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Register here for the live online event to learn about ‘Cleveland's Amazing Cash Flow Opportunities on Thursday, 3/20. Keith discusses the current state of the real estate market, highlighting that single-family rents have risen 41% since pre-pandemic times, while multi-family rents have increased by 26%. Single-family rents have been rising faster than prices for nine months, benefiting investors.  Austin, Texas, is an example of how increased supply can lower rents, as seen in their drop in rents after the city relaxed building regulations.  Real estate strategy expert, Phil, joins us and explains how this niche method can offer high leverage and cash flow. Show Notes: GetRichEducation.com/544 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching:GREmarketplace.com/Coach Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review”  For advertising inquiries, visit: GetRichEducation.com/ad Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  0:01   Welcome to GRE I'm your host. Keith Weinhold, build it and rents will fall. I discuss the direction of rents and prices. Then a real estate strategy for all time that can generate 8x leverage with investor cash flow and the exact city that could be the most advantageous for it today on get rich education.    since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show, guess who? Top Selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  1:13   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:29   Welcome to GRE from elizabeth new jersey to Elizabeth, Colorado and across 188 nations worldwide. I'm Keith Weinhold, get rich education, founder, Forbes real estate council member, Best Selling Author and long time real estate investor, you are inside, get rich education. What's that all really mean? Ah, I'm just another slack jod and snaggletooth podcaster.nationally, rents for single family homes are growing faster than for multi family apartments. Okay, that you might have already known, because for a few years, we've been in this era where available single family rentals are scarce and apartments are closer to being adequately supplied across the nation. We're now at the point where median single family home rents are up 41% since those blissful and Halcyon pre pandemic days, and yet, multifam rents are up just 26% since that time. So it's 41 versus 26 and that's all according to a new report from Zillow. Now you probably listen to this show every week, so although that might be a helpful update, you probably don't find those facts surprising at all. But here's a more nascent trend that could surprise you. Every single month for the past nine months now, single family rents have risen faster than single family prices. Yeah, the John Burns home value index is up 3.3% annually, and the rent index shows that those rents are up 3.6% so 3.6 versus 3.3 really not a big gap there, but single family rents rising faster than prices for nine months. You know that's exactly what swings things into your favor as a real estate investor, it increases your ratio of rent income to purchase price. This has been happening because for someone that needs housing out there, paying rent has looked more affordable than buying a home. So then those things have to soon come back into balance. Now you remember that five months ago, I visited Austin, Texas, walked the streets and with all of the new building of apartment towers there, I called it America's oversupply, ground zero for apartments. Well, I'm not sure if you've noticed, but here, a few months later, major media sources are now reporting on the same thing that I was telling you about on the ground five months ago, and this is really insightful for real estate investors in a real world case study that will be on every intro to economics syllabus this fall, rents in Austin, Texas plunged. They fell 22% from their peak a couple years ago after the city accelerated permitting processes and scaled back the rules on building height, and this is exactly what created Austin's apartment supply surplus and therefore lower prices for renters. Bloomberg was the one recently reporting on this. So Austin's, if you build it, rents will fall mantra that created about 50,000 new units over just the past two years, a 14% increase. I mean, that is the biggest spike in supply of any US city. Over that time, just tons of cranes in the air. And by the way, the median asking rent in Austin, Texas is now $1,400 remarkably, though, that is down a full 400 bucks from the height of the pandemic. I mean, that is such an aberration That is so weird and rare. Yeah, Austin rents dropped from $1,800 down to $1,400 in in fact, that is so weird, and they've fallen so much that notoriously pricey Austin is no longer the most expensive city in Texas. It's now DFW. And you know, this is astounding on a few levels, because typically rents are even more stable than home prices. Gosh, but now to take off our investor hat for just a minute. Don't worry, we'll put it right back on. This is what society needs. I mean, how in the world are we the nation that put a man on the moon in 1969 yet we can't house our own people today. It's what I've discussed before. We need to build more. If you build it, rents will fall. If you build it, home, prices will become affordable. Again, we're not doing enough of that. Not enough places are following Austin's model. Up zoning, as I've told you before, up zoning. That's the name for allowing taller building heights. And you know what? That's something that both developers and environmentalists often like. Both types developers get what they want, and environmentalists know that housing and the economics of that are more efficient. There's less energy use in everything when we build up and we build apartments rather than single family homes, Austin relaxed regulations and they got it done. So congrats to them. I mean, that is a model for what we can do to address not only housing affordability, but the swelling homelessness problem like I enjoy talking about as well. So yeah, congrats, Austin, though you might have gotten too far ahead of your growth for the short term. America really needs the housing so thank you.    Now here's some ominous news for society and the economy. I wouldn't make too much of it yet, but the Atlanta Fed tracker has plunged. They're now forecasting a shrinking economy this quarter, minus one and a half percent. GDP is a projection which that gets us going down into recession territory, and part of the reason for that is this recent drag in consumption. But news like that can come and go, and we all know how frightfully just laughably bad recession predictions have been for years. We haven't had one in five years. So I want you to get the longer term lesson here, because things pop up like this over time. What usually happens to real estate in a recession? Because we know that there's going to be one. No one knows when. What happens is that unemployment rises. That is bad, home prices go up. Yes, home prices typically rise modestly in a recession. Just remember, since World War Two, home prices only fell significantly in one period, and it was a bad one in those years around 2008 what happens to interest rates? Interest rates of all kinds. In a recession, they fall. Interest rates fall. The Fed make sure that happens, and the reason for that is rates fall because the economy needs the help to review what you've learned so far today, single family rents are rising faster than apartment rents. Single Family rents are rising faster than single family home prices, although not by much. And Austin is proof that if you build it, prices will fall. And during recessions, residential real estate is a good place to be. Then let's say it's a widespread job loss recession as we pivot into the core content of today's show, you're probably quite familiar with the turnkey real estate investing model, where ideally on day one of your property ownership, your income property is either new or renovated. There's a tenant in it. It's under management, and you might even get a little trickle of tenant rent at the closing table. All right, but instead, what if you had six months of patience you own the property for those months through the renovation, and what's your reward for doing that? It is both high leverage and high cash. Flow, potentially, and usually those notions are antagonistic. High leverage means low cash flow and vice versa, but not with what we're talking about today, my expert guest and I discuss how you can have both the cash flow, which is like your spending money, and the leverage that constitutes your long term wealth growth, and he has bought, renovated and sold more than 2000 properties. And my guest and I go back more than 10 years before I go to break where you hear who sponsored the show this week, I have a trivia question for you, and you'll see what this has to do with our episode soon enough, Ohio has six cities with a population of 100,000 or more. Name them. Name those six Ohio cities. I'll give you your answer later. I'm Keith Weinhold. You're listening to get rich education.   You know what's crazy, your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns, and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money back, no weird lock ups or anything like that. So if you're like me and tired of your liquid funds just sitting there doing nothing, check it out. Text, family to 66866, to learn about freedom. Family investments, liquidity fund, again. Text family to 66866,    hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation, because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridge lendinggroup.com, that's Ridge lendinggroup.com.    Richard Duncan  12:46   This is Richard Duncan, publisher and macro watch, listen to get rich education with Keith Weinhold, and don't quit your Daydream.   Keith Weinhold  13:02   We were last graced with the presence of this week's guest about two and a half years ago. Since then, we had dinner together in Boston. He is a long time experience expert in the real estate BRRRR strategy will explain, and he knows just the exact few markets where the strategy really works and where it doesn't, and he explains how this can deeply accelerate your ROI and your portfolio growth and get this he's been a real estate investor since he bought his first rental property in 1978 he's been working the burst strategy and mentoring others on it since before there even was a burr acronym, brrr, he has mentored and coached more than 5000 investors. Oh, it's great, Phil, welcome back onto the show.   Phil Alexander  13:54   Keith. Thanks so much. It's such a pleasure to be here. It's always great to see you, and the time really flew from when we were able to break bread together in Boston, which is my hometown. And as I recall, we went to America's oldest restaurant, the union Oyster House, which was a fun experience   Keith Weinhold  14:14   right, where there are lobsters crawling all over the place. Yeah, that was a cool distinction to meet with you in America's oldest restaurant there in Boston. Pretty unforgettable. Phil, though you're from Boston, well, that's not really where the cash flowing numbers work so much you're an expert in the art of the BRRRR  the real estate, buy, rehab, rent, refinance and repeat strategy, and then we'll discuss the market that you say is number one in the USA for this so really high level, big picture. For those that don't know, what is the burr strategy? What makes it so compelling?   Phil Alexander  14:55   There are a lot of different ways Keith to discuss the burr. Strategy. It really is nothing more than a turnkey property. However, in the old days, I'll say, you know, I've been in the business for over two decades, we would sell turnkey properties, and a buyer or investor would come to us, and we'd show them a number of properties that were available. They'd pick one, we'd renovate it, and then they would have it inspected, and then we would correct against that ugly inspection report, and then they probably would be using leverage, so there'd be an appraisal, and then we'd put a qualified tenant in place. And after all that had happened, we would close on the property, and they'd be cash flowing from day one. There's nothing wrong with that approach and strategy. It's very conservative, but relative to the burst strategy, Keith The one big element that's missing in the classic turnkey model, there's no built in equity. And what the burst strategy does is it allows the investor to create value through that renovation, and it's nothing more really than a developer himself or herself does when they renovate the property to create value, and in doing so, you then wait a prescribed period of time, often called a seasoning period, and then you do a cash out refi to pull out that built in equity that you created yourself. And the idea then is to recycle that cash and buy into your next property.   Keith Weinhold  16:35   Why don't you give us a real example with some numbers?    Phil Alexander  16:40   Let's say you could find a place. Now, anybody in California is going to listen to this say this doesn't happen because you can't buy houses for this. But trust me, you can't. You buy a house for $60,000 you renovate it for $40,000 that means you have $100,000 invested in that property. However, you bought that house because you knew, once renovated, it was likely to be worth, let's say, conservatively, 120,000 and yet, when you go and do the cash out refi often at six months from the time you acquired the property in the first place, you're going to be able to pull out up to 75% of that appraised value. I'll do the math for you quickly. 75% of that $120,000 is $90,000 you only put 100,000 into the property in the first place. So at a glance, that suggests that you've gotten this property for $10,000 Well, to be fair, you do have closing costs. So let's say the closing costs and the finance fees on that cash out refi loan are about $5,000 so in essence, for $15,000 you now own a property worth 120,000 now an illustration of the value of this BRRRR strategy is if you were to go and buy that very same house, 420,000 renovated, tenanted, cash flowing, it would cost you 20% down, which would be $24,000 plus finance fees and closing costs would push it to or over $30,000 here's the bottom line. Would you rather get it so it's cash flowing from day one after closing, no built in equity and 30 or $32,000 out of pocket? Or would you rather get it where you only have 15,000 out of pocket? And I can do the math on that and tell you that you're more than doubling your cash on cash return with the BRRRR strategy   Keith Weinhold  19:07    yes, and you've also increased your leverage ratio in the example that you gave after waiting six months, much of which includes waiting for that rehab to take place, you have A 120k property. Like you said, you only have 10k into it. Maybe add five more K to that for closing costs and such. So you've got 15k into a 120k property. That is an eight to one leverage ratio,   Phil Alexander  19:33   exactly. And there are numerous other examples, typically speaking, Keith in good investor advantaged markets with the burst strategy. You can expect after leverage, after that, cash out refinance loan to be netted in the range of 200 to $250 per month cash flow. That's the rental property the. Less all of the direct expenses, less your monthly payment on the loan. Your net positive cash flow every month is between 202 150 in most good markets,   Keith Weinhold  20:13   that is really good on a single family home, because typically when you have a higher leverage ratio, when you're borrowing more, that really crunches your cash flow. But in this terrific example that you gave, it does not So Phil to help distinguish the burr strategy from an investor buying a turnkey property. To make that distinction, I think of the turnkey provider is really already doing the first three letters of the BRRRR acronym for you, because the turnkey company, they buy it, they rehab it, and they rent it before selling it to you. They're doing the first three for you here, when you hang around for all five letters of the acronym, you can be the beneficiary of what you just described.    Phil Alexander  20:58   Spot on, Keith, that's exactly right. The bottom line is, I think a game changer for our company of late is that we have found a market where you could earn two to three times the net positive cash flow on a monthly basis with the BRRRR strategy.    Keith Weinhold  21:19   Yes, we're going to get into just where that market is, the number one market in the USA for the burr strategy, in Phil's opinion. But Phil, I think before some people wrap their head around the BRRRR strategy, sometimes they consider the investor doing this themselves. What's intimidating about doing BRRRR by yourself is that first R in the burr strategy, the rehab, it seems like a nightmare, especially across state lines for an investor to find and retain and to manage contractors, but you have a system where this is all integrated.   Phil Alexander  21:57   exactly, you Know, Keith, I consider the two biggest pain points for an early investor is actually that first letter the B. You can buy properties anywhere, but the trick and the key is to buy a property that you know, with proper renovation of a rental standard, in fact, will be worth, generally, 20 to 30% more than your out of pocket cost. The second pain point is the construction component, finding a contractor, managing a contractor, keeping the contractor on the job and productive and not running away with your money.   Keith Weinhold  22:44   We make you lose faith in humanity. Yeah,   Phil Alexander  22:48   yeah. We don't really even need to go into detail more on that, but you're absolutely right, and what we do, which I think has made a significant difference, we have our own crews. We're able to have the projects managed. We have detailed scopes of work, for example, that detail line by line, item by item, the scope of work and the draw schedule to renovate a property and deliver it on time, on budget, without exception,   Keith Weinhold  23:21   tell us about the track record of the team in the contractors. I think most people's bad experience starts with day one, when the contractor shows up 45 minutes late with beer on their breath.   Phil Alexander  23:35   It could be, it could be, I am blessed. Currently, I'm active in three markets, although during my career, I've worked in 19 different markets around the country, not become fickle, but because markets do come and go. But I'm in Baltimore and Philadelphia and Cleveland right now, and the bottom line is that I have cruise boots on the ground in every market, and my one general contractor that oversees all three markets, he's been with me for over 15 years. As you mentioned earlier, I've been in the business for over two decades. We've just been doing this, like you said, since before there was an acronym to what we were doing. It's just a sensible thing to do. We know each other well. We get the scope of work done accordingly. That's something that we, with pride, say is a guaranteed number, which you don't often find in this business. Meaning if we have not gotten it right, if we have screwed it up, if we find something that we missed when we were, you know, reviewing the house and drawing together the scope of work, that's not the client's problem. That's our problem. If we say the rehab is 50,000 the rehab is 50,000 period there is no cost overrun.   Keith Weinhold  24:58   We don't want. Contractors smelling like Michelob Ultra we want contractors smelling like sawdust and WD 40. But Phil, you talked about the specific markets that you work in because they're burr advantage markets, Cleveland, Philadelphia and Baltimore. Tell us about the one that is number one in the nation right now, and why   Phil Alexander  25:21   Cleveland, Ohio. And it's not because my dad was from Cleveland. When we were kids, we all played I haven't met one person who hasn't on a seesaw, if you recall, you know, and now in your mind's eye, imagine the seesaw. One end is home prices and the other end is annual return. When the home prices are high, the returns are low. When the home prices are lower, the returns are higher. That's why, sadly, for virtually everybody on the West Coast, my hometown of Boston, New York, Washington, DC, South Florida. These are amongst, to put it bluntly, the worst markets in the country to try and cash flow positive. What makes Cleveland, however, especially unique. I'm oversimplifying, perhaps, but it is blessed to have both lower home prices than most markets, but very healthy real world rents, and that's a juxtaposition that causes extreme cash flows. I think at the current moment, I might have one property that doesn't cash flow 500 or more dollars per month, net positive cash flow, as we were discussing, 200 to 250 is normal for a good market, even in my other markets of Baltimore and Philadelphia. But you come to a market like Cleveland, and it's absolutely extraordinary. This is a perfect segue, if you'll allow me to the thing that makes us and me different. There's a billionaire car dealer by the name of herb chambers in Boston. In fact, he just sold, I understand his business for $1.58 billion massive car dealer. That's not important. What is important is his whole marketing mantra, Keith, is I don't sell you cars. I help you acquire your next vehicle. I don't just sell investors houses, Keith, I have taken an approach, and I've been doing this for a number of years, where I help investors achieve their goals. I have a very specific process, and I'd be happy to share, if you'll allow me, yeah, I first ask people about their war chest. To me, that's the amount of liquid capital they have to invest when they're ready to pull the trigger. It's not just cash in the bank. It can be equity in a home that they can pull out with a home equity line of credit, a HELOC, maybe they have a retirement account that they're able to borrow against. It's their money, after all, but that amount of cash is your war chest, and frankly, I'm not one of those people who says, You can buy real estate with no money, if you have maybe $30,000 or more, I can get you in the game. The second question I ask is, what's your goal? Because every one of us in this business has a goal. Every one of us, I don't need to know the specific goal. But whether it's to have your partner give up the nine to five job, or you want to give up the 90 to five job yourself, every goal has a cost. So what I seek to find out or learn is, what is your number in terms of a goal, how many 1000s of dollars of passive income every month are you looking to achieve? And then the last question is, time frame? Are you looking to achieve that goal in? What three years, five years, 10 years. And then, simply put, whatever the answers are, I show you how it's going to happen.   Keith Weinhold  29:18    See, these are the types of questions that your everyday realtor just doesn't ask you. I mean, Phil doesn't just sell you houses. He helps you achieve your stated goals for passive income. There's nothing wrong with an everyday realtor, but that's just not the lane that 98% of them are in. And what makes this burr strategy so compelling? I'm just doing calculations, not even on the back of a napkin, but in my head here, if you've got eight to one leverage, like we do in the example here, even if you have 3% annual appreciation on a property, that's a 24% return on the 15k of skin in the game that you have here. And then additionally, if you achieve $500 Dollars of monthly cash flow once your burr property is done, that's $6,000 a year divided by only 15k of skin in the game. That's a 40 or 40% cash on cash return in addition to the leverage depreciation that stepped up. And these are two of only five ways you're paid. This is why people love the burr strategy, if you've got the patience to wait six months,   Phil Alexander  30:25   here's the other thing too. A lot of people say, Is it possible to cash out earlier? And the answer actually is yes, but you have to be prepared to decide what's that worth to you. Meaning, if you wait six months, you can expect 75% of the appraised value. However, I have some lenders that I can introduce that will do a DSCR loan, debt service coverage ratio loan, which is against the cash flow capability of the house rather than the credit worthiness of the borrower, and they'll do it at three months, and yet it'll be at 65% perhaps of the appraised value, a lower loan to value or LTV. But still, it's a cool way to roll plain and simple.    Keith Weinhold  31:18   Yes, so Phil, here, he offers you total solutions. It's not just helping you with the Property selection, it's renovation by his license, then insured crews, introductions to the financing needs that you might have hash out, refinance introductions and that all important professional property management, unless you choose to manage the property yourself. And Phil, I want to ask you more about Cleveland and just the neighborhoods that you're selecting in a moment, but I've got great news here. You get to join Phil live. He and a GRE investment coach are co hosting Cleveland's amazing cash flow opportunity with the burr strategy, and you can join from the comfort of your own home. It is just 10 days from today, Thursday, March 20, at 8pm Eastern. Registration is open now at GRE webinars.com I suggest you register. We had hundreds of registrants for our last BRRRR event, which was last year. But Phil, tell us more about what you'll let us know on that webinar when it comes to Cleveland areas and neighborhoods.   Phil Alexander  32:26   Sure thing Keith, Cleveland's a pretty dynamic and interesting town. Of course, most people know it's the home of the rock and roll, Hall of Cleveland rocks and Exactly. And there are so many things about Cleveland that I think are really kind of cool to get to know. First of all, we talk or you mentioned appreciation, home price appreciation in Cleveland last year, 7% Yeah, crazy, absolutely crazy. The cost of living is well below the national average, it's at 6% below. Now here's the interesting thing, too, the rent to own ratio of people who rent versus own, very strong 59% rent. And of course, if you're a landlord, what does that mean? It means a greater opportunity to have qualified tenants in place with very low vacancy periods regardless. Now the average rent is $1,433 a month, which, again, when you're talking about properties, the average price of which, even with the renovation, is between 100 and 130,000 let's say 14 133 is even ahead of that cool little metric that we sometimes call the 1% rule, where the rent is at or above 1% of the value of The property. It's a small city only about 360,000 people the metro area, of course, a bit larger, at 1.7 million. And there are a number of top employers, and you know, the Cleveland Clinic, obviously well known Progressive Insurance. Love their ads. Sherwin Williams, you think about that the next time you want to go paint, but it's as to where we're investing principally we target Keith. What often are called C and C plus neighborhoods this week, yeah, often on the eastern, southeastern side of the downtown. Of course, to the north, you've got Lake Erie, so you don't want to get wet, so that you stay east, west or south. And yet, there are a number of places, maybe areas, if you're familiar with Cleveland, like Shaker Heights, Maple Heights, Brooklyn Heights, Cleveland. Heights, University Heights, all of these areas are considered suburbs with high taxes, uniquely so we tend to stay away from those, but in close proximity, we're all around them, and we benefit in terms of appreciation by being all around them, but not being in them, because you don't achieve any higher rent in those suburbs, but you do have the higher taxes, and in that respect, we're able to enjoy these outsized returns.    Keith Weinhold  35:37   This is a rare opportunity for you to meet Phil, someone with this wealth of experience. And of course, the benefit of showing up live, if you so choose, is you can ask a question yourself and have it answered. Phil, do you have any last thoughts overall with anything, whether that's the burr strategy or Cleveland itself, or anything else?   Phil Alexander  36:00    First of all, a lot of people ask me, Keith, you know, with rates mortgages and this and that, what do you think I heard? Maybe they're going to go down in the spring or the summer? Should I wait? The answer is no, the best time to invest is yesterday, and you will always be able, in a market like Cleveland, for example, to enjoy strong, positive cash flow. And you know something, as I said before, I've worked in 19 different markets. As soon as Cleveland stops being such a cash cow, I guess I'll have to move on and find the next great thing. But until then, I'm in Cleveland.    Keith Weinhold  36:40   It is supply demand. Our listeners know, as I've shared with them, that the Northeast in the Midwest are under built markets. So you have the opportunity to own an asset that everyone is going to want in the future. It ought to be great. Phil, it should be terrific 10 days from now. Thanks so much for coming on to the show.   Phil Alexander  37:01    It's my extreme pleasure, Keith, I have to say, in all the years that I've known you and known your listeners, they are easily amongst the best educated and most serious investors I have the pleasure to deal with. So it's always a pleasure to come back and thank you for having me.    Keith Weinhold  37:19   That's really kind. Thanks for saying that.   Yeah, excellent. BRRRR. Breakdown from Phil the consummate expert. In fact, when we had dinner at America's oldest restaurant, we sat just across from JFK, his favorite booth. He used to dine there. He was also a Bostonian. Of course, which six Ohio cities have a population of more than 100,000 people? They are Akron, Cincinnati, then, of course, the subject of today's show and our upcoming live event, Cleveland. Also Columbus, Dayton and Toledo of all 50 states, Ohio has tons of industry diversity. They had the nation's seventh largest population, and Ohio's population is slowly growing. A number of GRE buyers, just like you, have already connected with our investment coaching, so therefore you got the introduction to Phil and have already bought BRRRR through Phil, including in Cleveland, but he is sourcing more of them for this event. Phil and I looked at some Cleveland single family rental pro formas together that utilized the burr strategy that cash flow over $600 even two properties that cash flow over $700 but I would say those results are not typical. The ARVs after repair values have been pretty good. What Phil does is he runs comps of properties within a quarter mile before the appraisal. And you know, to give you a little behind the scenes. He bought the same software that lenders use to run valuation reports. So he has it himself. Phil has shown me proformas where you get cash back at closing, and therefore what that means are infinite returns. Though that's not an expectation that you should have, though it's nice when it happens, people are often buying two or three properties at a time. And to give you a little more, behind the scenes, Phil has his own in house wholesale unit for helping source these properties. And for every 100 properties, he buys two to five of them, Cleveland rocks. But even if you're more into rep, it's completely free to sign up for our webinar. You'll learn the nuances of what makes the burr strategy so lucrative, what makes Cleveland advantageous, and have any of your questions answered. It's coming up next week, already, March 20, at 8pm Eastern. I mean, this is the kind of event that can alter the trajectory of your entire investor life. Sign up is open. Save your spot now at GRE webinars.com that's GRE webinars.com until next week. I'm your host. Keith Weinhold, don't quit your Daydream.   Speaker 1  40:20   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively. You   Keith Weinhold  40:48   The preceding program was brought to you by your home for wealth, building, getricheducation.com  

Allen County, Kansas is not a place most people will be familiar with, but the story is one you've probably heard before. Located in southeast Kansas, an hour and a half from the nearest major city, it features much that's typical of rural America. Iola, the county seat, is a city of 5,300 people. It has a classic town square and lies at the junction of a couple of state highways. The beautiful Flint Hills and its majestic cattle ranches are not far away.But after the community lost its hospital in the early 2000s, the usual questions emerge - is Iola, and the whole county on the verge of permanent decline?Out of this tragic circumstance was born Thrive Allen County Jared Wheeler, their Economic Development Director, joins me to talk about the path that Iola, Humboldt and the whole county have taken since that time. And, the remarkable successes they've achieved. Humboldt, for example, was featured in 2024's “15 Best Small Towns to Visit” in Smithsonian Magazine.You might not know much, or even care much, about rural Kansas. But I think you'll still find this to be an inspiring conversation and story. Jared and I cover a lot of ground, talking about rural community development, place-making, a culture of experimentation, and even bike paths.Find more content on The Messy City on Kevin's Substack page.Music notes: all songs by low standards, ca. 2010. Videos here. If you'd like a CD for low standards, message me and you can have one for only $5.Intro: “Why Be Friends”Outro: “Fairweather Friend”Text Transcript:Kevin Klinkenberg (00:01.158)Welcome back to the Messy City Podcast. This is Kevin Klinkenberg joined in studio today by a special guest from Central, what did you call it? Central Kansas? Southeast Kansas. Southeast Kansas, yeah. Southeast Kansas, all right. Well, shout out to my buddy Jason Carter-Solomon who hooked us up. He said, you know, just was out in Iowa, Kansas and I met this guy doing really cool stuff and it's like, you've got to talk to him.And it sounded intriguing and here we are. So welcome to the show for Jared Wheeler. You got it. Jared Wheeler. I am economic development director for a nonprofit in Southeast Kansas called Thrive Allen County. So I'm thrilled to be to be here today. Well, it should be a lot of fun. I have I've been through the area a little bit, have not stopped in Humboldt, which I know is like the big.tourist draw now. Right, right. Who would have thought that a community of 2,500 people would be in the Smithsonian magazine, New York Times, all these national publications saying you got, you have to come check this place out. Yeah. So why don't we start a little bit by just talking about, first of all, what thrive Allen County is, and how you came to be a part of it. So thrive Allen County.was initiated when the hospital in Iola, Kansas was closing. And as part of the agreement, anytime a hospital closed at that point, the idea that assets would be sold and then the money put it into the, with the intention of creating a 501c3 nonprofit, specifically dedicated towards public health initiatives. So Thrive Allen County was born out of really a crisis. So it's kind of birth from a crucible.the hospital in a small town closes. If you speak rural life fluently at all, that is a recurring theme that the hospital in town closes and you are left with some amalgamation of clinics or some specialty shops or just a general practice with limited beds, no overnight stays, that sort of thing. So the hospital closes, thrive, Allen County is born.Kevin Klinkenberg (02:20.988)And its initial mandate is to improve the community health. Just to interrupt for just a sec. So give people perspective. How big is Iowa? Yeah. Iowa, Kansas is about 5,200 people. Relatively small. It's the county seat of Allen County, Kansas. The next largest community is humble of 2,500 people. So the entire county's population is 12,000. Right. So for those of you who are in urban context, you are.probably struggling to imagine that sort of lack of population density, population scarcity. It's funny. It reminds me. So I went to high school in a small town in central Missouri. That was about 12,000 people. Okay. But when I hear you say, you know, Iowa is 5,200, it just reminds me that like when you're in a smaller town, like the hundreds matter. my. Saying 5,200 versus like 5,600, that's like a big deal. Right. It's the same way, you know,parents of young children still measure their kids age in months. It's like, is it about 27 months? It's the same situation for those of us who are doing our best work in rural communities, like 5,200. Because if I say, it's about 5,000 people, somebody out there is listening going, my graduating class was 5,000 people. That makes no sense. So Thrive, that's our context in which we work. And for the last,17 years Thrive has existed to enrich the health of citizens in Allen County. And that was initially in specifically related to physical health. So we have healthcare navigators that try and make sure that as many people as possible are insured. We operate vaccination clinics throughout the county, especially in even more rural and remote context. And thenabout halfway through the lifespan of Thrive, economic development was added. And economic development is really pursued from the perspective of community health. What is going to be a source of good, benevolent disruption? That's my approach constantly is what is going to disrupt the systems that are in place that contribute to the lack of health?Kevin Klinkenberg (04:45.788)for our community members through economic development. So that's my role and I am part of, technically I'm a one man department, but we all work together at Thrive and with our partners, both public and private partners in the communities. So how big is the organization overall? We have just under 30 employees right now. Yeah, and so we're fortunate in that some of those employees are in a transition period because we operate Allen Regional Transit.which is a public transportation organization in a rural context, which I know some of y'all out there are picturing like covered wagons. That's not exactly what's going on. But so we operate a public transit organization. And then we also have within our organization, the seed of another nonprofit that will probably spin off called Thrive Kansas, which is working for the same sort of rural community health goals.that we do in Allen County, but is trying to create statewide networks to do that. And how did you, are you from the area? Man, my rural bona fides are legit. I am, I am from a town of 500 people originally called Thayer, Kansas and in the same region, Southeast Kansas again, born and raised there. And really, so you have to remember I grew up in the nineties, early two thousands. So my experience of the wider world.was purely through pop culture. We didn't go anywhere. I was as hasty as they come. I knew what sushi was. did not eat. I had not had a bite of sushi until probably when I was on my honeymoon. And my cousin and I had a wonderful time. I'm just kidding. And so that's my baseline understanding of the world. But then I...I lived and worked in churches and schools after that. Did my grad school in Portland, Oregon. And so I did intensive weeks out there. So I was spending time in Portland in the Pacific Northwest for a couple of weeks at a time for four or five semesters. And so I've experienced a lot of different contexts. And then we moved back to Southeast Kansas, my wife and family and I from Kansas City actually. And so we lived up here.Kevin Klinkenberg (07:12.294)and then moved back about nine years ago with the choice to locate our family in a rural context. that's my route towards economic or community development is incredibly circuitous. And I really, I've found that that was a point of embarrassment for me initially when I took the job, because I just thought, everybody knows this stuff better than I do. And now I'm learning more and more about our conversation off mic before that.You were in architecture school before you got into community development. And I think that's, that is true for so many people that the reason they end up in community development, economic development, especially in a rural context is because they love the place. They love the place. They are invested in it and they have lived it. And again, bear the burden of what could be, or they have lived it and they are so quintessentially formed by it.that they believe other people should benefit from that formation as well. And the same is true for me in both directions. So, really the only experience I have with your area has been driving back and forth between Kansas City and Tulsa, which is kind of like the most direct route, really. Maybe not the fastest route, it's hard to say, but it's more interesting anyway, a little more scenic.been through Iowa. don't think I actually have driven through Humboldt yet. Humboldt, as you mentioned, has been a place that's gotten a lot of attention in recent years and it's kind of on the radar for, you know, like glamping and for cycling and everything else. Why don't you talk a little bit about like how and why has the area started to get the level of attention that you mentioned before?I think there's two categories I should speak to. The first is material and then maybe the second is going to sound a little weird, but it's mythological. So materially, one of the reasons that the area has gotten attention is because quite frankly, it's cost effective to develop and to try things in Allen County. The economic ecosystem in rural Kansas has typically been one of either extraction or exploitation historically.Kevin Klinkenberg (09:35.81)It is a wildcatting pioneering economy since my goodness, since the 19th century. And so the, industries that boomed the turn of the 20th century into the 19th century were extraction based businesses. Let's pull things as pull natural resources out. mean, my goodness, near Iola, Kansas, there is literally a city called gas and it is called gas because you, you made your bones.as part of a natural gas business there, that that's the way you made it so that the name stuck and in Humboldt and Iola there, there were massive, concrete businesses. there are these huge firms that, mined a mineral from that area and then use it to turn it into cement and concrete. So it's one that's still an operation monarch cement company in Humboldt, Kansas, butThat is the case. either you're pulling a resource from the landscape and when that is exhausted, you leave. And so that that also funnels into that exploitation idea. It's extraction or exploitation. So there's a sense amongst the folks who live and this may be true if you're a real person listening, you might be nodding along or you might want to fight me either way. WhereThere's an idea, the scarcity mindset that blends in that says, well, everybody who could have left did. Everyone who had the chance and the means and the capacity to leave when it was time to leave did, and we are what remains. I don't think that's accurate. I think that's sometimes, unfortunately, the way that small communities understand themselves. They either become bitterness factories or hope factories. That's very rarely.in a community that is somewhat remote and rural, is it in between those two extremes. You're either a community of hope or you're a community of bitterness. What could have been and what might be. So those are your two extremes. And I'd love to talk to people if they feel like they live in a community that exists right in the middle of those.Kevin Klinkenberg (11:51.238)So the first reason why the community, the area is getting more attention is because materially it's more cost effective to try something new there. That economic ecosystem of extraction or exploitation is given way to one of experiment. Let's try something new. And so there are people who are either coming back to the area or they are relocating from other parts of the country.because they have an idea that is impossible due to the cost constraints of where they live. I am assuming even for our folks who are listening in Kansas City, that if I started doing cost analysis comparison between opening a storefront business of some sort in Prairie Village compared to Iola, Kansas, you will not get the population density for traffic or tail lights, butfor your permit cost, you might be able to buy a building in Iola. So that's really at end of the day, it's more cost effective in our area just because things are cheaper. I don't mean to be crass, but that's what it comes down to. That's the material side. The second one, the one that I'm maybe even more interested in is the mythological side. Why are people so interested in that area? And I wanna ask this question as I hold this off in my head.How do you think people from non-rural contexts experience or how is their perception of the rural world formed by what pop cultural artifacts, so to speak? in the fifties and sixties, I would say it's probably Mayberry, you know, it's the Andy Griffith show. And what's the essence of the rural experience? Well, everybody knows you, you're not going to get away with anything because you'reyour mom's hairdresser's aunt saw you do that. And so they're going to report back. And then as it moves forward, what there's kind of this, it's dearth of pop cultural artifacts that have, kind of monolithic effect, except I believe there is now a new pop cultural phenomenon that everyone at least is aware of that is giving people a lens to look through.Kevin Klinkenberg (14:16.988)and see the rural context. And this is going to be absolutely ridiculous to most people, but stay with me. If you're familiar, if you, if you are familiar with the incredible pieces of art, they're known as hallmark movies. You have had a rural experience because those movies never take place in urban settings. Or if they do, it's only momentary because they're trying to escape it to getto the rural place in which you are going to fall in love, achieve your dreams and feel your stress melt away. And that's silly, it's ridiculous. But at the same time, I believe there is a, I think that is a very kitschy way of seizing on a groundswell ofCollective emotion right now where people are looking for something that is more simple. Our lives are incredibly hectic. We know they're hectic. We know that we are addicted to everything and anything. So how can I simplify? And then how can I take charge of my life and do what I want to do and have some agency? And with a little bit where your dollars go a little bit farther and maybe the pace of life slows down, people feel like they have a little bit more agency.And then finally, where can I still access some version of the American dream, whatever that is? And I think that is a piece of mythology that has been so twisted and turned, but there's, it's still baked in somewhere to us. And I think at the end of the day, part of that dream in a rural context is can I be known by people and can I know other people? I'm sure you are aware of thethe emphasis and the buzzwords of, you know, quality spaces, place making third spaces. mean, we are, we are addicted to those. And in a rural context, I think the perception is when you look through the lens of an artifact, like a hallmark movie, that the entire community is a third space because you're going to bump into the person you work with elsewhere. You're going to see someone.Kevin Klinkenberg (16:38.764)at one of the three restaurants in town that you saw yesterday crossing the street or so on and so forth. So I think that's one reason why the community has been so, or the area has been of interest is because mythologically, it provides an avenue towards some essential thing that we want out of living life in community that may be a little bit more difficult.in, if not an urban context, certainly a suburban context. So if I were to put a dot in Iowa and then draw like a circle 100 miles around it, there's an awful lot of small towns within that circle. Right. What has distinguished Iowa and Humboldt that you see more positiverebound and attraction than maybe some other towns that are within that context. One thing that has really helped so much are collectivist approach to problem solving. for example, my organization Thrive Island County, especially in the area of economic development, we would be completely inept and ineffective if we didn't haveclose and active partnerships with local government and local business leaders and confederations of industry leaders as well. So that's one of the first reasons that Iola Allen County has been successful is because it's taken a collectivist approach to problem solving without any sort of political machinations behind that, or sometimes even completely devoid ofpolitical ideology, just because, something needs to change. What do we do about it? Another reason is because folks who have been successful in Allen County have taken it upon themselves, even though there isn't a whole lot of philanthropic infrastructure, or they don't see philanthropic models that you might see in a larger community. you start a foundation, that foundation does this, this is the way in which you...Kevin Klinkenberg (18:59.088)you know, are able to recoup some of what you've given away through tax breaks and so on and so forth. That infrastructure doesn't really exist in Southeast Kansas and small communities, but successful individuals have taken it upon themselves to think critically about the complex issues that their communities face, identify the areas in which they can have an impact and aggressively pursue that impact. So, andI'll be somewhat discretionary simply because the individual in question is not a huge fan of publicity, but there's an individual, a family in Humboldt, Kansas, that at the time of the pandemic redirected a considerable amount of its workforce towards making community improvements as opposed to laying off workers at their industry. That's turned into almost a parabolic story.but it is exemplary of this individual and this company's approach to community improvement. And even without a model that said, is how you do this. There's no, there's not a Carnegie library in Humboldt, Kansas, even serving as a beacon of what philanthropy looks like. This individual became a quintessential philanthropist to solveproblems and it's in his small community again, because he loves it. And that example has had a profound impact throughout the region where there are more and more folks who have been successful and have realized that their success has resulted because someone else made a provision for them and they've turned around and said, okay.How do I address the complex issues? Not merely I'm gonna endow a scholarship, which by the way, we love that, keep doing that everyone, but we need new curb and gutters in the road. I bet I could do something with that. I bet I could have an effect in that direction. So we've been very beneficial through collectivist solution making and then also,Kevin Klinkenberg (21:19.676)the inspired philanthropy of successful folks. mean, that's so interesting. It kind of hits on a broader topic. know Aaron Wren on his podcast has he's talked about this as well. But like one of the real differences today versus in communities, say 100 years ago, is that 100 years ago, the bank in town was locally owned. Right. The department store was locally owned.Right. You know, most of the, and this is true in cities of towns of almost all sizes, that your local leadership class were people who owned prominent businesses in the town. Right. And that is something that has been lost in an awful lot of communities because of, you know, just changes in the economy and so muchSo much of a shift towards sort of larger corporate owned Businesses that then just have branches in places and you just never have the same buy-in right you're like if you're like the branch manager of a bank that's got 500 Locations right you're gonna have a different buy-in than if you're like the owner of the bank. Yeah and and the same goes for for a lot of industry so I think that's it's really interesting what you mentioned that you sort of start starting from a kernel of somebody who ownedan important business and lives in the town and says, just like you said, I'm not going to just do a scholarship fund, but I'm going to invest in things that make, improve quality of life where I am. Right. And I guess that's, as you were, as you were talking about that, I, I couldn't help but wonder, and I'll, I'll ask you directly if you, do you think a community can outsource its self identity? no. Okay. Okay. So, but that's, that's the tug.When so many things are operated or owned remotely is what happens is this, I really think an existential crisis for a community to go, then what are we and who are we? And if you don't have a thing to point to that provides an place of orientation for your community, it gets really hard to then invite people to invest in that community.Kevin Klinkenberg (23:44.63)And so I think that's, I think you're exactly right. That when, when that autonomy evaporates, then you do have a, identity crisis, so to speak. And so that's one thing that's been really interesting in both Iola and Humboldt is, you know, the businesses that are added, we have some community investment, groups and, some microloan groups andso on and so forth. The businesses that have been added are not, mean, there is no retailer that's saying we'd love to drop a branch in your town of 5,000 people. It doesn't make sense for them. So what's added is homegrown. It's local entrepreneurs who we claw to find capital for them and then they take a swing and we're fortunate in that. I sit on a board of what we call a entrepreneurial community.a lending group, micro loans. although, you know, to us, they're not micro to other folks. might be, we have over 25 loans on the book right now and 99.9 % of them are making their payments with regularity. And we have businesses that are crossing that year to five to year six, year six threshold, which is enormous for anybody in the entrepreneurial world. And we've just been fortunate because, there's nobody coming to rescue us.think that is, that is a shift in mindset for small communities. That's so important and it requires a bit of, I mean, you, have to be brutally honest with yourself that you, you need to empower the folks who are there to ask why not instead of why here. Yeah. AndIf something else comes along, if something locates itself in your community, that is an extra. But if you can empower the folks who are local to take a chance, then I think you're onto something that could be sustainable. Yeah. I wonder if you can talk a little bit more, maybe some specific examples of like the homegrown approach. The reason I ask that is I'm old enough to rememberKevin Klinkenberg (26:09.818)that the standard approach to rural economic development for a long, time was go plat an industrial park on the edge of town, put the infrastructure in, and try to attract what basically were like low wage industrial jobs from big companies. that's how you will save your community. what you're describing is a really different sort of a bottom up approach to working with people who are already there.I wonder if you could talk more about like some of the successes or some of the other couple of stories you can share. Absolutely. and we still do that. I mean, I, got, I got two industrial parks right now that are planning and ready to rock. So if you're out there listening and you, and you want to, know, you need a spot for your biofuel company, hit me up. Cause I am ready to talk. so we're not, we're not opposed to that approach. I just think that, charting that as the only course is, really risky.And to be honest, I don't know how much, how reliable it is. I think it's a part of a solution model. But so for example, we have a coffee shop in Iola, Kansas. Every community has got a coffee shop at this point. It doesn't matter how small you are. This coffee shop, shout out Wild Bloom Coffee in Iola. And this coffee shop got started as alower level commercial space on the square. Like every other cute coffee shop in a small town bought the bare minimum square footage that they could afford as just one half of a building, one half of the lower level of a building. And the coffee shop has been so successful and it's been able toapply for and receive grant funding. It's been able to benefit from a neighborhood revitalization program that's a tax rebate program when they made improvements to the space. It works considerably with our organization in small business coaching and in capital pursuit through our micro loan program. And this coffee shop has now purchased the entire building that they're in. They offerKevin Klinkenberg (28:29.468)kind of a subscription based bourbon taste in nights and cigar bar evenings. And they're going to expand to catering and they they serve brunch now. And in our little coffee shop in Southeast Kansas, the other day I had the best ramen I've had in years. we have, they're really talented folks who are owning and operating that shop, but it's been able to expand consistently.due to again, these collectivist approach because there's so many people, it's not only that they serve a great product, they do. It's not only that they provide a great customer experience, which they do, but it's also because they have been willing to not only want help, but ask for help. And that's an enormous difference. Wanting help is just the awareness that you need something. Asking for help is putting your hand in the air,I said, okay, I'm willing to reach out and grab whomever is going to help out, but I'm asking for it. And so that's an example that we've had in Iola. In Humboldt, Kansas, and I can take no credit for this, there's a group known as a Boulder Humboldt. And that is a confederation of business owners, entrepreneurs, movers and shakers who have added businesses throughout Humboldt. So the best...And from my money, the best little honky tonk in Kansas is the Hitching Post in Humboldt, Kansas. And they have live music every night, every weekend night, excuse me. Probably the most expansive collection of whiskeys that you could want or need. And it is an incredibly successful business and an incredibly successful gathering place. And again, was started.by an individual who moved to Humboldt who had connections with people who had multiple generations of their family within Humboldt. And they were able to continue to build that business and be patient as it was built. they live, to your point earlier, they live and work in the community. The gentleman who owns that business is a city council person in Humboldt, Kansas. And...Kevin Klinkenberg (30:48.88)is really devoted towards overall community health and community growth. those are, and those businesses are now moving beyond. So Hitching Post is moving towards, I think it's third year of operations. So kind of living past that initial start at birth. Wild Bloom, I believe is to year four and five in Iola. So we have some wonderful businesses that are outside of what people would expect in a small community.again, because there've been collectivist approach. So hitching posts exists because of the collective that is a bold or humble and humble. Wild Bloom exists because of multiple collective groups within Iola that were, had a vested interest in these success stories. So the one, I confess the one business I remember from going through Iola is I stopped at the butcher shop right off the highway, which was a pretty incredible operation.And I think at the time I was kind of thinking about, we're not very far from ranch country. I had a cooler with me. want to buy some steaks or whatever and take them home with me. And of course the selection was incredible. The prices were way better than when I get in the city. And it's pretty much like fresh off the ranch. Right. I mean, you might have driven by cattle that were lamenting that their buddy was gone and ended up in your cooler instead.Yeah. So one of the thing I definitely I know about the area is you have this north south bike trail. Yeah. That comes through that goes for, I don't know, 100 miles or something. Yeah. Is that the Prairie Spirit? Prairie Spirit Trail. Yeah. What impact has that had on the area? So one, we have a very high rate of folks who bike or walk to work. Comparatively, I just pulled that data.We are higher than the state average, I think almost twice as high as the state average and people that walk or bike to work. So to me, that signifies two things. is it's pedestrian or bike traffic is built into the community. think part of that is because of the trails. There's 60 miles of trail in Allen County alone.Kevin Klinkenberg (33:09.622)so that's around the, what will become the new state park, Lehigh Portland state park. That's going to be on the edge of Viola. let's say it was a lake that was publicly owned and privately owned and then was deeded over to the state of Kansas and, Kansas department of wildlife and parks is turning that into a new state park. So there's a lot of trails around that and people have access to those trails for a while. Thrive Island County, maintenance is those trails on behalf of KDWP right now.we have trails though, that also we, we think of in, in rural communities, you think of your trails as out somewhere out towards the woods. I mean, you're go ride around and walk around, but there's also dedicated trails in Iola, that go to the hospital. spoiler alert, we did get a new hospital. I started the story talking about the, this, closing of the hospital, new hospitals added, to the elementary school, a new elementary school and to the high school, middle school, and also to around.Not to, we're working on getting trails all through the main thoroughfares in town, but there's also trails around Allen Community College in Iowa as well. So we are addicted to trail building and maintenance because we have a population that in many respects is income challenged. And an automobile, even though to most of us is an automatic purchase to a lot of our neighbors and friends, it's a luxury.And so if you do not have an automobile, but you need to get to work or you need to make your appointment or you need to get to school, you need to have a safe way to do so. And so I think that that trail system is. It's part of a wider, pedestrian and bike travel understanding and folks in our community are not embarrassed to do so. And it's because there's not.There's not the income stratification that exists. I mean, in some communities, if you see someone that is riding their bike to work, there's three categories either, they're, they're a granola type that just wants to show us that they're more fit and better than the rest of us. They are too poor to purchase a vehicle or they get a DUI and they can't drive right now. I mean, that is the truth in, our community because the, because of the prevalence of the trail system.Kevin Klinkenberg (35:35.002)If someone is walking or biking to work, it's really hard to codify them. I wonder if they fall into this category or that category just because it's the norm. So we're very fortunate that those trails exist and they do. It also affects, as you mentioned, the glamping outdoors, outdoor recreation, infrastructure and commercialization that exists in our area. That's very helpful. So again, in Humboldt, there is a camping, kayaking,and BMX riding facility known as Base Camp. And it is located at a trailhead. And so you can jump off Prairie Spirit or Southwind Trail. You can go into Base Camp. The, again, the state park is full of trails and also on Prairie Spirit and connect to Southwind Trails as well. Yeah. And then if you ride it far enough, you'll connect to the Flint Hills Trail. Yeah, exactly. Which is.over a hundred miles East West trail. Right. Exactly. My wife and I have ridden a few times. Okay. Cool. Yeah. we, we, one of our favorite events of the years, we go to the symphony and the foothills. Yeah. which is, I almost hate to talk about it because I don't want, I don't want it to become too popular. You don't want people to show up. Yeah. I really don't want people from the coast flying in and, and, making this, you know, too expensive, but my God, it's an incredible thing. Right.just one of the coolest events that we do on a regular basis with where the Kansas City Symphony goes out onto a active cattle ranch in the Flint Hills and performs a concert. But we've made a habit of going and writing a different section of the Flint Hills Trail every year, which is really a fun experience as well. But haven't done the Prairie Spirit, so I'm...Interested to do that. You absolutely should. mean, we, we talked to cyclists who do the same thing, who are connected using the Prairie Spirit to get to the Flint Hills. We're doing a major ride and they're always impressed with the quality of the trails. the Prairie, I, I can only say I only ride or have ridden a portion of it. so, and if you happen to see me riding, can, you can, guess a, is it.Kevin Klinkenberg (37:46.192)Poverty is a DUI or is it granola? one? What's the reason? But no, we're very fortunate that that trail system exists and fortunate that we are the custodians of that trail system. And that's one thing that I would say to, if you're in a rural context and you're just trying to think of something that you could add that would improve quality of life, would be a quality of life amenity, which by the way is an absolute necessity now.That's reason people are choosing to locate themselves in different places. Obviously housing matters, obviously childcare matters, obviously the possibility of earning a comfortable income matters. But if those three things are satisfied, they're making decisions about where to land based on, you know, is there a quality of life, amenity that I can connect myself with? You have, you have space and you have dirt. You are almost there. You are almost to the, to having a trail.or a system of trails in your community on the edge of your community. Please, please talk to Thrive Allen