbecue For sure, but if it's just food, it's barbecue Okay. Chris: Yeah, because it's hard to have Tex-Mex without a margarita. James: Yeah. Chris: And then, of course, you have places now, especially here in Houston, I'm sure, other places where they're combining, you know, like the brisket into the Tex-Mex. James: so brisket, burritos or tacos, and that, to me, is probably the penultimate, it's fantastic. Chris: Yeah, there really is. It's challenging when it comes to healthcare. So, James, this has been great man. I really appreciate you coming on and sharing your story. It's pretty fascinating, and congratulations for all the success and what I know will be successful in the future. James: Awesome, thanks so much for having me, Chris: you bet. And there we have it another great episode. Don't forget to check out the show notes at boyermillercom forward slash podcast and you can find out more about all the ways our firm can help you at boyermillercom. That's it for this episode. Have a great week and we'll talk to you next time. Special Guest: James Dieter.

In this episode of the Just Schools Podcast, Jon Eckert interviews James Blomfield from the International Forums of Inclusion Practitioners (IFIP). They discuss his work in inclusive education, the importance of Universal Design for Learning (UDL), and the global challenges and opportunities in creating truly inclusive schools. Blomfield shares insights from his visits to Texas schools, highlighting student engagement in career and technical education programs. The conversation also explores the role of artificial intelligence in education, the shift from inclusion to belonging, and the power of networks like IFIP in connecting educators worldwide. The Just Schools Podcast is brought to you by the Baylor Center for School Leadership. Be encouraged. Mentioned: The Curriculum: Gallimaufry to Coherence by Mary Myatt How Change Happens by Duncan Green The Name of the Rose by Umberto Eco Connect with us: Baylor MA in School Leadership EdD in K-12 Educational Leadership Jon Eckert LinkedIn X: @eckertjon Center for School Leadership at Baylor University: @baylorcsl   Jon Eckert: All right, so we are blessed to have James in our podcast studio. He flew all the way from the United Kingdom to Waco, Texas, to be on this podcast. So James, tell us a little bit about what you've been doing here in central Texas these last couple of days. James: Yeah, I've been spoiled. I've just had the best cheese and ham roll, ever. I can tell you a lot about Texan food now. And brisket. But the quality of the experiences, the visiting the schools, meeting you at Baylor has been a terrific privilege. I'm very grateful. Yeah, today, this morning, in fact, we visited three schools in Waco Independent School District. We were shown around by the loveliest people, Adam, Caroline, and Christie. I think Adam and Caroline are on from your doctoral program. Jon Eckert: Yes. James: But they're like institutional coaches. I gather. We would call them improvement offices where I come from, but they had such a light touch. They knew everyone. They were so friendly with people, and I gather that they are also about compliance, but with the coaching aspects. So they were great. And the three schools we went to, we were Midway yesterday, which was amazing. And then this morning, Bells Hill Elementary, Cesar Chavez, and then GWAMA, Greater Waco Advanced Manufacturing Academy earlier. And yeah, what impressed me was speaking honestly as an English person, it is shocking to see police in a school. Very quickly, I was unaware of them. But we have our own issues in the UK with knives and all sorts. But the staff were, despite that, throughout just so calm, friendly, loving, and attentive to the students. Asking them, talking to them in front of us. And some wonderful experienced people, trauma informed. There was someone who was training to be a social worker this morning who just came out of her office and gave us a short speech without any preparation, speaking from the heart, talking about what she was doing, how much the children matter. If you've got people like that, then you are going to be doing the right stuff. So yeah, I was impressed. But also from the type of education, obviously Texas is massive. The school footprint, I've never been into such big schools, even the elementary and yesterday with Midway, that was the biggest school I've ever been in. It took us a long time to walk around. And all of the stuff, like this morning at GWAMA, we saw robotics, drones, they have the construction academy, welding, forklift truck driving. Yesterday we saw them building an airplane. When I was doing metalwork at school, it was for like a baked potato holder. They were building an airplane. And I would love that as a student. I would be inspired by that even if I was building a small part of the airplane. Rebuilding tractors yesterday. So that's practical. That's 21st century teaching, but visible, practical, hands-on. Jon Eckert: And then the engagement that you see that's possible there through starting a cafe restaurant through the airplanes. Just to be clear to the audience, the students are not doing this on their own. It's a two-seat airplane that would be like a Cessna, and they have engineers coming in to help build. I still am not going to be the first person that volunteers to fly in that, but it was impressive to see. And I do feel like in central Texas, there are a number of schools doing a lot to try to meet the needs of the community by educating kids in ways that engage them, use the skills that they've been given, help them become more of who they're created to be in a way that benefits the community. And even the principal yesterday, Allison Smith, was sharing about the new factory that's coming in that's got a gigantic footprint, and it's going to be a huge benefit to the tax base. Before they came, they met with the high school to see if there were ways that they could integrate some of the needs they have with what the high school's developing in their students. Because at Midway, about half the students go on to a post-secondary education. And so there have to be opportunities for kids to step into things that allow them to be gainfully employed and meaningfully use the skills that they have. And many of the kids were doing things that I couldn't even fathom doing. And they're just leaning into it and gaining expertise, which is for 16, 17, 18 year olds is truly remarkable. James: Isn't that also a bit like a UDL mindset? If the manufacturer comes in and has that intelligence to ask about what would you need? What would be helpful? And then you're designing the education from the ground up. Jon Eckert: That's it. And I'm glad you brought up Universal Design for Learning, because that's something that we haven't really gotten into. Why you're here and what you do in the United Kingdom, because we actually, Eric Ellison, met you a while ago. But you were the reason why we were at a UNESCO conference in Paris where we got to work with educators from six continents that were all interested in UDL and what it means to educate each kid around the world. And there's 250 million kids that don't have access to a school. And then we're in these amazing schools where the biggest schools you've been in that are offering all these different opportunities. And so we're getting to see it, but what does it really look like from your perspective, from your organization as it relates to UDL? James: Yeah. So interesting, I am a teacher, head teacher, classroom teacher from some 25 years. And for me, it's all about practical teaching and talking to parents, making things work. But at a very practical level. And one thing that drew me to my organization, which is the IFIP, International Forums of Inclusion Practitioners, was that when I met Daniel, who's a fabulous person to work for, it's much more practitioner based. It's all about pedagogies. I felt at home straight away. But also, how do we train teachers? How do we bring them on into inclusive practice? And the IFIP is all about the voice of teachers. Daniel would say inclusionistas, all manner and range of people, teachers, specialists, therapists, but parents as well, who are committed to a more equitable and enriching education. So the majority of what we do is training. We have things like our GITI program, which is a global inclusive teaching initiative. But we do events. And that's something that Daniel, one of his strengths, he speaks all over the world. He's written many books. We were so, so grateful to have the event at UNESCO in Paris. So we were co-hosting. Daniel had been talking about that for two years beforehand. And we didn't believe him. He made it a reality. He dreamt about it, and it happened. And the same more recently in Brazil. We went to the G-20 ministerial meeting. He was talking about that. So he sees things and it falls to me to follow behind him and try and make some of the practicalities work. But yeah, the inclusion piece covers so many flavors. And I think what you mentioned just now, we talk about inclusion. Well, if the 250 million aren't in school, well, that's a level of inclusion that puts lots of other schools into a completely different context. Where does the inclusion start? And even in some of the schools I visited, I've been very lucky to visit schools around the world who would say they're inclusive and they may have a sensory room, or they may have, but they aren't necessarily inclusive. But for me, one of my favorite schools I've visited was in Rome, [foreign language 00:08:28], Our Lady of Good Counsel. It was run by Silesia nuns. And they said in the words of their founder, Don Bosco, "Young people need not only to be loved, but they need to know that they're loved." And it's very reassuring as a practitioner, a teacher, former head teacher, to come here to Texas and you see that. You see that palpably going on. And I feel at home. The elementary school this morning, because I was a primary school teacher, it was just like, I know this. I understand this. I could probably take a lesson. But they had some great ideas. And teachers, I'm a teacher, you love stealing good ideas. Jon Eckert: Well, and I think this is the beautiful thing about the jobs that we get to do. We get to see all the amazing things that are happening in schools. So much of what's in the news and what gets publicized are the things that aren't working. And the tragedy that there are 250 million kids who don't have access to schools, that is tragic. But in schools, there are amazing things happening all over the world. And getting to see them is this encouraging, oh, it gives you hope. And I wish more people could see that. I do think there are challenges though, because when we think about inclusion, we've moved as a country toward inclusive education, the least restrictive environment for students, and bringing students into a place where they can flourish. But we really, as Erik Carter, who runs our Baylor Center for Developmental Disability, you met with him yesterday. He talks about moving from inclusion to belonging. And I think we even need to think about belonging to mattering. So you keep hearing more and more about what does it means to matter and seeing your gifts being used with others. And that's what we saw yesterday. It wasn't individual students. It was teams of students doing this and each member of the team had a different role, whether it was robotics or it was the plane or the cafe. And the educators needed to step in. So the principal was talking about, I need an educator who's willing to step up and do this so that this can happen. And that's the thing that I think people that haven't been in schools for a while don't see what it means to really help kids belong. They have a sense of what inclusion was, maybe when they were in school, where there was a class down the way that was a Sensory room, which is a nice room for just, here's where we're going to put a kid who's out of control that we can't manage in so many places. It's like, no, there's so many schools that are doing so much more than that. So what are some other hopeful things you've seen through IFIP? James: Well, I think, yeah, you see a lot and on social media, and you must have found this, there's so much many aphorisms about inclusion and metaphors about what inclusion is. It's a mosaic. It's a banquet with many tastes. It's symphony orchestra with many sounds. Inclusion is a garden. That's quite a good one actually, the metaphor. And that's something that Sir Ken Robinson from the UK has talked a lot about. And there's lots of analogies with growing and flourishing, which that's a word you've taught me in my visit here. But I do feel sometimes that it is all good to talk about that. I don't disagree. But there's some recently inclusion makes every day feel special. Yeah, it does. Inclusion is the antidote to the division in the world. It is. But will that help the early career teacher struggle with their class? Will that give them the practical steps that they need? So I think all of those things are true, and we must love the students. But I would say that's just comes a standard with being a decent human being. I would expect that from you, from anyone. You treat people with a respect. But for me, I feel more inclined to say, what are the practical professional steps? What's the pedagogy? What are the teaching principles that will help me to, as we were saying yesterday, maybe to hesitate before ask another question in class and listen. And listen. That's inclusion, isn't it? Wait for someone to answer and maybe then not say anything. It's actually stepping back. So for me, I'm very impressed by... I mean, I was brought up on quality first teaching, we would call it in the UK, which is about high quality, inclusive teaching for every child. So you mustn't differentiate in a way that you've got the low table. No one wants to be on the low table. You want to have high challenge on every table. And we used to say, you want your best teacher on the lowest table. It's not like you just put a teaching assistant or some volunteer on the lowest table. It's got to be focus lesson design, involvement, interaction, metacognition. So responsibility for your own teaching, for your own learning. Sorry. And I love the dialogic approach. Someone said yesterday, Socratic circle that I've picked up. But it's like you would encourage a child to talk about what they understand because very quickly then you assess what they actually know. Sometimes you'd be surprised by what they know. But for the same reason, UDL appeals to me, to my sensibility, because it offers very practical steps. And crucially at the design stage, it's not like I'm going to apply this assistive technology to a lesson I created a year ago and will do the best we can, and that child will now be able to do more than they could. But if I design the lesson, and one of our colleagues, Helena Wallberg from Sweden, who was a co-author on the Global Inclusive Teaching Initiative, she talks about lesson design. It's a far sexier way than lesson planning. So teachers are professionals, they're artists. They need to use their profession. Jon Eckert: So when you start thinking about design, I use Paideia seminars because Socratic seminars are great, but Socrates taught one-on-one. We don't usually get the luxury of doing that. So how do you bring in the gifts of each student, not so that you're doing something kind or helpful for that individual, but so that the whole group benefits from the collective wisdom in the classroom? And so the inclusive education is not to benefit one single individual, it's to benefit all of us because of what you draw out. And that's where design, I think, is more helpful than planning. And so when we think about this in this state that we're in right now, we've never been in a better time to educate. We have more tools than we've ever had. We know more about how people learn than we have in the history of the world. James: Yeah. Jon Eckert: And yet sometimes that can make things feel overwhelming. So that beginning teacher that you mentioned. The only thing that beginning teacher knows is no one in the room learns exactly the way she does. That's all you know. And so then how do you use tools... And we've talked a little bit about this artificial intelligence. Amazing tool for adapting reading levels, for adapting basic feedback, for giving an educator a helpful boost on lesson design because it can synthesize from large language models. It can do work that would've taken us hours in five seconds. But it can't replace the human being. And so how do you see tools like artificial intelligence feeding into UDL so that it becomes more human, not less? James: So where I am, there's a shortage of specialist teachers, for example, and therapists. And Daniel's been doing a lot of work in India and parts of Asia where there isn't the expertise. So I think maybe AI can help in those places. But even he would say that will not replace a specialist. You can never replace a specialist who has the intuitive and curiosity to see what an AI system can't. But it may empower parents who have no kind of training as a teacher might have for neurodiverse situations of how do I deal with my child when they're like this? And similar for teachers and who are looking for... They've tried everything. What do I try now? So we've been working on one on an AI system that's based on all of the research that Daniel's done. It's not released yet. We've got a working title of 360 Assessment, which doesn't really mean anything, but it was meant to be assessing the whole child. And he's, through his work in many schools over many years, many thousands of hours, he's put all of this stuff into the data for the AI system coupled with his books. So when you ask a question, it will do a quick spin round and come back with some suggestions. And it's quite fun to use, I think, as a tool to empower parents to signpost them. And for teachers, it's a useful tool. I don't think it's the panacea, but I think you have to use these technologies sensibly. But my daughter, who's a nursery nurse, and she tried to break it by saying, oh... We tried it, the computer. My child is two years old, but can't pronounce S. should I be worried? And it came back with the correct answer, said no, there's nothing to worry about. Up to four years old, some children won't be able to pronounce the sound S properly. And then it gave her the advice that she would give, because a manager of a nursery nurse, the advice you'd give to her staff. Now all of her team have just started that. None of them have any experience. So that, I could see, could be useful for training numbers, the ratio of good advice to people. That's the way I see it working in the short term. Jon Eckert: No, and I think that's great because it enhances the human's ability to meet the need of the human right in front of them. Because I will always believe that teaching is one of the most human things that we do. James: It is. Jon Eckert: And so any way that we can enhance that with any tool, whether it's a pencil or an artificial intelligence tool that allows you to give feedback and synthesize things and help with design. I also believe we just need to give credit where credit's due. I don't love it when we don't give credit for tools that we use. So if you're using UDL, they're a great people cast. We're about to have a call with them later today. They do great work. And so the same thing. If you have a digital tool, share that so that we know here's what we did and here's how we can spread that collective expertise to others. And so what role does IFIP play in bringing networks of people together to do that? Because in your convenings, that's one of the main things you do. So can you talk a little bit about that? James: Yeah. Well, in the title if you like, in our forums, one of the things that Daniel is very keen on is sustainable growth. So we want to introduce people to each other. And it's surprising with head teachers and principals who struggle. I've just come back from Brazil from a UNESCO GEM, which is a global education meeting, where the focus was on the quality of the leadership. And we need to give, empower our leaders. They're often working on their own. One of the roles of the IFIP is to join them together. So we're launching in January at the BET Show, which is the biggest technology show in the world, apparently, in London Excel Center, our Global School Principals Forum. So we have a forum for them. We have a forum for specialists, forum for pastoral leads. And we've also got regional forums of South America, North America, Asia, just to try to bring people together. Because when you share the experience, and I've been really grateful this morning for the opportunity to walk through and see some American schools that you share the ideas, you see the similarities. That's the power and that's so important. Jon Eckert: No, and that's been our experience. Whether we're just in the states or internationally, there's so much good work going on. We just need to have ways of connecting human beings who are doing it, so it doesn't feel like it's another thing to do, but it's a better way to do what we're already doing. And so I feel like that's what UDL does. I feel like that's what IFIP is about. And that the most meaningful part of our time in Paris at UNESCO was not in the panels, it was in the conversations that happened over lunch, in the hallways. The panel may have sparked a conversation, but it's hey, what are you doing here? And what are you doing there? And I walked away with multiple connections of people that we'll continue to talk to because, again, there's so much good work going on. Yeah, go ahead. James: My memory of the... Because it was a very stale affair, wasn't it? And the bureaucratic approach, UNESCO, because you feel like you're a United Nations and lots of people talking were sat down for hours and hours, was when you lifted your hand and actually ask a few questions. That's inclusion, isn't it? Eric was saying that people who were leaving the room walked back in to listen because that was interesting and someone was asking them how they feel and bringing it back into reality. That's so important. But I also think inclusion, there is an interesting power dynamic with inclusion. A guy called Michael Young who's a professor of education at UCL, talks about the right for all children and young people to be taught powerful knowledge. What knowledge are we giving them? How are we empowering them? So I think inclusion is all about discovering your power within, if you like. That's so important so that they begin to see. And some of the teachers are saying this morning, kids know what they see, what they've experienced. And if you introduce new ways of dealing with anger or with pain, they don't have to fight. They don't have to resort to what they've necessarily seen. Then give them new strategies. That's empowering those children. Jon Eckert: Well, and Adam and Caroline who were taking you around, they're behavioral interventionists. And they are always busy because there are kids that are struggling with how to manage the feelings that they have. And if they don't have people giving them those strategies, how do they grow? And again, that's very human teaching, and Adam and Caroline are great models of that. James: They were wonderful. So good, and it was the light touch that impressed me. Because I've worked with, as I say, school improvement offices. And the trick is not to push people down. It's to make them think twice about what they've done or how they could ask a question better. And their observations of the displays on the walls and just the language teachers and teaching assistants use has a profound effect. I do believe that inclusion is about the students look at the way their teachers behave. It's nothing to do with this pedagogy or the post. It's about how did they respond to me? How did they respond to the other person in the class? What's important to them? How do they talk? That's the inclusion that you teach. Empowering them to make the similar choices when they're older. Jon Eckert: That's well said. So our lightning round, I usually ask four or five questions that have relatively short answers. So first one, what's the worst advice you've ever received as an educator? James: Oh, as an educator? Worst advice. Jon Eckert: Oh, it could be as a human being if you want. James: Well, when I was young, my dad had many qualities and taught me many good things. But one of the worst things he said to me was, "Don't use your money, use theirs." So he would borrow money. And that got me off to a terrible start in life. And I learned through my own experience that it was better to use... Well, I was always using my own money. Jon Eckert: Yes. Yes, okay. James: But I could use it better. But bless him because he's no longer with us. But that was one piece. Jon Eckert: No, that's a tough start. James: Yeah. Jon Eckert: Thank you for that. What's the best advice you've received? James: The best advice, I think, was to go back to university. Jon Eckert: Okay. James: I dropped out of school to get engaged, because that's what you do when you're 19. And I was going to get married, but it didn't happen. And then I went to do a summer job, which lasted for 10 years. Jon Eckert: That's a long summer. James: But my blessed teacher, Michael Brampton, who gave me a love for painting, history of art, he kept on pestering me go back to university. I went back as a mature student and loved it. I think people should start degrees when they're near in the thirties because you appreciate it so much more. Jon Eckert: Yes. James: So that advice he gave me led to such a change in my life. Jon Eckert: Yes. Well, and then you went on to get a degree in art history, philosophy, then a master's in computer science. So you went all in. James: Yes. And that took me into education. And the time I went in, there weren't many teachers that were doing anything with computers. Jon Eckert: So as you get to see all this around the world, what's the biggest challenge that you see schools facing that you work with? James: I think it's manpower. Jon Eckert: Okay. James: I think there's a real manpower issue and belief that school can make a difference. I think one of the things that we believe in IFIP is that positive change is possible. And sometimes it's shocking going to schools. And if you do make people see that the positive change is possible, it transforms them. So advocacy, shared vision. And one of your colleagues was saying this morning, just changing the mantra can make a profound difference. Jon Eckert: Yeah. So what makes you the most optimistic as you get to see all the schools all around the world? James: Yeah. Well, I've just come back from Stockholm in Sweden, and I was really, really impressed by the school there. It was one of the best schools in Stockholm. It was a school that had in their entrance hall, you'd expect it to be very austere and you don't want to see any bad stuff in your entrance hall. But they had a table tennis table set up and they had a piece of found art or hanging above. And it was the whole sense of the school's about children started there, about young people. But in Sweden, it's all about sustainability. Everyone is expected to clear up after themselves, be mindful of other people, respectful. Even in the hotel where I stayed, I had to sort my rubbish in my room. It's that approach that starts from not just in school, across the board. Jon Eckert: Yeah. James: So that impressed me. Jon Eckert: Yeah, that's a beautiful example. One of my favorite schools outside of Nashville, Tennessee, they don't have custodians that clean up the building. They have 20 minutes at the end of the day where the students do all of the cleaning, including the bathrooms. Which you start to take care of stuff better when you're the one who has to clean it up. And the peer pressure to take care of it shifts a little bit. So it's a great word. All right, one other thing. Oh, best book that you've read last. James: Can I give you two books? Jon Eckert: Absolutely. James: I mean, I've got into fiction in a big way recently. So I use Audible, the app. Jon Eckert: Oh, yes. James: And I've been working through all kinds of classics that I never read properly. Just reread The Hobbit and Tom Sawyer. But I've gone through... The Name of the Rose stuck with me recently. I so enjoyed reading it. And I've just got into Robert Harris. He's written Conclave, which has just come out as a feature film. And a series of books called Imperium about Cicero and Oratory and how the Roman Empire was lost. But they aren't the books. Jon Eckert: I love that. Go ahead. James: But the two books, one is by an English specialist called Mary Myatt. And one of the really practical books that she wrote was The Curriculum: Gallimaufry to coherence. Gallimaufry is a word, I'm not sure if it's Gaelic, but it means a mess. So going from a mess to coherence. And that book is all about how it's important that children struggle. That learning only happens. We try to protect kids all the time that way. No, they should struggle. You imagine if everything's easy. And then she says this, if everything's easy, it's hard to learn. There's nothing to hold onto. There's no scratch marks. You need some of that. So Mary Myatt, that's a brilliant book. The other book is by Duncan Green called How Change Happens. And that's all about this idea of power. And he talks about power within, that's your self-confidence power with when you've got solidarity with people. Power to change things and then power over people. But it strikes me that as he shows in his book, where you've got instances where you've got the 'I Can' campaign in South Asia, all about women who were being violently treated by men, reclaiming their self-worth. It's like invisible power. Where does it come from? The change. You can't see any difference, but inside they've changed dramatically to stand up collectively against something. And that's what we need to do with students. Build that self-power inside. Jon Eckert: Great recommendations. And we talk a lot about struggling well and where that fuel comes from. And so, love that book by Mary Myatt. I'll have to get the spelling of that from you when we get off. My also favorite thing about that is I asked for one book recommendation and I wrote down at least seven. So, well done James. All right, well hey. We really appreciate you coming over. We look forward to potentially doing a convening where we get to bring great people together who want to work on serving each kid well in this way that benefits all of us. So hopefully that will happen sometime in the coming year. But really grateful for your partnership and a chance to go visit schools and have you on the podcast. James: Thank you so much. I really appreciate it. Thank you.  

A Note from James: So we have a brand new president of the United States, and of course, everyone has their opinion about whether President Trump has been good or bad, will be good and bad. Everyone has their opinion about Biden, Obama, and so on. But what makes someone a good president? What makes someone a bad president? Obviously, we want our presidents to be moral and ethical, and we want them to be as transparent as possible with the citizens. Sometimes they can't be totally transparent—negotiations, economic policies, and so on. But we want our presidents to have courage without taking too many risks. And, of course, we want the country to grow economically, though that doesn't always happen because of one person. I saw this list where historians ranked all the presidents from 1 to 47. I want to comment on it and share my take on who I think are the best and worst presidents. Some of my picks might surprise you. Episode Description: In this episode, James breaks down the rankings of U.S. presidents and offers his unique perspective on who truly deserves a spot in the top 10—and who doesn't. Looking beyond the conventional wisdom of historians, he examines the impact of leadership styles, key decisions, and constitutional powers to determine which presidents left a lasting, positive impact. From Abraham Lincoln's crisis leadership to the underappreciated successes of James K. Polk and Calvin Coolidge, James challenges popular rankings and provides insights you won't hear elsewhere. What You'll Learn: The key qualities that define a great president beyond just popularity. Why Abraham Lincoln is widely regarded as the best president—and whether James agrees. How Franklin D. Roosevelt's policies might have extended the Great Depression. The surprising president who expanded the U.S. more than anyone else. Why Woodrow Wilson might actually be one of the worst presidents in history. Timestamped Chapters: [01:30] What makes a great president? [02:29] The official duties of the presidency. [06:54] Historians' rankings of presidents. [07:50] Why James doesn't discuss recent presidents. [08:13] Abraham Lincoln's leadership during crisis. [14:16] George Washington: the good, the bad, and the ugly. [22:16] Franklin D. Roosevelt—was he overrated? [29:23] Harry Truman and the atomic bomb decision. [35:29] The controversial legacy of Woodrow Wilson. [42:24] The case for Calvin Coolidge. [50:22] James K. Polk and America's expansion.

A Note from James: So, I'm out rock climbing, but I really wanted to take a moment to introduce today's guest: Roger Reaves. This guy is unbelievable. He's arguably the biggest drug smuggler in history, having worked with Pablo Escobar and others through the '70s, '80s, and even into the '90s. Roger's life is like something out of a movie—he spent 33 years in jail and has incredible stories about the drug trade, working with people like Barry Seal, and the U.S. government's involvement in the smuggling business. Speaking of Barry Seal, if you've seen American Made with Tom Cruise, there's a wild scene where Barry predicts the prosecutor's next move after being arrested—and sure enough, it happens just as he said. Well, Barry Seal actually worked for Roger. That's how legendary this guy is. Roger also wrote a book called Smuggler about his life. You'll want to check that out after hearing these crazy stories. Here's Roger Reaves. Episode Description: Roger Reaves shares his extraordinary journey from humble beginnings on a farm to becoming one of the most notorious drug smugglers in history. He discusses working with Pablo Escobar, surviving harrowing escapes from law enforcement, and the brutal reality of imprisonment and torture. Roger reflects on his decisions, the human connections that shaped his life, and the lessons learned from a high-stakes career. Whether you're here for the stories or the insights into an underground world, this episode offers a rare glimpse into a life few could imagine. What You'll Learn: How Roger Reaves became involved in drug smuggling and built connections with major players like Pablo Escobar and Barry Seal. The role of the U.S. government in the drug trade and its surprising intersections with Roger's operations. Harrowing tales of near-death experiences, including shootouts, plane crashes, and daring escapes. The toll a life of crime takes on family, faith, and personal resilience. Lessons learned from decades of high-risk decisions and time behind bars. Timestamped Chapters: [00:01:30] Introduction to Roger Reaves [00:02:00] Connection to Barry Seal and American Made [00:02:41] Early Life and Struggles [00:09:16] Moonshine and Early Smuggling [00:12:06] Transition to Drug Smuggling [00:16:15] Close Calls and Escapes [00:26:46] Torture and Imprisonment in Mexico [00:32:02] First Cocaine Runs [00:44:06] Meeting Pablo Escobar [00:53:28] The Rise of Cocaine Smuggling [00:59:18] Arrest and Imprisonment [01:06:35] Barry Seal's Downfall [01:10:45] Life Lessons from the Drug Trade [01:15:22] Reflections on Faith and Family [01:20:10] Plans for the Future Additional Resources: Roger Reaves' book: Smuggler Information about Barry Seal: Barry Seal Wikipedia The movie American Made: IMDb Link

A Note from James:"So in a few hours, as I am saying this. The election of 2024 will begin. I'm doing this podcast on Monday evening, and I wanted to address a couple of important issues that people don't seem to know about in terms of how a presidential election in the United States works. And in particular, there are a couple of loopholes where I think it is possible to legally cheat in this election, and I'm not talking about either candidate but the big question that has been on my mind and on many people's minds, is it possible to quote-unquote, legally cheat in an election?"Episode Description:In this episode, recorded on the eve of the 2024 U.S. presidential election, I dive deep into the complexities of the U.S. electoral system and explore potential legal loopholes that might allow for what I call 'legal cheating' in an election. I clarify that this discussion is unbiased, focusing neither on Democrats nor Republicans specifically. I explain how the U.S. Constitution and state legislatures play key roles in the election process, the distinctions between a popular vote and the electoral college, and historical precedents that could impact the integrity of the election. We also explore scenarios where state legislatures could manipulate the process, the implications of Trump's impeachment for insurrection, and how these factors play out in a tightly contested election. While shedding light on these potential loopholes, I emphasize their improbability but underscore the importance of understanding them. Tune in to get informed about the intricacies and safeguards within the U.S. election system.00:00 Introduction to the 2024 Election00:05 Understanding Legal Cheating in Elections02:34 The Electoral College vs. Popular Vote05:39 Historical Examples of Electoral College Outcomes09:28 Mechanics of the Electoral College18:54 Potential Loopholes and Legal Cheating33:22 Impeachment and the 14th Amendment39:18 Conclusion and Final Thoughts ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to "The James Altucher Show" wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow me on social media:YouTubeTwitterFacebookLinkedIn

A Note from James:"So in a few hours, as I am saying this. The election of 2024 will begin. I'm doing this podcast on Monday evening, and I wanted to address a couple of important issues that people don't seem to know about in terms of how a presidential election in the United States works. And in particular, there are a couple of loopholes where I think it is possible to legally cheat in this election, and I'm not talking about either candidate but the big question that has been on my mind and on many people's minds, is it possible to quote-unquote, legally cheat in an election?"Episode Description:In this episode, recorded on the eve of the 2024 U.S. presidential election, I dive deep into the complexities of the U.S. electoral system and explore potential legal loopholes that might allow for what I call 'legal cheating' in an election. I clarify that this discussion is unbiased, focusing neither on Democrats nor Republicans specifically. I explain how the U.S. Constitution and state legislatures play key roles in the election process, the distinctions between a popular vote and the electoral college, and historical precedents that could impact the integrity of the election. We also explore scenarios where state legislatures could manipulate the process, the implications of Trump's impeachment for insurrection, and how these factors play out in a tightly contested election. While shedding light on these potential loopholes, I emphasize their improbability but underscore the importance of understanding them. Tune in to get informed about the intricacies and safeguards within the U.S. election system.00:00 Introduction to the 2024 Election00:05 Understanding Legal Cheating in Elections02:34 The Electoral College vs. Popular Vote05:39 Historical Examples of Electoral College Outcomes09:28 Mechanics of the Electoral College18:54 Potential Loopholes and Legal Cheating33:22 Impeachment and the 14th Amendment39:18 Conclusion and Final Thoughts ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to “The James Altucher Show” wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow me on social media:YouTubeTwitterFacebookLinkedIn

A Note from James:So, in 2006, I was starting this company called StockPicker. This random guy calls me out of the blue and says, "I want to be CEO of your company. I just sold Golf.com and now I'm figuring out what to do." So we meet for breakfast, and he gave me all these ideas that were great. I stole all of them, built up StockPicker, and sold it. This guy and his wife then started their own company, and eventually sold it for $800 million. We've been friends all along. Even though I rejected him and stole his ideas, I'm glad he did much better than if he had joined StockPicker. They decided to come on the podcast and share their secrets of entrepreneurship. So, here's Michael and Kass Lazerow, two extraordinary entrepreneurs and friends.Episode Description:In this episode, James Altucher sits down with Michael and Kass Lazerow, the dynamic duo behind Buddy Media, a company they built and sold for $800 million. They share their journey from the early days of cold emailing and breakfast meetings to navigating the challenges of the great recession and pivoting their business model. This conversation goes beyond the usual success stories, diving into the reality of entrepreneurship, the sacrifices, the mistakes, and the mindset needed to thrive.What You'll Learn:The Importance of Pivoting: How to know when it's time to change your business model and the signs that indicate a pivot is necessary.Building a Resilient Mindset: Insights on handling stress and maintaining a positive outlook during challenging times.Networking and Fundraising: Effective strategies for building valuable relationships and securing investments.Working with Your Spouse: The dynamics of being business partners with your spouse and how to make it work successfully.Marketing and Scaling: Techniques for marketing your startup effectively and transitioning from custom solutions to scalable software.Chapters:00:01:30 - The Unexpected Call: Starting StockPicker00:02:39 - Introducing Michael and Kass Lazerow00:02:50 - The Shift to Social Media00:03:25 - Buddy Media's Early Days and Challenges00:04:16 - Writing a Book: Shoveling Shit, A Love Story00:05:07 - The Art of Pivoting in Business00:07:53 - The Power of Partnership: Working as a Married Couple00:11:27 - The Evolution of Buddy Media00:16:15 - The Free Felt Business Idea00:18:46 - Navigating Early Challenges and Fundraising00:32:47 - Health Scares and Their Impact on Perspective00:34:13 - The Reality of Entrepreneurship00:40:22 - Balancing Personal Life and Business00:50:31 - Networking and Building Relationships00:56:28 - Writing the Book: Process and Insights01:00:38 - Conclusion and Future PlansAdditional Resources:Buddy MediaGary VaynerchukPeter ThielMark PincusVelvet Sea VenturesThese show notes capture the essence of the episode, providing listeners with clear insights and resources to further explore the topics discussed. ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to “The James Altucher Show” wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow me on social media:YouTubeTwitterFacebookLinkedIn

A Note from James:So, in 2006, I was starting this company called StockPicker. This random guy calls me out of the blue and says, "I want to be CEO of your company. I just sold Golf.com and now I'm figuring out what to do." So we meet for breakfast, and he gave me all these ideas that were great. I stole all of them, built up StockPicker, and sold it. This guy and his wife then started their own company, and eventually sold it for $800 million. We've been friends all along. Even though I rejected him and stole his ideas, I'm glad he did much better than if he had joined StockPicker. They decided to come on the podcast and share their secrets of entrepreneurship. So, here's Michael and Kass Lazerow, two extraordinary entrepreneurs and friends.Episode Description:In this episode, James Altucher sits down with Michael and Kass Lazerow, the dynamic duo behind Buddy Media, a company they built and sold for $800 million. They share their journey from the early days of cold emailing and breakfast meetings to navigating the challenges of the great recession and pivoting their business model. This conversation goes beyond the usual success stories, diving into the reality of entrepreneurship, the sacrifices, the mistakes, and the mindset needed to thrive.What You'll Learn:The Importance of Pivoting: How to know when it's time to change your business model and the signs that indicate a pivot is necessary.Building a Resilient Mindset: Insights on handling stress and maintaining a positive outlook during challenging times.Networking and Fundraising: Effective strategies for building valuable relationships and securing investments.Working with Your Spouse: The dynamics of being business partners with your spouse and how to make it work successfully.Marketing and Scaling: Techniques for marketing your startup effectively and transitioning from custom solutions to scalable software.Chapters:00:01:30 - The Unexpected Call: Starting StockPicker00:02:39 - Introducing Michael and Kass Lazerow00:02:50 - The Shift to Social Media00:03:25 - Buddy Media's Early Days and Challenges00:04:16 - Writing a Book: Shoveling Shit, A Love Story00:05:07 - The Art of Pivoting in Business00:07:53 - The Power of Partnership: Working as a Married Couple00:11:27 - The Evolution of Buddy Media00:16:15 - The Free Felt Business Idea00:18:46 - Navigating Early Challenges and Fundraising00:32:47 - Health Scares and Their Impact on Perspective00:34:13 - The Reality of Entrepreneurship00:40:22 - Balancing Personal Life and Business00:50:31 - Networking and Building Relationships00:56:28 - Writing the Book: Process and Insights01:00:38 - Conclusion and Future PlansAdditional Resources:Buddy MediaGary VaynerchukPeter ThielMark PincusVelvet Sea VenturesThese show notes capture the essence of the episode, providing listeners with clear insights and resources to further explore the topics discussed. ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to "The James Altucher Show" wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow...

A Note from James:"So, you know, just like last week, I wanted to bring a somewhat neutral point of view to all the wild conspiracy theories, allegations, rumors, and actual facts about the Trump assassination attempt. I wanted to comment on the conspiracy theories. What are the facts? What could be our open questions? And just state the truth about what's going on without any BS political bias. The reason there's bias is that right from the beginning, we have an election coming up. Democrats want to win. Republicans want to win. They hate each other. And so, they keep throwing these weird accusations at each other. Some of which may be true, most of which are not.So now, we have Biden basically dropping out of the race. Kamala taking his place. What's being said? What is this being compared to? What has happened in the past? What are the conspiracies, and what's true and what's not? Someone actually wrote to me and said they were quite upset. I was taking a neutral point of view. I won't say what party this person was from. He thought I should not be neutral. My whole point is not necessarily that I have no feelings about any of these issues. I actually have quite a lot of feelings about the issues. But I am disgusted with how easy it is to see the bias in the headlines, in the accusations, whether it was CNN headlines, MSNBC headlines, or Fox headlines. You could just see how gross the bias was and how just lacking in morals and ethics and even business model the mainstream media has. I just wanted to bring some truth to the discussion.So let's get right into it."Episode Description:In this episode of "The James Altucher Show," James tackles the contentious and dramatic events surrounding the 2024 election. With Biden dropping out and Kamala Harris stepping in, the political landscape is charged with conspiracy theories and partisan biases. James navigates through the noise to present a factual and neutral perspective on the Trump assassination attempt, the Democratic power struggles, and the unprecedented political maneuvers. Listeners will gain insights into the historical parallels, the behind-the-scenes power plays, and what these developments mean for the future of American politics.What You'll Learn:The factual background of the Trump assassination attempt and its impact on the political climate.Analysis of Biden's decision to drop out and Kamala Harris's rise to the candidacy.Historical precedents that compare to the current political situation.The internal power struggles within the Democratic Party.The potential impact of third-party candidates like RFK Jr. on the 2024 election.Chapters:00:01:30 – Introduction to the Trump Assassination Attempt00:03:24 – Biden's Decline and the 2024 Debate00:05:43 – Democratic Party Power Struggles00:07:01 – Impeachment and Political Bias00:16:22 – Historical Precedents and Political Uncertainty00:31:43 – RFK Jr. and Third-Party Candidates00:37:46 – Predictions and Final ThoughtsAdditional Resources:Hunter S. Thompson - Fear and Loathing on the Campaign Trail '72Grover Cleveland - 22nd and 24th President of the United StatesRobert Cialdini - Influence: The Psychology of Persuasion ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to “The James Altucher Show” wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow me on social media:YouTubeTwitterFacebookLinkedIn

A Note from James:"So, you know, just like last week, I wanted to bring a somewhat neutral point of view to all the wild conspiracy theories, allegations, rumors, and actual facts about the Trump assassination attempt. I wanted to comment on the conspiracy theories. What are the facts? What could be our open questions? And just state the truth about what's going on without any BS political bias. The reason there's bias is that right from the beginning, we have an election coming up. Democrats want to win. Republicans want to win. They hate each other. And so, they keep throwing these weird accusations at each other. Some of which may be true, most of which are not.So now, we have Biden basically dropping out of the race. Kamala taking his place. What's being said? What is this being compared to? What has happened in the past? What are the conspiracies, and what's true and what's not? Someone actually wrote to me and said they were quite upset. I was taking a neutral point of view. I won't say what party this person was from. He thought I should not be neutral. My whole point is not necessarily that I have no feelings about any of these issues. I actually have quite a lot of feelings about the issues. But I am disgusted with how easy it is to see the bias in the headlines, in the accusations, whether it was CNN headlines, MSNBC headlines, or Fox headlines. You could just see how gross the bias was and how just lacking in morals and ethics and even business model the mainstream media has. I just wanted to bring some truth to the discussion.So let's get right into it."Episode Description:In this episode of "The James Altucher Show," James tackles the contentious and dramatic events surrounding the 2024 election. With Biden dropping out and Kamala Harris stepping in, the political landscape is charged with conspiracy theories and partisan biases. James navigates through the noise to present a factual and neutral perspective on the Trump assassination attempt, the Democratic power struggles, and the unprecedented political maneuvers. Listeners will gain insights into the historical parallels, the behind-the-scenes power plays, and what these developments mean for the future of American politics.What You'll Learn:The factual background of the Trump assassination attempt and its impact on the political climate.Analysis of Biden's decision to drop out and Kamala Harris's rise to the candidacy.Historical precedents that compare to the current political situation.The internal power struggles within the Democratic Party.The potential impact of third-party candidates like RFK Jr. on the 2024 election.Chapters:00:01:30 - Introduction to the Trump Assassination Attempt00:03:24 - Biden's Decline and the 2024 Debate00:05:43 - Democratic Party Power Struggles00:07:01 - Impeachment and Political Bias00:16:22 - Historical Precedents and Political Uncertainty00:31:43 - RFK Jr. and Third-Party Candidates00:37:46 - Predictions and Final ThoughtsAdditional Resources:Hunter S. Thompson - Fear and Loathing on the Campaign Trail '72Grover Cleveland - 22nd and 24th President of the United StatesRobert Cialdini - Influence: The Psychology of Persuasion ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check...

A Note from James:"So during COVID, every single day, I was doing a podcast because I felt there was so much misinformation in the mainstream media. Everyone was saying conspiracy theories, and nobody was getting the math right on how infections like COVID-19 spread. I just wanted to make the information more correct every day, explain what was going on, and try to translate why so much of the mainstream news was wrong—not just about COVID but about the effects on the economy from the shutdowns and the printing of trillions of dollars. Many of the things spoken about then have come to pass.On COVID, it was more of an attempt to understand what was unknown by the public, what were conspiracy theories, and what was misinformation. I tried to understand from a rational point of view what was going on. Rationality is not part of the mainstream media anymore.We're seeing this again with the Trump assassination attempt—on every side, by the way. This is not intended to be a political podcast, although I will talk about some of the politics involved. So, I want to go through what happened, some of the conspiracy theories about this kind of stuff in general, some of the history behind this, and perhaps we'll get into some more recent events. This is a news-filled week: just a few days after the assassination attempt is the nomination of JD Vance as the vice presidential candidate for the Republican party. It's a very historic event, and I will comment on that as well. But let's start with this assassination attempt."Episode Description:James breaks down the recent assassination attempt on former President and presidential candidate Donald Trump. He provides historical context, drawing parallels to past attempts on major political figures, and discusses the ensuing conspiracy theories from all sides of the political spectrum. Listeners will gain a clear, rational perspective on the events and their implications for the upcoming election and beyond.What You'll Learn:The historical context of assassination attempts on U.S. political figures.An analysis of conspiracy theories surrounding the Trump assassination attempt.The implications of the assassination attempt on the current political landscape.How media bias and misinformation shape public perception during political crises.The potential impact of this event on the upcoming presidential election and economic markets.Chapters:01:30 - Misinformation During COVID02:12 - Mainstream Media Rationality02:34 - Trump Assassination Attempt: An Overview03:33 - Historical Assassination Attempts: George Wallace and Theodore Roosevelt06:19 - Secret Service Protection Protocols10:15 - Conspiracy Theories Debunked17:02 - Secret Service and Political Bias25:08 - The Fallout: Public and Media Reactions28:08 - Trump's Response: "Fight, Fight, Fight"40:18 - Economic Impact: Bitcoin and Stock Market Reactions42:33 - JD Vance: A New VP Candidate47:26 - Reflections on Political PolarizationAdditional Resources:Hillbilly Elegy by JD VanceSecret Service Protocols and History ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this episode, please rate, review, and subscribe to “The James Altucher Show” wherever you get your podcasts: Apple PodcastsiHeart RadioSpotifyFollow me on social media:YouTubeTwitterFacebookLinkedIn

A Note from James:"So during COVID, every single day, I was doing a podcast because I felt there was so much misinformation in the mainstream media. Everyone was saying conspiracy theories, and nobody was getting the math right on how infections like COVID-19 spread. I just wanted to make the information more correct every day, explain what was going on, and try to translate why so much of the mainstream news was wrong-not just about COVID but about the effects on the economy from the shutdowns and the printing of trillions of dollars. Many of the things spoken about then have come to pass.On COVID, it was more of an attempt to understand what was unknown by the public, what were conspiracy theories, and what was misinformation. I tried to understand from a rational point of view what was going on. Rationality is not part of the mainstream media anymore.We're seeing this again with the Trump assassination attempt-on every side, by the way. This is not intended to be a political podcast, although I will talk about some of the politics involved. So, I want to go through what happened, some of the conspiracy theories about this kind of stuff in general, some of the history behind this, and perhaps we'll get into some more recent events. This is a news-filled week: just a few days after the assassination attempt is the nomination of JD Vance as the vice presidential candidate for the Republican party. It's a very historic event, and I will comment on that as well. But let's start with this assassination attempt."Episode Description:James breaks down the recent assassination attempt on former President and presidential candidate Donald Trump. He provides historical context, drawing parallels to past attempts on major political figures, and discusses the ensuing conspiracy theories from all sides of the political spectrum. Listeners will gain a clear, rational perspective on the events and their implications for the upcoming election and beyond.What You'll Learn:The historical context of assassination attempts on U.S. political figures.An analysis of conspiracy theories surrounding the Trump assassination attempt.The implications of the assassination attempt on the current political landscape.How media bias and misinformation shape public perception during political crises.The potential impact of this event on the upcoming presidential election and economic markets.Chapters:01:30 - Misinformation During COVID02:12 - Mainstream Media Rationality02:34 - Trump Assassination Attempt: An Overview03:33 - Historical Assassination Attempts: George Wallace and Theodore Roosevelt06:19 - Secret Service Protection Protocols10:15 - Conspiracy Theories Debunked17:02 - Secret Service and Political Bias25:08 - The Fallout: Public and Media Reactions28:08 - Trump's Response: "Fight, Fight, Fight"40:18 - Economic Impact: Bitcoin and Stock Market Reactions42:33 - JD Vance: A New VP Candidate47:26 - Reflections on Political PolarizationAdditional Resources:Hillbilly Elegy by JD VanceSecret Service Protocols and History ------------What do YOU think of the show? Head to JamesAltucherShow.com/listeners and fill out a short survey that will help us better tailor the podcast to our audience!Are you interested in getting direct answers from James about your question on a podcast? Go to JamesAltucherShow.com/AskAltucher and send in your questions to be answered on the air!------------Visit Notepd.com to read our idea lists & sign up to create your own!My new book, Skip the Line, is out! Make sure you get a copy wherever books are sold!Join the You Should Run for President 2.0 Facebook Group, where we discuss why you should run for President.I write about all my podcasts! Check out the full post and learn what I learned at jamesaltuchershow.com------------Thank you so much for listening! If you like this...

The following is a conversation with Erin Kenney, the CEO of Nutrition Rewired. Erin is a registered dietitian with a Master's in nutritional science. She's done an amazing job in building a business that helps people take control of their lives through modulating their diet, improving their gut health and ultimately looking after the gut microbiome. Today's conversation was far-reaching. We talked about fibre, We talked about gums, we talked about artificial sweeteners, carbohydrates, fats, proteins, and supplements. This was pretty much an A to Z of what to do to look after your gut health, what works and what doesn't.  I wanted to take this opportunity to thank all of the listeners and supporters of the podcast for everything you've done to help us build the name, and the brand, and to get the message out there around microbiome being critically important and gut health being important for wider body health. Timestamps: 00:00:00 Introduction 00:01:19 How Erin became interested in gut health 00:04:32 Biggest impacts on Erin's health 00:06:09 Stress and gut health 00:09:22 Does caffeine give us energy? 00:14:46 Bone broth instead of coffee 00:16:06 Coffee and our liver 00:16:48 Taking control of gut health 00:18:42 The role of a good breakfast 00:21:55 Lean muscle mass and women 00:23:07 Importance of protein 00:26:32 Role of supplements 00:29:35 Creating an optimal regime 00:32:33 Ketogenic diets 00:38:34 SIBO 00:46:24 Microbiome testing 00:49:00 Vitamin D 00:51:51 Green powder supplements 00:55:19 Heavy metals 01:01:38 Artificial sweeteners 01:05:58 Gum instead of gluten 01:10:18 Palm oil 01:12:20 Nutrition Rewired   Full Transcript: [00:00:00] JAMES: The following is a conversation with Erin Kenny, the CEO of Nutrition Rewired. Erin is a registered dietitian with a master's in nutritional science. She's done an amazing job in building a business up that helps people take control of their lives through modulating their diet, improving their gut health and ultimately looking after the gut microbiome. [00:00:24] JAMES: Today's conversation was far reaching. We talked about fiber, We talked about gums, we talked about artificial sweeteners, carbohydrates, fats, proteins, supplements. This was pretty much a A to Z of what to do to look after your gut health, what works and what doesn't. I really appreciated how simply Erin put lots of complicated topics for the listener. [00:00:49] JAMES: She podcast so that might explain why she was such a good guest. This is an amazing episode for anyone who's wanting to enter into this field, but we also digged into some [00:01:00] technical aspects, and I learned a lot over the course of the conversation. This is Inside Matters. My name is Dr. James McIlroy. I hope you enjoy it. [00:01:16] JAMES: So how did you get interested then in gut health? [00:01:19] ERIN: It was a very selfish Journey for me, I, from a very young age, struggled with digestive issues. They had to take me off of being breastfed when I was a baby and got on to formula fed. And, you know, I was struggling with a ton of digestive issues. And basically they just slapped me with a diagnosis of lactose intolerance. [00:01:42] ERIN: And basically what most of my childhood, struggling with horrible pain, horrible bowel movement. I will honestly say that a majority of my childhood was spent in the bathroom because Of how bad things were with my gut and [00:02:00] I really didn't have much help, you know, it was kind of just, you know, let's watch out for dairy and let's watch out for, you know, triggers and things like that, but it was kind of just, you know, take elodium and, and hope for the best. [00:02:13] ERIN: So, fast forward, you know, as I started to get older, I was a full time athlete, I was, you know, in high school, and really wanted to start taking care of myself. I struggled with mental health issues, I lost my father to his battle with mental health struggles, and it started to connect with me that on the days when my stomach was at its worst, my mental health was also at its worst. [00:02:42] ERIN: And so I was starting to make these connections and, you know, learn and, Spent a lot of time on Google, which, you know, we all know is not a reputable source of information. But nonetheless, I was, I was interested in, in seeking alternative ways to help [00:03:00] support my body. And when I went to college, I didn't really know what I wanted to major in. [00:03:05] ERIN: And I thought, you know, nutrition sounds like something that I could use some support with, considering everything that I'm going through and. You know, the things that I've read online and from there on out, it was just about healing myself. I learned, you know, after being on a decade of medications from birth control to fix the hormone imbalance, from PPI's to address the chronic acid reflux, you know, it was just being thrown medication after medication because doctors were just treating symptoms. [00:03:40] ERIN: So I, I've dedicated all my time to researching about, you know, the gut microbiome and nutrition. And then I was in school for nutrition. And I started following people in the field who were talking about these things, talking about the gut microbiome, talking about how nutrition impacts mental health. I [00:04:00] just lit up, you know, it was, it was like, for the first time in my life, someone was speaking to me and, you know, I felt validated too, for so many years, it's like, oh, it's just all in your head, you just gotta, you know, stop eating dairy, and I have now, Basically built a business on helping individuals get to the root cause of their digestive issues and imbalances because of everything that I went through. [00:04:25] ERIN: So I'm incredibly passionate about what I do and I'm just really excited to chat with you today. [00:04:32] JAMES: So what were some of the key things then as you went along your own journey that made the biggest impact to your own health? [00:04:39] ERIN: I will highlight a very important one that I think a lot of people don't consider and that's stress. [00:04:45] ERIN: It's Uh, you know, there was a lot of stress in my life and I was kind of putting that on the back burner as something that, yeah, you know, I'm stressed, I'm, you know, working out intensely and doing all this stuff, but that [00:05:00] can't, you know, that's not going to make a huge difference. So I really had to prioritize stress as one of them. [00:05:06] ERIN: Diet, as we all know, you know, is incredibly important. My diet was Not supportive of what I needed for my body. I played around with a plant based diet, and I have no shame for anybody who is, who loves their plant based diet, but for me it was not the right fit. I needed a plant forward diet, but I also needed protein. [00:05:30] ERIN: I needed to really hone in on, like, focusing on diversity of what I was eating. I was eating a lot of the same things over and over again. I think a lot of us can get into a rut pretty easily with that. And then I learned, you know, how much diversity our gut needs in terms of the microbiome. So stress, diet was huge. [00:05:50] ERIN: And then I had to address imbalances. I had small intestinal bacterial overgrowth because I was On proton pump inhibitors long term, I had yeast [00:06:00] overgrowth. Uh, so a lot of these things I learned from stool testing and I was able to Going [00:06:09] JAMES: back to the stress then. So how do people identify if their stress levels are too high? [00:06:15] JAMES: And you mentioned exercise, maybe exercise is a double edged sword. If you do too much, it might be actually a big stress on your body. So what are your tools and tips then for stress management? I guess a little bit is good for you, right? But too much is detrimental. [00:06:31] ERIN: Sure. Yeah, we call that eustress, right? [00:06:33] ERIN: It's that, that, that period where you're kind of in that Goldilocks sweet spot where stress is, is beneficial. It helps us grow. It's good for inflammation. But in terms of my own journey, I, I would love to say that I had this like, you know, lovely revelation of your stress and you need to pull back. It was. [00:06:53] ERIN: One of those moments, I say this to clients all the time, it's if you listen to your body when it whispers, you don't have to hear [00:07:00] it when it screams. And I was at the screaming point where I was running seven to ten miles a day and You know, I got to a point where I couldn't barely even walk because I was just like so obsessed with how exercise made me feel, how good it was for my mental health. [00:07:16] ERIN: So I was basically forced in to loving yoga. It wasn't love at first. It was a, it was, it was not love at first. It was a rocky relationship to begin with, but I thought this is the only thing I can do. Yoga is the only thing that I physically can do that's going to support my mental health and I just fell in love with it. [00:07:37] ERIN: And to this day has always been an incredible stress management technique for me because not only do I get to move my body, but I'm doing it in a way that's not inflammatory. I'm doing it in a way where I'm, I'm like feeling everything of what's going on in my muscles and how tight I am and breath, right? [00:07:57] ERIN: I'm breathing. So a lot of times [00:08:00] people will say, I'm just not good at meditation. And I'll say, well, have you tried yoga? Have you tried walking or yoga? Like those are also forms of meditation because you have to focus on your breath. If you're in a down dog position and you're sweating and you're tired, the only way you're going to get through that pose is that you're going to breathe. [00:08:20] ERIN: So meditation has been, meditation and yoga have been incredible assets to my healing journey, but also just the way that I Manage my stress now and also just the awareness of what is my threshold for stress and what are some of the signs that come up for me when I know I've hit my breaking point and become more irritable towards the people that I love. [00:08:45] ERIN: My sleep starts to suffer. My digestion starts to go off a little bit. So these are kind of my. Red flags of, Hey, Aaron, let's check in with yourself. You might be doing a little too much. So are those [00:08:59] JAMES: [00:09:00] the sort of whispers then before the screams, the irritability, the sleep? Yeah. [00:09:05] ERIN: And for females to even males, people think, yeah, changes in hormones, like you'd notice changes in your menstrual cycle or your libido, like those types of things can, can also take a hit when you're dealing with chronic stress. [00:09:22] JAMES: Cause I guess a lot of people think, Oh, well. You know, I'm a little bit tired today. I'll just drink more coffee or I'm a little bit sore today. I'm just gonna train more But what you're saying is maybe you need to just slow down to perform [00:09:34] ERIN: better. Exactly. And I also love to talk to clients about how caffeine actually works. [00:09:41] ERIN: Caffeine doesn't give us energy. It actually blocks these adenosine receptors in our brain. And these adenosine receptors are like those little whispers of us hearing the signal that we're tired. And once that caffeine wears off, those [00:10:00] adenosine receptors don't go away. They're still there to then tell our brain, hey, we're really tired. [00:10:07] ERIN: So I always Tell people that, that you're not giving yourself more energy by loading up on caffeine, you're decreasing your perception of how tired you are, which is allowing you to push through something, whether it's a workout or a long, you know, night at work. And over time, especially your body is going to shut down. [00:10:33] JAMES: As an avid coffee drinker, I'm sort of running through my head, am I drinking? I'm not listening to the whispers, but have you got recommendations then for your clients around coffee and caffeine, like some rules or suggestions in terms of when to drink, how much to drink? Cause that could be really interesting for the listeners on Inside Matters. [00:10:52] ERIN: My number one tip is that, and I say this to clients, you have to eat a full breakfast before you have your [00:11:00] cup of coffee. And when we do this experiment, sometimes my clients will say, after I had, [00:11:10] ERIN: they'll say, I didn't, I didn't even want my cup of coffee after I had my breakfast. And it's because we're not using artificial fuel, right? We're eating. Some nice eggs with, you know, some sweet potatoes and avocado and, you know, we're energized and now we don't have this craving for a stimulant. And I'm not shaming caffeine completely, especially coffee. [00:11:36] ERIN: There's numerous health benefits in addition to the microbiome, but it's, it's evaluating that relationship with it. And so. So I always say, no coffee until you've had a, a, a full breakfast. Coffee does not count as breakfast. I tell them no caffeine after noon. Uh, the researcher, Michael, is it, oh, Matthew Walker. [00:11:58] ERIN: He talks about [00:12:00] metabolism of caffeine and, you know, the half life and how long that caffeine can stay in your system. And You could be laying in bed at night if you had your cup of coffee at 3 p. m., and you're still metabolizing it in the middle of the night, impacting your quality of sleep, and then the cycle just starts again, right? [00:12:18] ERIN: You wake up, you're exhausted, you're groggy, and that's because That's You know, that the later in the day that can impact your sleep. [00:12:27] JAMES: So someone maybe like me who wakes up in the morning and finds a way over to the coffee. I know myself. It just, it's like part of the routine and I kind of love it to be honest, but so someone's addicted to that morning routine and they come to you and they become a client. [00:12:45] JAMES: How do you get them to break that cycle and get into the routine of. I don't know, maybe cold shower and then they come in, they've had their breakfast, then they have their coffee. Is it a slow process or do you just say, right, that's it, cold turkey. [00:12:58] ERIN: I'm never, [00:13:00] I'm never militant with my clients ever because I'm also human and the I also understand that, you know, when we make changes, that they don't need to happen overnight and it certainly doesn't usually feel good to our nervous system or mental health wise when someone says, just cut it out. [00:13:17] ERIN: And now, don't get me wrong, I've got clients that are all or nothing and they just, when I tell them generally what I've just told you, they'll say, forget it, I'm cutting it out. I want to do this, I want to do it perfectly, that's type of person. Right. So when we, when we start, you know, I, I get to know what their relationship is like. [00:13:36] ERIN: I had a client one time and she had this, you know, whole setup in her house. The whole side of the wall was dedicated to coffee. So for the client like that, we're going to say, okay, you know, let's. Maybe switch to a decaf or switch to, you know, less of a serving and put more, you know, almond milk in it to just cut down on the, on the portion. [00:13:56] ERIN: And then we, we work our way towards, uh, maybe after [00:14:00] breakfast, but there's lots of alternative things that you can do to still have that routine. So I'll, I'll just give my example. I drink a bone broth, hot chocolate in the morning and that bone broth, hot chocolate. It doesn't, you know, contain loads of caffeine. [00:14:16] ERIN: It's still got the gut health benefits. It's still bitter because of the cacao. And so I drink that it's got 20 grams of protein and it's warm and it's, it still gives me that so people can find, you know, there's all these like, you know, medicinal mushroom type of blends and things like that. So if you can find something that you like. [00:14:36] ERIN: That isn't that, you know, bursts of caffeine and acidity to your stomach on an empty stomach, then that might help the transition be a little bit easier. Thank [00:14:46] JAMES: you so much for that example. Mark, who's one of the hosts here at the podcast studio has bone broth and cayenne pepper. Okay. There you go. In the morning. [00:14:56] JAMES: Yep. And bizarrely, I was speaking to him on Tuesday because we're [00:15:00] planning for the week and we're talking about you. Um, and I said, cause he was drinking in the same type of Yeti coffee mug as me. And I was like, Oh, nice mug. Like you're one of the good guys. Um, is that a coffee? He explained that no, it was just his bone broth and it's part of his routine to get, you know, great nutrition and in the morning and it's still warm. [00:15:18] JAMES: And as you say, it sort of feels like a coffee, but it's not really a coffee. So. Um, I'm going to go for it. I'm going to start my day with some bone broth. [00:15:27] ERIN: I expect a report back. I'd love to hear from you. [00:15:31] JAMES: I'll give you a report. I can't promise to stop the coffee. That's not the goal. I might go from two shots to one shot. [00:15:39] JAMES: I think two shots to one shot. That's success. You know, you mentioned the health benefits of coffee. It's really interesting. I've had several people come on. So one of them was Professor Debbie Shawcross, who's like a leading authority on, on liver health, basically saying drink more coffee because for some reason it's protective [00:16:00] against, um, cirrhosis and, uh, non alcoholic fatty changes. [00:16:05] JAMES: So there's, there's something in there, isn't there? [00:16:06] ERIN: This, I think there's so many, there's so many asks. Aspects of it. I think, you know, you and I are big into gut health, right? So we're probably gonna always look at it from a gut health lens. And, you know, my scientific brain goes to, well, you know, coffee helps people have a bowel movement, right? [00:16:22] ERIN: It stimulates the liver and digestion. And if we're having regular bowel movements and, and stimulating that process, that's great for the liver, right? We don't want, that's good. You know, sluggish digestion. So just one of the many, I mean, there's, there's antioxidants in there, there's. The polyphenols that feed beneficial bacteria and you know, the liver and the gut are most certainly connected. [00:16:48] JAMES: So could you maybe walk the listeners through some of the other things you try and help your clients with? So you mentioned stress, diet, maybe we can unpack diet a little bit more because that must be huge. We hear. In terms [00:17:00] of. You know, taking control of your health and your microbiome and your gut. [00:17:04] ERIN: Sure. Yeah. As a dietician, you know, people expect that we just focus on food and we, we often do. There's not usually one client that comes in that there's not something diet related that we're talking about and everyone's starting at different ends of the spectrum, right? Some people have no knowledge that. [00:17:23] ERIN: You know, they're not even getting nearly enough protein. They're not eating any vegetables, you know, that, that kind of standard American diet where a lot of processed foods, you know, a lot of refined grains that aren't providing any fiber or nutrition. So there's so many different ends of the spectrum of things that we work on. [00:17:41] ERIN: And then you have, you know, clients who have overgrowth or SIBO, like SIBO, for example, small intestinal bacterial overgrowth, and they're eating super clean. You know, air quote clean, where they're not touching your processed food. They're loading up on fiber because they've been told, [00:18:00] fiber, fiber, fiber, if you want better gut health, eat more fiber. [00:18:04] ERIN: And that's making them feel worse. So there's that end of the spectrum where we have to. obviously address the underlying root cause, but we need to simplify their diet, make it easy for them to break things down a little bit, give their gut some rest. And then there's the other spectrum where, you know, I have a woman come to me and she's eating one egg for breakfast. [00:18:25] ERIN: And I'm saying, where's your protein? She said, well, I haven't had an egg for breakfast. I said, well, one egg is six grams of protein. We need 25 or 30 grams of protein to start our day. Right? So there's, there's all these missing links. [00:18:42] JAMES: We've talked about breakfast quite a lot then because as you know, within the sort of wellness health sphere, there's this debate around intermittent fasting and it sounds like you're very much in favor of, you should have a really great nutritious breakfast with macronutrients to set you up [00:19:00] for the day. [00:19:01] JAMES: Is that the case? So you're big, big on breakfast for you and your clients. [00:19:06] ERIN: So for me, yes, I, I've always tried to adopt that my philosophy on my own nutrition and what I think makes me feel best is not going to determine what I think is best for a client. And I think that's really important. I think a lot of, you know, health professionals, it's, you know, they find something that works for them or works for some of their clients and then everyone should do it. [00:19:28] ERIN: Now. Do I often, would I recommend intermittent fasting to people? No, it wouldn't be my first recommendation for the majority of people that I work with. I have worked with clients and most of those clients end up being males who do really well with intermittent fasting. Maybe it's males or oftentimes it's women who are post menopause and they have specific goals, maybe related to body composition and hormone balance. [00:19:55] ERIN: And they found that these practices of intermittent fasting in whatever [00:20:00] fashion make them feel really good. A lot of these are CEOs of companies that like, they love the focus aspect of it during the day. And, you know, so I'm just going to come in and I'm going to work with them and say, Well, if this works for you and you're not, Uh, binge eating at night and feeling like you're deprived during the day and you're getting good nutrition and you're fast, you're feeding window, then I'll work with you. [00:20:23] ERIN: We'll work with where you're at. But the majority of my clients, you know, especially those that are female and they're still cycling, this can really disrupt their hormones. It can disrupt their ability to work out during the day. And so we have to really personalize that if it's going to be part of the protocol and, and the research that I've seen, my biggest concern is the body composition. [00:20:46] ERIN: I've seen the loss of muscle mass be a potential and I think that's a huge issue for a lot of people, right? We all need nice lean muscle mass and if fasting, you know, if we continue to see research that [00:21:00] fasting negatively impacts our lean muscle tissue, I don't love [00:21:04] JAMES: that. Yeah. I mean, intuitively it makes sense, right? [00:21:08] JAMES: You stop consuming calories, you've got no protein intake, therefore there's no amino acids moving around. So it kind of makes sense that your body is going to look for energy. Yeah. And I guess muscle is, is, is a target is probably less desirable than, than fat and certainly your glycogen stores kind of make sense that it forms part of that source of energy that we need. [00:21:32] JAMES: Our bodies are incredible. I'm just on the muscle mass thing. Oh yeah, absolutely. And on the muscle mass thing then, you know, I guess maybe some women listeners might think. It doesn't really apply to me. You know, that's for men that lift and train and work out, but that's not the case, is it? It's, it's just as important, maybe even more important. [00:21:54] JAMES: I, [00:21:55] ERIN: I'm a, I'm not a buff woman. Okay. I, I [00:22:00] get, you know, up to 130 grams of protein per day. And I'm not, you know, what, what people, a lot of women would think I would turn into by eating as much protein as I do. But I will tell you. Some things about me is that I'm very strong, very strong in the gym. I have a good lean body mass My hormones are balanced. [00:22:20] ERIN: I don't have cravings for sugar throughout the day. Those are the things that protein does for us. And so I think we need to understand that from a, you know, biochemical aspect, protein is essential. It is protective. It increases our metabolism. It's the only macronutrient that has a higher thermic effect of food like that. [00:22:41] ERIN: That's incredible. So we, you know, just old school recommendations that always seem to sneak their way into further generation. [00:22:50] JAMES: So, um, how does someone know, I mean, if they're not got the benefit of working with an expert dietitian like you, how do they know if they're on the right track for protein? And in [00:23:00] addition to like the actual macronutrient gram per day recommendations, how important is the source of protein for people? [00:23:07] ERIN: Hmm, that's a great question. So we have two different types of protein. We have a complete protein, which is basically a protein that combines all of the essential amino acids, which amino acids are the little building blocks of what protein is. And essential, meaning our body needs them to survive and to produce the daily functions and live optimally. [00:23:30] ERIN: So that's, that's an essential amino acid. That's a, that's a complete protein. Those Food sources are things like meat, fish, eggs. These are animal proteins. And then you have the incomplete side where we have incomplete, and these are going to be plant based foods. There are a few plant based foods that are complete proteins, but the majority, things like beans and lentils, these are not complete proteins. [00:23:55] ERIN: So they're just missing a few of those amino acids that we need for [00:24:00] essential daily living. Now, this doesn't mean that non complete proteins are not beneficial, but the requirement of how much you would need per day slightly goes up because the digestibility, how able we are to digest these proteins, is not as efficient, you know, if you were to eat eggs or a piece of fish, for example. [00:24:24] ERIN: So my approach is try to get some really good quality complete proteins in your diet and also get some incomplete protein sources in your diet, like lentils and beans and nuts and seeds, if that's something that works with, you know, your individualized physiology. But this idea that everything has to be a complete protein, I think is also, you know, too far left because, you know, bone broth isn't a complete protein, but it's still an excellent source of protein. [00:24:53] ERIN: And I'm still going to have, you know, salmon for dinner, and I'm going to hit my Total, you know, amino acid needs for [00:25:00] the day, if you will, [00:25:01] JAMES: and the total amino acid needs for the day. How does one calculate what they may or may not need? [00:25:07] ERIN: That's a great question. So the amino acids themselves, you could use something like I think chronometer might do this on a very, you know, specific level. [00:25:17] ERIN: I don't know if it goes that into detail, but we look at the total grams of protein as a dietitian, you know, so we're looking for Usually around 1.2, up to two kilograms, sorry, grams per kilogram per day of protein for each person. So the minimum, like the USDA requirements for protein, we're talking 0.8 grams per kilogram per day for a person. [00:25:43] ERIN: Uh, however you need to convert that, but it's what 0. 8 is not a recommendation I use for any of my clients. We're always going above that, especially when my clients are more active or they're looking to optimize their body composition. We're looking closer to like, uh, up to one [00:26:00] to two grams per kilogram. [00:26:03] ERIN: So that's your, that's your goal is to really figure out like what is that number for you based on your body weight and then how can you spread that throughout the day. You know, you don't have to completely spread it evenly, but I usually just tell people to make it easier. Get 25 to 30 grams at each meal and then adjust, you know, add to that to meet your needs and then add snacks where appropriate. [00:26:27] ERIN: But that's a good baseline if they're kind of starting from ground zero. [00:26:32] JAMES: That's an amazing summary of protein. Thank you so much. How do supplements fit into that? And I'm asking you in the context of this minimally processed versus like ultra processed food debate we have all the time. So some people say, Oh yeah, whey protein supplement contains the essential amino acids. [00:26:50] JAMES: Go for it. But other people say, Whoa, it's so processed you shouldn't have it. So what are your thoughts then, um, on supplements and How do [00:27:00] they fit in? [00:27:01] ERIN: I think supplements can be great. I think they have a time and a place and you know, a lot of the time is convenience is, is a big reason, you know, for somebody that has a protein goal of 180 grams per day. [00:27:15] ERIN: You know, meeting that might be really challenging if they're not throwing in some whey protein into a smoothie or a shake. Whey protein is excellent. Yes, it's processed, but so is your oatmeal and your brown rice and your ground meat. Like everything is processed. And if you choose grass fed, you know, protein powder, a whey protein powder with minimal ingredients that maybe just has whey, maybe some, you know, sweetener and something to Add some salt or whatnot. [00:27:43] ERIN: But if you have like a three ingredient protein powder, it's high quality grass fed, and you add that to your smoothie, you're doing wonderful things for your body. So I think it, it really comes into when you see these, you know, those, you know, body building companies always start these protein [00:28:00] powders and it's , you know, strawberry cheesecake or cookie dough. [00:28:03] ERIN: Yeah. And. I used to eat these. I'm not, I'm not saying I've never tried them. They do taste good. They do. They taste just like they say they do, or at least when you're, you know, eating healthy, they do. And, you know, that's when we get into the long list of ingredients. We see, you know, binders and gums and artificial sweeteners. [00:28:24] ERIN: And we see, you know, things that can really not make us feel good, especially from a gut health perspective. So a good quality You know, one that's been maybe tested for heavy metals, things like lead that can be common in plant based protein powders, arsenic. If we get a good quality protein powder, minimal ingredients, uh, high quality testing, ask for the certificate of analysis from the company. [00:28:51] ERIN: Then, you know, you're, you're, you're gonna help yourself out if you're struggling to get your protein intake. Thank you for [00:28:57] JAMES: that. I've, I've got so many things written down to ask, you know, I'm [00:29:00] actually not even sure where to start. Fibers, gum, sweeteners, heavy, heavy metals, other macronutrients. Before I jump into sort of more supplements and sweeteners and the heavy metals, I'd kind of like to. [00:29:16] JAMES: Round off the diet piece with you more generally. So maybe talk a little bit about fiber, um, fruit and veg, talk about carbs and fats. Yes. You know, when you're working with all your clients and for yourself as well, how do you build like an optimal diet? Big question. [00:29:35] ERIN: Yes. No, it's, it's a great one. How do you create like an optimal regime? [00:29:38] ERIN: Absolutely. So we start with again, base, like we kind of find this base for people to start. And that's where the three meals per day comes in. You know, if someone's not used to eating breakfast, we're going to try to get them to start eating breakfast, lunch, and dinner, or we can call it meal one, meal two, meal three, whatever your schedule is like. [00:29:56] ERIN: And at that meal, we're aiming to get again, that 25 to 30 grams of [00:30:00] protein. We want to hit. half a plate of vegetables that are colorful, usually like darker leafy greens tend to be an area that a lot of people struggle. So we try to look for those dark pigments. And then the other portion of that, usually I say like a fist of carbohydrates minimum at your meal. [00:30:18] ERIN: And we try to choose carbohydrates every meal and we try to choose carbohydrates that are more complex. So things like. higher fiber carbs. So if you're looking at a label, you're going to see fiber there. But if you're just in the produce section and you're looking at carbohydrate sources, potatoes have fiber, both sweet and white potatoes. [00:30:37] ERIN: Uh, things like quinoa, plantains, bananas. These are all sources of carbohydrates that are very nutrient dense. If a client's more active, those carbohydrates Intakes might go up. We might be consuming more carbohydrates per day. Um, and then fat is, is incorporated into those meals. We, we try to focus on healthy fats, particularly omega [00:31:00] 3 fats. [00:31:00] ERIN: So things like wild caught salmon, we're looking at things like mackerel, sardines, herring. These are omega 3 rich fats that we have to get two to three servings per week. So we've got three meals per day, protein, vegetable, carbohydrate, healthy fats included. And then, then we kind of go from there. We say, okay, are you working out? [00:31:22] ERIN: Okay, well, we need a pre workout, post workout routine. And how can we adjust there? Um, you know, you're training for a marathon. Okay, your carbohydrate needs go up significantly. We're going to have to adjust that. But once we have that base, you know, and, and You don't have to focus so much on the grams of fiber, although we are aiming for about 25 to 35 grams per day, if you're choosing complex carbs, if you're choosing half your plate of vegetables, then you're likely going to hit your fiber needs for the most part. [00:31:53] JAMES: It's going to happen, right? It's going to happen just by default, you know, because it's quite difficult to [00:32:00] find the fiber on the foods and to figure out. [00:32:04] ERIN: Yeah. And if you're focusing on it, we're [00:32:08] JAMES: sorry, there's a bit of a, a bit of a, a like you. Please continue, please. [00:32:13] ERIN: No, no. I was just going to say, so if you're focusing on getting the majority of your foods from less processed foods, then you're again, likely to hit those fiber goals because you're going to be choosing those types of fruits and vegetables and things like that that just naturally come with, you know, the, the benefit of the fiber. [00:32:33] JAMES: Absolutely. I'm going to just push you a little bit, um, on. Ketogenic diets and people even go more extreme and they have these um, carnivore diets. They're great. And you've been quite clear in your recommendation around you should have some carbohydrate with each meal. So, could we just unpack that a little bit and what some of the, you know, why is that part of your recommendation versus, you know, just eat meat and [00:33:00] veg, for example? [00:33:01] ERIN: Mm hmm. So, the, the main focus there is blood sugar balance and this is something that people think this is a discussion just reserved for people who have, say, diabetes. You know, oh, well, you know, they gotta watch their blood sugar and, you know, gotta make sure they don't eat too many carbohydrates. But the reality is, is we all should care about blood sugar. [00:33:22] ERIN: Blood sugar impacts our cardiovascular system. It impacts our mental health, it impacts our hormones, it impacts our muscle growth and maintenance. So having stable blood sugar throughout the day is absolutely key to optimal performance, energy, all those things that we're talking about. And so being able to get a steady adequate amount consistent throughout the day is going to allow that blood sugar to just kind of have this nice little up and down throughout the day. [00:33:52] ERIN: And we're going to stay within this nice range that the body likes to stay in for optimal health. When you go get your blood work done and you get your [00:34:00] hemoglobin A1C tested, that's your report card of how well you've been managing That blood sugar over the past three months, how well you've been staying within that range. [00:34:10] ERIN: And when you don't eat carbs for breakfast, and you don't eat carbs for lunch, and then you have a carb dinner, you're more likely to see a larger spike in those blood glucose levels. Again, this isn't the case for everybody. If somebody has been on a low carb diet, and they've maintained that, and their blood sugar is great, and they're feeling awesome, I'm so happy for them, and I would support them in that way. [00:34:34] ERIN: But for the majority of us, We have these habits where our carbs are not distributed properly. We're not eating the right amount. We're either eating too much in one sitting, not enough at one sitting, and we're wondering why we're craving sugar all the time, and why we're tired all the time. And if we just got high quality carbohydrates at every meal in adequate amounts, not overdoing it, not underdoing it, [00:35:00] we might find a really healthy balance. [00:35:02] ERIN: And not to mention, the trouble with those low carb diets is the number one symptom is constipation. Because These carbohydrates feed our beneficial bacteria. I probably see 10 to 15 stool tests per week, and any time I see someone come in with a carnivore, keto, low carb diet, they have very low beneficial bacteria. [00:35:30] ERIN: And it is pretty much causation, right? We can pretty much assume that the correlation there is because they're not So, my theory, you know, the, the keto diet, it's originally designed for, for medical purposes, and it's incredible for, you know, patients who are diagnosed with a, a type of epilepsy, and it has, been proven to And, uh, yeah, I mean, I don't [00:36:00] think that the majority of the United States needs to be on a carnivore or ketogenic diet, especially long term. [00:36:08] ERIN: We don't really know the long term effects of eating, you know, a ketogenic carnivore diet. it's, You know, I suspect that a lot of people that have found that they feel so good on those diets could be because they have an underlying gut imbalance, and now they're not feeding it with any fiber, any carbs, and that's kind of maintained their symptoms, so they feel really good. [00:36:36] ERIN: And that's, that's just a theory, it's just my thought, you know, that a lot of people find those diets because they're looking for relief and to feel good, and Ultimately, we all want to feel good, right? But if we're not addressing a root cause, then that, that's a, that's a problem, especially if it, it forces you to be on that restrictive of the diet. [00:36:57] ERIN: I [00:36:57] JAMES: mean, the way I like to describe the carnivore diets [00:37:00] to some people is you're essentially starving your microbiome. Yeah. It's not getting anything that it needs, really. I mean, there's, there's some microbes that can metabolize amino acids, um, and, and maybe some more complex chains and proteins, but it's, as you mentioned, it's really the fibers. [00:37:23] JAMES: It's the complex carbohydrates that they really, truly need. [00:37:27] ERIN: Yeah, there's, there's a few specific bacteria that the few specific bacteria, the Fecalobacterium Presnitzii. Uh, the aphromancia, these are two keystone, I'm sure you're familiar with them, they're two keystone bacteria in our gut. And one of the things that they thrive on is polyphenol rich foods. [00:37:47] ERIN: Polyphenol rich foods are going to be things like our berries, our, you know, pomegranates and grapes and those, those dark pigmented. fruits and, uh, leafy green vegetables, which wouldn't essentially be [00:38:00] allowed on some of those diets. And those are keys on species for protecting our gut lining for protecting us against things like inflammatory bowel disease. [00:38:10] ERIN: So I just, I don't know how you could convince me that a diet void of all these amazing foods and mentally for myself, I could never, you know, that's just. No, it's not for me. [00:38:26] JAMES: I've got a note to ask you about your diet and your routine in this totality, but just like to explore this, this fiber concept a little bit more. [00:38:34] JAMES: So one of the things that you said at the start, which I think was absolutely fascinating and you just touched on that again with people getting relief. I think maybe you're talking about the SIBO and how things are just going a bit crazy and counterintuitively, whilst perhaps in someone who doesn't have SIBO and who's functioning correctly otherwise, fibre is brilliant. [00:38:57] JAMES: For them, who've got too many bugs in the [00:39:00] upper GI tract, maybe fibre's not so good. So maybe you can walk the listener through that and Also, how you help these people get them to a state where maybe they can tolerate [00:39:08] ERIN: fiber again. Yes. And, and this would go for, you know, certain condition as patients who have inflammatory bowel diseases. [00:39:16] ERIN: Well, you know, if they're dealing with a lot of chronic inflammation, again, fiber is hard to break down. And that's part of what makes it good for healthy individuals, is that it's hard to break down. We don't digest a good majority of it, therefore it feeds our beneficial bacteria. But for those who are struggling, those who really find that, you know, they start to eat. [00:39:37] ERIN: a salad and it completely destroys them or, you know, the thought of any sort of vegetable on their plate is a nightmare. Then we're basically going to go forward and do some sort of testing. So the gold standard for the the SIBO is going to be a breath test. We're going to be testing for three types of gases, methane, hydrogen, and hydrogen sulfide. [00:39:58] ERIN: And then we're [00:40:00] also probably going to do a GI map to look at overgrowths in the colon, the lower part of the digestive tract as well. And If that person has a lot of overgrowth, then typically the course of action is going to be some sort of antimicrobial. And that could be either you could go to your conventional medicine doctor and you could choose to go that route, or you could choose to take the more natural route and use things like berberine, allicin, grapefruit seed extract, neem. [00:40:32] ERIN: These are all natural antimicrobials that have been shown to be very effective at, killing off harmful bacteria, both in the small intestine and the large intestine. And it's not just as simple as killing them off, right? We want to figure out what else is going on. You know, are they super stressed all the time? [00:40:50] ERIN: Do they have low stomach acid? Are they on a proton pump inhibitor, which is again, further reducing their stomach acid. We also want to look at the whole picture so [00:41:00] that this doesn't happen again. Cause the number one thing with SIBO is that people have reoccurrence because they just go in. They say, let's kill this off, but they don't address the fact that they have motility issues, thyroid issues, you know, stress that is just like, unbearable, and then they wonder why it comes back. [00:41:21] ERIN: So that's the, that's the big thing with addressing the gut is that we don't, we don't hone in on one specific thing. It's not as simple as like, oh, vitamin D is low, we, we increase it or. You know, it's, it's okay. So how did we get here? This is your gut is like a forest, right? You go into a forest and you just pull one thing out. [00:41:39] ERIN: You still have the whole forest there. [00:41:42] JAMES: So how do you then in your practice help your patients with SIBO? Do you recommend the berberine, the grapefruit extract, that kind of thing? And have you had good success with people? [00:41:52] ERIN: Yes. Yes. So I, those are the herbs that I like to use. Those are a few of the evidence based herbs that have been very [00:42:00] effective with my patients. [00:42:01] ERIN: And I've seen a lot of my clients get better with just a few rounds of these. Some, they do one round and we've addressed everything else and they're totally better. Some of my clients have had to go through two or three rounds of it to really fully get rid of it. But we'll retest it. We'll continually see those levels go down and down and down. [00:42:21] ERIN: And it's just, it's amazing to, to see people feel better. You start to see. Their iron labs start to go up because they start absorbing their nutrients, their vitamin D levels start to go up, you know, it's, it's a fascinating, you know, uh, progression of how people can be impacted by, by SIBO and for so long, you know, the, the, the statistics show that about 70 people who are, who are diagnosed with IBS actually have SIBO and they'll go their whole lives not knowing that because they're just going to say, well, I've got IBS. [00:42:56] ERIN: It's gotta, you know, be careful, follow a little FODMAP diet, and they don't ever [00:43:00] think to look further. And most doctors, some of them don't even, you know, we were talking about belief systems. Some of them don't believe that SIBO is a thing when it's clinically documented. So [00:43:12] JAMES: still to this day, to this day, for sure, it's still not widely accepted amongst the medical community. [00:43:20] JAMES: And some of the things you're talking about in terms of. Using these, you know, natural means rather than the classical antimicrobials. Also, we're just not there yet, I don't think. What's your [00:43:32] ERIN: experience? Yeah. And there's a lot of great doctors out there, especially gastroenterologists. And uh, I can't give you a long list of them, of great doctors that I know, but I can give you, um, you know, some experiences from clients who their doctors are, are really open to, they have a good understanding. [00:43:52] ERIN: You know, they, they see this in their practice every day. Uh, a lot of the doctors that say they don't believe in it, you know, they're, they're a [00:44:00] little outdated, right? They haven't been keeping up on the research. They have not been seeing patients and, and truly hearing them for what their symptoms are. [00:44:08] ERIN: And I think that, that there actually is, uh, a large amount of. Uh, physicians out there who are, are truly taking it seriously and treating and they're very, you know, there's a lot of doctors who are very quick to treat for, for SIGO with antibiotics and they do recognize how important it is. But, you know, it's just unfortunate that there are some out there that are leaving patients, you know, feeling very defeated. [00:44:35] JAMES: And with regards to the herbs that you recommend, is there like, this is the entrepreneur in me now, just my mind's going, is there like, you know, one supplement that has all the key elements in terms of all the herbs that have been beneficial or do you ask your patients while just. Maybe try a bit of the, the grape for effect, maybe try a bit of the berberine and see what happens. [00:44:56] ERIN: Yes, that's a great question. There, there are [00:45:00] formulations of herbs out there that are designed or supplements out there that are designed specifically for SIBO. So they'll usually have a combination of. You know, some of those more broad spectrum antimicrobials, I typically use them in a more isolated fashion because I love using tinctures. [00:45:18] ERIN: I like to try to reduce the amount of pills that a client will take. So oftentimes, you know, it will be like. Three times a day, you're doing your drops of oregano, your drops of neem, and then we'll do a berberine in a pill form. And, you know, we do that for a course of four to six weeks, and then we reassess symptoms. [00:45:35] ERIN: But there are, there are formulations out there. There's ones that are even more broad spectrum that, you know, are gonna have additional things like wormwood in them, and Uh, you know, things that can address yeast and candida, you know, knowing that those things can sometimes coexist, but the benefit of my practice is that I'm able to test with coins and I'm able to see, like, okay, how can we really hone in on this and instead of doing [00:46:00] this broad, you know, formulation, we do something much more specific to what you need. [00:46:05] JAMES: Yeah, my brain was just ding, ding, ding, ding, ding. And also, I was wondering That's just how it works in my brain. The, the tests that you do, I'm also fascinated. So I'm, I'm very familiar with the hydrogen sulfide, hydrogen methane, because Um, and terabiotics is actually going to be doing a clinical trial, uh, in the IBS area. [00:46:24] JAMES: So I've been reading all about IBSC IBSD, post infectious SIBO and so on. Um, but I wondered because what you're talking about, it's fascinating, it's, it's a combination of the breath test. It's a combination of the stool test. So do you have providers that you go to and that you trust to give you the right kind of data, or do patients come to you having done a microbiome test? [00:46:46] JAMES: Like at home. Mm hmm. [00:46:48] ERIN: Yes. So the majority of, of what I will have clients do with their providers is have their standard colonoscopy, endoscopy, get their blood work done. If they [00:47:00] can get, you know, the things that I like to see, like the ferritin, iron, B12, vitamin D. Uh, so I'll usually have them do that just because it's covered by insurance, right? [00:47:09] ERIN: We try to save clients as much money as possible knowing that these types of cases can be, you know, more intensive and, and costly. And so the stuff that we will do together, luckily as a dietician, we have, uh, different resources where I have an ordering physician on my team who can order the labs for me. [00:47:30] ERIN: And I've been trained to evaluate and interpret these labs over the past 10 years. And so I get these results, we sit down, we go over them together, and you know, we either work with their physician or just on our own, depending on how willing their, their other providers are. We try to work as a team to help this client get better in whatever way that looks like for them. [00:47:54] JAMES: Got it. Thank you. I just wondered if there was like a. Best in class microbiome testing service [00:48:00] that you just thought was unbelievably good. That gave you so many insights. Yeah, [00:48:04] ERIN: I, yes, much more simple. I will answer that more simply here. So the, I love the GI map. I've been using the GI map by diagnostic solutions for several years. [00:48:16] ERIN: I also love, uh, Jenova. That's another really great one. Um, sometimes that might be a better fit for a client based on kind of their symptomatology. But those are really the two main ones. And then, you know, the breath test, I use the TrioSmart because they do all three of the, the, the breath gases versus, you know, if you go get it done in your conventional doctor, they're likely just going to test for the hydrogen and the methane and they might miss the hydrogen sulfide. [00:48:46] ERIN: No affiliations with the brands. Thank you. [00:48:51] JAMES: Thank you for that. Um, you got quite excited when you talked about vitamin D, iron, and ferritin. Can you just like maybe unpack that a little bit? Why is that so important? [00:49:00] [00:49:00] ERIN: These are basic, you know, labs that should be run for all of us. And I laugh about it because it's so frustrating how it's like pulling teeth with providers that you want to know what your vitamin D levels are. [00:49:14] ERIN: Especially when we're in New England over here. So we're not getting UVB rays from the sun to produce vitamin D on our skin for a very large portion of the year. And also just scientifically knowing that 90 percent of Americans are deficient in vitamin D. Vitamin D impacts our hormones, our mental health, our risk for inflammatory bowel disease, everything. [00:49:35] ERIN: It quite literally impacts everything. Uh, so vitamin D, I always have clients advocate for that. And if it's not done over here in the U. S. as a standard blood panel. Iron is another one. Iron typically is tested, but ferritin, the storage form of iron, is not always tested. And this can tell us a lot about inflammation in the body. [00:49:56] ERIN: This can tell us a lot about our body's ability to absorb [00:50:00] iron. So that one is another one. Especially, I work with a lot of athletes, especially endurance athletes, and they tend to be very low in ferritin. And so, you know, if a provider saw, oh, in 2017, your iron looked good, they're not going to test it again. [00:50:15] ERIN: And, you know, hello, it's 2024. Things can change pretty quickly. So, I like ferritin. I also like B12. Both B12, ferritin, vitamin D can tell us that there maybe is malabsorption going on related to SIBO. So, these are things that are common deficiencies that I see in my practice. You know, we should just be knowing regularly what our values are. [00:50:39] JAMES: Got it. Are there any other blood tests that you recommend for the sort of general person? Um, and I'm assuming you recommend vitamin D supplementation. [00:50:49] ERIN: Yep. If you are deficient in vitamin D to a point where, you know, you're getting into the twenties and lower. You're not going to be able to eat food and get your values back [00:51:00] up. [00:51:00] ERIN: You're going to need to supplement unless you're living in a place where it's very sunny And it's very clear that you've been hibernating and lathering the sunscreen and then you can change that habit But the majority of people in order to get their vitamin D levels back up will need to supplement So that's really important for people to know and you always want to take vitamin D 3 plus K 2 K 2 It prevents us from absorbing too much calcium into our, um, the vascular system, which can increase your risk for cardiovascular disease. [00:51:32] ERIN: So vitamin D3 plus K2, always have that combination together and just make sure that you're advocating for it. If you have a deficiency in vitamin D, you're going to need to supplement. There's very few food sources of vitamin D. And those really aren't likely to move the needle if you have a deficiency. [00:51:51] JAMES: And on the subject of supplements, do you recommend anything else? Like, for example, a greens powder, which are all the rage at the moment. [00:51:59] ERIN: Yeah, [00:52:00] I, I don't recommend those supplements. You know, there, there's, um. There's some out there, you know, there's ones that I've taken that I feel really good on, you know, the, the athletic greens was a big, it, it blew up and I, you know, they sent me a sample and I thought, oh, you know, this is like another greens powder and I'll be honest, I felt really good. [00:52:20] ERIN: You know, I'm not going to lie to people. I felt really good when I took it. And that could be due to the fact that it's basically like a multivitamin. And it's got adaptogens like ashwagandha, which I love ashwagandha. And, you know, it was great. I was taking it for a little while. And then, you know, consumer labs came out. [00:52:38] ERIN: They, they independently tested all of these greens powders. And they found higher levels of lead in a lot of them, which something that just naturally occurs in the soil. You know, plants are growing, they absorb these heavy metals from the soil. And lead is not good for us. As someone might imagine, that getting lead in, in [00:53:00] higher doses regularly, ideally we want no lead. [00:53:03] ERIN: But we're always going to be exposed to some level of heavy metals. But when you take something and you concentrate it down, that means you're going to get a larger dose in a small serving. And so, you know, certain brands that I mentioned, like You know were above the limit that I would consider safe to consume on a regular basis for optimal health And so I wow, you know stopped using that and I you know, I I really caution My clients to be using these powders You know, even if they are passing heavy metal testing, you know, they're, they're not a replacement for food. [00:53:36] ERIN: You know, if someone's really struggling, they might offer some assistance. There are certain fruit and vegetable capsules out there that have passed heavy metal testing, you know, don't have any fillers in them. Um, the brand like Juice Plus, for example, over here in the U S you know, they, they seem to kind of pass with flying colors. [00:53:55] ERIN: So I would say. You know, I think of someone like my grandmother who, you know, [00:54:00] she maybe eats, like, two meals a day, if even that, and she doesn't touch fruits or vegetables. She might be a good candidate for someone to take these fruit and veggie capsules, just to get something in her body, but For the majority of us, you know, we don't need 17 different, you know, powders and vitamins in one sitting. [00:54:20] ERIN: First of all, it's really tough for our body to absorb that all in one. So you've got that aspect of it, where are you really getting all the nutrients out of it? Number two is the heavy metals. And number three is there's typically lots of additives to them, artificial sweeteners and flavors and, and things like that. [00:54:37] ERIN: So I, I don't, you know, I don't recommend them, but I'm sure there are times and places for, for those and in people's lives, but the majority of us should be just focusing on high quality foods from our diet. Aaron, this [00:54:50] JAMES: has been such a, an educational journey for me, uh, in addition to the listener, cause I also. [00:54:55] JAMES: take AG1 once or twice a day and have done for quite a long time. [00:55:00] Also a powder called Vibey Greens. And I had no idea about the heavy metal piece. Just no idea. And to be honest with you, I actually don't know that much about heavy metals and how they can impact on health. So could we talk about that for a little bit? [00:55:19] JAMES: Like How do we know if we're have, you know, if we've got too many heavy metals, what's the health and impacts of heavy metals? And then if there's too many and it's having an health impact, what do we do? [00:55:35] ERIN: So heavy metals. Each different type of heavy metal, from lead to arsenic to cadmium, those are two very those are three very common heavy metals that we typically see in supplements, powders, even chocolate. [00:55:49] ERIN: We see high levels of lead, unfortunately. Big chocolate fan over here, so, trust me, I'm not Nooooo! You're like, you're taking away my coffee and now my [00:56:00] chocolate. No, but what's going [00:56:01] JAMES: on here? But again, my AG1 and coffee, now my [00:56:04] ERIN: chocolate. So again, like I will use AG1 if I know I'm going out and I'm going to have a really long run. [00:56:10] ERIN: You know that that's that's the kind of thing I'm trying to really educate clients on is like I'm not taking it every day But I'm not never using it because I like the way it makes me feel I'm also consuming chocolate regularly But I'm choosing brands that are at least not the highest in lead and I'm moderating my intake But I probably eat chocolate at least three to four times a week. [00:56:31] ERIN: Like I'm not gonna lie. It's just You know, you can't avoid all of these things, but you know, there are some that are avoidable that are just, you know, we're getting too much and that could be impacting certain people. So you know, heavy metals can impact all of our organs. A lot of them can accumulate in our body and it's really hard to get rid of. [00:56:49] ERIN: Some are actually impossible to get rid of. So the kidneys can be affected. The gut can be affected. The liver, right? We can have this buildup of these heavy metals. And then on top of [00:57:00] that, if you have an unhealthy gut, then you're more likely to have these accumulate because if you have that intestinal permeability where things can move from your gut into your blood because you have leaky gut, you're in a, you're in a worse shape to be consuming these heavy metal, you know, containing products. [00:57:17] ERIN: But generally speaking, they have, they have widespread impact on our health from our brain health to our, our organ function. And over time, this can be very serious for people and it's, it's hard to say, you know, okay, look for these symptoms, it's, it's, you know, the, the, this happens slowly. So this could be you show up with dementia or Alzheimer's when you're, you know, 50 years old and you don't realize how much of something you've been consuming. [00:57:43] ERIN: But there's testing that you can do. There's hair mineral analysis testing that can look at heavy metals, which can be really helpful. Um, you know, mercury is another one that will accumulate in the body. And even just reducing your high mercury fish can really help your body, um, [00:58:00] work more efficiently. [00:58:01] ERIN: And then, you know, you can kind of go back to working in moderation versus. Eating high mercury tuna for lunch every day, for example, so this is a very big stressor for me is like we need to think about moderation. We don't need to fear monger people into being afraid of consuming chocolate or, you know, things like that. [00:58:18] ERIN: It's education, making better choices. And then if you are someone who has really poor detox, methylation issues, like MTHFR mutation, poor gut health. We might need some extra support with heavy metals, so we might use certain, like, green algaes to help just pull heavy metals out of your system. Um, we might use things like NACL cysteine, which, you know, helps upregulate glutathione levels in the body. [00:58:43] ERIN: You know, these are things that, essentially what we're doing is we're working on chelating, um, things like charcoal and, and algae, green algae vegetables. And then we're working to support the liver and, and, and all those other Um, up regulation processes that naturally happen in the body and then we [00:59:00] support the gut and we support sweating and we make sure our bowels are moving and, you know, we make sure nutrient deficiencies are addressed and that helps us just ensure that we're, you know, well oiled machines that can handle, you know, the daily toxins that we're always going to get no matter what, right? [00:59:16] ERIN: We're always going to get these things, but how can we educate ourselves, make better choices and reduce our total heavy metal load? [00:59:27] JAMES: What are some of the signs and symptoms that someone might have if they're sort of high and heavy [00:59:31] ERIN: metals? So kidney, you know, kidney issues can be a big one. Um, having, you know, kidney. [00:59:37] ERIN: So if you're doing blood testing or things like that, if you're, you know, consuming a lot of brown rice, very high in arsenic, um, that's something that over time, especially with smaller kids, you know, they're even more sensitive to these levels of arsenic, for example. Um, but, but kidney issues, liver issues, brain, um, if you're noticing, like I said, you know, early signs of Alzheimer's, dementia, [01:00:00] Parkinson's disease, uh, there's even, this is not my expertise, but, um, you know, a lot of dieticians who focus on the autism spectrum disorder, ADHD, um, a lot of discussion around how they have a harder time with detoxification and, and Some heavy metal accumulation. [01:00:17] ERIN: And so, you know, refer to them for more information on that. But I've learned from other dieticians about how that can be, um, you know, a way that these types of things can show up, um, gut issues, you know, you know, heavy metals can really disrupt the gut, the gut microbiome. So. Again, there's not really like obvious symptoms for a lot of people that you would say, Oh, that's, that's gotta be heavy models. [01:00:40] ERIN: Sometimes it's, you know, your body just kind of slowly not functioning optimally and not realizing that your total toxic burden is just too high. [01:00:50] JAMES: Gosh, it just made me wonder, I mean, imagine how many people with autoimmune disease, for example, may actually just be too high in, in these heavy metals. [01:01:00] It's again, I think it's one of these things where the traditional classical medical community probably aren't that interested. [01:01:08] ERIN: Yeah, unfortunately not. And you know, it's, it's, it's a, it's a very broken system overall. And, you know, I wish I had, I wish I had the solution. I wish that I could say that I could see things getting better in the future. But I think when you involve finances, when you put money into the, the picture, you know, it, the, yeah. [01:01:30] ERIN: The priority of healthcare, uh, preventative care really just. Yeah, [01:01:38] JAMES: I'm with you. So I'm going to bring us back now to some of the things I've wanted to discuss with you. Um, artificial sweeteners is top of the list. So as a dietitian and expert in gut health, what are your thoughts and recommendations relating to artificial sweeteners? [01:01:55] JAMES: Because I think this is one of the ones that comes up the most when you speak to people. Yeah. You [01:02:00] know? [01:02:00] ERIN: So what are your thoughts? Yeah. So I've, you know, I'

In today's episode, we sat down with James, a Freelance Web and Graphic Designer based in Bedford, Bedfordshire, who brings a wealth of experience in creating websites for Coaches. During our chat, we covered a lot of useful topics that can really help you level up your coaching website. We started by demystifying the differences between graphic and web design. Then, we dug into how to make sure your website truly reflects your coaching services and personal brand. James shared some great tips on planning out your website content effectively, and how to present your services in a way that resonates with your potential clients. We also explored how your website can connect better with your ideal client and the strategies you can use to keep them engaged and interested. Ever wondered whether you can change your website once it's up? We talked about that too. Plus, James shed some light on the ongoing maintenance that websites might need, and what to look for when choosing a website host. Whether you're a seasoned coach or just starting, this episode has something for you. In this episode James and I discuss about: The difference between a graphic and web designer How a website represents your personal brand How to plan out my website content How to position my services on my site What strategies can I use to engage potential clients and encourage inquiries? Is a website a static thing or can it be changed once I get it back from the designer and much more Ep 170 transcript [00:00:00] Sarah: Hello, Humane Marketers. Welcome back to the Humane Marketing Podcast, the place to be for the generation of marketers that cares. This is a show where we talk about running your business in a way that feels good to you, is aligned with your values, and also resonates with today's conscious customers because it's humane, ethical, and non pushy. [00:00:23] I'm Sarah Zanacroce, your hippie turned business coach for quietly rebellious entrepreneurs and marketing impact pioneers. Mama bear of the humane marketing circle and renegade author of marketing like we're human and selling like we're human. If after listening to the show for a while, you're ready to move on to the next level and start implementing and would welcome a community of like minded, quietly rebellious entrepreneurs who discuss with transparency what works and what doesn't work in business, then we'd love to welcome you in our humane marketing circle. [00:00:58] If you're picturing your [00:01:00] typical Facebook group, let me paint a new picture for you. This is a closed community of like minded entrepreneurs from all over the world who come together once per month in a zoom circle workshop to hold each other accountable and build their business in a sustainable way. [00:01:16] We share with transparency and vulnerability what works for us and what doesn't work so that you can figure out what works for you. Instead of keep throwing spaghetti on the wall and seeing what sticks. Find out more at humane. marketing. com And if you prefer one on one support from me, my Humane Business Coaching could be just what you need. [00:01:40] Whether it's for your marketing, sales, general business building or help with your big idea like writing a book. A book. I'd love to share my brain and my heart with you together with my almost 15 years business experience and help you grow a sustainable business that is joyful and sustainable. If you love this [00:02:00] podcast, wait until I show you my mama bear qualities as my one-on-one client can find out more at Humane Marketing slash coaching. [00:02:10] And finally, if you are a marketing impact pioneer and would like to bring humane marketing to your organization, have a look at my offers and workshops on my website at humane. marketing. [00:02:29] Welcome back to the humane marketing podcast. Today's conversation fits under the P of Promotion. If you're a regular listener, you know that I'm organizing the conversations around the seven P's of the Humane Marketing Mandala. And if you're new here, then you probably don't know what I'm talking about with these seven P's and the mandala, but you can download your one page marketing plan with the Humane Marketing version of the seven P's of marketing at humane. [00:02:58] marketing [00:03:00] forward slash one. page, the number one and the word page. And, uh, humane is with an E. So not human, but humane with an E at the end dot marketing. It comes with the seven email prompts to really help you reflect on these different Ps for your business. So humane marketing is not prescriptive. [00:03:21] It's not a six. step approach. It's a reflective approach. It's, uh, where I ask you to question all your assumptions that you have about marketing. So that's what you get with the one page marketing plan for the seven piece of humane marketing. Today I'm speaking with a new friend, James Mall, who's a web and graphic designer. [00:03:44] Uh, but before introducing you to James, I want to remind you that I'm talking to potential participants for the Marketing Like We're Human program, also known as the Client Resonator. This three month program is my main offering and it's connected [00:04:00] to this podcast and based on the seven Ps of the Humane Marketing Mandala because we'll dive deeply into these seven Ps during the program to help you discover your true self and passions so you can bring more of your. [00:04:16] into your marketing. It's really about marketing from within, marketing authentically. It's also much more than marketing. It's really about business building. And I do bring in kind of this different. business paradigm. While the main goal is to connect with your ideal clients, it goes beyond marketing. It forms the foundation of your life's work. [00:04:41] We'll start by focusing on things like passion and personal power, your why, and then move to other aspects like people, product, pricing, promotion, and partnerships. The program is in a small group setting, ensuring therefore a meaningful experience that aligns your business with your values. [00:05:00] It's a mix of videos, 20 to 30 minutes, uh, video per week. [00:05:05] Uh, beautifully designed workbook with lots of questions. My program is for deep thinkers, those who want to really roll back the sleeves and think deeply about, um, how they want to market, how they want to run their business, journal prompts. And then of course the live group calls in which I facilitate the conversation to take us even deeper into the topic of the week, who's this program for? [00:05:32] It's for entrepreneurs. Uh, who are quietly rebellious as well as change makers who have different levels of business experience, whether you've been in the game for one year, five years, or even 10 or more, it really is never too late to build a strong foundation for your business and your life's work. [00:05:52] So. If you want to know more, check out humane. marketing forward slash program for lots [00:06:00] of testimonials and case studies from past participants. And if this program feels like it might be the right fit for you right now, let's talk. There's a button on that page to schedule a call with me. So, uh, yeah, please do that. [00:06:15] We're starting on August 24th. All right. Thank you so much for letting me share about this. Now let's go back to today's podcast and back to James. So James is a freelance web and graphic designer based in Bedford. Bedford Shire, uh, that's the UK. And having worked with a variety, variety of clients, his portfolio includes fashion, swimwear, academics, coaches, property, charities, and photographers. [00:06:47] He now specializes in building websites for business coaches, and he loves and believes in helping coaches to build a better web. experience for their clients and themselves. In our [00:07:00] conversation, we talked about the difference between a graphic and web designer. I think that's really key for, uh, clients to understand. [00:07:09] How a website represents your personal brand, how to plan out. Your website content, how to position your services on your site, what strategies you can use to engage potential clients and encourage inquiries, uh, whether a website is static or whether it can be changed once you get it back from the designer and so many more topics. [00:07:34] So let's dive in with, uh, James Moll. Hi, James. I'm so happy to hang out with you. Welcome to [00:07:42] James: the show. Hi, Sarah. Thanks very much for having me. Thank you. [00:07:47] Sarah: Yeah, I'm delighted to have this conversation about websites. So let's see all the different topics we could get into. Um, we tried to beforehand, right? [00:07:57] Come up with some, some questions. [00:08:00] And so I do want to ask you one that you're like, Hey, maybe not this one, but I'm like, well, I'm going to ask you anyway, because, because actually, you know, in the bio that I just read about you, um, I did say you're a, uh, uh, web and graphic designer, right? So website designer, graphic designer. [00:08:19] And, and I know that quite a lot of people sometimes get confused. Well, what is what, who does what? And so I'd like to start us off there so that you can kind of give us a good Um, distinction between what does a graphic designer do and what does a web designer do? And if I need a website, who do I look for [00:08:44] James: then? [00:08:45] Yeah, sure. Um, yeah, it's actually quite a good question, I think, for people that are not aware, obviously, the difference between a web and a graphic designer. Being in the industry, um, a lot of people are aware. So, so a graphic designer is someone [00:09:00] that designs, uh, graphics. It could either be print based or digital based. [00:09:04] So it can either be. Uh, brochures, leaflets, um, billboards, um, and they could do digital design as well. So they could design adverts on social media. Um, there is crossover between that and websites. So they can design graphics that specifically go on websites as well. So they can sit on a, on a, um, a website, but how they differ from a web designer is that they're not techie. [00:09:29] So they're not able to, most graphic designers are not able to develop, uh, and build websites. So web designer is. actually more technical in terms of they're able to either code, uh, build a website with code, HTML, um, WordPress, um, software like that, or they can, uh, use no code software as well, which I, I worked with as well. [00:09:52] So I worked with a program called elemental along with WordPress. So I'm able to kind of use drag and drop software. Um, some like I've come, I'm [00:10:00] coming from a graphic design background to a website background. So there is some crossover, um, but generally. Graphic designers tend to design, um, the graphics either for print or digital. [00:10:13] Um, and they don't really tend to do websites. So they differ in that instance. I hope that kind of clears [00:10:20] Sarah: up things. Yeah, that makes a lot of sense. And I guess. A graphic designer can learn to be a web designer and then be both, which is your case. And a web designer can also, or that's a question, do web designers sometimes also go into graphic design? [00:10:40] Or maybe that direction is less common. What would you say? [00:10:45] James: Um, I've actually met quite a few people that have gone both. So from like myself on graphic design into website design, and then vice versa, website design to graphic design. And I think it just [00:11:00] matters on your technical ability and what you enjoy. [00:11:04] If you enjoy graphic design, if you enjoy sort of creating. You know, anything from logos to branding, you know, brochures, um, graphic design is so wide as well. Um, and then it easily crosses over onto, um, website design. Um, it's kind of similar to coaching in a way, I guess, because a lot of sort of business coaches, for example, that I work with tend to do, you know, personal coaching as well, life coaching, um, and vice versa. [00:11:36] So there's some crossover there as well. So, um. Yeah, they can be cross over as well. [00:11:41] Sarah: Yeah. Yeah. In my, um, sense of understanding this is the graphic design has to do with the beauty. It has to do with the aesthetics, with the art, with the colors, with the logo, uh, you know, with the, yeah, the word says it graphic, right? [00:11:58] And so [00:12:00] the web designer would be probably more, um, oriented towards the functionality of the site. Uh, of the website. So being like, you know, all of these click funnels and lead generation things that, that is more tech related. So, uh, in a way, I guess it's a good idea to look for someone who has an understanding of both. [00:12:24] Because then you get an aesthetically good looking website that also has the functionality behind [00:12:30] James: it. Right. Yeah, that's right. And that's why people like to hire me. Yeah. Because, uh, yeah, because I'm able to do, to do both. And, um, you know, from a UX and UI point of view, I'm able to kind of wireframe, uh, create like a blueprint and a map of, uh, the user experience as well, which is quite key. [00:12:51] I think a lot of web designers. Don't tend to think of that as well. Um, so it's not just making sure the website looks pretty, but also the [00:13:00] fact that you're thinking about calls to action, you know, your call to action buttons, getting people to book discovery calls or sign up to your mailing list. Or, [00:13:09] Sarah: yeah, so let's get in all of that because there's a lot to, to uncover. [00:13:13] So, so basically, yeah, we now know that there's both, right. There's the aesthetics and then there's the actual user friendliness and the. The functionality behind the site. So, so maybe before we go into the functionality, like what I, this is embarrassing, but like more than 15 years ago when I started out, I actually also designed some small websites for, for clients, you know, WordPress was like really new back then. [00:13:43] And so I quickly noticed how difficult of a job it actually is. Not so much big because of, you know, I was using WordPress. So it's pretty simple to put a website together, but where I always got stuck is with the [00:14:00] clients and their content, like the, the, the design of the site and their actual understanding of what needs to go on a site. [00:14:09] So I think that's also why there's. A lot of people, I don't know if that happens to you, but I know it happens to me that come with baggage and they complain about their website designer. They're like, it just didn't work out. Uh, and oftentimes it's because there is a miscommunication of who does what and in what kind of timeframe. [00:14:31] And so how can we help or, or, uh, to which level do we as the client have to be prepared? Uh, when we go to a website designer in terms of our content, in terms of knowing what needs to go on this website. [00:14:50] James: Yeah, so the content is, um, is a key thing in any website. And before, when I kind of started out, I used to kind of [00:15:00] rely on the client giving me the content and it doesn't always work out because what you've, you know, you designed a website and you put everything together and you made it look nice and you've put stock images there and you've put some. [00:15:12] Laura Ibsen text to kind of fill the gaps and you create a nice looking website and then the client either They do two things that either hand you Very little content. So there's hardly any text or any writing that they've put together themselves Or they can either give you too much Content so there's a lot to kind of pick pick out and put on the website And the information is is key because the information is what's gonna Sell your services. [00:15:40] So it's it's one of the most important things On a website and before when I started out, I used to always think about the design side and coming from a graphic design point of view as well. I used to always think about looking at making the website look pretty and probably less on the content, but as I've developed as a web designer and working with with coaches. [00:15:57] Now, I realized that, you know, [00:16:00] part of what we do is working with the coaches and having copywriters on board to help them create. Copy that is great to go on the website. Um, and that, you know, it's talking about their target clients, um, addresses, um, their pain points, um, and sells their services in a way that, um, reflects them, uh, in a, in a positive light, really. [00:16:25] Yeah. Yeah. [00:16:26] Sarah: Yeah. So, so you see the same thing is like, it can really be a, this idea. Oh, I need a website. But then once they talk to you or talk to any website designer, then they tell them, well, have you thought about, you know, who's your ideal client? How are you going to describe it? So it's like, it's this basically box of worms that all of a sudden gets. [00:16:52] you know, discover is like, Oh, I thought that was going to be quick and easy. And then I have, you know, all these other things that I now [00:17:00] need to look at and write about. [00:17:01] James: Yeah. Yeah. I mean, the planning stages is key with any website. Um, you know, sometimes clients will come to you and I used to have this a lot when I was starting out, you know, they'll say we need a website done in a week or two weeks or, you know, unrealistic deadlines and they're kind of rushing and they've got. [00:17:19] content ready and they're trying to create a website and they think that, you know, you can very easily create a website, you know, in a matter of a few days or a week and you can, but you know, it's like with anything, it's good to sit down and plan out, you know, the user experience, uh, wireframe and on paper, just, just even sketch out what, what kind of number of pages, the menu structure, uh, the calls to action, uh, what kind of information you're going to have, testimonials, um, All of that kind of stuff, social proof, um, and then layout, what kind of, what goes where, and think about that and spend time thinking about that [00:18:00] before you've done any kind of development or design. [00:18:03] That is a, is a must, I think now working with clients because we spend, we spend a good couple of weeks actually just, just on that. Um, when I work with clients now, uh, before we do any development work. [00:18:16] Sarah: Right. So take us into this user experience because you mentioned it a few times now. So, so what does that mean? [00:18:24] Take me on this journey. So let's say, you know, I'm landing on a website for the first time. Uh, I'm on the homepage. What needs to happen next? So take me through that journey. [00:18:39] James: Yeah, so when you're, when you've landed on a, um, homepage, for example, which is a, um, land, another word for landing page as well. So a landing page could be any page really on the website. [00:18:49] It's the first page that you're directed to. And often that is the homepage. But often you'll see a homepage and you'll see, you know, you've got the menu at the top. You've got your, um. [00:19:00] Items below it. So you would have like a hero image and you would have welcome to the website or whatever the company or person does on the website. [00:19:09] And then you'd have, you know, testimonials below it and you would have services, uh, what the coach does, for example, calls to action. Um, but it's. really mapping out clearly what goes where in terms of the information. So you want to be, for example, you don't want to be telling people about you necessarily what you do and how great you are. [00:19:33] You want to be talking about how you're helping them with their, with their problem, this problem solution. And you'll, you know, you, you've got a list of. your ideal client, you know, what kind of issues they're going through. Uh, for example, if they've, um, if you're in a corporate kind of coach, um, that's helping people that are coming out of corporate, the corporate environment, you want to say that, you know, uh, here's a, [00:20:00] this is what I do. [00:20:01] You know, are you coming out of a corporate job? Are you looking to start your own business getting into coaching, for example, and As soon as they see that at the top, you know, they know that this site is for them because people would immediately turn off in the first, you know, couple of three to five seconds. [00:20:18] If they don't see any benefit in, in, um, in the website and they'll just click, click off. So you have a high bounce rate as well. [00:20:27] Sarah: Yeah. It's actually in what we're just talking about this today in the humane marketing circle is the unique value proposition. You know, what it is you are offering To me, as the visitor to your website, how is it different from anybody else's offer? [00:20:44] And, uh, yeah, do I feel concerned? Like, yeah, do you speak to me or, you know? Yeah. Instead, do you just speak about yourself? And then I have to figure out if you're actually the right [00:21:00] fit for me. Um, [00:21:01] James: yeah, yeah. I think a lot of people make that mistake because. They want to say, you know, how great they are, you know, how many qualifications they've got, certifications, um, testimonials. [00:21:12] They want to, you know, literally tell the whole world about how great they are, but they forget about the client that they kind of helping. And what their problems are and really speaking to the client, you know, everything that you should be doing should be speaking towards your ideal client. And again, that's tied into the marketing side of things that you're aware of. [00:21:33] And a lot of web designers or graphic designers don't tend to think about that because it's a shame because a lot of web design and graphic design is quite separate from marketing. So coming from a background of both, I'm able to kind of use have both sides and think. You know, from a customer user point of view and think from a technical point of view, uh, and also from a design and colorful and making [00:22:00] everything look pretty kind of point of view as well. [00:22:02] So that it's a problem that I think we have in the industry where. In the whole kind of design industry where there's a miscommunication often between the marketing message and what you're trying to portray on an advertisement or a website. Um, there could be a misalignment there. Yeah. [00:22:24] Sarah: Yeah, I totally agree. [00:22:25] I think that the, you know, it's often a case in corporations as well, where they separate marketing from sales and, and here it's the same marketing should be part of it because that's essentially what you're doing with your website. You're not wanting to talk to yourself. You're wanting to talk to your ideal clients and everything you just said about the homepage. [00:22:48] I learned it's the same thing about on your about page, uh, on your about page, of course we think, Oh, it's about me. And yes, it is, but only in a second instance, it really [00:23:00] is again. Uh, people come to your about page because they want to find out if you're a good match for them. So they're really looking at the about page as a mirror much more than, you know, I'm so interested in this person that they don't know yet. [00:23:15] Right. And so it's kind of like just more like a checklist. Okay. Yes. This aligns this lines. Uh, and so it's the same thing for the about page. Um, so talk to us a bit more about the, uh, engagement. So. You know, it could be perceived that a website is a static thing because, you know, it just sits there. So how do we make it engaging, um, that actually people stay on it, first of all, you know, read our information and then maybe even go a step further. [00:23:50] How do we get them to stay in touch? [00:23:53] James: Yeah, I mean, One of the key things is not to put all of the [00:24:00] information out there in terms of content. So if you want to create engagement, for example, um, FAQs are a good example of this. So you don't want to frequently ask questions that you have. You don't want to sort of list them all out on the website. [00:24:14] You want to have options where people can click on a, on a question and they have a drop down and it tells them a little bit more about it. So anything that kind of people can interact with and engage with buttons that lead them on to another page, for example, that tells them a little bit more information. [00:24:31] So if you've got like a book, for example, that you're selling and you said, you know, do you want to buy this book right now? And then you clicked on the book and it just went to the purchase page. And it was just like. selling you the book, you know, from a buying point of view, it's not a great sales experience because you're not really giving them any more information about the book that they're buying. [00:24:51] So you want to create, um, almost like a sales funnel where you're, they click on, uh, to find out more about the book that you're selling, for example, [00:25:00] uh, how it can benefit them. Um, maybe give them like a free sample or demo, uh, That they can download like a PDF and then an option afterwards to then click and purchase. [00:25:14] So it's very much thinking about that user again, thinking about the user journey and experience rather than, you know, people are so desperate to kind of, you know, sell stuff, for example, or book a discovery call. And it's very much that you've got to kind of educate people. You've got to create that. Um, That trust, you've got to build that up, I think. [00:25:33] And you can't just rush into it. It's, it's, it's again, it's like us talking for example, now, and if we were at like a networking event and we met for the first time, for example, when you often meet people at networking events and, you know, they're just telling you how great they are and they're just like, do you want to buy my stuff? [00:25:47] Do you want to have a, let's book a call. Let's let's talk by my stuff. It's all me, me, me. And they don't really kind of create that opportunity where they, you know, you, you kind of. Meet them or add them on online or, um, go [00:26:00] to the website, find out a little bit more about them. And then a little bit later on, in the, in the kind of buying decision, you kind of decide that you want to work with them, um, rather than sort of rushing in. [00:26:13] It's kind of people kind of rush in. Um, [00:26:15] Sarah: yeah. Tell us how this would apply to the discovery call, because I like that a lot. So, so, um, and, and I'll share what I have in place, but yeah, I'd love to hear from you. Like, Okay. So I get it for the book. Yeah. How would you apply it to a discovery call? [00:26:34] James: So for a discovery call, for instance, you will, um, you've also got call to action on the site. [00:26:40] So I've got call to action. If people do want to book a discovery call straight away and they can click, you know, book a discovery call. So that's for people that have already made their decision. Um, so they've looked at your website, they've seen your homepage senior about page. Um, What you offer us is, you know, problem solution. [00:26:58] You can [00:27:00] help them with their, um, what their, whatever their problems are, issues are, and they've already made the decision to work with you. And they, you know, just click book a discovery call. So they're those kind of people are, um, sort of warm leads and they kind of, they're in that sort of. Uh, they want to buy from you and they want to buy what you're, what you, what you've got, but people that are, um, maybe need to be a bit more educated, for example, um, you'd kind of maybe I've got a few landing pages, for example, um, I've created for coaches where they could find out a bit more about me. [00:27:36] Uh, about what I do, the kind of clients that I work with. So it's kind of testimonials, social proof, um, talking through people, through, through the discovery process that I go through with clients. Um, and then they can, from there, they can decide to book a call at the end. So they can scroll right down to the bottom and then they can decide to book a call. [00:27:59] So those kinds of [00:28:00] people need, um, probably a bit more. educating and kind of getting to know you. Um, it just depends. I think if people are coming from online and if they've never met you before, then they're going to need a bit to know a bit more about you and probably add you on social media as well. [00:28:13] Follow you on, on LinkedIn and Facebook and Instagram, um, for, you know, at least a couple of months or, or, or whatever time period. And before they start working with you, uh, people that you've already met from online or networking or face to face networking, and they kind of know you and aware. The problems and solutions that you kind of solve. [00:28:36] Um, they're a little bit of more of a warmer lead. So they, they can, they just want to book a discovery call and they just want to talk to you. Right. Yeah. [00:28:44] Sarah: I would say the quality then also of this discovery, discovery call is, is very different. Um, if Someone comes to your site for the very first time and then just books a discovery call to me, those are often the clients [00:29:00] who just want to discover about, you know, website design. [00:29:04] Uh, so it's not like they are necessarily already. Um, on the gentle sales paths, like I call it that, that they don't know about you. They're not buying into you yet. They're just buying, they just need a website. Right. And it's like, Oh, this is one of them. Okay. Let me book a call. And then you're basically spending your whole time on this call, educating them, uh, instead of actually them, them educating themselves on their own time. [00:29:33] That's how I look at it. I'm like, well, I have all these things on my website. Spend some time there, you know, listen to the podcast, read the books, whatever, you know. There's a lot of information there. And then let's get on a call because otherwise, what often happens is we can spend our days on these discovery calls and then kind of end up being frustrated because, you know, people are just not there yet in [00:30:00] terms of where they are in their, um, sales decision. [00:30:04] Uh, and so that's, that's why often people who come to me and say, you know, I'm not closing. I'm like, well, you know, what do you have on your, I call them signposts. What do you have on your gentle sales path? Like your, um, like your templates that you're going to share with us for the landing page, right? [00:30:23] It's education like that, that then also leads to a better quality, uh, sales call. So, so yeah, I totally see that. Um, I also have an intake form. Where I didn't actually ask, you know, have you read, uh, my blog posts? Have you listened to the, so that I also come to this conversation knowing where they're at, because there's nothing worse than to be on a sales call and feel like being sold to, and, you know, and then. [00:30:52] After I do all this talking, they're like, actually, you know, I just want to talk to you and see how we can get started. [00:31:00] And so it's really good to pick them up [00:31:01] James: where they're at, right? Yeah. And also you don't want to be in that position of convincing them kind of thing as well. I think in my earlier days, I would often have to convince clients because, um, before I kind of niche down and work with. [00:31:16] Coaches and consultants and mentors and, you know, speakers and authors. Um, I used to work with quite a large variety of clients and I didn't really niche down in anything, so I didn't specialize in anything. So, um, I was seen more as a commodity. So, um, you know, it was all about price and it was all very much, um. [00:31:38] Yeah, fix it on price. So I'm kind of like, I lost track of where we were. Right. Checking around. Where were we? Sorry. Yeah, [00:31:46] Sarah: it's so important. Um, yeah. Any, any other things about the, you know, engagement and, and how to get more inquiries? Cause I think that's something that, you know, people [00:32:00] are really. Yeah, wanting to know more about, like, which part is content related and which part then is, like, we didn't talk about newsletter signups, right? [00:32:11] What are some mistakes you, you see there that, um, on websites related to that? [00:32:18] James: Um, I think a lot of times I think people have a newsletter signup and they don't really know what it is or, um, they don't really have a newsletter in place. So I think one of the key things is to have a just a mailing list. [00:32:34] Or a newsletter in place and tell people like, I've got one that's coming soon at the moment. So I'm just taking emails at the moment. So I actually don't have a newsletter at the moment. But a lot of the times people are just having a newsletter for the sake of having a newsletter. And I think you could have some sort of strategy behind it and know, because it is another way of bringing in leads. [00:32:54] Um, but it's not going to be straight away. Like, it's not going to be a, like, So today, tomorrow or next [00:33:00] week, you know, you you're still educating people about what you do. And it's again, it's the same with a blog on your website, you know, people come back and they will read your blog newsletters. So people are aware of, you know, your services, what you're offering, and they can see you on social media as well. [00:33:19] And if they've signed up to your newsletter, for example, as well, they see you quite active. So the more you're kind of, they're aware of what you do and who you are as a person, um, they, they have you in mind. So even if it's not for them, um, they will have you in mind for someone else. So as long as you're like that person that they think of when they think about sort of, um, You know, humane marketing, for example, um, and, uh, me being a web design consultant, working with coaches, um, you know, want to be like the first person that they think of. [00:33:55] So you want to have that, the newsletters were part of that sort of, that sort of [00:34:00] marketing strategy. Um, I think people don't often look at that hand in hand, like together, they just sit kind of separate. Um, but Anything that you do, if it's even if it's, you know, social media posts, um, uh, newsletters or blogging, you should always have like an end goal when you should always think about it from what, you know, what benefit are you giving to your clients? [00:34:27] Um, and it shouldn't really be just, you know, bragging about how great you are again with the website. A lot of times, you know, people are bragging about what qualifications or what things they're getting up to and what they're doing. As opposed to, um, how they're benefiting their clients and what kind of problems they can solve them for their clients. [00:34:44] Sarah: Yeah. Yeah. Thank you. So let's say, okay, we have designed this, this website, we have the content, uh, everything is in place. And then, I'm sure you're used to that, the client's like, Oh, I need to change, [00:35:00] you know, this copy again and, and, and this and that. When, when do you hand the site over and is there, you know, can we still change it? [00:35:11] I think that's probably a question that people wonder is like, okay, uh, I've heard of WordPress, uh, you know, how easy is it to then change the site [00:35:21] James: myself? Yeah, so it depends. I mean, if the client either wants content or design changes, um, I have a, um, maintenance, uh, package that I offer clients that for the upkeep of the site and, uh, updates as well. [00:35:41] Um, so that could be an ad hoc kind of basis, um, or, or they could, yeah, pay as and when they need it. Um, but ideally, um, I also do videos as well. So I do a video to show clients how to edit the [00:36:00] site themselves. So they've got like that on their dashboard, um, how to upload images and text and change all that stuff. [00:36:06] But it just depends on the client. If they're You know, it's like a lot of coaches are too busy, so they don't have time to update their site themselves. So they either fall into two categories, the one that, you know, they do have time and they would like to do it themselves, or they're too busy and they don't, they would like you to do it. [00:36:23] So it depends on, on the, on the, um. So basically [00:36:27] Sarah: it can be changed, it just needs time. Yeah, yeah. Or you can do it for them and, and well, it takes money. Yeah, yeah, yeah. It's always that equation. [00:36:38] James: But it should always be changed. I mean, I would do recommend for, you know, keeping a site regularly up to date, um, helps with your SEO, um, search engine optimization. [00:36:48] Um, you know, Google likes it when you've got up to date blogs and content on there. So a lot of times people will design a website, have it designed, and they [00:37:00] will just get excited and launch the website and make a lot buzz around it. And then within a few months or a year down the line, they've done nothing with the website. [00:37:10] So they've not added to the website and there's nothing new on their website. So from a search point of view, it gets ranked lower. Um, so the more engagement you've got on site, the more, um, people that are clicking on the site. So you want to constantly be putting content on the site and advertising on social media, for example, and plugging the site as much as possible. [00:37:33] Um, but it should always be Up to date in terms of content as much as possible. Um, but yeah, again, it's an, it's an additional charge. So once the site has been done and handed over to you, it's, um, it's an additional charge, it's kind of like. Decorating, for example, if this room that we're in, for example, if, you know, it's painted white, but if you wanted to paint it, you know, yellow or whatever, you know, there'll be an additional charge to purchase paint and do repaint the [00:38:00] whole room. [00:38:00] And then again, you want to pay it like orange or something or purple in a year's time. It's again, it can be done, but it's an additional. It's going to cost more time and money to kind of do that. Yeah, of course. [00:38:12] Sarah: So you mentioned, um, maintenance to me, there's two different things. There's maintenance, uh, which is kind of like updating the plugins and making sure it's the last, uh, and most recent WordPress, uh, addition, things like that. [00:38:28] Um, Or, you know, even backups and then there's updates, which is content updates or even design updates. So they're separate things like so like how much maintenance so purely functionality oriented maintenance does a website take once it's. [00:38:51] James: Yeah. So once a website is published, um, no matter what kind of software you're using, I mean, I build websites using WordPress. [00:38:59] Um, [00:39:00] if you could be using Wix or, or another software, for example, um, but it may certainly needs to be maintained in terms of security, uh, any kind of bugs that can happen on a site. Um, so it needs to be all anything plugin related that you've got any software that you use to kind of build, for example, if you've got, um, Um, I'm trying to think now, uh, scheduling software, any kind of, uh, appointment booking software, any additional plugins that are required. [00:39:29] If you've got Google, for example, or you've got Google site kit on there, uh, you've got Yoast SEO, um, on there. So you've got all these kind of different plugins, um, on there. They need to be kind of up to date and maintained. Um, otherwise they can kind of break the site as well. So if you've, uh, not updated a site after a while, if it runs into any kind of conflicts with plugin, um, Um, different plugins. [00:39:51] It can actually break the whole site. Uh, so you've got that as one issue. And then also you've got potential any, any site is vulnerable, [00:40:00] uh, online is vulnerable to being hacked as well. So, uh, twice to me [00:40:04] Sarah: already. So yeah. Yeah. So it's not like this. Thing that never happens. It [00:40:07] James: doesn't happen. Yeah. Yeah. So again, um, software in terms of security wise, um, needs to be monitored, monitored. [00:40:15] Um, so there's all that kind of stuff to kind of think about. And that's the more kind of techie kind of stuff. And that's the stuff that A lot of people don't like to kind of think about, but it's very important because obviously in terms of the longevity of the site, it's not nice to have a site that's being, being hacked. [00:40:32] Um, you know, so, um, it's always good to kind of, it's almost like insurance is always good to kind of just pay the extra to, to, to, to have someone do it. Or at least invest the time, you know, you could watch YouTube videos and learn how to do it yourself. But again, it depends if you want to spend the hassle time kind of learning that as well. [00:40:53] But it's the, it's [00:40:55] Sarah: the hassle of learning it, but it's also then the hassle of finding somebody who's [00:41:00] gonna fix your hacked site, right? Yeah. Where if you have kind of put aside some, uh, some for maintenance. Then that person somehow becomes responsible as well of, uh, having to fix the site or at least you'll come up with a fair price where if you just come to a new person and say, Hey, please, can you fix my site? [00:41:23] It's been completely hacked. They're going to charge you quite a bit to do that. [00:41:29] James: Yeah, yeah. Again, obviously with the backups, um, you know, all our sites are backed up. Um, content and design is backed up regularly. So if there is a problem, we can get back to a backup. Um, uh, so it's quite easily, uh, again, a lot of people don't back up their site. [00:41:49] So a lot of people, um, Sort of presume that's really done. And I've seen it in the past with clients that come to me and they've had cheap hosting in the past where they said, you know, they can get hosting for [00:42:00] like, I don't know, like 499, 599 or 10 pound, 10 or whatever it is a month or whatever it is. [00:42:07] And they think they're really happy with the hosting, but then they don't realize the fact that there is no added security or backups in place. And when something does go wrong, they All their content, everything is lost on the site again as well. And if you've got no backup of that all, um, you've got, for example, your blogs, if they're written in sort of Word documents and you've got them stored on, on your computer, it's good, you know, that's another backup. [00:42:34] Um, but again, you've got to go for the hassle of. You know, republishing everything, republishing everything and that sort of thing. So it's very, that's a hassle as well, you know. [00:42:44] Sarah: Yeah, yeah. All right. We want to end in a positive note, not in a, Oh my God, it's so scary out there. Um, yeah, just like everything. [00:42:55] Yes, everything can happen. It's, it's online and, and, and there is. That, [00:43:00] um, kind of tech stuff that, that happens. So, um, but yeah, like I said, let's, let's not end in a, in a negative note. Um, do you have a template that, um, you're sharing with our listeners? So. Why don't you tell us a little bit of what that is and where people can find [00:43:19] James: it? [00:43:20] Yeah, sure. Um, so I'll provide a link. Um, it's called the two week landing page challenge for coaches. So it's, um, a lot of people, a lot of clients just come to me that used to have, you know, trouble creating a landing page. And, um, I realized that I didn't really have. You know, if it's stuck in my mind and I like kind of can do it, but I don't realize that all this information was out there. [00:43:44] So I put it create like a template for people to kind of for coaches to download and very easily kind of put together. So, um, I'll provide the link for that. But yeah, it's just anyone else kind of. in the coaching space that needs to create a landing page to [00:44:00] sell a book that they're providing or um, a call to action, um, book a discovery call or any kinds of call to actions that they really just want to that specific key rather than providing it on the entire website. [00:44:12] They just want to specifically one pager, one pager. So it's a template that people can freely download. Um, and again, if you did want to book a discovery call with me and if you needed any help, I'm available to, um, help you out with any questions as well. [00:44:27] Sarah: Wonderful. Yeah. Thanks. We'll make sure we, we link to that. [00:44:31] And, um, yeah, your website is also in the, in the, um, in the text, uh, jamesmall. co. uk. Right. Uh, where are you most hanging out? [00:44:42] James: Sorry. And it's forward slash coaches to go on the actual coaching landing page. [00:44:46] Sarah: Okay. Great. And you're mainly on which social media platforms? So I'm [00:44:52] James: quite active on LinkedIn. [00:44:53] LinkedIn is probably the most best place. It's the best place to kind of connect with me and find out more about me and um, [00:45:00] just DM me and I'm always happy to talk. So. [00:45:02] Sarah: Wonderful. I always have one last question that is, what are you grateful for today or this week? [00:45:10] James: What am I grateful for today? Um, I suppose I'm grateful for feeling a lot better and being able to eat normal food again. [00:45:19] Uh, cause I've had a ongoing, I've had an ongoing chest infection for the last couple of months. So yeah, I did kind of stop working for a little while and I couldn't eat some foods. Um, so I'm, I'm glad that I got my energy back and, you know, I'm able to kind of, I'm out of breath and I'm able to enjoy food. [00:45:38] Um, [00:45:39] Sarah: which is a big deal. Yeah. Yeah. Yeah. We don't realize it until we don't have it anymore. [00:45:44] James: Right. Yeah. Yeah. And I'm actually going to a Retreat this weekend, helping my friend up, um, we were talking about it earlier. Um, so I'm going to be helping them out in the kitchen and there's going to be yoga and meditation and sound therapy there. [00:45:58] So yeah, I'm grateful [00:46:00] for being able to kind of take part in that as well. So, um, delightful. So yeah, I'm grateful. [00:46:06] Sarah: Thank you. Awesome. Well, thanks so much for coming on to the show. Really enjoyed this conversation. Thanks, James. Thank you for inviting me. Thank you very much. Thank you. I hope you got some great value from listening to this episode, especially if you're new to business and are needing to build your website. [00:46:26] You can find out more about James at jamesmall. co. uk. And as he mentioned, James also has a gift for us. It's a coach's landing page template, uh, which you can get at jamesmall. co. uk forward slash humane marketing. Uh, this is also a page where you'll find the two week challenge that, uh, James mentioned when he was speaking, James mainly hangs out on LinkedIn. [00:46:57] So make sure to send them a message [00:47:00] there, connect with him and tell him that you listened. And if you're looking for others who think like you, then why not join us in the Humane Marketing Circle? You can find out more at humane. marketing. com You find the show notes of this episode at humane. marketing. [00:47:21] com 1 7 1, sorry, 1 7 0. And on this beautiful page, you'll also find a series of free offers, uh, such as the Humane Business Manifesto, the free Gentle Confidence mini course, as well as my two books, Marketing Like We're Human and Selling Like We're Human. Thanks so much for listening and being part of a generation of marketers who cares for yourself, your clients, and the planet. [00:47:51] We are change makers before we are marketers. So go be the change you want to see in the world. Speak soon.[00:48:00]

