Podcasts about james there

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.

Check out this great encore show from November 19, 2024 Father Ramil Fajardo joins Patrick to discuss Sacrifice (6:45) What is a sacrifice? (12:34) Ramon - I would like some advice to know if what I'm doing is a sacrifice for someone else or for me. Walter - Reading a book by Archbishop Luis Martinez called The Sanctifier. Whole purpose of the Holy spirit's work is to reproduce Jesus in us. Sacrifice, joy, love. Most important is sacrifice because that's our job on earth. (22:11) Break 1 Nick - When we look at the crucifix, it's a great invitation. We saw what he went through and we unite our sufferings. All of those sufferings that bring about death are unavoidable. He asks us to offer it up. We have to receive the body, blood, soul, and divinity. I'm offering my struggles. (26:52) How do we cultivate the spirit of a Martyr? How can we cultivate sacrifice in our own lives? (34:45) James - There's a phrase in the psalms that talks about sacrifice of praise. I would like to talk about that. (38:12) Break 2 How can families make sacrifices in their lives? (45:15) Kelly - If on a Friday, you begin to eat meat and then remember it's Friday, should you eat it or give it up?

Father Ramil Fajardo joins Patrick to discuss Sacrifice (6:45) What is a sacrifice? (12:34) Ramon - I would like some advice to know if what I'm doing is a sacrifice for someone else or for me. Walter - Reading a book by Archbishop Luis Martinez called The Sanctifier.  Whole purpose of the Holy spirit's work is to reproduce Jesus in us. Sacrifice, joy, love.  Most important is sacrifice because that's our job on earth. (22:11) Break 1 Nick - When we look at the crucifix, it's a great invitation.  We saw what he went through and we unite our sufferings.  All of those sufferings that bring about death are unavoidable.  He asks us to offer it up. We have to receive the body, blood, soul, and divinity. I'm offering my struggles. (26:52) How do we cultivate the spirit of a Martyr? How can we cultivate sacrifice n our own lives? (34:45) James - There's a phrase in the psalms that talks about sacrifice of praise.  I would like to talk about that. (38:12) Break 2 How can families make sacrifices in their lives? (45:15) Kelly - If on a Friday, you begin to eat meat and then remember it's Friday, should you eat it or give it up?

In this episode, James Hsu unveils his unique career journey - transitioning from a litigator to employment lawyer to in-house legal counsel before finding his calling back in private practice as an employment and human rights lawyer at PortaLaw. James also shares his reflections from a nine-month long break between positions. Having gained valuable insights into maintaining personal autonomy, life satisfaction, and identity, James speaks on the importance of taking a break, understanding the meaning behind your career goals, and "throwing your own party". In this candid conversation, James delves into his reset and pivot into employment law, emphasizing guiding principles like helpfulness, honesty, and a human approach, with the unique addition of "happiness." James concludes the episode with valuable advice for lawyers navigating their own career transitions and finding their place in the legal industry. Please note the following changes since our interview with James: There are now 6 members on the PortaLaw Team. PortaLaw's guest Ukrainian lawyer has since moved on from his temporary role at PortaLaw to a permanent role in another organization.

In today's show, we discuss with Dave Conway. Dave Conway is the founder of the international mindset and sales training company, Conway Consulting. Serving hundreds of clients all over the world in a range of industries, Dave was a coach and sales team member for Bob Proctor, has completed 1,500+ sales calls, led 900+ group presentations and has hosted 100+ workshops, closing millions in sales along the way. Dave has helped many of his clients consistently hit 6-figures per month, with over 80% of his client base experiencing an increase in their income. So strap your seatbelts and let's take a ride to Saskatchewan, Canada on this ride of the dHarmic evolution podcast   James is now Coaching If you are a high achiever looking to transform your life/career/goals, James is now offering a limited amount of space for 1 on 1 coaching. You must be committed, dedicated and willing to welcome a transformation to achieve more in your life for this program. If this is you, James is offering a no-cost, no obligation 60-minute zoom discovery call for only 12 participants. (A $500.00 value!) You can schedule your discovery call with James right here to explore if this is a good fit for both parties.   As a Preview In today's episode we discuss with Dave Conway, a coach and sales professional. Dave explains what it truly means to be active in the universe. Listen to him break down his experience of losing confidence at 21, to transitioning from carpentry to coach, and finally becoming the number 2 consultant under Bob Proctor in a year. This episode is simply filled with wisdom. Let's dive in   Quotes   Every human being contains two things: ideas or opinions and beliefs behind them-Dave   The suggestion is the most powerful force in the universe-Dave   I've been early on some things but it was my indecisiveness that I didn't follow through-James   There is a big difference between knowing something and understanding it-Dave   I love helping people manifest the life they want-Dave   We rarely think about what we want-Dave   The secret is desire: you have to desire what you want-Dave   We don't get paid from people, we get paid through people-Dave   I want to remove the mysteriousness of manifestation-Dave   Timestamps   00:53 Introducing Dave Conway 03:53 Dave's career transition 04:30 Dave's first encounter of Bob Proctor 05:50 Dave at 21: Losing confidence 07:10 Dave checking on Bob: Paradigm Shift 09:00 Did Dave losing his confidence affect the time before he met Bob 11:51 Being the no.2 consultant  in the world in 1 year 15:28 What gives Dave the most joy? 17:48 Developing your mindsets 20:10 The two kinds of people 22:52 Connecting with the audience 25:40 When did Dave decide to start consulting 28:30 Study habits 31:52 Working with Bob: The Matrix 36:50 Goals 38:59 Dave's message to you 41:30 Conway Consulting's programs 44:29 Boutique coaching 46:22 Dave and his wife, Jack in consulting together 49:53 Dave's parting words  52:10 Ride On with James Kevin   Spotify Playlist:  Make sure you're not missing out on all our “Rising dHarmic Stars Spotify Playlists”. We already have four (4) playlists where you can find over a hundred songs from our very own dHarmic Evolution alumni. Don't forget to share them with your family and friends, and let the world support these fantastic indie artists! Check out the links here:   dHarmic Rising Stars: Aquila   https://open.spotify.com/playlist/4loDaYF0OuWRjZeMXvEjK4 dHarmic Rising Stars: Orion   https://open.spotify.com/playlist/5CnL9tl0xbU4oDh6jtJBZx   dHarmic Rising Stars: Lyra   https://open.spotify.com/playlist/1ov0OqNMJmPhHrxZjsXthS   dHarmic Rising Stars: Scorpius   https://open.spotify.com/playlist/5oQ4Sc4LAJSexsDgDcixt8   dHarmic Evolution links:   Stay up-to-date with our new releases! You just need to go to dharmicevolution.com and subscribe to your favorite podcast platform – there is much to choose from! Let me know what you think as well by leaving comments or reviews! And if you're digging this show, please share it with somebody on social media or just forward it to a friend and let them join the growing community of dHarmic Evolution!   Do you know someone who is suffering from anxiety and depression? Please help them out by suggesting the book “7 Steps to Mental Freedom.” It will be an excellent read for them. You can easily find it as well on the main page of the website, or you can just send them to 7stepstomentalfreedom.com   Keep yourself updated with what's going on with the dHarmic evolution; check out our Facebook Page: https://www.facebook.com/dharmicevolution. If you are an artist, an author, or a keynote speaker, who is trying to find a safe place to post your content, you can check out our own Facebook community page and let the world support you! Check out the link here: dHarmic Evolution Community.      Connect with Our Guest   Dave's coaching   Special Links and Mentions   Dave Anderson Bob Proctor

It's a pretty exciting week for James, who has finally started his new paid apprenticeship. He feels excited and nervous, and there's fear, but he's looking forward to it!Sean talks about his own fears, those he spent time sitting with, and how he realized that fear is not really bad and that extreme fear can actually promote growth.Finally, they talked about how emotions play in responding and reacting to situations.Key Takeaways:Do not let the what-ifs and the fears stop you from trying different things. If you do, you'll never know.The only way to be good at something is by being bad at it first.Most of us are so risk averse that we're mostly afraid to take very calculated, low-risk decisions.There are times when you're gonna make mistakes and it's okay. It's not the end of the world.You always will have this agency to choose how you react to your emotions.Episode Quotes:On failures and successes[00:12:28] Sean: We see failures as setbacks, but they're not bad at all. They're actually the way forward.[00:12:39] James: I think all success is underlined and paved through failure. No one has a success story without failing at some point.James on emotions and reactions[00:15:14] There are no good or bad emotions. They are just emotions. We have negative reactions to emotions. We have positive reactions to emotions. On reacting/responding to situations[00:17:01] Sean: If you see something happening, if you feel something, if you experience something, just recognizing that you have agency, that you have the ability to respond, the ability to make some choices and decisions. Again, it doesn't mean you have to act.[00:24:56] James: There are some days where you can react well and other days where you won't be able to react as well as you want, but you just keep going, and you kind of learn from that. You never expect yourself to be perfect in how you behave and perfect in how you react.

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. Optimized cloud compute plans have landed at Vultr to deliver lightning-fast processing power, courtesy of third-gen AMD EPYC processors without the IO or hardware limitations of a traditional multi-tenant cloud server. Starting at just 28 bucks a month, users can deploy general-purpose, CPU, memory, or storage optimized cloud instances in more than 20 locations across five continents. Without looking, I know that once again, Antarctica has gotten the short end of the stick. Launch your Vultr optimized compute instance in 60 seconds or less on your choice of included operating systems, or bring your own. It's time to ditch convoluted and unpredictable giant tech company billing practices and say goodbye to noisy neighbors and egregious egress forever. Vultr delivers the power of the cloud with none of the bloat. “Screaming in the Cloud” listeners can try Vultr for free today with a $150 in credit when they visit getvultr.com/screaming. That's G-E-T-V-U-L-T-R dot com slash screaming. 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.

“There are so many super-fit people out there and it doesn't necessarily define you as an athlete,” says returning guest Dr. James Stetson of Physio Room. In today's episode, Dr. Andrew and Dr. James discuss everything there is to know about the CrossFit Open. A competitive CrossFit athlete since 2015, Dr. James has the insight to explain what the audience can do to be effective participants. Ultimately, CrossFit is a community. When you work out with people every day to push each other to your limits, camaraderie is inevitable. With that in mind, Dr. Andrew and Dr. James let their listeners know the importance of having a team mentality with any competitive sport, and to enter the CrossFit Open without expectations. Even though there are people who are fitter than you, you can always keep working hard to do better next time. Tune into this week's episode of The Code for a revealing conversation on the CrossFit Open. Learn more about Dr. James' CrossFit background, physically and mentally preparing for the CrossFit Games, and how other competitors' physical fitness does not define your athletic capabilities.   Quotes • “When people are in the gym doing hard things together, it creates that shared suffering. You're doing hard stuff, you're pushing your body, and you form a bond with the people around you.” (4:23 - 4:33 | Dr. James)  • “There is a benefit to having a little bit of that butterfly feeling, a little bit of that anxiety because it means something to you. If you're going into a workout, and you just don't care about how things go, then you're probably in the wrong place to start with.” (17:11 - 17:30 | Dr. James) • “Don't put a lot of weight into where you rank on the leaderboard because of the broad scope of the Open. There are so many super-fit people out there across the globe and it doesn't necessarily define you as an athlete.” (27:37 - 27:53 | Dr. James) • “I never like to be the smartest person in the room, or the fittest person in the gym because I always want something to chase, something to strive for, and put myself around people who are in the position that I would like to be in someday.” (30:33 - 30:45)   Links Instagram | 
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  Facebook | https://www.facebook.com/profile.php?id=100004164646151    Connect with Physio Room:  Website | ​​https://physioroomco.com/  Instagram | https://www.instagram.com/physioroomco/ Facebook | https://www.facebook.com/physioroomco Andrew's Personal Instagram | https://www.instagram.com/dr.andrewfix/  Andrew's Personal Facebook | https://www.facebook.com/andrew.fix.9/   Podcast production and show notes provided by HiveCast.fm

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

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.

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

The Book of James: There's Joy in Change by Pastor Daniel Strosnider. Sermon message from June 13, 2021 at Kingdom: A Community Church.

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.

John: Hi, this is Doctor John Dacey with my weekly podcast, New Solutions to the Anxiety Epidemic. Today, I have a friend of mine, James, who’s going to be talking to us about his own situation and his own familiarity with anxiety. James, how are you? James: I’m doing alright, how are you? John: Good, thank you. I wonder if you could tell us a little something about yourself before we get started. James: Well, I am currently a junior in high school. I’m 17. John: How are you finding taking courses online? James: Online? It’s presented its own set of challenges. I wouldn’t say it’s better or worse than regular school but, I think there’s less work but it’s a different kind of material. It feels a little bit less meaningful. John: Yeah, I can understand that. People say that there’s such a thing as Zoom exhaustion. After you’ve spent a certain amount of time on Zoom that it’s much more tiring than sitting there and talking to somebody. James: Yeah, I don’t do too many Zoom calls because of the way the school has set it up for us but I get that. John: Today, what I would like to do is go over 7 of the 8 types of anxiety that there are and have you tell me, do you think that you have a condition in that area, the anxiety syndrome, and we’ll talk a little bit about if you’ve discovered anything that’s helped with you. Is that ok? James: Sounds good. John: I’m going to skip the first one which is called simple phobias because everybody has them, agoraphobia, afraid of falling from heights, things like that. We’ll start with probably the most common one which is social anxiety. Social anxiety is things like fear of speaking in public, feeling of not wanting to go to parties, that sort of thing. Do you think you’re bothered by any of that? James: Not generally. Sometimes I’ll have a little bit in large groups but generally speaking, that’s not something that I tend to experience. John: I remember some years ago watching you sing by yourself in front of probably 300 people in the audience and you seemed to be very calm about the whole thing and very confident. Is that typically the case? James: Yeah that tends to be the case. John: And you’ve been in some theater things where if you were going to have social anxiety, that’s where you’d have it. James: Yeah, I’ve been doing theater from a very young age so it’s something that I’ve got pretty used to. John: That’s great. Separation anxiety usually bothers younger people but sometimes older people. Separation anxiety is when you feel like if you’re not around a person who is very powerful, that knows how to take care of you, that you’re in trouble. Did you have any trouble starting school, for example leaving your mother? James: No, I don’t think I did. John: I don’t think you did either. The next one is called generalized anxiety. Just a general nervous feeling at least half of the time. James: Yeah, that’s the one that I definitely have. John: That usually comes about from a bunch of experiences that didn’t go so well for you, or  that you feel like they didn’t go so well for you, and you become sort of nervous, on the lookout and what we call “hypervigilant.” Do you know what I mean when I say hypervigilant? James: Yeah, exactly. John: What about that does that seem like something that you’ve been dealing with? James: Yeah I think it’s something that I definitely have. It’s something I was diagnosed with and it’s something I’m on medication for. John: Oh ok. When you talk to your therapist who’s the one who did the diagnosis I suppose, what suggestions do they make about why you have this? Do you have any guess as to why you’re generally anxious? James: There’s a history of anxiety in my family. John: So, you think it might be genetic? James: I think genetics certainly has a large role in it. John: We say that everything is biopsychosocial in my field so the biological part would be genetics. Can you think of anything that psychologically might have oriented you toward that? From your experiences, for example. James: Yeah, I think some of it’s genetic and some of it’s from my experiences. Some of it from when I was younger, but it’s a combination of things that have added up to this. John: What is your position in the family? James: I’m the youngest. John: Do you think that might have anything to do with it? James: Being the youngest? I think there’s a certain level of insecurity about being young and having to prove yourself so I’m sure that played a role. John: Yeah, that’s absolutely true. Your siblings are pretty smart if I remember. They are smart people. James: They are. They’re quite intelligent. John: But as I think you know, I think you’re very smart and I’m inviting you to be in a group of mine called “Spirituality and Science.” It’s almost all adults, older adults for that matter but you’re probably the youngest person in the group but you seem to do very well supporting yourself. James: Well thank you. John: Do you feel nervous when you’re in that group? James: No, it’s a very relaxed environment. John. Oh, that’s great. Now that’s the first four and they tend to be less serious so let’s look at the next ones. Agoraphobia is fear of being away from home because of lack of control. Are you bothered by that at all? Do you feel nervous when you’re about to go on a trip or something like that? James: No. John: Ok so being out of the house or being away from the home is not a problem. James: No. John: The next one is called panic attacks. Those are feelings of fearfulness that seem to come from nowhere. They don’t seem to be related to anything. All of a sudden you start to feel really nervous. How about that one? James: Yeah that’s one that I experience. John: I’m going to guess that you probably think that’s genetic also. James: I don’t know if it’s genetic. It’s not something that I experienced when I was younger. It really didn’t come up until fairly recently, actually. John: How recently, James? James: About a year or two ago is when it first started and then it’s ramped up in the past year or so. John: When you say started, what was the first one like? James: The first one I think was actually in my chemistry class and it was just like I was doing my work. The whole room was silent and I was just doing my work and then all of a sudden, something changed and I’m not 100% sure what it was but something shifted and it was like I couldn’t breathe, my chest was compressing, shaking. It was a terrifying experience. John: That’s exactly how everybody describes it. We can be very sure you had a panic attack because that’s exactly what it sounds like. And it seems to come out of nowhere am I right? James: Yeah. John: Has anybody ever told you that it seems to be, but it actually isn’t? When I talked to my clients about panic attacks, I make an analogy to a bunch of cowboys out with a heard of cattle and if the heard of cattle starts to get nervous and one or two of them start to stand up, the cowboys have to start whistling and singing to calm them back down. Because if they all get up and going, then the next thing you know, you got a stampede on your hands and there’s nothing you can do except follow along. That’s sort of an analogy to what a panic attack is described as. I’ve had a couple myself, only about two, and it’s the weirdest thing, it seems to come out of nowhere but it really doesn’t. And what we tell people is, “you’ve got to try and be aware of your subconscious.” And that’s a really hard thing to do especially when the subconscious is saying, “something scary is about to happen” because you try to deny it. Nobody wants to be scared out of their minds. It’s a very unpleasant feeling and that’s what a panic attack is like. Instead of saying, “I think I’m beginning to feel the beginnings of a panic attack” you try and avoid it and it makes it worse. Does that sound right? James: Yeah. John: have you had any success with stopping them? James: Yeah I think I have. John: As I might say, “cutting them off at the pass.” Do you know what I mean? James: Yeah. It’s something that’s really hard to do. John: It is really hard to do. The biggest thing that’s hard about it is that you don’t want to be thinking about this. Am I right? James: Exactly. It’s something that I’ve had a lot of, so I’ve had to get pretty good at preventing them, cutting them off before they get to that point and recovering after them which is also something that’s I’ve struggled with because they’re pretty debilitating. They’re hard to come back from. John: One of the things that I’ve heard is that they’re especially hard for males because males are supposed to be strong and not give in to something like this. Am I right? James: Yeah, I think there’s some pressure. John: When you’re having a panic attack, do you tell all your friends around you that you’re having one? James: Generally, no. John: Do you feel a little bit ashamed of it? James: Yeah, I mean, it’s not something that I want to be experiencing. John: Yeah of course not. Of course, you don’t. And of course, with the stereotype that we have that men are so brave and tough, it’s not the image that we want to give to ourselves. “I can’t talk to you right now because I’m having a panic attack.” But, you know, that’s how it is. Okay, there’s only two more. OCD, which is obsessive-compulsive disorder. James: I think I have a little bit of that. John: What’s your evidence? James: I find myself having to do things a certain number of times. It’s pretty manageable and it’s not super severe, but there are certain things where like, I have to flip a coin in my hand a certain number of times or whatever so it’s even on both sides. John: James, my understanding of OCD, or obsessive-compulsive disorder, is that it is not necessarily coming from a learned experience but from another part of your brain called the amygdala and that’s it’s definitely genetic. Do you have anybody else in your family, you don’t have to say who, but do you have anybody else in your family that has trouble with this? James: Yeah, definitely. John: Would that be your father or your mother? James: I believe it’s my mother’s side. John: And anybody else in your family? James: Yeah, some siblings. John: Ok, well dealing with that is a tough one and what you have to do is basically reprogram your amygdala, is what we say about it and it means when you got to go back in the house or you got to do somethings repeatedly because they make you feel safe, you know that old phrase, “don’t step on a crack, you’ll break your mother’s back,” do you remember that? James: Yeah John: That sort of OCD-ish because it means that if you don’t step on a crack, then your mother’s back won’t be broken. But if you do step on a crack, your mother’s back will probably not be broken. It just makes you feel a little bit better that you can do something about which you almost really have no control. Am I right? James: Right. John: Okay, James, one more. Post-traumatic stress disorder. You’re pretty young for this. It’s usually soldiers and people who have been in battle or firemen who have seen burnt up bodies. Do you think you have anything in PTSD? James: I don’t think so. John: Well, James, I appreciate very much you talking to me about this. You’re very brave and I think also one of the things it does is it shows other males that it’s OK to talk about some of this stuff and in fact, it’s really necessary to talk about it, even if you don’t feel like it. Would you agree with that? James: Yeah, 100%. John: Okay, James. Thanks a million for participating today, I appreciate it.

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: 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. 

Mary's parents died in a plane crash as they were traveling to her wedding.  Suddenly, Mary and James found themselves postponing their much-anticipated day for something they could have never imagined.   Listen as they share the way God prepared them for this loss, how he comforted and blessed them through complete strangers, and how he miraculously healed her younger brother who was the lone survivor in the plane crash.   Highlights from Mary and James: "There are a million ways everyday that God loves us. He gives us every breath we take and comforts us through loved ones and even strangers."  Mary Anderson "Look for the blessings hidden in all situations."  Mary Anderson "While our prayers are not always answered the way we would like, we need to trust that God has his wisdom.  It's up to us to trust and know he is good. Draw near to God."  James Anderson   Acts 17: 26-27  From one man he made every nation of men, that they should inhabit the whole earth; and he determined the times set for them and the exact places where they should live. 27 God did this so that they would seek him and perhaps reach out for him and find him, though he is not far from each one of us. (NIV, Life Application Study Bible, 1991)   Hebrews 11:1 NIV. Now faith is being sure of what we hope for and certain of what we do not see.   Romans 8:28 NIV  And we know that in all things God works for the good of those who love him, who have been called according to his purpose.   Book recommended by Mary:   Trusting God:  Even When Life Hurts, by Jerry Bridges.     More about Mary and James: James is a follower of Christ. He is an electrical engineer who has worked in top-secret defense of our nation from 1980-1985. His focus has been in telecom the past 30 years. He currently works for a major telecom company in microwave design. He and his wife, Mary, have three grown children and two grandchildren. James and Mary currently live near Franklin, TN.   Mary has a degree in Deaf Education from UNC-Greensboro. She has taught Deaf children, as well as tutored, and interpreted educationally. Mary earned a Master's degree in Adaptive Special Education from Emporia State University in Kansas while she taught students in high school from 2008-2012.    James & Mary Anderson are active members of Harpeth Christian Church in Franklin, TN.  They enjoy time with family, studying the Bible with friends, hiking, kayaking, nature photography, gaming, the mountains and the beach.   To contact Mary or James Anderson:  maryandersonpc@gmail.com To contact Julie Hedenborg:  everydaymiraclespodcast@gmail.com