County. We have a lot of experience of doing trail work. We have blown it and messed it up in different places so we can help you avoid those problems as well. But that is a way in which you can activate your community and you can also contribute to the overall health of your community as well. So I want to talk a little bit more about the place making aspect of this.Like I mentioned before, went to high school in a small town in central Missouri and before that I did first through eighth grade in a small town in southern Minnesota.things that were memories that really stick out for me was, know, if you live in a small community and you're a kid, like riding a bike is a normal thing. Yeah. And I used to ride my bike everywhere. And it was accepted. It was normalized. It was easy to do and safe. There's very little traffic on most of the streets. But as soon as you hit 16 years old, like it is theKevin Klinkenberg (39:54.78)uncoolest thing in the world. You've got to have a car. You've got to be cruising around. there, one of the things that has really interested me that I've tried to, I've tried to articulate, I haven't done a great job of it, but I've thought a lot about, which is most small towns are absolutely natural places for the sort of walking, biking lifestyle that.quote unquote urbanists talk about all the time. it's actually, they were built for that originally. But it also bumps up against like the, there's a culture aspect, which seems to not embrace that in most small towns. And I experienced that. I still see it all the time. And I've often thought like really, I guess maybe I want your reaction to this. One of the things I've thought is thatone of the best economic development approaches for a lot of small towns is to be the antithesis of the big city and the big city, people think of it as urban with all this cool stuff to do. But the reality is most people are spending a ton of time in a car, getting from place to place, commute, whether not just commuting, but going shopping, kids activities, et cetera. Looking for a parking spot. Looking for a parking spot. but in a small town,those, it almost ought to be like, that's the place where you could really sell this idea of a lifestyle where you get on your bike and get to a lot of places. You could walk to the town square and that should be a real competitive advantage. wonder if you could, you think that's. Yeah. So why does that not happen? No, I think that's a, I think that is such an insightful question. and one that we struggle with a lot. so I want to, I want to tackle it in a couple of different ways.One is back to the mythology. What's a marker of success? Marker of success is to be able to have your preferred automobile and typically multiple automobiles. And that doesn't end just because you're in a small town. People still want to virtue or virility signal with their automobiles. And because of the work and the terrain in which people live in small towns in rural Kansas, automobiles are typically bigger. Automobiles are bigger anywhere.Kevin Klinkenberg (42:13.868)Always constantly. that again, back to the American dream model, excess is our love language as a culture. so at the same way you got, you have a lot of big vehicles and we need, we're going to signal that we're doing well via this big vehicle, especially if you struggle with multi-generational poverty. Here's a purchase you can make that is a signal that does not require the type of overhead as a home.So I'm going to buy this vehicle. It's going to show everyone that I'm doing okay. The only way to show everyone that is to use said vehicle until I can't make the payments on it anymore. that's not a, that's not a purely rural experience, but it's one that shows up a lot, especially in socioeconomically, depressed areas. Yeah. Here's my $50,000, vehicle in front of my $40,000 house. Sure. Sure. yeah. So that, that, that occurs a lot. There's still,There's still status signaling through via vehicles. That's the first one. Second one is it costs communities more to provide the infrastructure necessary for safe pedestrian and bicycle traffic. If you have X amount of dollars in your county budget or in your city budget to build roads and it's going to take, you know, 5 % more to add a bike lane.to change the width of your sidewalks and you have to decide either we do the project without those things or we don't do the project at all because everyone is clamoring for those things. In most cases, they're going to choose to add the infrastructure without these dedicated spaces. Part of my organization's efforts is to educate communities that you can do that in a cost effective way. You can add those things in a way that's cost effective. So,I think we're moving the needle in that direction. I think that that's still a big issue. we have some, so there's some cultural status signaling. We have some infrastructure cost challenges there. And then also the antithesis of the big city idea is very interesting because typically when people see adults riding their bikes, if you are from a rural community,Kevin Klinkenberg (44:34.576)You only see that when you go to larger communities. I remember having, again, I did grad school in Portland and Portland is an incredibly bike friendly community. If you talk to people who drive in Portland, who do not also cycle there, they lament how bike friendly it is. But if you are a person traveling in a large city, from a rural context to a large city, you see for the first time.city infrastructure that has bike lanes, has bike crossing, pedestrian cross, a lot more foot traffic, a lot more bike traffic. And it can be really alarming to your sensibility of what it is to get from place A to place B. And so, man, did we have a scare, I almost hit that person on a bike. Do I really want to deal with that back home? In a place where you're sharing literal traffic lanes as opposed to driving next to a bike lane.so on and so forth. So I think you're right. think there there is a sense in which, you do want to be the antithesis of the big city. But where you say that and you go, so make yourself more walk walkable and bikeable. There are folks in smaller towns who go, yeah, man, there's a lot of cyclists in that big city that I that I visited. And it was really difficult to navigate. I think that's shifting. We're very fortunate in that even in our town of five thousand people, there are folks who are interested in.making a transition from predominantly using their vehicle, their automobile to get around to using their bike or just walking again, twice as high as the state average of folks who getting to work that way. So I think we're seeing that, that shift. And I think that is a selling point for why we're inviting people to spend time in our area or consider moving to our area. Because if that is a lifestyle change you would like to make or that you've already embraced, thenThere's probably a way in which you can get everywhere you need to go in Iola or Humboldt or elsewhere in Allen County on your bike or on your own two feet.Kevin Klinkenberg (46:38.566)Another thing that has been really interesting the last few years, in the wake of COVID and all of the policies and changes that happened, there's been an awful lot written and talked about in regards to like people moving. People leaving cities, looking for smaller towns. Sometimes they're leaving the city and moving to the suburbs. Sometimes they're maybe moving from the suburbs to a small town or an exurb.And obviously, I don't need to rehash all of that, but there's been a lot of conversation about that for the last few years. And it feels a little bit like there's been a shift in perception in the culture about small town living in a positive way. What have you noticed the last four or five years? First, a little bit of a, I don't want to dampen that.that exuberance for small town living. But I think the data is starting to show us that people dip their toe into rural life and then they have went back to the cities or to the suburbs or so on and so forth. But in some cases, that's that's true. Just people have chosen a city, a new city, and they've left. So Austin's a great example. Austin boomed post pandemic and now their vacancy rate in particular apartments, condos, things like that.is astronomical because people are like, well, this was cool. And now I'm ready to go back to where my job is or where I lived previously. And so I think that's happening. The shuffling of the deck is resettling itself, so to speak. I do think you're right that there is a more positive perception of rural living than there used to be. I think it's because COVID taught us that everything could be truly remote.And if you can survive and maybe even thrive, and you talk to some folks and the best years of their life, with all due respect to people who lost loved ones during COVID or struggled with that, or still dealing with the health effects following COVID, there are some people who will tell you that COVID changed my life. I was at home with my family. I was taking more, more direct self-care. I was making efforts toKevin Klinkenberg (49:00.964)identify some things in my character that I want to change. It changed my life. So being remote was a positive. And so I think, what if I did that geographically as well? What if I did that socially as well? And I located myself in someplace a little more remote. Would that also be advantageous to me? And I think COVID also reminded us of the power of knowing people and being known by people.I think that is probably the primary reason in which people are choosing, if they're not business owners or entrepreneurs, people are choosing to live in smaller communities or move to smaller communities, even if the numbers aren't as great as they were immediately post-COVID, because they see an opportunity to be known by their neighbors and to know their neighbors. Because when that was taken away from us, for so many of us,that was relationally cataclysmic. And it made us, it gave us all, but it also gave us time to go, okay, how well do I really know the folks that I'm not seeing anymore? And does that bother me that I don't know them? And could I know them better? And I think in a rural context, there's still that capacity to know the people that live on your street and to really interact with them. And not that it's impossible.in an ex-urban or suburban or urban context, but it might be a little less immediate than it is in a rural context. Yeah, it kind of reminds me of the joke that the best thing about living in a small town is everybody knows everybody. The worst thing about living in a small town is everybody knows everybody. For sure. That's absolutely true. I think maybe COVID reminded us though.The worst thing isn't as bad as the best thing could be good. doubt. What are, what are some of the things that your communities need to get better at? like what, if you were to chart a positive course or continue the improvement, what, what do you need to do better? What are you trying to work on now? So one thing we need to do is accentuate a positive that I mentioned earlier, more firm and reliable collective approaches to problem solving.Kevin Klinkenberg (51:22.138)So that's one thing. A second thing that we need to get better at is our anchor institutions need to position themselves as irrepressible agencies for good. So, for example, our school districts, our community college in Iowa, Kansas, and then the city governments and county governments, they need to, we need to work together to see ourselves as innovation agents.and benevolent disruptors as opposed to status quo maintenance agencies. And again, I think that's applicable in most rural contexts and probably applicable in a lot of community contexts, because again, you are either moving towards becoming a hope factory or bitterness factory and status quo will lead you to bitterness because those who don't achieve it will become in bitter that they didn't achieve it.or those that you're trying to force feed it to as the end result of their life will wonder why you didn't chart a more hopeful course for them. So we need our anchor organizations to see themselves as agencies of good and do so without shame. And I think that is obviously a difficult thing to map out or reverse engineer, but what it requiresis leadership that is constantly in pursuit of not utilitarianism or what works, but what is going to have the best long term effect on the quality of life of the people that work for the organization or that the organization serves. those are two things that I would say even more collective approaches to problem solving. So housing is a great example.Everybody's struggling with housing right now, whether you're in an urban context or a rural context. And the old ways of solving that, just, you know, here's a here's a platable era, you know, several plaits, plaited land that the city owns. And we want a developer to come in and you can build a subdivision. And we're going to give you these tax breaks. We're going to incentivize this in so many different ways. I think that's still maybe possible in certain contexts and rural contexts. It's just not possible.Kevin Klinkenberg (53:44.828)One, because the city typically doesn't own that much land. And two, a developer then has to say, can I, what are the margins going to be? Because I'm going to have to bring a crew down here. I'm going to get supplies down here. Are there already contractors down here? There's already people. There's master craftsmen and so on and so forth. But there's not a contractor and there's not a readily available crew. So, for example, the state of Kansas right now, the Department of Commerce has offered the frame grant.that is going to give capital to community colleges that have a building trades program, construction program to help identify the gap in the housing ecosystem and address it. And I think things like that, ideas like that are going to be so important moving forward because they're going to be necessary for everyone to get on the same page. In Humboldt, Kansas, the most reliable developer, with the exception of maybe in the past year,was the school district. High school built one house every two years or so. And it was a guaranteed reliable development. One house in Kansas City, who no one will notice, in a community of 2,500 people, a new house is, I guarantee you, is the talk of the town. So I think that is something that's going to be necessary is that we continue to embrace and expect collective solutions.collaborative solutions to complex problems. And then that our anchor agencies, and this could even include our anchor institutions and maybe even our industrial partners, see themselves with a responsibility to be benevolent disruptors.One thing kind of as part of that conversation, I might be reading a little bit into this, but I certainly know from my experience that oftentimes in rural communities, there is more of an acceptance of just status quo. It is what it is. I don't mean to say this like an insulting way to anybody, but.Kevin Klinkenberg (55:58.22)not necessarily a push for excellence or striving. Maybe the better way to say it is not as much striving to achieve. And I think part of that's because it's more comfortable and easy to live in a smaller town, costs are less, et cetera, et cetera. In a big city, you find a lot more people who really striving for something. Is that an aspect at all of kind of like, as you think aboutthe next phases are achieving more in your county? No. I'll elaborate. No, if you don't, if you don't believe that striving for excellence is part of the rural expectation, you have not been to a county fair. So if you go to a county fair and see the effort that people put into things that will neverbe recognized outside of a three day event and the sweltering heat at the end of July in rural Kansas, then I don't know what to you. if it's speak with, communicate with folks who are trying to grow the best stand of wheat that they have in their life every year, speak with people who aredo not care about commodity prices, but are proud of the way that they're being fields look, or the person that is growing the best beef you've ever eaten in your life. and I think that pursuit of excellence is still there. I understand what you're saying that, and I think the, what you're, what you're actually articulating is something that's present in rural communities, which is the reluctance to be disruptive. I don't, I don't want.to in any way rock the boat because rocking the boat will, could potentially bring shame on myself. And they still on the honor and shame, social economy and small towns is still very real because most people are multiple or are part of a multiple generation. you know, family tree it's been in that area. So my gosh, if you mess up, then the shame that bring on your family.Kevin Klinkenberg (58:21.628)it moves up and down that family tree. It's not isolated to just yourself. If you are an entrepreneur in Atlanta and you have no connection to the community, you just landed there, and you try a business and it flops, but then you're able to go somewhere else. There's no shame involved in that. You, you are.a pioneer. You are, you know, you're an entrepreneur and everyone is going to be impressed by you because you had a great big idea that just didn't work. And here's 18 reasons it didn't work that you had no control over. If you're an entrepreneur in Iowa, Kansas and your business flops and you still have to live in that community and everybody's going to ask your aunt when she goes to church on Sunday, well, you know.We saw that he started that your, your nephew started that auto body place. Is this, is it still open? Didn't seem like there were many cars there. Didn't seem, didn't seem like he's doing, is he doing okay? he's, they had to close. that's terrible. And your aunt's the one who has to answer that question for you. And so I think, I don't think it's a reluctance to pursue excellence. I think it is a fear that they will somehow.do something that will be shameful. Interesting. And I think that that's very real. And that burden of failure sits heavy in a rural community. failure in a rural community historically is very obvious. It is driving by a field that is fallow. It is driving by a farmhouse that's in disrepair.because there's not money to take care of it. So it is so much louder than it can be in other places. Interesting. I appreciate that. last thing I wanted to ask about, as I've looked before at coming to Humboldt in particular, I was really impressed by just the amount of activity that is programmed in the town on a regular basis.Kevin Klinkenberg (01:00:33.979)That's something that most small towns don't do much of. I wonder if you could speak to a little bit. So like, I always think about that, like in a community there's hardware and there's software and that's like the software side and talk a little bit about what Humboldt has been doing and what that has meant for the overall success of the place. And the credit again goes toward Boulder Humboldt, that group, and then also theirCity Administrator Cole Herder, shout out Cole Herder. Listen, if you want to know what it is to be a good City Administrator in a small town, which is part PR Director, part Public Works Director, part Ombudsman and Accountant and everything else, Cole Herder and Humble Matt Rader in Iowa, those are dues that you need to put on your radar and have a coffee with.In Humboldt, that software analogy is so perfect because that directly connects to their sense of self. And so all of these events take place. For example, they brought back an event called Water Wars in the summer in which the municipal fire department is involved and it's a part parade, part massive citywide water balloon fight, part public water sports.events on the town square. And there is, it is pure frivolity, but they have embraced it because it is a spectacle of joy for the community. And in that capacity as a spectacle of joy, it ceases to be frivolous because again, if you are driving or trying to move your community toa becoming a hope factory, you need spectacles of joy. You need reasons that people can revel in the fact that they live in that place, because so often we are told as rural people, it's a shame you live there. Gosh, wouldn't it be great if you just moved somewhere else? So these spectacles of joy in which people can fully embrace, my gosh, I'm so proud or even because we don't have to defend it.Kevin Klinkenberg (01:02:54.96)And that's typically what a small town person is told they have to do. Defend why you want, why do you live there? No, I'm just going to be happy that I'm here right now. Iola just had their Christmas block party on the square in which, you know, Santa visited and kids played games and the businesses served hot chocolate. And it's, mean, it's, it is very Hallmark movie. By the way, one of the, one of the largesttown squares in Kansas. So come and visit if town squares are your thing. First of all, you and I probably aren't going to hang out at parties, but if that's what you love, come to the Iowa block party for Christmas and you will get a taste of Americana that you have been hankering for. But again, it's just a spectacle of joy and communities need those things.They need those spectacles of joy. And I think that's also to your point earlier about why people are choosing to locate themselves in rural communities, because they can do it in an unabashed way. They don't have to defend why they're doing it. doesn't have to be cool. It doesn't have to be on trend. It can just be a thing that's fun that you can revel in. And in in Humboldt and in Iowa, in Humboldt especially, there have been a group of folks who have sought to addto the community calendar, these spectacles of joy that have become a collective experience of hopefulness and celebration. And I don't know that you need to defend that. And I think we would probably all live in healthier communities if we engaged in those things without the need to qualify why they exist.Jared, I think that's a great place to wrap. Very, very, very interesting. This was a lot of fun. I think at some point down the road, I might like to have you on again and talk some more. There's probably four or five more questions that I still have in my head. I'd love to talk about. But this is super interesting. If people are trying to find you and find your communities, what's the best way to do it?Kevin Klinkenberg (01:05:09.084)ThriveAllenCounty.org. You can find out everything about the organization that I work for and you can connect with all of my colleagues there. You can email me at Jared, J-A-R-E-D at ThriveAllenCounty.org. And that's the best way to get in touch with me. I'm on LinkedIn because I'm trying to be a grownup right now. But other than that, I am willfully disengaged from social media.beyond that, for minutes, not because I'm a rural lead, but because I'm trying to protect my peace in that way. So shoot me an email, find my phone number on, on the internet. And I'd love, I'd love to talk to you. If you are rural and you want to argue with me about this stuff, please, if you are a person living in a different context and you want to chat more about this, I would love to do so. Fantastic. Jared, thanks so much.Good luck with everything and I'll definitely make a point to bring the family down and come visit one of these days. Sounds great. Thank you so much Kevin. Thanks Get full access to The Messy City at kevinklinkenberg.substack.com/subscribe

Research Director for California YIMBY, professional city planner and author of Arbitrary Lines, Nolan Gray, joins us to discuss how zoning impacts our communities, affordability of retail and commercial real estate. Zoning laws contributing to the affordable housing crisis and what we can do about it. Shifting from NIMBY to YIMBY mindset requires understanding benefits of growth. How zoning laws prevent new development, causing housing shortages and limiting entrepreneurship. California's statewide legalization of accessory dwelling units can be seen as a successful zoning reform example. We discuss how cities like Austin and Minneapolis have seen price stabilization by allowing for more mid-rise multi-family housing near transit and job-rich areas. Learn how to connect with local policymakers and planners to advocate for policy changes that encourage more housing supply. Resources mentioned: Show Notes: GetRichEducation.com/514 You can follow Nolan on X @mnolangray For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai   Keith Weinhold  00:00 Welcome to GRE. I'm your host. Keith Weinhold, if you don't take the right action, inflation will make you poorer. Then the affordable housing crisis keeps your tenant as your tenant is zoning. What's ruining American cities in keeping starter homes unaffordable or just plain extinct in some areas, how do we get more apartments and more density built today on Get Rich Education. When you want the best real estate and finance info, the modern Internet experience limits your free articles access, and it's replete with paywalls and you've got pop ups and push notifications and cookies disclaimers. Ugh. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life. See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor, and it's to the point to get the letter. It couldn't be more simple text, GRE to 66866, and when you start the free newsletter, you'll also get my one hour fast real estate course, completely free. It's called the Don't Quit Your Daydream Letter, and it wires your mind for wealth. Make sure you read it. Text GRE to 66866, text GRE to 66866.   Corey Coates  01:38 You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  01:54 Welcome to GRE from Calgary, Alberta to Tirana Albania and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education. When most investors think about inflation, they get it mostly wrong. Their strategy is inflation hedging. And you know, even if you successfully hedge inflation, you are really missing out. You've really got to get fired up about beating inflation. When did you get your first job? Like your first real job in your life? Let's say you did that when you were age 18. Well, that work that you did when you were 18, that created value for somebody else. And you could have done anything with your valuable youth, but instead, you chose to provide value by focusing your time and your energy to sweep floors or enter data into a spreadsheet for somebody else. You were paid for that work that you did. You were paid in dollars, well, if you just tried to store your finite energy that you expended for that employer into dollars, you will lose. Your value will be coerced away from you by your government that just incessantly and relentlessly debases the dollar that you earned at age 18, because they just keep printing more of them. Well, that money printer, which creates the inflation is then an extraction of your resources. Yeah, they extracted your resources, of your time, energy and ingenuity away from you when you were 18, and even the work that you do today, its value will get extracted away from you too. If you say, store dollars under your mattress, if you instead invest it so that its growth rate keeps up with inflation, well, then all you've done is hedge inflation. My point is, get upset about how the system extracts resources from you. And my other point is, don't hedge. Hedge just means that you're treading water. Position yourself to win instead, because you can when you buy income producing property with a loan, you don't just hedge against the inflation. You win three ways at the same time. You probably know that's called the inflation Triple Crown, a concept that I coined. You can watch the three part video series on net, free. It's now easier than ever to access, learn how to actually profit from inflation, not just hedge yourself against it. You can watch that, and it's friction free. There's no email address to leave or anything. Simply watch learn and maybe even be amazed at how you can do this. Those three videos are available. At getricheducation.com/inflationtriplecrown, that's sort of long, so you can also get there with getricheducation.com/itc. Again, that's getricheducation.com/itc. Before we talk with our guests about how zoning is making the affordable housing crisis, even worse, housing values and rents are really looking stable in today's environment. CoreLogic tells us that single family rents are up 3.2% annually. That's the highest rate in a year. And when it comes to prices, the NAR tells us that existing single family home prices hit a record high of $426,900 and that is an all time high. And note that that's existing homes, not new. So median existing homes are basically 427k now. And what does that really mean? Well, that is up 4.1% year over year, the real estate market continues to be it's sort of this tale of the equity rich versus the affordability challenged. Are you equity rich or are you affordability challenged? Well, the more property that you own, the more equity rich you are feeling, that you're going to feel, and oftentimes you're renting out property to the affordably challenged. Of course, the big buzz and a potential really turning point in the economy here or not, it really began about 10 days ago. That's when America reported weak jobs numbers, and that set the unemployment rate from 4.1% up to 4.3%. Citigroup and JP Morgan are now predicting half point Fed rate cuts in both September and November, not just quarter point cuts anymore. I mean, gosh, if there's one thing that we really know, it's that nobody really knows anything. Starting about two years ago, everyone thought a recession was eminent. Bloomberg even said there was a 100% chance that we'd have one by last year. Wrong, wrong, wrong. Everyone thought there would be six or seven Fed rate cuts this year. Wrong, wrong, wrong. You can't even completely count out of rate cut at the next meeting. I mean, sheesh, before that time, we still have two new CPI reports to come out and another jobs report. So, you know, over the long term, this is just how people act. They tend to get ahead of themselves and overreact, and that's really more of a stock market investor sort of thing. And yeah, despite the volatility, you know, us real estate investors are here more chill than Snoop Dogg was at the Olympics. All this fear, what it does is it pushes money into bonds. And when money goes into bonds, it makes mortgage rates go down, and they recently hit 16 month lows near 6.4% and if rates stay low, millions of additional Americans will be able to qualify to buy property that couldn't before, and that could really put more upward pressure on property prices, more than this 4.1% year over year appreciation that we're currently seeing. We know that lots of investors are buying properties like you, getting equity rich and serving the affordability challenge. In fact, 60% of Home Builders indicated that they sold homes to investors from February through April, while 40% reported that they didn't sell to investors. And investors now represent wholly 25% of both new and resale residential transactions and among builders that sold to investors in the past 90 days, 69% of them sold to mom and pop investors. Mom and pop investors, they're loosely defined as those that own one to 10 rental units. They may very well be you. Institutional investors, those that own 10 plus investment properties in this home builders definition here. Well, those institutional investors, they accounted for just 4% of investor sales nationally. So again, more home builders are selling to small real estate investors, those that own one to 10 units. Well, now in almost 10 years of doing the show here, we've never had a full discussion about zoning, and really this is the time. Okay, this ends today because we describe how it's contributing to the affordable housing crisis and what we can do about it. I mean, anymore you really can't find a brand new build 250k starter home anymore, unless maybe it's a tiny home, which then really isn't a full home, and you sacrifice your lifestyle. Well, zoning is a big reason why the Supreme Court decision that deemed zoning constitutional that occurred in 1926. Yes, that's going to turn 100 in the year 2026 that Supreme Court decision that infamously referred to apartments as parasites. Wow. But yet is some zoning good? I mean, say that you and your family have your nice, quiet, single family home on an idyllic half acre lot. Well, if that's the case, should it be allowed that Bitcoin mining facility with its loud cooling fans is built right next to you I'll ask our guest expert about that, and what about say less offensive transgressions, like a condo board that says that you can't rent your unit out. How much zoning is too much or too little? I mean, is someone just being overly sensitive if a duplex is built next to their single family home and they complain about that? So we'll get into all of that. And it really comes down to limiting this McMansionization risk type of nimbyism, not in my backyardism. That's what it is. Again, you can watch the three free videos on how you can substantially and actionably profit from inflation, not hedge, but profit from inflation. It's the inflation triple crown. Be sure to check out those three videos at getricheducation.com/itc. I learned about this week's guest through reason.com we met in person at last month's Freedom Fest in Las Vegas. He is the research director for California Yimby, yes. Yimby, not NIMBY, that is yes in my backyard. And he's a professional city planner. He's the author of the book Arbitrary Lines, how zoning broke the American city and how to fix it. Welcome to GRE. Nolan Gray,   Nolan Gray  12:24 thanks so much, Keith. It's a pleasure to be with you, Nolan,   Keith Weinhold  12:26 you wrote one article for reason.com with such an interesting title, five words, Abolish Zoning-All of it, you're pretty emphatic there at what you'd like to have happen before we discuss that, why don't you tell us in your words what zoning is?   Nolan Gray  12:44 So for the past 100 years, America's cities have been running a grand experiment and how they're governed. Essentially, what we've done, beginning in the 1920s is we said for every single parcel in the city, we're going to assign an allowed use. So most people, if you've played Sim City, you know this might be residential, commercial, industrial, but it goes into so much more detail than that. Different types of residential might be allowed in different parts of the city, commercial, etc, and the vast majority of most American cities, the only form of residential that's allowed is a detached, single family home, right? So that's one half of it, the second half of what zoning is doing, it's placing arbitrary density limits. So the amount of actual housing or amount of floor area that you can build on any particular lot. And it's important to distinguish this from other forms of land use regulation, because in many cases, these rules aren't actually based on any health or safety concerns, but instead a sort of social project of engineering what a correct city should look like. And as I argue in the book and we can discuss over the course of this conversation, is I argue that these rules have actually had incredible harms for our cities and are at the root of our current housing affordability crisis.   Keith Weinhold  13:45 I think zoning initially, it began in New York City about 100 years ago.   Nolan Gray  13:50 Yeah, so New York City adopted one of the first modern zoning ordinances in 1916 a handful of other cities did so as well. So I'm coming to you from California, Berkeley, California also adopted zoning in this year. And essentially, what happened after New York City adopted it was the federal government put together what's called the standard zoning Enabling Act. They mailed that out to every single state in the country and started putting a lot of pressure on states to adopt zoning and allow local governments to adopt zoning. And then, with the rise of the Federal financial system, as part of the New Deal, housing programs. In many cases, local governments were required or strongly, strongly incentivized to adopt the zoning codes to be eligible for certain federal benefits.   Keith Weinhold  14:29 You know, maybe philosophically, one might think, Nolan, well, America stands for freedom, and I should get to do what I want with my plot of land. But if everyone can do whatever they want with their plot of land. I mean, does that mean that my neighbor then could start a sloppy hog farm, or the neighbor on the other side of me could start a battery factory with smoke stacks? So do those sort of things help make the case for zoning?   Nolan Gray  14:57  Yeah, that's a great question, you know. So before the rise of zoning. And we actually had a lot of rules for these classic nuisances, these classic externalities, things like smoke, smells, noise, or even just lots and lots of traffic generation. We had rules to say, Hey, if you want to operate certain types of uses, you need to be in a certain designated area where we're going to tolerate a much higher level of externalities. Zoning does that, but it also does so much more. And it's those other aspects that I think are ill conceived. So for example, of course, we don't want a slaughterhouse next to a single family home, but zoning might also say, Oh, by the way, you're not allowed to have a duplex next to a single family home. You're not allowed to start a home based business. You're not allowed to operate certain commercial uses out of certain strip malls in certain parts of the city. You're not allowed to build anything unless you have a certain amount of number of off street number of off street parking spaces, which can make adaptive reuse of historic properties very difficult. So I think absolutely there's a core of land use regulation that makes sense, that's focused on neighbors, not imposing costs on each other, but our current system goes so much further than that, in many ways, imposes new and unconceived costs, including increasing housing prices, limiting housing options in many of our neighborhoods, making it harder to start a business or to have neighborhoods serving retail in many of our neighborhoods.   Keith Weinhold  16:09 So perhaps zoning has just simply gone too far, and you touched on it earlier. It seems to me that about three quarters of the area of most cities have zoning restricted only to single family home building, for example, and they ban apartments completely. So maybe, as we try to find the right balance of how much zoning is right, tell us more about really the thesis of your book and why we should ban zoning completely.   Nolan Gray  16:38 Of course, we need certain regulations for externalities and nuisances, and to certain extent that can be resolved through litigation, but ideally you look for it and you say, okay, look, there are certain areas where we're going to tolerate certain nuisances and other places where we will not. But beyond that, I think so much of what our land use regulations do is actually causing harm. It's preventing property owners from using their property in ways that are not in any meaningful sense, harmful to their neighbors. It's created this context where now if you want to build just about anything in the typical American city, you have to go through multiple public hearings, you have to do an environmental report in some states, you have to get the permission of local elected officials, you have to undertake all these actions that heavily politicize every new development. And so what we get is so many of our neighborhoods and so many of our cities are locked in amber. And this is partly why, over the last few years, where we've seen a huge amount of demand flow into housing, we've simply had these extreme shortages because markets could not respond with the supply that many of our communities needed. So for example, a starter home in many US cities today might be a townhouse, it might be a two bedroom condo, it might be a single family home on a 2500 square foot lot, but those are precisely the forms of housing that in many cases, our zoning codes make illegal to build. So we're essentially saying if you can't afford at least a certain level of housing, you're not allowed to live in many parts of the community, if in the community altogether, or the same with businesses, if you want to start a small business that might not necessarily have any impact on your neighbors, you might require a special permit. You might require a hearing. You might require to attend a hearing where your competitors are going to show up and oppose your project, purely on a cynical basis. So what it's done is it's created this incredibly disruptive system that's prevented our cities from being entrepreneurial and adaptive, and I think this is the root of a lot of the problems that we're facing today.   Keith Weinhold  18:17 Oh, you really surface some good points there Nolan, when I think of over zoning, and we talk about how a lot of times you can't build anything more than a single family home, that certainly creates a lot of problems. Gentrification is sort of a bad word, kind of sprucing up community so much, raising the value so much, that one problem is that familial bonds decay when children that grew up in, say, Southern California, can no longer afford to live there, so they have to move to lower cost Las Vegas, a four to five hour drive away. Excessive gentrification. You touch that, it also harms mobility. If you want to move from Atlanta to Boston for a tech job but you can't find housing, you're not going to move there, so therefore, talent doesn't get matched up with opportunity.   Nolan Gray  19:07 That's exactly right. I mean, this is a at the national scale. This is an important piece of the puzzle, which is we've made it hardest to actually move to some of our most productive places. So as you mentioned, places like Los Angeles, San Francisco, Boston, New York City, for all their problems, these are incredibly productive places where folks can move to and get high paying jobs and other good educational opportunities, but in many cases, these are the most expensive cities in our country, and it's in no small part because of the many rules and regulations that make it so hard to build housing in those contexts. So you're exactly right. Folks actually turn down higher paying jobs or better opportunities and move to places simply because the housing is more affordable, and you pick up on a really important piece of this, which is in many cases, this is breaking apart families. So a lot of folks who are born and raised in a place like California, their parents might have been able to buy their home in the 70s or 80s or 90s, but they can't afford a home. They have no long term path to actually staying in the community. And so what you're actually seeing is neighborhoods and communities being ripped apart. If the situation in places like California has actually got to be so bad that many of the people who are in a certain sense, beneficiaries of the status quo, maybe they own their home and they're seeing the value go up and up and up. They're also saying, Oh, my children can't afford to live near me. I don't ever get to see my grandkids. The person who serves me at the hospital or at the supermarket can't afford to live here, and we're having trouble keeping folks on. The crisis got to be so bad in certain places like California that we're starting to see tremors of reform. But one of the things I like to say is, if you want to fall into a California style housing crisis, most parts of the country don't need to do anything the rules you have on the books have you moving in that trajectory, right? But if you want to remain a place where we can build more housing, where folks can buy their own home or buy small apartment buildings and start to build wealth, you have to allow for more supply to come online.   Keith Weinhold  20:42 Sure, zoning so that you can't build anything other than single family homes compounds the affordability crisis. There really just isn't any such thing as a 250k starter home anymore, anywhere.  You represent California, yimby and you live there in the state where people think of ground zero for excessive regulation and taxation and zoning too. I do read more about some zoning being relaxed in California, allowing for the building of an adu on a property, for example, to help build the density. But before you talk about some of the cracks that are actually starting to help break this down. Can you give any bad examples that are especially problematic there in your home state, Nolan?   Nolan Gray  21:27 For the past 50 or 60 years, California, has been stuck under a NIMBY paradigm, not in my backyard, right? Every single new project is politically contentious, has to undertake an environmental report, has to undergo multiple public reviews, it takes years and years to get a permit, and that's if the housing is legal to build at all. As you know, in so many parts of California, there's very little to no new construction happening, and that's because of the rules on the books that make it so hard to build. To the extent that we allow new housing to be built, we have a whole bunch of mandates that force the housing to be a lot more expensive, and even if all that pencils again, it can take two years to get fully entitled in a permit. And so of course, the only housing that actually ends up getting built is quite expensive. And some folks say, Well, if we allow new housing to be built in California, it's all expensive. Well, yes, if you only allow a trickle of new housing in a very expensive context, of course the new housing is going to be expensive. But if you look to places like Texas and Florida, for example, that build lots and lots of new housing and don't have all of these costly mandates, they actually can build a lot of new housing, and actually can keep prices relatively under control and create that new supply of what we call missing middle, low rise housing. So as you mentioned, the tide, I think, is turning in California. The silver lining of things getting so bad is that the culture is shifting. And what we've seen is the emergence of this new yimby movement, or yes, in my backyard. And these are folks are saying, hey, not only is not building more, not this horrible threat to my community, but it's actually this enriching opportunity. It's good to have a growing, healthy, affordable community where folks are building, folks are able to move to high opportunity jobs, and folks are able to have choice in the neighborhood they live in.   Keith Weinhold  22:55 We're talking about zoning and how that's made the affordable housing crisis worse in the United States with California, yimbys, Nolan, gray Nolan. Tell us more about just the exact sorts of codes that are problematic. We touched on apartment building bans, but I think we're also looking at things like off street parking requirements. You need to have so many off street parking spaces before you can build. Otherwise you can't build. You need to have a minimum lot size of a half acre or a quarter acre in order to build here. So can you talk more specifically about just some of those exact problems on the tactical level that are compounding here?   Nolan Gray  23:34 Yeah, that's exactly right. So where are the housings illegal to build altogether. In many cases, there are a whole bunch of rules that increase the price of that housing. So in urban context, for example, where you might want to be building apartments, many cases, you might have parking requirements that say, Well, you have to have two parking spaces per unit or one parking space per bedroom. In many cases, that's what consumers might demand, and you would have to build that to lease out those units or to sell those condos. But if you're building in a context where you might be near a transit line, or you might be near a university campus, or you might be near a major job center, many of your renters might say, hey, actually, I would prefer to have a more affordable rental or a more affordable condo, because we know that there's no such thing as free parking. You know, if it requires a structure or excavation work, parking can easily add $50,000 to the price of a new unit, and so some consumers might want to pay for that, eat that cost, have a parking space. But many consumers, when we relax these rules and say, Hey, developers, you have the incentives and the local knowledge needed to decide how much parking to build. In many cases, we find that they share parking with other uses, so commercial during the day and residential at night, or they allow renters to opt into parking and to pay for parking, but what you get for many households is a cheaper unit. Now another rule that you mentioned, which is very important, is minimum loss size rules. This is certainly a lot more relevant. More relevant and suburban and rural context. But what we say is, if you want to be able to have a single family home, you have to be able to afford at least a certain amount of land. Now, when if you have a context where you don't have water and sewer installed, and you're operating on septic and well water, you do need larger lots as a matter of public health, but in most suburban context, these rules essentially serve no function except to increase the price of housing and the ability to determine what type of housing can be built where is the ability to determine who gets to live where. So if we say, well, you're not allowed to live in this neighborhood unless you can afford a 10,000 square foot lot or a 20,000 square foot lot, what we're essentially doing in 2024 where land is a major factor in affordability, is we're saying that a whole bunch of middle working class households are not allowed to live in these neighborhoods, or they're not allowed to ever become homeowners and start building wealth in the same way that past generations did. And you look at places like Houston, for example, where they don't have zoning, but they have a lot of zoning-like rules. In 1998 they reduced their minimum lot sizes from 5000 square feet citywide to 1400 square feet citywide. And what this did was this kicked off a townhouse and small lot single family home building boom that has helped to keep cities like Houston affordable a whole new supply of starter homes that again, offered that first step on the ladder of home ownership and wealth building.   Keith Weinhold  25:52 Over the decades, home prices have outpaced incomes. There are a few reasons for that. One of them is inflation, with wages not keeping up with the real rate of inflation, but the other are barriers to development. We're talking more about that with Nolan gray. When we come back, you're listening to Get Rich Education. I'm your host, Keith Weinhold. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. 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Earn 8% hundreds of others are text FAMILY to 66866, learn more about Freedom Family Investments, Liquidity Fund, on your journey to financial freedom through passive income. Text, FAMILY to 66866.     Robert Kiyosaki  27:50 This is our Rich Dad, Poor Dad author, Robert Kiyosaki. Listen to Get Rich Education with Keith Weinhold, and the reason I respect Keith, he's a very strong, smart, bright young man.   Keith Weinhold  28:14 Welcome back to Get Rich Education . We're talking with California, yimbys Nolan gray about zoning and how these barriers to development are compounding the affordable housing crisis, and there sure are a number of barriers to multi family production. I really think that's what wild it comes down to. You touched on it earlier, and it's something that I spoke about with our audience a month or two ago. Nolan, and that is, mmm, multi families, missing middle these two to four unit properties, duplexes to fourplexes, where they're only constructing about 40% as many of those here in recent years than they did 20 to 30 years ago. The way I think of it is when you lift barriers to multifamily production, of course, you incentivize builders. If a developer buys an acre of land for, say, $90,000 and they had planned to build one unit on that All right? Well, there's one set of inputs in income that a developer can look at. But instead, if you allow them to go from building one unit on this plot of land to two units on it, it increases their profit potential, and it incentivizes developers from that side as well.   Nolan Gray  29:23 Yeah, absolutely. I mean, so there's been some great work by some friends over at the American Enterprise Institute. What they've done is they've created a nationwide map of mcmassionization risk. So when we have these conversations, we say, hey, let's allow for a range of housing typologies in more neighborhoods, duplexes, triplexes, small, low rise, multi family buildings, townhouses, the types of things that were commonly built in a range of neighborhoods before the rise of zoning. Every city in America has a neighborhood like this. That's a mixture of housing typologies. It would be illegal to build that today, but in many cases, we subject it to preservation requirements because we value it so much that we want to keep it. In any case, what happens when you don't allow that type of gradual incremental infill that keeps our communities affordable. What you get instead is the existing single family homes are converted into much larger, much more expensive single family homes. Now, again, there's nothing wrong with that. Many people might want to buy a smaller 19 fizzies bungalow and turn it into a much larger, 2500 square foot single family home, and God bless them if they want to do it. But what we have is rules on the books that say housing can only get more expensive, it can never get more affordable, or you can never unlock the wealth that's tied up in your land by building an adu or by building a duplex, or by creating more housing options for a range of households. And so that's really, really key. You know, the choice is not between, do we want our communities to change or not? The question is, do we want our communities to remain affordable and maybe change and have some more buildings built and more growth and more development. Or do we want our communities to change in the sense of they become more expensive? Folks retire and they move away, the neighborhood gradually becomes significantly more exclusionary, and young folks who moved grew up in the community can no longer afford to stay. That's the option facing many of our communities. And I think the yimby response to this is more housing construction is good and it's healthy and it's part of a thriving community.   Keith Weinhold  31:02 Yeah, Nolan, when we come at this from the familial perspective, like I brought up earlier, it seems like the more zoning there is, the more it benefits seniors and incumbents, the more it benefits the silent generation, the baby boomer generation, and maybe Gen Xers, and it disadvantages millennials and Gen Zers that really don't have their place yet.   Nolan Gray  31:24 Yeah, you know, it's tough. I would say it even hurts seniors, right? I mean, if they want their young adult children to be able to live near them, or, many cases, seniors like the option to be able to build an accessory dwelling unit in their backyard and maybe rent that out to friends or family, or maybe even you move into the adu and allow young adult children to move into the primary residence, or even just rent it out and have an additional source of income to supplement fixed incomes. There's reasons why folks, I think, at all different stages of their life, benefit for more flexibility in the rules that govern what can be built.   Keith Weinhold  31:52  Psychologically,  how do we turn one's mindset from a NIMBY mindset to a yimby mindset? I mean, if someone's got their single family ranch home that they want to live in in their senior years, and they want to see its value appreciate, so they don't want duplexes and fourplexes built next to them, rather than them saying no to turn them into saying yes. I mean, how do you get those people to understand that? Well, like this is the way for the next generation, for you to be able to live near your children and grandchildren?   Nolan Gray  32:21 Yeah, that's a great point. You know, I think when you go to these public hearings around projects, you hear relentlessly about the cost of new development, right? Folks speculating about traffic and runoff and other factors parking. We get that perspective. We get bombarded with that perspective. But what we don't get is the alternative perspective of the benefits of a community, remaining relatively affordable, remaining a place where teachers and nurses and firefighters can still afford to be able to own a home and live places, allowing for the kids who grew up in a neighborhood or a city to remain there. And in fact, even just the selfish appeal to the homeowner, there's not actually any evidence that new development happening around you necessarily reduces the price of your single family home, and in some cases, it could actually signal to the market, hey, there's actually development potential on this so when you do decide to maybe sell and move on, your land is potentially going to be more valuable because it has more development potential than it might under a strict exclusionary zoning scenario. So you know, of course, you try to make the altruistic case to people. Hey, think about future generations. Think about folks who maybe want to move to this community or stay in this community, but aren't going to be able to if we don't build housing. But even so, I think there's selfish reasons. If you want to have somebody who's going to check you out at the supermarket or serve you at a restaurant or be a home care nurse, eventually you got to have housing for folks like that. In many cases, new development happening around you is going to increase your land value. Now I would just try the rage of appeals and work people through it. And in many cases, you know, I think people will understand, yeah, okay, I understand we got to have some growth. They might have a perspective on what it should look like, and that's okay. But as long as we can get some consensus that we got to have some growth to accommodate demand the form it takes, we can have a healthy discussion over.   Keith Weinhold  33:57 Yeah, real community is the integration of all different types of people, and not school teachers living an hour away where they need to make a two hour round trip drive every day. Well, Nolan, as we're winding down here, can you give us any more successful zoning reform examples that maybe other communities can look to you touched on the success stories in Houston a bit. Are there some other ones?   Nolan Gray  34:21 Absolutely. Yeah. So one of the most successful things we've done in California has been statewide legalization of accessory dwelling units. Yeah, that's been key. That started in 2017 and that took a lot of legislation to get us to a place where we are today, but that's resulted in something like 80,00 ADU's permitted, since 2017. That's powerful stuff, right? That's 80,000 households that might have a home, or might be able to rent out a unit to young adult child or an aging parent. Really, really powerful. So I would suggest that folks look into that. That's the lowest of the low hanging fruit. Empower homeowners to add additional units to their properties, and by the way, we also allow you use to be added to multifamily properties, and we're seeing a lot of that happen as well. At other contexts, many cities, dozens of cities across the country. Have removed their minimum parking requirements, acknowledging that, hey, this is a huge cost that we're imposing on projects, developers who are close to consumers, who have, they have the incentives and local knowledge to get this question right. Let them decide. So that's been, I think, a big success. You know, certain cities like Austin and Minneapolis, for example, they've actually sort of kept their markets back under control amid all the chaos of the pandemic real estate market fluctuations by allowing for a lot more mid rise multi family on their commercial corridors and in Job rich areas and in places near transit, that's where we have a huge shortage, is these studios and one bedrooms. So young professionals who, if they can't find that unit, they're going to go bid up the price of a two or three bedroom unit, they're going to roommate up and be living in potentially overcrowded conditions. So Austin, Minneapolis, we, relative to peers, they built a lot of housing and have seen prices stabilize as a result. So there's a lot of different success stories, you know, I would say, if you're at all interested in this, talk to your neighbors about this issue. See what sorts of solutions might make sense for your community. You know, in a suburban or a rural community, ADUs or minimum loss size reform might make sense. And an urban community, removing your parking mandates, allowing for more multifamily, allowing for missing middle, make more sense.   Keith Weinhold  36:06 There sure are some encouraging signs. There was there any last thing that a person should know, especially a real estate investor type audience that's interested in buying a property and renting it out to a tenant for the production of income? Is there anything that our group really ought to know about zoning and the direction that things are moving, what to look for and what to be careful of?   Nolan Gray  36:28 Well, as your audience probably knows, you know that first essential step for your mom and pop local real estate investor is often a duplex, a triplex, a four Plex, historically, that was an absolutely essential source of middle class wealth building. Yeah, right. And you can see these in so many historic neighborhoods. And to the extent that we've made those exact typologies so incredibly hard to build, we've cut off this very valuable source of democratic, decentralized wealth building that we need to actually encourage as real estate investors and professionals, in many cases, you're an authority figure with your local policymakers and your local planners, and you can say to them, Hey, here's my perspective on what's happening in the market. You know, we have a shortage of a certain type of small scale multifamily or making this case. You know, I talked to a lot of elected officials, and when I say starter home, I think they still think of the bungalow on the 5000 square foot lot with the two car garage. But a starter home in 2024 might be a townhouse, two bedroom condo, a small lot, single family home. These are the types of stories that real estate investors and professionals are trusted advocates on, and you can make that case and explain to local policymakers. Hey, here's the change that we need or explaining. Hey, I wanted to add an additional unit to a property that I own, or I wanted to redevelop a property I own to add a lot more housing. And these were the barriers that I faced that's incredibly valuable information for your local policymakers and planners. And I would say, you know, look around many US, cities and states now have very active yimby or, Yes, in my backyard groups. Go connect up with them. You could be a valuable, trusted expert for them, somebody that they can learn more about the situation with real estate markets, and they can be more effective advocates for policy that I think a lot of us would like to see.   Keith Weinhold  37:58 And when it comes to changing NIMBY people to yimby people, and we look at esthetics and adu in the back, that really doesn't change aesthetics on the street front. And I've seen very smart, careful designs of duplexes, triplexes and fourplexes that really look just like single family homes from the Street View level. So there really are some ways around this. You've given us some really good ideas today. Nolan, hey, well, someone wants to learn more about you and your work and zoning. What's the best way for them to do that?   Nolan Gray  38:30 Well, I'm on the platform formerly known as Twitter. I'm @mnolangray, M, N, O, L, E, N, G, R, A, y, so feel free to find me there and reach out. And I have a book Arbitrary Lines, how zoning broke the American city and how to fix it. Check that out. If you're at all interested in this, always reach out. Love to hear from folks. Thanks so much for having me, by the way.   Keith Weinhold  38:50 All right, well, I hope our audience didn't zone out. It's been great. Chat with you. Nolan, thanks so much for coming on to the show. Yeah, a thought provoking discussion with California yimbys Nolan Gray there it's essentially illegal to build affordable housing in a lot of areas with the way that these zoning laws are written, allowing for more dense building that can limit this ugly urban sprawl, and this makes me think about an Instagram account that I follow. It's called how cars ruined our cities, or some names similar to that. It shows, for example, a picture of how a highway interchange in sprawling Houston has an area so large that you could fit an entire Italian town inside of it. And these sprawl problems compound when a lot size must be, say, at least a quarter acre or a half acre. The tide is turning toward allowing more dense building in some places like we touched on, but it's too bad that it took a. Visible housing crisis to make this happen. I mean, visible like more homeless people out on the street. It took that almost for municipalities to start doing something about all of this. Our guest has quite a following on X. Again, you can find his handle there @mnolangray on X and the image on his account cover it shows someone holding up a sign that reads, zoning kills dreams. Hmm, big thanks to the terrific Nolan gray today until next Monday, when I'll be back here to help you actionably build your Real Estate Wealth. I'm Keith Weinhold. Don't quit your Daydream.   Unknown Speaker  40:44 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for  profit or loss. The host is operating on behalf of Get Rich Education LLC, exclusively.   Keith Weinhold  41:12 The preceding program was brought to you by your home for wealth building,  GetRichEducation.com.  