In this episode, Colman Benson from the class of 2024 speaks with James Scott from the class of 1995. They connected back in the fall of 2022 to speak about James' path from Ohio to Holy Cross to the Marine Corps, culminating in his current career in banking. They speak about how a clever marketing commercial changed the course of James's career path and how you're never too old to reinvent yourself. What's even better, the friends you make on the Hill and the Holy Cross Alumni Network will always be there to support you on your journey. Interview originally recorded in December 2022. --- James: Two skill sets there will never be a shortage of, at least not in our country, and that's storytelling and problem solving. Those are the two skill sets that you'll never have a shortage of in terms of the workforce. You can do those two things, you can do them well. You can do just about anything you want in the industry that you want. And sky's the limit. Maura: Welcome to Mission Driven, where we speak with alumni who are leveraging their Holy Cross education to make a meaningful difference in the world around them. I'm your host, Maura Sweeney, from the class of 2007, Director of Alumni Career Development at Holy Cross. I'm delighted to welcome you to today's show. In this episode, Colman Benson from the class of 2024 speaks with James Scott from the class of 1995. They connected back in the fall of 2022 to speak about James' path from Ohio to Holy Cross to the Marine Corps, culminating in his current career in banking. They speak about how a clever marketing commercial changed the course of James's career path and how you're never too old to reinvent yourself. After 20 years of service in the Marine Corps, James chose to try something new and tackle a different challenge in his career. He landed in banking, first with Santander Bank and now as Vice President, Business Relationship Manager at Bank of America. The good news is that no matter what you choose to do, the core skills you learn at Holy Cross remain relevant. What's even better, the friends you make on the Hill and the Holy Cross Alumni Network will always be there to support you on your journey. Colman: Thank you for joining us. James: Yeah, absolutely. Thanks for having me, Colman. So once you reached out to me, it was one of those callings where I felt like, hey, any conversation helps anybody, my words, my journey, give somebody some type of inspiration, I'm all for it, right? So anyway to give back to the Hill, I do what I can, whether it's small or medium or as big as it can be. Colman: Very excited to be interviewing today. Just a little bit about your Holy Cross experience. I know that you were part of the football and the track team, and I think that was the last undefeated football team until this year, the team of 1991. So can you just describe your time as a student on the Hill and what you enjoyed in some of your extracurricular activities? James: I'm a graduate of 1995 Holy Cross, not Catholic, not from New England, certainly not from Massachusetts. So my journey began out in the Midwest in Ohio, and then my connection quickly with Holy Cross became through a coach who was recruiting out in Ohio, recruiting football players. And I happened to be on the radar and took a flight out to Boston. Now, this is where it gets kind of a little interesting because I actually thought Holy Cross was in Boston the way they gave me the tour, kind of showed me along the Charles River and all through downtown. So I got super excited and then I guess I got distracted. I fell asleep on the ride from Boston to Worcester. Next thing you know, I'm on this beautiful campus. So right away, I just had a connection with players at that time. Met a couple of professors. Very good friend of mine at the time was Margaret Freije. And so that was almost instantaneous connection. I flew back home, excited to tell my dad that I think I found the college of choice, leaving Ohio, wanted to end up in Massachusetts and then ended up showing up on campus. And then we'll talk a little bit more about that initial experience once I got on campus as an official student at the school. But again, that journey was something totally unexpected, totally culture shock to me, especially back in the nineties. So it just took a little bit of time for me to acclimate and get adjusted to a new environment, a new situation. But having sports was again one of those avenues, those channels that kind of gave me an out to express myself and get away and get away from the differences and cultures that I had with the majority of the student population, but allowed me to focus on something with other people who had similar interests to me, which is sports, competition and winning. So kind of a little bit of background about my journey on how I ended up at Holy Cross. Colman: Awesome, thank you very much. Funny, funny tricks they'll do for recruiting, but I just had a question. I know you were a math major. Was there any reason you decided to pick math? Did you think about maybe a future career in mathematics or a future career in business? As I know a lot of Holy Cross grads will choose econ or math and eventually end up in business. James: Fair question, but neither of those answers are anywhere close. There's no method to the math. I had a love affair with mathematics in high school. It was something I was really good at. Logic just seems to fit with me. So coming into college, again, the first college graduate in my family, so I had no real focus on in terms of, hey, what do you want to be after college life? So just a quick transition into the mathematics world, quickly realized that it's a lot more complex than it was in high school, but I was just one that kind of enjoyed the challenge, enjoyed the reasoning behind it, enjoyed the logic there, the thought processes, and next thing you know, you're a sophomore going like, okay, do I switch majors or not? And wasn't an option for me at the time. So I would say I was probably around that average to below average mathematics major, but I was kind of locked in at that point, so I was definitely going to gut it out. Colman: Well, so I guess moving on, after you graduated from Holy Cross, you decided to join the Marine Corps. What led you to this decision? Was there anything specific? Have you just always wanted to join the Marines or serve? James: So like you, you're the Army ROTC, right? So I'm going to see if I can draw a little bit of similarity here. So you're getting a taste of military life as you're going through school. So it's embedded in your daily routines, so you're getting fully immersed into what it will be like on the other side. For me, my journey was a little different. I went home between my freshman and sophomore year, and that was the year I got bored quickly, right? Football, school, a lot coming at me a hundred miles an hour. I get home, life falls to almost an idle throttle. So it was definitely something I didn't want to have happen at least every summer. So I like to tell people that slaying the dragon commercial for the Marine Corps came on at the right time of my life. Bored sitting at home, commercial comes on and marketing geniuses as they were, I wanted to sign up and slay a dragon. So I called the phone number at the bottom of the TV and recruiters being as good as they are, the moment I called, he said, I got a guy, I want you to meet the guy. I'll have a captain over at your house tomorrow morning. That captain showed up in his blue Deltas that next morning, gave me the pitch, took me out to Ken, Ohio with the school there, gave me a little heavy dose of you name it, pushups, pull ups, three mile run, all of this stuff. And I just wanted a little bit more. I had to have a little bit more what he was giving. Recruiters being as good as they are, they only give you a little taste and they kind of tell you, you can't do it. Don't tell me I can't do something because then I become one of those, I'll prove it to you, I'll show you. So he wanted to meet my father, came by the house later that week. My dad didn't think this was going to happen. He's like, yeah, you're not joining the Marine Corps. So this guy shows up in his blue Deltas and my dad's like, oh my gosh, you really are joining the Marine Corps. So that summer I take off to Quantico for six weeks, your Army ROTC, what we call it, the two meters class. So you had an opportunity to get two heavy doses in the summertime, six weeks apiece, full immersion in the military lifestyle bootcamp. And that first six weeks I was hooked. The adrenaline rush, the competition, the camaraderie, the esprit de corps, just people who believed in a common goal and focus, all wanting to do the same thing. I was hooked. I was hooked. And then that second summer I did the same thing. I already kind of knew what my career path was as a junior going into college. I knew it was a Marine Corps. And so graduation day, I had my dress blues on underneath my cap and gown and went across the stage, got my diploma. Unlike you, I still had the option to say no up until I got to the stairway and I did a swearing in. But I took that robe off, got on the steps, got my silk, my gold lieutenant bars, and I was gone. And the rest is, as they say, it was history. And 20 years later, and I'm retiring as a Marine Corps officer. So that was a great decision on my part, but I was locked in focus in terms of, again, that the core principles of what the Marine Corps offered, I was hooked. Colman: That's definitely a lot to relate to there for myself. As you talked about, kind of having that never quit attitude, never taking no for an answer, saying you can't do it. That's something that's really stuck with me. And then I also know I have a couple buddies that are in the Marine program here, and they do the same thing. Six weeks before their junior year and six weeks before their senior year, before they end up commissioning after. So a lot of similarities there, which is really cool to see. Some things never really do change. Transitioning, I know you spent 20 years in the Marines, so thank you for your service for that. Once you decided to get out, what do you think was the biggest adjustment transferring from a military career to a career in business? James: As I look back and reflect, you kind of have people who tell you, there's one train of thought that says military folks have a difficult time adjusting because they're used to discipline and structure and routine and everything's a procedure and a process. And I think I like to try to demystify that for a lot of people. I don't necessarily subscribe to that. I don't think it's true. I think military lifestyle is different, yes, but we're still people, so we're still able to adapt and adjust. But I think for me, one of the biggest things was accepting the fact that it was over as a career choice and I should be okay with not wanting to fall into something similar. So a lot of people kind of take the skillsets that they've honed in over a career in the military and they kind of just parlay it on to defense contracting or something of that nature. And I wanted to be comfortable with my decision and say, don't just follow a normal path if that's not what you want. And I certainly didn't want that. I didn't want defense contracting. I didn't want anything to kind of do with the military lifestyle anymore. Just kind of put it away, enjoyed it. I really had a great time, but I wanted a different challenge. And so for me it was just accepting the fact that it looked different, doing something that was completely away from the norm and being comfortable with that decision. For me, that was the toughest call to make and being okay with that. Not just saying, hey, I'm just going to pick up where I left off, but being okay with starting from zero and then building up a second career that I felt like I would enjoy a lot more as well. Colman: Definitely starting a new career and shift can have its own challenges, but it's very good that you decided to take almost a path less traveled. And I know you went from originally at Santander Bank and now to the Vice President of Business Banking Relationships, relationship manager at Bank of America. So if you could just tell me a little bit about your current role here and maybe what your day-to-day life looks like and some of the tasks and skills you have? James: Yeah, so banking for me is, that's the new space we're talking about. So I've been in banking now for five and a half years and I'm still learning. I feel like a brand new lieutenant again in the Marine Corps. So you sit back and you absorb and you interact with your bosses and your peers try to absorb as much as you can. But my current role as the relationship manager is exactly as it sounds, right? So I work with privately held companies within Connecticut and Western Massachusetts, and there's a certain target threshold for revenues that we work with. So we have small business and median businesses in the corporations that we work with. My job is basically sales, getting out there and trying to connect with those companies and kind of deliver values and solutions to those companies like every other bank out there. I knock on the door and try to peddle wares and say, hey, I have a solution for you and I've got a way to help your business grow. And so some of that is being able to connect with people. And some of that is, for me, I look at it as problem solving. So if you were to think about, maybe this is before your time, before mine as well, there used to be people who sold vacuum cleaners door to door. And back in that time intel was if you even knew somebody who had carpet. Knock on random doors and you didn't even know if someone had carpet. And so some of that is even true today, but I love problem solving, right? That's my shtick, if you will. And so part of this crafting of the puzzle is let's just find out who has a need, what's the demand before I go knocking on doors. So that research and trying to help people identify problems, that's my skillset, that's my strength. And then being able to take what I do as at my everyday activities, which is researching, trying to find out what industries have what particular problems, and then helping solve those problems, and then learning in the bank because we've got hundreds of solutions that we can offer, but I'm not going to throw that as an individual. My job is to kind of customize and say, here's two that I think will solve your problems. So just drawing it out and listening is probably the biggest skillset set that you can bring to relationship managers. Just listening, helping identify problems before you start rattling off solutions. And just being able to sit back and be comfortable in silence as people talk and you're listening, you're looking for problems and then you're helping them solve. So it's not a one size fits all, but it's working together to make sure you deliver the best solution, Colman: Definitely. Intelligence shapes the mission. So it's funny how you see them in your research now and how you can use that for your problem solving both in your past career and now in your present career at Bank of America. What advice would you give a Holy Cross student to leverage their liberal arts education to start their career in business? A lot of students coming out of Holy Cross are competing with kids coming from traditional business schools or getting a traditional business or finance major. How can a Holy Cross student use their liberal arts degree to their advantage? James: Yeah, that's a tricky one. And I remember in the mid-nineties where liberal arts education was the thing. It was the creme de la creme and you kind of went away from specific majors, so you wouldn't dare be a finance major. That's just suicide. And so there's a pendulum sway, and now you do have liberal arts which kind of took a hit in terms of industries looking for a particular talent and skill sets. And so now the challenge is being able to re-craft the story. That would be my suggestion. So as you look and you say, well, what value does a liberal arts education offer? Well, as you all kind of write your own story, I would say start with answering that question first, which is like well, you tell the story of what you think liberal arts education does for you. I tell my son, who's 7, of course, 7-year-olds olds don't listen to anything you say, but at least I start the message by saying two skillsets there will never be a shortage of in this, at least not in our country, and that's storytelling and problem solving. Those are the two skillsets that you'll never have a shortage of in terms of the workforce. You can do those two things. You can do them well. You can do just about anything you want in the industry that you want. And sky's the limit. So if you could figure out a way to convince, again, older folks that are sitting in the position of hiring people, that you have those skillsets, and liberal arts has kind of helped you shape those, you're not just singularly focused on a problem, but you kind of see the problem as an ecosystem. So you solve one thing, maybe you create another problem, you solve that problem. So if you can start to craft a story that tells people what the liberal arts education, what value it brings to a company or an industry, I think that's the keystone that gets you into any industry or any line of business that you want to get into. Colman: And I know that the alumni network from Holy Cross is very strong, just like me being able to reach out to you to do this podcast. Is there anything you can speak on about using the alumni network to your advantage and to help support you? James: Yes. I would say my first advice is don't follow my example. So in terms of networking, I probably would be the worst example. After I graduated, I lost connectivity with a lot of people who were close, dear friends while I was in school and didn't kind of build and continue those relationships while I went through the military, unless you were in the military. So if I ran across a Holy Cross alum, I would definitely connect. But one of the things that I did do successfully was I stayed connected to Holy Cross writ large, the campus, the alumni giving. So that thing I kind of held dear to, but in terms of the thing that actually made the school special, the people, I kind of lost focus of that for a huge chunk of time. Now you say, God bless LinkedIn, God bless social media. That allows me the opportunity to kind of right my wrongs. So I again capitalized those platforms and reached out to a lot of Holy Cross network. And the funny thing is, you're all accepting. So it's one of those deals where you kind of shoot yourself in the foot and say, why didn't I do this 15, 20 years ago? Why didn't I stay connected? But I guess that's the beauty in this thing, which is staying connected doesn't mean every day. Staying connected doesn't mean once a quarter. There's no time limit. It's just even if it's a casual hello, how are things going? Or hey, can you really sit down with me and kind of talk to me and help mentor me through a career? I personally have found, I would never say 100%, 99.9% of anybody that has the Holy Cross logo attached to their LinkedIn profile are willing to help you out in any way that they can. That's my personal experience. That's what I tout and that's kind of what I sell people on in terms of what Holy Cross alumni means, what that network means. And I have a wife who's very jealous of it because she went to American University and there's absolutely no connection there. Colman: Big rivals too. Big rivals. That's awesome that you always know that Holy Cross alumni and fellow classmates will always be there to help support you. So pivoting from that, I understand you do a lot of volunteer work with veterans and veterans programs. How do you think the Holy Cross mission of being men and woman for others lives on through this work? And are there maybe any similarities you see in your volunteer work to the Holy Cross mission statement? James: I think there's a lot of crossover and sometimes you have to stop even just sitting talking with people like you to reflect on how they're almost one and the same. So whether I consciously knew I was basically being groomed in a particular way at Holy Cross, and then you see some of that carryover, or even now it's a consistent theme. So whether I was attracted to that, and that's why I ended up at Holy Cross and kind of lived that lifestyle or whether it's because the faculty at the school and the students at the school kind of help you see that as well. I think it's a hybrid of both of them, but that's kind of been the central theme, at least throughout my military career and then thereafter. So there's a reason why I volunteered for what we call the Veterans of Foreign Wars Group is because they're not just this self-serving entity that's out there. I wouldn't join the organization if were. So yes, do we have 30 minutes for people to kind of trade war stories about War War II? Yes. I mean, that's just fascinating to listen to a World War II veteran talk to you about D-Day and what his role was. But the preponderance of our time, 95% of our time is looking for veterans who need help in our local area and then how we can help that veteran. Even if it's something as simple as they're down on their luck and they need a hot water tank installed in their house because they just can't do it, they don't have the money to do it, we're there to help. So we're looking, we always actively look for ways that we can actually help veterans in need, whether it's the fundraising events to make sure that we're able to provide those resources that they may need, but always looking for any way that we can assist even outside of the scope of, again, a veteran that served in a foreign war or not. So always looking to give back to the community, led by a great group of veterans from World War II and Vietnam, and I'm just happy to be in the shadow and learn and mentor for them because at some point they're going to pass the baton on and say, all right, they consider me young thinking about that. Right? Sorry, you're the young one. It's time for you to take the lead. But a great group of men and women who are always setting a good example again on that Holy Cross mantra, which is men and women for others, and that's why I'm part of that group. Colman: That's awesome. That's really great work that you do. Thank you very much. James: Oh, thank you. Colman: All right. Last question here before we wrap it up. Any last parting advice? I know you've bestowed a lot of wisdom upon us, but any advice you'd give to a Holy Cross student now just before they graduate, looking to finish that degree or connect with alumni? Anything you think that's good that's going to help them before they graduate? James: I would say going into graduation is one of those periods where we try to cram a whole lot in and in the shortest amount of time because I guess in our mind's eye, we kind of see the finality, right? We're like, wait a minute, I only have one more year. Shrink it down even more. Wait a minute, one more semester, one more month, and then you end up just bypassing a lot of the stuff. We're trying to get check marks in the box. But I would say that's probably a good time to say maybe slow down, shore up some friendships. One of the regrets I have, and I don't live by regrets, but one of the regrets I do have is just not finding a new friend, right? When I looked to my left and my right during the graduation ceremony, I did not have a clue who those people were. We were in alphabetical order. I'm just like, I don't know you, and I don't know you. So one of those where you kind of regret not reaching out and just trying a different friend group or different people and just connecting with people in different ways. It doesn't always have to be brotherhoods or sisterhoods, and it doesn't always have to be best friends. Sometimes it's just good to say hello to just someone because they're in your class and may never know when you know time is right for them to kind of reach out and connect. So find the person who will be sitting next to you and during graduation and go introduce yourself. That'd be my word of wisdom for anybody, but get yourself known out there and get to know as many people in your graduating class as possible. And you probably won't hit a hundred percent, but carry that through over the next 10 to 20 years of your career. Get to know people in your graduating class until you strike the hundred percent mark. Colman: Awesome. Thank you very much. As the fall semester closed down, I know a lot of people will listen to that and take that to heart with their last semester coming up. So thank you for that. And thank you very much for joining the podcast. It was awesome to talk to you and learn a lot from you and hear about your experience from Holy Cross while you were a student and an athlete here, to your service in the Marine Corps, and eventually to your career at Bank of America and the community service you do with the Veterans of Foreign Wars. So thank you very much for joining it. We appreciate having you. James: Well, thank you for having me. I really appreciate it. I have one more question for you. So Army, Navy, who you got this weekend? Colman: Army always. James: Oh, geez. Colman: Army beat Navy. James: Holy Cross, you're sure right? Colman: Holy Cross all the way, though. James: I didn't doubt that one for one second. Colman: Of course. Of course. Maura Sweeney: That's our show. I hope you enjoyed hearing about just one of the many ways that Holy Cross alumni have been inspired by the mission to be people for and with others. A special thanks to today's guests and everyone at Holy Cross who has contributed to making this podcast a reality. If you or someone would like to be featured on this podcast, then please send us an email at alumnicareers.holycross.edu. If you like what you hear, then please leave us a review. This podcast is brought to you by the Office of Alumni Relations at the College of the Holy Cross. You can subscribe for future episodes wherever you find your podcast. I'm your host, Maura Sweeney, and this is Mission-Driven. In the words of Saint Ignatius of Loyola, "Now go forth and set the world on fire." Theme music composed by Scott Holmes, courtesy of freemusicarchive.org.  

Welcome Back! RATE! REVIEW! SUBSCRIBE! Show Notes: ○ James 4:1-10 ○ James 4:1-6 § Read James 4:1-6 again in the CJB version § You desire so you kill, you covet so you quarrel and fight □ James could be talking about literal murder, or he could be talking about heart posture behind it, the hate or anger we harbor against people ® Read Matthew 5: 21-22 § You do not have because you do not pray and ask God □ James is telling saying that some of you don't have what you want because you don't even think to pray and ask God for it ® Read Matthew 7:7-8 □ The next sentence, however, is very telling…when you ask, you do not receive because you ask with wrong motives- you want only what will give you pleasure ® Read: ◊ Proverbs 16:2 ◊ Jeremiah 17:9-10 § Don't you know that friendship with the world means that you are an enemy of God? His Spirit that dwells inside of us longs jealously □ 1st, James calls the readers "adulterous people", which for the Jewish reader, would have been familiar, considering that God used various prophets to call out the children of Israel and Judah for their unfaithfulness to Him □ Remember the 1st and greatest commandment: "And you must love the LORD your god with all your heart, all your soul, and all your strength" (Deut. 6:5) ® Read Romans 8:5-8 § And what does "friendship with the world" look like? □ It looks like what we just read, fighting, quarreling, and it looks like what we talked have talked about for the past 6 weeks as we've gone through James □ So what is the solution? ○ James 4:7-10 § Submit yourselves to God § Resist the devil, and he will flee from you (think Jesus when he was tempted in the wilderness in Matthew 4) § Come near to God, and He will come near to you § Wash your hands and purify your hearts § Grieve for what you have done □ Read 2 Corinthians 7:10-11 § Humble yourself before the Lord, and He will lift you up □ Read 1 Peter 5:6 Listen and enjoy! Let me know what you think! Subscribe to my YouTube Channel- Can I Be Real? Podcast Follow me on Instagram- @raee.michele Join the South of Gaza Community Facebook Group to receive daily Bible scriptures and encouragement on your Facebook timeline! RATE, REVIEW, & SUBSCRIBE! --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app --- Send in a voice message: https://anchor.fm/rachel398/message

Remember, we welcome comments, questions and suggested topics at thewonderpodcastQs@gmail.com   S3E39 TRANSCRIPT:----more----   Mark: Welcome back to the Wonder Science-based Paganism. I'm your host, Mark, Yucca: and I'm the other one. Yucca. Mark: and today we have a very special episode. We're interviewing James Morgenstern, who is on the Atheopagan Society Council. And so, along with Yucca and myself and a bunch of other people. And so it's just an opportunity to get to know him and ask his ideas about where he sees the community going and how he came to be a part of this community and all that good kind of stuff. So, welcome James. James: Thanks for having me. Yucca: We're really happy to have you, so Well, why don't we get started with. you know how, how you found or came to agonism. James: So, it's kind of a, a, a long journey that started back in like the late eighties like 87, 88, somewhere around in there. And I, I was, I, I was an, an avid reader back then. And I remember coming across like a group of, at a garage sale, this collection of encyclopedias called Man Myth and Magic. And it was like everything supernatural in the cult from A to Z And I got made fun of a bit in grade school and called Encyclopedia Brown and stuff like that because I like, I, because I read encyclopedias. And so I came across these, bought 'em for like a quarter a book with my allowance and read them all. And that really sort of piqued my interest in, in the cult and whatnot. And there were there were articles in there about like, Paganism and, and Witchcraft and Wicca and, and what have you. And so I started seeking out books all of this under, you know, the cover of secrecy because I, you know, grew up in the Midwest, in central Illinois. And all of that stuff was a big no-no. So I. With, I had gone to you know, I grew up in a tiny little town, so we had gone some friends of mine and I had gone with one of their parents into this town, and there was this store in the mall that I went into, I think it was like, it might have been a b Dalton book Sellers, you know, one of those book sellers that's not around anymore. And I found a copy of Raymond Buckland's, Complete book of witchcraft. And I went through that whole thing. It was like a series of lessons. Anybody familiar with, you know, witchcraft from back in that area is familiar with the big blue book. But it went through the whole self initiation ritual thing that they had at the end of that. And that was sort of my start on that path. I started reading a lot of Scott Cunningham. He had, you know, a lot of good material for like solitary practitioners and and whatnot. And later on in my, you know, in my adult life I got involved with a this was shortly after I was married, I got involved with a group in Springfield, Illinois called the Edge Perception Collective. And we put on seasonal public rituals, you know, for the, for the community there in central Illinois. And from there I got involved with the Diana's Grove Mystery School and which was, those folks were fantastic. There's just some really good, you know, kind nice people. And the. It was interesting. They had like a 200 acre property in the Ozarks and, you know, it was beautiful. Had this, it had been a cattle ranch at one point, and so like the edges of it were forested and there was this big meadow in the center with like a seven circuit labyrinth mode into it. That was huge. And they had all these cabins that had built, had been built on the property by the Amish. And you know, they did week long intensives and, and weekend you know, seminars and things like that on all sorts of different topics. I took several like drumming classes there with lane Redmond and, and whatnot. And the you know, the whole time though, like, looking back, I, I realized that. With, in terms of like the belief in like DA and things like that. I was really sort of going through the motions on it. Like, I don't know that I ever actually really believed that, that there were these beings out there. I think a lot of it was me looking for an alternative to what I was in the middle of and sort of, you know, inundated by, and that was, you know, conservative Christianity you know, Midwestern Bible country, you know, kind of kind of folks. And so I, I, I sort of, I moved to St. Louis in like 2000 and really sort of drifted away from all of that and had this big. Spot in my life, you know? A lot of the stuff that I had done previously, even, you know, even being part of the, of this group and that that community all on my own, you know, was all solo stuff. Mark: Mm. James: And a lot of that, you know, took place primarily in, in, in my head. You know, it's the whole like, you know, you develop like a mind palace or whatever they call it these days where you've got this sort of sacred space in your own skull. And that some of that was coping mechanisms and things like that for, you know, mental health issues and, and whatnot. But but I had this big hole and, and, and that lasted a long time. And I moved to California in like 2013 or 2014. At the beginning of 2014. And I remember like, I don't remember the exact year it was, but I was online and on Facebook, and I don't remember if it was like a suggested group or if I was searching for, you know, some sort of online group to join. I've got a lot of, I've got friends out here, you know, on the west coast that are all part of this sort of like spooky dark, you know, like, you know, witchy, woodsy, you know, forest people type community musicians and artists and whatnot. And so, lots of pagan stuff being posted by them and, and you know, that whole aesthetic. So it may have been a recommended group but I found the Athe O Paganism one and I clicked on it and looked at the about page. Read the description and everything, and that seemed like that's, like, that was really kind of where I was at. Like, I wanted, I wanted all the pagan stuff, but I didn't want all of the praying to God's goddesses or offerings to forest, you know, fairies and, and, and things along those lines. so I joined the group and was just sort of a, a lurker for a while. And then I don't remember exactly how I met you, Mark. I think I, it was, you had posted something about where you lived or something along those lines, and I was like, Holy crap. Like, that's, that's, that's, you know, 20 minutes away, 30 minutes away or whatever. and I don't remember if I sent you a message or if it was in a comment or something. Like I don't, the details of all that are Mark: I think he sent me a message as I recall, and we decided to meet for coffee. James: Yeah. But that was fantastic. And then I read your book and like your whole story of how you came to all this. A lot of that resonated with me cuz I'd been involved with similar groups, you know, in the past, the whole church of all worlds. And you know, I wasn't involved with them at all, but I, I was well aware of them and, and things going on with them. And then, you know, I wanted to I wanted to take a more active role in the community because. I don't know. I feel like, I feel like everybody should want to take a more active role. You know, you gotta participate in community, you know, on some level. At least that's how I feel, you know, for myself. And so I, when a call went out for moderators on the group, you know, I, I stepped up to that and and then was a moderator on and off for a couple of years, I think.  Yucca: A few. Yeah. James: yeah, recently, recently, you know, stepped down from that again. And then when the Atheopagan Society started coming together, you know, and, you know, we decided to put together an actual, like, council of people, you know, I, I. Felt the need to be a part of that, you know, on the, on the ground floor. Mark: Mm-hmm. James: don't know cuz I, it's, it's really given me a lot in terms of like, helping sort of fill that hole that I had in my life for so long with not having any sort of like, ritual, you know, or spiritual life, you know, it was, I dunno, it was like, I struggle with I struggle with a fair amount of mental health issues, you know, depression, things like that. And when having that, having a spiritual life and even in my own head now using words like that is, there's a little bit of dissonance because I don't believe in like a spirit world, but I, when I tend to use the word spirit or spiritual, I'm, it's more in the sense of essential. Mark: Mm-hmm. James: spirit being the essence of a thing. You know, and so a spiritual life for me is an essential life. It's a thing that, you know, it's something that's Yucca: mm. James: Um, and the, the, a paganism group online and just the, you know, approaching spirituality from that standpoint has, has helped me out a lot. And so I, I wanted to, to, to try to give back on some level as much as I'm able anyway. Mark: Well, that's great. Thank you for that. Yeah, it's, it's been great for me because you, you are local to get to know you and, you know, become friends. And now of course we have the Northern California Affinity group the Live Oak Circle, and we've been having in-person meetings with a little group of folks. And to me that's just been wonderful. I've, I've really enjoyed sharing rituals with, with a group like that.  James: In person is definitely, at least for me personally, is far more rewarding than, you know, online. So if there's a certain, there's a certain distance that I feel, you know, with online interactions and they, they just doesn't feel as personal and meaningful to me. Other people get a lot out of it, you know, I know that we have like the the mixers and things like that, you know, on Saturdays and like on Thursdays or whatever online. And I know that there are a lot of people who get a lot out of those, and that's fantastic. You know, I think you should get, you should get that community interaction however you can get it. But yeah. Yucca: well, I really love that we've been able to start building both of those kinds of, of interactions right now as, as we're, we're growing and able to do in person gatherings. Both like we did earlier this spring with the retreat and then with local groups and then the mixers and the text communication, which is what mostly the Facebook discord is. Mark: Mm-hmm. Yucca: So it's, it's lovely to see that diversity and people being able to kind of plug in, in the way that fits in in their life and, and their particular needs. James: Yeah. Yucca: and it seems like James, you've, you've been a big part of a lot of that kind of looking out for and caring for and participating in that online component. James: Yeah. Like, I feel, I feel very, and one of the reasons I wanted to be like help be a moderator and stuff for the, for the Facebook group was that I feel like I tend to get protective of, you know, the groups that I'm, that I'm part of. It's all, it's like chosen family kind of, kind of situation. And I felt like being a moderator helped, like, put me in a role where I could be more effective at doing that. Yucca: Mm-hmm. James: because there's a lot of folks that aren't able to sort of stand up for themselves and you only have so much, aside from just blocking people online you've only got so much that you can do in a group if you aren't a moderator. You know, you don't have the ability to, you know, to shield other people from, you know, abuses and things along those lines. And not that we've had a huge problem with. Folks like that in the, our fa I feel like out of all of the Facebook groups that I've, that I've been a part of and all of just the social media groups in general that I've been a part of, the Atheopagan group is definitely by far the most friendly and problem free group that I've, that I, especially with, you know, now we've got well over 4,000 members. Like, it, it, it shocks me on some level that there wasn't, that there wasn't a lot more moderation issues than there, than there was. We just don't get the trolls. I think a lot of that is, is due in part to like our screening process for people, you know, and and just the, you know, vigilance and the community themselves, like, you know, that even aren't moderators stepping up to, you know, Sort of take charge cuz it's, it's, I feel like it's all of our responsibilities to make sure that we've got a nice, you know, safe, accommodating, friendly community, you know, to be a part of. You know, and every, every group is gonna have issues, but I feel like our group is, is always working on those, you know, when something comes up, when someone brings something to our attention, something was problematic or something that we, that needs to be addressed that we're, that we, we work on it. I feel like that effort is an honest one and that, you know, and that's important. But but yeah, it's by far the, the best group I've been a part of. And I, and I think that speaks a lot for the people that are involved. Mark: I agree. Yeah, I mean, I've, I continue to be amazed by the quality of the community that's come together online, around aop, Paganism, and As you say, with more than 4,000 members, you would imagine that there would be more conflict. And it's not like there's group think because we have really interesting conversations about lots of different things and people have varying perspectives on a variety of different things. But there's a civility and a a fundamental assumption of good intention on the part of one another that I think is really rare for Facebook. I mean, I don't even go to my main Facebook feed anymore. I just hang out in the atheopagan. James: yeah, yeah. And it was, it was really great for me at the retreat to get to meet some of those folks in person. you know, cuz you see a name, you see a name and like an icon on online and I don't know, for me that's Yucca: A real animal person  James: Yeah,  Yucca: really right there in front of you. James: cuz like online there's a, like, I feel like there is sort of a certain degree of anonymity that's necessary because it can just be a dangerous place. So I don't fault people for not putting pictures of themselves up as like their Facebook photo or whatever. You know, I didn't do it for the longest time. Uh uh, now I don't really care. So it's whatever. But but it's nice being able to put a face to, you know, conversations that I've had with folks and, and things along those. Mark: So, I have kind of a two part question, I guess, for you, James. The first one is so what do you see your role as being on the Ethiopia Pagan Society Council? What, what do you see as, you know, what are your responsibilities there? What is, what do you see yourself as doing for the community there? And then the second part of the question is what about the future? What, what sorts of things do you see the society being able to do to foster this community or support it or train it or, you know, whatever. What, what's your vision there? James: I think in terms of my, my role, like, I feel like I, I try to represent the, the greater community as a whole. Mark: Mm. James: Take into consideration, like when we're making decisions and things like that, the needs of, of, of the community as it's been sort of represented to me by my interactions with people on Facebook, you know, in the Facebook group. And, and to a far, far lesser degree, the, the discord sort of, cuz I, I, I started the, that Discord server I don't, a couple years ago or whatever. And Discord is not my, it's not my thing. It's, you know, it's some people that's totally their jam and that's, and they prefer that over everything else and that's totally fine. It's just, it was never really my thing, but there was a call for it online and so I just, I had used it previously for like some gaming. And so I was like, well, you know, I'll start a server and we'll see how that happens and how that works. And now it, you know, it's got a, I think a couple hundred people on it. Mark: I think about 500 Yucca: Yeah, James: is it really? Mark: Yeah. Yucca: It's got some great stuff. Yeah. Mark: Yeah. James: I, yeah, like I said, it's, it is wasn't really my thing. I am not a tech savvy person, so, you know, there were got all these people that jumped on it, that were doing Discord stuff all the time and asking me as a, you know, as like the admin there, you know, Oh, can we do this? Can we do that? And it's like, I have no idea how to do those things. So and I don't have a whole lot of time to learn how to do those things. So like, I, that's a, yeah, that's a whole nother change. But in terms of like my role and what I, you know, what I seem like my responsibilities being like, I, I don't know. I. I think everybody, I think every group and, and it hasn't been a thing that I, that has been something that I feel like I've needed to worry about because our, our group and our organization has, it's worked a lot differently than a lot of other groups that I, that I'm aware of in the Pagan community and not so many that I've been a direct part of in, in terms of like decision making groups and whatnot. But I don't know. There was sort of this idea in my head at one point of like, being kind of a watchdog and making sure that things didn't start going down like a hierarchical you know, sort of problematic path. Often happens with those sort of council type groups in various PE communities. Like I said, I'd been a member of a group in the past. The, the edge of perception, which, you know, all we did was really put on public rituals. That's all we did. We weren't like a, we weren't sort of guiding a community necessarily. So all of our meetings dealt with what are we gonna do for the next, you know, for the solstice or whatever, and you know, who's gonna do what roles. And you know, how is, you know, how much did we spend on supplies for the last one? How much money do we have in the account for supplies for the next one? And you know, and that sort of thing, we were, we were a not for profit five. I think we had, you know, our 5 0 1 3 c, you know, thing or whatever. So we had to, you know, keep track of receipts and all that good stuff for taxes and but There weren't, so, there weren't really any issues in terms of like power struggles or anything along those lines, you know, people wanting to take control of things necessarily. At least none that I was aware of, but I definitely know that there are groups that are like that. You get like an individual who is, and that's one of the things like I, I feel I really sort of commend you for Mark, because you, that's, you have not being sort of the founder of, of this whole thing. You have made, I feel like you've made great strides to not put yourself in a position of. Power and or a position of authority or anything along those lines. You know, you've been pretty good about when people try to appeal to you as an authority on something and say, Well, Mark says this, or whatever. You're very much, I feel like you've done a pretty good job of, of the whole, like, you know, I'm just like, I'm just another member of the community like you, you know, just because my name's on a book or whatnot, that doesn't mean that, like what I say is, is law sort of thing. And I know that's been an issue. So there was an, at one point in my head there was this idea of like, kind of being a watchdog for the community if that sort of thing started to happen, to try to be a bull work against that. But that's, but it's never come up. So, that quickly faded into the background as something unnecessary. So I, so mainly I think I, I feel like I'm just there as support. Like I, like I said before, I, you know, I struggle with a lot of mental health issues and what have you. So my, my ability to do things is, is relatively limited. But I do, I, I, you know, I want to do whatever I'm capable of, you know, and take a more active role other than just seeing posts online and hearing about things and, you know, listening to the podcast and whatnot. And as far as going forward, I'd like to see a lot more opportunities like that provided for the entirety of the community. You know, it's a big community and I think a lot of those opportunities should be like on a, on local levels. You know, like you mentioned before, we've got our local live Oak Circle. Here in Northern California, which, you know, we've had like, what, like almost a dozen people Mark: Yeah. James: I think involved, you know, that have that at least, you know, I've seen, you know, active, we've got our own little discord server Mark: Mm. James: and whatnot to help coordinate stuff. And then you know, we've had Facebook members who have posted things about their local meetups, you know, one in Chicago that looked like had a fantastic turnout. And I like seeing it. It makes me happy to see things like that happening because I, community is something that's really important to me. And I think it's, I think a lot of the reason it's really important to me is, is because of how little direct access I have to it. You know, I'm, I'm sort of isolated out in the redwoods, you know, and So, and community interactions are, are, have become far more important to me. They're more meaningful to me because I have them, you know, so rarely. So that's an important step going forward, I think, is helping to foster those local communities Mark: Mmh. James: to build a greater, you know, broader, you know, general community. The, I thought that the Sun Tree retreat was a, was a fantastic success in terms of like turnout and whatnot. So I'd really love to see more events like that going forward. Like maybe regional regional ones and then, you know, a like a main sort of national one or whatever here in the States. And it would be fantastic to see. Because we've got members of the Facebook group from all over the world, you know? And we've got affinity groups for larger affinity groups, for like regional affinity groups for some of those areas. But it'd be great to see them putting together, you know, events and it, and I think a lot of people think if the, if like, Oh, we, if we're gonna do that, we're gonna need all of these things and we're gonna need this awesome space, and we're gonna need, you know, speakers or we're gonna need, It's like, you don't really, you just get together, get together and have a meal, you know, and make it a ritual, you know, be, be mindful of the various parts of the meal that you're, you know, as, as they're, as they're served or consumed or whatever. Or get together and, you know, if you're into drumming and stuff, you have a drum circle or sing some songs together or, you know, just do some, do something. As a community and it'll grow from that. You don't have to have like a fancy convention space or, you know, retreat center to go to or something along those lines. But I think building those communities is important because we, we do better together. You know, we, we move forward better, faster, more stronger together than we do, you know, as individuals. And some people, you know, social interaction is not a thing for them and they don't do well in groups and that's fine. You can totally do it by yourself. But, you know, I feel like as a, as a community though, moving forward, like these smaller local localized groups are really. I think that the next best step forward. Mark: Hmm. I think that's really well said about community and humanity as a social animal. You know, we, we get e even those of us that are very introverted will usually get something out of social interaction. They may not be able to take very much of it. But there's a, there's a sort of a, an energizing or a charge that comes with interacting with other people who see you and are authentic and open and kind and, you know, fostering that kind of a climate is, it's super important to me and it seems. That's what people are gravitating to in, in the online communities is like, wow, these people are nice and they're thoughtful and they're interesting and they, and they're rational and and they are open to the idea of secularizing the world in, you know, in ways that are moving and impactful. So, yeah. Yeah. That's very cool. I didn't realize that you had joined the council with the idea of being sort of a watchdog on, you know, on the power dynamics, but I'm, I'm glad to hear that you haven't felt that was necessary. James: Yeah. I mean that was sort of, it wasn't like a main reason, you know, the main reason was like, I, I wanted to be a part of it. I, you know, I wanted to be a part of, I wanted to give back, you know, cuz I had gotten quite a bit out of, you know, the online community and, and whatnot. And wanted to give back beyond just being a moderator on the Facebook group. And the, the whole like watchdog thing was sort of a secondary, a secondary thing, you know, one of those creeping things in the back of my head. And it was like, Oh, I've, like, I've seen groups like this come together before with really good intentions and then a cult of personality forms around one person. And and then it all falls apart. And I didn't wanna see that happen. You know, like I said, I, I feel, I feel kind of protective of our community. , which can have its own drawbacks because I, I, there are times when I'm feeling probably too protective and might see threats where there aren't any. And that's, you know, that's, that's my own shoot to deal with. The yeah, I think other things that we could do, like I, I, I think I probably mentioned previously about you know, we've got members of the community who probably are a little isolated and not as able and like some sort of like, outreach program or something along those lines, you know, to bring resources to those people. You know, I think this, this podcast has obviously been a great. Because you know, like you had mentioned to me previously about like the number of new members coming to the Facebook group because they heard the podcast which is fantastic, you know, but that's one of those things that like is of, it's available to everybody all over the world, you know, You know, you don't have to be on a specific social media platform or whatnot. This podcast is available on, you know, numerous different podcast platforms and everybody's got, and I think network, maybe possibly networking more with other similar like-minded groups. Yucca: Mm-hmm. James: You know, I think that might be a good step in the right direction. Cuz you know, In the end to get sort of philosophical, we're all in this together. Yucca: Yeah. James: that's not just like the a o paganism group online. And that's not just, you know, our, our local circles. It's, you know, everybody we're, and you know, we might not all completely agree on things all the time, but we, none of us get out of this alive. So we should all work together to make, to make the experiences as, as as pleasant as possible. Yucca: Hmm. Mark: Yeah. James: and that, you know, and that in that involves a lot of work. And not, not necessarily like physical footwork type stuff, but like personal work, you know, for each of us. Things like Like dealing with issues of racism and ableism and things along those lines. You know, that's, that's stuff that has to be worked on, on a personal level. And you know, we all have a lot of, I think a lot of us the vast majority of us have a lot of internalized, you know, issues with those things. Things that have become normalized for us because it's just, they're, they just are things that have never been an issue. You know, it's a thing we've talked about in the Facebook group. Paganism in general for the, for a long time was a primarily white thing, Yucca: Mm-hmm. James: And and so I think a lot of people of color and whatnot really felt it was inaccessible to them, Mark: Yeah. Or that they were unwelcome. James: or that they were unwelcome. Exactly. Because there's still this huge trend, and that's why I'm I really. One of the things that I really like about Atheopagan and that that drew me to it, is that it's not based in a culture, a preexisting culture. It's not based around a preexisting set of traditions. You know, it encourages, you know, a DIY approach. You know, create your own rituals, create your own traditions, you know, start new ones. Don't, you know, like we, it's not the goal to recreate some lost civilization or culture, or to live in, you know, a a, a pretend past that never really existed. Cuz that's what most of these groups, you know, I feel like to some degree do. And it's not about escapism either, Yucca: Mm-hmm. James: Which is a thing that I found. I've gotten a lot of flack in the past for, for bringing the issue up in groups that I've been a part of that I feel like a lot of people were, you know, they'll be a part of a group that espouses like, you know, justice or something along those lines. I'm not gonna name any groups in particular. But they'll espouse values like justice. But then when issues of justice are brought up, people, you know, start going on the whole, like, why do you gotta make this political? It's like, uh, how is it not, How is that not like everything is political. If it involves people, it's political. So, You know, every aspect of our lives is affected by politics. You know, nobody lives in a. Yucca: Mm-hmm. James: from the rest of the world. So literally every aspect of our life is, has been affected or is constantly affected by politics. Whether it be the laws that we're living under or the regulations we have to abide by when doing things to our homes or you know, our yards, you know, down to like HOA organizations with how tall your grass can be and crap like that. Um, it's all politics, you know, And so, and I understand like people who get tired of hearing about hearing all the arguing Yucca: Mm-hmm. James: what have you, and I think that's primarily, it seems to be primarily an American issue, you know, a US issue. But you know, everybody knows what's going on in this country, you know, right now and has been for a while. So, you know, the whole world knows the sort of situation we're living in. So I think it's understandable that people are burnt out. . And, but most of those people who are like, Why do you gotta make it political, are the ones who aren't really all that negatively affected by politics. Mark: Right. They're  James: tired of hearing people argue about it because it interrupts their peace and quiet and they come into these groups because they're trying to escape rather than, you know. But for me, like I said, a spiritual life is an essential life and as an essential part of life, it's politics is unavoidable Mark: Mm. James: cuz that's an essential part of life. You can't exist in the world without, with other people, without politics. So, you know, that's I think working on those issues on an individual level is important. And working on those issues as a community, you know, supporting each other. You know, I, I feel like our community has been really good in like the comment sections and stuff on Facebook of offering up resources when issues come up and someone says, Well, I don't know how to do that, or I don't, you know, or where do I go to find that information? There's usually always someone who's got a list of links or books to read or, you know, or, or YouTubers to follow, or, you know, something along those lines that are, you know, resources. And then it's incumbent upon us to take personal responsibility then at that point, and read those things, you know, or, you know, or, or, or look up those papers or, or what have you. And you know, it so yeah, I the whole escapism thing, that's Mark: Yeah, we've, we've talked about that here before. I mean, it's, it's tricky because you can use sort of fantastic language and, and framing to. Make your life a lot as a tool to make your life a lot more enchanted. Right. James: Oh yeah. Mark: But you need to keep in mind, you know, it's that ability to recognize the difference between metaphor and reality. You know  James: And I, I'm a, I'm a big fan of like, the myth poetic, you know, as, as a tool, you know, for, like you said, re enchanting, you know, your life. But there's a, it be, it starts to become escapism when that becomes the, your preferred realm to exist in. Cuz it's not a real place. And you live in the real world and there's no getting around that. Mark: sure. When you start blaming fairies for things, James: Or Mark: It's a problem. James: right, or you know, like a thing you had mentioned, and I think you had mentioned it in, in your book, you know, with people like excusing behaviors, because you know, it's the will of the gods or, or whatnot. And the spiritual bypassing that takes place, you know, where people are like, Oh, well the reason this bad thing is happening in your life is because, you know, maybe you've angered some spirits or something along those lines. And, which is really just a fancy way of victim blaming at that point.  Yucca: It's a way of not taking responsibility, James: yeah, exactly. And so that's, that was going back to like the first question. You know, that's, that's another thing that sort of drew me to Athe o Paganism, was that, that that wasn't a part of all this. There was no, there was no road. For that sort of approach to things, you know, personal responsibility and and, you know, taking steps in our own sort of growth and development, you know, are are built in. And that's that's very appealing to me and I think needed, you know, in. Mark: Yeah. One thing that I've really appreciated about many people in the Pagan community, I certainly wouldn't say all of them, but many people in the Pagan community, is that there is this kind of dedication to personal growth, you know, to, to doing the work to become the best people they can and. I just see that as essential. You know, it's like if, if the goal is excellence in how we interact with one another in the world that we create in our engagement with the rest of the natural world in all of that, then it, you know, it starts with the wrestling that's happening in your head and, you know, figuring that stuff out and getting as clear and as kind and as balanced as we can. And so it, so that was one of the things that drew me back towards Paganism. And after I got sick of it, you know, there were those people that were living in a fantasy world and were, you know, causing harm out of that. But then there were these other people who were just amazing. Humble, fantastic, incredible people. And I wanted those people . I, you know, I, I wanted to go back and get them. So that's, that's been part of what this has been about. James: yeah. I've had, and like, you know, I, I skipped over in my story about how I got to aio Paganism. I skipped over a lot of the stuff that I got involved in, looking for ways of like making meaning in the world. That were more solo like, I got into Chaos Magic, and I got into the, you know, I was involved in the Lima for, for a while, Mark: Mm-hmm. James: you know, joined some initiatory orders and, and what have you. And know, it was all, you know, brain hacking, trying to figure out how to make myself that better person, you know, that you just mentioned. And doing it on your own by yourself is often very difficult. And so I, I think having a community that's all also working towards that. And like you said, not everybody involved in those groups was good. But there were definitely some jewels, you know, that stood out. But for some of them, like the, the, the, the Leic community there was a lot of just. I, I pretty much left all of, I left the Lima because of a lot of the just really horrible, toxic stuff. And I've always been a proponent of the idea that whatever it is that you're championing, whatever cause that you're standing behind, whatever beliefs that you are espousing, look around at the other people who are going, Yes, that's what that I'm on, pa on. I'm right there with you. I'm on the same page as you are. You believe what I believe and I absolutely support you. And if those people are neo-Nazis, and if those people are, you know, just you know, white nationalists and racists and terrible people, then you need to, you need to rethink these ideas that you're championing. Cause if they're saying, Oh, no, no, I totally agree with you, I don't think that's a good thing. and, So, you know, I, I, I've had these conversations to get political. I've had these conversations with folks who, you know, espouse like conservative values and whatnot, and they're like, Yeah, but you know, I don't agree with those guys, but yeah, but they agree with you. Like you don't agree with those guys cuz you don't, because they're on, you're just sort of cherry picking, you know, the things of their ideology that they, that you don't agree with. And I don't know that you're actually looking at, at what they believe and what you believe with an unbiased, you know, viewpoint. And I think that your ideas and their ideas line up far more than you're willing to admit to. And because on some level you do agree with them because if they're agreeing with you, how is that not the same thing? You know, if you say XYZ and they're like, Yes, xyz, and then you say, Oh yeah, but I don't agree with their xyz, but it's it's the same xyz. Then, you know, I think that needs some reflection and some rethinking. And so, yeah, I don't know where I was going with that. I've got my mid-afternoon coffee, caffeine hitting my, hitting my head and it's sending me on spirals. Yeah. What were we saying? Yucca: We had been talking about the gyms in the community, and you'd said that you'd kind of skipped over some of the, the, James: yeah, Yucca: the various groups that you'd been involved in and stopped being involved in. James: yeah. Cuz I think when, when, for me it was like a matter of percentages, you know, if there's like three or four people in the community that are absolutely wonder. People and the, the overwhelming majority of the community is not, then that's, then you, you can't, you can't it, I personally can't stay in a community like that. I can't stay involved with a group like that. Like I, it, it's always terrible to have to sort of leave a group because you know you're gonna miss those people probably, especially if you developed any sort of personal relationship with them. And you can always stay, you know, connected with those people outside of that group. But being part of the group itself is just not an option any longer. Again, I think, I feel like you gotta look around at the people who are, who are standing behind you and chanting along with you and see what sort of flags they're waving and, you know, if those are flags that strike you as you know, bad things, then maybe you should think about. You know why it is that they're chanting along with you. And I, and it's mostly been like, you know, events that have taken place here in the US over the last, like six years or so that have really sort of brought that sort of idea to a head for me. You know, or also if you don't, the people who are on your side are championing ideas that actively seek to harm or impede the lives of people you care about, then maybe you should rethink those ideas also, because if you really care about those people, why would you want to promote the things that are going to hurt them, you know? And I feel like in our, to bring it back to, you know, our community, I feel like we are, I feel like we're, we can always do better, but I feel like we're doing a pretty good job. And that is, and that's not to sort of say, you know, to let us off the hook in any way, shape or form. The work is, the work is constant and ongoing and not quick. You know, there is no fast like flip a switch and suddenly you're not racist, you know, or you flip a switch and suddenly you're not ableist anymore. You know, those are, they're patterns of behavior that come about from living in a system that promotes all of those things and oftentimes rewards those things. So, you know, working out of those situations, those methods of thought and whatnot is a. It's a lot of deep work, but I feel like as a community we can support each other in that work. And that's what part of what I was saying about when conversations like that have come up on the Facebook group, you know, people offering up resources, you know, books, you know, books to read and things along those lines. I know we've got, there's like a book club like an atheopagan book club and I think that they've read some, some pretty good books, you know, in, in that regard on some of those issues. I definitely, I'm not a part of it cuz reading books for me is a, it's a whole thing that's gets too complicated to get into right now. But but I definitely encourage them to read more of those books that help work on those issues. You know, everybody likes to read, you know, the fun books. Things like gathering loss is a popular one. Or what's the other, the Mark: reading Sweet Grass. James: Yeah. Braiding, sweetgrass. Those books, those books come up a lot in conversations. and those are great. Yeah. Yeah, they're great. I, I'd like to, you know, I'd like to see more opportunities for for unlearning the sort of problematic tendencies that, that, you know, the overwhelming majority of us tend to have. Mark: Mm. James: cuz that makes the community more accessible to the folks, you know, like I mentioned before, that felt it, you know, this sort of spirituality inaccessible before, Mark: Mm-hmm. James: Yeah. And, and build your own tradit. You know, around that sort of thing cuz that can help reinforce all of that and Mark: You know, I, I need to put in a word about that. I, I wrote a blog post probably four or five months ago now. In which I agree for myself, I, I want to create new culture. But I can see how for people of color, they might want to draw culture from their ancestors forward. Um, and so, you know, when I talk about, when I talk about Ethiopia, Paganism being a modern thing that just got started in the early two thousands, and it's not rooted in any culture that really comes out of the fact that I just designed it for me and I'm this white guy you know, this sort of Mongol American white guy. And I think. I've, I've since done more thinking about that, and I think that it's really important for us to acknowledge that there's a place for drawing indigenous traditions, drawing traditions of African ancestry, you know, drawing those, those pieces forward into the ritual practices of people that come out of those, those ethnicities. James: I, I absolutely agree. I think on, on a personal level, I think, you know, for your own like personal ritual and spiritual life, I think drawing on, on, on your heritage is, is absolutely, although I don't like using that word, heritage I think drawing on that is Backgrounds. is, is, is important and can be really sort of empowering and enriching and whatnot. I think it, where the issue comes in is when the overwhelming majority of a group comes from a particular background Mark: Yeah. James: and they try to make those aspects of their background, the primary focus of the community's background. So like, you know, taking a recent holiday for example. So that's an Irish thing, you know, that's a Gaelic culture cultural thing. Yucca: Mm. Mark: Mm-hmm. James: so everybody's like, everybody talks about sow and it's like, I mean, it's not, it's not like a solar festival, you know, it's not one of the cross quarter you know, holidays that is tied to an astronomical. Or anything along those lines, like the solstice and equinoxes. So it is a very sort of culturally specific thing, and not everybody celebrates that. And so when everybody's almost sort of insisted be called that because Halloween is too much of a, I mean, it's, it's even got its own cultural sort of baggage, you know, in terms of like all Hall's Day being, you know, kind of a, a, a more Christian centric holiday and the whole, the whole co-opting of, of, you know, pagan holidays by Christianity idea and those sorts of things. But I think a lot of people, when, when the community, when the greater community refers to it as a specific cultural thing like sa, those people who did not come, did not grow up in that background. Feel isol, you know, separated and they feel like they're not able to take, they feel excluded. So I feel like as a greater, you know, sort of global community or whatever, coming up with new non culturally specific things is great. And then incorporate in your own personal rituals and whatnot, and even your own local group rituals, incorporate aspects of the, of, of your own background into that. And then your group can each, each person can bring their own cultural background into the mix. And you have this, you know, lovely bouquet of, of mixed flowers, you know, that everybody can enjoy. The but yeah, I think that when people lean into those sort of traditional ideas of the holidays, You know, of our, like, you know, that can be one of the things that isolates people who have traditionally been sort of excluded from these sort of circles, and it makes us less inclusive. You know, I personally celebrate sound because That's my background. You know, I'm 93% Scottish and Irish and with a smidge of, you know, other, you know, I'm a, I'm a American mut, you know, with a blend of, of European backgrounds. And but I wasn't raised in any of those cultures, you know, that's a, so that's a thing. One of my. I don't wanna say pet peeves cuz that's not what it is. One of my issues that I struggle with a lot of times is I don't believe that for the most part Americans have in general, white America doesn't have a recognizable, consistent culture or cultural background to draw from. Which I think is one of the reasons why so many folks look to, like Ancient Ireland and Ancient Scotland or ancient Germany and you know, or Scandinavia, they look to Asat true, you know, because of their roots and their heritage and they, or they look to, you know, like the Celtic sort of stuff because of their, you know, their ancestry. It's like, that's great, but you likely weren't raised with any of those traditions, assuming those traditions are real at all. And so, In a way that's sort of a, it's a hot button topic and I'll probably get flack for it and people will talk about me. But I feel like in a way that's sort of still a matter of cultural appropriation cuz you weren't raised in that culture and there are people who legitimately went through terrible things because of their connection to that culture. They were prohibited from practicing just like here in the United States with the, with, you know, indigenous peoples being legally prohibited from pr, from practicing, you know, you know, uh, their, their ancestral traditions and what whatnot to step up. Having not gone through any of that and just adopt those things and say, Well that's, you know, that's my, that's, you know, my heritage. It's like you're, I. I guess blood wise down the road, always, you've got that connection to people who participated in that. But you, you never did. You're, you know, that's not part of your, your culture for the overwhelming, not for everybody. Obviously there are exceptions. People who are like first generation Americans and whatnot. They may have relatives who who carried some of some older traditions and stuff forward. But this idea of participating in these like ancient traditions, like, I mean, it's, Yucca: I think it doesn't necessarily just have to be first generation either. I mean, there, you know, there's a, James: but those traditions have to have been carried forward. Like, I feel like you need to have been raised in the culture to, to really, because otherwise you're, you are participating in a thing without, without any sort of, you know, you're participating in a thing that other people were punished for without. The threat of punishment, you know, and without having gone through those  Yucca: I, think it's really very specific to different ones. I mean that some, some times when those ancestors were forced to stop, Doing tho having those traditions. You know, my, my father's first language, he was not allowed to speak that outside of the home. And his, you know, his, his mother wasn't allowed to speak it. So I wasn't, I didn't get that language from him. Right. But, but there's still a connection that I have to that culture, right? Or, you know, and, and so for instance, my, my child is relearning the language even though there's a generational gap between, you know, what she was, how she's been raised, the culture that she was raised in, and, and wanting to like to rebrace, right, to reclaim and rekindle some of that. James: And I think as long as, as, as those things are being passed down with the knowledge of, of the struggle that people went through regarding those things, like how the, how the, you know, and that's, you know, the reason that you're doing it. But I think a lot of that is disregarded when people just sort of pick up a book on Celtic paganism or something along those lines, and they think that they're participating in these like ancient Celtic rituals and whatnot, which is Yucca: My personal pet peeve around that is when it gets all lumped into one culture, it's like, wait, but, but we're a lot of different cultures, you know? James: I've been involved in Drewry and things like that, and there's this idea of like this Dr. Reconstructionism and whatnot, which I think is. The fact of the matter is, is we don't know what any of the, there was nothing written down and we don't know what was practiced. So these like ancient rights or ancient rituals, they're not ancient. They're all new modern inventions. And there's that zero evidence that, you know, and there's a lot of hearsay and people are like, Well, no, this was passed down. Word of mouth. It's like, yeah. And we've all played telephone, we've all played that game. And there's a good chance that the way that you're doing things is absolutely nothing like what people did then. You know, and you've got the influence of Christianity and things like that. And to think that, to think that, like, I don't know. I think the assumption that, like the monks that wrote down a lot of this stuff, when they were encountering these new cultures, you know, as they were, were coming into the areas that they weren. Repainting and reinterpreting and just straight up lying about things. I think I, I don't think that's an honest approach to, to what that is. So,  Mark: Well, and, and James, this also goes to the lionization of the ancient, right? I mean, there's that whole idea that because something is old, that it's got a deep validity to it. And that's, that's one that I just. Honestly, I don't go with, I mean, to me, cultures are valid just because they're valid and it doesn't matter whether they started recently or, and then, then there are cultures that aren't so valid, like Joseph Smith's arrangement that has now taken off and has many followers all over the world that you know, the values of, which I find really problematic. But just because something is new doesn't make it invalid. And just because something is old doesn't make it valid. But particularly for people where there's been genocidal effort to extinguish the culture, I think it is really important to be able to say to someone who's, you know, grandfather and father were, you know, grandparents and, and parents were not allowed to speak their native language, that they are still entitled to relearn that language and restart those cultural traditions again. James: Sure, I think. But I think that a lot, and I think a lot of it is for me personally, that's it. It's all continued upon intent. Mark: Mm-hmm. James: if you're, if I think if you're going to do that, then you need to be learning about the struggles that they went through. You need to be informing yourself about the reasons why this is an issue, you know? It's like, you know, the, it's, for me, it's like the, the whole like, you know, When it comes to, like in, in indigenous folks, you get the person who does their 23andme DNA test and they get the thing that says, Oh, you're 0.05% Native American. And they're like, Oh, cool. Well, I'm just gonna start practicing Cherokee, you know, traditions or, or whatnot cuz you know, well I'm part, you know, I'm part Native American and what, and, and not learning why that's a, why that's a problem. Mark: Yeah. James: It's like if you're, I, you know, because in all likelihood, you, you, you really, the only connection you have is a genetic, is a genetic connection to those, you know, to those folks because you've not, you know, I don't know. It's a, it's a, it's a complicated. It's definitely not cut and dry. There are definitely, you know, exceptions to the rule and, and, and all of that good stuff. There's, I come from a, you know, a line of people who are very, very far removed from any of that. I, the, the research that I've done on my own family, you know, I got as far back as like the 15 hundreds to some, you know, Sept of SCOs who, you know, the, the, the McCulloughs or, or whatnot. And they were like a, they didn't have their own tartan, which was a, which was a pretty modern invention. They didn't have their own, you know, sort of clan, steel and motto or insignia or anything. There were like a vassal clan of some other larger clan, but. I wasn't raised with any of that. My grandparents weren't raised with any of that. My great grandparents weren't raised with any of that. You know, if anything, there's more Appalachian you know, traditions and culture, which is a mishmash of, of, you know, a number of things. Because the farther you get from the source, the more diluted those things sort of become, the more integrated with other, you know, cultures and, and, and traditions and whatnot. Those things become and they become their own thing, you know? So like, I feel like for me, like I've, I've, I've tried to educate myself on the struggles of those people from my background who were barred from like my Irish ancestors who were barred from speaking Irish, you know, by the English in my. I try to educate myself about that. And I try not to just take it for granted that I'm just allowed because my, you know, my grandmother's last name was Bailey, you know, and I think that there's the overwhelming majority of people that I have encountered in the Pagan community. That's really the sort of approach. There's this romanticized like idea of like ancient Celtic Ireland, you know, that people pursue. And and it goes, it goes back to the whole escapism thing for me. And you know, I think a lot of people are what draws a lot of people to modern paganism. And the new age movement is a dissatisfaction with the way the world is right now and a lack of sort of, Lack of meaningful internal life you know, to to help give them a sense of comfort and whatnot in, you know, the, the sort of times that we're having. And I think that there's that appeal to, it's the reason we read, you know, that's the reason we read fantasy books and things like that, you know, So for a brief time we can live in a world that is not this one. Mark: Yeah, but this one is so amazing. Yucca: Yeah. James: it really is. You open your eyes and you look at the world around you and you see like really look and see the various processes taking place on the. Smaller levels, you can just keep going. You know, like, Oh, well why does that happen? And there's a whole process involved and it's like, and then you can take a piece of that process and say, Well, why does that happen? And there's this whole other process involved, and it's this like fractal rabbit hole that, you know, winds up down in some quantum, you know, wormhole thing Mark: Some probabilistic. Weird. James: Yeah. Mark: Yeah, James: until we're just speculating, because we really don't know, because we are physically incapable of seeing any more detail from that for now. And you can do the same to the greater scale, you know, because the immensity of this universe and reality in general, as you know, is astounding and incredibly humbling. For me to contemplate. I've spent many a night lying on my back as a kid. I had, I built a skateboard ramp for myself, and there would be times when I would lay down on the deck of that skateboard ramp and living in rural America, there wasn't a lot of street lights and things like that to obscure my view of the sky. And spent a lot of time laying, just looking up at the stars in the moon and whatnot, and always feeling that sensation of sort of being held to the earth. Mark: Hmm. James: Like at any moment I could fall off of it Yucca: Hmm mm. James: into the, you know, the sky, you know, up into the, that vastness, because what is up Mark: Mm-hmm. James: that's arbitrary you know, it's in relation to where, you know, to where the ground is. That's up. Mark: Yeah. James: But in the, in the schema things, there is no up. There's no down. It just, we have to put these sort of descriptions on things to help us make sense because of how limited we are in, in our, in our perception. But I think going back to yet another thing that drew me to a, the o paganism is that whole idea of like, that's, I'm, I'm part of all of that. That's, that, that craziness, that just overwhelming levels of complexity. And like we talked you know, yesterday, mark, about the human brain and how, how little we really know about how it operates. This chunk of fat and water and whatnot that sits inside, you know, this bone on the top of our head or our bodies. Excuse me. Throat thing happening. The, the overwhelming, like, I don't know the awe that sets in Yucca: Mm-hmm. Mark: Mm-hmm. James: the, you just, there are times when it just takes my breath away. And it's the appreciation of that and knowing that every other person who's part of the, you know, not just part of our community, but every other person in the entire world is also part of that. Mark: Mm-hmm. James: And if there's anything that connects us, that's, it's that, you know, we're all part of this sort of greater mechanism. I don't know that like, I guess you could call it an organism if you wanted. Yucca: Mm-hmm. James: You know, I guess it all depends on per. , but we're all tiny, tiny, tiny little pieces of this huge thing that operates in a relatively specific manner. Mark: Mm. James: even though it seems like, you know, at times all of the stuff is so random and whatnot. That's sort of the point, is that that's how it works, is that there's no sort of predetermined path. No one has laid it all out, you know, and mapped everything out. Like what's the point of that? You know? Excuse me, my throat. So Yucca: Yeah. Well, I'll, Yeah. James: having me on.  Yucca: Yeah. So thank you James. This has been, This has been amazing. Mark: It has, it's the, I mean, we've wandered into all these really essential subject matters about, about our path and about our community, and it's just been a really great conversation. Thank you. James: Yeah, thank you for, for tolerating my, my ramblings.  Yucca: Well, thank you for sharing them with us. We really appreciate it. Oh, James: my pleasure. Mark: And we'll see you all next week. Everybody. Have a great week.    .

About JamesJames has been part of AWS for over 15 years. During that time he's led software engineering for Amazon EC2 and more recently leads the AWS Commerce Platform group that runs some of the largest systems in the world, handling volumes of data and request rates that would make your eyes water. And AWS customers trust us to be right all the time so there's no room for error.Links Referenced:Email: jamesg@amazon.comTranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: This episode is sponsored in part by our friends at Vultr. 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My thanks to them for sponsoring this ridiculous podcast.Corey: Finding skilled DevOps engineers is a pain in the neck! And if you need to deploy a secure and compliant application to AWS, forgettaboutit! But that's where DuploCloud can help. Their comprehensive no-code/low-code software platform guarantees a secure and compliant infrastructure in as little as two weeks, while automating the full DevSecOps lifestyle. Get started with DevOps-as-a-Service from DuploCloud so that your cloud configurations are done right the first time. Tell them I sent you and your first two months are free. To learn more visit: snark.cloud/duplo. Thats's snark.cloud/D-U-P-L-O-C-L-O-U-D. Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. And I've been angling to get someone from a particular department at AWS on this show for nearly its entire run. If you were to find yourself in an Amazon building and wander through the various dungeons and boiler rooms and subterranean basements—I presume; I haven't seen nearly as many of you inside of those buildings as people might think—you pass interesting departments labeled things like ‘Spline Reticulation,' or whatnot. And then you come to a very particular group called Commerce Platform.Now, I'm not generally one to tell other people's stories for them. My guest today is James Greenfield, the VP of Commerce Platform at AWS. James, thank you for joining me and suffering the slings and arrows I will no doubt be hurling at you.James: Thanks for having me. I'm looking forward to it.Corey: So, let's start at the very beginning—because I guarantee you, you're going to do a better job of giving the chapter and verse answer than I would from a background mired deeply in snark—what is Commerce Platform? It sounds almost like it's the retail website that sells socks, books, and underpants.James: So, Commerce Platform actually spans a bunch of different things. And so, I'm going to try not to bore you with a laundry list of all of the things that we do—it's a much longer list than most people assume even internal to AWS—at its core, Commerce Platform owns all of the infrastructure and processes and software that takes the fact that you've been running an EC2 instance, or you're storing an object in S3 for some period of time, and turns it into a number at the end of the month. That is what you asked for that service and then proceeds to try to give you as many ways to pay us as easily as possible. There are a few other bits in there that are maybe less obvious. One is we're also responsible for protecting the platform and our customers from fraudulent activity. And then we're also responsible for helping collect all of the data that we need for internal reporting to support some of the back-ends services that a business needs to do things like revenue recognition and general financial reporting.Corey: One of the interesting aspects about the billing system is just how deeply it permeates everything that happens within AWS. I frequently say that when it comes to cloud, cost and architecture are foundationally and fundamentally the same exact thing. If your entire service goes down, a few interesting things happen. One, I don't believe a single customer is going to complain other than maybe a few accountants here and there because the books aren't reconciling, but also you've removed a whole bunch of constraints around why things are the way that they are. Like, what is the most efficient way to run this workload?Well, if all the computers suddenly become free, I don't really care about efficiency, so much is, “Oh, hey. There's a fly, what do I have as a flyswatter? That's right, I'm going to drop a building on it.” And those constraints breed almost everything. I've said, for example, that S3 has infinite storage because it does.They can add drives faster than we're able to fill them—at least historically; they added some more replication services—but they're going to be able to buy hard drives faster than the rest of us are going to be able to stretch our budgets. If that constraint of the budget falls away, all bets are really off, and more or less, we're talking about the destruction of the cloud as a viable business entity. No pressure or anything.James: [laugh].Corey: You're also a recent transplant into AWS billing as a whole, Commerce Platform in general. You spent 15 years at the company, the vast majority of that over an EC2. So, either it was you've been exiled to a basically digital Siberia or it was one of those, “Okay, keeping all the EC2 servers up, this is easy. I don't see what people stress about.” And they say, “Oh, ho ho, try this instead.” How did you find yourself migrating over to the Commerce Platform?James: That's actually one I've had a lot from folks that I've worked with. You're right, I spent the first 15 or so years of my career at AWS in EC2, responsible for various things over there. And when the leadership role in Commerce Platform opened up, the timing was fortuitous, and part of it, I was in the process of relocating my family. We moved to Vancouver in the middle of last year. And we had an opening in the role and started talking about, potentially, me stepping into that role.The reason that I took it—there's a few reasons, but the primary reason is that if I look back over my career, I've kind of naturally gravitated towards owning things where people only really remember that they exist when they're not working. And for some reason, you know, I enjoy the opportunity to try to keep those kinds of services ticking over to the point where people don't notice them. And so, Commerce Platform lands squarely in that space. I've always been attracted to opportunities to have an impact, and it's hard to imagine having much more of an impact than in the Commerce Platform space. It underpins everything, as you said earlier.Every single one of our customers depends on the service, whether they think about it or realize it. Every single service that we offer to customers depends on us. And so, that really is the sort of nexus within AWS. And I'm a platform guy, I've always been a platform guy. I like the force multiplier nature of platforms, and so Commerce Platform, you know, as I kind of thought through all of those elements, really was a great opportunity to step in.And I think there's something to be said for, I've been a customer of Commerce Platform internally for a long time. And so, a chance to cross over and be on the other side of that was something that I didn't want to pass up. And so, you know, I'm digging in, and learning quickly, ramping up. By no means an expert, very dependent on a very smart, talented, committed group of people within the team. That's kind of the long and short of how and why.Corey: Let's say that I am taking on the role of an AWS product team, for the sake of argument. I know, keep the cringe down for a second, as far as oh, God, the wince is just inevitable when the idea of me working there ever comes up to anyone. But I have an idea for a service—obviously, it runs containers, and maybe it does some other things as well—going from idea to six-pager to MVP to barely better than MVP day-one launch, and at some point, various things happen to that service. It gets staff with a team, objectives and a roadmap get built, a P&L and budget, and a pricing model and the rest. One the last thing that happens, apparently, is someone picks the worst name off of a list of candidates, slaps it on the product, and ships it off there.At what point does the billing system and figuring out the pricing dimensions for a given service tend to factor in? Is that a last-minute story? Is that almost from the beginning? Where along that journey does, “Oh, by the way, we're building this thing. Maybe we should figure out, I don't know, how to make money from it.” Factor into the conversation?James: There are two parts to that answer. Pretty early on as we're trying to define what that service is going to look like, we're already typically thinking about what are the dimensions that we might charge along. The actual pricing discussions typically happen fairly late, but identifying those dimensions and, sort of, the right way to present it to customers happens pretty early on. The thing that doesn't happen early enough is actually pulling the Commerce Platform team in. but it is something that we're going to work this year to try to get a little bit more in front of.Corey: Have you found historically that you have a pretty good idea of how a service is going to be priced, everything is mostly thought through, a service goes to either private preview or you're discussing about a launch, and then more or less, I don't know, someone like me crops up with a, “Hey, yeah, let's disregard 90% of what the service does because I see a way to misuse the remaining 10% of it as a database.” And you run some mental math and realize, “Huh. We're suddenly giving, like, eight petabytes of storage per customer away for free. Maybe we should guard against that because otherwise, it's rife with misuse.” It used to be that I could find interesting ways to sneak through the cracks of various services—usually in pursuit of a laugh—those are getting relatively hard to come by and invariably a lot more trouble than they're worth. Is that just better comprehensive diligence internally, is that learning from customers, or am I just bad at this?James: No, I mean, what you're describing is almost a variant of the Defender's Dilemma. They are way more ways to abuse something than you can imagine, and so defending against that is pretty challenging. And it's important because, you know, if you turn the economics of something upside down, then it just becomes harder for us to offer it to customers who want to use it legitimately. I would say 90% of that improvement is us learning. We make plenty of mistakes, but I think, you know, one of the things that I've always been impressed by over my time here is how intentional we are trying to learn from those mistakes.And so, I think that's what you're seeing there. And then we try very hard to listen to customers, talk to folks like you, because one of the best ways to tackle anything it smells of the Defender's Dilemma is to harness that collective creativity of a large number of smart people because you really are trying to cover as much ground as possible.Corey: There was a fun joke going around a while back of what is the most expensive environment you can get running on a free tier account before someone from AWS steps in, and I think I got it to something like half a billion dollars in the first month. Now, I haven't actually tested this for reasons that mostly have to do with being relatively poor compared to, you know, being able to buy Guam. And understanding as well the fraud protections built into something like AWS are largely built around defending against getting service usage for free that in some way, shape or form, benefits the attacker. The easy example of that would be mining cryptocurrency, which is just super-economic as long as you use someone else's AWS account to do it. Whereas a lot of my vectors are, “Yeah, ignore all of that. How do I just make the bill artificially high? What can I do to misuse data transfer? And passing a single gigabyte through, how much can I make that per gigabyte cost be?” And, “Oh, circular replication and the Lambda invokes itself pattern,” and basically every bad architectural decision you can possibly make only this time, it's intentional.And that shines some really interesting light on it. And I have to give credit where due, a lot of that didn't come from just me sitting here being sick and twisted nearly so much as it did having seen examples of that type of misconfiguration—by mistake—in a variety of customer accounts, most confidently my own because it turns out that the way I learn things is by screwing them up first.James: Yeah, you've touched on a couple of different things in there. So, you know, maybe the first one is, I typically try to draw a line between fraud and abuse. And fraud is essentially trying to spend somebody else's money to get something for free. And we spent a lot of time trying to shut that down, and we're getting really good at catching it. And then abuse is either intentional or unintentional. There's intentional abuse: You find a chink in our armor and you try to take advantage of it.But much more commonly is unintentional abuse. It's not really abuse, you know. Abuse has very negative connotations, but it's unintentionally setting something up so that you run up a much larger bill than you intended. And we have a number of different internal efforts, and we're working on a bunch more this year, to try to catch those early on because one of my personal goals is to minimize the frequency with which we surprise customers. And the least favorite kind of surprise for customers is a [laugh] large bill. And so, what you're talking about there is, in a sufficiently complex system, there's always going to be weaknesses and ways to get yourself tied up in knots.We're trying both at the service team level, but also within my teams to try to find ways to make it as hard as possible to accidentally do that to yourself and then catch when you do so that we can stop it. And even more on the intentional abuse side of things, if somebody's found a way to do something that's problematic for our services, then you know, that's pretty much on us. But we will often reach out and engage with whoever's doing and try to understand what they're trying to do and why. Because often, somebody's trying to do something legitimate, they've got a problem to solve, they found a creative way to solve it, and it may put strain on the service because it's just not something we designed for, and so we'll try to work with them to use that to feed into either new services, or find a better place for that workload, or just bolster what they're using. And maybe that's something that eventually becomes a fully-fledged feature that we offer the customers. We're always open to learning from our customers. They have found far more creative ways to get really cool things done with our services than we've ever imagined. And that's true today.Corey: I mean, most of my service criticisms come down to the fact that you have more-or-less built a very late model, high performing iPad, and I'm out there complaining about, “What a shitty hammer this thing is, it barely works at all, and then it breaks in my hand. What gives?” I would also challenge something you said a minute ago that the worst day for some customers is to get a giant surprise bill, but [unintelligible 00:13:53] to that is, yeah, but, on some level, that kind of only money; you do have levers on your side to fix those issues. A worse scenario is you have a customer that exhibits fraud-like behavior, they're suddenly using far more resources than they ever did before, so let's go ahead and turn them off or throttle them significantly, and you call them up to tell them you saved them some money, and, “Our Superbowl ad ran. What exactly do you think you're doing?” Because they don't get a second bite at that kind of Apple.So, there's a parallel on both sides of this. And those are just two examples. The world is full of nuances, and at the scale that you folks operate at. The one-in-a-million events happen multiple times a second, the corner cases become common cases, and I'm surprised—to be direct—how little I see you folks dropping the ball.James: Credit to all of the teams. I think our secret sauce, if anything, really does come down to our people. Like, a huge amount of what you see as hopefully relatively consistent, good execution comes down to people behind the scenes making sure. You know, like, some of it is software that we built and made sure it's robust and tested to scale, but there's always an element of people behind the scenes, when you hit those edge cases or something doesn't quite go the way that you planned, making sure that things run smoothly. And that, if anything, is something that I'm immensely proud of and is kind of amazing to watch from the inside.Corey: And, on some level, it's the small errors that are the bigger concern than the big ones. Back a couple years ago, when they announced GP3 volumes at re:Invent, well, great, well spin up a test volume and kick the tires on it for an hour. And I think it was 80 or 100 gigs or whatnot, and the next day in the bill, it showed up as about $5,000. And it was, “Okay, that's not great. Not great at all.” And it turned out that it was a mispricing error by I think a factor of a million.And okay, at least it stood out. But there are scenarios where we were prepared to pay it because, oops, you got one over on us. Good job. That's never been the mindset I've gotten about AWS's philosophy for pricing. The better example that I love because no one took it seriously, was a few years before that when there was a LightSail bug in the billing system, and it made the papers because people suddenly found that for their LightSail instance, they were getting predicted bills of $4 billion.And the way I see it, you really only had to make that work once and then you've made your numbers for the year, so why not? Someone's going to pay for it, probably. But that was such out-of-the-world numbers that no one saw that and ever thought it was anything other than a bug. It's the small pernicious things that creep in. Because the billing system is vast; I had no idea when I started working with AWS bills just how complicated it really was.James: Yeah, I remember both of those, and there's something in there that you touched on that I think is really important. That's something that I realized pretty early on at Amazon, and it's why customer obsession is our flagship leadership principle. It's not because it's love and butterflies and unicorns; customer obsession is key to us because that's how you build a long-term sustainable business is your customers depend on you. And it drives how we think about everything that we do. And in the billing space, small errors, even if there are small errors in the customer's favor, slowly erode that trust.So, we take any kind of error really seriously and we try to figure out how we can make sure that it doesn't happen again. We don't always get that right. As you said, we've built an enormous, super-complex business to growing really quickly, and really quick growth like that always acts as kind of a multiplier on top of complexity. And on the pricing points, we're managing millions of pricing points at the moment.And our tools that we use internally, there's always room for improvement. It's a huge area of focus for us. We're in the beginning of looking at applying things like formal methods to make sure that we can make very hard guarantees about the correctness of some of those. But at the end of the day, people are plugging numbers in and you need as many belts and braces as possible to make sure that you don't make mistakes there.Corey: One of the things that struck me by surprise when I first started getting deep into this space was the fact that the finalized bill was—what does it mean to have this be ‘finalized?' It can hit the Cost and Usage Report in an S3 bucket and it can change retroactively after the month closed periodically. And that's when I started to have an inkling of a few things: Not just the sheer scale and complexity inherent to something like the billing system that touches everything, but the sheer data retention stories where you clearly have to be able to go back and reconstruct a bill from the raw data years ago. And I know what the output of all of those things are in the form of Cost and Usage Reports and the billing data from our client accounts—which is the single largest expense in all of our AWS accounts; we spent thousands and thousands and thousands of dollars a year just on storing all of that data, let alone the processing piece of it—the sheer scale is staggering. I used to wonder why does it take you a day to record me using something to it's showing up in the bill? And the more I learned the more it became a how can you do that in only a day?James: Yes, the scale is actually mind-boggling. I'm pretty sure that the core of our billing system is—I'm reasonably confident it's the largest or one of the largest data processing systems on the planet. I remember pretty early on when I joined Commerce Platform and was still starting to wrap my head around some of these things, Googling the definition of quadrillion because we measured the number of metering events, which is how we record usage in services, on a daily basis in the quadrillions, which is a billion billions. So, it's just an absolutely staggering number. And so, the scale here is just out of this world.That's saying something because it's not like other services across AWS are small in their own right. But I'm still reasonably sure that being one of a handful of services that is kind of at the nexus of AWS and kind of deals with the aggregate of AWS's scale, this is probably one of the biggest systems on the planet. And that shows up in all sorts of places. You start with that input, just the sheer volume of metering events, but that has to produce as an output pretty fine-grained line item detailed information, which ultimately rolls up into the total that a customer will see in their bill. But we have a number of different systems further down the pipeline that try to do things like analyze your usage, make sensible recommendations, look for opportunities to improve your efficiency, give you the ability to slice and dice your data and allocate it out to different parts of your business in whatever way it makes sense for your business. And so, those systems have to deal with anywhere from millions to billions to recently, we were talking about trillions of data points themselves. And so, I was tangentially aware of some of the scale of this, but being in the thick of it having joined the team really just does underscore just how vast the systems are.Corey: I think it's, on some level, more than a little unfortunate that that story isn't being more widely told, more frequently. Because when Commerce Platform has job postings that are available on the website, you read it and it's very vague. It doesn't tend to give hard numbers about a lot of these things, and people who don't play in these waters can easily be forgiven for thinking the way that you folks do your job is you fire up one of those 24 terabyte of RAM instances that—you know, those monstrous things that you folks offer—and what do you do next? Well, Microsoft Excel. We have a special high memory version that we've done some horse-trading with our friends over at Microsoft for.It's, yeah, you're several steps beyond that, at this point. It's a challenging problem that every one of your customers has to deal with, on some level, as well. But we're only dealing with the output of a lot of the processing that you folks are doing first.James: You're exactly right. And a big focus for some of my teams is figuring out how to help customers deal with that output. Because even if you're talking about couple of orders of magnitude reduction, you're still talking about very large numbers there. So, to help customers make sense of that, we have a range of tools that exist, we're investing in.There's another dimension of complexity in the space that I think is one that's also very easy to miss. And I think of it as arbitrary complexity. And it's arbitrary because some of the rules that we have to box within here are driven by legislative changes. As you operate more and more countries around the world, you want to make sure that we're tax compliant, that we help our customers be tax compliant. Those rules evolve pretty rapidly, and Country A may sit next to Country B, but that doesn't mean that they're talking to one another. They've all got their own ideas. They're trying to accomplish r—00:22:47Corey: A company is picking up and relocating from India to Germany. How do we—James: Exactly.Corey: —change that on the AWS side and the rest? And it's, “Hoo boy, have you considered burning it all down and filing an insurance claim to start over?” And, like, there's a lot of complexity buried underneath that that just doesn't rise to the notice of 99% of your customers.James: And the fact that it doesn't rise to the notice is something that we strive for. Like, these shouldn't be things that customers have to worry about. Because it really is about clearing away the things that, as far as possible, you don't want to have to spend time thinking about so that you can focus on the thing that your business does that differentiates you. It's getting rid of that undifferentiated heavy lifting. And there's a ton of that in this space, and if you're blissfully unaware of it, then hopefully that means that we're doing our job.Corey: What I'm, I think, the most surprised about, and I have been for a long time. And please don't take this as an insult to various other folks—engineers, the rest, not just in other parts of AWS but throughout the other industry—but talking to the people who work within Commerce Platform has always been just a fantastic experience. The caliber of people that you have managed to attract and largely retain—we don't own people, they do matriculate out eventually—but the caliber of people that you've retained on your teams has just been out of this world. And at first, I wondered, why are these awesome people working on something as boring and prosaic as billing? And then I started learning a little bit more as I went, and, “Oh, wow. How did they learn all the stuff that they have to hold in their head in tension at once to be able to build things like this?” It's incredibly inspiring just watching the caliber of the people that you've been able to bring in.James: I've been really, really excited joining this team, as I've gotten other folks on the team because there's some super-smart people here. But what's really jumped out to me is how committed the team is. This is, for the most part, a team that has been in the space for many years. Many of them have—we talk about boomerangs, folks who live AWS, go spend some time somewhere else and come back and there's a surprisingly high proportion of folks in Commerce Platform who have spent time somewhere else and then come back because they enjoy the space, they find that challenging, folks are attracted to the ability to have an impact because it is so foundational. But yeah, there's a super-committed core to this team. And I really enjoy working with teams where you've got that because then you really can take the long view and build something great. And I think we have tons of opportunities to do that here.Corey: It sounds ridiculous, but I've reached out to team members before to explain two-cent variances in my bill, and never once have I been confronted with a, “It's two cents. What do you care?” They understand the requirement that these things be accurate, not just, “Eh, take our word for it.” And also, frankly, they understand that two cents on a $20 bill looks a little different on a $20 million bill. So yeah, let us figure out if this is systemic or something I have managed to break.It turns out the Cost and Usage Report processing systems don't love it when there's a cost allocation tag whose name contains an emoji. Who knew? It's the little things in life that just have this fun way of breaking when you least expect it.James: They're also a surprisingly interesting problem. So like, it turns out something as simple as rounding numbers consistently across a distributed system at this scale, is a non-trivial problem. And if you don't, then you do get small seventh or eighth decimal place differences that add up to something that then shows up as a two-cent difference somewhere. And so, there's some really, really interesting problems in the space. And I think the team often takes these kinds of things as a personal challenge. It should be correct, and it's not, so we should go make sure it is correct. The interesting problems abound here, but at the end of the day, it's the kind of thing that any engineering team wants to go and make sure it's correct because they know that it can be.Corey: This episode is sponsored in parts by our friend EnterpriseDB. EnterpriseDB has been powering enterprise applications with PostgreSQL for 15 years. And now EnterpriseDB has you covered wherever you deploy PostgreSQL on premises, private cloud, and they just announced a fully managed service on AWS and Azure called BigAnimal, all one word. Don't leave managing your database to your cloud vendor because they're too busy launching another half dozen manage databases to focus on any one of them that they didn't build themselves. Instead, work with the experts over at EnterpriseDB. They can save you time and money, they can even help you migrate legacy applications, including Oracle, to the cloud.To learn more, try BigAnimal for free. Go to biganimal.com/snark, and tell them Corey sent you.Corey: On the one hand, I love people who just round and estimate—we all do that, let's be clear; I sit there and I back-of-the-envelope everything first. But then I look at some of your pricing pages and I count the digits after the zeros. Like, you're talking about trillionths of a dollar on some of your pricing points. And you add it up in the course of a given hour and it's like, oh, it's $250 a month, most months. And it's you work backwards to way more decimal places of precision than is required, sometimes.I'm also a personal fan of the bill that counts, for example, number of Route 53 zones. Great. And it counts them to four decimal places of precision. Like, I don't even know what half of it Route 53 zone is at this point, let alone something to, like, ah the 1,000th of the zone is going to cause this. It's all an artifact of what the underlying systems are.Can you by any chance shed a little light on what the evolution of those systems has been over a period of time? I have to imagine that anything you built in the early days, 16 years ago or so from the time of this recording when S3 launched to general availability, you probably didn't have to worry about this scope and scale of what you do, now. In fact, I suspect if you tried to funnel this volume through S3 back then, the whole thing would have collapsed under its own weight. What's evolved over the time that you had the billing system there? Because changes come slowly to your environment. And frankly, I appreciate that as a customer. I don't like surprising people in finance.James: Yeah, you're totally right. So, I joined the EC2 team as an engineer myself, some 16 years ago, and the very first thing that I did was our billing integration. And so, my relationship with the Commerce Platform organization—what was the billing team way back when—it goes back over my entire career at AWS. And at the time, the billing team was similar, you know, [unintelligible 00:28:34] eight people. And that was everything. There was none of the scale and complexity; it was all one system.And much like many of our biggest, oldest services—EC2 is very similar, S3 is as well—there's been significant growth over the last decade-and-a-half. A lot of that growth has been rapid, and rapid growth presents its own challenges. And you live with decisions that you make early on that you didn't realize were significant decisions that have pretty deep implications 15 years later. We're still working through some of those; they present their own challenges. Evolving an existing system to keep up with the growth of business and a customer base that's as varied and complex as ours is always challenging.And also harder but I also think more fun than a clean sheet redo at this point. Like, that's a great thought exercise for, well, if we got to do this again today, what would we do now that we've learned so much over the last 15 years? But there's this—I find it personally fascinating challenge with evolving a live system where it's like, “No, no, like, things exist, so how do we go from there to where we want to be next?”Corey: Turn the billing system off for 18 months, rebuild—James: Yeah. [laugh].Corey: The whole thing from first principles. Light it up. I'm sure you'd have a much better billing system, and also not a company left anymore.James: [laugh]. Exactly, exactly. I've always enjoyed that challenge. You know, even prior to AWS, my previous careers have involved similar kinds of constraints where you've got a live system, or you've got an existing—in the one case, it was an existing SDK that was deployed to tens of thousands of customers around the world, and so backwards compatibility was something that I spent the first five years of my career thinking about it way more detail than I think most people do. And it's a very similar mindset. And I enjoy that challenge. I enjoy that: How do I evolve from here to there without breaking customers along the way?And that's something that we take pretty seriously across AWS. I think SimpleDB is the poster child for we never turn things off. But that applies equally to the services that are maybe less visible to customers, and billing is definitely one of them. Like, we don't get to switch stuff off. We don't get to throw things away and start again. It's this constant state of evolution.Corey: So, let's say that I were to find a way to route data through a series of two Managed NAT Gateways and then egress to internet, and the sheer density of the expense of that traffic tears a hole in the fabric of space-time, it goes back 15 years ago, and you can make a single change to how the billing system was built. What would it be? What pisses you off the most about the current constraints that you have to work within or around?James: I think one of the biggest challenges we've got, actually, is the concept of an account. Because an account means half-a-dozen different things. And way back, when it seemed like a great idea, you just needed an account; an account was your customer, and it was the same thing as the boundary that you put all your resources inside. And of course, it's the same thing that you're going to roll all of your usage up and issue a bill against. And that has been one of the areas that's seen the most evolution and probably still has a pretty long way to go.And what's interesting about that is, that's probably something we could have seen coming because we watched the retail business go through, kind of, the same evolution because they started with, well, a customer is a customer is a customer and had to evolve to support the concept of sellers and partners. And then users are different than customers, and you want to log in and that's a different thing. So, we saw that kind of bifurcation of a single entity into a wide range of different related but separate entities, and I think if we'd looked at that, you know, thought out 15 years, then yeah, we could probably have learned something from that. But at the same time, when AWS first kicked off, we had wild ambitions for it, but there was no guarantee that it was going to be the monster that it is today. So, I'm always a little bit reluctant to—like, it's a great thought exercise, but it's easy to end up second-guessing a pretty successful 15 years, so I'm always a little bit careful to walk that line. But I think account is one of the things that we would probably go back and think about a little bit more.Corey: I want to be very clear with this next question that it is intentionally setting up a question I suspect you get a lot. It does not mirror my own thinking on the matter even slightly, but I get a version of it myself all the time. “AWS bills, that sounds boring as hell. Why would you choose to work on such a thing?” Now, I have a laundry list of answers to that aren't nearly as interesting as I suspect yours are going to be. What makes working on this problem space interesting to you?James: There's a bunch of different things. So, first and foremost, the scale that we're talking about here is absolutely mind-blowing. And for any engineer who wants to get stuck into problems that deal with mind-blowingly large volumes of data, incredibly rich dimensions, problems where, honestly, applying techniques like statistical reasoning or machine learning is really the only way to chip away at it, that exists in spades in the space. It's not always immediately obvious, and I think from the outside, it's easy to assume this is actually pretty simple. So, the scale is a huge part of that.Corey: “Oh, petabytes. How quaint.”James: [laugh]. Exactly. Exactly I mean, it's mind-blowing every time I see some of the numbers in various parts of the Commerce Platform space. I talked about quadrillions earlier. Trillions is a pretty common unit of measure.The complexity that I talked about earlier, that's a result of external environments is another one. So, imposed by external entities, whether it's a government or a tax authority somewhere, or a business requirement from customers, or ourselves. I enjoy those as well. Those are different kinds of challenge. They really keep you on your toes.I enjoy thinking of them as an engineering problem, like, how do I get in front of them? And that's something we spend a lot of time doing in Commerce Platform. And when we get it right, customers are just unaware of it. And then the third one is, I personally am always attracted to the opportunity to have an impact. And this is a space where we get to hopefully positively impact every single customer every day. And that, to me is pretty fulfilling.Those are kind of the three standout reasons why I think this is actually a super-exciting space. And I think it's often an underestimated space. I think once folks join the team and sort of start to dig in, I've never heard anybody after they've joined, telling me that what they're doing is boring. Challenging, yes. Is frustrating, sometimes. Hard, absolutely, but boring never comes up.Corey: There's almost no service, other than IAM, that I can think of that impacts every customer simultaneously. And it's easy for me to sit in the cheap seats and say, “Oh, you should change this,” or, “You should change that.” But every change you have is so massive in scale that it's going to break a whole bunch of companies' automations around the bill processing in different ways. You have an entire category of user persona who is used to clicking a certain button in this certain place in the console to generate the report every month, and if that button moves or changes color, or has a different font, suddenly that renders their documentation invalid, and they're scrambling because it's not their core competency—nor should it be—and every change you make is so constricted, just based upon all the different concerns that you've got to be juggling with. How do you get anything done at all? I find that to be one of the most impressive aspects about your organization, bar none.James: Yeah, I'm not going to lie and say that it isn't a challenge, but a lot of it comes down to the talent that we have on the team. We have a super-motivated, super-smart, super-engaged team, and we spend a lot of time figuring out how to make sure that we can keep moving, keep up with the business, keep up with a world that's getting more complicated [laugh] with every passing day. So, you've kind of hit on one of the core challenges there, which is, how do we keep up with all of those different dimensions that are demanding an increasing amount of engineering and new support and new investment from us, while we keep those customers happy?And I think you touched on something else a little bit indirectly there, which is, a lot of our customers are actually pretty technical across AWS. The customers that Commerce Platform supports, are often the least technical of our customers, and so often need the most help understanding why things are the way they are, where the constraints are.Corey: “A big bill from Amazon. How many books did you people buy last month?”—James: [laugh]. Exactly.Corey: —is still very much level of understanding in some cases. And it's not because they're dumb; far from it. It's just, imagine that some people view there as being more to life than understanding the nuances and intricacies of cloud computing. How dare they?James: Exactly. Who would have thought?Corey: So, as you look now over all of your domain, such as it is, what sucks the most? What are you looking to fix as far as impactful changes that the rest of the world might experience? Because I'm not going to accept one of those questions like, “Oh, yeah, on the back-end, we have this storage subsystem for a tertiary thing that just annoys me because it wakes us up once in a whi”—no, no, I want something customer-facing. What's the painful thing you're looking at fixing next?James: I don't like surprising customers. And free tier is, sort of, one of those buckets of surprises, but there are others. Another one that's pretty squarely in my sights is, whether we like it or not, customer accounts get compromised. Usually, it's a password got reused somewhere or was accidentally committed into a GitHub repository somewhere.And we have pretty established, pretty effective mechanisms for finding all of those, we'll scan for passwords and credentials, and alert customers to those, and help them correct that pretty quickly. We're also actually pretty good at detecting when an account does start to do something that suggests that it's been compromised. Usually, the first thing that a compromised account starts to do is cryptocurrency mining. We're pretty quick to catch those; we catch those within a matter of hours, much faster most days.What we haven't really cracked and where I'm focused at the moment is getting back to the customer in a way that's effective. And by that I mean specifically, we detect an account compromised super-quickly, we reach out automatically. And so, you know, a customer has got some kind of contact from us usually within a couple of hours. It's not having the effect that we need it to. Customers are still being surprised a month later by a large bill. And so, we're digging into how much of that is because they never saw the contact, they didn't know what to do with the contact.Corey: It got buried with all the other, “Hey, we saw you spun up an S3 bucket. Have you heard of what S3 is?” Again, that's all valuable, but you have 300-some-odd services. If you start doing that for every service, you're going to hit mail sending limits for Gmail.James: Exactly. It's not just enough that we detect those and notify customers; we have to reduce the size of the surprise. It's one thing to spend 100 bucks a month on average, and then suddenly find that your spend has jumped $250 because you reused the password somewhere and somebody got ahold of it and it's cryptocurrency-mining your account. It's a whole different ballgame to spend 100 bucks a month and then at the end of the month discover that your bill is suddenly $2,000 or $20,000. And so, that's something that I really wanted to make some progress on this year. Corey: I've really enjoyed our conversation. If people want to learn more about how you view these things, how you're approaching some of these problems, or potentially are just the right kind of warped to consider joining up, where's the best place for them to go?James: They should drop me an email at jamesg@amazon.com. That is the most direct way to get hold of me, and I promise I will get back to you. I try to stay on top of my email as much as possible. But that will come straight to me, and I'm always happy to talk to folks about the space, talk to folks about opportunities in this team, opportunities across AWS, or just hear what's not working, make sure that it's something that we're aware of and looking at.Corey: Throughout Amazon, but particularly within Commerce Platform, I've always appreciated the response of, whenever I report something, no matter how ridiculous it is—and I assure you there's an awful lot of ridiculousness in my bug reports—the response has always been the same: “Tell me more. Help me understand what it is you're trying to achieve—even if it is ridiculous—so we can look at this and see what is actually going on.” Every Amazonian team has been great about that or you're not at Amazon very long, but you folks have taken that to an otherworldly level. I just want to thank you for doing that.James: I appreciate you for calling that out. We try, you know, we really do. We take listening to our customers very seriously because, at the end of the day, that's what makes us better, and that's how we make sure we're in it for the long haul.Corey: Thanks once again for being so generous with your time. I really appreciate it.James: Yeah, thanks for having me on. I've enjoyed it.Corey: James Greenfield, VP of Commerce Platform at AWS. I'm Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice along with an angry comment—possibly on YouTube as well—about how you aren't actually giving this five-stars at all; you have taken three trillions of a star off of the rating.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.Announcer: This has been a HumblePod production. Stay humble.