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

James: Hi Audience. Welcome to Achieve Wealth podcasts where we talk about value-add and real estate investing. Today, I have two great guests. The company's called Raven multifamily, we have Ramana Korada and Venkat Avasarala, both of them own almost 2000 units right now, class B and C in the Dallas market and they're under contract on another 300 units and they had been looking at other markets as well. But let me get them to introduce themselves to you. Hey guys, welcome to the podcast.    Venkat: Hello James. Thanks for having us.    Ramana: Thank you, James. Thank you for having us.     James: Yeah. Did I miss out any of the introduction a section for you guys? Do you guys want to add anything about yourself?    Venkat: No, I think that that sums it up.    James: Okay. Okay. So you guys had right now all your deals in Dallas, right? And you are looking at or you did have some deals in the other markets as well. Can you explain what were the other markets and why did you guys focusing on Dallas or exploring other markets?    Venkat: Sure. So myself, hi, I’m Venkat Avasarala and along with Ramana, we partnered back in 2016 to get started with apartments and we both live in Dallas. But Dallas, as you all know, it's a pretty tight market, a very competent to market and you need to have a resume in order to land a property, right? I mean most often than not. So as we did not own any properties back in 2016, it was even so hard to even buy a 60 unit property awarded to us just because we didn't have any resume. So Ramana came up with this thought, you know what? We can keep doing that eventually, probably will get something. But if you want to expedite this, let's get out of the DFW market. Prove ourselves outside the market where the market is not very competent.  So that's why we went to Oklahoma, we bought a hundred unit property there, it's a C class property, but in the town of Norman, Oklahoma College town, and we showed that expedience and bag the 120 units deal in Phoenix. And Phoenix, back in 2016, was a really mellow market; right now, it's very hot. But back in 2016, not so much. So we showed this 100 unit experience from Oklahoma and we got the 120 unit deal in Phoenix. Then we showed both of these and bought our way back into Dallas where we live and ever since we were buying in Dallas and we didn't go back outside of Dallas ever since. But it had to be that way back then.    James:  So you guys went out of Dallas because you thought Dallas was overpriced and came back to Dallas once you have some track record, right?    Venkat: No, not really. Not all of time because it's just that we were not being awarded the deals.    James:  Oh, okay. Got It. Got It. That makes sense. Ramana, you want to say something?    Ramana: Yeah, same thing. We were not able to get hold of any brokers or sellers attention because we didn't sell any properties in our portfolio. These two properties from the other markets helped us to get in the Dallas market.    James: So that's very interesting because starting 2015, you guys went to Oklahoma or is it 2016?    Venkat: June 2016.    James: So 2016 to 2019 now, which is still early 2019, you guys have accumulated 2000 units. That means you have found some secret sauce in Dallas market on how to win the deals. Can you explain what is that secret sauce?    Venkat: Yeah, Ramana, you can weigh in man, how about you want to take this?    Ramana: No, I think you'd do better.  Venkat: And we strongly believe that real estate is a people's market, right? I mean it's a relationship based business, so it's what you can influence other people, right? So, I don't know what exactly it is, I cannot articulate, but basically, I think we heard it from brokers and other investors and our peers also. Basically, we come out very thoroughly prepared. We are both from IT background and you can relate to this yourself because you had enough background as well. We don't walk into any meeting without prep, right? So we prep and we prep and we prep and when we have the meeting we run it in an organized fashion. We come out very prepared and organized. And after the meeting we take meeting minute notes, right? And basically, we work towards every single day of getting things done on a timely basis.  And this is something that we brought along with us from our IT background and I would like to think that, you know, we kind of impressed upon our brokers or whoever we were working with and also we have a track record, right? So we try our level best and then some to always do exactly what we say. And when you keep doing that, you kind of develop a track record and people like to work with you. And I would say that other than that, it's not rocket science at all.    James: So let's go a bit more detail into that, right? Because it's important because a lot of people cannot find deals or could not win the final interview. We know whenever they go in the best and final round so I think that's what you mean when you go into a meeting with the broker or the seller, you guys are really prepared. So let's dig down deeper into that. So let's say when a deal comes, I know you guys underwrite it and you submit your deals and I think it's as usual, you want to make sure you go to the best and final, right? So and after that, let's say you go to the best and final where you get interview into the seller. So what exactly do you guys do to the confidence of the seller?    Venkat: Sure. I mean, so let's take an example off the 306 unit property, our very first property in DFW, right? So we didn't have, yes, we own about 220 units outside Dallas, but nothing in Dallas. But our very first property in Dallas had been 306 units, it's called Tradewind Apartments. Marcus [06:21unintelligible] sold that us so we were underdogs there. We won this particular property in an interview, a literal interview. Like where the seller was actually interviewing us and one other party and then they chose to award it to us. So again, the idea is the best and final, these interviews are just the closing part, but the whole process actually starts well in the beginning, right? The day when you go to actually tour the property, you better show up with all the relevant information, thoroughly analyzed and reviewed on your side and just don't go ask some basic questions.    Show the broker that this person actually wants this deal. They invested a lot of time and effort into this thing and come up with some relevant questions that you cannot get out of an OEM or a T12 or a rent roll, right? And then discuss with a broker, basically, get some help with underwriting on, just enroll a  broker into the underwriting process. I'm not saying that you should just underwrite based on exactly what the broker says, but involve them and make them a part of the process so they will get also invested into this process of your acquisition process. So you build up from that and then you put yourself in broker shoes and seller's shoes and say that if I'm a broker, what would I want to see in buyer if I'm the seller, what I would want to see in the buyer?     So in that particular case, we came to know that the seller was thinking to refi it and they were working with one particular lender at that time. And guess who we tried to get the courts from? And guess who we put on the interview call? We brought a broker from the same exact company.     James: These are the lender's broker, mortgage broker, right?     Venkat: This is a mortgage broker. And actually a DUS lender, in this particular case actually we put a DUS lender on the call and the mortgage broker, but from the same exact DUS lender that the seller was trying to use and they had the loan, they already had the loan with that particular DUS lender and they're trying to refi the loan with them. So again, remember, this is our very first deal. We don't have a lot of track record and we have zero track record in Dallas. See when you are well established and you probably don't have to try this hard, but you always have to assess your current situation and try to put yourself in other people's shoes and see what they are looking at, you know, when they're looking at you, what are the seeing and try to see what I can do to gain advantage. And in that case, that made a hell of a difference because we brought the same DUS lender and they felt instantly comfortable because the DUS lender batted for us and say that, yeah, I mean, these people have checked out, this is what we are looking at on the loan proceeds and all that. So instantly they became comfortable and they awarded us the deal.    Ramana: I know we close two more deals with the same Marcus broker, that's how best to get the DUS lender on the call. If it was a fast deal, they wouldn't care to join. But that kind of helped us, [09:38unintelligible] helped big time.    James:  Okay. Yeah, that was one of my question. How did you know the right DUS lender, right? So how did you guys find out that this was the exact DUS lender that the seller was using?    Venkat: This is Yardi and all that. This is common knowledge, right? I mean if you actually go into Yardi and put the property name, we know who did the loan, what is the loan amount, the terms and all that. Luckily, we happen to use the same exact DUS lender for our property in Oklahoma and Arizona so luck kind of favored us there. But even if that wasn't the case, we would have gone and got that particular DUS lender onto the call one way or the other. We already figured out all the details, but always how to work towards what's the end goal.    James: Okay. Got It. Got It. So just to clarify for the audience, DUS lenders are usually, DUS stands for delegated underwriting services. Basically, Fannie Mae gave like, I can't remember how many, 30 or 60 DUS lenders, how many?    Venkat: 40    James: 40 DUS lenders across the nation, which is the delegated underwriting portion of it to these lenders to help them underwrite because it's just as a part of their scheme for them to do the business. So basically, you can get access, I mean, you can Google DUS lenders and get access to them or you can go to your mortgage broker to get access to a DUS lender. That's right. So coming back to the preparation to meet broker when you're doing your tour because I think that's important. A lot of people, including me, I just go and say hi and bye to the broker, but usually I underwrite my deals if I go and see them.  But how to be really, really prepared when you go and meet a broker because I think that's important as you mentioned, it gives a lot of perception to the broker to say that this guy is really serious. They are the liaison to the seller and if they can give a good word out to the seller, that takes a long way. What are the things that a person need to be prepared before they meet the broker for a tour?    Venkat: Sure. So what I would say is that number one is there are three components in my mind that I have to check, right? So one is the business plan itself or am I buying into this business plan or not? Because every broker has a pitch, right? Sometimes, right? And the more repeated the broker is, the more accurate at whatever they put in the OEM that you can subscribe to that, right? I mean the more repeated the brokerage is. But still, you have to wet that. Like for example, one of these brokers always puts, you know, you do the small patio extension and you're going to get $50 rent bump. It might be true in some cases, right? I'm not saying that doesn't work at all, but may not work in every submarket, in every neighborhood, right? So you have to go look for the comps and all that and you can drop those names of those.   Like for suppose, let's say if I go to see this particular property and I tell the broker, hey, I read what you wrote in the OEM. So basically you're saying that if I spend about $800 extending this patio, then I'm going to get a $50 rent bump and I cross-checked with that, that that property and those two properties are already getting it. So I kind of agree with you. So this is how you make a connection and involve the broker onto the team. And I'm not saying that you have to agree on everything, but find the common points. And also even when you try and go into the negotiations into tough negotiations or anything at all, start with the yes. Find something which we both can agree upon and start hitting those points.     And once you build up a yes, momentum, yes, yes, yes, yes. And then you come to a point where we don't disagree, but since you have established the Yes momentum, right? So you both parties would be more willing for a compromise. That's a small detour from your question, but that is what I tried to establish. So basically I go through all the business plan and then discuss the same with the broker and kind of establish a rapport. Seeing that, yes, you wrote that, I verified it, checked out, it checked out. So I'm trying to build a rapport here. Then comes to this question, say water savings. I see that you think we can make that kind of water savings but in my experience, that didn't quite happen that way or all the time; what do you think? Where do you think you got that?    So what I'm trying to do here is I'm trying to build a rapport with the broker on every aspect that shows that, you know, this guy really spent time, effort, made calls, did everything he has to do. So in the broker's mind, you're trying to get ahead of everybody else because and not many people may not do all the ground the legwork before showing up and touring the property. The second thing is debt right? Obviously, you have to pull debt, you know, debt quotes and also you have to share that information, right? You may not have to share exact terms and all that, but some general idea on who you're working with debt and try to give that comfort feeling and everybody knows everybody these days, right? But if the broker knows that, yeah, you know, okay, you're working with that broker, I know him really well. That's kind of, again, the second leg of coordination over there.     And the third thing is equity, right? The broker will not ask you all these things. He will not, most people don't feel comfortable quizzing you like this, you are kind of [15:06unintelligible] there. So they're trying to show you the property, trying to sell you something, but they're not going to interview their, right? So they're not going to ask you how prepared you are, they're not gonna ask you where you're bringing debt or equity from. But if I think, I take the initiative of sharing the way I'm approaching on these three friends, the business plan, how I'm underwriting, how I'm bringing my debt, how am bringing my equity. I share that with the broker and I personally think that will help you go several rungs up the ladder and the ice with the broker.     Ramana: Just to add there, you have to make sure that you go through all the financials that the broker provides. I mean obviously accurate, but you test if it fits into your business plan. You know, make sure that, for example, water conservation, if you want to do this conservation, we have to make sure the water bill is high enough so that it will help you reduce your expenses. I mean you have to read through rental like left to right, right to left, top to bottom, bottom to top. Make sure to find anomalies, you know, just to make sure you're not getting into something you really don't want to. You can tune up the property but not be unbearable neighborhood, right? So make sure you understand what you're getting into. Like when concerned, if you plan out on the equity and debt and as long as you're well-prepared, you have a pretty good chance chunk, but you can get into it.    James: So you guys would have done underwriting and ready to go. You wouldn't be for meeting the brokers, is that right?    Venkat: That is correct. We only will show up at that property only if the numbers work, otherwise, we won't.    James: Yeah. Yeah. Same thing with me. I learn everything first before going and see the broker. I know a lot of people who whenever a deal comes they say, well let's set up a tour first. And then later go and underwrite it. But I think the bad part about doing the second option is basically you missed the opportunity to show how serious you are with the broker. Especially on a hot market like Dallas. Because you know, they want to make sure that people come prepared and spend their time wisely, I guess.    Venkat: No, I would say that no reputation is better than a bad reputation. Again, if you start hitting up all these brokers without prep and if they get a gist that you know what? This guy is just showing up, you know, it won't work well. But I concur with you there. The prep is the key.    James: So do you guys look at every deal that you get through the mail, through the broker email blasts or is it more through personal relationship or what?    Ramana: We do take a look at each and every bill that comes into our mailbox, but doesn't mean that we underwrite each and every deal. We want to make sure the location, location is critical, right? We want to make sure we are buying the properties in the right area. The median income, demographics, traffic, the property has to be located on the road if it's not near the main road, yeah, you have to spend extra dollars to market the property. So we have a few pointers that we look for in each property. If it doesn't qualify, we just delete the email.  James: So can you list down the top three things that you look for? It's basically a sniff test, right? What you're doing is the sniff test?    Ramana: Absolutely. So location is critical, median income; the look and feel of the property. I mean, we can improve the property, but you cannot make a class C property into a class A property. But location, demographics and median income, those are the things that we start with.     Venkat: To add to that, if you want to dig deeper on that let's say, we see a small culvert or a stream or something like that, we immediately check the flood zone. I'm not saying that you should not buy flood zones, but you know what the insurance will go through the roof. So as long as the underwriting works with a bigger number of insurance, then it's fine. And another thing is let's say if you're trying to buy 150 units and right next to it there is a brand new 2008 built low-income property with 450 units, I wouldn't go there in there because it's hard to compete. It's a much nicer asset, a newer asset, larger asset, and low income. There is no way I can turn a profit there any easy way possible. So these are the kind of things. Again, the first thing is this, you actually need to read the OEM and reading OEM literally takes about 20 minutes.   You can skim the data. You don't have to read every word. There are a few sections, like a section where the broker actually talks about the strength of the location and talks about the strength of the property, right? The asset itself, like it has new rules, things like that. So as you read them, what happens is you will have a farther need to look into few things and obviously, you look at the property and the Google maps kind of thing. And also read the reviews. Google reviews, apartment.com reviews, oh my God! I mean it tells you a whole lot about the property.     James: So you look for good reviews or bad reviews?    Ramana: I only looked for bad reviews.    James: Absolutely. It's value add, right?     Ramana: Yes, yes. For example, recently somebody sent us a large property on MacArthur. Now, this is Mac Arthur Irving and what's there not to like, right? You know, decent. But then again, we started looking at it and we see that 95% of them are one bedrooms. Nothing wrong with that. It's not something that we are very thrilled about. It's hard to keep tight on the families there with one bedroom. We want larger units to at least two bedrooms where people pile up all the stuff and you know, there should be a barrier to move away from your property. All they have is a [21:18unintelligible]  and a bicycle.    James: Yeah, the turnover is really high. What about the median household income, what's your criteria? Because that's part of your sniff test.     Venkat: Yeah, so I would say that we wouldn't look at anything less than 35; 35 is like really, really bottom so everything else should be strong. Like there should be a strong value add component. If you are buying at $35,000 one mile, only one mile matters. We don't even consider, we don't even look at the three miles and five miles and all that. Only one-mile matters in our book. And if we are trying to buy a property with $35,000 household median income, everything else better check out very well, right? Meaning the quality of the assets should be okay. The demographic mix should be okay, we don't want any concentrations. And then there should be at least like 50, $7,500 rent bump. Then we would venture into 35. Anything less than 35, it's just not worth it.      I'm not saying you cannot make money on this. I know a lot of people who really do well buying roughest properties. It's just that we are syndicating these deals so we are taking money for investment, we are taking money from working people who actually had to work a year or two to amass that 75 or $100,000 that they're giving to you. It's just not a proper way for us to take that money and going to riskier assets. Maybe the reward will be good, but it's just the risk is also high. So we just don't look at that lower end of the market. We try to sit between 35 to about 60,000 median income. Obviously the higher the better.  Ramana: [23:00unintelligible] Definitely. That is something we don't need to spend a lot of time--- of course, with the property we will come up with some value add strategy but we don't want to buy a C class property 23:18 when you can buy class A for 5 cap. That's another item that we look at before we delete the email  Venkat: Obviously, in order to get the whisper prize and it's all the stakes, again, once you keep doing that, you'll just do it subconsciously, right? I mean, you don't sit there and make a spreadsheet to track all these things, but you know what the key items that you need to know, the deal breakers basically. So for us, right now, if you see a large flood zone, it's a deal breaker. If we see a concentration of a particular demographic, it's a deal breaker like that. So basically once we weed out all these deal breakers and spend about 10 minutes, 15 minutes, and Yardi is a great tool to do this, right? So once you run Yardi, it just becomes so much easier to check these properties out.    James: Absolutely. Do you guys look at the rent range? I mean, you can buy a big property as well, right? Like a big townhome, right? Do you guys look at that and I know you don't look at the one bedroom, there are too many one bedrooms. I mean you're not thrilled about it so much. So do you guys look at the rent range?    Ramana: You mean to say like surrounding properties like single-family properties..?    James: No, no, no. Not Single family. So let's say you can buy townhomes, right? Which is like 1500 1600 a unit rent per month. Do you guys look at the kind of deals or it doesn't matter?    Venkat: So we don't own any townhomes yet. We are not opposed to it. But again, what we're looking for is renters by necessity, right? So as the rent actually goes up and up, let's say, 1300 1,416 or 1800, you better be in a really nice location, right next to a big financial business district or something like that so that you don't have to worry about, you know what? Yes, my rent is $1,800 but I don't care. You know, once this tenant moves out then somebody moves in. Unless that is the case, the higher the rent, I personally perceive it to be risky to play in that area. We don't want to be at a 500 $600 rentals, so the sweet spot is something like on a one bedroom, maybe 800 to let's say 1200, 1300 on the higher end. That is our sweet spot.     Again, this is where you get renters by necessity and also the larger the unit, what happens is they accumulate stuff and it's hard to wow. Because I was a renter once and when I was in school all I had was like my cycle and a couple of suitcases and that's it. It was so easy. I moved like four different places in two years. But that experience is something that I can never forget. So we want people to come in and also not just because of the luggage, we want people to stay there because it's a nice place for them to be as well. So again, we look at the rent roll, that's obviously the next step, right? If  like 90% of these leases originated in last one year, obviously that tells us something. So we're dealing with a high turnaround on the property and it's really tough to operate those kinds of properties as well.    James: Yeah. Yeah. I would say the volume of renters reduces at the binomial curve. You have the binomial curve in the middle where you have certain brand range where you have a lot more renters. When the market shifts and goes towards the end of the tail end of that curve, you're going to have a less number of people. And when the market shifts, you know that people may not be there anymore. They're like class eight people. So it's a slightly different market.    Venkat: So renters by choice, that choice can change at any time. Maybe a guy go meets a girl, they get married, have kids. Well, they don't want to live in an apartment anymore, they want a house.     James: They're not going to go to a high rise building. Right?    Venkat: Yes, there you go. So we want people that they are renters by necessity, so they'll continue to rent. Now then what happens is, okay, what do I do to just keep them there? Just treat them well, take care of their work orders. If they really want to move out, offer them an upgraded unit for a smaller bump or whatever the retention measures kick in at that time.    James: Okay, got it. I mean in the beginning you had a lot of on market deals, right? Where you see OEMs and all that. I'm sure at this point in time you get a lot of off-market deals, right? So it is that right?    Venkat: We do, but unfortunately this is the nature of the off-market. Off Market is technically not off-market. We bought this property called Surround in Irving and we closed it on February 21st this year. So very close to that, there was another 200 unit deal which came off-market and they were asking 95 a door. It's not penciling in 95 a door. So it's like no, the seller is going to list it; let's move, let's move, let's move. And then what happened, the next week a very big brokerage actually listed it and their risk for price is like 88. That's $7,000. So more often than not, what happens is that owners want to test the markets before. They obviously have some kind of thought on who they want to list the property with, but before they do that, they just flood the property around.    James: They want someone to underwrite it for you.      Venkat: Just to see if anybody will take a bite. It's worth the shot. I mean, it doesn't cost anything, so why not? But we do get, I would say about our nine properties, I would say about one, two, three, four;  four of our nine properties are off-market, they're true off-market. Meaning, nobody else is looking at us. It's just us and nobody else. That is how we define, they're very far and few between so we're not going to hold our breath for that but we sift through all the so-called off-market, which come through our table looking for the next off-market. But we are not opposed to buying the listing deals also. And one of the issue with the listing deals is the smaller the deal, the greater the number of bidders.     Right now there's a lot of euphoria and the market equity and the debt, everything is available and that translates to the bidding wars, right? Up until October of 2016, oh no, actually February of 2018 we were buying around 140, 150 unit, that asset class, right? I mean that size of the properties. Then what we notice is like every time we had to fight with so many people, we compete against so many people. So in order to elevate ourselves from the competition, then we started buying 300 units plus and our last four deals, including the one which we are buying. So we did the HRV, Cielo Surround and this one. So yeah, I mean our latest four deals on average, the average size of this is 350 units and here you get a lot less competition. So you get a much nicer product for a decent price. So that's what I would say.     Ramana: So on the same topic, the market is so hard.  Sellers are trying to get off-market. I mean off off-market. Definitely, they're just testing the market and giving to the broker who can get the best. But is it really happening? Not in every case. For example, we looked at a property in Jacksonville, this broker was displaying at 87 a door but ended up being sold at 78 a door; $9,000 per unit difference. Sometimes we get scared, not scared, but to tie that off-market prices not making sense at all. No property is getting right there. The market is so hard, so nobody is going to, I mean I wouldn't say nobody, but it's tough to make these off-market deals work out.    James: Yeah. It's called off-market premium. For me, off-market means unless the broker knows you, that you are the best buyer for some reason. And they come to you and say, Hey, you know, we only are giving up to three people and that we think you would be one of the better ones because you have properties nearby or you like this kind of deal that's an off-market, right? Or the deal falls out of contract and they want someone to close it quickly, that could be an off-market. Or, you're buying it directly from the seller, that is a real off-market. All other things is actually on-market but the term off-market to make it sound sexier thing, right?    Venkat: In our case, all these four properties, we got to buy them weeks. All four of them [32:24unintelligible] getting listed. So actually they had a listing agreement and they're working on the OEM and it takes them two to three weeks at least to launch them.  Because they had to send them somewhere to take pictures. They have to right up, underwrite and all that. So while that is happening, probably some brokers feel comfortable showing it to some of their clients. And all these four properties had we not buy these four properties, they would have hit the market with the same listing agent.    James: I think even for brokers is much easier for them to find a buyer and just close it off-market. Otherwise, they have to do [32:59unintelligible] they have to do your best and final. There are so many processes, there's that's property management stuff, getting visits and all that. So much pressure, right? So you'd rather do it the off-market, but I think they want to find the right buyers and the right buyer needs to move very quickly in the off-market situation if the numbers work out.    Venkat: And I think the seller psychology from what I have seen in the transactions. Our transactions and the other transactions, what I saw James, is there are two types of sellers, right? Hey, I got in at 40 a door. As long as I get 75 a door, I'm more than happy, right? I'm way past my projections. My investors are happy. I'm happy, I want to get it done quick because now time's money, right? Because I'm planning what to do with this money. The interest rate might go up, then maybe I will not get 75. The smart sellers, sometimes what they do is they work pretty quick, right? They are very agile so they work with one broker. Sometimes you won't believe, you get the same single deal from half a dozen, it happened to me. Over the period of two to three days, six different big brokerages call me with an off-market property and this seller didn't know what he was doing. He just blasted it out to all the brokers and that's how not to do it, right?     But all these properties that we bought are something like, you know what? They understood that a lot can change between now and four months, which it takes to actually market the property and sell it that way. So if somebody wants to move quickly and if they have a number in mind, as long as somebody is gonna pay that number, they'll transact off-market so that hasn't been the case. The other kind is, hey, I'm not in any hurry. I don't care what I bought at that. I want to see every last dollar, maybe 75 is not going to, maybe somebody will pay 78 a door, let's see what happens; a little bit more adventurous kind of people. And especially if people do that if they have nothing to worry about, right? I mean, they don't have a big prepayment penalty and interest rates are pretty stable or whatever the case, they will go that route. So we try to work with our brokers so once in a while, they get to transact with this type of seller, which we just talked about in the first case. Whereas, as long as you pay them this price, they're happy, right? So that is the kind of properties that we want, those are the true off-market properties if you ask me.    James: So Dallas is a super hot market, right? What are the things that you guys are doing differently in the contract terms to get these deals?     Venkat: Ramana, you want to hit it?    Ramana: You mean to say PSA?    James: Yeah, what are the tips? Like day one, had money, feasibility period, the water. What are the things that you guys think is essential to win a deal there?  Ramana: So we are being [35:53unintelligible] there, we want to work with sellers and brokers in order to make everything smooth for them. The market is like, I think 30 plus 30 or 30 plus 45, but based on our experience, we can close even much shorter time period. But just to keep or build some wiggle room, we are doing 21 days DD and got 39 days for closing. Usually, we have a question for a couple of extensions with additional hard money. I've seen some cases like a couple of 30 days extension. [36:36unintelligible] everybody's case is different, but it's working that way as well. We are doing, before getting into any property, making sure that this is the property that we want to buy so we are comfortable giving the day one hard money. Not a whole lot like on 1% on every deal but what is reasonable for the deal, we are just coming up with the hard money, day one.    Venkat: And James to add to that. So our comps are not vastly different but here's the differentiator on us, right? We work really hard to close the property ASAP. And the worst case scenario, one day before the 60-day mark, right? Just like Ramana said, obviously, we're not trying to be a cowboy here. We have signed a 60-day contract with couple more 15-day extension. So technically we have 90 days to close but we won't use it. We work as if we only have 55 days to close. We do it for a couple of reasons. When we close this property well before the 60-day mark, it really makes the broker look like a hero in front of the seller. The seller will be like ecstatic, oh my God, I mean you got me the best buyer, right?     So we work towards making our brokers look like superstars, that's the mindset that we have. Like, suppose we purchased a 400 unit property and we went into contract on a Friday; Monday, Tuesday, Wednesday, all the duties are done. We do ask for 21 days due diligence, but Monday, Tuesday, Wednesday, all the duties are done; on a 430 2-unit  property, with two different lenders, walking all the units, checking everything which needs to be checked. And the reports will be spit out by, by Friday, the following Friday, right? So it's just that we work so fast, so agile if you will, and in a very organized way with a lot of communication, a broker doesn't call me.   Right now, we are under contract to buy this property 330 2-unit property in Fort Worth. It's been a while since I spoke to the broker ever since we went into contract about two weeks back. That broker doesn't even call us because he knows that things get done. So that is the reputation that we carry forward, every deal, we close it that way. And even in this case, we have a 5/27, on May 27 to close the property; right now, we brought it forward by 5 days so we working to close by 5 days before. And we are even working harder to see if we can even close on May 15th. The idea is to treat your seller as your customer, right? And treat your broker as your customer and give them the best possible experience. Smoked, right? I'm not saying that you agree to everything that seller says or the broker says, that's not what I'm saying at all. If the  the more you prepare, the more organized you are, the smoother the transaction would be. I don't wait until a lender asks me. Ramana and I, keep everything ready, anticipating that broker will ask that, a seller will ask that, a title company will ask that. So just run a tight ship and more importantly, equity. Equity is nine out of 10 times that is the one that gets delayed. So as soon as the LOI is signed, we start working on a flyer, we send a flyer out in the same email, we schedule the webinar. And then we do the webinar asap so that we can quickly get the money in the bank to do the transaction.    James: Yeah. Yeah. Brokers love buyers who are very, very organized and get them to look like a rockstar. Ramana, you were saying something.    Ramana: Yeah. So just to add one more thing on the PSA. Like you know, nowadays with the day one hard money, also in the agreement, get enough time to check on few high-cost items would be a good idea. Some sellers would allow and some do not. But you have to make sure you have like an applied GC who can do an inspection if they can come up with some numbers, some check-boxes that would help buyers as well.    James: Got It. Got It. Got It. Yeah. The smoother we make our broker's life, which is what a buyer's responsibility should be. I mean, you have to be really, really prepared in terms of aligning every equity, lining up your debt, lining up your insurance guy, you know, so that the broker doesn't feel the pain and that's where they're going to get more deals coming to you. Because for them it's like, oh, this is so easy to make money with these guys. I mean, I have to convince the seller to a certain price. Now I have the right buyer, let's do more deals. I mean, ultimately everybody wants to close deals and get their commissions. So that's important.    Venkat: So just to add to that; in a market like Dallas or Phoenix, the hot markets. A seller might ask, why should I hire a broker when I'm getting unsolicited offers, people with good resumes and all that? So why should I need a broker? So the brokers kind have to justify, and it's just not meeting expectations, but they have to exceed the expectation if they want to be the top player in the market. Because 20%, in our case, I think maybe 10% of the brokers in the Dallas market does 90% of the deals. If a broker wants to be in the top 10%, they have to consistently exceed the sellers' expectations so they're already working under a lot of pressure. So if you can make their job easier, their life easier, oh, they'll love you for that    Ramana: Oh, absolutely. Yeah. It's not one-time business. It's for your life. That's repeat business that comes in the picture.    James: Absolutely. Absolutely. So let's go into a little more detail into the value add stuff. So you guys do a lot of value add. I mean, how deep of a value add do you guys do? I mean right now on the recent few deals that you guys have been doing,    Ramana: So last October, it appeared that interest rates are going to take off, they're not gonna come back. What? We hit 325, I think, on the 10-year treasury and people started doing loans at 5.4% 5.2%. I mean it was crazy. So then we had a big mind shift, right? So if you want to go buy something with a bridge loan and try to settle it into a permanent loan, God knows. I mean, it seems bad once it starts raising traditionally until they go all the way to there. We kind of started take and also we are so late in the cycle, right? I mean usually, a cycle between recession is about nine to 10 years and it's been nine years. The last time the recession ended was back in 2009 and we are in 2019. So we are actually at the end of one of the greatest periods of economic expansion in this country. So right now, we are off taking some different sub posture. What that means is again, we don't want to do a straight yield place. Yield is good because you go there [44:01unintelligible] 10%. If they don't have the value add, next year, maybe your expenses will grow faster, you earn your income and maybe that'll become 8% and then 6% and then 5%. So we definitely are not looking for very deep value add distressed assets, nothing like that. But as long as if there is at least a 30 to 50% left meat on the bone, then we are going into these deals with an expectation that we are going to do that value add and it's a good yield place. The good yield place usually gives you a good leverage. On our latest deal, we got what, 83% LTV, 70 in FIO and 154 spread. So right now, we just locked the rate a few days back and our locked interest rate is 4.19%. So good cash-flowing deals, make sure that you get a good deal on the debt side as well. Then there's some value add left.     So that is the portion that we are taking. We have to see how this 29 goes because we're keeping our ears close to the ground. The reason is if there is anything coming our way, but we don't want to be caught in a very deep distressed asset doing the major value add where interest rates take off on us. Or even worse if that decision was to come here. So that is our current state. But even when we are most aggressive, we always go for 90% occupied property; we don't believe in buying 40 50% properties.   Again, the kind of equity that we are using right now, we don't want to assume that kind of risk. Obviously, it's a high-risk value-add game, but we are accepting equity from individual investors. Most of these people are not super rich or anything like that. Most of our investors are wealthy but they're not like super rich or anything like that. They really need their money back, what they gave and the profit that we projected. So we are only buying 90% occupied properties with a verifiable value add. When I say verifiable, either the seller prove it to us or within the same property, he has to prove it to us or we have to be able to verify with the--- it should be 46:08  of debt. You shouldn't have to dig deeper to see the value add. If we have to dig deeper, that means more often than not...    James: There's no real value-add.     Ramana: That's only a good value for the next buyer.     James: So in your experience doing all this value add, light value add, I know slightly heavier value add, what is the most valuable value add that you guys think makes the most bang for the buck?     Venkat: I would say floors, definitely-- before we go into the floors and all that. Right? This is what, when we start the business, we couldn't care less about how the exterior look. We were always about interior. Our thought process was, hey, where does the tenant wants to 99% of the time when he's on the property, where does he live, inside the property, not staring at the buildings, right? It makes perfect sense to spend, let's say if you only have $1100 only spend it on the interior and make it look nice and that gives you a bump. Well, we kind of dial back from that kind of mindset. Right now exterior is more important to us as we saw a lot of deals being done, even up from our deals and all that. What we realized is first you should be able to attract a quality tenant, right?     A quality tenant has several options, you know, because we are a capitalistic society, there's a lot of competition in every single thing and apartments are not different. So everybody has some kind of upgrade or some kind of special, hey, my property has a water view or whatever. So constantly they are competing for our tenants here. So in order to first attract a tenant, as soon as a good tenant sees your property, that person has to take a U-turn and come see us, right? In order to make that happen, obviously, your exterior should look good. Otherwise, if it looks like crap and they're not going to stop.    James: They are just going to pass right by.      Venkat: They're not going to come at all. So that I would say, I mean, let's say if you have a very limited budget, you can just do the exterior. Obviously, what that includes is the paint and what I would tell people is, again, just change your mindset on how you see a value add at a C class property. I mean, 10 years back, Dallas is a second tier, it's still a second-tier city, but nothing to speak of, right? But a lot has changed in Dallas in the last 10 years or several Metros like San Antonio, Houston, a lot has changed. So treat these C class properties with some respect. And what I meant by that is higher a designer. Please don't pick your own colors. Hire a designer, see some renderings and make sure that you incorporate the elements. They're not really expensive, right? Corrugated metal, horizontal cedar planks, things like that, right? Throw some design elements into it and basically, the whole idea is this; there's only so much you can do to a 1960 property to make it look modern but a little bit of design with almost the same money. You don't have to spend a vast amount of money.     We spend about five to $10,000 in design and it's really well worth it because we get renderings, very good recommendations and all that and make the property really pop. So that would be my first step value add. And then we dial into these things. Like if you go into the interior side, obviously, your floor, number one, then appliances. Number two is appliances. And we love appliances. Let me tell you about appliances. The beauty of appliances is as soon as you go into the property, if you see new appliances because everybody's directly going to the kitchen, everybody's curious to see how the kitchen looks like, right? They would forgive you everything else except for appliances because that's something that they use almost everyday. The touch, the feel, even if they host somebody they don't want to cook on bad appliances and all that. The beauty of appliances is it does not cost you a single dollar in labor. You call somebody, they drop it off on the day when people move in; zero labor and you can mostly sometimes you can buy gently used appliances. You don't even have to shell out 1500 2000 anymore for a BNC class finish out. And you can sometimes see 50, $75 in [50:30unintelligible] so appliances in my mind is number one for me, but we kind of put it in the number two because the floor is obviously important because you cannot miss it. If it looks bad, you gotta deal with it. So those are my top two.    James: Ramana, you agree with that?    Ramana: Absolutely. So we've been doing the same thing in pretty much all the 2000 units. Right? And to that, definitely, the cabinets and the backsplash has to pop up in the kitchen so that, you know, they'll spend that extra time while you're cooking or whatnot. So all that is good is like electric and the plumbing fixtures, accent wall.  Every little thing adds up. On the exterior side, to attract the right tenant like Venkat said, you have to make sure it'd be [51:24unintelligible] Landscaping is good enough, you have to focus on that. The signage. Signage has to be good. [51:35unintelligible] with bad landscaping and not good signage.[51:44unintelligible]  you have to make sure it presents to the current market standard. So if you do that, you can attract the right tenant. A quality tenant is crucial in this business. The guy has to come in and he has to like the property and he has to pay the rent on time. If you don't find the right tenant, then the entire business plan falls off.  James: Correct. Absolutely. Absolutely. So, let's go to asset management. I mean, what are the tools that you guys use to asset manage your property? Because I know you guys don't have your own property management company, you guys are using third-party property management, right? But what are the tools that you guys use to do asset management?    Venkat: I mean there's not a lot of tools. We definitely have processes and procedures, obviously. We have our weekly meetings with them, but myself and Ramana, we run the meetings. We don't let our property management run the meetings because here's the thing. Usually more often than not a regional [52:53unintelligible] on the other side. And we have a deal with our management company where they allow the manager to be on the call as well because who's on the property five days a week? The manager; not the regional, not the owner, not the asset manager, not nobody else. The manager. Now oftentimes than not, most property management companies, they don't put the managers on the call for whatever reason that is. So a regional is responsible for so many other properties. So we kind of take any [53:21unintelligible] on them, Ramana and myself and we come prepared to the meeting. Obviously, the regional will bring the numbers and few updates, but then we have different sections, right? So obviously we go through the collections, vacancies, evictions and we will bring up discussion points. Every call is not just simply giving updates, our calls run as a brainstorm sessions. Obviously, there is nothing concerning. Obviously, we skip, skip, skip, as soon as we hit a point which is concerning, we brainstorm. And we treat our property management as experts and we constantly tell them, please don't look at us owners, just forget that we are owners. We're not here to make decisions. You make the decision, you are the experts. Our job is to just bring things up for discussion so that we have a good brainstorming session and just like how we do it in IT.     I mean, we could not use the policies and procedures that we used in IT. So we bring that here and also it gives a very good feeling for a manager because nobody's telling them what to do. Rather, people are respecting their views. One other thing is like you give responsibilities to some people and expect results. Hey, this is your responsibility, you got to do that. But then again, you have to give some power as well. Again, that's what I was exposed to in when I was IT. When my manager was managing me, they definitely have expectations for me, they said Venkat, this is all your call, not going to tell you how to do it, but this is the end result that we are looking for. So we try to give the same to our property management as well.    James: Okay. Okay. Awesome. All right, you guys, so we're at the end of the podcast. Why not you guys tell the audience how to reach you guys? What's the best way to get hold of both of you?    Venkat: You can reach me at my phone number is (281) 727-9238 or email me at venkat@ravenmultifamily.com Raven as the bird, multifamily, all one word.com.    Ramana: Yep. My phone number is (214) 799-9127 and email is ramana@ravenmultifamily.com.    James:  Awesome. Thanks for joining us today. And I think that's it. For the audience, join us on our Facebook group, Multifamily Investors Group, where we are having a serious discussion about multifamily. So thank you, guys.    Ramana: James, one last thing. You bring lots of value to your investors and multifamily, a whole multifamily group. Thank you so much. I mean, it's really educational and you provide a lot of insight to what you do.     James: Awesome.     Venkat: I'm in so many groups, but I never feel like asking things and bringing things for discussions and all that, but I feel very comfortable doing that in your group. I don't know why, it's just the way I feel. It's really a great group that you have created on Facebook.    James: Awesome. Awesome. All right guys. Thank you for the comments and nice chatting with you.    Ramana: Thank you.    https://ravenmf.com