We are always looking for new, revolutionary property management tools and strategies that benefit property managers, owners, tenants, and vendors. In today's episode, property management growth expert Jason Hull sits down with Tom and Diego from a new company called Calvary to discuss how property management entrepreneurs can improve maintenance processes at NO COST.  You'll Learn [01:35] Innovating in the property management industry [08:30] Improving maintenance at no cost to the property manager [17:26] What kinds of businesses does this work for? [21:26] The biggest maintenance challenges [27:28] How do I implement this? Tweetables “You show what you can do and then you build trust.” “It all goes back to systems, SOPs, and training individuals.” “The one piece that's not scalable in a business is depth and depth is where the magic happens.” “If you want to scale your business, you have to do the things that are unscalable.” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Tom: It's a true win for everybody. It really is.  [00:00:02] Jason: And you guys don't charge the property manager... anything?  [00:00:06] Tom: Nothing.  [00:00:08] Jason: Welcome DoorGrowers to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you're open to doing things a bit differently, then you are a DoorGrower. DoorGrower property managers love the opportunities, daily variety, unique challenges, and freedom that property management brings. [00:00:33] Many in real estate think you're crazy for doing it. You think they're crazy for not, because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners and their businesses. [00:00:52] We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now let's get into the show.  [00:01:10] So today I'm hanging out with Tom and Diego Alatorre? All right. I got it. Sort of. All right. And Tom Van Waelem. Yes. Perfect. You guys are stressing me out with these last names, man. These are not easy. All right. So it's good to have you both on the show. So Diego and Tom have this cool idea and business called Calvary. And we'll get into that in a minute. [00:01:34] And our topic today is how to improve maintenance processes at no cost ever. And this is something really unique. And I was like pretty surprised when they originally shared this idea with me, their business. And so we'll get into that, but first let's get into some background between the two of you, how did you get into property management? [00:01:56] And I think this will also help, you know, qualify you to the audience. So they go, "all right. Should I trust these guys with some maintenance stuff?  [00:02:03] Diego: So actually I could go ahead and get started and tell you a little bit about my background story. Yeah. It's actually really interesting, Jason, this was looking at your podcast and I saw that you did an interview with Pete Neubig. Pete Neubig was the owner of Empire. [00:02:21] Sorry, I'm a little bit, I'm a little bit nervous. It's the first time I'm doing a podcast. And he was talking about in your podcast that he hired four individuals, right? One of those four individuals that he hired, I was one of them. I started at the very bottom. I started as an assistant to a property manager. And from there working at Empire, I started to learn that maintenance was a very big struggle. Most issues pretty much happened because of maintenance, right? Escalations, billing problems, you name it. And from that point on I became a maintenance coordinator. [00:02:58] I started to take a really big like at maintenance. And I started to understand and build processes and start to, you know, find solutions on how to handle maintenance. So, and it really helped me because once Empire merged with a bigger property management company, I was able to utilize those same processes, that same structure and we were able to implement it at a very big property management company that had over 9,000 homes at the time. [00:03:30] And so after we implemented that, it really helped that company grow because we were able to rebuild the entire company you know, and scale it. Maintenance was one of those things that was hindering that company from growing and in less than two years that company went from 9,000 doors to over 18,000 homes. [00:03:51] And so after that, first I was headhunted by a couple of property management companies that knew what I was able to do when it came to, you know, to maintenance. And so that's when I decided to start working at Austin investors, I was able to do the same exact thing, which was implement you know, the maintenance knowledge, the processes, SOPs systems, and we had a lot of success. [00:04:18] We were able to help Austin investors grow as well, and we were able to solidify the maintenance department. It was actually during that time that I was at a conference with over 100 plus property management companies, and they were talking about their maintenance struggles and their maintenance issues and why they couldn't figure out how to handle it, you know, from you know, vendor relations growing from 100 doors to 500 doors and then how to handle maintenance, you know, once you have 1000 doors and so on. And that's when I realized that I had a lot of these answers that could help them. With these maintenance struggles, right? So after noticing those particular struggles, that's when I realized that we could help multiple property management companies, you know, and that was actually the same exact time that Tom approached me with the business proposition, and his business proposition it went very well with the idea of helping multiple property management companies. So Tom, my business partner he'll tell you a little bit more about, you know, himself and how we started our relationship. But yeah, that's  [00:05:32] pretty much it.  [00:05:33] Jason: So Tom, what did you think when you heard about some of the stuff that Diego had been accomplishing? [00:05:39] Tom: Yeah, crazy. I mean, when I approached him, I was a roofing salesman at the time, and I was knocking door to door. There was just a big hailstorm that hit Austin and the surrounding areas. And I was knocking doors, you know, helping people get insurance involved so they don't have to pay it out of pocket. [00:05:55] And I reached out to Diego with the hopes of, you know, landing, you know, a lot of inspections very easily without having to bother people knocking on the actual doors. So I reached out to Diego and I was like, "Hey, listen I would love to inspect all of your roofs because I believe that we can save your homeowners a lot of money just simply by inspecting them. If I find that if the homeowner doesn't want to continue, that's fine. At least the homeowner will know what the situation is with their roof." [00:06:19] Diego said, "wow, great. I've never heard about that. Let's do it." So we did the project, inspected 600 homes myself, and then after the project, we saved homeowners a lot. [00:06:29] We replaced about 60 or 70 roofs. So that's a lot of money that we saved because insurance claims, they have an expiration date, usually depending on the insurance company. And anyway, after that project, I reached out to Diego and I was like, "hey, what do you think? Do you think other property management companies would do this? Or are you the only one who was willing to do this? Because it was a lot of work." Right.  [00:06:52] And he was like, "yeah, I think they would, but," he said, "you're forgetting about all the other trades." [00:06:58] I was like, "what do you mean?" I was like, "yeah, roofing is only about 10 percent of all the work orders. So you're forgetting about all this." [00:07:06] And he said, "listen, I've been thinking about the same thing, and I believe that there's a way for us to provide excellent maintenance to all property management companies and we can figure out a way for us to do it for them for free." [00:07:20] I was like, "well, look, if we partner with multiple property management companies, and we get so much work, we can leverage that volume with our techs. So we reduce our technicians that we work with, we reduce their marketing and sales costs, and then they give us a percentage, which is much less than the marketing and sales costs. So the vendor wins, the homeowner wins because they don't get marked up, the property management company, of course, wins because they don't have to pay for payroll, and we win. [00:07:52] So everybody really wins. And also of course, the tenant wins because with our systems and our really well trained people. We can actually provide great service, faster and arounds and all of that.  [00:08:03] Jason: All right. So I think we need like a break sound effect. Everybody listening is like, "wait, whoa, what'd you just say?" [00:08:10] Like, that's like, sounds crazy. Could you take us back through that and help us make this make sense? So, cause you're talking a little crazy here. Like you can make maintenance more affordable and like, and do it and it would be free for them. And so let's break down the business model. So how does this work for a property manager? [00:08:34] Tom: All right. So when we partner with a property management company we basically. We can plug into their org chart wherever they'd like. So, for example, we work with big companies and we plug in underneath their maintenance coordinator, right? So that maintenance coordinator, they have about three, four hundred properties that they manage. [00:08:55] We just plug in there, they become our supervisor, and we provide the maintenance coordinators, we provide the vendor network, we provide everything. So we handle the work orders from start to finish. And whoever is supervising us within the company is also the liaison with the higher up. [00:09:13] Okay. Does that make sense? So for the smaller companies, for example, we would report to property managers. If a property manager is currently handling all of their maintenance themselves, they can just leverage our team. We have a specialized team with following the right processes. They leverage us and they just supervise us. [00:09:31] They send us the work and they become a supervisor. It eliminates 90 percent of their work. Yeah, sure. You know, sometimes there's an escalation. It's still maintenance, but at least we can handle most of it. They get daily updates. Everything runs very smooth.  [00:09:46] Jason: Okay. So the property managers listening are like, "yeah, but how's this free?" [00:09:50] Like explain that again, like take us through, how is it possible for this to be free? Because they know you want to make money. This is a business. Yes. So how is it free? And if it's free, then are the maintenance costs being marked up. Expressly high, right? And so this there, there's got to be a catch is what they're thinking. [00:10:10] Tom: Yeah, so there's no catch. So the way it works is with our vendors. We send them a lot of work. That work means that they have less cost on marketing and sales department. Usually that's about 25 to 30 percent of their revenue.  [00:10:25] Jason: Yeah. So let's explain this. So like, if you're a vendor, you have to spend a lot of time trying to market. [00:10:32] You're doing door flyers. You're like putting out mailers. You're like, they're wasting a ton of money. I get this stuff in the mail and it just goes right in the trash, right? They are going out on bids constantly trying to give quotes and none of this is making them money. This is all an expense. [00:10:49] So they're spending like a third of their revenue just to try and get customers. Exactly. Yes, sir. Yeah, exactly. And so vendors, you're able to basically eliminate that expense.  [00:11:02] Tom: Yes, correct. We cut it more than in half.  [00:11:04] Jason: Yeah. Okay. Yeah. So that's a big savings for them. They're not having to go out on bids. They're not having to like waste time. With the property management company, they're not having to deal with a lot of headaches and garbage. They just have work. And that's really what they want to spend their time doing is just doing the work. So this sounds like a selling point for these vendors and an incentive for them to work with you over maybe other, like through you rather than directly with property managers or rather out in the marketplace with random homeowners. [00:11:35] Tom: That is exactly. [00:11:36] Diego: Exactly. And the really unique thing about this, Jason, is that it doesn't just save them money, right? And we don't just get you know, the flat rate or we don't just mark up. We actually save the owner's money. Why? Because these vendors, they're so happy with the amount of work that we're sending them, that they also provide the best rates in the market. [00:12:02] Which are usually way below average. You know why? Because they want to be your number one go to technician, you know, they want you to send as much work as possible. And so they're pretty much booked up. You know, most of the vendors that we utilize, they're pretty much booked up. [00:12:19] And so they don't want to lose that relationship with you, which, you know, allows us to get better pricing for the owners, because that means we'll continue to get more work, you know, we'll continue to get more business, which also allows the vendors that we work with to expand as well. [00:12:37] We've had multiple vendors that started working with us in Austin and they have expanded to Houston, San Antonio, Dallas. And, you know, it's really a win scenario for everyone because vendors save money, owners save money, and property management companies don't have to pay any money when it comes to handling maintenance. [00:12:58] You know, they just have to have someone that oversees us.  [00:13:01] Tom: And I also would like to add in terms of pricing. So for example, because we handle so much volume, we actually have access to very good priced GE appliances. So the homeowners will pay around 15 to 25 percent less on appliances. That's black on white proof. You can check our price versus the store and then also Goodman HVAC units. We have extremely good pricing on a regular unit for 2400 square foot home. We save a homeowner easily 1500 to 2,500 dollars, depending on who we compared with. But those are things that we can actually prove black and white that we say.  [00:13:42] Jason: Yeah, awesome. So they're getting better rates on maintenance. They're not having to spend any money on doing that. They get discounted rates on appliances because of your buying power and they get discounted rates on HVAC.  [00:13:57] Tom: Yes, sir. It's really a win. It's a true win for everybody. It really is. And it works.  [00:14:03] Jason: Yeah, and you guys don't charge the property manager... anything?  [00:14:09] Tom: Nothing. Nothing. No. So because we have such a efficient processes we can provide a maintenance coordinator, a maintenance manager, a regional manager, we have vendor onboarding, we have a tenant success, and quality control. We have everything in place to function as a full maintenance department. And again, we just plug in right where you want it underneath a property manager, maintenance manager, maintenance coordinator. It doesn't matter. We just report and that person becomes the liaison to the directors. [00:14:42] Jason: Got it. So you guys can be the entire maintenance department for a small manager. If a big company already has. Some things going that they really like and some team members that they really value, then you guys can just plug in and be the pieces that they still need.  [00:14:57] Tom: Yeah, that's important to state. We don't want you to fire people. [00:15:02] That's not our goal. What our goal is, though, is now those people who are already in place, they can focus on tenant relationships. That is word to mouth right there. Same thing with the homeowners. Now you're going to grow your business because you provide a better service and you do not have to scale as fast. [00:15:20] So even without firing somebody, you just keep those people. They give a better service. Now you grow, but you don't have to hire as fast.  [00:15:30] Jason: The one piece that's not scalable in a business is depth and depth is where the magic happens. I always say to my clients, if you want to scale your business, you have to do the things that are unscalable and being able to spend more time talking directly with the owners, connecting with them, letting them know what's going on in maintenance, making them feel calm and that you've got things handled. [00:15:54] Yeah. That interaction is what's going to retain those clients. I mean, the number one reason people leave property management companies and go find somebody else is communication. It's lack of communication. So you can increase the communication level significantly. So you keep these clients forever and Calvary can handle all the maintenance, correct? [00:16:15] This sounds like such a good idea. Why has nobody thought of this before? Why is no one else doing this?  [00:16:22] Tom: Honestly, I think because it's hard. Maintenance is hard. And then not only that, yeah, I don't know if in maintenance, I guess you have to be a specific type of person, right to be able to handle that. And then you need to match that with entrepreneurship. Right. And most people, I think they have not seen the disconnect it's. Within the culture, all maintenance is handled inside the company. So I think, I don't know if like, a third company maintenance team has not come across. [00:16:57] Also, all of our competitors, they charge. They charge. Why? Because they can. You know, we want to provide value. We don't have to charge. We can. We don't have to. Our service is worth the extra cost, but we don't want to. You know, we want the smaller companies and bigger companies just to be able to grow without an extra cost. [00:17:17] And of course, by doing this it's smart business wise because now, you know, we can get our foot in the door more easily. So it lowers the barrier to entry.  [00:17:25] Jason: Okay. So, how small is too small of a company to work with you? Some people listening are like, "man, this sounds like a great thing. Like, I don't really like maintenance. [00:17:34] I don't have a maintenance coordinator yet. I would love to work with them." What's too small?  [00:17:38] Tom: Honestly, I don't think there is a too small. And the reason one caveat though, if we are already active in the market.  [00:17:46] Jason: And that's the next question then is there's certain markets you mentioned, you know, around Austin, Texas, et cetera, which markets are you in currently? [00:17:54] And what does it take for you to go into a new market? Like, so it's an option for people.  [00:18:01] Tom: So we're currently in all Texas markets. So Austin, San Antonio, Houston, Dallas, Fort Worth. We are very active in Denver, Colorado Springs. We have Tucson, Charlotte, North Carolina, Detroit. So those are the markets that we're already active in, so it's easy to just add a smaller PM company because we don't need to set up the whole vendor network right. We're constantly tackling new markets, by the way. But if we are in a market if you are a property manager looking, you're watching this and you're in a market that we are not in, we need about three weeks. [00:18:36] Jason: Yeah. Okay. That's it. So three weeks and how many units for a new market for it to make sense for you?  [00:18:42] Tom: I think 250 would be the minimum.  [00:18:45] Jason: Yes. Okay. Yeah. Got it. All right. So a property manager in a new market, if they've got at least 250 units. That could be it. If there's smaller ones, maybe they get together with their NARPM buddies and they're like, "Hey, let's get this." [00:18:57] And they add up to 250. That could work.  [00:19:00] Tom: Yeah. But also whenever we open a new market, for example, 250 would not be profitable for us. So then we just focus on these markets as well. So we have our sales team now has more to do.  [00:19:10] Jason: So then you start to like build that market up. Correct. Got it. And that builds up the business there and that allows you to get the discounts and do all the good juicy stuff that you guys do. [00:19:21] All right. Okay. Got it. Okay, cool. So you guys, this product sounds like a no brainer. And so you guys must be pretty busy rolling out to new markets.  [00:19:30] Tom: Yeah, we are. I mean, we started business when Diego? On October 21st, 2022, we received our first work order and now we're in what 12 markets already. [00:19:41] Jason: And it must you know, it sounds like Diego is a pretty sharp operator. So like the systemization of being able to do these rollouts is probably pretty tight.  [00:19:49] Tom: Oh, yeah. You go.  [00:19:51] Diego: Yeah. So it's actually one of the things that I wanted to mention, Jason cause Pete Neubig actually, you know, mentioned it in his podcast as well. [00:19:59] It all goes back to systems, SOPs and training individuals. You know what I mean? Because. A lot of people focus on churn when it comes to owner churn or you know, tenants leaving and so on. Right. But not that many people focus on you know, your maintenance coordinator churn or your internal churn. [00:20:20] And so that's one of the things that we like to focus on, you know, you want to train individuals correctly. You don't just want to, you know, let their hand go and roam free and figure out things on their own. You want to take time to, you know, to teach them, to train them, for them to understand the guidelines, the SOPs, the structure, so that whenever we do fit in with a new property management company, [00:20:46] they're ready to go. They understand the business, they understand the concept, they understand what is needed of them to make that maintenance department better. Because at the end of the day, that's what we want. We want to help property management companies grow. And so we can grow alongside them. And because that's what allows us to, you know, to continue to grow. [00:21:07] And so it all goes back to that. Yeah, exactly.  [00:21:10] Jason: So Diego, you know, having seen inside probably several lots of property management companies, maintenance issues and problems and having, you know, and being able to brilliantly do it really effectively and seeing that contrast, what are the biggest challenges that you're seeing or the biggest mistakes property managers are making when it comes to maintenance? And I think this is valuable because it helps people to understand how your brain works and how what you do at Calvary is a bit different than what they're doing.  [00:21:39] Diego: I think it's a couple of things, but let me pick the top that come to mind I would say vendor relations. Vendor relationships are so important because what ends up happening is if you tarnish vendor relationships, what ends up happening, you don't have good, reliable vendors that you can count on, you know, that will provide the best service, the best pricing possible. And so I feel like. In this industry, a lot of companies have treated vendors poorly, you know, and we notice it constantly when we go to new markets they usually mention like, "Hey, I don't want to work with a property management company." And then, you know, you ask them why, and it's usually because of that. You know, building that relationship is very important because they're part of your group, they're part of your network, and once they see that they're super, super reliable. They give you the best pricing, the best service possible, and so on. I would say that's number one. [00:22:40] Jason: And before we move on from that one, like, this is really interesting because what we hear a lot in the industry is people complaining about their vendors. Like property managers are always complaining about their vendors saying they're the problem. They're unreliable and having such a negative perception of the vendors and they might be creating it. Like maybe the property managers are the ones creating this problem. They're like, but maybe they're not like paying them on time, or maybe they're not like being responsive in communication, or maybe they're treating them poorly if there's like an issue or a mistake or a challenge, right. Yeah. Putting them into a bidding war. Yeah. None of them want to be doing that. Right. It's a big waste of their time.  [00:23:20] Diego: Yeah. Yeah, pretty much. I'm not saying all of them, you know, all property management companies do that, but I would say most do have that, you know, that they feel like they're entitled to get the best service instead of working together to, to build that relationship, to get the best service to have reliable individuals.  [00:23:40] Jason: What's the next thing that you noticed in contrast between, you know, the property managers that are ineffective with maintenance and dealing with issues versus how you do things at Calvary?  [00:23:50] Diego: Yeah. So I think it goes back to the maintenance coordinators or property managers, right? [00:23:56] Everybody is kind of doing their own thing. Right. So I've gone to different property management companies, and they're like, "Oh, no, I do things like this because this is the way to go. This is how I've been doing it for so long." But if you have five property managers, or if you have five maintenance coordinators. [00:24:14] They're all doing their own thing. They're not all working as a group, you know, towards the same direction. Which goes back to the structure, it goes back to the ESO piece. And so I feel like not that many companies understand maintenance entirely and so everybody's kind of doing a little bit different things, which is not scalable, you know. You can't have five individuals working, you know, differently because then what's going to happen is you're going to have people frustrated saying, "Hey, but this person said I could do this, but now you're telling me I can't do this and so on." [00:24:51] So I think it also goes, you know, that's one of the biggest things that I've seen going into different markets, different companies everybody's doing their own thing and so.  [00:25:01] Jason: So there's a lack of consistency and yeah, I could see how that'd be frustrating for vendors too. If like a company had like five property managers, like bugging them portfolio style and all of them are different. [00:25:12] One of them might be a jerk to the vendors and the other one might be cool. Yeah, it could be messy.  [00:25:17] Diego: Yeah, and then last but not least, numbers, KPIs, they never lie. And so if you have maintenance service requests that are taking too long, well, tenants are going to be frustrated. [00:25:32] Owners are also going to be frustrated. Why? Because most of the time, especially for small property management companies, the tenant has the owner's phone number most of the time, or, you know, I've seen that happen many times. So what they will do is they will reach out to the owner and they'll be like, "hey, they're lagging on this. They're not taking care of this. Hey, I'm having an issue with this." And so if you don't take care of things in a timely manner, it's always going to affect your business. I've seen where, you know, some clients they're okay with taking 14, 15 days to handle a maintenance request. And that's a big no no. [00:26:09] You know, you want things taken care of in less than five days. That should always be the goal. If it's an emergency, you want to handle it same day, you know, or at least mitigate the issue that same day so that the tenant is happy. So that they trust in the service that you're providing, and that will allow you to, you know, to dictate how you run your maintenance department and how tenants are trustworthy of your services. [00:26:36] And then, of course, you know, owners are also going to be happy with the services that you're providing, since you're not going to have that many escalations, that many issues, or that many problems that surface.  [00:26:46] Jason: So, yeah, it seems like kind of a snowball effect that when you start to be inconsistent, you don't have a quick enough turnaround time on maintenance. [00:26:54] You've got, you know, all these challenges that it starts to then. Turn it into escalations, more conversations, owners might even be getting involved. And so it starts to get messy. And that complexity then takes over the business because then something that should have taken maybe an hour is now taking three hours of manpower and time in the business. [00:27:16] And so then it's like the business owner is trying to run a race and they're shooting themselves in the feet, right? So things are just like snowballing and getting worse and worse. And then they're like, this is chaos. This is crazy. Yeah. So, all right. So those that are dealing with these challenges, they're like, maintenance is tough, like vendors are tough. [00:27:35] Like all of these are problems and they don't have all this stuff dialed in. Or maybe they've got things pretty well dialed in, but they're like, "Hey man, maybe I could save some money on. You know, team, or I could just improve and get my team focused on higher level tasks of like communicating with people, more depth and retaining clients longer." [00:27:53] What. What would be the first step? How do they connect with you?  [00:27:57] Diego: So they can pretty much, you know, reach out. We could set up a meeting where we can go ahead and explain, you know, go a little bit further in depth with their particular property management company, you know, how many homes they have and so on. [00:28:12] And then if they do sign up with us, in 7 days, we'll have a plan ready to go for them that will dictate exactly, you know, what is needed and what we're going to be implementing within those 7 days so that we're ready to hit the ground running.  [00:28:26] Jason: Yeah, that's pretty awesome. And so what's kind of the onboarding process like, like for those that would be getting started? What would, what's sort of the experience?  [00:28:36] Tom: So we have a two week process. So it starts by sending over the contract so they can read it over. [00:28:42] It starts by also getting all of the data of the current of the units they currently have, their history, the history of the work orders. Also, their current vendors are very important. We understand that property management companies, most of them have already built solid relationships with those vendors. [00:28:59] We don't want them to push them out. No, actually what we're going to do is we're going to contact those vendors. We're going to propose our proposal. And we're going to tell them like, "Hey, you will get more work, you know, by also getting work from other property management companies." So, yes, so we can use the same vendors as well. [00:29:18] So we collect all of the data, then we analyze the data. We implement everything into our software. There's something we actually haven't touched on, but we have found that Rentvine is a really, I mean, the best software out there. And we're also providing that for free to our clients. So we can I mean, we can work with any software, but if we do not have one, we can work with Rentvine. [00:29:44] Anyway, so that is also part of that onboarding process. Maybe it's like, "okay what software do you use? Do you want to switch to Rentvine?" And then over the second week, we start implementing. We have a few meetings where we discuss all the final, like who like the communication with the billing department. [00:30:01] Who's going to take care of that? Is that going to be the liaison? Is that going to be somebody of ours? So, yeah, it's a two week process. We have everything dialed down from a launch date, minus 14 days to launch date.  [00:30:13] Jason: And the reason you like Rentvine, do they have a pretty good maintenance system?  [00:30:18] Tom: Yeah, the communication is excellent. [00:30:21] The communication can be logged with timestamps, but more importantly as well, it aligns very well with bookkeeping. The bookkeeping is really solid in there and it just works.  [00:30:32] Jason: So, what about those that have different maintenance tools, like maybe they've been using Latchel and they've got them handling the phones, or maybe they've been using Property Meld and they're using that text based communication system, these things that they need to keep, are these things that you would work with? [00:30:49] Like this sends a whole nother level of complexity I would imagine to your business.  [00:30:54] Tom: Yeah, no, it actually, I mean, it works. So we started, so to get our foot in the door in the industry, we actually started as a vendor, right? So we, our systems work with any software. So it does work. It adds complexity, yes. But if we assign a certain maintenance coordinator to a certain account, they get used to that very fast. So it does work.  [00:31:15] Jason: Got it. So you can work with whatever tools that they do have. And if not, you've got some good ideas for them to get their maintenance systems dialed in well.  [00:31:24] Tom: Correct. [00:31:24] Diego: Yeah. Correct. And then, so that actually brings up a really good topic. So we can help them save money because most property management companies, they utilize, for example, Property Meld. Right. And that's an external tool to their actual software, which is usually Appfolio. And so they usually pay extra for per property for Property Meld, if they switch over to Rentvine instead of Property Meld, then we pay for that and it's, you know, it's completely free for them. So that means they save money there as well and pretty much Rentvine can do what Property Meld does. And one of the reasons why people choose Property Meld is because of the communication and Rentvine has a very good communication factor built into it. But it goes a little bit further when it comes to the, like, Tom mentioned the billing processes, because vendors can go ahead and submit the bills there and you can break down all of the information there, which fits in perfectly to the tool that the property manager is using. [00:32:27] So it allows us to have a very robust system that allows property managers, you know, to save money by choosing to work with us.  [00:32:35] Tom: So. Yeah.  [00:32:37] Jason: The more you share, the more stupid people might feel for not working with you.  [00:32:43] Tom: I have one more, 24- 7 maintenance. Okay. Say that again. 24- 7 maintenance. [00:32:49] So rather than paying an external company for a call center to, you know, receive phone calls from tenants. Yeah, we actually have a night crew that will pick up the phone and also dispatch those work orders for work orders, of course, that are dispatchable at night, right? For certain emergencies. So we have a team working around the clock. [00:33:10] The night team is a little bit smaller, but it's around the clock.  [00:33:13] Jason: That's amazing. So, yeah, because I know there's companies that are using Appfolio, they're using Property Meld, they're using maybe Latchel or EZ Repair H otline or something to do the calls. And these are all stacking as expenses in the business. [00:33:30] And then they're also having to coordinate all of the maintenance and go and source and find all the vendors. And you're saying, "we'll just take over all of this for you and it'll not cost you anything." Exactly. It worked. It worked. So, all right. So, a lot of people might be thinking this sounds too good to be true. [00:33:51] So let's say I sign up with these guys and I switch all my stuff over to using them and then I don't like it or there's something like they're afraid, right? This is their fear. And I've given everything to them. Are they going to have some benefits still? Like, will they have better processes? [00:34:09] Will they know what's going on? Like, like how do we lower this risk for those that are like concerned about handing over a piece of their business to somebody else and then what if it isn't good? Like, that's their fear.  [00:34:23] Tom: Yeah. So, part of our marketing strategy and part of our vision and mission is to share all of our information. [00:34:30] So, we're not going to keep everything to ourselves. We're actually in the process of writing a book, which will be finished very soon, on how we actually do the maintenance. So, it's one thing saying, "oh, we know how to do it." It's another thing showing it and that's what we're going to do. So we have the processes, we can share that with the teams, you know, if we're hopping on a call, we can share what that is, but also to make it available to the public, we've written a book, it's almost finished, which holds all of our processes in a story form, which then is connected to presentations and actually implementable knowledge. So if they don't want to work with us, fine. We will still teach you how to do it. That also means that, you know...  [00:35:11] Jason: like you're open sourcing your product.  [00:35:14] Tom: It is the 2023 way of marketing, right? You show what you can do and then you build trust. So, but that's really, and you know, it's also to help people. Many property management companies might not want to do this and that's totally fine, you know, but we can still help those people.  [00:35:31] Jason: Cool Well, I mean if things go well for you guys, which sounds like it will because it's a pretty sharp product If there might be the day when people are wanting Calvary doing the maintenance and not local property managers handling it. [00:35:46] So that's our vision. Awesome guys. I think this sounds like a no brainer. It sounds like a really awesome product. I'm really excited to see what you guys do. And I'm sure there's several that are interested in just once they hear this podcast episode, they'll be interested in giving you guys a shot.because maintenance is one of the biggest complaints we hear about in the industry. It's usually the first big challenge they all need to solve. And it sounds like you guys have got the product where it's solved and they can just get some Calvary and everything's going to be better. So, yeah.  [00:36:19] Tom: So our website is cavalry.works. That is cavalry, C A V A L R Y dot W O R K S, because cavalry works.  [00:36:29] Jason: Got it. Okay, cool. So check it out, everybody. So anything else you want to say before we end the show today?  [00:36:37] Tom: Yeah. Thank you for the opportunity to come and present us. It was our first podcast. I hope we did a good job. [00:36:43] Jason: Diego's camera's a little crazy, but it kept us on our toes. So I'm really impressed with you two. I know we met earlier and chatted and I was like this like, it sounds like such a crazy good business model. And I think it's possible because of the expertise that you both have and that you're able to bring to the table and excited to see about that. [00:37:05] When that book comes out, maybe we'll have you come on again and plug that book. That'd be really cool. And then man, Diego, I'd love to have you come and maybe present to some of our clients in our mastermind, just about maintenance because everybody has this challenge and I think it'd be really cool. [00:37:20] So. All right. Well, looking forward to hanging out a little bit more with y'all and seeing what you guys accomplished. So, thanks for being on the DoorGrow show.  [00:37:30] Thank you, Jason. [00:37:32] All right. Cool. So if you are a property management entrepreneur that wants to add doors, grow your business and you are struggling with getting more business and getting more doors, we can help you with that. [00:37:45] And we are really good at helping people grow. One of our clients, brand new, zero doors went through our rapid revamp class that we teach in our mastermind had zero doors and then after we cleaned up to the front end of his business, he started working on adding doors part time, like maybe 2 to 3 hours a day and then he was able to add and break the hundred door barrier. He was able to add a hundred doors in six months, and he was doing this part time. That would be impossible with advertising. That would be impossible with going and buying cold leads from doing SEO or pay per click or content marketing or social media marketing. [00:38:22] We gave him the right strategies. He went and took action. And he spent less time doing it than most people do. And he was able to add than most people do trying to grow their business. He was able to add a hundred doors in six months. That was what our client, Kent, who we just recently had on our podcast episode. [00:38:39] And if Kent can do it, you can do it too. And our clients can add a hundred to 200 doors every year, organically, just by using our strategies. If you have a really good full time BDM, we can help you add two to four hundred doors a year, organically. And then, we can also get you the right processes, and the right systems and things dialed in, so that you can become infinitely scalable, and then you can start to do acquisitions. [00:39:06] And you will make a lot more money off their doors, than the person you're buying them from was. So anyway, reach out to us at DoorGrow. You can check us out at DoorGrow. com and join our free Facebook group. You can get access to that. We have some free gifts for you by joining our community, go to DoorGrow club. com. This is just for property management, entrepreneurs, property management, business owners. Join that community. If you're starting a property management company, join that community. If you have an established company, join that community. People are helping people out in that group. It's an awesome community. [00:39:37] And our hope is that you will get so much value from the free stuff that we put out there and from our free content and our podcasts that you will want to join our mastermind, get beyond the paywall and see the amazing stuff that we're helping companies do and be part of an even more amazing community, our mastermind. [00:39:56] So until next time, to our mutual growth. Bye everyone. [00:39:59] you just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!  [00:40:25] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

This episode explores the metaphorical mountains we all face in life, drawing inspiration from the extraordinary journey of mountaineer Jenn Drummond. Brad and Lesley discuss the importance of resilience, balancing personal ambitions with family responsibilities, and redefining what success means on a personal level. If you have any questions about this episode or want to get some of the resources we mentioned, head over to LesleyLogan.co/podcast. If you have any comments or questions about the Be It pod shoot us a message at beit@lesleylogan.co . And as always, if you're enjoying the show please share it with someone who you think would enjoy it as well. It is your continued support that will help us continue to help others. Thank you so much! Never miss another show by subscribing at LesleyLogan.co/subscribe.In this episode you will learn about:How to balance family life, career and personal goals.The importance of prioritizing human connections over personal achievements.How to transform everyday frustrations into moments of gratitude.The importance of values over achievements in decision making.=Episode References/Links:OPC app on Apple and Google PlayWinter TourAgency Mini 10Danielle Stead BlantonConscious Counsel with Cory Sterling  If you enjoyed this episode, make sure and give us a five star rating and leave us a review on iTunes, Podcast Addict, Podchaser or Castbox. Get your free Athletic Greens 1 year supply of Vitamin D3+K2 and 5 free travel packsGet your discount for some Toe Sox using the code: LESLEY Be It Till You See It Podcast SurveyBe in the know with all the workshops at OPCBe a part of Lesley's Pilates MentorshipFREE Ditching Busy Webinar Resources:Watch the Be It Till You See It podcast on YouTube!Lesley Logan websiteBe It Till You See It PodcastOnline Pilates Classes by Lesley LoganOnline Pilates Classes by Lesley Logan on YouTubeProfitable PilatesFollow Us on Social Media:InstagramFacebookLinkedInEpisode Transcript:Brad Crowell 0:00  She doesn't get to choose when she dies. Right? Right. And I think that for her it was incredibly real because what set her down this journey in the first place was the near fatal near-fatal that she had where she said somehow she walked away from it. Everyone imagined that she wasn't going to, you know, and so of course when she made it home everything had a new perspective and so but also made her reevaluate everything. Lesley Logan 0:24  Welcome to the Be It Till You See It podcast where we talk about taking messy action, knowing that perfect is boring. I'm Lesley Logan, Pilates instructor and fitness business coach. I've trained thousands of people around the world and the number one thing I see stopping people from achieving anything is self-doubt. My friends, action brings clarity and it's the antidote to fear. Each week, my guest will bring bold, executable, intrinsic and targeted steps that you can use to put yourself first and Be It Till You See It. It's a practice, not a perfect. Let's get started. Lesley Logan 1:10  Welcome back to the Be It Till You See It interview recap where my co-host in life dig into the impressive, I will also say, rockstar elevated like seven points. How many other words do you put in here convo I have with Jenn Drummond in our last episode, if you haven't yet listened to that one, you are missing the fuck out.Brad Crowell 1:30  She's a badass.Lesley Logan 1:31  She's a badass. And I'm just gonna say has seven kids. So moms listening you just want to listen to this. Because there's a really oh my god just like, well, we'll get into in a second but just amazing. Awesomeness. So today is December 28. If you're listening in real time, if you are traveling home for after the Christmas, before the new year, or if you're in traffic or whatever. Hi, we are in. Where are we at?Brad Crowell 2:00  28th. We're in South Carolina?Lesley Logan 2:02  We're in Charleston, South Carolina at this moment, but let's actually talk about what today is. It is National Download Day. Ooh, tell me more. Brad Crowell 2:11  Yeah, as it should be.Lesley Logan 2:20  Smartphones have become a ubiquitous part of our lives. It's hard to imagine going anywhere without our phones, which now also serve as cameras, maps, guidebooks, banks, personal assistants, entertainment centers. So today, you should go down, I thought this is gonna be like a put your phone away thing. It's not. You guys go down to OPC app. It's free. Clearly didn't read the show notes over I got excited. But anyway, it's a download date, download all the apps, you should definitely download the OPC app because it's free. And you can listen to this podcast on it for free. Lesley Logan 2:52  It's Cumberbatch's Day.Lesley Logan 2:54  Oh we love Cumberbatch. We miss him. Is he doing anything? Let's look it up. Brad Crowell 2:58  No, idea.Lesley Logan 2:59  At any rate. That's an inside joke between my husband and I. He's a person. But if you don't know, we're not here to explain it. Because it's not his day. It's National Download Day. So go download a appBrad Crowell 3:11  The OPC. app. It's free. On it you've got like, you can actually listen to this pod right on the app. Lesley Logan 3:17  Yes. And it's really easy, because you can just see all, a bunch of episodes, so you don't have to go. It's not just like the most recent one.Brad Crowell 3:24  Also, we have the YouTube channel releases on there. We have a bunch of stuff, guides and free stuff. And our Tour map is on there if you're interested in following along.Lesley Logan 3:37  And if you are an OPC member, you can take classes.Brad Crowell 3:40  Yeah, right in the app and the community as well. Lovely. Lesley Logan 3:44  Go do that. And then also, if you're like Lesley, I'm like you though I like as few apps as possible. Well then delete an app you're not using, you can see it on your phone, because it will have a little cloud with an arrow button. If you have an Apple iPhone. And it means you haven't used that one in a while. Delete it.Brad Crowell 4:00  Like a month, I think and then they just like undownload. They don't delete it. Lesley Logan 4:06  They don't delete it. Brad Crowell 4:07  So they cloud it.Lesley Logan 4:08  They cloud it. At any rate Brad Crowell 4:10  It's a technical term.Lesley Logan 4:10  You've learned something new, Also, what is happening today, as we mentioned, we are in Charleston, South Carolina. So excited to be here. Because can I just say, I'm just gonna shout out to Diana. We were struggling to find a stop somewhere between Greensboro, North Carolina and Miami. I know you're thinking what, Miami? You couldn't find a stop? I would have done it. Well, you should have raised your hand. Because this girl saw that we were looking for some stops. But she was like, I don't know if I should say anything. I really love for her to come to Charleston. And then we called her. We're like, Hey, we're coming to Charleston. Would you like a stop? And she was so excited. Yeah, so anyways, you guys dreams do come true. And also, you can raise your hand for things. So I'm so excited we're here.Brad Crowell 4:55  And sometimes we need a place to go. So, let us know where you are, y'all. Lesley Logan 4:59  We want to know where you are. Brad Crowell 5:01  We do.Lesley Logan 5:01  We'll go where people want us to hang out. Brad Crowell 5:03  That's right. Lesley Logan 5:04  And so we're so excited to be here. It's her new studio. It's been open for a year. So congratulations, Diana. Then we're headed to Miami. There might be some spots left in the Mat Class at this point, but everything else is sold out Sarasota. The class is sold out guys. I got a waitlist an arm's distance long. I don't know what to do. I'm feeling really bad.Brad Crowell 5:21  I know. I wish that we could have gotten a bigger space even but like it just the way it worked out was amazing. But wow, what a response.Lesley Logan 5:29  Thank you, Christina Fenton. And also like, we, another spot that we like super struggled to like find a location and Christina Fenton, shout out to her who made a spot happen. And then we sold out so quickly.Brad Crowell 5:43  Yeah, I didn't, but there may still be spots in the workshop. After that. We'll be in Austin. We'll be there all day. Lesley Logan 5:50  All day. New Year's Eve.Brad Crowell 5:51  First of January.Lesley Logan 5:52  That's Gaia. She's so excited about Austin. She loves Austin, she's been there before. So Austin, we got four events, you have to come, it's the best. You want to start your day off, you're in New Year's off, right? You hang out with us. And then we're in Dallas, class sold out. But there might be spots in the workshop, and then it's Albuquerque and Sedona and then we're home. And then I kick off eLevate as soon as we get home. Round four. At the time that we're recording this, I do have a couple spots left. So if you are interested in a mentorship, if you're wanting to not only learn, like accessible and fun approach to classical work, it's still classical, but you get to be a human being. Hi, I'm your girl. So you go to lesleylogon.co/elevate. And then at the end of the month around my birthday, probably before we are going to (inaudible). Okay. Well, it's, I mean, as of right now, it's one month to my birthday since my birthday month. But halfway through the month. You are if you're on the waitlist for the retreat, you're going to get an email, let you know that you can lock in the best, the lowest price of the retreat.Brad Crowell 6:58  Only those on the waitlist.Lesley Logan 7:01  Only those one will get that. Just so you know, if you're not on the waitlist, you won't get that email. Brad Crowell 7:05  So get on the waitlist. Go to Lesleylogan.co/retreats. Lesley Logan 7:09  Yeah. And then in after my birthday. We'll do Agency Mini Number 10. Number 10. Brad Crowell 7:16  Yeah, that's crazy. Lesley Logan 7:18  Fuck, it's crazy. Well, Agency turns six in January. Yes. So it's number 10. And we only do it twice a year. And we're working towards once a year. So just so you know, Brad Crowell 7:28  It's quite possible that next year will be the last twice a year. Lesley Logan 7:32  Yeah. Or who knows, it might only oh, but (inaudible) happened. Brad Crowell 7:35  It's also possible that next year, maybe like the beginning of the year, we'll see. We're trying a couple of new things that going to happen next year. Lesley Logan 7:43  We're also doing like calendar light, guys, like we are Brad Crowell 7:46  We are really trying. Lesley Logan 7:48  So do not wait till next time because we can't promise it. It's actually not in the books yet. Just let me know.Brad Crowell 7:53  Profitablepilates.com/mini Lesley Logan 7:56  Yeah. Before we get into Jenn Drummond's question, Jenn Drummond's interview, we have a question. Brad Crowell 8:01  That's right. Yeah. I was gonna say, Wow, she wrote in a question? Amazing.Lesley Logan 8:05  She did. Well, you know what she did, because she's got a book launch. But we'll talk about that in a moment. We have a question from one of you all, this came on Facebook. Brad Crowell 8:14  Yeah. So the question was, I just bought a studio, what are some do's and don'ts that I should consider? Lesley Logan 8:21  Yeah, I love this question. Because it came up in a Facebook group, which I'm not in. I mean, I'm in them, but I don't participate. And we had five different Agency members comment and they tagged me. Brad Crowell 8:32  Really? Lesley Logan 8:33  Yeah. All of them are, so fucking proud of them. They're like, hire coach. Lesley Logan. I bought a studio. I own a studio. I work with her. And Agency Mini is in FebruaryBrad Crowell 8:46  You should screenshot this conversation. Lesley Logan 8:48  It is so great. Well, you should I don't know how.Brad Crowell 8:50  I'm gonna find that. I need to know where this is.  Lesley Logan 8:52  Yeah. So at any rate, my post response back was what I'll tell you here. If you're buying a someone else's studio, congratulations, I'm so excited for you. We're so excited for you. There is not a one size fits all anything. Brad Crowell 9:08  It's true. Lesley Logan 9:09  And if anyone tries to sell you that run the fuck away. Yeah. Because that means whatever their system is, doesn't include your dreams, your mission, your values. It's not possible. Brad Crowell 9:19  It's highly unlikely. Lesley Logan 9:21  Okay, it's highly unlikely, but it's true. So what we what I would say is do's and don'ts. Do's - hire a coach. Do's - really understand what to charge so that you are paying your employees and yourself correctly. We have a free tool. It's called the magic calculator. There's a studio owner version, which includes the salary you're gonna pay. Pay yourself. And that is on profitablepilates.com. Another do - get a lawyer. We have two amazing ones, Danielle Stead Blanton and Conscious Counsel with Corey Sterling. If you want those hookups, just ask for us. Those are do's. Brad Crowell 9:54  We're happy to make the intro. Lesley Logan 9:56  Have boundaries. Boundaries are key meaning when you'll work and when you won't work. And beyond that, I actually need to know what your goals are, as far as don't - don't get jealous of other people's businesses. Don't. That is waste of your time, you don't even know if they're profitable, I don't care if they look busy.Brad Crowell 10:12  I got a don't. Don't price your classes based on other businesses in the area. Lesley Logan 10:19  Yes to that, because you don't. Okay. I was talking to a group of studio owners and they were bulking at me because I wanted them to charge 45 Euros for up to six people in a class per person. And then I was like, but that's what you need to charge. So you can pay yourself and pay your employees, you can stay in business, you want to stay in business. If you want to be a charity, go file yourself. Here's the thing, y'all I've had many people go, I want to make accessible. Then, go file yourself as a 501-C3. Do not file yourself as a business because of you're business, you have to be profitable. Period. That doesn't mean you can't be accessible. But you can't be you. Somebody, you either have to have 1000 clients, or you have to have 20. Like it's it's you have this decision. This is where coaching comes in. Because we've actually figured out my mission is to make things accessible. Okay, how can we do that? Right? My mission is to get paid myself this much. Okay, how can we do that? So the don't that you, Brad just mentioned is super key. You don't know if they're profitable, you don't know if they're just filling their classes with ClassPass, things like that.Brad Crowell 11:20  You don't know their story, you don't know if they need to be profitable, maybe they're intentionally not being profitable. Lesley Logan 11:25  I have so many girlfriends in L.A. who are teachers whose entire role in their family was to not be profitable, because their family needed a loss on their taxes.Brad Crowell 11:37  Surprise.Lesley Logan 11:39  So, you guys like that. So don't don't base your services, your rates, your schedule around others, you have to go with your mission, vision and values. And beyond that, we actually need to know what those are. So we can actually coach you on do's and don'ts for you. So if you want that you can go to profitablepilates.com/agency. You can also go to profitablepilates.com/mini and find out on the next thing. You know, I know coach is an investment and it's, it's, you know, it's hard to know if you're making the right one. We hope it's us, but you should try people out. If you have a question for us to answer just send it to Be It Pod. I love this one. And I know most of you listening are not studio owners. If you are a business owner, everything we just said applies. Brad Crowell 12:22  It's true. Lesley Logan 12:22  If you are in the service industry, it all applies.Brad Crowell 12:25  Yeah, it doesn't have to be Pilates. It could be yoga, boxing, any kind of gym.Lesley Logan 12:30  Can be a retail store.Brad Crowell 12:32  Could be. Yeah, totally can. That's true. All right. Stick around. We'll be right back.Brad Crowell 12:51  Okay, now let's talk about Jenn Drummond. Jenn Drummond is an extraordinary adventurer, and a mother of seven, who, after surviving a near-fatal car accident embarked on an inspirational journey to climb the world's most challenging mountains. In 2023, she won the Guinness World Record, a first female mountaineer to seven second summits. So what that means, seven second summits. Second means they're the second tallest mountains on the continent. She summited the second tallest mountains on all seven continents. Lesley Logan 14:50  Also, first woman to do it. Brad Crowell 14:51  First woman to do it. Lesley Logan 14:52  And also you guys, they're apparently often harder than the K ones. Brad Crowell 14:57  Yeah, and that's like a lot of technical stuff. And there, but basically, they're not nearly as well mapped. They're not nearly as popular. The trails aren't nearly as consistent.Lesley Logan 15:06  What if the one she did, because of COVID, no one had even been there for years. And because of the snow, because like, what is it Antarctica she went at, (inaudible) it's like, years outdated map. And I'm like,Brad Crowell 15:16  Yeah, that's crazy. Lesley Logan 15:18  I'm gonna just say, no, no. But I love that she did it.Brad Crowell 15:24  It's pretty. It's ambitious. It's amazing. And you know, I thought what was really, like, what really, really inspired me was she said, you know, look, I was a full time mom, and awesome, love, love doing that. But when I started training for this, I had a chance to be showing my kids, you know, what it's like to live a busy life. And do you know, be a mom too? And I thought that was really inspiring to me. Because, you know, that's, that's reality.Lesley Logan 16:01  Yeah, I, I'm actually gonna go off off off the grid here, because I'm actually gonna talk about something I really, really, really loved. That she said, so here's she has seven kids. Okay, I got three dogs. It's already too many. So, I don't even know. But I asked her like, how do you? How did you even train for this? And this, to me is one of my favorite takeaways from the whole episode. Because she talked about finding a way and you guys, if you really want something bad enough, you find a way like, yeah, there Brad can tell when I want something bad enough, because I'll set up a car because I really want that. But that requires, like consistent things over time. However, I wanted this one chair so bad. I was like, I'm gonna sell my peloton. I'm gonna sell it. I want Brad Crowell 16:51  It's exactly what I was thinking about. Lesley Logan 16:52  I also sold a bunch of stuff in my closet. Like, there's this interesting thing when you want something bad enough, like the thing that the lengths you'll go to do something. And I was trying to figure out like, how if you're a mom of seven kids, you've got to choose a job. She's, you know, it's like she's like at home just taking care of seven kids. How did you train to be a mountain woman because like, that is, if Jenn lives in Utah, but also that's hours, hours a day, right? So she actually brought up she's like, you can find a way she's like, there's no takers for every phone call you're on. And that just takes notes for me. And so I'm physically on the call, but I'm on a treadmill at an elevation so I can get my time under my legs at elevation rock climbing. And I'm still working. And I can go back to the notes because it's high like you guys, there are so many great tools out there that will highlight will pull the questions up you can search on makes it so easy, right? The other thing she did was at the kids' soccer game, and she brought a stepstool and water bottles and water bottles. And she just didBrad Crowell 17:50  She would wear them like I'm guessing she would wear them? (inaudible)Lesley Logan 17:54  So she would like do her, for 90 minutes, just step on the stepstool. And she's fully present for her kids. But she is training for her event. And I just want to bring this up because I think we make a lot of excuses for ourselves. Brad Crowell 18:11  Well it's very creative, first off. Lesley Logan 18:13  It's very creative, but it's also I've got the soccer games I can't do I'll wait till they're older or whatever. You are, if you're, if your goal and your passion happens to be a physical activity, like mountain climbing, and maybe it's not, you actually want to do that when you're younger. Not when your kids are older. But also she pulled up like what if I die tomorrow? And I think it's really cool what she was able to show her children because she showed her seven children that she could still prioritize her goals and them and so anyways, just like I was like, mind blown. Yeah, because I do that shit. But I don't have seven kids.Brad Crowell 18:54  Well she started talking about she doesn't get to choose when she dies. Right? And I think that for her it was incredibly real because what set her down this journey in the first place was the near fatal near-fatal that she had where she said somehow she walked away from it. Everyone imagined that she wasn't going to, you know, and so of course when she made it home everything had a new perspective and so but also made her reevaluate everything. And this is pre-COVID when COVID made the world reevaluate everything right? So this for her was you know the moment the wake up call.Lesley Logan 19:37  Yeah, yeah. What did you love? Brad Crowell 21:16  I really loved it when she was talking about putting people over peaks. Now of course she's like, so polished in her presentation here that everything ties together she talks about conquering your own mountain in your life. But putting people over peaks was really interesting. She was a, she was on a mountain where there was a terrible accident that happened with one of her, her climbing mates died in an avalanche. Lesley Logan 21:48  I can't even imagine that I don't even like that's devastating. Brad Crowell 21:52  Yeah. Yeah. I mean, she decided not to continue the summit, which means she got part of the way up, and then decided to come back down. And she said, the reason was what I thought was really I was like, could I make this decision this way in this moment? She said, the mountain is always going to be here. So I can come back. But this is more important right now. Lesley Logan 22:23  Yeah, I think like what's beautiful is like, achieving that climb on that day wouldn't have been as special. Brad Crowell 22:35  Well, yeah, there's that too. I mean, it would have always been tied to that, that terrible memory. So yeah, that's another I mean, in hindsight now, like, wow, what? That's definitely the right move.Lesley Logan 22:45  I mean, what I'm also impressed by is that she still went and did it because like, I'm gonna be really honest, people dying in front of me, I'm like, I'm out. But I'm out. All right. I'm out on the climb. Like, I thought we hiked. I've decided we (inaudible).Brad Crowell 23:09  She said, who she believes that who we are as people. That's more important than what we achieve. Yeah. And I think that is so counterintuitive to the way we live in our society today, that we only value achieving the next goal, achieving the next thing and like, or the credentials, or you know, what's on a resume.Lesley Logan 23:34  You know, but this brings me up because I this morning, the day that we're recording this, I had a call with Jonah White, who is on the podcast, she's the one who's like recovering from a brain tumor everyone, right? And she went to some event and the person did the thing. Like, if you really, really wanted these goals, that would happen already. And she's like, like, I heal myself from a brain tumor. And I don't have the things that I want already. And it's because I'm holding myself back. And I'm like, I call bullshit. I call bullshit. Yeah, because there are things I really, really want. The G Wagon in the driveway. I also wanted this house. I also like, and I refuse to burn myself out. And I actually want to take this back to it. Like I think it's really, I think quotes like that from self-development gurus can be great for the person who needs to get the fuck off the couch. But I also love that in this instance, she could have been like, this is my goal I'm going and you know, but she actually chose to go off of her values. And she really values people and human life. And, and one, if you don't know what you would do, check your values. I bet you would. I want you to do the exact same thing because I know your values, you know, like, and if you don't know what your values are, this is your call to action. Sit down, there is actually, you can just Google list of values. (inaudible)Brad Crowell 25:06  Just ask chatGPT.Lesley Logan 25:07  Yeah. (inaudible) 54 and then go through and pick out the ones that stand out to you. And then notice which ones are duplicates, because you want to get down to five, three to five, you otherwise won't remember them. And I bet you'd you'd make the same decision. But I think it's really important. Like, there are obstacles that areBrad Crowell 25:23  Wait there are 54 values. Where, what? Tell me more about this. Lesley Logan 25:26  I Googled it a few years back. It might be more, but I Googled like, values. And it was like the ones that I found like, 54.Brad Crowell 25:37  Yeah, I think there are more than that.Lesley Logan 25:39  I'm sure there's more. The ones that I've found were like, 54. So whatever, doesn't matter.Brad Crowell 25:44  There's a lot. Here, 50 common personal values. Here are 200 values explained. Lesley Logan 25:49  Great. That's too many. Brad Crowell 25:50  Twelve universal values. What are 20 types of values. That's interesting. Lesley Logan 25:54  So 200 is too many. Brad Crowell 25:56  James Clear, 50 common personal values. Lesley Logan 25:59  Start there. And then like, there's other there's also tons, like Jill Coleman shout out to her, had us go through how to come with our values was a really, really fun, post it note thing at all, to go back to Jenn Drummond. If you know what your values are, you will know what you do in certain situations, and you will love hitting your goals while you're with your values intact. You won't love hitting your goals with your values out of alignment. So I think you would know what you'd do.Brad Crowell 27:26  All right. So finally, let's talk about those Be It Action Items. What bold, executable, intrinsic or targeted action items can we take away from your convo with Jenn Drummond? She said, this was really fun, y'all. She said she had a major reframe on something that made her so angry. There was a red light in front of her house, a stoplight and she said she would always hit this damn light. And it would just like, it's probably in my mind. I was like, we all know it. There's the one damn light that takes five fucking minutes to go. And you're like, why am I sitting here and the stupid light there aren't even any cars?Lesley Logan 28:02  Every light in Vegas is the longest light I've ever experienced in my life, like four minutes. Brad Crowell 28:10  So when she's talking about this, I was imagining, you know, us here in our town. And she said that she had the story about when she decided you know what I need? I need to reframe this. And she started to take that time to pause and use it as a time to be grateful for things in her in her world. And then she taught that to her kids. And then her kids said they began to enjoy the reframe. So whenever they would hit a red light, it's like I imagined it being like the punch buggy game. Punch buggy. You know, punch backs where you drive past a VW bug.Lesley Logan 28:50  Slug bag bus, it's what we called it. Okay. Now, there was an entire lot of that (inaudible) cars.Brad Crowell 28:57  Did you say slug blast?Lesley Logan 28:59  Slug bag bus. Slug bag. Slug bag was the car and slug bug bus was when you saw the VW bus. And there was a whole parking lot of used cars. And when we were in (inaudible), my parents drove us up my grandparents house, right to school, and we would be doing slug bug, the whole drive right? And we get to this part of this car lot. And it was like we get out of our seatbelts to like start counting. And my mom was like, stop, we're gonna drive by, you're going to all count and then you can divide it by three and punch each other.Brad Crowell 29:33  Ah, that's hilarious. No, I feel like we at one point had to call that game because my brother and I were getting stronger. And we were hurting each other. But anyway, I thought it was that's what I was comparing it to and her kids started to flip it around where they were like, oh, the light's green. We can't do our grateful thing now because the light's not red. And I just thought that was what a fun way to reframe something that normally would get you aggravated. And then also to pass that along. I thought that was really cool.Lesley Logan 30:04  Can you imagine if we tried to do it with my dad? Brad Crowell 30:06  Yeah. Your dad, he would just (inaudible).Lesley Logan 30:11  He would like, yeah, he would let us do it and he wouldn't do anything. It's fine. Brad Crowell 30:16  What about you?Lesley Logan 30:17  I do love that that one has really stuck with me, I have to say like, after how many interviews have I done? Close to 150? Not really, maybe like 120. I, that is one Be It Action Item. I think of her often I think of her at red lights. And I just love it. So I hope that one sticks with you. I actually really love this. She talks about taking a gap year. And I'm not saying to take a gap here from achieving a goal. But I do think y'all, it's so important to take a break after you achieve something. Because otherwise you're just like achieving and achieving, achieving it. And if you're not achieving, you're like, Fuck, I'm not doing anything with my life. Brad Crowell 30:53  Well, it's what we talked about earlier in this episode, where, you know, that's how we measure success is the achievements that we the our credentials, our accolades, or whatever. And, you know, that's, that's this weird to (inaudible).Lesley Logan 31:12  Yeah. I think it's really, really cool. Like, something I'm so proud of us, at this point is like, we have the fewest amount of events next year that we've ever had. And it doesn't scare me. It doesn't make me freak out. It's actually like, I love it. I like how do we make less? How do you make less than that? Because I think it's so it becomes a thing. Like, for example, I saw a girl last night at an event and she's engaged (inaudible) I don't know her, beautiful ring, gorgeous girl. And I legitimately didn't ask when are you getting married? They're celebrate her engagement. I didn't even ask because that is the next achievement. She just got engaged. And I was like, oh, my gosh, tell me what you've done. How did he propose? Like I was like, and then it'd be like, When is the wedding? What is this? What is this?Brad Crowell 32:02  When are you having seventeen kids?Lesley Logan 32:04  When are you having kids? And I, I was I've refused and I, only thing I said was I was like celebrating her engagement. She said, yeah, it's really stressful. I'm trying to find someone who just wants to do it for me. And I said, Brad Crowell 32:17  To do what for her?Lesley Logan 32:18  To do her wedding for her. Yeah. And I said, you know, if you want a simple piece of advice, I'll give it to you about wedding planning. But if you don't need it, I'm not gonna give it to you. And she's, well, I want it, and I said, use a project management tool and hire someone out on the stressful day. Period. Everything else is gonna be fine. And she was looking at other girls were like, looking at me, like, what and I'm, like, I was so proud because I was like, I'm not we need to stop going when are you getting married? Are you gonna have kids? Were you gonna buy a house? Like all these things that achievement, achievement, achievement, and like, it's justBrad Crowell 32:54  Just make sure that everything is the color blue and your wedding will be amazing.Lesley Logan 32:59  Watch Eliza slashing her special about weddings, you'll be fine. But like I, you know, there's certain things that I want to break as a habit. And I think one of the ways to take a break is also to give people permission to take a break. And so maybe that's when someone's celebrating engagement. Don't ask them when the wedding is. Let them tell you. They'll tell you. Brad Crowell 33:23  Oh, well, if they want to talk about it, they'll find a way. Lesley Logan 33:25  When people get married. You don't have to ask if they're having kids. They will tell you, Okay, it's like a vegan. They will tell you, you don't have to worry. Don't yell at me vegans. I am also a vegan who eats meat. But like I think it's really you can practice taking breaks and I just really love this as a Be It Action Item because like, how can you schedule in breaks after an achievement? We're doing a massive tour. Our biggest yet. We come home 24 hours later I'm on vacation. I'm on break. I'm on a break.Brad Crowell 33:59  Yeah, me too. Lesley Logan 34:00  You too. You will be you'll be on a Brad Crowell 34:02  This will be a break at home.Lesley Logan 34:03  You'll be on break at home you'll love it. I'm Lesley Logan.Brad Crowell 34:07  And I'm Brad Crowell.Lesley Logan 34:07  Oh, before I let you go.Brad Crowell 34:09  Oh, before she lets you go. Oh, right.Lesley Logan 34:11  She's got a book. It's called, Breakproof. That is the title and it's available for pre-order. I'll tell you right now I'm gonna click a link. Hold on.Brad Crowell 34:35  Official Breakproof book.Lesley Logan 34:36  Yeah, Breakproof by Jenn Drummond. It releases on January 9th, we will make sure that this link is in the show notes. Jenndrummond.com/book. It's J-E-N-N, two Ns dot com slash book. We'll put it in the show notes. Seven children, seven continents, seven summits, so seven strategies to build resilience and achieve your life goals. Let me like fucking how cool is she? She got all those sevens. It's a lucky number. Anyways, so we'll put that all in. June 9th is the day it is released but you can pre-order the book now. And let's make her a bestseller you guys because she's a badass.Brad Crowell 35:14  She is.Lesley Logan 35:15  Can't wait to read it. Brad Crowell 35:16  Love it. Lesley Logan 35:16  All right, I want to hear how you're using these tips in your life. So let us know and until next time, Be It Till You See It. Brad Crowell 35:22  Bye for now.Lesley Logan 35:25  That's all I got for this episode of the Be It Till You See It Podcast. One thing that would help both myself and future listeners is for you to rate the show and leave a review and follow or subscribe for free wherever you listen to your podcast. Also, make sure to introduce yourself over at the Be It Pod on Instagram. I would love to know more about you. Share this episode with whoever you think needs to hear it. Help us and others Be It Till You See It. Have an awesome day. Be It Till You See It is a production of The Bloom Podcast Network.Brad Crowell 35:57  It's written, filmed, and recorded by your host, Lesley Logan and me, Brad Crowell. Lesley Logan 36:02  It is produced and edited by the epic team at Disenyo. Brad Crowell 36:05  Our theme music is by Ali at Apex Production Music, and our branding by designer and artist Gianfranco Cioffi. Lesley Logan 36:12  Special thanks to Melissa Solomon for creating our visuals and Ximena Velazquez for our transcriptions. Brad Crowell 36:18  Also to Angelina Herico for adding all the content to our website. And finally to Meridith Crowell for keeping us all on point and on time.Support this podcast at — https://redcircle.com/be-it-till-you-see-it/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Join us for Land Academy episode 1968 as we delve into crucial topics: "The Difference Between A Side Hustle And Your Career In Land Investment," and "How To Hire And Train A Transaction Coordinator Who Can Also Effectively Answer The Phones." Get a sneak peek into our Land Academy member discord at https://staging2.landacademy.com/discord/ and feel free to reach out to us with your questions at 480-530-7383. Don't miss out on these essential strategies for success! Transcript: Steven Jack Butala: I am Steven Jack Butala. Jill K DeWit: And I'm Jill DeWit and this is the Land Academy Show. Steven Jack Butala: This is episode number 1,968 and today we are talking about the difference between a side hustle and your career in land investment. And then a little later we're going to talk about how to hire and train a transition coordinator who can also effectively answer the phones. Both of these topics were requested pretty seriously in Discord. Jill K DeWit: Well, I was going to say too, I think we've been doing so much transition in our office, I think you said transition coordinator instead of transaction coordinator. So let me just clarify that too, because you know what? There's a time for both. Steven Jack Butala: Yeah. Jill K DeWit: Right now in our companies, Jack is the transition coordinator. Steven Jack Butala: That's true. Jill K DeWit: Which is, "You over there. You over there. You, we may not have a home for. And you, you're in," kind of thing. That's the transition coordinator. Steven Jack Butala: When are we not going through a transition? That's my question. Jill K DeWit: Oh my gosh. I know. Even between us it's a constant transition. Steven Jack Butala: When you're younger, you say, "This is going to happen and this is going to happen." This is what men do. "And this is going to happen, and by the time I'm 28, this is going to happen. And then pretty much by the time I'm 32, 34 years old, it's over. All the transitioning is over. Everything's locked in, it's on autopilot and we're good." And that just never happens. Jill K DeWit: Oh, that's not what women do. So this is actually probably not bad then. We're never disappointed. So if you've had all those things... Oh, hold on a moment. Just hold on a second though. Steven Jack Butala: Women are never disappointed. That's the show for next week. Jill K DeWit: Not with that stuff. No, but I mean, you have your plan and you said it never goes like that. But so, here's the beauty of it, for us, we have simple goals, but we don't have a timeline plan like that, so it's easier to not be disappointed/however, we do have a thing called a biological clock and that does kick in sometimes and nobody... And that's one of the hard parts for women. It's like bursting out in tears when you're reading Hallmark cards, you don't know when it's coming. Steven Jack Butala: See, to me, through those two things lead to disappointment. A biological clock and Hallmark cards lead to disappointment, not positive stuff. Jill K DeWit: No, it's okay. Depends on when you're buying a Hallmark card. Maybe it's for your best friend saying, "Congratulations on your divorce." Just kidding. Steven Jack Butala: That isn't negative. Jill K DeWit: I know. Steven Jack Butala: Each week on the show we answer questions from our Land Academy member Discord forum, review land acquisitions from our weekly member webinars and take a deep dive into two land related topics, by popular request. If you want a sneak peek of our discord forum, go to landacademy.com. It's free. I think it's under the tools tab. Jill K DeWit: I meant to say congratulations on your baby. I didn't mean to go negative. Yeah. Okay. Oh, and by the way too, if you want us to answer your questions right here on this show or you need some help getting involved, don't forget, you can just text my team. It's 4-8-0... Oh, what is it? 4-8-0-5-3-0-73-83. They are read, you will get a response. Thanks. So Austin wrote,