Lying next to the River Avon just inside the Cotswolds, Avoncliff Wood is no ordinary wood. The site hosts one of the biggest trials in the UK to find biodegradable alternatives to plastic tree guards. As if that wasn't enough, it's also a living laboratory, revealing how ash dieback will really affect nature. Site manager Joe gives us a special behind the scenes tour to learn more. We also meet volunteer wardens Kay and James, and catch up with TV presenter Alice Beer who lives nearby. Don't forget to rate us and subscribe! Learn more about the Woodland Trust at woodlandtrust.org.uk Transcript Voiceover: You are listening to Woodland Walks, a podcast for the Woodland Trust presented by Adam Shaw. We protect and plant trees for people to enjoy, to fight climate change and to help wildlife thrive. Adam: Well, I've changed trains at Bath Spa for what appears to be a very small train which is taking me to Avoncliffe. Now, in fact, the train conductor has told me the platform is so short when I get there only one door is going to open. He came through asking “Is anybody getting off?” and I'm the only one, the only one. Well, I have to tell you, the station here is straight out of a 1930s style Agatha Christie film, that's what it screams to me. Beautiful signs, beautiful flowers, the River Avon just almost next door to the station, a great looking pub and down at the end of the platform one single man who I'm assuming is Joe Middleton with the Woodland Trust, site manager here and the guy who's going to show me around. Joe: So, welcome to Avoncliffe Wood in the Avon Valley just in between Bath and Bradford-on-Avon. We just crossed over the famous Avoncliffe Aqueduct and just followed the River Avon until we hit even Avoncliffe Wood which carpets the side of the valley across this area of the Cotswolds AONB, Area of Outstanding Natural Beauty, right at the southern end of the Cotswold AONB. Adam: There's very little woodlands right here, so what's going on in this first field? Joe: So, we're just at the edge of our woodland creation. So we bought 20 hectares, about 40 football pitches, of ancient woodland – untouched for generations – and to buffer that, to try and expand carbon storage and fight climate change and the ecological decline we're seeing we actually bought another 10 hectares, another 20 football pitches, worth of agricultural fields essentially and meadows which were very intensively grazed and we've planted that up with over 5,000 trees to try and get the next generation of trees in here. Adam: Wow, okay so shall we go through, have a look? Thank you. Joe: So just next to us as you can hear the birds singing away, there are blackbirds, robins and blackcaps in there. There's one acre, here, just on the right-hand side, which was actually planted up 25 years ago by a neighbour. So, the very small one acre square now 25 years later is teeming with you know 30-40 foot birch trees, willows, hazels and hawthorns, full of cherry blossom and hawthorn blossom, and birds nesting, tweeting, and insects buzzing all around us! It's quite rare these days! So hopefully we think everything we planted up here, all 5,000 trees would look like that in 25 years. A proper young woodland. Adam: And you've clearly, I mean, they're not uniformly planted so there's a big patch in the middle which you've got nothing and they seem to be done in clumps, so why have you done it like that? Joe: Do you want to know what that patch in the middle is? That's a sledging lane. Right well so we carried out community consultation when we first bought the woodland. We asked all the locals, we said look there's this really lovely kind of big expanse of fields all around the wood, we want to buy it, we want it to, you know, fight climate change, we want to try and do our bit for wildlife. And they said whatever you do leave us a sledging lane because when it snows here this hill is perfect for tobogganing down. Adam: laughs you see I thought it was going to be for some really technical reason! You need to do that for a very specific reason, I didn't realise it was gonna be sledges. Joe: There are also wide rides, you know, big areas that people can walk through. We've created a really good path network in here as well in some areas and natural regeneration so there are areas unplanted and there are areas purely for tobogganing fun in the middle of snowy winters. Adam: And why not? It's very important. Now, the thing that we can see in this immediate field is a lot of tree guards and well I'm also standing by a little sign which says biodegradable tree shelter. I always call them tree guards, but this was called tree shelter. Now that is not by coincidence. The tree guards are a huge issue, aren't they? Joe: Yeah, I mean with governments pledging to plant millions if not globally billions of trees to fight climate, you know hold onto carbon, stop floods, we have to be able to do it without using oil-based plastics. For the last 35 years people have just, every tree that's gone in you know, not every one, but most trees that've gone in have been planted with a giant plastic tree guard which doesn't biodegrade, it litters, it causes microplastics, and people… Adam: And are they reusable those plastic guards? Joe: They are to a certain degree, they're not easy to recycle, there are some better recycling schemes now just starting. But actually, probably one in three are reusable. But a lot of places are too far to go and get them, people don't bother they get left and derelict and are expensive to go and collect every single one, especially when you're planting hundreds of thousands. So the biodegradable alternative is the absolute key. Find something that naturally, you know, biodegrades away back into the soil, doesn't harm anything, it doesn't use oil. Adam: Right, I'm just going to go up to… So, this is a biodegradable one? Joe: Exactly. Adam: It looks sort of yellowish and quite canvas-like but it's very it's very firm, it doesn't feel, I mean that feels a sturdy old thing this. Joe: Yeah so, we've got 5,000 trees we put in. We are using some old recycled plastic ones, so we've been given a few, but actually we've got 16 different types of biodegradable alternatives to plastic here. So, they range from cardboard, you know, made from paper or mulch to biodegradable plastics, which the jury is out on at the moment, to actually resins and oils from things like cashew nut shells and pine resin. We've got a train coming past us! Train noise Two and a half years ago, when we planted the 5,000 trees in all these biodegradable guards, we launched something called Big Climate Fightback, a big Woodland Trust campaign to bring people out to help plant trees and do their bit. And actually, we ended up with over 250 people arriving one Saturday – spades in hand – on the trains in all the train stations. And the people in Bath, and Bristol and Bradford-on-Avon must have thought “what on earth is going on?”, with over 250 people arriving with spades on the platforms. And they came in here, they planted trees en masse – school kids, families, local groups. Everyone came here to try and plant trees and with that we, you know, told people about the problem of plastics and we've basically now got one of the biggest sites in the UK for trialling an alternative to plastic – to try and protect these trees so they get to five, seven years to get to a good height where they're no longer susceptible to browsing by deer, by rabbits, by voles, which is the main reason the shelters and guards are here to protect them. Adam: And correct me if I'm wrong but there is a sort of school of thought saying well don't use any guards. I mean it's now sort of established practice that you've got to use a guard otherwise the tree won't survive, but there is this sort of vague thought we never used to use guards in the distant past, so why have we suddenly got obsessed with them? Joe: I mean deer numbers are higher than they've ever been, it's a huge amount of browsing by deer with no natural predators, so it's complicated, that is the simplest answer, but putting up a giant 6-foot fence is probably you know the other solution which is in a lot of cases, depending on size, it can be much more economic, more practical. Very small areas – probably not massive areas, but medium sized – deer fencing is probably the answer, but then you've still got rabbits and voles you've got to fence out. So, doing nothing, over-planting, natural regeneration – we've got an area if you look up to the edge of the woodland we've left the buffer zone of about 20-30 metres around lots of this woodland, all around it, with nothing, we've just fenced it off and we're just going to allow the woodland to expand – every one of those berries and those nuts and seeds that drops into the ground will hopefully just have a, you know, wild natural generation. Like Knepp with a huge rewilding – that hope of what happens there doesn't happen as easily here but can take a long time. Hopefully that will establish woodland itself, but it may take 50 years. At the moment we've got a climate emergency on us and amongst us, so we have to do something now so planting trees is a very good quick solution. Adam: A huge issue because if we are planting for ecological reasons what we don't want to do is every tree comes with its own polluting plastic. I mean that's not the future. So, the answer to that question may well lie in the thousands of experiments you're carrying out in this field we're standing in. Joe: Absolutely. Adam: Right, well I've stopped us walking. We better… I better get my steps in. So, let's carry on. Where are we heading to now? Joe: So, we're gonna go and find our two volunteer wardens in a minute. Adam: So, we've got two volunteers hard at work. I can see just up the hill a bit. Joe: So, this is James and Kay who are both our two volunteer wardens. They've been working now replacing broken, rotted, fallen biodegradable tree guards, replacing the trees as they die as well, and these two have been working hard to help keep an eye on them for the last few years for us. Adam: It's got them hard at work! Joe: They are incredibly hard at work. Hey guys how you doing? Kay and James: Alright? Hi! Hello. Adam: They do have you hard at work! So Kay and James, so first of all before we get to what you're actually doing, why have you been doing it? What's your interest? Why did you volunteer to do all of this? Kay: Well, you've been a volun… a member of the Woodland Trust for about 25 years. James: Well, it's about 35 years now. Kay: Since this is really on our doorstep, this is a perfect opportunity to get really involved with the Woodland Trust. Adam: James, I mean, you've been a Woodland Trust member for a very long time. And, ah the debate around trees has changed enormously. Hasn't it? James: It has, and I am glad that people have suddenly valued trees. I was in the military but, before that, I was out of Kent, out near Canterbury and my uncle was a farmer with orchards and basically from the earliest days I knew about the trees, the names of trees. The pollards at the end of the field as windbreaks, the various wetland trees down in the floodplains around the Romney Marsh area. But I already had a fascination for the massive oaks, the spectacular deciduous trees on the horizon I think made this this countryside look like it does, so British, and so English, with these gorgeous round shapes, compared to a lot of conifers you see in all the European places I've been to. Adam: Okay, talk me through a bit about what you're actually doing here – I mean, you know, hammer in hand I can see. Kay: Hammer in hand, we're replacing some of the tubes that haven't stood up to the wind and the rain. We found that circular rather than rectangular and… Adam: works, circular works… Kay: circular works, because otherwise if it's square they act as a flag, especially cardboard ones. When they get wet, they just disintegrate – as you can see there's lots of bare sticks around here, so yeah, we're going through and replacing them with circular ones. Adam: Fantastic, now I know that the local community were very involved with the Trust, sort of when the Trust took over and sort of designed this site. Tell me a bit about what the local community feel. Kay: That was a great day. We had two schools frog marched in, and yeah, with their teachers and staff and they planted the whole area, which was lovely – they were naming the trees as they were planting them. I know the whole village got involved with planting 5,000 trees over a progressive few weekends and subsequently James and I have been replanting the failures. Adam: And James I mean very clear how engaged you are with this sort of issue but to tell me about the feelings then of the local community and what they what they felt when Woodland Trust first came here and how involved others are apart from you two. James: So, I'm very pleased that people are actually accepting, on the whole, that their backyard has been filled with trees and shrubs which are growing up for their children's lifetime. Kay: We have had some objections to this, but they haven't given their reason why. I assume it's because it's used when we do get snow, which is very rare, it's the sledging field. The Woodland Trust have kindly left a gap for sledging but then they moan that the grass is too long so you can't please everyone all of the time. Adam: But when it was first thought about, and I think it's really interesting isn't it, that you say the community are largely behind this, but I think if others are listening to you now where they may be talking about a woodland on their doorstep created by the Woodland Trust or their own sort of organisation – I wonder what people's first reaction, what were their concerns and hesitancies that you heard about that may have been overcome? Kay: People don't like change do they? And at the moment it's, yeah, it doesn't look picture perfect with the stakes and the guards on, but you've got to envisage what it will look like in 10-15 years' time. You've only got to look at the hedgerow, which is behind us now, and at this time of year which is beginning of May, it's absolutely gorgeous. The blossom's out, the fresh burst of the leaf is so colourful and vibrant, what's not to like about having a wood on your doorstep? And we were very lucky. Adam: Okay, well brilliant, well thank you very much. Look I don't want to disturb you anymore but that's brilliant. Thank you very much. Kay: Thank you! Adam: So, we're gonna head up now to the ancient woodland. Now this is certainly unique in any of the Woodland Trust sites I've been to, because normally the Trust actively encourages people to come in, but this is the only site I've been to where the ancient woodland bit you stop people from coming. Oh, look this is… Joe: This is our nifty little fenced area which… Adam: We're going through the barbed wire so just be careful going… So, explain to me why you've unusually actually kept the public out of the ancient woodland. Joe: Ash dieback really is becoming a huge problem across a lot of woodlands I manage. I manage about 30 woods across the West Country and every one of them has large amounts of ash that really grows really well on these sort of limestone soils and in these hills around the Mendips, the Cotswolds. Gosh there's a huge Buzzard just soaring over the edge of the woodland there. So, ash dieback is killing off essentially all our ash trees. Estimates vary at the moment. You know recently it was about 95% and then people said it was around 60%. So, the latest estimate is that about 60% of our ash trees will die over the next 50 years. How fast they die is the worrying thing but when we bought the wood in 2019 ash dieback was blowing across the landscape. It is a fungal disease. It naturally spreads. It came over from Asia originally in infected stock of nursery trees being planted out. So, no one's been able to plant any ash for the last three years. It's now being reported all the way from the east of Great Britain, all the way to the west, every year, until it's spread and spread and spread now our mature ash trees – whether they're in a hedgerow, along roadsides and country lanes, whether they're in woodlands – ash trees are essentially dying en masse, and this is killing off everything that lives and breathes on those ash trees. Adam: And the reason you're keeping the public out is because the trees are dangerous, are they? They might fall? Joe: Yeah exactly, so where you have a path or road or property you have to maintain, you know, what's reasonably practical safety for people to be able to walk under it. We realise if we were to create a load of paths, allow a load of people into now what is a fantastic ancient woodland, but it has never really had any paths in, it's been undisturbed for generations – over 100 years now – we don't think anyone set foot in it. So, we didn't want to create any paths because we didn't want to fell any trees, so we've kept it shut and all the locals have seemed to have bought into that and are really pleased this is just a woodland for wildlife. They're happy enough to walk around the fields where we've created woodland. Adam: And is it also something of a laboratory to see what happens to ash dieback? If you really don't step in and try and do anything? Joe: Exactly yeah, so, in so many woodlands across Britain because of the large amount of public footpaths, people are having to fell for health and safety reasons, so there's not very many examples where if no one goes in and nothing happens, what happens to that wildlife? Does it also dramatic- dramatically decline, with the trees losing? Or are there some winners? So, are there some decay species? Some fungi species? Some insects, beetles that love decay rotting wood that increase? So we don't really know. So, this site we've turned into a living laboratory, this is a unique case of where we are monitoring the species within the wood, how they react to ash dieback over time. Adam: We're now going into the bit of ancient woodland which the public are locked out of and so we have got this big “keep out, closed due to ash dieback” (sign). Joe: You have exclusive access! Adam: Brilliant, now I gotta say, I mean I've got to take a photo of this because this is a sea of amazing plants. I'm really, I want to be careful where I tread, I don't want to disturb anything. Because I'm completely ignorant, what are these plants? Joe: Can you smell it? Adam: Yeah sure, it's extraordinary! Joe: This is wild garlic. Adam: Is that what it is? Joe: Ramsons are all in flower at the moment and now we can see for literally, well, hundreds of metres is the white snowy tops of these wild garlic flowers that are just coming up across the thick green leaves and when there's no path in sight you have to be careful where you tread. So, luckily wild garlic's quite prolific, so we'll tread carefully, but an undisturbed wood looks like this. It's like a sea, or a carpet of sort of snow. Adam: That is extraordinary, isn't it? Yes it is a sea of snow and that's the advantage of actually having undisturbed places. Is that it, I mean, yeah sea is exactly what it looks like. These sort of white foaming tops to the rolling green waves of vegetation. Quite amazing. Joe: All you can make out are the occasional tracks of foxes, badgers, stoats, weasels, that have gone through it, maybe the odd deer as well. But insects seem to be declining catastrophically. The ideal analogy is, you know, people used to drive around even in the 80s and you get windscreens splattered with bugs and insects. It just doesn't happen anymore and that massive decline of insects, it's unknown the reason, it probably doesn't help with, you know, when people are using lots of pesticide sprays across the countryside, along with climate change, but as all those insects decline so do our birds that feed on them, so are our bat species – so they're not fat enough to basically get through the hibernation and then when they come out of hibernation and the young are born there are just not enough insects so they don't make it through the summer essentially, and they don't have another generation that makes it. So, yeah, bat species are declining at the moment, so that's one of the first things we've noticed, and well ash are declining en masse. There were a lot of these species of ash that we're monitoring that are all dying en masse. Adam: I mean so that, I mean, …you're telling me all these terrible things Joe: Yes, I know. Adam: But I mean that's important it's still amazing landscape still isn't it? Joe: Absolutely. Adam: And that's always been true with woodlands. That decay brings its own new life and decaying trees are very important parts the of the ecosystem, but even given all of those challenges that you talk about are there any, are there any high points, any reasons for optimism? Joe: Well, wild garlic's obviously doing really well in this particular wood! But there will be some species that do, really, there will be some species of butterfly that you know do really successfully with the increased amount of light. But one of the best success stories, the best things you can do to feel positive about it is to go back out into those fields, plant the trees, the next generation, so that if some of these woodlands do suffer for whatever reason then we've got far more woodland habitat. We need to increase our woodland cover from about 13% to 20% fast and then if we get 20% – we've got the shrubs, we've got the tree species, got the rewilding areas – to be able to provide those homes for the species that aren't doing so well. That's the key I think is to plant the next generation, get there quickly. Our woodlands have a fantastic history and have been managed over time. This is just the next phase in the management to basically keep an eye and ensure our guardianship secures for that next generation in the next 50-100 years. Adam: Well I'm going to leave Joe to smelling his wild garlic, because TV presenter and journalist Alice Beer, who I used to work with, I know lives not that far from this woodland. Now I know she's out and about today so I'm going to call her on her mobile to discuss what the countryside around here means to her and her family. Okay, so just Alice first of all we should explain a bit about our history, so everybody… Alice: Oh must we tell everybody? Do you think we should? Adam: I think we should share a little bit. I used to open letters on Watchdog which was a massive massive programme at the time and I can't, do you remember how many people watched it? I can't Alice: Well I don't know I'd come to watchdog from That's Life and That's Life, which was before you were born Adam I'm sure, had 15 million viewers in its heyday and I think Watchdog was around 7 million viewers, which now is completely unheard of, but then you know it was just 7 million people watching it and more importantly 7 million people putting pen to paper. No emails, pen to paper, and thank God Adam Shaw was in the post room! Adam: Yes I was opening the 7 million letters with one or two other people and Alice was much more senior, so we would come to pass those stories onto Alice and of course, you are now, what's your official title? Alice: I suppose I'm actually probably daytime television presenter but I'm far too much of a snob to say that! I kind of dip in and out of various things trying to still help the little guy or pass on information. Adam: You have a regular spot on a very big programme, This Morning? Alice: Well, This Morning, yes, it's every day, it's now two and a half hours, they keep extending it! I am waiting for it to bump up against the Six O'Clock News soon! But This Morning it was, “can you do a piece on brisk walking and the health benefits”, as a result of some survey that came out, so here I am for the second time today brisk walking and broadcasting at the same time which is fantastic! Adam: Very good! Don't trip over! You've got a couple of dogs with you haven't you as well? Alice: I have, I've got Stanley who's my five-year-old schnoodle and his girlfriend Tilly and there are times when they become quite amorous in the long grass but I'm going to try and keep it clean for your sake! Adam: I knew you when we used to work in Shepherd's Bush in London, but you are now a country girl aren't you? Alice: Yeah, wellies welded to my feet! I grew up in suburbia and in North London suburbia and the countryside wasn't really important to me, but my parents took me out, took me and my sister out walking quite a lot. There was always “shall we do the walk through the woods”, “should we do the walk through the bluebell woods” which is slightly longer or “should we go up and round” which involved the hill. So, there was always a consciousness of walking in the countryside as a pleasant thing to do, but as we've got older, the countryside has become more important to me and we have been doing that thing, my partner and I have been doing that thing where we're trying to move out of London and we've settled on this beautiful village, beautiful functional village not far from Malmesbury in Wiltshire, which is where I am now, walking alongside the River Avon. So not too far from Avoncliff and the same body of water sort of flowing past me which is rather nice. Adam: How lovely. I know, I've seen you on This Morning as you're talking about wellbeing, and in terms of actually, with your consumer journalist hat on talking about the gadgets you could buy to help with wellbeing and having lights I think that show, sort of, natural light. I mean, how important do you feel it's been for you and your family during these rather difficult times to have access to nature and the outside? Alice: It's been everything to me. Everything. I've got teenage girls in fact it's their birthday today, their 19th birthday today, so for them probably it spells isolation for them because they didn't grow up in the countryside, or this this particular part of the countryside, so you know this means being away from their friends, but for myself and my husband it's been, it's been really important. For me to leave the house and walk in space because in London everything has felt very close and very claustrophobic and I'm mentally not good at that at all! So, I'm incredibly lucky to be able to breathe and give myself sort of mental and physical space away from other people. I was able to work from here, so I did sixty live broadcasts from, in effect, my back garden during lockdown. Adam: It's really interesting that you talk about your girls sort of feeling a sense of isolation because they came from the city and now are in a very rural area. I often find that it's a curious thing to get one's head round because really the nature debate about sustainability and trying to be better for the world is often very strongly led by young people. Alice: Oh it's theirs, it's completely their campaign! But I'm not sure that they associate it with, I mean, I feel like I'm treading on dangerous territory speaking, you know, putting words into their mouths because they're both very eloquent, quite passionate girls. I feel that I'm not sure that they would stand out in a field and say “we must protect this”. Probably coming from the city, they feel more that they see stuff, they see things going into bins, they see landfill, smoke, pollution. So, they see the big preservation of our world from a city perspective, probably more than standing in a field and thinking “oh this must never have, you know, thousands of houses built on it”, which is what probably makes me panic as much as anything. Adam: Do you get a sense of a change in people's attitudes in the way they behave, I mean, I think people talk about the need for ecological sustainability. I see amongst my friends and family, I have to also be careful about what I'm saying, I see less actually willingness to change personal behaviour than a willingness to say it's important, but they don't do an awful lot. Do you see that real difference? Alice: I'm a huge hypocrite, but I am now suddenly, it was probably about six months ago I was putting something in the bin, and it sounds like a strange Greta Thunberg epiphany, but it slightly was. I was putting some plastic in the bin, and I was trying to clear out a room and I was thinking this is going nowhere! This can't be recycled. This has to go underneath the ground, and this is not going to break down. I had a sort of panic about the fact that well if I was doing this and everyone was doing this and though I sort of have had that epiphany and I am changing my behaviour, and nothing particular triggered that, apart from me clearing out a bedroom and realising I had too much stuff. You know, which is odd, but you know, in terms of the big picture in the world I think it's very hard to make individuals feel responsible when we see big companies not taking responsibility. It's that sort of, well what difference is little me gonna make? And I've sort of had that, well I'm going to make a difference, so I will. I've had that moment and I think we have to all have that moment and I'm just about to fall into the River Avon, which could be interesting! I'm trying to encourage the dogs to have a drink. There you go guys, come on, look Tilly have a drink! Yeah well they're sort of having a drink, but I'm the one that's most likely to go in here. Adam: Well look, Alice, I feel split because I quite like the sound effect of you going in to end this, it'd be a great end wouldn't it! But on the other hand not a great way of re meeting after all these years. Look I will let you get on with your walk but thank you very much, thanks a lot. Alice: Thank you, thank you. Adam: Well, let's leave Alice Beer there and indeed all our friends at Avoncliff Woods. I do hope you enjoyed that and if you want to find a wood near you, you can go to the Woodland Trust website, woodlandtrust.org.uk/findawood and you can find a wood that's local to you. So that's woodlandtrust.org.uk/findawood. I do recommend you do that. Until next time happy wandering! Voiceover: Thank you for listening to the Woodland Trust Woodland Walks. Join us next month when Adam will be taking another walk in the company of Woodland Trust staff, partners and volunteers. And don't forget to subscribe to the series on iTunes or wherever you're listening to us and do give us a review and a rating. Why not send us a recording of your favourite woodland walk to be included in a future podcast. Keep it to a maximum of 5 minutes and please tell us what makes your woodland walk special, or send us an email with details of your favourite walk and what makes it special to you. Send any audio files to podcast@woodlandtrust.org.uk and we look forward to hearing from you.

James Oliver Jr. is the Founder and CEO of The ParentPreneur Foundation, which empowers Black ParentPreneurs so they can leave a legacy for their beautiful Black children. Chad talks with James about inspiring, encouraging, and supporting ParentPreneurs to lobby to try to close wealth inequality gaps, shoot their shot and send cold emails, and engage in a community that supports one another. Parents Making Profits (https://www.parentsmakingprofits.com/) The ParentPreneur Foundation (https://www.parentpreneurfoundation.org/) Follow The ParentPreneur Foundation on Twitter (https://twitter.com/ParentPreneurF), LinkedIn (https://www.linkedin.com/company/parentpreneur-foundation/), or Instagram (https://www.instagram.com/parentpreneurfoundation/). Follow James on Twitter (https://twitter.com/jamesoliverjr) or LinkedIn (https://www.linkedin.com/in/james-oliver-jr/). Follow thoughtbot on Twitter (https://twitter.com/thoughtbot) or LinkedIn (https://www.linkedin.com/company/150727/). Become a Sponsor (https://thoughtbot.com/sponsorship) of Giant Robots! Transcript: CHAD: This is the Giant Robots Smashing Into Other Giant Robots Podcast, where we explore the design, development, and business of great products. I'm your host, Chad Pytel. And with me today is James Oliver Jr., Founder, and CEO of the ParentPreneur Foundation, which empowers Black ParentPreneurs so they can leave a legacy for their beautiful Black children. James, thanks for joining me. JAMES: I'm super excited to be here. Thanks so much for having me. CHAD: So I just said, in a nutshell, the tagline for ParentPreneur Foundation. I know it's a community that brings people together, Black ParentPreneurs together. How did you get started and see the need for this, and how did you actually then make it happen? JAMES: Oh boy, that's a great question with a semi-long answer, so just hang in with me, but I think it's a really compelling story. So back in 2013, (I'm from Brooklyn, New York) at the time, I was living in Northeast Wisconsin. It started in 2011. I was trying to build a startup called WeMontage, which was the world's only website to let you turn your digital images into removable photo wallpaper. CHAD: If you haven't seen it, by the way, you should look at it. That description that you gave, even though it describes it perfectly, I didn't realize until I went to the website and looked at the pictures exactly what it is and how remarkable of a product it is. JAMES: Well, I'm delighted that you say that. Thank you so much. And that's part of the reason why [laughter] it failed. I mean, it's still around. And I know we have a bunch of designers in the community. So look, the website still works. The underlying collage editing software is still brilliant, but the UI UX needs a lot of love. It's a bit of a zombie with about $10,000-$15,000 of technical debt floating around over there. [laughs] But the product still works. And we still print, ship them sometimes. And we have tons of repeat customers. It's just one of those things. You build a great product, and they will always come. But the product is still brilliant still today. So back then, I was a non-technical founder. I was out of money. I cleaned out my savings and living in the middle of nowhere. There wasn't exactly a bastion of technology startups or diversity, even for that matter. And I was fortunate to get into Gener8tor's...I think we were the second cohort. Back then, it was super early. We went to Madison. And right now, Gener8tor is killing it. But I was out of money. I was thankful to get into their Madison cohort, which was a two-hour drive away. My ex-wife now was pregnant with our twins. The kids were supposed to be born end of March. Gener8tor ended early April. So I was like, okay, this timing works out brilliantly. But a day or two before the program started, I had to deliver, and we had to deliver the twins prematurely. Otherwise, my son would have died. CHAD: Wow. JAMES: His blood just started to circulate backwards. It was crazy. So we had to take them out. They weighed two pounds apiece. Every time I tell this story, it gives me agita, man. The accelerator was a two-hour drive each way back and forth to the NICU, waking up at 2:00 a.m. every morning because I couldn't sleep. I cried every day. I had a really talented developer on my team, but he had his personal demons. So he was really unreliable. But he was a brilliant guy. He was so smart, really talented. But anyway, I got through the accelerator. Right before I was going on stage for demo day, I got a call from this angel that we pitched. We were raising $250,000 at the time, which really, in retrospect, was not nearly enough money. But I got a call. He said, "Hey, we're going to fill your round." I don't know. What does that mean? I don't take anything for granted. [laughs] What do you mean? "We're going to give you $250,000." And then I just dropped to my knees. I thanked God. And I cried because I had sacrificed so much to get to that point. Thankfully, my daughter came home after six weeks, and my son came home after ten weeks. The kids are doing fine. They drive me crazy, but they're beautiful. CHAD: [laughs] How old are they now? JAMES: They just turned 9 in January. So after I launched WeMontage, I hired just a really remarkable technical co-founder and just a great guy. We still have a wonderful relationship. We got in there, and when I started out, I was like, well, I'm going to start a blog. I started a blog, and I was like, one of these days, I'm going to use the content from this blog to write a book. CHAD: Before you move on, so in those early days, you had just gotten into the accelerator. You had this thing you needed to deal with with your family and delivering the twins. And did you ever consider dropping out of the accelerator at that point? JAMES: I wasn't going to go, but I knew with that decision, WeMontage never would have come to light because I just didn't have the resources to make it happen. But as a family, we decided that I need to go do that and crush that, and so I made that choice. We raised money. In retrospect, we raised just enough money to fail because, look, the software was cute. We were running around pitching angels. It was cute to show look at what we can do, look at what we could do. When we turned the thing on, it was so unsustainable. It was a black box. And I was on the phone literally with customers holding their hand to get them to place an order, and that was clearly unsustainable. So we made the decision that we need to fix this thing. We need to pull it apart, make it modular, stabilize the code, build on it. And by the time we got done with that, we only had a couple of months' cash left. And I remember...man, if anybody has never told you this to your face, I promise you it's a hard thing to hear. They were like, "We're not going to throw good money after bad." I'm like, well, damn. Like, thanks. We have our first Today Show appearance coming up here next month. So thank you for that. Thanks. [laughs] Man. CHAD: So you actually did go on the Today Show. JAMES: Yeah, we got featured three times on the Today Show. I mean, on my own without a publicist, I got Today Show three times, Good Morning America, Money Magazine, DIY, Martha Stewart, on and on. CHAD: I'm curious, after making an appearance like that, do your sales go up? JAMES: They do. They did with the Today Show. So it was funny, like that first appearance, they didn't even put the graphic on the bottom with the name of the business. When Mario mentioned it, he said, "wemontage.com." Man, our freaking website went crazy. It crashed the website. [laughs] But we were kind of already prepared for it to crash. We had a little splash screen up and information. We got it back up in; I don't know, it was less than an hour. But I spent literally all day getting back to those people. We gave them a coupon code. And we did about $15,000 that month from that one segment, which was great. That was our best month to date. I mean, all total, I've probably done $75,000 to $80,000 in sales from the three times we appeared on The Today Show. CHAD: That's great. We've had clients, or I've known people who have done appearances like that, and it seems a little bit hit or miss. Sometimes it won't even result in a blip, and other times it's huge. And I'm not sure what the trend is when it matters and when it doesn't. JAMES: This is the point: we all love these vanity things. We want to get exposure, exposure. So I have a really great relationship with Seth Godin, and he's a big supporter of the work I'm doing at ParentPreneur Foundation. He gives us scholarships to his marketing seminar, and he comes to visit with us sometime. The last time he talked about...he said, "Stop trying to do things to get attention. Spend your time getting your customers to tell their friends about your business." And that's a whole fact. We love the vanity, but at the end of the day, PR does not necessarily equal cash flow. I had some hits. I got on Good Morning America, and that was not nearly as good as the Today Show. But that was by virtue of the last-minute change that they made in terms of how they were producing the segment. When they introduced my product, they had the camera on somebody else's product. They had people calling me about somebody else's stuff which is like, are you serious? But what are you going to do? You can't control that. So yeah, those things are good. I will say that having that stuff on the landing page is good for credibility. People feel more comfortable, especially if they can see it. So that stuff matters to a point, but I wouldn't be spending a lot of time. I certainly would not be wasting a penny on a PR professional if I was a founder. I just wouldn't do it. All that stuff I rattled off I did on my own. CHAD: Awesome. So you started to build a blog. [laughs] JAMES: Yes. So the intention of that was to use that content to write a book to inspire ParentPreneurs around the world because it's hard being a parent and entrepreneur, especially if you're like early-stage scraping to get some revenue. You can't even talk about product-market fit yet. Can we make some money? [laughs] Can we make a buck? CHAD: So I've done a few things in my life. Writing books is one of them, and I can't say that it's easy. I don't know how you found it. I was doing it with a traditional publisher the first few times around, and it was pretty difficult. How did you find it? JAMES: So I self-published that book. And because of the way I approached it, I already had a bunch of content on my blog. It's funny; I was actually out of town. I was in Midland, Texas, because I got flown out there. I was on CNBC's version of Shark Tank, West Texas Investors Club, horrible experience, by the way. I swear if I ever go on another one of those shows, I'm going to bring the drama. CHAD: [laughs] JAMES: Piece of advice, for any of you guys listening, if you go on Shark Tank or any of those shows, do not leave it up to the creative people to tell a story about you. This is just me; I'm a little crazy, crazy like a fox. But you give them the story. So this is me and you talking, just the two of us. [laughs] If I go on Shark Tank or something like that, I'm not taking those people's money. They're going to be like, "Oh, well, you're just here clearly for the exposure." I'm like, well, so are you. You're doing it too. Why should I give you 20% equity in my company for $200,000 or whatever it is? How much time are you actually going to spend helping me build my company? And by the way, the people who came before you from an investment standpoint already took a ton of risk off the table. So why should you get that money? And how many companies are in your portfolio? 50? So, okay, so are you really going to be helping me or nah? Nah? Right. No, I'm good. CHAD: That'll definitely air. The producers will love that drama. JAMES: That will air, right? See what I'm saying? And the people watching will be like, "Hell yeah, you tell them. Let me Google that real quick." [laughter] CHAD: That's funny. JAMES: But that's just me. But I have no intention of going back on any of those shows again because, at the end of the day, it was a bad experience for me. I only got about $6,000 in sales, but that's because nobody was watching that show. It was canceled. But at the end of the day, if you have a customer acquisition problem which is what we had at WeMontage, those things don't solve your problems. They just don't. Not necessarily. They could; you could get lucky. But it's probably not going to solve your problem. CHAD: So I'm curious. So you wrote the book, and you focused on the concept of ParentPreneurs, Black ParentPreneurs specifically. JAMES: No, actually, so the book was just for everybody who's a ParentPreneur. So the book's called The More You Hustle, The Luckier You Get: You CAN Be a Successful ParentPreneur. So Mario Armstrong, who's my guy from the Today Show, wrote the foreword to my book. We're really good friends. And it's on Amazon. Some people have regarded it as the realest book of entrepreneurship they've ever read. It's unlike anything you ever read. It's the story of my journey, some of those things I just told you, and the up and down the back and forth. It will make you laugh, make you cry, make you wonder. You put it down, come back to it. There are some hard questions that I ask myself, and people read the book. It's a superfast read too. CHAD: Awesome. At what point did you decide to focus on empowering Black ParentPreneurs? JAMES: So that's a great question. So after I wrote the book, I had this idea. I said one day I'm going to sell WeMontage. And maybe it will happen. I don't know; if God can intervene, something could happen. Who knows? [laughter] It's just not likely at this point, and that's okay. But I was like, I'm going to sell this business. I'm going to take a million dollars of my own money and start a foundation for parents who are entrepreneurs because it's really freaking hard. It's so hard. Unless you've been there, you have no idea how hard that is. It's really hard. So then, in early 2020, the whole world falls apart with George Floyd, Ahmaud Arbery, Breonna Taylor. I had my own Karen experience here in my backyard. I live in a really nice neighborhood in the suburbs of Atlanta. And I had to call the police on her. After the second experience, I filed a trespass warrant. Then I started looking at all the Federal Reserve wealth inequality data. And I was like, I'm starting this foundation for Black ParentPreneurs because we need the help the most. We have got to try to close this wealth inequality gap. It's a big problem. I'm doing that. So now to answer your question, prior to that decision, so when I was going to Gener8tor, I met David Cohen and Brad Feld. They just popped up on a Google Meet to meet us. And these guys are co-founders of Techstars, which is one of the preeminent global startup accelerators. And I just stayed in touch with them through their blogs. I didn't want anything from them. I remember I got an email from Brad a couple years back. And he's a voracious reader. He's a prolific writer. He sent me an email out of the blue. He said, "I just read your book. I effing loved it." [chuckles] He said, "I got to feature it on my blog." I was like, wow, okay, dope. So he did that. And we sold some books, which was great. But so I reached out to Brad and David. I was like, "Hey, guys, I'm thinking about starting this foundation for ParentPreneurs in general." And they were like, "Yeah, I'm game. We can go back and forth with you about it," and which is amazing at that level those guys would be willing to do that. I appreciated that. And they were both like, "Eh, foundations are hard. It's a constant fundraising grind, blah, blah, blah." And, look, they're not wrong. [laughs] They're not wrong. But here's the thing, though. For me, telling me something is hard doesn't land with me because I've had to scrap and scrape for every single blade of grass on the field of life. And quite frankly, it's hard being Black sometimes. If I had $1 every time somebody told me that WeMontage would have been successful if I had a white face out there instead of me type thing, it is very frustrating. So then I got an email from Brad Feld out the blue after George Floyd, which was just a subject that said, "Hey, you're game for a 30-minute Zoom?" There was nothing in the body of the email. And I'm just like, yeah, I could as well want to talk to Brad. He's top of the food chain. He's not just a VC and co-founder of Techstars with a portfolio valuation north of $200 billion. He's also a Limited Partner. LPs are the people who write the checks to the VCs who write the checks to people like me and you guys listening who are entrepreneurs. So I'm like, hell yeah, I want to talk to you for 30 minutes, Brad Feld. Who doesn't? I just didn't know what it was about. So he said, "I just want to know what two things you're working on addressing racial injustice, inequality I can put my time on or attention on." I'm like, Oh, hell yeah. Chad, I'm like, he has no idea what I just decided. So we get on to Zoom. And I say, "You know, Brad, you remember that foundation thing I was telling you about?" He was like, "Yeah." I said, "Well, now that's just what Black ParentPreneurs is." He goes, "I'm so glad you did that." And this is the part that knocks me out of my chair every time I say it. He goes, "What would a 12-month operating plan look like? I can throw it up in a Google Doc, and I'll co-create it with you." [laughs] CHAD: That's great. I mean, it is unfortunate that George Floyd being murdered and these other things have instigated people to want to make change and to get involved in ways that they haven't been able to before. That's super unfortunate, but something's got to wake people up. JAMES: Well, that will come up because he was like, "Look, I'm this rich, middle-aged white dude. I've been doing things to support Black entrepreneurs in the past," but he's like, "I got to do more. So I'm reaching out to my friends, and I consider you a friend." I was like, wow, like, I knew you liked me a little bit, but I didn't know you liked me like that. CHAD: [laughs] JAMES: But he is a friend. I have his phone number. I can call him. He's a friend. Him and David these guys are friends. So I got the 12-month operating plan right back to him. He said, "This is great. What would a six-month plan look like?" I got to write back. And he's like, "Assume three things, one of which is a $50 000 seed grant from my foundation to start the ParentPreneur Foundation." So Brad has given now, I don't know, north of $125,000. He got us into the Techstars Foundation, which has been phenomenal. My relationship with David has blossomed. I went on the Techstars Give First Podcast with David, and David's a friend as well. I just love those guys and how they move, and they've been super helpful. And so our foundation, at the heart of what we do, you mentioned this at the top, is we have a community of now almost 1,800 Black ParentPreneurs hosted on Mighty Networks, which is phenomenal because it's not on Facebook. That's the thing I love the most about it. [laughter] CHAD: I actually have some questions about Mighty Networks on my list. So we don't need to take a tangent in there right now. We can come back to it. I want to ask you about Mighty Networks. JAMES: Love it. Love it. Love Gina Bianchini. She's the CEO. I actually had her on my LinkedIn live show a couple of months ago. CHAD: Well, let's do it now then, actually. So as someone who has built software before to put together a company, did you ever consider that for this? And why not? And why use Mighty Networks? JAMES: To build a community platform? CHAD: [laughs] It's a very loaded question, James. JAMES: Yeah, why would I do that? Listen, by the time I got done with my prototype with that; these guys would be like two versions past where they are today, which would be infinitely better than my little stinky MVP, right? CHAD: Yeah. JAMES: And these people live, eat, and breathe community. Is Mighty Networks perfect? No, of course not. But they're constantly making improvements. I think I told you at the top I'm actually about to launch a new podcast. I just signed a national podcast distribution deal. So we're launching a podcast on the HubSpot Podcast Network. You guys have heard of HubSpot, right? CHAD: I have, yes. JAMES: So it's for ParentPreneurs in general, kind of like my book, to empower ParentPreneurs to be the best parent entrepreneur they can possibly be because being a ParentPreneur is hard. And we came upon this opportunity. I saw an article; maybe LinkedIn, I don't remember, talking about HubSpot launched a new podcast network last year. And I told you I got all these PR opportunities. And I got that because I'm not shy about shooting my shot. A lot of people are too scared to shoot their shot, or they don't know what to do, how to do it. But cold emails I'm really good at sending cold emails. So I sent a cold email to the CMO of HubSpot. He was mentioned in the article. I went on LinkedIn. I scraped his email address using my favorite email scraping tool, GetEmail.io. It works on LinkedIn. You get their email address. I sent him an awesome email. Of course, he didn't follow up right away; well, not, of course, sometimes they do. He didn't follow up right away. I sent a follow-up email. And when I send follow-up emails, I like to give some kind of update. So in my follow-up email, I wasn't just like, "Hey, did you get my email? Please respond." It wasn't that. It was like some other update. I can't remember what it was, but it was an update following up about my email. He got back, copied somebody on the team. They got back, copied somebody else. They were like, "Do you have a clip or an excerpt of an interview?" And it just so happened we did because we knew we needed to get ready. So we did an interview with Neil Sales-Griffin, who's the Techstar Chicago Managing Director, and so we sent them an excerpt. They were like, "This is great. Do you have a whole episode?" So we edited that thing down right here that day. It was a Friday, sent it to them. They were like, "Thanks for sending. We'll get back to you by Monday with the decision because, by the way, we have this new program, this emerging podcast voices program. There'll be six to eight podcasts in this program. And we'll listen to this and consider it." So they got back to us Sunday night at 11:00 o'clock. "This is amazing. You guys are pros." I'm like, that's not me. That's really Mario. I have no idea what I'm doing at all. CHAD: [laughs] JAMES: But thanks, Mario. "And you guys are stars. You can't teach stars." But I'm like, hey, all right. I've never done a podcast. But hey, glad somebody other than my mama likes me. This is awesome. And they were like, "We want to invite you to be one of the companies in this new cohort with a new podcast," and just a swoop in at the last minute like that all because I shot my shot. So if anybody's out there listening, don't be afraid to shoot your shot, man. It's a mindset. You got to know what to do, how to move. But you've got to first have the mindset like, yo, I am going to shoot my shot. CHAD: I think as long as you...and you already said this, but you're making it real. Like, when you're following up, you're not just saying, "Hey, did you get my email?" You're finding ways to make it real and authentic. You got to show that you're real and not some bot. JAMES: Yeah. So I will say in terms of the cold emails, I send them all the time. Cold emails is how I ended up collaborating with Nasdaq Entrepreneurial Center. We're big partners with them. We're part of this grant project with them with this major Wall Street Bank Foundation they're about to be announcing this year any day now. We got a grant tackling the problem of Black or Brown founders, underestimated founders not getting access to early-stage venture and angel funding. So we're part of that with my foundation all because I sent a cold email to some guy at Nasdaq. I don't even remember who it was, Western president. Sent him an email, he copied the executive director from Nasdaq Entrepreneurial Center. The rest is history. My last round of grants, they co-sponsored the last round of grants. They put in some money. Great relationship with Nasdaq. They got 30 of my people from our community featured in the Nasdaq Tower in Times Square, let that sink in, all because of a cold email. So if you're going to send a cold email, just a couple of tips off the top of my head. You need to have a compelling subject line. Keep the emojis to a minimum. [laughter] If you can use the person's name in the subject, I think that increases your open rate by like 20%. The email's got to be right to the point. Hey, my name is James Oliver, CEO of ParentPreneur Foundation. Put a link to the ParentPreneur Foundation in that instance. We got funded by Brad Feld, co-founder of Techstars, and put a link to Brad Feld's article. Establish credibility right away and get to the freaking point. Like, what do you want? Make an ask. What do you want? Get right to it. That's it. CHAD: And then when you don't hear back, and you should follow up? JAMES: Oh yeah. You absolutely got to follow up. I'll follow up a couple of times. I know Mario is like, "I just keep following up till they tell me to stop." [laughter] He's gangsta like that. I'll follow up three or four times. But after that, I know when people are pestering me. At that point, you're pestering. I'm not interested. If I was interested, I would have responded, so knock it off. But I also respect the hustle when people are coming to me with something that's legit. And I will respond because I am them sometimes too. I'm like, "Hey, thanks for reaching out. I really appreciate it. I'm just not interested," or "I'm not interested now. Ping me back in six months." CHAD: As someone who gets cold emails, I do the same thing when it's a legitimate...and you can tell. You can tell the ones where they're just blanket sending the same thing to a bunch of people. And you can tell when it's someone legitimately sending you a cold email. JAMES: Because if you mention something about what they do specifically and how that's relevant to your email or your ask, that increases your chances of getting a response. Hell, I sent a cold email to Mark Cuban, bro. CHAD: Awesome. JAMES: He said yes. I interviewed him on my blog. I don't write on my blog anymore. But he got right back to me, and I interviewed him on my blog. He was great. CHAD: So I don't know if everyone does this. Like you said, even if it's not a fit for me or I can't do it right now or whatever, if it's a legitimate thing, I will almost always actually respond to it eventually. Mid-roll Ad I wanted to tell you all about something I've been working on quietly for the past year or so, and that's AgencyU. AgencyU is a membership-based program where I work one-on-one with a small group of agency founders and leaders toward their business goals. We do one-on-one coaching sessions and also monthly group meetings. We start with goal setting, advice, and problem-solving based on my experiences over the last 18 years of running thoughtbot. As we progress as a group, we all get to know each other more. And many of the AgencyU members are now working on client projects together and even referring work to each other. Whether you're struggling to grow an agency, taking it to the next level and having growing pains, or a solo founder who just needs someone to talk to, in my 18 years of leading and growing thoughtbot, I've seen and learned from a lot of different situations, and I'd be happy to work with you. Learn more and sign up today at thoughtbot.com/agencyu. That's A-G-E-N-C-Y, the letter U. JAMES: So, if I may, I just want to talk a little bit about the impact in the ParentPreneur Foundation. CHAD: Yes. JAMES: Because we have 1,800 people now. This current round of grants makes $95,000 in the last 19 months since we launched. We do micro-grants of $1,000 apiece. I think I just tweeted this morning that it just seems like people look down their nose at a $1,000 grant. And I'm like; clearly, these people are not or never have been a super hustling, early-stage entrepreneur and definitely not one of those with kids. So $95,000, again, keep in mind, I don't know anything about a foundation, a non-profit. I've never done it before. I've never started a community, but I don't care; it doesn't matter. [laughs] You know what I'm saying? In this instance, there's a tremendous founder-market fit because I am them. And that shines through brilliantly in all the things that we do. And the thing that I'm most thankful for that we've done in the community is we've paid for 320 mental therapy sessions for our community members. And that's important because historically, mental health is stigmatized in the Black community. And there's this belief of epigenetics, which is basically you can pass trauma down through your DNA to your descendants. And if that's true, Black folks got a lot of trauma, and we need to get it worked out. And when we do it in our community, people jump right on it. So I'm so proud of those guys that they take it very seriously. And that's really legacy, and that's impact because we're creating a legacy of mental wealth for the people in our community that influences how they show up for themselves, for their businesses, for their partners and spouse, for their children, all of which impacts how their children show up in the world. So it matters a lot. CHAD: I think the therapy sessions are a great example of when you have an authentic, unique community, something is going to come out of that which is so specific to that community. The impact of that is huge but also, where did that idea come from? Was that you? You said, "Hey, this is a need we have to do this"? JAMES: Yes. CHAD: Did it come from the community itself? JAMES: No. And see, this is why I'm talking about the founder-market fit. I don't know all the things that my people need, which is why a lot of times I ask them, "What do you want? What do you need?" But a lot of things I already know they need before they even need them because I've been where a lot of those guys are, and some of them ain't been there yet. I already know what you're going to be looking at in six months, bro. You need to pay attention a little bit. So right from the beginning, we use betterhelp.com. We created a BetterHelp account. And it's so easy. We use Typeform. Typeform is another partner of ours. They've given us lots of free codes, and VideoAsk is a new Typeform company. We use that for our application process, which is just brilliant. I keep getting compliments about how amazingly seamless and elegant our application process is for the grants using VideoAsk. But we use Typeform and first come, first serve. It fills up, and then I just get the email addresses, and I just drop them right into Betterhelp's account. And they reach out to people in the community, and they get them set up. It's so easy. CHAD: That's great. What happens in the community? Is part of the value of the community just support from each other? JAMES: Well, that's a big part of it. So that's a great question. So one of the things in the Seth Godin marketing seminar is he talks about tension and why it's important in marketing and how it drives change and drives people to action. And the assignment around tension I couldn't think of like what the tension was for the ParentPreneur Foundation. But when he came to meet with us, and we were talking about it, he said, "If I'm on an airplane and we're sky jumping, and they're like, 'Well let's jump out,' and it's a perfectly good airplane," the tension for him is what if the parachute doesn't open? And the answer is like, "Well, don't worry. We have a backup chute for you." Okay, banzai, let's go. [laughs] But for the ParentPreneur Foundation, the tension is what if we fail on this rocky road? What if we fail in our journey to leave a legacy for our beautiful, Black children? He said, "It doesn't matter because we have each other's backs on this rocky road." So I'm like, yes, that's exactly right. We have each other's backs. And I'm telling you, man, I see it. A lot of stuff is taking place; I have no idea. But I hear about it from time to time, just organically. People are collaborating. It's just amazing, man. It's just great. So yeah, I know it's lonely being an entrepreneur, a lot of different challenges, unique challenges of being a Black entrepreneur. And it's just great to have a safe space for that. We do a lot of different things. We paid for virtual assistants. We paid for when kids were being virtual schooled. We paid for some virtual tutors for some of the children. Social capital is another thing that I talk about a lot. We pay for people to improve their LinkedIn profiles and understand how to move properly on LinkedIn and build and increase their social capital, which to me is as problematic as a dearth of financial capital because, without social capital, you can't even imagine what's possible. And it was Albert Einstein who said that imagination is more important than knowledge. And it's just so true. So we're doing all the things. CHAD: So, do you have a sense of what the split is between moms and dads in the community? JAMES: Yeah, just off the top of my head, I think it's around 75-25 moms and dads, and that's interesting. Women like to build community, men we don't. We're like the king of the jungle. We're all okay by ourselves. [laughs] We don't want to build community. But, man, women love to build community, and they hold down our community in a big way, and I'm just so thankful for them. CHAD: So you started in 2020. One thing that I've seen, and I think it makes your timing good, is that a lot of people either had change forced on them because of the pandemic, and they lost their jobs. Or they felt like they needed to make a change. And a lot of people faced with that decided to do something on their own and make something happen. So there has been a surge in entrepreneurship from my... And another thing there's been a surge in is people going to coding bootcamps feeling like yeah, I lost my job, or I no longer want to do this job that I can no longer do remotely. I want to make a change in my life and learn to code. Does that resonate with you as something you've seen in terms of people who have never been entrepreneurs before who had it forced on them or making a conscious choice to do it, joining the community? JAMES: Yeah, absolutely. To a certain extent, at the beginning of COVID, when everybody was freaking out, because I understand that within every crisis exists an opportunity, I was looking for that opportunity. I was like, all right, where's the opportunity here? I was asking the questions. And then, I had a chance coffee meeting with some acquaintances and told them my intention of starting the foundation one of these days. And they were like, well, what are you waiting for? Why don't you do it now? And I thought that was like the answer to my question. And I was like, oh damn, like, yeah, what am I waiting for? Let's do it now. So yeah, a lot of people are moving towards entrepreneurship. I think a quick Google search will bear that out. I don't know to what extent, but I know it's a lot. The application for new businesses are increasing over the last few years. So yeah, I get it. People kind of hate their corporate jobs. They hate going to the office. I get it. My goal in life is to never have to wear a suit and tie again. [laughs] CHAD: Even when you go on Good Morning America. JAMES: I might wear a suit, but I'm not wearing a tie. Knock it off. [laughs] CHAD: Well, I'm sure everything you mentioned that you've been fundraising all this stuff costs money. Does the majority of your funding come from bigger donors? I know that you have a link to donate, and I encourage people to do that. But how much time do you have to spend fundraising? What is the donor mix? And how can people help? JAMES: It's just weird. We get in our own heads. I used to say, man, I kind of suck at fundraising, but I don't. We raised almost $300,000 since I started this thing with no experience. That's not somebody who sucks at fundraising, right? CHAD: Yeah. JAMES: But in my mind, we should have a million dollars in the bank so I can hire an executive director, and we can ramp up the programs that we know, or I can scale this thing up and do some other things. I have some other things I want to do. I want to do a startup studio. I'm trying to partner with Techstars right now. With Techstars, I'm already talking to the right people. I want to do a pre-accelerator program with them for Black ParentPreneurs and putting like $20,000 in people's pockets. That's going to cost money. We need a sponsor for that. But to answer your question, you can visit parentpreneurfoundation.org click donate. And $25 a month it all helps. It all adds up. We have things that we have to do to keep the platforms going and tools and resources that we use to keep it all going. The big chunks have come from people like Brad Feld and David Cohen. And Fred Wilson even donated $10,000 one-time but yeah, we need more. I'm just biding my time. And the work we're doing matters so much. It's making a big impact. We are literally helping people raise money and get their businesses off the ground. And one woman who just went through the Techstars Founder Catalyst Program with JPMorgan Chase here in Atlanta she went because I introduced them on my show. And she got in, and she just raised $250,000. And then she just told me she got a commitment for another half a million dollars. And this other woman she got a $250,000 grant from Wells Fargo because of our relationship with Nasdaq. And another guy got a term sheet for half a million dollars because of the introductions we're making. So we're literally out here building capacity for the members of our community in so many ways. I'm thankful. I'm honored. I'm humbled to be in this position to do this work. But this is purpose work for me. This is my purpose, and I'm thankful to have found it. It's like Mark Twain says, "The two most important days in your life are the day you are born and the day you figure out why." I encourage people to go figure out why. CHAD: And if you are Black ParentPreneur hearing what we're talking about and saying, "Yeah, now I know about this. This is for me." You also go to parentpreneurfoundation.org and sign up there. JAMES: Yes, sir. Click the join community button. Absolutely. CHAD: Well, James, thanks for stopping by and sharing with me and all the listeners. I really appreciate it, and I wish you and everything that you're doing all the best. JAMES: Yes. And, Chad, thanks for reaching out, man. Look at you; you're on your hustle. It wasn't you that reached out to me. There was somebody else. CHAD: It was, yeah. Another member of my team. JAMES: How'd you find me, man? CHAD: I think she's very good at LinkedIn, and you're good at LinkedIn and so -- JAMES: [laughter] Well, I got a big [inaudible 36:11] show them the receipts, man. Show them the impact because that's what you got to do. CHAD: Are there other places where if folks want to get in touch with you or follow along with you? Where are the other places they can do that? JAMES: Yeah, they can do that on IG. We're parentpreneurfoundation on IG. I'm not super active there, but we're there. You can follow me on Twitter. I talk a lot on Twitter. I don't think anybody's listening, but I talk a lot on Twitter. CHAD: [laughs] JAMES: That thing doesn't come on until you actually earn those blue checkmark thingies, I swear. Because I will say something I think is really profound, and it's crickets. And I see somebody with a blue checkmark say the exact same thing, and I'm like, okay, I see how it is, but whatevs. [laughs] So I'm on Twitter @jamesoliverjr, jamesoliver-J-R. Follow me on Twitter. That'd be awesome. Shoot me a tweet. Tell me you heard about us, heard about me on The Giant Robots Show here. I would love to connect, engage, and build and learn with your audience. So thanks. CHAD: Awesome. And for all of you listeners, you can subscribe to the show and find notes for this episode along with an entire transcript of the episode at giantrobots.fm. If you have questions or comments for me, email me at hosts@giantrobots.fm. And you can find me on Twitter @cpytel. This podcast is brought to you by thoughtbot and produced and edited by Mandy Moore. Thanks for listening and see you next time. ANNOUNCER: This podcast was brought to you by thoughtbot. thoughtbot is your expert design and development partner. Let's make your product and team a success. Special Guest: James Oliver Jr..

You don't need to sacrifice your health or happiness for profit.    James Nicholas Kinney was a successful global executive for over 20 years until burnout wiped it all away.   This week, James shares how he transformed from an overworked and profit-driven man to the conscious Global Diversity Chief he is today.    Dr. Sarah and James talk through the key causes of burnout and their effects on the average person. You'll learn the keys to promoting your own well-being in the workplace, so you can take positive steps right away.   After listening to this episode, you'll feel inspired to make self-care and satisfaction in the workplace an absolute priority, and know exactly how to do just that!    Key Topics/Takeaways:   James shares his story of burnout to transformation.  The erosion of the frontline worker and its impacts. Why you should rally businesses to solve world problems over the government. The disconnection of the average person today & the importance of collaboration. You should control your job, the job shouldn't control you. Self-care is always within your grasp if you choose it.  Create places where you feel deliberately accepted.    Where to Find the Guest:    JamesNicholasKinney.com   @jamesnicholaskinney   Memorable Quotes:   “The myth is that if you're focused on the bottom line and if you're living delivering results on the bottom line which is profit, that you also can't nurture and develop people. But that's an illusion because you can do both.” (5:42, James)   “There's nothing more powerful than money in America. What I mean by that is that business and commerce move way faster than government.” (13:57, James)   “I believe 2022 is the year of collaboration. I think collaboration and getting together in small groups, teams, et cetera, is the way to repair our communities as a whole.” (21:14, James)   “So my advice to anyone is just very simple. Don't do it alone. Find people that compliment you, build you up, and like minds come together. Like hearts, like souls, come together in order to build something that's meaningful to them.” (23:48, James)   “What I believe my cure was, was the moment that I got to myself and said, I love myself too much to continue on this path. And that if I dedicate myself towards sharing abundance for the rest of my life, I will never go wrong.” (34:25, James)   “We're all human. So even doing healthy things and self-care doesn't mean we're not going to still experience different emotions or fears or troubles. It's just how we deal with them and ride through them.” (37:33, Dr. Sarah)   Join the Are You Satisfied? Patreon Community: https://www.patreon.com/areyousatisfied?fan_landing=true

The beating heart of this passage is in vs 8 You too, be patient and stand firm, because the Lord's coming is near. The wisdom from above that James has been training us in only makes sense in the light of this HOPE FROM ABOVE. Jesus is returning... AND SOON! He will come with the clouds above... Revelation 1:7 “Look, he is coming with the clouds,” and “every eye will see him, even those who pierced him”; and all peoples on earth “will mourn because of him.” We believe that Jesus' return represents a future reality where God's will is perfectly fulfilled on earth as it is in heaven. What does that mean? v The best and most beautiful parts of our world will be renewed and shine with unspeakable new brilliance. v The worst of our world— and all who hope in it— sin, injustice, greed, arrogance, violence... will be judged. HOPE in Jesus' coming empowers us with a PATIENCE AND PERSEVERANCE to summon this future into our present. FOCUS: James highlights TWO key areas to show us what this future hope and judgment looks like in our lives today. • WEALTH- greed, injustice, and the pursuit of luxury. • CHURCH- our relationship with one another as the family of God. WEALTH- greed, injustice, and the pursuit of luxury. James (the whole Bible) doesn't condemn wealth in itself— but the way one gets it and how one uses it. James condemns 4 specific things: (1) hoarding- vs3 (2) defrauding- vs4 (3) selfish indulgence- vs5 (4) using violence- vs6. The day of Jesus' return is a day of judgement for greed. “day of slaughter”. James writes about these rich people for two key reasons: 1) To call God's people to be patient when we see evil, powerful, greedy people succeeding in the world. 2) To call us to persevere/ stand firm in doing good— being generous & kind. Psalm 37:1 “Do not fume because of evildoers or envy those who do wrong.” Fuming—- consumed with anger and worry. Envy— Want what they have. Either way- fuming and envying both have the power to distract and derail us Hoping in Jesus' return frees us and cleanses us— to be patient and persevere. Patience (4x)- makrothymeō— attitude of calmness and confident trust. Patience empowers our perseverance. Perseverance is our capacity to stand firm in doing good! Don't give up. Grit! Prov 11:25 A generous person will prosper; whoever refreshes others will be refreshed. CHURCH- our relationship with one another as the family of God. 9 Don't grumble against one another, brothers and sisters, or you will be judged. The Judge is standing at the door! The call to not grumble against one another is not a gag order to hide, cover up: abuse, hurt, corruption or conflict. Christian community must be a place where we learn and teach others how to face conflict and sin unto reconciliation and forgiveness. E. Peterson— Intro to James: “So christian churches are not as a rule model communities of good behavior. They are, rather, places where human misbehavior is brought out in the open, faced, and dealt with.” As a community and individually— we must learn to receive correction. • Prov 15:31 Whoever heeds life-giving correction will be at home among the wise. • Prov 15:10 the one who hates correction will die.

Welcome to the first season of Bachademia that covers Bachelor in Paradise and honestly, this is what we have been waiting for. So, to mark this momentous occasion we have brought back one of our favorite guests, Montana Smith! Question of the week? What components of a date would you most like to have happen on BiP (ie., some type of games, food tasting)?The show starts with David Spade, I will admit, I think Joe Dirt is one of the funniest movies ever. Where is the Intro music with the cast? So we get to meet the beginning people, I will say their name and you give me a thought about them:Abigail - Matt's seasonSerna P - Matt's SeasonBrendan - Claire and TayshiaTahzjuan - Was baked alive on BiPIvan - Tayshia and ClaireVictoria - Matt's seasonMari - got booped with dildoKenny - C&TKelsey - Pete's season and got the champaign facialConor B - Katie's seasonJessenia - Matt's seasonJoe - has been in everythingNatashia - PeterTammy - PeterTre - KatieAaron - KatieNoah - TayshiaDeandrea - Peter's seasonMaurissa - Peter's seasonJames - KatieSerena -Matt's seasonKarl - KatieWells sets the vibe and lets everyone know that love can happen, there is always uneven numbers of men and women, and you go home if you don't get a rose. The rest is totally between the contestants and the crabs..Thoughts on the overall vibe of the contestants? I saw something that said the women seemed there to hook up and the men seemed to be there to find a long-term relationship or date other men (looking at you Aaron and James)So, Abigail gets the first date card and pairs off with Noah, they talk and smash pinatas. Grocery store Joe is having a crisis. He said he was in the right head space to be on the show, thoughts? He has been eyeing Serena P. from the get go, but so has Ivan and every other guy. He eventually gets time with her and they talk about how old he is.Connor B. and Maurissa make out, thoughts on their connection?Tre and Tahz make out and Tahz says Tre kisses better than his uncle (insert break screech). What?Kenny and Mari make out…Jessenia and Ivan lock lips…Supposedly this is a record...what are we to make of all this necking? Will this create more or less drama? The next morning Demi shows up...as a reminder Demi was on a previous season and brought her then girlfriend. Obviously, having someone who is bisexual on the show adds a major wrench into the very rigid male and female pairings, predictions?Alright, so a couple wrap up questions:What couple will absolutely stay together and why?Who will bring the most drama and with whom will it be?Who do you want to see that hasn't arrived?Lessons learned?Montana, you get the final word…

About JamesJames is the Redmonk co-founder, sunshine in a bag, industry analyst loves developers, "motivating in a surreal kind of way". Came up with "progressive delivery". He/HimLinks: RedMonk: https://redmonk.com/ Twitter: https://twitter.com/MonkChips Monktoberfest: https://monktoberfest.com/ Monki Gras: https://monkigras.com/ TranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Cloud Economist Corey Quinn. This weekly show features conversations with people doing interesting work in the world of Cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: Your company might be stuck in the middle of a DevOps revolution without even realizing it. Lucky you! Does your company culture discourage risk? Are you willing to admit it? Does your team have clear responsibilities? Depends on who you ask. Are you struggling to get buy in on DevOps practices? Well, download the 2021 State of DevOps report brought to you annually by Puppet since 2011 to explore the trends and blockers keeping evolution firms stuck in the middle of their DevOps evolution. Because they fail to evolve or die like dinosaurs. The significance of organizational buy in, and oh it is significant indeed, and why team identities and interaction models matter. Not to mention weither the use of automation and the cloud translate to DevOps success. All that and more awaits you. Visit: www.puppet.com to download your copy of the report now!Corey: And now for something completely different!Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. I'm joined this week by James Governor, analyst and co-founder of a boutique analysis shop called RedMonk. James, thank you for coming on the show.James: Oh, it's my pleasure. Corey.Corey: I've more or less had to continue pestering you with invites onto this for years because it's a high bar, but you are absolutely one of my favorite people in tech for a variety of reasons that I'm sure we're going to get into. But first, let's let you tell the story. What is it you'd say it is that you do here?James: We—industry analysts; we're a research firm, as you said. I think we do things slightly differently. RedMonk has a very strong opinion about how the industry works. And so whilst there are plenty of research firms that look at the industry, and technology adoption, and process adoption through the lens of the purchaser, RedMonk focuses on it through the lens of the practitioner: the developer, the SRE, the people that are really doing the engineering. And so, historically IT was a top-down function: it required a lot of permission; it was something that was slow, you would make a request, you might get some resources six to nine months later, and they were probably the resources that you didn't actually want, but something that was purchased from somebody that was particularly good at selling things.Corey: Yes. And the thing that you were purchasing was aimed at people who are particularly good at buying things, but not using the things.James: Exactly right. And so I think that RedMonk we look at the world—the new world, which is based on the fact there's open-source software, there's cloud-based software, there are platforms like GitHub. So, there's all of this knowledge out there, and increasingly—it's not a permission-free world. But technology adoption is more strongly influenced than ever by developers. That's what RedMonk understands; that's what makes us tick; that's what excites us. What are the decisions that developers are making? When and why? And how can we tap into that knowledge to help everyone become more effective?Corey: RedMonk is one of those companies that is so rare, it may as well not count when you do a survey of a landscape. We've touched on that before on the show. In 2019, we had your colleague, Rachel Stevens on the show; in 2020, we had your business partner Stephen O'Grady on, and in 2021 we have you. Apparently, you're doling out staff at the rate of one a year. That's okay; I will outlast your expansion plans.James: Yeah, I think you probably will. One thing that RedMonk is not good at doing is growing, which may go to some of the uniqueness that you're talking about. We do what we do very well, but we definitely still haven't worked out what we're going to be when we grow up.Corey: I will admit that every time I see a RedMonk blog post that comes across my desk, I don't even need to click on it anymore; I don't need to read the thing because I already get that sinking feeling, because I know without even glancing at it, I'm going to read this and it's going to be depressing because I'm going to wish I had written it instead because the points are always so pitch-perfect. And it feels like the thing that I struggle to articulate on the best of days, you folks—across the board—just wind up putting out almost effortlessly. Or at least that's how it seems from the outside.James: I think Stephen does that.Corey: It's funny; it's what he said about you.James: I like to sell his ideas, sell his work. He's the brains and the talent of the operation in terms of co-founders. Kelly and Rachel are both incredibly smart people, and yeah, they definitely do a fantastic job of writing with clarity, and getting ideas across by stuff just tends to be sort of jumbled up. I do my best, but certainly, those fully formed, ‘I wish I had written that' pieces, they come from my colleagues. So, thank you very much for that praise of them.Corey: One of the central tenets that RedMonk has always believed and espoused is that developers are kingmakers, to use the term—and I steal that term, of course, from your co-founder's book, The New Kingmakers, which, from my read, was talking about developers. That makes a lot of sense for a lot of tools that see bottom-up adoption, but in a world of cloud, where you're seeing massive deals get signed, I don't know too many developers out there who can sign a 50 million dollar cloud services contract more than once because they get fired the first time they outstrip their authority. Do you think that that model is changing?James: So, ‘new kingmakers' is quite a gendered term, and I have been asked to reconsider its use because, I mean, I don't know whether it should be ‘new monarchmakers?' That aside, developers are a fundamentally influential constituency. It's important, I think, to say that they themselves are not necessarily the monarchs; they are not the ones sitting in Buckingham Palace [laugh] or whatever, but they are influences. And it's important to understand the difference between influence and purchase. You're absolutely right, Corey, the cloud is becoming more, like traditional IT. Something I noticed with your good friends at GCP, this was shortly after the article came out that they were going to cut bait if they didn't get to number two after whatever period of time it was, they then went intentionally inside a bunch of 10-year deals with massive enterprises, I guess, to make it clear that they are in it for the long haul. But yeah, were developers making that decision? No. On the other hand, we don't talk to any organizations that are good at creating digital products and services—and increasingly, that's something that pretty much everybody needs to do—that do not pay a lot more attention to the needs and desires of their developers. They are reshoring, they are not outsourcing everything, they want developers that are close to the business, that understand the business, and they're investing heavily in those people. And rather than seeing them as, sort of, oh, we're going to get the cheapest possible people we can that have some Java skills and hope that these applications aren't crap. It may not be Netflix, “Hey, we're going to pay above market rate,” but it's certainly what do they want? What tools do they want to use? How can we help them become more effective? And so yeah, you might sign a really big deal, but you still want to be thinking, “Hang on a minute, what are the skills that people have? What is going to make them happy? What do they know? Because if they aren't productive, if they aren't happy, we may lose them, and they are very, very important talent.” So, they may not be the people with 50 million dollars in budget, but their opinion is indeed important. And I think that RedMonk is not saying there is no such thing as top-down purchasing anymore. What we are saying is that you need to be serving the needs of this very important constituency, and they will make you more productive. The happier they are, the more flow they can have, the more creative they can be with the tools at hand, the better the business outcomes are going to be. So, it's really about having a mindset and an organizational structure that enables you to become more effective by better serving the needs of developers, frankly. It used to just be the only tech companies had to care about that, but now everybody does. I mean, if we look at, whoever it is: Lego, or Capital One, or Branch, the new insurance company—I love Branch, by the way. I mean—Corey: Yeah. They're fantastic people, I love working with them. I wish I got to spend more time talking with them. So far, all I can do is drag them on to the podcast and argue on Twitter, but one of these days, one of these days, they're going to have an AWS bill bigger than 50 cents a month, and then, oh, then I've got them.James: There you go. But I think that the thing of him intentionally saying we're not going to set up—I mean, are they in Columbus, I think?Corey: They are. The greater Ohio region, yes.James: Yes. And Joe is all about, we need tools that juniors can be effective with, and we need to satisfy the needs of those juniors so they can be productive in driving our business forward. Juniors is already—and perhaps as a bad term, but new entrants into the industry, and how can we support them where they are, but also help them gain new skills to become more effective? And I just think it's about a different posture, and I think they're a great example because not everybody is south of Market, able to pay 350 grand a year plus stock options. That's just not realistic for most businesses. So, it is important to think about developers and their needs, the skills they learned, if they're from a non-traditional background, what are those skills? How can we support them and become more effective?Corey: That's really what it comes down to. We're all trying to do more with less, but rather than trying to work twice as hard, how to become more effective with the time we have and still go home in time for dinner every day?James: Definitely. I have to say, I mean, 2020 sucked in lots of ways, but not missing a single meal with my family definitely was not one of them.Corey: Yeah. There are certain things I'm willing to trade and certain things I'm not. And honestly, family time is one of them. So, I met you—I don't even recall what year—because what is even time anymore in this pandemic era?—where we sat down and grabbed a drink, I want to say it was at Google Cloud Next—the conference that Google does every year about their cloud—not that Google loses interest in things, but even their conference is called ‘Next'—but I didn't know what to expect when I sat down and spoke with you, and I got the sense you had no idea what to make of me back then because I was basically what I am now, only less fully formed. I was obnoxious on Twitter, I had barely coherent thoughts that I could periodically hurl into the abyss and see if they resonated, but stands out is one of the seminal grabbing a drink with someone moments in the course of my career.James: Well, I mean, fledgling Corey was pretty close to where he is now. But yeah, you bring something unique to the table. And I didn't totally know what to expect; I knew there would be snark. But yeah, it was certainly a pleasure to meet you, and I think that whenever I meet someone, I'm always interested in if there is any way I can help them. And it was nice because you're clearly a talented fellow and everything else, but it was like, are there some areas where I might be able to help? I mean, I think that's a good position as a human meeting another human. And yeah, it was a pleasure. I think it was in the Intercontinental, I guess, in [unintelligible 00:11:00].Corey: Yes, that's exactly where it was. Good memory. In fact, I can tell you the date: it was April 11 of 2019. And I know that because right after we finished having a drink, you tweeted out a GIF of Snow White carving a pie, saying, “QuinnyPig is an industry analyst.” And the first time I saw that, it was, “I thought he liked me. Why on earth would he insult me that way?”But it turned into something where when you have loud angry opinions, if you call yourself an analyst, suddenly people know what to do with you. I'm not kidding, I had that tweet laser engraved on a piece of wood through Laser Tweets. It is sitting on my shelf right now, which is how I know the date because it's the closest thing I have to a credential in almost anything that I do. So, congratulations, you're the accrediting university. Good job.James: [laugh]. I credentialed you. How about that?Corey: It's true, though. It didn't occur to me that analysts were a real thing. I didn't know what it was, and that's part of what we talked about at lunch, where it seemed that every time I tried to articulate what I do, people got confused. Analyst is not that far removed from an awful lot of what I do. And as I started going to analyst events, and catching up with other analysts—you know, the real kind of analyst, I would say, “I feel like a fake analyst. I have no idea what I'm actually doing.” And they said, “You are an analyst. Welcome to the club. We meet at the bar.” It turns out, no one really knows what is going on, fully, in this zany industry, and I feel like that the thing that we all bond over on some level is the sense of, we each only see a piece of it, and we try and piece it together with our understanding of the world and ideally try and make some sense out of it. At least, that's my off-the-cuff definition of an industry analyst. As someone who's an actual industry analyst, and not just a pretend one on Twitter, what's your take on the subject?James: Well, it's a remarkable privilege, and it's interesting because it is an uncredentialed job. Anybody can be, theoretically at least, an industry analyst. If people say you are and think you are, then then you are; you walk and quack like a duck. It's basically about research and trying to understand a problem space and trying to articulate and help people to basically become more effective by understanding that problem space themselves, more. So, it might be about products, as I say, it might be about processes, but for me, I've just always enjoyed research. And I've always enjoyed advice. You need a particular mindset to give people advice. That's one of the key things that, as an industry analyst, you're sort of expected to do. But yeah, it's the getting out there and learning from people that is the best part of the job. And I guess that's why I've been doing it for such an ungodly long time; because I love learning, and I love talking to people, and I love trying to help people understand stuff. So, it suits me very well. It's basically a job, which is about research, analysis, communication.Corey: The research part is the part that I want to push back on because you say that, and I cringe. On paper, I have an eighth-grade education. And academia was never really something that I was drawn to, excelled at, or frankly, was even halfway competent at for a variety of reasons. So, when you say ‘research,' I think of something awful and horrible. But then I look at the things I do when I talk to companies that are building something, and then I talked to the customers who are using the thing the company's building, and, okay, those two things don't always align as far as conversations go, so let's take this thing that they built, and I'll build something myself with it in an afternoon and see what the real story is. And it never occurred to me until we started having conversations to view that through the lens of well, that is actual research. I just consider it messing around with computers until something explodes.James: Well, I think. I mean, that is research, isn't it?Corey: I think so. I'm trying to understand what your vision of research is. Because from where I sit, it's either something negative and boring or almost subverting the premises you're starting with to a point where you can twist it back on itself in some sort of ridiculous pretzel and come out with something that if it's not functional, at least it's hopefully funny.James: The funny part I certainly wish that I could get anywhere close to the level of humor that you bring to the table on some of the analysis. But look, I mean, yes, it's easy to see things as a sort of dry. Look, I mean, a great job I had randomly in my 20s, I sort of lied, fluked, lucked my way into researching Eastern European art and architecture. And a big part of the job was going to all of these amazing museums and libraries in and around London, trying to find catalogs from art exhibitions. And you're learning about [Anastasi Kremnica 00:15:36], one of the greatest exponents of the illuminated manuscript and just, sort of, finding out about this interesting work, you're finding out that some of the articles in this dictionary that you're researching for had been completely made up, and that there wasn't a bibliography, these were people that were writing for free and they just made shit up, so… but I just found that fascinating, and if you point me at a body of knowledge, I will enjoy learning stuff. So, I totally know what you mean; one can look at it from a, is this an academic pursuit? But I think, yeah, I've just always enjoyed learning stuff. And in terms of what is research, a lot of what RedMonk does is on the qualitative side; we're trying to understand what people think of things, why they make the choices that they do, you have thousands of conversations, synthesize that into a worldview, you may try and play with those tools, you can't always do that. I mean, to your point, play with things and break things, but how deep can you go? I'm talking to developers that are writing in Rust; they're writing in Go, they're writing in Node, they're writing in, you know, all of these programming languages under the sun. I don't know every programming language, so you have to synthesize. I know a little bit and enough to probably cut off my own thumb, but it's about trying to understand people's experience. And then, of course, you have a chance to bring some quantitative things to the table. That was one of the things that RedMonk for a long time, we'd always—we were always very wary of, sort of, quantitative models in research because you see this stuff, it's all hockey sticks, it's all up into the right—Corey: Yeah. You have that ridiculous graph thing, which I'm sorry, I'm sure has an official name. And every analyst firm has its own magic name, whether it's a ‘Magic Quadrant,' or the ‘Forrester Wave,' or, I don't know, ‘The Crushing Pit Of Despair.' I don't know what company is which. But you have the programming language up-and-to-the-right line graph that I'm not sure the exact methodology, but you wind up placing slash ranking all of the programming languages that are whatever body of work you're consuming—I believe it might be Stack Overflow—James: Yeah.Corey: —and people look for that whenever it comes out. And for some reason, no one ever yells at you the way that they would if you were—oh, I don't know, a woman—or someone who didn't look like us, with our over-represented faces.James: Well, yeah. There is some of that. I mean, look, there are two defining forces to the culture. One is outrage, and if you can tap into people's outrage, then you're golden—Corey: Oh, rage-driven development is very much a thing. I guess I shouldn't be quite as flippant. It's kind of magic that you can wind up publishing these things as an organization, and people mostly accept it. People pay attention to it; it gets a lot of publicity, but no one argues with you about nonsense, for the most, part that I've seen.James: I mean, so there's a couple of things. One is outrage; universal human thing, and too much of that in the culture, but it seems to work in terms of driving attention. And the other is confirmation bias. So, I think the beauty of the programming language rankings—which is basically a scatterplot based on looking at conversations in StackOverflow and some behaviors in GitHub, and trying to understand whether they correlate—we're very open about the methodology. It's not something where—there are some other companies where you don't actually know how they've reached the conclusions they do. And we've been doing it for a long time; it is somewhat dry. I mean, when you read the post the way Stephen writes it, he really does come across quite academic; 20 paragraphs of explication of the methodology followed by a few paragraphs explaining what we found with the research. Every time we publish it, someone will say, “CSS is not a programming language,” or, “Why is COBOL not on there?” And it's largely a function of methodology. So, there's always raged to be had.Corey: Oh, absolutely. Channeling rage is basically one of my primary core competencies.James: There you go. So, I think that it's both. One of the beauties of the thing is that on any given day when we publish it, people either want to pat themselves on the back and say, “Hey, look, I've made a really good choice. My programming language is becoming more popular,” or they are furious and like, “Well, come on, we're not seeing any slow down. I don't know why those RedMonk folks are saying that.” So, in amongst those two things, the programming language rankings was where we began to realize that we could have a footprint that was a bit more quantitative, and trying to understand the breadcrumbs that developers were dropping because the simple fact is, is—look, when we look at the platforms where developers do their work today, they are in effect instrumented. And you can understand things, not with a survey where a lot of good developers—a lot of people in general—are not going to fill in surveys, but you can begin to understand people's behaviors without talking to them, and so for RedMonk, that's really thrilling. So, if we've got a model where we can understand things by talking to people, and understand things by not talking to people, then we're cooking with gas.Corey: I really love installing, upgrading, and fixing security agents in my cloud estate! Why do I say that? Because I sell things, because I sell things for a company that deploys an agent, there's no other reason. Because let's face it. Agents can be a real headache. Well, now Orca Security gives you a single tool that detects basically every risk in your cloud environment -- and that's as easy to install and maintain as a smartphone app. It is agentless, or my intro would've gotten me into trouble here, but  it can still see deep into your AWS workloads, while guaranteeing 100% coverage. With Orca Security, there are no overlooked assets, no DevOps headaches, and believe me you will hear from those people if you cause them headaches. and no performance hits on live environments. Connect your first cloud account in minutes and see for yourself at orca.security. Thats “Orca” as in whale, “dot” security as in that things you company claims to care about but doesn't until right after it really should have.Corey: One of the I think most defining characteristics about you is that, first, you tend to undersell the weight your words carry. And I can't figure out, honestly, whether that is because you're unaware of them, or you're naturally a modest person, but I will say you're absolutely one of my favorite Twitter follows; @monkchips. If you're not following James, you absolutely should be. Mostly because of what you do whenever someone gives you a modicum of attention, or of credibility, or of power, and that is you immediately—it is reflexive and clearly so, you reach out to find someone you can use that credibility to lift up. It's really an inspirational thing to see. It's one of the things that if I could change anything about myself, it would be to make that less friction-full process, and I think it only comes from practice. You're the kind of person I think—I guess I'm trying to say that I aspire to be in ways that are beyond where I already am.James: [laugh]. Well, that's very charming. Look, we are creatures of extreme privilege. I mean, I say you and I specifically, but people in this industry generally. And maybe not enough people recognize that privilege, but I do, and it's just become more and more clear to me the longer I've been in this industry, that privilege does need to be more evenly distributed. So, if I can help someone, I naturally will. I think it is a muscle that I've exercised, don't get me wrong—Corey: Oh, it is a muscle and it is a skill that can absolutely be improved. I was nowhere near where I am now, back when I started. I gave talks early on in my speaking career, about how to handle a job interview. What I accidentally built was, “How to handle a job interview if you're a white guy in tech,” which it turns out is not the inclusive message I wanted to be delivering, so I retired the talk until I could rebuild it with someone who didn't look like me and give it jointly.James: And that's admirable. And that's—Corey: I wouldn't say it's admirable. I'd say it's the bare minimum, to be perfectly honest.James: You're too kind. I do what I can, it's a very small amount. I do have a lot of privilege, and I'm aware that not everybody has that privilege. And I'm just a work in progress. I'm doing my best, but I guess what I would say is the people listening is that you do have an opportunity, as Corey said about me just now, maybe I don't realize the weight of my words, what I would say is that perhaps you have privileges you can share, that you're not fully aware that you have. In sharing those privileges, in finding folks that you can help it does make you feel good. And if you would like to feel better, trying to help people in some small way is one of the ways that you can feel better. And I mentioned outrage, and I was sort of joking in terms of the programming language rankings, but clearly, we live in a culture where there is too much outrage. And so to take a step back and help someone, that is a very pure thing and makes you feel good. So, if you want to feel a bit less outraged, feel that you've made an impact, you can never finish a day feeling bad about the contribution you've made if you've helped someone else. So, we do have a rare privilege, and I get a lot out of it. And so I would just say it works for me, and in an era when there's a lot of anger around, helping people is usually the time when you're not angry. And there's a lot to be said for that.Corey: I'll take it beyond that. It's easy to cast this in a purely feel-good, oh, you'll give something up in order to lift people up. It never works that way. It always comes back in some weird esoteric way. For example, I go to an awful lot of conferences during, you know, normal years, and I see an awful lot of events and they're all—hmm—how to put this?—they're all directionally the same. The RedMonk events are hands down the exception to all of that. I've been to Monktoberfest once, and I keep hoping to go to—I'm sorry, was it Monki Gras is the one in the UK?James: Monki Gras, yeah.Corey: Yeah. It's just a different experience across the board where I didn't even speak and I have a standing policy just due to time commitments not to really attend conferences I'm not speaking at. I made an exception, both due to the fact that it's RedMonk, so I wanted to see what this event was all about, and also it was in Portland, Maine; my mom lived 15 minutes away, it's an excuse to go back, but not spend too much time. So, great. It was more or less a lark, and it is hands down the number one event I will make it a point to attend. And I put that above re:Invent, which is the center of my cloud-y universe every year, just because of the stories that get told, the people that get invited, just the sheer number of good people in one place is incredible. And I don't want to sound callous, or crass pointing this out, but more business for my company came out of that conference from casual conversations than any other three conferences you can name. It was phenomenal. And it wasn't because I was there setting up an expo booth—there isn't an expo hall—and it isn't because I went around harassing people into signing contracts, which some people seem to think is how it works. It's because there were good people, and I got to have great conversations. And I kept in touch with a lot of folks, and those relationships over time turned into business because that's the way it works.James: Yeah. I mean, we don't go big, we go small. We focus on creating an intimate environment that's safe and inclusive and makes people feel good. We strongly curate the events we run. As Stephen explicitly says in terms of the talks that he accepts, these are talks that you won't hear elsewhere. And we try and provide a platform for some different kind of thinking, some different voices, and we just had some magical, magical speakers, I think, at both events over the years. So, we keep it down to sort of the size of a village; we don't want to be too much over the Dunbar number. And that's where rich interactions between humans emerge. The idea, I think, at our conference is, is that over a couple of days, you will actually get to know some people, and know them well. And we have been lucky enough to attract many kind, and good, and nice people, and that's what makes the event so great. It's not because of Steve, or me, or the others on the team putting it together. It's about the people that come. And they're wonderful, and that's why it's a good event. The key there is we focus on amazing food and drink experiences, really nice people, and keep it small, and try and be as inclusive as you can. One of the things that we've done within the event is we've had a diversity and inclusion sponsorship. And so folks like GitHub, and MongoDB, and Red Hat have been kind enough—I mean, Red Hat—interestingly enough the event as a whole, Red Hat has sponsored Monktoberfest every year it's been on. But the DNI sponsorship is interesting because what we do with that is we look at that as an opportunity. So, there's a few things. When you're running an event, you can solve the speaker problem because there is an amazing pipeline of just fantastic speakers from all different kinds of backgrounds. And I think we do quite well on that, but the DNI sponsorship is really about having a program with resources to make sure that your delegates begin to look a little bit more diverse as well. And that may involve travel stipends, as well as free tickets, accommodation, and so on, which is not an easy one to pull off.Corey: But it's necessary. I mean, I will say one of the great things about this past year of remote—there have been a lot of trials and tribulations, don't get me wrong—but the fact that suddenly all these conferences are available to anyone with an internet connection is a huge accessibility story. When we go back to in-person events, I don't want to lose that.James: Yeah, I agree. I mean, I think that's been one of the really interesting stories of the—and it is in so many dimensions. I bang on about this a lot, but so much talent in tech from Nigeria. Nigeria is just an amazing, amazing geography, huge population, tons of people doing really interesting work, educating themselves, and pushing and driving forward in tech, and then we make it hard for them to get visas to travel to the US or Europe. And I find that to be… disappointing. So, opening it up to other geographies—which is one of the things that free online events does—is fantastic. You know, perhaps somebody has some accessibility needs, and they just—it's harder for them to travel. Or perhaps you're a single parent and you're unable to travel. Being able to dip into all of these events, I think is potentially a transformative model vis-à-vis inclusion. So, yeah, I hope, A) that you're right, and, B) that we as an industry are intentional because without being intentional, we're not going to realize those benefits, without understanding there were benefits, and we can indeed lower some of the barriers to entry participation, and perhaps most importantly, provide the feedback loop. Because it's not enough to let people in; you need to welcome them. I talked about the DNI program: we have—we're never quite sure what to call them. We call them mentors or things like that, but people to welcome people into the community, make introductions, this industry, sometimes it's, “Oh, great. We've got new people, but then we don't support them when they arrive.” And that's one of the things as an industry we are, frankly, bad at, and we need to get better at it.Corey: I could not agree with you more strongly. Every time I wind up looking at building an event or whatnot or seeing other people's events, it's easy to criticize, but I try to extend grace as much as possible. But whenever I see an event that is very clearly built by people with privilege, for people with privilege, it rubs me the wrong way. And I'm getting worse and worse with time at keeping my mouth shut about that thing. I know, believe it or not, I am capable of keeping my mouth shut from time to time or so I'm told. But it's irritating, it rankles because it's people not taking advantage of their privileged position to help others and that, at some point, bugs me.James: Me too. That's the bottom line, we can and must do better. And so things that, sort of, make you proud of every year, I change my theme for Monki Gras, and, you know, it's been about scaling your craft, it's been about homebrews—so that was sort of about your side gig. It wasn't about the hustle so much as just things people were interested in. Sometimes a side project turns into something amazing in its own right. I've done Scandinavian craft—the influence of the Nordics on our industry. We talk about privilege: every conference that you go to is basically a conference about what San Francisco thinks. So, it was nice to do something where I looked at the influence of Scandinavian craft and culture. Anyway, to get to my point, I did the conference one year about accessibility. I called it ‘accessible craft.' And we had some folks from a group called Code Your Future, which is a nonprofit which is basically training refugees to code. And when you've got a wheelchair-bound refugee at your conference, then you may be doing something right. I mean, the whole wheelchair thing is really interesting because it's so easy to just not realize. And I had been doing these conferences in edgy venues. And I remember walking with my sister, Saffron, to check out one of the potential venues. It was pretty cool, but when we were walking there, there were all these broken cobblestones, and there were quite a lot of heavy vehicles on the road next to it. And it was just very clear that for somebody that had either issues with walking or frankly, with their sight, it just wasn't going to fly anymore. And I think doing the accessibility conference was a watershed for me because we had to think through so many things that we had not given enough attention vis-à-vis accessibility and inclusion.Corey: I think it's also important to remember that if you're organizing a conference and someone in a wheelchair shows up, you don't want to ask that person to do extra work to help accommodate that person. You want to reach out to experts on this; take the burden on yourself. Don't put additional labor on people who are already in a relatively challenging situation. I feel like it's one of those basic things that people miss.James: Well, that's exactly right. I mean, we offered basically, we were like, look, we will pay for your transport. Get a cab that is accessible. But when he was going to come along, we said, “Oh, don't worry, we've made sure that everything is accessible.” We actually had to go further out of London. We went to the Olympic Park to run it that year because we're so modern, and the investments they made for the Olympics, the accessibility was good from the tube, to the bus, and everything else. And the first day, he came along and he was like, “Oh, I got the cab because I didn't really believe that the accessibility would work.” And I think on the second day, he just used the shuttle bus because he saw that the experience was good. So, I think that's the thing; don't make people do the work. It's our job to do the work to make a better environment for as many people as possible.Corey: James, before we call it a show, I have to ask. Your Twitter name is @monkchips and it is one of the most frustrating things in the world trying to keep up with you because your Twitter username doesn't change, but the name that goes above it changes on what appears to be a daily basis. I always felt weird asking you this in person, when I was in slapping distance, but now we're on a podcast where you can't possibly refuse to answer. What the hell is up with that?James: Well, I think if something can be changeable, if something can be mutable, then why not? It's a weird thing with Twitter is that it enables that, and it's just something fun. I know it can be sort of annoying to people. I used to mess around with my profile picture a lot; that was the thing that I really focused on. But recently, at least, I just—there are things that I find funny, or dumb, or interesting, and I'll just make that my username. It's not hugely intentional, but it is, I guess, a bit of a calling card. I like puns; it's partly, you know, why you do something. Because you can, so I've been more consistent with my profile picture. If you keep changing both of them all the time, that's probably suboptimal. Sounds good.Corey: Sounds good. It just makes it hard to track who exactly—“Who is this lunatic, and how did they get into my—oh, it's James, again.” Ugh, branding is hard. At least you're not changing your picture at the same time. That would just be unmanageable.James: Yeah, no, that's what I'm saying. I think you've got to do—you can't do both at the same time and maintain—Corey: At that point, you're basically fleeing creditors.James: Well, that may have happened. Maybe that's an issue for me.Corey: James, I want to thank you for taking as much time as you have to tolerate my slings, and arrows, and other various vocal devices. If people want to learn more about who you are, what you believe, what you're up to, and how to find you. Where are you hiding?James: Yeah, I mean, I think you've said already, that was very kind: I am at @monkchips. I'm not on topic. I think as this conversation has shown, I [laugh] don't think we've spoken as much about technology as perhaps we should, given the show is normally about the cloud.Corey: The show is normally about the business of cloud, and people stories are always better than technology stories because technology is always people.James: And so, yep, I'm all over the map; I can be annoying; I wear my heart on my sleeve. But I try and be kind as much as I can, and yeah, I tweet a lot. That's the best place to find me. And definitely look at redmonk.com. But I have smart colleagues doing great work, and if you're interested in developers and technology infrastructure, we're a great place to come and learn about those things. And we're very accessible. We love to talk to people, and if you want to get better at dealing with software developers, yeah, you should talk to us. We're nice people and we're ready to chat.Corey: Excellent. We will, of course, throw links to that in the [show notes 00:37:03]. James, thank you so much for taking the time to speak with me. I really do appreciate it.James: My pleasure. But you've made me feel like a nice person, which is a bit weird.Corey: I know, right? That's okay. You can go for a walk. Shake it off.James: [laugh].Corey: It'll be okay. James Governor, analyst and co-founder at RedMonk. I'm Cloud Economist Corey Quinn and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you hated this podcast, please leave a five-star review on your podcast platform of choice along with an insulting comment in which you attempt to gatekeep being an industry analyst.Announcer: This has been this week's episode of Screaming in the Cloud. You can also find more Corey at screaminginthecloud.com, or wherever fine snark is sold.This has been a HumblePod production. Stay humble.

The presenter is James Thurston, G3ict, who is joined by Chris Misra, University of Massachusetts, Amherts.  SPEAKER: Please welcome James Thurston and Chris Misra.  James is the Vice President for G3ict, where he leads the design and implementation of new worldwide advocacy strategies and programs to scale up G3ict's global impact. G3ict is the global Initiative for Inclusive Information and Communication Technologies promoting the rights of Persons with Disabilities in the Digital Age.   Chris is the Vice Chancellor and CIO at the University of Massachusetts – Amherst.  At the University of Massachusetts Amherst, information technology plays a crucial role in many key areas, including but not limited to student success and engagement, research competitiveness, and multi-modal education.   Today they will be looking at how leveraging accessibility and inclusion can provide an adaptive and accessible multi-modal IT ecosystem to support campuses. Chris will review findings, digital inclusion gaps, next steps for improvements at the University of Massachusetts – Amherst and more!   JAMES: Our goal with this session is to share with all of you some detail about how the U Mass approach to being more accessible, more inclusive through technology. Through its technology assets and deployments and Chris and I over the next hour want to surface and share with you, I think, what are some valuable and actionable experiences from U-mass, that will hopefully apply to your own accessibility journey in your higher education institution. This particular session is the third in the IAAP higher ed series. It's also the first of the next three sessions, which relate to, and are sort of sourced from, G3ict's work with universities and higher education institutions, using our smart university digital inclusion maturity model tool. And I'm just going to briefly give you a little bit of information on that, just so it will make a little bit more sense as Chris and I start to have a conversation about our work with Chris and what Chris has been leading and driving there at the University of Massachusetts model. The smart university digital inclusion maturity model tool, it's an assessment tool and a benchmarking tool. And it's really to help universities better understand how their digital transformation, how they're using technology, how their use of data is either supporting accessibility inclusion of people with disabilities or potentially presenting barriers to the inclusion of people with disabilities, including faculty, staff and students. And even, really, the broader community where the university might sit. So, the tool itself, the assessment tool, it's made up of 28 variables, we call them enablers, and they define what it really means to be an inclusive smart university. They enable accessibility and enable inclusion. These variables, or enablers, contribute to the university's building up the capabilities that we know support greater inclusion in accessibility at a university. And these capabilities, and with the tool we're able to look at the role of things like leadership, the existence of a digital inclusion strategy or not, we look at the accessibility of the university's engagement channels, how it's pushing information out, getting information back, are those accessible, we look at things like the culture of diversity, is the university employing people with disabilities, is it training on disability and accessibility. We look at things like procurement, what systems does the university have in place to make sure that its investments in technology and its deployments of technology are accessible. So, a whole range of issues that we know are pretty critical to a university becoming increasingly accessible, increasingly inclusive. And, of course, we do dig into technology and data, which are the backbone and the life blood of a smart university. And the way that we use these variables, these 28 enablers, these 18 capabilities, is in a three-step process. That is pretty straightforward. We do some analysis of documents, I.T. strategies, digital inclusion strategies, budgets, accessibility statements. We do some analysis of those. We make available to the university an online self-assessment where they sort of write themselves across these variables. And then we actually do an expert site visit where we curate a team of global experts on inclusion and accessibility and bring them in to engage with the university, dig into some of these variables, and hopefully, at the same time, provide some help and assistance on pain points, issues that the university might be experiencing. And then the final step is we deliver a road map, which includes a set of scores for each of these variables and a set of priorities and recommendations for moving forward. So, if you're at a level 2 on a scale of 1 to 5 for procurement, these are the kinds of things you might think about doing to get to levels 3, 4 and 5. So pretty straightforward. The process with U Mass, we'll be talking -- jumping in with Chris in just a minute. We, I think, started that process last spring and sort of did the site visit, I think, in early summer this past year. And in that process, we reviewed probably more than 20 documents, these budgets, these strategies, these org charts, policy statements. We talked with more than 40 U Mass faculty and staff over ten different listening sessions. And then we delivered the road map. And in the road map, U Mass, I think, had real relative strengths in the area of leadership and other areas identified where there's an opportunity to really make some steps to have some improvements in the capabilities and ultimately in the accessibility and inclusion there. So that's a little bit of a background on how G3ict came to be working with U Mass. I thought it might be useful to sort of frame our conversation. And with that, I'm really excited now, and I've been I've been looking forward to this discussion, Chris, for quiet a while, of jumping in with you and hearing a little bit about the U Mass Amherst journey, where you are, where you're headed but maybe we can start, if you can tell us a little bit about the University of Massachusetts Amherst, give us a general sense of the university and how you're deploying technology there. CHRIS: Sure, thanks, James. So, U-Mass Amherst, for those of you who aren't familiar with Massachusetts geography, I grew up in Massachusetts, so I know, we're about 90 minutes west of Boston, 175 miles north northeast of New York City. It's a relatively rural area, but it's a significant institution. We have about 24,000 undergraduate students, about 7,500 graduate students. About 1,500, instructional faculty. Largest state institution in New England, research one, $233 million, $1.3 billion budget, big. 1500-acre campus, which is the biggest thing is trying to find your way around the campus. Our journey of accessibility came about really through just conversations and advocacy within the campus in terms of this has to be a key responsibility for us. Our technology platform is really very traditional, higher education. We migrated many of our services to the Cloud, excessive use of Zoom recently, Google, exchanging out platforms, and the challenge with the campus of this size is really just managing the breadth and depth of both a campus and a highly decentralized institution. JAMES: Great, thanks, Chris. We probably started having conversations about a year ago, actually, just as we were coming into the pandemic and universities, in particular, I think, we're scrambling to try to figure out, okay, how do we fulfill our mission in this environment. Can you talk a little bit about sort of what that looked like as we were coming into the pandemic from a CIO perspective, the kinds of things that you were thinking about and needing to take steps on? CHRIS: Sure. There were sort of two interesting aspects. I mean, aside from it's amongst the longest days of my career in the past and probably ever going forward just in terms of how do you migrate an institution that size to an online education. We made a very early determines, we were one of the early schools who decided to go remote, we thought it would be two weeks, we took a double spring break. We quickly ramped up the technology portfolio. We were fortunate that we already had tools like Zoom, we had pretty good practice of online education, fairly robust online education school, but not a lot of digitally native capacity to teach instructionally remote. So, there's really two principal areas of impact. There's a principal area of impact in academics, and the impact in administration. Since we extended out the spring break for an extra week, we actually had two weeks to figure out how we were going to do these academics. But that meant we had to move the administration into an online world in a very short order of time. From the basic things, how are we going to pick up the mail to how are we going to communicate, how do staff meetings work, and recognizing that institutionally we were a face-to-face campus, our staff meetings were face to face, our one-on-one meetings were face to face and we had to comport all of that. So, the social change was actually significant, and that led quickly to substantial change in the academic side as well. We saw increases of -- astounding increases in Zoom utilization. One of my favorite statistics on Zoom utilization is in the first week of -- I'm sorry -- in the first day of the first week when we brought our academics online, we used more Zoom time the entire month previously. So, each day in April, we used the same number of Zoom hours in the entire month of February. And that pace continued through the balance of the spring semester. JAMES: Chris, I remember that data point as well. And I often use it myself because I think it is a really easy, compelling example of this accelerated digital transformation. Can you talk a little bit about where -- how accessibility fits into I.T. and into the university in general? I know, you've got a really great I.T. strategy, accessibility is embedded in there. I don't think that there's a specific digital inclusion or necessarily accessibility strategy, but maybe a little bit about strategy and organizational structure, just so we understand how accessibility fits in. CHRIS: Absolutely. So, we've actually been fortunate from an I.T. perspective, we've had staff supporting accessibility but a very modest staff. I think when James did the assessment, we had a single staff member, at a high point we had two staff, and we're in the process of transitioning that as well. So, our overall accessibility strategy comes multi fold. My team is responsible for the information technology, and that's across the board. That means we support students' technology use in the classroom, we support faculty's technology use, we provide general technology use for administration. We do not have responsibility for accessibility accommodations per se, we have a disability services team on campus, it's organized in our student affairs area. So, really, it's a key partnership working between student affairs, working with my central I.T. organization. I will say from a maturity perspective, though, we had staff, it was very much more about boutique service, solving discrete individual accommodations, and it hadn't crossed the line of being generalizable to most of our day-to-day normal use of population technology. It was very much targeted at a subset population that had self-disclosed a need for an accommodation. JAMES: And I know as part of this conversation, we'll get into a bit later, a discussion of these issues of silos and coordination and collaboration, which we had a lot of conversation about when we were working with you. So, maybe we can jump in now a little bit into this sort of notion of accelerated accessibility that happened for U Mass for sure but probably for most universities around the world because of the pandemic and what that looks like. And how -- maybe start with a little bit about how does the university deploy technology assets that are accessible and really are working for everyone, and what did it look like to have this sort of intensified effort to include a focus on accessibility as you were becoming more and more -- using technology more and more to do all of your services, both administrative and academic and teaching? CHRIS: Sure. So I'll say the structural change that really occurred was, I think, originally we treated accessibility as meeting the needs of identified individuals who had to have accommodations and making sure our web content was accessible, doing basic accessibility reviews, it was basic, W3CG, not a lot of detailed work and it was not invested across the board in terms of we had a lot of natively accessible tool set but it was really natively delivered accessible tool set, there wasn't a lot of work and push for us to drive an institutional priority around making sure our content was natively accessible, except where there was either liability or like I say, a dedicated accommodation. As we went into the pandemic, that really had to pivot because we realized, we no longer had the mechanism, we couldn't deploy a notetaker for a student in a classroom because there wasn't a classroom. We couldn't make point by point accommodations on either technology or use case basis. So, we had to start generalizing. We were fortunate that we were in the midst of a transition of our strategic plan, so we were actually at a point of making that type of pivoting. Of identify digital inclusion as a core property going forward. And, so, we had a lot of the substrate work, but I'd say the pandemic really drove us to recognize it wasn't solely about a compliance obligation but much more about reaching our community where they're at. JAMES And as you were making that shift, were you -- some of what we had talked about in the past, when you were in the middle of all this, is there some -- much like what you would probably do on the security side of your work, any sort of risk rating system, and trying to make these decisions about where are we going to prioritize and focus first and those types of decisions when it comes to accessibility? CHRIS: Absolutely, yeah. So, one of the things, for me, I consider fortunate is prior to my role as a CIO I've been in a number of roles at U Mass. I came from a very technical background. But I spent many years in a security role. So, I was responsible for information security at the organization. Within the information security field, it's very much a derivative of risk management field that works very heavily on risk and concepts like maturity models play very heavily there. So, when you're assessing implementation of controls to mediate security risk, you have to assess what is the cost of control, what is the value, what is the return. The easiest way to assess that is against a maturity model so I had a lot of familiarity with the concept of maturity models. One of the things that made me very excited about the engagement of G3ict was the application of this discipline-type technology of applying a maturity model to a domain like accessibility because I had not seen that done before, but I had a lot of experience.   What's nice about that, it gives you an abstract way of measuring your progress, although there can be a metric and a rating, it also talks about where you are legitimately relative to your peers but what steps you can take, and gives you a better mechanism to start prioritizing resource allocations. So, as I moved out of information security, into a CIO role, I changed from being responsible for compliance to be responsible for budget, priority and allocation. So being able to have a document like a maturity model that can help guide investment and show return relative to cost was a better framework for us to make ongoing decision making and I felt more at home in that security field, like oh, we know this is a high risk, let's apply a resource here, even if the resource is fairly modest, it's going to get us significant return against that issue. JAMES: Can you -- if you're able, can you talk a little bit about some of those areas where you were making decisions at the time in this accelerated period of focus on accessibility in addition to a lot of other things? Where you are identifying risk and taking some steps specifically around improving the accessibility of your technology assets? CHRIS: Sure. And in some cases, what's interesting with the technology assets is our first task, because we are technologists, is let's just fix the technology.  What it really came down to in many cases it's about the business process as well. So, when we started going through the assessment process, we realized the first and foremost, we have a 24,000 student population moving remote. We had to get in front of the faculty and instructors to explain why this was relevant. So, it wasn't so much about, hey, don't put a poorly scanned PDF up on your website, we'd already been providing those types of instructions, but it really had to pivot to, is your course content accessible natively. And in that case, it is still digital accessibility, but it may be, have you applied alt tags to your PowerPoints, have you made sure you're not doing poorly rendered PDFs, is your content screen reader able. It was these sorts of things that are actually technology related but it was about the business process behind it. What we did, we formed a working group between my team, our university library, our center for teaching and learning, and our instructional designers, we call our ideas group, it's a big long acronym I can never remember, but we put those together as ideas is the support resource, faculty primary interact with. Library is a resource that provides a lot of the supplementary external materials, I.T. is a lot of times the bridging infrastructure. So, it was really about forming a coalition within campus, identifying priorities, it was helped inform by the maturity model where those risk areas are, and providing guidance, which wasn't just apply technology, but help individuals creating content to make the content accessible natively, because the incremental cost to them was much smaller than us throwing lots of money at making the technology do it for them. JAMES: You touched on a really important point that I think would resonate with any university around the world, which is the sort of decentralized structure of universities, we'll dig into that more deeply in a minute. But I'm just wondering, as you were partnering, and leading this accelerated digital transformation during the pandemic and focus on accessibility as part of that, how was that received? I recall in part of our conversations, for example, there was, with the faculty, there may have been some incentives around going digital, maybe even going digital and accessible at the same time. But, in general, how would you say this accelerated accessibility was received? CHRIS: So I would say it was received well. I was actually somewhat surprised at how well it was received. Those of you who have been at universities, especially in large universities, they're very decentralized power structures, recognize that change comes slowly. The ship turns slowly, as we like to say, right? It will get there eventually but it turns slowly. I was tremendously impressed with the empathy and the caring shown by the faculty and the instructors involved in supporting students at a distance, but they recognized an individual obligation. And, really, our role as technologists was to reduce that barrier to them to make their content accessible. So, there was some financial structure incentives, as we went into our subsequent semester that helped faculty teaching online to build hybrid instruction. What we did, we developed a series of standards to make sure as our content went out, it met these standards, that was sort of the condition of the incentivising. So rather than make it a big deal, like hey, you all have to do accessibly, it was really embedded into an existing incentivization structure, but we added the accessibility obligations as additional compliance checks to go to an accessible by default role. I was concerned about the uptake we'd see from faculty, you but I was very surprised. The other thing with decentralized higher education, as much as the ship turns slowly, once everybody gets where you're going, they generally get on board. So, we took this more adapt to the culture of the campus, adapt to the change culture of the campus, and tie into those change mechanisms that are effective, that's what really helped us be more successful, I believe, that and the empathy of the faculty and the instructors. SPEAKER: The International Association of Accessibility Professionals membership consists of individuals and organizations representing various industries including the private sector, government, non-profits, and educational institutions. Membership benefits include products and services that support global systemic change around digital and the built environment. United in Accessibility, join I.A.A.P. and become a part of the global accessibility movement. JAMES: So, maybe take a little bit of a step back, but still thinking about the deployment of accessible, inclusive technology assets. Can you talk a little bit about your thinking, U-Mass' thinking and approach to incident management? How do you remediate issues, how does that happen? And then the other piece that I'd love to hear a little bit more is about testing, when it comes to accessibility, automated user testing? CHRIS: Sure.  So, two-fold. On the testing piece, we've employed students both in our help desk and our accessibility office to do some of the testing. We actually are just launching another program to do more broad usability testing, which includes accessibility testing, working in concert with some faculty in our writing program. They tend to have a good degree of expertise in there. So, the other advantage of a higher education institution is students are fresh, motivated, focused and quite inexpensive labor and they like the work. It's great experience, it's great value to them, it's great value to us institutionally. So, we've really tied into that, this is something we've done for many, many years, tie into a workforce that's motivated, it's interesting. We've definitely seen the awareness of our student body around accessibility issues is much greater in the last five and ten years than it has been previously. I've been asked about making sure content is accessible from a course perspective, I've been -- there's been a shift and the challenge is, that shift isn't necessarily as strongly perceived at the faculty that are instructing them because they tend to be a little bit older. So, using the students to help motivate that work has really helped improve the accessibility piece of it because we've embedded the testing more into the core processes when we role out new applications, whether it's a PeopleSoft application or a new web application, we're commissioning that testing as part of launches of applications, as well as new web properties. JAMES: Chris, Mark Nichols is asking a question. If the standards that you're talking about, before content goes out, or even other standards that you're looking at and testing on really to -- related to accessibility, are they in-house standards or are you using global standards like WCAG? CHRIS: They are in-house standards developed off WCAG. But I will get James and Yulia a link afterwards. We posted up our academic standards and it referred to those suggestions, it was built off of WCAG. One thing, just amongst everybody here, accessibility is not my first language. I'm an info set guy, I was a technologist, I was a Linux assist Admin. I know the acronyms, I know the space, but it's not quite my domain of expertise, I'm fortunate to have well-trained staff who understand this both on my team and the disability services team so we can absolutely share those standards. They're academic standards we posted for the fall semester for 2020. JAMES: So, Chris, I know, as I recall from our previous conversations and work, there were sort of nine legacy platforms that you guys had deployed. And I'm wondering if over the course of the many months since we've worked together, how you're thinking about incident management has changed or evolved or how you're approaching that and dealing with that, how much of an issue -- accessibility issues have become in this accelerated period? CHRIS: I mean, the challenge has been, before -- I believe we started talking about the accessibility review before the pandemic. I had high hopes that we would be able to make significant progress in some of our core administrative systems in the shorter term. And then the pandemic hit and next thing I knew, we were running COVID testing sites for the western part of the state. We were running vaccination programs. We were one of the earliest vaccination programs for first responders. So, unfortunately, a lot of the resources I'd have to help make accessibility improvements to our core applications really got put aside for new application deployment. What I will say, we've been strong about implementing accessibility standards for the new applications as we roll them out. So, at this point my hope is to get us back, likely as we refactor some of our applications to do a more detailed review. It's definitely a goal, it's an asserted goal, it's part of the road map and strategy going forward. It's just with the pandemic, the resource allocation tipped everything so sideways. I'm a little further behind than I hoped to be there. Legacy platforms, we haven't made as much progress as I was hoping to. We've certainly made progress. What we've made significant progress in is in the awareness and the accountability that accessibility is an issue that has to be accommodated at deployment or at refresh for an application. That was a huge improvement that we hadn't been able to make as successfully in the past. JAMES: You've shared, at least with me, what I think are some really interesting facts about how you as a CIO had to evolve into using technology to support a dramatically increased public health role of the university for the state during the pandemic, which is pretty amazing. There's another question from Peter, who decides the threshold for compliance? It's never 100%. CHRIS: And, so, again, this is where I'm going to go a little bit on my information security soap box, right? The definition of compliance is just bending the wheel to another. So, yeah, it's never 100%. It's not going to be 100%. Really what we do is use a risk-based model, understanding where the risk is. Usually that started historically, with either liability of the institution or legal accommodation requirements. That's a barrier to cross, that's a legal obligation to cross, but it's really not meeting this notion of digital inclusion as a core value of the campus. So, the threshold is really handled generally on a case-by-case basis. There isn't an arbitrary threshold. What we focus on, these are the recommendations to make your course content accessible, to make your web property accessible. These are the standards. From a web property perspective, we do actually have a compliance check less, we actually have a team inside our university relations group that will run through both automated testing and some hand-based testing to look at, does the content render in a screen reader, does it provide appropriate alt image tags and things like that. My goal with compliance is always making sure that we're investing the right amount of resource to ensure that we meet the largest degree of population as effectively as we can. Information security is a risk management game. Accessibility and compliance become a risk management game. And it's hard sometimes to think of it in those terms, but one of the challenges, I think, that I've seen working with some of my staff is, staff come with a tremendous degree of accessibility concern are passionate, profound and focused. The challenge is also balancing those resources against the other resource needs of campus, right? How much time can I spend on ensuring my web properties are accessible if, at the same time, I have to take those same resources to allocate them to make sure we're setting up a COVID vaccination clinic. It's really a continuum of resource allocations. For me, thinking about how can I make sure there's always a guarantee of resource allocation towards accessibility, recognizing that that might not be core to our mission. What can be core to our mission is deploying accessible applications on an going forward basis. But our core mission is instructing students, performing research, being a land grant institution. We always have to balance that resource allocation to make sure we're moving the ball forward in these different fronts, but serving, first and foremost, what is it we're core here to do, instruct students. Accessibility is a component of that, but it can't be the dominating component. It has to be an absolutely key component, but the dominating is us delivering students with a path to their future. JAMES: Thanks, Chris. Before we go on to the next topic, briefly, if you can talk about thinking about your staff, the technology staff at the university even more broadly, perhaps, the skill and training on accessibility and how you think about that and approach that. CHRIS: Yeah, I think there's three aspects of that. So, the first aspect was, we've had some staff transition, in our accessibility staff. Making sure we have the appropriate professional training for folks who are doing the accommodation work or engagement and consultation work. That's always been a fairly straightforward, that's an institutional investment. That makes good sense. Where the real value we've seen, both from a leadership perspective, raising accessibility as a topic of concern at senior levels at the institution. So, raising this concept, our provost is fluid with the concept of accessibility, right? He's not going to go out and do a WCAG review, but he gets the concept that he can instruct his Deans that this is going to have to be a key component of the content their faculty deliver on a go forward basis. From a training perspective, there's a lot of low-cost effort that we can put in place to raise accessibility on the radar from a leadership perspective, discuss it with a broad team of not just executive but operational, manager and cross-functional teams, we've also been very successful in engaging our students about accessibility conversations, what does that mean to you. Because my concept of accessibility is how big is the font is, a student's concept of accessibility may be how does it render on a cell phone. That's a very different problem set, depending on what technology you apply to that. It doesn't have to be, but we need to collect those voices in terms of understanding what that means and a lot of that does not involve a lot of out-of-pocket cost. JAMES: And just one more question, then we'll move on to one of my favorite topics, which is sort of collaboration across departments. From Kathy, how do you decide what to test? Do you do spot checks of certain course websites and more checking of applications used by larger populations? CHRIS: Sure. So let me break up the administrative from the academic side of things. So, from the administrative side of things, we actually have a review process for our web properties in conjunction between our I.T. team and our university relations team that's responsible for our web properties. So, there's actually a checkoff evaluative process for our core web properties. I'm fully confident there's probably some research lab websites or some individual P.I. websites that were created by word press that probably don't meet the testing. We focus on the high-visibility targets to make sure the information that's most relevant to a large population gets out there. From a course perspective, we do have a couple of very large enrollment courses. We tend to focus most of our resources on ensuring the platform is accessible natively. There is always compliance issues, right? There's always some faculty member that wants to take their PDF from 1982, turned it 10 degrees and scan it and hope it will work. We do spot checks, especially on the large enrollment course, but generally we focus on ensuring the platforms are natively compliant, and then providing strong guidance to the faculty to ensure they have the guidance and parameters of what are those steps that they can take that's relatively die minimums, relatively incremental burden for them but provides a more inclusive experience natively. JAMES: Thanks so much. Now let's shift gears a little bit, Chris, and get into the issues of collaboration, coordination, working across departments at a big university on a big campus. One of the things -- one of the other things that stuck in my mind that you said early on when we started working together was how at the University of Massachusetts Amherst, there are some really amazing, I give you full credit for this term, these pockets of heroic effort. Which I think will resonate with anyone who's doing work in the accessibility field, any kind of organization, that there are really good practices happening in parts of the university. And I think some of the ones that had come up, U Mass were around UDL, instructional design, and some other areas that the Assistive Technology Center, some really good resources and practices. But siloed and not scaled because they are siloed in departments. And even some departments, I think, that may have been a little ahead of others in terms of academic departments in terms of their approach to inclusion and accessibility. I know that since we last worked together, and during this -- these last several months, the accelerated accessibility period, that you've done some work on greater collaboration and coordination. Can you talk a little bit about that, including maybe some description of what it felt like before taking some improving steps? CHRIS: Sure. I mean, for those of you who have spent time, and this is true of both large and small higher education, but higher education tends to be a very siloing structure, at least in my experience. There's a couple of exceptions but there tends to be a lot of belief that faculty are experts in their domain, by virtue of experts in their domain, that there's a lot of notions of self-rule, self governance and that sometimes extends out to administration. I will avoid pining too deeply on that. But there are some challenges that come from that. There's communication, there's logistical challenges. What you end up seeing is subcultural development about, this is important. And what I've observed, and I've seen this both in technology fields as well as accessibility is and let me take it out of the accessibility domain, my email team for many years thought they delivered the best email application out there. They understood how it worked, nobody else understood how it worked but it made a lot of sense to them, and they thought they were doing great. And, so, within their minds, they were providing heroic effort but the impact from a user perspective was not the heroic effort they thought it was going to be. I've observed similar challenges within accessibility at the campus as well. There are these pockets of brilliance, pockets of heroes that are out there working with good empathy this. The challenge is, they don't always have, or they have not been provided the degree of leadership to have these conversations more broadly. So, why is it that one of the very small questions that came up had to do with a resource allocation around providing captioning for course materials for students that had defined accessibilities -- defined accommodations and it became this substantial issue that the costs were decentralized out to each of the departments? And many of our departments, by virtue of being academic, tend to run on very thin budgets. So, when we stopped this conversation, we went into the pandemic, said, what is the net budget impact can here? I can't remember what the number was. Let's say it was $40,000 across the campus. You know, when I brought it up to the right degrees of leadership, they're, like, we're arguing over this? $1.3 billion budget. Don't get me wrong, $40,000 is real money but that's not the thing we should be arguing. By virtue of us decentralizing decision making to that being 40 decisions of $1,000 each, it became much more difficult to get the resource allocation. So the key observation I'd say is, clearly articulating why this is important, clearly articulating that when we marshal our resources collectively, we can make changes that don't seem so big when you're working in a larger context and it really involves that collaboration between and amongst groups and I've actually been very pleased, I think, going through the review with G3ict, certainly delivered us a road map, it certainly delivered us a maturity model, it gave us a sense of where we sat, but it actually opened up conversations amongst teams that have worked and sat together for many, many years but those conversations weren't as effective. You know, we always joke, my background, like I said, is information security with auditors. If the audit doesn't tell you what you want to know, you did something wrong, right? I will say, I have been very pleased with James, had a very objective, and the team he brought in was excellent, but it told us what we wanted to hear, you've got some pockets of brilliance but there's some coordination, there's some logistics, alignment you need to do. Having a third party assert that brought more credibility to this notion of accessibility than any empathetic call from staff on campus could have. JAMES: Thank you for that, Chris. And I think to your credits, and we've done a good number of these reviews of universities and of smart cities as well, I think one of the things that you did was pretty courageous, I think, you involved an enormous number of people from both the academic side of the university and the administrative side in a large number of conversations. I think over these ten conversations that our expert team had with your university community, there were 200 participants, 40 unique individuals, I think, but they were heavily attended, some of the discussions were quite passionate, I will say, because the passion was there. Can you talk a little bit about where -- recognizing and wanting to make even more progress on collaboration and breaking down some of these silos and amplifying some of these heroic efforts. Either where some of these -- what are some of these pockets that you would love to see replicated and I'd also be curious to hear a little bit about what are some of the groups that can help promote this kind of collaboration? We had talked, in particular, in our conversations with U Mass, the faculty Senate actually had been pretty engaged on these issues of accessibility. There is an academic advisory committee, I think, on accessibility. Are there any sort of areas that or groups that can help you as the CIO promote this collaboration? CHRIS: Yeah, you know, that's a great question, James. One of the key things, and one of the things that I found sort of helpful to me in my career, both in the CIO role I'm in, and previously in the information security role, is identifying those governance structures and where they have efficacy. That's one of the things that I've observed at least in some of the accessibility staff I've worked with. They have passion, they have technical focus, they have deep empathy and deep caring, but they don't have the experience with how universities govern themselves or what the governance structures are, where decision authority really rests. It's great to think, you know, I've had staff that think I have all sorts of decision authority, I have responsibility for my $30 odd million of budget, but sort of the extent of the responsibility I have, I have responsibility for standards, as we get into decision making, I have to tie into bodies like our faculty Senate, I have the information technology advisory council, some of these academic advisory councils. We have other both faculty and administration, leadership groups, task forces that are focused on the shared governance structure of universities, we have administrative focus units. So working with accessibility teams to identify where those power structures exist, how change occurs in an institution, and how you can be effective at making this case amongst all the other many cases, that was one of the key things, which again, I was fortunate to have a lot of this experience in information security, I observed many of my peers in information security, other institutions, come in and try to win the day of information security solely on technical merit. Like, well, we're going to go to this, we're going to spend another $100,000 on this new antivirus thing, because it's incrementally better than this other thing. And quite honestly, when you're making that case to a CFO or to a Chancellor or Provost, that's $100,000 for a technical thing I don't understand. Whereas, if you can turn it into a conversation about, either mediating institutional risk, delivering institutional benefit, understanding how change actually occurs on a campus, when you make that case in business terms, it becomes more rational and plausible amongst the thousand other things the Provost or the Chancellor or the CFO has been asked in the last day. So that's the key transition for me, how do you find those power structures, how do you identify those governance structures, how do you make it a business value proposition, not solely a technical or empathetic proposition. JAMES: That's actually a perfect segue, Chris, into a topic that I know you feel passionately about and that we recognize as well in our assessment tool, the maturity model is really pretty critical to an increasing commitment and capability on accessibility, inclusion. And that is what we call, you know, the business case for accessibility. Moving beyond, particularly here in the United States, every university has a legal requirement to be accessible and inclusive, in other countries as well, but you and I are sitting or standing here in the U.S. today. But we'd like to sort of move the conversation beyond risk avoidance and legal compliance to what is the business case? As you say, the why or the value proposition, of accessibility. Based on your experience, either over the past year as a result of or as part of this assessment, or just in general, can you talk a little bit more about that, that key issue of how you are trying to tap into the why and the value proposition at U Mass? CHRIS: Absolutely. So, one of the key value conversations we have on a regular basis, and this is not a conversation unique to U Mass, it's not a conversation even unique to the northeastern United States, but within the United States, there is a significant decline coming in college-age students in the coming years based off of just changes in birth rates, patterns like that. What you're seeing is increasing competition within the field for high-qualified students, you've seen this manifest through, U Mass was deeply involved in the closure of mount IDO, we actually took over parts of the campus, we inherited some of the students from there, you know, recently, I know Becker college in Worcester announced that it is intending to close as well. One of the key things that drives university budgets is attracting, retaining strong students to maintain competitiveness. And if the population is shrinking, one way from a business value perspective is to make sure that you're delivering a natively accessible education to appeal to as broad a population of students as possible. If we are, by virtue of not providing accessible content, unintentionally excluding some arbitrary percentage, say, even 5% or 10% of our students. That's 10% of a student population that will not become paying students, high-quality students. We're excluding a portion of our population that could engage. And that's based on a conjecture of 10%. If the conjecture is much higher, we could be unintentionally avoiding potential population when we know there's going to be restrictions in that. So from a very raw perspective, if budgets are driven at institutions through a combination of both undergraduate, graduate tuition, and research education, if we're not strongly positioned, meeting the market demand, and that can either be meeting market demand because there's a growth or being more competitive and approachable to a larger population, if there's a reduction in that student -- potential student population. We are not tied into the strategic mission of the institution to provide our role as a land grant, to provide instruction to residents of the commonwealth and to create a workforce for the commonwealth. We have over 250,000 living alumni from U Mass, vast majority of them stay in Massachusetts. At U Mass, we graduate more students than the top eight private institutions from the state of Massachusetts combined. That means we're tied deeply to the workforce. So, if we cannot find a way to make our content accessible and approach that, we're not only risking our own potential economic future, but we're actually risking issues of workforce development and long-term competitiveness of the state potentially. JAMES: Yeah. A couple thing in there that I would love to follow up on. One is, you've talked about the role of students, the diversity of students as a driver for the competitiveness of U Mass in fulfilling your many roles as a land grant state university. As you're thinking about the why and the value proposition, are you having discussions or thinking about, we certainly discussed this as part of our engagement, the technology assets you're deploying, the accessibility of them, it also impacts faculty and staff, is that part of the calculus as well? CHRIS: It absolutely is. Because, again, that same, you know, rubric holds, as we remain a competitive institution, we have to be competitive in our hiring practices. And that means approaching as broad a population of the available talent pool out there. If we are not delivering natively accessible experiences, whether that is directly instructional or it's, you know, pedantic as H.R. forms, right, everybody's got to do an H.R. form somewhere, but if we're delivering, and we've had our challenges in the institution of three copy, carbon forms that, you know, our vice Chancellor of human resources loves to say, he shut off the last -- he got rid of the last typewriter not that many years ago, right? There's clearly some substantial issues that we've had. If we're not competitive with the potential workforce, both at the highly skilled faculty level, at the highly skilled technical level, but at all levels of the organization, we're going to potentially compromise the available resource pool as well. So, again, if it comes back to business case, I see a compelling business case to make sure accessibility is core to our digital transformation because it allows our long-term access to a larger candidate pool. With the move to remote work, we're having very serious conversations, what does that mean, long term, right? We've had staff working remotely, we're going to struggle, like every other public and private institution is now, what does it mean for workforces returning, if the pandemic slows as we're hoping? Would we accept this notion of more broad remote work? Does that increase our potential labor pool? Those are all interesting questions that are going to have to be worked out. But if we cannot position our institution to be natively digitally inclusive, we're excluding a portion of our population that may have accessibility accommodations that we're just turning our back to from the get-go. And that's a challenge. That's a loss both to us and it's a loss of potentially high talented, high-skill individuals that could make this university stronger. JAMES: So, Chris, I would imagine that with your expertise and experience in the information security space, you've sort of tackled this issue of the value proposition, the why of security. How is the starting conversations, advancing conversations about the business case, the why and the value proposition, of accessibility, how is that being received? Where is it being received well, where is it a bit more of a struggle? CHRIS: I'd say it's being received well at the high level when I talk about this notion of making sure we're finding the most accessible pool, we're making -- ensuring we're going to remain competitive, tying to workforce. I think the value proposition, executive level, is very strong there. We've always been very successful at the value proposition at a very operational level, for our students and our staff that are providing accessibility accommodations, who are working with students on a one-to-one basis, for our help desk who are taking calls. Where the challenge is, and I think we've had a path to move forward, is for people who do not have either the high-level strategy, do not have the day-to-day blocking and tackling is trying to make the value proposition of why is this one more thing they should do, why should you take ten more minutes to ensure accessibility, alt image tags, why should you take two more minutes to turn on the captioning features in Zoom or PowerPoint? So, I ended up teaching again this fall, I taught for many years at U Mass, I took a number of years off. When I taught this fall, I taught entirely remotely, I taught entirely by Zoom. Zoom's native captioning feature wasn't there. So, I elected to use PowerPoint, use Office 365, turn on the captioning when I lectured. I use Zoom to record the lecture. And it put the captions into it. It's not perfect. It wasn't great.  But the cost to me was thinking to do it, clicking a check box on Office 365 on PowerPoint and making sure I hit play and record. So, the incremental burden to me of applying captioning to course content, and I've taught this course material for 20 years, this is the first year I did that. So, there is two minutes of clicking, it took me about ten minutes going through each of my slide decks to apply alt image tags. That investment of my time as an instructor is absolutely worth it to make sure that content is more accessible. And that's the value proposition I think we have to hit that middle portion of the population, if we can move that population, the impact is going to be tremendous. SPEAKER: With the adoption of WCAG 2.1 in many countries, there is an increased demand for web developers, designers and other professionals with knowledge of web accessibility standards and guidelines. With this growth comes the need for an objectively verified level of expertise. The Web Accessibility Specialist exam will provide individuals and employers with the ability to assess web accessibility competence. Complete the WAS and CPACC exam to earn the special designation of Certified Professional in Web Accessibility! 