In this episode, Jen, Annie and Lauren are joined by James Fell, the author of The Holy Shit Moment, a book that explores epiphanies and how behavior can change overnight. James shares his insights from his own radical behavior change grounded in a lightning bolt moment of permanent change, and talks about the science and stories behind these important moments. Tune in and learn how you can find your own shift, what drives lasting change and how everything can come together in an instant.   What you’ll hear in this episode: What James Fell’s epiphany was and how that changed his life How personal responsibility can be empowering Global versus focal change – what’s the difference Identity shifts and their impacts on relationships The model of personality and how it relates to change Vanity goals: do they work? Are holy S. moments always bad? Gradual vs. Immediate change What supports immediate change? How does gradual change work? Crystallisation of discontent defined The breaking point and change The quest for greatness as an impetus for change Does sucking it up every work? Building habits and enjoyment over time Weighing the pros and cons of action and committing even when it’s unpleasant Acting like a tortoise but thinking like a hare – what does that look like? Post diet rebound, pendulum swings and coming back to centre Resources: Good To Great by Jim Collins The Holy Shit Moment by James Fell Lose It Right by James Fell Learn more about Balance365 Life here Subscribe on Apple Podcasts, Spotify, Google Play, or Android so you never miss a new episode! Visit us on Facebook| Follow us on Instagram| Check us out on Pinterest Join our free Facebook group with over 40k women just like you! Did you enjoy the podcast? Leave us a review on Apple Podcasts or Google Play! It helps us get in front of new listeners so we can keep making great content. Transcript Annie: Today’s long awaited guest has been a longtime friend and supporter to Balance365 and whenever we ask our community which guest we should have on our show his name always comes up. You might know him as the man behind Body for Wife but we can’t get enough of his straight shooter honest approach to behavior change. Joining us today is the one and only James Fell. James is a highly regarded science based motivator for lasting life change. James recently launched his second book and on today’s episode he shares with us how love and a Joan Baez as quote changed his life forever, how getting clearing your values can make change feel easier and why relying on willpower is a bad idea. We had so much fun recording this episode with James and we know you’re going to love it too, enjoy. Jen and Lauren, we have been waiting for a really, really long time for this podcast episode and I know our community members have been too. Are you ready for this Lauren? Lauren: So ready. We had to reschedule. Annie: Jen, are you? Jen: Yes I’m ready. Annie: Sorry, Lauren, what was that?  I’m so excited I just cut you off. Lauren: I was going to say, we had to reschedule so I’ve been waiting for like an extra week. Annie: I know and every time we ask our community insider Facebook group Healthy Habits Happy Moms who we should have on as a guest, notoriously this man’s name keeps coming up. It is James Fell. Welcome to the show, how are you? James; I kind of feel like a rock star right now after that intro. Annie: You kind of are a rock star. James: Yeah, well, tell my kids that one. Jen: We also get a lot of referrals from you so thank you. James: Oh you’re very welcome, you know- Jen: A ton of women that said they found us  through you. James: We have like minded followers I would say. Annie: Yes. We, James and Healthy Habits Happy Mom’s which is what Balance365 was before it became Balance365 go way back so we’ve been pals for a while and Jen and James, you guys met, I think before James and I met, how did you two meet? Jen: In Vancouver. Oh, like, we just met online, small world as we talked about, when you are not shucking B.S. to people and then we met up in Vancouver and we had coffee which was awesome. James: Yeah, that’s right, I was in Vancouver for a conference. So we got to do the, you know, going from being internet friends to real life friends which is always exciting when that happens, so high five! Annie: Yeah and I met James when I went to the fitness summit in Kansas City many years ago, I mean, gosh, that was probably 3 or 4 years ago I suppose but it was, like, one of those whispers in the lobby like, “That’s James Fell.” James: Don’t make it weird, Annie. Annie: That’s what the women were whispering in my ear and I’m like “Oh, OK, OK.” It was fun to have a couple of drinks and since then our relationship with our company and you have fostered and we are excited to bring you on because you have a new book coming out. This is actually your second book, second to Lose It Right, is that correct? James: That’s correct!   Annie: It comes out January 2nd and I told- James: January 22nd. Annie: Oh, sorry, January 22nd and I told you before we started this that we have labeled our podcast as clean, which means it doesn’t have any explicit lyrics and the title of this book is called the Holy S. Moment and that’s what we’re going to call it for this podcast because we know we have people listening with little ears within earshot but you can probably imagine what the title of that book is and I just have to say it’s not actually out in print yet, is it? James: No, no, we’re, so January 22nd, so as of recording right now we’re 6 days away, so it depends on when you publish this. Annie: So by the time it’s released, this episode is released they’ll be able to find it, where can they find it? James: Anywhere, so it’s being published by St Martin’s Press in the United States and Canada and if you have any listeners in the U.K. Harper Collins is the publisher there so this is this is my 1st international released book. My 1st book Lose It Right was just published in Canada. Annie: That’s exciting, do you feel good about it? James: Oh yeah, I’m really stoked. So yeah, they can find it in any bookstore, any platform, there’s an audio recording too so if people don’t hate my voice, I’m the one that did the narration for the audio. Annie: I love it when authors do that. Jen: I do too. You really feel connected to that author. James: Yeah, I love it too because they paid me to do it. Annie: Winning and the cover of the book, unless it’s changed, because you were kind enough to share the digital format with us, the cover has a lightning bolt on it, right? James: Yes, it does. Annie:  And I don’t know if you can see that but I’ve got a big old tattoo on my trap so, you know, I feel like it was clearly, this was a book that was meant to be in my house. James: Annie Brees, me and Harry Potter are all big on lightning. Annie: Except I’ve never seen Harry Potter, I’ve never read Harry Potter- Lauren: What? Annie:  I know nothing about. I know. James: OK, you just lost some fans. Lauren: I’m sorry. I’m not cool. Annie: Okay, I just wanted to get this out too because on page 6 it just says “hi mom” and I was like- Jen: Oh, that is so sweet. Annie: So you definitely earn some bonus points but what I want to talk about is, if you know us, you know that the 3 of us are all about slow and sustainable change but you actually wrote this book because you found yourself as a coach encouraging slow and steady change but that actually hadn’t reflected your experience in how you forever changed your life. Would you mind sharing the story about the moment and the quote that you think shifted for you? James: Yeah, so before I get into that briefly, like, when it comes to say health and fitness, I don’t mean, you know, jump into your first session with Attila the trainer and go hard core and wreck your self on day one. When it comes to the the change of changing one’s body, you still need to be rational and don’t destroy yourself but the change that I’m talking about is the way that you’re motivated, that quite often we talk about motivation as a form of baby steps, being a tortoise not a hare as well, you slowly, step by step drag, yourself over a motivational tipping point developing, you know, habits that become sticky and the reality is that there’s a lot of people that don’t do it that way. They go from 0 to 100 miles an hour in a moment and they stay that way because of some transformative life changing event that just wakes up a part of their brain where they achieve a new purpose in life that endlessly and vigorously drives them forward. So that’s what the book is about is the science of that event and so there’s the, you know, all the scientific aspect but there’s also a lot of anecdotal stories that run the gamut of, you know, relationships and career change and battling addiction but also, yes, there are some weight loss stories in there as well but to my personal, the first big transformative experience for me happened when I was about 22 years old and I was in university and I’d actually gotten a letter that said, this isn’t verbatim but it boils down to “Your grades suck, we’re kicking you out” and I was, you know, I was in debt, you know, the credit card companies were calling. And I wasn’t looking after my health, I was drinking too much and and I was in a state of despair and part of that had to do with my girlfriend was that she was a very driven woman, straight A student, destined for med school and I knew that if I got kicked out of school and I do not say this to ever speak ill of her but I knew if I got kicked out of school that it was going to be the beginning of the end, that, you know, she wasn’t going to stay with a guy that was a drunken dropout who was letting his health go to hell and so I was, I was really kind of freaked out about what am I going to do and so I’m reading the university newspaper and there was this section that’s like there classified ads called 3 lines free and it’s, you know, a mixed bag of things from quotes and witticisms and proclamations of undying love or temporary lust or whatever and there was a quote in there from of all people Joan Baez the folk singer and the quote read “Action is the antidote to despair.” And I read that and it didn’t hit me immediately but it’s the 1st thing was I realize that, you know what, all these problems that I have can be fixed via action. If I get down to get to work I can fix this stuff and that was the first little wake up and then the next part that hit me bigger was the realization that I had been pretty lazy my entire life. I’ve been skating turned on cruise control, not really putting much effort into anything, these problems that I was experiencing were of my own doing. You people know me that I’m not one of those guys that say “Oh, just suck it up” and you know, I realize that there are people that, you know, life is garbage sandwich and it’s not their own doing but my this was my fault. I had dug this hole myself and only I had the ability to dig my way out and and so there was that realization that I’ve been really lazy and I was actually putting effort into being lazy by, you know, the mental gymnastics it took to, you know, shirk my responsibilities each day and that was when my brain woke up in an instant where I said, “If I just put effort in a positive way, if I just got down and started working, I could fix all this” and that’s the way that these life changing epiphanies work is that they are there a big picture concept, they’re fuzzy, they’re not usually very concrete. The concrete action plan comes afterward, after you have the event but the event happened was like, “If I just work I’ll fix everything” and in that moment I experienced what’s known in Psychology of behavior change circles as dramatic relief, where suddenly you see the light at the end of the tunnel, all the problems haven’t gone anywhere, still there but you know you’re going to fix them and you know that the light is there, you can see it and you’re going to race toward it and everything’s going to be OK. And from that moment, in that instant, I was a changed man. Jen: Wow. James: I got 2 master’s degrees. I didn’t flunk out, I went on and got 2 master’s degrees, oh and that woman, the girlfriend, we’ve been together for almost 30 years now and so yeah, I told you she was the one and you know, got in shape, got out of debt all that good stuff, I don’t brag. Annie: I don’t want to spoil, I didn’t want to spoil it for everyone but when I was reading this part about your, like, this moment that you were having reading that quote I was like “Did he do it?” and he did! And that’s, oh my gosh, that’s so sweet. But I love that realization that you said, I was in this position because I had put myself there and while that can maybe feel a little like, “I did this to myself” it can also feel like that “I can get myself out” like the flip side of that coin is, “Yeah, I put myself here but also I can get myself out” and that’s really like encouraging and empowering I think. Jen: I got goosebumps and I don’t know if you can see that on camera but my hair is standing on end. So I see that shift with some of our Balance365 members sometimes and I agree some people get a garbage sandwich but it is so important to reflect on our contribution to where we’re at in life. I believe that wholeheartedly that it is so important to reflect on that. There are obviously things that were out of your control but there are also things that you have done and you know, for this is a very complex topic but especially, you know, just the different members we have in the different lives they come from but I feel like that can be such a light bulb or that lightning bolt they need to go, you know, maybe they can’t change everything about their life but maybe they have more control than they have let themselves believe, leading out to that moment. James:  And the thing is that there’s focal changes and then there’s global changes, what I experienced was largely a global change, that I just decided that it wasn’t that I was going to get in shape or that I was going to stop flunking out of school, I was going to fix everything and so that was a global change. Other people had these focal changes, like the example in chapter one of Chuck Gross, who had started with his weight because he weighed over 400 pounds and that was a life changing epiphany after having struggled and tried and failed to lose weight many times, he had this transformative experience and that he knew it was going to work and the direct quote from Chuck was “I didn’t have to struggle with my motivation. It came built in.” And he lost over 200 pounds and has kept it off for more than a decade but the interesting thing there is that these experiences often have cascading effects where afterwards, he ended up, he went back to school and he was a straight A student, he went through a personality shift where he went from very introverted to, you know, more confident and more extroverted, it was better for his relationship and it just had a lot of other positive impacts throughout his life. Jen: What about, something on the other end of the scale, I was listening to a podcast the other day with a therapist and she was talking about the high failure rate of relationships after somebody has weight loss surgery and they didn’t dig into that but it relates back to what we’re trying but here is because a lot of people, it’s not about the weight loss, it’s about the identity change that they have because of that huge event and I can also see it going the other way, that, I mean, this happens all the time in relationships, I guess, you have people go through identity shifts throughout their life and it can also affect your relationship negatively. And so I can see it also, you know, not that anyone should stop themselves from changing but it’s just to show this is radical, right, it’s radical what happens to people and this cascading effect that you’re talking about, it can affect, we have in Balance365 these women that go on, like, one woman has founded a feminist nonprofit in Vancouver and is building this huge community and she talks about how it was Balance365 that just, it just was that moment, right, everything changed from there and it’s just interesting to see and we’ve had women applying for jobs they didn’t think they were qualified for and we’ve had women leave their husbands, we’ve had, you know, it’s just that radical personal growth shift that just, yeah, cascades everywhere. James:  Well the research you’re talking about with weight loss surgery, of which I am very supportive, I’ve written an article about how I think that if people that think that that is the right decision for them I’m the last person that would ever shame someone for doing so because the research shows that it can be quite effective but I’m not aware of and I’m not denying it, I’m just saying that I can’t speak to that. Jen: Right. James: However, in these instances I didn’t interview anyone for the book that had undergone very bariatric surgery but there were a few people that had experienced significant weight loss and as well as gone through many other changes and the one theme that I noticed is that what we’re talking about is, yes, there’s an identity shift, yes, there’s a value shift, that’s what makes it effortless. There’s the whole, it refers to Roky, social psychologist Milton Roky teaches model of personality which is, like, the whole, you know, ogres are like onions. Well, people are like onions, too. We’ve got our actions and behaviors at the extra layer which is, if you focus just on changing behavior, that’s why you need to be slow and steady because you’re in conflict with those more internal layers of your values and your identity, whereas if you go through an identity shift and a shift in values, the outer layers just sync up effortlessly which is what happened with Chuck Gross. He went through a rapid identity and values shift which just brought his actions and behaviors into line immediately. But so here’s the thing that, yes, this entire book is about a shift in identity and values which sounds scary. So this is anecdotes, not data but the examples in the book, many of these people were in relationships when they went through this dramatic shift, those relationships got better. Jen: In the examples in your book. James: And I can posit a hypothesis as to why that happens, which is that it’s actually and there’s even some philosophy in there and psychology is that this is not a false construct that you’re creating. When you go through something like this, it’s more like the current identity that you’re letting reign is the fake one, that’s the one that is, you feel that you need to survive each day because of societal pressures and pressures of, you know, maybe toxic people in your life or your job or whatever else is going on that this is the thing that, you know, it can be referred to as the despised self that you’re letting rule your life and then all of a sudden, the true self that, this is the person you’ve been yearning to be your entire life, is suddenly let loose. It’s not invented out of thin air, it was there deep down and it was like every little movie that you watched where there was a hero that did something that impressed you or a story that you read that you say “I wish I could be that brave” or all these little things are tiny bits of data that get lodged in your unconscious that that have the ability to coalesce in a profound way in a moment. So when you go through this type of identity change, this is not slow and steady, it’s such a dramatic emotional event that it’s something where it’s unleashed, it’s like, it’s like a volcano where the magma has been bubbling under the surface, building for years and then all of sudden kerblewy, it explodes.   That’s why it’s a, it’s a holy s. moment because you have this sudden realisation and because and when we look at our relationships with other people that when you fall in love with someone, you have a tendency to idealize them and you’re falling in love with what you, the vision you have of them as their best self. You see, you know, they’re not always that way but when you see the best in them, you have a tendency to overlook the bad parts the parts that annoy you, hopefully. I know my wife does it with me all the time. Then when that real true best self comes to the surface and is allowed to let reign, it’s, like, yeah, the other member of that relationship is very welcoming of that, so I’m not saying it’s a guarantee, I’m not saying it’s going to work that way every time but it sounds good, they said. Jen:  James, what do you think of this, all of this in terms of dieting. So in our community, really, what we have founded everything on is that dieting does not work and a lot, I mean, it doesn’t work for the majority of people and what happens with women is that dieting becomes a part of our identity over time, so you are or losing weight or maybe you’ll tell me, I’m not using the correct scientific terms for all of this but it may feel like part of our identity. It is so ingrained in us to be basically defining our self-worth based on our ability to lose weight or at least trying to lose weight makes us feel worthy and we get, you know, many pats on the head for it as women when we’re doing that. I would say men probably experience that as well and so feel like when women join Balance365, when we help give them, you know, turn the light on a little bit and they join Balance365 and they realize dieting doesn’t work, and for some of them it happens like in “Zing! This does not work. This I have been doing for 25 years does not work” or sometimes it happens slowly, it’s like, “OK, maybe it doesn’t work” but then they, like, come back, you know, and then maybe they pull back from us a little and go, “Well, I’m just going to try one more diet, just to double check” and then would you say that’s a change in identity happening? James: Absolutely and I think you really nailed it, that a lot of people, so that’s that is, sort of a despised self identity that is being allowed to flourish because their values are the approval of other people or living up to some toxic ideal that you see in an air brushed model on a cover of a magazine and looking at food as something that, you know, what they consume is something that they need to suffer through and this is, the thing about these type of events is the whole goal is to remove suffering, when you focus strictly on behavior change, that’s why the tortoise’s preached over the hare because if you change too much all at once, the amount of suffering you experience is quite high because it’s at odds with the more internal layers. And that’s why they say baby steps is because you’re trying to minimize the discomfort until it gets to the point where you just kind of get used to it and you come to tolerate it and yeah, you know those things can work but we all know that the failure rates are pretty high and what can be a much more positive shift in identity is having self compassion, realizing that you are a fallible human being and that food is something that is supposed to be enjoyable and nourishing and necessary for life and that you can stop caring so much about what other people think and worrying more about the way that you, what you think about yourself. And how you feel about the way you look in the mirror and how you feel physically, like, when you wake up each morning and you know hopefully bounce out of bed and then looking at food as something that nourishes you and because you have compassion for yourself that you want to feed yourself in a healthy and nourishing way and that you want to exercise because it’s good for you and it’s enjoyable and it’s OK to have some vanity goals but if vanity is your overrunning motivator I’ve never seen that work out well. Yeah, you know, for many years I had a shirtless photo of me on my website. And you know, I’m wearing the short sleeved t-shirt- Jen: Snug fit. James: And I think it’s OK to have some of those motivations but you also need to think about the, you know, I’m never going to be as buff as the next guy, I’m never going to be as ripped as the next guy but that’s OK because my wife likes the way I look, I like the way I look and I like running, I like lifting weights, I like riding my bike, I like fueling appropriately, I like the way I feel when I eat mostly healthy food, I like the way I feel when I don’t drink very much, all those types of things, that’s part of my identity, that just being kind of Zen about this whole thing. You know, just do the best you can, enjoy your life, enjoy your food, enjoy your exercise, that’s identity and values right there and that’s a positive one as opposed to all “Oh my God, I’ve got this flab from Christmas” which I totally do and you know, that’s a positive shift that people can make because they hear me talking about it, they hear other people talking about it, they read it and this type of information percolates in your brain and maybe one day it bursts through the surface and you say, “That’s who I am.” Lauren: Can I ask a question before we kind of move on or switch gears? When you were telling your story, I kind of had this realization that I listen to a lot of podcasts and there’s always people, you know, being interviewed and telling their stories and it’s usually someone who has accomplished something or done something and a lot of times you’ll hear them have that Holy S. Moment, you know, whether it’s, you know, they had a big realization or whatever and I am realizing that a lot of times, it’s kind of like they’re, it’s a bad moment, right, like, they’re kind of in a low place when they have that moment, is that and I know you have a lot of examples in the book, is that true for all of them or is there another way you can kind of come to that moment? James: It’s common but it’s not the law so, you know, in my example when I talked about the one when I was flunking out of school, yeah, the whole action is the antidote to despair quote, I was in a state of despair so that’s one of the reasons why it really spoke to me. Despair is not same thing as depression, just so we’re clear. And but and so what happens with a lot of people, one example is called crystallisation of discontent which is a psychological term which refers to discontent is, you know, say there’s one problem that’s bugging you and it’s not that big of a deal by itself you’re like, “Yeah, whatever, I can live with that. Crystallization is when you look at all the other little problems and the whole is greater than the sum of it’s parts where they suddenly crystallize all together and you reach a point where you’re like “OK enough of this, you know, we’ve got to go in a new direction because this is just not working for me anymore.” So that’s an important shift people can make. Then going deeper, we also have the breaking point, which we see quite often with addiction where people are in a horrible state and they realize that they just can’t do it that way anymore and they’ve got to go in a different direction and it is very common for people battling addiction where one day they just “No, this is it, never again” and they’re done and they are done so that’s another way but on the other end of the spectrum, we also have the good to great mentality which is and I’m stealing that from a book of the same name by Jim Collins and and the book is actually about corporate change where corporations want to go from being good at something to being great but it actually, there’s a lot of good stuff in that book that applies to people as well and what it is is someone, you know, life is pretty peachy, things are going along OK, you know, it could be better but then suddenly a quest enters your mind, like, “I gotta do this” where where it’s not like you want to be great for greatness sake, you have discovered something that makes you want to try to create it. And you know, for me people who have that big life changing event often have more later on clarifying epiphanies and for me it was being a writer that I had reached the age of 40 and I had an MBA, I had a successful business career and I didn’t hate my job but I did not love it and I knew that writing was something that I love to do and I realized life was too short to spend the majority of my waking hours doing something that I wasn’t really passionate about and I was going to give it my very best effort in order to make a career out of this and so that was a, life was good and then I became a writer and it became great. Maybe not quite financially great right away. But trust me, you know, I just turned 50 last year and my forties were awesome because I decided to become a writer and my fifties are looking to be even better. Lauren: Right, that’s good to know, you know, you can have these epiphanies without being at like rock bottom. Annie: I would just like to say that James pretty much just described my last year of therapy in like 15 seconds. Because we actually have a section of our program called The Story of You which is where we help members get clear on their values and I think Old Annie, Annie 2 years ago would have just poo-pooed that, like, “Why does this even matter, I just want to lose weight, I just want to build muscle, I just want to, you know, run this or lift this or whatever, like, I want to look a certain way or I want to feel a certain way, why does my values even matter?” and you wrote in a blog post that you encourage people to spend less time worrying about the exertion of will and engaging in continual resistance and suffering and forcing yourself to do what you really would rather not and spend some quality time on examining who you really are deep down and you encourage people to, like, really look at their values, like, what really matters to you and you’ve found in your book evidence that supports that that will help, as you said with that one gentleman that he didn’t have to rely on willpower because this is just what he wanted, like this is was him. This is what he wanted and so we hear it from a lot of women that they feel like they need more willpower and more self control and you’ve dug into self self control, self love and willpower in your book and on your blog post and as you know, the fitness industry loves this like “No excuses, just shut up and do it, grind through it.” So after looking at your work in the book and knowing you and knowing your personal and professional experience, what do you think about that? I mean do you want to expand on that barfy noise? James: There was a lot of research in the book debunking the whole myth of willpower  and seeing it as a limited resource that you can strengthen and you just gotta suck it up, we know it doesn’t work, people have been told to suck it up forever, there’s research showing that the efforts to to strengthen willpower are futile. There’s more research in the book that people who do use what they call grit, that you just tough it out no matter what even though you hate what you’re doing, it’s actually physically damaging, it has negative cardio metabolic effects as well as negative effects on I think the telemores which has to do with your life expectancy and so yeah, it’s and it’s just not fun. Willpower and grit and powering through all imply suffering and I just, we don’t want to suffer, we seek to avoid it. Our entire evolution as a species has been about trying to find ways to make things more comfortable for us so instead a person’s ability to do things, like, I will get up and put on a ridiculous amount of layers of clothes to go out for a 6 mile run in minus 30 and it’s not because, you know, I don’t hate doing it, I actually feel a sense of accomplishment, like, it’s kind of cool for me knowing, “Hey, I’m out doing something that other people think is crazy” and so that’s one of the things that motivates me to do it is that it’s, you know, it’s just I get a bit of a an excitement out of it even though, yes, it’s really cold out there and I’m kind of slow because I’m trudging through snow but it’s just, it’s this neat little sense of accomplishment and also a shower after a run at minus 30 feels really, really good. Jen: And I’m over here like, “No way.'” It brings me zero joy to do something like that. James: So that’s not, I’m not suffering. Jen: Right. James: All that being said and I’m really hoping this book takes off because if it does, not only will I feel validated which I kind of need, then I want to write a sequel about what happens after the holy S. Moment and you know, how do you keep snowballing the success from it and I think that doesn’t rule out discipline, so discipline is different from willpower. Discipline is about things, like, you know, getting, formulating routines that you stick to even though you don’t want to and yes, there are days that I don’t feel like running but you know, I just, you know, I figure I’m still a runner, that’s who I am and I don’t always succeed but there other times when I don’t want to but I’m going to do it anyway and you make yourself do it and then you get out there and yeah, maybe the first kilometer and sorry for the Americans that are listening, the first kilometers kind of drag but then you get into it and after it’s like, “Yeah, I’m really glad I did that” so there’s it’s not like everything is a joyous “Oh yeah, I can’t wait to do this.” But it’s just, it’s because it’s who you are, it’s not that big of a deal. Jen: Annie just talked about this in a workshop last night that we did for our members around exercise, you know, it’s like we do encourage people to find exercise they enjoy or can tolerate and Annie just said “Look, it’s not always going to be super fun, you’re not always going to be like I can’t wait to get to the gym but even if you can tolerate that exercise and afterwards feel accomplished and glad you went” Annie:  Then, yeah, there’s like this like acclimating period for a lot of people that aren’t super jazzed about exercise or movement that it’s like they kind of just have to get over that hump of maybe they’re a little bit sore or they’re getting into a new routine, they’re like, I think of it as like snowplows, you know, like or you’re going through a gravel road, like the first time you go through like fresh gravel it’s like a little bit wonky and then you keep going through and you keep, like, grinding those, like, pathways and-“ James: Grind isn’t a good word to  use, we don’t want to be in a rut. Lauren: No. Annie: But eventually, the pathway is a little bit smoother and you have less resistance but initially, when you’re getting going or maybe you’re trying something new, you’re learning a new skill, it’s not all fun and there’s certainly days where you’re just tired and you just don’t want to do it for whatever reason. James: And sometimes you do and that’s great and other times you don’t, you know, don’t beat yourself up over it because you know, tomorrow’s another day and one of the things that I want to be clear about is that, you know, not throw out the tortoise approach to this because if you think about motivation as, like, a mountain and at the base of the mountain that is 0 motivation to do the thing. And then the peak of the mountain is absolute 100 percent motivation to do everything associated with this goal with inspired vigor. Well, if you’re down at the base of the mountain, you don’t just hang out there and wait for sudden inspiration to arrive and Star Trek transporter your butt all the way up to the top. That can happen, sometimes it does, that’s what happened with Chuck but it doesn’t always work. You increase your odds of success if you start to hike awhile and you do those baby steps, because what it does is that it opens up new experiences to you. It gets you thinking because this is something that happens in the brain and if you are having these new experiences and starting to think about this and examining yourself and how you feel about it and looking at your, this is an emotional experience and that’s what happened for me is I talked about the, you know, the change in school and the change and you know, getting out of debt, all that kind of stuff. I didn’t get in shape right away, that came 2 or 3 years later when I finished my undergraduate degree, stuff was really busy with school and I was really busy with working to pay off my debts and those kind of things and I didn’t do anything about my body because I felt like I didn’t have time and then as soon as I finished my degree I looked in the mirror and said “Wow, I got kind of heavy. Maybe I should do some about that.” That became my next mission, I’d learned how to work hard but it doesn’t mean that I liked it. I started going to the gym and I did not like it one bit and it was after about 2 months that I was, you know, just forcing myself to go because I knew that this was something that I had to do and I was powering through on that grit and that willpower and I came close to quitting so many times and I felt like I was losing no weight whatsoever and then, so I was doing that that slow hike up the mountain of motivation and then one day I’m walking out of the gym after a couple months and the person at the front desk said “Did you have a good workout?” and I stopped and I thought about that for a moment and I said to myself, “Well, it didn’t totally suck” and I thought “It used to totally suck” and hopefully we can say suck on your podcast. Jen: Yes. Annie: Yes. James: OK, so it went from totally sucking to not totally sucking and I thought, well, if I could evolve from it toward it not sucking then one day I could learn to love it and in that moment, I wouldn’t say that I transformed into loving it but I did make a life altering decision that said “OK. One day I can learn how to love that” so therefore, I’m going to keep doing it until I die and that was 25 years ago still going so, go me! Jen: There are a lot of aspects that suck about running a business, it’s coming together but ultimately when you’re, you know, values, you know wake up in the morning and being safe, having financial autonomy is so so important to me, I will, we will show up and we will do those sucky things because ultimately our value of having financial autonomy overrides the pain of doing those sucky things. James: Yeah and it’s, you know, the alternative is is worse, right. Jen: Right, is way worse, yes. Annie: I think that that’s an important point that I hope our listeners grab, especially, you know, I’m talking about exercise because I’m a trainer but so often people think that they love something so then they’ll do it and that’s how you do more things, right, you have to love it first but like you just described, you can actually do something, get a little bit better at it and that cultivates a sense of love or enjoyment, so you can, in essence, learn to love something, like, you learn to love exercise and I think that that’s what so many women who don’t naturally love exercise like I do, I get it Jen and Lauren have expressed that they don’t share their passion for exercise like I do all the time. But that that doesn’t mean that they’re just out of luck. James: And for the analogy that I would use to describe it is that when you take this approach hiking up that mountain and then waiting for sudden inspiration to move you much further up the mountain, you know, dramatically increase your motivation all of a sudden, I refer to it as acting like a tortoise but thinking like a hare and so people need to be receptive to the possibility of this sudden gaining motivation and if they’re more receptive to it, if they’re more mindful of it happening, it dramatically increases the likelihood of it taking place. Annie: I like that, that’s really good. Jen: One of our members, her husband’s in the Army and she had this really good saying on one of our podcasts around motivation and behavior change and self-awareness, I guess, sometimes you need to know when to advance and when you just need to hold the line and I feel like that was a real, like, that’s kind of the hare and the tortoise thing, right, like you just, sometimes you have an opportunity in your life to advance and you need to take it. Motivation isn’t bad, it’s just knowing, yeah. James: Something interesting happened with me, so I was talking about how new experiences and an openness to new ideas that wake up a part of your brain that wouldn’t have happened if you hadn’t gone out and tried that thing, that’s what absolutely happened to me with running. So when I decided to take up running, so I’d lost a fair bit of weight with weight lifting and dietary changes and then I decided, well, I want to lose more and this was before Facebook, so I actually knew that that running was good for weight loss, that it could work because I hadn’t bought into all the fit pros saying “No, cardio makes you fat.” So I decided that for me that running would be a good choice and that it would also be not just good for weight loss but just good for my health, it’s good for organ health and all that kind of stuff and so I decided to start doing it and I was terrible at it and it was painful but I just started it, really short distances and gradually built myself up and I was just thinking about the outcome, like, this is good for losing weight, this is good for my health, that’s why I’m doing it and something completely unexpected happened was that that being a writer and being a person that likes to create stories and tell himself stories is that became the most creative part of my day was when I go for a run my best ideas come to me, either when I’m running or going for a bike ride and I just love the free association that I get to do. I’m away from technology, you know, I don’t have my phone with me or anything like that and it gives me that time alone in my head that, you know, that I just didn’t realize how much I craved that. And it makes such a big difference to me that that was really what I fell in love with, that if I hadn’t actually tried running I never would have known that that was the thing that I needed. Annie: Yeah, that’s really pretty, that’s a beautiful story. Lauren: That’s really pretty. Jen: James, can I get your take on another behavior we see quite often? James; Sure. Jen: So what happens very often in our community when women have the epiphany that diets don’t work and they’ve been living for years and years under a very restrictive way of living, they have their pendulum swing out the other way so many of our members talk about, after they join Balance365 they overeat, go swing into this period of eating all the things that they have denied themselves for so many years and that usually comes with weight gain and a lot of them say it became a necessary part of the process for them in order to have their pendulum swing back to center and be able to be more objective and balanced in their approach. What is your, do you think it’s necessary and or do you, is there any science or anything that you know of to explain that or what’s your take on it? James: So, I mean, I, the first caveat is that I’m not actually a psychologist. Jen: Right. James: I interviewed a whole bunch of psychologists for the book and we didn’t specifically get into that type of stuff. I would say that if you are hearing a lot of people saying that that was necessary for them and that it worked, then it sounds like there’s got to be something to it. For me, like I always would like to say err on the side of caution a little bit but you’ve got to do what you gotta do. Jen: Right. James: If you have been punishing yourself this much for so long and you reach this breaking point and you just got to go in another direction where you’re like “OK, I’m sorry but this is, I just need a break” and that what happens then, then that makes sense to me but at the same time, you need to keep something in the back your mind that says “This is temporary, that this is a reset” because you don’t want to go off the rails, right? You don’t you don’t want to never stop because and it’s not about shaming people for their body weight but just being concerned for their health and you being concerned about your own health and how you’re feeling and that as long as you realize that this is a temporary reset and that it’s part of finding a mentally and physically healthier way to move forward it sounds OK to me but- Jen: Right. James:  Just realize, OK, how far does that pendulum need to swing the other way before it comes back and don’t go beyond what’s necessary? So just little bit of caution. Jen: We have to have these come to Jesus talks with our members often on how far that pendulum has swung out and how far, how long they’re willing to stay there because in the end, a lot of women feel they came from a space where they were controlled by the diet industry saying- James: Oh yeah. Jen: Right, but then they’re screaming out into this other space where I’m like “But you’re still not really free, like you’re still not making free will choices if you can’t get your pendulum to come back to center.” James:  Exactly- Jen: You’re just in a rebound state. James:  You let the food hedonism rule instead. Jen: Right. James: You go from restriction ruling the life on one hand to highly palatable food ruling it on the other hand. Jen: Right. James: So you’re still, like you said, you nailed it, you’re still not really free, so be careful how far you let it swing- Jen: Right. James:  Consider it a bit of a mental reset that it’s almost like a statement that you’re making- Jen: Exactly. James: A rejection of this toxic diet mentality where OK, and then you make your point, “Forget you diets.” And then you come back to what you really feel is going to be both physically and psychologically nourishing for you. Jen:  Right, exactly. Annie: James, I know you have to get going because you have more interviews, you are just an in demand man. The first time we tried to schedule this episode you were just coming off of another interview and it was right before another one and everyone wants to talk to you, so I’m so thankful that you gave us some of your time. I know our community is just going to really enjoy this episode and I bet they cannot wait to get their hands on your new book which comes out the 22nd of January, so by time this should be available. James: Yes, indeed. Annie: And where, I know they already know where to find you but if they’re new to you, where are you hanging out online, where is the best way to connect to you? James: So if they want to find a book probably easiest place is well, they can either walk into a bookstore or go to bodyforwife.com and there’s a book tab that has links to every possible platform they can want. I think I mentioned that I did the narration for it so they can also get the audio if they want to do it that way. We have a lot of fun on my Facebook page, really good crowd there. Jen: Oh yes. James: It’s, I think we’re over two thirds women on the page and they’re very accepting, very feminist environment, sometimes some very foolish men show up and get their butts handed to them righteously and that’s an awesome thing to witness. Annie: You’ve had some threads that are like “Get your popcorn ready” sort of thing. Jen: You know, I don’t even say a word, I just read through them and I’m like, “Whoah!” James: Yeah, well and the thing is that people like the smack down because it serves as a lesson to other people and I learn things by, because there are so many really intelligent women on that page that, you know, people say “Oh, you know, you really get this whole kind of feminism thing” and it was like “Well, it’s only because I’ve been reading comments on my Facebook page from awesome women who know this stuff really well” and so yeah, that’s Facebook.com/bodyforwife, Twitter, Twitter sucks. I’m on Twitter let’s stick- Jen: What about Instagram? James: I’m not on Instagram, I don’t take good selfies. So Twitter is Twitter.com/bodyforwife as well. Annie: Awesome, well James, thank you so much, I cannot appreciate you enough, I’m really excited for everyone to check out this book and we’ll hope to have you back soon, OK? James: I’d love to and in closing, the one thing I will say to everyone that’s listening, that when it comes to these types of life changing epiphanies, the most important thing is to understand these things happen all the time and it is really important to believe that it’s something that can happen for you because that’s what opens yourself up to actually experiencing it. Annie: Awesome, thank you so much. James: Thank you. Annie: We’ll talk to you later. James: Bye. Lauren: Bye. Annie: Bye.     The post 51: James Fell: Epiphanies and Life Change appeared first on Balance365.