Join us for Land Academy episode 1968 as we delve into crucial topics: "The Difference Between A Side Hustle And Your Career In Land Investment," and "How To Hire And Train A Transaction Coordinator Who Can Also Effectively Answer The Phones." Get a sneak peek into our Land Academy member discord at https://landacademy.com/discord/ and feel free to reach out to us with your questions at 480-530-7383. Don't miss out on these essential strategies for success! Transcript: Steven Jack Butala: I am Steven Jack Butala. Jill K DeWit: And I'm Jill DeWit and this is the Land Academy Show. Steven Jack Butala: This is episode number 1,968 and today we are talking about the difference between a side hustle and your career in land investment. And then a little later we're going to talk about how to hire and train a transition coordinator who can also effectively answer the phones. Both of these topics were requested pretty seriously in Discord. Jill K DeWit: Well, I was going to say too, I think we've been doing so much transition in our office, I think you said transition coordinator instead of transaction coordinator. So let me just clarify that too, because you know what? There's a time for both. Steven Jack Butala: Yeah. Jill K DeWit: Right now in our companies, Jack is the transition coordinator. Steven Jack Butala: That's true. Jill K DeWit: Which is, "You over there. You over there. You, we may not have a home for. And you, you're in," kind of thing. That's the transition coordinator. Steven Jack Butala: When are we not going through a transition? That's my question. Jill K DeWit: Oh my gosh. I know. Even between us it's a constant transition. Steven Jack Butala: When you're younger, you say, "This is going to happen and this is going to happen." This is what men do. "And this is going to happen, and by the time I'm 28, this is going to happen. And then pretty much by the time I'm 32, 34 years old, it's over. All the transitioning is over. Everything's locked in, it's on autopilot and we're good." And that just never happens. Jill K DeWit: Oh, that's not what women do. So this is actually probably not bad then. We're never disappointed. So if you've had all those things... Oh, hold on a moment. Just hold on a second though. Steven Jack Butala: Women are never disappointed. That's the show for next week. Jill K DeWit: Not with that stuff. No, but I mean, you have your plan and you said it never goes like that. But so, here's the beauty of it, for us, we have simple goals, but we don't have a timeline plan like that, so it's easier to not be disappointed/however, we do have a thing called a biological clock and that does kick in sometimes and nobody... And that's one of the hard parts for women. It's like bursting out in tears when you're reading Hallmark cards, you don't know when it's coming. Steven Jack Butala: See, to me, through those two things lead to disappointment. A biological clock and Hallmark cards lead to disappointment, not positive stuff. Jill K DeWit: No, it's okay. Depends on when you're buying a Hallmark card. Maybe it's for your best friend saying, "Congratulations on your divorce." Just kidding. Steven Jack Butala: That isn't negative. Jill K DeWit: I know. Steven Jack Butala: Each week on the show we answer questions from our Land Academy member Discord forum, review land acquisitions from our weekly member webinars and take a deep dive into two land related topics, by popular request. If you want a sneak peek of our discord forum, go to landacademy.com. It's free. I think it's under the tools tab. Jill K DeWit: I meant to say congratulations on your baby. I didn't mean to go negative. Yeah. Okay. Oh, and by the way too, if you want us to answer your questions right here on this show or you need some help getting involved, don't forget, you can just text my team. It's 4-8-0... Oh, what is it? 4-8-0-5-3-0-73-83. They are read, you will get a response. Thanks. So Austin wrote,

This week Randall and Craig have a long overdue catch up session about their Fall gravel travel trips. Covering Bentonville, Girona, Boulder, Austin, Reno and SF, between the two a lot of dirt was covered. Episode Sponsor: Hammerhead Karoo 2 Support the Podcast Join The Ridership  Automated Transcription, please excuse the typos: In the Dirt [00:00:00] Craig Dalton: Hello and welcome to in the dirt from the gravel ride podcast. I'm your host, Craig Dalton. I'm going to be joined shortly by my cohost Randall Jacobs. It's been a while since we've been able to catch up on the microphone, as we both been traveling and doing our own things. I've been super busy this last quarter. So it was great to catch up with my buddy Randall. And just dig into what we've both been up to. Before we jump in, I need to thank this week, sponsor the hammer head and the hammer head crew two computer hammer heads been a sponsor throughout the year. So I very much appreciate their support. I can't recall if I've ever mentioned this on the show, but. In my early twenties, I worked for a bicycle computer company called Avocet. And at the time Avocet introduced a product called the vertex. Which provided for the first time an elevation tracking device for bicycle, it was quite game changing, particularly at that time in the world of mountain biking, because it was so difficult to compare one ride to the other. I still to this day, find vertical feet climbed or the vertical feet of a particular course or an event that I'm riding to be the most important fact. That I need to have in my head in terms of preparing. So if you're going out to a race or an event that has 8,000 feet of climbing, I know I need to put in the work across my training schedule. I find myself often thinking back to that, as I enjoy the hammerhead crew too, I really very much enjoy the climber feature as anytime I update a course or even now it's got the maps added in there in real time. I can see when I approach a climb exactly what is ahead of me, how long the climb is going to be in terms of miles. But most importantly, how much elevation am I gaining? It comes into play in a number of different ways. One. I know if it's a longer climb, I need to settle in. I need to climb patiently and just stay within myself or in the case of my recent experience at big sugar, gravel, as I was seeing that these climbs were shorter in nature, I knew exactly sort of how many candles I could burn as I was attacking them. Attacking them being a generous term for any of my performance. In any event I do these days. Anyway, it was super valuable to know what kind of verb was in front of me. And that climber feature is just always been something I've taken to. The other big thing that I really enjoy has been the navigation features. I mean, it is something that the crew too has always offered in spades, above and beyond anything else out there in the marketplace. Based on an Android operating system. It kind of has the same kind of mapping capabilities that you see on your phone. So very visual, very easy to see trails and roads and where they lead to pinch and zoom and everything you'd expect. From a phone you get there right there on the screen. It also has a super cool feature I've mentioned before, which is sort of a find my way home feature. Whereas if you're kind of mucking around and a little bit lost, you can just kind of press this button returned to start, and it's going to navigate you directly to your home or the place where you started the ride. The other thing I just saw pushed to me in a latest software update. Was a choice of preferred terrain. So now layering on top. Oh, Hey, I want a ride home on gravel versus pavement is going to give you different results. So I thought that was super cool. And it's another feature that I've always loved from the team in hammerhead is just the idea that you have software updates. Every two weeks. I feel like I'm getting something pushed to the device. That's adding a new feature and I get an email describing it. And some of them. You know, background, improvements or something that's maybe only applicable if you have a power meter. But other ones super applicable, like this choice of terrain. I always like to be able to tell my computer that if you're routing me somewhere, take me on the dirt because that's what I'm all about. So anyway, as we approach this holiday season, if you're looking for a new cycling GPS computer, I highly recommend checking out hammerhead there@hammerhead.io for gravel ride podcast listeners, they're throwing in a free heart rate, monitor strap. So just make sure to put. Put it in your cart and add the code. The gravel ride to any of your hammerhead purchases for that crew to computer. Without business behind us let's jump right into my conversation with randall Randall. [00:04:28] Craig Dalton: Randall. Good to see you, my friend. [00:04:30] Randall R. Jacobs: Good to see you, Craig. It's been a bit, we've both been traveling. How you been? [00:04:33] Craig Dalton: yeah, I've been, I've been okay. You know, life continues to throw on challenges in front of me and haven't been on the bike as much as I'd like. But happy to be here. Happy to be chatting bikes for a few minutes. [00:04:45] Randall R. Jacobs: Yeah, yeah. I've been very much looking forward to it. Um, you've been, you were in Jerron for a bit and I think you were in, uh, Bentonville, Arkansas before that. [00:04:53] Craig Dalton: Yeah. Yeah, exactly. I feel like I stacked all my trips into one period of time, which turned out to be more stressful than I would've liked from a family dynamic perspective. It seemed like I was gone all the time, and I think in the weeks proceeding my. Bentonville trip. There was like a local group ride that I had to, like, wanted to prioritize and kind of block off some time away from the family then. And then in between Bentonville and Gerona, there was a couple things that seemed like it was all about Craig. When I, you know, obviously I wanna be a, uh, you know, equal participant in my family life as, as my wife. [00:05:33] Randall R. Jacobs: Yeah, I can. Uh, I don't have the same family obligations, um, for better or for worse, uh, but can definitely relate to packing all of one's travels all in one go, and having that be, um, while effective, uh, requiring some recovery. I was on the road for three and a half weeks in my case and never stayed in the same place, more in a couple of days. [00:05:53] Craig Dalton: that's a lot. And I wanna hear about the trip cuz I kept seeing it pop up in the ridership like where you were and shouting out locals and, you know, bringing people together. So it, it sounds like it was an exciting trip and I'm super excited to talk about it with you. [00:06:07] Randall R. Jacobs: Yeah. Well let's hear about Bentonville first, cuz that's a place that I've explored a little bit, but really wanna spend some more time in. You're there for what? Big sugar. [00:06:15] Craig Dalton: I was there for big sugar and I was able to go down there. I actually went for the People for Bikes conference, so as, as some people know, I, I do spend some time with a, a non-profit called Bike index. Bike index act org. A little plug for everybody out there. It's a bicycle registry, stolen bike recovery platform. People for Bikes is sort of the biggest non-profit advocacy organization in the industry by my likes, and they put together a conference called Shift and another one in the spring, but Shift was in Bentonville and I saw the opportunity, hey, if I can, if I'm already getting to Bentonville, I should go to that conference on behalf of Bike. It was super fruitful and interesting. Lot of interesting topics. There was, there was a, a big thread around diversity and inclusion, which is an important topic in the cycling industry, and an additional thread about sustainability and climate, which again, important across all industries if we wanna keep doing what we're doing out there in the world. So that was like a really valuable add-on two days to that. [00:07:21] Randall R. Jacobs: I'm kind of curious, um, cuz actually I didn't realize that you had gone to that conference. Uh, I'm curious to hear a little bit more about the, the topics and the angles and and so on in that experience. [00:07:32] Craig Dalton: yeah. I'd probably have to bring up the, uh, the, uh, agenda to kind of give you a full, a couple months out. Now, my brain is a little foggy, but on the sustainability front, it was great. They had a, an expert who had written a book about bringing sustainability into the cycling industry, and I could share that in the show notes and I'll certainly share it with you personally. Um, we went through an exercise of. How would you reinvent your business with a sustainability angle? How do you think about bicycle ownership differently? How do you think about supply chains differently and what are the net effects, both positive and negative to either your price point or your customer relationship? And I, I've thought it was pretty interesting. I. In a group with the bike flights team. So bike flights provides a service to ship bikes from, from one place to another. And they have these cardboard boxes you can use either like one of your own or you can actually buy a box from them, which is ideally reusable, but you, you know, it's only reusable to a certain extent. So we were just sort of riffing. How could you extend the reusability of that? How could you use different materials for that with achieving the same result of getting your, your bike from point A to point B safely without damage? [00:08:54] Randall R. Jacobs: I'd be curious if you, um, I'd be curious to read the report and pull out, you know, one or a couple of the experts potentially to bring on, because it's something that we're thinking about as well. And so, you know, we take the opportunity for, for us to learn, well, at the same time sharing what's going on with, uh, the listenership. [00:09:10] Craig Dalton: That's a great idea. I'll definitely, I can definitely connect you with the author of that book. The other interesting thing we were riffing about, and as we're both wearing our logos caps today, um, we were talking about, I was talking with another wheel manufacturer and we were talking about, okay, you deliver the wheels in a box. What could that box be used for down the line? Like is there anything in the garage that it could be converted to that you have like, you know, sort of Lego style instructions of like, cut your box in this way and all of a sudden you can, you know, have a wheel stand for example. You know, if you can imagine if you cut holes in the box, you might be able to like drop the wheels in and that would be a cool way to display your extra set of. [00:09:52] Randall R. Jacobs: You know, um, that's actually brilliant in that, um, this will, we'll talk about this in a moment, but we're in the process of, uh, building out our dealer network, our, our shop network. Uh, that was the, the pur the main purpose of this recent trip. And one of the things I kept coming up was like, how do I display this in a really attractive way in my shop? And so that would be a really great development exercise where it's like the box that it comes in gets, you know, has some perforations and. You know, you cut it and you fold it and all of a sudden it is this really interesting display stand with a story. I like that a lot. I'm [00:10:24] Craig Dalton: Good. I look forward to seeing that. So that was super interesting. You know, I always, whenever I, you know, I do, I've done business development in my career for, for ages and conferences are sort of the bane of my existence cuz you have to go to them and you think you're gonna meet so and so, but you never necessarily do. But it's important to show up because you do make these random connections. [00:10:47] Randall R. Jacobs: Yeah, [00:10:48] Craig Dalton: Always yield value. So I feel like a couple of those were. [00:10:53] Randall R. Jacobs: Yeah, it's the thing that I, I, uh, one of the things I mourn most about Covid is, um, you know, I'm one of these people who loves going to trade shows. So like I used to go, you know, I still go to Seattle O every year, haven't been to Asia in years. Uh, some folks who are listening will know that I lived in Asia a number of years, uh, mostly in China, um, and a Mandarin speaker and like was doing some, uh, you know, sourcing and product development work for various companies, both in and outta bike. And it's, it's a big part of me. And, and those relationships are not just great professional relationships where interesting ideas emerge out of, but also, you know, people I really. People whose families I know, um, and people I've stayed with. Uh, and so yeah, that's, that's something that, um, I'm really looking forward to in 2023 is attending more of those, uh, conferences and trade events and things like that. [00:11:45] Craig Dalton: Yeah. Yeah, yeah, it's definitely, I mean, it's so critical. I think when you've sort of broken bread with someone and then do business with 'em, you're just so much more likely to be successful in that relationship. [00:11:56] Randall R. Jacobs: Well, you start to understand people at a different level when say, you know, you're with the owner of this very large factory and you're trying to understand each other, and you do so over a cheap bowl of noodles at his favorite noodle shop down the street from the factory. And that's, and you know, or you, you know, you have. Uh, dinner with him and his wife and, and kids or her and her, you know, family or what have you, uh, which is the sort of thing that used to happen all the time. Uh, pre covid and hopefully Taiwan is open. Um, and so Taipei will be, uh, in person this year. It looks like in March. China is still closed, uh, effectively, unless you want to quarantine and risk being stuck there for, [00:12:35] Craig Dalton: Yeah, but, but showing some signs. I was just listening to an economist this morning showing some signs of easing their zero covid policy, which is interesting. [00:12:46] Randall R. Jacobs: It's interesting and, uh, there's a whole, if we wanna get into, uh, geopolitics and so on, there's a whole conversation we could have there about, um, how that, that might go. They have a huge unvaccinated elderly population, so that's a, a huge concern. And they've largely, uh, uh, rejected, you know, more effective Western developed vaccines in [00:13:08] Craig Dalton: Yeah. That's the [00:13:08] Randall R. Jacobs: less effective homegrown ones and they haven't deployed them. And, and so, Yeah. And, and there's reasons for that. That is, is, uh, again, a whole conversation on geopolitics we don't need to dive into. Um, [00:13:20] Craig Dalton: indeed. The final thing I'll mention about people for bikes is that they did reveal some statistics around sort of the bike industry and some of the things we already knew about. The sort of ebb and flow of supply chain constraints and how early on in the pandemic there was a lot of people flooding to cycling. Then some of the supply chain finally caught up and, and then there became a little bit of a glut of bicycles in some categories out there in the market. Then now combined with a softening of demand, the sort of supply and demand curves look really funny over the years, and they're sort of, [00:13:56] Randall R. Jacobs: Hm. [00:13:57] Craig Dalton: In synchronous, um, out of synchronicity. And I think we'll continue to be that way. Cause now with an impending recession potentially, it's just, it's gonna be interesting to see where supply meets demand in this coming period. [00:14:12] Randall R. Jacobs: Yeah. And we also are in the low of the season because, you know, when people talk about the bike industry, um, oftentimes they're talking about the upper end, you know, and, and when I say upper end, I mean anything that's not a department store bike. So like, you know, anything you'd buy at a bike shop, so like a bike that's, you know, has a minimum level of spec, at least maybe $400 and above. Um, and you know, the, there's, there's a cycle for that. And most of those, that level of bike is, is in the northern hemisphere. And so as the winter approach is like, demand always goes down anyways, so the question is what will it look like in April when you know the next season is kicking in? [00:14:53] Craig Dalton: yeah, yeah, exactly. So super fascinating stuff. [00:14:57] Randall R. Jacobs: you mentioned, uh, about diversity as well [00:15:00] Craig Dalton: Yeah, I mean, I don't, I don't, I, you know, you and I were talking offline like how difficult it is to find safe women who work in the industry to interview for the podcast. At times, I was saying like it's easy to find women athletes, which is great to see, but often I think there's just, it's just been such a male dominated industry. So there's certainly discussion around gender inclusion, but more of kind of race and ethnicity inclusion. We had the founder of Legion Bicycle, Justin Williams, just talking about, um, you know, just showing younger athletes, younger black athletes, that there was a world where they're included in the space in, you know, he's got an interesting vision around, you know, rebuilding city based criter racing and creating a league and providing ownership. To the writers, which I think is fascinating. There's a lot of stuff going on. It just, you know, it's always depressing how long these initiatives take to really show some impact. [00:16:05] Randall R. Jacobs: It does take a long time to get a critical mass of people who say, you know, look like me, whatever, you know, whatever your me looks like. Uh, so, so yeah. That makes sense. And, um, for anyone listening, hearing us talk about how it can be difficult to find, you know, uh, women or minority, uh, well, uh, Yeah, people of color, um, to represent, uh, the industry, to bring on the pod. If you have ideas, please reach out and let us know. You can let us know when the ridership in the, um, the Gravel Ride podcast, uh, channel, um, or drop us an email. Um, there's an email set up for the pod I call. [00:16:43] Craig Dalton: There's not, there might have been [00:16:45] Randall R. Jacobs: Okay. Well anyways, [00:16:47] Craig Dalton: you know where to find us. [00:16:48] Randall R. Jacobs: Yeah. You know how to find us, find Craig or I, um, cuz always looking for, uh, people to have interesting conversations with and we definitely have a few in the queue. Um, alright, so Bentonville and then, uh, how about the event itself? [00:16:59] Craig Dalton: Yeah. So great event. I mean, I really enjoyed it, not my, it was the terrain. I did the little sugar event at Big Sugar. Big Sugar Gravel is the final of the Lifetime Grand Prix series for the year, but it's also been running, I think. This might have been the third year this thing actually went off. Anyway, Bentonville, great community, embraces cycling in a big way, very kind of undulating, so a lot of short, punchy climbs, which isn't necessarily what I'm trained for. If you can call what I am trained for anything. But the terrain was, I mean, it was loose and rocky. I had my, my rock shock equipped titanium bike with 700 by 40 fives on. I felt super confident and it showed anytime it went downhill on the course. I was rifling by people. You know, I also have a dropper post. I was looking, you know, people were looking incredibly nervous as I was just absolutely flying by them, and I was talking to a friend after the fact and I mentioned like, I felt like I was racing, which felt good. I like, honestly, I haven't felt like I was racing. In a long time, and it wasn't intentional. I didn't go in with a lot of fitness, but by happenstance it was a, a road, a road rollout. We were on pavement. there was, uh, Molly Cameron, who's a transgender athlete. Friend of mine, was out in sort of the front of the pack and there was a few quick step pros from Europe over there and I was just kind of curious to kind of be around them. And I wanted to say hi to Molly. So I am fairly comfortable riding in packs and I got to the front and I front ish, I would say like top 20% of of riders. And I started to realize that I knew there was a heavy, heavy choke. Not like eight miles in where it had to go. You had to, everybody had to go down to sort of almost a single track, and it was a gully that was gonna give people some trepidation. And so I found myself in the top 20% there, and I can only imagine the carnage that happened behind me [00:19:04] Randall R. Jacobs: Yeah. [00:19:06] Craig Dalton: Randall, I finished 40th or something out of 400. and I rode, I rode hard to my ability. I was fortunate. It was super windy. I was fortunate that like I, I was always riding with at least one other person and occasionally we'd balloon up to, you know, 10 people or whatever. But I was riding hard over every hill. I certainly was riding the descent, hard to catch back on when I was getting dropped, but I just wasn't getting past five people and it started to dawn on me that, so, Some carnage happened back there because no one was catching me this entire day. [00:19:42] Randall R. Jacobs: That's, um, I've actually used the course profiles like that to my advantage in my racing days. It's like, okay, here's a course that starts on a big climb and at the top of the climb goes into a tight single track when no one can pass. I'm gonna be at the top of the climb first, and then I'm gonna, hopefully someone behind me is a lousy technical rider. [00:19:58] Craig Dalton: Yeah. It's almost the only thing that mattered, [00:20:00] Randall R. Jacobs: Yeah. Yeah. Oh, good for you. Nonetheless, it's takes something to, to be in the, in the front for that long anyways, so Bravo. [00:20:08] Craig Dalton: so it was, it was fun. Like I, I just like, I felt good about myself on the bike and it was, granted, it was the shorter course or whatever, but it was fun and it just sort of reminded me that, you know, getting out there and having sort of just the encouragement of event day to go a little harder, go a little deeper is just something I enjoy. [00:20:27] Randall R. Jacobs: It's a very different experience, like psychologically going, being in an event or even being, uh, you know, as I experienced in, in Boulder in particular on a, on a spirited group ride and just having to hold on right Knowing like, oh, not, it's not only. That you want to finish the overall event, um, in a good time and, and be towards the front, but if you get dropped, you're gonna be out in the wind on your own. And so you're just like holding onto that wheel, uh, for dear life, knowing that as hard as that is, it's gonna be that much worse. The moment a gap, uh, opens up and you're just doing half the speed on your own. [00:21:02] Craig Dalton: a hundred percent. It, that went through my mind constantly in, in Bentonville. I was just like, I, it doesn't matter. Bury yourself, because if you fall off this wheel, you're, it's gonna be, you know, you're gonna be out here a lot longer. [00:21:17] Randall R. Jacobs: Um, [00:21:18] Craig Dalton: I love it. I love it. So, you know, in some, I know we got, we have a short amount of time and, and ground to cover, but I, I really liked Beville. I really liked the big sugar gravel event. I, I definitely recommend it if you're a mountain biker. There's so much terrain down there to ride. Um, one, one real just funny anecdote to talk about, like Bentonville as a cycling community, I was staying at a hotel a couple miles, kind of away from down. And as I was riding back, and this happened two or three times, I would come to a crosswalk on a bike path and there'd be a car in the way. Not doing anything malicious, just kind of peeking out, trying to make their turn, and the car would back up. And I, I was just like shocked. Like of the, of the courtesy towards bicyclists. [00:22:02] Randall R. Jacobs: did they honk at you? Did they throw anything? [00:22:05] Craig Dalton: There is no gestures. Maybe even just like a friendly gesture, like, oh, I'm sorry, I was in your. [00:22:10] Randall R. Jacobs: Yeah, it's, um, I've visited, uh, Bentonville. I've, uh, some friends, uh, who moved down that way in part for, in, in no small part for the reason that you're siting there. The infrastructure there is incredible is, um, a lot of Walton money, so a lot of Walmart money. Cause that's their headquarters that's gone into, I mean, some of the, like, I've seen bridges that go over, you know, small little gaps that, you know, you could just ride down, ride up the other side and like these ornates, you know, rot, iron bridges that are done, you know, by a local artist, you know, um, real architecture in there. And, uh, yeah, this is just a, a lot of investment in that scene and it shows and it's pretty cool that, you know, you're starting to see some big events down. Did you bump into, uh, Benini Per chance or, [00:22:58] Craig Dalton: Um, no, I, no, I didn't. I think I might've saw him down there, but I didn't speak to him. I ran it to a bunch of other journalists along the way [00:23:07] Randall R. Jacobs: okay. Uh, I, I saw him in, uh, in Boulder. He has his, the ride with, uh, Ben Delaney YouTube channel. So I know that he had done a video from there. So curious if you cross paths. Um, [00:23:20] Craig Dalton: And then not a few weeks later, I found myself finally going to J in Spain. [00:23:25] Randall R. Jacobs: Tell me about it. That's a, that's a place that keeps coming up in conversation. [00:23:29] Craig Dalton: yeah, I mean, gosh, it was two years in the making. I've been talking to Trek Travel about joining their Jer Gravel bike tour, uh, five day trip outta Jer. Um, finally, you know, due to covid delays, it finally happened. I had a couple buddies from the Bay Area join me. We were a group of six. We had two great guides, Mickey and Rafa. Mickey was a local, so he kind of knew all the little goat paths and different ways. In fact, you know, we were given, we were able to use Trek bicycles for the entire trip, and we had a GPS from Garmin that had all the roots on it. But oftentimes when we were going outta town, if Mickey was leading us, he would just take us through the little goat path at the little trails, which were a heck of a lot of fun. Gerona appears to have gravel in every direct. And a lot of different style gravels. You know, they set us up on these trek demos with a 35 C tire, so, you know, very small tire and very kind of road plessy setup from compared to what, what you and I normally ride. But the bikes were, were very capable and a ton of fun for the type of gravel we were experiencing. We did a few rides out to the Mediterranean coast, which was amazing, but then got into some technical stuff and what I, what I really enjoyed about the trip was that there was a little bit of everything. It was clear the way they designed the days that they could sort of test people's appetite and their metal and their experience for, you know, the days that would come as they did get progressively more technical. [00:25:03] Randall R. Jacobs: Hmm. I would imagine it's challenging if you, like, if they have a more eclectic group of people who don't know each other and you know, you, you really, I wonder if they do some, uh, pre-screening before they put. People on a ride together to make sure that the abilities are, are roughly equal because when they vary widely, uh, you end up, you know, going at the pace of whomever the slowest rider is, which is fine for a certain type of riding. Uh, [00:25:28] Craig Dalton: Yeah, no, I, I did acknowledge that and I spoke to the guides a little bit about that, and we did feel fortunate that although we did have some varying ability levels in the group, um, a couple of the riders decided to stop at lunch one day and get in the van or opted to do tourist things one day and not actually ride. So it did feel very much like the pace was dictated by myself and my, my close friends. More than anything else, which was nice. Um, you know, I think on one day we had a guide all to ourselves, so it was just like ripping around Spain and doing, doing what we do. And they, they were very gracious about like, if we didn't have enough riding in any given day, we just, we would just go out and ride more and our, our guide would give us an additional route. So I think on two occasions, we, we set out in the afternoon after coming back from our, you know, our group. [00:26:19] Randall R. Jacobs: So am I right in saying that the terrain was like a lot of hard pack, relatively smooth given the the equipment that you were on? [00:26:28] Craig Dalton: Yeah. So yes, in that there's a lot of kind of rails to trails activity, like long stretches of, of, of former rail lines that are now just basically smooth bike paths that just go from, from miles and miles, but then some, some fairly chunky. Gravel climbs, um, and some fairly technical loose descents. Honestly, like I, I felt like it was maybe a bit more challenging than I would've thought would've been designed, but they always had out outs for people, I think, you know, if you didn't, if you didn't wanna do a certain section or feeling a little bit too beat up. So I was pleasantly surprised. I think I did an episode about it, just kind of with my contemporaneous thoughts that I recorded well in Jer. You know, on, on, uh, I think it was day three or four, like it was very similar to riding Tam, like we were on some steep descents. I was, I was wishing for my dropper post cuz it was getting a little bit, a little bit loose. Granted, like with the 35 C tires, maybe if I was on my bigger tire bike, it would've been like, I would've experienced it differently, but still, like, I felt reasonably challenged and satisfied. [00:27:38] Randall R. Jacobs: Sounds outstanding and, um, I you would, I think it was you who sent me the picture of you and Russ from Pathless Pedaled. [00:27:47] Craig Dalton: So how random is this? So I'm, I'm out, we're sort of halfway through, I think day four. We had just done a climb that is apparently is George Hank's favorite climb on the road after traversing to it on the dirt. And then we did this big dirt road climb and I was feeling spicy and I, I wanted to , I jokingly said to my friend if, if Rafa, our guide's responsibility, To stay with the lead rider. I'm gonna make it really hard for him today. And I was just on a day, like I was feeling strong and so I attacked on the climb, attacked, you know, but I just felt good and was pushing the pace and I decided since I had the gps, I was just gonna keep going. So I'm like 45 minutes to the top of this climb and I see a couple riding by me. And you know, Russ is, Russ often rides in flannel. He's got a, uh, you [00:28:39] Randall R. Jacobs: fishing shirts. [00:28:41] Craig Dalton: Yeah, and he's got a, you know, he is got that, uh, bike bag a certain way. Like he's got a visual aesthetic to him that if you've seen him ride you, you know, you kind of recognize it, recognize him, and it, I was like, God, I know that guy, but he went by and I'm like, well, I'm pretty sure that was Russ Pathos. Pedaled. But I didn't, didn't, wasn't able to connect with him. And then the. Was it the next day, I, I, I pass him in the town of Jerron when we're both riding different directions and I yell, pathless Pedaled and I sort of see him acknowledge, but like, we cannot stop, like, we're just not in a position to, and so I'm like, I've confirmed it's him. And then later on that afternoon, I actually run into him and Laura and was able to chat and grab a picture with him. And he, he, they've been over there a month as j as a base. [00:29:33] Randall R. Jacobs: Yeah. Oh, so cool. Yeah, I got a, um, I got an email from him one day just with a picture of him at Tata Bikes, which is a, a really cool shop in Gerona. Um, they're, they're built in. Did you visit their shop, their facility? I [00:29:47] Craig Dalton: I didn't visit that shop. [00:29:48] Randall R. Jacobs: It's built in out of an old building, so it's like this beautiful stone, uh, building right in the heart of things. Um, and, you know, they happen to have a fleet of our bikes for rentals and so Russ had a picture of himself with our, with our bikes at ta, uh, which I thought was, was pretty sweet. Um, [00:30:04] Craig Dalton: I love it. I love it. Yeah. So much, such a great cycle in community when we visited the new Castelli community store there and uh, we happened upon them when they were bringing together a night ride and we were all kicking ourselves for not having lights cuz it looked like it was gonna be a heck of a lot of fun. There's probably like 30 riders there and I have a snippet on the last episode with my conversation with Oscar, who's the manager there and really cool and lots of different local brands there. And it's, you know, It's fun to like go to a restaurant and then have bike hooks for you and those little details that happen when you're in a, you know, a cycling first community. [00:30:43] Randall R. Jacobs: That, that sounds outstanding. I really need to make it out there before too long [00:30:47] Craig Dalton: Yeah, highly recommend Jer. Hopefully I can get back at some point, but I know we're pressed for time and I, I definitely wanna hear about your trip. [00:30:55] Randall R. Jacobs: Sure. So, uh, three and a half weeks on the road, uh, started in Boston where I'm now based and was in Austin, Texas, Denver and Boulder, then in Reno and then, uh, stopped in Sacramento and route to the Bay Area, uh, against, seldom staying in the place for same place for more than a couple of days. Um, And it was a, a mix of, uh, visiting bike shops. So we're in the process of building a network of shops for logos and, uh, eventually for thesis, which by the way, uh, anyone who's interested in our wheels, who wants to buy them from a local shop, drop us a note. And, uh, with your local shop and. Um, the wheels you want, and we'll reach out and we'll get that taken care of for you. Uh, so really focusing on, um, you know, collaboration with, with these shops that are so, you know, critical to supporting the right experience. Uh, [00:31:45] Craig Dalton: just for, uh, so I know we've talked about the wheel set, on the wheel sets on the podcast before, but just for as a refresher, what sizes and styles do you have available? [00:31:55] Randall R. Jacobs: So 6 50, 700, 2 9, and we'll be introducing some more in each of those sizes coming up. And then we have, uh, you know, various end cap solutions, free hubs and so on for people who have different drive trains. Uh, and we have a very particular philosophy, which if you're interested, we did do, uh, you and I an episode on what makes a great wheel set, uh, where we go, uh, deep into the weeds there. Uh, you can find that a few episodes back. [00:32:19] Craig Dalton: Nice. [00:32:20] Randall R. Jacobs: Yeah. Um, so that was, uh, that was wonderful, just like getting to one, get a sense of the landscape once again. And two, you know, really sitting down with, uh, small business owners and understanding like, you know, what's their experience, how do they get into this, uh, what is the nature of their business? And seeing all the different ways in which people serve, um, their particular part of the cycling community, uh, and [00:32:44] Craig Dalton: How did you, uh, [00:32:45] Randall R. Jacobs: and. [00:32:46] Craig Dalton: how did you decide where you were going and what shops to visit? Was it led by the shops you wanted to visit or the locations you wanted to, to have a presence? [00:32:54] Randall R. Jacobs: Uh, a mix of both. So Austin was somewhat opportunistic. I had a couple of friends who just had their second kiddo, and so I wanted to, to play with the toddler and, and hold the, the, the newborn while they were both on leave. Uh, and then, you know, visited, uh, a co-founder on another project while there. And then was in Denver and Boulder. That was, um, again, got a bunch of friends in that area. Haven't been there since the pandemics, uh, or at least haven't spent a good amount of time there since the pandemic. Um, and a lot of the cycling media is centered in Boulder. So meeting with a, a bunch of, you know, industry people in journalists. Yeah. [00:33:31] Craig Dalton: you, uh, were you driving the Prius? [00:33:34] Randall R. Jacobs: No, no, I, I flew this time. I'm . I don't really care. I've done the cross country drive eight times now, um, between my racing days and then when I was, you know, moving out to the west coast and when I moved back this way. And, uh, yeah, I could see doing it again at some point maybe, you know, with a, with a partner some years down the road when, you know, you do van life for a few months. But yeah. Um, rent [00:34:01] Craig Dalton: Were you, uh, [00:34:02] Randall R. Jacobs: needed. [00:34:03] Craig Dalton: were you traveling with, with three wheel sets? [00:34:05] Randall R. Jacobs: Just the one, I have, the six 50 s with a, a byway semi slick in the rear and a, a venture, um, file tread up front. And that was my everything wheel set, which worked out well though, I'll say that in the Denver Boulder area, um, the. So I, I joined, uh, several group rides out there. People are fast, people are super fast, and the terrain, uh, that, that the group rides are on is generally pretty tame. So, you know, uh, mixer road, hard packed dirt roads, uh, even the single track is not overly technical. Um, I did hit a little bit of a, uh, technical single track, uh, with actually Ben I just mentioned. Uh, him and I rode together while I was out there and, but, um, Yeah, I was definitely, uh, was riding with some people on, you know, full on road bikes and could have used that little bit of extra edge as it was. I, I did the aides because, uh, I have the pride of a former racer, I suppose, uh, but was definitely just holding on for dear life, a good chunk of the time. [00:35:08] Craig Dalton: right. Nice. [00:35:11] Randall R. Jacobs: yeah. [00:35:12] Craig Dalton: fun. Should we bring, you brought your bike along with you? As well. [00:35:15] Randall R. Jacobs: So brought the bike along, group rides, visiting with friends, rolling into shops, talking, talking with shop, uh, uh, team members and owners and so on. Um, some really cool shops, uh, that I got to visit. In that area. And then Reno was visiting friends. Um, again, few shops out that way, but uh, in terms of activities, trail running and so on, in the mountains outside of there, uh, and did some hiking in, in Tahoe, which is stunning, um, at all times of year. But I'd never been in winter. Uh, there was already quite a bit of snow that we were hiking on, in, in spikes. Uh, and then the Bay Area, which was, I was all over the bay. [00:35:53] Craig Dalton: Yeah. So bummed to miss that you being out here. It [00:35:56] Randall R. Jacobs: Yeah, well, I'll, I'll be out this way. I'll be out your way again before too, too long at the latest, uh, sea Otter and, uh, probably the highlight of that trip, uh, was put on like a, just, just put out there, uh, a ridership sf, um, ride meet up and probably had 25 or so people show. And it was great. A lot of people who, uh, I haven't, haven't met before, a few friends, a few people I've known for a while. Um, and then some people I've interacted with over email and so on, uh, or seen in the ridership. And, uh, everyone was stoked to be there and it was really neat to see. Um, We did the headlands and then out to Tennessee Valley. So revisiting these areas that I used to ride twice a week, you know, when I was developing the OB one, those were the, the, uh, the, uh, the test loop. Uh, and then just. When everyone was out for pizza, uh, afterwards, just seeing people really connecting and exchanging numbers and taking photos and all that. And it was just such a great vibe. And, um, I remember when you and I used to do such things, uh, host rides together and so let's definitely make it a point to do that. Next time I'm out your way. [00:37:05] Craig Dalton: Yeah, yeah, yeah. I feel like, I mean, gosh, I can't believe it's December and looking back at the lack of group rides I tried to put together this year, cause I really do enjoy it and such, like I said, it's not, it's not about the riding, it's just about the people I. [00:37:20] Randall R. Jacobs: We also, um, we used the, so we're still kind of playing around with this, uh, mighty Networks tool, um, for like a a 2.0 version of the ridership that's not in Slack. And so like organizing the events in there actually made things a lot easier. So when the time comes, kind of you market it however you wanna market it, and then, uh, just create the actual event and link to. In the ridership.org. And if anyone else is looking to either organize group rides or manage their clubs, we have a couple of clubs that are managing their teams, uh, within the ridership.org. Uh, if you have any questions on it, just drop us a note in the current ridership, but, um, that, that actually proved really effective. [00:38:00] Craig Dalton: Were you able to do like messaging to the people who had registered for the [00:38:04] Randall R. Jacobs: You can do messaging. Uh, people who are registered can also put in comments and so on. Um, and for coordination, uh, you can, you know, if you send an update, everyone can get emailed. Uh, you can have all the, the ride details in the, uh, invite as well. You see who has signed up. Uh, and you can share with people who are outside of the network though to, to rsvp. You just have to create a. Everything is free. It's really straightforward. So, uh, yeah, it was, it was a useful tool, um, [00:38:32] Craig Dalton: I'm, I'm glad you're able to go through that. I know like, you know, we've, we've certainly put in many hours in developing that prototype over there and glad to see you using it and getting that real world kind of experience of like, is this tool beneficial to the community? [00:38:48] Randall R. Jacobs: Yeah, it's the sort of thing where I think the events are the most obvious application where anyone can start using it immediately. And, um, and again, for, for club membership of which events is a, a, a, you know, a critical component, uh, it's great for that. And again, free, just get your people in there. Um, if you're, if you're a club manager, then uh, reach out, we'll create a separate space. It's almost like having. Like your own private Facebook. If Facebook didn't have like algorithmic feed and like was, wasn't extracting all your data and would just leave you the hell alone. Um, and without all the, the advertising and fluff and everything else, it's literally just like your own defined space where you can. You know, coordinate communications amongst your teams and, and manage events. You could even have your membership in there, uh, if you want membership dues and so on. The platform supports that. Uh, so it's a really neat platform and each club can have its own either club or if you're an event organizer, um, you can have your own space within the broader ridership that is, you know, it can be private or public. Uh, it's pretty cool. So just gotta invest some more time in it. Now that we've got logos launched and I have a little bit more bandwidth, [00:40:01] Craig Dalton: Yeah, I know the vision's always been to just create a, a, a safe community place for people who love bikes and, you know, have a devoid of distractions, like you're coming there just to enjoy bikes in the community. [00:40:15] Randall R. Jacobs: yep. [00:40:15] Craig Dalton: No one's gonna advertise to you. No one's gonna try to draw you away. It's not meant to be a time sink. I mean, one of our core shared value is, is that we want people to get outside. We're not, we've never looked to kind of create a community to keep people in front of their computers. We wanna, [00:40:32] Randall R. Jacobs: Quite, [00:40:32] Craig Dalton: you're in front of your computer Yeah, exactly. We want this to be inspirational. To get outside. [00:40:37] Randall R. Jacobs: Yeah. Yeah. It's a, a vehicle for connection, you know, as, as with all things we try to do. Um, the, the last thing I'll share is I visited Enduro Barings. Visited their, [00:40:47] Craig Dalton: Oh, their facility. [00:40:48] Randall R. Jacobs: Yeah. And, um, it's not their ma they, they have, um, other manufacturing facilities, um, but got to tour the warehouse and see the testing that they're doing, um, on their bearings and comparison testing and so on. And, uh, it was a really great experience, uh, was with Matt Harvey, who I had on the pod before. If you haven't heard that episode. Um, a lot of deep nerdy on, on, uh, Barings and then Rick Sutton, who you've spoken to before as a representative. Um, uh, HBAR coefficient cycling. Um, I think I'm gonna bring on again to talk about his founding of Sea Oder. Uh, and he's also with, uh, you know, helping Enduro with marketing, but got to go really, really that much deeper in the weeds on, um, how bearings or designed and the materials and the testing regimens and all this other stuff. Uh, and it just made me that much more impressed with their XD 15. It's the only bearing that they've tested and I, I looked at the tests and it's a, it's a robust protocol. The only bearing they've tested that gets better as you use it. Pretty much every bear, every bearing, degrades and, and generally degrades, um, somewhat quickly and it gets better over [00:42:00] Craig Dalton: it's. It's so fascinating when you, when you meet these individuals who are so focused on their specific craft, their specific part of the industry, and you realize like a generalist could never produce a product as good as this person who was obsessed over this thing for their entire [00:42:18] Randall R. Jacobs: Uh, yeah. Well, and even, even if you, even then you could be obsessed your entire career, but in, you know, in their case, um, you know, getting access to that alloy, they're buying this in like solid bar stock and machining away like 97, 90 8% of it to make these races out of this XD 15 steel, which is the, the designation of the particular alloy. And you know, it's, uh, it's really cool stuff and worth it, frankly. Like I have, I now have an XD 15 bottom bracket in my bike, and that'll probably be the last bottom bracket I ever own. [00:42:52] Craig Dalton: The last one you [00:42:53] Randall R. Jacobs: to other bikes. Yeah. [00:42:55] Craig Dalton: So, so cool. So cool. [00:42:58] Randall R. Jacobs: So [00:42:59] Craig Dalton: Amazing to catch up. I wish we had more time today, but we'll do this again soon. [00:43:03] Randall R. Jacobs: Sounds good. [00:43:05] Craig Dalton: Cheers. [00:43:06] Randall R. Jacobs: Be well. [00:43:07] Craig Dalton: That's going to do it for this week's edition of in the dirt, from the gravel ride podcast. I appreciate you spending a little bit of your December with us this year. Big, thanks to hammerhead and the crew too, for sponsoring this episode . And be sure to use the code, the gravel ride for that free heart rate monitor strap. When you order your new crew to computer. If you're interested in connecting with myself or Randall, please join us in the ridership. That's www.theridership.com. It's a free global cycling community. We'd lot of great conversations going on every day. If you're interested in supporting the podcast, you can visit buy me a coffee.com/the gravel ride. All your support is greatly appreciated. And if you have a moment, ratings and reviews are hugely appreciated. Until next time. Here's to finding some dirt onto your wheels.  