James: Hi, audience. This is James Kandasamy. You're listening to Achieve Wealth Podcast through Value at Real Estate Investing. Today, we have an awesome guest. His name is Nikolaï Ray. He's who's the founder and CEO of MREX, which is an acronym for Multifamily Real Estate Exchange; is considered by many of his peers in North America as the leading expert in apartment investing with over $1 billion analysis, underwriting and transactions. He's also a pioneer in mid-cap, multifamily financial engineering, which is, you know, he's regarded as the teacher, advisor and also the keynote speaker. He's also a real estate tech innovator to his current work on the multifamily real estate big data, artificial intelligence and property tokenization using blockchain technology. Hey, Nikolaï, welcome to the show.   Nikolaï: Hi, James. Thanks for having me.   James: Okay, so do you want to mention anything that I missed out about your credibility?   Nikolaï: No, that sounded like a mouthful.   James: It's going to be ready technology-centric discussion today, right?   Nikolaï: Yeah, the full story is that it should probably a lot longer, but I mean, that could be for, that could be for a whole other episode of the origin story of how, how'd you get to, you know, how you get to where we get in life, and professionally and personally, but yeah, that's, that's the gist of it, you know, everything that's underwriting and, you know, acquisitions, dispositions, refinancing, obviously, portfolio management, whether it be the small market, small cap market, you know, between 500 units, all the way up to the mid-market, you know, market cycles, and obviously, have a very strong penchant for data and for technology.   So, so that's, that's pretty much what I've done over the last, I guess, over the last seven or eight years, is focused on, you know, for the most part, I focused mostly on acquisitions. So I was in charge of an investment banking firm, we worked, you know, on both sides of the transaction advisory side of things, for investors and we also work with a lot of ultra high net worth investors, that's kind of where I built my speciality. Eventually, ultra high net worth investors and private equity firms and family offices, you know, by doing all that I kept on, kept on getting annoyed with the fact that the multifamily market is so fragmented, and the data is so packed, I just kept on thinking to myself, you know, this, this market this, which is an important market, I mean, the apartment building investment market is a almost a $10 trillion market worldwide.   It's a, quite, house is a primary need of human beings, which is to have somewhere to live. And yet, you know, we're kind of in the dark ages as multifamily investors, because number one, we don't have access to any centralized marketplace. If you compare us to a stock investor who can go on the NASDAQ and trade every type of tech stock or stock market investing world, the New York Stock Exchange, and we don't have access to any data, the data is very raw, it's very, it's kind of, you know, what I call legacy data, as you look at like Costar and, and all these various data providers who provide this very raw and inert data, without any actual, you know, context around the data, and without any helps with regards to making decisions business intelligence wise, as a multifamily real estate investor. So that's kind of how that's how my career has gone so far. That's why I went from transactions and more towards data technologies because I felt like there was so much work to be done to help investors just you know, be better investors for once.   James: Okay, so let me understand MREX because I think it's important since you have a lot of passion we need right now. Right? So --   Nikolaï: Yeah.   James: Multifamily Real Estate Exchange, if I understand it correctly, so what you're saying is right now, the data is so fragmented, and a lot of times when, you know, people like me underwrite deals, we have to do so much work, I did too. I mean, I really learn to write [inaudible 04:05] for four hours because I did all the property management financial, that there are so much of mistakes in the property management financials, you have to do T-3, T-12, you had to do expense ratio, you have to do market comps, and all that. So what you're saying is, you are going to summarize all that, and make it so easy to look at so that it can be treated as a commodity, commodity, is that right?   Nikolaï: Not necessarily. So, so the idea is taking you as an example or any of your listeners, right now, who are multifamily real estate investors actually acquiring properties, let's say you have the capital ready, or your investors have the capital ready to allocate to an acquisition, you know, just actually finding that first property to buy or the next property to buy is a very time intensive and energy intensive job, right. You have to go on, you have to go on all the different MLS, you have to go on the loop that's of this world, the [inaudible 00:05:00] and the [inaudible :00:05:01] and, you know, just --   James: [inaudible00:05:02]   Nikolaï: Right, and then you have all the brokers, and then you have all the broker websites, then you have all the pocket listings and you have not even really touched the majority of the market, you're actually still missing probably, you know, anywhere between 25% and 50%, of actual transactional inventory, depending which metro area you're in. So it's a lot of work, even just looking at the stuff that's on websites. That's a lot of work because you have to go on between five and fifteen websites, each website has a different user interface, this different user experience, and actually shows different information. On one site, maybe on [inaudible 00:05:42] you might have a cap rate, maybe on the MLS, you won't have cap rate, you'll just have gross revenue.   So then you have to figure out your own cap rate off of that. It's a lot of work, you know, and for me, I just never thought it made sense, to not be able to say, hey, I want to buy a multifamily property, whether it be a five unit, whether it be a 50 unit or 500 units, I want to go on to one marketplace, we're all properties are centralized in a unified, and normalized manner. Because that's the second point of it, is you have to be able to normalize expenses, if you want to start comparing apples with apples, and oranges with oranges. So that's the second phase. So what we're doing with MREX is we're building a unified, standardized marketplace for multifamily investors, where they will be able to see every single property that exists, that is for sale, despite on the way it's being sold or listed or marketed. We're going to be working with brokers obviously, the goal is not to get rid of brokers or anything like that, that's not, that's not what our goal is. Our goal is to help brokers, help investors just make the whole transaction process much quicker and more time efficient. And that way, you know, we're making the market more, you know, just a more efficient market.   James: Okay, okay. Got it. Got it. So you are basically streaming lining the whole selling and buying process, I guess, just to make --?   Nikolaï: Absolutely. Absolutely.   James: Okay, got it.   Nikolaï: And the analysis process as you said too, right, because it's one, it's one thing finding the properties and having them all in one marketplace. Okay, let's say, let's say you have the NASDAQ, let's say I wanted Lesson TechStars rather than multifamily properties. I go the NASDAQ and I can see every single company, I could have access to inventory, now that's the first step. Now the second step is, once you have access to inventory, and the information provided on all that inventory is normalized and standardize, well, I still have to be able to start comparing and start, you know, building my own models to say, well, if I'm a cash flow investor, which stocks are generating the most cash flow relative to the other, to the rest of the inventory. So that's where you know, context and alternative data comes into play with our platform, is that we want to be able to, to offer data and tools to you as a multifamily investor, to help you streamline your underwriting of the inventory that you've seen. So that's really the two things we're focused on at the moment.   James: Okay, got it. Got it. So interesting. So that'll be, that'll make a lot of, I mean, for investors or for buyers, they would be able to see what kind of deals that they want to buy,--   Nikolaï: Right.   James: Not just what they want to get the yield out of --   Nikolaï: Exactly and instead of going on fifteen websites, well, they've only one website, instead of having to, you know, start normalizing expense ratios and sifting through, through T-12 and T-3, and doing all that, it already kind of be all chewed up and kind of built up already. So you can actually focus, focus on analyzing, focus on comparing and establish, okay, I want to buy this property using this strategy. And why would I do that versus the other property that I see over there? That's ultimately what's the most important thing.   James: Okay, okay. So could it then be a good idea to match this with a crowdfunding platform, because during the crowdfunding, they can choose what deal they want, right?   Nikolaï: Right. So crowdfunding is an interesting thing. The problem is crowdfunding, obviously, crowdfunding, crowdfunding has tried to kind of attack two things. Number one is liquidity, right? Because, as a multifamily investor, the more properties that you acquire, you increase your net value, right, you're a richer person. But the problem with that, is that you have to leave equity in every single deal, right. The banks won't finance you 100%. So you always have to leave equity. So as you get richer and richer, value wise, you are actually cash poor, because you're leaving so much equity in each property that you acquire. And there's always a part of the equity that has to stay in those properties. But the problem, the second problem is that as you get, as you become a bigger investor, and you acquire more properties, and you're more well known in the market, well, you get access to better deals, but now you have less access to more money, even though you're richer. That's kind of the liquidity conundrum of multifamily investors. So that's why crowdfunding is interesting, because it gives kind of, you know, after the JOBS Act, it helps multifamily investors, particularly syndicators, to go and raise capital from, you know, from investors either through the regulation CF, you know, and obviously, regulation D506C was quite an upgrade also to be able to start to, to market capital raises. But what we're doing is we're actually building a second platform that is shadowing the Emirates platform. And what that platform will be doing is, we're actually going to create a sort of stock market and take the crowdfunding thing a bit further, because crowdfunding, as I said, tries to attack the liquidity conundrum. But the problem is, is that when you invest in a crowdfunding deal, you as an LP, are stuck in that deal for the lifetime of the deal. So if it's a five, it's a three to five year exit, well, your money stuck in that, so you, you as a passive investor, or as an LP, do not have liquidity. That's, that's one problem. And obviously, crowdfunding also helps with accessibility, right. So obviously, regulation D506C is only for accredited investors, which doesn't really help accessibility that much. Regulation CF has helped that because now then, that kind of lowers the barrier to entry for everyday retail investors who don't have that much money, but it's still a fairly limited regulation. At the moment, I know, they're trying to pass a couple of bills to increase the opportunity for regulation CF investors. So what we're doing is we're building a second platform, that's going to be basically a stock market, in its own sense, where, you know, through a broker-dealer partner that we hope to get. And then also through eventually a, an ATS license with the SEC, we would like to be able to take it a step further, and allow a multifamily investor to pretty much offer his property through one the various regulations on that marketplace. That way people could invest as passive investors, as LPs, either through Reg D, Reg CF, or eventually maybe even Reg A plus, but then they would also be able to acquire or access a secondary trading market so that they're not stuck in an illiquid period of three to five years. They would actually eventually be able to re trade part of their shares or all of their shares, kind of like you would at the stock market.   James: Wow. So it looks like you are trying to really disrupt the industry.   Nikolaï: Yeah, definitely. [inaudible 00:12:36]. You know, multifamily real estate looks like the stock market before the arrival of NASDAQ. Right? It's like before the internet, even though we have internet and multifamily real estate, it's as if people are still trading kind of like stock market investors were trading on floors, you know, with papers and screaming and doing all that stuff. It, you know, it doesn't make sense.   James: Yeah, yeah. It's so private nowadays, right? I mean, everybody has priority, we do not know how, even multi families performing under a different private LLC.   Nikolaï: Exactly.   James: There's a lot of good news out there. But there's also bad news, but nobody talks about it. right. So I think,--   Nikolaï: Oh, right. And the data, the data out there, like look at any of the data from, you know, even from the really big organization like NCREIF so the National Council of Real Estate Investment Trusts, NCREIT sorry. Even their data, when they know these indexes based on multifamily markets is based on a very low volume of the actual number of transactions. So when say a, a company, various data company says, well, the cap rate right now of say Atlanta is 5%, for example, well, that's actually based on a very small portion of overall transactions. So it's hard for us as multifamily investors, to really be sure are about the numbers that we're inputting into our underwriting models, because we're basing it off so little data.   James: Got it. Got it. Yeah, it's, it is just so limited, right? Because everything is done on a private basis on syndication, which is not much of the data being published out there, right. So --   Nikolaï: It's like investing in the stock market, but not knowing how the stocks have performed historically.   James: Yeah. Correct. Correct. So but why do you think this would work? And because if you look at the demographics of the, I mean, because I'm looking at syndication, when we whenever we buy for multifamily.   Nikolaï: Right.   James: But for me, it's just a small part of the whole market.   Nikolaï: Right.   James: Even though we are I mean, maybe my group or my network thinks that that's the whole thing how people buy multifamily. I don't know, that's true, because I network with a lot of different type of people, right. So looking at the classes of investors who are buying multifamily, I think I know for me, my thing is maybe we are one of the, I am one the lowest level part of it, right, because we are buying Class B and C using high net worth individuals and all that, but there are a lot of higher network, higher calibre people who are playing at a different level, which we don't have, which I don't have visibility, maybe you have it right so. So are you trying to look at different classes of investors and cut through all of them? Are you looking at only some classes of people?   Nikolaï: So we're trying to help what we call the small cap to mid middle market investors.   James: Okay.   Nikolaï: So anyone who owns between five units and about, you know, I'd say around 2500 to 5000 units.   James: Okay.   Nikolaï: That's kind of where we stopped, you know, that's where we're focusing on because that, you know, the majority of transactions are actually done by, by small cap to mid-market investors.   James: Okay.   Nikolaï: You know, the multifamily market is historically a mom and pop market. Now, it's, you know, it has transition a bit, investors are getting bigger and bigger. But the reality is the majority of the market is not an institutional market, you know, at the root level, or the private equity firm level or family office level, depending obviously, which metro area you're in, right. New York City is obviously more of an institutional market. Canada, Toronto is a very institutional market, but the majority of cities and metro areas are still, you know, very small cap market. And the problem is that, you know, take you for an example as a syndicator, or even take someone who's not a syndicator, right, because a lot of investors, multifamily aren't syndicators, they just buy their own properties, you know, they end up with maybe, you know, anywhere between 50 and 500 units as time goes by. Now, the problem with with those types of investors and syndicators as yourself is that you do not have access to a team of underwriters, you don't have access to, you know, expensive data that say a real estate investment trust has more than a very big private equity firm has, you don't have access to all those analysts. So, you know, we want to try and make sure that the market stays very level and stays is a level playing field. Because, you know, ultimately, I think the multifamily real estate market is very important for a couple of reasons. Number one, you know, everyone talks about the disparity of wealth, right of the 1%, and how the disparity is getting bigger and bigger. And we could do a whole podcast on that and why it's happened and where it's kind of going. But ultimately, I think, you know, the multifamily market is probably, the market, it's probably the asset class that offers the best returns based on risk, with the best risk-adjusted returns. If you look at Sharpe ratios, and Sortino ratios and all these things. Now, it's also been proven, there's a lot of studies about this, a lot of university studies done on this, that, you know, social mobility comes from education, and access to property, right. The reason why people have been so poor for so long, and like the Brazilian favelas, or the Indian shanty towns, is because people don't have education, and they do not have access to property, they are not able to become landowners, or owners of their own homes, even less become investment property owners, right. So I think multifamily stays as a very important asset class, because, on top of filling a basic need of human beings, that means providing somewhere to live, it also is a very important mover, for the everyday investor, the mom and pop, just the normal person need you to be able to access a very good, very safe, wealth building asset class that does not have the same volatility, or the same pitfalls as say, the stock market and other types of asset classes. So I think it's very important that we provide, you know, tools and data and allow for the smaller investor, the investor that has less than 1000, or even less than 5000 units to be able to continue on performing, continue on from this, this asset class.   James: Got it. Got it. So let's go to a bit more details on some of the big data and artificial intelligence, right.   Nikolaï: Yeah.   James: So yeah, I studied artificial intelligence almost 24 years ago, every now it has become really popular, a lot of startups with artificial intelligence, right.   Nikolaï: Absolutely.   James: So the question is, how do you, I mean, first of all, let's define what, can you define artificial intelligence in your terms in terms of real estate? Because I studied engineering standpoint.   Nikolaï: Yeah, well, I'm not an engineer, by trade, so at least I'll give more of a generalist definition to the people listening which I think is probably gonna be very good. The important thing is to understand, kind of the difference between machine learning and artificial intelligence. So you know, machine learning is more of a, it's a less automated process, right. So a lot of what people are calling artificial intelligence is ultimately just machine learning. And what it is, is that let's say, let's say, you know, I'm a data scientist or an economist, and I build a predictive model using, say, Monte Carlo simulations. Well, I set a, I build a set of hypotheses, I plugged them into my Monte Carlo simulation, and then that runs. Now, with machine learning and artificial intelligence, what becomes very fun as you know, statistics are a funny thing, right? And economic modeling is a very funny thing because even though, you know, people in the economics world swear by predictive analytics, the reality is in data science, it's garbage in garbage out, right. So the outputs always depend on the inputs. So let's say you're doing an underwriting model, and you're looking at an apartment building, and and you say, well if I buy this apartment build in this way, my internal rate of return is going to be 25%. Okay. Now, internal rate of return, net present value is a, is an output or their outputs based ultimately on the strength of those outputs are only as good as the strength of the inputs.   James: Correct.   Nikolaï: And the very important inputs that affect an IRR and NPV, which ultimately led to two of the most important metrics to help you decide whether it's a buy a property or not are rent growth, expense inflation, refinancing interest rate; if your IRR and NPV is based on on refinance, because obviously IRR and NPV has to be based on an exit model. And the exit model can either be a refi or it can be a sale; disposition. And then if it's a disposition, while your IRR and NPV is based, ultimately off the reverse, the reversion cap rates, so the exit cap rate upon sale. Now what everyone's doing right now, in the multifamily market, especially small investors, and mid-market investors is they're just entering these inputs. You know, they're just playing it by ear, and they're not even playing it by ear. They're coming up with these random inputs that are based off absolutely nothing. I just had a huge discussion on LinkedIn about this, with a couple of investors where one guy was saying, well, you know, if I buy it at 5% cap rate, my underwriting model, what I do is, to establish the reversion cap rate. So the cap rate upon eventual sale, let's say five years, is I add 20 basis points to the purchase cap rate per year. So if I bought it at five today at a 5% cap rate, well, then five years from now, I predict that I'll sell it as 6% cap rate, okay. And, you know, people kind of hide behind this type of rule of thumb model, say, well, I'm being conservative, therefore, my underwriting models very good. The reality of it is your underwriting model is bullshit. Okay. It's not worth the the Excel spreadsheet that it's been written upon. The reality is, where are you pulling this, this expansion of 10% or 20%,10 or 20 basis points per year? What are you basing that off? Right? That's what anyone should be asking, What are you basing this off? While being conservative. How do you know you're being conservative?   James: Yeah.   Nikolaï: How do you know you're not being optimistic? Right? You could be being you could actually be very optimistic with that. And conservative might be and then an increase of 0.25 a year, right? The reality of it is that everyone underwriting deals, right now, they're not basing their inputs off any data, right. And they're definitely not basing it off any predictive analytics, because it's one thing to have the data, the historical data. But you know, just because you have historical data doesn't mean necessarily, that's going to repeat itself in the future. That's why we have predictive analytics. So let's say that based on historical data, your 5% acquisition cap rates will actually be a 5.5 in five years. Now, the problem with that is that the future, that history is never guaranteed of the future, right. So that's why you then have to plug in various scenarios where you're considering this. And that's where predictive analytics come very difficult because you're pretty much just kind of taking a shot in the dark and basing things off the past, but you're putting in like a margin of error. With machine learning and artificial intelligence, you're able to make your predictive models better ex post based on ex ante results. So let's say you create a model to predict the future cap rates, well, you want to predict the future cap rate of in five years, it's your goals to sell within five years. Well, if you predict that today, the probability that your five-year cap rate from now is going to be precise, is a lot lower than let's say, in four years, you predict the cap that same cap rate, right, because you'll be closer to your exit. So there'll be less room for margin of error. So what machine learning and artificial intelligence will allow you to do is to consistently kind of reset your model as time advances. So maybe your initial model based upon acquisition was off. But as you advance in time, the artificial intelligence and machine learning continues on training that same model, the same algorithm that you had, and adapts the various inputs and algorithms to make it more and more precise as you get, as you get closer. And on top of that, as you get closer, the range of distribution of property probabilities get smaller. So it's a double effect, your predictive models get even tighter and tighter as time goes by. And that's where [inaudible00:26:03] machine learning and artificial intelligence can really help out. Is that instead of just plugging in these ridiculous exit cap rates, and ridiculous growth rates and ridiculous inflation of expenses, and absolutely ridiculous refinancing interest rates, when we get closer and closer to being able to actually put in inputs that are based on something very, very solid and then, therefore, our underwriting models will become more and more precise. And what we want in underwriting when you're buying a property, whether you're a syndicator, and you're responsible for money of your LPs, or whether it's your own money, the goal of underwriting is not to be conservative. That's not what the goal of underwriting is. And anyone who says that they underwrite, and they're concerned, their underwriting is conservative, what they're really telling you is they don't know how to underwrite, okay.   James: Yeah.   Nikolaï: You don't want to be conservative, you want to be right on the dot, that's what you want to do with underwriting, you want to be as precise as possible because the reason that you buy the property today is you buy it for future cash flows. And cash flows can come in various ways, they come in an annualized cash flow so, so free cash flow, they come in the appreciation of the asset, so the value of that asset gains because of various market dynamics and because of the way you're, you're managing that property. And they also come through the capitalization of your mortgage. So there's a part of your mortgage that you're paying down, which is principal, right. So those are the three cash flows that you can receive. Now, when you're underwriting a deal, and you're looking at how much you should pay for, say, this hundred unit building you're looking at, well, if your inputs are off, you might buy that property. But it's a bad acquisition because you were too optimistic in your inputs. But it also happens that you were too conservative in your books, therefore, you didn't buy the property. Because if you input that at the exit capital, that property is 7%, but, in reality, five years from now, the exit cap rate is five and three quarters, well guess what? You missed one hell of an opportunity.   James: Correct.   Nikolaï: And in real estate investing, the most important thing is time value of money, we only have a very limited time during our lifetimes in which we can invest and create wealth. And we only have so many hours during the day. Therefore the cost of opportunity, the time value of money are the things that we should consider the most in our underwrite. And that's really where machine learning and artificial intelligence will help investors become much, much better. Obviously, you also need education, right? You have to understand these, I mean, this is advanced stuff. And I'm trying to kind of explain it in a simple way, where people who don't have master's degrees and PhDs in finance and engineering can understand it. But the reality of the matter is that multifamily investing is very, it's a very complex, it's a very sophisticated asset class, and you need a certain level of education.The problem being right now, despite the very high level of education that some investors have, we just don't have solid, predictive analytics tools and data to be able to make sure that we're actually able to transfer education into decent acquisitions.   James: Yeah. Well, that's very interesting, because exit cap rate is always being misused or mis-conservative right? So --   Nikolaï: Well, even entering cap rates, even acquisition cap rates, I see people saying, well, you know, I'm not gonna buy that property because it's a five cap rate and the markets trading at 5.5. Okay, is that a stabilized property? No, it's a value add property. Well, the cap rate doesn't, the cap rate is meaningless then. A cap rate is a metric of a stabilized asset. If the asset is not stabilized, there is no cap rate, because a cap rate is a perpetual annuity. It's a return metric, based on an unlevel perpetual annuity, which means the same cash flow every year forever.   James: Correct.   Nikolaï: Now, if you want to be able to calculate that your property has to be stabilized. So if you're not buying a property, because it's a five cap rate, and the market sharing at 5.5, but it's a value add deal, well, I'm sorry, I'm sorry to tell you, you should change, you should change fields, you should go play, you should go to Las Vegas and put it on red.   James: Not only that, I mean, not only new investors don't understand the entry cap rate doesn't matter [inaudible 00:30:46] and I don't know, I never see a reason not to do a stabilized deal. Not on commercial, right? So for me, I'm always [inaudible00:30:53] guy, that's why I --   Nikolaï: Well, unless you're a private equity firm or your family office or you're a RET or you're an ultra high net worth individual who now has, you know, net value of anywhere between ten and hundred and fifty million dollars, there's no real reason to do stabilize deals, right. The reason you wanted to stabilize deals is, because you have a very high net worth, or because you're trying to de-risk your portfolio. Right?   James: Correct.   Nikolaï: That's why you would just stabilize deals for small cap or mid cap investor.   James: Yeah, yeah. Most of the time. I mean, commercials always value at play. I mean,   Nikolaï: Of course.   James: I mean, there's a lot of people doing stabilized deal nowadays, just by getting a higher mortgage and getting slightly lower price, play on the mortgage side with the interest to get a cash flow, but --   Nikolaï: And that can work if you're a neurosurgeon, right? If you're a surgeon making a million and a half a year, and you're 35 and you say, well, you know, I want to start buying multifamily property because I like, I like real estate and I like the tangible part of the asset class. But I don't need any money right now, because I'm making a million, I'm making a million and a half a year. I don't need any cash flow. And I'm very long term and I just want to build myself a nice retirement, you know, because you know, that's what I want as objective. Well, then yes, buy stabilize property or be an LP and syndication, or purchase that stock in the [inaudible00:32:23], that's fine. But if your goal is to increase your wealth exponentially, in a short period of time, and what I mean by a short period of time is fifteen to, five to fifteen years. Well, then, yeah, you're gonna have to do some kind of value add, you can't just do financial arbitrage all the time.   James: Yeah. Yeah, there's a lot of deals out there in different asset class, which can give you that cash flow, right. I mean, you can buy a stabilized mobile home park, you know, it'll give you higher cash in cash than any multifamily deals.   Nikolaï: Right.   James: So even self-storage, or even multifamily, which has been stabilized, you get, you'll get good cash flow. But how long will that cash be guaranteed? Because you have a very tight DSER at that point of time. And let's say the market turn, you may not be, your DSER might be compromised right now, because you don't have any buffer. Right?   Nikolaï: Especially if you did not properly manage the terms of your mortgages. Right. So that's very dangerous. Like if you feel that you're, if you feel that the markets going to shift, say interest rate wise, the easiest way to kind of pull yourself out of that situation you just talk about is, you know, just take longer-term mortgages, you know, make sure that the mortgage does not end in five years, make sure it's a 10 year term, or even maybe a 30 year term. Right? That's, that's the easiest way to manage that risk.   James: Yeah, just do a hard loan.   Nikolaï: Right.   James: Which gives you like, 45 years. I mean, there's the other trick that a lot of people play is, you know, showing you need cash in cash based during IO period. And nowadays, people are getting five years, seven years, IO period and sometimes people think, oh, I will not hold, you know, that deal for long term. I mean, you are hoping on not holding, holding, right. But you do not know what's going to be happening to the economy, right?   Nikolaï: It's a dangerous game to play. And I'm not saying don't play it, but make sure you have the, make sure you have the education and the know-how to be able to manage that risk. It's all risk management. Ultimately, that's what it is.   James: Yeah, yeah.   Nikolaï: The problem, the problem is a lot of people are doing this, and they don't know what the hell they're doing.   James: Yeah, I mean, I think so there's so much of capital out there right now, looking for money to be placed in some way.   Nikolaï: Oh definitely.   James: And people don't think that are they going to putting 1% in the CD, I might as well put here and get like six, seven per cent, right? Cash Flow, right? And,--   Nikolaï: And that's, that's the retail market. Like that's, that's small investors like me and you the reality of is the real cap, the real capital flow right now is at the institutional level, there is so much higher level money and smart money searching for returns right now. I mean, we can't even fathom small investors, how much money, I mean, family offices, typically, if you take the family office market, typically always allocated maybe like, I don't know, depending on the family office in the region, but usually anywhere between, you know, maybe eight to twelve per cent of their overall asset allocation, capital allocation to what they call alternative assets, right. And real estate as part of alternative assets. Now, over the last 10, I'd say over the last 10 years, the last decade, family offices have become more and more in tune to the real estate markets. High net worth families also, especially towards like multifamily real estate, and more and more real estate is no longer considered just as, as something under the alternative asset umbrella. But now it's kind of becoming its own umbrella. And what that's doing is that instead of family offices, and we're talking about family offices that have trillions of dollars, right. These are not these are not small things, these are big moving bodies with a lot of capital, we're talking about multi-billions of dollars, not trillions, multi-billion dollar family offices, that are now instead of allocating, you know, 8% to real estate, well, now they're allocating 20% to real estate. So and that's, that's a scale like, there's a lot of them out there. And we haven't even talked about the private equity firms. We haven't even talked about the pension funds, the International pension funds, you know, people talking about globalization and international money, thinking that it's just, you know, rich Russians is going to Sunny Isles, Florida, buy $10 million condominiums. That's not what it is. The global movement of money to American and Canadian Real Estate are things like the Amsterdam teachers pension fund, or government workers pension fund, you know, allocating, allocating, you know, 100 billion dollars to the American real estate market. Now that's, that has a big, that puts a big dent on the supply and demand of real estate. And that's what ultimately drives property value is much more than interest rates. Interest rates only, only influence property values, like people were talking about, especially the last couple of years, all we know, if interest rates go up, cap rates will follow up, they'll go up. That's not true. Capital flow drives cap rates and values and properties and multifamily; interest rates only influence cap rates and values.   James: Very interesting perspective, that's you are right. There's so many, too much money, even out of United States is looking for money to place, right. Like the other dad had a call from the UK. It's a family office who want to invest in the UK and they're looking for like operators like me, and I was asking them, what's the return expectation? They say this 22% IRR credits and I said, well, I [inaudible 00:37:58] you guys, I can get better money in the United States right, so --   Nikolaï: Exactly. And all the, all the money from the quantitative easing the follow the 2008 crash, I mean, all that quantitative easing money, a lot of it still, after even 10 years, has not even found a place for it yet. Right? So there, there's a lot of money chasing deals, there's a lot of money chasing deals.   James: Correct. Correct. Right. That's true. That's true. So coming back to the exit cap rate. So I know that's one of the hardest parameters to measure. Right? So.   Nikolaï: Absolutely.   James: But can you clarify again, how did you, how would you use artificial intelligence to find that a more accurate exit cap rate? You know, T minus five, my T minus 5, five years earlier, before you hit that five years mark of selling, assuming five years of selling.   Nikolaï: So it's the computing power, right. So it's a computer, what we do is, we'll build, so we'll do we'll say, I'm sorry for anyone who hasn't studied, you know, high level university finance, but or statistics, you know, we'll build a, say, a regression model. So we'll look at past data. We'll plug all that in, in order to build a predictive model, a future model being able to come out with future cap rates, and, you know, the more data that we're able to plug into our regression model. So historically, what real estate institutions and economists have use is what they call the linear regression model, use the Monte Carlo simulations. Now, the problem with the linear regression model is that you know, past transactions or data are, are, are also affected a lot by various things like, you know, political environment, and capital markets. And there's a whole bunch of factors. So there's a new model that's being used more and more, especially with a lot of postdoctoral students in statistics, it's called a Quantile regression model. So that's where we're able to create that same kind of, I'm saying this in layman's terms as much as possible, we're able to take past historical data, build that kind of linear model, kind of, like build that line chart for people to understand, and we kind of repeat that line chart in the future. But we're also able to start to weigh that those data points with various things like a new government, with quantitative easing, with the war, with various factors that may be affected that models to make it less linear. And then we're able to start to better predict future stats and future cap rates. So that's the first step of it. The second step is, let's say, right now, we built our Quantile regression model. And now we compute it and what it says to us is well, T minus five cap rates, or five-year cap rate is going to be between, let's say, we have a couple of tracks, it's hard to explain to people who have not done statistics. But we have a couple of tracks. And ultimately, what it says is that the highest probabilities are that cap rate is going to be between 5.75 and 6.10% in five years for that specific market. Now, like I said, as we get closer to the five year period from now, the less the margin of error is, because we're closer and multifamily market moves very slowly. So predicting, the easiest way to understand is predicting 25 years out from now, it's very hard? Your 25 year prediction is going to be way more, there's more room for it to be completely off than your two-year prediction. So we build a model for the five-year prediction, and then starting tomorrow, every day, our artificial intelligence recalculates that model. So as it recalculates, the model gets more and more precise, because let's say we took statistics from today to 20 years ago, let's say we took the cap rate of that market, starting from today, and 20 years back. Well, obviously, the next 20 years are not going to be exactly the last 20 years. But that's ultimately what statistics do, we try and kind of say, well, let's take the last 20 years, there's a margin of error, that's what's going to be the next 20 years.   So what's cool with the artificial intelligence is without actually having to do anything, every day, the artificial intelligence kind of brings the model a day closer and adapts the model with more and more weight on what's going on right now, rather than what happened 20 years ago. And the artificial intelligence is also able to measure what today it predicted for yesterday, versus what actually happened. And what's the spreading difference and what caused that spread? And therefore, once it's able to determine what caused that spread, it'll add that into the equation for the future cap rate model so it becomes much more precise.   James: Yes, but don't try to run it in iteration on a daily or monthly basis to watch the whole investment process. But how do you make it on day zero? Well, today we're buying today how does it iterate then when on a day zero?   Nikolai: Well, what it is I don't understand the question.   James: So my question is, you said the data is being fed into the system to get more accurate exit cap rate. But you're making a decision to buy today? Is the iteration happening from today to all the investment cycle? Or do you do it earlier before you decide to buy a deal?   Nikolai: Okay, I understand what you mean. So like, for determining your actual purchase cap rate,   James: Yes, correct whatever price that I'm going to pay today because that's what I'm getting into the deal. That's the point of me making a decision, whether this is a good deal, and I'm going to be raising money and telling everybody it's a good deal.   Nikolai: The purchase cap rate is a whole other set of statistics and data models. That's more I'd say, determining today's cap rate is much more endeavor of collecting more historical data. Because like I said, let's say JLL Jones Lang LaSalle which is one of the biggest brokerages, they come out with reports and say, Okay, well, the cap rate, let's say in Austin is, 5.2%. Let's say the mean cap rate is 5.2%. Well, that's based on maybe what like 30 or 40%, of actual transactions that happen because they don't have data on like the off-market transactions, or the pocket listings or this and that, right. And on top of that, they haven't normalized the cap rates on whether, let's say, a building traded at a 4.6 cap rate. Well, as we said, if that property wasn't stabilized, well, then that cap rate is off. That's not a good cap rate. So that's a second thing. So for establishing what you should pay to the intrinsic, what's intrinsic value today. that's ultimately what I think the question is, and correct me if I'm wrong, but let's say you're looking at a 100 unit property, what is the actual intrinsic value of that property? What's the real capital I should be buying at? Well, that's a question of having the proper volume of data, Okay, number one. So that's what we're working on right now is making sure we keep on building our database. So instead of our market cap rates being based on the off 30 or 40%, of inventory, or transactions. Well, it'll be based off maybe 60, 70, 75%, therefore, that cap rate becomes more precise. Secondly, we actually look at every transaction and say, qualitatively because that's the first thing is a quantitative aspect, in statistics, we have quantitative, qualitative. So the quality of the data, once we have the quantity, we look at the cap rates and say, okay, that property traded for a 4.2 cap rate. Was that a stabilized property? No, it was not. Once we add the cap x, we have the new revenues. And we adjust the sales price for cap x, but we also adjust NOI. Now we can look at the stabilized cap rate. So that's the qualitative aspects of it. And now we're able to say, here are the market cap rates, here's the low end of cap rates, here's the high end of cap rates, here's the mean, or the media. And here's that range of cap rates. Because cap rates are based on the Capri calculation ultimately, even though people think it's NOI divided by sale price, I'm sure that's not what a cap rate is, that's how you find the cap rate of a soul stabilized property. The actual cap rate calculation or formula is a mathematical equation of R minus G, it's algebra, so are being returned minus g, which is growth. And R is defined as RF plus RP. So the risk-free rate plus the risk premium that you as an investor are looking for or that the market is looking for, a perceived risk premium, obviously. So what we want to do then, that would be like a third step, and we're not at that level right now. But I hope within the next couple of years, we will be, and I'm sure you as an engineer, probably understanding how valuable our ability to do that would become for the market. Is that then you're starting to be able to say, well, right now, that property is being listed at a say, let's say the range for cap rates in Austin is really five to six, obviously, six is going to be in the worst neighborhoods. Five is going to be the best neighborhoods because it's a matter of risk. Well, then you're looking at the property, let's say it's at a 5.7 cap rate. But it's kind of on the limit of a bad neighborhood, good neighborhood. And then you're able to intrinsically say, but the intrinsic cap rate of that property, the real intrinsic value of that cap rate is actually 5.3. Now, if you didn't know that, and you just said, well, the average cap rate is 5.7 well, it's not so much of a deal, I'm not gonna buy that property. But now with this new data, what you're able to see is, wait a minute, it looks more expensive than what it should be but in reality it's not, it's actually cheaper because the real intrinsic value is a 5.3 cap rate. And that would really unlock the potential of what we call value investing, what like a Warren Buffett has built his entire career off of the stock market? Well, he was able to build that value investing exists so much, in the stock market, because of the quantity and the quality of the data. The quantity of data is accessible to everyone, the quality of the data is a bit harder to get the qualitative aspects. That's why Warren Buffett was has been such a great investor, because he invested so heavily into being able to pull out the qualitative aspects of the data, well, now we would be able to do the same thing, you would be able to do the same thing as a multifamily investor. You would have access to the quantity of data needed for you, then to increase your knowledge based on the qualitative aspects of it, and then be able to properly price that acquisition. And then once you're able to do that, well, then you can go say to your investors, look, this is why I'm buying this deal. This is why it's a good deal. And if on top of that, you're able to be more precise with your exit cap rate, and the growth rates of your revenues and expenses and your refinancing rates. Well, you're going to be a much more confident investor.   James: You are making it really what you call a --   Nikolai: It's a more efficient market.   James: It's a more efficient way of actually determining your purchase because you can really just say generally, Austin is what five cap, it's not true, [inaudible00:50:46].   Nikolai: It's kind of scary to say, but we're all kind of invested in multifamily kind of half blindfold. The guys like me and you, and there's a whole bunch of other guys out there really intelligent wrestlers. We're all invested, based on intuition experience, a very strong knowledge base. But we're ultimately kind of invested with one eye closed. Now it's even worse for people who don't have our knowledge base and experience because they're all invested in completely blindfolded.   James: Interesting. So, if you can get that kind of data where you can look at the stock market, and what's the potential, especially if it's in the path of growth. And what's the risk that you're buying? There are some deals, even though you buy it at the lowest cap rate for that market, it could be still the best growth because it could be just like another big explosion, in terms of jobs, is going to be happening in that area just because of the path of growth.   Nikolai: That's so important because if you're a pro forma and you're underwriting you predicted a 2% growth rate in revenue. But in those five years, the analyze growth radio was six. Well, you probably didn't buy that property, when you should have. And the other thing is the same if you predicted a 6% growth rate, and it was two, then you bought that property you shouldn't have, But what most people will say is well, the guy who predicted 6%, he should have put in 2%, like he should have been conservative, but that's not necessarily true. That's a half-truth. That's actually a mistake in logical reasoning because the other guy who says, I'm going to plug in a 2% growth rate because that's what historically happens. What happens if you invest in a market where the growth rate is actually 6%? And that the other intelligent investors knew or predicted that it would be 6%, while they're willing to overpay, according to you for a property, and then you're not buying anything, you're not generating any returns, you're not building your wealth, and you're just kind of sitting on the sidelines there, Bah, humbugging saying, well, the markets paying way too much for the properties and these guys are stupid, stupid money, blah, blah, blah, I'm going to wait for the market to crash and blah, blah, blah, I know guys who've been saying this since 2012. And they have not bought anything since 2012. They haven't generated any returns. All under the pretext of being conservative investors. You know what, they're not conservative investors, you know why because they're not investors. They haven't bought anything, because they take themselves out of the market, and they're sitting on the sidelines, and they're just making up for lack of precision in their underwriting through, this kind of pseudo-conservatism.   James: I think it just depends on the sophistication of the investors. If you look at nowadays, multifamily has become so popular, so many people who did not have the financial education background or the way to analyze a deal. There's a lot of parameters that go into any deals. That's what you mentioned, you mentioned so many parameters, nobody will look at that. Everybody said multifamily is good. I bought it and it went 300%. And they say, Oh, I'm a really good operator. Well, actually, you should have made 500% because the market gave you at least 400%. 100%, you just did 300%, why did you do 300%?   Nikolai: That comes down to what we call the search for alpha. We want to outperform the market. And all these people and there's a whole bunch of them now there's gurus and mentors and coaches, and they're giving all these online classes or seminars or whatnot, or they're boasting about being such great real estate investors. And the reality of it is they don't even know what they did. They're like, well, I generated X percent returns, and I've created X amount of millions of dollars in profit over the last five and 10 years. But that's actually quite average. That's what the market does, as long as you are in the market. Of course, that's what you generated. Now, did you generate more than what the market did? That's the real question. And unfortunately, there are not enough people in the market asking that question. And if you're a passive investor, that's the question you should be asking your syndicator or your GP is not this is what you generated, great. That sounds awesome. You generated 22% IRR annually over the last five years. What did the market generate? The market generated 23.   James: I remember the other day I saw someone, he said, I made 60%. In one year, I bought it in the first year and I sold it in twelve months, I made 60%, I said well, you should have made that 100% because the market went up by that much.   Nikolai: And that's why I'm so bullish on education, and why I think it's so important that multifamily investors get educated and push their knowledge base, because, this is not Nintendo, this is not Xbox, we're not just playing, baseball on our PlayStation three, or Playstation four, this is serious business, and even more, so if you're syndicator. Just in the knowledge base, you know needs to continuously be expanded. And that's why data also needs to be there because knowledge without data is also quite useless.   James: Correct. So coming back to being the alpha in the market. I know you can look at different market appreciation versus how much you are making money. So coming to, let's say, for a decision where you have a deal in your hand, and you're deciding whether you want to sell or you want to refile, or you 10:31 exchange. So can you give us a good methodology to do to make that decision?   Nikolai: To make the decision on whether you beat the market or...   James: Whether you want to sell a deal, or whether you want to refinance, whether you want to hold it for long term or you want to do a 10:31 exchange? How would you approach it?   Nikolai: Well, I'd approach it on a very individual basis. Number one, I think everyone has a very different investor profile. What I mean by investor profile is, what type of returns do you want? And when? What are the strengths and weaknesses that you possess as either an owner-operator or syndicator or whatnot? What access to capital do you have? How patient is that capital? What's the cost of the capital? Now, if it's your own money, obviously, it's probably the most patient money with the cheapest cost of capital. If you're raising money from other people, well, then obviously, there's a less patient aspect to it, and the cost of capital is going to be higher. If you're taking money from bridge loans, well, that's even worse. So if you're taking money from hard money lenders, well, then obviously, your cost of capital is going to be very, very high. So these are all things that you have to consider, you also have to consider where you are in your career with regards to what it is that you want to achieve, either as annual cash flow or just overall that value and what type of risk you're willing to accept.   So ultimately, you have to be able to answer those questions initially, to be able to decide on the strategies. Because ultimately, people in multifamily investing, what they do not understand is the difference between philosophy and strategies. Now, everyone should have their own investment philosophy, based on their investor profile. Now, once you have that philosophy, what you want to do is adapt your strategies according to where you are in the market, and where you are in your career. That's something that is very misunderstood. People say, I'm a buy and hold investor. We hear that a lot in multifamily. So ultimately, what you're saying that you do not have an investment philosophy, that you think you do. You think your philosophy is to buy and hold. But buy and hold is not a philosophy, it's a strategy. So what you're saying is, ultimately, you're investing all the time throughout the whole of your career, using just one strategy. That's very dangerous because let's say the exit point of that strategy eventually, say the day that you do have to sell upon retirement because even though you're buying a whole, you might not be a legacy buy and hold investor. What I mean by that is a legacy buy and hold investor is someone who's just going to pass down the properties to their children, upon death, or upon retirement, whereas most buy and hold investors, what they really need is, I'm going to buy and hold until my retirement, then I'll start selling off. Well, what happens if, during your retirement, you're in a trough of the market cycle. What if you're in that part of the market cycle, or you're at the bottom of it, that's a really bad time to sell? Well, that's the mistake of always investing using only one strategy. So what I would say is that you have to establish your philosophy, understand that your investor profile is going to change over time. And the market cycle moves through phases, there are different phases of the market cycle and your strategies, you have to be able to use different strategies at different phases of the cycle, and at different phases of your career as your profile changes, or adapts or morphs. And that's how you then establish well, with this property, should I buy it and hold it or should I sell it? Or should I just refinance it? What should I do? And I'll give you a very concrete answer. Once I've explained all this.   I have a student here because I do teach real estate investing courses. We actually built a college we call it The College of the Emmerich's. Now you don't have to, it's not college level education. But what we're saying is that from everyday multifamily investors, if you really want to learn college level stuff without having to go to college, well, we have a couple of courses that we teach you very high-level stuff, very concrete work. You still need coaching from coaches and mentors and all that stuff. We actually teach courses. So one of my students in these courses, he's a very successful real estate investor in Montreal, Canada, Montreal is the most important multifamily market in Canada. It's a very strong multifamily market, very competitive. Now he's up to about I guess, 150 units, all on his own, no outside money, no passive money. And he started having trouble refinancing out of his properties because what he was doing, it seems a very big value add investor. So he was using two strategies value added buy and hold. But he was erroneously thinking that value-added and buy and hold was his investment philosophy, which is not, those are two strategies that are part of the philosophy. So he came to me and he said, well, look, banks have now started to tighten their DSCR ratings, and their LTV, therefore, I'm buying a property at a billion dollars, and putting in $300,000 into it. And now the market value of that property is $2 million. But I'm not able to refine it $2 million, because of the banking standards, they're only allowing me to refine out of 1.6. So now, if they're letting you refine out at 1.6, on a 75%, LTV, what they're saying is when you have to leave in 25% of 1.6 plus $400,000, that's a lot of equity, that it is unable to pull out because he was doing too much of a good job at value add. And the capital markets, the banks are not able to follow market value, banks, especially in Canada, are much more conservative than in the US, but even in the US, there is a lot of people buying properties. And they're not able to refine the whole value, because their total loan dollars are blocked by either LTV or DSCR. What I call economic value, the economic value is not as high as market transaction value. Therefore, instead of leaving 25% of equity, you're leaving 25 plus, in this case, $400,000.00. Now that's where I said to him perfect, I looked at his portfolio, I said, well, you have to adapt your strategies, you have to change the strategies, you can no longer at this moment, use the buy and hold strategy, you have to use the fix and flip strategy.   Because you're too good at fixing value add. And you're not able to pull out as much equity as you used to be through refinancing. Therefore, now you have to seriously consider selling that property. Because you can go and get $2 million for other markets right now. So that's an extra $400,000. Because he was able only to refinance 1.6 out of it. So now he's able to get the full market value, pull that cash out, and he has access to a lot of opportunities. He has a really strong bird document work. So his cost of opportunity is very high. If he's leaving all that equity, in these properties that are all stabilized, he's making way more money by doing more value-add stuff. So he made the decision and now he holds zero properties. He sold all of his 140 units because that has allowed him to get more and more cash rich, with less and less money and equity and properties and gain access to more and more opportunities. And ultimately, his annual portfolio, the total return on investment is in the 40 to 70% IRR. Whereas while he was doing buy and hold his overall portfolio was only returned to him maybe 20% if you consider the weighted average return on investment. So that's how I would attack that. I know, that's a very long-winded answer.   James: I think that's the right answer. So I mean, the return on equity, which is date right now, I mean, on this deal. There's so much of dead equity not producing cash. And if your cost of capital, which is also equal to an opportunity outside is much higher, you might as well just cash that out by selling it off.   Nikolai: Because the refinancing is living you to a liquid.   James: Recently, I mean the banks have been more stringent on refine. So the last refine they did ask me to leave 5% my cash basis, which they never did in the past, things have changed. I think that's okay. That's how the banks work now.   Nikolai: It's okay. But the problem is that on a $15 million property, you know, that's two and a half million dollars less cash you have for the next acquisition.   James: Correct. I mean, it depends on what is the cost of capital outside plus how much you can pull out and how much your equity stuck on it. So, coming back to market cycles, because I think this is one thing that I want to ask you because I think you have studied with Dr. Glenn Mueller. So right now, if I look at the latest Q1 forecast for apartments in the hyper supply market. I don't know if that's something that you are aware or not, but...   Nikolai: Nationally?   James: Nationally yes it's not a local, but lots of markets are in it for supply. It's very, very few markets are in the expansion cycle. And even though they are in the expansion cycle, they are at the last stage of the expansion cycle. And all the markets that are on expansion cycle, or the market that recovered late like Las Vegas, Phoenix and a lot of Econo markets. So can you give an overview of what do you think the market is? And what would the strategy be for investors now?   Nikolai: Well, I think number one, I would say that I try not to look at national or macro market cycles. I think that's the first thing to consider. Because multifamily real estate is so hyperlocal. So I look much more at those markets, cycles of hyper supply and expansion and contraction, I look at more of like a metro area. So like you're in Austin, Texas, I look at Austin, I wouldn't really consider the multifamily market at large, because it's kind of like looking at cap rates on an unstabilize property, it's kind of a waste of time. Now, I'd say that I haven't looked at recent data of where all the cycle, where all the markets are, the phases of the cycle. But I mean, I think it is safe to say that, most of the markets right now are in the later phases of the game, or later innings, as Howard Marks likes to say, in the stock market and capital markets. But also, as he says, we don't really know, see the thing with market cycles, and whether it be with Dr. Mueller, whether it be with Karen Trice, out of Australia, and also all the other various professors and researchers of market cycles, is

You’ve heard the saying quality over quantity, right? We are sure it has come about when talking about food at restaurants, television shows, and now even what type of hosting to choose as a business. It’s essential to know when to make the right call for what business expenses need priority.  Is choosing premium hosting worth the higher cost? Or can you get everything you need without spending more than you need to?  In the debate; Premium Vs. Affordable hosting, we uncover the hidden truths behind choosing the right option for your website. Affordable hosting Affordable hosting is often a server with generic software where you can build whatever you want. Thousands of websites opt for this option because of the price. If you are willing to spare one coffee per month, it may be worthwhile. It is perfect for smaller businesses with limited traffic, files, and storage on their pages. They are stored and hosted on a single, shared server. These perks do not always have to mean they lack functionality. But, they're built for any platform which can lead to performance and security issues. Cons The term shared hosting is an interchangeable word for cheap hosting as it does just that. By opting for cheap hostings, you will be sharing the features with others. It may result in a slower load speed. You will also be limited to other features such as security and resources like a personalised domain name.  Your audience may question the authority of your website when it ends with wordpress.com. A clean and on-brand URL will help put the metaphoric cherry on top of your website. Cheaper plans have storage caps and data limits that will restrict your capabilities on your website. Storage caps directly affect your page's performance and can even extend to your search engine ranking efforts.  Nobody likes a slow website. Sharing the same hosting server with other sites will increase your load speed and decrease your click-through-rate. Pros Do you love to hear the bad news before the good, or is it just us?  Shared or Standard websites are more affordable, less complicated, and quicker to finish up. You still get all the necessary features to keep your website up and running in a cheap and obtainable way, letting you focus on other areas of your business in more detail.  The main feature which stands out is the price. You will be saving up to ten times more by relying on shared hostings. The extra money in your pocket can make the difference for other significant business aspects that may not have cheaper options. You can always upgrade at a later stage.  You can look at it like you are renting an apartment - you share the space. It means you cannot use up a lot of space on your pages. But that doesn’t have to be a bad thing. I mean, minimalism is trending after all. Because you are renting this space, that means the landlord will look after any maintenance or updates along the way.  Premium Hosting If you flinch at the words: painfully slow, hacked or crash, you’ve probably experienced this from a cheap hosting service. You are not alone. After receiving increased traffic or running out of bandwidth, your site can often come to a halt. These are some of the reasons why premium hosting may be for you.  The Pros Your website is your most valuable asset. Security is an important feature that drove James and Joseph to invest in premium hosting to grow Web3. Premium hosting servers have reliable measures to ensure your website is safe and secure. They send data through a secure SSL network for monitoring that enhances their reliability. These protocols also mean reduced load time, even while being inundated with traffic. Your website will have 100% allocated for optimal performance, which will aid your Search Engine rankings. You can feel rest assured that your site is in safe hands.  The Cons  Premium hosted websites often cost more and take more time to finalise. At web3, we use WP Engine, which offers several different hosting solutions for WordPress, from around $38 / month. They allow for a generous amount of websites, domains, visitors, storage, and bandwidth. WordPress and other hosting companies tend to charge more. They host on better infrastructure designed for WordPress. They also build for that platform and can offer better support, security, and admin work.  With a new website or business, you don't need all those extra features. You can suffice with a more affordable hosting option. One that will get you up and running without making you break that piggy bank. Now, this is where cheap hosting comes into play.  Conclusion  It is necessary to know what exactly you want from your website. It will allow you to look beyond the price, which is often the feature that stands out the most. If you're after a run of the mill site with no upkeep, the affordable option will suit you nicely. However, to save you future headaches, we recommend investing in a premium hosting service. Transcript James: Hello, everyone, and welcome to another episode of the Web3 marketing debate show. I'm your host, James Banks.  Joseph: And I'm your host, Joseph Chesterton. James: And today, we will be debating everything and everything about hosting. So premium hosting versus affordable hosting. Unfortunately, I'll be taking the affordable hosting corner of this debate. Joseph: Sounds like you are preparing to lose already, James. James: We'll see about that, Joseph. Joseph: And I'm obviously on the premium hosting side. James: Well, without further ado, let's start the show. So Joseph, why is premium hosting better than affordable hosting? Joseph: Well, James, websites are one of your business's most valuable assets. If your website isn't working for you like it's crashed or it's down, then you potentially could be losing millions or even billions of dollars. You need to invest in really good hosting.  With affordable hosting, you run the risk of having your website hacked, crash, or run out of bandwidth. So as a result, you would lose business and lose reputation for your company.  Good hosting is everything. Yes, of course, it may cost more, but that comes with support, it comes with better infrastructure and it's easier to build your website on.  So that's about all that we need to cover. Thanks for listening in and we'll speak to you next time. No, I'm kidding. James, why is affordable hosting better than premium? James: Probably should have clarified this before we started, but I guess we need to define what is premium hosting and what is affordable hosting. So in your words, Joseph, what would you define a premium web host? What are some examples? How much do they cost? What's the difference? Joseph: A premium host usually is dedicated to the platform you're building for.  So for example, WordPress, you'll find managed WordPress hosting companies, generally have a higher price tag because they are hosting on better infrastructure that's built specifically for WordPress. On top of that, they build specifically for the platform and can then offer better support, security and administrative work. They do that on the server.  Whereas affordable hosting is often just a server with generic software that enables you to build whatever you want. But this isn't specifically built for WordPress or any type of platform. It means that you may run into performance issues, security issues, and the list goes on. James: Okay. And how much would a premium WordPress website hosting server costs per month, approximately? Where do they start at and what's the range? Joseph: Premium hosting depends on your usage requirements. We use a company called WP engine and they offer several different hosting solutions for WordPress, and they start at AUD$38 a month and scale from there.  They allow for many sites and a generous amount of visitors, storage and bandwidth. That is something you probably won’t see on shared hosting or affordable hosting, which is what we're calling it today.  Affordable hosting can cost anywhere from a dollar a month to... I guess it could cost hundreds of dollars, but generally, you would see it priced around $5-20. That's generally the affordable hosting range. James: So what I'm hearing is that for a managed specialised service, such as a managed WordPress hosting environment, it's going to run you the cost of maybe about $40 per month. But you'll have the added benefit of better performance, more security, specialised hosting environments, so on and so forth. But I can get exactly that for $5 a month. So why would I pay four or five times the price for the same thing, Joseph? Joseph: Arguably, if the server was the same as the affordable hosting as far as hardware goes, yes, you probably could get that. But the thing is, you won't get 24/7 support. You won't get prebuilt themes in WordPress.  You won't get automated backups that... Well, you may get automated backups but you can’t guarantee that they will work if your server crashes. With premium and managed hostings, you don't usually see them crash. Whereas with affordable, you run the risk of it crashing.  You get a team of people that manage the server so that if things like security issues become an issue, then they'll fix it for you, and you can rest easy knowing that your business is well looked after online. James: So basically what you're saying is, although you have to pay more, what that added cost means is, added supporting service. But what if I want to take care of it myself and pocket the change? What would be the value in that case? Joseph: I mean, you could do that when you're trying to run a business, you run the risk of your website going down and then having no one to bring it back up, except for yourself.  It might be limited support, but you'll have to wait 24 hours or even pay for support or get shipped to another company. We found this out the other day when we were helping a website recover from being crashed on their own affordable hosting.  When we contacted the provider, they said, "Yeah. We can help you, but it's going to cost X amount, and it's going to go through a third-party provider. We're not going to do the help for you." We had to recover the hacked website that was down for the client on our own, which we could easily do. But if you're on a managed hosting platform, then they will take care of that for you.  They'll be able to restore the website in seconds, rather than a couple of hours that it took to recover.  On top of saving money, the reason why you pay the extra amount for premium hosting is that the platforms that they post on, the software that they provide is fine-tuned. It will run your software better than just the generic software you'll get from the affordable hosting. James: Well, that's a pretty convincing argument, Joseph, but what about my emails? These whizzbang high-performance servers that you're talking about don't allow me to put my emails on it. And I've got emails coming out of the wazoo.  If I were to not have a server without emails, it's going to cost me so much more. Why would I even consider having to go to the server that doesn't allow me to put my email accounts on it? Joseph: It's funny you say that because that was another issue that a client came to us about. They had three websites hosted on their affordable hosting, and they had email accounts on top of that and a dozen accounts that were filling up.  Each account had a couple of gigabytes of emails hosted on it, and when your hosting server only has, in this instance, 20 gigabytes of storage, when your email accounts are on the same platform and each account has a couple of gigabytes, there was no room left for the hosting, which crashed the website and meant that the website wasn't able to be used. And then on top of that, all the emails were bouncing because there wasn't enough space available for the emails to come through.  The better option is you should use a platform like Microsoft or Google or any other email provider. Let them take care of the emails for you.  There might be a cost per account, but if your server goes down, then you will lose not only your website, but you will also lose your emails on top of that.  That's a pretty huge loss to your business if both your emails and your websites go down, especially if you rely on them to make money day today. James: Well, you're probably thinking by now, "Well, geez, there wasn't much of a debate with this show," and why? It's because it's the truth.  Over the past 10 years, Joseph and I have been in the web game, we've dealt with over a hundred different website hosting companies. All of the major ones you can think of having the same rule: you get what you pay for.  You pay for peanuts and you expect diamonds, that's just not how it works.  Particularly in the case of web hosting, you get what you pay for. Hosting for your website is in proportion to all other business, marketing and advertising expenses. It’s one of the last things you'll ever have to worry about. It shouldn't even be a cost consideration.  Of course, if your actual website is working for your business, keep things safe and secure. Rest easy at night and invest in high quality, premium hosting infrastructure. You won’t regret it.  Take it from us, out of dealing with how many retrieved hosting horror stories we've had to help people fix over the years. I can't even think of how many that has been.  So with that said, if you need help with your website, whether that be cheap hosting, poor quality, unreliability, spam issues or you're getting hacked, drop us a line at web3.com.au.  We can help you get set up with an infrastructure that will not let you down.  So with that said and done, we will wrap up another episode of the Web3 marketing debate show. For the next episode, we'll be talking about all things SEM and SEO-related software.  Stay tuned and we will talk to you again real soon.   Discover more at: 

Every day, we spend an average of 20,000 breaths with 11,000 litres of air, primarily made with subconscious effort. If you want better health, changing your breathing technique probably isn’t the first option that comes to mind. We don’t even think about it; we don’t pay attention to how we do it. But it turns out that how you breathe has far-reaching effects on many aspects of human health. Discovering what it means to breathe correctly is crucial for greater wellness. In this episode, author and journalist, James Nestor, joins us in seeking to unlock a person’s full breathing potential. He discusses the myriad of health benefits controlled respiration can provide. You’ll also learn how industrialisation made it harder to breathe correctly and how various exercises can improve your respiration. Listen to this episode to discover simple methods to maximise the benefits of each breath you take.   Get Customised Guidance for Your Genetic Make-Up For our epigenetics health program all about optimising your fitness, lifestyle, nutrition and mind performance to your particular genes, go to  https://www.lisatamati.com/page/epigenetics-and-health-coaching/. You can also join our free live webinar on epigenetics.   Online Coaching for Runners Go to www.runninghotcoaching.com for our online run training coaching.   Consult with Me If you would like to work with me one to one on anything from your mindset, to head injuries, to biohacking your health, to optimal performance or executive coaching, please book a consultation here: https://shop.lisatamati.com/collections/consultations.   Order My Books My latest book Relentless chronicles the inspiring journey about how my mother and I defied the odds after an aneurysm left my mum Isobel with massive brain damage at age 74. The medical professionals told me there was absolutely no hope of any quality of life again, but I used every mindset tool, years of research and incredible tenacity to prove them wrong and bring my mother back to full health within 3 years. Get your copy here: http://relentlessbook.lisatamati.com/ For my other two best-selling books Running Hot and Running to Extremes chronicling my ultrarunning adventures and expeditions all around the world, go to https://shop.lisatamati.com/collections/books.   My Jewellery Collection For my gorgeous and inspiring sports jewellery collection ‘Fierce’, go to https://shop.lisatamati.com/collections/lisa-tamati-bespoke-jewellery-collection.   Here are three reasons why you should listen to the full episode: Discover how carbon dioxide is necessary for getting enough oxygen in your body. Learn how soft foods and bottle feeding during childhood can impact your health as an adult. Understand how oral exercises and breathing practices can significantly improve your wellbeing.   Resources DEEP: Freediving, Renegade Science, and What the Ocean Tells Us About Ourselves by James Nestor Breath: The New Science of a Lost Art by James Nestor Wim Hof Method James Nestor’s website   Episode Highlights [04:03] How James Got into Breathing  James is a journalist who once covered a world freediving championship in Greece. Despite being a swimmer and bodysurfer himself, he was astounded by participants who can dive 300 to 400 feet in a single breath. Upon returning to San Francisco, James decided to write a book about freediving. His research exposed him to the art of breathing and its importance to wellbeing. He learned that improper breathing is damaging to the body. [10:29] The Physiology of Breathing Contrary to widespread knowledge, it’s possible to have too much oxygen and not enough carbon dioxide in the body. However, it is essential to have a balance between these two. Many standard breathing methods deplete carbon dioxide levels, leading to lower oxygen saturation and more unsatisfactory performance. A study found that by holding their breath comfortably for 25 seconds, 85% of the athletes will not have a breathing dysfunction. Instead of compensating, learning proper breathing techniques can increase your bodily tolerance for carbon dioxide. Listen to the full episode to learn more about the process of breathing! [19:57] Basic Breathing Techniques Most people breathe faster than the optimal rate without realising that many of their health problems come from their breathing rate. The point of breathing exercises is to acclimate your body to breathe through the nose without thinking about it. Slower breaths while maintaining the same volume of air can increase efficiency by 35%. Transitioning to slower breathing will temporarily reduce performance, but you will eventually see improvements as your body acclimates. [27:11] Nasal Breathing Listen to the full episode for James’ points on running and breathing! Nasal breathing leads up to 20% more oxygen absorption compared to mouth breathing, all else being equal. Nitric oxide is a potent vasodilator that increases blood circulation. Nasal breathing increases nitric oxide concentrations six times more than mouth breathing. Breathing through the nose is more effective in defending your body against viruses than any other form of breathing. [38:36] Why Aren’t Breathing Interventions More Popular? There’s not a lot of money that can come from breathing interventions. Hence, the development of this alternative practice isn’t promoted widely. That said, James believes that alternative medicine isn’t always the answer. Conventional Western medicine is still crucial for many health interventions. [41:38] How Modern Diets Changed the Way We Breathe In antiquity, people always had perfectly straight teeth and larger mouths. The introduction of industrialised food removed the need for a larger jaw. Evolution drove the shrinking of the human jaw, so more people have crooked teeth or impacted wisdom teeth. Smaller oral cavities also made breathing more difficult, and the incidence of upper airway resistance syndrome rose. [44:24] Childhood Feeding Improper oral posture can root from habitually breathing through the mouth. When we were younger, chewing was essential. The introduction of baby food prevented infants from performing the right chewing exercises. Breastfeeding changes the face structure and promotes more efficient breathing. Children need to eat hard foods to develop a proper jaw and airway. [48:20] Oral Exercises Even adults can see improvements in their breathing efficiency by doing basic oral exercises. After a year of oral exercises, James was able to improve his airway size by around 15% to 20%. Palate expanders are an option for people who need them. However, oropharyngeal exercises and myofunctional therapy are easier and more effective methods for improving your breathing. [54:33] Relaxation through Breathing Slow, focused breathing activates the parasympathetic nervous system, leading to greater relaxation. Doing breathing exercises several times a day will immensely help you cope better with stress. Listen to the full episode to learn more about how slow light breathing diaphragmatically stimulates the parasympathetic nervous system and the vagus nerve. [59:14] Hormetic Stress The quickest way to reduce stress is to breathe. It is all about working your respiratory system and working out your stress. James suggests starting with the foundations of nasal breathing, slow breathing and awareness. Similar to exercising at the gym, breathing exercises promote hormetic stress. At moderate amounts, hormetic stress is beneficial to human health. Listen to the full episode to learn more about the Wim Hof Breathing Method!   7 Powerful Quotes from this Episode ‘By mastering this sort of breathing, we can not only dive deep, but we can heat ourselves up, heal ourselves, and do so many other things’. ‘Scientific papers were published about this 115 years ago, showing very clearly that you need a balance of carbon dioxide and oxygen to operate effectively and efficiently. When we breathe too much, we can offload too much CO2, which actually makes it harder for us to bring oxygen throughout the body’. ‘That slower breath with that pressure allows us to gain 20% more oxygen breathing through our nose than equivalent breaths through our mouth.” ‘I think our bodies are the most powerful pharmacists on the planet and that’s been shown, so why not try to focus on your body and health a little bit’? ‘By having a smaller mouth, you have less room to breathe. And this is one of the main reasons so many of us struggle to breathe’. ‘Start slow, start low. See what your body can naturally do. If after six months, you’re like, ‘I’m still not, this isn’t working’, go see someone and take it from there’.  ‘I talked to dozens and dozens of people who have fundamentally transformed themselves through nothing more than breathing. I want to mention it again. I’m not promising this is going to work for everyone, for everything, but it needs to be considered as a foundation to health’.   About James James Nestor is a journalist and bestselling author. He has contributed to many newspapers and publications such as The New York Times and Scientific American. His first book, DEEP: Freediving, Renegade Science, and What the Ocean Tells Us about Ourselves, took inspiration from his journalistic coverage of a world freediving championship.  James also authored Breath: The New Science of a Lost Art where he combines thousand-year histories with modern research to shed light on proper breathing. His investigations have revolutionised the conventional understanding of breathing and have helped many people live healthier lives. His other projects include speaking engagements for institutions, radio and television shows, and collaborations for scientific research and communication.  Learn more about James Nestor and his work on diving and breathing by visiting his website.   Enjoyed this Podcast? If you did, be sure to subscribe and share it with your friends! Post a review and share it! If you enjoyed tuning in, then leave us a review. You can also share this with your family and friends so they can include more amino acids in protein in their diet. Have any questions? You can contact me through email (support@lisatamati.com) or find me on Facebook, Twitter, Instagram and YouTube. For more episode updates, visit my website. You may also tune in on Apple Podcasts. To pushing the limits, Lisa   Full Transcript Of The Podcast! Welcome to Pushing the Limits, the show that helps you reach your full potential with your host, Lisa Tamati. Brought to you by lisatamati.com. Lisa Tamati: Well, hi, everyone. Welcome back to Pushing the Limits in this new year. I hope you're enjoying yourself. You've had a good break over the holidays, and I have a fantastic guest today. Wow, this guy is insane. So his name is James Nestor, and he is an author, New York Times best selling author, Wall Street Journal best selling author, London Times New York Times bestselling author of a book called Breathe. So it's all about breathing. You might think, how the hell do you write a book on breathing. But I tell you, this is going to be a really exciting interview, and you're going to learn so much that you wish you'd been taught years ago. He's also the author of Deep, another best selling book that he did on freediving. And he's a filmmaker and science writer for many of the science magazines. Now in this book Breathe. He explores the million year long history of how the human species has lost the ability to breathe properly. And why we're suffering from a laundry list of maladies from snoring to sleep apnea to asthma to autoimmune diseases and allergies. And in this, on this journey in this book, which was absolutely fascinating. He travels the world and spends a decade in the attempt to figure out what went wrong and how do—we fix it. And, you know, the links that the sky week two—for his research has just absolutely next level. I really enjoyed doing this interview with James. He's an incredible person. And just so very, very interesting. So I hope you enjoy the show. Before we head over to speak with James in San Francisco, just like to remind you to do a rating and review if you came for the show. This is a labour of love. And it really really helps the show get out there if you can give us a rating and review, either on iTunes or wherever you're listening to this podcast. Or if you can't work it out, just send me an email with it. And we'll gladly receive those as well. And if you want to reach out to me if you've got any ideas for podcasts, or people that you would like to see on here, or if you have a question, health question, if you want help with health journey, health optimisation, epigenetics, run coaching, that's our day job. That's what we do for a living. And that's what we are passionate about. And that's what we love. So if you're having trouble with a tricky health issue, if you wanting high-performance, if you're wanting to do that next ultramarathon or first run your first five-kilometer race, whatever the case may be, please reach out to us, lisa@lisatamati.com. And you can find all our programs also on that website, as well as this podcast and lots of other goodies. So I hope you enjoy this interview with James Nestor. Over to the show now and thanks for listening. Lisa: Well, hi everyone and welcome back to Pushing the Limits. It's fantastic to have you with me and I am jumping out of my skin for excitement today because I have someone that I've been just so looking forward to interviewing. An amazing author, James Nestor, who is going to be sharing his research and his book, which is really a game-changer. Breathe is the name of the book. And James is coming to us all the way from San Francisco today. So welcome to the show, James. Fabulous to have you. James Nestor: Thank you for having me. Lisa: So James, can you just give us a bit of a background into your—who you are in your background? And how the heck did you end up writing a book about breathing? And why do we need to know about it? James: So I'm a journalist, and I write for science magazines and outdoor magazines. I've been doing that for years and years and years. And I think the real jumping off point for me was when I was sent out to go to Greece to write about the world freediving championship. And even though I've spent my life near the ocean, I'm a surfer. I'm a swimmer and body surfer, all that, I had never really spent too much time under the ocean. And I had never seen anyone freedive before because the water is very cloudy here on the West Coast. There's not a lot of places to do this. So I remember going out in this boat, it was the first day of the competition and just watching these people take a single breath and go down 300, 400 feet on a single dive there. And come back four minutes later and—just it was like they we're answering emails just like. Okay, next up, back for lunch. It was what the hell is going on here? I had understood that this was absolutely impossible. And yet here these people vary sizes, various forms - big, tall, large, small, all that - that had mastered this thing. And I got to be friends with a few of them who took me into this other side of freediving outside of the competitive freediving, which I just thought was pretty insane. And they allowed me to understand free diving as this meditation. And of course, breathing is at the core of this meditation. And by mastering the sort of breathing we can not only dive deep, but we can heat ourselves up, heal ourselves and do so many other things. Lisa: Wow, so that was the jumping off point in, for those interested. Yeah, I've taken an interest in freediving too. And my gosh, what they do is pretty next level, insane. I don't think I'm crazy enough to really have a go at it. To be fair, but absolute admiration for what they do and how they do it, in—the everything that they have to overcome. But okay, so if we just jump in now, the into—how does we know? What can we learn from these free divers and other traditional breathing techniques? And why is it important for the everyday person to be understanding how the breath works in the physiology, which we'll get into which I found absolutely mind blowing and thought, why is nobody told me this? And why did—why does, why should someone listening to this actually be interested? James: So the free divers told me that the only way to hold your breath is to master this art of breathing. And it was also something interesting to see all of these different people. And they all had these enormous chest, they had expanded their lung capacity. Some people double the average adult lung capacity by forcing. Well, they were not born this way. So it made me think about how malleable the body is depending on what inputs we give to it. And so I got back to San Francisco, and I wrote another book that featured freedivers. But in the back of my mind, that book was called Deep. And it looks at the human connection from the very surface to the very bottom of the deepest sea, magnetoreception echolocation all that. But as I was researching that book, and writing, I just kept finding more and more information about breathing, about how so many of us in the West, including in the medical world view breathing as just this binary thing. As long as we were breathing, we're healthy, and we're alive. When you're not breathing, that's bad, your dad or you have a serious problem. But that is such the wrong way of looking at this. It's like saying, as long as you are eating, you're getting food, you're getting nutrients. But it's what you eat. That's so important. And it's how you breathe. That's so important. So I was lucky enough to then meet a bunch of leading experts in this field who have been studying this stuff for decades, even publishing in these weird scientific journals. No one's been reading their stuff. I thought, why the hell hasn't anyone told me this? Like, I'm middle aged, I've been mouth breathing, through most of my life. I've been whenever I was working out or surfing, I'm just thinking I'm getting more oxygen in. And this is so damaging to the body, and no one was talking about it.    So this book took me so long, because I couldn't understand why some researchers on one side were saying how you breathe has no effect on your asthma, has no effect on your body, on your brain. And this other side was saying they're 100% wrong. Here's all the data. So it was going through all that and weeding through all that that took me a while. But I think at the end, I finally found the truth behind all of this. Lisa: He certainly did. And the book is such a deep deep dive like you know, and I've been talking to some friends about you know, reading this book and, and everything. How can you have a whole book on breathing? And I'm like, you have no idea. You could probably write 10 books on breathing and it's so powerful. And as an athlete I've, you know, I was just saying to you prior to the recording, I've spent my entire life as an asthmatic since I was two years old. I have a very small lung capacity. I have a low VO2 max, despite that I decided to become an endurance athlete. Go figure that one out, got some mental issues, obviously. But I'd spent my entire athletic career breathing in my mouth in places like Death Valley, in the Sahara, in the Himalayas, and altitude, and you know, freezing cold temperatures. And all of the problems that that brought and so this book has been a life-changing thing for me personally. Unfortunately, I'm no longer a competitive athlete bagger. You know, like I didn't get the memo back then. But now training hundreds of athletes. Wow, I can start to influence them and change them and are already started to adopt some of the information into the programs that we're using. So super powerful information, and in really important. So, okay, now let's go into a little bit—the physiology of breath because we sort of think if I take deep breaths, and breathe often in faster, if I'm running, then I'm going along. I'm getting as much oxygen as my body can get. Why is that completely upside down? James: That is upside down. And it's so counterintuitive. It took me months to get my head around this, even though we've known these scientific papers were published on this 115 years ago, showing very clearly that you need a balance of carbon dioxide and oxygen to operate effectively and efficiently. And when we breathe too much, we can offload too much CO2, which actually makes it harder for us to bring oxygen throughout the body. If you don't believe me right now, you can breathe 20 or 30, heavy breaths. You might feel some tingling in your fingers or some lightness in your head. This is not from an increase of oxygen to these areas, but a decrease of circulation. Lisa: Wow. James: Because you need a balance of CO2, for circulation, for vasodilation. This is—it is integral to providing blood and nutrients to our body. And for some reason, as Westerners we just think more is better, more is always more. That is not the way of the proper way of thinking about this when you talk about breathing, you want to breathe as closely in line with your metabolic needs as possible. Why would you? It's like being in a car. Why would you be revving the motor? Everywhere you're going, I had a stop sign just revving the motor. When you were over breathing. That's exactly what you're doing. You're causing a bunch of wear and tear on your heart on your vascular system. And you're sending stress in those—to your mind. People like you are very strong willed and we'll fight through it right you'll just keep going you're in pain, I don't care. I'm gonna finish this race. I'm gonna make it happen. Compensation is different than health. Oh, and and so this is why so many professional athletes, they'll be really good for a few years. The minute they stopped, diabetes, chronic health problems. Our body.. Lisa: Thyroid, diabetes, metabolic problems. Yeah, like no hell, you've spent your life being a disciplined athlete. I'm struggling with hypothyroid, for example, and high blood sugars. And I'm lean and I'm, you know, it's like what the heck. Like, wow. And I hope through the breathing in some of the other stuff that I'm doing that I can remove some of the damage because you're because it is so counterintuitive. So that carbon dioxide there was a real mind bender for me, because I've always understood carbon dioxide as a negative thing. You know, we want to breathe it out. We want to get it out of the system. That's the end result of you know, what do you call it the electron chain in the ATP production, and we're producing this carbon dioxide, we're gonna give it out. And that's not the case, isn't it? It's a controller of the acidity in the blood is something that we want to train, our chemoreceptors need to be trained in order to be able to tolerate more carbon dioxide. So this just dive into the winds a little bit on the actual physiology that I've just touched on the air so that we can actually get to the bottom of this carbon dioxide, your mind bender, really. James: So when we take breath in, it enters into our lungs and the bronchioles, to these little air sacs, the alveoli, and from there it goes through various layers and enters into red blood cells. The vast majority of oxygen enters into red blood. So there's some free floating but not much. So in those red blood cells or something like 270 million hemoglobin, and so then it enters into this hemoglobin. And it's, you know, it's funny, why would when we're working out, why would we get more oxygen in one area than another? So CO2 is the signaling molecule. So where oxygen is going to detach is an areas where there is CO2, and oxygen isn't going to attach otherwise. So you need this healthy balance of CO2, we have 100 times more CO2 in our bodies than we do oxygen.  Lisa: Wow. James: Okay, so this is this very carefully controlled system that needs to be in balance, and our bodies are so wonderful at keeping us alive. So when we become imbalanced, all these other things happen. If we become too acidic, we'll learn to breathe more, right? We’ll trigger that if we become too alkaline, our kidneys will release bicarbonate. So all of this is incredible and so important. Compensation, different than health. We can compensate for a very long time. Imagine you can live maybe 40 years eating garbage crap food eating Fritos. That doesn't mean you're healthy. No offense to Fritos. Delicious, absolutely delicious. But, you know, it doesn't mean you're healthy. So… Lisa: Yeah. James: ...the reason why you have to understand this balance of CO2 and oxygen is because you can't just understand CO2 as a waste product. It's still considered this a medical school. Yeah, you don't need it. But people who study this know that is—it's absolutely essential to have that balance, you don't want too much. But you don't want too little. You want your body to be able to operate at peak efficiency without having to go through all those compensations, right? To keep you there.   Lisa: Exactly. So when we breathe in, we.. When I say, we don't hold our breath, and I'm holding my breath for a long time, as long as I can. And then that's horrible urgency that comes up and you start to—your diaphragm starts to make that sort of hiccup thing. And this is actually the chemoreceptors in the brain, which is the area that is what I understand, correct me if I'm wrong, that is measuring the CO2 levels more than anything in the blood, not the oxygen levels. And it's so, the CO2 going up, and then the body's going “Oop, time to breathe,” and it makes you do that, you know, hiccup thing in order to make you breathe. And when I'm doing my breathing exercises that I've learned from you, I let that reflex go for a while while I'm training my body and to be able to accept more carbon dioxide. And that will help me be a better athlete with a bit of a EO2 mix hopefully, and make me faster and so on. But it's the CO2, that's actually pushing the oxygen into the cells as well, isn't it? And that was another, a mind bender as well. James: It's an exchange. So you can think about those red blood cells as this cruise ship, right? So and they're full of oxygen. And they cruise to areas where there are other passengers that want to get on this is CO2, and they exchange. The CO2 hops on as oxygen hops off. And this is just how it works. So that need to breathe, you're 100% right. A lot of people think, gonna exhale, hold my breath. “Oh, I don't have enough oxygen, I need to breathe.” No, that is dictated by rising carbon dioxide levels. And so many of us are so sensitised to CO2, that we can't hold our breath more than 10 seconds without going. But they've done a study with athletes. And they found that to very comfortably hold your breath, over 25 seconds, 89% of those athletes will not have any breathing dysfunction. So this is a great practice to do. And this is why this is used in so many different breathing techniques for so long. The ancient Chinese were doing breath holds. Pranayama ancient Hindus were doing breath holds for thousands of years—is to exhale softly. And to hold your breath calmly. You don't want to be struggling and feeling your diaphragm moving. Just calmly, when you feel a little teaspoon of discomfort. You breathe and you calculate how long that is. Don't look at this as a competition. I know that there's a lot of people out here. No, you can compete later. So what you want to do is to get your CO2 tolerance higher, because by having a higher amount of CO2, which is really a normal amount of CO2, your body can operate better. You will have more circulation. Oxygen will detach more easily. And when you're doing endurance sports, this is what you want. You don't want to use energy for things you don't have to use energy for. You want to be burning clean and tight. And that's what this allows you to do. Lisa: This is about efficiency isn't and maybe you're saying that the average person is breathing 12 to 18 times a minute, on average. And ideally, we should be around the five and a half or six times a minute would be ideal. “So breathe light to breathe right” was one of the catchphrases that stuck in my head. And that's my trigger for all over breathing again. And so it's actually slowing down our breathing rate and not increasing the volume so much as diaphragmatic breathing. So using the deep, lower lobes of our lungs to actually get the breath end and doing it a lot slower. And why are we all you know, doing it 12 to 18 times a minute and overbreathing? Which is yeah. It is... James: Sometimes a lot more than that. I mean, I've talked to clinicians who see people breathing 25, 30 times a minute just and they've been doing this for decades, and their bodies are just destroyed. So it's, these things become a habit after a while and our body gets used to that cycle of compensation. And we start acknowledging this is normal. We started thinking having migraines is normal, having cold toes and cold fingers all the time is normal, being exhausted all the time is normal. None of this is normal. And especially if you look at modern populations of what's considered normal now, I mean, what 15% of Americans have diabetes, 25% have sleep apnea, 10% have autoimmune like, what is going on here? And that this is just accepted that, “Oh, just you know, I've my diabetes...” Lisa: Aging. James: ...my drugs. So anyway, I'm getting off track here. You when this becomes a habit, again, compensation different than health. And a wonderful practice to try is to breathe in at a rate of about five to six seconds, and breathe out at around that same rate. I put in the book 5.5 yet, but then people have been writing me, saying, 'I'm a half a second off'. Oh, my God. So now I'm saying anything in that range. And if that's too difficult for you, slow it down, go three seconds in three seconds out. It's perfect. This is not a competition. This is about acclimating your body. So we can't breed this way all the time, that's going to be impossible. But whenever you become aware of your breath, that you're breathing too much, you can bring your breath back by breathing this way and recondition it. And the point of all these exercises is not to think about them. You want to do them often enough, that you're always breathing through your notes that you're always breathing lightly and slowly. And that range of diaphragmatic movement, especially for athletes, I cannot tell you how essential this is, when you're breathing too much. Okay, here's what's happening, you're breathing up into your chest, which is extremely inefficient. There's more blood further down in your lungs, so can participate much more, much better in gas exchange. But you're also doing something else. You're taking air into your mouth, your throat, your bronchi, bronchioles, none of which participate in gas exchange yet do you bring it in? You go? I'm using maybe 50% of that breath. If you slow down with the same volume, six laters a minute, to about six or seven breaths, right? Per minute, your efficiency goes up 35%. 35%. And if you're not gonna make a difference, you're running for five hour days. You're crazy. If you look at Kipchoge, check out how he's breathing, you know, an hour and a half, extremely light. He's completely in control, you can hardly see his chest. And he is in the zone. Sanya Richards-Ross was the top female sprinter in the world for 10 years, check out how she's breathing through the nose in control, destroying everyone else and all of our competitors. So it takes us a while, which is why people don't, you're going to see a decrease in performance when you switch. Okay, guaranteed that it's gonna to go down. If you stick with it, it's gonna go up. I don't want to say that it's true for everyone. But I would say 95% and the breathing experts, the elite trainers I've worked with have told me 100% of the people they've converted, their performance goes up and the recovery is cut by half. Lisa: Wow. And then I mean, who the hell doesn't want that as an athlete, you're fighting for 1%. So when we're talking, no such mess of possible changes that don't rely on your genetics and don't rely on you know, things that you can't control anyway. And like, for me, transitioning has been hard. I'll be honest, because I was completely congested all the time. And that's why I'd heard that nasal breathing because that’s the next thing we'll discuss that nasal breathing was very, very important for a number of reasons. I didn't really understand why. But I was like, well, I can't breathe through my nose is just blocked the whole time. And I don't have a show on hell of doing that. So well. Well, I'll carry on doing my breathing. And then when I learn how to decongest my nose and sometimes it will take me two or three breaths. And the first time the first couple of weeks when I was doing it, my nose was running and I wasn't getting anywhere and I'm like, this is not working. But I pushed through that phase. And now I can run for like a team case at a fairly good pace, completely nasal breathing, if I do the warm up phase properly, if I go out the door and just try and do it straight out, the gate won't work, I need to do the walking, holding my breath, and get that cleared first, and then I can get into my training. And then I can hold it in the first 10 minutes, I'm still finding it a little bit like I want to breathe with my mouth, but that instinct is there. But I'm slowly training myself into that system. And saying, I can actually, you know, I can actually run for a good hour just through my nose without any problems. And I've also not done the high-intensity. So I backed off the super high-intensity, because I know I'm automatically going to open my mouth when it gets to that. So while I'm in this transition phase, I'm not doing anything beyond that sort of aerobic capacity level. And I think I need this just to adapt. So these are huge types of people listening out there, if you are congested, and you think, well, this is all well and good guys, but there's no way in hell that I'm going to be able to breathe through my nose. Think again, there is, it's just a matter of being taught how to do it. And that's a pretty simple couple of exercises that were, you know, that's in the book. It can really, really help us if you persevere through it. And then I expect to see improvements and my VO2 max and all the rest of it. Now, let's talk a little bit about the reason why it has to be nasal breathing. And so it's not just about breathing slowly. We've talked about breathing slowly, we've talked about diaphragmatic breathing. We've talked about CO2 and the role that we don't want our CO2 levels too low in the body. Let's talk now about the whole. Where was I going James? Help me out. I've just hit a.. James: You wanted to talk about breathing, you want to talk about fitness, you want to talk about nasal breathing. Lisa: I hit a moment. So nasal. So we want to understand the physiology of the nose and why the nose is what we want to be breathing with rather than our mouth. James: So I want to mention a few things. A few more things about running. This may seem overkill, but just a couple of points. So what I've heard from various instructors, Patrick McKeown is a world renowned breathing therapist, top got Brian Mackenzie the same thing. Never work out harder than you can breathe correctly. So if you're entering the zone, your mouth is open, slow it down and build your base and work up from there. Sometimes it took Dr John Douillard took him six months to fully acclimate. But once you get there, you are going to find a power in yourself that you did not know existed. And this has been proven time and time again. When Carl Style was working with the Yale running team and the US Olympic running team. He said that these people suffered way more sicknesses, respiratory problems, asthma, COPD than anyone else. And he said, “They push through it because they're competitors. They're gonna push through it.” A complete mess. So there has to be a slight shift and thinking of like, you have to accept your performance is going to go down for a little bit. Right now's a good time to do that. We're still in a pandemic. So you know, once things open up, you'll be kicking everyone's ass. And that's not a bad thing. But just know that this is a wave. This is a process. So the reason why you want to be doing this, we'll get to nasal breathing now is I will bring on my guest. He's been waiting over here patiently. Steve, for the people who aren't watching this, I'm holding up a cross section of a human skull. You can see the nose right here. When you breathe through the nose, you're forcing air through this labyrinth. It's so similar to a seashell. It's called the nasal concha. So seashells have their shells this way to keep invaders out to keep pathogens out. Right? Our noses serve the exact same function. This is our first line of defence. So when we breathe through our nose, we're heating air which is important in cold climates where humidifying it, which is very important in dry climates. We're pressurizing it, we're conditioning it, we're removing particulate which is important, if you live in a city or basically anywhere else now. We're helping to fight more viruses. So there will be a smaller viral load breathing through the nose. And we condition this air so by the time it enters our lungs, it is properly conditioned to be more easily absorbed. When you're breathing through your mouth. You can consider the lungs as an external organ. Yeah, because they're just exposed to everything in your environment. So not only that, not only is this the most effective filter we have is it forces us to breathe more slowly. This is a self-regulating device. Yeah. How long did it take me to take that breath took a while? How long does this take? Yeah, nothing. So that's slower breath with that pressure allows us to gain 20% more oxygen breathing through our nose than equivalent breaths through our mouth. Again, if you think this is gonna make no difference to, you you're absolutely crazy. And this is simple science. You know, this isn't controversial stuff. Lisa: No, this is simple science, but not well, knowing until your book came out and became a worldwide best selling book. Thank goodness because this stuff needs to be out there. And I'm called silly because I'm deep in the waves and in researching all the time. And by hacking and the latest longevity, and the goodness knows what I'm just always into the latest and greatest. And I'm constantly surprised at how you know that some fantastic information never sees the light of day, because of the systems that are in place, or traditions and laws and stuff. And it's like, wow, we have to get this information out there. And this is one of those times when I'm thinking thank goodness, someone has put this into a book that's readable for people to understand the science without having to do such a deep dive themselves. And I think that that's really important. And that nasal, you know, nasal breathing. Also, it does another thing that I found really, really interesting was all about the nitric oxide. Can you explain what nitric oxide is and what it does in the body and why the nose is so important in that regard? James: Nitric oxide is this amazing molecule that our bodies produce that plays a central role in vasodilation. Having more nitric oxide will decrease your chances of having a stroke, will decrease your chances of having a heart attack. It will increase circulation to your brain. I mean, I can go on and on here. It's no coincidence that the drugs Sildenafil also known as viagra, guess what it does, it releases nitric oxide in your body. That's how it cleans. Yeah, we get six times. One study showed that we get six times more nitric oxide breathing through our nose than we do through our mouth. And if we hum we get 15 times more nitric oxide. So this has an incredible effect on the body and especially now there are 11 clinical trials right now where they're giving patients with COVID. Guess what? Nitric oxide. And apparently, according to Nobel Laureate, Louis Ignarro, oh, it's working wonderfully well in these. Studies are going to be out soon. I heard something. My brother in law's an ER doctor, my father in law's a pulmonologist. So we talk all about this stuff. And the vast majority of the people suffering the worst symptoms of COVID are people with chronic inflammation. And as an opposite, very observational study. There are also mouth breathers. Yeah. And this was known 100 years ago, they were saying 75 to 80% of the people with tuberculosis are mouth breathers, chronic mouth breather. So there's been no official study on this just this is just observational stuff. Don't go write me about this, that your nasal breathing got COVID. It can happen. Lisa: Can happen still, we're not saying that.  James: It's to me, but we know that can happen. But we also know something else. That breathing through the nose will help you defend your bodies so much more effectively, against viruses. And this is what Louis Ignarro again, he won a Nobel Prize. So listen to that guy, if you're not gonna listen... Lisa: Yes and I've actually I've heard Dr Ignarro speak a number of times, and I'm hoping I can get him on my podcast to actually just to talk a whole session on nitric oxide and what he discovered, because he he won a prize for discovering this, this gas if you like in the body, because nobody really understood what it was or how it operated. And it is being used for Viagra. And the reason it works for that is that it expands and dilates the blood vessels, but that's what's actually doing it and all parts of our body. And therefore when we're doing this nasal breathing, and we're getting more of that nitric oxide and I mean, a lot of the athletic supplements that you can get now in your corner supplement store are about, you know, drinking beetroot juice or whatever increases your nitric oxide. So this is another way to get at an info for you athletes out there. You want better performance, you know, a lot of my athletes are on beetroot juice and things like that. Just nasal breathing is another way of doing that. You know, so that's a really big piece of the puzzle, I think. James: And those don't work. They certainly work but the key was so much of this just like with a key with oxygen. You don't like, go and get a bunch of oxygen for five minutes, then walk away so I'll fix them. You want to constantly be producing this stuff. So beet juice, you know what we'll work for a short amount of time. But to me, it seems like a much better idea to use something that we're naturally gifted with to use our nose. And to constantly be having a body that can constantly produce a healthy healthy level of nitric oxide. I drink beet juice. I'm a big fan of that, the nitrates and other vegetables can help release more nitric oxide. Great stuff, right? But nasal how often can you be drinking beet juice, you don't want to be drinking that 10 times sugar in it. Lisa: No. There's a lot of sugar in it. James: There’s a lot of sugar in it and you know, occasionally is great, but there's other ways of doing this. And you know, I think our bodies are the most powerful pharmacists on the planet and that's been shown so why not try to focus on your body and health a little bit? Well last thing I want to mention that I just find, is so frustrating here in the US is all this talk of COVID all this talk of you know wear a mask, which I'm a believer in that stay at home. I'm a believer in that. Zero talk about not eating four double cheeseburgers a day.  Lisa: Hey, mean. James: Ola, like getting your health and breathing through your nose. like where's that conversation? Getting vitamin D, getting vitamin C. And so anyway, we've seen what the government's you guys have a much more progressive government, let me tell you, we're so jealous of it. But now we have the whole... Lisa: We’ll be a medical society, though there's nothing. It's not that late. But yeah, and I've had a number of episodes, I've just done a five part series on vitamin C, and intravenous vitamin C, and cancer, and sepsis. And, you know, the whole gamut in the problems there. In this, every single doctor has said to me too, when it comes to COVID, why aren't we building up our immune system so that we don't get people in our ICU on ventilators? You know, so that we don't get to that point, or we have less people and, you know, that just seems like a no brainer to me, but we're still promoting eating crap and drinking crap. And, you know, and not taking into account. It's, yes, I mean, the vaccines and all that, but how about we just take a little bit of self-responsibility we might not have as bad if we do get it. You know, like I've got a mum. I've just written a book called Relentless that my listeners know about and it was about rehabilitating my mum back from an aneurysm four and a half years ago, where she hit massive aneurysm. Hardly any higher function, I was told, like, should never do anything. Again, I spent four and a half years rehabilitating her and she's completely normal. Again, she's driving the car, she's walking, jogging, everything's fine. And this is why I've ended up doing what I do, because I'm very passionate, because none. And I mean, none of this was offered in the standard medical system that we were in. They were great at the surgeries, they were great in the crisis. But when it came to rehabilitation, there was just nothing there, and so I discovered all of these things. And one of the passions I have is just staying one step ahead of here and giving her the next thing now she's 79 years old, I want to keep her healthy. So when COVID threatened us, you know, I've, you know, got over there in the corner, my hyperbaric oxygen chamber, my ozone over the air, and, you know, you name it. I've got it so that if it does come, we prepared as prepared as we can be. And that is a good approach, I think prevention, rather than waiting for the disaster, and then trying to pick up the pieces at the end of the day. You know? James: Yeah, and I just want to be clear, and I know that you're saying the same thing here. There's, doctors in my family that practice Western medicine who've helped people, when I get a car accident, last thing I want is acupuncture. I want to go to the ER and have somebody say, “Sir, I break a bone. I'm not doing pranayama breath work, I'm going to go and get a cast.” But about rehabilitation. This is 100% true, because it costs a lot of money. There's no way a system can support full rehabilitation. And one thing that I've heard from almost every expert in the field, whether it's a professor at a university, or an MD, or a nutritionist, or whatever is they believe, this isn't my view. This is their view. I want to be objective here but they believe that there's a reason people aren't talking about breathing again. It's, there's no money in it. There's a money. Oh, why the US government isn't saying “Don't go to McDonald's today.” That's going to shut the economy down. So the good news about this is people who are interested want to take control of their health. There are now other means of getting information from people who have studied this stuff, people who are into scientific references, who are looking at science in a real objective way. And so I view this thing, hopefully, this is going to be a lesson we can all learn then that we can acknowledge how incredible the human body is, how we become susceptible to illness, and how to better defend ourselves in the future. Lisa: I'm just so on board with all of that. And I think it's our right and this is a problem we do. You know, we love Western medicine, they do some brilliant things. I love naturopathic medicine, I love alternative, complementary, whatever you integrate, or whatever you want to call it.   We've all got deficits, and we've all got blind spots, and every single piece of this. And it's about bringing the whole lot together, and not letting money rule the world. I think is, if we can ever get to that point, that would be fantastic because it is at the moment. And there's a lot of things that are being hindered, like things, simple things like breath work, like stress reduction, like intravenous vitamin C's, like things that don't, nobody can make money at, or hyperbaric oxygen is not going to make millions for anybody. So it's not getting out there, that information is not getting out there. And it needs to be out there. We got I reckon we could talk for days, the job's because we were obviously on the same track. But I wanted to touch on a couple of areas. One was the whole skeletal muscle record of our ancestors and our facial, you know, our whole facial development and why that's part of the problem and the food problem, the mushy food that we eat today. And then remind me to talk briefly about the immune system and all this inveigled the vagus nerve and stuff. So let's start with though, with the skeletal record, and the difference between our ancestors and how we are today. James: So early on in my research, I started hearing these stories about how humans used to have perfectly straight teeth and I don't know if you're like me. I had extractions, braces, headgear, you name it, every single person I knew had the same thing. It was never if it was just went this is what how it was done. At wisdom teeth removed. If you think about how weird that is, you're like, why are we removing teeth? From our mouths? Why are teeth so crooked? Where if you look at any other animal in the wild, they all have perfectly straight teeth. And what I learned was that all of our ancestors, before industrialisation, before farming, any hunter-gatherer all had perfectly straight teeth. So I went to a museum and looked at hundreds of skulls, and they all stared back at me, these perfectly straight teeth. Completely freaked me out. They had these very broad jaws, wide nasal apertures forward, growing powerful faces. So if you have a face that grows this way, and you have a mouth that's wide enough for your teeth, you have a wider airway. Having a smaller mouth, you have less room to breathe. And this is one of the main reasons so many of us struggle to breathe, we have upper airway resistance syndrome, sleep apnea, snoring, and so many other respiratory issues is because there's less room in there. And what happened is this came on, in a blink of an eye with industrialised food in a single generation. People went from having perfectly straight teeth, wider nasal apertures, to having crooked teeth and smaller mouths and a different facial profile. And this has been documented time and time again. Yet I had learned in school, which for me, it was zillion years ago that this was evolution-meant progress we're getting we're always getting younger, you're getting taller, we're getting better, look around the day and ask yourself if that's true, it's complete garbage. And then I went back and looked at the real definition of what evolution means. All it means is change and you can change for the better, or for the worse. And humans, as far as our breathing concern is concerned, are changing very much for the worse. Lisa: Wow. And so we're, I mean, I'm saying I grew up have had so many extractions and teeth completely crooked and a tiny little mouth and all of those sort of problems that you're describing. So what was it that their ancestors did differently? So it was just the food being not we not chewing as much was that basically? Yes, like that's that was a real chain game changer for us when the industrialisation happened and we got mushy food. James: There were many inputs, chewing is the main one. So when you live in an extremely polluted environment, sometimes your nose can get plugged, right? You start breathing through your mouth, that can create respiratory problems, but if you breathe through your mouth long enough, your face grows that way actually changes the skeletal picture of your face. So that's another input improper oral posture is what that is called, but it's for when you're younger chewing is so essential and it starts with breastfeeding. There were no Gerbers food. I don't know if you have that out there, but there were no, like, soft foods. Just a few 100 years ago. So if you think about it, so now we're eating the soft processed foods right out of the gates. We're going, we're being fed on a bottle, soft processes. All of our mouths are too small and too crooked. So this chewing stress starts at birth. They've done various studies looking at kids who were bottle fed versus those who are breastfed. When you're breastfed, your face pulls out your mouth, gets wider because it takes a lot of stress to do. Two hours a day, like every day, every two hours, you're doing it. And literally, and I've talked to parents who had twins, I just talked to a lady yesterday who bottle fed one did love not want to be breast fed breast fed the other. They look totally different. One has crooked teeth, one has autoimmune problems. One has swollen tonsils, the other doesn’t. So that is anecdotal. But there's been studies in the 1930s they did tons of studies into this. So I'm a dude, I'm not going to sit here and tell everyone they breastfed people for that is not my point yet. But some people just can't. But I think it's important to acknowledge that the physics of how this works. And after that, if you have bottle fed a kid that's fine. But they need to start eating hard foods baby led weaning, this is what needs to happen to develop that proper jaw to develop that proper airway. And even if you don't do that, if you then go to soft foods, and your kid is two to three years old, and it's snoring or sleep apnea, which is so common now it's so tragic, because that leads to neurological disorders, ADHD, again. This isn't crazy New Agey. This was at Stanford, there's 50 years of research on this from the top institution here. So there are direct links between those things, but luckily we have technologies now that can help restore to the mouth to the way it was supposed to have been before industrialisation. They actually widened the mouth of these small little kids, and open their airways, and it drastically improves their health. Lisa: Today so it's palatal expanders that you you tried out and actually isn't even as an adult was you developed I remember it was at eight coins worth of new bone in your in your face and in a year or something crazy so we can still so if you've missed about if you've not received your kids or your you didn't get that yourself or whatever, it's not all over there is things that you can start doing even starting just to chew now like that to eat some carrots and whatever you know, whatever hard foods you can find to actually use those that powerful joy in order to make it stronger. It's just like every other muscle in the body isn't it? And when we're mouth breathing to our remember you saying or the muscles here get lax and flattered and just like any other muscle that we're not training, if we're if we're going to mouth open all night and we're you know, then we're causing those muscles to be lax and over time that that leads into sleep apnea and things as well can do. So yeah, so this is something that we can practically get a hold on now even if it's a bit late for you and I think. James: Yeah, I talked to my mum I was bottle fed after like six months my mum was like six months is a long time when I was growing up bottle fed soft foods industrialized crap my off intel I was you know 25 and it discovered these things called vegetables. But you know, so so this isn't pointing the finger at anyone we were sold this story by our governments that said you shouldn't eat mostly refined grains, eat your Cheerios, eat your bread, or crema wheat eat your oatmeal like that this is eat your sugar, that's good. Eat your chocolate milk, you know, so we have knowledge now we know the folly of our ways. But the one thing that was inspiring to me this is easier to do, when you've got a developing kid quickly growing it, you can set the foundation and their face will grow around like their faces grow different. It's just, it's beautiful to see how the body forms to its inputs. So I, you know, youth was several decades ago for me, for far too long. I was a child of the 70s and 80s. Right? Yeah, we thought I thought once you're in middle age, you're completely screwed. What can you do, but that is just a convenient excuse for people to say, “Oh, it's genetics. Oh, I inherited this.”  Like genes turn on but they can also be turned off and so I wanted to see what how I could improve my airway health in a year and so I took a CAT scan, and I did proper oral posture, you're 100% right when, when you're just eating soft, mushy food in your mouth is open. All of those tissues can grow really flabby just like anywhere else on your body. But if you exercise them if you exercise the jaw, the strongest muscle in the body, you know, for its size, the tongue, extremely powerful muscle, you exercise these things, they get tone like anything else. And this can help open your airways. So this is just an anecdote, this was my experience, it'll probably be different for other people. But I did a number of these things. And a year later to the week, I took another CAT scan, and the results were analysed by the Mayo Clinic, which is one of the top hospitals here. And they found that I increased my airway size about 15 to 20%. In some areas, and I can't tell you just as a personal story, it has absolutely transformed my life because I can breathe so much more easily through my nose. At night. I am silent. I didn't snore before but I was knowing that my wife would always tell me, totally silent now. And of course I am because I have a larger airway, things are more toned air can enter more easily. Lisa: Is it easy to find palace expanders are these like any a couple of dentists in the world doing this sort of stuff? James: Not everyone needs palatal expansion. I've gotten so many hundreds of emails of people, you know how we are, it's like, what's the latest thing, oh, there's a new pill, there's a new device. Oh, I get it, that's gonna solve all my problems. So they can really help people who need it just like surgical interventions. For people who have severe problems in their nose are a huge help. They're transformative. What I found is a lot of people don't need that. And what I firmly believe is start slow, start low, see what your body can naturally do. If after six months, you're like, ‘I'm still not this isn't working,’ go see someone you know, and take it from there. But palatal expansion absolutely works for people who really need it, but you would be amazed by just doing something called oral-pharyngeal exercises. There was a study out in chest, which is one of the top medical journals, you know, they found this significantly cut down on snoring, not lightly, significantly. And all it is, is exercising the tongue, roof of the mouth, proper oral posture, just working out this area. Toning it, of course, that's gonna help you if this is flabby and hasn't been to.. Lisa: The gym for your mouth. James: That's what it is. And I view that world, there's a whole separate school called myofunctional therapy that is helping people do this, which is so beneficial. They focus mostly on kids, but they also work with adults. And this is what they do. They are the instructors, the gym instructors, for your mouth and for your airwaves. And I strongly recommend people looking that up, there's a bunch of instructionals for free on YouTube, you can go that route as well. Lisa: Oh, brilliant, we'll link to some of those on your website. And, you know, I get people those resources. It's just, it's just amazing and fascinating stuff. And who would have thought this conversation would go so deep and wide, I wanted to just finish up then with talking about the immune system and stress reduction and vagus nerves and all of us area too, because, you know, me included in this and most people are dealing with, you know, massive levels of stress, and breathing can I've, since I've read your book, and I was really, you know, quite aware of how to bring my stress levels down and movements and the importance of you know, yoga and all those sorts of things. I've had that piece of the puzzle sort of dialed in, if you like, but the breathing exercises and actually calming the nervous system down within minutes. Now I can fall asleep in seconds. And you know, what seconds is a bit exaggerated but minutes, and I can I can take myself from being in this emotionally, my god and i tend to be like that because I'm like, you know, busy, busy, busy. And then go, “Hey, I'm spinning out of control. I've lost control of my breath. And I hear myself and I pick myself up on it now.”  And I go and do two minutes of breathing exercises. That's you know if that's all I can afford to do, and I can switch into parasympathetic now, that's been gold. Can you just explain why the heck does doing this slow light breathing diaphragmatically stimulate the parasympathetic nervous system and the vagus nerve from what's actually going on there? James: Sure. So what people can do now is take a hand and you can place it on your heart. And you can breathe into rate of about three seconds and try to breathe out to about six to eight seconds, just whatever's comfortable. Now, breathe in again. 123 and exhale. And as you're exhaling out very softly, you're going to feel your heart rate, get lower and lower. And lower. So when you are exhaling, you're stimulating that parasympathetic side of your nervous system, our breath can actually hack our nervous system function. And by exhaling more, and taking these long and fluid breaths, you can trigger all of those wonderful things that happen when you're parasympathetic. You reduce inflammation very quickly. You send signals to your brain to calm down. You actually change how your brain is operating the connectivity before the between the prefrontal cortex and the emotional centers of the brain changes when you slow your breathing.  So throughout the day, if you want to remain balanced, you take those soft and easy light, low breaths, to account of whatever's comfortable, three, four, even up to six, and six out. But if at some times you feel “My stress levels are starting to increase. I'm feeling my mind slip. I'm making rash decisions.” Start extending the exhale. An exercise I like to do is inhale to about four, exhale to six, you don't have to do it that long. Inhale, two, three, exhale to five, whatever's comfortable, as long as that exhale is longer, you're gonna feel your body slowing down. And if you don't believe me, all you need to do is get your heart rate variability, monitor your pulse oximeter and take a look at what happens after 30 seconds of slow, focused breathing. And you will see this transformation occur in your body, if that can happen in a couple minutes, what's going to happen to you after a couple of hours of taking control of your breathing, or a couple of days, or a couple of months.  I'll tell you what's going to happen. I talked to dozens and dozens of people who have fundamentally transformed themselves through nothing more than breathing. I want to mention again, I'm not promising this is going to work for everyone for everything. But it needs to be considered as a foundation to health. Lisa: And you need to stick at it for a little bit. And you know, I do my HIV monitoring every morning before I get out of bed and do my breath holding exercises and look at my boat score from Patrick McKeown. And you know, all that sort of stuff. Before I even put my feet on the floor, and I yeah, I can control my heart rate to a degree just through my birth weight. So I know this works. And I know that when I do a longer exhale from that, and compared to the inhale, immediately, I just feel a bit more calmer, and a bit more in control. And it's reminding myself and this is the trick because we, when we're in the middle of work, and we've got meetings and phones are going and emails are coming at us, and it's like the “Lions are chasing me.” And it's been trying to remember to breathe in. Bring yourself down and calm yourself down. And just take that couple of minutes many times a day, you know, depending on how stressful Your life is. And in doing that on a regular basis, over time will have massive implications. Because we're talking here, your digestion. You digest food better if you're in a parasympathetic state versus a sympathetic, your immune system. Again, coming back to COVID in that conversation, you're going to be improved, you know, your hormone balance. Yeah, just to fix everything, the way your, the brain waves, all of these things are going to be affected by your stress levels. And what is th

Let’s get this out of the way now: most companies will not have someone go from intern to CEO in a matter of months. That’s a situation unique to James Standley and Solé Bicycles. What isn’t out of the ordinary, though, are the many challenges and hurdles that James and his team had to deal with when scaling Solé into the success it is today.On this episode of Up Next in Commerce, James takes us through the trials and tribulations of the Solé journey, including various shipping and manufacturing disasters and lawsuits that nearly bankrupted the company, and he explains how he worked his way out of those troubles and what he learned along the way. Plus, he gives some secrets on what’s working well for Solé now, such as the strategy of finding different touchpoints to reach customers in a way that has absolutely nothing to do with selling to them. Main Takeaways:Starts With Heart: While the relationship with your supplier or manufacturer might seem like a cut-and-dry part of business, it has to go deeper than surface level. f you are working with overseas partners, taking the time to meet, and understand, the people you work with in person and form a relationship with them will carry you further and ease some pain if there are ever problems in the supply chain process.    What You’re Known For: Through unique partnerships and marketing opportunities, there is potential to reach people in different ways, even if that means you’re not necessarily selling them a product with every touchpoint. Having a relationship with customers is more important than selling to them at every opportunity, because if they know you for one thing and then find out you sell something else, they are more likely to buy from you across the board. Shot on an iPhone: There will always be a place for highly-produced, glossy marketing materials. But, more and more these days UGC and lower-budget content is what is resonating with consumers. As opposed to showing potential buyers something they have to aspire to, like a model, highlighting people and experiences that are familiar to them as they are now will convert better. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles and you're listening to Up Next in Commerce. Today on the show, we have James Standley. He's the president and founding partner at Sole bicycles. James, welcome.James:Hey, how are you guys doing?Stephanie:Doing good. Thanks for joining us.James:Yes, I'm super excited to talk about all things ecommerce with you guys.Stephanie:Yeah. I was just looking through your website and I am very excited to get a bicycle after this. I didn't even know I needed one, but now I do.James:Totally, totally, yeah. We have tons of great bikes and yeah, and tons of cool different colorways and options and a bike for just about anyone's kind of need.Stephanie:Awesome. Tell me a bit about how you started Sole. I think it was in college, right?James:Yeah. My business partners, that I ended up starting the business with and I, we met back, funny enough, my first venture, which was a music festival I helped start back in college. We were both partners in that.Stephanie:It was called the Coachella for the Mountains, right?James:Yeah. It was called Snowball, and the idea was Coachella meets on the mountains. Yeah, there was this guy, Chad Donnelley, who I knew through the lacrosse world. I played college lacrosse and he came up with the concept and I was always involved in music. Growing up, I was a concert pianist, and I had DJ'ed in college and been in bands growing up. We met through the lacrosse world, and he came up with this idea. He had reached out to me just to ask my opinion on the project and what I thought about it. At the time, I was a freshman in college and he was asking me about it and I ended up just going back to him and say, "Hey, I want to be a part of this. I think this is amazing."James:I was part of that initial team. We kicked off this event with ... Our first, we had Edward Sharpe and the Magnetic Zeros, and Bassnectar, and Pretty Lights, and Diplo and all these amazing artists come out and sold like 15,000 tickets. It was a really cool first venture and a first event. Yeah, so Jake and John, my original founders with Sole, they were partners in it as well, and they helped get some of the money for the project. We met, first year was a huge success and we stayed in contact. At the same time, they were coming up with the idea for Sole, and going back that summer, between my freshman year and my sophomore year of college, they were looking for some additional help on Sole.James:I said I'd come in and I've got a more like operational financial sort of background or mind, and they were more of the creatives and the visionary type of people. I came in, helped clean things up. We got the business off the ground. Then going through the summer, they ended up going and raising some money and starting another business, and I ended up taking over the business. I went from being technically an intern in May to the CEO in August. Yeah, so that's how I got involved. Shoot, that was 2011. So, we're going on nine years ago, and I've been CEO ever since.Stephanie:Wow. Very cool. That's a wild story. How many bikes were you guys selling when you took over, and where are you at now? So I can get the scale of the company.James:Totally, totally. Yeah. Our first year we were featured on this big Forbes article and the business sort of took off, and I think we sold maybe a thousand bikes our first year, which was a lot for a first year business. This past year we're going to sell about 15,000 bikes.Stephanie:Wow.James:Yeah. We've grown quite a bit.Stephanie:That's great. What is the selling point of Sole bikes? How's it different?James:Totally, totally. Yeah, for us, our main selling point is you go look at the bike and it's just going to look different than any other bike you've ever seen before. We're really heavy on our marketing and design and colorways and wanted to make something that's really, really simple, easy to use, easy to maintain, but also looks really beautiful, and something that has a personality, and really people can relate to. I think a bicycle, for most companies, is more of a utility product, something that's really spec-driven.James:For us, we wanted to make something that people were really, really proud of, and it's like, they can relate to, and find a colorway that really matches their personality, or they could this store music fixed tapes or find these other ways that people can relate to the product. That's really allowed us to set ourselves apart from other bike brands.Stephanie:Cool. It seems like pricing is also a big thing. The one thing I've always thought is, why the heck are bikes so expensive? Why? How'd you get your guys cost down so much?James:Totally. Totally. Yeah. Yeah. The biggest way we do it is we work directly with a manufacturer and we sell directly to our customers. Just the natural, by cutting out some of the normal distributors or middlemen, we're able to offer what would be a traditionally higher price point products for a lower price and pass those savings onto the consumer by selling direct.Stephanie:Tell me a bit more about that, because what did that look like finding a manufacturer? I think I saw you found, in the early days, your manufacturer on Alibaba. Right? Which I was like, oh, that's interesting because I feel like Alibaba ... I've been there before and there's a lot going on. There's a lot of people. It's hard to know who to trust, it's hard to know if they're going to send me something good. How did you guys go about finding a manufacturer there? Did it work out well? Give me some behind the scenes.James:Totally. Totally. Yeah. Our first, when we got the business kicked off, we actually were involved in this Ali-Baba business plan competition. Back when we were in college, Jake and John had applied for this business plan competition. They won it and we got a $15,000 grant from Alibaba. That grant or that money paid for them to initially go over, meet our first supplier who Alibaba had helped set up, and we got our first order of bikes in. That's what the initial financing that got the business kicked off. But over time, went through a few different suppliers and really had to iterate our process.James:I spent a lot of time over in China meeting with different suppliers, refining the product, getting it to a place where it is today. It took a lot of trips over there and a lot of refining.Stephanie:In the early days when you're picking your suppliers and manufacturers, what would you do differently this time around? What lessons did you learn or what things did you maybe stumble on in the early days that you can avoid if you were to redo it now?James:Totally. What I would recommend is, we got placed with the supplier via Alibaba, and we just worked with the first person we were placed with. I think we ended up switching a few different suppliers over time, but what really ended up getting us with a supplier that we were super happy with is we went over there, and I went to one of the big trade shows, and we ended up visiting another 15 or 20 during this trip I went on about year two or three, and that trip we ended up finding the supplier we worked with, still to this day.James:We really got to go out and meet these people and do your diligence and find the supplier that makes the most sense for you, and not just use the first one that you end up getting placed with or you end up meeting with. You got to go over there and develop a relationship with them. I mean, it's so important. They have this saying there. It's first, you drink tea, then you drink Maotai and then talk business. What I mean by that is, they want to meet you, the different suppliers and the different people over there want to meet you. They want to build a personal relationship, and then they want to talk business because it's so important there to have a personal relationship, as well as a business relationship.James:If you're going to try to source something from China or overseas, I'd recommend going over there and meeting these people and spending time with them, and learning, meeting them as people, and really developing a relationship, because that's going to help that business relationship over time and make a really, really strong business relationship.Stephanie:Yep. If you don't go and meet them and you didn't really do your due diligence, what kind of problems could a new company encounter? Did you encounter any issues in the early days with some of your suppliers that you stopped working with?James:Totally, totally. Yeah. The supply chain for a bicycle is pretty complex. For our product alone, there's over 50 parts. Those 50 parts come from 20 different other suppliers, and then those have to come into an assembler, the assembler puts the product together and then it's shipped over. There's a ton of different things that could go wrong. A good example would be we had one of our biggest shipments ever, at the time for the business. We had put in an order for summer, and it was like 2000 units. We had also set up a big sale online with a company called fab.com. At the time, they were having ... I don't know if you remember the company, fab.com, but they were one of the fastest companies to a billion dollar valuation, I think, and people were talking about it as the next Amazon.James:It was having this really big moment. We were selling really well on there. We partnered with them and we were like, hey, we're going to bring in a bunch of units. Let's have a really, really big sale. We have this massive sale. We sell like 1,500 to 2,000 units, pre-sell them, and ends up being the biggest sale ever on fab up to that point. So, do the sale, goods come in, and then we ship all the product out. Well, our manufacturer had packaged the bikes slightly incorrect to where ... The crank arm usually woven through the front wheel, which is detached, and then tucked to the side of the bike when it's shipped. They were all packaged slightly off that almost every single bike came with one of the spokes popped off.James:You get your brand new bike that you just bought offline, brand new, beautiful bike, you open it up, and one of the spokes popped off, which it's like ... You can't ride it, but it's a small problem, but it's not an easy problem to fix. Oh my gosh, that situation almost bankrupt us. What ended up happening we-Stephanie:What did you guys do?James:Yeah, we had the product on credit. We had given we had been sold the product on credit, so we went back to the supplier and we were like, hey, this is going to bankrupt us. We got to figure something out, and they refused to take any discount on it. Then, our advisor was like, "Hey, we're going to just hold payment until we get something settled." They ended up serving us a lawsuit. They came to America, served us a lawsuit.Stephanie:Oh my gosh.James:So we were served, and had to go through this entire ... Mind you, I'm like 21 years old at the time. I'm still in school. We get served a lawsuit. I'm like, oh my gosh, what is going on? So, we had to hire a lawyer who was our body. He was only like 30 and we didn't have a ton of money. We had to put together a case and actually go out and defend ourselves.Stephanie:Yeah, did you win?James:We go through this, and we hired this lawyer, and he's like, "Look, you guys don't have the money, [inaudible] afford me, so I'm going to teach you how to build this case." I went and actually built this timeline of everything that's happened, and we came up with a case theory and counter sued them. They responded and deposed me. I had to go through this 40 exhibit eight hour deposition. But we held our ground and got through it. After that, it got to the point where it was like, financially it made the most sense to settle and were able to settle for what ended up being about half off of what the original was. Yes.Stephanie:That's wild. I'm just imagining being in college, dealing with it. How was that experience being in college? I'm just thinking, all of a sudden, you have this company and you're having to go to China and now you're getting sued. What was the college experience like for you when you were having something very different than probably a lot of your peers go on?James:To be honest, it was really exciting. You felt like it was just so cool to be building something and going through this. We were so ignorant, I think, going through a lot of this stuff, which I think ended up actually helping us. It was just very shoot from the hip and like figure it out. Yeah, so many of these different scenarios could have totally bankrupt us or ended us, but I think it builds a lot of character by going through these different situations and surviving it and learning from it and growing from it. Yeah, it was exciting. It was really fun and exciting. The goal was just like, don't go bankrupt, don't die. Keep fighting and figure it out.Stephanie:That's good. I like that. I could see it also just making it seem like, well, what else ... Nothing can really scare me. I've gotten sued. I almost went bankrupt. There's nothing too scary out there after that. I think it's a good place to be.James:Yeah. I think it's part of building a business. You're going to face adversity and a lot of ... There's a reason nine out of 10 businesses fail. There's so many things that can go wrong with building a business, but you have to learn to embrace those challenges and know that you just got to fight through it. There's not always a way to figure it out, but there's oftentimes, if you keep working at it and keep fighting, you can find ways to get through these things. If you do get through them, these are like business cards, I guess you could say, or things that'll stick with you and you could grow and build on as you continue to build your business.James:After going through all this stuff over so many different situations over so many years, we've now learned to embrace the challenge and just know, hey, here there's going to be some new challenge, every year, there's going to be some new thing that's going to ... we're going to get hit with, and you just have to learn to embrace it and take it head on and not let it beat you up.Stephanie:Yeah. I love that. You guys seem really good at partnerships. I've seen some of the very well-known companies that you work with, who they get their own custom bikes built, and you've got things with artists going on and music and all that. How do you how do you view that strategy in your playbook to be able to access new customers and new markets, and how do you even develop those partnerships?James:Totally, totally. A lot of that was built from, again, when we started the company, we weren't the traditional bike guys. We were coming from the music background and fashion background. A huge art scene. We had all these relationships early on, and just out of pure having those relationships, we intertwined it in business, and you have the fixed tape series, which one of our early employees was a professional DJ, so he's like, "Hey, I got this idea. Let's create an hour long mix to listen to while I'm riding our bike, and we'll go get some other DJ friends to do it." That piece of content. Just that, that we created that and it's been rolling ever since. We just launched the Sofi Tukker one, which was, I think our 76th mix tape.Stephanie:That's cool.James:Then that artist creates that mix, and some of these DJs are very globally known DJs. We posted on our SoundCloud and they showed on their SoundCloud, and it creates this nice piece of content that people can come back to and find Sole, or find that mix each month. It's funny because we're not ... you wouldn't think of us as a music business or a bike business, but there's people out there in the world that only know us as the fixed tape company. There are people who'll find out, they'll be like, "Oh my gosh, you guys sell bikes. I thought you were just the fixed tape company or something." It's just organic sort of different little marketing tricks that we've, or little tactics we've built over the years.James:They just are organic, unique way to reach new customers and relate with our customers. We do the different partnerships. Again, I'll use the Sofi Tukker example. They're a big DJ group. If you don't know them, they're a big DJ group, globally known. I think one other fun facts, I think they have a platinum record in every country in the world except Antarctica. They're pretty big and they're up and coming. They had a song that's called Purple Hat. One of the lines in the song is purple hat cheetah print. We thought, how cool would it be to make a purple hat, their purple cheetah print bike? So, we had connections.James:One of their agencies or marketing companies or whatnot. So, we were able to get a pitch in front of them and they were super stoked on it. Yeah, now we're selling purple hat cheetah print bikes. Again, it's a cool way to ... What other bike companies are selling purple cheetah print bikes? It's just a unique way to reach new customers and provide a unique product and put a cool product out in the world that no one else was doing. I think it's just thinking that way with the bike industry has allowed us to build up these partnerships and set ourselves apart from other bike companies.Stephanie:Yeah. When you're doing these partnerships, these partners can also sell it on their website. Right? So, it's not all being sourced back to your website as a central hub. You're essentially letting these partners also sell the bikes on their websites as well. Right?James:Totally, totally. Yeah. For each partnership's bespoke and different in their own way. Sometimes like, we did a partnership with Wildfox, which is a women's centric fashion brand. We did these like really beautiful floral prints all over a bicycle. They took them in and they sold them through all their retail shops, as well as their partner wholesale shops, as well as their website, and we sold on our website. There's a bunch of different ways we can structure it. But yeah, it's usually just bespoke to whatever that partnership is.Stephanie:Well, that's a good segue into, I mean, when you're thinking about, you've got these mixed tapes going out and partnerships that aren't anywhere close to like the biking industry, how are you tracking conversions? Is your goal to try and get people to listen to these mixed tapes and then come back and buy bikes? Or how do you think about what your goals are around these different projects that you're doing?James:Totally, totally. With the fixed tapes, I think we're trying to push out a certain amount of content each month and each quarter. Then we go out and we build content calendars around what are different initiatives that we can tap into? I think when we're thinking about content, we like to look and start with email. Email is like one of our highest converting marketing channels. We're constantly filling and adding to our email list, and then from there, we're trying to push out two to three emails a week. We're mapping out our email pushes. We say, what are the different content initiatives that we can tap into? So, we try to do a fixed tape every two months. We try to do artist series every quarter and large-scale partnership once or twice a year.James:We map out all these different things we're trying to do, and then we funnel, and then that leads into email. With email, where you can't really just send very bland marketing type style emails every month. You're not going to get good engagement. So, we have to create stuff that's engaging. I think we've just gotten so good at creating this stuff very cost-effectively that it ends up paying for itself through the conversions of email. It's also a great brand building. They're all great brand building initiatives, and they all kind of build on themselves.James:If I do a big large-scale partnership with like a Sofi Tukker, that's going to come back and open up new opportunities down the road for other potential brands, or other potential artists. It's sort of all builds on itself as we go bigger and bigger.Stephanie:When you're talking about emails really high, when it comes to converting customers, how do you think about creating that engaging content? What pieces of content are working or what emails work best?James:I think one of them more interesting fun little emails that we came up with years ago and it's like the easiest thing [inaudible] to create ever, is we do what we call Sole Saturday. Sole Saturday, it's one photo by the Sole team and then three user-generated photos. Every bike we ship out has a little tag on it that says tag at Sole bicycles hashtag, and you use hashtag of the bicycle for a chance to be featured.James:Then, what we do is as we're spelling product, customers are going out and taking photos for us, and every Saturday we feature three of our customers. That, again, it's just like ... we're using user generated content and it's creating a nice email that people can go back to and see if they're featured. It's actually very high converting as well.Stephanie:That's fine. Do you think having actual customers and photos is where a lot of brands are going to be headed, less about the models and the people who look perfect and more about ... Is this someone who reminds me of myself and I can see myself riding that bicycle, yeah, feeling a better connection with them?James:Totally, totally. It's funny you say that. Because even when you look at ... you go to our paid spend or paid marketing, a lot of times the [inaudible] produced sort of content where it's on a really ... Get a really expensive content creator to produce it and it looks very professional, versus like content that's shot on iPhone or content that's just shot with customers' photos. That ends up converting a lot better than the higher produced stuff. I think that's just the people can relate more to it.Stephanie:Yeah. I agree. What kind of channels are you putting that content or the more natural looking content that your customers are creating? What channels are you finding are working best right now to convert customers?James:We're constantly testing when we're doing Facebook and Instagram ads. I've been serving different type of ads to different audiences on Facebook and Instagram with different types of content, the more professionals type of content versus the more just shot from iPhone vibe. Even like, over the last year, we've had a big uptick on our online business because of COVID, and people being at home and wanting to find a way to get outside and escape from this madness.James:One of the craziest things that we found was iPhone ads or the story ads-specific, so had to build just enough format for iPhones were converting at like crazy, crazy higher row ads versus just more static or traditional images or ads on the Facebook or Instagram. That was like a crazy thing we came up on this year.James:There's a very beautiful, simple ad where it's just like the bike on the beach and you have the sky in the background and then the sand below it. Then just the brand and a little copy below it. That little ad actually absolutely killed it for us this year.Stephanie:That's great. Are you still using, maybe not that ad, but still putting new ads into the story section on iPhones?James:Yeah. I recommend any brand out there that's doing ... I mean, I've been learning a lot of this as we go and trying to get better at it, but when you're creating your ads on Facebook and Instagram for when you're setting that ad up, you can actually split it so that it's like, you have this certain photo for the stack set up and then you have a different photo for when it's served on story. My biggest eyesore, or I hate is, when you're on a story and you get an ad, and it's like an ad that's built for the display. So, it has the kind of squared picture and then it has the words under that.James:I don't know if you guys have seen that, but it's such an eyesore to me compared to a beautiful ad that's like really built for the stories. Just making sure that you have the ad set, the story specific ads, it'll help your conversion so much. That's helped us a ton.Stephanie:Yeah, that's a really good point. What kind of return on spend should a brand expect from the iPhone story ads versus maybe Instagram or Facebook or Tik-Tok.James:That's a tough question. I think it's specific to the brand and the product they're selling, and then, even the time of the year. For us right now, our ROAS is way lower than like the middle of summer. It's almost like a 10th of what it was during the summer. That's just because it's seasonality, our product. We saw specific ... static first story during the summer, I think it was converting 3 or 4X of what it was static. But that's specific to us. I think every brand is different, every product's different. But yeah, I think that can give you an idea of the potential.Stephanie:Yeah, very cool. Is there any other new marketing channels that you're trying out, that you're like, I'm not sure if this will work, but we are allocating some funds here to try this out?James:No, for now we're focusing just on Facebook, Instagram. We're doing Google AdWords and media retargeting. I want to dip my toes in some other things. I want to try the Tik-Tok and I want to try some Pinterest. I've heard about the Tik-Tok, but the tracking is not that great on it. We haven't done anything yet. Also, Tik-Tok's I think for a little bit lower age or younger demographic than what our target audience is, so we haven't tried-Stephanie:I don't know. We've had a lot of people on here saying Tik-Tok works well. That originally, it was just the dancing videos and younger people and all that. People are like, it seems like there's still a good arbitrage opportunity on Tik-Tok right now, because the attribution and tracking might be worse, but you still get a lot of the benefit of going onto a new platform before they increase the pricing and actually understand what kind of conversions they're hitting. I don't know, [crosstalk] to check out.James:Totally, totally. There we go. That's my takeaway from this. We'll give it a go. We'll give it a go.Stephanie:Yeah, give it a whirl and see. When new customers are coming on your website, I want to talk a bit about like, how do you guide them through the funnel? How do you personalize things and show them, not only content, but also maybe a bike that would work for them or that might peak their interest?James:Totally. Totally. It's an interesting ... there's a few things we do. We have about our bikes page, where it's like, which Sole are you? That walks them through the different, we have like six different models. You have the single-speed fixed gear, you have the City Bike, you have the Dutch Step through, you have the three speed City Bike, and then you have the Coastal Cruiser. Top Bar and Coastal Cruiser are down and slanting more. We have a page that we'll walk the customers through the difference between all of those and the pros and the cons of each of those. That can explain the style.James:Then once you know the style, what we do different than maybe other companies is we actually ... Each product, each colorway has its own product variant versus like, you may go see a single-speed version of one of our competitors and they keep all the colors on one product page. We create the personality and each colorway has its own personality and its own page. It really helps customers, like okay, I like the red bike, and see the lifestyle on it, and just for that red bike. The red bike would be [inaudible] for a walk and it's got its own story, help the customer really fall in love with that product, and tell a story around each of them, versus them all being bundled up on the one page.Stephanie:That's great. Very cool. Then, I was seeing a couple of retail stores that you were partnering with, probably pre-COVID, but it seems like there'd be a really good opportunity to have those partners also kind of market and share for you while they're getting in front of their own new customers as well. It seems like they would kind of take on the budget, the marketing budget to then share your brand under their brand, if that makes sense.James:Totally, totally, totally. Yeah. We're seeing a big uptick with like these online third party wholesalers and distributors. That's been, for us, I think our product, it's got such a great look and feel to it that it can transcend from, not just traditional sporting goods or traditional bike-centric channels. We can sell on sites like an Urban Outfitters or on Zola, or some of these other more lifestyle driven sites that want a cool lifestyle product in the bike space.James:That's one of our big initiatives that we're trying to get on more of these like third-party digital wholesaler channels, because in the last year, what we've seen the biggest takeaway from all this is like, everything is going digital much faster than it was prior to COVID.Stephanie:Yep. Are those partners showcasing your brand? Are they more white labeling, like ordering the bikes and then putting under their brand to say, okay, this is an Urban Outfitters bike, or are they actually saying no, this is Sole [crosstalk 00:33:32].James:Yeah, we're selling us as Sole. Yeah, we're selling us Sole through these third parties.Stephanie:That's good. That's awesome. How are you getting in front of these big partners? Urban Outfitters is huge and super popular. How did you even get in front of them and convince them to partner with you guys to sell your bikes?James:Yeah, just cold email them. Right?Stephanie:I hear you cold emailing. Tell us your secrets. Come on, James.James:Very easy. Yeah, we'll go out there. If we believe our product could fit in someone's store or someone's space, then we'll hit them up. We're very confident in our product and our brand and we'll sell them on it. It works a ton. Then there's other partners that have reached out to us and want us to work with them. I think, a good example we were connecting ... Target reached out to us and we've just recently started selling on Target's website, which I think is ... It's interesting with them. Target's trying to, in each of their product categories, bring a more 21st century brand in. I think like we really fit that really lifestyle driven 21st century brand for a product.James:Normally, there's not a lot of brands in the space that have that kind of fit. I think we really fit those as well. That's an exciting one for us. Then, like I said, the Zola. Zola's a massive, or one of the biggest wedding registry sites. We're one of the only bike brands on there as well, and do really, really well on there.Stephanie:Ooh, that's a good angle. I wouldn't think to put a bike on a wedding registry website, but that's awesome, because a lot of times it's just the same old, same old. You're like, I don't need more plates, but I can go for a bike. I would put on my registry.James:We sell so many likes there. You'd be really, really surprised. It's a great wedding gift. We have a his and hers, so almost every single order that goes there, it's two bikes, obviously.Stephanie:Yeah. That's awesome. Really good strategy. How are you keeping up with fulfillment in the backend? Especially when you're integrating all these partners like Target and Urban Outfitters, what happens if target has a big surge and they've got a bunch of traffic come to their website, and all of a sudden, you've got 500 bike orders? How are you guys keeping up behind the scenes to make sure that you don't go out of stock or have issues on the backend?James:Totally, totally. This was something that this year that we've invested a lot of time and energy and effort into, is leveraging technology to make sure all of this stuff runs super smooth. We're using a third party warehouse that has their own systems. Then, we have to use an EDI software or partner to connect to a lot of these systems. It's just spending the time, energy and effort to really automate all this stuff and make sure all these systems talk to each other, and there's inventory pushes going out multiple times a day. You put in the front end work to automate all this stuff so that you can avoid those problems.James:There's systems that say, hey, there's inventory pushes that happen multiple times a day to all these systems, so if there's a big spike on say Target, that inventory is removed and pushed out to the other channels so that there's no overselling or minimal over selling. That still happens a little bit here and there because the inventory pushes don't go out all the time. It's a couple times a day, but yeah, it's just about leveraging. There's a ton of technology out there, like using the technology to your advantage to automate the stuff.Stephanie:What are some big bets that you guys at Sole are making over the next couple of years? Where do you think the bicycle market is headed? What are some things that you're betting on that you're not sure if they're going to pay off or not over the next couple of years?James:Yeah, totally. I think it goes back to digital. We're super focused on digital right now and we're super bullish on digital. We're investing in this technology to make sure that we're set up the scale and then we want to continue to expand where we're selling and who we're selling in front of. Then, on top of that, it's continuing to expand how we market our product and where we market our product and the media partners we can use to get in front of these different people. I think the biggest thing ... People having a stay at home as a result of COVID has set all these new habits. I think they say like, it takes three weeks to set a habit, and what? We've all been at home since April.James:Everyone's having to shop from shop online and shop at home. Once we come out of COVID, those habits, I don't think are going to go away. For us, we're super bullish on making sure we have a really solid foundation with, not only our website, but the online e-retail partners that we're selling through so that, as we come out of COVID, we continue to have really strong distribution digitally to the future.Stephanie:Yep. I could see some of the retail partners leaning on you guys also for maybe advice and best practices. I've seen some of the bigger companies kind of looking at, not that you're a startup, but looking at startups, looking at people who are able to be agile and move quickly, and trying to figure out like, well, what are you guys doing? Tell us what are the best practices right now, because what we've been doing for the past couple of years was just thrown up into the air and we have to rewrite how we do things now. So, do they ever hit you up and be like, "Hey James, how should we set this up? Or how are you guys doing this so we can replicate this?"James:Totally. No, no, no. There's always like other people in the industry that we're talking to. There's always people that we ... Whether it's people in the bike industry or other businesses, other friends that have businesses. Again, always happy to talk with them. For us, you say that we aren't a startup, we are a startup. We've been doing this for 10 years, I still feel like it's a startup. Our team's still pretty lean. There's only 10 of us. We're super nimble and able to move quick, which is great and allowed us to pivot and make changes when things like COVID happened, that bigger companies can't do.James:Once we find successes, we can double down and grow on those. Yeah, we're staying nimble and going with the flow and learning quick. Yeah.Stephanie:That's great. All right, cool. Let's jump over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, James?James:I am ready.Stephanie:All right. Stephanie:What is your favorite business book that you think about or refer back to [crosstalk 00:40:28]?James:It's not a business book per se, but it is You Can't Hurt Me by David Goggins.Stephanie:Oh, okay. I like that. I actually have not heard of that. I don't think.James:The quick hitter on it, it's about overcoming adversity and pushing yourself. I think that's so important in business is understanding that you can overcome adversity and always setting your bar higher and higher. Again, it's not technically a business book, but I think there's ton of good business lessons you can learn from it.Stephanie:I like that. That sounds good. I'll have to check it out. If you were to have a podcast, what would it be about, and who is your first guest be?James:Oh my gosh. If I were to have a podcast, I would talk about ... Personally, my favorite thing outside of business and bicycles is traveling. I would do a travel blog and my first guess would be, Oh my gosh, I would pick Barack Obama.Stephanie:There you go. I'd listen to that. That sounds good. What is the nicest thing anyone's ever done for you?James:Oh my gosh. The nicest thing that anyone has ever done for me. The nice thing, oh, this is big.Stephanie:Heavy.James:My friend, Mario and Ken, in the early days when we started up our USC shop, these guys would come out every year and work for back to school, which is our craziest time of year for that shop. We sell like a thousand bikes in two weeks, and they would come out and stay at my place, crash on my floor and help us every year for the first four years. So, shout out to Mario and Ken.Stephanie:Oh, that is really nice. That's a good answer. What trend or tech do you not understand today that you wish you did?James:What trend or tech? Tik-Tok.Stephanie:There you go.James:I don't get it, but I feel like I need to get it.Stephanie:Okay. I've had some other people say that as well, so you're in good company. Others don't also do not understand it. All right. Then the last bigger one. What one thing will have the biggest impact on ecommerce in the next year? It can't be COVID because we've had too many people say that.James:I think the big thing impact on ecommerce, I think it's going to be shipping. I feel like shipping is going to change drastically over the next one to five years. You have like Amazon starting to do their drones. We're starting to see in LA these little robots that are delivering food. Then, on top of that, FedEx and UPS are just killing everyone with all their fees and their pricing. We've been in peak surge charges since July. I just feel like there's so much potential for disruption there, shipping.Stephanie:Yep. Oh, that's a good answer. Yeah, I agree. I see a lot of companies, a couple of them actually are in Canada who are trying to get one and two day shipping. I think a lot of more companies will be leaning into that once they figure out how to make that work, and they also see how reliant they are on the FedExs, the UPSs, and how much it disrupts businesses.James:Totally, totally. Please someone come out here, please help us [inaudible 00:43:54], it's so expensive to ship bikes.Stephanie:Well, maybe James, that can be your next business. You've done a lot in your day. You might as well just start a shipping company as well.James:There we go. There we go.Stephanie:All right, James. Well, thanks for coming on the show. Where can people find out more about you and Sole bicycles?James:Totally. You can check us out at solebicycles.com, or our Instagram, which we update daily, @solebicycles, and then my personal is @JimmyStans.Stephanie:All right. Thanks so much.James:Thank you guys so much. Appreciate it.