January 20, 2019 Let It Grow Genuine Faith |marks of maturity from James| There is just no other place I’d rather be on Sunday morning than worshipping our incredible God with the Dayspring family! In the middle of a soggy, gray, Willamette Valley winter, there is great joy and encouragement to be found when our church family comes together. This week we're starting a brand new sermon series on the book of James, called Genuine Faith. James wrote to Jewish Christians who had been scattered far and wide, escaping persecution in Jerusalem by the Roman Empire. It was an incredibly difficult time to be a believer. James’ words to his brothers and sisters in faith are full of practical encouragement to grow, even in (or perhaps because of?) hard circumstances. We too, need the encouragement of James as we walk through the daily challenges in our own lives. 

Panel: Charles Max Wood Guest: James Shore This week on My Angular Story, Charles speaks with James Shore who is the author of the book, “The Art of Agile.” James is a thought leader in the Agile software development community. He combines deep technical expertise with whole-system thinking to help development teams worldwide achieve great things! Check out his complete biography here! Chuck and James talk about Agile development, James’ background, and future projects! In particular, we dive pretty deep on: 0:00 – Advertisement: Get A Coder Job! 0:48 – Chuck: Welcome! James was on a past episode, which was show 205! Give us an introduction, please! 1:05 – James: I have been involved with the software industry since 1991. I have written a book and it’s fairly evergreen. 1:30 – Chuck: Yeah, I remember that’s when the Agile development was getting really, really hot! 2:09 – James: Yeah in the early 2000s there was this energy to do software really well, and it seems like it’s turned into this bureaucracy. I find that to be depressing a tiny bit. 2:50 – Chuck: Yeah, I agree. 3:01 – James: Going back to a perspective where excellence is no longer the priority; excellence in your craft. 3:31 – Chuck. 3:34 – James: Yeah that was Bob Marten.  James talks about the Agile movement. 4:22 – Chuck: This show is a walk back throughout your story. Let’s talk about HOW you got into this stuff. 4:40 – James talks about his background. 4:58 – Chuck talks about his Grandpa and his experience with technology when he was young. 5:10 – James: ...it had a whopping 2K of memory! That’s really how I got involved into programming. Later on I got a Trash 80 then an Apple 2, so I had programming in through my blood. 6:01 – Chuck. 6:08 – James talks about switching between computer and antenna, and his black and white T.V. He also talks about the electrical engineering program at the university. 7:16 – Chuck: I studied ad received my computer science degree. 7:28 – James. 7:34 – Chuck: You have been in the industry since 2001 and you are a bit older than me. 7:50 – James: My first job was in 1994. Then I wrote some things with Fido Net. Fido Net was this early online form thing. Sort of like Used Net / Used Groups (online bulletin web forms) via the telephone dial-up. They were hobbyists running this out from their home. It was basically chat forms. Once you have some experience (doesn’t matter your degree) – it’s...have you done this before? 9:30 – Chuck: This is RIGHT in-line with what I say in my eBook that I am developing now. 10:00 – James: I didn’t even post that I was looking for a job, but I got very lucky. 10:15 – Chuck: What is your journey look like and how did you get into Agile development? 10:30 – James talks about his Kickstarter, knowledge in JavaScript, programming experience, and more here – check it out! 13:16 – Chuck: How did you get to Agile development? 13:31 – James: I was programming throughout my teens. I was working on a really complicated project. I still play Dungeons and Dragons (D&D). It was the most complicated program that I built at that point. I had it in my head and then I didn’t understand it anymore. The program collapsed. To me that was really transformative b/c it’s not writing the algorithms but how it all works together. Then this taught me how to communicate the design to the other members on the team to make it work. 15:50 – James: Have you heard of Rational Rose? You don’t hear about it anymore b/c it was a complete flop. 17:20 – Chuck: Wow! 17:33 – James: It was actually detrimental to get it done. It really was a crisis of faith. I ran into this book: Object Modeling in Color by Peter Coad. Extreme Programming is mentioned, too, by James’ coworker! 21:10 – Chuck: It’s so interesting to me. We focus so much on the technological side, we forget to talk about the people, and the other sides to this. It’s easy to overlook this other stuff. 21:47 – James: There is so much silver bullet thinking within this industry. The original communication from person-to-person is so crucial. It’s so important to software development. Ultimately, the computer doesn’t care, but the collaboration is the real trick and the real challenge. 23:10 – Chuck talks about his brother and his computer science courses experience. 24:27 – James: It could be that 1 team could solve a problem but nowadays it’s working with multiple teams. People want to water things down to help facilitate – but don’t do that. There is a huge large scale Agile that is large interdependent teams. 25:19 – Chuck: MFCEO is a podcast that I am listening to now. He says that nobody wants to sit down and dictate what each member will be responsible for. Chuck reads a quote from an episode from MFCEO – check it out! 26:54 – James: It’s something that people have lost track of. I still program daily even though I do this Agile stuff as well. I have been programming for 25 years and Extreme Programming was the most effective thing for me throughout my career. James: I think XP is the time (now) to have a comeback! 29:41 – Chuck: That was my experience, too. We pushed one team to go to Agile, and then we went to our boss. Chuck: We’d sit down every two weeks and have an Agile-Perspective (what is working and what isn’t working). We are talking about HOW we are writing the software, and that is really what we are after. 30:54 – James: You are building the TEAM that builds the project. Of course, you need to have consistencies across the team, and every team is different b/c every member has different personalities. Mod Programming is we are going to work as a whole group around a screen. Personally, that is not my style but I would TRY it. If it worked for that team then I would do it. 32:00 – Chuck: That is the beauty of it. With this set of programmers x, y, and z may or may not work, and that is O.K. 32:25 – James: I heard about Extreme Programming and I thought it was nuts!! 32:40 – Chuck. 32:44 – James: The more I tried it, and the more it worked. Try Extreme Programming b/c it’s totally a different experience. It’s my book that I wrote 10 years ago but it still is applicable today. Try it for a few months (3 months) or so, b/c it takes time to figure out the different terms and such. Go try out a bunch of new different things, but figuring out HOW to make it work for me. 34:05 – Chuck: Yeah, you need data. Look at the data. Go experiment. 34:47 – James: Try it for real. Check out this essay: “We tried baseball, and it didn’t work.” James: Many things only work in context!  What we do is we change the context in Agile. 35:58 – Chuck: What are you working on now? 36:00 – James: I am actually working on AgileFluency.org. It’s a set of tools for coaches and leaders to CHANGE their context. How can you find those constraints and invest on changing those. 36:31 – Chuck: Where do they go to find you? 36:40 – James: My website - it’s the ugliest website, but it’s been working since 2003. 36:54 – Picks! 37:05 – Fresh Books! END – CacheFly Links: jQuery Angular JavaScript Vue React Slack Zone.js GitHub – Zone.js Chuck’s Twitter Chuck’s E-mail: chuck@devchat.tv Timex Sinclair FidoNet VHDL Book: Java Modeling Color with UML Pivotal Labs Book: The ART OF AGILE DEVELOPMENT BY JAMES SHORE James Shore’s Website Sponsors: Get A Coder Job Fresh Books Cache Fly Picks: Chuck Podcast: MFCEO James Package Management Tool: Nix.org