Podcast: The Lunar Society (LS 30 · TOP 5% )Episode: Austin Vernon - Energy Superabundance, Starship Missiles, & Finding AlphaRelease date: 2022-09-08Austin Vernon is an engineer working on a new method for carbon capture, and he has one of the most interesting blogs on the internet, where he writes about engineering, software, economics, and investing.We discuss how energy superabundance will change the world, how Starship can be turned into a kinetic weapon, why nuclear is overrated, blockchains, batteries, flying cars, finding alpha, & much more!Watch on YouTube. Listen on Apple Podcasts, Spotify, or any other podcast platform. Read the full transcript here.Subscribe to find out about future episodes!Follow Austin on Twitter. Follow me on Twitter for updates on future episodes.Please share if you enjoyed this episode! Helps out a ton!Timestamps(0:00:00) - Intro(0:01:53) - Starship as a Weapon(0:19:24) - Software Productivity(0:41:40) - Car Manufacturing(0:57:39) - Carbon Capture(1:16:53) - Energy Superabundance(1:25:09) - Storage for Cheap Energy(1:31:25) - Travel in Future(1:33:27) - Future Cities(1:39:58) - Flying Cars(1:43:26) - Carbon Shortage(1:48:03) - Nuclear(2:12:44) - Solar(2:14:44) - Alpha & Efficient Markets(2:22:51) - ConclusionTranscriptIntroDwarkesh Patel (00:00:00):Okay! Today, I have the pleasure of interviewing Austin Vernon who writes about engineering, software, economics, and investing on the internet, though not that much else is known about him. So Austin, do you want to give us a bit of info about your background? I know that the only thing the internet knows about you is this one little JPEG that you had to upload with your recent paper. But what about an identity reveal or I guess a little bit of a background reveal? Just to the extent that you're comfortable sharing.Austin Vernon (00:00:29):My degree is in chemical engineering and I've had a lifelong love for engineering as well as things like the Toyota Production System. I've also worked as a chemical engineer in a large processing facility where I've done a lot of petroleum engineering. I taught myself how to write software and now I'm working on more research and the early commercialization of CO2 electrolysis.Dwarkesh Patel (00:00:59):Okay yeah. I'm really interested in talking about all those things. The first question I have is from Alex Berger, who's the co-CEO of Open Philanthropy. When I asked on Twitter what I should ask you, he suggested that I should ask “Why so shady?” Famously you have kind of an anonymous personality, pseudonymous thing going on the internet. What's up with that?Austin Vernon (00:01:25):Yeah. I think he posted a tweet that said “I don't know who this guy is or if he's credible at all, but his stuff sure is interesting”. That really made me laugh. I thought that was hilarious. Fame just doesn't seem necessary, I think I'm fine with my ideas being well known and communicating, but I have less desire to be personally famous.Starship as a WeaponDwarkesh Patel (00:01:52):Gotcha, gotcha. I wanted to start off with a sexy topic, let's talk about using Starship as a kinetic weapon. I thought that was one of the more amusing posts you wrote. Do you want to talk more about how this would be possible?Austin Vernon (00:02:08):Well, I think the main thing with Starship is that you're taking a technology and you're making it about 100 times cheaper for cargo and 1000 times cheaper for people. When things like that happen that drastically, you're just looking at huge changes and it's really hard to anticipate what some of those can be when the change is that drastic. I think there's a lot of moon-based, Mars-based stuff that doesn't really catch the general public's eye. They also have trouble imagining some of the point-to-point travel that could be possible. But when you start talking about it as a weapon, then I think it lets people know they should be paying attention to this technology. And we certainly do not want to be second or third getting it. We should make sure that we're going to be first.Dwarkesh Patel (00:03:05):Yeah. I think you mentioned this in the post, but as recently as the '90s, the cost of sending one kilogram to space was around $20,000. More recently, SpaceX has brought it to $2,000. Lots of interesting questions pop up when you ask, “What will be possible once we get it down to $200 per kilogram to send into orbit?” One of them could be about how we might manufacture these weapons that are not conventional ballistics. Do you want to talk about why this might be an advancement over conventional ballistic weapons?Austin Vernon (00:03:37):Well, regular conventional ballistic weapons are extremely expensive. This is more like a bomb truck. But usually we think of B52 as the bomb truck and this could be even cheaper than the B52, delivering just mass on target. When you think about how expensive it is to fly a B52 from Barksdale in Louisiana all the way across the world.. you can do it from south Texas or Florida with the Starship and get more emissions per day and the fuel ends up being. When you go orbital, it takes a lot to get to orbit. But then once you're in orbit, your fuel consumption's pretty good. So over long distances, it has a lot of advantage. That's why the point-to-point works for longer distances.Austin Vernon (00:04:27):There's really a sweet spot with these weapons where you want it to be pretty accurate, but you also want it to be cheap. You're seeing that problem with Russia right now as they have some fancy parade style weapons that are really expensive, like multi-billion dollar cruise missiles, but they're missing that $5,000 guided artillery shell or that $20,000 JDM that you can just pit massive. Or the multiple launch rocket system, guided rockets. They're really short on all those because I think they had just had a limited amount of chips they could get from the US into Russia to make these advanced weapons.Austin Vernon (00:05:07):But yeah, so the Starship gives you just a platform to deliver. You could put JDMs in a shroud, or you could just have the iron unguided kinetic projectiles, and it just becomes impossible for a ship to launch missiles to intercept yours if your cost is so low, you can just overwhelm them.Dwarkesh Patel (00:05:29):Okay. There are a few terms there that neither I nor the audience might know. So what is JDM? What is shroud? And why are chips a bottleneck here? Why can't it just be any micro-controller?Austin Vernon (00:05:42):So JDM is Joint Direct Attack Munition. So what we did is we took all our Vietnam surplus bonds and we put this little fin-kit on it and it costs like $20,000, which is cheap for a weapon because the actual bond costs, I don't know, $3,000. And then it turns it into a guided weapon that, before you were probably lucky to get within 500 meters of a target, now you can get it in with two meters. So the number of missions you have to do with your planes and all that goes down by orders of magnitude. So it's an absolutely huge advantage in logistics and in just how much firepower you can put on a target. And we didn't even have to make new bombs, we just put these kits on all our old bombs.Austin Vernon (00:06:33):Let's see.. Yeah the chips are a problem. There's this organization called RUSI. I think they're in the UK, but they've been tearing down all these Russian weapons they found in Ukraine and they all have American chips in them. So technically, they're not supposed to be able to get these chips. And yet, Russia can't make a lot of its own chips. And especially not the specialized kinds you might want for guided weapons. So they've been somehow smuggling in chips from Americans to make their advanced weaponsDwarkesh Patel (00:07:03):What is special about these? As far as I'm aware, the trade with China is still going on and we get a lot of our chips manufactured from Taiwan or China. So why can't they do the same?Austin Vernon (00:07:14):It's the whole integration. It's not just the specific chip, but the board. They're more like PLCs where you almost have wired-in programming and they come with this ability to do the guidance and all that stuff. It all kind of has to work together. I think that's the way I understand it. I don't know. Maybe I don't have a really good answer for that one, but they're hard to replicate is what matters.Dwarkesh Patel (00:07:43):Okay that's interesting. Yeah, I guess that has a lot of interesting downstream effects, because for example, India buys a lot of its weapons from Russia. So if Russia doesn't have access to these, then other countries that buy from Russia won't have access to these either.Dwarkesh Patel (00:07:58):You had an interesting speculation in the post where you suggested that you could just keep these kinetic weapons in orbit, in a sort of Damocles state really, almost literally. That sounds like an incredibly scary and risky scenario where you could have orbital decay and you could have these kinetic weapons falling from the sky and destroying cities. Do you think this is what it will look like or could look like in 10 to 20 years?Austin Vernon (00:08:26):Well, yeah, so the advantage of having weapons on orbit is you can hit targets faster. So if you're launching the rocket from Florida, you're looking at maybe 30 minutes to get there and the target can move away in that time. Whereas if you're on orbit, you can have them spaced out to where you're hitting within a few minutes. So that's the advantage there.Austin Vernon (00:08:46):You really have to have a two stage system I think for most, because if you have a really aerodynamic rod that's going to give you really good performance in the low atmosphere, it'll end up going too fast and just burn up before it gets there. Tungsten's maybe the only thing that you could have that could go all the way through which is why I like the original concept of using these big tungsten rods the size of a telephone pole. But tungsten's pretty expensive. And the rod concept kind of limits what you can do.Austin Vernon (00:09:28):So a lot of these weapons will have, that's what I was talking about with the shroud, something that actually slows you down in the upper atmosphere. And then once you're at the velocity where you're not just going to melt, then you open it up and let it go. So if you actually had it fall from the sky, some may make it to the ground, but a lot would burn up. So a lot of the stuff that makes it to the ground is actually pretty light. It's stuff that can float and has a large surface area. Yeah, that's the whole thing with Starship. Or not Starship, but Starlink. All those satellites are meant to completely fall apart on de-orbit.Dwarkesh Patel (00:10:09):I see. One of the implications of that is that these may be less powerful than we might fear, because since kinetic energy is mass times velocity squared and there's an upper bound on the velocity (velocity being the component that grows the kinetic energy faster), then it suggests that you can upper bound the power these things will have. You know what I mean?Austin Vernon (00:10:32):Yeah, so even the tungsten rods. Sometimes people, they're not very good at physics, so they don't do the math. They think it's going to be a nuclear weapon, but it's really not. I think even the tungsten rod is like 10 tons of T&T or something. It's a big bomb, but it's not a super weapon.Austin Vernon (00:10:54):So I think I said in the post, it's about using advanced missiles where they're almost more defensive weapons so I can keep you from pitting your ship somewhere. Yeah I could try to bombard your cities, but I can't take ground with it. I can't even police sea lanes with it really. I'd still have to use regular ships if I had this air cover to go enforce the rules of the sea and stuff like that.Dwarkesh Patel (00:11:23):Yeah. You speculated in the post, I think, that you could load this up with shrapnel and then it could explode next to an incoming missile or an incoming aircraft. Could these get that accurate? Because that was surprising speculation to me.Austin Vernon (00:11:43):I think for ships, it's pretty... I was watching videos of how fast a ship can turn and stuff. If you're going to do an initial target on a ship to try to kill their radars, you'd want to do it above the ceiling of their missiles. So it's like, how much are they going to move between your release where you stop steering and that? The answer's maybe 1000 feet. So that's pretty simple because you just shrapnel the area.Austin Vernon (00:12:12):Targeting aircraft, you would be steering all the way in. I'd say it's doable, but it'd be pretty hard. You'd actually maybe want to even go slower than you would with the ship attack. You'd need a specialized package to attack the aircraft, but if you have enough synthetic aperture radar and stuff like that, you could see these aircraft using satellites and then guide the bomb in the whole way. You could even load heat seeking missiles into a package that unfurls right next to them and launch conventional missiles too, probably. It'd be pretty hard to do some of this stuff, but they're just the things you might be able to do if you put some effort into it.Dwarkesh Patel (00:12:57):Yeah. The reason I find this kind of speculation really interesting is because when you look at the modern weaponry that's used in conflicts, it just seems directly descendant from something you would've seen in World War II or something. If you think about how much warfare changed between 1900 and 1940, it's like, yeah, they're not even the same class of weapons anymore. So it's interesting to think about possibilities like these where the entire category of weapons has changed.Austin Vernon (00:13:33):You're right and that's because our physical technology hasn't changed that much. So it really has just made more sense to put better electronics in the same tanks. We haven't learned enough about tanks to build a new physical tank that's way better, so we just keep upgrading our existing tanks with better electronics. They're much more powerful, they're more accurate. A lot of times, they have longer range weapons and better sensors. So the tank looks the same, but it maybe has several times more killing power. But the Ukraine war right now, they're using a lot of 40, 50 year old weapons so that especially looks like that.Dwarkesh Patel (00:14:20):Yeah. Which kind of worries you if you think about the stockpiles our own military has. I'm not well educated on the topic, but I imagine that we don't have the newest of the new thing. We probably have maintained versions of decades old technology.Austin Vernon (00:14:35):We spend so much, we've got relatively... This kind of gets into debate about how ready our military is. For certain situations, it's more ready than others. I'd say in general, most people talking about it have the incentive to downplay our capabilities because they want more defense spending. There's lots of reasons. So I think we're probably more capable than what you might see from some editorial in The Hill or whatever. Us just sending a few weapons over to Ukraine and seeing how successful they've been at using them, I think, shows a little bit of that.Austin Vernon (00:15:18):There's so much uncertainty when it comes to fighting, especially when you're talking about a naval engagement, where we don't just don't have that many ships in general… you can have some bad luck. So I think you always want to be a little bit wary. You don't want to get overconfident.Dwarkesh Patel (00:15:37):Yeah. And if the offensive tech we sent to Ukraine is potentially better than the defensive tech, it's very possible that even a ballistic missile that China or Russia could launch would sink a battleship and then kill the 2,000 or 1,000 whatever soldiers that are on board. Or I guess, I don't know, you think this opens up avenues for defensive tech as well?Austin Vernon (00:16:03):Yeah––generally the consensus is that defensive technology has improved much more recently than offensive technology. This whole strategy China has is something they call anti-access/area denial, A2/AD. That's basically just how missiles have gotten better because the sensors on missiles have gotten better. So they can keep our ships from getting close to them but they can't really challenge us in Hawaii or something. And it really goes both ways, I think people forget that. So yeah, it's hard for us to get close to China, but Taiwan has a lot of missiles with these new sensors as well. So I think it's probably tougher for China to do it close to Taiwan than most people would say.Dwarkesh Patel (00:16:55):Oh, interesting. Yeah, can you talk more about that? Because every time I read about this, people are saying that if China wanted to, they could knock out Taiwan's defenses in a short amount of time and take it over. Yeah, so can you talk about why that's not possible?Austin Vernon (00:17:10):Well, it might be, but I think it's a guess of the uncertainty [inaudible 00:17:14]. Taiwan has actually one of the largest defense budgets in the world and they've recently been upping it. I think they spend, I don't know, $25 billion a year and they added an extra $5 billion. And they've been buying a lot of anti-ship missiles, a lot of air defense missiles.. Stuff that Ukraine could only dream of. I think Ukraine's military budget was $2 billion and they have a professional army. And then the other thing is Taiwan's an island, whereas Russia could just roll over the land border into Ukraine.Austin Vernon (00:17:44):There's just been very few successful amphibious landings in history. The most recent ones were all the Americans in World War II and Korea. So the challenge there is just... It's kind of on China to execute perfectly and do that. So if they had perfect execution, then possibly it would be feasible. But if their air defenses on their ships aren't quite as good as we think they could possibly be, then they could also end up with half their fleet underwater within 10 hours.Dwarkesh Patel (00:18:20):Interesting. And how has your view of Taiwan's defensive capabilities changed... How has the Ukraine conflict updated your opinion on what might happen?Austin Vernon (00:18:29):I didn't really know how much about it. And then I started looking at Wikipedia and stuff and all this stuff they're doing. Taiwan just has a lot of modern platforms like F16s with our anti-ship missiles. They actually have a lot of their own. They have indigenous fighter bombers, indigenous anti-ship missiles because they're worried we might not always sell them to them.Austin Vernon (00:18:54):They've even recently gotten these long range cruise missiles that could possibly target leadership in Beijing. So I think that makes it uncomfortable for the Chinese leadership. If you attack them, you're going to have to go live in a bunker. But again, I'm not a full-time military analyst or something, so there's a lot of uncertainty around what I'm saying. It's not a given that China's just going to roll over them.Software ProductivityDwarkesh Patel (00:19:22):Okay. That's comforting to hear. Let's talk about an area where I have a little bit of a point of contact. I thought your blog post about software and the inability of it to increase productivity numbers, I thought that was super fascinating. So before I ask you questions about it, do you want to lay out the thesis there?Austin Vernon (00:19:43):Yeah. So if there's one post I kind of felt like I caught lightning in a bottle on, it's that one. Everything I wanted to put in, it just fit together perfectly, which is usually not the case.Austin Vernon (00:19:55):I think the idea is that the world's so complex and we really underestimate that complexity. If you're going to digitize processes and automate them and stuff, you have to capture all that complexity basically at the bit level, and that's extremely difficult. And then you also have diminishing returns where the easily automatable stuff goes first and then it's increasing corner cases to get to the end, so you just have to go through more and more code basically. We don't see runaway productivity growth from software because we're fighting all this increasing complexity.Dwarkesh Patel (00:20:39):Yeah. Have you heard of the waterbed theory of complexity by the way?Austin Vernon (00:20:42):I don't think so.Dwarkesh Patel (00:20:44):Okay. It's something that comes up in compiler design: the idea is that there's a fixed amount of complexity in a system. If you try to reduce it, what you'll end up doing is just you'll end up migrating the complexity elsewhere. I think an example that's used of this is when they try to program languages that are not type safe, something like Python. You can say, “oh, it's a less complex language”, but really, you've added complexity when, I don't know, two different types of numbers are interacting like a float and an int. As your program grows, that complexity exponentially grows along with all the things that could go wrong when you're making two things interact in a way that you were expecting not to. So yeah, the idea is you can just choose where to have your complexity, but you can't get rid of that complexity.Austin Vernon (00:21:38):I think that's kind of an interesting thing when you start pairing it with management theory... when you add up all the factors, the most complex thing you're doing is high volume car manufacturing. And so we got a lot of innovations and organization from car manufacturers like the assembly line. Then you had Sloan at GM basically creating the way the modern corporation is run, then you have the Toyota Production System.Austin Vernon (00:22:11):But arguably now, creating software is actually the most complex thing we do. So there's all these kinds of squishy concepts that underlie things like the Toyota Production System that softwares had to learn and reimagine and adopt and you see that with Agile where, “oh, we can't have long release times. We need to be releasing every day,” which means we're limiting inventory there.Austin Vernon (00:22:42):There's a whole thing especially that's showing up in software that existed in carbon manufacturing where you're talking about reducing communication. So Jeff Bezos kind of now famously said, "I want to reduce communication," which is counterintuitive to a lot of people. This is age-old in car manufacturing where Toyota has these cards that go between workstations and they tell you what to do. So people normally think of them as limiting inventory, but it also tells the worker exactly what they're supposed to be doing at what pace, at what time. The assembly line is like that too. You just know what to do because you're standing there and there's a part here and it needs to go on there, and it comes by at the pace you're supposed to work at.Austin Vernon (00:23:29):It's so extreme that there's this famous paper, by List, Syverson and Levitt. They went to a car factory and studied how defects propagated in cars and stuff. Once a car factory gets up and running, it doesn't matter what workers you put in there, if workers are sick or you get new workers, the defect rate is the same. So all the knowledge is built into the manufacturing line.Austin Vernon (00:23:59):There's these concepts around idiot-proofing and everything that are very similar to what you'll see. You had Uncle Bob on here. So Uncle Bob says only put one input into a function and stuff like that because you'll mix them up otherwise. The Japanese call it poka-yoke. You make it where you can't mess it up. And that's another way to reduce communication, and then software, of course you have APIs.Austin Vernon (00:24:28):So I'm really interested in this overall concept of reducing communication, and reducing how much cooperation and everything we need to run the economy.Dwarkesh Patel (00:24:41):Right. Right. Speaking of the Toyota Production System, one thing they do to reduce that defect rate is if there's a problem, all the workers in that chain are forced to go to the place where the defect problem is and fix it before doing anything else. The idea there is that this will give them context to understand what the problem was and how to make sure it doesn't happen again. It also prevents a build up of inventory in a way that keeps making these defects happen or just keeps accumulating inventory before the place that can fix the defects is able to take care of them.Austin Vernon (00:25:17):Right. Yeah, yeah. Exactly.Dwarkesh Patel (00:25:19):Yeah. But I think one interesting thing about software and complexity is that software is a place where complexity is the highest in our world right now but software gives you the choice to interface with the complexity you want to interface with. I guess that's just part of specialization in general, but you could say for example that a machine learning model is really complex, but ideally, you get to a place where that's the only kind of complexity you have to deal with. You're not having to deal with the complexity of “How is this program compiled? How are the libraries that I'm using? How are they built?” You can fine tune and work on the complexity you need to work on.Dwarkesh Patel (00:26:05):It's similar to app development. Byrne Hobart has this blog post about Stripe as solid state. The basic idea is that Stripe hides all the complexity of the financial system: it charges a higher fee, but you can just treat it as an abstraction of a tithe you have to pay, and it'll just take care of that entire process so you can focus on your comparative advantage.Austin Vernon (00:26:29):It's really actually very similar in car manufacturing and the Toyota Production System if you really get into it. It's very much the same conceptual framework. There's this whole idea in Toyota Production System, everyone works at the same pace, which you kind of talked about. But also, your work content is the same. There's no room for not standardizing a way you're going to do things. So everyone gets together and they're like, “All right, we're going to do this certain part. We're going to put it together this certain way at this little micro station. And it's going to be the same way every time.” That's part of how they're reducing the defect rates. If your assembly process is longer than what your time allotment is to stay in touch with the rest of the process, then you just keep breaking it down into smaller pieces. So through this, each person only has to know a very small part of it.Austin Vernon (00:27:33):The overall engineering team has all sorts of strategies and all sorts of tools to help them break up all these processes into very small parts and make it all hold together. It's still very, very hard, but it's kind of a lot of the same ideas because you're taking away the complexity of making a $30,000 car or 30,000 part car where everyone's just focusing on their one little part and they don't care what someone else is doing.Dwarkesh Patel (00:28:06):Yeah. But the interesting thing is that it seems like you need one person who knows how everything fits together. Because from what I remember, one of the tenets of the Toyota Production System was you need to have a global view. So, in that book, was it the machine or the other one, the Toyota Production System book? But anyways, they were talking about examples where people would try to optimize for local efficiencies. I think they especially pointed to Ford and GM for trying to do this where they would try to make machines run all the time. And locally, you could say that, “oh this machine or process is super efficient. It's always outputting stuff.” But it ignores how that added inventory or that process had a bad consequence for the whole system.Dwarkesh Patel (00:28:50):And so it's interesting if you look at a company like Tesla that's able to do this really well. Tesla is run like a monarchy and this one guy has this total global view of how the entire process is supposed to run and where you have these inefficiencies.. You had some great examples of this in the blog post. I think one of the examples is this guy (the author) goes to this factory and he asks, "Is this an efficient factory?" And the guy's like, "Yeah, this is totally efficient. There's nothing we can do, adopting the Toyota way, to make this more efficient."Dwarkesh Patel (00:29:22):And so then he's like, "Okay, let me look." And he finds that they're treating steel in some way, and the main process does only take a couple of seconds, but some local manager decided that it would be more efficient to ship their parts out, to get the next stage of the process done somewhere else. So this is locally cheaper, but the result is that it takes weeks to get these parts shipped out and get them back. Which means that the actual time that the parts spend getting processed is 0.1% of the time, making the whole process super inefficient. So I don't know, it seems like the implication is you need a very monarchical structure, with one person who has a total view, in order to run such a system. Or am I getting that wrong?Austin Vernon (00:30:12):Not necessarily. I mean, you do have to make sure you're not optimizing locally, but I think it's the same. You have that same constraint in software, but I think a lot of times people are just running over it because processing has been getting so much cheaper. People are expensive, so if you could save development time, it just ends up the trade offs are different when you're talking about the tyranny of physical items and stuff like that, the constraints get a little more severe. But I think you have the same overall. You still have to fight local optimization, but the level you have to is probably different with physical goods.Austin Vernon (00:30:55):I was thinking about the smart grid situation from a software perspective, and there's this problem where, okay, I'm putting my solar farm here and it's impacting somewhere far away, and that's then creating these really high upgrade costs, that cost two or three times more than my solar farm. Well, the obvious thing would be, if you're doing software, is like you're going to break all these up into smaller sections, and then you wouldn't be impacting each other and all that, and you could work and focus on your own little thing.Austin Vernon (00:31:29):But the problem with that is if you're going to disconnect these areas of the grid, the equipment to do that is extremely expensive. It's not like I'm just going to hit a new tab and open a new file and start writing a new function. And not only that, but you still have to actually coordinate how this equipment is going to operate. So if you just let the grid flow as it does, everyone knows what's going to happen because they could just calculate the physics. If you start adding in all these checkpoints where humans are doing stuff, then you have to actually interface with the humans, and the amount of things that can happen really starts going up. So it's actually a really bad idea to try to cart all this stuff off, just because of the reality of the physical laws and the equipment you need and everything like that.Dwarkesh Patel (00:32:22):Okay. Interesting. And then I think you have a similar Coasean argument in your software post about why vertically integrating software is beneficial. Do you want to explain that thesis?Austin Vernon (00:32:34):Yeah. I think it actually gets to what we're talking about here, where it allows you to avoid the local optimization. Because a lot of times you're trying to build a software MVP, and you're tying together a few services… they don't do quite what you need, so if you try to scale that, it would just break. But if you're going to take a really complex process, like car manufacturing or retail distribution, or the home buying process or something, you really have to vertically integrate it to be able to create a decent end-to-end experience and avoid that local optimization.Austin Vernon (00:33:20):And it's just very hard otherwise, because you just can't coordinate effectively if you have 10 different vendors trying to do all the same thing. You end up in just constant vendor meetings, where you're trying to decide what the specs are or something instead of giving someone the authority, or giving a team the authority to just start building stuff. Then if you look at these companies, they have to implement these somewhat decentralized processes when they get too complex, but at least they have control over how they're interfacing with each other. Walmart, as the vendors, control their own stock. They don't tell the vendor, "We need X parts." It's just like, it's on you to make sure your shelf is stocked.Dwarkesh Patel (00:34:07):Yeah. Yeah. So what was really interesting to me about this part of the post was, I don't know, I guess I had heard of this vision of we're software setting, where everybody will have a software as a service company, and they'll all be interfacing with each other in some sort of cycle where they're all just calling each other's APIs. And yeah, basically everybody and their mother would have a SAAS company. The implication here was, from your argument, that given the necessity of integrating all those complexity vertically in a coherent way, then the winners in software should end up being a few big companies, right? They compete with each other, but still...Austin Vernon (00:34:49):I think that's especially true when you're talking about combining bits and apps. Maybe less true for pure software. The physical world is just so much more complex, and so the constraints it creates are pretty extreme, compared to like... you could maybe get away with more of everyone and their mom having an API in a pure software world.Dwarkesh Patel (00:35:14):Right. Yeah. I guess, you might think that even in the physical world, given that people really need to focus on their comparative advantage, they would just try to outsource the software parts to these APIs. But is there any scenario where the learning curve for people who are not in the firm can be fast enough that they can keep up with the complexity? Because there's huge gains for specialization and competition that go away if this is the world we're forced to live in. And then I guess we have a lot of counter examples, or I guess we have a lot of examples of what you're talking about. Like Apple is the biggest market cap in the world, right? And famously they're super vertically integrated. And yeah, obviously their thing is combining hardware and software. But yeah, is there any world in which it can keep that kind of benefit, but have it be within multiple firms?Austin Vernon (00:36:10):This is a post I've got on my list I want to write. The blockchain application, which excites me personally the most, is reimagining enterprise software. Because the things you're talking about, like hard typing and APIs are just basically built into some of these protocols. So I think it just really has a lot of exciting implications for how much you can decentralize software development. But the thing is, you can still do that within the firm. So I think I mentioned this, if the government's going to place all these rules on the edge of the firm, it makes transactions with other firms expensive. So a few internal transactions can be cheaper, because they're avoiding the government reporting and taxes and all that kind of stuff. So I think you'd have to think about how these technologies can reduce transaction costs overall and decentralize that, but also what are the costs between firms?Dwarkesh Patel (00:37:22):Yeah, it's really interesting if the costs are logistic, or if they're based on the knowledge that is housed, as you were talking about, within a factory or something. Because if it is just logistical and stuff, like you had to report any outside transactions, then it does imply that those technology blockchain could help. But if it is just that you need to be in the same office, and if you're not, then you're going to have a hard time keeping up with what the new requirements for the API are, then maybe it's that, yeah, maybe the inevitability is that you'll have these big firms that are able to vertically integrate.Austin Vernon (00:37:59):Yeah, for these big firms to survive, they have to be somewhat decentralized within them. So I think you have... you're going to the same place as just how are we viewing it, what's our perception? So even if it's a giant corporation, it's going to have very independent business units as opposed to something like a 1950s corporation.Dwarkesh Patel (00:38:29):Yeah. Byrne Hobart, by the way, has this really interesting post that you might enjoy reading while you're writing that post. It's type safe communications, and it's about that Bezos thing, about his strict style for how to communicate and how little to communicate. There's many examples in Amazon protocols where you have to... the only way you can put in this report, is in this place you had to give a number. You can't just say, "This is very likely," you had to say like, "We project X percent increase," or whatever. So it has to be a percent. And there's many other cases where they're strict about what type definition you can have in written reports or something. It has kind of the same consequence that type strict languages have, which is that you can keep track of what the value is through the entire chain of the flow of control.Austin Vernon (00:39:22):You've got to keep work content standardized.Dwarkesh Patel (00:39:26):So we've been hinting at the Coasean analysis to this. I think we just talked about it indirectly, but for the people who might not know, Coase has this paper called The Theory of Firms, and he's trying to explain why we have firms at all. Why not just have everybody compete in the open market for employment, for anything? Why do we have jobs? Why not just have... you can just hire a secretary by the day or something.Dwarkesh Patel (00:39:51):And the conclusion he comes to is that by having a firm you're reducing the transaction cost. So people will have the same knowledge about what needs to get done, obviously you're reducing the transaction cost of contracting, finding labor, blah, blah, blah. And so the conclusion it comes to is the more the transaction costs are reduced within people in a firm, as compared to the transaction cost between different firms, the bigger firms will get. So I guess that's why the implication of your argument was that there should be bigger tech firms, right?Austin Vernon (00:40:27):Yes, yes, definitely. Because they can basically decrease the transaction costs faster within, and then even at the limit, if you have large transaction costs outside the firm, between other firms that are artificially imposed, then it will make firms bigger.Dwarkesh Patel (00:40:45):What does the world look like in that scenario? So would it just be these Japanese companies, these huge conglomerates who are just... you rise through the ranks, from the age of 20 until you die? Is that what software will turn into?Austin Vernon (00:40:59):It could be. I mean, I think it will be lots of very large companies, unless there's some kind of change in inner firm transaction costs. And again, that could possibly come from blockchain like technology, but you probably also need better regulation to make that cheaper, and then you would have smaller firms. But again, in the end, it doesn't really matter. You'd be working in your little unit of the big bank of corporate, or whatever. So I don't know what that would look like on a personal level.Car ManufacturingDwarkesh Patel (00:41:40):Yeah. Okay. So speaking of these Japanese companies, let's talk about car manufacturing and everything involved there. Yeah, so we kind of hinted at a few elements of the Toyota way and production earlier, but do you want to give a brief overview of what that is, so we can compare it to potentially other systems?Austin Vernon (00:42:02):I think all these kinds of lean Toyota process systems, they do have a lot of similarities, where mostly you want to even-out your production, so you're producing very consistently, and you want to break it into small steps and you want to limit the amount of inventory you have in your system. When you do this, it makes it easy to see how the process is running and limit defects. And the ultimate is you're really trying to reduce defects, because they're very expensive. It's a little bit hard to summarize. I think that's my best shot at it there, quickly off the top of my head.Dwarkesh Patel (00:42:49):Yeah. The interesting thing about the Toyota system, so at least when the machine was released, is they talk about... that book was released I think the nineties, and they went to the history of Toyota, and one of the interesting things they talked about was there was a brief time where the company ran... I think, was this after World War II? But anyways, the company ran into some troubles. They needed to layoff people to not go bankrupt. They had much more debt on books than they had assets. So yeah, they wanted to layoff people, but obviously the people were not happy about this, so there were violent protests about this. And in fact I think the US written constitution gave strong protections to labor that they hadn't had before, which gave labor an even stronger hand here.Dwarkesh Patel (00:43:42):So anyway, Toyota came to this agreement with the unions that they'd be allowed to do this one time layoff to get the company on the right track, but afterwards they could never lay somebody off. Which would mean that a person who works at Toyota works there from the time they graduate college or high school till they die. Right? I don't know, that's super intense in a culture. I mean, in software, where you have the average tenure in a company's one year, the difference is so much.Dwarkesh Patel (00:44:13):And there's so many potential benefits here, I guess a lot of drawbacks too. But one is, obviously if you're talking in a time scale of 50 years, rather than one year, the incentives are more aligned between the company and the person. Because anything you could do in one year is not going to have a huge impact on your stock options in that amount of time. But if this company's your retirement plan, then you have a much stronger incentive to make sure that things at this company run well, which means you're probably optimizing for the company's long term cash flow yourself. And also, there's obviously benefits to having that knowledge built up in the firm from people who have been there for a long time. But yeah, that was an interesting difference. One of the interesting differences, at least.Austin Vernon (00:45:00):I mean, I think there's diminishing returns to how long your tenure's going to be. Maybe one year's too short, but there's a certain extent to where, if you grow faster than your role at the company, then it's time to switch. It's going to depend on the person, but maybe five years is a good number. And so if you're not getting promoted within the firm, then your human capital's being wasted, because you could go somewhere else and have more responsibility and perform better for them. Another interesting thing about that story, is almost all lean turnarounds, where they're like, we're going to implement something like Toyota production system, they come with no layoff promises. Because if you're going to increase productivity, that's when everyone's like, "Oh gosh, I'm going to get laid off." So instead you have to increase output and take more market share, is what you do.Dwarkesh Patel (00:46:00):It's kind of like burning your bridges, right? So this is the only way.Austin Vernon (00:46:05):The process really requires complete buy-in, because a lot of your ideas for how you're going to standardize work content come from your line workers, because that's what they're doing every day. So if you don't have their buy-in, then it's going to fail. So that's why it's really necessary to have those kinds of clauses.Dwarkesh Patel (00:46:22):Yeah. Yeah, that makes sense. I think it was in your post where you said, if somebody makes their process more efficient, and therefore they're getting more work allotted to them, then obviously they're going to stop doing that. Right? Which means that, I don't know, do you ought to give more downtime to your best workers or something or the people who are most creative in your company?Austin Vernon (00:46:48):I was just going to say, if you're a worker at a plant, then a lot of times for that level of employee, actually small rewards work pretty well. A lot of people on drilling rigs used to give the guys that met certain targets $100 Walmart gift cards. So sometimes small, it's a reward, new ideas, stuff like that works.Austin Vernon (00:47:15):But because the whole system has to grow together, if you just improve one part of the process, it may not help you. You have to be improving all the right processes so normally it's much more collaborative. There's some engineer that's looking at it and like, "All right, this is where we're struggling," or "We have our defects here." And then you go get together with that supervisor and the workers in that area, then you all figure out what improvements could be together. Because usually the people already know. This is like, you see a problem at the top, and you're just now realizing it. Then you go talk to the people doing the work, and they're like, "Oh yeah, I tried to tell you about that two weeks ago, man." And then you figure out a better process from there.Dwarkesh Patel (00:47:58):Based on your recommendation, and Steven Malina's recommendation, I recently read The Goal. And after reading the book, I'm much more understanding of the value that consultants bring to companies, potentially. Because before you could think, “What does a 21 year old, who just graduated college, know about manufacturing? What are they going to tell this plant that they didn't already know? How could they possibly be adding value?” And afterwards, it occurred to me that there's so many abstract concepts that are necessary to understand in order to be able to increase your throughput. So now I guess I can see how somebody who's generically smart but doesn't have that much industry knowledge might be able to contribute to a plan and value consultants could be bringing.Austin Vernon (00:48:43):I think this applies to consultants or young engineers. A lot of times you put young engineers just right in the thick of it, working in production or process right on the line, where you're talking to the workers the most. And there's several advantages to that. One, the engineer learns faster, because they're actually seeing the real process, and the other is there's easy opportunities for them to still have a positive impact on the business, because there's $100 bills laying on the ground just from going up and talking to your workers and learning about stuff and figuring out problems they might be having and finding out things like that that could help you lower cost. I think there's a lot of consultants that... I don't know how the industry goes, but I would guess there's... I know Accenture has 600,000 employees. I don't know if that many, but it's just a large number, and a lot are doing more basic tasks and there are some people that are doing the more high level stuff, but it's probably a lot less.Dwarkesh Patel (00:49:51):Yeah. Yeah. There was a quote from one of those books that said, "At Toyota we don't consider you an engineer unless you need to wash your hands before you can have lunch." Yeah. Okay. So in your blog post about car manufacturing, you talk about Tesla. But what was really interesting is that in a footnote, I think you mentioned that you bought Tesla stocks in 2014, which also might be interesting to talk about again when we go to the market and alpha part. But anyways. Okay. And then you talk about Tesla using something called metal manufacturing. So first of all, how did you know in 2014 that Tesla was headed here? And what is metal manufacturing and how does it differ from the Toyota production system?Austin Vernon (00:50:42):Yeah. So yeah, I just was goofing around and made that up. Someone actually emailed me and they were like, "Hey, what is this metal manufacturing? I want to learn more about this." It's like, "Well, sorry, I just kind of made that up, because I thought it sounded funny." But yeah, I think it's really the idea that there's this guy, Dimming, and he found a lot of the same ideas that Toyota ended up implementing, and Toyota respected his ideas a lot. America never really got fully on board with this in manufacturing. Of course it's software people that are coming and implementing this and manufacturing now which is like the real American way of doing things.Austin Vernon (00:51:32):Because when you look at these manufacturing processes, the best place to save money and optimize is before you ever build the process or the plant. It's very early on. So I think if there's a criticism of Toyota, it's that they're optimizing too late and they're not creative enough in their production technology and stuff. They're very conservative, and that's why they have hydrogen cars and not battery cars, even though they came out with the Prius, which was the first large sales hybrid.Austin Vernon (00:52:12):So yeah, I think what Tesla's doing with really just making Dimming's ideas our own and really just Americanizing it with like, "Oh, well, we want to cast this, because that would be easier." Well, we can't, because we don't have an alloy. "We'll invent the alloy." I love it. It's great. Mostly, I love Tesla because they do such... I agree with their engineering principles. So I didn't know that the company would come to be so valuable. It's just, I was just always reading their stock reports and stuff so I was like, "Well, at least I need to buy some stock so that I have a justification for spending all this time reading their 10 Ks."Dwarkesh Patel (00:52:53):I want to get a little bit more in detail about the exact difference here. So lean production, I guess, is they're able to produce their cars without defects and with matching demand or whatever. But what is it about their system that prevents them from making the kinds of innovations that Tesla is able to make?Austin Vernon (00:53:16):It's just too incremental. It's so hard to get these processes working. So the faster you change things, it becomes very, very difficult to change the whole system. So one of the advantages Tesla has is, well, if you're making electric cars, you have just a lot less parts. So that makes it easier. And once you start doing the really hard work of basically digitizing stuff, like they don't have speed limit dials, you start just removing parts from the thing and you can actually then start increasing your rate of change even faster.Austin Vernon (00:53:55):It makes it harder to get behind if you have these old dinosaur processes. But I think there's a YouTube channel called The Limiting Factor, and he actually went into the detail of numbers on what it costs for Tesla to do their giga-casting, which saves tons of parts and deletes zillions of thousands of robots from their process. If you already have an existing stamping line and all that, where you're just changing the dyes based on your model, then it doesn't make sense to switch to the casting. But if you're building new factories, like Tesla is, well, then it makes sense to do the casting and you can build new factories very cheaply and comparatively and much easier. So there's a little bit of... they just have lots of technical data, I guess you could say, in a software sense.Dwarkesh Patel (00:54:47):Yeah. That's super interesting. The analogy is actually quite... it's like, Microsoft has probably tens of thousands of software engineers who are just basically servicing its technical debt and making sure that the old systems run properly, whereas a new company like Tesla doesn't have to deal with that. The thing that's super interesting about Tesla is like, Tesla's market cap is way over a trillion, right? And then Toyota's is 300 billion. And Tesla is such a new company. The fact that you have this Toyota, which is legendary for its production system, and this company that's less than two decades old is worth many times more, it's kind of funny.Austin Vernon (00:55:32):Yeah. I would say that, in that measure, I don't like market cap. You need to use enterprise value. These old car companies have so much debt, that if you look at enterprise value, it's not so jarring. Literally, I don't know, I can't remember what GM's worth, like 40 billion or something, and then they have $120 billion in debt. So their enterprise value is five times more than their market cap.Dwarkesh Patel (00:56:02):What is enterprise value?Austin Vernon (00:56:03):Enterprise value is basically what is the value of the actual company before you have any claims on it. It's the market cap plus your debt. But basically, if you're the equity holder and the company gets sold, you have to pay the debt first. So you only get the value of what's left over after the debt. So that's why market cap is... when Tesla has very little debt and a lot of market cap, and then these other guys have a lot of debt with less market cap, it skews the comparison.Dwarkesh Patel (00:56:34):Yeah, and one of the interesting things, it's similar to your post on software, is that it seems like one of the interesting themes across your work is automating processes often leads to decreased eventual throughput, because you're probably adding capacity in a place that you're deciding excess capacity, and you're also making the money part of your operation less efficient by have it interface with this automated part. It sounds like there's a similar story there with car manufacturing, right?Austin Vernon (00:57:08):Yeah. I think if we tie it back into what we were talking about earlier, automation promotes local optimization and premature optimization. So a lot of times it's better to figure out, instead of automating a process to make a really hard to make part, you should just figure out how to make that part easy to make. Then after you do that, then it may not even make sense to automate it anymore. Or get rid of it all together, then you just delete all those robots.Austin's Carbon Capture ProjectDwarkesh Patel (00:57:37):Yeah. Yeah, that's interesting. Okay. So let's talk about the project that you're working on right now, the CO2 electrolysis. Do you want to explain what this is, and what your current approach is? What is going on here?Austin Vernon (00:57:55):Yeah, so I think just overall, electrofuels right now are super underrated, because you're about to get hopefully some very cheap electricity from solar, or it could be, maybe, some land. If we get really lucky, possibly some nuclear, geothermal. It'll just make sense to create liquid fuels, or natural gas, or something just from electricity and air, essentially.Austin Vernon (00:58:25):There's a whole spectrum of ways to do this, so O2 electrolysis is one of those. Basically, you take water, electricity, and CO2, and a catalyst. And then, you make more complex molecules, like carbon monoxide, or formic acid, or ethylene, or ethanol, or methane or methine. Those are all options. But it's important to point out that, right now, I think if you added up all the CO2 electrolyzers in the world, you'd be measuring their output and kilograms per day. We make millions of tons per day off of the products I just mentioned. So there's a massive scale up if it's going to have a wider impact.Austin Vernon (00:59:15):So there's some debate. I think the debate for the whole electrofuels sector is: How much are you going to do in the electrolyzer? One company whose approach I really like is Terraform Industries. They want to make methane, which is the main natural gas. But they're just making hydrogen in their electrolyzer, and then they capture the CO2 and then put it into a methanation reaction. So everything they're doing is already world scale, basically.Austin Vernon (00:59:47):We've had hydrogen electrolyzers power fertilizer plants, providing them with the Hydrogen that they need. Methanation happens in all ammonia plants and several other examples. It's well known, very old. Methanation is hydrogen CO2 combined to make water and methane. So their approach is more conservative, but if you do more in the electrolyzer, like I'm going to make the methane actually in the electrolyzer instead of adding this other process, you could potentially have a much simpler process that has less CapEx and scales downward better. Traditional chemical engineering heavily favors scaling. With the more Terraform processes, they're playing as absolutely ginormous factories. These can take a long time to build.Austin Vernon (01:00:42):So one of the things they're doing is: they're having to fight the complexity that creeps into chemical engineering every step of the way. Because if they don't, they'll end up with a plant that takes 10 years to build, and that's not their goal. It takes 10 years to build a new refinery, because they're so complex. So yeah, that's where I am. I'm more on the speculative edge, and it's not clear yet which products will be favorable for which approaches.Dwarkesh Patel (01:01:15):Okay, yeah. And you're building this out of your garage, correct?Austin Vernon (01:01:19):Yeah. So that's where electrolyzers... Everything with electric chemistry is a flat plate instead of a vessel, so it scales down. So I can have a pretty good idea of what my 100 square centimeter electrolyzer is going to do, if I make it quite a bit bigger. I have to worry about how my flow might interact in the larger one and make sure the mixing's good, but it's pretty straightforward because you're just making your flat plate a larger area. Whereas the scale, it is different from scaling a traditional chemical process.Dwarkesh Patel (01:01:56):I'm curious how cheap energy has to be before this is efficient. If you're turning it into methane or something like that, presumably for fuel, is the entire process energy positive? Or how cheap would energy, electricity you need to get before that's the case?Austin Vernon (01:02:18):The different products and different methods have different crossovers. So Terraform Industries, they're shooting for $10 a megawatt hour for electricity. But again, their process is simpler, a little less efficient than a lot of the other products. They also have better premiums, just worth more per ton than methane. So your crossover happens somewhere in between $10 and $20 a megawatt hour, which is... I mean, that's pretty... Right now, solar, it's maybe like $25. Maybe it's a little higher because payment prices have gone up in the last year, but I think the expectation is they'll come back down. And so, getting down to $15 where you start having crossovers for some of these products like ethanol or ethylene or methanol, it's not science fiction.Dwarkesh Patel (01:03:08):I think in Texas where I live, that's where it's at right? The cost of energy is 20 or something dollars per megawatt hour.Austin Vernon (01:03:16):Well, not this summer! But yeah, a lot of times in Texas, the wholesale prices are around $25 to $30.Dwarkesh Patel (01:03:26):Gotcha. Okay. Yeah. So a lot of the actual details you said about how this works went over my head. So what is a flat plate? I guess before you answer that question, can you just generally describe the approach? What is it? What are you doing to convert CO2 into these other compounds?Austin Vernon (01:03:45):Well, yeah, it literally just looks like an electrolyzer. You have two sides and anode and a cathode and they're just smushed together like this because of the electrical resistance. If you put them far apart, it makes it... uses up a lot of energy. So you smush them together as close as you can. And then, you're basically just trading electrons back and forth. On one side, you're turning CO2 into a more complex molecule, and on the other side, you're taking apart water. And so, when you take apart the water, it balances out the equation, balances out your electrons and everything like that. I probably need to work on that elevator pitch there, huh?Dwarkesh Patel (01:04:31):I guess what the basic idea is, you need to put power in to convert CO2 into these other compounds.Austin Vernon (01:04:38):The inputs are electricity, water, and CO2, and the output is usually oxygen and whatever chemical you're trying to create is, along with some side reactions.Dwarkesh Patel (01:04:49):And then, these chemicals you mentioned, I think ethanol, methane, formic acid, are these all just fuels or what are the other uses for them?Austin Vernon (01:04:58):A lot of people are taking a hybrid approach with carbon monoxide. So this would be like Twelve Co… They've raised a lot of money to do this and 100 employees or something. You can take that carbon monoxide and make hydrogen, and then you have to send gas to make liquid fuels. So they want to make all sorts of chemicals, but one of the main volume ones would be like jet fuel.Austin Vernon (01:05:22):Let's see Formic acid is, it's the little fry of all these. It is an additive in a lot of things like preserving hay for animals and stuff like that. Then, ethanol there's people that want to... There's this company that makes ethylene, which goes into plastics that makes polyethylene, which is the most produced plastic. Or you can burn it in your car, although I think ethanol is a terrible vehicle fuel. But then you can also just make ethylene straight in the electrolyzer. So there's many paths. So which path wins is an interesting race to see.Dwarkesh Patel (01:06:13):The ability to produce jet fuel is really interesting, because in your energy superabundance paper, you talk about... You would think that even if we can electrify everything in solar and when it becomes super cheap, that's not going to have an impact on the prices to go to space for example. But I don't know. If a process like this is possible, then it's some way to in financial terms, add liquidity. And then turn, basically, this cheap solar and wind into jet fuel through this indirect process. So the price to send stuff to space or cheap plane flights or whatever––all of that goes down as well.Austin Vernon (01:06:52):It basically sets a price ceiling on the price of oil. Whatever you can produce this for is the ceiling now, which is maybe the way I think about it.Dwarkesh Patel (01:07:06):Yeah. So do you want to talk a little bit about how your background led into this project? This is your full-time thing, right? I don't know if I read about that, but where did you get this idea and how long have you been pursuing it? And what's the progress and so on.Austin Vernon (01:07:20):I've always loved chemical engineering, and I love working at the big processing plant because it's like being a kid in a candy store. If I had extra time, I'd just walk around and look at the plant, like it's so cool. But the plant where I worked at, their up time was 99.7%. So if you wanted to change anything or do anything new, it terrified everyone. That's how they earned their bonuses: run the plant a 100% uptime all the time. So that just wasn't a good fit for me. And also, so I always wanted my own chemical plant, but it's billions of dollars to build plants so that was a pretty big step. So I think this new technology of... there's a window where you might be able to build smaller plants until it optimizes to be hard to enter again.Dwarkesh Patel (01:08:21):And then, why will it become hard to enter again? What will happen?Austin Vernon (01:08:27):If someone figures out how to build a really cheap electrolyzer, and they just keep it as intellectual property, then it would be hard to rediscover that and compete with them.Dwarkesh Patel (01:08:38):And so, how long have you been working on this?Austin Vernon (01:08:42):Oh, not quite a year. But yeah, I actually got this idea to work on it from writing my blog. So when I wrote the heating fuel post, I didn't really know much about... There's another company in the space, Prometheus Fuels and I'm like, "Oh, this is an interesting idea." And then, I got talking to a guy named Brian Heligman, and he's like, "You should do this, but not what Prometheus is doing." And so, then I started looking at it and I liked it, so I've been working on it since.Dwarkesh Patel (01:09:08):Yeah. It's interesting because if energy does become as cheap as you suspect it might. If this process works, then yeah, this is a trillion dollar company probably, right? If you're going to get the patents and everything.Austin Vernon (01:09:22):I mean, maybe. With chemical plants, there's a certain limitation where your physical limitation is. There's only so many places that are good places for chemical plants. You start getting hit by transportation and all that. So, you can't just produce all th

Austin Vernon is an engineer working on a new method for carbon capture, and he has one of the most interesting blogs on the internet, where he writes about engineering, software, economics, and investing.We discuss how energy superabundance will change the world, how Starship can be turned into a kinetic weapon, why nuclear is overrated, blockchains, batteries, flying cars, finding alpha, & much more!Watch on YouTube. Listen on Apple Podcasts, Spotify, or any other podcast platform. Read the full transcript here.Subscribe to find out about future episodes!Follow Austin on Twitter. Follow me on Twitter for updates on future episodes.Please share if you enjoyed this episode! Helps out a ton!Timestamps(0:00:00) - Intro(0:01:53) - Starship as a Weapon(0:19:24) - Software Productivity(0:41:40) - Car Manufacturing(0:57:39) - Carbon Capture(1:16:53) - Energy Superabundance(1:25:09) - Storage for Cheap Energy(1:31:25) - Travel in Future(1:33:27) - Future Cities(1:39:58) - Flying Cars(1:43:26) - Carbon Shortage(1:48:03) - Nuclear(2:12:44) - Solar(2:14:44) - Alpha & Efficient Markets(2:22:51) - ConclusionTranscriptIntroDwarkesh Patel (00:00:00):Okay! Today, I have the pleasure of interviewing Austin Vernon who writes about engineering, software, economics, and investing on the internet, though not that much else is known about him. So Austin, do you want to give us a bit of info about your background? I know that the only thing the internet knows about you is this one little JPEG that you had to upload with your recent paper. But what about an identity reveal or I guess a little bit of a background reveal? Just to the extent that you're comfortable sharing.Austin Vernon (00:00:29):My degree is in chemical engineering and I've had a lifelong love for engineering as well as things like the Toyota Production System. I've also worked as a chemical engineer in a large processing facility where I've done a lot of petroleum engineering. I taught myself how to write software and now I'm working on more research and the early commercialization of CO2 electrolysis.Dwarkesh Patel (00:00:59):Okay yeah. I'm really interested in talking about all those things. The first question I have is from Alex Berger, who's the co-CEO of Open Philanthropy. When I asked on Twitter what I should ask you, he suggested that I should ask “Why so shady?” Famously you have kind of an anonymous personality, pseudonymous thing going on the internet. What's up with that?Austin Vernon (00:01:25):Yeah. I think he posted a tweet that said “I don't know who this guy is or if he's credible at all, but his stuff sure is interesting”. That really made me laugh. I thought that was hilarious. Fame just doesn't seem necessary, I think I'm fine with my ideas being well known and communicating, but I have less desire to be personally famous.Starship as a WeaponDwarkesh Patel (00:01:52):Gotcha, gotcha. I wanted to start off with a sexy topic, let's talk about using Starship as a kinetic weapon. I thought that was one of the more amusing posts you wrote. Do you want to talk more about how this would be possible?Austin Vernon (00:02:08):Well, I think the main thing with Starship is that you're taking a technology and you're making it about 100 times cheaper for cargo and 1000 times cheaper for people. When things like that happen that drastically, you're just looking at huge changes and it's really hard to anticipate what some of those can be when the change is that drastic. I think there's a lot of moon-based, Mars-based stuff that doesn't really catch the general public's eye. They also have trouble imagining some of the point-to-point travel that could be possible. But when you start talking about it as a weapon, then I think it lets people know they should be paying attention to this technology. And we certainly do not want to be second or third getting it. We should make sure that we're going to be first.Dwarkesh Patel (00:03:05):Yeah. I think you mentioned this in the post, but as recently as the '90s, the cost of sending one kilogram to space was around $20,000. More recently, SpaceX has brought it to $2,000. Lots of interesting questions pop up when you ask, “What will be possible once we get it down to $200 per kilogram to send into orbit?” One of them could be about how we might manufacture these weapons that are not conventional ballistics. Do you want to talk about why this might be an advancement over conventional ballistic weapons?Austin Vernon (00:03:37):Well, regular conventional ballistic weapons are extremely expensive. This is more like a bomb truck. But usually we think of B52 as the bomb truck and this could be even cheaper than the B52, delivering just mass on target. When you think about how expensive it is to fly a B52 from Barksdale in Louisiana all the way across the world.. you can do it from south Texas or Florida with the Starship and get more emissions per day and the fuel ends up being. When you go orbital, it takes a lot to get to orbit. But then once you're in orbit, your fuel consumption's pretty good. So over long distances, it has a lot of advantage. That's why the point-to-point works for longer distances.Austin Vernon (00:04:27):There's really a sweet spot with these weapons where you want it to be pretty accurate, but you also want it to be cheap. You're seeing that problem with Russia right now as they have some fancy parade style weapons that are really expensive, like multi-billion dollar cruise missiles, but they're missing that $5,000 guided artillery shell or that $20,000 JDM that you can just pit massive. Or the multiple launch rocket system, guided rockets. They're really short on all those because I think they had just had a limited amount of chips they could get from the US into Russia to make these advanced weapons.Austin Vernon (00:05:07):But yeah, so the Starship gives you just a platform to deliver. You could put JDMs in a shroud, or you could just have the iron unguided kinetic projectiles, and it just becomes impossible for a ship to launch missiles to intercept yours if your cost is so low, you can just overwhelm them.Dwarkesh Patel (00:05:29):Okay. There are a few terms there that neither I nor the audience might know. So what is JDM? What is shroud? And why are chips a bottleneck here? Why can't it just be any micro-controller?Austin Vernon (00:05:42):So JDM is Joint Direct Attack Munition. So what we did is we took all our Vietnam surplus bonds and we put this little fin-kit on it and it costs like $20,000, which is cheap for a weapon because the actual bond costs, I don't know, $3,000. And then it turns it into a guided weapon that, before you were probably lucky to get within 500 meters of a target, now you can get it in with two meters. So the number of missions you have to do with your planes and all that goes down by orders of magnitude. So it's an absolutely huge advantage in logistics and in just how much firepower you can put on a target. And we didn't even have to make new bombs, we just put these kits on all our old bombs.Austin Vernon (00:06:33):Let's see.. Yeah the chips are a problem. There's this organization called RUSI. I think they're in the UK, but they've been tearing down all these Russian weapons they found in Ukraine and they all have American chips in them. So technically, they're not supposed to be able to get these chips. And yet, Russia can't make a lot of its own chips. And especially not the specialized kinds you might want for guided weapons. So they've been somehow smuggling in chips from Americans to make their advanced weaponsDwarkesh Patel (00:07:03):What is special about these? As far as I'm aware, the trade with China is still going on and we get a lot of our chips manufactured from Taiwan or China. So why can't they do the same?Austin Vernon (00:07:14):It's the whole integration. It's not just the specific chip, but the board. They're more like PLCs where you almost have wired-in programming and they come with this ability to do the guidance and all that stuff. It all kind of has to work together. I think that's the way I understand it. I don't know. Maybe I don't have a really good answer for that one, but they're hard to replicate is what matters.Dwarkesh Patel (00:07:43):Okay that's interesting. Yeah, I guess that has a lot of interesting downstream effects, because for example, India buys a lot of its weapons from Russia. So if Russia doesn't have access to these, then other countries that buy from Russia won't have access to these either.Dwarkesh Patel (00:07:58):You had an interesting speculation in the post where you suggested that you could just keep these kinetic weapons in orbit, in a sort of Damocles state really, almost literally. That sounds like an incredibly scary and risky scenario where you could have orbital decay and you could have these kinetic weapons falling from the sky and destroying cities. Do you think this is what it will look like or could look like in 10 to 20 years?Austin Vernon (00:08:26):Well, yeah, so the advantage of having weapons on orbit is you can hit targets faster. So if you're launching the rocket from Florida, you're looking at maybe 30 minutes to get there and the target can move away in that time. Whereas if you're on orbit, you can have them spaced out to where you're hitting within a few minutes. So that's the advantage there.Austin Vernon (00:08:46):You really have to have a two stage system I think for most, because if you have a really aerodynamic rod that's going to give you really good performance in the low atmosphere, it'll end up going too fast and just burn up before it gets there. Tungsten's maybe the only thing that you could have that could go all the way through which is why I like the original concept of using these big tungsten rods the size of a telephone pole. But tungsten's pretty expensive. And the rod concept kind of limits what you can do.Austin Vernon (00:09:28):So a lot of these weapons will have, that's what I was talking about with the shroud, something that actually slows you down in the upper atmosphere. And then once you're at the velocity where you're not just going to melt, then you open it up and let it go. So if you actually had it fall from the sky, some may make it to the ground, but a lot would burn up. So a lot of the stuff that makes it to the ground is actually pretty light. It's stuff that can float and has a large surface area. Yeah, that's the whole thing with Starship. Or not Starship, but Starlink. All those satellites are meant to completely fall apart on de-orbit.Dwarkesh Patel (00:10:09):I see. One of the implications of that is that these may be less powerful than we might fear, because since kinetic energy is mass times velocity squared and there's an upper bound on the velocity (velocity being the component that grows the kinetic energy faster), then it suggests that you can upper bound the power these things will have. You know what I mean?Austin Vernon (00:10:32):Yeah, so even the tungsten rods. Sometimes people, they're not very good at physics, so they don't do the math. They think it's going to be a nuclear weapon, but it's really not. I think even the tungsten rod is like 10 tons of T&T or something. It's a big bomb, but it's not a super weapon.Austin Vernon (00:10:54):So I think I said in the post, it's about using advanced missiles where they're almost more defensive weapons so I can keep you from pitting your ship somewhere. Yeah I could try to bombard your cities, but I can't take ground with it. I can't even police sea lanes with it really. I'd still have to use regular ships if I had this air cover to go enforce the rules of the sea and stuff like that.Dwarkesh Patel (00:11:23):Yeah. You speculated in the post, I think, that you could load this up with shrapnel and then it could explode next to an incoming missile or an incoming aircraft. Could these get that accurate? Because that was surprising speculation to me.Austin Vernon (00:11:43):I think for ships, it's pretty... I was watching videos of how fast a ship can turn and stuff. If you're going to do an initial target on a ship to try to kill their radars, you'd want to do it above the ceiling of their missiles. So it's like, how much are they going to move between your release where you stop steering and that? The answer's maybe 1000 feet. So that's pretty simple because you just shrapnel the area.Austin Vernon (00:12:12):Targeting aircraft, you would be steering all the way in. I'd say it's doable, but it'd be pretty hard. You'd actually maybe want to even go slower than you would with the ship attack. You'd need a specialized package to attack the aircraft, but if you have enough synthetic aperture radar and stuff like that, you could see these aircraft using satellites and then guide the bomb in the whole way. You could even load heat seeking missiles into a package that unfurls right next to them and launch conventional missiles too, probably. It'd be pretty hard to do some of this stuff, but they're just the things you might be able to do if you put some effort into it.Dwarkesh Patel (00:12:57):Yeah. The reason I find this kind of speculation really interesting is because when you look at the modern weaponry that's used in conflicts, it just seems directly descendant from something you would've seen in World War II or something. If you think about how much warfare changed between 1900 and 1940, it's like, yeah, they're not even the same class of weapons anymore. So it's interesting to think about possibilities like these where the entire category of weapons has changed.Austin Vernon (00:13:33):You're right and that's because our physical technology hasn't changed that much. So it really has just made more sense to put better electronics in the same tanks. We haven't learned enough about tanks to build a new physical tank that's way better, so we just keep upgrading our existing tanks with better electronics. They're much more powerful, they're more accurate. A lot of times, they have longer range weapons and better sensors. So the tank looks the same, but it maybe has several times more killing power. But the Ukraine war right now, they're using a lot of 40, 50 year old weapons so that especially looks like that.Dwarkesh Patel (00:14:20):Yeah. Which kind of worries you if you think about the stockpiles our own military has. I'm not well educated on the topic, but I imagine that we don't have the newest of the new thing. We probably have maintained versions of decades old technology.Austin Vernon (00:14:35):We spend so much, we've got relatively... This kind of gets into debate about how ready our military is. For certain situations, it's more ready than others. I'd say in general, most people talking about it have the incentive to downplay our capabilities because they want more defense spending. There's lots of reasons. So I think we're probably more capable than what you might see from some editorial in The Hill or whatever. Us just sending a few weapons over to Ukraine and seeing how successful they've been at using them, I think, shows a little bit of that.Austin Vernon (00:15:18):There's so much uncertainty when it comes to fighting, especially when you're talking about a naval engagement, where we don't just don't have that many ships in general… you can have some bad luck. So I think you always want to be a little bit wary. You don't want to get overconfident.Dwarkesh Patel (00:15:37):Yeah. And if the offensive tech we sent to Ukraine is potentially