In this episode of the Web3 Marketing Debate Show, we talk eCommerce. Arguably the two biggest platforms in eCommerce are WooCommerce and Shopify. We'll assess both platforms from the perspective of small to medium businesses who are considering setting up an eCommerce website or needing to add eCommerce to an existing one. Which platform is the best one for selling physical and digital product and which one is better suited for small to medium business. Listen ahead and we will share our insights in this eCommerce episode. Let the debate begin! WooCommerce VS Shopify Episode show notes James: Hey everyone. Welcome to the Web3 Marketing debate show. I am your co-host, James Banks Joseph: and I'm your co-host Joseph Chesterton. James: And today we'll be weighing in to an all time heavyweight debate, which is WooCommerce versus Shopify. Which one is better? I will be taking the Shopify ring of the corner in this debate. Joseph: and obviously I'm on the WooCommerce side. James: All right, Well, without further ado, let's start. So, which one is better for selling physical products? WooCommerce or Shopify? What's your opinion, Joe? Joseph: Okay, so first of all, WooCommerce. It's built on WordPress. It has a huge open source community made by the people that actually build WordPress whereas Shopify. It's all closed source and you can't actually modify your website to the exact needs that you require, whereas WooCommerce you can. To actually sell physical products. It's a seamless integration with your website. Selling physical products on your website is an end to end solution. It starts from customer coming to your website. Your products are listed on your website, not on a third party platform. The customer chooses the products they wanted buy, clicks add to cart. Person puts in their payment details and is able to pay on your website using payment gateways that you choose. If you're selling products that are physical products then you're obviously going to need shipping. So WooCommerce integrates really well with all the major shipping providers. With WooCommerce you can list an almost infinite number of physical products. Each product has its own product page with all the info that you would expect: description, gallery, variations and so forth. So yes, it's a very good platform for selling physical products. James: So you mention community. I mean, Shopify has probably one of the most, if not the most passionate community of eCommerce merchants in the world over 700,000 of them. Yeah okay, I might agree with you that there's more individual WooCommerce sites per se than Shopify. Data speaking, that is the truth. But are they active in the market? Are they passionately commerce, business people that are there to help each other out? I think a big part of it is the difference between open source versus close source, particularly around selling digital products, is Shopify has everything you need to do to basically get an online store to sell physical products up and running within five minutes or less. Good luck trying to do that with WooCommerce. You're going to be there for a lot longer, trying to figure out the right themes, trying to figure out the right plugin mix to make it work. And on top of that, you have also vulnerability. That open source has versus a close source. Secure platform, like Shopify does not have as much. So that's my point of view why Shopify is superior for selling physical products online. What's your counter argument to that? Joseph: Well, all platforms can be compromised, the fact, that it is a huge community building. The platform means that it's peer review, whereas who knows with Shopify, maybe it would be hacked in a second if someone just did some sort of exploit on the system. Okay, moving on. So it's clear that both platforms can sell physical products, but not everyone needs to sell physical products. What about digital products... James? James: Well Shopify, is not only excellent at selling physical products. It's also great for digital products. It has a whole slew of apps that can be integrated into your Shopify site to allow it to do things such as direct digital download sales, online course sales, selling MP3's, music for your musicians out there. Same with video. And the list goes on and on and on. It has got great community support. These arent sort of hackjob plugins that just some random throws up. These have been verified through Shopify, and they've got a great community support. So it is a fantastic platform for doing this. On WooCommerces front. It's more of a mixed soup off a huge variety of plug ins that all say they do the same thing, and often the case they don't. It's very difficult, in my opinion, to know what is the best way to sell products digitally through WordPress eCommerce such as WooCommerce. WooCommerce is you can switch off its inventory control, but it's still sitting there is still weighing the site down. It doesn't really function as well as a pure play digital products selling platform as opposed Shopify. It can be, it can't be flipped to do that and do it very well. Joseph: OK, so you're attacking, what, the free plugins on the WordPress plugin repository. Whereas, well actually there's a dedicated WooCommerce platform of reviewed plugins that will do exactly what you need with what you're after on your website. WooCommerce does digital products very well. Just as well, as physical products and the checkout process adapts to selling digital products very well. There isn't any need for inventory solutions, but if you do need to then sell products that require inventory, then WooCommerce can easily just integrate straight in. It's part of your website, so it looks like it's just another page on your website. You can integrate with things like memberships and selling courses and membership platforms so that it's a seamless experience for all your customers. James: All right, well, I'm sure the question everyone wants to know is, Why is WooCommerce better than Shopify for small and medium businesses? And in my opinion, is this is the thing is that no matter how hard you try with WooCommerce, you cannot get an eCommerce store up and running. That has a nice, decent design, is well developed. It doesn't break any of the coding and development rules that could hurt your site from things such as organic search ranking point of view. It has a turnkey checkout everything you need to know everything you need to get started and it's so simple to get one up and running. I think I've been able to do it in about two minutes flat and you just simply can't do that with WooCommerce. You know, WooCommerce, yes, it is quite an advanced, powerful tool, but you typically would need professional help. Or you really have to know what you're doing to pull off an effective well optimised online eCommerce store whereas Shopify takes away all of that hard thinking from you and gives you the ability to set it up yourself quickly and easily and get your products to market as fast as possible so you can start making money. That's what we're all here to do as business people. Joseph: Well, James chances are, with 30% websites already running WordPress, you don't actually need to set up a new platform to just sell products online. You can use WooCommerce and integrate directly into your existing website. You don't need to change the entire website, just to sell products. WooCommerce is free to get started. You can do everything that you need to sell products online and it will integrate into your WordPress website just fine. Of course, there's thousands of plugins and things that you can install on your website to increase the amount of flexibility and control on your website, but those are optional paid extra, so you don't need to use them if you don't need them. WooCommerce grows with your business. You're not locked into plans that increase. The problem with Shopify is that as your shop grows, you then have to pay more for all the hosting and platform, whereas with WooCommerce as it's way more flexible and will allow you to scale at a greater rate. James: I think to bring this all together, ultimately both are good, both are very good eCommerce platforms. You can create a successful eCommerce site on either one of them. Either would WooCommerce or Shopify ultimately it boils down and typically our advice is that how do you plan on actually running your eCommerce business. Is eCommerce more of say, like a side extension to your core business, which isn't eCommerce. As Joseph mentioned, typically in that case, the business would probably already be on WordPress. So then extending the existing WordPress site to include WooCommerce to allow for eCommerce sales is often the best way to do it because then you don't have to respin the business. You don't have to relearn how to use a separate platform and then manage a completely separate platform on top of our existing content management system, which just becomes a maintenance and management nightmare long term as organisations grow. However, if you're a pure play eCommerce store and, you know, you're wanting to run and manage the store yourself with the minimal design and development help and you have a relatively straightforward store, no crazy custom integrations that requires sort of custom development. Usually in that case, Shopify is the better solution, particularly for businesses that are starting up. There's Shopify plus, of course, which is for your mid to enterprise level clients. That's a whole other thing we won't get into. But ultimately it boils down to what is the right tool for the right job for your business. If you need any help and assistance and understanding which one will be best for your business, that's what we're here to do. So reach out to us. Web3.com.au. Get in touch and will happily advise you on what will be the best way to get your business selling online and what would be the best way to execute it online. Any final comments on your end Joe? Joseph: Nup. James: Haha, Well, that's a wrap. We'll see you again on the Web3 Marketing debate show real soon. Discover more at https://web3.com.au/woocommerce-vs-shopify/

James: This is James Kandasamy from Achieve Wealth through Value-Add Real Estate Investing Podcast. Today I have Ashley Wilson from Philadelphia. Ashley is a specialist in Asset and Construction Management; she is an asset manager and also taking care of construction as well. So it's going to be a very interesting discussion. She has a GP in 350 units and also have invested as an LP and working on deals on her own as well, which is awesome.  Hey Ashley, welcome to the show.  Ashley:  Thank you so much for having me.  James: Good. Have you been on podcasts before?  Ashley: Yes.  James: Okay. A lot of podcasts?  Ashley: Yes.  James: Okay, good. So it looks like you're going through that podcast circuit, I guess, right? Ashley: Yes. I have been on the podcast circuit for a little while now, yeah. James: Good. So a lot of times when I bring guests into my podcast show, I usually bring operators, which are people who buy deals, who does the raising money, who does the asset management as well and who also do the rest of the investor relationship as well. A lot of times some people do not do third party property management or in house property management. They are not [inaudible 01:18] integrated, but some are. You are special because now you are an asset manager, right? And you also do construction. Can you tell us a bit more about your role as an asset manager and construction manager? Ashley: Absolutely. So what I like to tell people about operations on multifamily is operations are very important in a down market, they are the most important and what I like to specialize in is everything from once a property goes under contract, even prior to that looking at the numbers, making sure that we account for how things actually happen, as opposed to just accepted statistics in multifamily in terms of underwriting, because every market is different and the way in which you operate a property can be vastly different from market to market.  So being very well versed on what things work within a specific market accounting forward within underwriting, then verifying it during the due diligence process and then ultimately operating according to the business plan, or if the business plan needs to be adjusted to make better value for the property and an ultimately a better return for the investors is what I enjoy doing the most, the property, the real estate component of multifamily is what excites me. I know some people really enjoy networking with investors and going to dinners and doing all of those things while that can be very exciting, it's really exciting to me, the property and how much money I can squeeze out of a property. That's what I enjoy doing. James: Got it. I'm an asset manager as well so I really appreciate what you're saying because you can go around and raise money from people. You do a lot of advertising marketing too to get people to give money to invest and a lot of people give up on that, right? But once you close on the deal, executing the business plan is the harder part, right? It's not closing the deal. It's easy to close the deal, especially pre-COVID and market-speak. There's so much money chasing multifamily. There's so much Bootcamp and so many people who want to invest right, everybody has this formal effect, right? But you're right, I mean, executing the business plan is hard, right?  And I've seen a lot of people who were very motivated before closing because they tell all the fun story but after closing, they're very quiet or they don't really talk about their performance on their property, right? Nobody really declares about their property performance because it's hard to really do post closing execution, right?  So let's talk about when do you come? I mean there's asset management fee and some passive investors, especially new one who comes in, ask me, why are you taking asset management fee, right? Why not an asset manager which is the same as the property manager? Can you differentiate between that? I can add my things and differentiate property management and asset management. Ashley: Yes. So there are a couple of questions there. I think that investors seeking an answer to. The first being the difference between the two positions, property managers and asset managers, a lot of times when you speak to people who own multifamily, they see that a property manager works for an asset manager. I do not see that the same way, I see it as we're a team and we work together and the only way you can achieve your business plan optimally is working in conjunction in partnering. And ultimately the asset manager has a different number one client that they're answering to, they're answering to the investors, the property managers they're answering to the tenants and they're making sure that the property is the best property for that particular tenant, that demographic and if someone doesn't really understand everything that a property manager is doing, a property manager, in my opinion, is comparable to a teacher. They have more things on their plate than they have hours in a day. They are doing marketing; they're doing general service complaint calls, et cetera for the property. So they're managing the current tenant base while also trying to attract a new tenant base and also trying to execute a business plan for the ownership group. It is very difficult to do especially in terms of the metrics, the national metrics for number of property managers per unit; typically it's one inside one outside's per a hundred units. So for example, a hundred unit property would have one interior, a property manager, and then one maintenance person on-site for every hundred units you have. That can happen on a property that is a stabilized asset, but a lot of times, especially the properties that I go after their value add assets. So there are things firing on all cylinders because there's deferred maintenance that we're tackling, there are tenants that should not be in the property that was put in the property probably by pre-released ownership so they're really trying to tackle a lot of different things. The asset manager, on the other hand, answers to the investors. The asset manager is the person responsible for protecting your investment, they're responsible for maximizing every single dollar that's placed in that apartment, we want to try to get two times that dollar three times that dollar up, ten times that dollar, that's what we're trying to do, every single investment we make on a property. So what we're doing is we are the added layer of protection. We're looking to make sure that the day to day operations are not only executing that business plan that you have in place but also maximizing the investment. And I say that, and it sounds like a broken record, but truly that is what an asset manager does and there are so many things to make sure that you're doing from vetting contractors, making sure that you're getting the best price on the renovation too. It's very strategic when you're doing renovations, how you should do the renovations, how much you should do, how little you should do, what rents you can charge, what's the absorption rate, what is the market comparables in that market that you can push the rents? There are so many different components, I could probably talk for an hour alone on just different components that I look at even on a daily basis, let alone on a weekly or monthly or quarterly basis. So to me, it's a full-time job and that is why personally I've been able to execute business plans a lot faster than, you know, I've had two properties where I've had to execute a business plan on the first property. It was a two-year business plan with a refi in year three, and I was able to execute it all under budget within a year. So I think that's pretty impressive and then on my most recent property, it was a four-year business plan that after we executed the renovation over four years, then we were at the end of three years, we would refinance in year four and we were able to execute the business plan in actually less than a year and also under budget. So that is the difference between having someone oversee your investment on the asset manager side and work in conjunction with the property management team. I've been very blessed to have an incredible property management team that I work with on these properties. So for us now we have systems in place to make it even easier to execute everything we do. James: Got it. So let me summarize what Ashley just mentioned, right? So asset managers basically approve, execute property budgets. They look at property financial reporting and making sure that budgets are met and at the same time they also have to make sure that you are able to execute what you thought in the beginning, whatever performer and whatever the original sponsor has planned for that and they have to make sure they hit that, but as for the budget as well, right? So do you work any part of it as part of the investor side of it like investor tax document and any other things on the investor portal and all that, or is it all that a sponsor takes care of it and asset managers on the asset? Ashley: Well, I also am a sponsor, I sign on loans, I'm not just doing asset management and I've also brought my own investors in, on deals as well. So in terms of being fully involved, 60 knots of whether or not we execute a cost segregation study, getting the K ones out, getting all the information, I provide all the reports to the investors. I'm the one who creates all the reports for the investors. So really I'm doing soup to nuts and I do it in a very granular fashion. So I'm a full-time real estate investor. I think there are a lot of opportunities for people to get in multifamily while working at W2 and there's a point in which you absolutely need to transition. I don't know how someone could keep up with all the work that you need to do for an asset manager of a larger property. When you are also juggling a W2 on maybe a more stabilized asset you could probably do that, but in terms of the volume, if you want to scale, ultimately what you would be looking to do is to do it full time, which is what I do. So in terms of prepping everything that the investor needs for whether it's preparing their taxes or doing things for the property, I just really make sure that I'm the glue that puts all those pieces together. James:  Got it. So let's go a bit more technical here, right? So you have a plan from the sponsor, right? So when you're working as part of the sponsorship team as well, and now you said, Ashley, you're going to asset manage this, right? And we talk about absorption rate and renovation progress, right? So let's go into each one of those and you say like four to five key indicators that you look at. Can we just quickly summarize that? What are the four to five key indicators that you look on either daily or weekly basis? Ashley: Okay. So first I also wanted to mention that despite how many properties I have, I also consult with other sponsorship groups. What they'll do is they'll bring me in and I will basically audit their property and I will point out all the things that they could improve upon. So there are things that I look at when I'm auditing other sponsors deals and then they're also things that I look at on a daily basis for my property, I can speak to the things that I think probably most people who asset manage. They don't have the time to look at things on a daily basis so they're probably looking at it more on a weekly basis. So I'll share what I look at on a weekly basis because what I look at daily versus what I look at weekly what I look at monthly and quarterly are completely different. So what I look at on a weekly basis is obviously I'm going to look at my traffic, I'm going to look at my occupancy, I'm going to look at move-ins and move-outs, I'm going to look at work orders. How many of those emergency work orders, categorizing the work orders, time of resolution, and then in terms of repeat work orders and or the reviews of the work orders. So in terms of whether or not someone would give the work order a five-star review or one star, those are things I'm looking at. I'm also looking on the traffic side- where's my traffic originating from, my source and what's my conversion rate on those sources. So that way, I know very thoroughly, which traffic sources are working, which traffic sources aren’t. I also look at it on a weekly basis specials within the market to make sure that my property remains competitive. I look at my renewal rate; I look at a lot of different things. I'm trying to see if I'm remembering every single aspect of everything that I look at, but ultimately what I'm trying to do is I'm looking at the property in such a detailed fashion as if I was operating the property with boots on the ground. So that way I can make little adjustments immediately when I see that there's a need, as opposed to waiting until let's say, for example, I've plugged a lot of money into a marketing campaign that I don't see working, three weeks in, I'm going to yank that marketing campaign as opposed to keep it running for six months and lose that investment when I could have plugged it into a resource, it's giving me a higher conversion rate and higher traffic. So that's really the things that I'm looking at. I'm looking at how to influence the people who are coming into the property and how to influence the people to stay at the property. James: Got it. So let's talk about renovation per unit, right? I mean, before you close on the property, I mean, let's say for example, 5,000 per unit, right? And post-closing, how's that 5,000 per unit budget being tracked? How do you know that it's very effective in terms of your rent growth and your annual growth and meeting your business plan? Ashley:  So when I go into a property, I know exactly what I'm going to do to that unit and day one, I pick every single finish that I want for that property. So that's inclusive of if I'm going to change the flooring, I pick out the exact flooring I want, I pick out the paint, I pick out everything and then what I do with my management company is because I'm not located in Texas and my properties are located in Texas, we've implemented systems where we have a tracking system so it initiates what units are available to be renovated and what condition they're in and then we put together a package on what that particular unit needs. So I know to a penny, how much that unit costs to be renovated and then ultimately what I do is then I track the progress of the unit through pictures before pictures storing and after pictures. So I can see the progress of the unit and then I can see what the total cost of the unit, if there are any change orders, typically I don't have change orders unless there is something extremely grave at the property that is unexpected but I've been in construction long enough to know I'm raised by a general contractor who had his own business for over 40 years. I'm very well versed in construction that I know how to negotiate prices, I also have a lot of contacts so I can get prices down pretty well so in terms of verifying afterward, I then confirm the cost for the unit and then I have my own tracking system to ensure that I stay below budget and that's how I've been able to stay below budget on all of my projects. James: So let's go into that process, right? So now you have a unit that you're going to renovate and I presume the property manager is the one that is going to give you the budget on the progression of whatever being spent on that unit. Is that right? Ashley: Well, what I do is I package it. So I know, for example, there are two things in construction. It all comes down to labor and material. I know how much material it's going to cost me and we have a checklist on what that individual unit needs so I already know upfront what the material is going to cost me and then what it comes down to is what the labor is going to cost me and in terms of the price per labor, everyone should know how much it costs to switch out an outlet, how much it costs to switch out a fixture, how much it costs to paint a room. I know all of these numbers. So if someone says to me, okay, this unit costs this much and it's over budget I can then question them and say, why is it over budget? And they'll say because our guys spent three more hours, so why did they spend three more hours on this unit versus another unit? Oh, well there were some issues. Well, you walk that unit in advance, you knew what the unit condition looks like and let's say it's painting, you knew like unless I replaced like a put up a whole new wall or took out a wall and I reframed it like you knew what the estimate was, you knew the square footage of the wall that you were going to paint. We have it priced for rooms. So it's very easy for me to argue, because I know it's such a granular level that I can get the price down and that's how I confirm that I stay on budget is to know all of the prices to that level. James:  So you are assuming that, or maybe you already have a really good crew, which is working as what was planned, right? Otherwise, you're going to always question then why you guys are late because that's another variable, right? You have to schedule, right? I mean, you have your materials of labor cost, but they can take forever to finish one unit. How do you keep track of that one unit renovation? Ashley: So we have, in terms of scheduling, we have certain times in which we release a certain amount of units and then they get them to renovate. I have worked with contractors for years now, across all different types of properties-single-family, multifamily. And if one thing I have learned across along that process is that when you work with someone for the first time, you're not going to give them an entire job, you're going to give them a piece of a job and they're going to have to prove themselves to get the rest of the job. These contractors, when I have large multifamily properties, they want the entire job. So they're going to work very diligently at the beginning and hopefully throughout the entire project, but most likely they're going to work very diligently at the very beginning. So I will give them a little piece of what I need them to do in terms of the grand scope, but I'm not going to give them the whole scope of the project initially when I have no track record with someone. So I'll give them a little piece of the pie at the beginning. If they prove themselves, I'll give them a little piece more. If there are any issues upfront, I just pull that crew and get a new crew immediately. So I minimize my risk of loss and I minimize my risk of loss of time. So it's a loss of time and a loss of dollar amount and honestly, time is also equitable to dollar amount too. So that way I just minimize the risks across both. James: Yep. Well, that's exactly what we do as well. I mean, we usually hire for a few new projects. We hire like two, three crews, and give them a small portion and see who's doing the best and kick out the other two and keep one and keep on giving them the work, which is a good validation of what we do too, right? Thanks for that and how do you work with the property managers onsite? Because you can't be on site, so you need a lot of communication unless the contractor is giving you the data directly to you through some kind of Excel spreadsheet or you're having meetings with them. So you're doing both. Ashley: Yes, both. So first before I got into real estate, I worked in pharmaceuticals, I worked in clinical research and development and I worked on global clinical trials. So I worked on studies all over the world and I had to leverage technology. So my entire professional career, entire working career has always been in a virtual capacity. I had become very well versed on how to work remotely and I've put into play different things to make it very advantageous for me to work remotely by leveraging technology, I've taken that same approach and applied it to multifamily. Before I got into multifamily, I built up a very successful high-end flipping business in the suburbs of Philadelphia, Pennsylvania and I did that whole business while living in Europe. So even though I lived in Europe, I created a flipping company while living back in the States, I've taken the same approach and I've done the same thing in Philadelphia suburbs now back living in the States and my properties are in Texas.  So to be honest with you, it was a lot harder when I was working in Europe, creating the flipping company that I'm faced with today. I already had all of the systems that I built up on the flipping company, and I've just been able to apply them on the multifamily side of things. Unfortunately, there's only an hour time difference as opposed to I had anywhere between a six to nine-hour difference because at one point I was living in Russia. So it's been very easy for me to make that transition. I have never had any single time where I said, oh, I wish I was like right down the street from the property, because the way in which I react and manage would not change by being on the property, you don't need to be physically at the property. Now, do I still go down to the property? Yes. I go down to the properties quarterly to check on the property. Also, I think there's much to be said about the relationship that's built between your onsite team and the ownership group and I think it's really paramount if you want to run a successful business, which multifamily is real estate and business. So I don't discount that, but I definitely think that your operations, as long as you have an excellent team, which we make sure that we always put a really great team in place that you still can be successful.  James: How do you test rent growth based on the rehab? Ashley: In terms of how much I can push the rent prior to completing the project or afterward for absorption? James: For absorption. So basically, there's a certain limit of rent growth based on the rehab that you're doing, right? So how do you test that? How much you can get based on the rehab that you're doing? Ashley: So I'm huge into understanding the market demographics. So what I do is I spend a lot of time researching market comparables. I look at if I was a prospective tenant, what properties would I look at and why, what property would attract me, would I be willing to pay an extra $10 more for property A versus property B? And what are their amenities? We live in an amenity based society right now where people love the bells and whistles that properties provide. They love having a pool, they love having laundry in their unit, they love having like in Texas carports or garages, there are certain amenities that based on the market draw people in and that changes by market. That doesn't mean just because you're in Texas everyone wants a carport, some places they don't care. They're not going to pay extra for, you really need to understand your market very thoroughly and then compete with what that market wants.  If the market is a tech-based market, maybe you should implement thermostats that are able to be controlled with your phone or laundry facilities that are able to be controlled by your phone. If you're not in a tech-based market if you're in maybe a secondary tertiary market, I'm not saying all the secondary tertiary markets, but I'm just saying, if you're not, as close to a major MSA or primary market, they might not be as well versed in technology and they might not see why they would pay extra. It's really about understanding the market, understanding what is renting in a market, what properties have high occupancy, what their rents are at, what their specials are at, what amenities they have, and then trying to compete on that level. I walk the other properties. So when I go tour the area, I always make sure to tour other properties and see what their unit interiors look like, what their exteriors look like. I want to secret shop these properties because I want to understand what a prospective tenant is looking at. I want to understand how they are greeted by their staff. I want to understand if a market is Hispanic speaking, let's say right, and they want someone to greet them in Spanish and they want Texas, TAA contract in Spanish, like a Texas Apartment Association contract in Spanish, these contracts. So they're very little things, the devil's in the details. It's really important that you understand the details of the market. And then you ensure that you are exploiting them on your property. So people want to live on your property. You're providing a better value than competing properties, and that's how he tests it. So then I can see, okay, this property, they're not doing granite counters, but they're getting a hundred dollar rent bump over what we had initially projected. So we don't need to go with granite counters, maybe our business plan had granite counters in it and we don't need to go with granite counters because I know the market will pay a hundred dollars more, even despite the fact that they have granite counters. So some people like to over-improve. It's no different in flipping people do the same thing in flipping all the time. You really need to understand not how little you can put in to get the maximum value, but in a sense, that is true. James: I mean, follow up question to what I asked just now is like, for example, let's say an ownership group, come to you to do consultation and they said, hey, we plan for 3000 per door until rehab, and we want to get $150 a rent bomb and that was all planned and now you are coming in, how do you communicate to them that that $3,000 is not going to get 150 rent bump? I mean, have you been in that kind of situation? Ashley: Yes. I have been in that situation and I've been in this situation where I've been given a business plan and I went down and did due diligence with this ownership group as a consultant and I said, hey, this is not what you want to do. You want to do X, Y, and Z and you're going to get this rent bump instead and it's a better return on your investment. So I think it's very hard to argue with numbers, right? So I understand underwriting very thoroughly and all I have to do is take their underwriting and plug in what I think the business plan should be and show them their underwriting versus mine and ultimately I think that kind of speaks volumes to speak in that language most people who are in multifamily, I would say, are very proficient with mathematics and finance and understanding underwriting, especially if they're the key principle. So if you're dealing with the key principle, the operator you really just have to speak their language and ultimately they should want the best return on their investment. So I've never had anyone disagree with the strategies I've recommended. No one has really taken it negatively at all. James:  If they already closed on the deal and you're coming now, and you think that it's not realistic Ashley: In terms of it not being realistic and squeezing the dollar out that really comes into a lot of people don't bring on a construction manager and I think that's a huge shortcoming on a team. I think that a lot of people try to shortcut that position because they think they can outsource construction management to a third-party vendor. I think third party vendors when you hire a construction manager, they're paid off of the cost of the total construction and, therefore, they are not motivated by the same reasons that your team is motivated, which is to get the highest return for your investment. So ultimately my suggestion to them is that they need to bring on a construction manager if they don't want to bring on me, which I'm not doing this to sell myself, I'm doing this to help people. I find the more people I help, it comes back to me. I never have to worry about it. So I just say to them that I recommend bringing a construction manager who is motivated by the same reasons as them. I get approached often to be compensated as a construction manager from a flat fee and my comment back to them is if I take this, then I'm a hypocrite because what I'm telling you is that you should bring someone on who is motivated by the same reasons. The only way you will find someone who's motivated by the same reasons if they have a piece of the GP equity, because then the more work they do and the more they put into it, the more they get on the back end and that's why you should have someone on the construction management side. And the reason I propose having someone on the construction management side is those are the type of people who not only can negotiate something, but I've used this example in other podcasts where I call it the porch deck scenario or whatever you want to call it. But basically what I'm saying is that you can go to a property and on the property, you have a patio and on that patio, it's a second-floor patio and when you do the due diligence, you have a contractor come in and say, all of these have to be ripped down and they have to be report and the framing has to be redone and you need new posts, a new joyce, and new concrete slap, okay. That is one way to fix it, right? But there's another way to fix it. And that contractor is not doing you just service by telling you that they're doing it because when they do their due diligence, they are not giving you advice based off of a hold period. They're not assuming that you're going to hold the property. They probably don't even know how long you intend to hold the property for whereas a member of your team is going to know, okay, we're trying to access this property in three years or exit this property in five years and really what could happen instead is you share up one of the posts or two of the posts, and you have all these cracks on the patio, but really it's a facade and it could be just resurfaced and it'll get you through maybe five to ten years, but you plan to exit the property in three years so it won't be that big of a deal and it won't be that big of a risk and you're talking the difference between maybe a 3 to $5,000 repair job versus 500.  So by having someone who not only understands the process of construction but understands the different mechanisms in which to solve problems and negotiate. That's what you're looking for in a construction manager. You're not looking for someone who's just good at managing construction and knows a very high level of construction. You're looking for someone who really knows the details of construction because that is the way they provide the most amount of value to you. I mean, there's a reason why I've been able to save hundreds of thousands of dollars on cap X budgets, hundreds of thousands and it's because I know construction like this, and I'm not just saying like, toot my own horn. I'm saying you should seek someone if you're not going to seek me, you should seek someone like me who is going to save you hundreds of thousands of dollars and get the project done faster because at the end of the day if I can hit my business plan after year one versus year three or year four, that's a different exit opportunity or a different other capital event, which is a refi. So that gets your money back to your investors. It could drastically change your returns. It gives you a better track record. I mean, ultimately that is your ACE in the hole, so to speak of executing your property. James: Got it. Yeah. Very interesting. I mean, construction manager or which whoever managing that construction budget it can give us a lot of benefit in terms of reducing costs and exiting the plan as quickly as possible, right? I mean who should be hiring a construction manager at how many units or what kind of project should they be hiring a construction manager? Ashley: I'd like to say that someone on your team should be well versed in construction. If you plan to have any property that is multiunit even on a duplex or quite small multifamily, you want to make sure that you are either connected with someone or know someone, because the example that I like to always say to anyone who has ever owned a house, if you own one house, a single-family residence, right? And you've owned it for a year; I don't know anyone who can tell me they've owned a single-family residence for a year without needing some sort of work on that house, something. So when you extrapolate that across a hundred plus units across a three to five-plus year hold, you are magnifying, the need for someone of that skill set.  So maybe on the smaller properties, it's easy to like outsource it but when you get to larger properties and especially when you're taking in investors, I think it becomes more important that you safeguard that person's investment. That's why I think it's really important. It's an added layer of protection for people, whether its college funds for their kids, retirement money, generational wealth, it doesn't matter the reason you want to protect their investment. I forgot your second part of that question. James: Well, the second part is like I'm missing that second part as well, but let's go to the next question because that was a long answer, but I have a follow up question to you. I mean, in terms of the most valuable value add, right in multifamily, I mean, you have done quite a number of construction projects on multifamily. What do you think is the most valuable value add for high ROI? Ashley: Before I got into multifamily, I used to think that the interiors were the most important part of the value add, because I thought that where someone lives, where they sleep at night, where they're raising their family I was like, okay, that makes the most amount of sense, but the more I'm in multifamily and just in real estate in general, I am more of an opposite opinion, which I think the exterior matters way more than the interior and I see that across multiple markets, I think if you were asking me for a specific market, what's the best ROI. That might be a different answer, but in terms of just a general blanket statement, I think people are really concerned of the impression that they give off. And I can tell you that I see market after market, where the exteriors are stunning and the interiors are horrific, and they have the highest occupancy and they're able to collect the highest rent bumps in the market and then alternatively, I've seen beautiful interiors, but the exteriors are really dated and those are typically the ones that are maybe a little bit more challenging, but they are definitely not competing with the other properties and I think people don't tend to look to do the exterior because the exterior costs more and it's a huge gamble and they don't see the added value but ultimately if you focus on the exterior, you impact the entire property. If you focus on the interior, you're only impacting one unit at a time. So the bump in ROI is only when you complete an individual unit whereas bringing people on the property, to begin with, can be sometimes the hardest part. That's why even on single-family, they always say the exterior matters more than the interior, getting someone to visit that property, getting someone to tour it, they want to buy it. It's all about the facade. It's all about this illusion of the lifestyle that someone's living. James: Maybe it's social proof, I guess, right? You live in a nice house too. You can show it to others, I guess, right? That's my apartment, looks really nice, but who cares about the inside, I guess, right? And I've seen a lot of times owners who have been doing this very long time. When they buy a deal, they just do exterior and they say interior somebody else can do it and they sell it quickly after they do the exterior. I mean, that's a very interesting perspective that you're able to get high occupancy. You may not get a high rent bomb, but you may get high occupancy and stable demographic if you have a nice exterior, but the rent bomb comes from the inside, I guess, right? Interiors as well so I think the valuable side is more on the exterior side because that brings in people, right?  Ashley: Absolutely.  James: Got it. So let's go to your personal side of it. I mean, as part of your venture into single-family and multifamily do you have a proud moment that you can never forget? One proud moment that is going to be living with you throughout your life. Ashley: I'm really just proud of the people I work with and I partner with. I have gone through some really challenging things with apartments and when I talk with other people, when I talk to owners and operators, who've been in multifamily for 10 plus years, they haven't even gone through half the things that I have gone through. And in the moment I'm like, Oh my God, what do I do? And a bit frustrated. But I think that experience has propelled me to the position that I'm in today and the fact that I've been through a fire, I've been through a gas leak and a line where it's a replaced an entire line, I've had to replace the entire sewer line from the building out to the street, I've been through multiple plumbing leaks, I've been through roofs coming up, I've been through incidences with the police being involved, I've been through a whole new rebuild of an apartment and a whole host of other things- depleting occupancy to 60% and then building it up to hopefully over 90, in less than a year is another thing I'm going to be really proud about and I'm just proud of the people that I work with. I'm really proud of the fact that we take a team approach, we're never pointing fingers and I also like to think of it if I had this same opportunity to mastermind with these same people, how excited I would be. So just because I'm the one who's actually living in the moment of what we're talking about in the quote-unquote mastermind, I should just think about it from a different perspective. Think about it as I'm having such a great opportunity to learn from the best people in the business and people who are really supportive. I think that opportunity is something I will never forget for the rest of my life, that I've had this amazing opportunity to connect with people and to learn from people and to help other people. It's just been something that I'm really excited about and the other thing I'm excited about is something that I do on all of my properties is I really connect with the community. I'm not into changing a property; I'm into changing a community. That is my goal on every single property that I'm a part of is to have an impact on the overall community, to whether it's by partnering with local nonprofits or school systems or helping provide food or gifts to children at holidays really it's important to me that you can be successful at business a lot of different ways, but to be successful and help someone's life is much more rewarding. So I really get a lot of joy out of creating change in a community, along with helping my investors either build or preserve their wealth for whatever reason they were doing it for. So I just really enjoy helping people. James:  Yeah, absolutely. I mean, we are all about helping people. We like to improve the community and really, we have a lot of initiatives that we do in our properties- we give school backpacks when they go back to school, we do many libraries follow communities. So we do a lot of things for our communities. I mean during COVID-19, we have a lot of people who lost their job and don't have food, we usually buy food for them, right? I mean, that's what you and I think the same, I guess, right? I mean, you can make money in many ways, right? But helping people, kind of come with you to the grave, right? So awesome, Ashley. So why don't you tell our audience about how to get hold of you and how to get in touch with you? Ashley: Absolutely. You can follow me on badashinvestor.com on the website or badashinvestor on Instagram, my website badashinvestor.com. It actually links to all of my other companies. So if you're interested in learning about multifamily, I have a link there. My multifamily company is Bar down Investments. So it's very easy. All the traffic just goes through badashinvestor.com. James: Oh, that's a nice catchy name. Awesome. Thanks for coming on the show.  Ashley: Thank you so much for having me.  James: Absolutely. Thank you. Bye.

James:  Hi, audience and listeners. This is James Kandasamy from Achieve Wealth Through Value-add Real Estate Investing Podcast. Today I have Ryan Gibson from Spartan Investment Group. It's an investment group that focuses a lot on Self-storage. They have almost 4,000 units. They have a lot of units in DFW area and a few other States. I think Ryan's going to talk about in a short while, and they recently started to [00:32unclear] in a mobile home parks, which we'll touch upon in a short while. Hey Ryan, welcome to the show. Ryan: Thanks, James, for having me. It's fun to get on your show. It's great. James: Yeah, absolutely. Absolutely. So why not you tell about yourself and your company, things that I've missed out? Ryan: Yeah, so we are based in Golden, Colorado, and we buy existing and develop self-storage properties. And we do all of our properties and projects through syndication. So we raised capital from private investors and we go out and buy storages that we can buy and get existing cashflow on. And then we can eventually either expand them or just improve operations to make additional income. We also build self-storage from the ground up and we do a little bit of RV park investing as well, but storage is the primary focus. So, you know, previously, we were land developers and built condos and flipped houses and focused on storage mostly just because of the recession resistancy, you know, during downtimes. And when we were first looking at the industry, that really is what you know, attracted us to jump into the business. Was the, you know, kind of how it performed during the last two recessions. James: Got it, got it. Yeah. I mean, I did a lot of research of different asset classes. I wrote it in my book as well. Like how many asset class, six asset class for the past 15 years and just on my own, this is not from Marcus and Millichap or this is not from CoStar.  I looked at all the asset class and was looking at all the past 15 years report, which that's a report called Integra Realty Resources. That's the report that all the commissioner pays us a report to, that's the organization. And I was looking at self-storage and multifamily and all that. I was surprised to see that self-storage did do well the past 15 years, even during the downturn. I know at the beginning, you know, 15 years back, they didn't really allocate a specific asset class for it, but they did talk about it. And in general, I didn't see any downturn, even though every other asset class goes up and down. So that's very interesting. And why do you think is that? Ryan: Because it relies on life events and life events never stop happening. No, I'm serious. You get divorced, typically, stuff goes in storage. You renovate your house, stuff goes into storage. In times of good times, stuff goes into storage and times and the bad time, stuff goes into storage. When you get downsized, when you move, when your job relocates, when there's a disruption in the market that triggers self-storage events. And added onto that, businesses use it because not everybody can park their work truck in their HOA driveway, if they're in a covenant restricted community and not everybody can have all their utilities and supplies in their house. And so, you know, simpliest way to say it, you know, for an extra 50 bucks a month, imagine having a whole other room in your house. And that's really been a big driver for demand and self-storage.  We like it because unlike other asset classes, when a customer comes in, we have a lien against all of their stuff. So if they don't pay, we can auction that off for a profit. So, you know, the revenue loss is much lower for you know, the potential when a tenant doesn't pay. With COVID and everything, there was still a rental rate, great increases. We still had high occupancy. We still can host auctions and have people move out if they don't pay. We held back on that in a couple of properties and a couple of markets, but for the most part, you know, we didn't have the government restrictions that a lot of other asset classes had on that kind of stuff. James: Got it. Well, I mean, I'm sure the audience is thinking why not James jump on self-storage. So but let me tell you why I didn't, you can always debate this. So one thing I didn't jump on self-storage at that time. I mean, of course, for me, focus is very important. I mean, every asset class has so many nuances in it. I mean, it's not easy, even though self-storage is like four walls and there's nothing in it, but there's a difficulty in finding the deal and difficulty in executing the business plan and turn around and, you know, disposition and all that. So, I mean, but I didn't do it because at that time there was not much of nonrecourse loan available, I think, unless you go really low on the leverage. So how is that right now? Ryan: You can get a non-recourse right now on ground-up construction James: On ground-up construction. Okay. Got it. What about on the... Ryan: Oh, and of course you know, that would be rare in our industry. Of course, on buying existing self-storage properties, non-recourse is widely available. James: Got it. Okay. So now it's available right now, at what leverage level? Ryan: It just depends. I think we just tied up a deal that around 70 to 75% non-recourse institutional loan. So, you know, it just depends on the lender. Depends on the deal. Depends on the play. James: Oh yeah. I had a friend who was like 85 years old. He's a broker, but he's a very healthy guy. And he said he started multifamily and moved on to storage and he owns a lot of storage unit and I was calling him and he said, maybe at that time, he said, yeah, it's hard to find non-recourse loans. The other challenge in storage is, you know, I mean, anybody can build a new self-storage development in front of your storage unit. It's very easy to build Ryan: Maybe. Yeah. So, you could say that as a general statement, that wouldn't apply everywhere. So there's a lot of moratoriums on storage. There is a lot of restrictions. Some communities don't have zoning for it. Some cities quite frankly, would not allow you to use it at all. So, you know, it just depends on where you are. Some jurisdictions it's, Oh yeah, come build it. No problem at all. So you just need, you know, it just depends on the market. You know, we have markets where there's no zoning and we could build whatever we wanted and there are markets where it's taken us 40 years to get a permit. So it really just depends. And then there are some markets where you get your permit and then they slap a moratorium on there and you can't build your storage anymore. That's happened out here in Washington and a few places.  So you really got to pay attention. And, you know, and I think really if someone was like, what's the one thing that I could take away from talking to a storage operator? It's the market study. It really comes down to: do you have the demand and is there the supply of people and demand essentially in the market to fill up your property or execute your business plan? It's huge. You know, someone might say, is storage a good play? I don't know, make up a city, Austin, Texas and I will say, well, generally, no, it's not, it's actually a terrible market, no offense, but it might be good on one side of the town and catastrophic on the other side. It's a three-mile business so it's like whatever's happening around in that immediate micro-market is really what it comes down to. So some markets are generally better, some markets are generally worse, but at the end of the day, it's right in that five, 10 minute drive time of the property. In the market study, that makes the difference. James: So, all your details that you're telling me right now, that's why I say there are so much of nuances in any asset class that outsiders may not know. I mean, it's easy to say, you know, it's easy to build but there's so much of a market research knowledge that, you know, only the operators who are specialized in it knows about it. So, and I do have a lot of respect for every asset class operators. There are definitely people who are really good at that. So let's walk through a deal in self-storage.  So not in terms of deal underwriting, but let's look at the demographic of that storage. Let's say you found land in a city. Walk us through the steps you would take to say whether this is a good site for a self-storage facility? Ryan: So a couple of things. The first thing I would look at is what's the population. So I would drop in on the facility, we have data and maps that will show us the drive times. And then based on those drive times, we'd get the population within the drive times of the property. And then we would look at saturation levels. James: And what are the drive times? Minutes? Ryan: Yeah, four minutes. I think we use eight minutes and 15 minutes. Think of it this way. If you're in an urban core, you're not going to drive 15 minutes across town, you're going to drive eight minutes so that there's relevancy to where you are in the market. But what we look at is, you know, we'll look at what are the comparable rent comps to what our subject facility is charged. So, you know, we might be getting $15 a square foot on the average but it's important to know kind of what type of facilities those are: three-story glass, Class A facilities, are they first-generation roll-up metal buildings, you know, big difference. Is it non-climate controlled is it climate controlled and in that market, is it a hot market, like a warm climate that likes self-storage to be climate controlled? Or is it a market that prefers drive-up or, you know, climate control would be overkill and people would be unwilling to pay the extra money for that.  So we look at price per square foot, you know, probably just like multifamily. And then, for Spartan, we look at the ability to add onto that property, you know, can we expand it and what is the existing dirt that's there? What is it? Is it flat gravel? Are there stormwater requirements, setbacks, easements restrictions, how usable is that land, and how much would it take to get the land pad ready? Cause we're developers. I mean, we take properties and develop them into bigger... James: What about zoning? Ryan: Zoning is important. That's kind of a little bit further down on the checklist. The top thing is demand. Cause you know, you could have, Oh, this is a zone for self-storage. And of course, everybody knew that. And then everybody built, a bunch of storage is there and there's no demand. James: But is it easy to change as zoning from, let's say in multifamily to self-storage?  Ryan: Ah, that's a loaded question.  James: Maybe not multifamily. I know residential has a lot of high priority in terms of city development. Let's say, commercial office building, commercial land to self-storage. Ryan: I mean, it depends. I know you don't like the word, it depends, but it depends. So like if you are looking in a market where, you know, we entitled the self-storage project in a city that had no zoning for storage. So everything was a conditional use permit. Everything was a public hearing. The public had come in, the city had to make a recommendation to a hearing examiner. Huge process. We've taken a residential land and rezoned it into commercial so we could build self-storage. We had to go in front of the board of county commissioners. We had to go in front of, you know, there had to be room for public comment. There was opposition, but we were successful and got the land entitled, but every jurisdiction is just a little bit different. We've bought properties that are zoned for storage and we've gotten the entitlements and they can take anywhere from two to six months to get it,  it's a building permit, you know, depending on how fast you're pushing and assuming no closures in the city and things like that. It just runs the gamut. You know, as I said, I have colleagues in the industry that have bought property, they got the entitlements. So yeah, you can build storage here. And then the city puts a moratorium on storage and now they can't build anything. So they bought this land, they got the entitlements, they've spent all this money, now they can't even build it.  James: How do you prevent that kind of thing from happening? Ryan: You don't. James: Because you've already bought the land.  Ryan: I mean, you could negotiate the contract to close upon building permits, but then you've got to find a willing seller and you know, of course, that's always a negotiation.  James: It's too messy, I guess. Ryan: But yeah, when you develop, I mean, it can be riskier and there's a potential for a bigger return but you also introduce a lot more risks. So yeah. I mean, is it easy to do? It can be, and it can be very difficult to the point of being impossible so it really just depends.  James: So when you guys raised the money from your investors, have you already done that, let's say for a [13:57unclear]  project. Have you already done that part or are you are still looking at that entitlement? Ryan: Yeah, we've really learned our lessons through the year. So you know, we bought a storage property and when the rezone of the land from, you know, so you have kind of a couple of different phases of development when you're doing like the paperwork to get it ready to go vertical. So the last thing you get is their building permit. So your building permit is pretty straight down the fairway; that is meeting building codes, getting your building permit, not a lot of risk in that - a risk, but there's not a lot of risks. But the phase just before that might be your entitlement so that you can actually do what you want to do, or might even be some type of site plan development where the city has to approve your site plan but you don't necessarily have your drawings done for the buildings they've just approved. Okay. Building here, building here, building here, this is your height. This is your step back. This is how much square footage you're going to deliver and a site plan approval. And then you have the zoning that might be before that. And it might already be zoned that that might be your first step. You know, do I meet the zoning if I don't, I might have to rezone that could take years. So, you know, we just kind of look at the projects and negotiate with the seller to buy the property. You know, when it hit a point where we're comfortable with closing on the land, and then we negotiate the purchase and sales agreement as such, and then we do the raise in accordance with how we feel our comfort level to be. Because we don't want to raise the money until we know we can do what we want to do. And you know, we've really refined our processes for that over the years to know that, Hey, we can close. And we've gotten better at negotiating. Like how can you expect me to buy this land and I don't even know I can do what I want do with it? If it's a hot market, you know, make a decision; you either want it, or you don't. If it's a property that's been sitting on the market for a year, you can come up with some pretty creative ways to keep the property tied up while you go through that process. James: So how many percents of these 4,000 units were developed versus how many were bought from....? Ryan: 25% James: 25% newly developed. Okay. Are you guys more trending towards development rather than buying? Ryan: That's a great question. I would probably say we're buying more than we are developing right now for no reason other than our development pipeline is full enough. Development is expensive and development requires a lot of cash and you don't want too many of them going on at one time. So we have two very large, about $22 million right now with development. Actually, no, we probably have about $30 million in development right now and that's about our comfort level. That's our spend for 2020 for development and we really don't want to get much past that. We also only develop in the states that we live in so Washington and Colorado. Adding onto a property is not a big deal, but we don't like to do ground-up development where we go through the whole process if we live out of state, because inevitably if you want to get things done, you gotta be down at the county, down at the city hall, down at the office, all the time. You're going down there all the time. Oh, you want this? Okay. No problem. James: Otherwise, it's going to just take forever to get a project done. Ryan: And who wants to fly an hour and a half somewhere to drop off a piece of paper and then fly back? I mean, it's just not efficient. So we just like to be in town.  I can't tell you how many times I've gone down there to, you know, shake the trees and get progress. James: Yeah. I've done a small land development beside my apartment. We were converting it. We were combining the adjacent plot of land into the apartment. And that itself was a lot of work already. But the city was supportive and it went through well by just the amount of paperwork, the amount of bureaucratic process that you have to go through. So, absolutely. What about a demographic? I mean, we talked about demographics. How do you say that this particular submarket is a good demographic for a good self-storage business? Ryan: We like at least 1% growth. We like to see trending growth. We like to see 50,000 income. We like to see saturation levels like a seven square foot per utilization for storage. James: How do you get that data? Seven square feet per utilization? Ryan: We have Radius Plus and we use a couple of different programs. Radius and there's one other program that James: So Radius is a software for self-storage investors? Ryan: Yes. James: Okay. For them to see the demand, I guess. Ryan: If you gave me an address, within 20 minutes, I could tell you what's the drive time around it. I could tell you the demographics. I could tell you the demand. I could tell you all the permits in the pipeline. So that's another thing. This is great. I can tell you everybody who's building, everybody who's applied, who's canceled, who is coming. And then of course we do our boots on the ground research where we go knock on doors and go to the city and ask them like, Oh, Hey, you know, is anybody else? Oh yeah, John, you know, he was over here last week. You know, that doesn't show up on record but the intent. And then you go talk to John and you say, Hey, you're really going to do this because we're thinking about doing it too. And we've got into situations like that and you know, either we've given up or they give up or whatever, and we just move on to a different market if the market can't supply all that additional. James: So does the self-storage purchase involves stringent requirements or stringent terms like what multi-families like day one, hard money, you know, very tight on inspection, do due diligence process? Ryan: It's extremely competitive. And it might be as competitive or more competitive as multifamily. Because when people think of storage, they're like, Oh, I've never really heard of that. I don't know what that is. And then they do multifamily and they're like multifamily is really hard. You know, there's always people doing it and Oh my God, there's so much competition. Maybe I'll go try storage because it'll be less competitive. And then they go over to storage and they're like, Oh, there's a lot of people that do this. But what the difference is there are so many multifamily properties in the United States. Self-storage, you can't even hold a candle to the wind. I mean there are 50,000 facilities total in the entire United States. So yeah, when you're talking about competition, if you're looking at a property that's a million dollars or less, no problem. You can go bid on it as a mom and pop.  When you go a million to maybe 6 million that you can reposition or that, you know, show some signs of a mom and pop operations, you're competing against the best of them. You know, the all-cash, close in 30 days, 60 days, whatever it might be. But generally what we do is we do about 10% earnest money deposit...sorry, not 10%. On a $6 million facility, we might put up anywhere from 25 to 50K. And that doesn't go hard until due diligence is completed and signed off on. James: Oh, okay. So that's not bad. It's not like day one hard money, like what's happening in multifamily, right? Ryan: No. And if we were in that space, we wouldn't play that game. So yeah, whether you think it or not, you're competing with yourself at that point. You're worried about losing that money. I mean, we have a 100% contract-to-close ratio, so everything that we've put under contract we've purchased. I mean, we had a bank pull out three days before closing, we went and raised a private loan. We did our own deal. So we've done everything to really help get the deal closed and we've got that reputation to close. And I think that people value our relationship a lot more than they do necessarily how much earnest money we put up. And we've had a broker bring us a lot of deals and just keeps bringing us deals because we make it real simple on them. You know, it's a very simple process with us. We get everything on the table. We are very transparent and as you know, in multifamily that'll go a long way. Any business, right? James: Yeah. That's true. That's true. Yeah. I mean, brokers, love people who are easy to deal with. Because you know, this is just multimillion-dollar deals and you do not want to have a tough person to work with when you're going to such a big transaction. So at a very high level, what are the value add that you usually do in self-storage? Ryan: Cameras for security, rental rate increases. James: So what, you put a camera and you get higher rental rate or it's just...? Ryan: People walk in and they want to feel secure. So our target customer is a 70-year-old woman, that's who rents our properties. So when they walk to your property, is it dark, are there cameras, is it secure? Does it feel like the fence is going to fall over? So we take the properties, we'll put in a new fence, we'll put in new cameras, we'll paint all the doors, we'll replace doors, we'll rehab the office, we'll put in notary services, we'll put in ice and vending machines.  James: Why do you need a notary service in a self-storage facility?  Ryan: Convenience. So we like to be a shop of convenience. So if somebody has got an Etsy, Amazon, they have a home-based business and they can come to our storage facility, they can drop their FedEx/UPS deliveries off at one of our properties. They can get their items notarized. They can ship, they can store. We even have a car wash at one of our properties. So, we try to be a place of convenience for people. Not that we were going to make any money on it. It's just a place where people can go and know that I rent my Uhaul truck to move my goods somewhere. At your property, I can notarize my documents, I can store my belongings, I can do a lot of different things to transact and do my business obligations. And so what we try to be kind of a helpful facility. Not all of our facility does that because not every facility even has an office. But the ones that do, you know, we sell retail. We start, you know, people pay cash, we get rid of cash payments and we go to as many automated payments as possible. We enforce the lease. You know, a lot of these facilities we take over, tenants might not even be on adequate leases. So without being on an adequate lease, you don't have an adequate lien against their belongings. You can't do an auction.  James: Have you guys done auctions? Ryan: All the time. James:  It's like Storage Wars on TV, right?  Ryan: Yeah. Yeah.  James: That really happens? Ryan: Yeah. The semantics are true or the actual process is true, but the way that it's carried out is not true. So nobody goes in person, you know, there are some old school places that still kind of do that, but we do them online. So you can go to selfstorageauctions.net, you can register. And then in your neighborhood, there could be a storage auction and you get alerted like, Oh, Hey, this unit is going up for auction. You can kind of log into your account and see, Oh, what's in there. James: All right. I can see all our audience and listeners are doing that right now. I didn't even know that. What was the website? Ryan: I think it's selfstorageauctions.net. And so as a company, what we do is we say, you know, that the storage auctions is revenue producing or whatever. They're not really revenue-producing. They're basically just to get you to get out and get a new customer in. Like we clear out the, you know, and it's the threat of losing your stuff, right? If you don't pay, you lose your stuff. James: So it's like an eviction process, I guess.  Ryan: Right.  James: Except the government can put the moratorium like what they did in multifamily right now. Ryan: The government hasn't touched us. So usually within 30 to 60 days, if you're not...so let's say, your rent is due today. If you haven't been paid in five days, you get a late fee and your unit gets locked automatically. So the gate code that lets you into our properties, the revenue management system will automatically turn the gate off.  James: Really? [26:40crosstalk]  Ryan: We over-lock your unit. You can't even get into your unit.  James: You don't pay your rent and after five days, it locks by itself? Ryan: Just like that. And then we'll over-lock you. So we'll put a red lock on your unit as well. Some of our properties will have the smart locks where it'll lock behind the door so you can't get in, you can't get into your stuff. So if you don't pay after five days, you're automatically locked out. So we liked that. We don't have to really manage that too hard. I mean, there's, you know, we have property managers are onsite staff that deals with that, but the gate code, that's automatic. And then once you pay it, we'll let you back in. But if you don't pay, you're locked out. So now you don't have access to your stuff and after 30 days we do our notices, our legal notices and then, we can take pictures of your property, do our publications and then it goes on this website and then people can buy your stuff.  And then you know, any earned income from that auction goes directly to us first, to recoup the costs of whatever the tenant owed us and then any costs of legal fees associated with it. And then anything that's left over after all of our money has been recouped, goes to the tenant, you know, cause they gotta be compensated for their stuff. So, we get paid first and then, but most importantly, we get our unit back and in multifamily or residential, they might trash the place. They're gonna do whatever they do. In storage, I mean, you can try to trash the place, but I mean, it's a box. And you know, we just sweep it out. They moved their stuff out and they're gone. And then, you know, for us, we just get our unit back and we let our customers know when they book, you know, Hey, sign up for our online auctions. You know, so they can bid on stuff and they can also know that, Hey, we do online auctions.  So a lot of places we take over, I mean, the delinquencies are a mess when we take over and that's a way to increase value. So we took over property last year, for example. And I just heard from our management that, you know, auctions were like, I mean, there were people that were 180 days delinquent and the manager just wasn't collecting on the units, they just weren't enforcing the rules. So we'll come in and we'll just follow the rules. You know, your lease says this, if you don't pay with this, you go to auction, you know, and then we make money on late fees. And some facilities that we take over don't charge late fees. I mean, if you don't pay on time, you should get charged a late fee. So there's a lot of different things we can do. You know, and plus we'll repaint, we'll redo the doors. Some doors of the old cabinet doors, you know, to open up the lock, the storage locker, we'll put the roll-up doors on them. We'll improve the lighting, we'll redo the asphalt, whatever it might be, we just get it nicer so that the customer feels safe and secure and they feel like they're getting good value for their money.  James: Got it. Got it. Got it. All right. Why don't you tell our audience how to get hold of you and your company?  Ryan: Yeah, sure. So my email is Ryan@spartan-investors.com. Our website is spartan-investors.com.  James: Awesome. Thanks for coming in and adding tons of value to our listeners and audience. Thank you.  Ryan: Yeah, you're welcome. It was nice meeting you, by the way.    

James: Hey, audience and listeners. This is James Kandasamy from Achieve Wealth Through Value Add Real Estate Investing Podcast. Today I have Raj Tekchandani from the Boston area. Raj is a co-sponsor/KPGP in 650 units across Georgia, Florida, Kansas City, and Texas. Hey Raj, welcome to the show Raj: Thanks, James. Thank you for having me James:  Good. I'm happy to have you here because I want to talk about technology. You are a technology guy turned into a multifamily investor, right? Raj:  Absolutely, I can speak technology all day long James: Yeah, absolutely. So I want to make sure I give you an opportunity to explain some things that I missed out. So why don't you tell us about your story? How did you get started and how did you end up being a multifamily investor? Raj:  Sure, I will do that. So hi guys, I've been in technology for most of my career, I did Undergrad Computer Science, then I did an MBA in high-tech so purely technology-based and wanted to become the next big company founder. A lot of my jobs were mostly startups but when I realized that I'm sitting on a lot of options and not going anywhere, I said, I need to diversify and started looking into real estate investing that was not until 2012, but that was just a side gig. I still was fully devoted to my job, which was startups and it was in data analytic space and we're building a platform to connect all the data in the world together and put meaning into data, using something called a Data Lake. A lot of formal companies were using our software, financial services, but there was no real estate company using it. But anyway after I finished my five years with that company, my stocks options fully invested. I was like, okay, what is my next startup? And by this time I had started collecting my grants from the little investments I'd done. I had started investing in 2012 in one Condo in Orlando, Florida, and gradually went on to buy more because the prices were very attractive and I could see the prices going up and I said, let me just get in there, so I got in there, fortunately, had a good property manager that helped us take the worries or headache off our head and the cash flow was beautiful. So in about 2016, I said, okay, they need me to see this look and I bought actually a 15 unit multifamily near my house in Boston and I wanted to do more of that because I'd heard, you know, multifamily the whole economy is upscale. So I said, let's get into multifamily and that experience was interesting, to say the least. I had not too much knowledge about the underwritings and how to really look at expenses and that came in as a very expensive learning lesson for me in terms of multifamily. So from there on, I said, this is too much work, I can't do this. I found a good property manager and he quit and then found another one then he quit and it's like, this is too much. So I said, no passive investing is my way to do it, this whole active thing is not my thing and I'm still working full time on my job. So I started nesting passively with some investors. The first time I looked at a passive deal I was like that's too much, there are too many zeros in here, I can't do this but gradually as I understood, I took learning and took all the courses and reading blogs and podcasts and I got comfortable with investing passively and then a couple of passive investments and I was like, this is great, I have my nine condos, I have my fifteen hundred, which has now started giving me cash flow and now has passive investments. Interestingly, it was almost matching up to my startup salary. And I was like the options are great, but what if the options don't mature or do much? So I took a bet and I quit after five years of my job to do real estate full time and that's how I dig more into multifamily. But interestingly at that point, I had this idea of another startup, which didn't go too much far because I wanted to take these learning from data analytics into real estate and now that I'm doing multifamily and doing all this, I'm not seeing too many systems out there. It's still very, laborious jobs, the property management company is a lot of work on paper and even the underwriting was very painful. So I was like, what if there's an automated software machine learning data, whatever we have learned in technology to build that. So I met up with the person at MIT, Jennifer, she had done a Ph.D. in Real Estate Technologies, like Artificial Intelligence Machine Learning for Real Estate. I'm like wow this is a person that I James: Talk to right? Raj: Yeah, so I sat down with her and she went through her thesis with me. In fact, she was nice enough to explain her thesis; there are too many companies out there that are doing what I'm trying to do.  James: So what was the thesis about? Raj: The thesis was the use of machine learning and artificial intelligence in real estate  James: But is it real estate underwriting, or is it real estate analysis or--  Raj: --Real estate analysis  James: Is it for investment or is it-- Raj:  So she actually worked for MITs and Darwin program buying the advisory real estate James: Oh, okay. So they're basically looking at investing Raj: So they're looking at investing so mostly commercial real estate, eventually, from her thesis, she came into that, MITs fund. She was working there at that time. But in her research, she had looked at a lot of technology companies, right? From doing everything from sensitivity analysis to underwriting to figuring out where the locations thesis are, property management companies that are looking to do automation based on the [inaudible06:24] so a lot of machine learning in there. Actually, one of the companies that struck me at that time was in [inaudible06:33], which is what I had been thinking about, sort of how to automate underwriting and how to take all the data that's been sitting in, all these Yardi Matrix and all the places that been collecting data. How can we leverage that to say, okay, well, this is a property that I'm looking at in multifamily, this is the address and boom, we'll go and run into algorithms and come back and say red light, green light, yellow light based on all these factors and in [inaudible 07:02] was doing that, some of that, I talked to the CEO there and start using the platform. So I had some suggestions for them into building other plans and other features on the platform but at that point I said, you know what, I'm more of a user now, and they're not technologists, I want to use these technologies that are out there, I can talk about what features they need, like lease analysis. In one of the deals we went inside in the back and you're looking at 150 leases, one by one, what is matching up. There's no use of doing that, those leases should be fed into a system and outcomes, and these are the mismatches  James: The lease [inaudible 07:38] should be automated Raj: This is a tenant profile and based on this tenant profile and this property and this neighborhood, this tenant profile will be surviving through any downturn, that’s what you need to know on tenant profile I'm sure somebody will build it in there; I think [inaudible 07:55] was already thinking about doing that. Anyway, from that I said, okay, I'm going to stay as a user, I started using these technologies but then I got stuck more into the whole underwriting piece and managing the properties, finding the properties, I was like talking to brokers, now I'm talking to this and that's how I met a couple of good people through coaching programs that I said, okay, it's time to take the next step, move from passive to active, and see how the big things are done. I wanted to be closer to the action. So that's how I got into active investments James: Got it. I mean, that's a lot of things there. So I want to go a bit more in detail on that, but that's good. I mean, so right now you're a full-time real estate investor, right? Raj: Full time real estate investor. Yes. I mean always thinking of the next technology ideas James: Well, that's the problem with all these tech guys coming into real estate? I also think the same, let's automate this, and let’s create a system on this Raj:  Yeah. But I mean, I keep in touch, keep a pulse on that. So I don't know if you know about this organization called CRE tech- Commercial Real Estate Tech, middle of New York and they are looking at all these things, all kinds of who's doing what, which company is being funded. So I keep in touch with them. I'm a member of them, but just looking at ideas, someday somebody has come with a great idea that we are still a little behind than other industries in terms of use of technology James: Oh yeah. Real estate is so manual. I mean, there's not many people investing in technology and it's a bit tricky too because a lot of people component Raj: And I was told one day that, (AI) Artificial Intelligence, the biggest tool, billions of dollars are being traded in real estate based on excel spreadsheets. That is the technology of choice of all these big reads and fund managers and they're just doing Excel spreadsheets James:  Yeah. I don't know why the real estate is just so hard to automate in terms of location because even like, if you look at a street, one side of the street can be completely different valuation from the other side. And how do you tell that to the software? You can't tell them that people have different preferences going in Raj: Well, if you feel that, you can tell that by how many murders were on the left side of the street and how many murders on the right side [inaudible 10:16] I mean, I just think the crime rate, our school districts and there are so many factors you can pinpoint it. Now there's so much data being collected on all of this, right? You just have to leverage the data and every time a property gets sold, a property gets bought that data is entered into a system, right? The analysis entered into the system, even for an upgrade, all the data has been entered so you should be able to tell that if I put granite flooring in this, or I put up vinyl flooring in this, or whatever, this is the gorgeous fettuccine down the road, right? Because that's [inaudible 10:50] James:  I think that's what [inaudible 10:52] does, right? Sometimes they do a lot of underwriting, they try to predict what is the rent going to be, but I'm not sure how big they are. I know there were some people really excited about it, but some people really didn't like it. I saw it once; the tool looks good for a tacky, right? If you're a second, it looks like everything's done for you. But I don't know for me, I don't feel comfortable yet. Raj: I think there's nothing. So all that said, James, there is no equal end to be having boots on the ground. So this is what I've learned James: Well, for real estate, you have to go to the property, you have to do the cost yourself Raj: Exactly. So you'll do all, that saves you a lot of time, right, because you can do the cost, the real analysis is done when you're there and you're looking at the property because we walked away from a deal that had everything looked good on paper and technology tools and everything, because this one building down the slope, had some structural issues that we didn't know, I mean, no technology tool will tell you that turning on some like pillars that are like fake  James: Correct. There's no way to know. I mean, as I say, I love all these tools, but I don't know for me, I don't want to pay so much money for this tool unless it giving me an automated thing. Raj: That's where the progression has to happen. The more they have to get better and they have to get cheaper for that option. Otherwise, excel spreadsheets help people doing their report James: One day will, right? I mean, if you look at it right now, we need a buyer agent, we need a seller agent to do a house transaction and the reason for that is so much people touch, right? I mean, a seller needs to know that he's getting the best value for his product. Only people can see the house and decide whether it's a good house or not, right? It's a bit hard for computer AI to really say that this is a good house for this person, right? Maybe one day it will. Raj: It will. They'll cut short the time or for your needs maybe James: Correct. And I know a lot of startups were trying to do all this right there. I mean, every tech guy who was introduced into real estate in the behind them is [inaudible 12:53], oh, I can do a startup, even syndication people are trying to automate right? They're trying to rank the sponsors, they tried to give stars to sponsors and everybody is trying to do all this but as I said, it's very hard to give a star ranking to sponsor there are so many other things that are involved. I mean, one day probably, yes. But we are not there yet with the technology, the information we have so how do you feel? I mean, you and I are almost the same, right? I mean, we're always in the technology space and suddenly become real estate. Do you think you've wasted all that lifetime in tech space? Raj: No, not wasted. It's a game, it's life as it plays out, now where I am my biggest strength is my value for my time. I mean, I control my time in what I'm doing, when I was working tech job, I mean, you had management meetings on Friday afternoon. I was like an owl, now if you go look at my calendar, you'll never find a Friday afternoon open because I dropped it James: Okay. That's good. Yeah. I mean sometimes people who have studied so much in certain fields, I don't know. I do see some doctors moving from being a doctor to becoming a real estate investor. I mean, at the end of the day it's all about time, right. Time and how much [inaudible 14:13] Raj: I mean it’s time and it's what you enjoy. I mean, I also realized that a lot of what I do in real estate is marketing and I love marketing James: Nobody cares in the tech company Raj: Yeah. So when I'm even in my tech job, my last job was in marketing. So I was basically a demand generation for this data analytics back on rebuilding. So basically evangelizing technology for people that don't understand it, it's sort of marketing. So writing blogs, writing white papers, writing all this stuff, simplifying things for them. That's what I had become in my technology job also because nobody wants to hear the mumble-jumble of data lakes and medication and all that stuff. It's like, bring it down. What does it do for me? And now he's the same thing, syndication and all what does it do for me? I mean, so marketing is basically attracting the right people and getting rid of people that you don't want in your system. So that's why even in capital raise or even the deals that we do it's very important to figure out who your customers are which in our case is investors and it took me a little while, my first four deals, I was like talking to everybody and anybody like, okay, this is what we have and I was like, no, that's not me finally figured out the people who are attracted to my deals, especially are tech executives, like me that have collected a decent paycheck, they have a decent amount of wealth, they want to diversify, they're paying a lot of taxes and they are paying [inaudible 15:50] that. So they want to learn about how real estate can help them with taxes, how real estate can help them diversify, a lot of them have invested completely in the stock market, which we have done that in the past and I've lost a lot of money in stock and that's why I never want to go back to stocks anymore and I'm trying to teach the same thing through my formal education. James: Yeah. Surprisingly not many people know about real estate. I know probably all the listeners here, they will. I mean, you are already learning and listening to podcasts about real estate, you already know, but it's very surprising to know how many people don't know about real estate and don't know what passive investing. I mean, people know that you can go buy a house and give it for rental, but nobody knows that I can put the money with a sponsor who will do the work every time Raj: They know real estate investing, they don't know realistic passive investing James: Correct Raj: Yeah, passive investors have become my passion James: Yeah. I mean, that's why I wrote my book too because not to introduce real estate to passive investors, I want them to be a bit smarter. I mean, sometimes when they got introduced to real estate, they think, wow, my God this is the best thing they just follow one way of thinking, right? So Raj: You just stole my line that's what I say, because, at smart capital, we make you smarter James: Okay, good. Because I mean, first, you get introduced to passive investing, second is how you become smarter, right? So let's talk about that. I mean, you said you have done some really cool stuff for passive investors and incorporating some technologies and all that Raj: Absolutely. I mean, again, nothing was planned. It just happened over time, my first deal, when I presented to some of my friends, they said, Raj take my $50,000. I'm not going to take your $50,000. You need to sit down with me, understand what it is James: Well, that's the problem with me. I don't like just taking money. I want you to understand the deal. Cause I believe it's a good deal Raj: I actually know the four friends that I had, I bought them tandoori chicken. I said, come sit with me and I'll explain to you what it means. So I bought wine and food. I said, look at this, I'm going to tell you what it is if you understand it and if you still want to invest, that's great. I want you to understand it because I can take the money and invest it, I mean, that's not a problem, that's the easiest thing for me, but I really want you to get smarter in my sense, you know, that's why smart capital and so that small group grew into a little bigger group and I created a meet up in the Boston area on just apartment investing and teaching what it is and growly slowly And I kept it small for a number of my first year I did it in my office in a conference room. They were like 35 chairs and who can come but we kept it very educational. That was the thing. We'll take a topic, we'll discuss the topic or make sure that anybody in the room is understanding and if there is somebody else experienced in the room, they're absolutely allowed to speak up and do so, kept it very educational, very different meet ups. A lot of people said, okay, Raj's meet up is educational so we're going to go there, and then I didn't have enough space so I took a bigger space now the membership in that whole meet up has grown to 600 plus people but we now get about 60, 70, 200 people monthly and I've kept it monthly and still, we talk about educational purposes There's no come have beer, learn about network and go back. That's not it. So to answer your point in doing so right, I've internally built some systems to make sure this is a smoother process for me. So in terms of the thought leadership platform, I have my meet up, I started doing blogs consistently. Obviously I'm active on Face book, LinkedIn, and really wherever else I can post my blogs. I also to become a member of the Forbes relisted council so I can do some technology related articles there and talk about what I'm thinking. So yeah, I've done all these things and now I have in a way that I've created this CRM and systems and attracting investors who, whatever platforms that they can get onto podcasts like this and talk more about what I've done in my past and just share my experiences, that's basically it. James: So how do you decide on doing a deal? Let's say someone brings you a deal, right? How do you decide this is a good deal, I really like it. What are the things that you look for? Raj: So the first thing I like, ideal deals only very few people. I mean, as partners, right? I mean, I'm not into numbers of deals and I don't count the number of doors. I don't do that. I like to enjoy myself, I mean, to [inaudible 20:30] my life, you're going to be just chasing money and [inaudible 20:33] James: You want to be peaceful too, right. Reinvesting the right sponsor because you can make an investment any-- Raj: --People that I enjoy, I mean, the deals will have good and bad times. One of our deals is we haven't done distribution, but I will say that I'll invest that deal again. I believe so much in the team that even because I'm so close to the deal and my investor is saying, Hey Raj, we haven't distributed work. I said it'll be fine. It's just because I trust the people that I work with and I could do another deal with them. So I’m very selective about who I work with, these are people from my coaching backgrounds, I've heard them say I hear them strength and they have to be complemented with my strength. So if I'm good at finding markets and I say, what, I'm going to invest in Orlando or Kansas City or whatever markets that I have in my head because I've done some research on data on that and obviously then underwriting should make sense but my number one criteria is the people that I work with and do I add value to them and they add value to me. So I will claim I'm not a good asset manager, I've never intended to be so I will always look for a very strong asset management on the team James: Got it. So you basically look for the sponsorship and how the team complements with you as well Raj: The dealership and the numbers should make sense, but that's true for everybody. You will not invest or be participating in the deal, that doesn't make sense James: Yeah. What do you look for in a very strong sponsorship team? That you really like? I mean, what personality, integrity or--? Raj: --Integrity, number one is integrity, right? I mean, the track record is okay, but I think track record, I've seen these guys done. I mean, it was not done like 15, 20 syndications, some of them have, but some of them are still early in the stage, they have done maybe two syndications before this one, but I've seen them through the coaching classes and going through with them to on due diligence trips. So I always go and make sure that I'm on part of, once we go sign up, form a structure, I'm going to get involved with all the due diligence and all everything. So I'd sit down with them and see what their work ethic is, how passionate they are about it, and will they stay committed with me? James: Got it. Very interesting. What about, on other things, in terms of the underwriting or in terms of market analysis, have you done any; have you incorporated any technology things into analyzing that? Raj: Yeah. I mean, I do my own technology things. I mean, I haven't written software for that, but I do look at a lot of data James: What kind of data do you look for? Raj: So, I mean, a standard feature, like population growth, job growth, and median income. We will also look at STEM jobs, right? I mean, I look at if it's a technology oriented job, are there or not because I mean, in these times the properties that are doing well, are people technology, company, people working from home, right? So all of that is important as well [inaudible 23:34] James: Got it. Very interesting. So is there any proud moment throughout this real estate career that you think oh, I did that and I feel really proud about it and you can never forget about it until the end? Raj: Well, the proud moment was I'm into partner with you on my first deal. I mean, that was a very proud moment. I told you right when the first time I looked at syndication when a friend of mine presented to me, he was on the GP side, I was on the limited partner side. He says "Raj I got the deal."  And I said, "What is this? This is like 300 units. I mean, there are too many zeros. There was no freaking way." So now when I did my first deal with that number of zeros, I mean, it was not 300, it was 152 units that deal was a very proud moment for me having gone through understanding what it means and then the other proud moment was to convince some of my investors to partner alongside with me right now that I learned this and I'm sort of sharing my education. I don't even call it capital raising. I'm giving them an opportunity to participate with us. I'm doing them a favor, sometimes I feel that way and that's one way to look at it and I'm saying no, every deal of mine for my side has the same investor. The first investor is always the same, that's me. So I'm going to invest in these deals, I've done the research; I've been to the property. Now I'm presenting it to you this deal, why I like it, and you're welcome to join along, so the proud moment was to getting that achievement, right? The first one and the second one becomes easy. And then the first one was the problem James: Got it. Awesome. Can you tell our audience how to get hold of you? Raj: Absolutely. I mean, I have a website, I'm very active on Facebook, but my website is smartcapitalmgmt.com. My email is raj@smartcapitalmgmt.com. Easy to use to get to me or LinkedIn. Facebook also is there James: Awesome. Thanks so much for coming. It's so refreshing to see how someone from the tech industry moved directly into a multifamily investor. I think a lot of people do, right? But there are still tons of people who don't, right? So it's just the thought process and sometimes the desire to technologize everything, sometimes it's hard, right? Real estate-- Raj: -- Why do you want to do that? I mean, you want to enjoy what you're doing, right? If building a technology company is your passion then real estate will not be the thing, but leveraging technology to get smarter is another issue James: Got it. Awesome. Well, thanks for coming. I'm sure everybody got tons of value Raj: Thank you, James. Thanks for having me James: All right. Good

James: Hey audience and listeners, this is James Kandasamy from Achieve Wealth Through Value Add Real Estate Investing Podcast. Today I have Rama Krishna from California. Rama has been focusing a lot on apartment purchases which is averaging around 30 to 40 a units and at the largest you have done were 59 units. So it's going to be very interesting especially for a lot of people who are trying to get into the game and also looking for like high cash flow as well, you're going to go detail on why sometimes the smaller deals makes a lot more money than larger deals. So hey Rama, welcome to the show.  Rama: Thank you James. Thank you for having me.  James: And one of the things that we want to talk about apart from going into Rama's strategies and businesses, we want to go into what asset manager can do during these Covid19 crisis that has been happening right now. Hopefully I can publish this podcast as soon as possible. But I'm sure it's going to be very relevant because it's going to take a few months for this crisis to subside I guess, it may take a few more quarters to fully subside. So Rama, did I miss out anything on your credentials?  Rama: No, not much I think. So just to kind of re-summarize, I am based out of California in the corporate Bay area of San Francisco, an IT professional. So just to recap like 90 seconds. I started like from real estate two years back started from single family homes and I always want to actually to do Real Estate but the problem is in Bay Area, really hot market. I cannot get any cash flow. It's kind of very hard to find deals and I didn't want to do out of state because I have a very stressful IT job here. I cannot travel out of state to do these things. I was postponing doing real estate for so long time, but three years back kind of pull the trigger, bought my two single family homes, one in Raleigh and Atlanta, that's where it started and quickly realized that I cannot scale with single family homes and got into multifamily, bought eight apartment complexes between 20 to 80 units. That's a more like a sweet spot for me. Like doing the deals. We can go further into that. One thing, we started, we didn't talk before is that construction projects, two new construction projects, 97 and 92 units in Raleigh, Durham, North Carolina. So they are like devalue adds, value adds and the new construction mostly into that existing apartments and new developments.  James: Got it. That's very interesting. I think we should just definitely talk about you and maybe do a separate podcast for the Covid19 asset management because there's so much of information that I want to get from you and I think the Covid19 thing is also very important. So that's going to be another podcast maybe before or after this. So let's go into details; the market that you have been focusing on that, I know we talk offline before this is Florida, Kansas City and Ohio, and you are sitting in California. At what point of your work, you are very stressful IT guy. I mean, I was a stressful IT guy too. What was that aha moment saying that hey, I better go buy something else or did you play around with stocks and realize stocks is not for you? So what was that aha moment that said that you need to go and focus on buying a multifamily apartments?  Rama: So I did two businesses, IT businesses, products and the consulting business. I did stocks, options and everything. It was a lot of active businesses, I need to be there, and I am really active, let’s say if somebody can start restaurants, like franchises, you need to be there in that actively. So you are there to be part of the business, then you cannot succeed in that. Even IT businesses or consulting or product development, everything is active here. Even where a lot of people have a lot of money from IT as freelancing or like full time jobs, but the problem is if they stop going Monday morning they cannot make money. That's the main part for me to getting into the Real Estate and then I bought these single family homes, I'm getting like $200, $300 for each single family home as a cash flow. But then I wanted to scale it, but at the same time I thought I cannot scale it. The problem with apartments at the time for me personally living in Bay area, these apartment complexes are so expensive. These are like 20, 30, 40, $50 million. I didn't even know that we can buy a apartment complexes. The two things, kind of the aha moment for me is we can buy apartments as a common man with syndication. Syndication is another thing. I was buying single family homes myself and I know a lot of my friends actually buying single family homes out of state. They buy in Texas, North California; they buy everywhere all the single family homes. But if you combined 10, 20, 30 people combined, we can actually buy larger complexes, larger commercial properties. That was a [05:17unclear] the syndication itself was an aha moment for me.  James: Was that from someone talking to you or from bigger pockets or you're talking about syndication or what happened? How did you find it out? Rama: I learned about this syndication with a webinar from Neil Baba, you know Neil? He was having this weekly or acting monthly multifamily fundamentals webinar. So two years back in November 2017, I had this is a webinar from him and the moment that I did the webinar, I first reached out to him Neil, I want to meet you, this is really good, this is crazy. Then met in a Starbucks in Fremont and I told him after this Neil I want to learn this thing. This is exactly what I wanted to do and he said there's a boot camp coming up. He would come in February and I said I'm going to sign up on that. That's when it kind of started, kind of working from single families to multi families.  James: Got it. What were the few key things in that discussion with Neil that you have was like, wow, this is suitable for me. What was your personal thing that you think that oh, this is very interesting for me. What are the aspects of syndication that was very attractive to you that you think [06:40unclear]. Rama: Three things, Oral apartments is a kind of a scale in the single family home model that what I'm thinking. I know the real estate passive income, but then I cannot buy a hundred, 200, 300 single family homes. The first thing is scale. The second thing is run as a business, like I did my IT businesses before. So apartments is also a business, you need to increase your income, decrease your expenses, and then efficiently run your operations. Make sure that you know everything like people management and you talk to your property managers and investors and your brokers and seeing like identifying this analysis, everything. Run it as a business. Third thing aspect is a syndication model itself. I have like hundreds of friends here and other acquaintances, old colleagues, a lot of people are high net worth individuals. If I can prove myself in this business, I can definitely syndicate and raise capital. So those are the three main aspects for me that kind of struck the card when was talking to him and also the fundamental thing, hey we can buy larger complexes like this. Like I was not even imagining the common man can buy apartments. Those are the three main aspects.  James: Got it. So now you're sitting in California, after you talk to Neil you come out and you already go to his boot camp. Why you went from California to Florida, Kansas City and Ohio? Which deal did you buy for us? Which state was that?  Rama: For my multifamily?  James: Yeah. Multifamily.  Rama: The first five deals, I bought it in Jacksonville, Florida.  James: Okay. Why Jacksonville, Florida? Why not Las Vegas or Utah or Texas? Or is it just that you landed there by luck? Rama: So I want to actually buy a multifamily in Raleigh, Durham and Atlanta because that's where I started. When I started researching about markets for my single family homes, with all the research I did, I picked these two markets, Raleigh and Durham.  James: Okay. What are the things you saw in Raleigh, Durham and Atlanta that were like awesome [08:49unclear].  Rama: Some of it I think was I'm reading all the articles and reading all the articles and everything with the technology stuff happening also there and jobs moving in, I didn't actually connect the dots at the time, When I did the boot camp from Neil then I was able to connect the dots and say hey, these are good markets. Then I was started offering on deals in North Carolina and Atlanta. Like none of them were pencilling out, like what is this? Even two, three years back it's not working out. I can't imagine now, maybe like with Corona, it's never kind of worked out for me because I never purchased in the last three years. When I started multifamily again I started looking into these two markets, Raleigh, Durham and Atlanta. I was offering ton of properties. I visited brokers’ network. Either the deals are like C minus, really bad locations or bad tenant profile. The income is bad, which numbers are working on but the thing is I don't know how to do the deals there or it's too expensive where it just didn't work out for me.  The vision for Jacksonville is when I was trying to expand markets from single family homes, I was looking at Austin and somehow actually got into Jacksonville because of the property manager or the property manager was actually offering, they do turnkey single families home as well. So I was talking to them doing due diligence, everything with them and making sure what kind of deal on single family homes that they can help me on, on rehabbing and the stuff. Then I suddenly like after talking to Neil, I said, guys, I'm not interested in single families. No, we have deals, this is like 60k and we have this 140k [10:39unclear] but they said okay we'll help you in multifamily as well. Let me know if you find any deals. We'll help you manage. That's when Jacksonville started and then they also kind of helped you and due diligence and everything. Then we'll look at a few deals together and we bought this 20 unit deal and that was on market actually, but it's the heavy lifting stuff like the roofs are bad, two, three units are down; it's really heavy lifting. I thought, okay, let me just get into it. The twenty unit is most like a cost of a one condo here. James: Looks so cheap when you look at California?    Rama: You know what I'm going to lose here, let me try it out but we made really good money on that. So definitely that's the good, I got the money from my friends and family first, not as syndication. It's more like a joint venture. A lot of my small multifamily is a joint venture. We can go into details how we've structured those. So that was very good deal. Look back right now. We did that and then quickly since I liked the market, I kind of learned about Jacksonville more. The more I know it's like a really hot market, then the found more deals in the end of that eight months to nine months and then they all are smaller, 20, 30, 12, 32 to 59. James: Syndication. I mean syndication; you can put larger money and buy a hundred plus unit or like some gurus say by start with a hundred plus. Why did you start with 20 and 30? And what is the driving motivation for that?  Rama: Neil actually encourages to start with small, he never said go more than a hundred units, but I'm part of a team of multifamily Mark Kinney. He suggest only a hundred plus units because of several reasons because you're putting effort on a 20 unit, it's the same as 200 units, go hundred plus. I totally believe it from a mentorship perspective, he's different. I did that because when I did my eight LLC taxes for last year and all the administrative work that goes behind these things. I would totally agree with Mark and also any other gurus out there that say go hundred plus units. I totally agree on that from effort standpoint. But there is money to be made in this 4,200 unit space as well. And a lot of people ignore it. There is definitely a possibility that you can put your operations hat there and your creative hat there to see how you can profit from it. You also know from the investor perspective as well.  James: Yeah correct. I started with the 45 units and I really love it just because you really learn a lot from smaller deals and you don't have to go much bigger deal and you forget, you cannot be like skipping elementary school and middle school and try to go direct to high school. I mean you can do it once in a while or when the market's so good but the fundamentals of real estate is really learned on the smaller deals, even with single family. You start with single family and you move to the smaller deals.  Rama: There are pros and cons. For example, the pros are you don't need to have payroll. The con is also the same thing. You don't have a staff and then your property manager may be sitting in some downtown office somewhere. They don't know what's happening at the 20 units or forty units. So you need to have very kind of a good property manager, even for a hundred plus units also you need a good property manager, but at least you have staff. If you can talk to them, hey, what's going on? Because the regional might not be at the site all the time. The regional might be like going once in a month, once in 10 days, whatever. But you have a staff day you can talk to, hey, what's going on leasing, what are the foot traffic? What are other strategies that you have always or do you have going on these units? Have you did the make ready? All of these things. There is a long [14:38unclear] clean you can talk to someone. But if there is a 59 unit somewhere in the west side of Jacksonville and my property managers sitting on downtown, they don't even know the pool guy's coming, they don't know that the lawn is not cut for the last two months. So there is good and bad, especially if you're doing out of state property manager, no asset management. That would be more difficult. But there are ways to mitigate that. Have a local partner in your deal that is onsite, on the ground goes once in a week or so.  James: Did you have a local partner there? Rama: One in Jacksonville but not in Kansas City and [15:2unclear] but now Jacksonville, I have changed my property managers, she's really hands on and she actually sits in one of our office. Jacksonville Unit has an office actually. So she's really good and now I can think of acquiring more properties in Jackson, I was thinking not be acquired more. But if you have really good property manager who is hands and kind of trustworthy, then you can definitely; these are really cash cows.  James: Yeah. I mean the people play the most important aspect in property management. It's a people business. So once you find a really good people, you are motivated. Rama: You are local or have a partner locally in the 40 to 80 unit game and it's definitely worthwhile to [16:08unclear]. James: Because it's not many people look at that space. I mean, the market was so hot right before, pre-Corona, I would say. Now we have to talk about pre-Corona and post-Corona.  Pre-Corona is so much of capital looking for deal and everybody just buy the bigger deals. Rama: Yeah, I do buy the deals in the three bands, James like 40 to 80, 80 to 160 and 160 above. 40 to 80 is where I do kind of deals with mostly JBS and then also syndicate patients deal where you don't need an onsite staff, we can operationalize and make sure that let's say if you have multiple 40 to 80 deals in the same market, you can actually have some scale within that. Have a maintenance person who I only see for properties. So 80 to 160 units where our focus primarily from a syndication perspective when we can have staff. 160 plus is an institutional level where the different companies move there, which I'm not going right now. But I would love to go 160 plus.  James: 160 plus, okay. I think that still does not answer [17:16unclear]. Rama: [17:17unclear] but at least you have a different set up [17:20unclear] James: Different level of people. Yeah, professional investors I would say maybe. That's good. Yeah. I mean so how did you structure this JB on the smaller side? Because you really don't have to do syndication for everything, I mean, if you have a few guys who are your family and friends who are willing to put some large money, you can just do a JB and explain to the audience how did you do that JB and syndication. Rama: Yeah, even if it is JV, I would want someone like they do perform some tasks. It's not that, you know, hey, like it's a JB and I'll do all the work. They allow us to have to do some work on that. Because they all structure James two options here. One, either I put less money and they put more money and everybody will have an equal share. Let's say I'm giving very rough example. I bought 50K and other people put 100K each or 200K each, whatever it is. And each of the 3% will be attached to person of the [18:15unclear]. James: Got it.  Rama: That's one option. The second option is I've also put 100K but all three people will put 100K into the deal, but I get 50%. They both get 25%. It's just very high level examples. Either I put less money in and take an equal percentage with the other investors or I put more money and take higher percentage. But same money as others.  James: All these deals you're buying in these different cities is it all value add or de-value add or cash flowing? How's that?  Rama: Most are value add as some are de-value adds as well. I'm kind of going away cookie cutter stuff, but the cookie cutter stuff, I'd still do it. But for the long-term part. That is more kind of relevant for a JV structure because for syndication I need to perform two to five years, I need to exhibit. But if I find a deal, which is really kind of a long-term goal and that is also good for this model where I don't need to worry about performing something in three to five years, I can even take a bridge loan and refinance it and keep it for longer term to the cash flow that's fine. If you don't get to cash flow, that's also fine. At least you can get all the rehab money from the lender and renovate it fully and then go to a permanent loan and keep it for like another six to eight years or 10 years.  James: Do you finance with the bridge loan in the beginning itself?  Rama: Yes. Yeah. Half of the loans I deal with now are bridge loans.  James: Okay.  Rama: Half of them are Freddie Mac. But see this is a de-value add. I know I can get all the rehab budget from the bridge loan. James: Yeah, correct. De-value adds make sense for... Rama: And then refinance it.  James: Got it.  Rama: So it's like kind of a cookie cutter or a little bit like value adds, I go with Freddie Mac loans.  James: Got it. Yeah. I mean the smaller ones has less competition. Sometimes you make a lot more money because there's no payroll and some people like my 45 units people just like to stay in a smaller community because they don't like bigger and the people, a lot of residents like a smaller communities, they don't need all these amenities. They just say we want housing.   Rama: Yeah that's true and another trend is happening, the build to rent. They're doing a medium density bill to rent the whole complex is for Randwick. So they built a town home complex or a single family home complex only for rent because we will be rendered national for some, and especially this post-Corona, it will be delayed like three more years, people will not be looking at home ownership. But at the same time, they don't want to live in apartments. They can live in a town home community or the kind of a little bit less density, a single family home community, maybe more density, single family home community. They're okay with that, right? Because they still have the pride of ownership. You have a better tenant profile and they can also feel that they're living in a regular home than an apartment complex. So the build to rent a town home and a single family home concept is growing as well.  James: So let's say you get a deal; every day you get a deal right now, I mean you're getting into brokers I presume. So what are the sniff test do you do on the deal? Because sometimes they list too many deals?  Rama: Yeah. I have my 60 seconds rule, 60 minutes rule and I don't know, 60 days like I see the more you go, you're going to spend more time on this deal. So the first thing I do is go to the justice map or CoStar just to see them demographics. For what is the median income and demographics mix on this and how the income is growing in this area. If that is a bad area I just... James: So every deal, the 62nd is that few steps go to CoStar.  Rama: Yes first go to; no, I don't need the CoStar, District Map is free. Just go to justicemap.org, just put that address.  James: What's that website called?  Rama: Justicemap.org. James: Oh justice map, yeah, justicemap.org. Rama: Just go to that, put the address you will see the census block. What is the median income, what is the demographics mix and how the income is changing. Then you will see the first sniff test and then I'll see the rents. Nowadays what I'm seeing is the average rent, like around $750 or about; I'm not going to C minus, C property, C plus or B. So I can quickly take a deal out, 60 seconds or less. And then next step will be go to the bond writing and see what the rent projections are, go to Rentometer or any other, I can go CoStar or Rentometer and see what are the rents. Are they below the market or not because I don't care about the rent growth, what happened in the next five, six years, what is in place rents and what I can achieve the market. That is where I focus. Let's say if it is $75, $150, $200 below, then definitely if it's like a C plus, B area, 45K or 40K median income and the demographics mix is good and everything, then I definitely go to the next level and traditional spend six days or not. Then to go to the 60 days. James: That's probably including the best and final and all that. Rama: Yeah every step that you go 60 seconds, 60 minutes, 60 days you're going to waste your time, effort, money on a deal. You need to talk to programs you need to visit, it adds up the cost, time and effort, energy.  James: Yeah. It's crazy how much work you have to do on progressively. So is there a lot of competition even on the smaller deals? Rama: There will be. Yeah. And it sounds especially previously that lasted two years, this competition for everything. But the 40 to 80 unit spaces, James, the smaller people cannot buy those and they still want a track record and know everything. They don't want to give it the deal to anyone. The bigger people are not interested in this because and the same thing that you said it's too much work. Definitely there will be competition but if you do a JV structure and especially you can do a long-term goal or maybe a tentative exchange because on a largest syndication it'd be 20, 30, 40 people. It's going to difficult to convince everyone, hey, let's do a 10, 31 exchange. So on a smaller deal if I get a 42 unit I know the JV people, like we have five people, so once we got a bridge loan, we renovate, and we’ll sell. Say if somebody wants to know by this thing, we have a bigger pool of money in the pot for the 10, 31 now we can from 42 units they can go to 80 units and then they can move to 160 units. I can spin off three fourth, 10-31 exchanges like that and quickly it can go from 200 to 800 units within two to three years or four years.  James: That's interesting. You can start from small and just doing 10 31 and start increasing. Rama: Exactly, on syndication it's not kind of very difficult. I have 40 investors, like half of them, hey, I need my money back. I let them say, let's just enter the one. Okay. Then it'll be difficult to coordinate this.  James: Oh, right. Interesting. Yeah. I never done a 10 31 exchange up until now because I don't prefer it so much because I'm worried that it costs me to buy the wrong deals. Because all sellers love 10-31 buyers. Rama: TO be active, don't disclose that you're a 10-31 buyer. Have those deal flow, you need to be really active. Every time I have four to five, six deals, then I can pick the right one. Hey, I'm not going to go wrong on this because it's a B property, eighties construction. What are the criteria that you have? The rents are like a hundred dollars lower. I'm okay to even or pay 100K - 200K on this because on the 10-31 you want to certain the deal, you want certain to close it. So picking the right property and make sure you're doing the due diligence and then do the 10-31 because yeah. So worst case, you'd pay taxes and it's not like another wall. It's better than going in the bad deal.  James: Correct. Yeah, absolutely. Absolutely. Absolutely. So tell me about your value add strategy. Do you do interior, exterior and from deck and you define what's the most valuable value add that you have seen? Rama: No, I do de-value add, like if the roofs are leaking, like falling down we get a new roof and completely renovating the units to top-notch, [26:57unclear] dollars also into the C properties. I think the thing is weird to see the holistic picture. There is no one specific thing that I do, which is the most value add, just turning it on the property to create the maximum value out of this. Like if it is a exceeded deferred maintenance, the problem with deferred maintenance is you don't get any rent bump if I change my roof. But you need to make sure that you negotiate the deal. Okay. Hey, this has a roof issue and if you're paying the market price, but for a de-value add that doesn't make sense. If there is an exterior deferred maintenance I would love to know everything in place and only do the interior value add. That is the best thing to do if I can get, but I'm not afraid of de-value adds. I did full redevelopments also I'm doing new construction as well, so whatever the maximum value that you can out of the property on the rent. That is what I looked into it.  James: Got it. So that's very interesting. So tell me about yourself. I mean so you are an engineer and you are doing real estate right now, where do you see yourself in the next five to 10 years? Pre-Corona or post-Corona? Rama: If we didn't have the same conversation January James, I was thinking I would retire in 2020. Like I had two deals. I was about to go under contract at backdoor on one day I was at the deal also I'm at 80% on the fence to back out. Completely changes. So things like this, you go back to the square one, go back to the drawing board or go back to school. . Then rethink your strategies. Yeah, definitely. De-value adds and new construction. I want to get maximum value out of it. Cookie cutter. I'm like mostly ignoring, but if I can do long-term goal, I'm okay with cookie cutter. If not that I can get out three to five years and do this like kind of churn. It's just a lot of work. A lot of people think when you're just come into syndication or a multifamily, it is a passive income. This is not passive income at all, like zero. For investors, yes. So I would continue doing what I'm doing, but it'd be more conservative. The new rules. The rules have changed.  James: The rules have changed. Yeah.  Rama: The playing field changed. The game is changed. Everything is changed. But the fundamentals remain the same. We will be renters’ nation. The multifamily will not go away. People need place to live. The next one year will be a little bit at least six months to one year. It will be tough in the operations perspective, fully focusing on operations on what I have and I'll continue the story, but the story now will be much better. You will see what is the need for passive income now you know better. Things might change. People are getting laid off. So you need to get your passive income streams. The story becomes stronger now and nothing changed in that perspective. James: Correct. Correct. Also in the stocks market you can lose your money, but in a brick and mortar real estate, you don't really lose the money. Rama: The capital is reserved, you have a hard asset. You can go and touch, feel it, and then that's not going anywhere. You might have instead of 8% returns, you might have 2% returns or 1% returns, at least your capital is reserved. Stock markets you're bidding down like crazy there. You're losing half of your money or more than half of your money. So the story got better and maybe easier to pass on this thing. But there might be challenges raising capital in the next few months because people might have lost money in stock or lost their job, whatever it is. But eventually it will come back. The people will remember this. They know the value of passive income more than before. I'll continue the value adds, the de-value adds and new construction strategies into the multifamily.  James: Got it. Is there a proud moment in your life that you think you're really, really proud that you cannot forget? I mean, until now, I mean, of course you're going to do a lot more things right, but until now when you started this business. Rama: Yeah. The first 20 unit deal, when we actually renovated this thing, I really felt happy. It was actually really bad property. The roofs were really leaking and everything; the tenants were bad, the backyard, everything was all trashed and completely, we re-profiled this thing. We did maybe more than 70% returns on that. The manufacturer, that's one thing. Overall the transformation that you do kind of really was proud moment for me and also the land development deals that I'm doing. It was 18 months of effort for us to get these 97 units a town home project, we closed it in February. So I was really proud of that new development site.  James: Got it. So you're like moving from one domain to another domain. That must be a happy moment. Why did you move to development?  Rama: As I said, I like this North Carolina, Austin, Atlanta hot markets because I would rather do it in this market, but there are no deals out there in a sense too expensive. You know Austin? All seventies and eighties property itself is so expensive. I would rather build new but there are unknowns. There are risks for new construction. It's not that easy to hazard zone. James: [32:54unclear] building, if it's [32:57unclear]. Rama: Everybody will be building, it has its own staff but overall I want to be patient to find the right deals and find the right construction partners, find the right type of investors. Not everybody will be interested in new development. You want cash flow. You're not going to get cash flow. There are a lot of risk also. You might lose your capital also in that because there are no assets.  James: You have to go to so many entitlement process and city approvals and all that.  Rama: Exactly, there are red tapes involved, there are so many things involved but I would in a market like Austin or North Carolina I would rather to build than buy a seventies or eighties product. That was the main reason for me to get into new development because I liked the market, what I can do in this market because I love North Carolina, I love Austin, I love North Atlanta. What I can do in these markets from a Real Estate perspective, the only answer for me is the new development.  James: Got it. Interesting. So tell our audience how to get hold of you? Rama: Yeah, you can reach out on my website is zovest.com; you can reach out at rama@zovest.com and I'm active in a lot of Facebook groups, you can reach out to me there as well.  James: Awesome. Thanks Rama for coming in. Happy to have you here and happy that you add a lot of value to our listeners. Thank you.  Rama: Thank you, James. Thank you for having me.