Panel: Charles Max Wood Guest: James Shore This week on My Angular Story, Charles speaks with James Shore who is the author of the book, “The Art of Agile.” James is a thought leader in the Agile software development community. He combines deep technical expertise with whole-system thinking to help development teams worldwide achieve great things! Check out his complete biography here! Chuck and James talk about Agile development, James’ background, and future projects! In particular, we dive pretty deep on: 0:00 – Advertisement: Get A Coder Job! 0:48 – Chuck: Welcome! James was on a past episode, which was show 205! Give us an introduction, please! 1:05 – James: I have been involved with the software industry since 1991. I have written a book and it’s fairly evergreen. 1:30 – Chuck: Yeah, I remember that’s when the Agile development was getting really, really hot! 2:09 – James: Yeah in the early 2000s there was this energy to do software really well, and it seems like it’s turned into this bureaucracy. I find that to be depressing a tiny bit. 2:50 – Chuck: Yeah, I agree. 3:01 – James: Going back to a perspective where excellence is no longer the priority; excellence in your craft. 3:31 – Chuck. 3:34 – James: Yeah that was Bob Marten.  James talks about the Agile movement. 4:22 – Chuck: This show is a walk back throughout your story. Let’s talk about HOW you got into this stuff. 4:40 – James talks about his background. 4:58 – Chuck talks about his Grandpa and his experience with technology when he was young. 5:10 – James: ...it had a whopping 2K of memory! That’s really how I got involved into programming. Later on I got a Trash 80 then an Apple 2, so I had programming in through my blood. 6:01 – Chuck. 6:08 – James talks about switching between computer and antenna, and his black and white T.V. He also talks about the electrical engineering program at the university. 7:16 – Chuck: I studied ad received my computer science degree. 7:28 – James. 7:34 – Chuck: You have been in the industry since 2001 and you are a bit older than me. 7:50 – James: My first job was in 1994. Then I wrote some things with Fido Net. Fido Net was this early online form thing. Sort of like Used Net / Used Groups (online bulletin web forms) via the telephone dial-up. They were hobbyists running this out from their home. It was basically chat forms. Once you have some experience (doesn’t matter your degree) – it’s...have you done this before? 9:30 – Chuck: This is RIGHT in-line with what I say in my eBook that I am developing now. 10:00 – James: I didn’t even post that I was looking for a job, but I got very lucky. 10:15 – Chuck: What is your journey look like and how did you get into Agile development? 10:30 – James talks about his Kickstarter, knowledge in JavaScript, programming experience, and more here – check it out! 13:16 – Chuck: How did you get to Agile development? 13:31 – James: I was programming throughout my teens. I was working on a really complicated project. I still play Dungeons and Dragons (D&D). It was the most complicated program that I built at that point. I had it in my head and then I didn’t understand it anymore. The program collapsed. To me that was really transformative b/c it’s not writing the algorithms but how it all works together. Then this taught me how to communicate the design to the other members on the team to make it work. 15:50 – James: Have you heard of Rational Rose? You don’t hear about it anymore b/c it was a complete flop. 17:20 – Chuck: Wow! 17:33 – James: It was actually detrimental to get it done. It really was a crisis of faith. I ran into this book: Object Modeling in Color by Peter Coad. Extreme Programming is mentioned, too, by James’ coworker! 21:10 – Chuck: It’s so interesting to me. We focus so much on the technological side, we forget to talk about the people, and the other sides to this. It’s easy to overlook this other stuff. 21:47 – James: There is so much silver bullet thinking within this industry. The original communication from person-to-person is so crucial. It’s so important to software development. Ultimately, the computer doesn’t care, but the collaboration is the real trick and the real challenge. 23:10 – Chuck talks about his brother and his computer science courses experience. 24:27 – James: It could be that 1 team could solve a problem but nowadays it’s working with multiple teams. People want to water things down to help facilitate – but don’t do that. There is a huge large scale Agile that is large interdependent teams. 25:19 – Chuck: MFCEO is a podcast that I am listening to now. He says that nobody wants to sit down and dictate what each member will be responsible for. Chuck reads a quote from an episode from MFCEO – check it out! 26:54 – James: It’s something that people have lost track of. I still program daily even though I do this Agile stuff as well. I have been programming for 25 years and Extreme Programming was the most effective thing for me throughout my career. James: I think XP is the time (now) to have a comeback! 29:41 – Chuck: That was my experience, too. We pushed one team to go to Agile, and then we went to our boss. Chuck: We’d sit down every two weeks and have an Agile-Perspective (what is working and what isn’t working). We are talking about HOW we are writing the software, and that is really what we are after. 30:54 – James: You are building the TEAM that builds the project. Of course, you need to have consistencies across the team, and every team is different b/c every member has different personalities. Mod Programming is we are going to work as a whole group around a screen. Personally, that is not my style but I would TRY it. If it worked for that team then I would do it. 32:00 – Chuck: That is the beauty of it. With this set of programmers x, y, and z may or may not work, and that is O.K. 32:25 – James: I heard about Extreme Programming and I thought it was nuts!! 32:40 – Chuck. 32:44 – James: The more I tried it, and the more it worked. Try Extreme Programming b/c it’s totally a different experience. It’s my book that I wrote 10 years ago but it still is applicable today. Try it for a few months (3 months) or so, b/c it takes time to figure out the different terms and such. Go try out a bunch of new different things, but figuring out HOW to make it work for me. 34:05 – Chuck: Yeah, you need data. Look at the data. Go experiment. 34:47 – James: Try it for real. Check out this essay: “We tried baseball, and it didn’t work.” James: Many things only work in context!  What we do is we change the context in Agile. 35:58 – Chuck: What are you working on now? 36:00 – James: I am actually working on AgileFluency.org. It’s a set of tools for coaches and leaders to CHANGE their context. How can you find those constraints and invest on changing those. 36:31 – Chuck: Where do they go to find you? 36:40 – James: My website - it’s the ugliest website, but it’s been working since 2003. 36:54 – Picks! 37:05 – Fresh Books! END – CacheFly Links: jQuery Angular JavaScript Vue React Slack Zone.js GitHub – Zone.js Chuck’s Twitter Chuck’s E-mail: chuck@devchat.tv Timex Sinclair FidoNet VHDL Book: Java Modeling Color with UML Pivotal Labs Book: The ART OF AGILE DEVELOPMENT BY JAMES SHORE James Shore’s Website Sponsors: Get A Coder Job Fresh Books Cache Fly Picks: Chuck Podcast: MFCEO James Package Management Tool: Nix.org

Panel: Charles Max Wood Guest: James Shore This week on My Angular Story, Charles speaks with James Shore who is the author of the book, “The Art of Agile.” James is a thought leader in the Agile software development community. He combines deep technical expertise with whole-system thinking to help development teams worldwide achieve great things! Check out his complete biography here! Chuck and James talk about Agile development, James’ background, and future projects! In particular, we dive pretty deep on: 0:00 – Advertisement: Get A Coder Job! 0:48 – Chuck: Welcome! James was on a past episode, which was show 205! Give us an introduction, please! 1:05 – James: I have been involved with the software industry since 1991. I have written a book and it’s fairly evergreen. 1:30 – Chuck: Yeah, I remember that’s when the Agile development was getting really, really hot! 2:09 – James: Yeah in the early 2000s there was this energy to do software really well, and it seems like it’s turned into this bureaucracy. I find that to be depressing a tiny bit. 2:50 – Chuck: Yeah, I agree. 3:01 – James: Going back to a perspective where excellence is no longer the priority; excellence in your craft. 3:31 – Chuck. 3:34 – James: Yeah that was Bob Marten.  James talks about the Agile movement. 4:22 – Chuck: This show is a walk back throughout your story. Let’s talk about HOW you got into this stuff. 4:40 – James talks about his background. 4:58 – Chuck talks about his Grandpa and his experience with technology when he was young. 5:10 – James: ...it had a whopping 2K of memory! That’s really how I got involved into programming. Later on I got a Trash 80 then an Apple 2, so I had programming in through my blood. 6:01 – Chuck. 6:08 – James talks about switching between computer and antenna, and his black and white T.V. He also talks about the electrical engineering program at the university. 7:16 – Chuck: I studied ad received my computer science degree. 7:28 – James. 7:34 – Chuck: You have been in the industry since 2001 and you are a bit older than me. 7:50 – James: My first job was in 1994. Then I wrote some things with Fido Net. Fido Net was this early online form thing. Sort of like Used Net / Used Groups (online bulletin web forms) via the telephone dial-up. They were hobbyists running this out from their home. It was basically chat forms. Once you have some experience (doesn’t matter your degree) – it’s...have you done this before? 9:30 – Chuck: This is RIGHT in-line with what I say in my eBook that I am developing now. 10:00 – James: I didn’t even post that I was looking for a job, but I got very lucky. 10:15 – Chuck: What is your journey look like and how did you get into Agile development? 10:30 – James talks about his Kickstarter, knowledge in JavaScript, programming experience, and more here – check it out! 13:16 – Chuck: How did you get to Agile development? 13:31 – James: I was programming throughout my teens. I was working on a really complicated project. I still play Dungeons and Dragons (D&D). It was the most complicated program that I built at that point. I had it in my head and then I didn’t understand it anymore. The program collapsed. To me that was really transformative b/c it’s not writing the algorithms but how it all works together. Then this taught me how to communicate the design to the other members on the team to make it work. 15:50 – James: Have you heard of Rational Rose? You don’t hear about it anymore b/c it was a complete flop. 17:20 – Chuck: Wow! 17:33 – James: It was actually detrimental to get it done. It really was a crisis of faith. I ran into this book: Object Modeling in Color by Peter Coad. Extreme Programming is mentioned, too, by James’ coworker! 21:10 – Chuck: It’s so interesting to me. We focus so much on the technological side, we forget to talk about the people, and the other sides to this. It’s easy to overlook this other stuff. 21:47 – James: There is so much silver bullet thinking within this industry. The original communication from person-to-person is so crucial. It’s so important to software development. Ultimately, the computer doesn’t care, but the collaboration is the real trick and the real challenge. 23:10 – Chuck talks about his brother and his computer science courses experience. 24:27 – James: It could be that 1 team could solve a problem but nowadays it’s working with multiple teams. People want to water things down to help facilitate – but don’t do that. There is a huge large scale Agile that is large interdependent teams. 25:19 – Chuck: MFCEO is a podcast that I am listening to now. He says that nobody wants to sit down and dictate what each member will be responsible for. Chuck reads a quote from an episode from MFCEO – check it out! 26:54 – James: It’s something that people have lost track of. I still program daily even though I do this Agile stuff as well. I have been programming for 25 years and Extreme Programming was the most effective thing for me throughout my career. James: I think XP is the time (now) to have a comeback! 29:41 – Chuck: That was my experience, too. We pushed one team to go to Agile, and then we went to our boss. Chuck: We’d sit down every two weeks and have an Agile-Perspective (what is working and what isn’t working). We are talking about HOW we are writing the software, and that is really what we are after. 30:54 – James: You are building the TEAM that builds the project. Of course, you need to have consistencies across the team, and every team is different b/c every member has different personalities. Mod Programming is we are going to work as a whole group around a screen. Personally, that is not my style but I would TRY it. If it worked for that team then I would do it. 32:00 – Chuck: That is the beauty of it. With this set of programmers x, y, and z may or may not work, and that is O.K. 32:25 – James: I heard about Extreme Programming and I thought it was nuts!! 32:40 – Chuck. 32:44 – James: The more I tried it, and the more it worked. Try Extreme Programming b/c it’s totally a different experience. It’s my book that I wrote 10 years ago but it still is applicable today. Try it for a few months (3 months) or so, b/c it takes time to figure out the different terms and such. Go try out a bunch of new different things, but figuring out HOW to make it work for me. 34:05 – Chuck: Yeah, you need data. Look at the data. Go experiment. 34:47 – James: Try it for real. Check out this essay: “We tried baseball, and it didn’t work.” James: Many things only work in context!  What we do is we change the context in Agile. 35:58 – Chuck: What are you working on now? 36:00 – James: I am actually working on AgileFluency.org. It’s a set of tools for coaches and leaders to CHANGE their context. How can you find those constraints and invest on changing those. 36:31 – Chuck: Where do they go to find you? 36:40 – James: My website - it’s the ugliest website, but it’s been working since 2003. 36:54 – Picks! 37:05 – Fresh Books! END – CacheFly Links: jQuery Angular JavaScript Vue React Slack Zone.js GitHub – Zone.js Chuck’s Twitter Chuck’s E-mail: chuck@devchat.tv Timex Sinclair FidoNet VHDL Book: Java Modeling Color with UML Pivotal Labs Book: The ART OF AGILE DEVELOPMENT BY JAMES SHORE James Shore’s Website Sponsors: Get A Coder Job Fresh Books Cache Fly Picks: Chuck Podcast: MFCEO James Package Management Tool: Nix.org

The Portland Jazz Composers Ensemble gives two world premiere performances of James Miley’s newest work “Watershed Suite.” This six-movement piece is inspired by distinctive bodies of water in the Oregon landscape, from the Tamolitch Pool to Oaks Bottom, capturing the spirit of each through music. James Miley joins PJCE Executive Director Douglas Detrick for a conversation about the piece taped at Sellwood Riverside Park, on the banks of the Willamette River. Learn more at pjce.org/watershed. Episode Transcript [Doug] Welcome to Beyond Category. I’m Douglas Detrick. The Portland Jazz Composers Ensemble gives two world premiere performances of James Miley’s newest work “Watershed Suite.” This six-movement piece is inspired by distinctive bodies of water in the Oregon landscape, from the Tamolitch Pool to Oaks Bottom, capturing the spirit of each through music. Head to pjce.org/watershed to learn more about this new piece and the performances in August, 2018. And stay tuned for the release of Trio Untold, with James Miley on piano and keyboards, Mike Nord guitar and electronics, and Ryan Biesack on drums. It’s the thirty-third release on PJCE Records, and it drops this September. Here’s the episode. [ambient tape: “I hear water”] ? [James] This is James Miley, I’m a composer/pianist. [Doug] Meeting near a waterway seemed appropriate. We are down along the Willamette River, this is Sellwood Riverfront Park. We’re looking at the Sellwood Bridge, listening to waves from a really noisy boat that just went by a little while ago. I’m doing two projects with PJCE this summer. First is a trio recording that’s going to be out in September with Mike Nord and Ryan Biesack, and that’s called Trio Untold. It’s all freely improvised music in the moment. And the second is a new piece for the ensemble and that’s called the Watershed Suite. Each section is inspired by a waterway here in Oregon. And I’m using watershed, the term, fairly loosely. I settled on it mostly because of the connection to the idea of a drainage basin, a large area that a river gives identity to. And, the concept of shedding, as musicians. [Doug] This is a bit of a musician’s joke. If you hear a musician say they need to “shed” a particular piece of music, that means they need to practice it. Shed is short for woodshed, which is where a musician would go, as the story goes, to practice away from an audience. [James] I wanted to write a piece about the Tamolitch Pool, the Blue Pool, down near Eugene up off the McKenzie River. Which is an extraordinary place. If you haven’t gone, you need to check it out. It’s a spot where the river goes under ground then bubbles up in this intensely deep blue color that doesn’t seem real at all. I wasn’t prepared when I saw it. I thought “oh it’ll be some water, and it’s blue, and it will be pretty” but it’s really really wild. It’s, I don’t know, thiry-ish feet deep, and you can see all the way down to the bottom, just a really deep, kind of intelligent kind of blue. I had all these sketches, all these ideas, and I just couldn’t come up with the thing that was working for me to elicit some sense of that place and how it makes me feel. In the process of doing this, we were editing the trio disc and all of this improvise music that we just kind of made up in the moment, and there’s a piece on there that  really speaks to this place. So I went back into that and used that material to write a new large ensemble piece. Static is not the right word. It feels very serene. All the way through it feels like it’s got this flat sheen, there’s a feeling that you’re looking at something very deep but it never burbles to the surface. Which made me think of that pool, where you stand and you look at it and if you jumped in you wouldn’t be able to swim to the bottom of it. It looks closer than it is, but nothing is quite what it seems. The water is the connecting point but each one has a specific kind of sensibility to it. What I’ve always loved about Oaks Bottom is that you can get lost in there in a way after this crazy day in a big city. You can find yourself on a path in the middle of these wetlands, staring at a great blue heron, and then realize I’m sitting in the middle of this amazing place and I’m ten minutes from home. So, it’s the most urban of the settings, yet it has these qualities that it can transport you to a different place. [Doug] Finding inspiration in bodies of water is fitting for James Miley’s music. He crafts melodies with an amazing rhythmic lightness. The music dynamic and dazzling on the surface, but there’s always movement and depth underpinning it. He holds a doctorate in music from the University of Oregon, and currently is Assistant Professor of Music at Willamette University in Salem. He was born in California, but his studies and creative pursuits have taken him to Nevada, Virginia, Michigan, Arizona, Texas and abroad to Hong Kong and Kathmandu. He’s a master of composing for jazz ensemble, and that comes from a huge range of experience, including professional jazz bands, classical ensembles, and years spent teaching jazz in colleges and high schools all over the country. So it means something when he says about Portland and the Montavilla Jazz Festival that... [James] There’s more talent here per capita than any other place that I’ve lived. Even in Los Angeles, there are amazing musicians but there’s also ten million people and you drive two and a half hours between gigs. I think an opportunity to showcase what we have here and connect with the community on a grass roots level is fantastic. [Doug] If you’re in Eugene, come hear the ensemble play “Watershed Suite” at Roaring Rapids on Thursday, August 16th at 7 pm, free admission! If you’re in Portland, we play Saturday, August 18th at 5:30 at the Montavilla Jazz Festival. Go to pjce.org/watershed to get reserved or VIP stageside tickets. General Admission tickets are available at the door only, but your reserved seating ticket gets you General Admission access to see the whole festival. Learn more about rest of the festival lineup at montavillajazzfest.com. Have you heard the ensemble play a few times? Have you listened to some recordings on PJCE Records? Maybe you’re a subscriber to this podcast? If you enjoy this music and media, and you want to see us make more of it in the future, I encourage you to become a PJCE Sustainer. You can make a tax-deductible donation of as little as $60/year, or $5 per month, and get access to discounts on concert tickets and PJCE Records releases, and invitations to Sustainers-only events. We’re offering a $10 discount for Montavilla Jazz Festival reserved seating tickets, and you’ll be invited to a special reception with James Miley in September, available only to PJCE Sustainers. You’re going to have a million questions running through your mind after you hear his incredible music. Come to the reception and you can ask him all of them. Head on over to pjce.org/sustain to become a PJCE Sustainer and we’ll send you all the details. This has been Beyond Category, I’m Douglas Detrick, Executive Director and Podcaster-in-Chief of the Portland Jazz Composers Ensemble. Thanks for listening.

Michael: Hello everyone. This is Michael Gross of OptionSellers.com here with head trader James Cordier here for your April Option Sellers Video Podcast. Well, James, we didn’t see any abatement in the volatility in the stock market this month. In fact, Fed chairman Jerome Powell last week coming out, maybe spooking investors, talking about asset prices and maybe even financial markets being overvalued here… a little ghost of 2007. What do you think is going on here? James: Michael, it’s interesting... for the first time since quantitative easing was first announced practically a decade ago, investors and money managers now actually will have an option of not just pouring money into long stocks but fixed income is going to now be some of the talk. The tenure is approaching 3%. With what Jerome Powell said this past week, we will be reaching 3%, possibly 3.25 and 3.5 coming up over the next 6-12 months. With that in place, does the stock market have now still a free ride to the upside? Investors are going to be putting some of their money into fixed income and for the first time in practically a decade there’s an alternative from just being long the stock market. Michael: Obviously at this point, a lot of investors, especially high net-worth investors, are always looking to diversify into alternative asset classes. Physical commodities as hard assets always seem to have an appeal in any type of environment really but especially in this type where you have a lot of the jitters about paper assets. James: There’s probably more jitters now than I can think of over the last decade. As you know, we have investors contacting us on a daily basis, I think, just for that reason. Investors wanting to diversify right now from the stock market, I think, is hitting a really great stride right now. Wanting to get into markets that are uncorrelated to what the DOW does and what the S&P does is not only really popular right now but a lot of the real investors, you know, the people with millions of dollars under management, they are looking for alternatives now and I think they’re going to find some, not only in yield bearing accounts like fixed income but certainly in commodities like what we do, as well. Michael: Of course, we are in springtime now in the commodities markets. That means there’s a lot of things that happen in a lot of the physical commodities in the springtime, especially the agriculture markets and energy markets. We have some great seasonal tendencies, as well, in the spring. James: We do. Needless to say, a lot of people look at commodities and they think about the weather. Over the next 90 days the weather will be a really big factor. Quite often, end users for soybeans, corn, and wheat, they need to get insurance and make sure that they’re going to have these products for what they do and basically for animal feed. Of course in the United States, the largest producer of corn and soybeans, the weather is key. Often, they build in a certain premium during the months of May, June, and July just in case the farmers in the United States don’t do exactly what they would have hoped each year. Of course, later on in the year, once again the U.S. farmers are the best in the world and the spring rallies that often happen normally are just great sales for doing what we do. Michael: Speaking of those rallies or markets, we have a couple we’re going to feature this month that are maybe a little ahead of themselves. Now we have some of that inflated call premium. If you are one of those investors, it’s just learning how to sell options or learning how to sell options on commodities, these are two markets we think are really going to help you... Good opportunities, actually markets we are taking advantage of now in our management portfolios. We are going to cover those for you here in just a minute. Thank you. Michael: Okay everyone, we are back with our Market Segment for this month’s podcast. The first market we’re going to discuss this month is the soybean market. Soybeans have been in a strong rally the past couple of months primarily as a result of some things going on down in South America. James, do you want to talk a little bit about that and what’s driving prices right now? James: Michael, corn, soybeans, and wheat are all about the weather. The third largest producer in the world is Argentina. They’ve had a very dry growing season this year. For that reason, they do have reduced yields and we’re going to have a little bit of tightness out of that South American country. They are the third largest producer in the world and basically the U.S. weather is normally the big catalyst for the market moving up or down. This year, Argentina, which of course they have the opposite season here in the United States, their summers/our winter of course, and while there’s not much to talk about in the United States, traders look elsewhere. In South America, especially in Argentina, they had a really dry season. For that reason, the soybean prices have been bumping up to nearly 12-month highs over the last couple weeks. Michael: Yeah, we have seen some reduced yield expectations right now. We were at 60 million metric tons out of Argentina just a couple of years ago, now we are hearing it might be down as low as 40 million… it’s not reflected yet here. I guess that has been driving prices substantially higher, but we’re nearing the end of that growing season there now, aren’t we? James: We really are. Quite often, traders and investors will price on the worst-case scenario, so then once the corn and soybeans are actually harvested, often the weather wasn’t as bad as people thought and then the market readjusts to the current level of the production it actually turns out to be. Michael: So what you’re saying is although we’ve had some problems out of Argentina, they do about 50% of the production done in the U.S. or Brazil. From what I’m hearing, they’re thinking that production out of Brazil may make up some of those losses out of Argentina already. Is that correct? James: Unlike Argentina, just to the south of Brazil, Brazil has had just wonderful growing conditions for cocoa, coffee, soybeans, orange juice, sugar. Brazil is just a wonderful garden right now for growing soybeans. I think the Brazilian harvest will be larger than expected and that will make up probably a quarter and a half of what we’re going to be losing out of Argentina this year. Michael: Of course, as South American harvest is under way, we get started with planting here in the United States. The market probably starts focusing on what’s going on with the U.S. crop here pretty soon. If they do, the United States has some pretty big supplies heading into the planting season this year. James: We’re certainly going to have harvest pressure probably starting September-October of this year, and the Argentinean drought it probably going to be a forgone memory at that point. Supplies are going to be more than plentiful in the United States, and of course the U.S. is going to be the supplier to the world because of our ending stocks here in the United States, which is something I know we want to talk about as well. Michael: Starting off the year, we have the second highest ending stocks in the last 30 years and the highest in over a decade, so we’re already starting off the year with big supply. Now, the planting intentions, which we’ll know more for sure the 29th of March when that report comes out, but right now estimates are we’re going to have at least as many acres planted as last year, 90 million with estimates now at 90-92 million, so if we even have average yields we could be looking at all-time record ending stocks for next year. Like you said, that harvest pressure coming in… if they’re harvesting that size of a crop you’ll get some pretty substantial harvest pressure. So, the trade you’re recommending here right now, you’re thinking that this rally is probably going to fizzle and we’re going to see steadier lower prices. What are you looking at to trade here? James: Michael, we think that come October-November, soybean prices will probably be below $10 a bushel. We’re trading around $10.40-$10.50 right now. Basically, on the dry conditions in Argentina, we’re thinking that soybeans have a little bit of a chance to rally another 20-30 cents. They could get to the mid-upper dollar region. We love the idea of selling soybeans at the $13 level, so we’re going to be recommending soybean calls at $13 and $13.25 thinking that while soybeans might have a big of a rally going into May and June, we love the idea of being short in fall. So kind of like football, we’re not exactly throwing the ball to where we think the market is right now, but we’re selling options to where we think the runner’s going to be, and the runner being a huge harvest in the United States come September and October. $13 level for soybeans, you’ve got to bet on something, and boy we don’t see that happening nowhere being near that price. Michael: Yeah, that’s a pretty big cushion there to be wrong. The USDA itself has average on-farm price this year at $9.25, which is down here. So, that seems like a pretty safe bet. Let’s go ahead and move on to our next market right now, and that would be the cocoa market. Michael: James, cocoa is another one of these markets that has had a pretty good run here over the last several weeks. What’s going on here with prices? James: You know, similar to soybeans that we just talked about, one of the main producers of cocoa is the Ivory Coast. They are the largest producer in the world. They’ve had dry conditions this past year and, while those dry conditions certainly will reduce some of the pods yielding this year, we have what’s estimated to be 2% less cocoa being produced worldwide in 2018; however, a 2% drop in production has now caused and created a 30% increase in price. The balance doesn’t quite weigh out but we do have speculators buying, we have commercials buying on the idea that the Ivory Coast crop is going to be smaller, and it is certainly trading above what we think is going to be fair value in price later this year, probably be a couple hundred dollars a ton. Michael: So, while this west African crop got hit somewhat, you’re saying global production is probably going to make up for a lot of that? James: It is. A lot is always made at the Ivory Coast because they are the largest producer. Sometimes they have political turmoil. Sometimes they have the weather that’s not quite right. 2018 and 2019 there’s supposed to be a world production surplus for cocoa. So, all this discussion about the Ivory Coast being too dry is eventually going to take the back seat to the fact that the world does have enough cocoa. It’s not as tight in supply as a lot of people think. Rallying from $2,100-$2,200 a ton all the way up to $2,600 a ton, we think that the rally is overblown and probably, starting in August and September, we’re going to be quite a bit lower than where we are right now. Michael: There’s the numbers you were talking about. That’s the latest from the ICO (International Cocoa Organization) and it’s showing only 2.3%, so that’s a pretty good rally for the bigger picture short fall. James: It’s interesting. Commodities do have a reputation for overshooting on the downside and overshooting on the upside, and I think cocoa is a prime example of that here in 2018. Let’s say the cocoa production falls off 2.5-3%... we’ve had a nearly 30% increase in price and I think things will come into equilibrium the 3rd and 4th quarter of this year. Michael: So, how do you recommend that option sellers at home take advantage of this? James: You know, like we’re looking at on the chart here, $3,000 a ton, $3,100 a ton, yet a large leap above where we are right now, those options right now are fetching $500, $600, $700 each. We think those are a great sale. The market, needless to say, is still in an uptrend. It could still go slightly higher, but as harvest around the world starts taking place we will have harvest pressure again and a lot of the commercial and speculative buying will probably back off. We expect cocoa to probably be around $2,300-$2,400 later this year. If we’re short from $3,100 by selling those calls at $3,000 and higher, we think that’s going to be a really good way to position in this market. Michael: Yeah, especially I see the speed this moved up… probably really goosed those option premiums up there. Maybe just like the market, they’re probably overpriced too now at this point. James: Michael, it’s interesting. As you know, we follow 10 commodities. We don’t trade all 10 all the time. Cocoa is on our radar screen. It is one of the markets we follow extremely closely. When you have extremes in this market, cocoa is an absolute necessity to many households and many consumers around the world. Cocoa is not so much an exotic. It is a market that everyone is in touch with and the fact that we’ve had that large increase in a very short period of time, those options now open up to large premium and, we think, we’re going to be taking advantage of those in a very good way over the next 30 days. Michael: I know for me chocolate is a necessity, so I know how those people feel. Okay, let’s go ahead and move into our Q&A session now and answer some of our questions from readers. Michael: We’re back with out Q&A with the Trader section and, James, our first question this month comes from Orson Falck of Manchester, New Hampshire. Orson asks, “Dear James, I noticed when you talk about positioning an account, you say you keep a large cash reserve for your client accounts – fifty percent I believe. Are your published results based on the entire amount in the account, including the non-invested cash, or is it based on the amount you have invested?” James: Orson, that’s a good question. If you’ve been following our materials over the last period of time, we follow 8-10 commodities. We rarely find opportunities in all of them at one time. Therefore, Orson, what we do, for example, we want to keep our margin levels at 50% or lower so that when we do have an opportunity in cocoa or soybeans or coffee positions that we don’t currently hold, we have dry powder in which to take advantage of them. Even when we are fully positioned and we are in 2 energies, 2 metals, 2 foods, and 2 grains, we still don’t raise our margin level to much more than 50%. There’s not a right way or a wrong way to do this. For us, that’s been the sweet spot for margin and leverage. I know how we did last year, I know how our returns were last year, and that was on less than 50% margin. Our client is never going to receive a margin call, we’re never getting shaken out of the market because one market or another market moved a certain level. We like the comfort of that. That allows us to make the yield curve as flat as possible so that we have smaller equity swings in people’s accounts that have invested with us. To answer your second question, the published results last year and years prior is on the total amount of money invested, not just the amount of money that is put up as margin. It is the 100% of exactly what the client invested. Michael: Very good. I get that question a lot. People, especially stock investors, that aren’t used to how those margin fluctuations, they aren’t used to that big cash cushion, and knowing how to use leverage in commodities is really one of the biggest keys to being successful in it. This is how you use leverage properly, by keeping that cushion there. James: Absolutely. There’s no reason to push this type of investment product. I know how we’ve done the last several years, being invested less than 50%, I know what the results were, and I don’t feel the need to really push that envelope. I like the ability to be nimble in the market. If we have something on that we need to add to, we have extra cushion to do that. If a market moves against us slightly it doesn’t really mess up a portfolio to any great extent, and that is why we utilize the 50% rule. We rarely are going to be invested above that. Michael: Let’s go to our second question. Our second question this month comes from Harold W. Corson. Harold is writing in from Monterey, California. Harold asks, “Dear James, Thank you for your outstanding book that introduced me to selling options on commodities contracts. So far, I’ve sold options in oil, gold, and just started out in wheat. So far, so good. I’ve noticed some commodities don’t have much trading volume. How many commodities do you typically recommend trading in an option selling account?” James: The four sectors that we follow are energies, metals, foods, and grains. Generally, we’re watching about 8 or 9. We are often in 5 or 6 of these commodities, as I mentioned in the last question. Rarely are we in all 8 or 9 at a time. I like being in all 4 sectors. We definitely want to be in the grain market, that is the main staples, of course, in the world. Precious metals, energies are extremely high-volume trades. Great liquidity there, very large premiums generally, and in the foods, as well. Basically, volume is going to be mostly in these 8 commodities. We don’t like straying outside of them. Liquidity and volume is very important. Basically, you want to look at the round strikes. For example, if you’re managing your own portfolio and you’re looking at crude oil you’re going to be looking at the $70 strike. Don’t look at the $71. In gold, don’t look at the $1,825 option, look at the $1,800 or the $1,900 option. Easy tricks like that to find the volume in the open interest will help you get in and out of the market if you choose to do this on your own. Michael: Yeah, I mean, it’s a great point you make that, again, going back to stock traders and stock option sellers, they’ve got 2,000 or more stocks they can pick from. We’ve got 10-12 commodities we watched and maybe 6-8 you’re trading at any given time. So, there’s not a big universe there. You focus on the ones with the highest volume. Obviously, there are markets like lumber and aluminum or what have you that there’s really no volume there for option sellers, so you don’t have to bother with them. James: Right. The 8 or 10 that we follow are just absolute staples of life both here in the United States and abroad. They have excellent volume and excellent open interest, for the most part, and that’s where you want to be. The exotics so much, you know, every once in a while there’s an opportunity there, but having liquidity for our clients is of the utmost importance and it should be for you, as well. Michael: A couple resources if you are interested in learning more about selling options on commodities… obviously our book, The Complete Guide to Option Selling. You can get it on our website at a discount to where you’ll get it at the bookstore or Amazon. That link is www.optionsellers.com/book. If you’re not yet a subscriber to our newsletter, you can get a free copy by going to www.optionsellers.com/newsletter and get some of these trades we’ve been talking about and also more answers to option selling questions. That does it for our Q&A section for this month. We’re going to go ahead and move into our final section of the podcast. Michael: Thank you for joining us for the April podcast. We hope you’ve enjoyed what you saw here today. Next month, we’re going into May and we have even more seasonals coming up. James, some of your favorite markets come into some major seasonals next month. James: We will look at an active calendar starting in May, certainly. Soybeans and corn are probably the main feature. We’re selling options and call options during the next 60 days. Of course, cocoa is on our radar screen right now with 2% smaller production and an increase of 30% in the last several months. We’ve got a lot of activity going on in the next May, June, and July it really looks like. Michael: We also have the energy markets coming into play, as well, so there’ll be a lot to talk about next month. We’ll probably continue talking about some of these great seasonals that happen during the spring and how you can take advantage of them here. For those of you that are interested in how the accounts work here or may be interested in becoming a client of OptionSellers.com, we do recommend you get our free Discovery kit. That’s an information pack for investors. It’ll tell you all about our accounts and how you can invest directly with OptionSellers.com in a managed option selling account. If you’d like to get that, the website link is www.optionsellers.com/Discovery. Speaking with Rosie, we do have all our April consultations booked, so there is no further availability for them; however, we do have consultations still available in May. If you’re interested in discussing an account with OptionSellers.com, you can call Rosemary at the main office. That’s 800-346-1949 or Internationally at 813-472-5760. Depending on availability, Rosemary can get you scheduled with a consultation. As a reminder, our minimum account level did go up this month. The minimum account level is now $500,000. James, thanks for all of your insights this month. James: My pleasure, Michael. Always fun and very insightful to help our viewers and listeners out with this. Michael: We’ll talk to you right here in 30 days. Thank you.