better than the defensive tech, it's very possible that even a ballistic missile that China or Russia could launch would sink a battleship and then kill the 2,000 or 1,000 whatever soldiers that are on board. Or I guess, I don't know, you think this opens up avenues for defensive tech as well?Austin Vernon (00:16:03):Yeah––generally the consensus is that defensive technology has improved much more recently than offensive technology. This whole strategy China has is something they call anti-access/area denial, A2/AD. That's basically just how missiles have gotten better because the sensors on missiles have gotten better. So they can keep our ships from getting close to them but they can't really challenge us in Hawaii or something. And it really goes both ways, I think people forget that. So yeah, it's hard for us to get close to China, but Taiwan has a lot of missiles with these new sensors as well. So I think it's probably tougher for China to do it close to Taiwan than most people would say.Dwarkesh Patel (00:16:55):Oh, interesting. Yeah, can you talk more about that? Because every time I read about this, people are saying that if China wanted to, they could knock out Taiwan's defenses in a short amount of time and take it over. Yeah, so can you talk about why that's not possible?Austin Vernon (00:17:10):Well, it might be, but I think it's a guess of the uncertainty [inaudible 00:17:14]. Taiwan has actually one of the largest defense budgets in the world and they've recently been upping it. I think they spend, I don't know, $25 billion a year and they added an extra $5 billion. And they've been buying a lot of anti-ship missiles, a lot of air defense missiles.. Stuff that Ukraine could only dream of. I think Ukraine's military budget was $2 billion and they have a professional army. And then the other thing is Taiwan's an island, whereas Russia could just roll over the land border into Ukraine.Austin Vernon (00:17:44):There's just been very few successful amphibious landings in history. The most recent ones were all the Americans in World War II and Korea. So the challenge there is just... It's kind of on China to execute perfectly and do that. So if they had perfect execution, then possibly it would be feasible. But if their air defenses on their ships aren't quite as good as we think they could possibly be, then they could also end up with half their fleet underwater within 10 hours.Dwarkesh Patel (00:18:20):Interesting. And how has your view of Taiwan's defensive capabilities changed... How has the Ukraine conflict updated your opinion on what might happen?Austin Vernon (00:18:29):I didn't really know how much about it. And then I started looking at Wikipedia and stuff and all this stuff they're doing. Taiwan just has a lot of modern platforms like F16s with our anti-ship missiles. They actually have a lot of their own. They have indigenous fighter bombers, indigenous anti-ship missiles because they're worried we might not always sell them to them.Austin Vernon (00:18:54):They've even recently gotten these long range cruise missiles that could possibly target leadership in Beijing. So I think that makes it uncomfortable for the Chinese leadership. If you attack them, you're going to have to go live in a bunker. But again, I'm not a full-time military analyst or something, so there's a lot of uncertainty around what I'm saying. It's not a given that China's just going to roll over them.Software ProductivityDwarkesh Patel (00:19:22):Okay. That's comforting to hear. Let's talk about an area where I have a little bit of a point of contact. I thought your blog post about software and the inability of it to increase productivity numbers, I thought that was super fascinating. So before I ask you questions about it, do you want to lay out the thesis there?Austin Vernon (00:19:43):Yeah. So if there's one post I kind of felt like I caught lightning in a bottle on, it's that one. Everything I wanted to put in, it just fit together perfectly, which is usually not the case.Austin Vernon (00:19:55):I think the idea is that the world's so complex and we really underestimate that complexity. If you're going to digitize processes and automate them and stuff, you have to capture all that complexity basically at the bit level, and that's extremely difficult. And then you also have diminishing returns where the easily automatable stuff goes first and then it's increasing corner cases to get to the end, so you just have to go through more and more code basically. We don't see runaway productivity growth from software because we're fighting all this increasing complexity.Dwarkesh Patel (00:20:39):Yeah. Have you heard of the waterbed theory of complexity by the way?Austin Vernon (00:20:42):I don't think so.Dwarkesh Patel (00:20:44):Okay. It's something that comes up in compiler design: the idea is that there's a fixed amount of complexity in a system. If you try to reduce it, what you'll end up doing is just you'll end up migrating the complexity elsewhere. I think an example that's used of this is when they try to program languages that are not type safe, something like Python. You can say, “oh, it's a less complex language”, but really, you've added complexity when, I don't know, two different types of numbers are interacting like a float and an int. As your program grows, that complexity exponentially grows along with all the things that could go wrong when you're making two things interact in a way that you were expecting not to. So yeah, the idea is you can just choose where to have your complexity, but you can't get rid of that complexity.Austin Vernon (00:21:38):I think that's kind of an interesting thing when you start pairing it with management theory... when you add up all the factors, the most complex thing you're doing is high volume car manufacturing. And so we got a lot of innovations and organization from car manufacturers like the assembly line. Then you had Sloan at GM basically creating the way the modern corporation is run, then you have the Toyota Production System.Austin Vernon (00:22:11):But arguably now, creating software is actually the most complex thing we do. So there's all these kinds of squishy concepts that underlie things like the Toyota Production System that softwares had to learn and reimagine and adopt and you see that with Agile where, “oh, we can't have long release times. We need to be releasing every day,” which means we're limiting inventory there.Austin Vernon (00:22:42):There's a whole thing especially that's showing up in software that existed in carbon manufacturing where you're talking about reducing communication. So Jeff Bezos kind of now famously said, "I want to reduce communication," which is counterintuitive to a lot of people. This is age-old in car manufacturing where Toyota has these cards that go between workstations and they tell you what to do. So people normally think of them as limiting inventory, but it also tells the worker exactly what they're supposed to be doing at what pace, at what time. The assembly line is like that too. You just know what to do because you're standing there and there's a part here and it needs to go on there, and it comes by at the pace you're supposed to work at.Austin Vernon (00:23:29):It's so extreme that there's this famous paper, by List, Syverson and Levitt. They went to a car factory and studied how defects propagated in cars and stuff. Once a car factory gets up and running, it doesn't matter what workers you put in there, if workers are sick or you get new workers, the defect rate is the same. So all the knowledge is built into the manufacturing line.Austin Vernon (00:23:59):There's these concepts around idiot-proofing and everything that are very similar to what you'll see. You had Uncle Bob on here. So Uncle Bob says only put one input into a function and stuff like that because you'll mix them up otherwise. The Japanese call it poka-yoke. You make it where you can't mess it up. And that's another way to reduce communication, and then software, of course you have APIs.Austin Vernon (00:24:28):So I'm really interested in this overall concept of reducing communication, and reducing how much cooperation and everything we need to run the economy.Dwarkesh Patel (00:24:41):Right. Right. Speaking of the Toyota Production System, one thing they do to reduce that defect rate is if there's a problem, all the workers in that chain are forced to go to the place where the defect problem is and fix it before doing anything else. The idea there is that this will give them context to understand what the problem was and how to make sure it doesn't happen again. It also prevents a build up of inventory in a way that keeps making these defects happen or just keeps accumulating inventory before the place that can fix the defects is able to take care of them.Austin Vernon (00:25:17):Right. Yeah, yeah. Exactly.Dwarkesh Patel (00:25:19):Yeah. But I think one interesting thing about software and complexity is that software is a place where complexity is the highest in our world right now but software gives you the choice to interface with the complexity you want to interface with. I guess that's just part of specialization in general, but you could say for example that a machine learning model is really complex, but ideally, you get to a place where that's the only kind of complexity you have to deal with. You're not having to deal with the complexity of “How is this program compiled? How are the libraries that I'm using? How are they built?” You can fine tune and work on the complexity you need to work on.Dwarkesh Patel (00:26:05):It's similar to app development. Byrne Hobart has this blog post about Stripe as solid state. The basic idea is that Stripe hides all the complexity of the financial system: it charges a higher fee, but you can just treat it as an abstraction of a tithe you have to pay, and it'll just take care of that entire process so you can focus on your comparative advantage.Austin Vernon (00:26:29):It's really actually very similar in car manufacturing and the Toyota Production System if you really get into it. It's very much the same conceptual framework. There's this whole idea in Toyota Production System, everyone works at the same pace, which you kind of talked about. But also, your work content is the same. There's no room for not standardizing a way you're going to do things. So everyone gets together and they're like, “All right, we're going to do this certain part. We're going to put it together this certain way at this little micro station. And it's going to be the same way every time.” That's part of how they're reducing the defect rates. If your assembly process is longer than what your time allotment is to stay in touch with the rest of the process, then you just keep breaking it down into smaller pieces. So through this, each person only has to know a very small part of it.Austin Vernon (00:27:33):The overall engineering team has all sorts of strategies and all sorts of tools to help them break up all these processes into very small parts and make it all hold together. It's still very, very hard, but it's kind of a lot of the same ideas because you're taking away the complexity of making a $30,000 car or 30,000 part car where everyone's just focusing on their one little part and they don't care what someone else is doing.Dwarkesh Patel (00:28:06):Yeah. But the interesting thing is that it seems like you need one person who knows how everything fits together. Because from what I remember, one of the tenets of the Toyota Production System was you need to have a global view. So, in that book, was it the machine or the other one, the Toyota Production System book? But anyways, they were talking about examples where people would try to optimize for local efficiencies. I think they especially pointed to Ford and GM for trying to do this where they would try to make machines run all the time. And locally, you could say that, “oh this machine or process is super efficient. It's always outputting stuff.” But it ignores how that added inventory or that process had a bad consequence for the whole system.Dwarkesh Patel (00:28:50):And so it's interesting if you look at a company like Tesla that's able to do this really well. Tesla is run like a monarchy and this one guy has this total global view of how the entire process is supposed to run and where you have these inefficiencies.. You had some great examples of this in the blog post. I think one of the examples is this guy (the author) goes to this factory and he asks, "Is this an efficient factory?" And the guy's like, "Yeah, this is totally efficient. There's nothing we can do, adopting the Toyota way, to make this more efficient."Dwarkesh Patel (00:29:22):And so then he's like, "Okay, let me look." And he finds that they're treating steel in some way, and the main process does only take a couple of seconds, but some local manager decided that it would be more efficient to ship their parts out, to get the next stage of the process done somewhere else. So this is locally cheaper, but the result is that it takes weeks to get these parts shipped out and get them back. Which means that the actual time that the parts spend getting processed is 0.1% of the time, making the whole process super inefficient. So I don't know, it seems like the implication is you need a very monarchical structure, with one person who has a total view, in order to run such a system. Or am I getting that wrong?Austin Vernon (00:30:12):Not necessarily. I mean, you do have to make sure you're not optimizing locally, but I think it's the same. You have that same constraint in software, but I think a lot of times people are just running over it because processing has been getting so much cheaper. People are expensive, so if you could save development time, it just ends up the trade offs are different when you're talking about the tyranny of physical items and stuff like that, the constraints get a little more severe. But I think you have the same overall. You still have to fight local optimization, but the level you have to is probably different with physical goods.Austin Vernon (00:30:55):I was thinking about the smart grid situation from a software perspective, and there's this problem where, okay, I'm putting my solar farm here and it's impacting somewhere far away, and that's then creating these really high upgrade costs, that cost two or three times more than my solar farm. Well, the obvious thing would be, if you're doing software, is like you're going to break all these up into smaller sections, and then you wouldn't be impacting each other and all that, and you could work and focus on your own little thing.Austin Vernon (00:31:29):But the problem with that is if you're going to disconnect these areas of the grid, the equipment to do that is extremely expensive. It's not like I'm just going to hit a new tab and open a new file and start writing a new function. And not only that, but you still have to actually coordinate how this equipment is going to operate. So if you just let the grid flow as it does, everyone knows what's going to happen because they could just calculate the physics. If you start adding in all these checkpoints where humans are doing stuff, then you have to actually interface with the humans, and the amount of things that can happen really starts going up. So it's actually a really bad idea to try to cart all this stuff off, just because of the reality of the physical laws and the equipment you need and everything like that.Dwarkesh Patel (00:32:22):Okay. Interesting. And then I think you have a similar Coasean argument in your software post about why vertically integrating software is beneficial. Do you want to explain that thesis?Austin Vernon (00:32:34):Yeah. I think it actually gets to what we're talking about here, where it allows you to avoid the local optimization. Because a lot of times you're trying to build a software MVP, and you're tying together a few services… they don't do quite what you need, so if you try to scale that, it would just break. But if you're going to take a really complex process, like car manufacturing or retail distribution, or the home buying process or something, you really have to vertically integrate it to be able to create a decent end-to-end experience and avoid that local optimization.Austin Vernon (00:33:20):And it's just very hard otherwise, because you just can't coordinate effectively if you have 10 different vendors trying to do all the same thing. You end up in just constant vendor meetings, where you're trying to decide what the specs are or something instead of giving someone the authority, or giving a team the authority to just start building stuff. Then if you look at these companies, they have to implement these somewhat decentralized processes when they get too complex, but at least they have control over how they're interfacing with each other. Walmart, as the vendors, control their own stock. They don't tell the vendor, "We need X parts." It's just like, it's on you to make sure your shelf is stocked.Dwarkesh Patel (00:34:07):Yeah. Yeah. So what was really interesting to me about this part of the post was, I don't know, I guess I had heard of this vision of we're software setting, where everybody will have a software as a service company, and they'll all be interfacing with each other in some sort of cycle where they're all just calling each other's APIs. And yeah, basically everybody and their mother would have a SAAS company. The implication here was, from your argument, that given the necessity of integrating all those complexity vertically in a coherent way, then the winners in software should end up being a few big companies, right? They compete with each other, but still...Austin Vernon (00:34:49):I think that's especially true when you're talking about combining bits and apps. Maybe less true for pure software. The physical world is just so much more complex, and so the constraints it creates are pretty extreme, compared to like... you could maybe get away with more of everyone and their mom having an API in a pure software world.Dwarkesh Patel (00:35:14):Right. Yeah. I guess, you might think that even in the physical world, given that people really need to focus on their comparative advantage, they would just try to outsource the software parts to these APIs. But is there any scenario where the learning curve for people who are not in the firm can be fast enough that they can keep up with the complexity? Because there's huge gains for specialization and competition that go away if this is the world we're forced to live in. And then I guess we have a lot of counter examples, or I guess we have a lot of examples of what you're talking about. Like Apple is the biggest market cap in the world, right? And famously they're super vertically integrated. And yeah, obviously their thing is combining hardware and software. But yeah, is there any world in which it can keep that kind of benefit, but have it be within multiple firms?Austin Vernon (00:36:10):This is a post I've got on my list I want to write. The blockchain application, which excites me personally the most, is reimagining enterprise software. Because the things you're talking about, like hard typing and APIs are just basically built into some of these protocols. So I think it just really has a lot of exciting implications for how much you can decentralize software development. But the thing is, you can still do that within the firm. So I think I mentioned this, if the government's going to place all these rules on the edge of the firm, it makes transactions with other firms expensive. So a few internal transactions can be cheaper, because they're avoiding the government reporting and taxes and all that kind of stuff. So I think you'd have to think about how these technologies can reduce transaction costs overall and decentralize that, but also what are the costs between firms?Dwarkesh Patel (00:37:22):Yeah, it's really interesting if the costs are logistic, or if they're based on the knowledge that is housed, as you were talking about, within a factory or something. Because if it is just logistical and stuff, like you had to report any outside transactions, then it does imply that those technology blockchain could help. But if it is just that you need to be in the same office, and if you're not, then you're going to have a hard time keeping up with what the new requirements for the API are, then maybe it's that, yeah, maybe the inevitability is that you'll have these big firms that are able to vertically integrate.Austin Vernon (00:37:59):Yeah, for these big firms to survive, they have to be somewhat decentralized within them. So I think you have... you're going to the same place as just how are we viewing it, what's our perception? So even if it's a giant corporation, it's going to have very independent business units as opposed to something like a 1950s corporation.Dwarkesh Patel (00:38:29):Yeah. Byrne Hobart, by the way, has this really interesting post that you might enjoy reading while you're writing that post. It's type safe communications, and it's about that Bezos thing, about his strict style for how to communicate and how little to communicate. There's many examples in Amazon protocols where you have to... the only way you can put in this report, is in this place you had to give a number. You can't just say, "This is very likely," you had to say like, "We project X percent increase," or whatever. So it has to be a percent. And there's many other cases where they're strict about what type definition you can have in written reports or something. It has kind of the same consequence that type strict languages have, which is that you can keep track of what the value is through the entire chain of the flow of control.Austin Vernon (00:39:22):You've got to keep work content standardized.Dwarkesh Patel (00:39:26):So we've been hinting at the Coasean analysis to this. I think we just talked about it indirectly, but for the people who might not know, Coase has this paper called The Theory of Firms, and he's trying to explain why we have firms at all. Why not just have everybody compete in the open market for employment, for anything? Why do we have jobs? Why not just have... you can just hire a secretary by the day or something.Dwarkesh Patel (00:39:51):And the conclusion he comes to is that by having a firm you're reducing the transaction cost. So people will have the same knowledge about what needs to get done, obviously you're reducing the transaction cost of contracting, finding labor, blah, blah, blah. And so the conclusion it comes to is the more the transaction costs are reduced within people in a firm, as compared to the transaction cost between different firms, the bigger firms will get. So I guess that's why the implication of your argument was that there should be bigger tech firms, right?Austin Vernon (00:40:27):Yes, yes, definitely. Because they can basically decrease the transaction costs faster within, and then even at the limit, if you have large transaction costs outside the firm, between other firms that are artificially imposed, then it will make firms bigger.Dwarkesh Patel (00:40:45):What does the world look like in that scenario? So would it just be these Japanese companies, these huge conglomerates who are just... you rise through the ranks, from the age of 20 until you die? Is that what software will turn into?Austin Vernon (00:40:59):It could be. I mean, I think it will be lots of very large companies, unless there's some kind of change in inner firm transaction costs. And again, that could possibly come from blockchain like technology, but you probably also need better regulation to make that cheaper, and then you would have smaller firms. But again, in the end, it doesn't really matter. You'd be working in your little unit of the big bank of corporate, or whatever. So I don't know what that would look like on a personal level.Car ManufacturingDwarkesh Patel (00:41:40):Yeah. Okay. So speaking of these Japanese companies, let's talk about car manufacturing and everything involved there. Yeah, so we kind of hinted at a few elements of the Toyota way and production earlier, but do you want to give a brief overview of what that is, so we can compare it to potentially other systems?Austin Vernon (00:42:02):I think all these kinds of lean Toyota process systems, they do have a lot of similarities, where mostly you want to even-out your production, so you're producing very consistently, and you want to break it into small steps and you want to limit the amount of inventory you have in your system. When you do this, it makes it easy to see how the process is running and limit defects. And the ultimate is you're really trying to reduce defects, because they're very expensive. It's a little bit hard to summarize. I think that's my best shot at it there, quickly off the top of my head.Dwarkesh Patel (00:42:49):Yeah. The interesting thing about the Toyota system, so at least when the machine was released, is they talk about... that book was released I think the nineties, and they went to the history of Toyota, and one of the interesting things they talked about was there was a brief time where the company ran... I think, was this after World War II? But anyways, the company ran into some troubles. They needed to layoff people to not go bankrupt. They had much more debt on books than they had assets. So yeah, they wanted to layoff people, but obviously the people were not happy about this, so there were violent protests about this. And in fact I think the US written constitution gave strong protections to labor that they hadn't had before, which gave labor an even stronger hand here.Dwarkesh Patel (00:43:42):So anyway, Toyota came to this agreement with the unions that they'd be allowed to do this one time layoff to get the company on the right track, but afterwards they could never lay somebody off. Which would mean that a person who works at Toyota works there from the time they graduate college or high school till they die. Right? I don't know, that's super intense in a culture. I mean, in software, where you have the average tenure in a company's one year, the difference is so much.Dwarkesh Patel (00:44:13):And there's so many potential benefits here, I guess a lot of drawbacks too. But one is, obviously if you're talking in a time scale of 50 years, rather than one year, the incentives are more aligned between the company and the person. Because anything you could do in one year is not going to have a huge impact on your stock options in that amount of time. But if this company's your retirement plan, then you have a much stronger incentive to make sure that things at this company run well, which means you're probably optimizing for the company's long term cash flow yourself. And also, there's obviously benefits to having that knowledge built up in the firm from people who have been there for a long time. But yeah, that was an interesting difference. One of the interesting differences, at least.Austin Vernon (00:45:00):I mean, I think there's diminishing returns to how long your tenure's going to be. Maybe one year's too short, but there's a certain extent to where, if you grow faster than your role at the company, then it's time to switch. It's going to depend on the person, but maybe five years is a good number. And so if you're not getting promoted within the firm, then your human capital's being wasted, because you could go somewhere else and have more responsibility and perform better for them. Another interesting thing about that story, is almost all lean turnarounds, where they're like, we're going to implement something like Toyota production system, they come with no layoff promises. Because if you're going to increase productivity, that's when everyone's like, "Oh gosh, I'm going to get laid off." So instead you have to increase output and take more market share, is what you do.Dwarkesh Patel (00:46:00):It's kind of like burning your bridges, right? So this is the only way.Austin Vernon (00:46:05):The process really requires complete buy-in, because a lot of your ideas for how you're going to standardize work content come from your line workers, because that's what they're doing every day. So if you don't have their buy-in, then it's going to fail. So that's why it's really necessary to have those kinds of clauses.Dwarkesh Patel (00:46:22):Yeah. Yeah, that makes sense. I think it was in your post where you said, if somebody makes their process more efficient, and therefore they're getting more work allotted to them, then obviously they're going to stop doing that. Right? Which means that, I don't know, do you ought to give more downtime to your best workers or something or the people who are most creative in your company?Austin Vernon (00:46:48):I was just going to say, if you're a worker at a plant, then a lot of times for that level of employee, actually small rewards work pretty well. A lot of people on drilling rigs used to give the guys that met certain targets $100 Walmart gift cards. So sometimes small, it's a reward, new ideas, stuff like that works.Austin Vernon (00:47:15):But because the whole system has to grow together, if you just improve one part of the process, it may not help you. You have to be improving all the right processes so normally it's much more collaborative. There's some engineer that's looking at it and like, "All right, this is where we're struggling," or "We have our defects here." And then you go get together with that supervisor and the workers in that area, then you all figure out what improvements could be together. Because usually the people already know. This is like, you see a problem at the top, and you're just now realizing it. Then you go talk to the people doing the work, and they're like, "Oh yeah, I tried to tell you about that two weeks ago, man." And then you figure out a better process from there.Dwarkesh Patel (00:47:58):Based on your recommendation, and Steven Malina's recommendation, I recently read The Goal. And after reading the book, I'm much more understanding of the value that consultants bring to companies, potentially. Because before you could think, “What does a 21 year old, who just graduated college, know about manufacturing? What are they going to tell this plant that they didn't already know? How could they possibly be adding value?” And afterwards, it occurred to me that there's so many abstract concepts that are necessary to understand in order to be able to increase your throughput. So now I guess I can see how somebody who's generically smart but doesn't have that much industry knowledge might be able to contribute to a plan and value consultants could be bringing.Austin Vernon (00:48:43):I think this applies to consultants or young engineers. A lot of times you put young engineers just right in the thick of it, working in production or process right on the line, where you're talking to the workers the most. And there's several advantages to that. One, the engineer learns faster, because they're actually seeing the real process, and the other is there's easy opportunities for them to still have a positive impact on the business, because there's $100 bills laying on the ground just from going up and talking to your workers and learning about stuff and figuring out problems they might be having and finding out things like that that could help you lower cost. I think there's a lot of consultants that... I don't know how the industry goes, but I would guess there's... I know Accenture has 600,000 employees. I don't know if that many, but it's just a large number, and a lot are doing more basic tasks and there are some people that are doing the more high level stuff, but it's probably a lot less.Dwarkesh Patel (00:49:51):Yeah. Yeah. There was a quote from one of those books that said, "At Toyota we don't consider you an engineer unless you need to wash your hands before you can have lunch." Yeah. Okay. So in your blog post about car manufacturing, you talk about Tesla. But what was really interesting is that in a footnote, I think you mentioned that you bought Tesla stocks in 2014, which also might be interesting to talk about again when we go to the market and alpha part. But anyways. Okay. And then you talk about Tesla using something called metal manufacturing. So first of all, how did you know in 2014 that Tesla was headed here? And what is metal manufacturing and how does it differ from the Toyota production system?Austin Vernon (00:50:42):Yeah. So yeah, I just was goofing around and made that up. Someone actually emailed me and they were like, "Hey, what is this metal manufacturing? I want to learn more about this." It's like, "Well, sorry, I just kind of made that up, because I thought it sounded funny." But yeah, I think it's really the idea that there's this guy, Dimming, and he found a lot of the same ideas that Toyota ended up implementing, and Toyota respected his ideas a lot. America never really got fully on board with this in manufacturing. Of course it's software people that are coming and implementing this and manufacturing now which is like the real American way of doing things.Austin Vernon (00:51:32):Because when you look at these manufacturing processes, the best place to save money and optimize is before you ever build the process or the plant. It's very early on. So I think if there's a criticism of Toyota, it's that they're optimizing too late and they're not creative enough in their production technology and stuff. They're very conservative, and that's why they have hydrogen cars and not battery cars, even though they came out with the Prius, which was the first large sales hybrid.Austin Vernon (00:52:12):So yeah, I think what Tesla's doing with really just making Dimming's ideas our own and really just Americanizing it with like, "Oh, well, we want to cast this, because that would be easier." Well, we can't, because we don't have an alloy. "We'll invent the alloy." I love it. It's great. Mostly, I love Tesla because they do such... I agree with their engineering principles. So I didn't know that the company would come to be so valuable. It's just, I was just always reading their stock reports and stuff so I was like, "Well, at least I need to buy some stock so that I have a justification for spending all this time reading their 10 Ks."Dwarkesh Patel (00:52:53):I want to get a little bit more in detail about the exact difference here. So lean production, I guess, is they're able to produce their cars without defects and with matching demand or whatever. But what is it about their system that prevents them from making the kinds of innovations that Tesla is able to make?Austin Vernon (00:53:16):It's just too incremental. It's so hard to get these processes working. So the faster you change things, it becomes very, very difficult to change the whole system. So one of the advantages Tesla has is, well, if you're making electric cars, you have just a lot less parts. So that makes it easier. And once you start doing the really hard work of basically digitizing stuff, like they don't have speed limit dials, you start just removing parts from the thing and you can actually then start increasing your rate of change even faster.Austin Vernon (00:53:55):It makes it harder to get behind if you have these old dinosaur processes. But I think there's a YouTube channel called The Limiting Factor, and he actually went into the detail of numbers on what it costs for Tesla to do their giga-casting, which saves tons of parts and deletes zillions of thousands of robots from their process. If you already have an existing stamping line and all that, where you're just changing the dyes based on your model, then it doesn't make sense to switch to the casting. But if you're building new factories, like Tesla is, well, then it makes sense to do the casting and you can build new factories very cheaply and comparatively and much easier. So there's a little bit of... they just have lots of technical data, I guess you could say, in a software sense.Dwarkesh Patel (00:54:47):Yeah. That's super interesting. The analogy is actually quite... it's like, Microsoft has probably tens of thousands of software engineers who are just basically servicing its technical debt and making sure that the old systems run properly, whereas a new company like Tesla doesn't have to deal with that. The thing that's super interesting about Tesla is like, Tesla's market cap is way over a trillion, right? And then Toyota's is 300 billion. And Tesla is such a new company. The fact that you have this Toyota, which is legendary for its production system, and this company that's less than two decades old is worth many times more, it's kind of funny.Austin Vernon (00:55:32):Yeah. I would say that, in that measure, I don't like market cap. You need to use enterprise value. These old car companies have so much debt, that if you look at enterprise value, it's not so jarring. Literally, I don't know, I can't remember what GM's worth, like 40 billion or something, and then they have $120 billion in debt. So their enterprise value is five times more than their market cap.Dwarkesh Patel (00:56:02):What is enterprise value?Austin Vernon (00:56:03):Enterprise value is basically what is the value of the actual company before you have any claims on it. It's the market cap plus your debt. But basically, if you're the equity holder and the company gets sold, you have to pay the debt first. So you only get the value of what's left over after the debt. So that's why market cap is... when Tesla has very little debt and a lot of market cap, and then these other guys have a lot of debt with less market cap, it skews the comparison.Dwarkesh Patel (00:56:34):Yeah, and one of the interesting things, it's similar to your post on software, is that it seems like one of the interesting themes across your work is automating processes often leads to decreased eventual throughput, because you're probably adding capacity in a place that you're deciding excess capacity, and you're also making the money part of your operation less efficient by have it interface with this automated part. It sounds like there's a similar story there with car manufacturing, right?Austin Vernon (00:57:08):Yeah. I think if we tie it back into what we were talking about earlier, automation promotes local optimization and premature optimization. So a lot of times it's better to figure out, instead of automating a process to make a really hard to make part, you should just figure out how to make that part easy to make. Then after you do that, then it may not even make sense to automate it anymore. Or get rid of it all together, then you just delete all those robots.Austin's Carbon Capture ProjectDwarkesh Patel (00:57:37):Yeah. Yeah, that's interesting. Okay. So let's talk about the project that you're working on right now, the CO2 electrolysis. Do you want to explain what this is, and what your current approach is? What is going on here?Austin Vernon (00:57:55):Yeah, so I think just overall, electrofuels right now are super underrated, because you're about to get hopefully some very cheap electricity from solar, or it could be, maybe, some land. If we get really lucky, possibly some nuclear, geothermal. It'll just make sense to create liquid fuels, or natural gas, or something just from electricity and air, essentially.Austin Vernon (00:58:25):There's a whole spectrum of ways to do this, so O2 electrolysis is one of those. Basically, you take water, electricity, and CO2, and a catalyst. And then, you make more complex molecules, like carbon monoxide, or formic acid, or ethylene, or ethanol, or methane or methine. Those are all options. But it's important to point out that, right now, I think if you added up all the CO2 electrolyzers in the world, you'd be measuring their output and kilograms per day. We make millions of tons per day off of the products I just mentioned. So there's a massive scale up if it's going to have a wider impact.Austin Vernon (00:59:15):So there's some debate. I think the debate for the whole electrofuels sector is: How much are you going to do in the electrolyzer? One company whose approach I really like is Terraform Industries. They want to make methane, which is the main natural gas. But they're just making hydrogen in their electrolyzer, and then they capture the CO2 and then put it into a methanation reaction. So everything they're doing is already world scale, basically.Austin Vernon (00:59:47):We've had hydrogen electrolyzers power fertilizer plants, providing them with the Hydrogen that they need. Methanation happens in all ammonia plants and several other examples. It's well known, very old. Methanation is hydrogen CO2 combined to make water and methane. So their approach is more conservative, but if you do more in the electrolyzer, like I'm going to make the methane actually in the electrolyzer instead of adding this other process, you could potentially have a much simpler process that has less CapEx and scales downward better. Traditional chemical engineering heavily favors scaling. With the more Terraform processes, they're playing as absolutely ginormous factories. These can take a long time to build.Austin Vernon (01:00:42):So one of the things they're doing is: they're having to fight the complexity that creeps into chemical engineering every step of the way. Because if they don't, they'll end up with a plant that takes 10 years to build, and that's not their goal. It takes 10 years to build a new refinery, because they're so complex. So yeah, that's where I am. I'm more on the speculative edge, and it's not clear yet which products will be favorable for which approaches.Dwarkesh Patel (01:01:15):Okay, yeah. And you're building this out of your garage, correct?Austin Vernon (01:01:19):Yeah. So that's where electrolyzers... Everything with electric chemistry is a flat plate instead of a vessel, so it scales down. So I can have a pretty good idea of what my 100 square centimeter electrolyzer is going to do, if I make it quite a bit bigger. I have to worry about how my flow might interact in the larger one and make sure the mixing's good, but it's pretty straightforward because you're just making your flat plate a larger area. Whereas the scale, it is different from scaling a traditional chemical process.Dwarkesh Patel (01:01:56):I'm curious how cheap energy has to be before this is efficient. If you're turning it into methane or something like that, presumably for fuel, is the entire process energy positive? Or how cheap would energy, electricity you need to get before that's the case?Austin Vernon (01:02:18):The different products and different methods have different crossovers. So Terraform Industries, they're shooting for $10 a megawatt hour for electricity. But again, their process is simpler, a little less efficient than a lot of the other products. They also have better premiums, just worth more per ton than methane. So your crossover happens somewhere in between $10 and $20 a megawatt hour, which is... I mean, that's pretty... Right now, solar, it's maybe like $25. Maybe it's a little higher because payment prices have gone up in the last year, but I think the expectation is they'll come back down. And so, getting down to $15 where you start having crossovers for some of these products like ethanol or ethylene or methanol, it's not science fiction.Dwarkesh Patel (01:03:08):I think in Texas where I live, that's where it's at right? The cost of energy is 20 or something dollars per megawatt hour.Austin Vernon (01:03:16):Well, not this summer! But yeah, a lot of times in Texas, the wholesale prices are around $25 to $30.Dwarkesh Patel (01:03:26):Gotcha. Okay. Yeah. So a lot of the actual details you said about how this works went over my head. So what is a flat plate? I guess before you answer that question, can you just generally describe the approach? What is it? What are you doing to convert CO2 into these other compounds?Austin Vernon (01:03:45):Well, yeah, it literally just looks like an electrolyzer. You have two sides and anode and a cathode and they're just smushed together like this because of the electrical resistance. If you put them far apart, it makes it... uses up a lot of energy. So you smush them together as close as you can. And then, you're basically just trading electrons back and forth. On one side, you're turning CO2 into a more complex molecule, and on the other side, you're taking apart water. And so, when you take apart the water, it balances out the equation, balances out your electrons and everything like that. I probably need to work on that elevator pitch there, huh?Dwarkesh Patel (01:04:31):I guess what the basic idea is, you need to put power in to convert CO2 into these other compounds.Austin Vernon (01:04:38):The inputs are electricity, water, and CO2, and the output is usually oxygen and whatever chemical you're trying to create is, along with some side reactions.Dwarkesh Patel (01:04:49):And then, these chemicals you mentioned, I think ethanol, methane, formic acid, are these all just fuels or what are the other uses for them?Austin Vernon (01:04:58):A lot of people are taking a hybrid approach with carbon monoxide. So this would be like Twelve Co… They've raised a lot of money to do this and 100 employees or something. You can take that carbon monoxide and make hydrogen, and then you have to send gas to make liquid fuels. So they want to make all sorts of chemicals, but one of the main volume ones would be like jet fuel.Austin Vernon (01:05:22):Let's see Formic acid is, it's the little fry of all these. It is an additive in a lot of things like preserving hay for animals and stuff like that. Then, ethanol there's people that want to... There's this company that makes ethylene, which goes into plastics that makes polyethylene, which is the most produced plastic. Or you can burn it in your car, although I think ethanol is a terrible vehicle fuel. But then you can also just make ethylene straight in the electrolyzer. So there's many paths. So which path wins is an interesting race to see.Dwarkesh Patel (01:06:13):The ability to produce jet fuel is really interesting, because in your energy superabundance paper, you talk about... You would think that even if we can electrify everything in solar and when it becomes super cheap, that's not going to have an impact on the prices to go to space for example. But I don't know. If a process like this is possible, then it's some way to in financial terms, add liquidity. And then turn, basically, this cheap solar and wind into jet fuel through this indirect process. So the price to send stuff to space or cheap plane flights or whatever––all of that goes down as well.Austin Vernon (01:06:52):It basically sets a price ceiling on the price of oil. Whatever you can produce this for is the ceiling now, which is maybe the way I think about it.Dwarkesh Patel (01:07:06):Yeah. So do you want to talk a little bit about how your background led into this project? This is your full-time thing, right? I don't know if I read about that, but where did you get this idea and how long have you been pursuing it? And what's the progress and so on.Austin Vernon (01:07:20):I've always loved chemical engineering, and I love working at the big processing plant because it's like being a kid in a candy store. If I had extra time, I'd just walk around and look at the plant, like it's so cool. But the plant where I worked at, their up time was 99.7%. So if you wanted to change anything or do anything new, it terrified everyone. That's how they earned their bonuses: run the plant a 100% uptime all the time. So that just wasn't a good fit for me. And also, so I always wanted my own chemical plant, but it's billions of dollars to build plants so that was a pretty big step. So I think this new technology of... there's a window where you might be able to build smaller plants until it optimizes to be hard to enter again.Dwarkesh Patel (01:08:21):And then, why will it become hard to enter again? What will happen?Austin Vernon (01:08:27):If someone figures out how to build a really cheap electrolyzer, and they just keep it as intellectual property, then it would be hard to rediscover that and compete with them.Dwarkesh Patel (01:08:38):And so, how long have you been working on this?Austin Vernon (01:08:42):Oh, not quite a year. But yeah, I actually got this idea to work on it from writing my blog. So when I wrote the heating fuel post, I didn't really know much about... There's another company in the space, Prometheus Fuels and I'm like, "Oh, this is an interesting idea." And then, I got talking to a guy named Brian Heligman, and he's like, "You should do this, but not what Prometheus is doing." And so, then I started looking at it and I liked it, so I've been working on it since.Dwarkesh Patel (01:09:08):Yeah. It's interesting because if energy does become as cheap as you suspect it might. If this process works, then yeah, this is a trillion dollar company probably, right? If you're going to get the patents and everything.Austin Vernon (01:09:22):I mean, maybe. With chemical plants, there's a certain limitation where your physical limitation is. There's only so many places that are good places for chemical plants. You start getting hit by transportation and all that. So, you can't just produce all the chemical for the entire world in Texas and transport it all around. It wouldn't work. So you're talking about a full, globe-spanning thing. At that point, if y

We've gotten into a little bit of a pattern here on the show. Seems like every other interview or so is with some founder or executive at an influencer marketing software company. There are lots of reasons for that. First, they're anxious to mention their platform to you since they know the people who listen to WInfluence are interested in and often shopping for solutions to problems with influencer marketing. That makes this group of people easy interviews.  My goal in having them on the show is to certainly talk about their platform so you might have a good idea of something else out there, but then I try to dive deeper into their worldview, at least as it pertains to influencer marketing. We discuss and debate issues and such. That gives you more than just a veiled ad for their thing and helps us push the thinking. By the way – no one pays to be interviewed on this show. The editorial part of it is just me deciding that person has something worth sharing and talking about. Sure, I've interviewed Pete Kennedy from Tagger, who is our show sponsor, and some folks from companies that sponsor the Marketing Podcast Network, of which Winfluence is a member, but being interviewed on Winfluence is not part of any ad buy for them. Just so you know. Austin Rosenthal actually caught my attention recently by saying he didn't agree with my conclusion from an earlier conversation. If you'll remember back a few episodes we talked to Aaron Bruce of Posse.io. His platform allows brands to tap into an influencer's audience by targeting advertising to them with the creator's permission, but for a CPM payout to the influencer and no need for content creation.  My headline / conclusion on that episode was “Are we doing influencer marketing all wrong.” So Austin took issue. It's no surprise. Austin Rosenthal is the chief operating officer at Lionize.ai. It is an influencer marketing software platform in the traditional sense. You use Lionize.ai to search and discover, then engage and manage influencer campaigns. So I could see why he would object to me inferring that we might be doing influencer marketing wrong by not focusing on just ad buys against influencer audiences. I welcomed the pushback and knowledge about Lionize.ai, but only if Austin would come on the show and explain both. So, a new tool and a little fun discussion is in order today on Winfluence.  This episode of Winfluence is presented by Tagger, a complete influencer marketing management solution. Try a free demo at jason.online/tagger today. Learn more about your ad choices. Visit megaphone.fm/adchoices

Is it possible to find and list commercial real estate properties for free? Caleb Richter has made it possible already through his company, MyEListing. Unlike other platforms where you still need to create an account then log in, you can simply search a city, county, Zip code, or even property ID on MyEListing, and thousands of search results will appear right away.  The best part of this experience is that it is totally free. Caleb will talk about his motivations for offering this service to real estate agents without asking for any money and their business model that still allows them to generate revenue.  [00:01 - 03:42] Opening Segment Caleb Richter is now focusing on commercial real estate technology What's the story behind He says that you necessarily need a technology background in this space Here's why [03:43 - 13:14] Finding and Listing Properties for Free Caleb gives a sneak peek into the services offered by MyEListing The business model currently not present in commercial real estate Why uploading a listing on MyEListing is totally free If their service is free, how does Caleb's company generate revenue? [13:15 - 15:44] Navigating the MyEListing Website How to utilize the Comp Software in the MyEListing website Caleb talks about how he funded the launch of MyEListing [15:45 - 16:58] Closing Segment Reach out to Caleb See links below  Final words   Tweetable Quotes   “The idea is we want everyone to come to us so that we can monetize the traffic just like what [Facebook, Google, Pinterest, Instagram, and Twitter] do. It's not a new business model, but this business model doesn't exist in the commercial real estate space [yet].” - Caleb Richter   “You can come to our site (MyEListing.com) and post [your listing] and the whole world can see it without even logging in.” - Caleb Richter   “We take a ton of pride in that we have no automation. [There are] people on the line…” - Caleb Richter   -----------------------------------------------------------------------------   Email caleb@myelisting.com to connect with Caleb or follow him on LinkedIn. Go to MyEListing to find and list properties for free! You can also reach out to them by calling 512-923-6373.  Connect with me:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: Caleb Richter  00:00 A solution that we're providing is every listing on our site gets a demographic report, and it's the best demographic report you can get. So I had an individual call me and say, “Hey, during COVID, you just because you're giving away demographic reports, I don't have to fire two people at my firm because I'm saving money on that.” Yeah, so the solutions are endless for brokers because we want to give them everything for free everything, and we want it to be the best.   Intro  00:26 Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.   Sam Wilson  00:39 Caleb Richter is the CEO of MyEListing.com, which is a site to list and find commercial real estate for free. Caleb, welcome to the show.   Caleb Richter  00:48 Thank you. Glad to be here. This is one of my first podcast, so I'm excited about it.   Sam Wilson  00:54 Oh, good. Well, I'm gonna be sure to grill you hard and make it super uncomfortable. I'm just absolutely kidding. Caleb, there are three questions I ask every guest who comes on the show. In 90 seconds or less, can you tell us where did you start? Where are you now? And how did you get there?   Caleb Richter  01:07 Yeah, okay. Yeah, so did real estate, was a real estate agent for a while, did a lot of cool things. As an agent, I did some projects where we raised money for value-add deals, usually industrial office, warehouse, parks, those kinds of things, and then I shifted into tech, but commercial real estate tech, primary drive now is to change commercial real estate commerce itself, and that's why I'm here to tell more people about it.   Sam Wilson  01:38 Man, that's super interesting. Did you have a tech background before? Or was this just kind of random? Like, oh, wait, there seems to be an opportunity here and I want to fill it.   Caleb Richter  01:47 My tech background is playing a lot of video games as a kid and having an iPhone. That's about my tech background. I have zero and I don't think you need it. But yeah, it's no tech background.   Sam Wilson  02:01 That's interesting. You say you don't think you need it? Why do you say that?   Caleb Richter  02:04 Because the tech of it is an art form and people, so if you're building a tech company, usually it is an application or software, and if it's an application or software, to have it be decent, it has to be better than WordPress, okay, WordPress are the linking or the Legos of the internet world that 99% of websites are made off of. You put this leg on top of that Lego and you have a website that's good for 99% of people. If you have a tech background and can do that quickly. That's great. But a custom web application where there's an interactive map, users accounts, that's an application, well, you have to be a lifetimer to be able to do that, right? It is a form of art. And so having a tech background is usually, means that well, you're going to outsource it. Like you can't just have a tech, even people who say they have a tech background usually can't do good web applications. So it's truly an art form. And it's kind of like, well, I went to law school to be my own attorney, which I did go to law school for a year. And I thought, “Hmm, do I want a half-decent attorney that doesn't practice law doing all my legal work, aka me or do I want a real attorney who lives it to do my legal work?” So I was like, “Well, I want a real attorney to do my legal work, and it's the same thing with everything else, right?” That's my opinion on it. Right. You don't need a tech background.   Sam Wilson  03:43 No. Understood, let's jump right into what MyEListing is. What if you didn't have a tech background? And you said, okay, you know, I see a hole in the marketplace, what hole did you see? And how did you decide to fill it?   Caleb Richter  03:54 So listing and finding commercial real estate cost money, right? It can be expensive, which is relative, but it can be expensive currently. And I was we were in the space. I was in the space. I was thinking, you know, Facebook's free, big company. Google's free, pretty big company. Pinterest is free, pretty big company, Instagram, Twitter. Those are all pretty big companies. And they're also the most, some of the most valuable companies in the world. And so we started looking at this and we're thinking, why don't we create a business model that is similar. We want to generate as much traffic as possible through you know, just user experience, quality of listing, so we give everything away to the agents for free, and that includes flyer creation demographic reports, traffic reports, comps off where we power people's websites, like we power in NAI global, we give everything away for free, and we're super amazing, right? And the idea is we want everyone to come to us so that we can monetize the traffic just like what those companies previously listed do. It's not a new business model. But this business model doesn't exist in the commercial real estate space. And so our goal is to bring it to commercial real estate.   Sam Wilson  05:16 That's really intriguing. You know, so are you dealing with residential? Are you dealing with strictly commercial, what's your target real estate that gets listed on my listing?   Caleb Richter  05:26 So it is strictly commercial real estate. As of now, all companies, if they live infinitely will begin to enter in other markets and began to spread to different parts of the world. Think about Amazon, right? They sell books, then they sell toys, and then they sell Amazon, you know, fire sticks, whatever. So we're yes, it's just commercial right now. But as we grow, we intend to enter into other markets and other parts of the world. But it is strictly at this moment, commercial real estate in the United States.   Sam Wilson  06:01 Right, and tell me what did someone if they go to your site, what do they find?   Caleb Richter  06:04 So when you go to our website, you have a search bar right on the homepage. And you can and this is for someone looking to find a property, you can search by city, state, zip, county, and we're adding neighborhoods this week, and then the property type, and then you search. And then you can see all the listings in your area. We don't allow people to pay us to post their listings. That is strictly everyone can post listings, if they want to.    Sam Wilson  06:36 What are you solving that maybe Crexi, CoStar, LoopNet, what are you solving that those platforms haven't already solved?   Caleb Richter  06:44 So there is not one spot that everyone goes because of price and networks within certain cities. And what we're solving is the quality of the, of where you're searching itself. So in multiple cities, you got to look here, you got to look at this website, and this website and LoopNet and Crexi to see every single listing. But what we're doing is we're saying, Look to upload a listing, it's completely free. And we don't even allow you to pay us to get your listing on more exposure, it's a Puritan, you can come to our site and post and the whole world can see it without even logging in. So the solution that we're providing, even today, if you pick a random city, and every time I talk to them, like just pick a random city, search it on our website, Crexi, LoopNet, there has been countless times where I would say that we have, I would argue and say we have more listings and Crexi and LoopNet does on both of their platforms. It's like, okay, that's fine. You say you have this many listings, let's all search a random city together and see how many listings show up on my listing your website and your website. And I would do that in front of the whole world with everyone watching 100 times over. And it's because we're free, right. So since we're free, we have the most listings, and we give your listings the most exposure because you don't have to be logged in to see anything. Like they do say that they do that. But you can't download the flyer without creating a profile. That's a barrier, right? And people claim so many things that their website does. And we don't have to claim and then be like, “Oh, look at the fine print.” It's we're a pure come Puritan, when it comes to you come to our site, you list properties, and you find properties. And on top of that the powering of the website, right, so you can come to us, we give you one line of code. And you have a map that displays all your listings. You can see in NAI Global, they're the second biggest commercial brokerage firm in the world. We power their Mapping Display. Okay, we also do agent directories. We do it for brokerage firms that have two listings or 26,000 listings, it doesn't matter. We've talked to all the top 10 brokerage firms to do the same thing. And demographic reports, right, a solution that we're providing is every listing on our site gets a demographic report, and it's the best demographic report you can get. So I had an individual call me and say, “Hey, during COVID, you just because you're giving away demographic reports, I don't have to fire to people at my firm because I'm saving money on that.” Yeah, so the solutions are endless for brokers because we want to give them everything for free everything. And we want it to be the best, yeah.   Sam Wilson  09:34 So you've gotten all these brokerage houses? You guys are powering an NAI Global's would you say it was their Mapping…   Caleb Richter  09:40 Display. Yeah, like on their own map. It's the map that shows all the listings with pins, and then their own listing pages.   Sam Wilson  09:46 Right, you guys are powering now, which is really cool. You're giving away free demographic reports. And your idea behind this is that you can then monetize the traffic through paid ads and other things there than on the site. Is that right?   Caleb Richter  09:56 Correct. So we identified 48 different vendors that were all around the commercial real estate industry. So think title companies, plumbers, roofers, phase one, guys, everything, electricians, architects, and we say, “Hey, if you want to be in front of our users and little ad boxes on the right-hand side of all listings, pay us.” And that's how we make money.   Sam Wilson  10:19 That's really, really intriguing. Now, does a broker when they log in, or not log in, do they have when they want to post a listing? Let me start my question over, do they have to log in in order to post a listing?    Caleb Richter  10:31 Yes, they have to log in to post the listing because we require that you show your contact information when you create a listing.   Sam Wilson  10:39 Right, that's really intriguing. I mean, I haven't heard of your website until you know, here maybe a week or so ago when you guys reached out. And so I'm really curious, how are you guys really driving traffic to it right now? And what's your plan for that going forward?   Caleb Richter  10:53 Right. So it's a light switch that I call it a light switch. So we spent with a huge team, one year cold calling every single commercial brokerage firm in the world, in the country. And we said, hey, we're MyE Listing, we're free, we're always going to be free, would you like us to upload your listings for you? And then when they say, yes, we follow up with an email saying, “Hey, you said yes, over the phone, say yes, over email.” And then we go to their website. And once they say yes, over email, so that we have a paper trail for every listing, we went to their website, organized it all, by agent-created profiles for them, and uploaded their listings. And we did that for over a year with a massive team to do it all legit, because you think, well, I haven't heard of you. It's like, I don't want you to hear about me. Because if you're in Waco, Texas, and we just haven't gotten there yet, or gotten enough traction, and we track every single city and how many listings it has, and we didn't want people to come to the site because if they come to the site, and there's no listings for the first time, it's like this is bad. And on even further, the SEO aspect of that is terrible. If you get a ton of bounces, meaning someone goes and then immediately leaves, there's a lot of consequence to that when it comes to ranking. But we just flip the light switch, and again, challenge anyone to compare us to any other website and say, Google Austin, Google St. Paul, Minnesota, do it on ours do it on another one. And then the lights, which I'm referring to is all the SEO terms. So it's all the property types combined with sale for lease with city, zip code. So Austin, retail for sale, we're on the first page of Google when you Google that. Now we are, but we haven't indexed for yet, because we did it in phases, we have an index for 78613 Industrial for lease, it's a slow trickle. But the first step of it was the light switch with the city combined with the property type. And that's just now indexing on Google. So you will start to see us.   Sam Wilson  12:56 Gotcha, that's really, really intriguing. And the value proposition for the end-user, not necessarily the listing company, but the end-users that they can get in, they can see all the data, they can generate all the reports, and you're not monkeying with, hey, login, hey, look at this, look at that, it's you can just get in, take a look at it and then move on if it's not for you.   Caleb Richter  13:15 Correct. Yeah. And in the Comp Software, we organize all of our live listings in the form of a map. So if you click comps off where it takes you to a new page, you can search, but it'll have the map and an Excel below it. So you can change the zoom of the map in certain areas. So if you want to look over a whole city, or you just want one little block, all the listings that meet your parameters, like if you search retail, 10,000 to 50,000, square feet, all of those listings will show up in the Excel below the map. And it'll show the average price per square foot, the average land price per square foot, the average square foot. So that's free as well, we give away all of our data, our live data, so anyone in any place in the United States can be an expert in any market. So that's another value add prop, but it's pretty cool, man. I'm really excited about it.    Sam Wilson  14:13 That's absolutely fantastic. I love the run-up in the runway, I mean spending a year cold calling all the major brokerage houses by getting their listings getting organized, getting them on the site. I mean, that's no small task. Caleb, one of the things that I think is intriguing, I mean, is really just how I mean to have the run-up, the runway to say, man, you know, we're going to put all these people in place, we're going to spend a year kind of developing the plan, getting everybody on board, reaching out to brokers that cost a lot of money in time, you know, is this something, did you sell fund this, that you go out and raise money from investors, just how did that process work, and just kind of break that down for us?   Caleb Richter  14:48 Yeah, so when I got the idea, I really just loved it. And I went all in and I had a couple 100 grand, it was two or 50 grand, I can't remember if it was 250, grand or 200, I went to zero. And I was like, shoot, I need money, and then I raised like 500, and then in March or raising or not in March, January of 2021, raise another 2 million and plan on raising more.   Sam Wilson  15:15 Right. You guys are a couple of to 3 million bucks in and you know, you still have some ways to go, I guess, you know, maybe on the development side, but it sounds you basically got the product developed. So that's absolutely intriguing. I love that. Caleb, thanks for taking the time to jump on today. It's been a blast. I've certainly enjoyed it. Certainly enjoyed learning a lot about your business, MyELlisting. I mean, that's a lot of fortitude. And you know, a lot of just foresight to say, hey, here's a hole in the marketplace. And we think we can fill it. So I look forward to seeing where you guys and your company as a whole goes. If listeners want to get in touch with you or learn more about you, what is the best way to do that?   Caleb Richter  15:48 Yeah, so the best way to reach us is to call our office number. It's 512-923-6373. We take a ton of pride in that we have no automation. There's people on the line if you want to talk to me directly, ask for me, whoever answers and if you want to talk to any of anyone in any of our divisions at the company, just say can I talk to one and sales are the comp software or flyer creation? I forgot to mention that. We do flyer creations as well. No one ever asked. We do custom fliers. Yes, completely free. And it's sweet. Like just trust me. It's incredible. Yeah, that's pretty much it.   Sam Wilson  16:29 That's awesome. Caleb, thank you for your time today. I do appreciate it. It was great learning about you guys and your business.    Caleb Richter  16:35 Alright, sir. Thanks for your time.   Sam Wilson  16:37 Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.