James:  Hi, audience and listeners, this is James Kandasamy from Achieved  Wealth Through Value-add Real Estate Investing Podcast. Today, I have Bruce Petersen, my buddy from central Texas and in Austin too. So, Hey, Bruce, welcome to the show. Bruce: Thanks for having me. It's just going to be a blast. This will be the first person I've done a podcast with that I actually knew before the podcast. James: Good, good, good. So let me just make sure I introduce Bruce properly. So Bruce owns like almost 940 units as a GP, he's the operator. He focuses a lot on Austin and San Antonio and he has done overall almost 1100 units. And how long have you been in the industry, Bruce? Bruce: Started my education in 2011. I bought my first 48 unit property as a syndicated deal back in 2012. James: Okay, awesome. So tell our audience before becoming a multifamily syndicator what were you doing? Bruce: Well, like we talked a little bit before we started here, I'm a college dropout. I'm the guy that did not thrive in a formal education environment. It was sucking the life out of me. So I dropped out of college, fell under retail because you know, I don't have a degree, there's not a whole lot open to me unless I want to start my own business. And back then, I had ideas but nothing formal. So I went into retail and I did that for 18 years. I quit working for other people at the age of 43 in 2000, I guess it was 13, I guess. Well, no, 2010, I think. And just started looking around and trying to figure out what to do with my life. I did a Google search to find somebody to help me invest in real estate because I didn't know how to do it. And I got very lucky and found a really good mentor. She helped me through the process on the first one, even a little bit on the second one. And you know, we've been off and running since. James: Got it. Got it. So, you have like almost 940 units. I mean, did you expect Covid-19 to happen and cost this recession? Bruce: Did I expect it? Of course, I expected it. Nobody saw this shit coming. This is that whole Black Swan thing, right? That Holy crap, this is probably going to make 2008/2009 look kind of small. I'm not worried, honestly, I'm not Chicken Little, I'm not a pessimist. I'm not a doom and gloom guy. I'm the eternal optimist. We're gonna make it through this without question. Things are a little dicey right now. What kind of collections are we going to have for the month of May? I'm not sure. People were worried in April, but April turned out to be pretty good. We averaged about 95 to 96% across our portfolio o we're fine. May, we're already starting to see a prepaid rents being made now. This is April 29th, right now, that we're recording this, but we're starting to see prepaid rents come in like we normally do. So I think we're going to be okay. James: Yeah, I mean, we were worried about April payment. Now we are going to May 1st week, right? I mean, next week I guess. Well, this week we are going to May 1st, so it's just crazy. So hopefully things doesn't change. And did you do anything different in your property that you have ensured that everybody's taken care of and was paying on time and you know, what did you do differently right now? Bruce: Yeah, just like you, I believe you have your own management company as well as we have our own management company too. So we're on the phone all the time with our staff, first and foremost, making sure everybody is healthy; both physically and mentally. I gotta make sure that we are the voice of call for our staff right now to make sure they don't get panicked. If they feel panic or concern coming from me as the leader of this thing, we're all doomed. So that's the thing. I'm an eternal optimist anyways, but I'm going way above and beyond to make sure that they feel we got this under control, guys. But you know, outside of, you know, making sure everybody's safe, we have closed all of our offices, you know, we're the whole touchless thing you're hearing about everywhere. We do self-guided tours. We've done virtual tours for leasing. We're still leasing, right? One of my properties, we've actually leased more in April than we did in March and that blew me away. We leased probably about 25 to 30% more in the month of April than we did March. So that was really surprising. James: That was surprising in one of our properties. We virtually list more than when they were in the office and we were joking, Hey maybe we don't need staff in the office Bruce: We haven't gone that far but... James: The prospects are running away because we do face to face, maybe we should do everything virtually. Bruce: Well, it's funny that we're rethinking a lot of things in this industry right now. What do we really, really need to do our jobs effectively? You know, just like all industries, all companies, you know, not so much for us, but companies that go to an office every day. How big an office do I really need, cause it looks like maybe my staff can truly work from home? So there will be things that change after we come out of this. So it'll be exciting. I think we're going to be better off for it. And a lot of people think, yeah, I'm a nut for saying stuff like that, I'm naive. I think we will be better off. It's going to take some time to get to that point but once we do fully recover, I firmly believe we're going to be better off as an industry, as a country, and as a world, honestly. James: Got it. Got it. So let's go down to the market and submarket and all that. Right? So why did you choose Austin and San Antonio? Bruce: I live in Austin. It was easy. My mentor taught me to buy something for your first deal that you can get to within an hour, hour and a half, maybe. And I thought, well, it's not much closer than 10 minutes down the road from my house. So I bought down the street from my house. James: And it's an awesome market by itself, Texas and [06:12 crosstalk]  Bruce: Austin's a little...well, I guess a lot of major cities are like this, but I live in a really nice part of town, but I'm only 10 minutes away from my properties, which are kind of a much more working-class area, we'll put it. But that's why we decided to buy here because it was a great market and it was right down the street. And then we branched out to San Antonio. Same thing. We can get to it within an hour and a half. My regionals can get back and forth easily. There are no worries there. So it's worked out very well. You know, we happen to be in one of the hottest parts of the country to buy and it happened to be my backyard. James: Yeah. Yeah. I was looking at the numbers published by CVRE talking about cities, which was performing very well before the Covid-19 and Austin is number one, so it's crazy out there. So what do you think the difference is between Austin and San Antonio? Bruce: Austin? I'm more profitable here, almost, always. San Antonio does well for us, but we're almost always more profitable in Austin. The pocket we've always bought in, in Austin is an incredible pocket. You know, I've got a studios going for over 900 bucks and it's in Rundberg and the Moore. If you Austin, that's by big city standards, it's not a dangerous neighborhood, but by Austin standards, it's one of our rougher neighborhoods. But I've got studios going for over 900 bucks. I've got three bedrooms. I'm the only one in the submarket that has a three bedroom but they leased for as high as 1749. So, we do better in Austin. We prefer Austin again cause we live here, but we have higher class properties down there. We have B plus properties in San Antonio. We've always had C to C plus properties in Austin, but they've been more profitable. James: Got it, got it. I mean you are similar to me, right? I mean we have our own vertically integrated company. But how did you structure your company in terms of staffing? Bruce: Well, first of all, and a lot of people don't understand this, especially people first getting into it. The management company owns the employees. And I hate to use the word own because that sounds, you know, like they're just animals or you know, they're just numbers. They're human beings that we love dearly but they do work for the management company. They do not work for the properties at all. So a couple of things there that now, I'm free to move people from property to property as I see fit. If they're owned by that property, that's one specific investor base. This is the same investors that invested in the other property down the street. So it gets a little weird moving salaries and people around for property to property but we don't have that problem this way.  And then secondly, with the PPP, the Payroll Protection Program that they rolled out that not many people that I know guys cause it all filled up with who's Chris hub. But what happened is a lot of people were told that, look, if you're a GP and that's your only exposure in multifamily, we're not going to support you with those PPP and this is an investment for you. Oh, but I have a management company so I have an actual functioning business on top of an investment so I get to submit for the PPB through my management company and I didn't have any problems. So that's the way we structure it and it works very well by having everybody under one umbrella too instead of spread over the properties. I have more employees in that one company so I can get better insurance rates as well.  James: Got it, got it. What about in terms of like you and the site management stuff? I mean one of the roles that you do, I think, I believe you have original, I'm not sure whether you have a VP of operations or not and then going down to the site staff, how did you structure it? How did you do your split off with roles and responsibilities? Bruce: So in the beginning, like all entrepreneurs, when you start a business, you got a new company. We wore every hat and my wife and I, every single hat and then we had the onsite staff. So we've never done the onsite work. We've always bought large enough to afford a onsite staff. But then as we started to grow, we started to bring in, we've got bookkeeping now in-house. We've got a regional manager in house. We have a director of operations, but not a director of operations, he's actually an operations manager. He's doing all the back-office work. He helps set up vendor contracts. He renegotiates vendor contracts that people are having issues. He works somewhat as our tech guy also. So that's the way we've laid it out.  And then Stephanie, my wife and I, we are basically the two people that provide direction, leadership, and vision and make sure our culture is exactly where we want it to be. So day to day, like boots on the ground, we don't do a lot of that anymore, but we're always involved every single day; digesting numbers, making decisions based on reports, walking properties, make sure everything looks right, making sure rehab projects are going as planned. But again, day to day operations, we don't do a whole lot of that anymore. James: So do you think that owning this own property management company is a good thing? Do you like it? Bruce: I actually love it, but as many people will tell you, and I know that you're thinking of this now or I shouldn't put words in your mouth. It's a bitch; it is. You're always dealing, you know, it's a transient industry, people are always quitting. You're always losing people. You're having to let people go, unfortunately, sometimes. So it's just this never-ending cycle of replacing people. But this is what I've done my whole life. In retail, I was always in a leadership position, so I'm used to hiring and firing and firing is not fun but sometimes you have to do it, but it's the hardest thing that we do, without question. The construction company is not that bad. It gets frustrating sometimes dealing with subcontractors and the asset management company, you know, that's pretty, pretty easy, relatively speaking. Yeah. It's the management company that's a pain in the butt sometimes. But I love my employees though, so I love having it. James: Yeah, it's a huge turnover, in the property management company and you are like hiring and firing. Sometimes we think we just keep on hiring and firing, you know, what else are we doing? So finding the right person is always the hardest. Bruce: Yeah. And finding the right person that even...so I just got word that one of my property managers, yesterday, late in the afternoon, sent an email to her regional manager and say, look, I'm giving my two-week notice. This woman is spectacular at her job. She runs an incredibly profitable property for us, but she's got some medical issues within her family; not her, her husband, her mother, and her father all have medical issues right now so she had no choice. First, I've got to go, I'm sorry. So, you know, even good people have things happen beyond their control and there's more turnover that we've got to deal with now. But it's fine, we'll get through it. James: Yeah, it's crazy out there. And what about underwriting? Do you get a lot of deals off-market or from brokers? I mean, before this, pre-Covid, we're not talking about Covid. Nothing is happening right now. Bruce: Right, right, right. I've gotten a few things sent to me off-market, but for the most part, all my deals have been fully marketed properties. You know, you're plugged in with the big brokerages in town. CVRE, ARA, HFF, JLL, those guys. So you know, usually they're fully marketed deals, but yeah, I do all my own underwriting. I'm a one-stop-shop. And I think that you and I were taught a similar process and there's nothing wrong with the way everybody else seems to be being taught today, but it's not the way I do it. You put 400,000 billion trillion people into your GP because nobody could raise 5 million bucks, but everybody can raise 12. So if everybody gets together a raised $12 an hour, first of all, you're going to paying yourself because you're probably doing this illegally. But secondly, you're giving away the whole pie. I want the pie for myself. You know, if I got a 20% promote and I carved it up amongst five or 10 people, all of us are getting that much. It's more work for me but I get the whole pie and I'm fully in control. So yeah, we do everything ourselves. James: Yeah. Nowadays, I see syndication being put up by like six people, seven people and sometimes 10 people, and there's more than 10, I've seen a lot. And there's no way 200 or 300 units, you need that many people to manage the assets. You probably need like one maximum two. And maybe the third, maybe the other half a person to do investor relationship. But that's like, I really want to say investor relationship person nowadays. Bruce: Right. Well, you make a good point though that you still only came up with three people because legally, right, you notice, they have to have a legitimate job in your general partnership. You know, how can you justify 10 different jobs for people? Do you get assigned these investors? You get assigned Mr. GP number two, the toilet rehab; how do you do that? Yeah. It's just too complicated. One at a time, build your own database and raise your own money. James: Yeah, it's crazy. It's crazy. So in terms of value, and I'm sure you do a lot of interior and exterior value add and all that. What are the most valuable value-adds you have seen between interior and exterior? Bruce: So I'll start with ROI, right? So the biggest return on investment project I've done to date is we kicked out everybody's favorite company, CSC, right? The company that would manage our laundry rooms for us, and they didn't manage anything. They put a little washer dryer in there, they barely came out to service it. They'd come out sometimes to collect and you sometimes get checks. They hold...it's just a nightmare. So I was at a month to month situation when I took over this asset, and about a year and a half in, I decided, you know what, we're going to buy our own units. And we spent $40-42,000, something like that, to buy our own units. We took our monthly laundry income up from 1,450 bucks a month, to $6,000 a month. My ROI is well over 100% and it improved the value of my property by about $900,000. So not everybody's in that situation because you get into those ironclad contracts that you buy from the seller that you bought it from, and you're stuck with that contract until it runs its course and those are 10 year contracts, almost always. So I just got lucky there. But that's been the most profitable one I've done so far. And everybody knows to have laundry on-site, but I think a lot of people are hesitant to do it themselves. It's really not that hard. James: Yeah, it's not that hard. I mean, yeah, if I can, I'll buy it myself; if I'm not under contract and I'll do it myself. And you are right. Actually that's one of the...in fact, it is the highest valuable value add because on one of my properties, we spent like 31,000, we're making like 2,500 per month. That's a lot of money. Right? And you're spending 38,000 and you get like millions of dollars in value increasing. Right. Bruce: Exactly. Yeah. It's incredible. James: And you're right. The company never come and service. It's hard to get. And they steal money as well sometimes. And they are hard to negotiate the contracts. Right? So why wouldn't we do that? So very interesting. So I want to talk about your book because you're going to be launching a book. Hopefully, I can align this podcast launch with the launch of your book. Let's talk about your book because a book is very hard to write and why not talk about it. Bruce: Okay, so this came up on another podcast that I'm working on getting booked onto and they're like, okay, help me understand it. You said you're a college dropout and you wrote a book. How the hell do you write? Look, I barely know how to use a library, but I know how to pay somebody that's really good at pulling information out of my brain, putting it in a book form. And now, I can go through and kind of red line and say, that's not the way I speak. So to be fair, I did use a ghostwriter and many people that write books, they use a ghostwriter. But that's what I did. I paid somebody a fair amount of money, I'll be honest, but it was a skill that I didn't possess. So I knew enough that it was something I couldn't do and I knew I had a book that I needed to get out. It was important for me to get this book out and so I reached out to some people to help me write it. And it's taken about nine to 12 months, but we're finally about to launch. The launch date is May 5th so things are going really well so far.  James: So you're doing a reveal the title of the book? Bruce: Am I allowed to cuss on your podcast?  James: Yeah, absolutely.  Bruce: It's syndicating is a bitch and other things you haven't been told.  James: Syndication is bitch and other things? Bruce: Yeah, 'Syndicating is a bitch and other truths you haven't been told.'  James: Wow, that's awesome. Yeah. That's something people think real estate is so easy, right? Syndicating real estate is so easy. Right? So can you talk about some of the most carriers stories from the book or you want to hold on to people?  Bruce: No, no. So I'll start by kind of say, I said I had to get this book out. Let me tell you why I wrote it and then we'll go into a couple of stories. You know, we've all been to real estate conferences and expos and two-day seminars and all this stuff. And the stuff that they're teaching from this stage, it's all legitimate stuff and these are good people teaching it and giving you basically a two-day sales pitch or you know, a sales pitch at an expo, whatever it is, they're almost always selling something to either try to sell their program, their education to you. And again, I firmly believe these are good people and they've got a good product, but you're only hearing for the most part. There are some out there that are exceptions, but you're only hearing the dog and pony show. You're only hearing about the rainbows and lollipops, the unicorns. I'm going to do this. And yesterday I'll be a billionaire.  Okay, that's not going to happen. This is hard. What we do is hard. You know, we make mistakes. Things that come up that we never saw coming, there's no way we could have known they were coming so things surprised us all the time. So I wanted to be the guy...again, let's think about the person pitching from the stage that they tell you the truth, the scary stories, the arson, the dead guy in your pool, losing 5 million of your investor's money. If they tell you that stuff, I'd say 50% of the people that would've signed up, would go, ooohhh, no. I don't want to do this. So it's not in their best interest to give you the story. Again, I don't believe they're lying, I think everything they're teaching is legitimate. But my book is pulling back the curtain to show this is every bit of the step in how to syndicate a deal. Everything. I laid everything out. You don't need a course but I want to tell you some scary stories along the way and we'll laugh together. I cussed a little bit in the book too, but I want people to understand, most people that I think they can do what we do and not that I'm brilliant, I'm not brilliant, I'm a college dropout, but most people shouldn't do it.  Most people don't have the intestinal fortitude to do this because it is very difficult. It's very stressful. There's a lot of work involved. But yeah, I just want them to know what they're getting into before they try to do this. Many people, I'm hoping, will read the book and go, okay, thank you for putting this in a book. I now know I don't want to do this.  James: I think you're going to just create more money raisers out there because most of the money raisers are raising money because they don't want to be an operator. Bruce: Right. James: Being an operator, you're absolutely right. It's a really, really hard job and nobody talks about it. Because most of the people who are taught, they are not even operators. They're more marketing arm off the operators. Right? Bruce: Yeah. And that's another reason I don't want somebody else raising money for me. I'll show you my deal, Mr. Money raiser but I don't know what you're out there saying on my behalf. Are you making weird promises that I can't back up? And yeah, so that's another reason I just don't like using them myself. James: Yeah. And that's why even in my book, Passive Investing in Commercial Real Estate, I talk about make sure the passive investor, whoever you're talking to, are they the backbone of the deal or not? The operators are the backbone, not the money raises. I mean there's nothing wrong about raising money for investment. You actually showing the parts to real estate investment but the passive investor needs to understand that they have to really understand who's behind the deal. And a lot of times people behind the deal are not really on the spotlight, they're somewhere far away. And a lot of times the money raiser doesn't even want to show them because they're worried that they go directly to that. Bruce: Right. And I've actually had some times, you know, I've had people say, yeah, I was going to invest in this deal, but then I asked the syndicator who the actual operator was and they, Oh, wait a minute, how do you not know? James: There are too many layers, I guess. Bruce: Exactly. They had no idea who they were raising money for. They were raising money because I get a cut, you know, which probably again is being done illegally if you don't know who you're pitching a deal on behalf of. So yeah, there's just such a mess out in the industry right now. James: You know, there's this concept called sub syndication now. That within a syndication, there's sub syndication and within the sub syndication, there are many layers in between. And yeah, I dunno. Bruce: Or they raise money as a syndication and then take that money that they syndicated to put it into a syndication. That's too complicated. There are too damn many layers. No thank you. You're a great guy. You're doing good by your investors, but I want no part of you raising money for me, just no. James: Yeah, that's different from fund to fund. Fund to fund is where even the fund, I mean this is probably the SEC lawyers can talk about it, but the fund itself will have PPM and there's another fund that has a PPM. Right. But that is different. I think that's legal, right? Bruce: Yeah. There are ways to do it legally without question, but I really feel many people aren't doing it legally. James: Yeah. Yeah. I'm not sure why people want to walk the gray line. I mean if you get caught, I mean you can be in very big trouble, right? Why do you want to walk the gray line? Why? Bruce: Well, the same reason Bernie made off existed. People make really bad decisions chasing dollars and I don't want to take time to build up the multiple thousands of people on a good, robust database of investors. I don't want to take the three to five years that that's going to take so I want to shortcut it by bringing in one of these other people in. And I don't really know much about them, but they said they could help me raise money for my deal. And it just, and then you got the people that are out there raising thinking, I don't have to do anything except just pitch somebody on a deal. That's my involvement. You know. So I hate to say these things cause it's kind of harsh, but because I know a lot of these guys that I think some of them it's just laziness and others, it's greed. James: Yeah. So who do you target? Who should be reading this book? Bruce: Basically. And that's important too. Cause I don't teach you how to invest in real estate. I'm assuming if you're trying to look into syndication, you're already investing in real estate. So I don't need to take the time to teach you how to invest in real estate. So somebody that's a single-family rental investor or maybe a flipper or maybe they bought some small apartment complexes themselves, somewhere between a five 12 maybe 24 units but they're not getting to the scale that they want to be able to hire staff or full-time staff or better quality staff so they're looking for a way to try to, you know, grow exponentially but safely. So it's those people, I think. It's the people that are already in it but they want to take it to the next level. Cause again, I'm not going to teach you how to do a spreadsheet. I'll do a proforma. There are other ways for me to teach you that but that's not what this book is about at all. James: So this book would basically tell you all the hard part of doing a syndication and is it just catered to multifamily or is it any other commercial...? Bruce: What I say in the book is and I probably stole this line from Jean Drawbridge, right? My attorney, my syndication attorney. But look, you can syndicate a Snickers bar. A syndication is basically just everybody pulling their money together to go make a purchase. That's it. Then you have a security definition and there's a word too, but syndication is we're just going to put our money together, go buy something. That's what a syndication is. So I do talk about that in the book, but I also say, but we are going to talk about multifamily syndication because that's my experience. But yeah, you can go out, most, I would guesstimate, I've seen stats about this, but I'm going to try to remember of all the major purchases in the nation, not in Austin, not at San Antonio, but in the nation, across every industry, almost every single one of them were done as a syndication. It's very rare that one person will put all the money in for a deal and buy it by themselves. Talking about us buying the Dallas Cowboys, you know, investing in a restaurant, anything, almost everything is a syndication. So yeah, you know, anybody can do this intellectually and if you can master the art of a syndication, then, again, you can syndicate anything but I'm talking to you about all the individual team players you need: your attorney, your real estate attorney, your syndication attorney, your bookkeeper, your management company, the broker, the mortgage broker. I tell you exactly who you need exactly when you need them, what you could expect to pay them. And then, I give you the whole rundown of your 60 to 75 day purchase.  What does that close process look like? I walk you through your due diligence period of 20 to 30 days, and then after due diligence, you're wrapping up your loan. I walk you through everything. So I want you to know how to do this yourself. You probably still need a mentor, honestly, because a book can only do so much, but at least I'm giving you the blueprint. James: And where is it available?  Bruce: It's going to be audible. It'll be Amazon. It'll be Barnes and Noble. It's going to be everywhere, everywhere books are sold.  James: So that's going to be on May 5th, right?  Bruce: May 5th James: Yeah. Are you the one who writes the book in audible? Bruce: No. I wanted to, but my ghostwriter said, Bruce, look, we'll do whatever you want. You're the client, but I'm telling you right now, do not do that because you've never done it. She said, you've got a good voice. You're a very good communicator, but you've never done this. It's going to take you forever to get through it because you're going to screw a lot of things up. You're going to get frustrated, you're going to get pissed. I know you. It's like, Oh, okay. So I had somebody else read it for me, but the next book or two, I hope to read my own book because again, I think I have an energy that somebody just reading it is not going to have, so I'm hoping to read my next book myself, but we'll see. James: Got it, got it. What is one advice that you would give to passive investors who are looking to invest in syndication? Bruce: Well, I tell them that, first of all, you're investing in a business. You're not buying into real estate. You're investing into a business that happens to buy real estate. That's it. Just like any business you ever invest in, things can go wrong, things will go wrong, and if you can't handle, maybe we have a hurricane or a tornado or a fire and I can't send out a distribution or Covid, I might not be able to send out a distribution for one, two, three, four quarters until I get an insurance check back in or Covid until the economy opens up. I might want to be able to send the distribution for a while. Long term, our trajectory will be up, but you know between now and then, we're going to do a little bit of this. And if you can't stomach that, if you're going to lose your mind, if I say I can't send you distribution this quarter, do not invest in this deal with us because no matter how hard we try, how good we are on the front end and due diligence, things are going to happen, things are going to come up. So if that's not you, then please be self-aware and don't invest.  James: Got it, got it. So let's go to a bit more personal side, right? Why do you do what you do?  Bruce: Why do I do what I do? First of all, I worked in retail for 18 years and that sucked. I thought it was fun until I realized, this really sucks.  James: You must be happy right now because retail has crashed.  Bruce: Retail is totally destroyed. Exactly. But it's fun. The biggest thing...I would say, the most fun I have is also the thing we talked about that's the hardest. It's working with the employees. It's watching them grow, watching, you know, developing them, being a leader to them, and then having. Part 2 James: Okay, go ahead.  Bruce: All right, so you asked, why do I do what I do? Again, it's for my staff. I like communicating with the staff and working with the staff, but also, you know, you always hear people talk about, you know, we're in the business of creating safe, clean, nice places for people to live. You know, we did a school supply drive at one of our lower-income properties for three years in a row before we sold it. And these are people that can barely afford to pay their rent, to be honest. Right? They barely make ends meet. And so, we decided we were going to buy all the kids - there were 87 kids on this 120 year property. Who knew it'd be that many, but we bought backpacks for all the little kids. We bought all their school supplies. We reached out to the schools to say, give me the school supply list for each grade at each of these schools. We provided all that for them, had them come into a vacant unit. They walked in the door, got some pizza. At the front, my daughter standing in the kitchen, handing out pizza, they walk to a table where my wife and our property manager was handing out the backpacks. Then they left that room and went into one of the bedrooms where my autistic adult daughter was in there. She was participating too and she was giving them their bag of supplies that they could now put in their backpack and they walked off. And it's that stuff that, you know, money's one thing, returns are another thing. It's really making a difference in somebody's life. And I know that sounds cheesy and kumbaya crap, but it's true. You know, I cry fairly often in this business because we do get to make a difference. Now some people, you could give them a free car and they bitch because they have to wash it or put gas in it. Give them a bright, shiny new puppy and they're pissed because they got to feed it now. So some people are just miserable people; they're just mean, they're mad. But most people really do appreciate when they can see that you are really in this with them and you care for them. And that's the real good part. James: Got it, got it. Yeah, it's definitely a fulfilling journey helping our residents and at the same time taking care of employees as well while providing returns to your investors. You are impacting multiple level of hierarchy there. And is there any proud moment in your career that you can never forget throughout your life? I mean, this moment I'll never forget it until I die. Bruce: You said proud. Now, do you mean with respect to a staff member or attendance or like a personal achievement?  James: Anything. Bruce: Well, selfishly, right, we've talked about school supply drive. That's probably the best thing we've ever done. That was my wife's idea. I owe her all the credit for that. It's phenomenal idea. But on a more selfish level, we were the rental owners of the year for Austin of 2016 for the national apartment association in 2017 and we were the Realty multifamily investors of the year for 2019 so that's been cool for me. Because they recognized those school supply drive things that we were doing so that's probably the coolest thing and the proudest part outside of just helping other human beings. James: Awesome. Awesome. All right, Bruce, why don't you tell our audience how to get hold of you Bruce: So you can go to the website if you're interested. I'm apt-guy.com. I'm basically the apartment guy. You can follow me on Instagram. That's the social media I try to stay the most active on it's apt.guy or Facebook,  the APT guy. If you're interested in the book, again, there'll be on the first page of the website. It'll tell you how to get it. Again, it launches May 5th. So yeah, that's the best way to get ahold of me and try to follow along with what we're doing. James: Awesome. So the book is going to be an Amazon, I guess, right? Absolutely. Bruce: Amazon. Audible. It will be at all bookstores too. James: Oh, cool. That's awesome. All right, Bruce, thanks for coming. I'm sure everybody got tons and tons of value out of your knowledge bombs out there. Bruce: Oh, dude, I really appreciate it. Again, it was fun to do one with somebody I knew personally. James: All right. Bye. Bruce: Alright, buddy.    

James: Hey, audience and listeners, this is James Kandasamy from Achieved Wealth Through Value Add Real Estate Investing Podcasts. Today I have Jeremy Cyrier from Boston. Jeremy is one of my mentors, you know, I'm happy to have him here to talk about commercial real estate and Jeremy has been focusing on taxes and a lot of markets out of North East U.S like Rhode Island and you know Massachusetts and of course Texas and he have done a lot of bills, you know, I think he used to syndicate and now he's also investing as a passive investor and he focuses a lot on multifamily medical office buildings, retail and also office.  Hey, Jeremy, welcome to the show.  Jeremy: Hey thanks, James.  James: So, what's happening? I mean with all this covid 19, I know you're not in New York, but you're in Boston, which is, you know, almost near to epicenter there. I mean, what's happening with you personally and the commercial real estate business right now?  Jeremy:  That's a great question, we're all healthy, we’re home. I've got four kids, eight and under and it's a little crazy, but we're feeling just frankly blessed at this time to have a moment of pause in our lives to focus on the basics together. I think, you know, amidst all the tragedy that's unfolding around us, that's actually a blessing.  James: Yeah. Sometimes you know, you have to look for positive things in a, you know, whatever situation that we are in right now. Right? So tell me, I mean, about what are you seeing right now in the commercial real estate space? What was happening in February before this whole covid 19 and now we are in the middle of it. This is like almost in April, mid April to, you know, towards the end of April. What are you seeing right now that has completely caught your attention and create that "aha" moment for you?  Jeremy: Well, I'll tell you the interesting thing is we've been over the last three or so years saying, well, when's the recession coming? And we were looking for it, we're looking for leading indicators of a recession and here it is, it's upon us and it's more of a black swan event than really any of us would have expected to have happened to such a point where I've been talking to people about this being similar to our country being invaded and the government shutting down our economy is a defense mechanism. So, that's a pretty fascinating set of circumstances for us to be operating within right now in any business, let alone the commercial real estate space.  James: So do you see a lot of transaction has died down right now from what you were doing two months ago and  Jeremy: Yeah, so the, one of the things I do is I track data, so I live outside of the Boston market. I track that data very closely to see what the volumes look like and I'll tell you the 2020 Q1 data was up 75% in terms of sales volume over Q1 of 19 and so it was a very healthy start to the year but as soon as you go and you shut down the economy, all the volatility comes into the market and buyers start to pull back, lenders try to figure out what to do, who to lend to, how to lend and then you've got sellers pulling back saying, am I exposed here? Is this a dangerous time for me to be selling my property?  So, I'd say the first month of this event was really characterized by people trying to figure out what's going on, what's happening and this last month it's being characterized with more intentionality. Okay, here's what I'd like to see happen in three months, six months, nine months, twelve months. So the discussions are moving forward to a, I'm going to stop focusing on the hourly new cycle and I can see more of a two to three day new cycle and within that environment I can start to think strategically about what's next for me.  James: Got it. So do you see, so you're saying sellers are starting to look at more strategically, so, I know some people were talking about V-shape versus U-shape and I think some of the V would have changed to U right now, right? I don't know where the Nike swish. Right. So where do you think we are heading from March, 2020 you know?  Jeremy: Yeah. What's the letter of the alphabet are we going to see? You know, I listened to a great webinar, which was done with KC Conway and Eddie Blanton, Eddie's the president of the CCIM Institute. KC is the chief economist, they got on a webinar and I think you can see this; you can catch on YouTube and KC got on and he talked about the letters and he goes through the different shapes. Some of them I'd never heard of before, but they, like, what happens when you have a fiat currency recession, it's a Q, I guess but he said, you know, if early on we were hoping for a V he thinks it's going to be a W and I think he's right, I think the W is, we go through an initial dip, we have a recession now.  We start to rebound and recover, in the summer, people start to get outside and start to circulate and you know, return the flow of capital but we go back into a secondary recession in the fall driven by two primary things. One a concern over covid, you know, spiking again and the second being the, all the bad news that accumulated from March through September that shows up and we see a secondary recession as a result of what's happening right now. He said it's probably, and I think he's right, we probably don't start to see the volatility come out of the market until this time next year, 2021 and it's just going to be a matter of writing this, you know, writing things out the best we can in 2020  James: So, when you talk about the second V, right, I mean, I think first of the V and after that is another V which is coming in, which makes it a W? Right?  So are you saying the, from your perspective, do you think the second lowest point will be lower than the first low point or will be higher than the  Jeremy: I don't know but I know those low points take a lot of pain and they dish it out and so in our business, in commercial real estate investing, is it, people have been asking me: Okay, so when one of the deals are going to show up, you know, where are all these distressed sellers? Well, it takes time. Right?  James: What kind of time, why do you think we need to take time? Jeremy: Well, if you look back historically when we go through, we've gone through recessions and they happen just about every 10 years in the last four years. This one was a longer cycle than we'd seen.  So typically you see expansion kickoff and the third year of a decade, you see a transition year in the eighth year of the decade we go into a recession, then we come back up and out. This one didn't happen that way. I think it's because the Obama administration didn't push the FDIC to recycle assets like we'd seen in prior recessions, which extended the recovery period, it took longer to recover and expand in this last cycle, so as a result of that, the cycle lasted longer. I think it just was a longer period of protracted growth. So we have, you know, in the time frame of how things tend to play out, on the inside, you might see real estate deals two quarters after a Dow correction, but typically I see like a fourth to six quarter lag off the Dow.  And there's a reason for that, if you follow the money, so start with the Dow. What is the Dow? The Dow is a highly liquid market people are trading on nanoseconds and they're trading based on projections and perceptions. So from their companies, their shares are devalued, they, report, you know, revenue, they have revenues coming in lower, their earnings are lower, they start adjusting their P and L's, they lay off people. Okay, so unemployment comes up. Then they start to look at their real estate and they say, well, we need to reduce our exposure of real estate, we're not demanding as much square footage. Let's give some back. That goes back to the landlords. The landlords get the space back, they rent it for less or they can't rent it. They burn through cash?  Then they go to the bank and they say, hey bank, I'm having some issues. Bank says, okay, well let's work with you for a little while and see if you can get through it. That takes another three or six months before ultimately hits the point where the bank says you have to get out of the asset, we've got to take it. So, it's a slower moving asset class. That's one of the reasons why people like it. I mean, when you're buying, you want it to happen now you want it to be fast, but when you own this, it has less volatility than the stock market does and that's one of the reasons why people get excited about building durable wealth in the space.  James: Really interesting. So, I just want to touch back on what you mentioned just now. So you said during the Obama administration, the 2008 crisis, you said FDIC did not recycle assets as quickly as you know. So can you clarify that because that's completely new and I never learn about that. Jeremy: So, if you look back at the savings and loan crisis, this was back in the late eighties, the tax reform act. What happened was depreciation schedules were changed on how real estate was owned and written off. The tax world had distorted real estate evaluations, that combined with the junk bond industry and banks investing in junk bonds, chasing yield, okay, to make money. So, those two things together broke down the system and what happened was banks, the FDIC went into banks and said, we've got a lot of, your balance sheets are a mess, your ratios are out of alignment, we want you to call your notes and recapitalize. So, banks actually started calling owners up and saying, you have to pay us in 30, 60, 90 days. Pay off your mortgage. Well, okay, but when all the banks are doing the same thing, there's a problem. So owners were foreclosed on, they dropped their prices to liquidate their buildings. They filed bankruptcy and all this real estate ended up coming onto the bank balance sheets and the FDIC came in and said, okay, well now we're going to set up a corporation called the resolution trust corporation to liquidate all this stuff, flush it out. Okay? Establish the market bottom and then we'll come out of it. So, in 08', a lot of people were thinking that was what we were going to see. We had finance and demand induced recession and so we expected to see real estate defaults go back to the banks.  The banks would take the properties over, the FDIC would come in and say, push the stuff back out on the street, market down, recapitalize, and then we'll get back to business, they didn't do that. Instead what they did was they came in, they closed the really sick banks and they, a lot of them were set up as M and A deals. So they had other banks buy out the sick banks to dilute the balance sheets and then clear off the sick real estate. But what they ended up doing was they did a lot of forbearance agreements and they extended loan terms so that they could keep the owners operating the assets even through all the pain of the recession. So as a result of that, we never saw a real mark down or mark to market on all those properties. They weren't quote and quote recycled.  So if the idea was to keep all the real estate and everyone's in all the owner's hands, you saw fewer deals on the buy side and you just saw these owners just barely making it, holding onto these things, waiting for the economy to start to pick back up and for demand to come back into the space so they could recover the valuations and ultimately refinance the bank off the asset or sell the asset and recover or just break even on it. That takes a little while to do that. So I think that's one of the reasons why we saw this sort of longer cycle this time. I mean, a lot of people were looking at Trump's administration and his policies for continuation of this. I do think that was part of it but I think what we really had was, we had a long recovery and it took us until 2013 to really jump into an expansion phase from 08' but it wasn't like a jump, you know, it, it was kind of a slog to get there.  James: Yeah. You can see 2013 onwards and other property, the caplets not comprising a lot more compared to, you know, from 2008 to 2012 right.  Jeremy:  Yes. James: So do you think that's gonna happen in this market cycle where somewhere there's going to be, you know, FDIC going to come and do inaudible15:42  Jeremy: I don't, I kind of think that's not going to happen because if you follow the logic here with me. So country gets invaded, government shuts down the economy. People are forced out of business. Landlords default on mortgages. Banks have to foreclose on property. FDIC makes them and says; now you got to recycle the buildings. So if I'm the owner of the building that went through that whole horrendous experience, I'm looking at the government going, “Well, wait a second, you shut down the economy and now you're telling the bank to take my building away. How can you do that?” So I'm not sure that's the outlet on this one, I think the outlet's probably going to be just a market and it's going to be buyer demand and what buyers are willing to pay but it's going to be driven by two things over the next couple of years. One is who your tenant is, their stability and their durability to pay rent and number two, the lending resources that you have available.  My concern about this situation we're in is banks freezing lending, to attempt to reduce their exposure to the degradation of net operating income? That's a concern because they take the debt liquidity out of the market, when that happens, that slows transaction velocity down considerably and that will bring pricing down and that's, you know, if you're buying and that's the time to buy, when money's hard to get, when it's easy to buy and money's hard to get. James: Would you still be you have a challenge in terms of lending, right? The terms may not be as favorable during the peak tomorrow. Jeremy: But it's interesting, I think the lenders, when we go through recessions, they get picky about who they lend to, having relationships with your lenders is critical so your local banks are extremely valuable. They want to know that they've got strong hands operating these assets and using the money correctly. So those are elements to be very focused on in maintaining those relationships. It's the national banks that concerned me with inaudible18:30, so working on a deal last week and well as Fargo said, well, we're not doing it, we're not doing the deal, we're not lending period. Just shut it off.  James: Yeah. Except for multifamily, I presume all of the asset classes, like very less in terms of landing multifamily. I know Fannie and Freddie still doing it even though they have additional visa requirement, which is good for multifamily, but I think it's just hard to do any deals anyway right now because no one knows what's the price. Jeremy: What's the price? James: And no one knows what the cap rate, I definitely know Capita has expanded, right? Definitely not compressed as they, from what, two months ago but how much it has expanded, right? And who's going to take the risk of, what are they buying? Right? No one knows.  Jeremy: You get back to good old fashioned cash flow and I always tell people, there's always a market for cash flow in any market cycle, there's a market for cash flow. So the key is figuring out who the tenants are and in multifamily, where do they work? It amazes me when I talked to multifamily investors about their properties, I asked them, when your tenants fill out credit apps, you know, our rental application, you get their place of business, wherever they work, you should be cataloging every single employment center in your portfolio and finding out which industry sector they're in because you could, I mean for all you know, you might have 60% of your tenants working in the cruise industry. You just don't know, you know? So having an idea of what your economic footprint is by income diversity in your multifamily properties is really valuable information to have.  James: Yeah. Even multifamily near to airports, right? Where there's a lot of workers from airports and the airports are shut down, right? So that can be a bigger issue as well in terms of demographic, right? So yeah, we never really looked at it because, you know, but I recently looked at, it looks like we have really good diversified in my portfolio, but I don't think so many multifamily bias have done, you know, demographic analysis until now, recently, right?  Jeremy: Yeah, it's good to do.  James: Now, it's like, okay, you better know who are your dynamics.  Jeremy: Yeah, you want to know who is paying rent. So I have a question for you.  James: Sure. Jeremy: Okay, so multifamily deal making, where the deals are, where are they going to be. One of the things that KC Conway mentioned on his webinar that fascinated me was he said he expects to see hotels converted into multifamily housing and he also said, we may even see cruise ships become multifamily housing.  James: I just heard recently, I mean in fact, this morning I was listening to a podcast, by Robert Kiyosaki and Ken McElroy, who are talking about 10 years ago, someone was pitching this idea, let's convert the cruise ship into a moving condos and sell the condos as an apartment. I mean, if you heard about that, I was like, wow, really? Maybe that's coming back.  Jeremy:  It may, these crew lines they're going to have surplus cruise ships, aren't they?  James: Yeah, absolutely. Jeremy: I don't imagine demand will drop off for a considerable period of time and hotels.  James: Yeah. So let's go back to the tenant demographic analysis and the economy. Right? So, looking at what happened 2008, we did some kind of a benchmark with what happened then and what happened now but what happened now is basically the service industry and the people who want a paycheck, you know, paycheck to paycheck, right?  People are living paycheck to paycheck, they are the biggest impacted because everything stopped, right? So the people who have higher pay, who are basically living in A class or you know who are working on a normal, you know, highly paid job, they are working from home, they didn't lose their job, right? So, this is my thinking, right? My thinking is just like, yeah, I mean people, once everything opens back up, you know, the paycheck to paycheck is going to go back to work, right? But there's also going to be a global economy slow down because now this virus has impacted almost every country, right? The whole economy, the whole global economy is gonna slow down. So, my thinking is, you wanna multifamily class B and C, you know, where people are living paycheck to paycheck, they're going to go back to work and they might be a quick recovery, but people want class A, who are, you know, who are working from home, the company is going to have impact, right? That's where the Dow is going to have impact cause now your corporate profits going to come down because now you have a global economy slow down, right? So, I think even though now you're saying this is just my thinking, maybe we can just, you can figure it out whether you're thinking of the same, the class B and C is gonna is getting impacted right now. Class A not so much, but it's going to swamp later on, maybe in the second part of the W right? Or the V in the second.  Jeremy: Well it's starting already. If you look at, office work and employment and you read the news, you're going to see that companies that didn't lay off office workers are reducing their salaries.  James: Okay. Jeremy: And you're hearing about owners saying, you know, the owner of the company saying, okay, I'm going to waive my salary, everybody in the organization is going to take 10, 20, 30% pay cut with a floor, you know, not to be no less than. So following that logic, you're taking all that money out of circulation and it's not being spent, of course that slows things down so the question is how long you, you definitely have a slowdown, that's, inevitable but the second piece is how long those people stay employed? And are they able to get through this and operate at a level that with those cuts they can sustain operations and then start to pick back up when spending returns and it's going to be incrementally returning.  It's not, it doesn't just, this won't be a light switch so we're talking about W's and then I talk about it's a dimmer switch, you know the dials so you go and you can flip the switch in the room and the lights come on, but there's the round dial, you kind of push the knob and then you can adjust the, I think we're going to be doing that for a little while, turning the lights up, turning them back down, turning them back up and it's going to be partially in response to people hearing about hotspots or breakouts of covid until we have a situation where majority of the population has been exposed and we've processed the virus or we have a vaccine to manage the virus.  James: Yeah but this is going beyond the virus, right? So, I mean maybe the vaccine is already up in the next, you know, eight months or one year. I'm sure people are saying one to one and a half, but I'm sure the administration is going to cut a lot of red tape too, you know, well that.  Jeremy: Hey, they built a nuclear bomb pretty fast, right? They had to. James: Yeah because you know, during these times, everything is all hands on deck, right? So all the processes get thrown away or you know, there need to be some kind of leadership happening there but I think it's happening, but I just think the second order effect right on the overall slow down on the job losses on how the world is going to change. Right? And how it's going to impact commercial real estate. So, well, what do you think would be impacting a commercial real estate? Let's say, you know, you have experience in office, multifamily, retail. So let's go to each asset class and see, you know, what do you see it?  Jeremy: All right, retail, very, you know significant damage to retail. Okay? I mean, department stores are pretty much talking about the end of their era here this may be an extinction event for the department store.   James: So do you think if today we have a vaccine, what would the impact be if you already have a vaccine?   Jeremy:  If we had a vaccine, for the department stores? James: Yeah, for the department store for the retail industry. Jeremy: I don't know that they really cut, they survive longer, but this is devastating for them when Walmart, Target, Costco and Amazon are seeing 25 to 35% revenue growth, all that money is flowing, you know, flowing in different directions than Macy's and Lord and Taylor and Nordstrom's.  So the department stores are definitely, they were weak coming into this, this is terrible for them. General retail, you know, I think quick service restaurants like with drive-thru's come back very quickly, the drive thru is kind of an ideal service model for this environment where we'll be going through and coming out of and the cost hits a point, it's a low cost dinner, you know, dinner for the family, to go to Chick-fil-A, you know, and grab, you know, feed the family for 50 bucks. So quick service comes back quickly, I think some of the other sectors where we've got, you know, experiences, you know, it's interesting, services and experiences were really kind of the bellwether in this e-com impact on retail real estate but they're getting hammered and so you're going to have some service and experience spaces return, they'll reemerge from this and the weaker ones, they just won't make it back. They won't make it back, so it's, I think in restaurants, full service restaurants, maybe half of them come back from this. It's just going to be very difficult to reopen all those.  James: But don't you think someone is definitely going to buy that space? Somebody else that have the same vision as the previous owner. I mean, maybe the original owner is no more there, 50% have gone right because they kinda lost it. Jeremy: You're going to see new operators come in and it's, that's, look restaurant, full service restaurants, they can be recycled and you're going to have operators say, well we, you know, we made it through, let's open another location cause it's on sale. We can get the equipment and refurnish it and open and go. So there'll be opportunity there for new operators.  James: So the industry is not going away, it's just the operators are disappearing.  Jeremy: The operators that disappear, it's a slow recovery for them. It's a difficult recovery and the real estate; there will be some good restaurant real estate that will become available. It will happen. Okay, so I know retail, that's sort of my take on it. I wish I did. James: Are you seeing a lot of distressed sellers right now. I mean are you doing a lot of transactions right now?  Jeremy: No, not right now. I think it's early.  James: Yeah, I think it's still early. I think people are just riding through their cash flow. Just walk up and watching and nobody knows what's the price and nobody, not many people are distressed.  Jeremy:  Yeah. Multifamily, I agree with you, if you segment by class ABC, you look at the populations that are renting from those units. The A-class seemed to be more insulated because they tend to be professional, high-income office working  James: Those that work from home as well, right? Jeremy: Yep. The B's and C's tend to be more service level and they've got a lot more exposure in this environment. So, you know, they get laid off quickly, but they get rehired first because they're lower cost, the office workers, they get hit later and they, you know, they're slower to come back. I mean, what's that rule of thumb, if you've got, for every $10,000 in salary, it takes you a month to replace, to find a new job. James: This new ratio. Jeremy: I know this new ratio if it's true, but I've heard that. So the bigger question that I've got on multi-family is the suburban versus urban, we've been in an urban cycle the last 10 years.  James:Yes. Jeremy: And I've been. James: Explain that a bit, what do you mean by urban cycle? Is it people building more multifamily in the urban areas?  Jeremy: Yeah, it's the live, work, play, lifestyle, millennial, you know, millennials and baby boomers wanting to live in the city near where they work, walkability people that live in rich environments. There was a quote that I was reading today from Goldman Sachs and they're saying, they're expecting a flight of millennials to the suburbs from urban markets and it makes sense.  What does this suburb offer? Less density, more value for what you rent, you know, you may be working from home more so they may be making decisions about, well I could have done a one bed but I have to get two bed cause I need a home office, that's a consideration to take into or keep in mind and then there's just the overall comfort of, hey, you know, I don't want to be in downtown New York right now. That's not a good place to be, I want to get out to the burbs and just have some more space. So I think the idea of urban versus suburban is it's going to be a big topic here over the next four or five, six years.  James: Got it. So I think that's very prevalent in where you are, but you also buy in Texas, right? I mean, from what I see in Texas, everything is a suburban mid-rise apartment, not in style apartment. So I mean there is very people I know who buy apartments near downtown, even though they [33:34unclear]  Jeremy: Sure James: It could be depends on which market you're talking about.  Jeremy: Yeah, I agree with you on that. In Northeast, we have a very clear urban, suburban experience. You know, Texas, you guys just keep building rings.  James: Yeah, we have a lot of land here, right? So everything is garden style and [33:58unclear]  Jeremy: Yeah, as long as you got the water.  James: Yeah but there could be like tertiary market where it could be more interesting. I'm not sure it would be less density or not, I mean everything seems to be less density for me in Texas just because we have a lot of land here, you know, people move around pretty well, everybody, I guess so. Jeremy: Yeah, you got a lot of roadway.  James: Yeah. Could that also mean that there's a lot more investment coming from the coastal city to places like Texas or Florida or where  Jeremy: It could mean that, yeah. What's interesting about the last cycle nationally, the suburbs have been kind of out of fashion. So, it didn't have the same run up in value that the urban markets did so I started to see that the last couple of years where investors were starting to look at suburban markets and say, well, I can still get some yield there, so I'm going to go invest in the suburbs. This is now going to really bring that conversation to the forefront.  James: Yeah, I think that's why I like places where you are like Boston is called like gateway cities versus you know, places like where I inaudible35:17. Jeremy: Yeah. James: Suburban market, I would say so. Jeremy: Yeah. So industrial, I'm still bullish on industrial. I think we'll see some dislocation in distribution and port industrial, I don't know what the future looks like with China. I mean we import a lot from China through Long Beach and it goes to the inland empire and I think we're going to see some of that shift to other port markets as we start importing from other parts of the world but overall with consumer behavior shifting, it had already started before this. If there's been anything that's going to accelerate the demand for industrial spaces, it's this because you're going to have ghost kitchens, you know, restaurants that basically just, they're like catering kitchens that they just run full time, they have no seating and they deliver food, you know, basically meal prep. You're going to have more demand for online consumption and distribution and shopping, that's going to put more pressure on existing in industrial inventory, I sort of thought the industrial market was peaking in the last couple of years, but that may not be the case, there may still be some runway in that market.  James: So when you're talking about industrials, basically, warehouses where, you know, products made and distributed, I would say, right? I mean, I can see that with more manufacturing going to be coming in house right now, I mean, with all this, that's one shift that's going to be permanent.  Jeremy: Yeah.  James: Everybody knows that, right? So, do you think industrial would be the asset class that most beneficial from that? I mean, because I'm looking it’s going to be a lot more manufacturing factories coming here; I just don't know which assets.  Jeremy: Yeah and that's really, I mean, if you remember doing 102 in CCIM and we talked about basic employment. James: Yes, absolutely.  Jeremy: As soon as you start to see manufacturing coming back into the United States, that's going to be really good thing for our economy.  James: Correct.  Jeremy: It's going to really boost multifamily, a lot and it will help retail and it'll help office but you know, it's really a value, it's a power source, it's an economic engine for importing money into economies, local economies. So, I think industrial overall in terms of, if you're on the buy side, it's like you want to be really careful about industrial exposure to China, but the rest of the industrial story I think it's going to be a good place to be, I think it's going to be a good asset to own.  James: So, is industrial equaling to manufacturing factories.  Jeremy: Yeah, so manufacturing, flex R&D, so that's research and development, Warehousing, distribution, bulk storage, cold food storage. Just there, you're going to see that stuff cranking.  James: Cold food storage  Jeremy:Yeah, cold food storage. James: This is not the same storage that we are talking about now? Jeremy: No, we're talking about like freezer facilities that type of thing, yeah. James: Why is that? Jeremy: It's because people are going to be continuing to demand home delivery of food and you got to store it somewhere.  James: Well, I never seen one when I drive around, so I don't know.  Jeremy: Kinda funny looking, you know, if you, sometimes on the outside they're a little funny look.  James: Now, it's going to be looking nicer because it makes more money. So how do I position myself or anybody else listening? Let's say if I want to take advantage of this manufacturing coming in house right now. I mean, how would a commercial real estate investor should be able to position?  Jeremy: It's a good question. So you want to, you know, the main thing about manufacturing is you want to find buildings that have good characteristics for an efficient manufacturing operation. So grade level, you know, Celeste slab on grade buildings with ceiling heights in them that are preferably 16, 18 feet or higher, that have good loading access, you can get a truck, tractor trailer, multiple tractor trailers in and around the building to access it, plentiful parking for labor so typically you're gonna see, you know, one parking space per 800 square feet is kind of the building code standard for manufacturing warehouse but depending, you know, power supply, how do you have enough power coming into the property and utility services.  So you could probably, you know, you're probably going to be able to find some outlier properties that you can bring into that market and you know, convert over and, I mean, the other thing is you might want to be looking at retail and converting that to distribution, zoning is restrictive for that because typically municipalities don't like to see industrial uses in retail locations but you may end up seeing big box or department store or retail buildings that have those characteristics of what I just described cause a lot of them do being converted to that use, it could be manufacturing or it could even be distribution.  James: So which market should we be looking at to position ourselves for this kind of industrial asset class?  Jeremy: I think you can look at pretty much any market in the U.S, I think this is not a specific market, now if I, you know, I think you do this, you to follow that formula in any market in the U.S now if you want to do a, let's look at the demographics and the economic drivers in a market. You want to look for population growth, employment growth, that it's, you know, if there are more people move in there and live in there and it's growing, that's a good thing because people demand space.   James: Yeah. Well I mean the other way to look at it also is like, if there's already a manufacturing hub in that city or state, you know, that could be a good expansion place, right, if you find some assets around it. I guess  Jeremy: It could be, the other thing you're going to see are companies trying to find manufacturing redundancy. So if they've got a facility that goes down in their location, they can continue supplying from an alternate, which is, it's really interesting cause it's sort of contrary to what Gordon Gekko would tell us to do, right? Build shareholder value, become more efficient and be more profitable, do things faster and increase volume and the way you do that as you bring everything into one location and make it as streamlined as possible but now we're looking at a situation where, and this has been going on in manufacturing for a little while, customers demand redundancy because if there's an event or a disruption to a location, they want to make sure that they still have a continuity of supply chain.  And so they're getting what they need so that's even more important now than it ever was. So we'll see some of that. So I think you gotta kind of get into that world and talk to people and find out you know who's looking at bringing things home who isn't, and then start to think about the properties that they could be using and you might even have the opportunity to go out and pick up some land and put something on the land for someone.  James: Yeah. And I'm sure there's going to be some kind of government incentive to do that, right? Because now the government wants lot more manufacturing.  Jeremy: So I think so. Yeah. So office. James: Yeah, let’s go to office. Jeremy: You working from home, if you had a choice today to go to the office or work from home, which would you prefer? Is the question and I got to imagine a lot of people are saying, I'd love to get back to the office. I miss talking to people, socializing that's missed and I think the home office thing is great, but boy, when it's home officing and schools are shut down, it's really hard.  James: That's a good point.  Jeremy: This sort of experiment is, you know, forced home officing can companies do it? We've got a variable that shouldn't be there and that is the kids, the kids should be in school. But it's, I think people go back to the offices, but they, you know, offices may end up seeing a similar thought, which is, hey, instead of piling everybody on the train or getting their buddy into the center of the city to work, maybe we need to have a smaller office in the center of the city and then have some suburban offices, spread people out, improve their commutability and create redundancy in our workforce.  You know, with people being closer to their smaller offices. So I think that, I'm hearing that a little bit in the market now with people I talk to, I think that's something to keep an eye on that. So again, I kinda like the suburbs, I think there's an opportunity in the suburbs and office may actually be a suburban opportunity here.  James: Got it. So what you're saying is people are just going to go back to office. I mean, it's not going to die.  Jeremy: I don't think it dies. No. I mean if anything, you know, we've gone from, in the office space, I mean you see these offices where people are like in their benching and I mean I went into an office building and people were waiting in line to get in the bathroom, in an office building and the reason is that the building was built for more or less one employee for every 300 square feet and when companies come in and they go, we're going to be more efficient, we're going to get 1 employee in for 135 square feet, all of a sudden the bathrooms are overloaded, the parking is overloaded and that the buildings, it's too dense. The amount of people in there, it's not designed to carry that density. We'll throw a pandemic in the mix and the idea is for us to be six feet together in this world we're in right now. Maybe we're going to see that, you know, that office demand change where you know, I want to be able to shut my door to an office, I don't want to be at an open bench next to my colleague sneezing on my keyboard, you know, so that, I think we would go back to the office.  It's important, the nature of the office is to bring us together and for us to work and collaborate, share ideas, but also to have deep work time, need to be able to do deep work and we need to go somewhere to do that. So maybe it's not about packing as many people in and forcing them to assemble and work together rather spreading them back out a bit, providing some, you know, some work from home, some work from the office days, maybe your home two days, three days in the office. So I, this is a fluid one, but I think we go back to offices. I think it's how we do work. We can do it this way, you know, we can talk to each other, but it's not as fast in my opinion, information slower than it is in person.  James: Oh yeah, absolutely. Yeah, I was talking to a doctor, Glenn Mueller, right? So I'm sure you know him, right? This was like two months ago when we're looking at all of the asset class and office was the opportunity it was going from, into the expansion cycle. Right? So, and I asked him the same question, what about people working from home? He said, well, you know, humans are social creatures, you know, they like to be together, right? And you're absolutely right about communication and deep work and all that, just so hard to do working from home. Right? So I think people are going to go back to the office, especially after the vaccines is [48:47unclear] right?  Jeremy: Yeah, I will make this prediction. So just like after 9/11, the U S government moved in security and defense. This is a healthcare crisis; I think the next decade will be a healthcare decade. We tend as people, we tend to overcompensate for a trauma that we just experienced so that we never have to feel it again and so I think we're going to see when we rebound from this, healthcare will come back very quickly because there'll be such a backlog of demand for everybody else who's not suffering from Covid but has a knee replacement or you know, an oncology treatment and everything, they're going to be there, they need to get in for services but we're going to have a situation where healthcare is going to be at the forefront of government decision-making, investment and in development of protective and planned responses to anything like this coming again. So I see that space is a very fascinating space to watch and get involved in as you see us start to come out of this and these discussions come to the forefront.  James: So how should we prepare for that opportunity too?  Jeremy: Well, it centers around the hospitals and if you follow a hospital strategy, they've been merging with each other to become more efficient as they struggle to operate profitably in a very narrow margin environment and one of the things they've done is they've expanded by going out into retail locations and creating outpatient and urgent care services that essentially become a feeder for the hospital. So I expect to see more of that because that's a lower cost way for hospitals to expand. Hospitals are very expensive and they tend to be constrained geographically because of where they were cited. You don't see a lot of just new hospitals being built around the country. They tend to have additions put on them. So as a result they expand out into multiple locations that become more like a hub and spoke model. So I'd be looking at anything in the healthcare space in the next several years. I think it's just going to be really good place to be.  James: So are you talking about like medical offices or you're talking about labs or life sciences Jeremy: Medical office, yes, I can't really comment on life science, I don't follow it very closely, it's so specialized, but I probably should know more being out of Boston cause it's just a center for it, I hear about all the time. I just kind of go,"...oh yeah, labs, ugh"  But, that I, anything with healthcare, I'm loving it in the next several years.  James: But even on medical offices, I mean, the tenants have a long lease terms, right? I mean, how would that increase the valuation of the property as a real estate investor? One is, we look at the cash flow, the other thing we want to look at value increase as well. Jeremy: Well, there's, it's durability, yeah, that's one of the great things that medical office offers you is 90% and higher renewal probability rate. The you know, historically it's been a recession, quote and quote proof, investment class, not this time. I mean, I was looking at data last week 42,000 healthcare professionals lost their jobs, were laid off. I mean, you go, what, no way.  James: Why is that?  Jeremy: Why is that? Because hospitals aren't allowing for elective procedures, urgent care only. So they're laying people off, it's a fiscal nightmare for the healthcare system right now. So they, that's short term, okay? There was the version, what is it, version three of the P we're on now that just came out and there's billions of dollars going to the healthcare system, which is a good thing.  James: Got it.  Jeremy: Good thing. So short term healthcare is volatile that may be the opportunity to pick up some property, I think that over the next decade it's going to be a wealth builder.  James: Okay, so you mentioned about some of the healthcare which is located in the retail centers and all of that become like a hub and spoke model. So that's like single tenant healthcare, right? Compared to a multi-tenant. Jeremy: It could be single tenant, could be multitenant. You might have a medical office building with four practices in it. Sure. Yeah.  James: Got it.  Jeremy: Yeah, I think those are really good investments.  James: Okay and it could be offices converted to medical offices.  Jeremy: Yeah, it could be. Yeah, I mean it's, I just looked back at 2001. I mean if you were in the like the metal detector, you know, security business in 2000, probably not really interesting. James: Right, like 2001 [54:48unclear]  Jeremy: Yeah, so that's what I see here. I'm like, this is going to be interesting, there's going to be an overreaction in healthcare. I think there's going to be opportunity there.  James: Could there be like construction of healthcare facilities like medical offices or do you think just buying new medical offices.  Jeremy: I think there could be development, we're early on that. I don't know that's anything that we're going to see probably for three years. I'm just following the trend, I'm kind of following how people are, what they react to and then where they go and for us to come out of this and not have a national discussion about how are we going to be prepared for the next pandemic.  James: Yeah. Jeremy: Yeah, it's going to happen and money is going to flow there and, and there's going to be a lot of pain and people are going to say, I don't want to do that again.  James: Yeah. Jeremy: I don't want to hear about ventilators next time. You know? And so, I think that presents an opportunity for investors to get in front of that now. James: Yeah. I'm sure for the next three, four years people are going to say we didn't want to have that healthcare problem again. Right? And I don't mind paying for this. Right? Some kind of thing. It's going to be a lot more investment. So I think medical offices would be a really good investment.  Jeremy: Yeah. I liked it before this and I like it even more after that. James: Awesome. Good. So what about other asset classes like self storage or mobile home parks and you know, what else is there, warehouse I think is probably part of the industry.  Jeremy: We talked about warehouse, hey, you know, self storage, kind of a maturing asset class in this last cycle but I think it's still very viable and it's a good place to be. You are going to have dislocation of residences the next couple of years so self storage is going to be valuable to people who need to store their belongings, mobile home parks, I mean, look, everybody needs a place to live and if it's affordable, you know, it's gonna work. So again, there I think I see an opportunity too. James: Got it. I think multifamily; we did talk to her in detail about it, right? Do you think there's going to be a lot of crash happening in the single family space because there's so much short term rentals, people bought a lot of short term rentals as second houses and probably right now there's no short term rentals happening.  Jeremy: Yeah, that's not so good like kind of the Airbnb, I mean you're sort of in the hospitality business there so yeah, those folks are gonna need to convert to long term or sell.  James: Correct. So I think there's going to be, you know, a lot of people, you know, giving up their second short term rental houses that way to the banks. It could be a lot more houses available I guess. Right?  Jeremy: Yeah. That could be an opportunity, you know, if you want to buy and rent or buy in rehab and then resell that space could have some volume coming through. Yeah.  James: Okay. Got it. Interesting, yeah, I mean, did I miss out on any asset classes? I think that's the more important. Jeremy: I think we got most of them.  James: Yeah and do you think we are going to be much better in terms of economy wise? Just because there's going to be a lot more base employment, which is manufacturing happening in the U.S. Jeremy: I'd love to see that, I hope our companies can come home with that and who knows, I mean with the unemployment rate being what it's going to be for a while and the wage growth that we didn't really see in the last 10 years, and we just lost on that, maybe there's an opportunity for us to employ people that otherwise we couldn't have a manufacturing basis to make it make sense. I don't know. I'll leave that up to the manufacturers to figure out.  James: Got it. So, I didn't want to forget one asset class, which is hotels, right? I'm not sure whether we went deep into hotel. So that's going to be, I think the hotels are really suffering right now.  Jeremy: Oh, it's terrible.  James: Right now.  Jeremy: When I hear 9% occupancy rates.  James: Yeah. Jeremy: That's bad news.  James: Yeah, that's crazy right now. So hopefully hotels survive through this downturn, I guess. Right?  Jeremy: Some will, look, we still need hotels.  James: Yeah, I know.  Jeremy: We still need them so they're the strongest, best located hotels will come out of this thing, others, you know, they'll fail and they'll either get bought at the discount and with a lower basis they can compete in the market and grow back out or you're going to see them reused for something else.  James: Got it.  Jeremy: That's maybe the multifamily conversion.  James: Yeah, if the city allows it of course, then they can be a lot of studios and efficiencies, I guess and I've seen that happening in some cities and some projects. All right, Jeremy, thanks for all the value, can you tell our audience and listeners how to get hold of you?  Jeremy: Sure. So you can check out our stuff on CREinvested.com, that's C R E I N V E S T E D.com, I've got an investment course there, that is available and if you ever want to chat with me, you can email me @jeremy that's JEREMY@creinvested.com  James: Yeah, Jeremy is a wealth of knowledge. I mean, he's also a senior CCIM instructor, right. So that's a lot of knowledge if we came in, absolutely, you will be a really huge value to connect with you and just to learn from you. So thank you very much for coming on the show.  Jeremy: Hey, thanks James, it's a pleasure. James: Alright.

James: Hey, audience and listeners, this is James Kandasamy from Achieve Wealth Through Value-add Real Estate Investing. Today, I've Cody Payne and Michael Tran from Colliers International out of Dallas market. Hey guys, why don't you say hi to our audience and why don't you introduce what you guys do? Michael: Oh, Hey everybody. Michael here. You know, we focus mainly on multitenant, mid-rise office buildings or industrial buildings or industrial parks. Anything between three to 25 mil is our typical range that we work on. Cody: And I'm Cody Payne and I work with Michael and that pretty much sums it up pretty well. We sell investment office and industrial buildings in Dallas Fort Worth. James: Got it, got it. So you guys are brokers, right? Do you own any of these as well? Cody: Yeah, actually we do, we actually just did a syndication not long ago where we pulled together a few investors and bought a portfolio of five office buildings down the mid-cities. And we've even done some development also. James: Got it. So office and industrial; nobody has talked about this asset class in the show. So I want to go really deep into how people make money out of this asset class because I'm a multifamily guy. I'm so used to multifamily and a lot of people knows multifamily very well. It's like seems to be like the only asset class out there. Right? But I'm sure there's a lot of people out there who's killing it in industrial and office. Right? So, I want to go deep into, you know, how an active investor would look at these two asset classes and you guys absolutely will be you know, giving a lot of value in this discussion. So let's start with industrial. Can we define what is an industrial asset class and how does it look like when I drive by, how can I say this is industrial and is there any different types of industrial that I need to be aware of when I drive by and when I'm going to look at something? Cody: Yeah, absolutely. So industrial is going to be, you know, your big box, tall, concrete warehouses that you'll see as you're driving along the freeway or in some other parts. These things can range anywhere from tenants utilizing just a couple thousand square feet up to a large shipping receiving warehouse that you'll see, that can be half a million-million square feet. A lot of things that I think a lot of people are familiar with is, seeing those tall, 24 36 foot tall concrete structures where a lot of 18 wheelers are backed up to that are loading, unloading, cross-docking and things of that nature. That's what your typical image of a warehouse industrial is. And a lot of people look for that and that's one of the key asset classes that a lot of investors are looking for right now. James: Well, so you said a lot of investors, I mean, it's a very relative term, right? And I'm not sure you guys know how much people invest in multifamily. So is that same equal in people investing in industrial and office or is it like coming from your knowledge in a multifamily is like crazily too many people and industrial is like a niche [03:26unclear] ? Cody: So the office and industrial it is a little more niche. I wouldn't say there's as many buyers for it as there is for multifamily. I mean, you, obviously there's a lot more multi-families than there are mid-rise office buildings, especially out here in Dallas, Fort Worth and even in Texas as a whole. But it's very niche specific. And so, that's why a lot of times you'll see a multifamily guy refer out if someone's looking at buying an office building or even vice versa. Because we won't sell a multifamily complex just because we're not as aware of it but the buyer pool is still very good. We get a lot of multifamily people, especially over the past three, four or five years, that have really started to hone in on the office industrial market as compared to my 10 years prior to that. James: Got it. Got it. Yeah. Even in my book, I mentioned that, you know, all these asset classes, they are somebody who's really good at these asset classes. And a lot of passive investors just look to, you know, seek to this kind of operators who are really good at industrial office or multifamily. There are people who specialize in this and they're really, really good at it so they have to seek for that operators. So that's good to know. It's very niche market. So, coming back to industrial, how do I identify a sub-market...how do I find an industrial, which is a really good, in terms of location, how do I say if I look at this building, I can say that this building is in a really good industrial location. How do I say that? What are the factors I need to look at? Michael: You know, one of the main ones nowadays is access. A lot of the logistics chains, they kind of make sure they can get the 18 wheelers in there, parked. That's why a lot of the users that are looking out that way, they're always making sure that they're centralized too. So like, let's say the great Southwest district here just South of DFW Airport; that's one of the biggest industrial hubs over here, you can get to almost any part of the metroplex within 20 to 30 minutes max. And then you'll have Alliance, which is in North Fortworth. I think that's a sleeper town that a lot of people overlook here but they're just building more and more bigger boxes up there. And it's due to 35 West Highway that goes all the way down to Austin, even down where you guys are at. So that's become another major hub press as well. And FedEx, Amazon they're all up that way. And you've got little pockets up in Plano as well which is probably about 30 minutes from the airport and they've got some major like Toyota is looking to move up that way. And they've got everybody else just following them over here. James: So do you look at, like for example, in multifamily, we look at household demographic, we look at median household income and income growth, job growth and all that. But it looks like industrial is different, I guess. Like you have to look at how convenient it is for the 18 wheelers to meet and compare and also seems to be some kind of adjacency with the certain key distributors like Amazon or Toyota. So is that key factors, I presume? Cody: Yeah, absolutely. And actually, we've got a map behind us.  James: So those who are on YouTube, you can definitely see the map. Cody: Yeah. James: To really, you know, talk numbers in terms of what? Cody: Just as the Dallas Fortworth airport right here. And this is the great South West district that Michael was talking about. This is where you'll have a lot of warehousing and a lot of it up North as well. Amazon's got a large center as well. So you've kind of have the same thing, which is growing a lot out here where Hillwood has their Alliance airport. And then the same thing back over here where Dallas load field is, there's a lot of warehouses over there and there's a lot off limits. So you know, a lot of these guys where we see a lot of tenant velocity and things of that nature are going to be closest to the airports because that [07:49unclear]  Fortworth because here and going to Fortworth and go to Dallas and go South and go North and they can receive from one of the largest airports in the world right here. James: Got it. So it's basically access to the airport and access to the highway and how can we get to go to other big cities, I guess, right? Fortworth, Austin. Cody: And they don't necessarily need highway visibility cause that's your most expensive parcel of land, but they need good access to it. And so having that nearby that airport, they've got access to I-20, I-30, 183, 360, and so that's a really good hub. And that's why that district is such a large district and continues to expand. James: Is there like a park, like an industrial park where the city or the government is allocated or is it like, is there random everywhere? Cody: They're more spread out. James: So there is no like tax incentive offered by any government or any cities, I guess. Cody: Well, yeah, certain cities will offer certain tax incentives. I know Dallas offers quite a few in certain areas and even if you start getting into like the opportunities zone areas and things of that nature. James: Got it. Got it. Got it. So, you talk in terms of industrial, in terms of square footage, right? That's what you said, or square footage and access, access is also an amenity. But I presume, what is the average price per square feet in terms of industrial buildings? Michael: So that is a very good question cause those can actually range anywhere between 50 a foot all the way up to, you know, building new. It also depends on the age of the building, ceiling height, [09:39unclear] in the building. So there's a lot of factors in industrial that you have to account for. How many docks as well. Dock high, grade level doors or are you familiar with any of these terms? James: No, no. This is all completely new. But it's important. I want you guys to share that level of detail because I want people to really learn how do you, cause I'm going to go to their underwriting later on. So that's going to features of the industrial, is that like a class A, class B, class C industrial buildings? Cody: Absolutely. Go over some of the rates that you see on some... James: Yeah. What are the class As? Cody: Are you asking for rental rates? James:  Rental rates and also buildings, right. I presume that's all correlated? Michael: Yeah. So rental rates, you'll see anything, depending, like I said, very niche-specific stuff. So like you'll see anything from $4 a foot all the way up to 10 and sometimes even higher and triple net or some of the newer industrial products coming out. And then you have if it's, you know, if it's in the less desirable area, they'll Teeter with the four to seven modified gross or industrial gross as you'll hear. And those usually have some expenses in there that are charged back to the tenant. As for space, if the space is less desirable, you're going to see more of that industrial gross number anywhere between, you know, five to seven. Newer stuff, like I said, $10, sometimes triple net, just depending on area and access. Cody: And a lot of times is that building size gets larger, that rental rate, well a lot of times go down. James: Okay. Okay. So before we probably go further, can you define triple-net because a lot of people in the residential stage, they are not used to this triple net. Can you define triple net, what does it mean? Michael: Yeah. So if you can ever in residential, try to charge them triple net. But when I was saying it's a triple net, basically it's taxes, insurance, and common area maintenance is charged back to your [11:46unclear]  Sometimes you can get an absolute triple-net deal and that's where the tenant also care of the roof and structure. It's not as common in industrial unless it's a single-tenant deal, but most of the time you're going to see this regular triple nets. James: Okay. Right. Interesting. Because we don't have that in multifamily. That'd be awesome. So triple net also means that if the property taxes go up, the landlord doesn't get any impact. We still get the rents that we supposed to get, I guess. Michael: That's correct. And sometimes, you know, your tenant, if they're a little more savvy they'll have like a protection on no higher increase in five to 10% on their common area maintenance or taxes. So let's say like your lawn guy wants to charge you way more, that'll force you to just find a new one at a more reasonable price. James: Got it. Got it. Got it. So what is the landlord responsible for then? Michael: Roof and parking lot. Structuring the building if it's triple net. Yeah. James: So does the landlord still get the tax benefits of owning the real estate? I'm presume so, right? Because you own the building, you own the roof and you own the real estate, I guess, right? Cody: Yes. So, well it depends on the tax benefits that they're getting, but if it's, you know, ownership of the real estate tax benefits, yes. Now if it's business-related or some of that nature, that's for them, obviously. James: Correct. Correct, correct. And I think the depreciation schedule for industrial and an office, I just want to cover that, is 39 and a half. Is that right if I'm not mistaken. Cody: I believe you're correct. James:  I think in residential it's 27.5 and all of the asset classes like 39 or 39.5, I can't remember. But that's a good distinction within triple net and the normal deals that we buy in multifamily. So, coming back to my question, I know we talked about different rental rates, but are there any classes that you guys have categorized in terms of industrial buildings? So it's just based on how old they are and there's no real definition... Cody: Yeah. So they do have classes, you've got B, you've got C, you've got A class and a lot of times that is determined by age and location and building quality and things of that nature. James: Okay. Okay. Got it. Got it, got it. But definitely have to be in some way accessible near to their distribution part I would say, or distribution hub. I guess Cody: That's when a lot of them like it, they are very keen on location. But like I said, I didn't have to have highway frontage. In that access is very key. James: Okay. What about the, who buys the industrial? I want to interview a buyer of industrial parks and industrial buildings and I can never find, but you guys know all these guys, but who buys...what are the typical buyer characteristics or where does it come from? What does he look for? What is his appetite in terms of investment whenever they buy these industrial buildings? Cody: Absolutely. So there's a lot of buyers for industrial and they increase every day. And you know, even for the small Bay warehouses, you know, we have so many of those people that keep pouring into the marketplace and not just Texas, but in the US as a whole. But yeah, I mean industrial probably gets some of the most cross product or cross asset buyers that we've got. You know, people from self-storage buy these, people retail, past experience, they buy these. We even have apartment owners and operators buy these. But you know, there's a lot of REITs and institutions and things of that nature that are big in it. But no, a lot of, I would say the past 10 industrial buildings that we sold, probably I think, I want to say seven of those were an out of state owners. James: Got it. Are they from coastal city? Like New York and California? Are they local? Cody: Yeah. Canada, Florida, Chicago, absolutely. James: And do you see that this one guy buying across the nation or it's still very localized? Cody: No, a lot of these people will buy across the nation, but this is a market that a lot of these people will look into.  James: Texas, they like a lot of Texas? Cody:  Oh absolutely. Yeah. And like Michael was saying, you know, because of the Dallas Fortworth economy and things of that nature, it gets a lot of eyes. James: Got it. Very interesting. So, let's go back to underwriting and industrial building. So I presume that's a rental of the building where the tenants...is it like usually one tenant or is it like multiple tenants or how does that or is it all the 17-wheelers parking need to pay rent?  Cody: Yeah, it can be one tenant. We just sold a very large complex off of 360 and about 80 tenants in it. So, it can be very, very intense with a lot of tenants. And I think the group that bought that had a lot of multifamily experience as well. James: So 80 tenants in one building. I mean, do they have like counters in it or do they have docks? Cody: Yeah, so it was a bunch of buildings in a business park and so it was about 22 of them. And so it was just park. James: So it's like an industrial park where everybody had buildings and they ran the... Cody: Yeah, they had their own suites and things of that nature. James: Okay. So if it's triple net then probably there's nothing to do with expense ratio for a landlord. Right, because you get [17:30 crosstalk] Cody: One of those, I believe, were on gross leases still, but with industrial, a lot of people that aren't on triple net are going that way. James: Okay. Explain what's the difference between gross lease and triple net? Cody: So a gross lease, you'll find a lot more in office, in general office. You will absolutely find it in an industrial and gross lease is going to be where the landlord's taking on commonary maintenance, landscaping, repairs and maintenance, you know, HVAC, things of that nature. And so it's more management intensive. Your expenses on the landlord are going to be higher and that's a gross lease. But then you start getting into other types of leases. You know, you've got full service, you got gross, you've got modified gross and you get into like net, double net, triple net. James: Oh, okay. And what about full service? As you mentioned, because I've seen Cody: So full service, you're really only going to see that in office. And what I mean by that is landlord pays everything. They pay the utilities, they pay the janitorial, they pay the common area maintenance, they pay taxes, insurance, they cover everything. A tenant goes in as you know, a price per square foot and that's all they pay. James: Got it. Got it. Very interesting. So let's go to office. I mean in general, people are worried about office. Because you know, people say the trend is working from home. So is that still true?  Cody: Not here. James: Not probably in Dallas, I guess. Cody: No. I think office is actually trending a lot more towards coworking and things of that nature. And that's a model that has just expanded and blown up like crazy, especially out here in Dallas, Fortworth. James: So what is a typical investor who's looking to buy office space, office buildings? Where do they come from, what do they look for in an office? What kind of hold time do they have usually? Michael: Yeah. So their hold time can range anywhere between five and seven years. But you know, we just did a major value-add project in Plano where Toyota's headquarters is. State Farm had moved out and it was probably 20% occupied. That buyer actually, you know, did a bridge loan and he's going to go ahead and get that filled up very quickly, just cause the area's occupancy is not any lower than 80, 85%. But where these buyers come from, same thing as the industrial guys, cause a lot of industrial buyers also look at office and office guys look at industrial as well. But like I was telling you the other day on the phone, we've noticed a huge influx of multifamily buyers moving into office just because the returns are a little higher. And so, we had like that last guy, California we've got one in Chicago looking at one of our deals right now. We've got a couple of local groups out here that know these office buildings really well too and they know the trends of the area and how the occupancy is. So one specifically we're working on right near White Rock Lake in Dallas. That one's at 92, 93%, and that one's always been full ever since anybody can remember. So that's where these buyers come from. Any other questions? James: Yeah. How do you decide this office space is in a good location? Other than knowing, I know Plano is hard and I know free score is hard, but how, what are the parameters you look for in terms of like like you know, jobs growth in that particular submarket? Michael:  So, yeah, so you look for competition within the area for that office building, comparables in that market to the building because if you know the market really well and you know every building, you'll see that some gives you like a better bang for your buck. You know, some will have a lot of amenities that they're starting to offer. [21:48unclear]  groups are starting to do incubator spaces where they have a smaller coworking model and then their tenants will grow into spaces that are available in their building that they have rooms. And so they'll convert, you know, a small executive office and they can charge anywhere, you know, 35 to $45 per square foot just for a room. And as that tenant grows, they can grow within the building. But if you want to look at like specific markets like Las Colinas Irving area, are you familiar with that area? James: Yeah. Michael: Yeah. So you know that area has a lot of office and that's one thing you need to make sure of when you're looking at a deal. How many other class B or class A properties can your tenants look at before they commit to a space? But if you're looking over in Dallas, like where White Rock is, our building is the only building for the next two or three miles before you hit a highway, either going towards 75 or going North towards 635. And so that's why this building has been able to capture a lot of the people who don't want to drive all the way to 75 and fight that traffic every day or drive North on  635 and fight with that traffic as well. James: So you probably look at a cost, what the VPD, vehicle per day drive on that nearby highway, I guess. And I think you probably...I mean, as you mentioned, you look at other office supply in that area and I'm presuming you look at vacancy rate as well, on nearby office. And what tool do you use? Is it CoStar that you guys is primary for this industrial and office? Cody: Yeah. So there's a lot of tools you can use CoStar and Craxi and things of that nature. There's a lot of, you know, real capital analytics as well. They track a lot of good stuff. What I would also say on the office side is it's probably one of the product types. It's a little closer to multifamily as far as kind of a how to make them successful and things of that nature. Because, you know, when people go look at a multifamily complex, they usually have a couple options. And so a lot of times what they'll look at is amenities, access, recent renovations, things of that nature. What can they do for me on a new move in? And so office is very much a model that is driven just like multifamily. And so, keeping up with the times, making sure the renovations are good, making sure the building offers things like the deli or wifi and stuff of that nature or coworking style environment. Those things all help office buildings succeed. James: Got it. And what about this vacancy rate? Cause sometimes they're not...I mean multi-families and people that need a place to leave and vacancies are pretty low I guess comparatively to office, I mean different tenant profile. Right. So what is the average vacancy rate? I mean, how do I know like this area, this is the vacancy rate because somebody can be like six months, one year or somebody can be a few months, right? Depends on the area, I guess. How do you determine what is the vacancy rate for office and what are the lease terms in office? Cody: Absolutely. So the vacancy rate is going to be area driven. And so, you'll have certain areas like downtown Fortworth, which will have a certain vacancy rate and then that is going to be very much different than Las Colinas, downtown Dallas, Plano Allen, McKinney, Frisco. We pulled something earlier today working on a few things out in the Allen and McKinney area up there by Frisco and you know, they're class B office spaces around 5% on the vacancy side, which is very good for office, especially with more and more supply continuing to come up out there. In Los Colinas, it's gonna move a little bit more. And so, in my career, I've seen Los Colinas go down to almost 30%, and come up to somewhere around 10. But there's a lot of supply out there and there's always things shifting. Fortworth, I believe their occupancy is higher than what's being shown, but that's because XTO owned a bunch of the office product out there at one time and they recently sold a lot of that off. So some of that's being converted to hotels and things of that nature. But what you want to look at when you're buying an office building is yes, the area of vacancy, the area rental rates, but also the velocity of tenants, how many tenants are moving in that area. And then you also want to look at what are the size of tenants, the square footage sizes that we have and what is really the area tenant size. And so, some people will buy a building and they'll have 10,000, 15,000 square foot units, when the area is really commanding three to 5,000 square foot tenants. And so they'll see a lot longer on market time. And so what they need to do is chop those spaces down. James: And do people who buy, you know, I just want to add industrial. So industrial office, are they people who syndicate deals, like what a lot of multifamily people do? Or is it REITs or is it some institutional or some rich guy from the coastal areas? Cody: It can be a rich guy like yourself or it could [27:23crosstalk] James: I'm in Austin, Texas.  Cody: It varies. When you start dealing under $5 million, a lot of that's going to be private. James: But is it a lot of syndication happening? Cody: Oh yeah. James: Oh really? Okay. So, syndication is not a multifamily game only is also in the office and industrial. Okay. That's really good to know because I didn't know that. Michael: Yeah. And to go back on your question, you're asking about these terms. So you want to make sure that, area driven but you also want to make sure that your TIs are not going to eat you alive. James: Yeah. So TI is tenant improvements; just for our audience, for them to know. Michael: Yes. So and you'll see a lot of these guys in office that are moving. Sometimes they really want like a gold plated wall finish out and you just can't do that for them. You need to make sure you get that lease term where it can get your TIs not in the red for the first year. I even try to keep that around like $10 or so per square foot. But you'll see those terms go just depending on what they need done to the space, how many offices they need built out. You'll see that range anywhere between three years, five years, seven or 10, sometimes 15. That's really big one that's usually the range you'll see on a lease term. James: Got it. So I think it's all up to negotiation and how much the landlord is going to pay and how strong is the lease terms and all that. How do you qualify your tenants? I mean, let's say I'm a buyer, I'm buying an office space with 10 different tenants in it, how do I say this is a class A tenant, this is a class B tenant and this is a class C tenant. And how do I say that? Michael: So when we underwrite a lot of these deals, we're looking at the tenants, how long they've been there. We can also reach out to the seller or ourselves if we know the tenant what their credit rating is. And you can give a write upon them. Like we were selling a three tenant deal out in Las Colinas and some of the tenants themselves put in their own money. They put in 500,000 in improvements to the space work for them. So that was one of the things that we made sure that we had in our OM when we were underwriting that deal and how much time they had left. Cause when you're looking at these, you're like, Oh man, this guy, he's only got a year or two left. But you know, a year or two ago they put $500,000 into this space. So sometimes it was a really big key factors, explaining these commitment levels of the tenant. James: So you said credit rating. Is there data that you pull out from them or you just look at history and how they [30:18unclear] Michael: Yeah, all those things combined. James: But is that something that way you can pull from the credit rating of the tenants? Is that a system or you just have to look [30:30unclear] Michael:  Yeah, not always, but you know, when you're working a lease deal when I used to lease back from the day, we would get tenant financials from them, sometimes, yeah. James: So based on their financials and what's their commitment to the space that's where you establish their credit rating, I guess? Michael: Yes. And comfort level and then like, Oh, okay. I feel like their financials are good enough for me to say. James: So it's very subjective then because I mean, somebody who want to sell the deal, he may say to all my tenants are A-plus credit rating, I guess. So, I'm just trying to quantify that a bit more, but I think it looks like there's no real... Cody: Sometimes you would have like an A-plus credit rating or something of that nature is when you've got like a DaVita or something of that nature in the building or a FedEx or something like that. But a lot of times, office buildings will have, you know, a little bit more generic companies, local regional firms. And so that's why Michael said if they're going to spend a lot of money on the finish out, they'll say, Hey, we'd like to see your business financials just so we can make sure that the money we're spending that you look like someone's going to be in business for the term. And you know, they're pretty much used to that. James: Got it. Got it. So let's say a building is being sold right now and some of the residents have like one or two years left in their lease. If they get to know that somebody's going to buy this building, will they start negotiating with the new buyer or the new buyer have an option to know whether they're going to be renewing? How does that work? Cause you know, that basically increases your risk. Michael: Yeah. So typically they do not know until you're pretty far along in the process. So they'll usually get attendant estoppel, which will signal to them that, Hey the building may change hands to a new owner. But although they're getting that, it's mainly just a lease verification to make sure also their security deposit is transferred over as well. And you know, you don't want to alert the tenants, but you also want to make sure that when you're working on these, they're paying what they're saying on the OM and it's matching what it has on the estoppel as well. James: Got it. Got it, got it. Well, Michael and Cody, thanks for coming. I mean, can you tell our audience and listeners how to get hold of you? You guys are doing really big deals in the DFW area. I'm not sure, are you guys covering any of the areas other than DFW? Cody: I'd say 95% of the business that we've got is in DFW now. We will branch out and sell a couple of things here and there. We're actually about to bring out a 20 story office tower out in Corpus Christi. That's a relationship that we have. James: Let me know if some of the towers in Austin is coming for Salem. Probably I can even buy one. Cody: Absolutely. James: I just heard there are 37 new towers coming in Austin. Cody: Well, there's a lot of people that are looking out there, I can tell you that. James: Yeah. So why not you guys tell our audience how to get hold of you guys. Cody: I'll do it. So yeah, Cody Payne, Michael Tran. Our number is (817) 840-0055, we're with Colliers International, we're office and industrial specialists and we've got some really good self-storage and retail guys here as well. James: Good, good. Guys, look for a specialist because all this asset class, there's a lot of nuances to it as so much of details. Not everybody can do this. And you know, these guys are some of the best in the industry. Thanks for coming on Cody: See you.

James:. Hi, audience and listeners, this is James Kandasamy from Achieved Wealth through Value Add Real Estate Investing podcast. Today we have a special session with Rama Krishna from Zovest Company from California. Hey Rama, you want to say hi to our audience and listeners?    Rama: Yeah. Hi James. Thank you for inviting me on this special session. I know definitely the primary reason is we are attending so many webinars on this COVID19 impact for multifamily, a lot of other groups that we're discussing. I wanted to just compile all that strategies that I have compile and also mine as well. What I'm actually going through right now with my properties, compiling the blog posts and whatever you wanted to talk about it.    James: Yeah. Today's a special session. I'm trying to make all this podcast release. I'm actually rearranging all my podcast releases to make it really timely. So all of you guys, listeners, can we take action from whatever you're listening from this podcast and listening to podcast that was recorded one or two months ago, which is like super boring because all that is pre-Corona. I'm sure all of you guys are wondering what is this guy talking about. 3% rent growth at that time, so this is timely. We're going to release as soon as possible. Rama has done a really good job compiling fifty strategies for multifamily operators and asset managers to tackle Covid19 and we're going to go to each one of those quickly and also in detail so that each one of you can take a pencil and paper and write down what are some of the things that you can use right now. Rama, let's get started.    Rama: Yup.    James: What's the first one?   Rama: I think before even getting there, I'm reading the primary thing that we need to do here is, people lost jobs in the sense that we need to become passionate about the way how things are going. I think we are actually suffering as operators. We also have to put ourselves in the tenant's shoes and they got impacted. Some of these strategies to also have to work with them to see how they can weather the storm, including us, have to weather the storm here. Another thing is, I mean, there are federal regulations right now that we cannot evict tenants. So in a sense, even though, we can do some of these things, but the strategy is what we have before we cannot do it because of the regulations in place and then also shelter in place right now.    The first primary thing that we wanted to do to alleviate the problems of tenants is the late fee waiver. We actually wanted to not to communicate this thing until the fifth, but we did communicate before that itself, just wanted to give some assurance to the tenants saying that you're not going to charge late fee for the month of April and May. That's the first strategy you want to do. Also they cannot; they are impacted. The primary thing we wanted to do, James is when you're working with the tenant that they have an issue, you want to get a proof from them that they got laid off from their job and then put it into your resources, your folders so that in case if you're applying for any other benefits in the future, any ADL program or a PPP program, or maybe a forbearance or forgiveness, you can have all these things noted in your documentation.    The second thing is some of the tenants are not misusing this thing. There is a late fee waiver. There's a flexible payment plan, but if you're not impacted, you're not eligible for that. That's the reason. The second point where we wanted to put them into a payment plan, if they are impacted and then they can continue catching up these payments. The second thing again and then typical guidelines to the tenants saying that you need to do the shelter in place and follow the state or CDC guidelines to make sure that there are protected. The last thing that you need is a Covid19 patient in your properties and then they're spreading and they don't know what, and God forbid there's a death. There are lot of things that you need to do to make sure and also fundamentally you want your tenants and everyone to be safe. Then follow the state guidelines and what you have to do or they have to do somebody tested positive in your property. How they can do self quarantine and how you can help them also.    I know maybe there is one more point in here is to, for us as an operative to disinfect the common areas and especially, I think we'll come back to those points again in the later strategies is to disinfect the common laundry mailboxes and other things, leasing office and other things. The other thing from a financial standpoint was security deposits. When we found out about this program called [05:15unclear] there other insurance programs, even not just for this one later also the operators can use this strategy to actually use in lieu of security deposit. They can actually get into some of these insurance programs like the Rhino or like Nash tag, Lemonade, where in this strategy, James, I think you might already know. Let's say the security deposit is thousand dollars. They need to pay $5 per month as insurance and they don't need to deposit this thousand dollars. So somebody coming in new as a tenant instead of paying first month's rent plus a security deposit of say $2,000. Now the need to only pay $1,000 and an insurance program for $5 a month. If it is $2,000, it will be $10 a month. It covers both security deposits and also any damages that they do, including they haven't officially confirmed but when I talked to rhinos representative, they're saying even wear and tear. Say if we want to do and make ready and there is damage that you have under the unit it covers that. So the way how it works is, so let's say if the tenant vacates and you go and do the move out inspection and you saw overall to make ready of this is twelve hundred dollars, and you do it claim to rhino and then they pay you within 48 hours and they collect from the tenant later because it's still learning deposit. There is wear and tear or some damage happened to the unit.    James: So that is a sayrhino.com, that's what you're saying?   Rama: Yeah.    James: And there are a few other people as providers?    Rama: Providers, yeah.   James: Let me get a bit more structured here. We are on that line item number five, which is basically the first one, is look at late fee waiver. Second is look at payment plans for your residents who are impacted, make sure they are impacted. Third one is a make sure that you communicate to residents and make sure they follow the shelter in place and follow the State and CDC guidelines. Fourth is basically if they are exposed to Covid19 patients who are tested positive you want to do a self-quarantine as well. If you as a property manager knows about whether any residence has been impacted, usually a lot of property management software have given us access to additional fields in the tenant information to mark them as Covid19 quarantined and all that. I do have it recently on my property management software. So check with your property management company, so they can mark it as someone was impacted or quarantined or what's the status.    The fifth one is basically using some of the security deposit for some of the two months rents using some companies like sayrhino.com where you can use it as an insurance for evictions and if they evict out or if for any make ready, if the tenant cannot pay.    Rama: If you collected the security deposit, you can convert to a sayrhino agreement.    James: Okay.    Rama: The minimum is at least they need to have six months more left in the lease because at least whether the new person coming in or maybe like another two months are done in the...   James: But this program already existed before Covid19? Rama: No, sayrhino has 700,000 units insured.    James: So they already existed right now. So you can just use this at this stage, I guess. Use some of the current security deposit and convert it to this insurance program, I guess.    Rama: Exactly.    James: Okay, got it. So sayrhino.com and REIG insurance, call home, [08:59unclear] king.com and these are the some of the providers?    Rama: Yes, there are some other insurance providers in lieu of a security deposit.    James: Okay. Let's go to number six.    Rama: Okay. Let's say from an operator perspective you feel that there is one more point here that we can come back to this. I think I haven't ordered this in the right format, right numbering. The first thing before doing that is to privately segregate our profile tenants. Go each lease by lease and profile your tenants how exposed are they with this Covid19 impacted businesses. Are they in restaurants, are they in travel tourism industry or whatever it is to see what would be the impact of it. Say if you have 50% of your tenants are in medical profession or maybe some other which are not really impacted into that. So at least you will know yourself if you own [09:55unclear] unit, Hey, like, I'm 50% of my tenants are restaurants, maybe. Then you can actually be really alert and also do go to these programs, what we're talking about here. Talk to your Fannie/Freddie lender and see if they have any mortgage forbearance or relief. No, they already have it. Fannie and Freddie already rolled it out, for 90 days you can forbear your mortgage not to pay that. Then how the payment plan of twelve months to catch up on this 90 day payment.    But make sure that there will be some negative remark or agency loan history and to see, make sure you go through all the agreement before actually signing up. But yeah, if you're really impacted, definitely if you're going on water with not being able to make mortgage payments, for sure you should consider this mortgage forbearance.    James: Okay, good. Let's go to the next one.    Rama: Yeah. And then so that is one aspect of it. The other aspect of it is the SBA disaster loans. There is an EIDL emergency loan...   James: I think it’s called Economic Injury...   Rama: Economic Injury Disaster Loan. So that's the loan that SBA is giving up to $2 million for small businesses including rental apartment owners, there is 3.75% interest and then there is some times that you need to pay. The idea here is based on your situation you can actually apply for this a disaster loan for EIDL program so that you can weather the storm for the next three to six months or nine months. There's another loan for a payroll protection program, PPP, which I can update this as well. If you have a payroll that you're running by yourself, you can actually apply for this PPP program to get two and a half months of payroll from the government or if your property management company actually runs the payroll, you can ask them to apply for this PPP loan so that they cannot bill you for the next three months for the property management personally. James: Yeah. I think the caveat is anybody who's applying for it to be having less than 500 employees.    Rama: Exactly. I think they figured out some more than 500, but overall, yeah, up to 500. Yes. And then also thing from I think from a tenant perspective some of this one's four or five points series. If they are actually having some hardships right now how they can use some of these federal programs. They're actually sending a $1,200 to $3,400 checks every person who actually filed their taxes. Also they can apply, if they are a small business, they can apply SBA loan or they can apply a PPP loan and they can weather the storm and actually use that money and then if they get referred, they can file the taxes immediately and use that money to pay rents. Some of these aspects that you can think on their shoes and see how these federal programs can help them as a tenant. Maybe one of your tenant is a restaurant owner, then you can see how the federal programs can help them so that they maybe they can file an employment benefits and then you can tell information about that or you can find local companies which are hiring and then see if some of these tenants that actually wants to find a job right now. Then you can ask them to continue pay the rent.    James: Yeah. Let me add some more things. Some of the apartment association in many big cities have given renters resources, which includes how to file unemployment. What are the resources for them to get different types of help from different organizations. Rama: Yeah. So again, two aspects of our operations, one is income and the other is expenses? Right now we've talked a lot of stuff from income perspective and some are expenses perspective. The other aspect that we kind of brought in is with all these people talking about are expenses. So in the non-essential expenses, even send email like a message to all the tenants, memo the tenants saying that, if you have any emergency only like create a service request, non-emergency service request will be done once the things settle down. Now if you are a light bulb vendor where you can fix it yourself or you leave the light bulb at the doorstep, let them fix it. Instead of you exposing your maintenance staff to more people, either they can fix it themselves or we can drop the light bulb there or they can wait for a few weeks until these things settle down so that you can cut your non-essential expenses and other controllable expenses that you can eliminate and you can close all the amenities, pool, the common amenities so there is no need to continue maintaining them.    James: I think also you do not want to people to use that and spread the virus more.    Rama: Exactly. Those are shelter in place, not using the common amenities, throw a party in a club house then you will have 50 people infected there. Primary thing is the common amenities. You have laundry room, everybody's coming in there to do the laundry, how they can sanitize this thing or maybe one person at a time or have a roster, Hey, this building one to ten people using Monday to Monday 9:00 AM to 12:00 PM some roster so that not everybody coming in Saturday morning to do the laundry. Or maybe some mailbox to see if somebody is there at the mailboxes, have some instructions that say wait for them to leave and then you go, wait for a minute and then you can go and pick up your mail.    Some of this stuff that you can instructions at the mailing and laundry, or in any common areas. The other thing is aspect of income perspective is primarily focused on the leasing aspect. Can you put some deals on renewals or lease modifications or if you already gave notices and then maybe cancel the notices and then pause the rent increases right now to make sure that you're at least a hundred percent physically occupied and then later on 100% how it can be economically awkward as well. At least at this point right now if you can make this a hundred percent thing, James, both physical and economically, you can weather the storm for the three to six months and come back and again go back to your typical asset management strategies to increase the valuation of the property. Right now it's more a fight or flight mode right now. Let's see how to make it smoother for the next 90 days to 120 days is the strategy here.    James: Yeah. So what you're saying is rather than pushing for rent, try to keep people in the units, whether they're paying or not.   Rama: If you renew it, we're going to not increase it, let's say if you renew it in April, May, we're not going to do any rent increases. The last thing for you to do is make this unit empty right now and then we don't know what the situation of leasing activity in that building. So continue withholding rent increases, especially if you renew it in the next two months, we will not increase the rent, for example and the things that were discussed already, it'd be sympathetic and then also profile your tenants, see what jobs they do. Another strategy on this is, you don't need to pay April or maybe May but that rent will be amortized in the next 12 months. That's another strategy they're doing. Hey, you know, you're affected. We're not going to charge you for April or maybe half of May as well, but that $1,500 will it be amortized for the next twelve months. James: Okay, so you'll give them a break for one month and you take that money and amortize over 12. Rama: Yeah. Just like forbearance from a mortgage, same thing. That is amortized for the next 12 months. Same thing that you can do here, but some of these are lease modifications and see how painful it is, but whatever that is kind of, it takes it to get this thing done right and extending the leases. One more thing in the leases we can come back to later on is usually when you do a short term rentals at the three months lease, six months lease, you have a premium. You can actually reduce the premium, no premium for short term rentals. Say, hey, like, we are leasing right now. Hey, you want a six months, and then it will be same as the 12 months’ rent. So at least you can fill up your units by doing that. James: Yeah, even on a month to month. I think they can usually we charge premium for month to month, but you can either reduce it or don't charge that for now. Rama: Exactly. So I think maybe for them also they also wanted to try for month to month, three months, and then they can do an annual release after two to three months.  So you can at least fill them in coming in, let them pay, and then you can think about this after three months. The same topic we discussed before is the go to a local; even though there are jobs lost, some are trying to hire. Amazon is hiring for the warehouses, grocery chains, hospitals; some of them, they're not able to have enough staff. So you can find these in your market, in your sub-market and see and take those information and then send you to your people who actually came, Hey, I lost my job. Hey, why don't you try to go to Amazon warehouse five miles from here, they're actually hiring. That you can help to see if they can come back to the employment at least for temporary for the 90 days until this thing comes back.    A lot of these people are furloughed right now just because they can get unemployment benefits, but if they can get some other job for the next 90 days, because what if just delays more, they can get some job for the next six months and come back to the workforce later. Another thing is something similar is lot of charities and churches and they pay the rent and if they're part of the local church or a charity program now there are so many people paying rent and also their utility payments.  James: To help our residents and one good resource that you guys can use, all the listeners can use. It's findhelp.org, that has all the completion of all the organizations which are helping people in terms of money, housing all kinds of things there, so use that resource. Rama: Yeah.  And like this is the first step. So whatever that's happening for us or for them, the message to tenants is the rent is due, just because we have to have utility payments, we have to have mortgage payments, we have to pay salaries for employees. This is a laser thin business. This is not; we're making 50% as profits here. So we had to send that message properly that we also have expenses. We cannot  just not forego this thing, not paying rent. That's the message that I might not be putting into the right way here, but you have to [21:24unclear] because some of these articles in some of these markets saying, Hey, don't pay rent for three months. So it's just showing a wrong message, but they're not thinking about the operators. James: Yeah and the government or our mortgage providers did not give us a break on our mortgage. The rent is still due, we do sympathize with all the residents. Let's work out some plan. But rent is rent and it still needs to be paid in some way. So we have to figure that out and see. Rama: Then another thing is if you're doing renovations, if you have draw requests, it's already competitor immediately do the draw request because there might be some delays right now because of this demo here, the inspector might not come in to verify that renovations that you did to approve the draw request. Submit your draw request as soon as possible so that your money, you had to pay your vendors. James: So this is the capital or replacement reserve, what we're talking about here?  Rama: Exactly. So you renovated like say five, ten units and usually the bridge loans, other loans which we have escrow money. Get the draw request and then get the money at least and then you can pause. The idea here is to release what you did to now, get the money, pay your vendors and pause your renovations for some time until this is done. Another aspect is until it is utilities, because now everybody's at home. They're going to use all their deliveries for the maximum, the water, the electricity, the heaters, the air conditions, and the internet, everybody utility company is right now maxed to the capacity. So just keep it down on the utilities and see how things are going on that. All bills paid or you're doing the reps program. Do you need to increase the reps? Like whatever it is, just keep an eye on it. It'll definitely be a much higher. James: Yeah. I think because everybody's staying at home right now and the one or two months when the utility bill hits to everyone is going to be much higher and now I appreciate why all this spend people go to work, somebody else is paying for their utilities when they are at work. Now operators do feel the heavy load here, but it is what it is.   Rama: And also the load on this, if you're continuously using something like your HVACs maybe break broken, or your water, something that issues that you need to make sure that you do the regular maintenance of these stuff and then make sure that you have ducks in row. Like, hey, we're talking to the Water Company, talking to your Plummer, talking to your electrician or HVAC Company, making sure they're ready for any service request that comes in. Because if the HVAC broken or some water broken, last thing is that the tenants are not happy.    James: Correct. Correct.    Rama: So I think we discussed it the month to month of high risk tenants, rental increases on this. Yes. Pausing all upgrades and the distribution side. Another thing is we've talked about lenders, talked about the tenants but you did not think about the investors. If you're syndicating this deal or if you have the private money that you raised or whatever that you have investors in your deal, make sure that you inform them about what's going on and how well your assets are performing and what are the things that you are doing as an operator to get some of these strategies are what your strategies that you're already applying to whether this storm and maybe there are some other great topics, uncomfortable things that you need to talk to them. Say there might be some pause on distributions because we don't know what's going on here. We need to preserve the cash, preserve our reserves right now, what if this goes beyond 90 days. So maybe pause or reduce your distributions or pause it for now and then you can catch back once everything kind of settles down. That's one of the conversations you should have. James: Yeah. Make sure, I mean, just a caution to everyone who's listening. Make sure that any operators are communicating to the passive investors more frequently than what they used to know. This is very important right now. Just because everyone knows Covid19 is happening, the whole country is in a lockdown, doesn't mean that you can't communicate. So make sure you communicate all your plans and what are you doing to your passive investors? Rama: I think we kind of came through this reprint reserves. We need to make sure that you're are person maintenance; so make sure that now is the time that you have a pause. So you can actually flag kind have all your depreciated items, have HVACs these other things. Make sure that you have all of them done properly. Also, again, the same thing, use audit, full use audit to categorize your employers. So their dependents are at risk or not. James: Yeah, I mean, you can do a general lease audit as well because most of the time, right now our offices are closed for public. Most of the apartment office. So in my company, most of my staff are doing lease audits. Just as part of the normal thing, but to keep them busy.    Rama: So this is the right time, everybody give it time we are running, now is the best time to profile your tenants lease audits and make sure that what strategies that you can employ to make them in place and again, same thing as utility, like just how you can do savings of utilities. Is it a new water leaks that are happening. Let's see your old bills in the last six months or one year. See any patterns that you can identify or any other measures that you can save utilities because the utilities will be stressed in the next a few months. Again from the expenses side, completely renegotiating all your contracts and [27:30unclear] every insurance, everything that you spend, your controllable expenses like non-controllable, property taxes and mortgage. You cannot do anything. Maybe yes, if you can refinance now if you have ability you can do that, if the rates are low. But if the controllable expenses you have the negotiating ability, your pool vendor, hey, pause for a few months or maybe renegotiate the contracts, go through every line expenses that you have and try to get renegotiate these things.    There are even companies it seems, which can do like this, that can help you go through all your bills and then find anything that you can renegotiate the contract. The thing is noise notices because now everybody's home. There will be a lot of complaints. Hey, like my neighbor is making a lot of noise. Make sure that you again send it across back to the tenant notification saying after nine o'clock it is a quiet time for what it is like in the night. Any of the notices that you want to do, the courtesy notices to make sure that everybody's people are working from home. Whatever it is and again, so a lot of people kind of saying maybe on the section eight, what's yours? Maybe this is a time to think about rethink...   James: It's the best time to get section eight vouchers because that's guaranteed income for now.        Rama: Exactly. So if your property is already approved and you have a few tenants in section eight now go through, go to your city and say, hey, do you want any more? We have vacancies right now. Hey, absolutely we have so many people are looking at it and we are already approved as section eight for your property, they'll let them send your way. And you can fill up easily and these are at least for the next one to two years, it'll be like in a way standard and then not all section eight is bad, just make sure that you profile your tenant properly and then...   James: Yeah. And I also heard that the government provided a lot more funding for housing people so there could be a lot more section eight vouchers coming in and what you're saying, they're not bad people. I mean they are definitely a lot of good people there you just have to make sure that you screen them properly and make sure you get the good ones.    Rama: Yes. I think we kind of briefly touched based on this too about the [29:57unclear] and all the forgivable loans or the loans and then property managers can use some of these loans. Each LLC, that own asset can use this. Check with your lending terms to see that it's not violating any terms. There are a couple of things, I got it from the CVRE webinar, make sure that you have fire productions on the building equipment and backups and mission critical operations that you have. These are kind of into the back-end of it that we already usually ignore. Make sure that all the buildings are inspected properly by the fire inspection because now that everybody's at home, there are higher chances of some of the stuff they could make big dormant happen. Do you have your backups of emergency?  And then any mission critical operations your cooling any heating water or anything, we have redundancy on these things. Make sure that you're building physical aspects of your buildings, make sure that you do those and then if you don't have credit card payments, for rent payments, make sure to enable them and also inform tenants that you can pay rent through credit card or maybe in that you can actually give back the money or the transaction fees. Usually in a credit card payment there is a two and a half percent transaction fee. Hey, you can use credit card. If you use a credit card, let us know. We can refund you the transaction fee.    James: Yeah. That's something that we are happy because we moved all to online payment for the past one year. So now it's so much easier during this kind of thing because...   Rama: Especially if you're not yet on the credit card payment option, make sure that you talk to your property management software and enable that and then also inform them, Hey, like you already have ACH but you have an option to pay through credit card. That's another thing and also another incentive is, I think Neil was using his, if you can give some credit, if they pay the rent before fifth of the month, or if you pay April and May upfront now you'll get a $100 off or $150 off. Give them incentive to pay for the next two to three months upfront. So that if somebody has that capability to do it now they can use up the program and they can get, they can get a credit for that and make sure, again, this one is, I think should be the first stop. If you're working with the tenant, either a late payment waiver or a traded audit, lease modification, any other that you're working with them, make sure that they show the letter that they lost their job. Otherwise people will make use of these features that you would actually giving. So that's the primary and then the couple of things we already talked about the short term rent leases and renegotiating the contracts and other one is primary, the model unit. Now that nobody's coming in and seeing the units, maybe you can use your model unit as lease apartment for short term, but this is the [33:07unclear] idea and lease to traveling nurses because right now with the Covid a lot of these hospitals are actually getting healthcare professional from outside, from other towns, other places and they're hiring more people as a temporary staff, but these traveling nurses and healthcare professionals need to have some place to stay. You can go; I had to find this link, James. I'll talk to Ellie and then send it to you as well later on; you can put it into your notes.   James: Is this a link for traveling nurses?   Rama: Yeah, there is a way to find out these people and then post your apartments there. Hey, if your apartment is say five to ten miles from a hospital major hospital and you can actually use these resources to actually post, hey, we have available short term rentals, maybe for lease or not, we can give you this for the next 90 days to 120 days. That's another way to actually fill a unit. James: That's awesome, it looks like we went through the list. So let me add one more thing, which I just remembered. If you have never done a virtual 3D tour of your units, you want to prepare right now, there's a lot of photographers out there that they can do a virtual 3D two of the units. Right now that's very useful because right now we can't use our leasing agents to go and tour the units, we just tell them to go themselves or drive around or look at the pictures or look at the videos. But if they have a really nice virtual 3D picture, there'll be a really good way to attract leases to you. Rama: Rentally has a self-touring technology. You can purchase webcams. So if you're using Rentally, also Rentally is also an app into existing property management. You can put the webcams there. You don't need to be there, your leasing staffs are not exposed. So they can come in 24/7, you'll send them the lock core. You'll open the unit and you can monitor from your leasing office or whatever desk you are and then do that, Rentally has that. James: Yeah, I did look at that as well. So that's awesome. Rama, thanks for sharing this. Is there anything else you want to mention to the audience and the listeners? Rama: Yeah, I think we have some light on the other end of the tunnel. The government is helping us. Hopefully I think this will pass and we'll back stronger and stay safe.    James: Yeah. Yeah. Multifamily is still one of the best asset classes to invest in because there's so much help we are getting from all our different sauces. Imagine if you are an office or warehouse or industrial or everything is closed down, or hotels. Right now things are doing really badly in that asset classes. But shelter is part of the Maslow's hierarchy of needs, food, shelter and safety. So absolutely everybody needs housing to stay on and live on.  So thanks for coming in and hopefully we can add this as soon as possible and that's it. Thank you very much, Rama.    Rama: Yeah. Thank you, James.   

James: Hi audience and listeners this is James Kandasamy from Achieve Wealth through Value at Real Estate Investing podcast. Today I have Anton Mattli from Peak Multifamily who is one of the leading multifamily financing agencies. Anton is a CEO of a big multifamily funding. He graduated from Zurich Business School. He's from Switzerland originally, love Switzerland for the view of it and he has been advising family officers’ high net worth individuals and has done billions and billions of dollars of loans. Anton and I was discussing before this interview started saying it's not fair for lenders to declare how many billions they have done because that can be a lot of money but the experience level and the knowledge and the acumen of the industry matters a lot when you're doing financing. Hey Anton, welcome to the show. Anton: Yeah. Hi James. Thanks for having me. James: Absolutely, absolutely. Actually we are having, originally I planned to have a meeting with you to talk about what could happen similar to 2008 crisis because we have been talking about it for past few months, but now we are in the middle of corona virus recession, I would say and we are in the first or second week of this happening. So basically we don't have to predict what the recession can be, but we can predict what are the outcome from this event could be. I think a few months ago you and I have a lot of discussions about how the market would turn, how dangerous is the market right now in terms of operators or sponsors or syndicators buying things because overleveraged, overpriced and all that. What were your thoughts before this Covid19 recession came about and how was your state of mind in terms of how the economy was and how everyone was buying deals and we'll go into the details on Covid19 and what's happening now? Anton: Sure. As you write on the operator side have seen quite a number of deals that for me personally didn't make sense but I didn't know a deal was financeable from a lender perspective, from a debt service called [02:36unclear] particularly when it's an agency loan, does not necessarily mean that it's a good deal from an equity investor perspective. Even though we were able to finance some of these deals with a number of them I would not have felt comfortable to invest in those deals. There were plenty of deals that still made a lot of sense, so don't get me wrong, it's not all of them, but there were only the number of deals that in my view, didn't make sense over the last two years, only have increased dramatically compared to before. At the same time we have also arranged bridge loans and as you probably know, bridge lenders, they're extremely active. They have taken a major activity uptake over the last few years.  So there was a lot of competition in the bridge lending space, which meant that you were easily able to get 80% of cost for your C class property and sometimes in really tough locations and bridge loans make perfect sense when it's a true value-add deal. When it's not really a value add and it's mostly to do with soft rehab, but you feel that you get the agency loans when you need it and you go with a bridge loan, then I think it was much more problematic. So with that obviously we have seen quite a number of these bridge loans and deals that I believe particularly in the current environment will likely struggle. Because this bridge lenders they are not like the agencies and that came down now with the forbearance offer. Don't expect that from bridge lenders. James: Yeah, I know. It's crazy. Now I feel so happy. I'm all in [04:41unclear] for the past one and a half year I've moved to [04:45unclear]. So are you saying on the bridge side there is no forbearance or what's happening on the bridge side with the Covid19 crisis right now? Anton: Well as a general rule, bridge lenders have never been; some of them, the good bridge lenders they have always been willing to make adjustments when they see that a borrower is behind of the original plan, the ones that are really in there as a partner, they have been willing to cooperate and I think those lenders, and they are not really that many among all the bridge lenders that are out there, they will continue during these times to help a borrower to get through that time. But the majority of bridge lenders are not maybe staying, very often it's not their own money so they essentially have orders behind that that they buy into and they have kind of an obligation to fulfil that loan agreement to the letter and their investors demand that they fulfil their obligation as per the loan agreements.  So some of them are very aggressive just by nature and the others have to force from the investors they have the loan funded from do actually go into enforcement or you can call it loss mitigation as the nice term sounds with these loans very forcefully and very quickly.  So now maybe the [06:25unclear] is a little bit of a shine of positive light here that they may say, look, yes, we could foreclose right now, but maybe it's not a good time to do the foreclosure now anyhow so let's just go through another couple of months and then see if we want to foreclose. But it's still in my view that just kicked the can down the road for a very brief period of time until they go all way in with their loss mitigation process.  James: But I think it only depends on what's happening in April, right? I mean, we have another 10 more days to go [07:03unclear]. But in general, I am already seeing even in my properties, they are residents who are declaring that they can't pay and this $3000 a door family units. I'm not sure, as you mentioned they're going to use it for rent or is it one time? I'm not sure for how many months is that? But the thing is the delinquency will be higher. So I believe the sponsors or syndicators who are halfway to value add and right now they are not done with the value add. So their value add might be struggling. If it goes below certain level, they're going to be stuck because it's going to be negative and as you mentioned, bridge lenders are or private people. They have the obligation to whoever gave them the money.  Anton: That's right. Yeah. So if you have already a property that is, let's say a third empty because you planned all your rehab, even if you do rehab, a lot of tenants that you now can attract and so you would have to attract them with very aggressive terms. If you find them and then you still know that at that level that you need to be based on your performance, which the lender wants to essentially base their decision on to release more rehab money for future doors. So then essentially that rehab money sits with the bridge lender, you have not performed as per the loan agreements. So if you want to go ahead further, you need to inject more equity. James: Yeah. It's basically... Anton: It's kind of a vicious cycle. James: Yeah, it's a downward spiral because now I believe on the bridge sites, a lot of loan are based on LTV, loan to value and they're going to assume the values are going to drop. Because now your rent is going to drop [08:54unclear]. Anton: Yeah. It's a combination of loan to value, but as you go through the draw process, it's more driven by some amount of collections that you need to achieve and why and then the dead deals that you need to achieve with that. So it's a little bit of a different measuring sticks. But at the end of the day, it doesn't really matter what you use, it's maybe hard to achieve these points that you need to meet at some point in the timeline, then you property is not performing and so the reality is all these bridge loans they typically have very aggressive timelines to start with. So if you fall behind just by a couple of months, it can become very problematic. When it says after six months we should achieve this and you are essentially behind by two or three months and it continues to go in the same direction as you fall behind once you are at the enrolment then, and so long. So I would say the ones that have enough cash on their own that they can inject as needed, they will be fine. So the ones that suffer the most are the sponsors that just kind of get by with their own personal financials and they don't have the ability to inject a couple of hundred thousand as needed to get the ball rolling at the property. James: Yeah. But it is tricky, right? Right now, I mean most sponsors can use this Covid19 and burn the equity and get out or they can keep on injecting and try to; because no one knows what's going to happen in the next six months. So it's a gamble. A lot of sponsors or syndicators need to take whoever on the bridge loan if they need to continue injecting more money or give it back to the bridge lender. But right now they have a valid reason. They can say the whole world is collapsing. I'm getting out now.  Anton: Yeah. If you're a syndicator. So you essentially can ask your investors, look, we are in really deep trouble. Do we want to inject more money? Generally I would say what typically should happen is that you do a capital call and if no one wants to do it, then you would have to lend yourself or you come up with the equity yourself. But in most instances it's not equity, but it's more a loan by the partners. But again, that all requires that the channel partners actually have the cash available if we lend to the property and a lot of them I've seen out there they don't have that capacity. So they'll be very interesting. Obviously that always assumes that things really get bad but we don't know yet. Maybe it's a miracle and all that stimulus money somehow entices these tenants to pay the rent. Obviously I hope for you and for everyone else who operates properties that that's going to happen. But based on history I don't think that that is really going to happen. I think last night I do have Brian on and he was referring to the situation during the hurricanes in Houston and that's a perfect example I would say but you cannot compare with 2008, I think we all agree with that, but certainly what happened with Harvey and the flooding is probably much better comparison. Because everything had to be shut down. It was very localized, but it had to be shut down. As Brian correctly mentioned like the properties across the board suffered with delinquencies. So I would say we will likely see that we just do not know yet how big the percentages by asset class and by location. I think it will depend a lot on locations obviously places like the Northeast, the greater New York City areas only suffer more. Same thing in Washington State, in Texas we would have to see how bad it is. Obviously we have also the additional element of oil and gas that has laid a massive negative role here for us in Texas, particularly for the property owners in Houston and we don't even have to talk about Midland and Odessa. But even in Houston it's only something that will in addition to Covid19 will have a negative impact on these properties. So it will be very fascinating to see how the performance looks like in the next a few months. James: Yeah, I'll get a good indication in the next 10 days. But we are already getting our property managers to start probing with tenants and who's having trouble and all that. So we are compiling that, trying to understand and trying to work with them. Some kind of payment plans. That's what Texas apartment association or we call it TAA has given us guidance. But I think a lot of it depends on which sub market you are in. I mean, I know sometimes we use and it depends on and then people think, okay, my property's good but there's a lot more details to it. So whether you have a base manufacturing in that area or not, or whether you are CTO or whenever you invest it's a lot of its service industry or not a service industry is dead right now. Las Vegas, we used to be the best place to invest before two weeks ago, but up until now, the whole Las Vegas is closed down. I'm sure you people don't have money there because they are both more leisure business and gambling, hotel business. So basically there's no money, so within two weeks, things change now. So compared to places where there's a lot of manufacturing happening, this diversity of employment, you can still reduce the rent slightly and then you still get people who can pay because they are still being employed. Anton: That's right. Yeah. Yeah. And if you're right next to an Amazon logistics center, you're probably good. James: Correct. Correct. Correct. Absolutely. Absolutely. I am still getting rent right now, up to now for the past two, three days, I'm still getting rents for April, so that's a good sign but ours is all automated. It's all virtual. So probably they already set up, the ACH is all coming online, but we'll know more in the next 5 to 10 days, where it's very interesting times. But as I say, I mean last time, everybody was doing very well because the market was doing very well. Right now no sub market location becomes very important and the good thing is whoever has this agency load, I think they have many ways to weather this; either take the forbearance or just ride it through because your loan is there. But guys with short term loan, this is very, very tricky right now and you talked about the bridge loans and all that. Do you see the same issue with loans on credit union, the banks, small banks and all that? Do you think they still have issues similar to bridge loan guys? Anton: No. I mean, what we have seen was actually so far has been very positive where particularly these small credit unions and banks have been very cooperative in finding solutions better rates for barons. And that seen before it started. Why it's almost like, okay, we understand, we are reaching a now a tough period of time and that you're willing to either modify it along to stretch it out to lower the right. So they feel very at least a good number of them that we have heard back from, from various borrowers have had a very good experience there. James: Got it, got it. So are they being managed by a FHK well? The small banks and credit unions? Anton: No, it's all balance sheet based. So these are really the easy loans to long straddle which unite the loans and then secured the heist then too, they are in the same boat as I would say all the other loans that are out there. I'm talking the ones that typically it's more the small loans somewhere in the $300,000 to maybe 2 million, 3 million range. So not really the large lumps, they are some exceptions there but they are loans that are not a significant burden on their balance sheets and it's much better for them to work out these existing lumps that they have on the balance sheet that are on the basis of still that we sound them just going through a hard time but they are willing to work it out with the borrowers. So that's really for the ones that are on balance sheets and the ones that really have had success, the borrowers or the ones that have already very good established relationships with these banks. So they know the owners or the branch manager and that brings us back to that relationship. Now is more important than ever. Whether you do a new loan now or whether you already have an existing loan, the way you will have managed your relationships, whether it's your tenants, whether it's your property management company, whether it's your lender. Now that all comes back to you but if you treated them badly, they will remember if he treated them well, they are more willing to work with you. James: Yeah. And just for the audience, I mean, if you guys read my book, Passive Investing in Commercial Real Estate, I did very, very specifically mentioned that bridge loans may not be the best loan during the market peak. I'm not sure how many people read my book, but I did mention it there and that was written like two years ago. As I say, I stopped doing it just for my peace of mind and I want to make sure that I protect my investors’ money as much as possible than doing these flips at the end of the cycle and giving them; taking  large risk and trying to do a flip at the end. I rather go on a much better, safer bet with the better finance strategy. So when was this triggered to you? I know we are talking about; I think we are like two weeks into this crisis right now. But this happens so quickly. When did you feel like, okay, we are in trouble right now because you and I spoke and we had like 12 different reasons why the market can go bad. We have Brexit, I don't know if we have 12 things. I can't remember what the exact things. We had so many things we laid out what could go wrong, but I believe this is completely out of the norm. A medical health issue, a virus infection that's causing everybody to stay at home. I mean, is that right? When did you start to think that, oh my God, this could be the next recession? Anton: Yeah, I mean, we have seen already pressure in the system for a while, where we have seen that already [21:06unclear] was an issue and in the banking system we have seen it already last fall and we have seen it in January and February. Just because of the all whole world view that we have reached a point where everyone is getting more concerned. But it was still possible with the fad essentially doing all these liquidity measures in the past, as soon as there was the slightest view that there might be a little bit of a slowdown. So they were able to essentially put as much liquidity into the market as they needed to. Now, I would say the current situation and where we are now on the lending side really has started just about two weeks ago. It's not that it really built up. Obviously everyone was watching what was happening in China and then slowly in Europe. And as it was building up in Europe, suddenly the clouds came out. But you may recall at that point the treasuries dropped significantly. The fed already dropped the rates once and that actually resulted in some of the best time to borrow and to refinance. So that we had maybe a period of two weeks, maybe three weeks. But I think it was just around two weeks. Then we were able to get essentially 10 year and 12 year loans at close to 3%. I know someone that was not arranged through us, but I know someone who bought the rate that was below 3%, I think it was 2.94 or something like that and that lasted really just for a brief period of time until two weeks ago and everyone realized we have a problem and that problem really just was shown again in the market that there was no liquidity. And the fed will stay in coming out with their one and a half trillion injection where they said we are going to buy as much treasuries as we need and we are going to buy commercial papers and that still didn't do anything to the market. And then so the spreads started to do tighten on the agency loans at that point and then we were up into the mid two, three, 3% in Olin rates. And then this weekend and the lamps, as you may recall last weekend, that we, the fed announced that they are now buying also agency NBS for as much as it is needed. So now obviously the hope was there that they would provide the contents to the market that was so much liquidity that they are willing to put into the market that no investor in these NBS should be concerned and that that would stabilize at least the multifamily market. Always leave a half note to say that they will buy all the commercial mortgage backed securities like hospitality or retail based NDS. But it still did not help when it came to the agency side. And I would say that was probably the biggest surprise so then that deal ended on Sunday and then on Monday the agency spreads actually went up by 75 to 100 basis points. So, even though they announced it that they will buy us many agency mortgage backed securities as the market needs to get the liquidity in the market, obviously they didn't believe it and spreads moved up even further and we all still in the same situation today.  So if you wanted to get into new agency loan today with the new Fannie loan, ten year Fannie loan, your rate will be at four and a half percent for a large Fannie loan that passed some form of, as we call it, permission-based, like with affordability elements to it. If there was no affordability element to it, you're probably closer to 5%; and that's coming up from just three weeks ago when we were at the low threes. That's all grim because the markets, there are no buyers out there, so no one is able to price right now. Obviously the hope that that will be sorted out and I think as market participants see how the impact on multifamily is going to be in April or May it will calm down because then they understand how big that impact is and are able to determine where the priority should be, but until then, it's essentially there is an old one that is buying. That puts Fannie and Freddie in a very difficult position because obviously they are obligated to buy that loan from a lender that originates that loan and then they need to securitize it and sell it. They do not want to keep it on their book.  Even if they keep it on their book, they still have half the credit risk transfer buyers that they are going to so they're good. Fannie score has always been that they will find and Freddie too that they find other risk participants and in order to find them, the loans need to be priced so that these risks, participants are willing to buy whatever share of risks that they are participating in and right now, no one is willing to take that risk. James: I know it is crazy. I mean where we are looking at to do deals or to refinance should wait a few more weeks or because, I don't know, a few more weeks or months or what do you [27:43unclear]? Anton: Yes. I think for refi is in my view is easier. Why? Because you are not really under immediate pressure unless you're really in a very difficult financial situation. But then it's probably the last thing to consider refinancing now. I would wait on the refinancing side until the market has calmed down. Why would you want to now deal with an interest rate that is four and a half to 5% when the 10 year treasury holders are under 1%. If the market calms down, there is a reasonable expectation that the spread narrows again and that you're back down. Maybe not to the three and a half, but maybe in 4% or four and a quarter. It is such an uncertain time, but in my view it just doesn't make sense to campaign and apply for refinancing. Also the other point is since your future collections are still taken into consideration. If you apply today, a lender may underwrite your T12 up to March and everything looks great and as April and May and June come in and if the drop is pretty significant, that will impact your loan proceeds at that point too. So not only have you applied for a loan potentially at a very high rate but now with the loan proceeds are getting customers. There is so much uncertainty that in my view just doesn't make sense right at this point unless it's an absolute emergency to do so. When it comes to acquisitions I mean it needs to be a blazing deal in my view to even consider an acquisition. Because you have the same situation. How you negotiate with a seller? What clauses can you put into a contract in terms of occupancy and in terms of collections that a seller would feel comfortable with, but you are also comfortable with? Because that's really what you should do, in my view, if you go under a new contract, you should say that the occupants who need to be at certain level and the collections need to be at a certain level. And if not, then it's going to be through a re-trade.  If you don't have that, then I think the risk is just too high. And on the other side with the loan, it's essentially the same thing. So yes, you can apply for that loan, but unless you have these clauses in that PSA, you'll run the risk that you go in for a higher price. You should reprice the seller, but you cannot. But the loan amount is still being cut. So my recommendation is if you find that deal the first step is we need to get these clauses with the seller and the PSA. And if you have these clauses the way out, then you need to decide whether it's worthwhile to spend, let's say 20,000 in loan application fees and all that that you may lose. But that's ultimately the session that depends on that you feel that deal is so good. So I wouldn't say don't do it, but have these clauses in that PSA that allows you to re-trade with the seller that essentially then reflects the lower loan proceeds that you would likely get the occupancy and collection slow. James: Got it. Got it. Got it. Yeah, and also, I think it's a very tricky situation. You want to raise money but I'm sure if you find a deal, which is screaming good and you fear an experienced operator, you probably can raise the money. But it's just so uncertain right now and I don't know whether you probably already know this, I heard Fannie Mae right now is asking everyone to put like 12 months principle and taxes and insurance into escrow, I guess, right? Anton: Yes. Up to 18 month. It depends on the tier, if you're on tier two; it's up to 18 months. It's massive. At least I say it's cap that 10% of the loan amount, it's a massive amount. So obviously what does that mean? Now you need to raise more money. So you've likely also, I would say there haven't really lowered the LTV or increased that service, Coleridge recline that may come too but I would say it's more on a deal by deal basis anyhow now but let's assumes they are still in place that you still get can get these maximum leverage and the same service coverage. Just the fact that you have full these escrow that you need to build is a on top of the higher interest rate deal, which means that you need to get the lower price from the seller, there is just no way around. James: Yeah. Yeah. I think Fannie is just saying we are actually out of the market, but if you can meet this, we maybe come back. Let me just basically break it down. Anton: Yes, that's right. Yes. Yes. So actually that's always the conventional Freddie side and Fannie on the Freddie SPL side. I mean there has nothing being communicated officially, but there are solely some rumours that Freddie may stop any new origination for a certain period of time just to see their things all settled. So it will be again, the next few weeks will be extremely fascinating to watch how the market participants will from tenants to operators to lenders respond and right now we just do not know, but it's already extremely difficult even to get an agency loan into place that makes sense. But also would say it's really dangerous if someone still seek quotes from brokers and lenders that come in at the three and a half percent, because I guess they often threaten you or just to get the borrowers into the door knowing that it will be re-traded. That is another thing that borrowers really need to be acutely aware of. Do not trust any quote until you have it validated and validated, ask the broker, ask the lender multiple times, is that still valid?  Again, what we said just a couple of days ago is already outdated. It's important to be really on top of it and know what the current situation looks like. So maybe just to go quickly back to the forbearance discussion. Obviously it's a very attractive program. It's good news when you have agency loans, but I still would caution to use that forbearance and just would, because you can. Both Fannie and Freddie obviously they have implemented it.  It came down from FHA, so it was not really Fannie and Freddie that wanted to do it, but it's essentially a government driven decision that it's necessary and I think it's the right thing to do and it's a very good backstop for all the operators. However, if you operate the property in a good fashion or take it if you have owned the property already for a year or two years you should have enough operating reserves to get through a month or two without having already to suffer so much with let's say a 20% or even 30% collection loss that we needed to go back to the lender and ask for forbearance.  Now could you do it? I would say you probably could, but generally speaking I would say you really should only go back when you see that you are getting close to the 1.01105 of that service cover and essentially make a case, look, it's all bad at my property. I have a collection drop for 40% or whatever it is, I need your help. But if let's say the drop is 10% or even 15%, even 20% and you go right now to Fannie and Freddie they may agree to it, but I think it will be a negative Mark with them down the road when you go for a new loan that they feel that you really haven't attempted to work out the solution on your own first before you lend to them. So I will just to be a little bit careful there in how quickly you want to pull that trigger.  James: Yeah. Yeah. And also forbearance is not free. You have to make sure you don't even meet the person for 90 days or whatever time that you're getting that forbearance.  Anton: Yeah. That's actually an interesting part. So with Fanny, it's actually not just the 90 days. If you have that forbearance, so you're allowed essentially you have that 90 days and then you can pay it back over a stretch off twelve months without any late fees and interest charge on it. Now, Fannie has communicated that you are not allowed to extend the 90 days of forbearance, which is obvious, but also that you're not allowed to be late until you bring the loan current, which includes that 12 month of repayment period if you choose to scratch it out for the 12 months. Now, Freddy so far only refer to the 90 days. I suspect that they just forgot to mention that by the way, you need to bring it current. So I have seen it on Facebook and in some other places where people say, well, Freddy is easier because you only need to have 90 days. The eviction is halted and then you can do it again.  I suspect Freddy will probably also come out and announce that you need to bring the loan current and only then are you allowed to run your evictions again. So in other words if you want to or if you need to go back to normal that your property allows to do action, the property manager, you essentially do pay after these 90 days, then if you do not and you want to stretch out for an another three month or all the way up to 12 months, you essentially have potentially 15 months at your property. They cannot do any of evictions at all.  James: How do they track whether you're doing evictions or not?  Anton: I don't know how they... James: There's no way to? Anton: Well always a way that they can, I'm pretty sure that they all have access to the local court system and validate that you have not filed any evictions.  James: Got it. Great. Yeah, but somehow it may trigger bad [39:49unclear] if you go and not follow the agreement [39:53unclear]? Anton: That's a good question.  James: You can only say you violated our agreement, so... Anton: Maybe it's not triggering the bad [40:02unclear] but don't go back to Fannie or Freddie if you didn't follow these rules to the dot.  James: Okay. Got it. Got it. So it's just so crazy. So I mean are you already seeing that a sponsors and syndicators are getting bridge letters for people on bridge? I mean it's still very early right now to say?  Anton: No, we haven't seen anything, what we have seen is that the number of bridge lenders walked away from their loans at the last moment, I mean there are several bridge loans that we know of. Lucky for us it was none that we were arranging, but I know of a number of a sponsors that had bridge loan commitments in place that are supposed to close within a week to two weeks and the bridge lender said sorry we cannot fund. So these are situations that have happened already. It's more that lenders essentially have pulled out, but we haven't heard anything yet on existing loans that are in place by then. It's really too early. We need to see how April comes in and I would say probably takes until May until things get really bad, if a property has a massive loss of collections.  James: Based on your experience, because you have gone through 2008 and you have been in the industry for a very long time. Let's say right now Covid19 is gone within one month, so everybody start going to work, what will the impact be as we move forward to the financial market? Because that's a big shock happened in the financial market. There are a lot of people, who didn't have income for one or two months, is there a downward spiral or are we a good back again, the sun shines and everything goes back to normal. Where do you see it? What would happen? Anton: I wish I had a crystal ball, but I think the harder we land over the next few months. I think the quicker the upturn is going to be, but I still feel that they probably will take 18 months to two years until we are truly stabilized. I know some feel that everything will jump back up again right afterwards. I think the damage to consumer confidence will still be a lingering around for quite some time. Yes, there is that pent up demand for some items, but places will still suffer particularly the small businesses, some of them really are suffering tremendously and some of them are not able to come back and also I think a lot of the service employees, restaurants will be very slow in hiring. It also the reason to keep wages lower so it's the impact I think on the GDP or we probably go through obviously little jump up very quickly, again, form from a deep drop, but this year it definitely will be negative in my view but Goldman Sachs talks about roughly 3.8% for the year after a 25% drop. I think Morgan Stanley in talks about a 30% drop, who knows? But I think when you look back on 2008, also when you look back into the savings and loan crisis I haven't been around for the actual savings and loan crisis in the past but I was when I first started out in New York in banking, I was involved with a lot of the workouts of loans that went through in the early nineties that were caused during the savings and loan crisis in the 80's. So it still took several years to get out of that. And as we have seen in 2008 it took a long time to get back running. Yes, it was a very different situation then, but here the shock, in my view, is so much faster and also it's at the global level, the global economy is suffering so much and a lot of the US companies are dependent on global rate too. So everything just will take much longer to recover. That's my personal view and again, I think it probably will take two years, 18 months to two years just to fully stabilize.  James: Got it. Got it. So yeah, that's a lot of discussion about, H=hey, this is going to be a sharp V. So we go down very quickly we're going to come back and everything is normal. Even the government saying our economy's going to be roaring back again and everybody go back, it's normal again, but what you're saying is in terms of recovery, a lot of us businesses, global trade, yes, impacted, maybe the hiring would be slowed down because the profit has been lost I guess. They want to be careful, I guess. But for example, let's say a restaurant has been closed down for two months, so the third month they open again, back to business again. So do you think that will be slower in terms of hiring as well? I mean, because they're back in business. I mean they probably have two months of rent that they didn't pay.  Anton: So it won't be very interesting to see how the human behavior is going to be at that point. So particularly the first six months to nine months. So you have seen that if all the governors at federal level to say now we all clear, obviously the virus is still lingering. So I think people will still practice a little bit more of that social distancing. Everyone is a little bit more careful. Personally I feel air travel will probably not pick up nearly as fast. Why? Because everyone feels why should I want to be in that airplane with other people next to me, I cannot really walk away. Also I think launch events will have a much harder time to come back. It's really hard to tell but I just feel based on all the downturns we have gone through. Very often people say, well it comes back fast and I think the initial recovery undoubtedly will be extremely strong. I think there is no doubt about that because we are essentially shut down to a large extent so it has to come back drastically. But really come back to the confidence level, where we were before I think it will take much longer.  James: So you're talking about consumer confidence?  Anton: Yes, yes and business confidence.  James: Got it, got it, got it. Yeah, I mean I read somewhere that consumer confidence is the most important indicator for any economy or any crash or any recovery. If that comes up, everything comes up; if that goes down, everything goes down no matter what you do that consumer confidence in terms of probably spending money and doing events and taking flights and so. So for example, let's look at class A, B and C renter’s base plus B and C is a lot of service industry. People are on pay check, pay check. I don't know I'm just thinking this quickly, they may be okay. So about third month, fourth month we are back in business. I mean, unless they are wage is lower than say impacted them but if their wage is the same they probably have that wage coming back to them again. Maybe they are scared. Maybe they want to go to a lower rental amount. Maybe, I do not know. But I think still the impact to the flights and to the big companies it's going to be more because now this is a global trade. So could that be the A-class renters are more impacted compared to B and C in the long run? I'm not sure. I'm just thinking this quickly.  It depends on how fast it comes back and what is the wage they are getting and how confident they are buying.   Anton: It think when you look at most people that live in any class properties they have really decent jobs and always leave some of these jobs are now being lost or at least they are in a furlough, so they are not getting paid right now. So they can collect their unemployment; and I would say if they cannot afford it then the A class, they may move down to the B class. So that's where I would see people that struggle in these shops do not get back that I need to move down into B. I just do not see that someone who is in an A class will be willing to go into a C class property. So I would say they would probably rather move somewhere else than into a C class property. I feel kind of the same for the people that live in B class properties that moving into a C class property is for them in my view, is also kind of the last resort. Now the big question is how the residential market will evolve. We haven't even talked about that, will there be a massive dropping in prices in the short term, because no one now in some markets can even see properties.  James: Are they getting forbearance as well, the single family houses?  Anton: I think when you are a residential and not active at all in in the single family space but my understanding is if it's your own primary residence, you get forbearance you can apply for forbearance too but not for less than property. But I think I'm more wondering how it would work for someone who is in the B class property would they have an opportunity potentially then buy a property and if still not able to buy your single family home. Whether they will be able to rent a single family home instead. I just do not feel, and again, some people say that doing the last downturn, a lot of people move down from A to B and from B to C, it's hard to track. I do know that really believe anyone has been able to properly track that, but based, at least on what I have seen during that time, there was not really much movement. There was a lot of moves from A to B because of that pricing point, but it's still a decent quality property. When you are used to an A class property, but they have not really seen much coming from a B class to a C class. But again, I'm not an expert in this light there may be economist out there that have studied this.  I just feel that these movements are really happening. Now when it comes to the service employees I agree with you. Once they start back up, they need to employees right away. There is no doubt about that and that thing that's really in my view is kind of that positive flight for C class properties at the end of the tunnel. Once the shutdown is over and restaurants are able to operate again and stores are able to operate and all the other service type related business including hotels they have a job again.  James: Provided they don't have a negative wage growth, I guess which could happen as well.  Businesses may be covering this, but this is, I mean, within two miles, if I'm an operator, if I'm a restaurant, I will hire back the same people. I mean I have two options, either pay them the same amount before they leave or I pay them slightly lower. I just don't hire, that's the option [53:36unclear].  Anton: So there the question again is how many restaurants are able to reopen. So we just don't know if it's just for another month or two month, I would say the majority are able to cover the loss and go back to normal afterwards or go back to business. But a lot of them I think will without some form of a bailout, wherever that comes from will probably not be able to reopen. So that's fair. That question comes in. It's there all sort of pressure, at least in the short term on wages that whoever is in the service business now does not have as much choices as they've had pre-Covid19.  James: What about the construction loan? What's happening in that space? I mean people with construction that is ongoing right now. From what I understand, the construction loan is also a loan where if the value of the building that you're constructing drops, they may ask whoever the developer is to put in more money right now, could they be in trouble as well?  Anton: Yeah. They haven't really seen that yet. It probably depends on what phase you're in, in that construction loan. If you're in the early phases or just started the earth movements or started with going vertical and you're still in year last to start your lease up, I don't really see that that impacts it that much. If you're already doing your lease up period span, I think you need to go back to your lender and find out how you can extend that loan. You'll see, usually you may have to do three years, two and a half to three years of the construction before you go into perm and you may not need another six month to complete that lease up, but if you're early or right in doing the construction I would say it shouldn't be such a big issue because when you consider the leverage for most of these loans is relatively low anyhow. Value at your 60, 65 of cost, maybe 60, 65 to value if it's a more an established sponsor. So the leverage is not really in most senses, it's not that high to start with. So I don't think that these lenders will be holding back. I'm more concerned about, again, the harm on the construction lenders that are out there too.  James: [56:31unclear] Anton: Yes. So where you are in your eight, nine, 10% construction loans, so these players I'm more concerned about. James: Is there a chance for the construction loan guys to say, okay, I'm not funding anymore because they go on draws based on the progress of construction. Is there a chance they said, okay, we are done. We are no more funding you; we are out, even though they have signed the commitment because they probably don't have the money. I mean it’s all come from some pool of money?  Anton: Yeah. I would say you have that risk. The law to the player I would say the less likely it is. I would say if you have a strong bank, a bank will continue to do lends, if you have a life insurance company that has provided that, they're likely will continue to lend and have the access to the funds but if it's a private lender then that would be probably more concerned that they are able to continue to fund the draws.  James: Yeah. That's interesting because I think in 2008 that's what happened. A lot of construction projects. Everything stopped because everybody ran out of money.  Anton: I mean, it could happen, we do not know but at least so far we haven't seen it where they have come to a complete halt. And again, the private space I do not know, but suddenly the institutional space hasn't come to complete halt yet.  James: Got it. So the other thing that I want to just give some education to the listeners is how a loan can be made from non-recourse to recourse. And I know since we talk offline in the past crash or you had that one of the function that you are familiar with or you are doing is like lenders are trying to figure out how to make deals from non-recourse to recourse. What are the potential ways that that can happen? I mean, we know we talk about this [58:48unclear] agency loans.  Anton: So obviously I think most of your lessons that for now have that [58:54unclear] which essentially means that if you cause fraud or gross negligence, then that loan can turn into a personal recourse and one of the examples for this kind of obvious when it comes to the property operations, when it comes to gross negligence can be that you are not maintaining the insurance. That can be, even if you forget about it, that's gross negligence. So even if it's unintentional, it's still gross negligence. If you do not verify that the insurance meets all the agency requirements, particularly when you might change the insurance from one to the other and the somehow you feel, oh, I get a better rate and then suddenly you get that better premium, but you may not meet all the requirements of the loan insurance requirements. So these are kind of the obvious things like this now will all be [1:00:10unclear]. James: But usually the agency have the specialized insurance department to verify all insurance requirements met whenever we change the insurance provider?  Anton: Well, yes they should. It's essentially the service server is supposed to track this but it's still up to you to verify that you would actually need these requirements. You cannot say well the service from that lender didn't save me anything so I'm fine, that's not the way it works. It's really important that with an insurance change, always leave if you'll get the approval from the insurance person that the lender or whoever they are hiring and gives the green light and it's a different story, but that's not as you are in a loan, that's not necessarily happening, I'm not talking about when you apply for the loan, but more down the road when you make changes to that insurance.  James: Yeah. Yeah. I mean, my experience has been like they are very, I mean, even I've made changes to my insurance and the insurance department is so particularly they go into every line item, they make sure we are reading it. So there could be some of those lenders, which is not doing a detailed job, I guess.  Anton: Yes, that's why and it really varies from lender to lender how detailed they are now. What a lot of people do not realize and that's something that we have to discussed offline is that  your representation and your order, guarantor representations when you apply for that loan are also part of that bad boy car found. So what that means is that if you or any of your guarantors make a representation when you apply for that loan, that can ruled as inaccurate. And I'm not talking about, oh, I put in a value for a property that I felt was a million and it's only 900,000 or 800,000. I'm talking about a gross misrepresentation of your financial strength, of your experience but particularly your financial strength that can be triggering that bad boy carve out and we have seen that in the past.  You need to understand why particularly when it comes to Fannie, what a lot of people do not know is that each Fannie lender has a loss share agreement with Fannie. So they take a loss. If Fannie takes a loss, they take a loss too. And though they have that first loss arrangement. So they have an interest of loss mitigation. And obviously if the property somehow will not pay back the loan plus all the accrued charges they need to look through all the solutions. Then one of the items is that they will have a in house or external lawyers look at all the representations that were made pre-application to approve that loan or aside from all the documentation that was submitted throughout the loan being in place.  So it's very important that you trust your partners that they are or not lying. We have seen it a lot, a lot of people claim that they are accredited investors and they are participating in deals that are a 506 deals and because we don't need to verify that you are an accredited investor with these 506 deal offerings but then they suddenly then pop up and do their own or attempt to do their own syndication and then you suddenly realize, well you are not really an accredited investor.  James: But that's not really a loan thing, that's more of a system guideline?  Anton: No, that's not a loan thing. I completely agree. But that is just an example of another thing to read, most people they are so desperate to get into deals, particularly on the GP side, so many times they are stretching the truth or into deals that they are sometimes stretching the truth of what the true situation. So it's really important to ensure that all the partners and guarantors that you have on board, that they are not grossly misrepresenting their situations. Whether it's experience, financial strength, that everything on the REO schedule is really true. No one is really verifying this.  James: Oh yeah, no one read that in detail.  Anton: No one is looking at tax returns. So there is solely a risk that someone can inflate their balance sheet and their experience tremendously without being verified.  James: Got it. Alright Anton, why don't you let our audience and listeners know how to get hold of you?  Anton: Yeah, sure. So my email address is anattli@peakmff.com and that's probably the easiest to reach May also then when you're on Facebook or LinkedIn, just type in my name and then I will pop up. It's a pretty unusual name, so you should find me there and I would say that's the easiest to reach me.  James: Awesome. Thanks for coming on the show. I think this is a really, really timely show in terms of discussing the loans and all that. So sometimes when nothing happens, when we talk about how risky bridge loans are, nobody really cares. No passive way to look at what a sponsor is taking loan; they just look at the numbers and did that. But keep in mind, I did write it in my book like two years ago. So if you have read it, I mean, there's a lot of resources out there as well. You would have been warned about it,  there is nothing wrong is just market risk, sometimes you make a lot of money doing bridge loans as well, but it just depends on the market cycle and the sponsor and the syndicator, how strong they are as well. I mean, there's a lot of sponsor who's going to write this bridge lending uncertainty as well, fine. But just for anybody to be aware of, I guess. Thank you very much Anton. Anton: Yep. Thank you James. 