Our third and final episode of maritime tales. Among some lighthearted shorts, we meet a sailor's wife, and then witness the birth of the ship that's we've heard so much about. Music: Creepy — Bensound.com.     James: Here are some Totally Made Up Tales, brought to you by the magic of the internet. Alternating: Jump over small hoops. It's better than going through them. Sweeten your deal with honey. It will help you get sales. Mixing your metaphors will lead you to water. Walk a long way. You'll clear your mind and stretch your legs. James: And now: The Sailor's Wife. Alternating: Heather was the wife of a sailor who spent many months away at sea at a time. She survived on hope and her only consolation was her child, Phillip. He was the apple of her eye. Three years old and running around like a maniac. Just the spit of his father. One day, Heather and Phillip were playing in the sand when Phillip saw a ship entering the harbour. "That is my Daddy's ship," he cried. "No," said Heather. "Your daddy is away for another six months." "No," said Phillip. "That is my Daddy's ship," and he stamped his foot petulantly. Heather caught him up in an embrace. "We'll go and look at it." They walked to the harbour wall, Phillip squirming in anticipation. "There he is!", he said, pointing to a man walking away from the ship. "No," said Heather. "That man is too tall." "There!" said Phillip, pointing at a different man. "No," said Heather. "That man is too short." "There!", said Phillip, pointing at a third man. "Well," said Heather, "it is very similar to Roger. I wonder what he's doing back so soon." They walked quickly to where the man was standing. "Are you my husband?", asked Heather. "Are you my Daddy?", asked Phillip. "Are you my family?", asked the man, and they embraced. "Why are you back so soon?" asked Heather. "That is a long story," said Roger, "and one day, I will tell it to you." "We met a disaster just as we were passing the Rock of Gibraltar. The Captain saw three figures floating above the deck and one pointed at him and let a fearsome cry. The second pointed at him and spoke words of dread. The third pointed at him and spoke nothing. The Captain locked himself in his cabin and refused to come out, insisting that we return home at once. The First Mate brought us around and navigated us safely home. I do not know when we shall sail again, but this is a terrible portent." Heather held his hand and hoped that he would never go away again. Phillip also held his father's hand. The End. Alternating: Attention to detail is a devil's errand, so allow yourself to be sloppy. Muster Mister Custer, pester Lester. Faster, Pastor Caster! and foster Coster Gloucester. "Splice the main brace," said Jeffrey, and proceeded to get drunk. James: And now: The Ship Awakes. Andrew: Bang, bang, bang, bang, bang went the hammers against the wood and the sound reverberated around the mighty shed of the shipyard. James: They were putting the finishing touches on the latest ship to roll through the George & Brothers Shipyards, at Chatham. Andrew: She was a truly beautiful vessel, destined for the merchant marine. Large, imposing, grandiose, sleek, missing only the final pieces of decking and the mast to be fixed and raised. James: Spencer, the ship's architect was watching from one side, from the office, as the men swarmed over her. Andrew: He turned, from watching the finishing touches being made, to the ship that he had been imagining for so long. Rolled up the plans on his desk, locked the office door, and headed off to meet the ship's new owner. James: Over a pint in the Rope and Anchor, they toasted the successful completion of the ship's hull, and looked forward to her launch next week, to join the merchant fleet owned by this particular businessman. Andrew: The end of the day came, the foreman blew his whistle, the workmen downed their tools and set out for their homes, and the shipyard shed was locked securely for the night. James: There she rested, silent and waiting. Andrew: The silence of the ship building shed at night had the special quality that only comes to spaces that so often ring with noise. It had a textured feeling to it, as if you could reach out and touch it. James: A shaft of moonlight through the windows of the shed, illuminated the brass name plate on the ship's stern. "Sea Sprite." Andrew: If anyone had been in the shed, they might have had the eerie feeling that someone behind them was watching, and have turned and found nothing but the ship bearing down on them, as its soul slowly started to awaken. James: What do ships dream about before they first touch the ocean? What can a boat imagine before it feels the kiss of a wave? What could go through the mind of Sea Sprite, before she had ever even tasted the open air? Andrew: That same observer, who we earlier imagined, might feel, not just a watchful, but was it a malevolent presence? No. Not quite malevolent, but somehow not of this world. James: All ships have personalities, and those personalities are shaped and changed by their captain and their crew, but at birth, they are invested by only two things. The men who built her and the wood she is constructed from.   Andrew: Once upon a time, in a far off land, where a warm rain falls for much of the day, for much of the year, and many exotic animals make their homes, and the forest is alive with the squawks of birds, and the ribbitting of frogs, and the hissing of snakes and other wildlife… there stood a tree. A mighty hardwood tree, towering over all the others. James: It had been there so long, that it had seen not only generations of creatures and birds come and go, but it had also seen the gradual rise of the forest around it, and indeed, deep within its rings, it still bore the memories of the open plain. Andrew: Ah, the time of the open plain. The tree was one of the few remaining witnesses of the period in history, when humans has first descended from the trees, walked on the grounds, and formed their earliest tribes. James: In its branches and whorls, in its trunk and its bark, were encoded the history of not only the human race, but so many other species that it had seen rise and sometimes fall before it. Andrew: Owing to its long life, the tree possessed a deep wisdom that few others were able to obtain, through years of reflection and adversity. Many human shamans and magic men and women had come to worship at the tree, and to draw strength from its wisdom and from its magical power. James: For generations, the savviest traders would come and eat under the tree, hoping that its wisdom would somehow filter into them, and help them be better in the world. Andrew: Now the tree stood tall and proud. Its history rooted deeply inside it. And it knew that a change was about to come. James: The animals and birds were gradually being driven out of the forest, and indeed the forest itself, was being felled one tree at a time. Andrew: And then, the fateful day dawned when the foresters came for the mystical tree itself, and began to hack their little axes into its bark, and slowly cut out an enormous wedge from its base, until it fell — bringing down with it many smaller trees, and other parts of the canopy, so that it too could, in its turn, be packed up, chopped down into planks, shipped off, and sold to European merchants. James: In the shed of the shipyard, Sea Sprite lay waiting, and dreamed of revenge. I'm James, and I'm here with Andrew. These stories were recorded without advanced planning, and then lightly edited for the discerning listener. Join us next time for more Totally Made Up Tales.   Andrew: Muster Mister Coster. Pester Lester, test… James: No, I think when we pester Lester, you need to move on to something else, don't you? Andrew: Oh, okay. James: Well, I don't think there's a third one with pester Lester. Andrew: Oh, I don't know why in my head, it was gonna go pester Lester, test a sister. But, that was maybe a bit… James: Yeah, that wasn't gonna happen. I would not have guessed that. Andrew: But, okay. So, pester Lester. I'll just keep "test a sister" for myself. James: Okay.

In episode 6, we finish the story of the Rosewood Unicorn, along with meeting Theresa who runs a comforting bookshop, and seeing what happens when the Dean Drops In. Music: Creepy – Bensound.com.   James: Here are some totally made-up tales brought to you by the magic of the internet.     We start with the Dean Drops In.   Andrew: The head librarian looked up from her desk at the sound of a knock of the door of her wood panelled office.   James: Perhaps, she thought, it was her assistant with the soup for lunch. But, no, standing in the doorway was the Dean of the University.   Andrew: "May, I come in?" he said in his patrician drawl that he had spent years perfecting.   James: "Of course, Dean," she said drawing a chair for him on the other side of her immense desk.   Andrew: "I wondered if I might speak to you about the little subject of books?" He said.   James: "Ah, yes, books," said the head librarian, "they are indeed in my remit."   Andrew: "Yes," he said, "I was wondering if that is really the most efficient way for us to work? Do you think we might re-visit the whole topic?"   James: The head librarian thought for a moment. This was a familiar pattern with the Dean, walking in and sparring with members of his faculty, threatening to take away certain responsibilities or authority. But this, she felt, was going further.   Andrew: Books had always been at the heart of University life and at the heart life and at the heart of learning and culture and damn if she was going to lose them.   James: Although the library contained a large number of things that were not by any stretch of the imagination books, she felt that reducing herself to only looking after those would inevitably see the library become part of some other faculty, such as languages or perhaps the modern hearts.   Andrew: She turned over in her mind the best way to conquer this threat to her domain. What could she do?   James: Smiling gently at the Dean, she walked around the large desk flicking open a small drawer as she went and withdrawing a jewel-encrusted dagger.   Andrew: This she delicately plunged into his back behind the middle of the rib cage, up into his heart and withdrew it wiping it on her handkerchief.   James: "Chelsea," she called for her assistant, "file this under D for dead things."     And now: Part II of the Rosewood Unicorn.   Andrew: The day dawned bright and fair. There was not a cloud in the sky. It was the 17th birthday of the Princess Caroline.   James: She rose early and was dressed in the most sumptuous clothes by her maids and prepared for the full day of celebration before her.   Andrew: In the morning she toured around the capital city meeting, greeting, receiving birthday wishes from the loyal subjects of the king among whom she was so popular.   James: At lunch there was a great banquet with many of the princes from surrounding kingdoms vying for her hand in marriage, not knowing, for the king had never disclosed to anyone the deal he had made with the Man in Black.   Andrew: The afternoon she had for recreation, for it was her birthday after all. She went for a pleasant walk in the gardens and played a game of tennis.   James: And just before the evening meal, as she had for so many years, she played briefly with the unicorn toy that she had been given so many years ago. Although it was no longer alive, she still loved it with a strange passion from her past.   Andrew: After a busy day, her birthday ended with a simple meal for the most immediate members of the royal family in their private dining room. They had a delicious, but not extravagant meal, and had come to the end of it.   James: There was a knock at the door to the royal suit.   Andrew: "Who could that be?" said the Queen. "This is a very late hour for us to be interrupted by an urgent message or an embassy from a foreign power."   James: The King signalled to one of the servants to open the door and inquire who it was at this late hour.   Andrew: The double doors were flung open and framed in silhouette against the flickering candlelight from the corridor behind, was the Man in Black.   James: "I have come," he said, "as we agreed."   Andrew: Well, there ensued a rather complicated conversation. The King had a great deal of explaining to do. The Queen was unhappy. Princess Caroline was unhappy. Tears were shed, voices were raised, but the Man in Black was implacable and the King was a man of his word. There was no way around it other than Princess Caroline should immediately pack her things and leave.   James: Tearfully she looked around her rooms deciding what she would take with her. There was no need, perhaps, for many of the things that she normally liked to wear or many of the books that she usually read from. She packed a small bag, taking with her only a couple changes of clothing and the unicorn.   Andrew: The Man in Black had a fine black horse, strong and sturdy waiting in the courtyard, steam rising from his nostrils as it stamped its hooves and shook its head. "Climb aboard," he said.   James: She swing herself up behind him. The bag pressed between the two of them. Almost as a wall between her and, as she thought of him, her captor.   Andrew: They rode through the night. Across lands that the princess had never seen before and had barely known existed. Across forests and fields, mountains, valleys, they forded rivers, until at length they came to the far off land where the Man in Black ruled.   James: A dark, sinister castle thrust itself out of the naked rock. Towers twisting towards the sky. Around it a dark and menacing forest stretched as far as the eyes could see. As the Man rode his horse, Caroline behind him, down the single, narrow path through the forest, she, tired from their journey, gradually slipped off to sleep.   Andrew: The next day, the princes awoke. At first, she was aware of being in a comfortable bed so familiar to the one that she had slept in for many years. But soon she realised that, no, she was not in the bed chamber that she had grown up in, but she was in a different castle in a different land starting a new life.   James: She crept out of her bedroom and started to explore around the castle very soon finding the main hall where the Man in Black was taking breakfast.   Andrew: "Ha-ha, my dear, you are awake," he said with great charm and courtesy. "We'll you join me for breakfast? I have all the goods that one could possibly want to eat."   James: As he spoke, she realised that she was hungry and sat down to eat some of the most delicious fruits and meats that she had ever tasted.   Andrew: The spread was vast and she ate her fill and was sitting in quiet contentment when her husband spoke.   James: "Now you have come to live here you will, of course, have all of the benefits of my country. The best food, the most delicious wine, the most compliant servants; however, I do regret that you will never be able to go back and see your family again. That is just the way that these things work, I'm afraid."   Andrew: The princess was heartbroken. She said nothing and left the table and returned to her room, tears brimming in her eyes.   James: She threw herself down upon the bed attempting to smother her tears in the pillow. Before long she felt a touch on her arm. She started, looking down her arm she noticed the unicorn and it tossed its head.   Andrew: "What on earth," she exclaimed looking down at the toy from her childhood. "But all those years ago you, surely you, I remember ..."   James: It nudged her with its horn gently and then cantered up to her face.   Andrew: "Oh, you've come back to me just at the moment which I needed a friend. Thank you, thank you, thank you," she said, kissing it on its back.   James: That night Caroline waited until she was certain that all in the castle were asleep before taking the unicorn in her pocket and creeping down to the great hall.   Andrew: There, she gathered up the things that she would need for a long journey and made her way outside through the kitchens.   James: The circle of the trees of the dark forest surrounded the castle and she could not see the path. So thinking that any direction was as good as any other, she picked one and started walking.   Andrew: The forest at night was strange and eerie but she was a confident young woman and with her trusty unicorn and her provisions, she strolled ahead without fear.   James: She walked through the night and as the first hints of dawn started to be visible through the dark trees, she finally came across a clearing and in the centre of the clearing was the castle.   Andrew: She was bitterly disappointed. "Oh, I must have taken a wrong turning somewhere or followed a path that came around. What a foolish mistake to make." But she realised that it would be futile to try and leave again during the daytime when she could be seen by everyone in the castle and she returned to the great hall for breakfast.   James: The following night she tried again. Once more as dawn started to creep across the land, she found herself back at the castle.   Andrew: She made several attempts over the following nights to escape. Each time taking a different path, recording the path that she had gone down by making a mark on the barks of the trees, but each time it brought her back to the castle at daybreak. Then while sitting down to breakfast the Man in Black addressed her.   James: "I told you, but you did not believe me. There is no way that you can leave this place and see your family again."   Andrew: "And indeed why would you want to? Here you will have a life of complete contentment. We have a peaceful land where we are unchallenged in our rule. You will have a life of ease and joy. You should accustom yourself to it and not seek to escape."   James: Caroline ran from the table up to her room and threw herself down on the bed in despair.   Andrew: "Oh, what shall I do?" she said to the unicorn as they played together. "What shall I do? It is comfortable here and life could be easy and it is impossible to escape, but I oh I miss my family so. What shall I do?"   James: That night she did not try to escape and as she lay sleeping the unicorn thought.   Andrew: The unicorn was a sensitive beast and hated to see the mistress who it loved in so much pain and discomfort. "How can I help?" it thought. "How can I help her to escape?"   James: The unicorn understood the magic that controlled the forest and the routes through it. The unicorn made of rosewood from the great tree that stood at the centre of the forest, was well aware of exactly how the Man in Black's magic constrained the Princes Caroline. The unicorn knew that this particular spell was powerful and woven through the very fabric of the castle and the forest itself and that only one thing could cause it to fail.   Andrew: The unicorn, a magical animal, understood the ways of the occult and knew that the only way to break the spell and to transport the princess back to her childhood home where she so longed to go, was to burn a part of the magical forest that formed that the impenetrable boundary around the castle along with an item from the desired destination of the traveler. The unicorn rooted around through the possessions that the princess had brought with her from her home and found one of the scarves that had been given to her in her childhood.   James: Now all of the unicorn had to do was to burn this with part of the rosewood heart of the forest. But now the Princess Caroline never went outside. She always wanted to stay within her room and play and the unicorn could not deny her that.   Andrew: Although it bided its time hoping for an opportunity to be taken outside so that it could collect something from the forest, the days turned into weeks, the weeks turned into months and the princess was beginning to waste away with sadness and despair.   James: Seeing her condition, the unicorn knew that it could not wait and that its chance to get outside into the forest might never appear. It took the scarf, wrapped it around itself and when the princess was not looking, cantered into the fireplace where it burned completely.   Andrew: The day dawned bright and fair. There was not a cloud in the sky. It was the seventh birthday of the Princess Caroline.   James: She woke excited for the day's festivities ahead and as she always did, she started her day by playing with the delicate and beautiful swan that she had been given for Christmas. Made by the finest toy maker in the land.   Andrew: The door of her bedroom opened and her kindly aunt and uncle beamed down on her. "Come my child, let us have a celebratory breakfast on this your special day. A happy birthday to our beloved child and the most special girl in all the land."   Alternating: Theresa was a pleasant lady who ran the bookshop in town. Every time she wanted a breath of fresh air, she would walk outside into the square and sit on a stone bench beside the fountain. One day while perambulating, she encountered a small boy who was without his parents. He looked lost and sad. "Are you okay?" she asked. "No," he said, "I've lost my mummy." Theresa took him by the hand and went inside the bookshop. She picked him a book to read and made some tea. As he read to himself, she patted him on the head. He sighed contentedly. "I'm not scared any more."   James: I've been James and I'm here with Andrew. These stories were recorded without advanced planning and lightly edited for the discerning listener. Join us next time for more totally made up tales.  