DOWNLOAD SOLCIETY APP NOW! Speaker 1 (00:03):Welcome to the Solarpreneur podcast, where we teach you to take your solar business to the next level. My name is Taylor Armstrong and I went from $50 in my bank account and struggling for groceries to closing 150 deals in a year and cracking the code on why sales reps fail. I teach you to avoid the mistakes I made and bringing the top solar dogs, the industry to let you in on the secrets of generating more leads, falling up like a pro and closing more deals. What is a Solarpreneur you might ask a Solarpreneur is a new breed of solar pro that is willing to do whatever it takes to achieve mastery and you are about to become one.Speaker 2 (00:42):What's going on Solarpreneurs, we're back with a another episode, and this is another feature we have with our recent sponsor on the show, and that is pipes in to get. So we've got the man behind kind of the, I would like maybe like the scientist behind the scenes working on the backend of all this. So he's going to give us yeah, just get a stoked about pipe syndicate. Tell us a little bit more about what's going on. So we've got Austin Underwood on the show, Austin. Thanks for coming on with us today.Speaker 3 (01:11):Yeah, thanks for having me today. Yeah, so we I came on to talk about a company that we've been involved with and Taylor's been doing some stuff with called PI syndicate. It's basically a program that we've decided as a mastermind to help solar wraps any real wrap in the door door industry, but primarily solar. I mean, you get all these kids that are coming in to do quite a bit of money all of a sudden, and they don't really know what to do with it, or maybe they're not as smart as they, as it could be. And they don't really know that. And so we help them manage and kind of help really just manage that money. So we're, we're helping them utilize our skills to make that money go further for them as they're, as they're younger and they don't know what to do with it, or they just don't know how to get into certain aspects of, of the investment pools that they want to.Speaker 3 (01:58):And then a big portion of that is tax mitigation. So we help mitigate the taxes on your income side. And we do that a numerous of ways. I mean, we really just decided that we needed to start something that would help out the reps. I there's so many different companies that come in and help the owners, the CEOs, the high level executives. Everybody wants to take care of those guys, but nobody's really talking about, you know, that, that new rep that just started in solar, that you know, is going to crush it and make, you know, 250 K this year, that just came out of nowhere. And and nobody helps that kid, right? He, he gets his tax bill. He goes to a CPA. He thinks he's doing everything the right way. And he doesn't really know that there's a different way to do it, or there's more opportunities than he really thinks there are.Speaker 3 (02:40):And so we wanted to start something that would really help, not only the companies, because we have corporate memberships, we have memberships that include CEOs and owners and things like that, but we wanted a lower level package for the reps. So I rapped could afford it. And a rep could come in and, and say, Hey, I don't know what to do here. I don't know how to file these. I don't know what the right expenses should go, where we just take care of all that for you. We've designed it to be a white glove service. That'll just take care of it for you.Speaker 2 (03:10):That's awesome. And it's cool. Cause you guys have, you know, different packages, different levels. So there's really no excuse for anyone not to being, be getting help from you guys financially. Cause yeah, I mean, yeah, they're lower packages. Maybe it's just the taxes you want done.Speaker 3 (03:24):Yeah. Well, and we, we do the three packages. There's about three main ones and we do them for a reason is we really want, you know, we go anywhere from 5,000 to 30,000 and we do that because we know that there are different needs for different people. Some people aren't in a place this year, you know, some of those new reps, aren't in a place to need all of the benefits with a 15 and $30,000 package, but they definitely needed a $5,000 package and, and vice versa. Some guys are too far. But what, what we do allow is as you grow, we grow with you. So you eventually can move into those spots and not have any problems.Speaker 2 (03:54):Yeah, that's awesome. So yeah, we're going to talk more about that and get into more detail here, but I wanted to hear from you, do you Austin, we were talking yesterday and you told me your background. What's really cool. Austin has just kind of the rags to riches story. I grew up in pretty humble beginnings and all that. So I wanted to see if you would tell our listeners kind of like your upbringing, your story with that, and then how you got more involved in like, you know, door to door and like financial side of things.Speaker 3 (04:21):Yeah, absolutely. Yeah. So we, we we grew up in Utah, so we're from salt lake city, Utah, but we grew up in a little suburb subsidiary section and a Ned called Magna super far west. And it's a, it's a really humble little city. I mean, it's, it's really small compared to most cities in Utah. We we struggled a little bit with, with financial matters and you know, it wasn't like I ever went without things for the most part. I mean, there was a few times that, you know, things got a little, a little sketchy, but for the most part, you know, we, we made it work and, you know, I think for the time and the era, you know, my parents were bringing in like $30,000 together. Like both of them were working, full-time multiple jobs at one point. And you know, it was just hard to figure it out. Right. You know,Speaker 2 (05:07):And you're not that old, so that's right. Yeah. Cause some people are like, oh, maybe he's maybe Austin's like 60 years old.Speaker 3 (05:14):Yeah. I'm only 25. And I I just decided like, you know, at a young age, I, I'm not going to live like this. I can't, I can't do this, this isn't for me. Like not even just the money, but just the security behind what the money brings. Right. It's really not about the money it's I wanted to be able to first off utilize how to use the money. So what do I need to do to keep the money that I'm going to bring in? Right. Not just trying to generate millions and millions of dollars. Like I think most people think, right. You could have a million dollars but use it the right way and still have more money than somebody with $5 million that uses it the wrong way. Right. Yeah. And so that's kind of where, where I started out and I really was just like, yeah, there's gotta be something I can do.Speaker 3 (05:53):So actually, one of my first jobs as I went around to a local restaurants and things like that, and I was like, Hey, that disgusting garbage brick wall thing that you guys keep your garbage Kennan. I'll scrub it out, you know, for like 20 bucks an hour, I'll come every Saturday and I'll do it all. I just ride my bike over there and you know, I was like 13 years old and I needed money for something. Oh, I, well, I wanted to go to a T I wanted to go on a trip to New York city to visit my uncle. We were never really able to go on any sort of traveling trips. I didn't really start to travel until I got into my early twenties when I could pay for it myself. The, the most I had ever really traveled as we would drive somewhere, anywhere we could drive, we could kind of go, but that was it.Speaker 3 (06:32):I had never been, I didn't get on an airplane until I paid for my ticket by myself. And I just happened to be 13 years old. But I just, I just, I went crazy all summer and I just hustled as hard as I could. And so I started doing that and I got that company up pretty, pretty good. I think I was doing at one point like 50, 50 restaurants within riding, riding, riding my bicycle distance. So there's a big street. If you drive out to 5,600 west where it's just lined with restaurants up and down, both sides of the street. So I just went and talked to every, every single one that I could. And, and I had an uncle that was in the franchise world and he was like, well, yeah, you can come do you know mine? And I was like, okay, you'll let me come do these.Speaker 3 (07:16):You already agreed to it, but here's the catch. I don't have a car. I can't drive on 13. So you gotta come get me and take me to all these things. So I made him come and pick me up and go do that. And so that's kind of where I realized like, okay, so if I do this something by myself, I'm obviously gonna make a lot more money. I have to rely on anybody else. I can do the work myself. And so that's when I kind of was like, I got to a point where I actually had a little bit of money. And so I thought I have to figure out how to manage this money the right way. And so I started just kind of doing, taking some small classes doing some college stuff, you know, some community stuff kind of going through and figuring out like, you know, how do I do this? How do I do that? What's the tax side. I mean, you know, what is the tax sides of these mean? Speaker 2 (07:57):That's cool. Most, most people aren't thinking about that. Well,Speaker 3 (08:00):They're not right. And I think that's the problem is that I don't think that there's enough education for people available. I mean, cause it's out there and you can find it, but how hard is it defined? It's a lot easier to find a dumb video of, you know, a super rich kid online doing something stupid with money. So that's the envision people have in their head and I needed, that's not real. And so I was like, I have to figure out how I can manage this money the right way.Speaker 2 (08:23):I think that came just from like your upbringing and seeing that you guys learned growing up. So you're like, okay, I want to figure out how to like,Speaker 3 (08:29):Yeah, a hundred percent. I don't think my goal in life when I decided that I wanted to be able to make some money. My goal was never to be the richest man in a room. My goal was to be stable. That's all that I wanted. There was so much unstability growing up in a poor family and you know, things just are all over the place. So I wanted the stability of what the money could bring. And so my idea was never to make a lot of money. I mean, in theory, that happens, I guess, where you, you do make good amounts of money being pretty strategic and smart and cautious about what you're doing. But for the most part, it's really just, I wanted the street, the strategic ability to be safe and content, right. Savings accounts, things like that, that most people are like, not important. I can do that later. Well, that's not true. You need to be doing that now.Speaker 2 (09:16):Yeah. That's a good point. And that's cool. And so you were in a, were you already in college at that point or was this still in high school? You're doingSpeaker 3 (09:25):No. So it was, it was still in high school. So the high school that I went to had a a secondary program where they'd ship you out to a college campus, just the slick campus, the community college campus. So I was doing some classes from high school to try and get some of that knowledge that I wanted for that.Speaker 2 (09:40):Okay. That's awesome. And so yeah, especially, I'm sure you can agree with social media and everything. Like you're seeing, you're just seeing people flash the big cars and how many people I mean, I have people I know that just got, make rent, they fancy cars and all that. Just go show it off on social media and then they're not actually making that type of money. Well, yeah,Speaker 3 (10:00):Exactly. It's funny. Cause you, you really see the difference between somebody that has a lot of money and somebody that doesn't right. Like you can tell the difference, you know, and it's about, you know, and I think that's just my, my analytical analytical mind thinking is like my thought process is, is the dude that has more money lives in a normal size house drive normal cars. He's not spending money on frivolous things that he doesn't need. Right. The ones that need to feel like they have more money than everybody else push out the other way. And there's nothing wrong with that. If that's the life you want to live, do it by all means, just make sure you can really afford it.Speaker 2 (10:35):No. Yeah. And what's cool is you guys, won't talk more about this, but you guys are teaching people that like kind of have the best of both worlds. You got your clients that have the nice cars and all of that, you know, getting it probably off a passive income, they were using it like is avoid taxes, things like that. Yeah.Speaker 3 (10:50):Well, and that's yeah, we, we definitely don't want to refrain from people buying the things that they want. Like that's our goal isn't to say live, you know, as frivolously as possible. Like we, I, there was, I had a conversation with a guy yesterday and I was like, you know what? I think the best ideas of what you should do is go buy $140,000 car go buy that Tesla model X, you know, that new plan version just launched. And we went through why it was something that he wanted and I went through why it was actually tax advantaged to him to do that. And so we go through both, both sides of life, obviously there's a fine line to walk amongst. But we're definitely not a group. That's going to say, you know, go buy the Corolla over the Tesla. Like that's not something that we want to do. We want to help you get what you want, get it when you want it and make it work for you the best.Speaker 2 (11:42):Yeah. That's awesome. And yeah. And Austin, how did you get more involved in kind of like, you know, the door to door space and I know you worked with door to door experts, those nails for awhile. So how did, you said you got in the, kind of the financial education, how did you transition into kind of helping the doorstep?Speaker 3 (11:59):Yeah, so-so is actually out consulting some other companies on on financial footings and things like that. The financial foundations, I actually just wrote a book about it. That's going to be launched with a PR company out of Alabama. But so I was, I was kind of doing that. I was, I was, I was consulting those other companies on the financial structures, like the very beginning basics, right? Like the foundations of the financial processes that they were missing. And and I had a guy that I knew that was working at the D experts. He was there in intro CFO. He's just kind of filling in as Sam was trying to find somebody else over at the door to door experts. And and he called me and he's like, Hey, you know, this is a really cool opportunity.Speaker 3 (12:46):I really liked this guy that I'm working for. You should come over and interview with me and see if it's something that you would even really think about. And I was like, okay. Yeah. So I actually went over there to to do that with him. And, and the position that he was looking for was actually a just somebody to kind of help oversee his books and, and do some of this stuff. And all internally, it was all internal when, when I first was over there and I went to him and I was like, Hey man, look, you know, we've had the bootcamps and they, you know, they have these events that everybody's coming to. And I was like, I really think that there's a bigger market for the door to door industry that people just don't know about.Speaker 3 (13:21):I think all these company owners, aren't, aren't realizing how much more they need to pay attention to the financial sides of things. Because I think, and I especially learned in the learning as I'm going through the door to door industry more and more is they're so sales focused, right? Everything that they, everything in their mind can be fixed with more revenue or revenue, more sales like that, that's their job. That's what they're good at. That's what the exact day, no. Or that had exactly that, how to do that. And so we're able to, I was able to say, look, look, there's a secondary system to this. The admin side is no fun. Nobody likes it. But the admin site includes the financial footing. It includes, you know, the staff, they experience like all of these things, the operations that aren't as aren't as known or, or not as practiced.Speaker 3 (14:04):And so I was able to convince Sam, like, we need to come in and do this and I'll go out and do this. And I started traveling, you know, to company, to company. I was going twice a week out to Atlanta, then Washington and Illinois than Idaho, just kind of everywhere. And it really just started to blow up. And so it really became a a staple to the, to the door. And her name is like, Hey, we're not only are we a consulting company, but we're a consulting company that, that helps you with your finances, which is pretty unknown. Like you have to hire somebody basically just to take it over. I was showing these owners how to help them. So not just doing it for them and then leaving them and saying, well, if you want me to do more, it's, you know, another $10,000 or, you know, these, these companies, these CFO guys they're expensive. And so if you could learn to do it by yourself, when you want to, right. I mean, we're all hustlers out here. That's what we're doing. You know, slinging doors is not an easy job, so anything else we can make that easier for that? You don't have to cost you a fortune, you know, we wanted to be able to be a part of that.Speaker 2 (15:04):Awesome. And so I'm sure you had a lot of experiences seeing what people were, I don't know, not focusing on mistakes. I'm sure they were making, is that a lot of these companies, they not even have CFOs and they were just kind of trained to do things. Yeah.Speaker 3 (15:15):So a lot of these companies, they didn't have CFOs, they didn't have bookkeepers, they didn't have anything.Speaker 2 (15:20):Wow. And so you would help them set that up and run it.Speaker 3 (15:24):So I would do a few different things. I think the majority of the companies that will lend to either didn't have QuickBooks or some sort of a CRM or not CRM at some sort of tracking tool for their actual books. And so I helped them kind of figure it out. Some of them did. But I, I worked with the systems they were using and they weren't awesome. And so I would either convince them to switch or I didn't, and, and either way was fine. I, I really have a bias towards QuickBooks. I just know it really well. I got my certification in it because I wanted to be the best at it. And obviously things have changed and I'm probably not the best at it anymore, but you know, there's a point in your career where you don't do some of the things that you used to do really well. Yeah. But aSpeaker 2 (16:03):Cookbook is pretty, pretty, somewhat simple. It'sSpeaker 3 (16:05):Super simple. I mean, it's just really intuitive. Like it knows what the customer experience should be. And so I really liked that, especially with owners that don't want to push a budget to a financial footing or a financial team it really just makes it easy for them to be like, all right, I can set up all this automatically. And then I never have to go back in here. It'll just kind of do it by itself. And so it's really easy to do. You just have to know what you're doing. Yeah.Speaker 2 (16:26):Awesome. And so cool. I know you gained a lot of experience doing that, working with Sam, seeing other companies, I'm sure. Learning from their mistakes, things like that. And now you're a CFO. I hear it's a, you're in, that's the name? Green energy coercion.Speaker 3 (16:40):Okay. And yeah, and then PI send the kid as wellSpeaker 2 (16:43):By any yet. And so yeah, you guys are doing incredible things. We just talked with Josh and Jerry on the podcast who were also part of that. And yeah, it's been really cool seeing how you guys have things set up structured and you really focused on teaching these reps. I was just talking with Josh about not just like selling, but all kinds of aspects of it. And I think you teach your guys the finances, you teach them the social media, teaching their recruiting. That's really cool to see. And so what gave you I guess why, why did you guys start pious indicate and what's what's kind of your whole goal around that. I know you talked a little bit in the beginning, butSpeaker 3 (17:19):Yeah. So I would say the main reason is that is that me and Jerry have been around enough companies to know how much is truthfully going wrong. Even without people knowing what's always wrong. And so just being able to compile a by, you know, I've probably consulted upwards of 200 companies by now. And so being able to see that many different companies doing that many different styles and that many different types I think it's really drove the pie syndicate drive because we were, we were sitting in a room and we were talking about we were actually in St. George at, at Jefferson JKRs office. Well, that's where we first started talking about PI syndicate and doing some of this stuff is, is out there with Jefferson. And we were just talking about, you know, there's so many mistakes they're being made every day that I don't think people know that they're doing anything wrong.Speaker 3 (18:09):And so how do we create a, something that not only it can be an outreach program for them to learn about it, but something that like a mastermind that will really help them learn. And so we developed by syndicate off of all of the bad things that we've seen happen in solar and in past, and, and in roofing, like we took all of the bad things that we could find and all of the things that people didn't know or that we had seen, even if we only had sought once we still brought it to the table. And and so that's kind of where we got the drive for, for PI syndicate. And what we want to do with it is really get the knowledge out there. You know, there are masters masterminds all over the place and, and they're all great. And so I thought, you know, it's not going to be that hard to push one more.Speaker 3 (18:50):That that really is something that truthfully helps people that really makes them, you know, learn and experience things in a different way than they ever have before. And, and I mean, it really is something different. And so we even are so confident in what we're doing. You know, we, we went in to the drawing board and we said, look, we, we want people to know exactly what we're here for. And so we actually do something very unique. You know, when was the last time you were able to go to your CPA and say, Hey, if you don't save me more money than I'm paying you, I'm out,Speaker 2 (19:18):Right. That's a pretty strong guarantee, pretty strongSpeaker 3 (19:22):Guarantee. So we actually guarantee our, our pricing. So if we cannot save you more than what you paid us we'll pay you the difference in what we don't save. You were, we'll, we're willing to put our own money up to bat to say, we know what we're doing, and we know we can do this, let us show you. And if we can't do it, then you're right. And here's, you know, here's that difference backSpeaker 2 (19:42):Incredible. And it's like, why wouldn't you do it with that guarantee? You don't hear it out from CPAs or financing.Speaker 3 (19:48):Never, never. And so we want it to be different. We want him to be able to push our name out there differently. And that's how we've decided that not only do we have the knowledge we know that we do, but you know, a lot of people don't put their money where their mouth is. And so we thought, you know, we're going to be the first to do that.Speaker 2 (20:02):Yeah. Now it's really cool. Cause I've heard a few just, you know, Mikey, you guys hopping on calls with people and it sounds, it seems like it's almost the same exact things they're hearing from their CPA, the exact same thing. Oh, they told me to do this. I'm going to owe this much in taxes. And then you guys are just telling them, you know, the same, it's the same stuff. They hear it from everyone. Cause all that is pretty standardized advice. I mean, they're, they're telling you the same stuff over and over. Yeah.Speaker 3 (20:27):Actually we make jokes and, and we say, you know, CPA firms are like our silent partners. Every time they go and talk to a CPA firm, they always come back and follow up with us and see the difference in and switch over. And so we, we, we, we joke and we call them our pro our silent partners. But but it's true. I mean, we were actually just having a conversation with a guy the other day yesterday. And he went to a CPA and he's like, okay, you've got to spend 150,000 to $200,000 to save 60,000 in taxes, but you're still going to have to pay 40. And me and Jerry just dropped that. We didn't even know what to say. We were, I mean, we were stunned. We were like, that's an incredible observation to give somebody, spend $200,000 to save 60 bucks, but you still have to pay 40,000 times since at the end of the year.Speaker 2 (21:14):Hopefully they have a lot of money.Speaker 3 (21:16):I'm like, that's, I'm, you're, you're talking about, okay, well, if you go spend $260,000, then I can get your tax bill down to authority. How does that make any sense who would want to do that? Who thinks that that was a good idea to, to offer it as a buy. And it's just something that you see every day, the CPAs are doing everything they're supposed to, if they're not doing anything wrong and I'm not talking about it with them in any way whatsoever we've just dedicated and prided ourselves on monitoring the changes that happen when they happen categorizing expenses correctly what the mileage is, right? Offs are things like that. That just, most people don't think to dive deep into that are a really big difference that make a huge difference to not spend the 200 K to save.Speaker 2 (22:03):Huh. Right. Yeah. No, that's really cool. And do you think I mean, like you said, there's a lot of good CPAs out there and I know they're doing, you know, the best with their resources and everything, but do you think it's that they don't have the knowledge on these things or they don't want to like necessarily tell them to do these things?Speaker 3 (22:21):I don't, I don't, I don't know. Honestly, I think that there are definitely CPAs out there that have the knowledge to do it. I do think that the CPA certification itself gives them some pushback on what they can and cannot offer people to do. And so one of the things that we really do differently is we actually have our CPAs on staff. But me and Jerry are not CPA. So we run everything through CPAs, everything is done the right way. Everything is above board. We're Uber transparent with everything that we do to refrain from any sort of auditing. Or if you do get audited, it's knocking the park as long as we've been in it long enough. And we're doing everything that we're supposed to be doing the right way. I mean, there's no way that you're going to fail an audit.Speaker 3 (23:05):It's just not every once in awhile, there's one weird little thing that that gets passed or, you know, something that they find that's just really weird and random, but, you know, for the most part it's, it's pretty solid. Yeah. But I do think that, I think that that's really that I, I don't think that it's still, they don't have all the information. I don't even think that this, they don't want to share the information. I think that there are certain things that they just can't do, or they're not allowed to talk about because they have specific certifications and they don't need to get their certifications taken away. I mean, that's not worth it to do that for them. And I, and I wouldn't suggest they do that either. Yeah,Speaker 2 (23:37):Yeah. No, that's good. That's good stuff. Yeah. Cause it's like, I've worked with a lot of CPAs too. And and some of them have, you know, finance coaching, do they type stuff they do. But the disconnect I've seen too is a lot of times they don't, they're not all communicating with each other. Like, you're talking about how you guys have it kind of your own internal CPAs. You're communicating with them. So everyone's on the same page or they gave me this advice. This is what's going to happen where other you know other CPAs I've worked with like, yeah, I get advice from one thing, but their CPA is not gonna necessarily help me do that. And then me not having good financial knowledge necessarily. I don't, I don't know necessarily how to like explain to them, well, Hey, I want to do this. Or this is what's best because they're just all me kind of the one size fits all stuff.Speaker 3 (24:22):And it's interesting, I think, and one of the things that we do differently than that as well is we're, we're pretty limited on the capacity we want to grow at because I think that's the problem. I don't think that it's, that they're not communicating. I don't think that it's, they don't know what they're doing. I think that they just grow so rapidly. They really just say like, okay, you're one CPA. You handle these 50 clients, but then this other CPA is gonna handle these 50 clients. And when this guy goes on vacation, this guy's kind of picking up that slack. But then there's the disconnect because it's not his actual client. So I think the scaling is just too fast. They just don't know how to keep up with it. They might just add some people do it. Great. I mean, there are massive CPA firms out there that just crush it.Speaker 3 (24:59):I think H and R block is huge. They're nationwide. They're everywhere. Obviously they scaled it up at a very scalable rate, but I feel like for the most part, you know, those are just generalized CPAs. They help random regular people. Yeah. You know, do their taxes and stuff. So they're not really going to go that extra mile for somebody like you, who's on the doors who's knocking, who's got, you know, LLCs and things like that that are quite a bit more to actually function through the actual filing. And so they, you know, they don't really want to do any of that. So they don't push that extra mile to do that, which is fine. They probably don't get paid to do that. Honestly, they don't.Speaker 2 (25:33):Yeah. And that's, what's cool. You guys are guaranteeing it too. I'm sure you guys back in it, it's like, you want to know it it's right.Speaker 3 (25:40):But then that's why we, we do you know, that's why we limit our, our capability of growth is because we know how much we can, we can really truthfully take on and still keep a truck in the way we want to. And so we're, we're pretty particular about who we want to let in and where in the, in the, in the stages that we have. And so it's more along the lines of, we definitely want to help everybody. We can help. But we want you to, we want you to come to us or, and say, Hey, look, this is what I've got is what I have. And then we would, we would literally sit down and do a call with you and say, you know, this is the plan. I think you should be a part of, this is why this is what I think we can help with. And this is how fast I think we can get it done in, in, in addition to the filing and the bookkeeping sides and the white glove service of it. All right. Mikey offers some specific coaching with it that he does with these guys. I mean, he's been on calls with these guys every day, seven days a week. I mean, he'll call it, he'll talk to anybody whenever they want to talk to them.Speaker 2 (26:31):Yeah. I know. He's helped me a ton. And that's, what's so cool about it. You guys have so much personalized attention. It's like weekly follow ups say, is this, how's this going? And yeah, I've never had this much just financial attention from anyone I've worked with. So yeah.Speaker 3 (26:45):And we do, we do some other cool stuff as well. You know, we really want to, to be able to get in person with these people, meet them face to face, have these conversations one-on-one. And so we we're down here in Las Vegas and, and we'll invite people down and want them to come and experience this with us and do these events with us. And the purpose of that is to have those one-on-one conversations, have the ability to sit down and have a personalized conversation about something that's a pretty uncomfortable topic to talk about to most people like you don't want to tell people how much money you make. You don't want to tell people how much trouble you're in or debt. And and that's why we need that personalized edge side to not just be the CPA that they kind of have to tell, but we want to be there, you know, be there and have a friendship aspect to it to be like, listen, dude, we, we got you, we're going to be able to handle it and take care of it. And we're going to be able to make sure that you don't ever have to do this again, but we have to have you tell us the truth. And so we, we need to be able to build that relationship to be there. Yeah.Speaker 2 (27:40):That's awesome. And so walk me through, you guys have people coming on and like if someone wants to start working with you guys, what are some common things you see that like almost no one has said, and I can tell my experience to kind of how to spend, to kind of get onboard and start working with you guys. But if someone signs up by us in to get tomorrow would order kind of the steps you have them go through just to give people a demo. AndSpeaker 3 (28:01):Yeah, absolutely. So, so first thing that we usually have everybody do is do a consultation call with Mikey, Mikey kind of evaluates where you're currently at what you're really thinking you're needing and then what we think we, we can do for you. So Mikey, we'll do an introduction call he'll go through everything that he has in his list to go through. Are you budgeting? Do you have the right account set up? Are you utilizing QuickBooks or some sort of tracking system? Are you, are you budget sizing out everything or just personal, you know, separating out credit cards, things like that. He just goes through all of it with you, just, just on the surface touching base, making sure it's getting done. Right. and that's where we kind of start. And so that allows us to build out a financial group blueprint of sorts to be able to say, okay, well, you know, I think, you know, knowing this information, you know, I think he needs to be in this package and this, and so then we go back to the, the, the client say, okay, this is what we suggest.Speaker 3 (29:04):Obviously they can, they can say no, or they can want a different package than that. And we can have that conversation with them, but we give them our best thought of where they should be and what needs to be done next kind of creating that financial blueprint plan and steps. And so that's kind of where we start in. The onboarding process is actually really good. We've brought on a few other guys. We have a VA, we've got some other guys in Utah that does like three days, three, three times a week. Check-Ins you know, Monday, Monday, Wednesday, Friday, really just trying to make sure you're keeping up on all your updates, making sure that, you know, everything that we know at the same time, and then as well, we utilize a really great app that we really love called Pronto.Speaker 3 (29:46):Maybe you've talked about that before, but but we really love it. And we put in me, Jerry, Mikey, any bookkeeper, the CPAs yourself all within that Pronto group set. So any questions you have, anything that could come up, somebody in that chat will be able to answer that and you have access to that chat 24 7. And then we also do some other cool things where we've thrown in a little bit of perks with doubt in the onboarding process, you get a, you get access to an attorney. We've started a a a partnership with a company that'll help with legal troubles, things like that. You know it doesn't happen super often, but if it ever did happen at something that you want that most people don't really think about, you know what, 22 year old kid has a lawyer on retainer, none. So we, we, we S we supplement that out with some of that stuff. Yeah,Speaker 2 (30:36):It's cool. No, it's when I was talking to Mikey, I didn't even know all this stuff you're offering, but it's like just all these different things. You got the attorney they used, he's telling me I'm going to get like some some like body tests. Then he hands me like his biome kid. He's like, yeah, we're going to have you do like a gut test. See where that's at. I'm like, man, I thought you guys were just like doing my taxes or something at first, like you starts going down the lanes, like you're getting an attorney, you're getting, you know, body test. You're getting access to all that. You're getting crypto advice, you're getting investment advice. So it's just like a whole stack of things. And I know that's not in, you know, every package depending on the package and things like that you get. But yeah. So as far as like investments, things like that, water yeah. What are some, how do you get these people started on investments? I'm sure you see what their situation is, but yeah.Speaker 3 (31:22):So yeah, we take what their situation is, what maybe what capital they have on hand or what they plan to have. Maybe they have a big pipeline or something like that on the back end of their waiting for, but there's a few different places that we have. We've, we've developed a really good relationship between me and Jerry on partnerships out there with a specific investment. So right now a really big one that that's just really hitting really hard as a self storage. So we'll actually anybody that comes into us with money will actually another guarantee that we have is a 10% guaranteed our, our year over year on your investment. And me and Jerry willing to back that with our money, because if we're going to put your money somewhere we're obviously going to trust it 110%. We wouldn't put our own money in it. If we wouldn't put your money in, and if we wouldn't put our own money in it. And so we really, really pride ourselves on that as well. So, so we will actually do that 10% guaranteed our, our year over year for any money that you invest with us. And we put into a solar projects, we put into self storage, we put into Touro, anything that you really want to be a part of, we can help you figure out a way to get into that industry. Yeah,Speaker 2 (32:25):That's so cool. Yeah. You guys are putting your money where your mouth is. I mean, you're, you're doing these investments. I know Mike, he has the Turo going. You guys are in real estate, you guys are doing all these things. So it's cool that we're not just hearing them from people that are like, oh no, this should a good idea. It's like actual investments. You're doing yourself. And depending on the package, you get the opportunity to be able to go in on the investments, which is awesome. And I mean, I know all you guys are super successful, got money. So that's, for me, that's where it is, is like go work with the people who have the money or your CPA. They're probably not going to be the richest guy in the room. Yeah.Speaker 3 (33:00):Well, and it, and it's, and it's really cool because, you know, Jerry's, our backgrounds are so different, right? Obviously Mike and Jerry are huge in the solar space, but you know, most of my investments are nowhere near solar. It's, interros, it's in real estate, it's in franchises, it's in all sorts of stuff. And Jerry's knowledge is in completely different aspect of it, right? So Jerry's knowledge really reaches out into solar. He started a very successful solar company. He's, he's done multiple other companies. And so his, his range is, is really something completely different. And then mine is on the other expert under the spectrum where, you know, I definitely have some, some experience and knowledge in the F in the franchise world, but, you know, I love the tech investments. There are high risks, but man, the rewards are just so much better.Speaker 3 (33:44):And so they're not for everybody, but but you know, I just recently did a big test investment that, you know, could pay off exponentially. Well, if it works, but you know what my point is is that all of us are in such different realms of the investment. That we're good at that we really just cover so many different aspects of it. And, and so it really just is a really good team to say, you know, what is it that you want to invest in? We'll figure out how to get you there. We, we know somebody, somebody knows somebody that we know, right. Everybody wants to be that guy. Mike was talking about that yesterday. Like everybody wants to be the guy that's like, oh, I know I got a guy. I know a guy, oh, you need this. I got a guy and we want to be that guy. I want to be that for everybody. And so that's kind of where, where we, where we've developed, why, who is in, ER, excuse me, sorry. That's that's why, who is in by syndicate is who's in, by syndicate is, is because of the knowledge and where that scope looks.Speaker 2 (34:32):Yeah. I love that. And it's cool. Cause you guys, like you said, are doing it mastermind style too. So you're not just, we're not just learning necessarily from you guys, but we're interacting with other people that are super, super successful. We got guys making hundreds, hundreds, thousands, you know, in the millions and all that in the group. So I liked that it's a network in there. We're all hearing about each other's investments and I'm just starting on it. So I can't wait to, you know, follow up on this on a year. See we're having that.Speaker 3 (34:56):I will have to do another podcast in a year and say, okay, show from, start to now, how do you really feel?Speaker 2 (35:01):Yeah, my before and after. Yeah. Broke picture and then picture with all my Teslas and stuff. But yeah, no. So it's cool just to be able to interact with you guys and have you know, that community too, and these community-based and I haven't done events. You guys, you said the package, how many events do you guys plan on doing? For kind of the high level?Speaker 3 (35:26):Yeah. So there's a few different ways that we've looked at it to do it. So I'm, we're, we're really open. We want people to feel as, as to feel like they can come as often as they need. So I think what we've decided is probably once a month we'll invite you guys down to Vegas or somewhere to just get some FaceTime and have those conversations. And then we're, we're, we are going to do two big trips every year with with some of those highest pride member packages. And either, you know, in you know, The Bahamas to buy cryptocurrency or it'll be a mixture between, between a good relief, you know, fun trip, but a knowledgeable trip. So we'll go out and I'll buy cryptocurrency with you guys. Or we'll, we'll bring in a heavy hitter in, in this specific finance field.Speaker 3 (36:11):Like we'll kind of do some of those things that that we've we've been talking about doing a lot of these trips. We haven't really done any of them yet. We're just kind of starting to get the ball rolling, but that's definitely the, you know, the phase two of where we're going with this is, is just blow this up and make this something that we can scale to a really big place. And then and make everybody a lot of money and help with the investment side, help with the tax side and mitigation side, everything. And then the trips will just be a bonus that we're like, okay. You know, every, everybody, every year is going to be looking for, to the pies and to get trips. Like, they'll just be those kinds of trips that everybody's like, man, the price in and keep trips coming up. That's going to be so great.Speaker 2 (36:43):Yeah. I love that. And know, I know, I know you guys can't I mean the cool thing about this, you're probably not going to be able to run it at this level for, depending on how many people get in, because I imagine you get, you know, hundreds of people on this, you can't be that level of attention. So for our listeners, if you are wanting to get, you know, this type of level of attention, they gain in wallets at this price, that's the other thing I know you guys will have to eventually increase prices and all that too. So you heard it here first, if you want to get in while they're still, you know, able to give this level of attention, have these guarantees and all that. I know you're probably always have the guarantees with what you're doing.Speaker 2 (37:23):Absolutely. But getting on this and I don't think you're going to find this level of attention, this level of financial literacy advice, all that stuff that's going on here. So that's our invitation for our listeners and I, Austin, I know you're a, you got guys going out on the doors and get you to hit doors and things like that. So it's cool as you're still involved, you know, in the solar side. So Austin has a ton of water. Yeah. Yeah. He has a ton of understanding of the solar space and he's out knocking, you know, putting his feet to the floor here after this. But for our listeners, those that do want to get in on pipe syndicate and maybe, you know, get on a call with you guys, hear more about it, where can they do that? And how can they connect with you?Speaker 3 (38:04):Yeah. So, so there's a few different ways. You know, we've actually got a lot of guys that just they already follow Mikey Lucas on Instagram. Cause Mikey, Lucas is the solar man to be. And so a lot of people are just DM-ing Mikey Lucas on Instagram at Mikey Lucas. But we also have a webpage that we developed and created just a 3, 1, 4 syndicate dot com. And that's a good place we, we can run through. You can kind of get a good look for, for how we're doing the website should be live next week. We went through and reiterated all the content and kind of did some of that stuff and other well guy built it out for us. Cool. And so next week or so it should be, it should be live, but there's a consultation link in there as well.Speaker 3 (38:49):And then and then you could always even just reach out to Taylor, reach out to somebody on the podcast and say, Hey, I want to get a phone number, call us. I mean, we're, we're just that open with it. Like we'll let anybody give out our phone number or email addresses because we want them to be able to have that that touch point that they want to have. So, you know, if somebody is like, Hey, I was listening to your podcast, I want to get Austin's phone number. Like give it to him and let them call me and we'll have a conversation about it. Cool. All right.Speaker 2 (39:14):We're here to hear Austin, watch a call them every day. But yeah. Especially if you're in the group, but thatSpeaker 3 (39:18):Does mean I'll answer every day, but you can absolutely call it.Speaker 2 (39:22):Yeah. So yeah, we'll link to all that in the show notes. So if you're interested, definitely go check that out. And at the very least go do a call with you, get with these guys. Cause that's, what's cool is even before I had the intention of getting in on this, just a call with my Dean, you guys helped me realize, Hey, at the very least talk to your CPA about this, or like get yourself,Speaker 3 (39:42):Come to a consultation and we'll tell you like, you know, take what our consultation is, come and have a consultation with us. After you talk to your CPA, come, come lock the loader to be like, Hey, this is what my CPA said. See if we really know what we're talking about, see if we can really beat what your CPA said, right. To have those, those calls first and then have our consultation. But there's no, there's no harm in having a consultation because you might learn something that you didn't know. Even if it's one thing. I mean, that's, that's still a takeaway. Yeah.Speaker 2 (40:06):Or like, like we're what happened yesterday. I heard Mikey talking to a guy who I think was the guy who, you know, oh, the 40 grand or whatever. So maybe you're getting ready to do your talk, your taxes. Maybe your CPA is telling you, you're going to owe this much. Might as well talk to them. You get these guys. And you know,Speaker 3 (40:21):If you, if you had something wrong with, you know, something in your house and you knew that it was going to be expensive to fix you, wouldn't you get more than one quote on something rightSpeaker 2 (40:30):Now, exceptSpeaker 3 (40:31):For solar. That's right. That's right. But for anything else, you shop around a little bit, but no, but, but it's the same thing. Like, you know, you, you it's like a dating experience. You're not going to love this first CPA that you ever find it. You're going to have to find a few talk to a few work with a couple, you know, it's dating, you're dating. And so w w we, we hope to win that last date. Right. But but yeah. Have those consultations and, and, and then bring them to us and see what they say and see, see where it is because we, you never know what you're going to find out.Speaker 2 (41:00):Love that. Well, Austin, thanks for coming on the show today. And then last question, before we let you go I don't know, one word of advice, or maybe like some common mistakes that you've seen a lot of I dunno, solar reps or companies make with their finances, any like final words of advice.Speaker 3 (41:17):I mean, there's just so much, it's so hard to pick down, which, you know, which is the best thing. I, I would probably say, you know, one of the number one things that that I see is so many people fight for W2. You know, they think W2's king and they're like it's prepaid, it's makes the filing so much easier. W candidates is not, W2 is not king. There's so little that you can do to help mitigate some of these taxes if you're W2 and yourself. So I would say if you are a W2, if it's something that you've thought about doing 10 and nine is the way to go. And then I would say, you know, the only way to do a 10 99, the one thing most guys don't do is they're just letting they're letting their companies pay their 10 99.Speaker 3 (42:03):We help. And one of the things I definitely recommend is having your own personal company with an LLC attached to a 10 99 or something like that to pay yourself through. Most guys don't know how to do that. Are they, are, they questioned that? And we definitely bring that to the table, but it's not impossible, but that's probably the number one thing that I would say is the biggest overlooked thing is they're not utilizing their own things. Cause they their own companies or things like that for the write offs and, and things like that. They're just letting them pay the 10 99 and they're paying whatever they say they have to pay at the end of the year. And so I would say that's probably the number one thing, advice. The second word of advice is always strive to pay the least amount of taxes. I feel like the government already gets enough money. Do they really need any more? Not from you. Right? They can have somebody else's money. They don't, they don't need my money. So the mindset change of of of not paying taxes is something that most people have to get used to because it's something that people talk about quite a bit. Right. It's everywhere. SoSpeaker 2 (42:59):That's great advice. And guys, I went, when I started in the industry for like my first three years, I didn't know any of this stuff. And I have, like, I was getting paid 10 in night. I didn't even have an LLC set up. None of that.Speaker 3 (43:10):Yeah. So that's probably one of the biggest things. That's probably the, one of the first things that we fix. Every time we come into somebody's books, every time that we sign a new client on our, one of our first questions is okay. Do you have an LLC? What state it is in it? Yeah.Speaker 2 (43:22):Yeah. That's first question. I gotSpeaker 3 (43:23):So and that's exactly. Yeah, it's the truth. So we definitely help utilize that. And so that's one of the biggest things that you can do, because there's just so much that you can write off that people don't know about. Yeah. Just, just by simply opening up an LLC and having the, having your company, whoever you're working for pay that, that's it. Step number one. I mean, it really makes that much of a difference. You still have to know what you're doing and know where to put things, but I mean, it really does make a big difference to do that.Speaker 2 (43:49):Yeah. That's fire. So guys make sure you're getting the right financial advice. Don't take advice from people that don't know what they're doing and look at their bank accounts. If they're broke, don't take advice from broke people, right? So that's what you're going to be doing. If you want to get in pipes in the kit, you're going to be getting advice from people that are making fat stacks from guys that are in the investments themselves guys like Austin. So Austin, thanks again for coming on the show. And I can't wait to see how many people connect with you, but thanks for all you guys are doing for the industry. You're really helping us keep a hold of that money, which isSpeaker 3 (44:20):Thanks for letting me come on. Yeah. If anybody has any questions or any concerns even about by syndicate or anything that you can think of, feel free to to reach out and, and don't be hesitant to, to ask your questions. Like we want to hear them. We want to know what they are. We want to help everybody. Yeah.Speaker 2 (44:34):Much appreciated Austin. Thanks again. And we will talk soon. Hey, Solarpreneurs quick question. 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DOWNLOAD SOLCIETY APP NOW! Speaker 1 (00:03):Welcome to the Solarpreneur podcast, where we teach you to take your solar business to the next level. My name is Taylor Armstrong and I went from $50 in my bank account and struggling for groceries to closing 150 deals in a year and cracking the code on why sales reps fail. I teach you to avoid the mistakes I made and bringing the top solar dogs, the industry to let you in on the secrets of generating more leads, falling up like a pro and closing more deals. What is a Solarpreneur you might ask a Solarpreneur is a new breed of solar pro that is willing to do whatever it takes to achieve mastery and you are about to become one.Speaker 2 (00:42):What's going on Solarpreneurs, we're back with a another episode, and this is another feature we have with our recent sponsor on the show, and that is pipes in to get. So we've got the man behind kind of the, I would like maybe like the scientist behind the scenes working on the backend of all this. So he's going to give us yeah, just get a stoked about pipe syndicate. Tell us a little bit more about what's going on. So we've got Austin Underwood on the show, Austin. Thanks for coming on with us today.Speaker 3 (01:11):Yeah, thanks for having me today. Yeah, so we I came on to talk about a company that we've been involved with and Taylor's been doing some stuff with called PI syndicate. It's basically a program that we've decided as a mastermind to help solar wraps any real wrap in the door door industry, but primarily solar. I mean, you get all these kids that are coming in to do quite a bit of money all of a sudden, and they don't really know what to do with it, or maybe they're not as smart as they, as it could be. And they don't really know that. And so we help them manage and kind of help really just manage that money. So we're, we're helping them utilize our skills to make that money go further for them as they're, as they're younger and they don't know what to do with it, or they just don't know how to get into certain aspects of, of the investment pools that they want to.Speaker 3 (01:58):And then a big portion of that is tax mitigation. So we help mitigate the taxes on your income side. And we do that a numerous of ways. I mean, we really just decided that we needed to start something that would help out the reps. I there's so many different companies that come in and help the owners, the CEOs, the high level executives. Everybody wants to take care of those guys, but nobody's really talking about, you know, that, that new rep that just started in solar, that you know, is going to crush it and make, you know, 250 K this year, that just came out of nowhere. And and nobody helps that kid, right? He, he gets his tax bill. He goes to a CPA. He thinks he's doing everything the right way. And he doesn't really know that there's a different way to do it, or there's more opportunities than he really thinks there are.Speaker 3 (02:40):And so we wanted to start something that would really help, not only the companies, because we have corporate memberships, we have memberships that include CEOs and owners and things like that, but we wanted a lower level package for the reps. So I rapped could afford it. And a rep could come in and, and say, Hey, I don't know what to do here. I don't know how to file these. I don't know what the right expenses should go, where we just take care of all that for you. We've designed it to be a white glove service. That'll just take care of it for you.Speaker 2 (03:10):That's awesome. And it's cool. Cause you guys have, you know, different packages, different levels. So there's really no excuse for anyone not to being, be getting help from you guys financially. Cause yeah, I mean, yeah, they're lower packages. Maybe it's just the taxes you want done.Speaker 3 (03:24):Yeah. Well, and we, we do the three packages. There's about three main ones and we do them for a reason is we really want, you know, we go anywhere from 5,000 to 30,000 and we do that because we know that there are different needs for different people. Some people aren't in a place this year, you know, some of those new reps, aren't in a place to need all of the benefits with a 15 and $30,000 package, but they definitely needed a $5,000 package and, and vice versa. Some guys are too far. But what, what we do allow is as you grow, we grow with you. So you eventually can move into those spots and not have any problems.Speaker 2 (03:54):Yeah, that's awesome. So yeah, we're going to talk more about that and get into more detail here, but I wanted to hear from you, do you Austin, we were talking yesterday and you told me your background. What's really cool. Austin has just kind of the rags to riches story. I grew up in pretty humble beginnings and all that. So I wanted to see if you would tell our listeners kind of like your upbringing, your story with that, and then how you got more involved in like, you know, door to door and like financial side of things.Speaker 3 (04:21):Yeah, absolutely. Yeah. So we, we we grew up in Utah, so we're from salt lake city, Utah, but we grew up in a little suburb subsidiary section and a Ned called Magna super far west. And it's a, it's a really humble little city. I mean, it's, it's really small compared to most cities in Utah. We we struggled a little bit with, with financial matters and you know, it wasn't like I ever went without things for the most part. I mean, there was a few times that, you know, things got a little, a little sketchy, but for the most part, you know, we, we made it work and, you know, I think for the time and the era, you know, my parents were bringing in like $30,000 together. Like both of them were working, full-time multiple jobs at one point. And you know, it was just hard to figure it out. Right. You know,Speaker 2 (05:07):And you're not that old, so that's right. Yeah. Cause some people are like, oh, maybe he's maybe Austin's like 60 years old.Speaker 3 (05:14):Yeah. I'm only 25. And I I just decided like, you know, at a young age, I, I'm not going to live like this. I can't, I can't do this, this isn't for me. Like not even just the money, but just the security behind what the money brings. Right. It's really not about the money it's I wanted to be able to first off utilize how to use the money. So what do I need to do to keep the money that I'm going to bring in? Right. Not just trying to generate millions and millions of dollars. Like I think most people think, right. You could have a million dollars but use it the right way and still have more money than somebody with $5 million that uses it the wrong way. Right. Yeah. And so that's kind of where, where I started out and I really was just like, yeah, there's gotta be something I can do.Speaker 3 (05:53):So actually, one of my first jobs as I went around to a local restaurants and things like that, and I was like, Hey, that disgusting garbage brick wall thing that you guys keep your garbage Kennan. I'll scrub it out, you know, for like 20 bucks an hour, I'll come every Saturday and I'll do it all. I just ride my bike over there and you know, I was like 13 years old and I needed money for something. Oh, I, well, I wanted to go to a T I wanted to go on a trip to New York city to visit my uncle. We were never really able to go on any sort of traveling trips. I didn't really start to travel until I got into my early twenties when I could pay for it myself. The, the most I had ever really traveled as we would drive somewhere, anywhere we could drive, we could kind of go, but that was it.Speaker 3 (06:32):I had never been, I didn't get on an airplane until I paid for my ticket by myself. And I just happened to be 13 years old. But I just, I just, I went crazy all summer and I just hustled as hard as I could. And so I started doing that and I got that company up pretty, pretty good. I think I was doing at one point like 50, 50 restaurants within riding, riding, riding my bicycle distance. So there's a big street. If you drive out to 5,600 west where it's just lined with restaurants up and down, both sides of the street. So I just went and talked to every, every single one that I could. And, and I had an uncle that was in the franchise world and he was like, well, yeah, you can come do you know mine? And I was like, okay, you'll let me come do these.Speaker 3 (07:16):You already agreed to it, but here's the catch. I don't have a car. I can't drive on 13. So you gotta come get me and take me to all these things. So I made him come and pick me up and go do that. And so that's kind of where I realized like, okay, so if I do this something by myself, I'm obviously gonna make a lot more money. I have to rely on anybody else. I can do the work myself. And so that's when I kind of was like, I got to a point where I actually had a little bit of money. And so I thought I have to figure out how to manage this money the right way. And so I started just kind of doing, taking some small classes doing some college stuff, you know, some community stuff kind of going through and figuring out like, you know, how do I do this? How do I do that? What's the tax side. I mean, you know, what is the tax sides of these mean?  Speaker 2 (07:57):That's cool. Most, most people aren't thinking about that. Well,Speaker 3 (08:00):They're not right. And I think that's the problem is that I don't think that there's enough education for people available. I mean, cause it's out there and you can find it, but how hard is it defined? It's a lot easier to find a dumb video of, you know, a super rich kid online doing something stupid with money. So that's the envision people have in their head and I needed, that's not real. And so I was like, I have to figure out how I can manage this money the right way.Speaker 2 (08:23):I think that came just from like your upbringing and seeing that you guys learned growing up. So you're like, okay, I want to figure out how to like,Speaker 3 (08:29):Yeah, a hundred percent. I don't think my goal in life when I decided that I wanted to be able to make some money. My goal was never to be the richest man in a room. My goal was to be stable. That's all that I wanted. There was so much unstability growing up in a poor family and you know, things just are all over the place. So I wanted the stability of what the money could bring. And so my idea was never to make a lot of money. I mean, in theory, that happens, I guess, where you, you do make good amounts of money being pretty strategic and smart and cautious about what you're doing. But for the most part, it's really just, I wanted the street, the strategic ability to be safe and content, right. Savings accounts, things like that, that most people are like, not important. I can do that later. Well, that's not true. You need to be doing that now.Speaker 2 (09:16):Yeah. That's a good point. And that's cool. And so you were in a, were you already in college at that point or was this still in high school? You're doingSpeaker 3 (09:25):No. So it was, it was still in high school. So the high school that I went to had a a secondary program where they'd ship you out to a college campus, just the slick campus, the community college campus. So I was doing some classes from high school to try and get some of that knowledge that I wanted for that.Speaker 2 (09:40):Okay. That's awesome. And so yeah, especially, I'm sure you can agree with social media and everything. Like you're seeing, you're just seeing people flash the big cars and how many people I mean, I have people I know that just got, make rent, they fancy cars and all that. Just go show it off on social media and then they're not actually making that type of money. Well, yeah,Speaker 3 (10:00):Exactly. It's funny. Cause you, you really see the difference between somebody that has a lot of money and somebody that doesn't right. Like you can tell the difference, you know, and it's about, you know, and I think that's just my, my analytical analytical mind thinking is like my thought process is, is the dude that has more money lives in a normal size house drive normal cars. He's not spending money on frivolous things that he doesn't need. Right. The ones that need to feel like they have more money than everybody else push out the other way. And there's nothing wrong with that. If that's the life you want to live, do it by all means, just make sure you can really afford it.Speaker 2 (10:35):No. Yeah. And what's cool is you guys, won't talk more about this, but you guys are teaching people that like kind of have the best of both worlds. You got your clients that have the nice cars and all of that, you know, getting it probably off a passive income, they were using it like is avoid taxes, things like that. Yeah.Speaker 3 (10:50):Well, and that's yeah, we, we definitely don't want to refrain from people buying the things that they want. Like that's our goal isn't to say live, you know, as frivolously as possible. Like we, I, there was, I had a conversation with a guy yesterday and I was like, you know what? I think the best ideas of what you should do is go buy $140,000 car go buy that Tesla model X, you know, that new plan version just launched. And we went through why it was something that he wanted and I went through why it was actually tax advantaged to him to do that. And so we go through both, both sides of life, obviously there's a fine line to walk amongst. But we're definitely not a group. That's going to say, you know, go buy the Corolla over the Tesla. Like that's not something that we want to do. We want to help you get what you want, get it when you want it and make it work for you the best.Speaker 2 (11:42):Yeah. That's awesome. And yeah. And Austin, how did you get more involved in kind of like, you know, the door to door space and I know you worked with door to door experts, those nails for awhile. So how did, you said you got in the, kind of the financial education, how did you transition into kind of helping the doorstep?Speaker 3 (11:59):Yeah, so-so is actually out consulting some other companies on on financial footings and things like that. The financial foundations, I actually just wrote a book about it. That's going to be launched with a PR company out of Alabama. But so I was, I was kind of doing that. I was, I was, I was consulting those other companies on the financial structures, like the very beginning basics, right? Like the foundations of the financial processes that they were missing. And and I had a guy that I knew that was working at the D experts. He was there in intro CFO. He's just kind of filling in as Sam was trying to find somebody else over at the door to door experts. And and he called me and he's like, Hey, you know, this is a really cool opportunity.Speaker 3 (12:46):I really liked this guy that I'm working for. You should come over and interview with me and see if it's something that you would even really think about. And I was like, okay. Yeah. So I actually went over there to to do that with him. And, and the position that he was looking for was actually a just somebody to kind of help oversee his books and, and do some of this stuff. And all internally, it was all internal when, when I first was over there and I went to him and I was like, Hey man, look, you know, we've had the bootcamps and they, you know, they have these events that everybody's coming to. And I was like, I really think that there's a bigger market for the door to door industry that people just don't know about.Speaker 3 (13:21):I think all these company owners, aren't, aren't realizing how much more they need to pay attention to the financial sides of things. Because I think, and I especially learned in the learning as I'm going through the door to door industry more and more is they're so sales focused, right? Everything that they, everything in their mind can be fixed with more revenue or revenue, more sales like that, that's their job. That's what they're good at. That's what the exact day, no. Or that had exactly that, how to do that. And so we're able to, I was able to say, look, look, there's a secondary system to this. The admin side is no fun. Nobody likes it. But the admin site includes the financial footing. It includes, you know, the staff, they experience like all of these things, the operations that aren't as aren't as known or, or not as practiced.Speaker 3 (14:04):And so I was able to convince Sam, like, we need to come in and do this and I'll go out and do this. And I started traveling, you know, to company, to company. I was going twice a week out to Atlanta, then Washington and Illinois than Idaho, just kind of everywhere. And it really just started to blow up. And so it really became a a staple to the, to the door. And her name is like, Hey, we're not only are we a consulting company, but we're a consulting company that, that helps you with your finances, which is pretty unknown. Like you have to hire somebody basically just to take it over. I was showing these owners how to help them. So not just doing it for them and then leaving them and saying, well, if you want me to do more, it's, you know, another $10,000 or, you know, these, these companies, these CFO guys they're expensive. And so if you could learn to do it by yourself, when you want to, right. I mean, we're all hustlers out here. That's what we're doing. You know, slinging doors is not an easy job, so anything else we can make that easier for that? You don't have to cost you a fortune, you know, we wanted to be able to be a part of that.Speaker 2 (15:04):Awesome. And so I'm sure you had a lot of experiences seeing what people were, I don't know, not focusing on mistakes. I'm sure they were making, is that a lot of these companies, they not even have CFOs and they were just kind of trained to do things. Yeah.Speaker 3 (15:15):So a lot of these companies, they didn't have CFOs, they didn't have bookkeepers, they didn't have anything.Speaker 2 (15:20):Wow. And so you would help them set that up and run it.Speaker 3 (15:24):So I would do a few different things. I think the majority of the companies that will lend to either didn't have QuickBooks or some sort of a CRM or not CRM at some sort of tracking tool for their actual books. And so I helped them kind of figure it out. Some of them did. But I, I worked with the systems they were using and they weren't awesome. And so I would either convince them to switch or I didn't, and, and either way was fine. I, I really have a bias towards QuickBooks. I just know it really well. I got my certification in it because I wanted to be the best at it. And obviously things have changed and I'm probably not the best at it anymore, but you know, there's a point in your career where you don't do some of the things that you used to do really well. Yeah. But aSpeaker 2 (16:03):Cookbook is pretty, pretty, somewhat simple. It'sSpeaker 3 (16:05):Super simple. I mean, it's just really intuitive. Like it knows what the customer experience should be. And so I really liked that, especially with owners that don't want to push a budget to a financial footing or a financial team it really just makes it easy for them to be like, all right, I can set up all this automatically. And then I never have to go back in here. It'll just kind of do it by itself. And so it's really easy to do. You just have to know what you're doing. Yeah.Speaker 2 (16:26):Awesome. And so cool. I know you gained a lot of experience doing that, working with Sam, seeing other companies, I'm sure. Learning from their mistakes, things like that. And now you're a CFO. I hear it's a, you're in, that's the name? Green energy coercion.Speaker 3 (16:40):Okay. And yeah, and then PI send the kid as wellSpeaker 2 (16:43):By any yet. And so yeah, you guys are doing incredible things. We just talked with Josh and Jerry on the podcast who were also part of that. And yeah, it's been really cool seeing how you guys have things set up structured and you really focused on teaching these reps. I was just talking with Josh about not just like selling, but all kinds of aspects of it. And I think you teach your guys the finances, you teach them the social media, teaching their recruiting. That's really cool to see. And so what gave you I guess why, why did you guys start pious indicate and what's what's kind of your whole goal around that. I know you talked a little bit in the beginning, butSpeaker 3 (17:19):Yeah. So I would say the main reason is that is that me and Jerry have been around enough companies to know how much is truthfully going wrong. Even without people knowing what's always wrong. And so just being able to compile a by, you know, I've probably consulted upwards of 200 companies by now. And so being able to see that many different companies doing that many different styles and that many different types I think it's really drove the pie syndicate drive because we were, we were sitting in a room and we were talking about we were actually in St. George at, at Jefferson JKRs office. Well, that's where we first started talking about PI syndicate and doing some of this stuff is, is out there with Jefferson. And we were just talking about, you know, there's so many mistakes they're being made every day that I don't think people know that they're doing anything wrong.Speaker 3 (18:09):And so how do we create a, something that not only it can be an outreach program for them to learn about it, but something that like a mastermind that will really help them learn. And so we developed by syndicate off of all of the bad things that we've seen happen in solar and in past, and, and in roofing, like we took all of the bad things that we could find and all of the things that people didn't know or that we had seen, even if we only had sought once we still brought it to the table. And and so that's kind of where we got the drive for, for PI syndicate. And what we want to do with it is really get the knowledge out there. You know, there are masters masterminds all over the place and, and they're all great. And so I thought, you know, it's not going to be that hard to push one more.Speaker 3 (18:50):That that really is something that truthfully helps people that really makes them, you know, learn and experience things in a different way than they ever have before. And, and I mean, it really is something different. And so we even are so confident in what we're doing. You know, we, we went in to the drawing board and we said, look, we, we want people to know exactly what we're here for. And so we actually do something very unique. You know, when was the last time you were able to go to your CPA and say, Hey, if you don't save me more money than I'm paying you, I'm out,Speaker 2 (19:18):Right. That's a pretty strong guarantee, pretty strongSpeaker 3 (19:22):Guarantee. So we actually guarantee our, our pricing. So if we cannot save you more than what you paid us we'll pay you the difference in what we don't save. You were, we'll, we're willing to put our own money up to bat to say, we know what we're doing, and we know we can do this, let us show you. And if we can't do it, then you're right. And here's, you know, here's that difference backSpeaker 2 (19:42):Incredible. And it's like, why wouldn't you do it with that guarantee? You don't hear it out from CPAs or financing.Speaker 3 (19:48):Never, never. And so we want it to be different. We want him to be able to push our name out there differently. And that's how we've decided that not only do we have the knowledge we know that we do, but you know, a lot of people don't put their money where their mouth is. And so we thought, you know, we're going to be the first to do that.Speaker 2 (20:02):Yeah. Now it's really cool. Cause I've heard a few just, you know, Mikey, you guys hopping on calls with people and it sounds, it seems like it's almost the same exact things they're hearing from their CPA, the exact same thing. Oh, they told me to do this. I'm going to owe this much in taxes. And then you guys are just telling them, you know, the same, it's the same stuff. They hear it from everyone. Cause all that is pretty standardized advice. I mean, they're, they're telling you the same stuff over and over. Yeah.Speaker 3 (20:27):Actually we make jokes and, and we say, you know, CPA firms are like our silent partners. Every time they go and talk to a CPA firm, they always come back and follow up with us and see the difference in and switch over. And so we, we, we, we joke and we call them our pro our silent partners. But but it's true. I mean, we were actually just having a conversation with a guy the other day yesterday. And he went to a CPA and he's like, okay, you've got to spend 150,000 to $200,000 to save 60,000 in taxes, but you're still going to have to pay 40. And me and Jerry just dropped that. We didn't even know what to say. We were, I mean, we were stunned. We were like, that's an incredible observation to give somebody, spend $200,000 to save 60 bucks, but you still have to pay 40,000 times since at the end of the year.Speaker 2 (21:14):Hopefully they have a lot of money.Speaker 3 (21:16):I'm like, that's, I'm, you're, you're talking about, okay, well, if you go spend $260,000, then I can get your tax bill down to authority. How does that make any sense who would want to do that? Who thinks that that was a good idea to, to offer it as a buy. And it's just something that you see every day, the CPAs are doing everything they're supposed to, if they're not doing anything wrong and I'm not talking about it with them in any way whatsoever we've just dedicated and prided ourselves on monitoring the changes that happen when they happen categorizing expenses correctly what the mileage is, right? Offs are things like that. That just, most people don't think to dive deep into that are a really big difference that make a huge difference to not spend the 200 K to save.Speaker 2 (22:03):Huh. Right. Yeah. No, that's really cool. And do you think I mean, like you said, there's a lot of good CPAs out there and I know they're doing, you know, the best with their resources and everything, but do you think it's that they don't have the knowledge on these things or they don't want to like necessarily tell them to do these things?Speaker 3 (22:21):I don't, I don't, I don't know. Honestly, I think that there are definitely CPAs out there that have the knowledge to do it. I do think that the CPA certification itself gives them some pushback on what they can and cannot offer people to do. And so one of the things that we really do differently is we actually have our CPAs on staff. But me and Jerry are not CPA. So we run everything through CPAs, everything is done the right way. Everything is above board. We're Uber transparent with everything that we do to refrain from any sort of auditing. Or if you do get audited, it's knocking the park as long as we've been in it long enough. And we're doing everything that we're supposed to be doing the right way. I mean, there's no way that you're going to fail an audit.Speaker 3 (23:05):It's just not every once in awhile, there's one weird little thing that that gets passed or, you know, something that they find that's just really weird and random, but, you know, for the most part it's, it's pretty solid. Yeah. But I do think that, I think that that's really that I, I don't think that it's still, they don't have all the information. I don't even think that this, they don't want to share the information. I think that there are certain things that they just can't do, or they're not allowed to talk about because they have specific certifications and they don't need to get their certifications taken away. I mean, that's not worth it to do that for them. And I, and I wouldn't suggest they do that either. Yeah,Speaker 2 (23:37):Yeah. No, that's good. That's good stuff. Yeah. Cause it's like, I've worked with a lot of CPAs too. And and some of them have, you know, finance coaching, do they type stuff they do. But the disconnect I've