James: Hi audience and listeners, this is James Kandasamy from Achieve Wealth Through Value-add Real Estate Investing. Last week, we had Ivan Barratt, who owns almost 3000 units, almost $300 million assets and he's doing a lot of deals in the Midwest cities and the States. So today we have Reed Goossens from Wildhorn Capital. Reed owns with his partner Andrew Campbell, who's also a friend. They own like almost 1800 units valued at $250 million and they've been it doing almost four and a half years. Hey Reed, welcome to the show.  Reed: Good day, James, thanks for having me, man.  James: Thanks for coming. I mean I was on your show like a few years back. And you know, it's great to have you back here and I know you guys are doing a lot of deals in central Texas, like where my backyard is. I also do Austin and San Antonio, so it's going to be a good discussion on what do we see in the market, right?  Reed: Exactly, exactly.  James: So did I miss out on something in your introduction? Reed: No, not at all. You've hit the nail on the head. I'm sure a lot of people have heard my story. An Australian guy, moved to the United States back in 2012. My background is in instructional engineering. I moved here to be an expat and just to live in New York City and you know, all these years, seven, eight years later, I have found financial freedom through investing in US real estate and I moved here with little funds, no established network. And my whole shtick is that if I can move here halfway across the world and make it happen, then so can the average American sitting, you know, get off the fence and start investing in real estate because it truly is the, you know, in terms of the Western countries, it's the premium in terms of Western countries for yield and commercial real estate. And we can get into that in a minute. But yeah, that's really my background. James: Yeah, it's very interesting. I think sometimes people who have never lived outside of the US knows how much you can achieve in the US. Your own sweat equity, right? You can really work hard and come up and live and they have to really go outside and see how difficult is it to come up. And you can work day in, day out and you can work 24/7 you know, for seven days. There's always a limit your progress. Right? Reed: Exactly. Exactly. No, 100%. James: So let's go back to the market that you guys are focusing, right? Austin and San Antonio, right? So why did you choose these two markets? Reed: Yeah, so historically, originally back in four and a half years ago, we chose central Texas. I chose central Texas, it had moderate cap rates compared to, I live in Los Angeles, California. I live on the coast, very compressed cap rates, looking for something with a little bit more moderate cap rates. At the time, I was, you know, Koji paid a couple of deals with some preexisting partners. I had my systems from underwriting to deal sourcing. I sort of had that down pat. But what I didn't have down pat was a business partner, boots on the ground and that's where I met Andrew Campbell and we formed a partnership. I was getting involved in underwriting deals in Dallas and San Antonio, not in Austin as yet, you know, that will morph into that in a little bit, but in the beginning, it was just like underwriting small deals, you know, between 50 and 100 units. But what I was missing was the boots on the ground, the broker relationships. And so, what I needed was a partner like Andrew who was there, who was in the thick of it, who could go and you know, hang around the hoop and bug brokers while I sort of underwrote deals and did sort of the more the back end operational stuff. And we found a partnership back in 2007-15 I think it is. And yeah, the rest is sort of history.  We underwrote a lot of deals in the beginning, people took a bet on us in terms of, you know, brokers taking a bet on us and then we got their first deal done. And that morphed too quickly in the second deal and now going on nine deals. So it really came, it stemmed from the fact that I was needing to get a business partner who could take some of the workload off me and do something that I had a skill set that I didn't have, which was boots on the ground, access to brokers, access to deals and walking assets and I really focused on the operational side on the backend. So yeah. James: So can you give some advice to our listeners on, I mean, I know you say you needed boots on the ground, so you looked at the market and, I mean, I'm trying to help some of our listeners who are trying to do like what you're trying to do, right? You are in California, you have a partner here in Austin, Texas. And how did the discovery of that partners and boots on the ground, because it's not like I find a guy in Austin and I'm good with it. There must be some qualities in him.  Reed: Yes.  James: And how did you assess that?  Reed: Let's just rewind the clock. I'd been doing deals prior to meeting Andrew when I was living in New York City, when I first moved to LA, when I first moved to the United States. I flipped a few houses in Philadelphia and I had a business partner on that and it was sort of a JV more than a business partnership. I had people tell me that that particular person not to be named, wasn't the best partner to work with. You know, he was unorganized and blah, blah, blah. And looking back on it, he kind of was and it didn't go that great. Well, I'm no longer in business with that gentleman, but it was, I tell you that story because it's a learning curve, right? My first flip deal in Philadelphia didn't go very well. But between him and I, the old business partner, we were able to get the deal over the line. We didn't lose any investors money. And you know, we then parted ways after that because we just realized we wanted different things in life. But I say that because when you're looking for a partner, you need to understand that there's going to be some times you're going to get into partnerships that may not necessarily jive because you're hungry to get deals done and you're hungry to get the business off the ground. But when you first get started, the thing that attracted me to Andrew and what he attracted to me was we had skill sets that complemented each other. And I think that's the most important thing is the skill sets to complement each other. Because if you don't have those skill sets, then what's the point? And actually, you don't wanna be working on the same thing. So, I saw in him that he had a skill set that I didn't have and he saw in me a skillset that he didn't have; complementary skill sets are really, really important. Also, just the fact that both of us wanted to grind. We were not afraid to roll up the sleeves and work hard. At the time when I met Andrew, he was working a full-time job, I was working a full-time job and we were hustling on the weekends. He had kids, I don't have kids as yet, but you know, he had all these other external factors and so did I, in terms of, my mom was sick in Australia. All this stuff was happening and really, but we still knew that our North star was to get financially free and create a business. And years later, we've achieved that, which is awesome. But when it boils down to it is we are business partners first and friends second. I view Andrew's one of my better friends now, but that's because we came through business partnership, right? Andrew also runs a different crowd than I do. He's very much in the, you know, play golf and all this stuff where I'm more of the go surfing. If you're watching this video, go surfboard in the background. You know, I'm very, very different. Ying to his yang and we did a presentation last week at the best ever conference in Denver, my sorry, in Keystone, Colorado. And what we were talking about where was that real estate is the art and science, right? Real estate form is an art and there's a science of it. Andrew is very much the art and I'm the science behind it. So it's the marriage of two different polar opposites that can really make a successful business and partnership work. So all that type of stuff is like you have to assess what you're good at, right? You have to assess your pros and what you're bad at and do what you don't want to do. But you have to also realize that being in this game of real estate investment, you know, whatever size you do, whether it be from flipping houses all the way through to doing large commercial multi-families like what we do, James, you and I, you have to realize that you need a team. And having someone, a copilot, a co-captain sitting right next to you, bearing taking some of the responsibilities and taking some of the pressure off you as an entrepreneur and business owner, it's so vital. It's paramount to the growth because you will grow by bringing on a partner that works and is harmonious with. Then, you know, looking back, I wouldn't be sitting here today talking about 1800 units and a quarter billion dollars worth of assets under management if I didn't go out and find Andrew, vice versa. He wouldn't also be sitting in the same position if he didn't find me. So it's a combination of seeing what you're good at, what you lack at and seeing if you can find someone that can meet you halfway in the middle and that you can get on and you have those similar goals and visions, but you also can work hard to achieve a goal. James: Got it, got it. So I mean when you guys, I mean, I'm trying to go into this partnership because I think a lot of people are trying to get a partner to partner with them and they just need to know how does a successful partner look like when you were like, cause you guys are very successful in partnering up. So how was that discussion? I mean somebody brought up, okay, let's find out, we partner up. Right? So, and what was the other person saying? Because sometimes people say, Oh, well, I'm not sure yet. Right? So there's not going to be like, let's partner up and everybody's going to be partnering.  Reed: Look, let's not beat around the bush here, it is like dating. If anyone's been out in the dating world, same fricking thing. [09:46crosstalk] a few times. I guess Reed: Exactly. [09:48crosstalk] a few people before you get into bed with someone and skews the crass. But you know, it's an interpersonal relationship. It's a feeling you get from the other person that, Hey, this person could work. Now, it could've gone badly, but it's the same, you know, when you do go out on a date, you get an energy from that person, you can feel that they want the same thing that you want. You have conversations, you get to know one another. It wasn't just like, Hey, let's partner. It was over a period of, you know, three to six months that Andrew flew out to LA with his wife. He got to meet my wife. I flew out to Austin, I met his kids. It was a courtship, you know, similar to how you would date someone. And through that, we were able to have candid conversations about where we're headed, the goals and really align with, you know, he'd lost his mom through cancer, I'd lost my mum through cancer. So we had some very much some things that aligned. Plus also the fact that we could hustle and we could grind and graft hard. You know, that was a plus. And we had complementary skill sets. It sort of was ticking a lot of boxes. But at the end of the day, the first couple of deals, we were very much Reed and Andrew. It was RSN, which was my old company and Wildhorn and we took down this first couple of deals, really as individuals but you know, using our entities to partner in case something did go wrong and we can just, okay, look, we'll sell the deals and we'll go our separate ways.  Over time, that morphs into one banner, one marketing arm and that's where RSN falls away and we went with Wildhorn because he was based in Texas and we became more of a partnership. And look, I'll tell you here today James is that partnerships also don't last forever. You know, Andrew and I have had conversations. I'm from Australia originally. I know that in 10 years' time when I'm 43 years of age, I want to have some investments back in Australia. Andrew might not be involved in those deals but for right now, we're looking to double the portfolio in the next three to five years and we're looking to make some successful exits. And that's all I can promise, right? I don't know what's going to happen in 10 years. The biggest thing for me, James, is that I picked up the book Rich Dad, Poor Dad back in 2009 and, you know, we just finished 2019. So a decade later, I'm sitting on a podcast with you telling you about my assets under management. I had no fricking idea that I would be doing that 10 years later. And so what the message is, don't plan your 10 years ahead, work right now. What's in front of you. See what doors open, which is, you know, Andrew and I are having a really successful partnership and relationship and we're going to double our portfolio next three to five years and just be okay with that. And don't worry, the future will figure itself out from there. You know what I mean? Because you can overestimate what you can achieve in a year, but you can underestimate what you can achieve in a decade. And so my whole story, my main message to people out there is when you do look at partnerships, understand that they morph over time. They may come together for five, 10 years and they might go apart and that's okay. That's how businesses evolve. That's how entrepreneurs evolve as human beings. And you have to also, not sacrifice but surrender to that and understand that that might change in the future and that's okay. Right? Because as you know, multifamily isn't very hot right now. It's everyone, every man and their dog is in there so you might have to pivot and change different business structures. James: I mean, absolutely. That's really good conversation there. But some of the key nuggets I want to recap, right? I mean, a lot of people talk about a partnership is always complementary skills, but it's not that, right? I mean, that's one thing, that's just one part of it but there's a lot of core values. I mean, you and your partner have a lot of core values similarity and take time to discover that, right? I mean, based on your family stories and based on your goal because you can find a partner with complementary skills, but who may not want to hustle. He may not have the goal that you want. I mean, there are certain aspirations that anyone who's hungry for achievement want and you know, he expected the same on this partner and I'm sure you guys found that.  So let's go back to the market that you have chosen in central Texas and I'm sure people have learned it's not only a compromise, it's a lot more than that and you guys have to discover it. And one more thing I want to recap on the partnership is the way that you guys set up your company, right? Two of you guys, I remember the RSN Capital Group, if I'm not mistaken and Andrew has his own and you guys kept it separate, which is really good. That's how I would recommend to anybody who wants to do a partnership. Keep the entity separate, put it into one LLC and buy a deal and in case something doesn't work out, you can always fade it out. Right. So yeah, I've seen a lot of people where on day one itself, create one LLC and hold partners on one LLC and they can never split up when something happens. Right. So, awesome. So let's go to the market. You chose central Texas, you found your first deal. Did you find the deal first or did you analyze the submarket first? Reed: All of the above. I was looking in Dallas, I was looking in San Antonio. I was just really seeing what... I was underwriting a lot of deals. Before that first deal came to me back in 2000...sorry, leading up to that point was when Andrew and I met then we went and underwrite like a hundred deals before we go that first deal under contract. But if I look at the why behind central Texas, you also gotta understand where I come from and I made this speech last Thursday night at the best ever conference, I come from a country in Australia and you have to put it in context, right? Because part of my special power, part of my superhero, part of my special sauce that I bring to Wildhorn Capital is my international perspective. And the reason that is so special is though I can look at things through a different lens. So what do I mean by that? Well, I compare just to Australia and America, right? Australia and America, the land of mass, I'm talking about excluding, let's ignore Alaska for a second, but just those two landmasses, they're roughly the same size, give or take. However, in Australia, we can only inhabit about 18 to 19% of our land because the rest is a desert. And so everything is full. Everyone is forced into major cities. Everyone's forced to the coast. And so we have a small population, we only have 24 million people. Unlike here in America where you can inhabit North to South, East to West and you have 300 million people so we don't even have 1/10th.  The reason I'm bringing all this up is because I grew up in an area where we have a high demand but low supply environment, right? What does that mean when you have high demand, low supply environment? You have low cap rates. In major markets in Australia, in major markets in other Western countries, commercial real estate cap rates are sub 3%. I'm going to spout off some big names, but you look at London, you look at Sydney, you look at Hong Kong, you look at Singapore, office space and then there's probably the only thing that is a common thread between all of them. Office space in those markets are sub 3% maybe even 2%; where you can buy office space in New York City or LA or now even Austin for full cap.  And so when you've got these international perspectives of like, wow, I've come from a market where historically there's been low cap rates for decades because of supply and demand and I see the same thing happening in central Texas where the GDP of all of Texas is greater than that of all of Australia. I'm doubling down on that and that market, because a place like Austin, Texas has now transitioned from a boom-bust town into a tier-one market like Los Angeles, like Sydney, like Singapore, like London. Where dirt is trading for as much or even more as the coastal market. So when you have high demand like you do in Austin, low supply coupled with a very high barrier to entry for new product, which means buying dirt, getting an approved construction, doubling down on existing assets in a market like Austin means that coming to the recession in the next couple of years, you'll be able to ride that out because you have a high demand and a low supply.  I also come from a country where we have not had a recession in over 27 years because of, obviously physical policy, the way in which we invest our pension funds is a lot deeper than that. But again, I say this all to give you the lens that I look through when I'm looking at different assets. One other thing that not many people know, multifamily does not exist in Australia because of the lack of financing vehicles. We only have 25 million people. We have four or five major banks. Those four or five major banks do not lend money on a new apartment construction unless you've pre-sold X amount of units, which is a combo market. So they lend on a build to sell, not a build to own. Right? And so when you don't have those sophisticated financing vehicles as you do here in these States, you know, Freddie Mac, Fannie Mae interest only for 10 years, Ameritrade over 30 years, the fact that multifamily doesn't even exist in Australia when I first moved here coupled with population GDP growth, seeing markets transition from a boom-bust into a high demand, low supply environment, seeing markets transition into, it's a high barrier to entry for new product, all those things add to why I would double down in a market like that into help me ride out the next 10 years.  Because remember James, the last 10 years that we've had just had, since 2009, has been the best 10 years for multifamily, probably in history, right? We're not going to see the next 10 years are not going to be the same. And so as an investor, as an operator, you need to look for markets where there's true growth. Now, you compare Austin to New York and San Francisco and LA, money is still being invested in those markets because of the demand. So people still invest in these coastal markets because of the longterm gains that they are going to make. And a lot of people have made a lot of money in a short term period over the last 10 years and I think that's going to be the same trend moving forward. And that isn't completely incorrect. And if you think that's going to happen, you need to go invest in something else, in my opinion, James: It's crazy on how much the tide has gone up or the past 10 years and everybody thinks multifamily is the same, right? It's a commodity now, but it's not. I mean, at some point the wage growth is going to hit some limitation and you're going to have a problem, right? So you have to be really ready as when you say; that's really awesome. And the other thing about Austin though, other than coastal cities, a lot of coastal cities are getting rent control, whereas Austin, I don't think that we'll ever get a rent control. Even those20:30unclear] city, but it's in there. Reed: Yeah. Even if that was to happen, people still make a lot of money in places like LA, New York, San Francisco, they're making a lot of money and it's because of the value of the dirt. And everyone's got to realize you buy real estate for the value and now that is what is intrinsically is going to grow over time. The fact that when I first moved to this country, I noticed that land, at least in LA, in New York and San Francisco, land is key. You're right, it's what holds the value that, the asset depreciates over time, but in central Texas, the asset is more valuable than the land, that's slowly starting to change, right? As demographics changes, people move as population grows, as GDP grows, all that sort of stuff in terms of supply and demand; that then means that dirt is worth more, right? Dirt is where the value is. And if you hold it for a long period of time, I'm talking seven to 10 years, you're going to do just fine. James: I was happy to know that. You know, I'm not sure whether you'd known, Tim Ferris moved to Austin like a few months ago, a few years ago. I need to find out why. I mean, I listen to his podcast and his podcast is awesome, right? So, let's go to underwriting. So let's say you get a deal today, right? What are the things, what are the sniff test that you do before you look into the second level details? Reed: Yeah, look, stiff test, it's a hard thing for a sniff test these days because there's so much more to this story. It goes back to the art and the science of underwriting. Back in the day, five, six years ago, yeah, you can do back of the napkin and  does it make sense? Yes. Does it not make sense? No, because you had so much, you had a cap rate that was moderate and you had an interest rate that, you know, was a Delta of maybe 200 basis points you could get cash flow. Today, it's not like that; that spread between interest rates and cap rates have compressed, right? Its cash flow becomes harder to achieve, thus you need to understand the story and that's where the art comes into it, not necessarily the science. So I still look for a spread between going in cap rate or a stabilized cap rate and interest rates. I want to make sure there's at least a hundred basis points in there and that's growing over time and when I model it out over five or seven years, that continues to grow. But I also want to see now, I'm looking at deals where there's other opportunities. So, we are about to buy a deal south of the river in Austin, Texas. It's the lowest cash flowing deal we've ever put out. And we're oversubscribed to that deal because of the location. Now what you don't know, if you looked at just at the numbers on that thing, you think, Oh God, it's a really low cap rate, but you don't realize that if you don't know the story behind what's happening in that area, 600 units are going to be completely demolished and taken offline in the next 24 months. So do you think that's going to have an impact on our rents and the occupancy? Of course, it is. But how do you underwrite to that? You can't, you've got to underwrite it if it's a value add multifamily.  This is where the story comes in and where you need to go bigger than the sniff test because this is what market we're in. Also, we know that this land that we're buying, we're buying 12 acres where the density could be doubled on this plot of land. It can go from 294 units, we could go and put 500 units on it. Now whether you go and execute on that as a different thing, but that could be an exit option for someone in the future for a developer to buy if all these investments in the South of the river there near the Oracle is to come to fruition. Then again, I'm seeing very similar trends as if I'm looking at an ally or a New York market. So these are all the things that I look at now and you have to go deeper. You have to do more than just a sniff test because we're not in those days anymore. We're in a different market and we have to spend time. I have four analysts that work for me and they spend a minimum of three to four hours on any one deal. Andrew is the guy that makes sure he feels out the deals that we see but if he thinks that there's a bit of a something a little bit more to sniff out and he's got a little bit more an art to it, than the science, then we will dive deep into it and we'll spend three or four hours underwriting it. And it still might not work at that point, but we've gone and exhausted all avenues to make sure that it isn't a deal that works for us. James: So, what you're saying is you have stopped looking for the normal cash flowing value-add deal. You're looking more for the path of progress and you know the story behind the deal as the future appreciation I would say, future potential in that deal., I guess. Reed: Future potential because your whole podcast name is called increasing your wealth through adding value, right? You may add value by entitling the land to have a bigger a density on it. That is adding value.  James: Absolutely. Absolutely.  Reed: Any way you add value but historically it's been all, we'll put lipstick on a pig and hopefully it looks good. So that's gone, right? There are still those markets out there. There's still these deals out there. You can still find them and don't get me wrong, but when you become more sophisticated when you become more advanced in your underwriting when you become more experienced, you start seeing different trends and why the big guys, and let's not beat around the bush here, I've worked for big developers in LA, in New York, and they don't have podcasts, they don't have books, but they own half of Beverly Hills. The reason the way the big dogs are, they're still buying these pieces of dirt, they're still buying these trophy assets and putting it in. They're still selling to rates, they're still selling to insurance companies and making a lot of money and you've never heard of their names. So I've come from that background and that is where exactly how my mindset has now shifted to start understanding the pennies dropped, ah, and now I know why those guys do what they do is because of the value which the supply and demand curve, we go back to that a lot, that demand is high and supply is low. James:  I mean it's very interesting, look at things differently. And I met someone the other day who was buying land on a, it's called a submerge land, land under the Lake. And she was saying, Oh, I sell that. I say, how do you sell that? So it's a very interesting story on when a boat comes, you know, you need to dock on your land, even though it's under the water, but they can still sell it. Mixed with different kinds of people, go out of this, the normal value add, I would . To see those kinds of things. So yeah, it's absolutely, you know, it makes sense to do creative stuff as long as you're doing it in the right market. Reed: It does all come down to market and it does all come down to just reacting to the market. Right? You got to react and you go to, as entrepreneurs, we're riding the wave, the wave of change is ever-evolving. And so we have to be ready to look at things through a different lens to not be ignorant of other options that you can do to your property. Because you know, it's about being creative, just be creative with the piece of land and you can figure out many different ways in which you can make money from it. So it's just understanding that rather than just plugging, implying and you know, buying at a six cap and getting interest rates at a full cap and having all this cashflow and yada, yada, yada. There are still those deals out there, they're a lot harder to find and thus you need to be a little bit more educated in terms of the value that you bring to your asset now coming into, you know, a new economy that we're in. James: So do you see some of the investors who are used to getting cashflow and doing value add on the rent and all that, do you see some of the investors dropped out? I mean they don't buy into the idea or you think a lot more people buy into the idea or you just finding different people buying into the ideas? Reed: Last year we rolled out and we were the first ones in the industry to do it in the multifamily industry, at least in our little circle, the AB structure, we brought that to market first. We closed on a deal first. The way we do that is by offering 25% of the equity has 10% preferred return paid current. And that means that you can satisfy those cashflow customers or investors with that class A bucket. Class B bucket that they have an accruing pref but they get all the back end. They get 70% of the backend so they're looking for the equity multiple and we then divide it out the investor group into two pots. We can now see who wants what but what it does mean is that if we buy a deal that cashflow is 2% out of the gate, which is pretty much a lot of deals only cash flow very little out of the gate, you can pay that 10% pref straight up to 25% of the equity.  If you have 25% of the equity not participating in the backend, then that juices the IRR to the class B. All these things we are doing in terms of structure because we are reacting to the market and because we're not just blindly going along and not getting any deals done because, oh, it doesn't work like it used to work. Well, we're changing the way in which we structure ideas. We're changing the way in which we underwrite ideals to back into making sure we're appeasing our investors that have some cashflow, a bucket but we've also got the equity appreciation bucket and having honest, candid conversations with our investors that, hi, if you give me 100,000 bucks, does it really matter if I give you seven grand every year? Is that going to change your life or does it more matter that you give me $100,000 and in five or six years' time, I'll give you back $250,000? Is that more valuable to you?  When you have those conversations with those investors, they start thinking differently. And people that they think, Oh, the pref isn't being met, oh, that means it's a bad deal. No, it just means that the deal is getting out of the gate into different velocities where another deal is. And so looking at the longterm play, real estate, James, is a longterm play, not a get rich quick. And that's why I say a lot of people have done so well with their money in the last 10 years. They've doubled, triple their money in three to five years and I think that's still the norm. Well it's not and that's where you have to readjust your expectations. And that's where, again, my international perspective where I've come from a country where if you double your money in 10 years, you're doing just fine. The longterm play is what real estate is and people sometimes lose that vision of what longterm means and they think long term is three years. James: Yeah, that's true. Sometimes people are just so used to what they make in the past 2012 to 2017/18, keep on looking for the same yield and you know, that kind of deal is no more existing.  Reed: And investors appreciate being candid. Investors appreciate having those open and honest conversations. And why would you take a lower return? You're taking a lower turn because it's risk-adjusted. You're not investing in a tertiary market or a secondary market where it may get really rattled if they have another recession, you're investing in lower risk, and thus you have to adjust your expectations when you go and invest in a market like Austin with lower risk, low margins. James: Yeah, yeah, yeah. Risk-adjusted return is something that a lot of people don't understand. I mean if you're making 6% in an awesome market compared to you're making a projected 8% I would think is projection in the beginning, maybe before you invest, everything's projection, right? Someone tells you they're going to give you a 20% IRR in a tertiary market compared to someone's going to give you a 10% IRR in a solid market. That 10% is actually much better than the 20%  because the risk is lower.  Reed: The risk is lower. But also you look at like if you want no risk, go put your money in a treasury, the 10 year treasury and that's what 1.32% if you want zero risk, go do that. And if I'm offering you six or 7% return, I think I'd rather place my money. So backed by physical real estate where you can have all the tax depreciation, no other investment holds up. So obviously the stock market is doing very, very well, but you have to also combat apples to apples and that is, you know, one is risk, two is volatility, three is tax depreciation and four is access to capital. And so all those things play into effect when you think about real estate versus other ways in which you can make money in this world. So yeah. James: Yeah. I think I saw the way you guys structure the class A and B, where you have one person class A is like flat 10% or in a certain percentage, I can't remember the number. Reed: It's flat 10% but the class side does not participate in the back end and then you've got class B that has an accruing 7% pref and you catch up upon sale but they get 70% of the back end. And those investors are more focused on the equity multiple rather than the cash flow. And thus, you're splitting the bucket but you still offer them both. The investors can still have some in A and some in B, but you limit the cost A to 25% of the equity. So it helps, you know, juice the IRR. James: And does the class A, the 10%, get paid from day one itself?  Reed: Correct.  James: Okay. Okay. Reed: You can do the math, right? So if you have $1 million of equity, 25% of $1 million of equity is $250,000. 10% of $250,000 is 25 grand, a year. Now, $1 million in equity, that's probably going to buy a $4 million property. You think a $4 million property could cashflow in any one year, 25 grand? I think it could. Yeah. So that's where the special souls comes in because you're paying 10% on 25% of the equity. So thus your cashflow out of the gate can be lower and you can still hit that 10% preferable. James: Yeah. So do you see...we trying to get filled up fast. I know one has a smaller pool, the other one's bigger, right?  Reed: So, we also have a higher barrier to entry on the class A so we have $100,000 minimum. And we have a lot of people wanting class A. The thing is we tend to see costs, on the first deal, it got filled up really quickly. On the second deal, it was a little bit more equal, you know? So, but here's the other thing, class A investor is if my deal, I'm not hiding anyone from it and it's the truth, they get paid first, right? So if I go and refi and I hold it for five years and I decided I'm not going to sell, I'm actually going to refi, well, I can refi it and pay all my investors costs I owe their money and they're out of the deal. And I can replace class A with cheaper, cheaper debt, right?  Cause if I'm paying them 10% of their money and I can get debt at full percent, then I've just essentially, you know, taking them out of the deal. Now there's a risk there that they're out, right? And I have investors saying, well you could just come along and do that. It's like yes I can. That's part of, you know, real estate and debt stacks. Right. I can just replace as the value of the asset grows, I can replace the debt and I could potentially have a debt number that could take you all out of the deal. They've gotta be okay with that. But they sit in a safer position, they sit just behind the debt. They don't sit in class B, they sit in class A side.   James: Got it. Got it. So it looks like if you look at class A and you are saying is much more attractive. A lot of people compared it to class B [inaudible] right. Can you hold on, let me just fix my staff cause I didn't want this to be half. Okay, good. So forget about it. So let's start again. So class A has a lot more attractiveness to it and compared to class B because class A people get 10% flat, I guess, right?  Reed: Well, yes and no, there's pros and cons for both. I just explained the class A that yes, I sit at and I have a 10% pref, but their cap did it at a certain return. They cannot earn any more than 10%.  James: And you can buy them out at a refi? Reed:  I can buy them out at any stage and if we smack the deal out of the park and 20% IRRs, they share none of that because they want to sit in a safer position. And that's where class B, yes, you're sitting behind class A, but you get all the profits, you know, we split all the profits, profit sharing at the end. And so again, you have to understand capital stacks and you have to understand risk in relationship, just capital stacks in order to really grasp your mind around the AB structure. It's pretty simple once explained. And I can show you a diagram if for any investors who might be interested in it, but again, it's just a different way of looking at it and I come from the ground up construction world. I've built a lot of ground up multi-family. This is exactly how multi-families constructed a finance. Your debt, you have a mez equity piece, you have equity, and then you have the GP and it's just capital stack and math. So it's very basic, once you get your head wrapped around it. And probably a lot of people scratching their heads thinking, Oh my God, what's he talking about? James: No, no, for me, it's pretty simple. I mean, I think it makes sense. I mean there's risk in both classes and you take that risk. I mean, even in my book about, you know, different investors want different things. Some people just want cashflow, 10% flat cash flow. Some people really want the equity. I mean, it depends on their life cycle, where they are in your life cycle. Reed: And so as an operator, I've got to continue offering that. And the way I've offered it in terms of how deals and now underwriting is, that's how I've split the baby from the bathwater as they say. You know, I've split it and made sure that I can serve as both the type of investors who one wants cash flow, the other one wants longterm appreciation. James: Got it. Got it, got it. So, Reed, let's go to more personal stuff. I mean, can you name like top three things that you think is your secret sauce to success? Reed: That's a hard one. Look, there are no secrets. Hard work is...let's talk about secrets. Hard work is so underestimated. I moved to this country. I didn't have a job. I was an engineer. I literally dawned on a suit and I knocked on 50 different engineering joints and engineering companies until I found a person to say yes. I'm not afraid of hard work. Am I lucky? Have I got a bit of luck in this? Sure. I'm lucky that I was born into a really awesome family that, you know, I come from a blue-collar working background, I've got blue-collar work ethic. I'm not afraid to roll up the sleeves and get my hands dirty. I'm also not afraid to back myself. I think that's another key to success is like you've got to learn and you've got to be okay with betting on yourself. And I remember when I first took that plane from Australia, I quit my job, my well paying job in Australia and I moved to the United States to give it a crack. As I say, you know, I was betting on myself. I was betting that I can figure this out. I might not have had the answers at that point, but I knew that I was resourceful enough to figure it out and I have. And so those two things, there's a little bit of luck in there, but it's also hard work and learning to back yourself; are really too important skill sets, life skill sets that that people need to learn. And I've developed that through going and backpacking around the world with, you know, $2,000 in my pocket, you know, understanding the value of a dollar and stretching a dollar. You know, people ask me all the time, well, what advice could you give to a 20-year-old? Go backpacking, go to a third world country, go backpacking for two years, come back and then you go find yourself, you go in the university of life, figure it out, go understand a little bit of the street ways and then come back and you'll get started. I think going out and widening your horizon, taking off the blinkers and experiencing other cultures, otherwise how people live their lives is all parts of learning and why I that I've been very lucky that I was able to travel and I paid for my own travel. I've saved my own money. I was able to go out and do it and experience different cultures, take on their advice, take on the wisdom and internalize it and spit it out and say this is what I want to do with my life. So a couple of pieces of advice of success there. James: Yeah, absolutely. Now I realize why people go backpacking and never really understand, but you made it very clear, right? Cause you really like on the street with a shoestring budget and you're talking to different people, you're talking to normal people. Reed: You get a skill.  I'll tell you a story. I was in South America, this is 10 years ago and I had a rule. I was backpacking by myself. The most invigorating thing I've ever done in my entire life, James i,s to backpack by myself. I had no one to answer to, I would meet someone at a hostel or a group of people and say, this is awesome, let's go. But you get really bloody good at determining if you're going to be, you know, you only have 30 seconds to make an impression and I'm going to either have to have a beer with you or I'm not gonna have a beer with you. And it was very quick, that skill became very, very quick. I had a rule that when I was backpacking by myself, you know, if I go into a bar and I hadn't met someone within three drinks, I'll move to another bar. I never left that first bar because it was always about putting yourself out there, being vulnerable, talking to other backpackers and getting that interpersonal skills really sharpened and really honed in. And that's part of what you learned from backpacking.  James: That's very interesting. That's the perspective that you get when you go backpacking. Let's go to another one more aspect of your life. Is there a proud moment in your life that you can never forget until the end? One proud moment that you're really, really proud that you think, I'm really proud of myself. Reed: I think getting that first job in New York City, getting that first job, getting that visa, I was proud that that was, I did it. Like that was the coming to America story. In order to stay, I needed a visa, I needed a job. And so that proud mate, if I got that job, it meant that that was, you know, talk about doors opening. That was the first door that I could unlock. And that then meant that there's a bunch of other doors behind it. But that meant I could stay and I could figure it out. And that was the first proud moment that I think, it was, you know, again, I was literally walking the pavements, knocking on doors because in 2012 you know, putting your resume out into the indeed.com or whatever just was useless. I needed to go knock on doors and say, Hey, here's my resume. I'm more looking for a job. And a lot of people said no, but it takes that one, yes. And that one yes can change your life. So that one yes for the job that meant that I could stay in the United States. It meant I can continue the journey.  James: Got it. Got it. So one other question from one of the passive investors is like, is there any advice that you would give to passive investors that are investing in a syndicated commercial real estate? Reed: Yeah, I think the biggest thing is you have to have an alignment of interest, trust, and transparency but do you get on with the operator? Because the number one thing that passive investors want to invest in is they don't actually invest in the deal, the deal is sort of second secondary, right? The first thing is the person. Who re you investing with, who is your partner that you're going to go into this deal with, who is the operator who's going to take control of this asset? And if you don't like them or you don't have that energy that I spoke about earlier, then don't invest with them. And it's very easy to figure out who you like and who you don't like. And again, this is a world, of  life is short and you want to do business with people who you like and you want to be with, right? That's the whole point of why we do this business. And it goes both ways, both from the operation point of view, my point of view, and also from the passive investor point of view, we're all in this business to make money. Let's do it with people that we like. So I think that's the short of it. James: So Reed, why don't you tell our audience and listeners how to get hold of you and how to Reed: Yeah, sure. So I've got for those listeners who like to read, I've got two books. I've got the Investing in the US which is on Amazon. It was a bestseller last year. You can find that and I've also got 10,000 Miles to the American Dream, a story of financial freedom. So those two books are on my website or on Amazon. You can go to reedgoossens.com, that's www.reedgoossens.com. Everything's up there. My podcasts are up there, my blogs are up there. If you have any questions, you can click on little links and stuff. And I always offer people or listeners, if they're coming through LA and they want to meet up for a beer or lunch, I'm always interested to meet up and talk shop. You just got to email me at info@reedgoossens.com and just give me enough heads up and let me know when you come through town. James: Awesome. Great. Welcome. And thanks for coming into the show and I'm sure you added tons of value. Reed: Thank you very much, mate.  James: Alright, bye.  

James: Hey audience and listeners, this is James Kandasamy from Achieve Wealth True Value Add Real Estate Investing Podcast. Today I'm happy to get Ivan Barratt into our show. Ivan is a multifamily owner-manager syndicator who specializes in large apartment complexes in the Midwest and he has been doing it since 2015 with over $18 million in equity, with more than 3000 units as the primary GP. And he has grown his company, which is Barratt Asset Management to be best in class two time inc 5,000 private equity and management firm. And he focuses a lot on equity, finance, acquisitions, and companies' strategies. So currently managing over 300 million in assets, comprised of almost 3,500 units. Hey Ivan, welcome to the show Ivan: James, so good to see you, dude. I always love talking to you man. It's good to be on the show officially. James: Absolutely. I know we postponed it a few times so this is going to be very, very valuable to me and to my listeners as well. And so, Ivan, let's get started. How did you get started, right? Let's quickly go through it. How did you get started and how did you end up with $300 million in assets under management? Ivan: Yeah. You know, for me it all started with one duplex that I house-hacked back in 2000. I'd wanted to be in real estate my whole life. My dad is in real estate. He was an attorney, always owned rental properties on the side. A couple of entrepreneurial uncles on both sides of my family that owned apartments, gas stations, car washes, all kinds of businesses. So at a really early age, I wanted to be an entrepreneur and I wanted real estate because I thought, gosh, why would I want a real job when I could just go out on a lot of property and do whatever I want and watch the rent cheques just come in. So I went to school, went to college, went through business school, got a degree in real estate finance, got out, house-hacked a duplex. For the first eight years, I worked for a mentor in mostly development, but also property asset management. All kinds of different jobs that I got to have that I got to where I working for this real estate developer. And most importantly, I got a front-row seat to the great financial crash in 2008 at a really young age, a huge gift. I learned. I wasn't as smart as I thought. I learned that I was doing real estate the wrong way and that's when I really started modeling multifamily companies. Because I'd always wanted to own apartments, but I also saw that in a downturn, those multifamily companies got bigger, they got stronger, they acquired more assets because of the way they were financed. And so that really was the impetus to get me started in my own pursuits. Then I actually started in 2010 as a property management company first because I knew that if I could figure out the property management game and doing that for others, that when it was time to buy bigger deals for myself, I would have a higher likelihood of success of execution. So I started buying a few small deals at the same time, was managing for other clients. Anything I could get my hands on where I didn't have to carry a gun and I was doing everything. Started from the bottom, then started being able to buy larger apartment deals. And when I say large, I mean, my first apartment deal was six units and about 35 and a 30. Then I said I'd never do another small deal again and I bought 15 cause it was just too good to pass up. And then from there, I started syndicating. I did my first syndication of 60 units and I bought 112 and all the while, still managing for other people as well. That was really how we grew the company in those early days. Once we got to onsite staff size properties, there was really no turning back, pretty addictive. Fast forward to today, we still do some management for others but we mostly manage our own assets now. And we are far and above are our biggest clients. And that's the shorter version of where I come from and how I got here. James: Got it, got it. So is this 3,500 units, is it all you? I mean, your company or you guys do fee manager part of it or how does that? Ivan: Yeah, so I own about 3000 units. We're down to about 500 units that we manage for others, it's not really a focus moving forward. We still have a few close partnerships that we like managing for. But really the way I've built and designed my company is not to be a profit center of property management, more to be an execution machine for my own wealth strategy. And so I think you and I've talked about this before, you know, on the property management side, I could be Scrooge and I could really be tight and I could probably make a 15% margin but instead, we focus those dollars into our culture, our people, growing leaders within the organization, having fun. Property management is not easy. You know, having great events and really trying to create this beautiful machine of people that want to come to work, want to do a good job, want to stick around a while and believe in what we're doing. We call it the band fam. James: Awesome. Awesome. So let's go deep into the, you know, how you got started and it's just so interesting, right? I mean, you had that vision to start from property management first and then added assets, which is, you know, how like even like Ken McElroy started, right. He started being a property manager first. Ivan: Ken McElroy was a huge influence in my career. Yeah. Huge influence. I read his book very early on and that was one of the key influences for starting my management company and figuring that out first. James: Yeah. And I think he had mentioned it many times. I mean, for the audience who doesn't know who's Ken McElroy. He is one of the largest owners of multifamily in the US. I mean, he is an advisor to Robert Kiyosaki and he's a big guy, well-known guy, a well-respected guy in the multifamily industry. And he mentioned very clearly in his book, right? I mean, to get started, you probably want to work for someone or go work as a property manager. And I don't think so many people are following it because people think it's just buying assets and letting it ride through a, it's okay. But what did you learn from that experience? And starting from property management and going into as an owner as well. Ivan: You know, this is 2011, 2012, I've got 70 units and I am everything. I'm the busboy, the cook, the maitre D. I'm the leasing agent. I'm the property manager. I'm the rent collector. I had a little bookkeeper that came in every other week cause I didn't want to screw that up. So I literally did everything first and learned to be efficient with it and also learn, you know, strengths and weaknesses and made a lot of mistakes. I've finally just decided early on that I knew I was gonna make a lot of mistakes and that was just part of it. I finally figured that out in my mid twenties, that being an entrepreneur is a lot about failing forward, making mistakes and learning from those mistakes and not quitting. It's not a calm, okay sort of method, but it's the backstory to a lot of successful entrepreneurs. So I just copied what those who had been there before me had done. James: Got it. Got it. And I mentioned it in my book, I mean, across all commercial real estate, multifamily is a really, really good asset class but the hardest part in multifamily is property management, right? I mean, managing that 300 or 100 units income stream from different people is just the hardest. I mean, you'd rather buy an office, have three tenants, professional tenants and you're done. Ivan: Yeah. Multifamily is the best asset class for return on investment on the planet until you move in the people. James: Yeah. Until you move into the hard job of multifamily, which is basically the property management and, you know, you'll figure it out. You'll figure it out beginning in itself that, you know, property managers, I mean, you want to start from property management and going into asset management. I mean, you and I know that you really don't make money in property management. It's basically a time-consuming job. Ivan: The most important one, but very, very time-consuming. The most important job, James: Absolutely, the most important and we do it for control, right. For control of our value... Ivan: Oh, absolutely. I couldn't imagine hiring a third-party manager for my own assets. It's just the way we do things and the amount of control we have, the ability to move pieces around. For instance, we had one property that was suffering a little bit. We were still trying to get the right management team in place. We took our best leasing agent in the entire company and we moved her across the state to do her thing at an asset that needed her assistance. And that's very easily done when you control the management side of it. If you're out there and you're just another number to a third-party company that's a far more difficult solution to get. They're not necessarily going to give you their best people or move around their best people. James: Yeah. And I also think property management is the best way to make deals, numbers work in this market cycle, right? Where the market, it's not like appreciating like what it used to be in the past five years. Ivan: You're giving away my best secrets, James. James: I know. Ivan: How we get our value-add picture to work is a big part of it is being able to manage these units efficiently and knowing exactly what it's going to cost to run them and finding inefficiencies and reducing expenses. It's one of the three legs on the stool right now for making deals, achieve target returns. No question. James: Absolutely, absolutely. I think that's very important for...that's why we do vertical integration. Because deals at this stage of the market cycle, where everything is overpaid and people are bidding for high prices for everything and it's just so hard to do, you know, if you're doing it third-party. Ivan: No question. James: So, yeah, I mean, to be frank with you, in the last one month, I have like four guys, four friends who are syndicators, who never had a third party. I mean never had their own property management. They called me for a meeting. They say, Hey, how can we do our own property management company? And I asked why and they said, Oh, you know, all these guys are not good. All this third party, what I told you guys like two years ago, right? And I say, do not do it. But they say, no, we are going to do it. Right? So I mean, yeah, if the market is 150% and your property management is 70% capable, market is 150%, your property management company capabilities are mask off by the market. Right? But if it's the other way around, right now, I don't think the market's at 150% probably is 90 80% right? But now you know, everybody's getting undressed on how capable they are. Now, everybody's like scrambling to go and say, now they're seeing all the weaknesses of all the third-party property management companies. Right. Ivan: Agreed. James: Yeah, absolutely. Absolutely. So come back to deals that you buy in the Midwest. So is it you are in Midwest and is that why you buy in that market? Ivan: Well, I'm lucky. I live in a place that's really great to invest in right now. Midwest, it's steady. The markets we look at have been growing on average 3% a year for 35 years. They don't boom, but they don't bust either. And so, we like a lot of these tertiary and secondary markets in the Midwest that have also successfully decoupled from the Roosevelt economies of old and have government education. Health care is big. There's some blooming in the tech space, R and D, there's some big insurance companies, financial services. So there are these markets like Indy is a great example that hasn't quite seen the boom that some other markets have, but they've just continued to steadily grow, which is really good on a five to seven-year hold period if you can find the right assets inside those markets. James: Yeah. Midwest I mean, I'm not sure where I read it, but essentially the whole Midwest is very stable in terms of economy, right? Ivan: Yeah, it really has become that way. And also in the B, B plus rental cohort, the percentage of rent income is still in the mid to high 20% range versus a lot of hotter markets where it's higher than that. So I would see that as a sign that there's still room to grow rents if you're good at picking growing submarkets within those markets. James: Got it, got it. Yeah. If you're able to identify the submarkets within the market itself.  Ivan: The submarket within the submarket, within the submarket, right? James: Well that's what real estate is.  Ivan: Hyperlocal.  James: Hyperlocal. Yeah. And I'm sure you being local, you would be able to know a lot of areas on your own and then you'd be able to figure it out things. So what are the States are you investing right now in Midwest city? Ivan: So far we're in Indiana, Ohio, Illinois, we've got lots of submarkets in these areas that we are targeting. And then from there, there are certainly other States we've got our eye on, here in the Midwest as well. James: So, the deals that you are getting from this Midwest, is it through brokers or how are you guys, through relationships or how's that? Ivan: At our level...so our typical deal is going to be somewhere in the 30 to $40 million range and all those assets are controlled by the brokers. If you try to circumvent them and start going direct to sellers, they're really not going to keep you on their deal flow list. So we use the brokers to our advantage and we get a lot of off-market deal flow from our beloved brokers. We've closed a lot of transactions with them. They know we're a great company to do business with. We never retrade, we close quick. And so, we ended up being on the shortlist when they've got a seller that may be willing to transact but doesn't necessarily want to go full bore on market. James: Got it, got it. So let's say today a broker sent you a deal, right? So what would you look for in that deal that may be attractive for you? Ivan: Yeah, so we're looking for newer assets that are late 90s, early two 2000s. We'd like some stability because our fund dictates that the property can pay monthly cash flow to the LPs starting within 30 days of closing. And we liked that cashflow to be current to the preferred return of 7%. So it's got to have cashflow, day one. And then we still want to see some upside from value add, bringing in our management team, like you and I just spoke of, to manage it more efficiently, but also to make some improvements. If it's the mid-90s, it likely can stand some amenity upgrades and some cosmetic upgrades to the units. So we're looking for, for those two pieces.  And then third, we want a market where the rent is still growing, jobs are coming in, it's a good school district, you've got population growth. So those three components. If those add up to a reasonable expectation of 15, 16, 17, 18% IRR on a five to seven-year hold, we'd like it. We underwrite it to attend. So, if we're holding it more than seven years, we want to do two and a half, three and a half X equity multiple net, or we really want to harvest every five years if we can. James: So how do you determine the exit cap rate? I mean, I know you can't really determine the exit cap rate but in the Midwest States, how would you underwrite, what is the market cap rate plus how many...? Ivan: Yeah, I know there's a lot of talk right now about exit caps and what makes sense. We always just provide a cap rate sensitivity analysis. So we show what it looks like if the cap rate goes up every 25 bips, we show what the return looks like. It's our suspicion that cap rates are maybe a little bit lower than they will be over the long run, but not as much as you'd think. The spread right now between the 10 year treasury, which is at 150 today (actually it's a little less than 150 thanks to the coronavirus) and say a cap rate on buying out of five and a half or six, you're talking about 500 basis points spread in some cases.  In 2008 when the economy crashed, the spread between the 10 year and commercial cap rates was 50 75 basis points. So if you think about the spread between what you get for leaving your money in a 10 year bond and what you get for putting your money in multifamily is still very, very fast. So I don't see that spread going up unless interest rates go up a lot and there's a growing consensus that interest rates aren't going up anytime soon, the debt would just get too expensive. There are too much deflation and global slow down in the macro global economy to force rates up. They're actually continuing to have to ease and keep rates down. And so, I am certainly in the school of thought that we are going to look much more like Japan over the next decade. We're not going to have a lot of negative GDP but we're not going to have a lot of positive growth either. So rates will stay fairly low and there will be a demand for risk assets that offer a healthy spread above the 10 year. So that being said, you know, I probably went down a rabbit hole, maybe a little too deep, but with that being said, you know, we're typically looking at 50 basis points on the exit at five years but we don't get too caught up into that. We never show our pie in the sky and projections to our investors. We never show what we think the maximum rent we're going to return is. For example, I just bought a 272 unit deal, a fantastic deal I'm excited about in the submarket called Greenfield, Indiana, it's inside the Indianapolis MSA, third fastest growing County in my state. And I just have been organically raising, for instance, closing $150 a door on renewal and I'm painting and carpeting. James: That's awesome. Ivan: So I'm not really worried about my exit cap on that deal. You know what I mean? The thing is if cap rates, this is the other reason why you and I get 10 year, 12 year agency debt is because if there's this point in time where cap rates spike, I'm not selling, I'm going to hold the property in cashflow. Just think about it, James. If cap rates are going up, it's because of inflation. Interest rates are going up to fight inflation. Agree? James: Yep, absolutely.  Ivan: Well, if inflation goes up, rents are going up too. And the best part about apartments is that we get to reset our rents every month and every year. And so if I don't have to sell at this little point in time and I can raise my rents and wait for things to stabilize and cash flow along the way, I shouldn't be as worried about an exit in a specific year. Where people should be worried about exit cap are these shorter terms bridge loan deals where they're banking on a big rent increase in a refi or a sale two years from now or three years from now. I think that's taking on a measure of risk that would be a little more than I'd be willing to buy it off. We locked in that agency debt early. James: Yeah. Yeah. I've been doing my agency, all my deals has moved to agency, you know, for the past two years I've stopped doing bridge loans just because of the exact reason that you are talking about and yeah, I agree. Bridge loan do have some risks. Some people like it because they think they can flip it but you don't want to flip at the end of the age of the market now [21:51crosstalk]  Ivan: It can also flip the other way on you. James: Yeah, exactly. I mean, bridge loans and turning around huge deep value add needs a lot of skills and you are really banging on the market timing right now. There are a lot of factors to put in. I mean it's like a flipping a house, you're flipping an apartment. So is that how you started from the beginning itself, where you have trained your investors to focus on the cash flow of the deal? And a lot of my investors now, they want like annuity, just give me a cash flow. I don't really look at the pop the bag and it just give me an annuity because you know, six to 8% return cashflow is an awesome return. Right? And it can be much more awesome going down there. Ivan: Yeah. So, how we work with our investors is first, we educate them on how we mitigate the downside. Why we do agency loans, why we lock in for a longer period of time and we plan to hold it. Why we're buying a little bit newer of an asset versus what we were buying in different stages of the market cycle. Then we look at the yields of the property and we look at with them, like you just said, look at this asset. If nothing else works, it's still going to yield seven, eight, 9%. And then we're looking at what's the potential upside down the road, in that order because people do want to see cash flow first and they don't want to lose money. And it's nice to be in a situation where if the stock market is down 30% or if it's 2008 2.0, we might not be selling anytime soon, but we're still going to be cash flowing. Whereas, other parts of their portfolio will be hammered. James: Correct. At that time, that seven to 8% would reap some really, really good return. I mean, you are basically getting it now and you're just maintaining it throughout your market up or down cycle. Ivan: And it's harder but that's why we look for deals that have that seven, eight, 9% cash flow very quickly. And we pay monthly on our distributions is because I like monthly cashflow. I know you do and investors you do. James: Yeah. But is that how when you started like six units, 30 units, 35, is that how you were looking at the apartment? The perception of change. Ivan: No. [24:17inaudible] 2010-2011. When I bought that property, it was bank-owned, REO so that those were heavy value add deals. So early on, I was learning how to reposition a property. Because that was the market cycle that we were in, the stage of the market cycle at that time. And so, I started off buying those, I bought some C properties and Bs and we're looking for more of those heavy value-add deals. And as the market changed, we changed with it. James: Got it. That's very interesting. That's the part that I did. I did a lot of deep value-adds and you know, prove ourselves. I mean, deep value-add takes a lot of skills. I mean, even value-add takes a lot of skills or how fast the turnaround or how we manage a contractor, how you manage your finances, how do you manage your scope of work and the schedule itself. It's very complicated, right? I mean, a lot of people would have done it by skill. A lot of people could have done it just because the market appreciated, not to say because they did the job itself. Ivan: I'm sure you are excited for those deep value-add deals to come back one day down the road. But today a deep value-add deal, we just underwrote one. There was a moderate value-add, maybe $15,000 a door and if everything went according to plan, we would make a 15 IRR. James: Then what's the point of doing deep value-add? Right? Ivan: What's the point? Right. Because I just bought a 1998 vintage deal. It's fully occupied. And I just told you I raised rents organically already and that's going to do a 17. And so, there's so much demand and there are so many buyers trying to crowd in and buy these so-called value-add deals that we've gone to a different strata within our space to find value. And then, when those value-add deals, get back up above a 20 IRR, I'll start taking another look at them. James: Got it. Got it. Got it. So you have changed your strategy just because of the market cycle, and you think that is what the investors want, and you still get, I mean, a lot of investors who had even one, three, 4% return, right? So if you're able to give them like, you know, 15% IRR or 17% IRR, they would be ecstatic. Ivan: Yeah, in my opinion, I've got to be mindful of the market and work within my marketplace. There's opportunities in every stage of the cycle. But you have to go right with the market, not against it. James: Yeah. So how are you competing with big institutional players? Because they look for this 1990s, 2000, and they'd be able to look at the same deals that you are looking at. Right? Ivan: Yeah. It's very hard. It's very hard. I'm very lucky that I started this several years ago. And that I've got a reputation and a track record with the biggest brokers in my region which are all national brokers. And we lose a lot, we lose a lot to big guys. I've just lost a deal yesterday for a deal, I loved it, at 41 million and some out-of-town buyers who've done it for 44 million so they can have it. A lot of times it's off-market. And then some of these submarkets that we're keenly interested in are off the radar of some of the bigger fish from out of town. And that's really how we're finding a lot of value. We know where the emerging markets are, the old Dave Lindahl approach, right? We know how to spot an emerging market and that's a key to getting that value. That's really, in my opinion, one of the only ways that you can get those returns up to where they need to be to continue to please your existing investors and attract new ones. James: So let's go into details on how do you identify emerging market. Can you give like top three things that you look for to identify this as an emerging market? Ivan: You know, there's a lot to it. I'm lucky that I'm in an area that I want to be in, but we're looking at infrastructure improvement is a big one. We're looking at population growth, job announcements. Have the developments. So example in Indianapolis, I know where the growth is going. I know where the good submarkets are that it'll be the big suburbs of tomorrow. Infrastructure is probably one of the biggest ones. For instance, we're buying in a market right now or they're building a brand new federal highway over the Ohio river that is going to bring more jobs and more commerce. Right?That's just a few of the nuggets James: I think the local knowledge and the local connections, right? Just, just the local knowledge itself is just very powerful. Ivan: Yeah. But it's not as hard as people think to find. I mean, if you're looking at the entire map of the United States and you're like, okay, I got to find an emerging market, that's going to be tough. But if you can start to focus in on an area and say, okay, what's like one rung out, where's the growth going? Where are the new big infrastructure projects planned? Where are the good schools out in those areas where people are moving to, where the housing starts, right? Housing brings commercial, commercial brings jobs and jobs bring multifamily. James: Got it. Yeah, it's very interesting to see where is the path of progress and just go and target that where the big fish is not really looking at.  Ivan: And then if you're buying below replacement costs and you're doing it right, you should have a rental range that gives you an economic moat between what a new construction project would have to deliver and would have to charge in rent. So if I'm in an area, like I told you about Greenfield and Indianapolis, I'm in that area and right now my target rental rents are maybe 1150, 1175 target rents after renovation. If I know in that market that somebody wants to come in next door and their rents have to be $1,400- 1,500 a month just to get a shovel in the ground then, I've got a decent defensive asset. So new supply, in many cases for me, isn't as dangerous. It's actually, it can be a good thing. James: Got it. Got it. Yeah, that was my question because in 1990 2000 vintage, sometimes can be competing with a new supplier.  Ivan: Yeah. You really got to make sure your Delta is three, four, five, $600, especially if you're buying A-minus like me. It used to be the difference between A-minus and A-plus was maybe $200 and now in a lot of markets, it's 500, 600, 700, maybe a thousand. And so, if you can figure out where to enter that market and have a large spread between you and new construction, you're much more insulated from A-plus concessions. James: Yeah. Got it. Got it. So apart from getting good loans, because right now, the interest rates are pretty low, apart from the buy itself, you're probably buying at a certain price that you think you can hit the investor target. How do you do value-add? I mean, what do you look for in this 1990s, 2000 vintage that is common. What are the biggest value-adds that you see that is your favorite? Ivan: Oh, that's none of your business. James: Come on, man, reveal the secret. I have to work hard on 1980s, 1970 probably. I want to go to 1990. What are the things, apart from the price, apart from the loan? Ivan: Well, listen, I'll give you a nugget. James: Yeah, you can give a few. Ivan: A lot of operators are spending way too much freaking money on unit improvements. James: Okay. Ivan: Okay. And so because we're vertically integrated because we're property managers and we know everything going on on the front lines, in the trenches, we know where we're going to get an ROI. We know that maybe granite countertops don't get us the ROI but really nice Formica does. We know that a yoga studio...in redoing a 90s fitness center with new equipment and a little yoga studio, it's going to get us a much better ROI than stainless steel appliances, for instance. So it's just knowing your market, it's knowing really the ROI on those improvements and how they impact rent and it's different everywhere you go. It's not like you can just take what I say, go do it anywhere. You have to know in that market what works. James: So is it by doing market surveys where you look for, I mean, in terms of...? Ivan: Well, remember we don't have to survey the market here because we are in the market. We manage the properties. We have leasing agents all over the Midwest that are giving us instant, realtime feedback, right? James: Yeah. Yeah. Ivan: But with that said, we shop our competition. So, because we control our management company and we're part of the apartment association, it's a very tight family in the apartment industry and we really hire from within most of the time because it's such a specialized job. And so, my team can call anybody on any apartment project anywhere in the Midwest and say, hey, it's Cat from Band. Can I shop you today? And they do the same to us and we all trade information on what's working and what's not. And that's really one of the really cool things about property managers, we help each other, right? James: Yeah. Yeah, absolutely. Absolutely. I mean, it is a very small... Ivan: No here is what we do: We shop ourselves, we secret shop ourselves. We're very upfront with our competition. When one leasing agents calling my competitor and saying, Hey, can we trade what's working, what's not? What are you guys renting for? But then we secret shop our own people and they get scored on how they do by outside sales consultants. James: So, you talk about two things. One is the amenity where certain amenities are desirable, where you can raise rents because it's more desirable. The second thing you talk about is the efficiency within the pipeline of property management. Ivan: Listen, nobody uses the gym but it still sells people on renting. James: Yeah, I know. It's crazy, right? I mean, right now I'm being more cautious about what I spend on a gym because I know people may not use it. So I know there's a gym…  Ivan: Yeah but it's the wow factor, James. Oh, you've got a yoga studio. Maybe I'll do yoga now. I've been meaning to do yoga. The year goes by, I never did any yoga but I rented from that guy, James. James: And I see my property managers using the gym, not my residents. That's okay, you need everybody to be healthy.  Ivan:  #culture. James: So let's talk about amenities. How do you decide on which amenities are more attractive? Ivan: It's all a functional market. And, again, it depends on what marketplace that we're talking about. So we're looking,  we will redo pool furniture. Bark park is an easy one to put in if it's not already there, we're typically redoing the gym. A lot of times we're redoing the clubhouse with new paint, new furniture, maybe a couple of computers. Again, things that sometimes we will never use, but just to give that wow factor when they come in to be able to close them on living there. James: So do you increase, like, I mean, you'd be mentioned in the beginning, $100-150 per door just by adding amenities and better management, I guess. Ivan: Yeah. It doesn't always work out that well and usually that 150 is coming from multiple areas. We're raising certain fees so maybe the owner hasn't raised pet fees or water fees since they bought the property. I get bad reviews on my website because we raised water fees to market, you know, but that's just part of it. It'll come from organic rent increases, which is where we're just raising the rent on turn. And then it comes from quick cosmetic improvements to the units, on turn as well. Paint, countertops maybe new cabinet hardware. We rarely ever take out the cabinets. Maybe new switch plates, maybe some new flooring in the kitchen and bath. Very light improvements. James: So among the things that you mentioned just now, what do you think is the most valuable improvements that is the biggest bang for the buck that all your residents love? Ivan: Yes. James: Which one? You've mentioned like five or six, which ones? Ivan: I've given you more nuggets that I should, man. I feel exposed to you. I feel like I got to tell you these things, but no, no. I'm like, keep this to myself. You know, it depends. Sometimes it's organic, right? We bought a couple assets where it was a big company. They own 5,000 units, but they still ran it like a mom and pop and they were like 20 years old and they never raised rents. If people don't move out, they don't renew them and increase them; we do. Another property, it was the amenity package that really started getting more income in other properties. So it's all those things and it's property by property, which one's going to move the needle the most. But typically you need all those components to get into that target rent. That 125, 150, 175, it's going to help you achieve your target returns over the whole period. James: Got it. Got it. So yeah, that's very interesting. So let's go back to whatever you mentioned just now to the demand of the property, which are the residents. Do you think the residents in this 1990s vintage, 2000 year apartment residence is harder than class C, 1960, 1970 residence. How did you manage? Was it more maintenance? Ivan: In some ways, it's less maintenance but in other ways, the tenants can also be the residents. We don't call them tenants anymore, James; the residents. James: Yes, exactly. Ivan: The residents can be more demanding, have higher expectations. See you've got to have the right people there that are used to managing that particular product with the income of the residents that live there. So yeah, some people would misunderstand and thinks that A-plus is easier because everything's new and shiny and oftentimes A-plus is extremely management intensive because of the expectations of the residents. So in some ways easier and in some ways not. James: Yeah, someone told me, a regional manager told me that A or A-plus residents are much harder to manage because they have all this ego that they can pay. They expect a lot of things from the property management company and sometimes their delinquency can be high because they say, I can pay next week, you don't have to really come up... Ivan: We find the collections are usually better. James: Okay. Got it. Got it. So let's go to financing. So on top of agency debt you also do hard debt,  right? And why did you choose some of the deals to be under hard loans? Ivan: It's a great way to take a ton of risk off the table. It's a 35-year amortization and it's full and meaning, you can hold that note for 35 years without having to refinance yourself. So you take a lot of risk off the table. The interest rates are somewhat lower, although Fannie and Freddie have gotten very competitive in the last couple of years. It allows you to get an 85% loan to value on after repair value, so you can finance a lot of improvements as well, which is great in some circumstances. So if you want to hold the deal a while, like 10 years or more, HUD can be a good alternative. It's also very compliance heavy. There are audits, there are physical audits of the property, so you really have to know what you're doing.  We like it just simply for risk management. So we have several assets that are HUD. Big myth is that HUD means it's an income subsidized project and that's actually incorrect. HUD finances A, B, C, D assets. Their mandate is to help provide rental housing so it's available to a lot more people. A lot more assets than people may recognize. It's certainly not for everyone, but in certain circumstances, I think it's advantageous. We locked in our last HUD deal November of 2018, a $34 million deal. Locked in with HUD, our all in note rate is 313. James: And I remember November 2008, the interest for agency debt was pretty high cause I did lock in some deals at that time and I think that was, I think, November, December is when it picked up and it came down again. Ivan: Yeah, it was luck, we were able to catch the bottom of that treasury dip, which helped but it was still lower than the agency. James:  I know HUD like a six months once distribution, where you can take out the money. How do you do distribution to your investors when you have that kind of limitation? Ivan: That's one of the downsides of HUD. You can only distribute every six months. That's why we don't use it very often. It's a different investor profile. Some investors want to be defensive. They want to have their money in something and they want to have leverage but they want to have downside protection. So HUD works really well but it does not provide the same sort of cashflows that agency and Freddie do, which is why we typically use the agencies. For instance, I think I said earlier with our fund, it distributes monthly; I couldn't do that with HUD. James: Got it. Got it. Hey, Ivan, let's go to a personal side of you, right? Why do you do what you do? Ivan: You know, for me, multifamily and growing BAM as a business is a lot of fun. Because the bigger it gets, the more fun I get to have and it's a great business for designing the life I want and designing the business in a way that it's the life I want for myself, my wife, my family. And so I liked the wealth and the freedom with real estate. Yeah, that's the crux of it. James. I've got some big goals and being a good dad and a good husband and a good member of my community and leaving behind the legacy. And for me, owning real estate and owning a business to operate it, is the path. James: Would you do this for another 20 years? Ivan: You know, it's funny, I got to sit down with an older guy on the banking side of our business of multifamily. He took his bank public. I dunno what he's worth, but it's over half a billion dollars. He's probably approaching 70. And he says, Ivan, you don't stop; you just play the game at a higher level. And I can tell you he's having a lot of fun, has a lot of freedom, has a lot of time with the grandkids, travels wherever he wants for as long as he wants, with whomever he wants. So I don't see myself retiring in the traditional way, I want to continue to just play the game at a higher level. James: Yeah, it is so fun to keep on improving things. Ivan: Yeah. And I like to tell young entrepreneurs this and people that are newer to the business, if you're getting bigger and you're not having more fun, you're not doing it right and you need to refocus on your people and your process and so that you can scale it. Because none of us can just keep working harder. It's unsustainable. James: Correct. Yeah. That's one of the challenges that we are having and we are trying to grow and you know, it's becoming harder to find that process and people especially to replace what we do. And we have set an expectation on how things should be done, but not everybody is gonna work like what we do. Ivan: The first coach I hired four years ago, all we focused on was figuring out what my one thing is that if I spend most of my time on that, I will be successful and then finding the right people to do everything else. And then the hardest part is from a guy that started myself and did everything myself, the hardest part but the key is getting out of their way once you hire them. James: That's really hard. And you're right, that is the hardest part. Ivan: I think Tim Sarah(?) said it best. James, he wrote some articles about letting little bad things happen and that's key. Excuse me, I thought I was going to sneeze. Learning to let people make mistakes even when it costs you money and letting them learn and fail forward just like you had to do, it's very freeing. And when you have a management company and you've got fees coming in every month, it becomes a little bit easier to start to let those little bad things happen. Let people fail forward, let them learn and make sure they're not just coming to you for the answers all the time. James: Got it. Got it. Yes. The art of delegation and managing people. So it's just so hard to master, right? Ivan: Well, if you get the right people, there's far less management. You get the right people in the right seats. That's a big part of it. James: Yes. Yes. I agree with you. Let me ask you one more thing. I mean, you started from six units to now, almost 3000 units. So I mean, you have gone through a lot of experiences. Tell me one proud moment that you can never forget that you were really, really proud of yourself. Where you think, Hmm this is something I will never forget in my life, what is that moment in your real estate career? Ivan: Oh, so real estate category? James: Yes. Something related to real estate. Real estate family, I mean, anybody, just a human interaction. What is that one moment where you think that, 'I'm very, very proud that I did this and I can never forget this until the day I die'? Ivan: So it was one of our first bigger deals, it was only 89 units. I think I bought that one after I bought [48:53crosstalk] Yeah, I bought 112. I had already bought 112 units. And so I almost passed on this deal. It was only 89. I'm like, I don't want to do a deal that's only 89 units. And it was in kind of a rough area that we thought was maybe emerging. We kind of looked at each other or like my partner and me, like six months ago, this deal would have been huge for us, why are we turning our nose at this deal? We should do it. And we did the deal, we got it at a good price and people thought we were crazy. And it was a little bit difficult to raise the money. And we bought it from a construction guy that had already done all the heavy lifting on the value. So people thought, right, what's left to do because this guy already improved it physically, but we had the suspicion that we could manage it better. And two years later, we sold it for almost $2 million more than we bought it for, ended up selling it at a two and a half X to our investors in two years, a little over two years. And that was my first like really big home run. And I remember thinking, gosh, we almost didn't even do this deal. James: Yeah. So what did you guys do in that deal to make that much money since it's already done..? Ivan: We got a much better manager in place. We got a really good maintenance guy in there and of course, we asset managed them and we were able to raise rents, we got occupancies up. We reworked the utility bill back to make more revenue there. So the cap rate on that one didn't compress all that much on the sale. It wasn't just like the market went up. We just got in there and turned around the NOI because this guy was really good at making all these physical improvements and he was a terrible manager. And so we got all that straightened out and a couple of years later, had a big win to show for it. James: Awesome. Awesome. Yeah, I remember my third deal was like, everything's done, well, I was trying to find out what's wrong with this deal and it was a smaller deal from what I used to do, trying to really analyze what's wrong. Something is wrong but it ran in and out of contract like five times and the seller was really frustrated, so he wanted someone to close it so that's where I came in at that time. So Ivan, why don't you tell our listeners how to find you, how to get hold of you or your company? Ivan: I'm all over the internet. The easiest way to find me and my team is probably Ivan barratt.com. B A R R A T T If you Google Ivan Barratt, you can find ivanbarratt.com. Barratt Asset Management. Ivan Barratt Education, which is a site I put together for accredited investors, but they all cross-pollinate. So you find one, you'll find them all. I'm all over LinkedIn. Okay. And then if you want to talk, 317 762 2625 James: Is that your cell? Ivan: That is my scheduler to get you on the phone with me.  James: That's going to be, I was surprised. It sounds like a cell phone, but it's not. Awesome, Ivan, thanks for coming over. Hope you enjoyed it. Ivan: I had so much fun, man.   James: I learned so much from you and I'm super happy to know you and thanks for coming in and add value. Ivan: Yeah, I'm sorry to miss you in New Orleans. I can't make it. I'll see you at the next one, dude. I always enjoy our conversations and I gave my banker a ton of crap, thanks to you. I appreciate that. James: Oh yeah, absolutely. I gave you that tip.  Ivan: Oh, yeah. James: All right, so thank you.

James: Hi audience and listeners, this is James Kandasamy from Achieved Wealth Through Value Add Real Estate Investing podcast. Today we are doing a podcast and a webinar as well because I've an awesome presentation from Jeff Adler who's the Vice President of Yardi Metrics. Yardi is one of the largest property management companies in the nation and they have a lot of data behind them and Jeff is going to provide a lot of insight, which is going to give us a state of the union of multifamily industry. Hey Jeff, welcome to the show. Jeff: Well thank you very much James. James: Alright Jeff, so let's go back to last year 2019 where we had a really good podcast. I believe that's podcast number one. Where we call it a state of the union of multifamily for 2019. So this time is 2020. So let's have a recap. What has changed from 2019 to 2020 for the multifamily market? Jeff: Well, you know, in one regard, not much. Okay. And another regard a whole bunch. So if you kind of recall at the beginning of 2019 from an economic standpoint, there was a fair amount of uncertainty. The fourth quarter of 18 was kind of a Swan dive, we had an, a big inversion of the yield curve. The Federal Reserve had kind of raised rates. Stock market had kind of gone into a significant correction and 2019 we really weren't sure whether the economy would continue to be able to grow. Would the fed take the corrective action necessary? And the economy would be able to navigate some of the trade pensions and basically the continued health of the multifamily industry would it still kind of advance at a good clip or what was the state of supply. So there was some uncertainty around some of those kind of components. And so the picture is a bit more clarified from the macro economic standpoint. The feds did cut rates, the yield curve stopped its inversion flat again. And the economy kind of advanced forward, we had 2.3% growth over the course of the year. Job formation has still been quite good. Difficulties with supply had kind of stretched out that supply delivery curve and occupancies have performed well. Overall rent growth across the country has been around 3% with fewer markets performing poorly. Some of the hot markets kind of beginning to tamp down. So the one I would say negative component in all of the multifamily world is the regulatory backlash that occurred from rent control legislation in Oregon, New York and California, which has made those markets less attractive compared to others. But the basic outlines of the economy are still quite good. I just came back from the NMAC conference in Orlando I guess it seems like forever ago, but I think it's was only last week. And there the mood is very good, lots of capital lots of activity going on. People always worried about are things kind of richly valued, and they are. But if you look at the spreads in cap rate in the 10 year, still pretty good. You look at good availability, still very good. More capital is flowing into the multifamily industry from not only outside the United States, but inside of the United States with a multifamily being one of the two top asset classes for investments. So when you look at the demographics continued to be on a positive, you look at the supply, which we do not think will be out of hand and we just finished up a new supply forecast by property almost.    Taking into account a lot of the cycle time data we have on deliveries of projects. We think that we'll actually, as a country, deliver a tad less than the 300,000 odd units that were delivered in 2019. And we are in generally speaking housing shortage contrasted to the housing surplus that we had before the crash. So it's really a really good time to be in multifamily. It's almost so good we kind of pinch ourselves and saying we don't want it to be this good. There must be something bad. What's the horrible thing that's going to happen to us? We're just having a hard time dealing with good news as an industry. But I'm cautious. I continue to be cautiously optimistic. I don't see a recession at least until 2021 and quite frankly, with the way in which the economy has kind of come through this, I'll call it a mini manufacturing recession. It didn't really affect the services industry; it did affect manufacturing and sectors exposed to trade. With us actually coming out of that growth prospects for GDP are actually higher this year than they were in 2019. So I don't really see a recession till 2021 and one could argue very effectively, 2022 but certainly we have another good year ahead of us and inflation is not out of hand in any respect. And because inflation isn't out of hand, there really is no pressure for interest rates at the short end to move higher. And there certainly is no pressure on the long end. I mean, interest rates for the tenure are back down to below one six and they were at one nine, not just before this kind of corona virus scare. But if you look at that, like if there's no inflation, then you're not going to see kind of big interest rate moves. You're not going to see big interest rate moves. You're not even going to see moving in cap rates or movement associated with a recession.    It's really quite positive. I think the biggest issue if you're a multifamily investor right now is it's hard to find deals that aren't very richly priced. You have to be very prudent with your underwriting and with your capital investment. The competition for assets is quite extraordinary, particularly in cities adjacent to California and the Northeast; there are capitalist fleeing those areas. I've been speaking to folks in Phoenix where the market for multifamily is so amazingly red hot because of all the California is trying to move their capital out of California on a gradual basis. So I think that the biggest challenge right now is to prudently underwrite and to find opportunities that make sense. And if you're going to overpay and the fact of the matter is if you're in a competitive bid situation and you won, you overpaid. The question is will the market kind of bail you out? Are you in a rising tide so that the fact that you overpay at any particular moment doesn't really matter because the investment overall will perform well as the market and your value creation strategy plays out. So, long answer James, but I'm pretty optimistic about where we are in 2020. James: So what would cause the recession in 2021/2022? Jeff: Well as I've been saying quite a while, I don't know if I had this little piece here. Let's see. I'm trying to find out how do I kind of explain, this is a classic way of thinking about, and by the way, this slide is the same slide I've had since Trump was elected in November of 2016. Alright. So seems like, okay, things are a little more positive than I think they were even in November. Alright. So the balancing act has always been the pro growth elements of the administration's policy compared to the anti-growth elements of the administration's policy. Pro-growth seemed first tax reform, regulatory relief, executive orders. The anti-growth came later immigration control, which has restricted the amount of labor coming into the United States. It has created a labor shortage which has boosted incomes at the lower end of the economics and education scale. So it achieved its objectives at the cost of some level of growth and trade negotiation. Because the tussle with China has scrambled supply chains. And so there's a little bit of clarity with the signing of the USMCA in North America and the first phase of the Chinese agreement in I think in mid January. So trade negotiation is less of an anti-growth element than it had been. Immigration control still is an anti-growth element and the program elements are still kind of there, but kind of burning their way in and nothing much has happened. Infrastructure, education reform or healthcare, nothing's happened there. So when you look at it, I would say it's more like three quarters full versus a half full that I said in November. So what would cause a recession to occur? Well if you had a sudden increase in inflation, either labor cost inflation or materials cost inflation that would raise shorter term interest rates, that would cause an inversion and then you'd have a recession. Some significant macroeconomic demand shock, negative demand shock would cause it; apart from either of those things, I don't see a response and the other thing I do look for constantly is where's the debt bubble? Recessions are classically caused by excess leverage in certain sectors of the economy. So you constantly, in my mind, I'm constantly looking for where's the debt bubble and it's a big enough to cause a recession? Right now one could argue that there's a bit of a debt bubble in consumer auto loans, not that big a deal. It's not happening in mortgage or real estate. That's clearly the case.    Is it happening in corporate debt? Yeah, maybe, but they're sophisticated folks. Is it happening to a certain extent in oil? Well, one could argue that that the factors are a bit over levered and the banks are trying to sort of reel them back in. But at 55, 60 bucks a barrel, it's not so bad. I don't see, again, when you look around and say, where's the inflation coming from? It's not coming from materials and it's certainly not coming from oil. I'll go back here and kind of show you a little bit of slide on oil production. It's not coming from oil. It's not really coming from labor. If I kind of go back a further point, not really coming back from labor, rent actually; rent, real estate is a quite frankly a bit of a driver of whatever inflation we do have because of frankly regulatory constraints to supply and the cost of materials and labor. That's kind of hard to produce supply to enter the market. So I don't really see inflation cracking over too, I don't see from the material side, I don't see from the labor side. Read some interesting papers by the way, that one of the issues we kind of are scratching our head about is with all this labor shortage. Why aren't labor unit costs going up? Or the fact of the matter is the workforce is older, is less likely to move, is reasonably productive. So there is wage inflation at the bottom end of the scale, wages at the bottom end is going up 5% but it's not enough to offset people who are retiring it at higher wage rates and slower wage growth among older workers. So even, and we've had a long history of services inflation with goods deflation and seems to play out. Now long story is the multifamily, not exactly economic piece, but the basic point is if you understand the basic sort of lay of the land, interest rates lower for longer, not really no big inflationary pressure, then income producing real estate looks really good because you're not going to get a reprising on the value of the asset and that's the way real estate works and generally you got growing incomes. So that's the basis of not believing that there's going to be a recession kind of upcoming immediately. We always thought, we're going to eventually have recession, but I don't see the basis of the pressures that would give rise to that at least for the next 18 months or more. James: Got it. Got it. So a primary would be the political climate is what you are saying could be where we might be causing some of these potential recession. It depends on what's the policy and you don't see any other big risk, I guess, right. In any other... Jeff: Yeah. So I mean, so James, you're in Texas, I believe, Austin is that correct? James: Austin. Texas, Jeff: Yeah. So your state and your city is the beneficiary of misguided policies in other places. The growth in population, the growth in tech centers is really occurring in the South and the West. It's not to say that New York, San Francisco, LA, are not wonderful places have very deep tech hubs and tech ecosystems. But what's generally happening is that when a business decides it wants to scale, it doesn't scale. In California, it can't, it doesn't scale in New York. It scales outside. That's not the say that Google is building a big footprint in New York City to access that labor pool. That's not the say that there are large tech firms that are; just yesterday I think Google was trying to in a wall street journal get San Jose, we redeveloped the city of San Jose downtown as an employment and a commercial center. But the fact of the matter is the cost of housing and expansion is so difficult in these major gateway cities that places that are business friendly and have an intellectual capital infrastructure like Austin are growing quite rapidly. Ross, Austin, Raleigh, Atlanta, Denver, Phoenix, Salt Lake City, these are places where the tech infrastructure on talent is expanding. Texas is a beneficiary of having a great business climate. And so population and I think I have a little slide on this one here, population is moving as one would expect. Population is moving domestically; Vegas, Austin, Phoenix, Raleigh, Charlotte, Nashville, Orlando, Dallas, and Denver. You know, these are places that have significant domestic inland ratio. If you look at the other, I'll call gateway cities, they have a significant amount of domestic out migration and in the past they really were covered by international immigration. Now that as coming down a population in the US is growing at seven tenths, I think now six tenths of a percent. So these cities over here are growing quite rapidly. And Austin is one of the beneficiaries of that. Jeff: Got it. Got it. So what about, I mean, in the beginning you mentioned about the cities just outside of California or like Phoenix, I mean, Phoenix and Las Vegas is beneficiary or people are moving out to California and why is that? Why is that driving? Why not they come to Florida or Texas? Why is Phoenix and Las Vegas which had a huge cycle in the past crash, it went from hype to so down. Why are they like now? James: So if you think about it both in New York and in California, you have a hollowing out of the middle. And so if you're extraordinarily wealthy, so let's convert this to almost a apartment investment discussion because of the structure of the economy if you can build a class A property in Northern or Southern California, you should continue to build it. They will continue to get occupied because there are a reasonable number of people that have continued to expand at the very high end of the market.    Jeff: Got it.    James: Conversely, in the very low end of the market, it is a draw for people from around the world who want to get a start in the United States. But if you're in the middle of the income stream, then your life isn't that great and your costs are quite high and you can improve your quality of life by going someplace not too far from where you are. So if you look at California, the people streaming out of California, Boise, Salt Lake, Phoenix, Las Vegas, and yes, companies are moving all the way to Dallas. But there's a steady stream of the middle income and I would say and low income and it will cost 50 to 150,000 a year. Educated, skilled, but not at the highest level, not the half a million dollar a year kind of thing or $300,000 a year, but right there in the middle. Now the same thing is happening coming out of the New York metropolitan area, New York, New Jersey, Connecticut, and that's streaming to the Carolinas and into Florida. That's what's happening. Orlando has a little bit of a bump from Puerto Rican immigration, but there's pretty much people streaming out of there. And if you're talking about people leaving Chicago, they're going more to the Tampa where they used to go for winters. The new workers are going to the gold coast and the people in Chicago go to the Gulf Coast and down to the Carolinas as well. And Carolina is Georgia and so forth. And this is just where, look at the numbers, look at where the people are coming from. I mean it's in the numbers, it's in the cost structure. Certainly the tax bill that it went to effect in 2018 is pushing people at the margin on a slow roll kind of basis, adding a little extra push to what's been going on otherwise. And so when I look at where the population is growing, where the new supply is going, where intellectual capital is moving this is what I see. That's what I see and that's where an investment standpoint, my own view is you want to be in places where the tide is rising. It's easier to make money where the tide is rising and populations are growing and the economy is boosting incomes and it is to kind of swim upstream. I'm not saying you can't make money in Buffalo or Syracuse or Cleveland, but it’s tougher. James: Awesome. Yup. Yup. So Jeff, I have a question in terms of the rising, I mean the capital is comprising the price of buying an apartment nowadays as reason now from, I mean if you look at Texas in Dallas, Austin and San Antonio and I think everywhere, I think everyone across nations. It used to be 50 a door to buy an apartment. Now it has gone like 80 to 100 and in some places 120, 130 a door even for a class B and C properties. So how does it make sense? Because you can construct new class A with that similar cost, like a hundred, 110, you should be able to? Jeff: But no actually you can't and that is the entire point. Because of restriction and again, we're obviously talking about the city and which part of the neighborhood, but the fact of the matter is that construction costs have risen significantly and regulatory burdens have risen significantly, particularly in kind of urban cores so that the cost of constructing new products is higher. Now there is a lot of work being attempted to bring down the construction costs through prefabrication, through potentially regulatory streamlining. But it's not as easy as it seems and there's a lot of institutional resistance to it. I've spent the whole year trying to help crack the sort of affordability code and it's literally just buried in a swamp. I mean, it's just, it's ugly. So can you build, if a city planner will let you build essentially what it was eighties product on sort of suburban ex urban land. Then yeah, you can deliver it at maybe 80, a hundred thousand dollars a door. But it's very hard to do so. And as a result, so if you think about values, values are driven by two things. One, what's the next best alternative? And two, are our incomes growing to increase the value of the asset? In multifamily, you have both of these dynamics happening. One, because of the general shortage of housing and the higher cost of adding capacity rents are rising. So if rents are going up three percent, NOI is easily going up five to six. Plus given the fact that interest rates are lower for longer and there's capital streaming into it that is saying, well my cost of capital is lower and all the institutions which started this cycle 10, 11 years ago, only in the urban sexy six all of them are spreading out all over the country and they're bringing their lower costs of capital with them and their lower return expectations and that is having an impact on values.    A third component I would also argue that kind of fills into the second one is that as cities grow and develop, and I'll use Austin as an example, Austin has become an institutional grade capital city. 20 years ago it wasn't, you had opportunities to capital, but now it is. So what that tends to as a city changed in its nature and becomes more broadly diversified and more accepted as having a broader economic base, institutions with lower cost of capital and lower return expectations now make it appropriate for investment and they drive up values. So it's kind of tied up in a second lot that I discussed. So multifamily is really in a situation where yes values are going up, but the real question you have to ask yourself is what does the future hold? Are the conditions under which the fact that the values went up are those likely to continue or are they likely to end? And like I almost hit myself over the head, I don't see how they end. So suddenly, admittedly we had always expected as a homeowner interest rate would increase a little bit and I think it's up to 65%. But it's down from 69 but up from 63 and we are going through a period of time where the millennial are getting older and they will want to live in basically the amenity if they have had children, more than one, they are more likely to want to live in the suburbs in better school districts, which is in the historical pattern. So, but be that as it may have, demographics are still very much people are renting for longer. They're getting married later. They're having fewer children. All that was elongating the rental period initially.    And then as people are living longer and living healthier they are selling the house and then moving back downtown in a multifamily asset. That one asset class you really have to worry about are very large suburban homes that are sort of ex urban go to Fairfield County, Connecticut. You can buy a big estate for a relatively speaking a song. Nobody wants to live there. The taxes are too high. It's too hard to get to New York. There's no reason to be there anymore. That asset class is going to experience some real problems, but if you're near an employment center with a modest sized home or apartment, you're going to do okay. James: Got it. Got it. Yeah. I mean, you don't see anything in the horizon as long as you're by the employment center you should be good from what we see right now.  Jeff: That just looks pretty good. So yeah, that's when someone says, okay, the careful thing you have to be at worry about excess leverage and overpaying. That's the biggest problem one has to be concerned with right now is there will be a recession. I don't know when. But you do not want to be in a situation where you are squeezed out during a recession because you're over levered and you have a debt maturity and you basically you get pushed out of a great long-term investment. That's the biggest concern. James: So let's say we have a recession right now, so the rents are going to drop. So if you have a long term loan, you should be able to ride and you should have some cushion in your operation cash flow. But one trick that has happened, not say one trick, one thing that has happened that what I realized in 2015 onwards, there used to be a lot of interest only loan started being given out by lenders after 2015. I don't know. That's what I feel. I know I used to be very hard to get even one year higher loan in 2015 and now it's like so easy to get three to five years higher loan. So it's the lenders that made it easier for people to buy and extend this expansion boom? James: Yes. I mean, so what they're doing is in order to sort of compete to get the loans, while they're not reducing the LTV percentage, they are allowing you to go IO and not pay down the principal which effectively helps you pay more. That's what it does because you have time for the rents to rise. So that by the time the loan comes due, you can refinance it and do okay. So certainly if you can get an IO loan for three to five years and increasingly you can fantastic. If you're a 65% levered, you can ride out a 5 or 6% reduction in rent that do occur in a recession. Obviously the reduction in rents will be higher at the class A levels than the class B, class B has got some more insulation. Value adds assets right now are priced to beyond perfection. So a lot of folks are basically saying, particularly in the institutional level, 150 units and higher, 90's or 2000 vintages a lot of the folks that I talked to were just saying it's not worth it. The prices are basically, I'm going to work for somebody else. I'm paying him all the profits from the value add. There's no point doing the work. So they're going back to, it's called core plus or kind of just building new again because those are the better returns converted value add. So the value add, you can still make work but you may have to sort of go under 50 units. You may have to do something to avoid the institutional capital pressure on values. And I saw about a year and a half ago credentials saying they were suddenly going to enter the value add space; by the way, I love credentials, they are great people, but it's kind of like run for the hills man because they're going into a value add place where you know there's an innovation risk. And that's not something they usually price too. I usually price to kind of a buy and hold deal. So they're not the only institution. A lot of institutions have found values add, but they found it as usual a tad late. Jeff: Got it. Got it. So I want to come back to the high leverage comment that you made. So on a value add deal, usually even though you buy it at 1.25 DSCR. So, for example, most of the banks gives us a loan at 1.25 but when you do value add that 1.25 could be 1.85, [31:22unclear] in a couple of years. So even though...   James: But when you're done [31:31unclear] in-going with the expectation that you'll invest in and raise the rents and then you'll be at a 1.75 when it's time to cash out. But my point being is, if you're paying a lot and you're not getting a big pop in the rent relative to what you paid, then that 1.25 may not move high enough to cover the risk. Remember, building a value add as anyone, I'm sure you and other people know. There's a lot of hard work. I mean, you've got to sweat for it. There's a lot of sweat to make a value add work. It's not just doesn't show up on its own. And I've seen a lot of value ads go horribly wrong. Because people didn't get the ducks in a row. So it takes skill to do one. But the fact of the matter is values add is really from a public policy standpoint and indictment of the inability of supply to expand to meet the needs of upper income renters because that's really what happens. What ends up happening is because there's not enough supply at the upper end value add is a near price substitute for new supply. It also happens to withdraw supply from the lowest income consumers. That is what it does because you don't add a new supply at the bottom end of the scale. And one could argue that the rent control in New York and rent control as executed in California are essentially a rebellion against value add because in New York they basically wiped out the value added trade entirely. And in California they basically changed the value adds from a maybe a two to three year exercise to a seven to eight year exercise. But remember they didn't say [33:30unclear] it's very difficult to build in any one of these locations to get through all the permitting and the environmental zoning and all these other kinds of garbage. But they're not stopping luxury housing. What they're trying to do is stop the value add trade because there's no structure to add supply in the middle to the bottom end of the stack. And the fact of the matter is that the public policy response is short term in nature. So rather than solving the root cause they are basically kind of putting a Band-Aid on the symptom and that's unfortunate. It's bad public policy. But I don't see it changing James: That's very interesting. Never heard anyone looking at that perspective that I know it's basically a going against value adds in that cities that's why the rank [34:25unclear]. But it absolutely makes sense. So I want to ask before we end because we are almost to the end, I want to ask a few more scenarios that may cost impact to the apartment; and you can answer it quickly in a short. Fannie and Freddie Mac becoming private, what could that be impacting? Jeff: Well obviously the intent is for there to be no impact and their current program and current capacity of 20 billion a quarter each without any kind of green exceptions is kind of, I'll say, calm the market. So it's always been profitable. It's been the most profitable part of the, the GSEs there is, I think, and the NHC and NAA are doing a fine job communicating to Congress the fact that multifamily isn't the problem. The blow up was in single family housing underwriting. So if you look at Brickman, David Brickman became head of Freddy and he came out of the multifamily industry. He was in charge of multifamily for Freddy. Now in charge of all of Freddy. So in my mind, that kind of bodes well because at least from Freddie and Fannie, they know how to make money doing what they do for multifamily. I mean, they make money, they know how to make money. It's always been profitable. They could rebuild their capital cushions relatively quickly. I think the issue will continue to be how does Freddie and Fannie support single family home ownership without pushing so hard on home ownership that it blows it up like the last time. So how can they retain their underwriting criteria? The fact of the matter is, should they be differentiate pricing by market for single family. They don't really do that and do that for multifamily much either; but they are supporting their mandate and really if you think about it Freddie and Fannie's mandate is to supply multifamily capital where the life insurance companies or other places won't go, which really is the middle of the stack. A smaller to mid size markets, class B assets. It's one of the reasons why Freddie and Fannie don't do construction lending. They say that's a commercial banks business. It's not our business. And so I'm optimistic that it'll all work out okay. It absolutely has been a tremendous boom to the multifamily industry to have Freddie and Fannie because it basically puts a lot of stability into asset pricing, but I think it's quite recognized. So I'm hopeful that that won't cause disruption. James: Got it. How was China's economy slow down could impact the US economy and multifamily? Jeff: The fact of the matter is the us economy is mostly driven by services and the dynamic and technology services in particular. So if you think about the recent trade spats, which really slowed and began separating the economies, the places that got hurt had a manufacturing or agricultural bend to them. Minneapolis, classic example right there. Even their urban jobs were tied to those sectors and then they lost employment. So I don't think it's a tremendous problem. The fact that there's excess capacity in China, for example, means that goods costs even less, there'll be less inflationary pressure on goods. What we sell to the Chinese are primarily agricultural goods that are what we sell. And anything else ends up being produced there with our intellectual capital. So, I think according to the trade agreement they'll buy some more agricultural goods, which will help rural areas, but they weren't big multifamily centers anyway, so it doesn't really have an impact. And for manufacturing centers, those were pretty much, manufacturing takes a lot of land that occurs in ex urban and rural areas where rents are low multi family, where it's done well is where it's tied to intellectual capital and technology that drives down costs globally. So all in all, I don't think much is what I'd tell you. James: Got it. Got it. And that's one piece of advice on how to be prepared as we move forward. And in case there's a recession, what kind of what would you advise a property investor that already owns a property or is going to buy a property? Jeff: Yeah. So I mean, first one should mind dependence. This is a relatively speaking low margin business. There is a increasingly systems and technology available to sort of squeeze expenses down. So the way one prepares for recession is always to really look at your cost structure and re-examine what you're spending money on in a very meaningful way. You need to sort of be mindful of your leverage and model up. What happens if your rents go down five or 6%. Remember, it won't happen all at once. What you'll see is the new leases will go negative, renewals will hang together. You will have a higher skipping of the upgrade. So you kind of need to model out what happens to you and in a recession, I don't think it'd be a big one, but only a mild one. What happens? Are you prepared? Do you have a cash flow reserve? Have you spoken to your investors and your lenders already about what you would do? So are you prepared? And then I'm chairman of a ULI council and our council members, about a year ago, we went through a recession planning exercise. Like what kind of recession we're going to have and what are you going to plan for right now; and so every one of the organizations that I was working with had had a recession scenario plan in place about a year ago. Not that they had to execute on it, but everyone had one. So what I've experienced in all of now I've seen through four or five recessions and a big blowout is you need to have a plan, you need to be prepared, in a calm moment have thought through what you're going to do because in the moment in the crisis your brain just doesn't work that well. Under that kind of stress you don't think it through. So I would argue whatever organization size you are, if it's just you and your spouse or you and a slogan of investors, spend the time now to come up with a recession plan, put it to paper, talk about it. And then begin asking on the steps that you can take right now to prepare yourself. Again, I hope you don't have to do it, but weaning and hoping it'll never happen and not being prepared for it is a sure fire away to not be able to capitalize on it. And we had a great session from Clyde Holland who basically he capitalized on recession. He's a chairman of Holland partners’ pledge, great guy. And he basically in preparation, he saw something bad coming in oh seven, he basically slashed costs built a lot of dry powder and basically waited to pounce and came out of the recession incredibly strong. Now I don't think we'll see another recession like that one in front of their 80 years. The recessions we're going to see it more like the typical post World War II recessions. But you can get yourself prepared and you can be ready to act. And with that James, I have to run. It's been a real joy speaking with you today. Take care now. Bye bye.  