Our fourth episode of Totally Made Up Tales, with more tales of wonder and mystery. Spread the word! Tell a friend!   Music: Creepy – Bensound.com.   Andrew: Here are some totally made up tales. Brought to you by the magic of the internet.   James: One   Andrew: Day   James: Elise   Andrew: Held   James: Her   Andrew: Boyfriend   James: Tightly   Andrew: And   James: Whispered   Andrew: That   James: She   Andrew: Was   James: Pregnant.   Andrew: He   James: Was   Andrew: Surprised   James: But   Andrew: Delighted.   James: Together   Andrew: They   James: Planned   Andrew: For   James: A   Andrew: Home   James: That   Andrew: Would   James: Welcome   Andrew: A   James: New   Andrew: Life.   James: Painting   Andrew: The   James: Nursery   Andrew: In   James: Bright   Andrew: Green   James: With   Andrew: Some   James: Dinosaurs   Andrew: On   James: The   Andrew: Walls.   James: Building   Andrew: A   James: Crib   Andrew: Out   James: Of   Andrew: Ikea   James: And   Andrew: Reading   James: To   Andrew: Each   James: Other   Andrew: The   James: Day   Andrew: Of   James: Delivery   Andrew: Arrived   James: And   Andrew: They   James: Took   Andrew: Elise   James: To   Andrew: The   James: Hospital,   Andrew: Where   James: She   Andrew: Gave   James: Birth   Andrew: To   James: A   Andrew: Healthy   James: Baby   Andrew: Dinosaur   James: The   Andrew: End.   James: This is the story of the Gamekeeper's Family.   Once upon a time, not so very long ago, there lived a couple in a wood.   Andrew: The husband was a gamekeeper at the local estate.   James: His wife was a housekeeper for the same.   Andrew: They had lived in their little cottage very happily for the last fifteen years.   James: But ... they longed for a child.   Andrew: They had tried many things, been to doctors, healers and priests but without success.   James: They had traveled the world looking for witches that might be able to cure their barrenness, but all in vain.   Andrew: After many years of searching and hoping, they had resigned themselves to their situation and were content to mind the children of their neighbours and fellow workers.   James: But one day, as the gamekeeper walked home through the forest paths, he came across a basket.   Andrew: Attached to the basket was a note, read, “please take care of me” and inside wrapped up in blankets there was a tiny baby.   James: He rushed home to his wife to show her what he had found.   Andrew: They spent a long time discussing whether or not it would be right for them to keep this child. Who had left it there and why?   James: Eventually, they chose to consult the local vicar who assured them that with all of their experience helping to look after their neighbours' children and given that almost everyone else in the village already had children of their own, the right thing would be for them to keep it and raise it as their own.   Andrew: This they did, with great success and a fine healthy young man was the product of their labours.   James: They had named him Benjamin, after the wife's father and as Benjamin grew in stature, he also grew in the love given to him, not only by them but by others in the village. For everyone enjoyed his outgoing and pleasant company.   Andrew: As the years passed the time came for him to take over his father's job as gamekeeper on the estate and this he did.   James: He had spent his childhood growing up amongst the forest and knew how to look for the different types of woodland animal and also how to protect them. How best to defend them from poachers and so forth. And so, continuing the charm of his childhood as he started his job, he proved to be more than adept as a gamekeeper and was rapidly promoted until he became head gamekeeper.   Andrew: After many years, his parents passed away in a peaceful old age and he moved back to the cottage where he had grown up.   James: By this time, he was himself, married, although as with his parents, he and his wife Amelia, had not been able to have a child.   Andrew: One day, while out walking in the estate, completing his rounds and jobs, Benjamin too came across a basket with a note attached.   James: The note, as the note on his own basket, said “please take care of me” and inside was a tiny child that he took home to Amelia and which as with his parents before him, they decided it was right to adopt.   Andrew: Now, the listener will not know that Benjamin's parents had not chosen to share with him the story of how they had found him in a cradle in the woods. And so, it did not occur to him that there was anything unusual about this coincidence.   James: As Benjamin and Amelia's daughter, Susanna, grew, she also, much like Benjamin was much loved around the village and when it came time for her to start working, she took over Amelia's job as housekeeper, as Amelia had taken over the job of Benjamin's mother before her.   Andrew: And so it was that this story played out from generation to generation. Susanna had a son named Robert. Robert had a daughter named Barbara. Barbara had a son named Tom.   James: And always, down through the generations, the same jobs were passed from father to daughter, from daughter to son, across the generations, gamekeeper and housekeeper both.   Andrew: But why? Why was it that these popular, lovable, outgoing people were never able to have children of their own? And where was it that the mysterious foundlings were coming from?   James: For that, dear listener, we must go back to the first gamekeeper and housekeeper, Benjamin's parents, and see their story from another angle.   Andrew: Once upon a time there was a magical forest where there dwelled many sprites and pixies.   James: Chief among them was a fairy who had lived for many hundreds of years, spending her time looking after the non-magical creatures of the kingdom.   Andrew: Now, many fairies have an ambiguous and complicated relationship with human beings, seeing them somewhat like a tree sees a fungus growing on its bark.   James: At times, the fairy would help humans through stumbling difficulties in their lives, but at other times she would punish them for what she saw as a transgression against the magical forest.   Andrew: She was, to our eyes, capricious in her whims. Sometimes kind, sometimes cruel.   James: One day, the gamekeeper, while walking home through the forest spied a rogue pheasant which had somehow escaped from, as he thought, the forest that he managed.   Andrew: What appeared to be a pheasant to his eyes, was in fact the fairy, wandering through her domain.   James: He carefully set a trap and as she did not consider him a threat, she walked right into it and was quickly bound and trussed with him carrying her home towards the pot.   Andrew: He was not by nature a sentimental person, having spent his life working with the wild animals of the forest. But, there was something about the way this bird fixed him with a seemingly knowing stare as he set it down on the kitchen table that made him think twice about instantly wringing its neck.   James: In the moment that he hesitated, the fairy, as fairies sometimes do, cast a spell, not only for her to be released and free but also so that he would forget having ever encountered her. And, as fairies are also sometimes wont to do, she cursed him at that moment, annoyed and upset that she had ignominiously been bound and walked over the forest. She cursed him that he should never have a child to love him.   Andrew: Sometime later, the fairy observed his wife walking through the forest and weeping and lamenting her lack of children.   James: Unaware that this woman was in any way related to the gamekeeper she had previously cursed, she cast a beneficial spell over the housekeeper that she would have a child that she so clearly desired.   Andrew: The child of course, was easy to provide for fairy folk often have children which they need to be raised in the human world.   James: And no one ever questioned from Benjamin through Susanna, through Robert, through Barbara, through Tom, why, when their feet touched the ground in the forest, flowers grew in their footsteps.   Andrew: And from generation to generation, they continued to live, in the small charming cottage in the middle of the wonderful magical wood.   James: Sally   Andrew: Held   James: Her   Andrew: Handbag   James: Defensively   Andrew: When   James: The   Andrew: Mugger   James: Threatened   Andrew: Her   James: With   Andrew: A   James: Knife.   Andrew: She   James: Balanced   Andrew: On   James: The   Andrew: Balls   James: Of   Andrew: Her   James: Feet   Andrew: And   James: Lashed   Andrew: Out   James: With   Andrew: Her   James: Handbag   Andrew: Knocking   James: Him   Andrew: Over   James: And   Andrew: Giving   James: Her   Andrew: The   James: Chance   Andrew: To   James: Escape.   Andrew: She   James: Reported   Andrew: The   James: Incident   Andrew: To   James: The   Andrew: Police   James: Who   Andrew: Promptly   James: Ignored   Andrew: Her   James: And   Andrew: Carried   James: On   Andrew: Filling   James: In   Andrew: Paperwork.   James: The   Andrew: End.   James: Our next story is Jeremy's Place.   One   Andrew: Day   James: Jeremy   Andrew: Was   James: Walking   Andrew: Along   James: The   Andrew: High   James: Street   Andrew: When   James: He   Andrew: Noticed   James: That   Andrew: The   James: Shops   Andrew: Were   James: All   Andrew: Closed.   James: In   Andrew: Normal   James: Times   Andrew: They   James: Would   Andrew: Be   James: Open   Andrew: On   James: Fridays   Andrew: But   James: Today   Andrew: They   James: Were   Andrew: Not   James: “Hmmm?”   Andrew: He   James: Thought   Andrew: “Is   James: There   Andrew: A   James: Special   Andrew: Occasion?   James: Perhaps   Andrew: It's   James: Remembrance   Andrew: Day?   James: But   Andrew: That   James: Is   Andrew: Always   James: On   Andrew: A   James: Sunday.”   Andrew: So   James: He   Andrew: Knocked   James: On   Andrew: The   James: Door   Andrew: Of   James: The   Andrew: Post   James: Office   Andrew: And   James: Waited   Andrew: For   James: Someone   Andrew: To   James: Open   Andrew: It.   James: Waited   Andrew: And   James: Waited   Andrew: Then   James: Waited   Andrew: Some   James: More.   Andrew: He   James: Gave   Andrew: The   James: Putative   Andrew: Post-mistress   James: Half   Andrew: An   James: Hour   Andrew: And   James: She   Andrew: Didn't   James: Appear.   Andrew: So   James: He   Andrew: Pushed   James: And   Andrew: The   James: Door   Andrew: Opened.   James: “Funny,”   Andrew: He   James: Thought   Andrew: And   James: Stepped   Andrew: Inside.   James: Inside   Andrew: There   James: Was   Andrew: No   James: Light.   Andrew: In   James: The   Andrew: Space   James: Reserved   Andrew: For   James: Packages,   Andrew: There   James: Was   Andrew: A   James: Small   Andrew: Dog.   James: “Strange,”   Andrew: He   James: Thought,   Andrew: And   James: Approached.   Andrew: The   James: Dog   Andrew: Looked   James: At   Andrew: Him   James: And   Andrew: Opened   James: His   Andrew: Mouth.   James: “Why   Andrew: Are   James: You   Andrew: Here?”   James: Asked   Andrew: The   James: Dog   Andrew: “I   James: Want   Andrew: To   James: Know   Andrew: What's   James: Going   Andrew: On?”   James: Said   Andrew: Jeremy.   James: “This   Andrew: Is   James: Not   Andrew: A   James: Place   Andrew: For   James: You.”   Andrew: Said   James: The   Andrew: Dog   James: “Where   Andrew: Am   James: I?”   Andrew: “You   James: Are   Andrew: In   James: The   Andrew: Seventh   James: Kingdom.”   Andrew: Jeremy   James: Backed   Andrew: Away   James: From   Andrew: The   James: Dog   Andrew: And   James: Fled.   Andrew: Once   James: Outside   Andrew: He   James: Started   Andrew: To   James: Calm   Andrew: Down   James: Again.   Andrew: He   James: Convinced   Andrew: Himself   James: That   Andrew: Nothing   James: Strange   Andrew: Had   James: Happened   Andrew: To   James: Him   Andrew: And   James: Proceeded   Andrew: To   James: Walk   Andrew: Down   James: The   Andrew: High   James: Street   Andrew: And   James: Knocked   Andrew: On   James: The   Andrew: Door   James: Of   Andrew: The   James: Butchers.   Andrew: Again   James: There   Andrew: Was   James: No   Andrew: Reply   James: So   Andrew: He   James: Pushed   Andrew: The   James: Door   Andrew: Open   James: And   Andrew: Stepped   James: Inside.   Andrew: Within,   James: There   Andrew: Was   James: No   Andrew: Light.   James: In   Andrew: The   James: Area   Andrew: Where   James: Meat   Andrew: Would   James: Be   Andrew: Chilled   James: There   Andrew: Was   James: Another   Andrew: Dog.   James: “What   Andrew: Are   James: You   Andrew: Doing   James: Here?”   Andrew: Said   James: The   Andrew: Dog.   James: “I'm   Andrew: Just…”   James: “No!”   Andrew: Said   James: The   Andrew: Dog.   James: “This   Andrew: Is   James: Not   Andrew: A   James: Place   Andrew: For   James: You!”   Andrew: Jeremy   James: Looked   Andrew: Confused.   James: “Where   Andrew: Am   James: I?”   Andrew: “Go!   James: This   Andrew: Is   James: The   Andrew: Kingdom.   James: You   Andrew: Must   James: Leave.”   Andrew: Jeremy   James: Backed   Andrew: Away   James: From   Andrew: The   James: Dog   Andrew: Into   James: The   Andrew: Doorway,   James: And   Andrew: Stepped   James: Back   Andrew: Onto   James: The   Andrew: High   James: Street.   Andrew: Now   James: He   Andrew: Was   James: Having   Andrew: Second   James: Thoughts   Andrew: About   James: The   Andrew: Shopping   James: Trip   Andrew: That   James: He   Andrew: Had   James: Planned   Andrew: And   James: Walked   Andrew: Back   James: Towards   Andrew: Home.   James: Passing   Andrew: The   James: Police   Andrew: Station,   James: He   Andrew: Went   James: To   Andrew: The   James: Door   Andrew: And   James: Knocked.   Andrew: The   James: Door   Andrew: Was   James: Not   Andrew: Locked,   James: And   Andrew: So   James: He   Andrew: Went   James: Inside.   Andrew: Within,   James: There   Andrew: Was   James: No   Andrew: Light.   James: In   Andrew: The   James: Cells   Andrew: Where   James: Prisoners   Andrew: Usually   James: Resided,   Andrew: There   James: Was   Andrew: A   James: Third   Andrew: Dog.   James: “Seriously!”   Andrew: Said   James: The   Andrew: Dog.   James: “What   Andrew: Are   James: You   Andrew: Doing   James: Here?”   Andrew: Jeremy   James: Panicked   Andrew: And   James: Ran   Andrew: At   James: The   Andrew: Dog.   James: “Give   Andrew: Me   James: Back   Andrew: My   James: Place!”   Andrew: He   James: Exclaimed.   Andrew: The   James: Dog   Andrew: Jumped   James: Sideways   Andrew: And   James: Avoided   Andrew: Jeremy's   James: Grasping,   Andrew: And   James: Replied,   Andrew: “This   James: Is   Andrew: Your   James: Place   Andrew: Here.”   James: Slamming   Andrew: The   James: Cell   Andrew: Door   James: Shut,   Andrew: Jeremy   James: Collapsed   Andrew: Into   James: The   Andrew: Corner   James: And   Andrew: Slept.   James: The   Andrew: Next   James: Day   Andrew: He   James: Awoke   Andrew: In   James: The   Andrew: Cell   James: To   Andrew: Discover   James: Three   Andrew: Policemen   James: Looking   Andrew: At   James: Him   Andrew: In   James: Confusion.   Andrew: “What's   James: All   Andrew: This   James: Then?”   Andrew: They   James: Said   Andrew: In   James: Unison.   Andrew: Jeremy   James: Stumbled   Andrew: Out   James: Into   Andrew: The   James: Open   Andrew: Air   James: And   Andrew: Saw   James: That   Andrew: Things   James: Were   Andrew: Back   James: To   Andrew: Normal.   James: The   Andrew: Post   James: Office   Andrew: Was   James: Open,   Andrew: The   James: Butchers   Andrew: Had   James: Customers,   Andrew: The   James: High   Andrew: Street   James: Was   Andrew: Bustling.   James: “What   Andrew: Happened   James: Yesterday?”   Andrew: He   James: Thought   Andrew: As   James: He   Andrew: Opened   James: His   Andrew: Front   James: Door.   Andrew: “I   James: Swore   Andrew: I…”   James: And   Andrew: In   James: Front   Andrew: Of   James: Him   Andrew: Were   James: Three   Andrew: Dogs.   James: The   Andrew: End.       James: Peter   Andrew: Liked   James: Jam   Andrew: And   James: Toast.   Andrew: He   James: Regularly   Andrew: Ate   James: Ten   Andrew: Slices   James: Of   Andrew: Them   James: For   Andrew: Breakfast.   James: His   Andrew: Constitution   James: Was   Andrew: As   James: Solid   Andrew: As   James: A   Andrew: House.   James: One   Andrew: Day   James: He   Andrew: Ran   James: Out   Andrew: Of   James: Jam   Andrew: And   James: Had   Andrew: To   James: Use   Andrew: Marmite   James: Instead.   Andrew: This   James: Gummed   Andrew: His   James: Works   Andrew: Up   James: And   Andrew: He   James: Slowly   Andrew: Died.   James: The   Andrew: End.   I've been Andrew, and I'm here with James. These stories were recorded without advanced planning and then lightly edited for the discerning listener. Join us next time for more totally made-up tales ...    

Welcome to the second episode of Totally Made Up Tales, an experiment in improvised storytelling in the digital age. We hope you enjoy our tales of wonder and mystery. Let us know what you think! Music: Creepy – Bensound.com.   James: Here are some Totally Made-Up Tales, brought to you by the magic of the internet.   This is the story of Dr. Rich. Andrew: Once upon a time, there was a doctor who specialized in curing diseases only of the very rich. Inevitably of course, they were in some way or other. James: He would travel round in his large, black car made specially for him by Mercedes-Benz himself, and visit them one by one, his rich clientele, ringing on the doorbell and asking, "Are you ill?" Andrew: In fact, one of the things that he had identified, and the reason why he himself was so successful, was that he realized that money did not in fact make you happy, but filled you with a deep sense of malaise. James: In fact, to put it simply, money made you ill. Andrew: His expertise was to remove money from the rich in order that they could feel better, and indeed many of his patients who were bankrupted by his bills went on to lead happy, fulfilled, virtuous lives. James: Even before they'd got to that state, merely at the point that he presented them with the bill for having cured their sniffle or subdued their pox, or whatever it is that he had been called upon to do today, they felt better, relieved, as if the air was flowing more freely through their lungs, as if the blood was moving more smoothly through their veins. Andrew: The problem was that over the course of his long and successful career, he himself became extremely wealthy, deeply unhappy, and died. James: There was no one who could minister to him in his last days. He was as ill as you could possibly get from money, and indeed was quite capable of diagnosing himself as dying of wealth, and yet, without having trained an apprentice or one to come after him, there was no one who could cure him. He died sad, despondent, very, very wealthy, but utterly ill.   Josephine Andrew: wanted James: children, Andrew: but James: her Andrew: husband James: was Andrew: emperor James: of Andrew: France. James: "Not Andrew: tonight," James: he Andrew: said James: repeatedly. Andrew: The James: end.   Keyhole Andrew: surgery James: is Andrew: performed James: using Andrew: keyholes, James: which Andrew: are James: available Andrew: from James: B&Q Andrew: and James: similar Andrew: retailers.   Judith James: went Andrew: to James: Cardiff Andrew: for James: her Andrew: sister's James: wedding. Andrew: It James: was Andrew: a James: beautiful Andrew: weekend James: full Andrew: of James: dancing, Andrew: sunshine, James: and Andrew: happy James: bridesmaids. Andrew: The James: bride Andrew: herself James: was Andrew: sick, James: and Andrew: vomited James: all Andrew: over James: the Andrew: vicar. James: The Andrew: end.   Victor James: went Andrew: to James: war Andrew: and James: fought Andrew: bravely James: time Andrew: and James: time Andrew: again. James: When Andrew: he James: returned, Andrew: he James: discovered Andrew: his James: country Andrew: had James: changed Andrew: and James: he Andrew: no James: longer Andrew: belonged. James: The Andrew: end. James: Now, Abigail the Mistress Milliner. Andrew: Abigail was a milliner, and made the finest hats in the kingdom. James: She was renowned from city to city. The aristocracy would always use Abigail's hats, or risk the disapproval of their peers. Andrew: She was totally dedicated to her craft. It was her life's work, and every fiber of her being, every drop of her blood was dedicated to the making of hats. James: Since she had passed from apprentice to journeyman to master hat maker, she had had one perfect master work in mind; the ultimate hat. Andrew: It was a hat that she knew once she had made it, there could be no better hat made by human hand until the end of time. James: She had resolved at the tender age of twenty-two to dedicate her life to creating the best hats she always could while always striving towards the perfect hat. Andrew: It was rumored that she kept in her safe at the back, behind the box in which she kept her money and other valuables, a small box in which she was working on a secret project. James: Many rumors were started about the project. Many rumors were started about the safe and about the other things that she had done to protect her most vital and important secrets. Andrew: Other milliners throughout the kingdom were jealous, suspicious, and met together one evening in the back room of a dusty tavern to discuss their suspicion. James: One of them, Brian the Hatter, was convinced that she had already created the ultimate hat, but was withholding it for fear that others would copy her work. Andrew: "There is only one way for us to find out, brothers and sisters," he said, "and that is, we must take possession of the box within the safe." James: So began the most delicate planning. Milliners around the country contriving a way to steal a box from within a sealed safe that even the most dedicated cat burglar would have had difficulty getting near. Andrew: "Let us hold a festival," they proposed. "Yes, let us hold some kind of celebration, some distraction, some occasion on which everybody's back will be turned." James: They worked their connections long and hard, and finally were able to persuade some lady of the court, and through her some gentleman of the court, and through him some knight of the court, and through him, some lady of the bedchamber, and ultimately to the king and queen themselves that there should be a grand banquet where all the greatest people of the land would come, and of course the desire for the best hats would be unrivaled throughout history. Andrew: So it was that in the following days and weeks as the banquet was made ready that there were queues around the block to every suit maker, every boot maker, and every hat maker in the kingdom as more and more finery was demanded so that everybody could appear at their very best at this once-in-a-lifetime feast to be given by the royal family. James: Of course, nowhere were the queues longer nor more densely packed than outside the shop of Abigail the Milliner. For many months, she serviced the next person who came through the door, measuring them, measuring their head, considering the weight of their brow and the movement of their lips and of their nose, and taking into account the other clothing that was being made for them. Day and night, she would work in the back, making hats from the measurements she had taken. Andrew: Each customer demanded a hat finer than the one that the customer before had received, and so it was that after a lifetime of training, even she was nearing the end of her store of creative energy as each masterpiece, slightly better than the one before, went out the door in its beautifully wrapped box. James: Meanwhile, Brian the Hatter and his cohorts were plotting how to get inside the safe. Andrew: "Would it be better for us to cut a hole in the wall and slide it out into a side street, or cut a hole in the floor and let it down into the vaults of the cellars or the sewers below?" James: "Perhaps we should cut through the top of the building and employ a crane or some small children with rope to haul it up high into the gables and from there escape across the rooftops of the city." Andrew: "May I make a suggestion?" Came a voice from the back of the room.   "Of course, go ahead brother. Tell us your suggestion."   "What we should use is the psychology of the artist." James: Well, they were all very impressed with this idea, even though most of them didn't really understand, and they voluntarily gave up control to the owner of the voice, Mr. Jim Blacklock. Andrew: "The true artist is only satisfied when his or her craft is applied as close to the standard of perfection as it is possible for human endeavor to reach. Each person has demanded a hat more superior than the one before. How many more hats can this woman make before she is forced to reveal the greatest hat of all time?" James: The hatters, from their conniving congregation, went out back into the land and plied their connections and persuaded the lords and ladies who had got early hats from Abigail the Milliner to go back for better ones now that there were better ones available to their peers. The line once more became long and winding throughout the city, and Abigail, working as hard as she ever had, wracked her brains for more ideas to top the last ones that she had put out. Andrew: Finally, when the line had dwindled to one person, and that person had been handed their finely-wrapped box and left and the door swung closed and the little bell rang and she was left alone, she knew that she was spent. She had no more hats available for her to make. It would be impossible for her to service another customer, and indeed there were no more customers. Everybody owned a hat of hers who had a head to wear a hat on. James: Just then, there was a knock at the door. Andrew: "Who could this be?" She thought to herself. "A customer who had left behind a pair of gloves, or wanted a duplicate invoice for tax purposes." James: She got out of her chair and felt her way across the dark shop front and opened the door. In front of her was the king. Andrew: "Your majesty." She said, and curtsied low, for she was a very correct lady. James: "Abigail," began the king. Andrew: "If your majesty has come in search of a hat, I'm afraid I must disappoint you, for I have no more hats left to make." James: "Come, come," said the king, for he was a kindly man, but also used to getting his own way. "Come, come, you would not disappoint your monarch." Andrew: "It would pain me to do so, sir, but I really do not see how I could supply a hat finer yet than any that I had supplied without ... " James: There Abigail stopped. Andrew: "Without ... ?" Said the king. James: "I should not have spoken." Said Abigail. Andrew: "Yet you did speak," said the king, "and now you must surely explain yourself." James: "The only way, your majesty, that I could hope to top the previous hats that I have made for all in the land and to satisfactorily clothe your royal head, would be to open the book that I have been keeping these last forty years as I have worked on perhaps an impossible dream of the perfect hat." Andrew: At this, the king's eyes lit up, for he was a man who liked the finest things, and the idea of owning the most perfect hat that had ever been made or could ever be made appealed very deeply to his regal heart. James: "I must have it." He said, and left. Andrew: Abigail wept, for she knew that the hour had come where either she must make the most perfect hat of all time, or she must leave this place that she called home, abandon her shop, her career, her profession, and begin a new life somewhere else, for no one had ever successfully denied the king his wish and lived. James: Uncertain of what her choice would be, she stole back to the back room and opened the safe, and within it moved past the money boxes and the certificates of birth and death and the other precious objects that were necessary for a satisfactory and legal life in this complicated time, and at the back pulled out a small tin which contained folded paper of her notes over the years. Andrew: She reviewed the scraps, shuffled them, paced, lit a fire, made tea, stoked the fire, paced, shuffled the papers, and so continued through the night, all the way through to the crow of the cockerel and the rising of the sun. James: She was still pacing when her young apprentice entered the shop in the morning, expecting to be up and at the business before she was. He was surprised, and did not attempt to hide it. Andrew: "Mistress Abigail, whatever is the matter? You seem troubled, agitated, as if you haven't slept." James: "I haven't!" She cried. "I can't sleep. I cannot sleep until I ... Until I at least try." Andrew: So it was that they embarked together on making sense of the diagrams that she had drawn, and little by little began to compose the finest hat that had ever been made. James: There was every conceivable material, Andrew: and yet somehow, even though it was composed of parts as diverse of silk and leather, it formed a beautifully coordinated whole in which every part was neither too much nor too little, but in perfect proportion and place. James: Spent, they sat on the floor and looked up at the perfect hat. The ultimate hat. The end, indeed, to millinery itself. Andrew: As to the rest of the story, well of course the king collected it and wore it and achieved universal admiration. The great feast was, exactly as it promised to be, huge, memorable, spectacular, once-in-a-lifetime experience, and Abigail was, as you would expect, done. Done with her career. There was no way that she could continue now. James: As for the other hat makers, well, walk down a high street in your town any day you like and try to find a milliner's shop. They're all gone now. All gone.   I've been James, and I'm here with Andrew. These stories were recorded without advanced planning and lightly edited for the discerning listener. Join us next time for more Totally Made-Up Tales. Andrew [outtake]: "Would it be better," they said, "if we cut a hole in the floor and let it down into the core of the earth?" No, no, that's a ludicrous idea. Sorry.