James: Hey audience, this is James Kandasamy from Achieved Wealth Through Value Add Real Estate Investing podcast. And today we are doing a slightly different format. We are doing a podcast plus a webinar and I have Dr. Glennn Mueller here. So Dr. Glennn is someone I have been following for many, many years looking at his real estate market cycle studies and he's a professor at University of Denver. He has been doing this almost 36 years, if I'm not mistaken, has gone through many, many different market cycle. And, Dr. Glennn, why not tell our audience what I didn't cover in terms of introducing yourself. Glenn: Sure. So I've actually been in the real estate field for the past 45 years. Started out as a loan analyst at United bank of Denver and by chance got put into the real estate group after a couple of years, realized that real estate people made a lot of money, went out and started my own construction and development companies and built custom homes for about seven years and then decided that I wanted to have a change and a different lifestyle. So I went back to school, got my PhD in real estate and started teaching at the University of Denver. I hired away by a big institutional investor, Prudential real estate investors and then onto a Jones Lang LaSalle. And then started working on the security side with Wreaths Real Estate Investment Trusts at Lake Mason. I ran the research group there and then one of my client's black Creek group invited me to come and head up research for them. And I've been with them now for the past 15 years and at the same time teaching as a full professor at the University of Denver. So I guess I'm a typical real estate type A personality running two jobs at the same time. But a lot of my research is focused on real estate market cycles, which is what we're going to talk about today. James: Yes, yes, correct. And real estate is very interesting because sometimes it's very hard for us to make it into a very analytical format. And when I look at your charts and the work that you do, you have really break it down to science. I mean, of course, definitely there's art in real estate but there's a lot of science to it as well. And it comes from years and years of research, like what you have done. And that's very important for people like us who are basically active investors who are buying deals day in, day out and going to different market cycles and it's also more important for people who have never gone to a full market cycle. Like, even for me, I've not gone through a down cycle yet and there are tons and tons of people who have not gone to a down cycle, so we always wonder how this different cycle is impacted by different property types. What do you call us, like industrial, self-storage, apartments, office and retail and few other things. So this presentation that you're going to be doing on the webinar and throughout the podcast, we're going to try to clarify some of the slides that's going to be covered here so that the people who are listening to the podcast is going to be able to follow too as well. And this going to be difficult [03:26unclear] Glenn: So do you want to... James: Go ahead doctor? Glenn: So if you'd like, if you want, I've got my slides ready to go. We could probably go to that. I can start in. James: Let's start, I mean I'm going to name this podcast, A State of the Union of Commercial Real Estate Property [03:46unclear] so let's go through it. Glenn: Throw the word cycles in there someplace because I do real estate cycles. So let me actually bring that to full screen size to make it easier to see. Is that clear for you?   James: Yes that's awesome.   Glenn: Okay, great. So basically I believe that real estate is a delayed mirror of the economy as the economy goes, so goes real estate when the economy is doing well, real estate does well. When the economy turns down, real estate lags by about a year and about a year after the economy starts to turn down, real estate will turn down. You can see that here in this first chart and on the demand side of real estate, there are three key things we look at. The first one is population growth. The US population is growing at nine tenths of 1%. We are 330 million people. So we're actually growing by 3 million people every year in this country; and let's put that into simple real estate terms. That means that we need to build one city, complete city the size of Denver, Colorado, which will actually hit 3 million people this year, to give them a place to eat, sleep, shop, work, play, pray, store things, et cetera.   So here you can see GDP growth, the great recession in oh nine and the beginning of 2010 with negative GDP growth. And then it has rebounded and it's been running at this nice average of right around, just a little over 2%. And the forecast is that that looks like it continues forward with a little bit of a dip here in in late 2020. But to be honest, economists are always wrong. Their numbers never perfectly accurate and there's a fairly high probability that doesn't happen. The reason for that dip is actually the employment growth below, which again, you can see the negative number back in 2009. It starts to recover and go positive in 2010 and has been running about 2%. And then you see the forecast for a slight decline back to down to close to zero in 2021. That's actually a mathematical calculation of the number of baby boomers like me getting to retirement age of 65 versus the number of millennials who are just coming out of school.   The only thing and one of the reasons I believe that that number is wrong is that most baby boomers like me, we enjoy what we do and we're not necessarily retiring or if we do within six months to a year, we're out with another job. It may be a totally different kind of job. I love up here in the mountains of Colorado and a lot of my friends that retired are working as ski school instructors or driving a shuttle bus or my wife is a host and tour guide, Arapaho area ski area. So those people are still working. So that decline in employment growth sort of forecasted decline in GDP growth, my guess is that doesn't happen. And a lot of economists now are saying maybe we're in the lower for longer term. As you probably all know. We just hit 10 years of economic expansion. So we're in the longest economic expansion in modern history and a lot of economists do say, well, it can't go past that, but I don't believe that because right now the country in the world that's had the longest economic expansion is Australia and they're in their 28th year of expansion with no recessions. So I believe that the way that we're set up with this more moderate growth is something that is potentially sustainable as we go along. James: So let me recap that because that's very important point because that's a lot of notion out there that we are too long in expansion cycle, we must come to an end, it's cyclic but what you're saying is the way the employment growth and the way that GDP growth has become moderate right now for the pass many how many years we have, and that's a good thing. So what you're saying is with that moderate growth, we might be able to go longer on expansion cycle. Is that right? Glenn: Right. We're at the beginning of the longest ever. James: Correct. So when you talk about Australia, I mean, I know it's one of the longest expansion cycle and things are getting very expensive there, but is that the same case in Australia? Were they like moderate growth for very long time and that's how they're able to sustain it? Glenn: Yes. James: Okay. Got it. Got it. And what's driving the 0.9% population growth, where is the growth coming from? Glenn: That is new births over deaths plus legal immigration.   James: Okay.   Glenn: And so we're actually growing at a higher rate than that from illegal immigration as well. But there are more people; we're at a very low unemployment rate at this point in time. So anybody that wants a job, basically you can get a job and that's a good thing.   James: Okay. I'm going to ask about inflation and you are showing the chart on inflation, okay let's go to inflation.   Glenn: So on the flip side of the coin is as we look at, and this talk that we're talking about, by the way, we're talking about income producing real estate, not homes, not home ownership. So we're focusing on the income producing side of this as we go along. So the two things that we look at, so we've got good demand as we put up new properties for people to us. On the cost side inflation is running at again about 2% and has been since the great recession when it was actually negative and that is expected to continue. And then we look at interest rates and of course we are at, actually, I'm going to jump ahead here to a different graph, I think. No, I'll wait on that because it's too far ahead.   We're at a very low interest rate. As a matter of fact, the lowest interest rates in 60 years. And then in income producing real estate, commercial real estate you can't go out and get a 30 year mortgage on an office building. The longest you're going to see is 10 years. And so we look at 10 year treasuries, US treasuries as our benchmark. And here you can see that 10 year treasuries and these graphs are actually wrong, they forecast going up to 4%, 10 year treasuries are running a little under 2%. So if you're going to go out and get a commercial loan, you might get in a 10 year treasuries plus a 2% premium. So that would be a, today, 10 year treasuries are running right about one seven, one eight. So you would be getting a 3.8% 10 year loan on your property, which is a very low interest rate. Hence good return to equity on investment after the loan amount.   James: So the chart that you showed is basically a forecast but we are running much lower than the forecast I guess?   Glenn: Yes. Yup. We are.   James: And who came up with the forecast?   Glenn: Every economists forecast what is going to happen. The forecast that we look at many times are the congressional budget office. So that's cbo.gov, if you want to go get their stuff; they do 10 year forecasts on GDP growth, limit growth, interest rates, all kinds of different things. So that's a very good place and it's free to go look at what's happening. And just underneath that they've got a lot of different things. Just click on the economy one and all that information will come up.   James: And why do you think the economists are wrong? Why were they forecasting at 4% [11:41unclear] 1.7?   Glenn: It's a statistical method called reversion to the mean. Interest rates over 60 years have averaged close to 6%. So now that it's low, it has to go back up.   James: Got it, got it.   Glenn: And every single year they did forecasting within two years, 4% and every year for the last 10 years they've been wrong. James: Last 10 years they've been wrong. Is there a chance for them to be continuously being wrong? Glenn: Again there's an old saying for kindness, forecast often. James: Well, the reason I ask is because every year people are forecasting the interest rates are going up or coming down when everybody's wrong all the time.   Glenn: Yes.   James: And it's very important for interested for investors like us, like where we are predictive because we do exit cap rate and we have buying deals, hoping on the cash flow, but also this market appreciation would be a bonus for us, so that's why I asked.   Glenn: So let's actually go right to talk about real estate and my market cycle analysis. So I believe there's really two cycles in real estate. The first one is the physical cycle, which is demand and supply for real estate. So people renting and space available for rent and that drives the occupancy rate which is just the inverse of vacancy. I like using occupancies and you'll see why here and occupancy drives rent growth. So if my occupancies are up, which means there's more demand, I can raise my rents. If we're in a recession and occupancies go down, people aren't renting. Landlords are going to drop their rents. And if I add occupancy and rent together, so if I get an increase in occupancy, in other words, I rent more space and I get an increase in rent, those two together will tell me how much income I'm going to get off my property. That's the physical cycle.   The financial cycle talks about the price of real estate and we're going to do that second and we're going to do it separately. So here's my market cycle analysis and you see that I've got four quadrants, just like the account, just like an economic cycle or recovery and expansion. I have a supply and a recession phase. There are 16 points on the cycle because historically real estate cycles have lasted 16 years and so at the bottom we've got obviously declining vacancy on the way up and increasing vacancy on the way down. We don't build much there in the recovery phase. We build a lot in both the expansion and the hyper supply phase. And then we don't start anything but we complete buildings that have been started in the recession phase. So actually we'll go to this slide. So the study that I've done and published that I get quoted on all the time is the fact that if you know where you are in the cycle, you'll know what kind of rent growth you might expect. So you can see here at the bottom, I don't know if my arrow is showing up here or not, but at the bottom of the cycle points one and two, you've got negative rent growth, so landlords are dropping their rent. So if it was $10 a square foot last year and it's going down 3%, 3% of $10 is 30 cents or it's going to go down to $9.70 a square foot to rent. As we start to come up through the cycle and occupancies increase you can see rent growing and at positions six, at the long-term average there, 0.6 is on the long-term average dotted line; you can see that rent growth was 4% and during this historic cycle time, inflation was running 4% then. So when you get to long-term average, you get basically the rate of inflation.   Then in the green shaded area here, which is the expansion phase, you can see rents really rising quickly to a peak and a high of 12.5% in position 10. Then when we hit the peak of the cycle, which is the highest level of occupancy after that, rent still grows positively, but it starts to decelerate or slow down, back to around inflation at 0.14 and then low and negative again at the bottom. And then one of the things to notice here is that 0.8 on the cycle is green and because that is the cost feasible rent level. By that I mean that if it costs $400 a square foot to build a new office building here in Denver and investors are looking for a 10% rate of return on that $400 investment, 10% of 400 is $40 a square foot. So rents in the market have to hit 40 before we can cost justify building the new building. Makes sense?   James: Got it. Makes sense. Makes sense.   Glenn: Okay. So every quarter I look at the major property types, look at that demand and supply, look at the occupancy levels and as you can see today five major property types office downtown or suburban office is at 0.6, downtown offices at 0.8, retail, which will surprise everybody at 0.9, industrial at 0.10 and retail industrial warehouse up at peak occupancy rates. And the only property type that's over the top into hyper supply is apartment. An apartment is there not because of a decline in demand, we've got all these millennials coming out of school and so every year demand is going up for apartments, but we're just overbuilding it a little bit. So for my company and for other investors, what I do is I analyse the 54 largest cities in the United States and where they are in their cycle. And as you can see here they're kind of spread up because demand and supply is very local in nature. Notice what's happening in New York office, which is driven by the financial sector and the stock market is going to be different from what's happening in Boston or Chicago or in New York or any other city. So you can look at the companies that are there, the industry that's driving the growth and what you see here is national average at 0.8. But some markets moving up the cycle and some markets over the top. And I'll give a quick example here. We've got two markets that are in the hyper supply phase, Austin and Houston, both in Texas   James: [18:19unclear]   Glenn: The Austin market is driven by technology companies. A lot of tech companies like being there because they can hire young people that want to live in Austin, It's a cool city. Actually [18:31unclear]   James: I'm in Austin. It is very cool to live here.   Glenn: And so, what's happening there is since that's been going on for a few years, the developers are putting up just a little bit more space than you need. So the occupancy rate is starting to come down just a little bit because there's too much space there. So that's a situation of too much supply. Houston is exactly the opposite. It's a place of declining demand because the oil industry is driving Houston and with low gas prices, the amount of exploration and other things going on has dropped off and they've laid people off. So that's a position of declining demand. So since you're in Austin, let's watch Austin as we look at this. So that's where office is, here's where industrial is. So warehouse space, again, Austin is just one point over the top. A lot of markets are at their peak, demand for an industrial warehouse space has been very strong because of Amazon and people buying things online.   So we've got a huge demand growth on the industrial side and there are some cities again where it's easy to build. So we're overbuilding just a little bit. Now we look at the apartment market and Austin is at the top at the peak point at 11 because you aren't putting up apartments fast enough for all these millennials moving in. But you look at, there's a lot of other markets where they are putting up a little bit too much space. In other words, we're oversupplying almost half the market. So the national average is just a little over the top. Every time I talk to developers I'd say if you just back off on building apartments by about 10% of what's being built, you'll come right back into balance and be back at peak equilibrium point 11. When we look at retail, you can see that the majority of the cities are at peak and Austin is there as well. This is the one surprising thing because everybody hears about retailers going out of business and we’ll talk about that a little bit more in just a second. And then finally hotels here you can see that hotels, the majority are in the expansion phase with some over the top. And again, Austin, you're oversupplying by just a little bit. So what I want to do now is jump to and looks at the historic cycles. As you said, you haven't been through a full cycle yet. Well here we're going to go back to 1982 and that's a point in time at which I was building. And you can see that occupancies in office were very high. They came down and bottomed out in the early 1990's with a small recession and we'd actually over oversupplied a lot. They peaked in 2000 with the technology boom, they bottomed in 2002 and three, with the technology bubble bursting; came up to a lower peak in 2006 and seven as the economy was doing well, bottomed out in the great recession in 2010. And today has come back and are reaching a kind of a lower level equilibrium occupancy level than we've seen in previous times. But it looks like it's going to last for at least another two or three years. So the other line that you see here is the rent growth line. And you can see that those two are very highly correlated. As a matter of fact, they're correlated by almost 80%. So if occupancies are going up, rents are going up, if occupancies are going to go down, rents are going to go down. Pretty simple and straightforward to look at. So let's look at my forecast and here's the forecast and it looks very much like the monitor. And you can see that markets are again, majority in the expansion place. Austin, as you can see there is in the hyper supply phase at position 13. And again, that's because I'm forecasting that you've got a lot of new properties coming online, so your occupancy levels are actually going to fall a little bit in the coming year. If we look at industrial, you see basically the exact same cycle of occupancies and rent growth and we've got this really nice equilibrium that happened back in the mid-nineties and another one that's happening today. Rent growth has been really high in industrial because of the, I call it the Amazon effect up at 7% more than double the rate of inflation and we expect that to kind of work its way back down over the next few years back to kind of a more normal by 2017 we expect to see kind of inflation type things there.   So again, half the markets at peak or equilibrium, the other half building just a little bit too much, but that's the way it is and Austin, again, just one point over the top. Oh, one other thing is you notice I've got some numbers after each city and those numbers tell you if the city is moved from the previous quarter, for instance below Austin there you've got Cincinnati at a plus one. So Cincinnati was at peak number 11, and its occupancy occupancies dropped enough for me to move it forward to position 12. So it's rent growth is going to be decent James: And the bolded city are the biggest cities? Glenn: Right. Okay. Yeah. So the bolded cities make up, one of the things I found was there are big concentrations. So in each of the different property types there is anywhere between 11 and 14 cities that make up 50% of all the square footage in all 54 of these markets. So what city is bolded may not be the same in each case. So like Riverside is here in the industrial, but it's not in any of the others. Las Vegas will be in hotels, but it's not a big city for office or any of the other property types. When we look at apartments, you can see that we actually hit a peak in occupancy back in where am I?   James: 2019.   Glenn: Yeah. We had a peak back in 2014. It looks like we had another peak here in 2019, but because of the overbuild; we slowed things down a little bit. But going forward, we just have a lot of it in the pipeline and so we're going to overbuild it looks like for next three or four years and hence rent growth, which was as high as 5% back in 2015 has dropped off. And in 2019, I think it's going to run about two and a half percent. James: But looking at that chart, you're predicting 2019 after 2019, rent growth is going to slow down because of the oversupply stage?   Glenn: Yes. Yup.   James: Got it.   Glenn: Exactly.   James: And does it matter on which class apartment is it? Which location? Which city? Tertiary, primary market? Glenn: Oh, well. So here are the cities for apartments. And you can see Austin I think is still at its peak. You're not putting up quite enough. Most of the other cities are in that hyper supply phase. Where they're putting up a little too much. And so they're occupancy levels are dropping. Denver had a number of years of 8% rent growth. And because we're over building and you can see Denver way over, further down the cycle there at a position 13, our rent growth now is only running about 3%. James: Yeah. So for example, like the city on the hyper supply, I mean going to the recession on the point 14. So what you're looking at is you're looking at the supply that's coming into that city and looking at the demand for that city and that's where you're determining the point 14 for that particular city. Glenn: That's right. Yup. Because when I combined supply and demand, I can then forecast the occupancy level. Okay.   James: Got it.   Glenn: So there were no cities of Memphis, Miami, Orlando, and San Jose. I don't expect them to get anything more than inflation, which is we're right about two percent. James: Oh, you mean rent group, right about 2%.   Glenn: Right. So their rent growth is only going to match inflation.   James: So at point 14 is supposed to be deaccelerating rent growth and recession. It should be like almost negative rent growth. Glenn: 12, 13 and 14 are decelerating rent growth. And point 14 is when rent growth should only be running at the rate of inflation, which if you remember back to your economics class, we have nominal inflation and real inflation or nominal growth and real growth. All that is, is nominal growth if the price of something goes up, that's inflation. So if we have 2% inflation, if you've got like GDP growing at 3%, that's nominal GDP growth. So 3% nominal GDP growth, subtract inflation of 2% and real GDP growth is 1%. James: Got it. So what about at point 11, the cities who are estimated to be at the final phase of expansion, still in expansion where; what is the percentage of expectation of rent growth for that kind of cities? Glenn: Well it will vary by city, but it's probably going to be, well, let's back up one slide there. And when you're at peak occupancy, you've seen historic rent gross as much as here's four and a half, here's almost 5%. This little peak here is that 3%. Okay. So again, and I do this model that you see here individually for each city. James:  Okay. How do we get access to that data to get a rent growth prediction for each city? Glenn: So, well that's what researchers do is we model and project things and I get my historic data from CoStar, the company that does all the major property types and I get supply information, demand information, occupancy levels, rent growth. So I can model every city. James: But your model of forecast is not available for public consumption, that's mainly for your research, I guess? Glenn: This is my forecast report that you're looking at here. And my regular market cycle report I give away free. It's actually on our website at the University of Denver. So if you go to du.edu/burns school, I'm in the Franklin Burns School of Real Estate, scroll of the bottom of the page and you'll see my market cycle forecast so you can get those for free. We sell a subscription to my forecast report that comes out four times a year. It's only a thousand dollars and that money goes into a fund to support research on real estate and sustainability. James: Got it, got it. So my question is on a specific city, for example, I'm buying a deal in Memphis and I'm trying to do a five year projection on my performer to show it my investors and raise money for you. So usually a lot of people use a 3% or 2% rent growth for next five years. But what you're saying is that's not correct, right? Because that's not how it's being forecast.   Glenn: They need to take a look at the city where it is in its cycle and it might be doing better and might be doing worse than that.   James: So how do we get that number rather than saying three or 2% blindly, is there a place where we can go and say it's 3% the next one year but after that it is going to be 1% for year 2 or second year or third year?   Glenn: Yep. So CoStar, you can subscribe to CoStar.   James: Okay.   Glenn: They do projections on all this stuff. City by city property type by property type.   James: Okay. CoStar for projections. Got it. Got it.       Glenn: Okay. Also Jones Lang LaSalle has their own research and forecasting group, so you can go there as well. For your individual investors who probably aren't doing enough to spend that kind of money on research. Most of them are probably working with a broker when they're looking to purchase properties operate the properties, lease the properties, et cetera. When they're talking to a broker, they should ask, do you have CoStar access for your city and your property type. And the broker is allowed to share that information and those forecasts with them. James: Got it, got it. And what about the cap rate? I mean, when we talk about rent growth, deaccelerating it's also meaning cap rate being expanding, right? So is there a place... Glenn: Okay, so we're almost there. Let me just finish this and then we'll jump right over to the financial cycle. Okay, here's retail; and the key thing here is that you can see that we are at the highest level of occupancy ever in retail. People go that doesn't make sense, got all these companies going out of business and everything else. So series is going out of business. What am I students family owns a mall in Macon, Georgia and series goes out of business. They open up the center of roof of the building on one side they put an experience retail, two restaurants, a movie theater and an escape room. On the other side, they're building four stories of apartments on top of the space. So they're actually going to have higher occupancy and rent going forward. We're replacing these department stores with experience retail and remember supply; we're not building a lot of new retail, number one, but we're also repurposing a lot of retail.   So many times a retail center that's not working, convert it to office space or today Amazon is trying to get that last mile delivery to you on the same day, convert that into closed in warehouse space where you can deliver it to someone the same day. So retail is doing well because it's got a low level of demand growth, it does have some. But it has an even lower level of supply growth, hence the high occupancy rate. But you can see that the rent growth is really pretty low too. It's only one and 2% going forward. James: So retail is more of a play off, people have given up on retail and there's not many people building but it's still a demand there that's why the occupancy is much higher. Glenn: Right, right. So again, most of the markets at the peak and then hotels, we are again at the highest occupancy rate we've ever seen. That's because millennials like experiences versus things. So they're doing a lot more travel. And we're in the process because hotels are extremely profitable at that high occupancy rate. We're seeing a lot more new hotels being built. So a lot of markets kind of heading over the top and Austin being one of those, where you're actually putting up a lot of new hotels. So when you think about it, the one property type that's the best in Austin is actually apartments at this point; highest occupancy, highest rent growth. So that's the income side of real estate. All we talked about is occupancies and rent growth. How much income can I get?   James: Yes.   Glenn: Now let's talk about the financial cycle and its capital flows that drive the prices and we look at that as cap rates. So the blue lines is the real estate cycle, the black lines, the capital flow cycle, and it should work as when things aren't very good, not much capital. The line's flat there at the bottom. As things get better, capital goes up. The highest rate of growth is when we go through that 0.8 now yellow where we reach cost feasible rents; capital flow peaks out in the hyper supply phase and then drops off very quickly. Now remember that we've got two types of capital flowing in the real estate. The green shaded area up here is capital flows to existing property. So if you buy a property from me for a higher price than I paid that's more capital flow. The other capital flow at the bottom is capital flows to new construction, adding more buildings in, so producing more properties.  Real estate, I consider it a separate asset class. So we've got stocks, equities, bonds, and commercial income producing real estate. It's about 20% of the marketplace. So for me, as I talk to and have worked with for 25 years, institutional investors, they should have a separate allocation to real estate. You should have a separate allocation to real estate in your retirement account. If you could only do public equities buy rates. Directly you can buy into funds or you can actually own properties yourself. But remember, when you buy a property, you just bought a business. You've got to operate it, you got to rent it, you got to take care of it, you got to maintain it, pay the taxes, you're operating a business. So when we look back over history, here's the history of ten year treasuries, you can see it going from 2% back in the 50's to 15% in 1982 to today, back to 2% with the forecast that it's going to go up but of course for the last 10 years, that's exactly what that forecast has looked like and it's always been wrong.   We've been running in the 2% range since the year 2010. So notice the total return between 1981 and 2017 is 8.4%. That's because as interest rates go down, bond values go up, your bonds appreciate. But if you think bonds are a good place to be today, go to the left hand side and when you go from two to the long-term average of five, eight, the total return has only one nine because if you bought a bond at a 2% interest rate, $1,000 bond at 2% and interest rates go to four and you want to sell that bond, the new buyer is going to want a 4% yield. So they're going to give you $500 instead of a thousand for that bond. So you're going to lose money on your bonds. So that's why today bonds kind of don't make any sense. Real estate versus stocks and bonds. It's only had five years of negative returns versus over 20 for both stocks and bonds, and it is capital flowing. That money coming in that makes a difference. So here's a company, real capital analytics that collects data on every commercial real estate transaction in the US over two point $5 million. The bars go up, the bars go down and their price index, which is along the top there, you can see follows that pretty closely. So as more people buy, prices go up. When people back off, like during the great recession of oh nine prices come down.   James: Is that the international money coming in or is that local money coming in or it's just [37:20unclear] you're easing   Glenn: I will be answering that question in two slides. When we look at the cap rate, which is the simple way to describe that, it's like a bond yield or cash on cash return. Back in 2001 cap rates were around eight to 9% and then as prices went up, cap rates dropped to a low in 2007 of around six to 7%. Great recession happened, property prices drop, cap rates go back up, so you're getting a better cash yield when you buy. Since then cap rates have been coming down and they're down at a low of mainly in the six and a half to 7% range except for apartments which are at five and a half. Now of course hotels are higher because they're riskier at eight and everyone says, well, so interest rates have to go up, therefore cap rates have to go up. Not true. All the historic studies done, and I've done some myself show that the correlation between interest rates and cap rates is no more than about 20% that's not what drives it. It's capital flow.   As a matter of fact just came from a conference where two different real estate economists say we expect cap rates to go even lower next year because there's so much money out there around the world trying to find yield, trying to find income and bonds don't have it. Today the US stock market [38:51unclear] 500 dividend yield is 1.2%. The 10 year treasury, which is risk-free, is 1.7%; corporate bonds are running around three to three and a half and you can buy into properties earning six. So that's quite different isn't it?   James: So what you're saying is the capital is going to continue, I mean your prediction is the climate is going to continue to go down in apartments and any, is it within all asset classes...?   Glenn: Cap rates are most likely going to be staying about where they are or coming in and it depends upon the property or coming down just a little bit. They probably won't go down in retail because people don't believe that retail's coming back yet. So one way to look at this as take the risk free rate of the 10 year treasury, ask how much additional yield income am I going to get over that risk free rate of the 10 year treasury. So that's the spread above the 10 year treasury. Here you can see that the spread was 375 back in 2001 it dropped down to only 150 basis points in 2007 but today you're getting somewhere between 275 and 600 points over the 10 year treasury for taking that additional risk of investing in real estate. So from that standpoint, real estate looks like a very strong buy as an investment and because of that, what we see is real capital analytics collects data from all over the world and this shows money going from one country to another. So at the top you see the United States in 2018, we don't have the 2019 yet numbers yet, sorry; into Spain, put $11 billion into Spain, that was 15% higher than the previous year. Because they believe the Spanish economy has finally figured itself out and is going well. The next one was France coming into the United States with money. $8.8 billion of French investors buying us real estate. The next one, the United States going in the UK, a $7.9 billion, that's a 20% decrease. Why do you think it went down?   James: Because of the Brexit?   Glenn: Yes, everybody has...   James: [41:03unclear]   Glenn: When Brexit happens, the economy in England will go down and hence if the economy slows, occupancy rates will go down and rent rates will drop. So you can see that money moves around the world and the most expensive property in the United States today, would be a class A office building in downtown New York City. It will go for a 3.8% cap rate. In London, the same size class A office building will go for a 2% cap rate.   James: Got it.   James: In Tokyo or Singapore, a class A office building will go for a 1% cap rate. So an English investor looks at the US and says, Hey, I can buy a top quality property for half price and an Asian investor goes, wow, I can buy a property in the US for a quarter of the cost in Asia. So we are the largest economy in the world. We're the safest economy. We have good laws that protect investors. In China you could invest there, but the government, since it's communists, could next year decide that oh, we own everything anyway, we're taking it away from you. So capital is flowing in the United States and I believe that keeps prices high and cap rates low. James: What about this trade war with China? I mean, I know it's a bit cooling down, but it's cooling down and heating up; so how is that going to be impacting the money flow to the US? Glenn: Well we've already hit the first level of agreement on it and it certainly did not hurt our economy in any major way. If you look here down at number seven, China and the United States $8.375 billion up 8% back in 2018 when it was first in process and our president was threatening. Chinese investing in the United States went up not down. Why? Because Chinese investors are trying to get their money out of their country where they thought it might slow down and move it into our country or where it was safer.   James: Correct.   Glenn: Okay. James: So this is a very awesome slide because it shows where all the money flows in the world and you can clearly see that a lot of money coming to the US which is important for capital flow too or real estate prices. Glenn: Right. So here's a slide from NAREIT, the national association of real estate investment trusts; you can find this on their website and they're showing historic cycles at being 17 years long. So the first cycle there from 1972, which is when they start having data through 1989, the green line, the total average return per year for publicly traded rates was 13.9%. The next cycle, 1989 through 2007, just before our great recession total return was over 14% a year. And here we are kind of halfway through the next cycle. 10 years in and so far the average return has been 3.9, but that's because of that big drop during the great recession and you had to recover the money that you lost. So I believe we're kind of mid cycle and a fair amount of expansion to go. James: So we are not going to die of old age I guess. Not because of the cycle is too long and we are due for a correction. Glenn: Correct. So that's my story and I'm sticking to it. If you want, we can do a quick summary or any other questions you have? James: I have a few questions. So in terms of development, so in this market cycle, let's say for example in apartments, if you look at the apartment, the market cycle that we put in, we are in hyper supply. I mean, of course you say we have like 10% additional supply it's not because there's no demand, but is this the right time to do development? Because I saw somewhere in your studies that the best time to start your development is 75% on the expansion cycle. If I'm not mistaken. Glenn: Right. I would love to be developing at points six seven eight on the cycle James: That's 0.6 or 67% of the whole cycle on the upward trend before it reached the equivalent, right? Glenn: Well, I know, let's go back to my cycle graph and we want to be, let's go to the apartment one as a matter of fact. So I would like to be developing points 6, 7, 8 and maybe 9 in the cycle. What's happening is a lot of people are over here putting up new properties at 12, 13, and 14. James: So right now, I mean, your chart shows the apartments at the 13, which means it's not the best time to really do development ideas.   Glenn: Correct.   James: And what about people, I mean, some of the investors who are doing like bridge loans or long-term loans. I mean there's pro and con in both, but what would you recommend in this market cycle? Glenn: Well, when you say a long-term note, you mean give me a mortgage on a property? James: Yeah. Getting a mortgage with agency debt or fixed rate long-term versus a bridge loan, which is a short term financing. Glenn: So bridge loans are basically taking the risks that properties being developed or redeveloped and that it will be successful upon completion. Whereas a long-term mortgage you get the first money, so the rents that come in and have to be high enough to pay your mortgage payment and if there's nothing leftover, then the equity investors aren't making any return in those years. So again you can buy an apartment and it most likely is going to cash-flow but it's a full time job to manage a big property, make sure it's done right, and finance it properly and everything else. That's why pretty much every university in the country today has a real estate program. We are actually at university of Denver, the second oldest real estate program in the country started in 1938. Where you are both an undergraduate or graduate and an executive online program so you can be at home and get your master's degree in real estate from us. James: Got it. Got it. Right. Wow really, I should probably look at that. But the other question I have, especially on this chart, why is it not symmetrical? I mean, I know during the recovery and expansion, it's just a longer cycle and update like a slight down. Glenn: Great question; and that's because historically we've had 11 years of up cycle and only three or four years of a down cycle. As a matter of fact, I'll go back to the, one of the slides that I bounced past earlier on, and that is this here you can see previous economic cycles, they last anywhere from 5 to 10 years historically and recessions are normally one to two years long. The great recession at two and a half years was the longest recession that we've seen since the great depression in the 1920s. James: Got it. Got it. And what about the the industrial office and other property types what do you think would try for in the next, I mean other than apartments, among all these property types, what would be the best property type to invest for the next five years? I would say from your perspective. Glenn: Here's the chart. Office has got the longest run in the expansion cycle followed by retail. Power centers doesn't mean that stuff can't sit at the top for a long time too. So if it keeps going, I believe we've got a good five year run of demand for industrial space going forward. James: Got it. By is office being driven by some factor. I mean, technology, right? I mean, a lot of technology people work from home too, right? So I'm not sure where that drive is coming from for office. Glenn: Basically more and more of the jobs in the United States are office using jobs and people start going crazy sitting at home and we're social animals. And so being together with other people and that social interaction actually benefits the work for every company, that's why we work. When you start a company, instead of working on your garage, you can now go and rent some, we work space on a daily, weekly, monthly basis. They charge you plenty for it, but now you've got a space to be in, all the amenities that are necessary there. There's a receptionist, there's copy machines, there's all the different things that you need to be successful; collaboration, conference rooms, all those kinds of things. So most new companies start out by going to you short term office rental space. Last year that was 10% of the demand in office. James: Got it. And what about the Amazon effect? Is that just on the industrial? Because I read somewhere that they own like 25% of the...   Glenn: Last year Amazon rented 25% of all warehouse space, new warehouse space rented in the United States. That's how much they're growing. They opened a 1 million square foot warehouse North of Denver and hired 1500 people.   James: Wow. What about this boom in marijuana and all that happening on some of the coastal cities is that impacting any of these property types? Glenn: The, I'm sorry, the? James: Like, they have this marijuana, right? Like you know like medical marijuana and...? Glenn: So yeah. Well Colorado was one of the first and it created a huge demand for warehouse space here in Denver and drove our rents from $3 to $6 over a two year period. I can see if you went to basically 100% all the old crappy warehouse got rented up to grow marijuana. And since we're one of the first States where marijuana tourism became very big. Now that other States are picking it up, less people are coming and we've had a couple of marijuana companies go out of business and so all of a sudden, and we built a lot of new space for them and so now we're in the hyper supply phase because that economic base industry in Denver is shrinking. James: Got it, got it. What would you advise an investor, let's say for example an apartment investor who are more in the hyper supply stage right now, what would you advise that person to be cautious of as we move forward for the next five years? If keep what? Keep on buying or do you want to be more defensive? Glenn: Well, if you believe that there is a recession coming, then what you want to do is have what we call defensive assets. You want to be in the best markets, the highest, the bigger markets like the ones that I show and the ones that I have in bold and italics. You want to be in higher quality properties that can attract and retain tenets and you want to try and get the longest term leases you can get to bridge you through the next down cycle. James: Got it, got it. And what about tertiary market? Is it a good idea to go into tertiary market looking for yield? Because I know some of the tertiary market is [52:52unclear]? Glenn: Yes, but you have to be careful and very selective. You need to look at what is the economic base industry that's driving the growth in that market. So for instance, an economic base industry produces a good or service it exports outside of the local market that brings money in. So in Detroit, Michigan for decades it was auto, the auto industry did well, so did Detroit. When the auto industry turned down and we got a lot more foreign competition, Detroit became pretty much a ghost town. Now you've got a billionaire, a tech giant who came in and started buying up a bunch of office space in Detroit to run his company out of at next to nothing and hire people in saying, come here and live in oh, by the way, you can go buy an existing house here in Detroit for like 10 or $20,000. So instead of spending 3000 or $4,000 in San Francisco and rent, you can have a mortgage that's only a couple hundred bucks a month. So Detroit is starting to turn around because of the new economic base industry. This tech company creating demand for office and when you create demand for employment, then people buy things. So retail goes up and the demand for rental goes up, it just, it moves everything up and plenty of growth is the number one key thing to look at for demand for real estate. James: Got it. Got it. What about some of the government controls like rent control and some of the cities, some of the States that's happening right now, how is that going to be impacting the cap rate and the rent growth? Glenn Right. so rent control is the government interfering with the free market and it has shown that when that happens it severely restricts supply because no one wants to build if they're going to end up with rent control on their property where they can't raise rents to at least meet inflation. And so every place where that kind of stuff is coming into play, investors aren't buying and property prices are going flat. In the long-term they will hurt the market. It will create exactly the opposite. They're saying, oh, we're trying to make apartments more affordable for people. Well, it does just the opposite. People that are there end up with a lower rent and then they sit on it even when they now have a good job. And I'll give you an example. I have a good friend who owns an apartment building in San Francisco. He has four of his 20 units are rent controlled. One of the people in it was a guy that when he got in, he was in school. Now he is a very wealthy person and he continues since he had it, it can't be released. His rent is less than 25% of what market would be on his property. And he's there maybe one or two nights a month. And my friend keeps asking, why do you rent this for the month when you're only here two nights? He goes, because it's cheaper than a hotel. So it's bad government policy in my personal opinion. James: Yeah. It's crazy [56:25unclear] like, so does that mean some of the cities which doesn't have rent control will have a lot more price run up because a lot of people want to be investing in like for example, in Texas or maybe Florida, which doesn't have a lot of space doesn't have rent control. Would that mean that a lot of people from the East coast or West coast will be investing more on these states? Glenn: Potentially, yes. James: Okay. Okay. So I think I covered most of the questions that was asked in the Facebook group. If audience and listeners, you guys want to join this multifamily investors group in Facebook and we have almost 4,000 people there and now we are recording this as a podcast and a webinar, so you should be able to get the webinar as well as you register. So Dr. Glennn how do people get hold of you and get in touch with you? I believe you mentioned it halfway through, but... Glenn: Right. Yup. So they can go to the university of Denver website, which is du.edu/burnsshool, and a scroll to the bottom and they'll be able to see my cycle reports there. And there I've got my profile and all the other information there. That's the easiest way to do it. James: Awesome. Thank you very much for coming into the show and doing the webinar as well. Thank you very much. Glenn: Okay, thank you. Have a blessed day.   James: Have a good day. Glenn: Bye.

James: Hey, audience and listeners, this is James Kandasamy from Achieve Wealth True Value-add Real Estate Investing podcast. Last week we had Kevin Bupp who's an awesome syndicator and a sponsor in the mobile home park space. And he gave a lot of insight on why did he choose mobile home park and what happened during 2008. And you know, how he rebounded in his real estate career and a lot of other things. So you guys want to check out that episode.  Today we have Todd Dexheimer. Hey Todd, welcome to the show.   Todd: How are you doing?   James: Good. Good. Very good. Very good. So Todd owns almost 550 units and he has been buying in Minnesota, Wisconsin, Kentucky, Ohio, Tennessee. Is that right, Todd? I mean, is this all that you're focusing, which is completely different from the usual guests that we get who buys in Florida and Texas, right? So I want to really dive into these States, which is not the usual focus or not the usual point of discussion that you know, a lot of multi-families syndicators and investors have. So let's talk, you know, Todd, why not you introduce yourself in case I missed out something?   Todd: Yeah, sure. I mean, you know, a little bit about my background. I started doing this business actually right when the crash happened. I started in 2008 so the timing was great. At the time people were telling me I was stupid and crazy because the sky was falling, you know, but luckily I didn't listen to them. I, you know, buck the Trendon instead of running away, I ran headfirst in. So started buying single families, did a lot of fix and flips, did a bunch of them, probably 150 or so, and was really, they'll want you to focus on rentals at the whole time. So while I didn't have any money as I flipped, I would just keep a little bit of that cash that I would get from the flip and buy some rentals. And that's how I was able to build up my rental portfolio.    Bought a lot of one to four families, some small apartments, did that all locally in the twin cities. And I got up to maybe close to a hundred units just under that at one point in time before I kind of transitioned them. Yeah. Out of the flips, out of that smaller one to four family stuff and into apartments, I've since sold a few buildings in the twin cities, but I've been buying in mostly out of state; in Cincinnati, Kentucky area Tennessee. That's been my main focus now is just buying... I went from buying kind of 20 to 30 unit type buildings to then now and buying larger hundred-plus unit buildings. So that's my main focus now is looking at a hundred plus unit buildings and doing value add syndication.   James: Awesome. Awesome. I mean, looking at your bio, you also have done some office, some ski resorts, some mobile home park. And finally, I think now you're focusing a lot on, I mean, you have been focusing a lot on apartments, right? And why is that? I mean, didn't the other businesses make a lot more money than apartments?   Todd: Yeah, I mean, everything made plenty of money. They all make sense. And that's the beautiful thing about real estate and the confusing thing about real estate is it all make sense, right? I mean, you know, I can make a lot of money in office, I can make a lot of money in retail and warehouses and all kinds of stuff, and I can make money in development and owning land and mobile home parks. I mean, you talked about Kevin Bob, he's a fantastic guy. He's making a lot of money, I'm assuming, in mobile home parks. And so that's the beautiful thing about real estate, but you got to pick your focus, right? And so, yeah, I did some development, I did some land, like you said, I owned a ski resort, which is just super random.   James: Do you still own it?   Todd: I don't, I sold it. It was a distraction. It was a beautiful place. Look, it was like 190 acres or something like that. It was beautiful. A really nice river ran through one of the edges of the property. It was nice hills and it was an amazing property, but you know, it was a distraction and you've got to get focused. And I actually talked to my...   James: Can you hold on? Sorry, my dog is disturbing. Hey, Todd so it looks like you have done, you know, quite different types of business, right? Like an office, some ski resort and some mobile home park and you know, you started with smaller common, complex and all that. But finally you ended up focusing a lot on a common complexes. Right. And why is that?   Todd: Yeah. because apartments make you a lot of money. No, the answer is I needed to focus on one main thing. And I could've chosen office, I could've chosen retail and warehouse or buying, you know, distressed land, like the ski resort and I did all that. But there's just no focus when you're doing just random stuff like that. And I wanted to really focus and I wanted to build something big. And so ultimately, it was a choice of, okay, what do I really enjoy and what do I really want to focus on? You know, the beautiful thing about real estate, there's so many different options, every way makes money.   And I've gotten friends that do note buying. I've got friends that, you know, flip houses that wholesale, that do land development, everything. And they all make a lot of money if they focus on it and they do it well. So that's why; I just had to focus. I just had to have one niche that I picked and ultimately I was most attracted and most led to multifamily.   James: Awesome. Awesome. So looking at the States that you have invested right now, I'm not sure whether, you know, like the popular state, I would say like Texas, Florida, Las Vegas, Arizona, Phoenix and all that, right? I mean, how is the market different compared to this populous state? How's the market in Minnesota, Wisconsin, Kentucky, Ohio, Tennessee, different from the other markets that a lot of people know?   Todd: Yeah. So first of all, Minnesota is a totally different market than all of them. Minnesota is a extremely competitive market. You and I talked offline. I mean, it's a super competitive market. There's very little inventory, very competitive. Cap rates are extremely compressed. almost impossible to find deals. Not that you can't, but I mean, extremely hard. There's just not a lot of deals that sell, especially when you're talking a hundred-plus unit deals, just not a lot of deals itself.   James: The twin cities are there, right?   Todd: Yup. This is Minneapolis and St Paul, the twin cities. You know, if you go way out state, it's a different story, but you don't want to invest there cause nobody lives there. So if you're going to remain populous, which is Minneapolis, St Paul or the Rochester area, which is where the male clinic has...a lot of people know what the male clinic is. It's one of the best hospitals in the US, those are the two areas of most people are investing in and it's next to impossible to find a deal.   James: What is so special about these twin cities? I mean, now it's like what Phoenix and Las Vegas, but past three, four years, I mean, I used to read Marcus and Millichap report and they always say the top city to invest in is twin cities. And I can never Google it. And now you're telling me that it is the twin city, right? What's the real definition of it, where it's located and what is so special? Why is it the top city?   Todd: Yeah, well, look, I mean I think we're the 16th largest Metro in the US, if I'm correct and I think we've got 3.8 million people in the whole Metro area, which we called the twin cities. We have a large portion of Fortune 500 companies are based here. It went down recently because there have been some mergers, but they're essentially still here. It's just a couple of companies that merged. So we've got a very large amount of Fortune 500 companies. It's just a stable, steady place, right? We're never going to have big population gains, but we don't have population loss and our rents never go skyrocket up. I mean, they've skyrocketed recently, but we call skyrocketing three and a half percent increase, you know, that's skyrocketing for the twin cities as far as rent goes.    But we're going to see, you know, that just stable, that really stable, it's never that up and down. It's not like a Phoenix, it's not like a Florida, it's not like that. Just that roller coaster ride, we're just straight. And so people like that. Our occupancy rate in the twin cities is, I mean, I think we've now come down a little bit, but we're at about 97% occupancy up until fairly recently.   James: On average. Wow, that's really good.   Todd: That's amazing. People couldn't find places to live. I mean, if you were an okay landlord, you were full. The only people that weren't full were just the slum Lords and even they were close to being full.   James: And that probably could be the reason why, you know, you can't find inventory, right? Just there's no inventory. Right.    Todd: Yeah. Yeah, it's good. So the difference, that's one market. And then, the other markets that I'm really focused on are going to be like Cincinnati. Now as you start to really look, Cincinnati's in some of the lists now, market is to be looking at, and I just looked up the other day, like the cities with the best population growth, job growth, and Cincinnati was on there. So you're starting to see the markets that I'm invested in beyond those lists and they weren't on there before. So basically what it was is through my research, I wanted to find markets that hit all the criteria that I'm looking for. That's job growth. That's population growth, that's strong government and independent support for businesses, bringing in businesses. That's good rent affordability. That was huge on my list. I wanted cities that had good rent affordability, opportunity to purchase assets that were cash flowing with decent cap rates.    I wasn't necessarily looking for like a 10 cap, but I want decent cap rates. I wanted a market that I didn't feel like compressed to the point of where when we do see whatever recession is coming next, that they're gonna go way back up. And so those were the markets that I really tried to focus on. And that's what I feel like I've found. Now, since I found them, they have definitely compressed a lot more. You know, it's challenging, but when I first started in those markets, there's a lot of opportunities and there still is.   James: Got it. Got it. So how was your experience from going from buying and flipping houses into syndication, right? Why did you make that leap into syndication?   Todd: Yeah, flipping houses suck. It's a lot of work.   James: I mean, I've tried two times and I promised myself I'm not going to do it again.    Todd: Yes. It's just so much head damage in flipping houses. And can you make some good money? Yeah, I made some good money. I'm not gonna say I didn't, but there's just a lot of liability, a lot of head damage. You're dealing with a lot of contractors and you're in use always, and homeowners and emotions and it's just...you're always grinding. You're never...not that like I care about it, I enjoy grinding. I mean, I do it in multifamily right now, but I feel like I'm actually getting somewhere; where with the flips I felt like I was on that hamster wheel or I got to buy one and I got to immediately find another one and I'm always like running in a circle. And so that was kind of the reasoning that I wanted to get out of it.   Plus I'm paying, you know, short term capital gains or ordinary income, I just didn't like that. Now multifamily syndication made a lot of sense because I had a lot of investors. When I was doing flips, I was bringing in private money to my flips. I wasn't using hard money. I was using just private money. People I've met that wanted to invest in my deals and that's how I got them involved. And so when I wanted to transition into multifamily, it was pretty easy to say, Hey, this is what I'm doing. If you want to come on board or not. And all my investors said, yeah, let's do it.    Ultimately that was what James I wanted to do from the very start. When I first started this real estate journey back in 2007 when I started reading books, before I ever bought anything, I read several multifamily books, one by David Lindel called multifamily millions and another one by Ken McElroy called ABC's of real estate investing and I loved those books and that said, this is where I want to go. And I had always been kind of obsessed with it, but I had no clue how I was going to take down $1 million-plus building. And so, I just kinda got scared and let it fall by the wayside.   James: So how did you take that leap? Who helped you and was it like a aha moment? One day you wake up and you bought it or?   Todd: I had a business partner and ultimately it was time for us to kind of separate and go our own ways. I wanted to do something different than the flips and wanted to take this multifamily leap. I started by buying some smaller, you know, as I said, 10 to 20 to 30 unit buildings and that was making a big step there. And then just started like listening to people on podcasts and going, no, why am I doing this? I hired a business coach too and I remember talking to him and going, I think he said, like, what? Why are you buying another 20 unit? And I said, well, you know, like I got to keep on buying these and then eventually I'll get up to, you know, hundred-plus unit buildings. Why not do it now? And I'm like, Oh yeah, why not do it now? So it's just like somebody just needed to tell me like, what are you doing? Let's just do it now. Like, and it wasn't like, Oh wow, that's a scary thing. When he said it, I was like, well, yeah, yeah, let's just do it now. You're right. Yeah. So I don't know, sometimes you just gotta be told like, what are you doing? Just go do it.    James: Just go do it. Yeah. You just need someone to, I mean...   Todd: Just a little kick in the pants sometimes.   James: A little kick or a knock on the head, hey, you can do it now. Right. Why not you do it? Right. So that's very interesting. So what are the things that you when you started syndication, right? I mean, when you look at a deal, when you get a deal, I mean, first of all, you're already finding it hard to find inventory, right? But whenever you find an inventory that comes to you, what kind of things do you look at?   Todd: I'm sure kind of the same as most people. I'm looking, you know, beyond the city and the neighborhood, which I already kind of mentioned. I'm looking for that population growth, that job growth, I'm really digging into the neighborhood too. And I want the neighborhood to have the same fundamentals that I'm looking for in the city. I want that specific neighborhood to have too and low crime and that growth is what I'm looking for. So beyond that though, as property-specific, I'm looking for an opportunity that has something wrong with it. And it might have really high expenses that I can take down. You know, utilities are a big one where people aren't, you know, we can put some like led stuff and we can put low flow toilets and we can do energy-efficient stuff that's really going to cut down on our bills and increase our ROI.   We can do RUBS which is ratio utility billing and where we're charging back to the tenants,  those people who don't know. And then potentially, you know, depending on how the property is being run, there might be some other potential small things that we can do. And then of course on the income side, we're looking at can we raise rents by doing improvements to the property? We don't like to raise rents just to raise rents, I like to provide something good for my tenant base. And then, you know, there might be other things, like there might be a just occupancy issues that the other management company or other owner just wasn't on top of things, collection issues. Potentially. there are crime issues or there's other just management issues at the property where they have the wrong tenant basin and we can correct those problems that are happening.   James: Got it, got it. I mean, out of these five cities, five states that you invest in, is there any difference in landlord friendliness within this city?   Todd: You know, they're actually all fairly similar as far as this landlord friendliness. They all have different quirks to them. You know, some of them might have to give a like a five-day notice to the tenant before you can evict them. Some of them, you can't set their stuff out on the curb right away, you have to give them, you know, like in Minneapolis, if you evict a tenant and they leave stuff at the property, you have to hold onto that stuff for 28 days. That doesn't have to stay in the property. You can put it in storage or whatever. They have time, it used to be 60 days but they have time to be able to get their belongings. So they're all a little bit different. But I would say, all in all, they're kind of probably less right in the middle.   You know, I hear some other States are being better. For instance, Texas I hear is really good. But yeah, you just kind of raised your eyebrows and rolls your eyes a little bit and I've heard that too by other people. And I think what happens is, you know, and not saying every state is the same cause there are some states that I'm sure are really hard on landlords, but I think if you know and understand the laws and understand what you can and can't do to get your tenants out and that type of stuff, most States are just fine. Like it's not that difficult to move tenants. So, for instance, Minnesota, a lot of people have that kind of misunderstanding. I don't know where it comes from that you can't kick a tenant out in the winter and that's not true.    My company just evicted one of our tenants and there's date to be sat out is, I think December 12th. You know, so you can, you know, it's winter here. I mean, December 12th is...next week is going to be zero degrees out. So, you know, you just have to understand it and if you understand the landlord laws, the tenant laws, you're going to be just fine. So get the right people around you, surround yourself with the right people.   James: Got it. Got it. And also, I see in your bio that you have a passion to teach undeserved youth and adults on how to create financial independence. So can you explain about that?   Todd: Yeah. You know, so I've volunteered for a nonprofit called Junior Achievement, a lot of people know that and my passion and I don't know exactly where I'll take it, but my passion is just to continue to do that and raise awareness, raise money and for people who don't have the opportunity to have what we have and do what we do. A lot of people don't even know a business or being a business owner, being an entrepreneur is even like a possibility for them. And it's possible for everybody. Cause there's a lot of people that come from nothing especially, you know, I see people from different countries come here that have nothing or start with nothing and they do amazing things. And there are people living in this country that just don't even think it's possible. Like they don't know that it's there. So I want to just really educate people.    The other thing is I love to figure out somehow how to get financial education into the schools. And that's a tall task, I know, and it may never happen, but that's one of the things I really want to do. I used to be a high school teacher. I really think it's important to teach our youth about how to be responsible financially and just about the amazing opportunities that there are out there.   James: Yeah, absolutely. Especially in the US right. Where it's a capitalist country, right? Anybody can, you know, make a lot of money, as long as they're willing to work hard, you find the right people to be coached on, right. You're on the right path, you work hard, you should be able to make a lot of money. I mean, it's completely different from a lot of other countries out there. I mean, people may not appreciate how much freedom to create wealth in the US unless you have travel outside and you have lived in other countries, right? So a lot of people did not know that, so that's really good. Yeah. I mean, a lot of people take it for granted and a lot of people do think that somebody else owes them something.   Todd: Yeah. It's a hard mindset to change. I mean one of my very first tenants, and this is partly where it came from, one of my very first tenants in a single-family house, she moved in. She had section eight and she said, "You know, I'm not going to have this section eight for very long so could you take me when I drop out of section eight?"  I said, "Oh, absolutely, yeah, as long as your income and you meet the requirements, no problem."  "Okay, I'm going to do that. I'm getting my real estate license. I'm going to get out of this. My mom had section eight, my grandma had section eight and I don't want to be part of this circle." She never got out of section eight. I had to actually evict her because she wasn't even paying her portion of the rent and I don't know where she is at today. I'm hoping she's out of section eight but my guess, my gut is she's probably still in section eight and never learned really what to do and how to get out of it. And I'd like to be able to help end that cycle.   James: Yeah, that's a very good thing that you're doing because I think sometimes they need someone in the business circle to go back and, you know, just tell the possibilities out there in the business world. So, yeah, that's very important. So, Todd, when you look at the multifamily apartment, I'm presuming you're doing a lot of value add deals, right? Is there anything that you find in terms of what the most valuable value add when you're doing all this turnaround?   Todd: I mean, it's different for every project, but one of the things I like the most is trying to find expense, just expenses that we can cut but efficiently cut. Like I don't want to just cut repairs and maintenance because those are going to come back. And they're going to probably come back and bite me because I tried to cut those and be cheap. But now if we can do things, we can cut down by buying in bulk, by buying the right materials, by being efficient at our scheduled repairs versus just randomly doing it when it finally breaks. If we get into a more of a rhythm and a schedule, we can actually cut expenses, which a lot of people don't understand. Like how is that possible? Cause we're always on the property and always scheduling things.   But preventative maintenance is actually going to save you money versus having something that breaks, I mean, think about a furnace, right? If you go and you change the furnace filters, every month, you're going to extend the life of your furnace by potentially 10 or more years just by doing something like that. So that's one big thing. The other big thing with expenses and this is my favorite one, and I already mentioned this, is the utilities and cutting back on a lot of the utility costs by doing, there's a lot of different things we can do. We can replace the toilets with the low flows, we can put on a water reading system where it can tell and it can send us a rating if we have a water leak. You know, just silly things like that that seem like they shouldn't, you know, save you that much money, end up saving you a ton of money.    And the reason why this stuff is my favorite, the expense reduction is my favorite is because this is a recession-proof system, right? If we cut our expenses and a recession whacks us, guess what? Our expenses are gonna go way up. But if we jack our rents up today and a recession happens, what happens with our rents? They go back down. Right? And they do, and I don't care what people tell you that multifamily rents don't go down, they do. And so, so raising rents while I like that, and I'm not going to tell you we don't raise rents, but we know that by cutting expenses down, as long as we do it the right way and not just cut to cut because we want to be cheap, but if we do it the right way, that's recession-proof and that's going to continue to keep our NOI high during the recession.   James: That's a very interesting perspective because yeah, you're right. I mean, rents can go up and down, right? But once you optimize your expenses, you're probably going to be, you know, sticking to it, right? So you could invest on your expenses. That's a very interesting perspective. That's good. So Todd, let's go to a bit more personal side of it. So do you have any secret sauce to success? I mean on your personal side?   Todd: You know, I mean, there's no secret sauce, right? It's all out there. It's all about yeah, several different...if you can do the few things, focus, following one course until success...keeping yourself completely focused that's extremely difficult, right? But because we got so many distractions out there, but limiting those as much as we can. You know, never giving up, always pushing on, always continuing to persevere, being consistent and persistent. Those are all really big. I mean, it's very easy in this industry and in any industry to get kind of discouraged. You know, you get beat out on 10, 20, 30, 40 properties and you don't get one and you get discouraged. Look, I haven't bought a property since May. Do you think I'm excited that I haven't bought a property since May? No. I would love to have a property right now under contract, but I don't.    But I'm not discouraged. I'm going to keep on going and keep on pushing on and keep on putting on offers until I get one. So I think those are just really important things to focus on. I think obviously you need to be clear, you need to have goals, you need to understand where you're trying to go with this business. Those are all so important. So there's no secret. I wish there was and I found it, but you know, it's hard work. Being an entrepreneur can be lonely. That's out there all alone. You're getting your butt kicked in but it's a fun business at the same time, there's a lot of reward in the end when you're building something bigger than yourself.   James: Yeah. It's interesting. And even on the previous podcast, we were talking about how the world has changed compared to like past five to six years to now. Because now with social media you feel a lot of FOMO, right? Because you start seeing people are closing deals and doing deals and you are like, Oh, I didn't buy since March. You know, so you have to really, really control your fear of missing out. Especially when you can see everybody, what's happening.   Todd: Stop comparing yourself to others. For one, you don't know what others are doing. You don't know what type of ownership structures they have or anything like that. And when I look at my properties and I really probably dive into them, I have a really good ownership structure on my properties and some people that have three times the amount of units, four times the amount of units than I do, they probably have less ownership, less overall, whatever you want to call it, equity than I potentially have. And so if you want to compare yourself to others, you're always going to be disappointed. You just have to look at yourself and go, I'm happy where I'm at today. You know, where are the goals that I have for myself in the future and where am I today and what do I need to do to keep on pushing on? That's how you gotta look at it. If I look at what you're doing and what everybody else is doing, what Kevin Bop is doing, I'm going to be disappointed in myself. I'm going to want to buy these properties and I'm going to end up doing stupid stuff.    James: Correct. Yeah. I mean sometimes it's surprising. Sometimes people can claim they own a half a billion dollars in assets, but he may be poorer than the guy who owns a hundred units on his own. Cause they had half a billion, they probably own like a what, 10-20% out of it and out of the 20% they probably own like...   Todd: Or half a percent.   James: 30% out of it. And out of that 30% they probably gave so much money for all the capital raises that they are hiring.  And they probably wouldn't do the 0.001 of that billion. Right. So you know, I mean just audience, I mean, you guys really want to make sure that you don't get caught in all this marketing hype that you're seeing in Facebook or LinkedIn. So the real guys are really working. So you'll be able to identify the real guys just by talking to them in terms of what are they doing and how are they portraying themselves? And, you know, talking to their passive investors.   Todd: Yeah, yeah. I mean, there's a lot of noise, like you said.   James: It's a lot of noise and sometimes the rise of social media, I mean, you have a Facebook group. I have a Facebook group. Sometimes they know the amount of I mean just in general, Facebook itself, there's so much of noise out there that it creates a lot of FOMO in a lot of people, so you have to be really watching out for that. Yeah. Was there any proud moment in real estate that you think I'm really, really proud of that moment? I'm really proud that I did something that's gonna stay with you for a long time?   Todd: Boy. you know, I guess just getting started from the beginning is probably what I'm most proud of is that well, like I said at the beginning, everybody goes 2008 that was an amazing time. you're a lucky guy. But at the same time ask yourself this, did you invest in 2008? You know, most everybody listening has to say no because they were either, well, maybe too young or they're running the other way. And I was young in 2008 but I just took that risk, I believed in it and I saw what was possible. And so that's probably what I'm most proud of when everybody else was running the other way, I ran right to the fire hydrant.   James: Yeah, yeah, that's true. I mean, even now it's hard to find deals. I mean, it was the same thing in 2008, it's hard to find deals. Even in 2010, it's hard to find deals, all the time. It's always hard to find deals.   Todd: Well that's the thing is, and you said it, that's perfect right there. And I'm glad you said that because it's always hard to find deals. It's always easy to say there was a lot of deals back then. We might be saying in 2025 that every deal in 2019 and 2020, we should have bought. We don't know right now, but in 2011, 2008, you know, all those years while it was happening, there was not a lot of great deals to buy because the market was totally different than it is today. And you didn't know where it was going to go. You just didn't know. You have to buy on today's fundamentals. You can't buy on to tomorrow's fundamentals because we don't know where that's going.   James: Yes, absolutely. Absolutely. Hey Todd, why don't you tell our audience how to get hold of you?   Todd: Yeah, so I've got several things. If they want to listen to my podcasts, they can definitely listen to that. It's Pillars of Wealth Creation. They can reach out to me if they want to learn more about my company and invest in that kind of stuff. They can reach out to me at my websites venturedproperties.com or they can email me, todd@venturedproperties.com. And then I do coaching as well, run some mastermind groups and coaching. And if they want to learn more about that, they can either email me at the email address or they can go to my website, which is coachwithdex.com as well.   James: Awesome. Todd, thanks for coming on the show, you added tons of value. Give us a lot of perspective of different markets that I'm not familiar with and I'm sure a lot of listeners are not familiar with and how did you, you know, came up in life and you know, you have been giving back as well. So really happy for that. Thank you. Todd: Yeah, definitely. Lots of fun. Appreciate you having me on.   

James: Hi, listeners and audience, this is James Kandasamy from Achieve Wealth True Valued Real Estate Investing Podcast. Last week, we had Rich Fishman(?) with 8,000 units. Almost half of which he owns by himself and he had bought over 20 years across five to six different states. And he gave us an outstanding overview of what happened during the crash of 2008. Was it true that everybody needs a roof above their heads? And that's what a lot of gurus are telling us in multifamily or is it true that multifamily has the lowest default rate? You will definitely need to listen to that podcast. Because he went through the whole downturn with all his multifamily(s) and came back up after the cycle and he gave a lot of awesome perspectives. Today, we have Kevin Bob. Hey Kevin, do you want to introduce yourself? Kevin: Hey James, I'm excited to be here. Yeah, I'll give you the quick overview for sure. So, I have been investing full time in real estate going for on 20 years now and I got started like a lot of folks did with single-family investments. It was just what my mentor was doing. It's what he was good at and what he taught me and so I didn't reinvent the wheel. I did exactly what he told me to do and that evolved into multifamily investments and other types of commercial real estate. That led me up to the crash of 2008. That's a very challenging time. It kind of was reborn in 2011, 2012 and was introduced then to mobile home parks. Which is what we focus on today. So, for the past seven years now, we've been solely focused on mobile home communities. We own parks in thirteen different places throughout the US and that's our niche of choice as of now. James: Awesome. Awesome. I mean, Kevin is being very humble. So, just to give you guys some background when I was in my W2 job, one of the first podcasts that I listened to was Kevin's podcast. I mean, the podcast is called Real Estate Investing for Cash Flow With Kevin Bob and it's an awesome podcast. It focuses a lot on commercial real estate and I really learned a lot when I was in W2 and I was listening to it in the car. Are you still doing the podcast, Kevin? Kevin: I am. Absolutely. I do two podcasts. So, I do the Real Estate Investing for Cash Flow Podcast and then about three and a half years ago I thought it was a good idea to start a second podcast as if I wasn't busy enough already. And I started the Mobile Home Park Investing Podcast, which is specific to that topic. James: Got it. Got it. Kevin: James, I remember the first day we met. Not to interrupt you but I always joke with you every time I see you because I got a weird memory. I forget a lot of things but I remember the odd things and I do those free Friday calls. I've been doing it for like five years now. And I remember that's how you and I originally met. It was during one of those 30-minute calls on a Friday and I don't recall why I remember this part of our call but I had been making lunch with my Bluetooth in while we were talking about a multifamily deal that you were taking down in San Antonio, Texas. James: Yeah, it was my second deal. I was buying 174 and have you found it on our yellow letter marketing campaign. It is very interesting because when you had your podcast, you announced it that you're giving thirty minutes of your time and I was like, ‘Wow, that's awesome. I'm going to talk to a celebrity.’ Right now, I do offer like fifteen minutes of my time for whoever wants to talk to me. You just have to send me an email at jamesatachieveinvestmentgroup.com. We're not big celebrities.  We're just normal people. Kevin: I get as much value from those calls as the person on the other side. That's how I like to think and you just never know who you're going to meet on the other end of the phone, right? I mean, that's how I that's how you and I met. You just never know and so I think that you have to keep that normalcy in your life and I enjoy those calls. I’ve met a lot of great people on the way. James: Surprisingly, I still remember the day you called me and the moment you called me. I'm not sure why but that was like probably five, six years ago. And I don't remember my other calls. Kevin:  Yeah, yeah. I have been on for five years. Yeah. James: Yeah, that's awesome. Awesome. So, I mean, I want to dive deeper into mobile home parks. I can see you have like a 150 million real estate transaction. Is it all mobile home park? How many parks do you own right now? And can you give those kinds of details? Kevin: No, we don't have. Our current portfolios are not 150 million. That's just that's like my transaction for the principal. You know, investments over the years. James: Thanks for being honest, Kevin. Because a lot of people misuse those big numbers to do their marketing and then we find out they don't have anything. They're probably on a passive investor and that's really awesome that you're being very upfront with that. Kevin: Yeah, I’m the majority principal in the parks we own as far as on the GP side and things like that. So, we'll get that clarity out there as well. James: Awesome. Kevin: We're not really sellers. So, to answer your questions about what we own today. We've been teetering around like the 2,000 mark. We go above it. We go below. We have a park that going to be closed in a week and a half. We sold a park earlier this year and then we're going be selling one in probably February next year. That's in contract currently. We got one that we're closing on in 45 days, which is 215 lots and so we keep teetering around this 1900-2000 mark. We've really been evolving our portfolio by selling off some of the smaller properties and by selling off some of the properties that we don't really have an interest in scaling in a particular marketplace or maybe it's just one that just doesn't fit our model moving forward. I don't know how else to answer it other than that. So, that's where we're at today. We're really long-term cash flow investors, though. That really is our business model. It just as far as the selling side of things I like to take advantage of an opportunity when it arises. That's one thing I did not do before 2008. I never would sell anything and it came back to bite me at that point. So, I am not a seller. However, I will sell when the timings right the price is right. James: Yeah. Yeah. Let's talk about that experience. Because I heard about that in your podcast and so you are doing single-family homes before 2008 and you were doing very well. Kevin: And multifamily but mostly single-family was our focus. That was our business model. It's what we were very competent at. We had acquired a few hundred multifamily doors over the years almost by accident. We didn't really put much effort into it because deals would just come our way like small multifamily stuff. Thirty-six units forty-eight-unit type properties that we just kind of threw into our rental pool. However, the biggest part of our model and the thing that took the most time and energy was a single-family. You know, buying the single-family rental properties and managing a portfolio across multiple different counties was just very inefficient. And it's unfortunate because I think we just got very complacent with our model. You know, we were we felt we were really good at it and we never took the time to be honest with ourselves about how inefficient that was and that we should have just taken our efforts and converted them over to multifamily at that given moment. I think that we would have fared through the downturn a lot better. The single-family properties… it wasn't really the single family that sunk us during the downturn. It was a whole mixture of ingredients. You know, Florida was ground zero for the crash. A lot of our properties, not only did they lose within a year but they also were upside down. Our leverage point on the front side was originally somewhere in between the 65% to 68% range. So, we were very low leverage. Most of them were upside down underwater within a year. Another big thing in Florida that really was a major impact on us was there were a lot of speculative single-family builds happening back then. I don't know if you remember back in that heyday. I guess you could say that was back when a new build property in like Vegas or Phoenix or Southwest Florida would literally flip three times before it was ever even occupied. Before it was ever finished. It was crazy. There was like thousands of new home builds happening in Southwest Florida for a population that wasn't really coming in. So, the big nail in the coffin for us back then was a lot of these builders that had these properties who weren't selling and they started renting them out. And so now, they started pulling the populations away from our rental properties and they offered better incentives. Because what they had was a new product. So, we had an occupancy issue. We were under wonder water value and like it's just a perfect storm and it was ugly. It wasn't fun at all. And the banks at that point weren’t willing to work with us. This was like a year within entering into this downturn. The banks didn't have loss mitigation departments. They weren't prepared for this and so we struggled with a majority of our lenders to even do work out deals or loan modifications. James: Yeah, I read some books about how the lenders can be nasty during the downturn but now they're super nice. Kevin: I think they got a lot more flexible. Because they had to. In the first year of the downturn, no one knew how bad it was really going to get. It was like ‘Are we at the bottom? Are we at the bottom?’ I feel like that question was asked for many years before it's like, ‘wow, it's 2011 and it's still messed up like things are still fairly bad.’ You know, I think it took the bank's a while to realize that and they even put the infrastructure in place to manage all these defaults. It was a disaster for the banks as well. I mean, they had more defaults than… they had to build entire departments within their companies to manage this onslaught of default. So yeah, it was a challenging time for everybody. James: Do you think you could have done better if you had a lot of non-recourse loans? Kevin: Yeah, absolutely. I mean, as far as my personal assets being attacked and things of that nature absolutely. And I think there is also a lot more flexibility with the non-recourse lenders to work with a borrower because they have quite a bit of leverage. You know, another thing that hurt us pretty badly on our part was a lot of our apartment properties and a lot of the commercial loans and a lot of times we would package up like eight to ten or twelve single-family properties and put a commercial loan on and it takes money out. That was kind of our model. A lot of that debt was shorter-term recourse debt. It was five years,you know, either resets or five-year balloons, twenty-year [inaudible10:23]. What happens we didn’t default on multifamily. However, after all the credits were going bad on the single-family stuff and we started having issues there. We couldn't get new loans when the time came due for them a couple of years later. We couldn't get any debt in place. We had to sell things for basically fire sale prices and give them away. We basically either gave it back to the bank or did some minor workouts, did short sales or had to sell at fire-sale prices. It is what it is. I learned a lot from that period and things move on and I've learned a lot from it. And I think I'm a stronger investor and a better investor nowadays because of it. James: Absolutely. Absolutely. So, you brought up three or four cities that are very, very high growth right now.  We’re at the late stage of this cycle. Which is similar to 2008 before that. They are Phoenix, Las Vegas and Florida, right. So, do you think we're in the same stage right now because they are one of the highest growth rental rates for multifamily? I would say I'm not sure how much you would be able to compare multifamily at that time.    Kevin: I think the reasons behind the crash back then are a little different. I mean, back then the lenders were so loosey-goosey. Because anyone could get a loan and I mean anyone. Even a waiter who just started the job yesterday. Who had no provable income could get a loan on a property. You know that that's one thing that hasn't gone back to the way it used to be, lending restrictions are still very tight. So, I don't think that we have that fear. I'm not an economist and by no means am I an expert here but I don't think our fear should be related to anything that was similar to back in the 2007, 2008 crisis and what caused that. So, I'm not sure what it could be. I know that there's a huge demand for multifamily. There’s a pent-up demand for supply still in a lot of these markets based on population growth. I think that the bigger risk lies and like A class stuff or like some new developments as far as like, you know, the game of musical chairs. It’s about who's ultimately left holding the bag. I think that what you do as far as like BNC grade apartment complexes are very similar to our business and that as long as you provide a clean, safe and high-quality product at affordable prices. There's always going to be a demand for it no matter what happens. I'm a firm believer in that and that's played out time and time and time again and that you were making mention of the last guest you had on. I'm going to give listen to the show but what was his take? You know, what did he tell you was the ultimate outcome of his multifamily holdings through that downturn? James: Yeah, it was very hard for him during that downturn. I mean, He has to cut down a lot of it and if I remember correctly the default rate was pretty high. It was like almost 8% where a lot of people did lose their property to the banks. Kevin: I wonder if that was because they were over leveraged but I'm not talking about him though. I was talking about the operators. See that's it leading up to that recession and the last time people were overpaying for apartment complexes and if you recall one of the big the big hot trends were buying an apartment and doing a condo conversion. So, you saw people buying apartment complexes for valuations that had no relative nature to the actual NOI that was in place. It was all based on a pro forma exiting out as individual condos and a lot of those condo things failed miserably. Anyway, how did the guy you interviewed fare? James: I think he was not talking about condo conversion. He was just talking… Kevin: I mean as far as multifamily investments. How did he fare? How did his investment go? James: He did say that it was pretty bad for him and for a lot his friends and who were buying at that time. Kevin: Specific markets or…? James: Across the country and he has been down twenty years right now. I mean, he has like a thousand units right now. The key thing is I mean everybody says ‘everybody needs a roof over their head.’  But he's a says that people become creative on how to get a roof above that they’re head. They double up. They live in their basement. So, it's not like everybody's going… Kevin: Yeah. Well, I think another thing that changes is  the quality of your prospect changes as well. You know, people lose their jobs. People miss payments on their credit cards.  They get bad credit. They get into this revolving cycle or downward spiral. And so, although everyone does need a roof over your head, the quality of that prospect might change. It might actually deteriorate over time but what you can really get to fill that unit which a lower quality resident typically is going to equate in a higher turnover, rate higher expense and maintenance costs associated with running that property. So, I think that there are other factors that are derivative of a downturn  even though everyone does really need a roof over their head. James: Do you think the optimism that you had or the entire market had before 2008 crash like in 2006…  I'm sure everybody was optimistic. Nobody knew about the subprime mortgage. Because nobody really knew in detail, right? Do you think that the optimism that people had during those few years before the crash is the same as now? Kevin: There's some Deja vu that I've had and I think maybe a lot of that has to do with even just watching like social media feeds and things of that nature. A lot of the kudos and congrats are given to folks just because they like buy a property and that’s only a part of it. James: They just started running. They haven’t done the marathon yet. Kevin:  It not what it looks like today but it’s can you execute the plan accordingly? What does it look like three years from now? Because you bought something doesn't mean that you've won yet. It's easy enough to get on the front side. So, that's a different form of that optimism. James: Social media has increased the FOMO syndrome. Kevin: Yeah, that's it. Success seems to be equated on social media to actually just doing a deal. Whatever it means to get the deal done: overpaying for it, over raising investor capital, putting capital your investors capital risk. I mean buying bad markets and I think that was a very similar sentiment that was shared by a lot of people back prior to the crash. ‘If we don't buy now, there's like anything left. We’re going to get priced out of every market and then will never own real estate. Let's buy whatever we can. Let's get that 95% loan.’ So again, the lending standards have not gone back to what they were then. Which was a big cause of that crash. But I do think that there's some Deja vu that I've had.  You know, the FOMO thing… the fear that you’re missing out, that's real. We've seen things be much more competitive over the past year. We bought nine properties last year and we wound up buying two this year. So, we did get side-tracked a little bit this year with building a property management company. And we that's another discussion but even then, I don't think we would have bought more than maybe three or four properties. If that was our sole focus but we're very conservative. I think we had seven or eight deals in contracts that we ended up killing… for various reasons.  There just a lot of hairy things out there and you can make money with hairy deals but you got to really know what you're getting a deal go to. James: Yeah, exactly. I mean, that the experience of going through the crash will make you’re really a conservative person, right? Because people have never gone through it [inaudible17:59] including me. I didn't go through it. So, I didn't know how painful it was, right?  But I do read a lot of publications and try to feel the fear at that time. I mean, you can be too much of an optimist. I'm not so engaged in the height of optimism right now. So, you did single family and you went through this 2008 crash and suddenly you started doing mobile home park. Why that mobile home park asset class and why not go back to the single-family apartments? Kevin: Well, it's a great question. So, I answer the second part of that question first about why not go back to like single family properties. You know, I finally had an internal point of reflection probably like two years after the crash started. There were a couple years where it was pretty challenging to even think about what was happening in my life. So, there were a couple years, I don't like to say that I put my head in the sand and buried it. But somewhere around, 2010 to 2011 I would go through like a reflection point in my life where I tried to look back and just really be honest myself like, ‘what I should have done differently.’ What I ultimately felt went wrong and I came to a quick realization and I kind of knew it back then.  You know, you're comfortable and complacent you know we should have made the switch. Our model is very inefficient with the single-family properties. You know, running multiple maintenance crews and management crews amongst many different counties. You know, having a home here, a home over there, home over there, hundred something that way. It was incredibly inefficient and it was very hard to scale. You know like just going out and trying to buy one by one by one and buying a hundred and twenty, a hundred and fifty, two hundred single family properties is a lot of work. That’s two hundred individual closings. That takes a lot of effort to make that happen. And you'll being honest with myself, I knew that those same efforts could have been multiplied like 10 x but by actually putting that effort into multifamily and that multifamily is much more efficient to operate. It could truly provide that cash flow and help me get back on top much faster than trying to go back into the single-family space. I didn't have an interest in the single-family. It was what I was taught at a young age and I rolled with it and I did really well with it. And then now, I felt more grown-up and it was time to make a big change in my life and I knew multifamily is going be it. And so I went on this exploration journey, knowing that it was going to be multifamily. What I wanted to do, James, I wanted to go back and talk to everyone. I went on a six-month binge of interviewing and talking to everyone I could, locally and on the phone, who have either been in the multifamily and made it through the crash and you'll just get a sense from them how things have changed today?  How the landscape has changed? I always spoke to those who just got their start. You know, what's their perceived notion of the next couple of years? What the lending environment look like? Where are they finding opportunities? Where was the risk? I just wanted to get an update because I basically stepped away for years from real estate. And things had changed over those three or four years, right? And during this period, I was introduced to a guy named Randy through a mutual friend. And Randy had mobile home parks here in Florida. He owned three of them. He had been a banker for thirty years and I like meeting new people. So, I said ‘let's grab lunch. You’re local to me. So, let's grab lunch.’ And we did. I didn't go there with the intent of like, ‘I want to learn about mobile home parks.’ I just wanted to meet someone new who had been quite successful in their life. And that after like a two-hour lunch with Randy I walked away, saying ‘I'm going to buy a mobile home park.’ I need to either prove or disprove all these great things that Randy had to say about this niche and this asset class. And that's what I did. It took me about 12 months.  I bought a park up in Atlanta. We still own it today. It was a small part of a highly distressed Park and I bought that one and then I bought a second one and I bought a third one. I just spent a couple of years of my own money proving the concept. And then ultimately once we proved the concept and went full cycle on a few things. I went out and actually built a business out of it.  Where we started hiring multiple team members and investors into the game and that's where we're at today. James: What were the top three ‘aha’ moments from that discussion with Randy in that one-hour lunch that you had with him? Kevin: Yeah, and this isn't to compare multifamily to mobile home parks. I mean, but this is what he told me. This is how his conversation went with me. He was like ‘You know, the bottom line being C class apartment complex is great. Everyone needs to roof over their head.’ Just like we talked about. Affordable housing is in high demand and that demand… James: And what year was this? Kevin: This is in 2011. James:  2011 which is supposed to be one of the lowest and best times to buy. I guess, right? Kevin: Yeah, absolutely. Absolutely and so he went on to say that one of the big challenges with multifamily that he found in his career, and he wasn't a multifamily guy but from a theoretical standpoint was the turnover and you're turning 50 to 60% of your tenant base every 12 to 18 months. In mobile home parks, he's like, ‘95% of our residents owner their homes and it costs a lot of money for them to move their homes.’ So typically what happens, Kevin, is if they want to sell that home or they want to go somewhere else move. They don't move their homes. They just put their home up for sale and they move and go buy a home somewhere else. And basically, you never lose that lot rent. That lot rent continues to come in day after day and you don't have that down period like you might have an apartment and you don't have to that make-ready costs like you might have an apartment. So, that was one of the big ones. Another big one that really piqued my interest was the just really the barrier to entry and that there's really no new supply coming in the marketplace. You know, municipalities don't like our asset class. It's got a bad stigma attached to it. And so, no new parks being built and so if you find a good quality park in a great market, you don't have to worry about competition coming down the road. It’s not going to happen. It's just not a chance of it happening. James: It's not like a straightaway somebody can just come and build something in front of you. Kevin: Right. Right. Exactly. So, that was a big one. I liked that and then another big thing that he sold me on was just the management side of things. You know when the residents own their own homes you're not maintaining the roof, you’re not maintaining their plumbing, you're not maintaining their electrical. You’re not maintaining anything whatsoever that happens to their unit. They just like a homeowner, they call that vendor. They call the HVC company. They call the roofer. They call the plumber to fix it. You're not in charge of that. Our only requirement is to maintain the infrastructure. So, the roads, the water and sewer lines leading to the houses and the electrical infrastructure and that's pretty much it. And so I was like, ‘Wow, that's interesting.’ So, like low turnover, fairly lower management responsibility and very rarely is there ever a point in time where you have a down unit or a lot that's not paying you rent. So, the fourth, you asked me for three but the fourth big thing that really sold me on it was He's like Kevin there's a lot of first- and second-generation park owners still out there. Either they built these parks or their father built these parks and now they're aging out. All of these parks were built in the 50s and 60s and 70s and these owners are getting very old. You know, like five years ago the statistics were that 85% of Park owners only owned one Park. And so, to me that means they're a mom and pop, right? They're not a big professional or institutional operator. And so, his point that he made was that these individuals have been working these parks not like you or  I, where we run them like a professional company,  but with their bare hands. They are working these things from day to day. And they're either getting old or their health is becoming an issue. They're getting tired and they're aging out of these things at a very fast rate. And so, there's the opportunity to get in and run it like a professional. You know, get markets up to the market rate in the area and run it more efficiently and do a better job of collections and whatever they might be doing wrong there. So, that was a big thing that piqued my interest as well is working through that ‘mom and pop’ generation and finding opportunities that had a lot of meat left on the bone. Those were the big ones he threw at me and many others as well. But those are some of the big ones that just really sold me. I was like, ‘I’ve got to learn more about this.’ James: Yeah, that's awesome. When I learned about mobile home park, I went for like some three-day class and I really learned it. I love it. I mean, it's a really good asset class and I didn't want to do it because I believe in focus. I mean sometimes as entrepreneurs, we are like, ‘Oh, mobile. Oh, that's so cool. The self-storage let's go do this.’ Kevin: Shiny objects. James: And I realized that to be really good at something you have to have focus. So, that's the one thing I wrote in my book, right? Whenever a passive investor chooses your sponsor make sure that your sponsors focusing maximum to asset class. There are so many details in this asset class but with this market being hard a jack of all trades can’t really make money. Kevin: True. James: Some of their mobile home parks are a bit small, right? I mean, it used to be like 3 million for like a hundred parks or something like that. So, we were like all in doing like large deals and we thought, ‘Okay, we're just going to stick with apartments and stay focus and make sure we get good at it.’ So, that's important, I think. And so, at a very high level can you explain how the cash flow is generated in a mobile home park? Kevin: Yeah, absolutely. It's pretty straightforward. You know, we own the entire community and in a perfect world, this is how we’d like to own the community, where we own zero of the home. So, let's just give an example: we have 149 space mobile home park in Buffalo, New York. In that community, we own zero of the homes that are in there. There are 140 of those lots that are occupied with residents. Who again, they own their roof above their head and they pay us on average $428 a month in lot rent. They also pay their water and sewer; you bill it back for the trash usage. So basically, our job in that community is to maintain the roads and make road improvements as necessary. We cut the common areas of the grass. We trim trees throughout the community. Just making sure that the community or the subdivision is up kept and their responsibility is to pay us for the renting of the lot that they're homes are sitting on. That's it. We make money in that manner. That is the sole source of our revenue. Now I’d say, ‘In a perfect world, we don't own the homes.’ Unfortunate, we're not in a perfect world, James, are we? So, we have our portfolio of approximately two thousand lots that we own and it changes every day. In somewhere between two hundred and fifty and two hundred and seventy of the mobile homes and some parks we own zero homes and in other parks around twenty. It just really depends on how that older owner who we bought it from was operating it. And so, our goal with those homes that we own is to get out of the ownership as fast as possible. And so, what that means to us is that we'll go in and we'll do a very nice builder-grade renovation on them. We’ll sure make everything is operating as it should and make them look good and ultimately try to sell them at a breakeven or we'll even lose money on the homes if we can find a cash buyer, who will come in and purchase. Who we know once they own it outright that they will be a very sticky resident and they'll end up staying there for a very, very long time. And so, our goal is really good to get it back to the lot rental model. Because at that point our management and our maintenance responsibilities are incredibly minimal. James: Yeah, let me try to summarize this for the audience. It’s like a parking lot for a car, right? But it’s Just a car that doesn't have a wheel to move. Kevin: We’re the home parking lot specialists. James: You make a lot of money, right? Because I just own the land, right. The earth is one of the best business on earth. Kevin: Yeah, that's a good way to put it. We are definitely a parking lot.  Except the homes are very expensive to move… I don't want to say that's a great thing about our resident base because that's not the best way to put it. But typically we cater to workforce housing. That's what we have. You know, so good hard-working blue-collar folks. And the average single-wide cost about 5-6000 to move and reset in another the community and a double-wide 10-12,000 and the average folks who live in our communities do the average do not have that type of money lying around to move their home but some of them. And so normally, like I said what happens is that they sell it. Just like you would sell a stick-built home. They put it up for sale and someone else buys it and that person comes in and takes over the lot rent responsibility. So, it's a beautiful thing. James: Yeah, it's a beautiful thing. So, just in terms of the lot itself are there any other issues with the city? Or do you just own the whole lot? Kevin: Issues with the city meaning…? James: So basically, you own the entire park. So, that whole thing is an SL real estate, right. Kevin: That's correct. James: The city doesn't own any of the things inside. Kevin: Sometimes, every park is a little different. We have a few communities where the main road going through it is owned by the town or the city and we own the park. So, they maintain that one road. We have other communities where the water company direct build the water and sewer lines. So, when that park was built the local municipality handled the water and sewer and they literally put the lines and they own them. And we're not responsible for water leaks or anything like that. In most communities, we own the lines but there are some communities that are just anomalies. They are kind of stand alones, where we don't have to maintain them. Every park is different but normally, we own everything. For the most part, we own everything in the park and we have to maintain it. James: So, do you get a lot of depreciation because you just own the land? Compared to like multifamily? Kevin: You do. You do. You know, we did a bunch of cost ex studies last year and we were actually pretty shocked. In fact, Tom Wheelwright from Rich Dad Advisors… I didn't know that he's good friends with the person who does our cost ex studies. He personally reached out to me because he had never looked at a study from a mobile home park before and she shared one of ours with him. And he's like, ‘You got to come to my show. I'm actually baffled at the amount of depreciation that you guys able to gain.’ So, the infrastructure… So, all the improvements in the land. Most of the value of that property because we're not buying the homes. Most of the value is in the improvements of the properties. Because a lot of our property that we're buying it’s not like a path of progress. I mean, the dirt itself isn't worth the money. It's the infrastructure that's there that is really worth the money. And so I don't want to just off the cuff share with you some of the cost ex studies but it's a fifteen-year depreciation schedule.  And I think we've been able to, on a couple of our deals, depreciate it like upwards of 60% of the actual purchase price within the first year. So pretty significant. James: [inaudible34:57] the bonus depreciation. Kevin: With the bonus depreciation. James:  Got it. Got it. So, is it fifteen years or is it similar to like twenty or fifteen? So, mobile home parks[inaudible], okay. That's something that I didn't know. That's very interesting, Okay. That's really good and what about what is the primary value at the mobile home park? Kevin: Yeah, there are a couple big ones. I kind of classify them as like low hanging fruit, middle hanging fruit and then the high hanging fruit. Which is hard to get to. The low hanging fruit for us are simple operational changes. You know, the heavy payroll. We will go in and…  they’ve basically got their family members and their cousins and their brothers on payroll and we'll go in and chop it down to what it really needs to be. That's very low hanging fruit for us. Some other low hanging fruit for us are just your rent increases. There have been many communities that we have purchased that literally have not had a rent increase in fifteen years or twenty years that’s a long, long time. And so that's very low hanging fruit. Medium hanging fruit to us would be controlling the water and water sewer and other utility expenses. So, a lot of these parks when they were built back in, back in the day, water and sewer weren’t expensive utilities. They just weren't. It was included and was factored into the lot rent. You know, the infrastructure was new back then. So, there weren't leaks or wasn't waste or anything like that. Over time the infrastructure gets older and leaks that happen. People tend to abuse water. Water and sewer are expensive in most parts of the country. And that's normally a very large line on the PNL expense statement. And so, we'll go and we'll basically buy individual water sub-meters. They’re pretty advanced meters that are digital and have remote reads. And then we will install them to a lot and will essentially start building the residents back for their own usage. Proportionately speaking we will do the reads each and every month build them back. So, number one: we'll save anywhere from 20% to 40% of usage because people now get responsible very quickly when have to pay for it. And then they'll all those savings basically good to our bottom line. So, it costs us a little bit of money but typically in a normal-sized Park, we will recoup that entire investment of the water meters within like 12-14 months. It's pretty quick. And then the high hanging fruit of the value-add side is infilling of new homes on to vacant lots and so a lot of communities that we own they might have some vacant lots of them. Some more than others. So, I'll give an example: we buy a mobile home parks 100 lots in size. It's got eighty that are occupied with trailers that are paying. The other twenty they were fully developed when the park was built. They've got infrastructure there. However, they do not have a mobile home sitting on them. We've got dealers license in every state that we own a park in and so we can buy wholesale from the retailers and the manufacturers. And we’ll go buy brand new home inventory and we'll bring it in and will basically create a retail program and find buyers for those homes to infill those lots. So, we'll buy the homes. We’ll bring them in. So, I say that's high hanging fruit because it's very capital intensive. It costs money to purchase a home and that money is tied up until you sell that home. So, there are different programs out there that help you to facilitate that but it's still very capital intensive. And there are a lot of logistics involved with moving homes in and setting them up and things like that. So, those are the big ones of how we add value to communities. James: Got it. Got it and I believe the mobile home park homeowners compared to multifamily which are renters, right? So, it’s a completely different mindset when it comes to pride of ownership. Kevin: That's it. That's it. That's why we try to convert them to a homeowner as fast as possible. I mean, you still have your homeowners who you have to kind of kick in the butt every once in a while, to keep your house in order, to keep the yard in order. We’re pretty strict with our screening processes and for the most part, the homeowners within our communities have pride of ownership and take care of their units quite well. James: Got it. Got it. Got it. So, let's go back to the property management side of it. Because I remember when I was listening to your podcast about five years ago, you were always saying or the apartment guys had it easy. Because they have their own property management. They are more professional. Finally, after five years you are going to be moving your property management company under yourself.  You going to self-manage, right?   James: Yeah. So, you guys do have it easy. All you have to do is pay it and just hand it off. Buy it and... Yeah, joking. I know there's more to it than that. So, up until a little over a year ago, we managed all our own assets in house. And unfortunately, the property management side of any business there's a certain size to where you can actually break even and we were nowhere near that size. And so, it was a losing endeavor for us. And so, sometime in the middle of last year we were introduced to a property management firm…. we’d never considered property management in the mobile home park space. Only because we were always told that the options of the companies that were out there were poor, very poor. And I was told so by many different people, many different veterans of the industry and so we never really explored it. And so, we always manage it ourselves but last year we were in contract to buy a property up in Michigan. It was in receivership and the bank had engaged this management company, a national management company, a property management company that were mobile home park experts in the business forty years. They were engaged to actually manage the day to day of this thing while it was in receivership. We were buying a note on this thing and we got introduced to this property management company. We got to see them in the real world. James: [barking] My dog has been like a... Alright, Kevin. So, one thing that I got to know since a long time ago is apartments have an easy way of getting into third party property management and buying it and giving it to third party property management. More recently, you have been trying to get your own property management company or maybe you already done it. So, can you explain why that is? Kevin: Yeah. Yeah. So, in our space it is not the norm to hand off to a third-party management company. I think we're like the redheaded stepchild or the anomaly of the real estate industry. Because pretty much every other asset class multifamily, office, retail, all of them have multinational property management companies and lots to choose from, right. They can choose from many different people in the space, best in class things of that nature. I had always been told in the mobile home park space by many industry veterans that it just doesn't exist here that there are only a handful of property management companies and most of them aren't very good. So basically, in the initial years of us owning parks, we managed it ourselves. However, in order to build an appropriate property management company that's profitable, you have to have a certain scale and we were never there two years ago. We just weren't large enough. And so, it was kind of a losing endeavour for us. We're okay with it. But it was prohibiting our ability to grow at the scale that we wanted to. We were good at finding great opportunities and we were good at raising capital. The roadblock was actually the operations of all these different parks were buying.   And so just by happenstance, we were buying a note on a distressed property up in Michigan and it was in receivership. And during that transaction, we got introduced to the management company that was running the show and it was this large group. They've been in this space for 40 years. They are the largest fee manager in our business and they've had a footprint nationwide. And I saw them first-hand and it seemed like they were doing a great job within the first couple of months of us being introduced to them and of them managing this asset that was not yet ours. And so, I flew up and met their team and flew my team up to meet their team. I got to see their operations. I got to learn about them and everything seemed great. I mean, I was impressed. Again, they had a lot of experience… way more experienced than us in this business. They knew everyone in the industry. They knew all the intricacies of the business. They had different departments to manage those things whereas we were basically were trying to wear a million different hats. And it seemed like a perfect match made in heaven. And so, after another month or two of kind of testing them out on this asset. We were buying this and we said ‘You know, let's hand them the majority of our properties and let's see how they do.’ And we kind of did it like two different chunks. And long story short, they're great guys. However, no one's going to ever manage your property like you would. No one's ever going to care as much as you do. And so within four or five months, we started seeing some pretty readily available signs that things were not going as planned. The promises weren't coming true. You know, decisions that should have taken three minutes to make were taking three months to make. Everything was moving like a snail's pace and nothing was getting done and we were actually regressing and it was frustrating. However, what happened during these first six months of us being with them is that we literally acquired like another nine properties. So, we doubled in size. So, unfortunately, it wasn't as easy as us making a decision saying, ‘Hey, we're going to give you our thirty-day notice and we're going to take it back in house.’ Because we surely did not have the infrastructure now to actually manage our assets because we literally doubled in size in a short period of time. And so over the last six months, we've been kind of behind the scenes building out a legitimate property management company with systems and processes and in hiring new team members. We didn't want to bring it back in and fumble. We want to make sure that we brought it back in, we basically built our own best in class operation that we could do it better than anyone else. Whether it be for ourselves or current assets or new assets that we were buying. If we woke up one day and we ended up going crazy. We thought that we wanted to do a third-party management for other people that we would be best in class. I don't think that's going to happen. But that's what we've done over the last five or six months and that's actually side-tracked some of our acquisitions we've only bought two properties this year. We probably could have bought a lot more but anyway I guess long story short, James, is I'm somewhat envious of you guys in the multifamily space. Because there's a bar that set with property management companies and if one company is doing poorly you’ve got other options to go to and typically they kind of keep each other in line a lot of times. And I know that they’re still never going to treat your property like you would yourself personally. However, You've got options and things that might not be working with one company you know that you could probably actually go and get served correctly at another company. We just didn't have that option. We just didn’t have that option. This was the once and done. There were other companies out there but these are the best in class and I'm like, ‘If these are the best in class, we got to build our own. Because there are other options for us.’ That's what we did. We brought it back and so that just happened on November 1st. That’s when we actually truly brought everything that had migrated back in was November 1st. So as of the time of this recording, it was like six weeks ago. James:  Got it. Got it. So yeah, it's a different ballgame, right?  of course, it's going to slow down in terms of acquisitions because now you're also managing the property management. But I think overall, in the long run, it’s much better for you. Right? Kevin: Absolutely, at the end of the day the amazing strides that we've made just in the construction side of our business and the marketing side of our business as far as like sales are concerned…like we've done more in the past two months then was completed in the past year. I'm not even joking. It's been absolutely amazing. So, I'm excited. I’m like, ‘Hey if I'm going to screw up, I want it to be my fault. I don't want it to be someone else's fault that our properties aren't performing.’ I'm okay taking accountability if they're not performing if it's me that's running the ship or driving the ship, right? But if it's another company and they're doing a poor job and we can't control it. I've got issues with that. So, that's kind of where we're at. James:  And I also think that when the market turns people with their own vertical integration will have a lot more leverage in terms of control, right? I mean a lot of property management companies are doing a mediocre job right now but they escape because the markets are super strong right now. Kevin: That's right. The market props everything up. James:  When the market turns then we will know how good they are. Because now we have to be answerable to our investors and we have to go to third party. So, one other thing that I want to touch on about the way you do business a lot of times you raise money and not deal by deal but you use fund model. Can you explain what's a ‘fund model’? And why is that beneficial? Kevin: Yeah, to keep it somewhat simple… I mean, it's really not much different than your deal-specific syndications other than the fact that we've got multiple properties that we're putting underneath that fund umbrella versus just one individual property. So, an investor is going to get their investment diversified amongst multiple properties and possibly multiple different markets rather than just one. So, simply put that really is the only true difference between probably how our business operates and how your business operates. The reason that we decided to go that route happened about three years ago…We were going into the end of the year and we had just founded Sunrise Capital Investors. As like a formal company, rather than just me and buying parks on my own. And we had a pretty stout pipeline and a lot of deals kind of fell apart. And we were like, ‘Oh, we only have two deals now. They're going to either going to close January or February next year. This is due to individual deal-specific raises.’ That's fine. And then all sudden like within like two weeks somehow all these other deals came back to life and we all of a sudden had five deals that absolutely looked like they're going to close. We had like four to five money that went hard and anyway we're like, ‘Okay, well now we have five and they're all going to end up dropping like in the same like week or two. Logistically speaking, it'd be an absolute nightmare to try to do five deals specific syndications. Because of the paperwork and logistics behind it and then the legal costs associated with it and that just didn’t make any sense.’ They're going to close right at the same time.  I think there's more of a benefit for our investors to give them diversification amongst all five of these versus just one. You know, one individually. And so we didn't know what the feedback was going to be and we put it out there and it was well-received. So, it was great for us. It gave us a little bit more flexibility on the buying side. Gave them risk diversification amongst multiple different assets and markets and so it's been a win. So, we did really well with that. That was kind of our test fund and you're last, actually about eighteen months ago, we launched our second Fund. Which is a little bit larger fund twenty-million-dollar fund and it did the same thing. So you know, we're a little different, though.  A lot of funds… a lot of institutional funds will go out and they'll get really aggressive. They'll raise all the money. Let's say it's 100-million-dollar fund to go out and raise I'll spend all their time and energy raising 100 million dollars. And once they've got the commitments for, let's say, maybe 75% or maybe more than that. Then they'll actually start going to buy it. You know, once that money's there and the costs of capital is very high. We didn't want the money sitting around idle. And so, we just continued our building our pipeline and we would only bring money in tranches. So, we'd only bring enough in during that fundraising that we actually knew we're going to need or the next like two months to close deals. So, although it was an eighteen-month buying period over the last fund, we would raise it in tranches. Which meant our investor capitalism is sitting around idle, not collecting a return. We weren't occurring pref on money on millions of dollars that were sitting being around idle. And it just held us accountable and it held everyone accountable which I like. Our interests were very much aligned with one another. James:  So, you basically do capital calls whenever you need the money.  Kevin: That’s it. That's it. James:  These are good capital calls, not the other bad capital calls.  Kevin: Right. Exactly. Like the verbal soft commitments are there. And some of them might not come through but the majority of them do.  You know, I think about 5% drop out of folks. James:  So, you basically make a verbal commitment. And when you have a deal, you say now let's make it hard. Kevin: Yeah, absolutely and each one of these two funds that we started, we actually already had deals and contract going into them. So, it wasn't like we were raising a blind pool like, ‘Oh, here's what we're going to do. We're going to raise this much money, and then we're going to buy.’ It's like we got X amount of properties in contract right now. So, while there might be more properties in this fund, you can physically see and see the performers in each one of these. These are going to be properties that are in this fund. So, there's something tangible there. That's another thing so different about us and how we do these funds. We don't go into it blind. Where we're just raising money and then we're going to go do what we say we're going to do. We're actually doing it simultaneously but we've got deals coming in. We've got deals in contract money hard--- James: ‘Semi blind’ I would call it. Kevin: Call it ‘semi-blind.’ That's a perfect way to put it. It sounds like a rock band. James:  Right, right. Right. Alright, Kevin, can you give some advice to people who are trying to start up in this business in real estate or even in mobile home park? Kevin: Yeah. Yeah. Trying to get started up I'd say go try to mute a little bit of social media because everyone's on social media now, but I’d try to mute a little bit of that and go find the one individual girl or gal who is actually doing what you want to do. They can prove to you that they're doing what you want to do.  They're an actual GP. They're not they don't have five thousand units of very minimal shares as an LP and they're touting that. I know that's happening a lot out there. So, you know try to mute all that crap because I know it gives people anxiety. You know, like social media gives people anxiety because they see how everyone else is doing deals and ‘I’m like stuck here I can't get going.’ Just try to mute it out. Silence it and go find the James. Find guys like me.  We're very good with our time. We’re not going to just give everything away for free per se. We only have like so much time today but like find an authentic individual like us,  I don’t want to tout ourselves here, who will actually like give you some real advice that can give you some proper guidance or at least give you some nuggets get on your way and let all that other noise go. Because I think that that that that bottlenecks people a lot. That fear of missing out man. That anxiety creates just this internal turmoil of like, ‘I'm missing out’ and then like you get nothing done right. You’re like, ‘I'm going all these conferences and I'm reading all these books. I'm doing all these things.’ And you feel like a… James:  And you pay big money to some gurus out there. Kevin: Yeah and I think that a lot of folks’ mistake that with like productivity of …attending things like that. It's great. I do it all the time. You do it obviously. We're part of a mastermind together. But like you've actually got to like at some point get granular and you actually have to take some risk and take that leap. It's easier to do when you know someone like you or someone like me or there are other people like us. That one person who you can just kind of lean on and get some general advice from and get the real picture from as well. You know, what's real and what's not.  James:  Absolutely, absolutely. Kevin, why do you do what you do? Kevin: Why I do what I do? I really enjoy it as far as investing in real estate, I really enjoy it. I mean, I love the people I work with. I love our team here. I really enjoy being active and so everyone likes different parts of the deal like as far as what I do I'm not an Excel junkie. Not like my other partner he'll sit in from an Excel platform and run the model many different ways over like five hours. I want to shoot myself when I think of that. I'd rather be out in the field, I like executing on the plan. I like taking something from what it is today and actually seeing the end result of our hard work and effort over a period of six to twelve to eighteen, twenty-four months. And I also like seeing the smiles on the faces of residents. When we take something that's been blighted and actually make improvements to it. Especially folks who have lived there for many years. That's pretty rewarding to be seeing that kind of stuff. Especially, you get the one residence like, ‘God, I’ve been in for twenty years and this place over the last ten years was just scary and I didn't want my family to come over. Now, I have dreamt of the day that it will be the back to its former glory.’ And I like that kind of stuff. So, I like the lifestyle that that real estate provides, right? I get to spend a lot of time with my wife and my kids and friends and family and things like that. James:  Absolutely and was there any proud moment towards your real estate career that you can never forget? That will stay with you.  Is there one proud moment that you were like I’m so proud of myself. Kevin: Yeah, actually there is one. It was the very first mobile home park that we bought. If you got time, I'll tell the story. It's probably two- or three-minutes story but anyway, I'll try to keep it short. We were buying a very, very distressed park in Atlanta, Georgia. It was in a good little town but it was in the southern part of Atlanta. Which was got hit really hard with the recession and was slower to recover because there were a lot of the new developments that were out that way.  Anyway, we're buying this park that had been receivership for two years. It was fairly poor condition. Lots of squatters, all kinds of bad stuff happening there. The chief of police and the mayor's office were right across the street like a catty-corner. They had to drive past this place every day and we got it tied up and it was a small enough town and corporate town that we actually got a meeting with the mayor and this entire city council including the chief and everyone. And we went in there with his grand plan of how we're going to literally spend hundreds of thousands of dollars to clean this place up and to improve it and make it a proud part of their community.  And we gave this big sales pitch to the mayor's like this really tall guy with a bald head and the handlebar mustache. He is a really mean looking guy and this was in Georgia. He had like a rifle on the wall and a fox. He was a  very intimidating guy but he let us talk. Everyone's kind of looking like shaking their heads. I thought we were like getting their acceptance and he let us talk for fifteen minutes and then he looked at us and he said, ‘If you guys buy that park, you're wasting your money.  Get out of my town. I've been trying to shut that thing down for years now and I'm not going to stop until it's completely closed down. So get the hell out of here. Take your money somewhere else.’ So, we walked out of that room and we and I looked at my partner I said, ‘What do you think we should do?’ Because we weren't getting financing, we were paying all cash for this thing, too. Because it wasn't financialable. So, it was like basically all the money we had at that point. We bought it anyway. ‘So, let's buy it. I mean what are they going to do? Listen, let's just show them what we're going to do. I mean, how are they going to truly stop us, right? Let's do what We're going to do. We know we're going to clean the place up. He doesn't believe us but let's prove them wrong.’ We did that cleaned it up. We became really good friends with code enforcement officer that's kind of that was our like our foot in. We got her gift cards and made her like us and it was a very very open with our communication to her. So, if there was ever an issue, we addressed it right away.  Anyway, twelve months later I got a call from Mayor Bobby Carter's that his name and we got a call from him and I answered I didn’t know it him and he said, ‘This is a Mr. Bobby Carter.’ He has a southern accent. He said, ‘I just want to take a moment to apologize. I want to apologize for the way I treated you guys. I want to apologize for thinking that you wouldn't be able to execute on the beautiful plan that you have done over here.’ It was a long apology and he's like, ‘I just want to take a moment today. I've been meaning to call you over the last six months as I've seen progress being made but it's a year later and this place is great and actually, one of my staff members lives there.’ James:  He was holding it off until he had to tell you. Kevin: That was pretty cool. He literally wrote me a letter then he wrote a letter of recommendation to another Mayor who we were having an issue within another state in another town. Basically, saying like, ‘I thought mobile home parks were the problem. I thought this and the other and that's not the case. And these guys proved me wrong.’ And that's pretty cool. I'm pretty proud of that one. James:  Yeah. It's a big change especially with one of your first ones.  Kevin: He was the very first one. James:  You must have been really scared. I like how come the is not behind your back. Kevin: Well, we could lose that money either. I didn't have much at that point. In 2012, I was pretty broke back then. So, I had to make the money work. James:  That must be the fuel that launched your rocket and your motivation I guess. Kevin: Yeah, that's it. James:   So, why don't you tell our audience how to get a hold of you and your company? Kevin: Yeah, the best place to reach me personally is my website, Kevin Bob. You can find me on LinkedIn and Facebook as well. As far as our company if you want to learn what we're doing in the mobile home park space, you go to sunrisecapitalinvestors.com and get signed up there as well. We don't have an offering open today but get signed up. We have a secure portal and get updates from us when you know we have deals coming about and things of that nature. But other than I'm not too hard to track down. So, it’s pretty easy to find me on iTunes. I've got a couple of podcasts as we've mentioned earlier. You can find me in many different places. And now you can also find me on Jame’s show. James:  Yeah. So, thanks for coming. It was an awesome podcast. It was a lot of value that you gave us and I'm happy to have you on my show. Kevin: Thank you. Thanks for having me, James. And it's been a pleasure knowing you. I appreciate all you do with the podcast. I know how much work it is to put these things out. So, thank you for taking the time to get back to everyone. So much appreciated.  

James: Hi, audience and listeners. This is James Kandasamy from Achieve Wealth at Real Estate Investing podcasts. Last week, we had Jake and Gino from Wheelbarrow Profits. You know, Jake and Gino have tons and tons of deals on their own and you know, recently have moved into syndication space as well. And their story is just very interesting in terms of knowing how did they get started, how did they refinance their first deal to launch their multifamily investing career.   Today I have Rich Fishman from Dallas, and Rich has almost 8,000 units right now across 23 complexes and he has been buying in Texas, Tennessee, Indiana, Pennsylvania, Ohio, Mississippi, and South Carolina. So Rich is going to be giving us a lot of valuable insights into how he had bought so many apartment units. And imagine half of that 8,000 units is fundamentally owned by Rich itself and the other half of it is more of a partnership and syndication. Hey Rich, welcome to the show.   Rich: Well, thank you, James. Glad to be here.   James: Good, good. So, Rich, it's going to be a very interesting podcast because, and I'm going to be learning so much from you and I'm sure my listeners is going to be learning so much from you. How did you get started? I mean, you have like 8,000 units right now. You started almost 20 years ago. So walk back, how did you get started in multifamily immediately when you get started in real estate?   Rich: Well, actually, I was the owner of a mortgage company in the San Francisco Bay area in Berkeley, California and I financed mostly half homes, but I also financed apartment complexes. And I had a deal to finance, it was a six-plex in Alameda, California, and it was a foreclosure. Back then, there were a lot of foreclosures and the realtor gave me the deal, I got the loan, and then the buyer fell out of escrow; they didn't like the deal. And then there was another buyer; same thing happens. And I said to the realtor, I said, “What's wrong with this deal? It looks like it makes money.”  And she says “Nothing's wrong with the deal.”  And I said, “Well, I don't know how to manage anything like this.”  She says, “Well, I know management company, don't worry about it.” So I went to the property, then I dragged my wife there.   And it's a funny story because my wife is from Scandinavia and they don't do very well there. And so we went to the property and we had one of those, you know those long screwdrivers that the termite guys have because we are poking around, seeing if it was well-built. And the screwdriver went right through the wood into the drywall. And my wife says, "No, I can't buy this with you.”  I said, "No, we're buying this.”  And she looked at me and she said, “Okay.”  And so we bought this six-plex. And the six-plex was the beginning of us starting to buy real estate in earnest. So that's the story is we cut aside. There was a sidebar from the mortgage business.   James: Got it, got it, yeah. I always wonder, like whenever I meet brokers, mortgage brokers, and even brokers, I always ask them, why not you guys buy these deals, right? Why are you just doing transaction? And a lot of times, I mean not a lot of times I think once I talk to someone who went from a mortgage broker to become an investor. I'm sure you know him; it's like Michael Becker, right? Yeah. I think he's a big buyer in Dallas. I asked him this question because he used to be working in Wells Fargo and he told me not everybody likes to take risks like a business owner.   Rich: It's not only about the risk. The main reason that people get into the investment side is because, when you're doing transactions as a broker, you're making income and you're only as good as your last deal. You have to keep churning and closing deals to make a living, and every broker is off to the next listing, or the mortgage person is off the next loan and you'd live and die by the transaction. So eventually, most people either say, I've got to own this stuff; build wealth rather than income. Or I'm not interested; I really don't want to own anything. It takes the risk and the responsibility of owning property. So that's the thing, I had to make a decision to own it, take care of it, use my free time because I was still a mortgage broker. I had to use my weekends to run the real estate with my wife. We want to get started because we couldn't just go into multifamily; we needed the income from the mortgages. So it takes a lot of sacrifice for the first couple of years to get into something like this.   James: Got it, got it. So you must know the industry; working as well in the mortgage and to really successfully become owner and take advantage of that knowledge as well. So after how many years or after how many unit count that you, you said, okay, I'm going to give up this mortgage business, I'm going to be just a fulltime, a real estate investor?   Rich: I think we hit about a thousand apartments. And at that point, I let go of my duties in the mortgage company and concentrated on just buying and selling apartments.   James: Got it, got it. So, 20 years ago you started buying the six-plex, when did you see your fastest acceleration of purchase or acquisitions?   Rich: Well, we hit about 4,000 units and then the recession came 2009 to 14, 12, 13 as on the area of the country, and that was really hard. So we didn't really grow during that period. We were selling off as fast as we were buying, just kind of trying to keep our head above water. We got to about 5,000 units, about two or three years ago, and then we've grown a lot more. I could probably have 50,000 apartments today if I wanted them. I would have to basically align myself with someone on Wall Street or some investment banking for like a Goldman Sachs or something like that. And they would be happy to raise the money and give me all that money and I could then own five or 10% or 15% or whatever it is that is bought, BUT I'm not that going to ho for that strategy.   So the growth at this point is really about organic growth for me and our company, and also quality of life because when you have institutional mining, you have to take care of it in a way that suits the institutions. And they have requirements that family and friends and other people don't have. For example, they might want audited books every year. That doesn't sound like a lot because we don't; we have books [inaudible 08:46] and everything, but that just takes a lot of time to get an audit done. And if you multiply that by 15 or 20 EO, now you have to have a whole audit department, and CPAs work who for you and things like that. So it's been really about opportunity and raising money mostly from either my own, resources or family and friends and other methods.   James: Got it, got it. So, Rich, I think you bring a really good perspective in terms of economic cycle because you have went through, I mean, you started 20 years ago, you went through that 2008 and everybody said 2008 multi-family, you know, fat better than any other asset classes, they are very, very low. What you call, you know, who went into a receivership or bankruptcy; multifamily, so is that true?   Rich: That's not true at all. Most of the people who are in multifamily today, we're not even involved in the business.   James: Exactly, that's what I'm asking because everyone is sort of newbies--   Rich: A lot of people were wiped out in that recession and a lot of other people were underwater. I mean, there were thousands of apartment complexes that were foreclosed on. Now was it as bad as office buildings or retail? Maybe not, I really don't know, but it was bad. Now they say anybody who lasted eight years, they could come out the other side feeling good. But most people don't have the capital to take five or six or seven years of losses, and large losses. If you're not making debt coverage, if you're not able to pay your loan and you're coming out of pocket, that might be okay for one deal. But if you have 20 deals like that, yeah, that's a whole different story. So it's quite a different thing than when people say. Now, the multifamily was hitting extremely hard, and I think the default ratio was up to about 8%.   James: 8%. Okay.   Rich: Yeah, I think so. Yeah. That doesn't sound that bad compared to student loans. But if you think about it 8% is, you know, you're talking about housing that touches the lives of millions of people.   James: Got it. Yeah. It's very interesting data because you are giving me true data. I mean, sometimes we read in the news and they say low delinquency rate and it was not a hard hit and we don't have real, true story. Right, because a lot of it depends on the sub-marker, depends on which class we are talking about, and you know, depends on the operator as well. So how did you survive the 2008 crash?   Rich: Well, I have some properties that cash barge really well and I had others that really couldn't survive and I got rid of them. I sold them off or actually, I had you cut my portfolio down in order to survive and retrench a little bit, but I only had a few deals that were like that, the rest, I didn't have the leverage. If you were totally leveraged up in a bad market, then you cannot save yourself because, and if you're a partnership, you can't save yourself either. Because, if you own 10 or 20% of the deal and the loan is negative, then you would actually have to make a capital call every month on your partners in order to make those payments, and if you raise money. You know that there are two words that should never be spoken ‘capital costs’.   James: Exactly.   Rich: And so it's hard to really get money out of people to feed something that's losing money. So, there are a lot of people who gave; I know one fellow in the Houston market, he had property all over Houston, Atlanta, I think he gave up about 40 yields back. And there were other people like that who had just a tremendous amount of deals that they gave back to the banks.   James: So was this deal when they give back did Fannie and Freddie was giving non-recourse loan at that time?   Rich: Yeah, non-recourse loans, they just won't; if you give them deals back, they don't want to lend to you again unless you pay a heavy penalty to offset their losses because they take losses, themselves or the service or takes the loss. And in Fannie Mae's case, the loan originator slash servicer usually takes about five to 10% of the risk of the loan. So, you know, that could be pretty substantial too, to them because they're usually own companies by either large wealthy individuals or by banks. They don't like taking losses at all.   James: Got it, so they--   Rich: Hopefully we won't be there again.   James: Yeah, absolutely, we didn't want to be there again. So it was non-recourse and the owners were able to just give up their property, they lose their equity and the service that takes some loss and they gave it back to Fannie Mae and that's it.   Rich: Fanny Mae never own; one of the problems with the way the system was set up, is that Fannie may never really own the loan. People don't realize this, but Fannie Mae is just a broker.   James: Really? Okay.   Rich: There's really like nobody, you know, there's not like someone in Mumbai who owns or in Shanghai who owns all these loans. I mean, they basically securitize the loans and they sell the loan as a bond in the world financial markets. And so there's a special servicer who represents the interests of the bondholders and that person is delegated decision making, but they're not able to cut deals on Fannie Mae loan. So, they don't generally go and say, we see that you're negative, and why don't we go from 5% to 3% and you can owe us the money later? Things like that; they're not flexible. So, actually, Freddie Mac is, is more flexible, they act more like a bank, and so they can do workouts in a much better way than Fannie Mae can. It's just one of the things people don't know.   James: Got it. Wow, that's interesting. That's a lot of information out there. Yeah, I mean, Fannie Mae does a, securitize the loan and they sell it to the investor who buys it as a bond and they get certain percentage out of it. And in the middle there's servicer, there's Fannie Mae, everybody makes a few percent like this one [inaudible 15:59].   Rich: Everybody is making money, and at the end, the only people who generally lose money are the bondholders.   James: Okay, are the bondholders. But if the deal is given back, I mean the equity holder, whoever, the owner also lose the money as well, right? So there are two people, the buyer, and the seller, right?   Rich: The borrower absolutely loses a whole lot of their entire investment. And then the lender, if the lender can't be made whole by the sale of the real estate, they may lose money too. Things can get pretty bad in that cycle, that the value of the property often sunk below the outstanding balance of the loan. There're a lot of negative things to talk about, but let's talk about more positive things.   James: Got it. So you talked about people who are highly leveraged, right? So let's say you're buying a deal at 75% leverage. Do you think that's high level, I mean, can you define highly leverage? What is the highest leverage that you think?   Rich: Well, in today's world, you can leverage up to, Oh, even 90% for the first and second or preferred equity. And that's not necessarily a bad thing. It's just that you don't want to leverage that high on a stabilized property. It's one thing if you buy a property that's a value add and that you're going to add value and renovate a property, increased rents, increased value, and you're looking on a stabilized basis that okay, you went high leverage, but within a year or two you're going to be catching up and the leverage point will be at 60%, 65 or 75% or something. But if you're basically highly leveraged in stabilized properties without any value add then. If the rents go down five or 10%, then you're underwater, you want to have some protection; you want to certainly have 20% or debt coverage or something like that.   James: Yeah, that's a good point. I mean, that's the reason where I'm going with the question because we buy deals, we buy deals or value at deals even at 80% leverage, but in one to two years, that 80% leverage is going to be, 70 to 65% leveraged. So basically it's not leveraged at the start of the loan, it's basically, where are you going to be once you're stabilized; that's the more important thing. Sometimes people get confused that you shouldn't be highly leveraged? Why highly leverage and you don't understand that we are looking for buffer for DSCR? We want to be as further up from the debt service coverage ratio. That's the fundamental discussion about what highly leverage and costing higher risk.   Rich: Right, leverage is your friend, if you're using the leverage to invest capital, if you're using leverage to service debt or to pay out dividends, then you're making a huge mistake.   James: Okay, absolute point, that's an awesome point. That's well-said. I couldn't have said it better. So what about the guys who have done breach loans at that time in 2008 what happened to them and what would you give advice to that kind of people who are doing--   Rich: You mean the answer 2007 or 2008 with a value add deal, and then they had a bridge situation. While those people probably suffered, I mean they didn't execute. If they executed, that's fine. It was hard to push rents back then, everything is based on increase in rent. Fundamental multifamily strategy is how can I increase the rent? What value can I give the tenant so they'll pay more? Now, between 2008 and 2012, the only value add strategy that I know that worked was the fixed deferred maintenance to make sure you kept the lights on, for the most part. So beyond that, I didn't see people putting granite countertops in and all this other stuff because everyone was just trying to supply.   So those people, many of those people who got in at the cycle; at the end of the cycle, didn't make money unless they stayed all the way through 2015-16, so there were about seven years. But you would have to stay in that deal in order to make it. Now I did buy a property in the Midwest that I bought for about 15,000 units. You can get things that way back then. And I bought it in 2006 and I did do really well on it, but it was unusual because I got it so cheap; my basis lever was very high. But at the time it seemed like I had really jumped the shark as they say because the economy wasn't very good, and it wasn't easy to rent up any apartments for a while.   James: So coming back to Midwest, which I believe is MAVA secondary or tertiary market, right? So like right now in 2019 right now, market is so hard and people can't buy in the hot cities like Dallas, Houston, San Antonio, Austin, people are, I mean, I'm just looking at Texas, right? I mean, we're in Florida, we have Orlando, Tampa, and what Jacksonville, and I mean a lot of people have started going to other States and tertiary market or States which is like supposedly supposed to be upcoming. So, what would you give advice to them?   Rich: Well, I think my advice on the States like South Carolina or those kinds of places, is that to study the local market and make sure that it's vibrant, that there are good jobs there. There are a lot of great secondary and tertiary markets. Huntsville, Alabama or Hoover, Alabama or you know, Greenville, Columbia, South Carolina, I mean there's just, you know, Asheville, North Carolina, there's a lot of great secondary markets. I think the biggest problem that people have in these markets, one is they think they can increase rents more than they can. Because if you go to some of these markets and you think you can get $200 for putting in a new kitchen, you might find out you can only get $35 and 20 cents because there's a limit to what a lot of these people were willing to pay in these markets.   And if you go too high, they just want [inaudible 22:56], but there are still some markets that are small that people are really surprised at. I mean if you've been to Indiana and you know, there is Columbus, Indiana, well that sounds like a real nothing place, but Commons is located there, it's a very large company, and it's a pristine town with really high rents. Bloomington is also a great town in Indiana; it's got the college there. So there's a lot of college towns and there are capitals and there are places where there's a lot of manufacturing that's particularly in the Southeast that they didn't have manufacturing before. Some of these places have become very desirable for retirement and for our businesses like Charleston, South Carolina, nothing was going on there except history about 20 years ago. If you've been they are now, they are building homes like crazy. People are moving there to retire. There's a huge tourism business, I think ranked the number one wedding venue one year recently. And then they have they're making small planes there; just tremendous amount of activity going on.   James: What happened to this kind of tertiary market? I'm sure you had similar tertiary market during 2008 where you thought, okay, this is really good to go in and invest in. Looking at some of the cities that you're looking at it right now, what happened to that kind of market in 2008 how did they do compared to the major cities that are well known for--?   Rich: I own the property, and the answer is different. Every tertiary market was different, just like every major market. For example, if you look at the major markets or the secondary major markets take Tucson. Tucson was wiped out in the recession, now people say it's a good investment. Phoenix was wiped out, Vegas was wiped out, Reno was wiped out. Today Reno; people think Reno is part of California. It's hard to buy something under 150 a door in Reno now. So back then it was 50 a thousand a door was a great retirement exit. So I own property in Sierra Vista, Arizona, and there is an army base there. Now, I will never buy another property next to an army base. I don't care what the numbers look like because the politics of the army base are things that I cannot control.   And they decided that army base that they didn't need hardly anymore. So they cut the enrollment at the army base there by about half. And it was the town that depended upon the army base almost completely, not just the army people, but the people who were feeding and the vendors, and everybody else. And so the town really; rents went down about 30-40% in the town, but then there are other locations. I owned a property in Davenport, Iowa and it got hit, but it didn't get hit that bad. And agriculture, which was a real feeder for Iowa, stayed pretty good. And you know, they had the ethanol and that was pretty good. We never got below in general 90% occupancy in the properties that we own there, so it just really depends, you've got to do your research. Just how you can't make a blanket and say tertiary market, secondary market; core markets; it wasn't long ago that people considered Baltimore to be almost a core market.   Because of its proximity to DC on the Amtrak corroder from New York, the new Harbor that they had built there with the aquarium and today, a lot of people don't think of Baltimore as a core market and back then people didn't see DC as a core market. They thought it was crime, wedding blah, blah, blah, you know, stay away from DC. And now today, I mean, you're talking about very expensive real estate all over DC.   James: Awesome, awesome. That is a lot of insights there. So Rich, which market have you been focusing on, I mean, you bought in a lot of markets before these and you probably own some of it over there, but what has your strategy has been at this hot--?   Rich: Right now my strategy is really to buy more in DFW.   James: Okay.   Rich: Our office is here. This is probably the best multifamily market in the country. The cranes are all over the skyline. The jobs are coming in like crazy every day or week there is another multinational company that's relocating from California generally to Dallas Fort worth. There's a lot of vibrancy here. Rents keep tricking up. I like DFW. I've liked Houston a lot in the past; Houston is very squatty though, and there's a lot, I can't just tell you that Houston's going to do well because every part of Houston is so different and there's no zoning, so it doesn't have a character. Neighborhoods don't have as much character that they do here. But Houston is great Austin is great, it's just the real question, isn't what do I like, the real question is, is there an upside? Where is the upside in multifamily today?   And the answer is that there isn't the kind of upside today that there was until a couple of years ago because we were still basically catching up from the recession; a lack of housing, deferred maintenance and household formation. During the people said to me, "aren't there going to be more renters?" Because people were foreclosed, I don't know if you remember that. They will say, "You're in a great business". All these foreclosures, they have to rent now. No, they didn't have to rent. They moved in with their families, they hold up; whatever they had to do. People are much more flexible and adaptable than statisticians and university professors. So people didn't create households, kids stayed in the basement, and so here we are 2012 wondering where are all the renters? Well, it turns out that they were hiding out.   So when the economy got good and they got jobs, they all came out and that created a lot of household formation, a lot more renters. And that created a boom in multifamily. So, either more and more people who need rental housing, absolutely, and particularly in areas like Dallas, Fort Worth where they're coming in for the jobs, they need housing; Austin, they need housing. That puts pressure on rents and they usually start building a lot more too. The areas that have a declining population, I wouldn't invest.   So if a deal's in a city that has a declining population, I automatically say no, I'm not interested in, even if I could fix it up and make some money, to me that's; I'm going against the tide. I'm just one guy, I can't make an ocean. I have to get in my little boat, and I have to have the-- I want the ocean to work for me and not against me. I don't want to fight that. Same or crime; if I'm in an area that has just tremendous amount of crime, it's still, crime is [inaudible31:42], but if it has a lot of crime, I don't want to own it because I can't do all the things necessary to stop crime in my neighbor. I'm not a police department. I'm just one person owning one complex or two in a neighborhood and I've got to have an ability to deliver safe housing to the people who rent from us.   James: Got it, got it. Just want to add one thing to the listeners and audience. If you want to find a city where there's declining on appreciating one free resource, which is very quick to check, it is called bestplaces.net. Bestplaces.Net, and you can go and enter the city information and you can go to a household. I believe it's a real estate statistics and it shows you whether there's a declining population or increasing population. I mean in general, I think Texas is increasing in general. Everybody's moving to Texas and I believe Florida as well, so--   Rich: I mean, if you're looking in Texas and you say, well, why don't I buy in Amarillo or Abilene or these kinds of places, I don't have anything to say. I don't know those markets, but those are not vibrant places generally.   James: It makes sense; vibrant. Okay, got it. But I think the major cities in Texas are pretty vibrant.   Rich: The major cities are really San Antonio, Austin, Houston, and Dallas. Then you have cities like El Paso, Lubbock, Tyler, you know, places like that that are in the second tier. Corpus Christi is another one that is in between the second and third-tier cities. Aon, actually in Corpus Christi real estate, and that's on a lot of people's radar because they are putting along money to the ports and the petroleum industry, but it's not as vibrant as it San Antonio or Austin.   James: Got it. Got it, got it, very interesting. So but Dallas, I mean, I know you're focusing on Dallas, but Dallas prices have appreciated from what 50,000 a door. I mean, I think all over Texas it's like this, right? For the past five years, $50,000 a door to almost a hundred thousand a dollar for a C-class property. So how are you planning to buy deals? I mean since, don't you think at some point the price per door is just going to be limited by the rent wage growth of the--?   Rich: Well, I think that it's a mistake to really focus on price per door. I think it's a better thing to focus on cap rates.   James: Cap rates, okay.   Rich: And if you could buy something over a five cap rate and put loan on it for under 4%, then you have positive arbitrage, and you're going to make money. So a lot of properties are expensive, but property in San Francisco is 350,000 a door. Now, I was a mortgage broker there when they were going for 100,000 a door, and I thought people were crazy. Who would ever pay that? So, we can't let a number and you shouldn't let a number per door impact your buying decision. What your buying decision should be based on is what return on your investment you're going to get. Now, it's true that you want to make sure there's an exit there, meaning that there's somebody else who would buy a property at more per door if that's a problem.   Now there are some markets where maybe that is an issue still, but they're generally very depressed; places like Detroit or things like that or Cleveland. But even those places are not any more per door oriented. So I've seen deals recently that are 120,130 a door. They were bought for 80 a door just three, four years ago. And before that, they had one for 55 a door. And I don't really care what people bought them for in the past, I just care what can I do? What's my return going to be? If I could hit my numbers and I don't really care. Now the question is, can I hit my numbers? Am I chasing a dream that's-- is the ship already sailed? Is there really any more room in this property to enhance value? And the answer has to be yes. And a lot of the areas in Dallas are improving. The income levels are going up in some of these places. The number of jobs in the area is going up, so they're not static environments. Today, a suburb of Dallas is not the same place as it was 20 years ago because now there are four times as many people living in the area, shopping in the area, working in the area, and those people are all competing for housing.   James: Wow, that's interesting. Okay, so how do you underwrite your deals? I mean I'm sure you're looking for upside, right? That's what you talk about in any deals and whether you can make a return on your investment, right?   Rich: I'll tell you my tricks of the trade, which is nothing unusual; first of all, we go into the numbers and make sure we understand the expenses. And we also increase the property taxes based on what we think the assessor will increase the taxes too. Yeah, that's a really big thing; people don't realize they come from out of the outside Texas that your property is assessed every year a new bag. So you can't look at a tax that your seller's paying and think that you're going to have the same tax. So we get the real expenses, and then if we're going to do a value add, we want to find a property that's very similar, same vintage and everything that's already done the value add and see what rent they're achieving, what they've done, and we're not going to go past that.   In other words, I'm not going to be a pioneer and decide that I need golden faucets or Berber carpets or whatever it is; I'm going to make a nice value-add, the same as everybody else. Maybe you are a little better, but I'm not going to a guest that I can get more rent, so that's where I get my revenue, just estimating how many of this was going to renovate? What rents can we get today, today in the marketplace, not tomorrow? And then use those numbers, and if those numbers show that I can get a great return based on what it costs and what the money we put into the property, then it's a go. If the numbers, there's nothing here, I can't get a return from doing this or the rents are tapped out, that kind of thing. Then I pass. And we use a model. I think we use the CRM model. We bought the model because it got too complicated for Excel for us. And so we use a model that we bought to program the IRR and all that stuff.   James: What about the rent growth assumption? How do you usually predict that?   Rich: We don't put more than two or 3% a year in there? We're not looking to create false expectations. 5% rent growth sounds nice, but that doesn't happen all the time. In fact studies in Houston show that there's been virtually no rent growth in two or three years in Houston. And every year they say that they had four or 5% rent growth. And I asked the realtors, is the four or 5% rent growth that these reports say? And nobody seems to know where the data's coming from.   James: Yeah, absolutely. But do you think we can get that 3% rank growth moving forward from now on the next five years? I mean, do you think it's real estate?   Rich: I think we can get the two to 3% rent growth just by doing nothing; if you're in a market that is strong.   James: So it depends on the market as well.   Rich: It all depends on one thing and one thing only, which is wage growth in the market you own.   James: Correct.   Rich: I own a lot of property in San Antonio and there was virtually no wage growth in San Antonio. And I have property that I've owned there now six years, seven years. And the last two or three years there's been virtually no increase in wage growth or rents in none of these markets. The cap rates keep going down, so people keep paying more for these properties. They expect wage growth and rent growth, so everyone has a different expectation.   James: Got it, got it. So what about the, I mean, you mentioned that I mean, you did this for 20 years, own like 8,000 units, you could have multiplied 10 X your holdings by going with private equity money which some people have done. And some people have gone to private equity and came back to be a [inaudible41:31]. Some people are trying to get into working with private equity because it's easier to rent and raising money from retail investors which is like family and friends. I know you mentioned some perspective, but can you give a full perspective on why you didn't choose that route at all?   Rich: Well, we do have family and friends, and private equity, and some family offices in our deals. I have three deals that I have is tuition in, and I just prefer the flexibility that-- I prefer working with individuals and with people I know because multifamily is not a straight line. You buy something a lot of times prizes after you close, you don't know, some problems that you run into. Sometimes you have to replace staff. A lot of times you have a staffing issue. It could take a year or two longer to execute your business plan. And still, it's very good. When you execute your business plan, you make a lot of money, but instead of taking one or two years, it could take five years or four years. And when you have institutional money, they're not very patient and they are very willing after; if you don't make your numbers for one to two years, they're very willing to take the management away or threaten you with your cramming, taking away your investment. Actually, you're cramming down; they call it crammed down; to make the return.   It can be pretty nasty, so that's one of the reasons. It's getting easier to raise money from family offices privately. There are a number of crowd-sourcing platforms; we've done some crowd-sourcing rising for a couple million dollars as infill, you know, to fill in a partnership after a family or friends invest, and we still have a couple million left. Well, we've been successful at raising that money there. We've also used preferred equity, which is kind of a hybrid deal. It's not secondary financing, like mezzanine financing, but it's similar. What they do is there is a pay, they want a pay rate of around four to 6%, and then they want a complete return of let's say nine to 11% or 12%. They'll take the difference when you sell the property well when you refinance. So, it gives you more leverage, you might say, but it's not partnership money, so it reduces the money that you have to raise as a partnership.   James: Got it, got it. And what would you give advice to people who are saying that you know, when the market turns, I mean, they will not be any more private investors anymore, I mean, you have to go back to private equity? Do you think that's the true case?   Rich: You mean institutional equity? You have to go back to-- that's all private equity. I think the reality is when the market turns, everyone goes back into their little clamshell, so what you call it and money is money. And if people don't feel that they can make a return, then they won't invest. Now, what happens is that if the market turns and people are not making return, some deals will go south and will go sour, and then you'll start a new cycle of this trust real estate. And then there'll be opportunity funds or vulture capital guys who are trying to invest in those deals and they'll be looking to invest. So every part of the cycle has a different kind of investor. Right now the profile of the average investor is looking to clip coupons. Most people know that the glory days of making two, 300% on their money is over and they're very happy with what they'd done and now they really don't want to lose their principal. There have gotten more conservative as wealthier people do, and then they say, well, can I get a seven or an 8% or 6% coupon clip every month when you send me a check? And there are a lot more of those people today. There is virtually none of those people in 2008, nine, 10, 11, 12. Yeah, but today, most people have the profile as investors of wanting to have lower risk and are willing to take less reward.   James: So what you're saying is in 2008, everybody disappeared; nobody invests retail, right? And then after that, there is some vulture capital and then now people are looking more into stabilized assets with lower risk.   Rich: The people who appeared in 2008 were the people who worked at Goldman Sachs or Blackstone or these other Carlisle group and these other large accumulators of capital. And what they saw is a tremendous amount of blood on the street as they say. They saw just a lot of financial suffering and they were looking at enabling because of their massive amounts of capital to scoop up troubled assets for pennies on the dollar. So a lot of the mortgages that went bad were sold off for 20, 30, 50% of their mortgage value to these conglomerate; these large companies. And then they went through the process of foreclosing on individual assets. Some of them actually created management companies themselves, and they got the properties back. A bunch of then they put them back on the market and made a lot of money. So there was a lot of business, a lot of wealth created in that time frame, but it wasn't created by people like you and I, it was created in Goldman Sachs, and in Blackstone, and these kinds of places.   James: Got it, got it. So where do you think we are heading in the next two or three years or five years? Are we going to have a slowdown bump or it's going to be a crash into like 2008 or there is just going to be a coupon rolling in multifamily?   Rich: I don't think that we're going to have a crash. I see it more that it's just a steady market and I just think it's going to go up and down a little bit here and there, and I don't see much change from where we are for a couple of more years. I can't see out too far into the future. Sometimes politics and things like that intercede, and we don't know if someone politically comes in and starts changing the tax code like they did in 1986 or something like that. But the way I see it is that America is fundamentally becoming a retro society. People are living a lot longer, and the longer people live the less they want to own a house. A lot of people will own houses and raise families there, but they will exit houses more and more frequently to live in places like central cities or small main street America so they can be near services and doctors and entertainment and [inaudible 49:41].   And I don't think that we're going to go back to the white picket fence for everybody's environment. Now, that doesn't mean people won't buy houses, but when people are not raising children, they will prefer generally to live in smaller environments, more like Europeans do, and I think that pertains, well, for multifamily. There are so many good trends that are feeding into the multifamily trough that I can't imagine right now that in general, multifamily would have a crash.   James: Got it, got it. And so we're coming almost to the end of the show. Can you give us one advice to people who are thinking of becoming like you owning thousands of units and they're just getting started?   Rich: Sure. So this is my main piece of advice is that if you want to be in this realm, then you must make it a full-time job. This is not an investment, multifamily is not a stock that you-- it's not putting money on Microsoft and watching it go up and down. It's an active business, and if we're going to try to be somebody who owns several apartment complexes, then you just really can't buy the complexes and hand away the keys to the management company and expect great results. You have to be very actively involved, visit your properties, know the rents in the market, walk vacant apartments, and make sure you hire good people. It really is a business, and if you're not prepared because of your lifestyle, your other job or something like that to devote most of your time to this business, then my recommendation is become a limited partner in a deal or two, try to make money that way. But don't think that you could become a principal and own five or 10,000 apartments that way, no, it's not going to happen.   James: Got it. I mean, this is one of the requests from our listeners. Is there anyone advice that you want to give to a passive investor who is investing in this deal? What they should look for [inaudible 52:14]?   Rich: Well, the big issue for passive investors is that they should really understand what they're investing in, like any other investment, and not take the offering that they get from the company or the operator at its face value because it could be too optimistic. You want to make sure you agree with the assumptions. So you would probably at the very least get on the computer and look at how much are units really renting for in that area. If they're going to renovate, well, what does a renovated unit look for? Is this an achievable rent that they're projecting and are their expenses realistic? Are they in line with what expenses really shouldn't be? So do a little homework; that's my main thing, and don't just trust that, just because somebody sent you something that said that there's a 30% return, that that's a real thing.   James: Yeah, I have many, many times some passive investors just look at the final return numbers and decide whether they want to invest or not, but they forgot that we are making thousands of assumptions in that spreadsheet. So you rather check the assumptions rather than just the final numbers.   Rich: Absolutely.   James: Right, so Rich we're really happy to have you here. How can the listeners and audience reach out to you?   Rich: Well, they could, we have a website, alcapgroup.com and they can send me an email through there. If they want to know about our upcoming deals, we'd be happy to put them on their list and work with them, talk to them, and see if we can do some business together.   James: Awesome, awesome. Thank you very much Rich for coming onto the show.   Rich: Thanks James, been a pleasure.   James: Pleasure to have you. Thank you.