Michael: Hello, everyone. Welcome to the monthly Option Seller Radio Show. This is Michael Gross here with James Cordier, coming to you from Tampa, Florida- our main office. We’re going to talk a little bit about the markets, a little bit about trading this month. Quite a bit going on, including what could be the final game of the series between the Tampa Bay Lightning and the Pittsburgh Penguins. My colleague, James Cordier, happens to be a Tampa Bay Lightning fan, and, being from Pittsburgh originally, I’m a Pittsburgh Penguins fan. James, what do you think on the series possible finale tonight? James: Well, it’s interesting, Michael, we’re using our backup goalie and he had little butterflies the first game or two. He wasn’t getting any support from the other players, and finally he is, and certainly a great series right now. We’re ahead 3-2. We being the Tampa Bay Lightning. For your sake, I hope it goes a little bit further. For our sake, hopefully we get to win tonight and we get to watch for a day or two before the Lightning hopefully take on the San Jose Sharks. We have a couple clients in the San Jose area and it would be fun to get a little friendly bet going there, too. Michael: By the time our listeners here this, they’ll know the results. They can visualize our reactions, I suppose. What a lot going on in the markets this month. Volatilities are subject of the month as an options seller. Volatility is obviously a very good thing, and probably the best place to start this month. You’ve been talking a lot about volatility in some of your videos, and I know we’re talking about it in the newsletter this month. Maybe just kick off, we’ve seen a lot of pick-up in the last 6 months across many sectors in commodities in volatility. What are some of the macro-reasons or why are we seeing this rebound? James: The rebound in volatility is coming from the uncertainty, especially from the FED. Earlier this year, as we described, they were going to have four rate hikes in 2016. That got backed off to maybe one. Now, the Federal Reserve, one governor is being walked out after the other in front of the microphone, talking about possibly three or four rate hikes again. This back and forth is really gyrating currencies around the world, and certainly the currency play is directly affecting gold prices, silver prices, and oil prices. Volatility right now is through the roof, and this is certainly low-hanging fruit for option sellers. I know not everything applies to option selling however, because there is a world outside of this, but the volatility right now this is certainly a by-product of what’s going on, and certainly that does help what we do immensely. Michael: Yeah, and a good point to make as an option seller, a lot of people asking now “Are they going to raise rates? Are they not going to raise rates?” People positioning on one way or the other are really gambling on a decision, and, as an option seller, you don’t have to do that. In fact, it really ushers in some of the strategies we talk about in our book as far as credit spreading. I know it’s one of your favorite ways to sell options. Maybe talk a little bit about that, how volatility does favor credit spreads, what advantages come to an investor for using a credit spread in this type of environment. James: Michael, this environment, as we are referring to, certainly has the large volatility, which is blowing out premiums on option prices. In times of low volatility, in order to get decent premium, you do have to sell naked calls or puts based on if you’re bullish or bearish. Being naked is certainly not our first choice. Certainly we sell naked options because we don’t have the premiums available that further out strikes. Right now, it’s available by being able to sell protection against your short position, slow and steady option decay is what we’re after. Now, this environment offers that luxury to do that. Michael: Yeah, you not only get the protection aspect of it, but a thing a lot of investors don’t always realize is, often times because you have that protective aspect, your margin requirement drops. There are certain occasions where credit spreading can even offer a higher ROI than selling naked. Would you agree with that? James: It does. Not only does it help you stay in your position through ups and downs in the market, but it offers smaller margin requirements and it allows you the ability to participate in practically all the opportunities you see in the different markets. Often, if volatility is too high, selling naked just doesn’t allow you to protect assets like you’d like to. Smooth and steady is what the goal is, and having the ability to buy protection against your short position is the utmost performance year’s end. What we’re always looking for is slow and steady currently, and the only excitement we’re looking for is on December 31st reading statements. Michael: Very good then. Let’s talk a little bit about volatility in particular markets. We’ve seen a little burst of volatility in the soybean market here over the last several weeks. We had talked last month about selling calls in soybeans, and we had a big move up in that market. It’s a good market to address because I think you can’t just assume that every option you sell is going to slowly decay to zero. Sometimes, the market moves against you. Maybe talk to our listeners and clients right now about how we reacted to that and how we recommend reacting to a market like that. James: That is true. We’re selling options in eight different markets, and, from time to time, the market exceeds our expectations. A lot of what’s going on in commodities right now is headline driven. There are so many hedge funds and money managers right now chasing performance and chasing return, and they’re looking at eight commodities like we are. They see headlines for the gold market or for the soybean market or they’re having problems in Argentina getting soybeans to the market. That kicks in buying or selling form computerized generated funds, and that’s what happened to soybeans the last two or three weeks. There were headlines from Argentina and China was buying a little bit more soybeans than a lot of people anticipated, and soybeans rally an extra dollar probably above their fair value. As we talked about recently, later this fall, I think the United States is going to be producing a great deal of soybeans, probably in excess of what we need. The headline news really moves the markets and that is what happened over the last week or two. We did cover some of our short positions. We rolled up some of them to higher strikes, and we’re still holding a short position there, but from time to time the market exceeds your expectations and you know you have to take evasive action from time to time, and that’s what we did last week. Michael: Sure. You’re talking about headlines; the big headline driving the soybeans was the May USDA report. The number that really jumped that really caused the spike is, not this year’s ‘15-‘16 ending stock, but the USDA is looking at next year, ‘16-’17 ending stocks. The trade pretty much had them coming in around 400 million bushel, and USDA says it’s only going to be 305, which is a pretty significant drop. It’s interesting, because the harvested acres are, more or less, the same as last year, but they knocked down the yield estimate. Not really sure why they felt they needed to do that yet, but they also bumped up demand substantially for next year. That, at least for now, they’re looking for substantially low ending stocks. I know you and I had talked earlier that we thought they would have to increase acreage because we’ve had a little bit of a wet spring, and that can cause them to shift some of the corn acreage over to soybeans. So, the jury is still out on that. The market has backed off since we got the big spike, but when we talked about defensive strategy, taking evasive action, so we’re short the calls and the market rallies, maybe explain the strategy we executed there to deal with that. James: Well, we are selling calls earlier this year, based on the fact that we are going to have a very large crop come this fall. Quite often, soybeans will have a weather rally, a spring-summer rally. This year’s rally was based on a very large cut from the USDA, as far as ending stocks. We did cover some of our shorter positions. We rolled them up to higher strikes. That’s a trade that is going to not perform the way you hoped it would, but they don’t always do that and that was certainly one of them. Michael: Yeah, and you had emphasized this previously, but the reason we roll strikes up like that is, often times after a big rally like that, that’s when the volatility is the highest, that’s when the premiums are highest. The fundamentals did shift a little bit, but they didn’t shift that much to where those higher strikes we felt would be threatened. In fact, as you mentioned, they were so far out that it was a difficult opportunity to pass up. So, often times, even if you’re in a market, you get a big move like that, the volatility that’s created by that move can often make it an optimum time to be selling options in that very same market. That’s one benefit of the roll. James, let’s move over and talk a little bit about oil prices. You have been in high demand this month from various media sources. You had an appearance on CNBC earlier in the month, and you’ve made a pretty bold prediction there on oil prices. Let’s talk a little bit about where prices are now and where you see them going later in the summer. James: Michael, similar to headlines that have been driving a lot of the different markets, crude oil certainly is included as being one of those. There were some difficulties in Canada where some of the fires there were actually keeping production down. They’re looking at 2 million barrels a day in certain regions of Canada, which was knocked down to just 1 million barrels per day, simply because workers couldn’t get to the oil fields. That is going to be a situation that is going to be calming down in the coming days and weeks. That was a headline, there were some headlines out of Nigeria, Saudi Arabia has been making noise about getting away from production of oil as their main economic resource. All of these headlines will not change the fundamentals in oil going on later this year. As driving season, we’re into now, starts wrapping up a little bit later this year, investors and traders alike start looking at global supplies. Right now, there are tankers that circle each other just off the coast of China, just waiting for the phone call to come into port and unload their oil. There is so much oil right now floating on the Seven Seas, it’s record breaking. As this little bit of euphoria that’s right now developed in oil because it has finally rallied. When that subsides, and we think it will this fall, I think we’re going to see oil prices back down into the 30’s. Right now we’re trading in the upper 40’s, and we think this is a great opportunity based on fundamental availability of oil later this year. Supplies are going to be in a glut situation again, and selling calls right now in oil is one of our favorite opportunities, we feel. Michael: It’s a pretty solid fundamentally based case, and I know when places like CNBC and Fox come calling, they typically want you to make a call. A lot of times, they don’t understand that we do that for them but we don’t necessarily have to do that in trading and the way you trade- you’re selling options. But, when you’re talking to reporters like that or you’re on camera, do you ever get a feel that they’re pulling one way or the other for what they want you to say? James: That’s interesting, Michael. CNBC, I think, is probably notorious for bringing people on when the markets are rallying and they want to talk bullish. When oil is falling, they want to bring analysts on that are talking bearish. I think CNBC is probably the biggest culprit for simply frenzied, if you will, interpretation of what the market is doing. Rarely do they want to hear an analyst or trader talk about it’s a good time to buy oil when it’s falling. I remember back in January and February, we were on CNBC and saying this route in oil is probably almost over. Our girl in Los Angeles who helps us get on to the different television stations when they call us, they simply didn’t want to hear about buying oil back in January. Finally, they thought maybe we should take another perspective, and CNBC rarely wants to put someone on that has a contrarian view. I think they’re learning a little bit. Back in January, we were talking about going long oil and the whole world knew it was going to zero. Lo and behold, the market did rally. Now, recently, we were asked to be on CNBC, reluctantly, talking about bearish oil factors later on this year. So, you know, we talked about how we feel about the market. We’re not “Ra-Ra” cheerleaders when the market’s going up or down. We look at the base fundamentals and we make predictions on 3-6 months out. I know CNBC loves talking about what the market’s doing today and what it’s likely going to do tomorrow. As we know, no one knows these facts. If, in fact, a person that comes on CNBC knows what the market’s going to do tomorrow they wouldn’t be on CNBC, they would be on an island right now eating cracked crab, like they did at the end of Trading Places. Can’t we have both? Michael: I know when they’re shooting you remotely, they’re shooting you from the studio here in town, but you’ve been in the studio right there with them before, as well. Do they ever talk when the camera goes off? Do they ever say, “I think it’s going this way” or “I wish you would’ve said that”? James: I think one of the most interesting memories I have of being in New York and being on set was, I think, when we were interviewed on Bloomberg. They probably have several hundred people walking through the lobby, going in and out of the offices, going in and out of the green rooms, making sure that you have everything you want. When you see the anchors walking through the lobby at Bloomberg, they’re like gods there. When you’re sitting in the green room you’re also like a god, because everyone’s job at Bloomberg resides on providing great content. So, when you’re going to be on for a half hour-an hour, they’re looking at you like “Dude, don’t screw up. I hope you do something really interesting and speak intelligently, because my job relies on great content”. I think Bloomberg walking through their offices there was very memorable. We’re going to be invited to do that again this fall. We’re going to be on set there for probably a very long segment. I think Bloomberg, which is a fantastic operation, I think they cover the fundamentals more than anybody else. Some of the Fox, not as much, but CNBC, they’re “Ra-Ra” stations. Bloomberg actually gets down to the nitty-gritty. They actually talk about the fundamentals, the markets that are actually moving for fundamental reasons. It’s so much fun being on Bloomberg and that operation, I’ve found, is just a Class-1. It’s just fantastic being on there and to walk through the lobbies there, you have your credentials and people are looking at you like “Yeah, you’re the man”. It’s pretty cool. Michael: That’s an interesting point. You know, in this month’s newsletter we interview Mark Sebastian. One of the many things he does is he’s a writer for the Street and Mad Money, and he works a lot with Jim Cramer. One of the things he said in the interview is that Cramer is a really smart guy, but he can’t always say what he thinks on the show because the network has certain rules or guidelines they have to abide by, or I don’t know the reasons- he didn’t really go into that. But, he says if you really want to know what he thinks you have to read what his blog on Real Money… I’m not going to spoil the interview. He was kind of speaking to that same thing, where they have a framework of where they want you to go and where they don’t want you to go, and it sounds like Bloomberg gives you a little more freedom to explore the fundamentals. If you do want to see that interview amongst our other items we’re covering in this month’s newsletter, you will be getting it next week. I think you’ll find that a very interesting interview. Mark brought some things to my attention that I was not aware of that takes place up there. James, we started off the show today talking about credit spreads. I know, we’re going to spend a little time here talking about one of your absolute favorite credit spreads that you describe as the “Maserati of option spreads” in our book, The Complete Guide to Option Selling. Maybe talk a little bit about what this spread is and how it works. James: Of all the option trades that we do, a credit spread generally buying one against selling three, buying one against selling four, gives us an incredible amount of flexibility to be in the position for slow and steady decay. If in fact we see a market that we determine to be fair valued, we’re actually going to sell a credit spread on both sides of the market. Anyone who has read the Third Edition: The Complete Guide to Option Selling, I really suggest you take a look at chapter 10. It talks all about the “Maserati of all option sales”. Basically, what is does, is it allows the investor, whether they’re clients of ours and we’re managing the portfolio for them, or if you’re doing it yourself, it gives you an incredible amount of flexibility to stay in the position, allow your fundamental analysis of the silver market or the coffee market to actually play out the way you thought it would. So often, investors get involved in commodities or in Apple Stock or what have you, and the gyrations of the market simply take you out of your position. The “Maserati of all option sales” is a credit spread that’s done sometimes on both sides of the market, and it gives you an incredible amount of staying power to allow you to be in the market when your options expire or at the time that you want to pull profits and close out the position. Being in a credit spread, sometimes on both sides of the market, allows you to adjust the position, at the same time, keeping 80-90% of the premium that you sold your options for. Quite often, the protection that you buy you only need for 30-60 days. Sometimes, you want to keep it on until the end of the position, but the idea is for all of your options to expire worthless. Anyone reading chapter 10 in our book the Third Edition: The Complete Guide to Option Selling, can learn and understand the greatest trade in option selling that there is. If you do it yourself or if you want to manage an account that we do for you, I think you’re going to find that it allows you to stay in the trade and allows you to see the end of option expiration on the positions that you have. It seems to be boring, it seems to be slow, it really locks down your position, but, in essence, that’s what you want. More often than not, at the end of the year, having this credit spread on, you’re going to be very happy with the results if, in fact, that’s the way you traded throughout the year. Michael: James, for those that haven’t read the book yet or read that chapter, you’re referring to the ratio credit spread where you’re selling maybe 2, 3, 4 options out-of-the-money, and then for every 2, 3, or 4 that you sell, you’re buying a closer-to-the-money option for protection. The reason you do that is it protects your distant calls, but it’s one of the only option spread that I know of, if the market moves the wrong way you can actually end up taking a higher profit on that. Is that correct in some circumstances? James: There are some circumstances where your long protection actually goes in-the-money, and the further out options that you sold stay out-of-the-money. It is truly designed to hit singles and doubles all year long. If the market does make a slightly more dramatic move than you first anticipated, that long option can actually turn out to be extremely profitable. Of course, your options on the other side of this strangle, if in fact that is the position that you’re implying, that expires worthless and your one long option can actually go in-the-money. That is more than a single or a double. That’s not how we have positioned, that’s not the rationale for doing it, but if you are selling 10. One of those options can go in-the-money and just dramatically increase the profitability of this trade. The long options are there for insurance, they’re there for stayability in the position. The ability for this option trade to produce profits in extents of what you first anticipated is there, but primarily it keeps you in the trade and allows you to be there when the options expire, preferably worthless. Michael: Again, for those of you that would like to read about it, that’s in chapter 10 of The Complete Guide to Option Selling. You’ll certainly want to take a look at that if you’re interested in it. That’s all we have for this month. We do recommend you look for the newsletter next week in your mailbox and/or e-mail box. If you’d like more information on accounts this month, learn all about what’s available, the different programs we have, you can get a full information pack at www.optionsellers.com/discovery. We also do still have some new investor interview consultations available in June. James, I don’t believe you have any account openings left in June, but do you know or do you have to check with Rosemary? James: Rosemary said we are full for June. Michael: Okay. We do have consultations available in June for July account openings, so if you would like to book one of those, feel free to call Rosemary at 800-346-1949. Have a great month of premium collection, and we’ll look forward to the outcome of the hockey games over the next 2-3 days. We’ll talk to you all next month. James: As we say here in Tampa, “Go Bolts!” Michael: Have a great month, everyone.

YouTubeDustin's guest appearances* Utah Outcasts* Secular Stories* Forgot to share the link from Waiting 4 Wrath DUSTING OFF THE DEGREE - The Trinity THIS DAY IN HISTORY - February 4* 1677 – Johann Ludwig Bach, German violinist and composer* 1913 – Rosa Parks, American activist (d. 2005)* 1940 – George A. Romero, American director and producer* 1947 – Dan Quayle, American sergeant, lawyer, and politician, 44th Vice President of the United States* 1948 – Alice Cooper, American singer-songwriter and actor* 1967 – Lunar Orbiter program: Lunar Orbiter 3 lifts off from Cape Canaveral's Launch Complex 13 on its mission to identify possible landing sites for the Surveyor and Apollo spacecraft* 2004 – Facebook, a mainstream online social networking site, is founded by Mark Zuckerberg* 2006 – A stampede occurs in the PhilSports Arena near Manila, killing 71 people SCIENCE AND TECHNOLOGY* Fungus from Antarctica survived Martian conditions simulated aboard ISS* The rotten smelling Amorphophallus titanum to bloom next week* Method developed to restore the bacterial benefits of vaginal birth to c-section babies POLITICS AND RELIGION * State Legislatures Behaving Badly  - Florida house committee passes abortion ban | via Progressive Secular Humanist  - Washington state senate committee passes transgender bathroom bill | Transgender People's Bodies Are ‘Security Concerns' | State Rep. Graham Hunt quits over military-service exaggerations  - Oklahoma has several anti-gay bills | via Raw Story via via Addicting Info  - Utah senate resolution would declare porn a public health crisis | Full bill  - Utah house bill would give opposite sex couples preference in adoption  - Idaho house's proposed constitutional amendment would allow state funds to go to religious schools* Bundy occupation update* Religion headed to extinction in nine countries* Lunch meeting between French and Iranian Presidents canceled over wineHarlem church of James “There's semen in my coffee” Manning to be sold at auction | via Joe My God | Gays trying to buy his church FEEDBACK ‎Travis Megee‎ via Facebook New iTunes review Email us at contact@atheistnomads.com or call us at (541) 203-0666. This episode is brought to you by: Nuclear Sponsor - US$20.00 - US$35.00 per month* Russ from the Kitsap Atheists & Agnostics* Travis Megee* Vernware* Frank* Darryl Goossen* Robert Ray from the Humanists of the North Puget SoundPlatinum Sponsor - US$8.00 - US$19.00 per month* Virginia Dawn* Paul Burkey* BT Motley* George* Hugh MannGold Sponsor - US$4.00 - US$7.00 per month* Mark* Gary from Idaho Atheists* The Flying Skeptic* Renee Davis-Pelt* Alex* Mike Price* Mark* LaTonya* Duncan* Jaded ZappaBronze Sponsor - < US$4.00 per month* Mark* Peter* Heather* Shawn Archway Hosting provides full featured web hosting for a fraction of the cost of traditional shared hosting. You get all the benefits of shared hosting, without the sticker shock or extra fees. Check them out at archwayhosting.com. You can find us online at www.atheistnomads.com, follow us on Twitter @AtheistNomads, like us on Facebook, email us at contact@atheistnomads.com, and leave us a voice mail message at (541) 203-0666. Theme music is provided by Sturdy Fred.

YouTubeDustin’s guest appearances* Utah Outcasts* Secular Stories* Forgot to share the link from Waiting 4 Wrath DUSTING OFF THE DEGREE - The Trinity THIS DAY IN HISTORY - February 4* 1677 – Johann Ludwig Bach, German violinist and composer* 1913 – Rosa Parks, American activist (d. 2005)* 1940 – George A. Romero, American director and producer* 1947 – Dan Quayle, American sergeant, lawyer, and politician, 44th Vice President of the United States* 1948 – Alice Cooper, American singer-songwriter and actor* 1967 – Lunar Orbiter program: Lunar Orbiter 3 lifts off from Cape Canaveral's Launch Complex 13 on its mission to identify possible landing sites for the Surveyor and Apollo spacecraft* 2004 – Facebook, a mainstream online social networking site, is founded by Mark Zuckerberg* 2006 – A stampede occurs in the PhilSports Arena near Manila, killing 71 people SCIENCE AND TECHNOLOGY* Fungus from Antarctica survived Martian conditions simulated aboard ISS* The rotten smelling Amorphophallus titanum to bloom next week* Method developed to restore the bacterial benefits of vaginal birth to c-section babies POLITICS AND RELIGION * State Legislatures Behaving Badly  - Florida house committee passes abortion ban | via Progressive Secular Humanist  - Washington state senate committee passes transgender bathroom bill | Transgender People’s Bodies Are ‘Security Concerns’ | State Rep. Graham Hunt quits over military-service exaggerations  - Oklahoma has several anti-gay bills | via Raw Story via via Addicting Info  - Utah senate resolution would declare porn a public health crisis | Full bill  - Utah house bill would give opposite sex couples preference in adoption  - Idaho house’s proposed constitutional amendment would allow state funds to go to religious schools* Bundy occupation update* Religion headed to extinction in nine countries* Lunch meeting between French and Iranian Presidents canceled over wineHarlem church of James “There’s semen in my coffee” Manning to be sold at auction | via Joe My God | Gays trying to buy his church FEEDBACK ‎Travis Megee‎ via Facebook New iTunes review Email us at contact@atheistnomads.com or call us at (541) 203-0666. This episode is brought to you by: Nuclear Sponsor - US$20.00 - US$35.00 per month* Russ from the Kitsap Atheists & Agnostics* Travis Megee* Vernware* Frank* Darryl Goossen* Robert Ray from the Humanists of the North Puget SoundPlatinum Sponsor - US$8.00 - US$19.00 per month* Virginia Dawn* Paul Burkey* BT Motley* George* Hugh MannGold Sponsor - US$4.00 - US$7.00 per month* Mark* Gary from Idaho Atheists* The Flying Skeptic* Renee Davis-Pelt* Alex* Mike Price* Mark* LaTonya* Duncan* Jaded ZappaBronze Sponsor - < US$4.00 per month* Mark* Peter* Heather* Shawn Archway Hosting provides full featured web hosting for a fraction of the cost of traditional shared hosting. You get all the benefits of shared hosting, without the sticker shock or extra fees. Check them out at archwayhosting.com. You can find us online at www.atheistnomads.com, follow us on Twitter @AtheistNomads, like us on Facebook, email us at contact@atheistnomads.com, and leave us a voice mail message at (541) 203-0666. Theme music is provided by Sturdy Fred.

Tony Robbins once said that “It's not what we do once in a while that shapes our lives. It's what we do consistently.”James Whalen is a federal criminal defense attorney who truly believes in the power of consistency in managing and building his boutique law firm. Creating productive policies and consistently applying them played a major role in transforming his law practice into a law business.What sets the Whalen Law Firm apart from the competition? James is truly passionate about helping his clients. He strives to deliver value to his clients in all phases of the engagement. This is why the firm’s tagline is “Personal attention, aggressive defense.”The first mindset shift that James went through was to view his practice as a business. This is not an easy change, but necessary to develop a long term vision and strategy for the firm.To take control of the direction of his firm, James started with the financial aspect and implemented a detailed budget. Measuring and comparing his actual achievements to his set goals gave James a chance to spot problems quicker and correct them faster.The only person you need to compete with is yourself. But how can you do that if you don’t even measure your progress? Getting more comfortable analyzing financial information gave James an edge to make better and profitable decisions. Having a fulfilling personal life is often sacrificed among small business owners. James is able to maintain his work-life balance by consistently managing his calendar and setting limits to himself. A piece of business advice from James: “There is plenty of work out there, don’t give in to the scarcity mentality. Do what you love to do, and do it well consistently.”Book recommendations: The Science of Getting Rich by Wallace D Wattles The Four Agreements by Don Miguel Ruiz

Part 2 of my conversation with guest James Gralian as we discuss the future of podcasting. I've also got music from Courtney Barnett, What Moon Things and Mattress Financial. Show notes: - Recorded via Skype - Check out James' show The Avs Hockey Podcast - Old media (radio, newspapers) is struggling - Radio stations need to think differently - Boston was once a great radio town - College radio is still going - Jay: Playing DJ on BFF.fm - Apple helped grow podcasting with iTunes - Talk radio is still popular - James' podcast has nothing to do with sports talk radio - Mo' money, mo' problems - Everything revolves around smartphones - Podcasting is about as DIY as it gets - Still having fun with it - James: There will be massive dropoff in conventional podcasts - Hard to keep up with all the shows - Similar to the amount of good TV out there - This American Life was originally rejected by NPR, went to PRI - It's not about SEO, it's about making good shows   Completely Conspicuous is available through the iTunes podcast directory. Subscribe and write a review!   Music: Courtney Barnett - Avant Gardener What Moon Things - Astronaut Mattress Financial - I Do That Good   The Courtney Barnett song is on The Double EP: A Sea of Split Peas on Milk! Records. Download the song for free at Amazon MP3. The What Moon Things song is on the band's self-titled album. Download the song for free at Soundcloud. The Mattress Financial is on the Mattress Financial/Fond Han single Private Split. Download the song for free (in exchange for your email address) as part of Exploding in Sound's EIS Sampler 2013-2014 on Bandcamp.   The opening and closing theme of Completely Conspicuous is "Theme to Big F'in Pants" by Jay Breitling. Find out more about Senor Breitling at his fine music blog Clicky Clicky. Voiceover work is courtesy of James Gralian.

Page Fan Facebook: http://www.facebook.com/pages/DJ-Jaymess/182014705176097 Party Mix Live By DJ Jaymess 03.04.11 (78) 1. F.O.O.L - To Japan And Never Back I 2. Picco Vs Djs From Mars - Can`t Come Home (Picco Club Mix) 3. Submission DJ, Javier Elipe Feat. Monica Moss - Siente Balearic (Victor Magan, Francesc Sentis Remix) 4. Gregori Klosman - Jaws (Original Mix) 5. Kalls & Arc feat. Ellington - U Got It (Jeremy Kalls Club Mix) 6. Albin Myers Feat. St. James - There 4 You (Dirty Dub Mix) 7. Moguai - Westbam (Original Hardcore) 8. Sidney Samson Ft. Tara McDonald - Set Me On Fire (Original Mix) 9. Ralvero - Switch That Bass (Original Mix) 10. Sultan & Ned Shepard Ft. Nadia Ali - Call My Name (Spencer & Hill Remix) 11. Bassjackers, Ralvero - Rambo (Original Mix) 12. Angger Dimas - Doomsday (Original Mix)

01. Laurent Pautrat - Sexy Girl (Muttonheads Remix) [Pool E Music] 02. Alexis Jordan - Good Girl (Freemasons Club Mix) [Star Roc] 03. Andrew Spencer feat. Pit Bailay - Can't Stop Love (Extended Mix) [Mental Madness] 04. Moussa Clarke - She Wants Him (Noiz Remix) [Armada] 05. STFU, Twin Pack - Saving My Love (Twin Pack and STFU Mix) [Tiger Records] 06. Jean Claude Ades feat. Sam Obernik - Work Of Art (Tomcraft Remix) [Nitron Music] 07. Albin Myers feat. St. James - There 4 You (Don Palm and Johan Wedel Remix) [PinkStar] 08. Matty Menck and Terri B! - Sky (Classic Club Mix) [Housesession Records] 09. Nino Live and Rowan P - Midnight Freak Circus (Chardy Remix) [Midnite Music] 10. Gregori Klosman - Jaws (Original Mix) [Dirty Dutch Records] 11. Dada Life - White Noise Red Meat (Bassjackers Remix) [Dim Mak] 12. Mason feat. Roisin Murphy - Boadicea (Human Life Dub) [Animal Language]

First podcast of 2010 to be released in September, it's a bit late but hopefully worth it. These are songs that have inspired me during my USA West Coast Tour and get me dancing circles every time! Dave Audé & David Garcia feat. Sisely Treasure - Dancin' Circles (Club Mix) Ralphi Rosario feat. Shawn Christ - Everybody Shake It (Dave Audé Mix) Roger Sanchez - 2gether (Original Club Mix) Avicii & Sebastien Drums - My Feelings For You (Original Mix) Full Intention vs Marco Demark & Dave Manna - I Love America (Denzal Park Mix) Albin Myers feat. St. James - There 4 You (Myback Club Mix) John LePage feat. Debby Holiday & LFB - Heaven (Electric Allstars Club Mix) Ne-Yo - Beautiful Monster (Tony Moran & Warren Rigg Save The Soul Club) Jason Walker - Leave It All Behind (Chad Jack Remix) Kelly Rowland - Commander (Pitron & Sanna Remix) Dave Audé feat. Isha Coco - Figure It Out (Ralphi Rosario vs Matt Effect Vocal Dub) Offer Nissim feat. Maya - Superman (Alex Acosta Private Edit Mix)

(Proverbs & James) There is little disagreement among most adults that our words carry tremendous power. They can be used either to encourage or to hurt others. For example, gossip is something we are all tempted to engage in. But in reality we should recognize that when we participate in gossip, someone is about to be hurt by our words.This message, "Words of the Wise", is the concluding message for the series entitled the Game of Life. Support the show (https://thisis.church/give)