seen too is a lot of times they don't, they're not all communicating with each other. Like, you're talking about how you guys have it kind of your own internal CPAs. You're communicating with them. So everyone's on the same page or they gave me this advice. This is what's going to happen where other you know other CPAs I've worked with like, yeah, I get advice from one thing, but their CPA is not gonna necessarily help me do that. And then me not having good financial knowledge necessarily. I don't, I don't know necessarily how to like explain to them, well, Hey, I want to do this. Or this is what's best because they're just all me kind of the one size fits all stuff.Speaker 3 (24:22):And it's interesting, I think, and one of the things that we do differently than that as well is we're, we're pretty limited on the capacity we want to grow at because I think that's the problem. I don't think that it's, that they're not communicating. I don't think that it's, they don't know what they're doing. I think that they just grow so rapidly. They really just say like, okay, you're one CPA. You handle these 50 clients, but then this other CPA is gonna handle these 50 clients. And when this guy goes on vacation, this guy's kind of picking up that slack. But then there's the disconnect because it's not his actual client. So I think the scaling is just too fast. They just don't know how to keep up with it. They might just add some people do it. Great. I mean, there are massive CPA firms out there that just crush it.Speaker 3 (24:59):I think H and R block is huge. They're nationwide. They're everywhere. Obviously they scaled it up at a very scalable rate, but I feel like for the most part, you know, those are just generalized CPAs. They help random regular people. Yeah. You know, do their taxes and stuff. So they're not really going to go that extra mile for somebody like you, who's on the doors who's knocking, who's got, you know, LLCs and things like that that are quite a bit more to actually function through the actual filing. And so they, you know, they don't really want to do any of that. So they don't push that extra mile to do that, which is fine. They probably don't get paid to do that. Honestly, they don't.Speaker 2 (25:33):Yeah. And that's, what's cool. You guys are guaranteeing it too. I'm sure you guys back in it, it's like, you want to know it it's right.Speaker 3 (25:40):But then that's why we, we do you know, that's why we limit our, our capability of growth is because we know how much we can, we can really truthfully take on and still keep a truck in the way we want to. And so we're, we're pretty particular about who we want to let in and where in the, in the, in the stages that we have. And so it's more along the lines of, we definitely want to help everybody. We can help. But we want you to, we want you to come to us or, and say, Hey, look, this is what I've got is what I have. And then we would, we would literally sit down and do a call with you and say, you know, this is the plan. I think you should be a part of, this is why this is what I think we can help with. And this is how fast I think we can get it done in, in, in addition to the filing and the bookkeeping sides and the white glove service of it. All right. Mikey offers some specific coaching with it that he does with these guys. I mean, he's been on calls with these guys every day, seven days a week. I mean, he'll call it, he'll talk to anybody whenever they want to talk to them.Speaker 2 (26:31):Yeah. I know. He's helped me a ton. And that's, what's so cool about it. You guys have so much personalized attention. It's like weekly follow ups say, is this, how's this going? And yeah, I've never had this much just financial attention from anyone I've worked with. So yeah.Speaker 3 (26:45):And we do, we do some other cool stuff as well. You know, we really want to, to be able to get in person with these people, meet them face to face, have these conversations one-on-one. And so we we're down here in Las Vegas and, and we'll invite people down and want them to come and experience this with us and do these events with us. And the purpose of that is to have those one-on-one conversations, have the ability to sit down and have a personalized conversation about something that's a pretty uncomfortable topic to talk about to most people like you don't want to tell people how much money you make. You don't want to tell people how much trouble you're in or debt. And and that's why we need that personalized edge side to not just be the CPA that they kind of have to tell, but we want to be there, you know, be there and have a friendship aspect to it to be like, listen, dude, we, we got you, we're going to be able to handle it and take care of it. And we're going to be able to make sure that you don't ever have to do this again, but we have to have you tell us the truth. And so we, we need to be able to build that relationship to be there. Yeah.Speaker 2 (27:40):That's awesome. And so walk me through, you guys have people coming on and like if someone wants to start working with you guys, what are some common things you see that like almost no one has said, and I can tell my experience to kind of how to spend, to kind of get onboard and start working with you guys. But if someone signs up by us in to get tomorrow would order kind of the steps you have them go through just to give people a demo. AndSpeaker 3 (28:01):Yeah, absolutely. So, so first thing that we usually have everybody do is do a consultation call with Mikey, Mikey kind of evaluates where you're currently at what you're really thinking you're needing and then what we think we, we can do for you. So Mikey, we'll do an introduction call he'll go through everything that he has in his list to go through. Are you budgeting? Do you have the right account set up? Are you utilizing QuickBooks or some sort of tracking system? Are you, are you budget sizing out everything or just personal, you know, separating out credit cards, things like that. He just goes through all of it with you, just, just on the surface touching base, making sure it's getting done. Right. and that's where we kind of start. And so that allows us to build out a financial group blueprint of sorts to be able to say, okay, well, you know, I think, you know, knowing this information, you know, I think he needs to be in this package and this, and so then we go back to the, the, the client say, okay, this is what we suggest.Speaker 3 (29:04):Obviously they can, they can say no, or they can want a different package than that. And we can have that conversation with them, but we give them our best thought of where they should be and what needs to be done next kind of creating that financial blueprint plan and steps. And so that's kind of where we start in. The onboarding process is actually really good. We've brought on a few other guys. We have a VA, we've got some other guys in Utah that does like three days, three, three times a week. Check-Ins you know, Monday, Monday, Wednesday, Friday, really just trying to make sure you're keeping up on all your updates, making sure that, you know, everything that we know at the same time, and then as well, we utilize a really great app that we really love called Pronto.Speaker 3 (29:46):Maybe you've talked about that before, but but we really love it. And we put in me, Jerry, Mikey, any bookkeeper, the CPAs yourself all within that Pronto group set. So any questions you have, anything that could come up, somebody in that chat will be able to answer that and you have access to that chat 24 7. And then we also do some other cool things where we've thrown in a little bit of perks with doubt in the onboarding process, you get a, you get access to an attorney. We've started a a a partnership with a company that'll help with legal troubles, things like that. You know it doesn't happen super often, but if it ever did happen at something that you want that most people don't really think about, you know what, 22 year old kid has a lawyer on retainer, none. So we, we, we S we supplement that out with some of that stuff. Yeah,Speaker 2 (30:36):It's cool. No, it's when I was talking to Mikey, I didn't even know all this stuff you're offering, but it's like just all these different things. You got the attorney they used, he's telling me I'm going to get like some some like body tests. Then he hands me like his biome kid. He's like, yeah, we're going to have you do like a gut test. See where that's at. I'm like, man, I thought you guys were just like doing my taxes or something at first, like you starts going down the lanes, like you're getting an attorney, you're getting, you know, body test. You're getting access to all that. You're getting crypto advice, you're getting investment advice. So it's just like a whole stack of things. And I know that's not in, you know, every package depending on the package and things like that you get. But yeah. So as far as like investments, things like that, water yeah. What are some, how do you get these people started on investments? I'm sure you see what their situation is, but yeah.Speaker 3 (31:22):So yeah, we take what their situation is, what maybe what capital they have on hand or what they plan to have. Maybe they have a big pipeline or something like that on the back end of their waiting for, but there's a few different places that we have. We've, we've developed a really good relationship between me and Jerry on partnerships out there with a specific investment. So right now a really big one that that's just really hitting really hard as a self storage. So we'll actually anybody that comes into us with money will actually another guarantee that we have is a 10% guaranteed our, our year over year on your investment. And me and Jerry willing to back that with our money, because if we're going to put your money somewhere we're obviously going to trust it 110%. We wouldn't put our own money in it. If we wouldn't put your money in, and if we wouldn't put our own money in it. And so we really, really pride ourselves on that as well. So, so we will actually do that 10% guaranteed our, our year over year for any money that you invest with us. And we put into a solar projects, we put into self storage, we put into Touro, anything that you really want to be a part of, we can help you figure out a way to get into that industry. Yeah,Speaker 2 (32:25):That's so cool. Yeah. You guys are putting your money where your mouth is. I mean, you're, you're doing these investments. I know Mike, he has the Turo going. You guys are in real estate, you guys are doing all these things. So it's cool that we're not just hearing them from people that are like, oh no, this should a good idea. It's like actual investments. You're doing yourself. And depending on the package, you get the opportunity to be able to go in on the investments, which is awesome. And I mean, I know all you guys are super successful, got money. So that's, for me, that's where it is, is like go work with the people who have the money or your CPA. They're probably not going to be the richest guy in the room. Yeah.Speaker 3 (33:00):Well, and it, and it's, and it's really cool because, you know, Jerry's, our backgrounds are so different, right? Obviously Mike and Jerry are huge in the solar space, but you know, most of my investments are nowhere near solar. It's, interros, it's in real estate, it's in franchises, it's in all sorts of stuff. And Jerry's knowledge is in completely different aspect of it, right? So Jerry's knowledge really reaches out into solar. He started a very successful solar company. He's, he's done multiple other companies. And so his, his range is, is really something completely different. And then mine is on the other expert under the spectrum where, you know, I definitely have some, some experience and knowledge in the F in the franchise world, but, you know, I love the tech investments. There are high risks, but man, the rewards are just so much better.Speaker 3 (33:44):And so they're not for everybody, but but you know, I just recently did a big test investment that, you know, could pay off exponentially. Well, if it works, but you know what my point is is that all of us are in such different realms of the investment. That we're good at that we really just cover so many different aspects of it. And, and so it really just is a really good team to say, you know, what is it that you want to invest in? We'll figure out how to get you there. We, we know somebody, somebody knows somebody that we know, right. Everybody wants to be that guy. Mike was talking about that yesterday. Like everybody wants to be the guy that's like, oh, I know I got a guy. I know a guy, oh, you need this. I got a guy and we want to be that guy. I want to be that for everybody. And so that's kind of where, where we, where we've developed, why, who is in, ER, excuse me, sorry. That's that's why, who is in by syndicate is who's in, by syndicate is, is because of the knowledge and where that scope looks.Speaker 2 (34:32):Yeah. I love that. And it's cool. Cause you guys, like you said, are doing it mastermind style too. So you're not just, we're not just learning necessarily from you guys, but we're interacting with other people that are super, super successful. We got guys making hundreds, hundreds, thousands, you know, in the millions and all that in the group. So I liked that it's a network in there. We're all hearing about each other's investments and I'm just starting on it. So I can't wait to, you know, follow up on this on a year. See we're having that.Speaker 3 (34:56):I will have to do another podcast in a year and say, okay, show from, start to now, how do you really feel?Speaker 2 (35:01):Yeah, my before and after. Yeah. Broke picture and then picture with all my Teslas and stuff. But yeah, no. So it's cool just to be able to interact with you guys and have you know, that community too, and these community-based and I haven't done events. You guys, you said the package, how many events do you guys plan on doing? For kind of the high level?Speaker 3 (35:26):Yeah. So there's a few different ways that we've looked at it to do it. So I'm, we're, we're really open. We want people to feel as, as to feel like they can come as often as they need. So I think what we've decided is probably once a month we'll invite you guys down to Vegas or somewhere to just get some FaceTime and have those conversations. And then we're, we're, we are going to do two big trips every year with with some of those highest pride member packages. And either, you know, in you know, The Bahamas to buy cryptocurrency or it'll be a mixture between, between a good relief, you know, fun trip, but a knowledgeable trip. So we'll go out and I'll buy cryptocurrency with you guys. Or we'll, we'll bring in a heavy hitter in, in this specific finance field.Speaker 3 (36:11):Like we'll kind of do some of those things that that we've we've been talking about doing a lot of these trips. We haven't really done any of them yet. We're just kind of starting to get the ball rolling, but that's definitely the, you know, the phase two of where we're going with this is, is just blow this up and make this something that we can scale to a really big place. And then and make everybody a lot of money and help with the investment side, help with the tax side and mitigation side, everything. And then the trips will just be a bonus that we're like, okay. You know, every, everybody, every year is going to be looking for, to the pies and to get trips. Like, they'll just be those kinds of trips that everybody's like, man, the price in and keep trips coming up. That's going to be so great.Speaker 2 (36:43):Yeah. I love that. And know, I know, I know you guys can't I mean the cool thing about this, you're probably not going to be able to run it at this level for, depending on how many people get in, because I imagine you get, you know, hundreds of people on this, you can't be that level of attention. So for our listeners, if you are wanting to get, you know, this type of level of attention, they gain in wallets at this price, that's the other thing I know you guys will have to eventually increase prices and all that too. So you heard it here first, if you want to get in while they're still, you know, able to give this level of attention, have these guarantees and all that. I know you're probably always have the guarantees with what you're doing.Speaker 2 (37:23):Absolutely. But getting on this and I don't think you're going to find this level of attention, this level of financial literacy advice, all that stuff that's going on here. So that's our invitation for our listeners and I, Austin, I know you're a, you got guys going out on the doors and get you to hit doors and things like that. So it's cool as you're still involved, you know, in the solar side. So Austin has a ton of water. Yeah. Yeah. He has a ton of understanding of the solar space and he's out knocking, you know, putting his feet to the floor here after this. But for our listeners, those that do want to get in on pipe syndicate and maybe, you know, get on a call with you guys, hear more about it, where can they do that? And how can they connect with you?Speaker 3 (38:04):Yeah. So, so there's a few different ways. You know, we've actually got a lot of guys that just they already follow Mikey Lucas on Instagram. Cause Mikey, Lucas is the solar man to be. And so a lot of people are just DM-ing Mikey Lucas on Instagram at Mikey Lucas. But we also have a webpage that we developed and created just a 3, 1, 4 syndicate dot com. And that's a good place we, we can run through. You can kind of get a good look for, for how we're doing the website should be live next week. We went through and reiterated all the content and kind of did some of that stuff and other well guy built it out for us. Cool. And so next week or so it should be, it should be live, but there's a consultation link in there as well.Speaker 3 (38:49):And then and then you could always even just reach out to Taylor, reach out to somebody on the podcast and say, Hey, I want to get a phone number, call us. I mean, we're, we're just that open with it. Like we'll let anybody give out our phone number or email addresses because we want them to be able to have that that touch point that they want to have. So, you know, if somebody is like, Hey, I was listening to your podcast, I want to get Austin's phone number. Like give it to him and let them call me and we'll have a conversation about it. Cool. All right.Speaker 2 (39:14):We're here to hear Austin, watch a call them every day. But yeah. Especially if you're in the group, but thatSpeaker 3 (39:18):Does mean I'll answer every day, but you can absolutely call it.Speaker 2 (39:22):Yeah. So yeah, we'll link to all that in the show notes. So if you're interested, definitely go check that out. And at the very least go do a call with you, get with these guys. Cause that's, what's cool is even before I had the intention of getting in on this, just a call with my Dean, you guys helped me realize, Hey, at the very least talk to your CPA about this, or like get yourself,Speaker 3 (39:42):Come to a consultation and we'll tell you like, you know, take what our consultation is, come and have a consultation with us. After you talk to your CPA, come, come lock the loader to be like, Hey, this is what my CPA said. See if we really know what we're talking about, see if we can really beat what your CPA said, right. To have those, those calls first and then have our consultation. But there's no, there's no harm in having a consultation because you might learn something that you didn't know. Even if it's one thing. I mean, that's, that's still a takeaway. Yeah.Speaker 2 (40:06):Or like, like we're what happened yesterday. I heard Mikey talking to a guy who I think was the guy who, you know, oh, the 40 grand or whatever. So maybe you're getting ready to do your talk, your taxes. Maybe your CPA is telling you, you're going to owe this much. Might as well talk to them. You get these guys. And you know,Speaker 3 (40:21):If you, if you had something wrong with, you know, something in your house and you knew that it was going to be expensive to fix you, wouldn't you get more than one quote on something rightSpeaker 2 (40:30):Now, exceptSpeaker 3 (40:31):For solar. That's right. That's right. But for anything else, you shop around a little bit, but no, but, but it's the same thing. Like, you know, you, you it's like a dating experience. You're not going to love this first CPA that you ever find it. You're going to have to find a few talk to a few work with a couple, you know, it's dating, you're dating. And so w w we, we hope to win that last date. Right. But but yeah. Have those consultations and, and, and then bring them to us and see what they say and see, see where it is because we, you never know what you're going to find out.Speaker 2 (41:00):Love that. Well, Austin, thanks for coming on the show today. And then last question, before we let you go I don't know, one word of advice, or maybe like some common mistakes that you've seen a lot of I dunno, solar reps or companies make with their finances, any like final words of advice.Speaker 3 (41:17):I mean, there's just so much, it's so hard to pick down, which, you know, which is the best thing. I, I would probably say, you know, one of the number one things that that I see is so many people fight for W2. You know, they think W2's king and they're like it's prepaid, it's makes the filing so much easier. W candidates is not, W2 is not king. There's so little that you can do to help mitigate some of these taxes if you're W2 and yourself. So I would say if you are a W2, if it's something that you've thought about doing 10 and nine is the way to go. And then I would say, you know, the only way to do a 10 99, the one thing most guys don't do is they're just letting they're letting their companies pay their 10 99.Speaker 3 (42:03):We help. And one of the things I definitely recommend is having your own personal company with an LLC attached to a 10 99 or something like that to pay yourself through. Most guys don't know how to do that. Are they, are, they questioned that? And we definitely bring that to the table, but it's not impossible, but that's probably the number one thing that I would say is the biggest overlooked thing is they're not utilizing their own things. Cause they their own companies or things like that for the write offs and, and things like that. They're just letting them pay the 10 99 and they're paying whatever they say they have to pay at the end of the year. And so I would say that's probably the number one thing, advice. The second word of advice is always strive to pay the least amount of taxes. I feel like the government already gets enough money. Do they really need any more? Not from you. Right? They can have somebody else's money. They don't, they don't need my money. So the mindset change of of of not paying taxes is something that most people have to get used to because it's something that people talk about quite a bit. Right. It's everywhere. SoSpeaker 2 (42:59):That's great advice. And guys, I went, when I started in the industry for like my first three years, I didn't know any of this stuff. And I have, like, I was getting paid 10 in night. I didn't even have an LLC set up. None of that.Speaker 3 (43:10):Yeah. So that's probably one of the biggest things. That's probably the, one of the first things that we fix. Every time we come into somebody's books, every time that we sign a new client on our, one of our first questions is okay. Do you have an LLC? What state it is in it? Yeah.Speaker 2 (43:22):Yeah. That's first question. I gotSpeaker 3 (43:23):So and that's exactly. Yeah, it's the truth. So we definitely help utilize that. And so that's one of the biggest things that you can do, because there's just so much that you can write off that people don't know about. Yeah. Just, just by simply opening up an LLC and having the, having your company, whoever you're working for pay that, that's it. Step number one. I mean, it really makes that much of a difference. You still have to know what you're doing and know where to put things, but I mean, it really does make a big difference to do that.Speaker 2 (43:49):Yeah. That's fire. So guys make sure you're getting the right financial advice. Don't take advice from people that don't know what they're doing and look at their bank accounts. If they're broke, don't take advice from broke people, right? So that's what you're going to be doing. If you want to get in pipes in the kit, you're going to be getting advice from people that are making fat stacks from guys that are in the investments themselves guys like Austin. So Austin, thanks again for coming on the show. And I can't wait to see how many people connect with you, but thanks for all you guys are doing for the industry. You're really helping us keep a hold of that money, which isSpeaker 3 (44:20):Thanks for letting me come on. Yeah. If anybody has any questions or any concerns even about by syndicate or anything that you can think of, feel free to to reach out and, and don't be hesitant to, to ask your questions. Like we want to hear them. We want to know what they are. We want to help everybody. Yeah.Speaker 2 (44:34):Much appreciated Austin. Thanks again. And we will talk soon. Hey, Solarpreneurs quick question. 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Show notes:Links:Snohomish Centennial trailIndie Hackers AMAIntro CRMFull transcript:Starr:All right. Welcome back. Welcome back, everybody. So we took a little break. We're going to have her hot vax summer, but that-Josh:Hot vax summer.Starr:It turns out that was the mirage. It turns out that was a mirage.Josh:Well, it did reach 112 degrees in Portland. So it was hot.Starr:There you go. Yeah. The summer never existed. It was just an illusion caused by our overwhelming thirst for lots of things.Josh:Mirage.Ben:Well, there were a couple of weeks there that I thought, "Yeah. This is going to work out. And then Delta.Starr:Yeah. It was a couple of nice weeks, wouldn't it?Ben:Yeah. It was. It was.Starr:Except for the panic about, "Oh, crap. I need to learn how to deal with people again."Josh:Wouldn't it be wonderful when we can just look back on those two weeks and just remember those last good two weeks?Ben:Yeah. Went 112 in Portland. That's pretty bad. It got to 116 in my garage.Starr:Yeah.Ben:It's pretty warm.Josh:Yeah. That's like melt some things if you're not careful.Ben:I did not know this until well, at the beginning of the pandemic, that there was actually a special class of freezer called the garage freezer because at the beginning of the pandemic I wanted to have a freezer in my garage. I'm like, "Okay. I'm just going to go to Home Depot and buy a freezer." Oh, no, no, no, no. You can't just buy a freezer to put in your garage. You have to have a garage freezer to put it in your garage. So we have a garage freezer and even with 116 in the garage, the stuff stayed frozen. So I guess it actually works.Josh:Nice. Yeah. My freezer survived as well.Starr:I mean, not having a garage freezer in your garage is almost as bad as wearing white after labor day, or is it before labor day? I forget.Josh:I don't know. I never wear white.Starr:I just don't wear white.Josh:Yeah.Starr:Yeah.Starr:Stains too easily.Josh:I just always dress like I'm going to a funeral.Starr:All right. So today's going to be a little bit of a short episode. So we should probably get to the content.Ben:I thought we were already in the content.Starr:I know our reader.Josh:Yeah. It might be short. I don't know.Starr:Oh, we are?Josh:Our podcasts tend to have a mind of their own.Ben:That's true.Starr:Well, that's true. But we've got this Ask Me Anything schedule.Josh:Oh, yeah.Starr:20 minutes from now.Josh:Well, the great thing about asynchronous ask me anything is that they're asynchronous so you can post them even while you're on a podcast and answer the questions whenever you want.Starr:Yeah. Maybe you can, but my brain does not work that way.Josh:Oh, I've got it all queued up.Starr:I've got a one track mind.Josh:It's just a button press. We're locked and loaded.Starr:Oh, you're like Kramer. You've got the button.Josh:No. I'm ready to go.Starr:Sell sell sell!Josh:So yeah. At 10:30, we're recording this podcast. It's 10:08 right now. Pacific. And we're going to be doing an ask me anything AMA on the indie hackers forums.Starr:Yes. And it's a last minute affair as of 20 minutes ago. I didn't have an indie hackers invite code. We're running around scrambling.Josh:Yeah.Starr:Yeah. Ben wanted to try a new podcast recording software, and I'm just like, "No. I can't handle this amount of change in my life right now."Josh:We need to title this episode, live from the indie hackers backstage, by the way.Josh:[crosstalk]Starr:Oh, yeah. I don't know if you like a live album.Josh:Yeah.Starr:Okay.Josh:We're doing it live.Starr:Well, so Ben suggested, when you talk about one work thing and one vacation thing we did. And I guess, I'll start because I didn't actually have a vacation. I just got sick a lot, which I didn't get COVID, but there was some sort of bug that was going around and I got it and I was out for a couple of weeks. And so I guess that was my vacation. I don't know. I just played a lot of Diablo III.Josh:That's cool.Starr:Yeah.Ben:We got our worst vacations in Diablo III.Josh:Yeah. We got away for a few days. We went to this lake up north of Spokane in Washington and just five nights or something. But on the trip there, we're looking at our friends who were already up there, sent us the fire map of Washington. And we are traveling, literally our destination is in the middle of six fires.Starr:Oh no.Josh:We're like, "Should we be turning around?" I don't know. But it turned out all right. We breathe too much smoke the first couple of days, but it cleared up and-Starr:Yeah. After the first couple of days you hardly notice it.Josh:I only got a minor headache.Starr:Your nerves just die. The nerves in your lungs.Josh:Yeah.Ben:It's okay. We have good health insurance.Josh:I'm an ex smoker. So I'll just tack it on, it's just like adding a couple of days.Ben:It's like getting that upgrade package when you're buying a $30,000 car. And it's like, "What's another thousand dollars?Josh:Yeah. I've already got the risk.Ben:Yeah. I stayed closer to home. I read a bunch of books and I got out for a nice bike ride, went to the Snohomish Centennial trail. So it starts in Snohomish and it goes up through Arlington and it's rails to trail conversion. So there used to be railroad tracks there, but now it's a paved trail. And the thing that's neat though, they have a bunch of trail heads and a few of them have the recreations of the old train stations. So it's like, you can act like you're getting on board that train and actually getting on-Josh:Oh, that's nice. Really nice.Ben:Yeah.Josh:That's cool.Ben:That's a lot of fun. Let's see, a work thing that I did. It's a blur.Josh:Yeah.Ben:I probably migrated something somewhere at some point. And back-filled something-Josh:You were busy.Ben:Yeah.Josh:Yeah. You did a lot.Ben:Yeah. I can't remember what I did.Starr:Yeah. I mean, there's a lot of things, right? We're working with that sales consultancy, what is it? Intro CRM people?Ben:Yeah. Did do that.Starr:Have you done some outreach? You got some replies even?Ben:Yeah. Yeah. It's been kind of a mixed bag. So I've gotten some replies, but also the outbound stuff has not really been all that productive. So I'm questioning my life choices at this point.Starr:Have you had any overt hostility though?Ben:No overt hostility.Starr:Oh, you're not pushing hard enough then. You want your OH metric to be at least 10%. At least 10%, you want death threats.Ben:I will take that under advisement.Starr:Okay. That's how you know you're really-Josh:Really selling it.Starr:Yeah. I would say coffee's for closers, but you don't drink coffee. So there you go. Oh, cool. On my end, I don't know. We published our first batch of Honeybadger intelligence reports and I don't know. Loyal listeners might remember from last time, I mean, if you don't remember how loyal are you and how much should I even trust you, but yeah. You might remember that we were working on these things. Basically, they are quarterly reports for a certain programming language where if you kind of need to keep an eye on, I don't know. Front-end JavaScript, but you don't want to just inhale the feed of news that's constantly coming out, you can just look at this beautiful quarterly report. And we are publishing them quarterly now on our blog. And the first batch went out three weeks late, maybe a month late, I don't know. I didn't give myself enough time to get them ready for publication. And then I got sick for two weeks and just could barely crawl to the computer. So I'm sorry. I'll do better next time.Josh:If that's you're going to say, if you don't want to inhale the whatever weekly newsfeed, you can inhale it once a month or once a quarter. Just all.Starr:Well, no. We're not just collating everything together.Starr:[crosstalk].Starr:We're concatenating together.Josh:It's like a curation of curation.Starr:Yeah. We're not just a pending three months worth of Hacker News together. We're going in and applying some real intelligence to it. We have real domain experts.Josh:Editorial.Starr:Curating.Josh:Occasionally?Starr:Yes. Providing you the choicest morsels.Josh:Mm-hmm (affirmative).Ben:Hand crafted morsels of information.Starr:Yeah. Maybe I should be doing these outreach emails.Ben:Yeah. I think so.Ben:I've got the wrong person writing this stuff.Starr:Yeah. They'd be like, "Are these people even professionals?"Josh:Well, that should be obvious from our website.Starr:Yes.Josh:I'll let you decide which way that goes.Ben:Wow. I've been sitting here while you're talking, thinking, what did I do? I'm like, "This is not good. If I can't remember doing anything useful for the past three months, that's probably a sign that I'm doing the wrong things."Starr:I mean, it could just be, you did a lot, Ben. I can remember things you've done. Can we got set up in a new compliance automated thing?Ben:Oh, yeah. Then the compliance-Starr:Yeah. An automated compliance thing. So you don't have to juggle all that stuff manually.Ben:Yeah. We got our SOC 2 type two report done. So we're legit now. We're officially doing the things that we said we would do.Starr:We're enterprise.Ben:Yeah. Full on enterprise.Josh:That's amazing.Ben:Yeah. And it wasn't a particularly painful process. I mean, it wasn't pleasant, but yeah. We survived.Starr:My favorite part of that was that, so as part of this automated security, your automated SOC 2 compliance stuff, all of the employees I guess, have to do mandatory security training once a year now. And it's this automated quiz where you have to read something and then it asks you questions. So it was a really weird big business moment, where I just felt, okay. I'm watching this training video. It should have 50s music in the background of it. And I hate to admit that I got stuck on the first question for 10 minutes. For 10 minutes. Because it was an easy question, but it was one of those things where it's like, "What's the correct answer? Choose one or more." And the correct answer was all of them. But for some reason, I had selected them all with my keyboard and that wasn't good enough. I had to click on them to show I really meant it because hackers generally use keyboards. So they're not really trustworthy devices.Starr:Yeah.Josh:Starr it was like a JavaScript bug.Starr:So eventually, I literally tried every combination. Eventually, I was just like, "Okay. I'm just going to try the first one again," and it worked. So there you are. There you are.Ben:I can't believe you're giving away the answers to our security questions on the podcast. That's a breach of security.Starr:Yeah. I mean, I think our security questions have some security vulnerabilities if, you can manually brute force them. You have four binary options. That's what? Four factorial combinations? You can knock that out in an hour.Ben:Starr is hacking the mainframe.Starr:I am hacking the planet.Josh:That's how Starr passed the security test.Starr:Yeah. That's also how I got such a great score on the SAT, by the way. You just take it, I don't know. 128 factorial times and then you just brute force it.Josh:Nice. How long did that take you?Starr:I don't know. I still haven't graduated from high school.Josh:I sort of graduated from high school.Starr:Well, you can tell you've been away for a while. Because I just have all this bullshit that I've saved up for you all, and it's just all coming out now.Ben:So I was surprised to learn. I don't know why this surprised me, but it surprised me nonetheless, when we had our all hands meeting recently that we have three Honeybadger employees that have children starting kindergarten this year.Starr:Oh, my God. Yes.Ben:That's pretty wild.Starr:It's pretty terrifying. It's pretty terrifying. I'm glad that I live in Seattle. You guys don't. Josh and Kevin don't, but I mean, you all live in fairly reasonable places where governors aren't banning masks in school.Josh:Yeah.Ben:As they themselves are going to get advanced treatments for their COVID infections. Yeah.Starr:Oh, yeah. Yeah. It's okay. We love you Texas. We just don't love your governor.Ben:Speaking of Texas. So this random tidbit I saw the other day, Austin, Texas of course, you know the housing market has been crazy. As far as prices go over the past several months, people have been overbidding regularly on how to just be able to-Josh:Oh, I read that.Josh:A hundred grand?Ben:Yeah. So Austin, Texas.Josh:That's what I'm asking.Ben:A hundred grand over asking price. So you have a $400,000 list price, but you actually got to pay $500,000 to get the house. That's crazy.Starr:That is wild.Josh:Yeah.Starr:Yeah. I had to drop off my car at the mechanic to get its normal service and I was walking by, and this was this morning and there's this kind of older condo building. It's not great looking or anything. And it's two bedroom condo, 900 square feet is now selling for the same price that I bought my single-family house with big yard and everything three blocks away. And that was five or six years ago? Six years ago?Ben:Crazy stuff.Starr:It's bizarre. Totally. I don't know. It's the sort of thing like it feels kind of gross even. Just because I was able to scrape together a down payment for a house, suddenly I get, I don't know. A hundred grand a year extra just in appreciation.Josh:You just hit a jackpot.Starr:Yeah. But it's just like, okay. I literally did nothing to deserve that. And meanwhile, people who could use that or I mean, I could use it, but I'm not in dire straits. I don't know. It's just like, "Wow, this whole system is just kind of backwards and weird."Ben:Yeah. It's to the point I'm getting unsolicited offers to buy my house, right?Starr:Oh, me too.Ben:I'm getting these letters in the mail like, "Hi, I'm Bob and my wife is Alice and we'd like to buy your house." And I'm like looking at the letters, "Is this is really an automated thing or do they really write this by the hand?"Starr:I've had people call me on the phone, in person.Ben:They called you?Starr:Yeah. They called me. Three houses on my block have been demolished in the past two months, three older houses, one of them was just really messed up. But two of them were these small houses on big lots. And essentially what happened is a developer bought almost every house on the opposite side of the street from me and is now basically filling up the lots with as many units as they can. So I think they're going to end up with like 18 units out of these five or six houses, which is fine. I guess. I don't mind density and everything, but it's just so wild because it's like, "Oh, it finally caught up with us." Because for a long time we were just over the edge where things were nice, we were just one block over from the nice stuff. And it finally caught up with us. So we're going to have to move now because we're not fancy enough for the neighborhood anymore.Josh:Yeah. Just cash out.Ben:Yeah. Move to Kansas.Starr:Yeah. I mean, that's the problem though. It's like, "Okay. Great." I get all this appreciation, but if I ever want to get a new house, it's like, "Okay. I've got to pay those new prices."Ben:Mm-hmm (affirmative).Josh:Yeah. We've looked at that too, or you could sell and rent for a few years and see if anything happens. That would probably be a gamble.Starr:That would be a really bad gamble I think. I mean, I don't know.Josh:Yeah.Starr:Yeah.Josh:Considering no markets decline anymore.Starr:I mean, they, they could decline, but you're trying to time it.Josh:Time the housing the market?Starr:Yeah.Starr:Maybe it'll decline, but yeah.Ben:This got me thinking, real estate agents, they want you to trade up, right? You buy your starter house and then you buy your bigger house and then eventually you downsize again because hey, why not have another transaction that a real estate agent can take a commission on, right? And it just got me thinking, why don't we have that for businesses? Why can't you trade up your business, right?Josh:Like trade it?Ben:Yeah. It's like, "Honeybadger, that's a nice little business. Why don't you trade it on up to a bigger business?Starr:So we sell Honeybadger and then by a larger business.Ben:Right. Right. Like that. Rolled into a down payment for a bigger business, yeah.Josh:Yeah.Starr:I'm not sure if you're very good at that.Josh:I love it.Starr:I don't know.Ben:Maybe this is a new marketing thing we can try. We can figure out new business models.Josh:Because we're getting trade-in program like the private equity firms.Ben:You're slapping the top of your business. You can fit so many customers in here.Josh:Might be our best bit yet.Ben:Well, I guess, we better get ready for our ask me anything session. Got a crack the knuckles and get ready to type.Starr:Crack the old knuckles.Josh:Almost time.Starr:All right. Okay. I will sign us off. All right. So this has been FounderQuest back from hot vax summer, back from vacation or being sick or whatever we call it these days. If you want to give us a review on Apple podcasts, whatever they call it, go for it. If you want to look up this AMA we're about to do on Indie Hackers, we recommend that and yeah. Otherwise, just stay cool, stay safe, and we will see you next week.Ben:Catch you later.Josh:See you.Starr:Bye.

I was joined Austin Sandman, the man behind Honk Stompers Guide Service. He is located in Washington, he speaks about the aspect he deals with in that state. I ask him the questions of the path he took to withhold the business. They have different kind of season dates so it makes it sometimes different for making the hunt more successful. Austin sure does have it down to a science and knows what he is doing. I have been asking a lot of my guest speakers what there 5 year plan is. So Austin speaks a little bit on his plans for the next 5 years. Definitely look forward to hopefully running up to Washington and meeting up with Austin! If you are looking to book a hunt with Honk Stompers. Look them up on Facebook and Instagram. 

01:04 - Austin’s Superpower: Pain Tolerance 02:06 - Deserted Island DevOps (https://desertedisland.club/) (Running an Online/Virtual Conference in Animal Crossing (https://animal-crossing.com/) or Other Mediums) * Deserted Island DevOps 2020 on YouTube (https://www.youtube.com/playlist?list=PLVUQjiv8GtwL-B9AJJ-rNdiDtcU2wo7Gy) * Software Circus (https://www.youtube.com/c/SoftwareCircus) * The Great Cloud Native Bakeoff (https://www.youtube.com/watch?v=koT08purWDc) * Making Real-Time Audience/Human Connection * Streaming * Watch Parties * Austin Parker: Virtual Events Suck. (https://aparker.io/posts/virtual-events-suck/) 24:09 - Failure; Making it Safe to Fail * Technical Failure * Psychological Failure * Underpromise, Overdeliver 32:51 - Safety and Setting Expectations (The Problem with More is Better) * OKRs * Open Source Principles (https://opensource.com/principles) Reflections: John: The creativity of new ways to experience a conference. Coraline: The importance of moderation. Austin: How to communicate feelings of failure and setting expectations about it to people you’re working with. Jacob: Find a conference that has been thoughtful about interaction when not in person and go. This episode was brought to you by @therubyrep (https://twitter.com/therubyrep) of DevReps, LLC (http://www.devreps.com/). To pledge your support and to join our awesome Slack community, visit patreon.com/greaterthancode (https://www.patreon.com/greaterthancode) To make a one-time donation so that we can continue to bring you more content and transcripts like this, please do so at paypal.me/devreps (https://www.paypal.me/devreps). You will also get an invitation to our Slack community this way as well. Transcript: CORALINE: Hello and welcome to Episode 231 of Greater Than Code podcast. I’m so happy to be here with you today. My name is Coraline Ada Ehmke and I’m joined by my friend, John Sawers. JOHN: Thanks, Coraline. And I’m here with Jacob Stoebel. JACOB: Thanks. John! It’s my pleasure to introduce our guest this week, Austin Parker. Austin makes problems with computers and sometimes solves them. He’s an open-source maintainer, observability nerd, DevOps junkie, and poster. You can find him ignoring Hacker News threads and making dumb jokes on Twitter. He wrote a book about distributed tracing, taught some college courses, streams on Twitch, and also ran a DevOps conference in Animal Crossing. Such a nice pleasure to have you on the show. AUSTIN: It's fantastic to be here. JACOB: We can start the show like we always do by asking you a question. What's your superpower and how did you develop it? AUSTIN: Right now, my superpower is I'm 50% through a COVID-19 vaccine and I developed it by staying indoors for the past year, but more hilariously I guess, I developed a strong resistance to burns by working as a gas station cook for quite a while, back in my younger days. So I ran the fryer and you get really good at ignoring hot oil spattering on you. So I'd like to think that that level of pain tolerance is what helped me get through a lot of DevOps stuff and getting used to computers. [laughter] CORALINE: Yeah. I hate Kubernetes and it's hot oil splashing. They should do something about that. It's open source. I guess, I could open my PR, but . AUSTIN: Yeah. Well, they say PR is welcome, but that's the open-source maintainers. Bless your heart, right? CORALINE: Yeah, exactly. So Austin, I want to know more about this DevOps conference that you ran in Animal Crossing. AUSTIN: So let's start at the beginning, let's take everyone back to just about a year ago now where we were all kind of settling in for our wonderful pandemic that has been extremely not wonderful for most people, but I think everyone was coming to grips with how long it would take at first. My day job, I work as in developer relations. I'm a marketer, effectively. But I remember a lot of people were talking, the marketing team and certainly, the entire events space like, “Oh, what's this going to do about the summer events, what's this going to do about the fall events?” and I'm sitting here like, “Hey, I think this is going to last a little longer than till June.” So the conversation kind of pivots as everything gets progressively worse and people are starting to come to grips like, “Well, can we do a virtual event?” I don't think anyone at the time really had a good idea of what a virtual event would be. We all know video conferencing certainly is something that we've come to rely on in our day-to-day lives over the past year. Even if you weren't already in tech, or weren't already working remotely, Zoom is – it’s been Q-tip. It's been Kleenex. It's a no matter what you're using, you're Zooming someone. So they have that going for them, I guess. People, I think there was a lot of possibility and not a lot of real, strong ideas about what does this actually mean? So I wanted to try something different. I was joking around on Twitter and I had just gotten a copy of Animal Crossing: New Horizons, and I was staging with screenshots with like, “Oh look, this is funny. It's like a conference booth.” It's like ha, ha, we're all giving out t-shirts and laughing. And the code people picked up on and they were like, “Oh, that's funny. I bet you could actually do a conference in Animal Crossing and stream it out” because you can actually have people like join you, come over to your island and stand around. I was like, “Well, actually, you could just composite that video from the output of the game over some slides and what's the difference?” Someone's talking, someone's clicking through slides, and it spiraled from a joke. I put up a page, a landing page on April 1st, which is the best time to announce anything thing. Because if people don't go for it, you can always be like, “Ha, ha, April fools. Got you!” [laughter] But I put up a landing page and we had a 100 people register for more information that first day, I messaged them on Slack, and I'm like, “Well, I’ve got to do it now; a 100 people one day. That's great.” CORALINE: Yeah. AUSTIN: So long story short, over the next 30 days, we basically put together, myself and then my co-organizer, Katie @thekatertot on Twitter, or Katie Farmer, a virtual conference inside of Animal Crossing. It's called Deserted Island DevOps. You can go watch it on YouTube, the one from last year. We're doing another one this year on April 30th. It's just a one-day live stream. If you're watching it, you're just watching it on Twitch. We have a Discord that you can talk and do the hallway track stuff and ask questions and network. But the gimmick is basically, everyone's presenting has a Switch and they are in Animal Crossing. They're on this island, they're dressing up their little Animal Crossing character and we overlay their slides with the video coming out of the Switch so they can emote and react and it's cute experience to watch. But I think it's also interesting because what I saw, last year at least, is that it solves a lot of the problems, I think most virtual conferences don't quite nail, which is, I think a good event is something that takes you out of your day-to-day. It takes you out of where you are and put you somewhere else. Now, if you go into KubeCon, or re:Invent, or even devopdays, if you're doing this physically like, you're not at your office, you're not at home, you're somewhere else talking to people, literally, you have changed the physical location you're in. But most virtual events, it still boils down to, “Hey, I'm watching a Zoom effectively and I'm talking to people in Slack.” If I wanted to do that, I could just do my actual job. So I think one of the things that people appreciated about Deserted Island and continue to is the idea that this is produced differently. There's a couple other people that are doing stuff like this. I think Software Circus out of the UK, they've done a lot of themed events, themed virtual events like this, where the presenters are wearing costumes. Or there was The Great Kubernetes Bake-Off, I want to say where it’s a cloud kitchen theme so everyone has their chefs’ hats. I think having that concept also gives presenters a lot of mileage in terms of hey, you can theme what you're talking about. Here is an analogy in a box, here is a world that you can put your talk in and you have an idea that everyone can use those shared experiences, that shared language to develop your talk and give people an anchor for it, which I think is one of the good ways you help people learn. If you give them something they know about and then you tie your concept into that concept, then they're going to get more out of it. The other thing is that it's a great way to be expressive. In Animal Crossing, you are who you are, you are whoever your avatar is. So you don't get any of the – I hate being on camera a lot. It gets exhausting because you feel like you're performing for the camera. It’s not the same, but in this, nobody's seeing your actual face; they're hearing your voice and then you can dress your Animal Crossing your avatar whatever. So you can be creative. You can be who you are without having that weird performance pressure of a bunch of people that you can't see staring at your face JOHN: This is an important topic these days because there's still everything's online and will be for a while and I think so many people are still learning how to do online events and those skills are going to need to keep happening over the next coming years. I think because you can do now online events, which are more accessible to more people all over the world, you don't have to be the sort of person who can fly places in order to attend certain events. Having them online is a great accessibility option. So finding new modalities for making that interesting and not just sitting on Zoom all day, I think is a worthy endeavor. AUSTIN: Yeah, and it's super challenging. I don't want to sound like I'm like dragging people's work because I know CNCF has had to move a lot of stuff virtual. I know of the entire devopsdays community has had to move a lot of stuff virtual. This is super hard to do. It's not easy. It requires a lot of intentionality; a lot of planning and I think we will all get better at it over time. The future is not necessarily going to be like the past, I don't know if there's ever going to be a day where we just kind of flip a switch and it's all like, “Oh, we're back to how we were before March of 2020,” I think. So there's still going to be a desire for virtual events and there's still going to be a desire for figuring out ways to be more inclusive and to bring people in, especially because of climate change and everything like that. At some point, we have to come to a reckoning about the actual cost of a global travel-based society but that's maybe a slightly different topic. I don't know. CORALINE: I actually think a good side effect of all this is a focus on accessibility and like you said, a lot of people aren't people to travel. It's expensive. I know conferences, typically in-person conferences, used to spend quite a bit of money with programs to bring in marginalized folks who maybe couldn't afford the travel. But one thing I do miss is getting that audience reaction. Especially as a storyteller, I tend to tell a lot of stories in my talk and I like to be able to see, is the audience with me, is the audience getting what I'm saying? I can tune my presentation in real-time based on audience reactions and I really miss that. I really missed that aspect of it, that feedback aspect of it, because at the end of people are like, “Oh, great talk.” I'm like, “Yeah, but did it get to you?” AUSTIN: Yeah, did you connect with it? CORALINE: Yeah, and that's so hard. AUSTIN: It's challenging, especially because so many of – on the production side, there's a bias, I think in virtual events to prerecord, due to a lot of factors and this is not a diss on prerecording. I personally hate it. I basically have stopped doing any event that's like, “Oh, we want you to prerecord.” I'm just like, “Eh, I'd rather not” because that’s the style, that's the way I talk. I agree with this idea of storytelling like, you're not just reading slides. If I just want someone to read slides, I could just hand them a book. But what's weird to me is one of the things that I think that we did, that I haven't seen anyone else really do, is there's already a way that people do this. If you watch Twitch, if you watch twitch.tv, or live streams like the kids do these days, there is a real-time chat and people are reacting in real-time. It's a little bit delayed. It's a couple seconds delayed, but I don't know why you haven't seen other virtual event platforms take that idea and really try to have even just a button like a clap button, or a sparkle fingers button, or something to kind of let people know that there's people out there watching you and that they're reacting positively and maybe not negatively, but they're reacting. That they are cognizant of what you're saying. It's really surprising to me that we haven't seen more like that and I would love if some of these event platforms thought about that. How do you make that actual, immediate real-time, or near real-time audience connection with the speaker? CORALINE: The Twitch thing is really interesting. Back in October, I started streaming in addition to everything else I do in my life—I'm a musician—and I started streaming, recording, and music production and I have a weekly show. You're right, the audience interaction is great and I incorporate that into my show. I'll stop what I'm doing after I finish laying down one track and I'll ask the people in chat, “What instrument should I pick up next?” Or, “What sound would you like to hear there?” Things like that. It does make that more interactive and it brings some of that human connection back and I think you're right. That's what's missing from a lot of these online conferences is that connection. CORALINE: Yeah, and I actually think you've hit on it right there with streaming. There's been a big question – I don't know how much you follow the CNCF, KubeCon EU talk acceptance drama that kind of popped off a week, or so ago. But the short version is obviously, KubeCon is a very prominent conference in the Cloud Native world and it gets a lot of submissions and because it gets a lot of submissions, a lot of talks get dropped, a lot of things get cut. That's every event; there's always more submissions than there are slots for people to speak, but it turned into a bit of a blow up on Twitter and they actually wrote a blog post that's very explicitly described again hey, this is how we pick these talks. There's a lot of factors that go into it. The thing that occurred to me and I've seen some people talk about, especially people that have been in the industry for a while is, what really is the benefit of a conference at all? When you have things like Twitch and you can build an audience for yourself and it's easier than it's ever been to get a platform. Some people in the world have used that for good ends and some people in the world have used that for ill ends, but regardless, I could go out and just say, “I'm not doing talks and I'm not doing conferences anymore. I'm just going to stream. I'm going to produce things and put them on YouTube.” The only reason you would be at a conference at that point is as like okay, this is a quality filter. These are some people saying, or suggesting that these talks, or these individuals have a higher value to the community because we got a bunch of people, smart people to look at it and say like, “Yeah, we think this one's better than that one.” But I really wonder if all of this with COVID, with the pandemic, with the change in events is going to inspire a different model going forward, where there's less of a centralization factor of you haven’t made it until you've done a KubeCon keynote, or you haven't made it until you've done the devopsdays circuit, or you haven't made it until you've written a book, or whatever. If you’ve got something to say, go say it and I think maybe that's a better way because that also is more accessible. You don't have to necessarily – there's less gatekeepers and a lot of times, gatekeepers and experts are useful because they help cut through all the chaff. But on the flip side, it can be harmful, too because everyone has biases and even the best process is never going to weed out bias and most of the time, you don't want it to weed out bias. You want it to be biased for good things, not bad things. I don't know. I feel like there's a conversation that needs to happen about this that hasn't quite gotten off the ground yet. I'm interested to see where it goes. JACOB: One thing that sounds interesting about this Animal Crossing conferences, you talked about it was a different modality altogether and I'm just curious if did this conference include, or at least was it like there was a side-effect of conference goers just playing the game with each other? AUSTIN: Yeah, actually that was one of my really interesting learnings from it was that when you have a community started, just the best thing to do is just let them go do stuff. We had a bunch of people form impromptu watch parties where they would open up their island and invite people are watching to come and be in the same game space as them as viewers and run around together while watching the stream. So they would tweet out pictures like you would do at an actual conference, where it's like, “Oh, hanging out with the besties,” and then tweet out a picture, a screenshot of their island with people sitting. Some people went really into this; they built little watch party rooms where everyone had chairs and a little movie projector set up. Some people had coffee machines and a little snack plates, or whatever in the game. It was really interesting to me how, when you kind of let people be creative about it and you let people try to build what they want inside this modality, this world, this bigger world, I guess, of being at a virtual conference, that they'll do stuff with it because it's fun and because it gets you engaged. Again, it's not just watching another Zoom. It's not just chatting on Slack. It's, you're doing something and the really good thing about that is if you are doing something, if you do make it a unique experience, people will actually take the time for it. One thing that I think gets lost in a lot of these virtual events right now is that it's not something you're blocking off time for. You're saying like, “Okay, I've got maybe two, or three talks I really want to watch. So I'm going to block off 45 minutes in my calendar here and there and I'm going to watch this different screen for a minute.” But with this, what we saw was people had blocked the entire day off. It was a 6-hour, maybe 5 hours total and people were there the entire time. We had 8,000, 9,000 people watching basically consistently from the beginning to the end and about 15,000 people total watched it over the course of the day. So nearly 50% of that were people that were there the whole time roughly. I think by giving people that space to make time for themselves and to say like, “I'm going to treat this like an actual thing and not just something I'm going to pop back into.” That meant they could do the networking. They could do the chatting. They could react in Twitch and they could do the little clap emojis and the sparkle emojis. They could have those hallway track conversations and network and bond and get that social jazz you get by talking to people that have this similar problems, or have overcome challenges and are like, “Oh, this is how I solved X and Y problem in Kubernetes,” or even, “Oh yeah, this is a strategy I learned for dealing with managers that don't understand me, or making sure that we – how do I communicate this technical concept to the business?” It wasn't just, “I want to talk about really cool IP tables configs.” It really was like, “Hey, we're all people trying to solve these problems,” and that was, I think, wonderful to see and something that I'm really hoping that we can nail again this year. JACOB: I think the wonderful thing about conferences is that, as someone who has a good deal of social anxiety, or shyness, is the in-person experience is an excuse to sort of – well, it was like it prevented me from having the excuse of like, “Oh, I could just watch it on – is this something I can just watch it on YouTube?” I was able to like, convince myself, like, “No, you actually have to go there and you have to sit next to someone you don't know and introduce yourself.” I feel like conferences that I could get the exact same experience just watching the video anyway, I lose that side effect, which is, I think the more valuable thing is that there's an experience that I would miss out on if I wasn't there. So it made me think about what Caroline is saying about that immediacy of being a speaker and I guess, what I’m wondering is maybe the secret is if you can't reproduce the immediacy of people being in the same room together, and I'm not certain that's true, or not whatever it is, maybe the trick is how do you use technology to your advantage rather than thinking about it as a barrier to get around? AUSTIN: Yeah. I'm not going to say I have all the answers, certainly. The thing that I really hope, because I wrote a big thing about it on my blog and I feel like there's a progression of events, virtual events that have happened where people are experimenting and trying new things. I would like to think they're trying to get to that point. How do you use the technology we have to enhance connections rather than viewing it as just like, “Oh, this is a thing we’ve got to do until we can get everyone back on a plane”? CORALINE: And really, that's the best thing about technology is when you find an unexpected use for it. When you find something outside the use case that it's designed for and you get that feeling of delight, I think that's when tech is at its best. AUSTIN: Yeah. I think that was one of the things. The two big things about Deserted Island is the idea that this is a deliberately delightful and cute and comfortable place. It is the softest game you can imagine. There are no harsh edges. There is no failure state. I don't think there's a 90-degree angle in that entire game, but it also gives you enormous constraints because it's a very crafted world and so, working around and through those constraints, but also having sort of the delight of overcoming them and figuring out like, “Oh, this is this really soft round space that I can do stuff in, but I have these walls. I have these barriers set up that I have to work around.” I mean, that's why I'm in technology; it’s because it's endless source of challenges and it's an endless source of like, “Oh, here's a hill I can overcome.” I was never super popular, or fast, or anything. I sucked at sports. I still suck at sports. The one time I went skiing, I tore my ACL in 15 minutes. I'm just not a coordinated guy, but in technology, there's always a new hill to summit. There's always something new to learn. There's always a new challenge that presents itself. That, to me, is that's why I stick with it. I could do other things, but here's something that's always going to challenge me and it's always going to give me something new to do. That, I think is worth celebrating in itself and if we can find a way to blend all these things together, blend all the different ideas about events and the delight and constraints and challenges of technology and dah, dah, dah, dah, and throw that together in a Twitch stream. Cool, rad, let's do that. I think that was a lot of the inspiration. It was just like, “Hey, this might blow up in my face. This might fail terribly, but it's better to try it and see what happens.” Every day when I'm sitting here thinking, “Oh my God, it's never going to be as big of a success. Everyone's going to hate me,” whatever, I come back to that like, “Well, better to try and just like fall on my face than it is to wonder what might've been if I hadn't tried.” CORALINE: That reminds me of safety and something that we talk about at least in workplaces is making more places safe to fail and I think at the event level, the fear of failure has got to be a lot more on a different level. So were you prepared to fail and how did you prepare to fail? AUSTIN: It’s a great question. To be super honest, I'm not sure I was prepared to fail by the time it actually – so there's two types of failure. There was the technical failure and that was something that I did have plans for. There's a lot of technical failure that can happen during a live event production; my computer could have crashed, my internet could have gone down, a presenter's internet could have died. In preparation for that, there was a playbook effectively of okay, if this goes wrong, then do this. If this goes wrong, do that. Now, in doing so, I actually discovered a lot of other things that I didn't think could go wrong that did go wrong. One example was, we had very strong moderation in the chat because it's the internet, it's a public thing. There's no registration. Anyone could come into the Twitch chat and say whatever. So I was pretty biased towards okay, now let's crank up the moderation filters and make sure that people aren't going to just come in and say some mean things. One thing I didn't think to ask any of the presenters is like, “Hey, do you have something that's interactive outside of this?” One of them did, they had an interactive presentation where people went to Slido, or something and could that had its own chat input, text input. Any large enough Twitch stream, you had some trolls that had come in and started typing some slurs and other non-code of conduct things. So it's like, “Oh, crud,” and switch that scene off really quick and try to make sure, coordinate in chat like, “Hey, are you aware of what's going on with the speaker?” In real-time while they were continuing to present. We managed to deal with that and then cut out the offensive language in the video on demand version. So it's not there and it didn't disrupt things. there was a blip of like, “Ah,” and then we dealt. I think beyond that, though, the actual psychological failure because my expectations were pretty low in terms of like, “Oh, what is a success?” Because we didn't spend a lot of money on it. I didn't have any sponsors. I think I had an email list with 1,500 people on it and I was like, “Well, 50 roughly, you have some sort of webinar, or whatever, you get 50% of the sign-ups and that's a good one.” A 100 people sign up and 50 people show up. Great, you're doing fantastic. So my expectations were like, “Oh, here's my bar, 1,500.” If we hit that, if we hit anything close to that, we're doing great and then we hit 8,000. So the problem coming back to this a year later is oh, now the expectations are so much higher and we've taken sponsorship. We have sponsors now; we have a sponsor money in order to fund things like scholarships. One of the problems last year was you had to have a Switch to participate. This year we've come, I've gone around and said, “Hey, if you want to sponsor this and pay for someone that doesn't have access to a Switch, or Animal Crossing, or whatever, you can sponsor us by buying that person the equipment thingy to join this because not everyone can afford that.” Obviously, it's some level of exclusionary, like not everyone has internet, but within the group of people, the class people are giving talks to this, I figured that's about what we can do. Especially since you don't need a good camera, you just need a microphone. But because they're sponsors now, because there were so many people last year. It's like, “How do I set myself up for the chance that this is a failure psychologically?” And that, I don't have a great answer to. Therapy, I guess, is the answer to that. I talked to my therapist about this stuff. But it is. I think the psychological effects are actually much harder to plan around and much like in a workplace, psychological safety is significantly harder than technical safety. So my advice is to be very open and honest and transparent with the people that you're organizing with and to talk about it. I think this is the problem with most things is we don't talk about failure enough and we don't talk about how does it feel to fail? How do you get back up after you failed? By keeping all that inside, that leads to a lot of negative stress outcomes and stuff and you just feel like crud. So normalize talking about failure. JOHN: Were there any specific structures, or just communications that you set up with your organizing team around that to get everyone on the same page about thinking through failure and how it feels and how you're going to react to it, anything like that? AUSTIN: So that's also a really great question. It's an area that I could do better at. The organizing team is very small and informal for this like, it's mostly just me and Katie, and I've wound up doing quite a bit of it just for a variety of reasons that are really important. But we've had a lot of conversations about, I think that level of nervousness and that level of stress that you can have. A lot of it is both of us talking ourselves down right and being nobody – and some of it also just being very straightforward with people, with external people. When I did this last year, literally the expectations were very, very low and when people applied to speak, it's like, “Well, you know what you're getting into.” I didn't pretend this was anything other than what it is. This year as well, when I'm going and I'm talking about it, or I'm putting together sponsorship perspectives, or whatever, I'm saying, “Look, here's what happened last year. I can't guarantee you the same level of thing, but I'm also not asking a ton from you.” So I think one lesson from this is preemptive de-escalation. It's better, or maybe a better way to say this is under promise/overdeliver. The perspectives is very clear. It's like, “Look, this is historically what we had. Here's what I'm asking from you and here's what you're getting for it.” I've seen what a lot of conferences charge for sponsorships, I'm asking you for much less and maybe compared to those, you're not getting as much. You're getting a 30-second ad a couple of times over the day, you're getting your logo, you're getting some shoutouts and that's it. You're not getting leads. You're not getting an attendee list because there is none. That's one nice thing, I think about doing stuff like this is you don't have to be super aggro about stuff because it's like well, this doesn't exist. There's no registration so I can't tell you who's attending. But by lowering the stakes a little bit, people are still willing to throw you a couple grand, or whatever on a community conference, because one, that's a rounding error in most places’ event budgets. Two, even if you only get a 1,000 people and you expected 8,000, the video's going to be there. It's a long-term asset. Those videos are going to be on YouTube forever and they're going to be something that people go back and watch so, under promise. And the third thing really is and this actually makes it worse, not better, but this is probably the longest I've talked about this to anyone, this podcast right here. Most of the promotion for this has come from people that attended last year and spoke last year that are going around and talking it up and being like, “Oh no, this was the best thing I did in 2020. You should definitely put this on your calendar.” That actually makes it worse because that's all of your internet friends are like, “Oh my God, this was so great,” and you're just sitting here like, “Wow, I hope I don't let all these people down,” but that's life. I'm not going to tell people, “Hey, don't talk good about this because I'm worried that it's going to fail.” Let those external expectations try to lift you up a little. If everyone knew what it was last year and if you can deliver that again at least, then you're probably going to be doing all right. JOHN: There's two threads I wanted to pull on with that. First of all, you talked about having multiple different people, different constituencies like there's you as the organizing team, there's you and the speakers, there's you and the attendees, there's you in the sponsors. There's all these different groups and there's different levels of safety with each of them that. A different type of relationship with each of those and they each have a different level of communication and setting expectations. And then I think the other thing that really jumped out was the setting of expectations. I think that's such a key to managing an emotional reaction to something because so often those negative reactions come from missed expectations and that proactive communication about where things can land and what's possible and what's likely is a great way of keeping everyone on the same page. AUSTIN: Absolutely. So I want to actually start on that second one about expectations because I think this is something that catches me a lot and probably catches a lot of other people that are – wherever you are in your career, really, but there's both a tyranny of low expectations and a tyranny of high expectations. We tend to focus on one, or the other, but the hardest thing in the world is actually figuring out what that band is in the middle between your expectations are too low and your expectations are too high. I think the tech industry is absolute hot garbage just stem to stern. There's a ton of practices we have in the industry that I think because we're so afraid because the way capitalism works, the way funding works, the way everything works, every incentive is tuned towards preventing you from ever setting expectations too low. So if you look at OKRs, the concept of OKRs, the idea is the objective and key result and you should always set those as something you'll never hit; you should never set your key result too low. I think the Google-y way to think about this as if you achieve 70% of OKR, then that's good. That's what you should expect. To me, that's terrible. I hate that with every fiber of my being because you're giving me an objective that I'm always going to fail. That's how I perceive it and I get why we do this because it's always bad to be too low and I think a lot of this is cultural. It's the success win whatever business culture that's infested technology, where we would much rather set a very high bar for ourselves and then not meet it rather than set a low bar and clear it because if you set a low bar and you clear it, then that means you weren't pushing yourself. Because of the way that all of the money works an d how monetized we make all of our labor, if you aren't doing enough, you might as well not have done anything at all. So the thinking is better to have that high bar and then miss it. But that's extremely, I think just dismantles people that aren't super neurotypical. It certainly dismantles me and I'm whoever, I'm Austin, I'm one person in the distance. But I think it's prevalent throughout everything in tech and I would love to see that interrogated more. You're starting to see a lot of the golden geese of the tech industry being interrogated because of the pandemic. Things like the value of people working in person with each other, or the value of having companies in San Francisco, or the value of hiding your pay, of pay inequity. I think this idea of what should our expectations of ourselves be, of our teams, of the performance of our software even, I made a joke the other day that’s like, I want to see smaller applications written by fewer people that are paid more, that don't work as well and I'm not kidding. Because I think that the idea of oh no, we want the Googles, we want the big companies of the world to encompass everything. We want this one-stop shop. It's not great. It's harmful, it's actively harmful, and I know that there's a lot of voices and people are like, “Well, you can't just dismantle, you can't just cut Google into two pieces, or five pieces, or Amazon into five pieces and have it all worked out.” I agree, you need to be intentional about this. But I remember when I was growing up in the 80s and I remember what technology was like a little more than and the idea that someone could go into business for themselves maintaining a library and just selling a license for people to use that library. Maybe they figured out a really fast way to do a bubble sword and it's like, “Okay, I'm going to sell you a library, a Pascal library that you can link to and it does this work really fast and if you have a problem with it, then you get support from me and you email me, or whatever and I fix this bug for you.” We've taken all those things that people used to be able to do and build and craft and just said, “Hey, we're going to socialize all that expensive maintenance and put it on the open source community and have them do that for free and then we're going to build businesses around extracting value from all that labor.” CORALINE: That's one of the seven criteria of the ethical source principles is that we have a right to be paid. We have a right to have the value of our work respected and if you're making billions off of an open source library, you would better be giving back. AUSTIN: Yeah, and I think but it feeds back from – this all goes back to the capitalism.exe; It's all from the same source and a lot of ways. But I think that idea of expectations setting and never setting the bar low; that is a product of this and it's all intersectional. It's all interrelated. There is no one evil other than really big sociological complex sociotechnical human systems, or whatever and we can make it better, but we can't fix it without equally big changes. JOHN: Yeah. I think that the capitalism more is always better rule is what's poisoning this because you could make a small app and it can be successful and it could be two people on the team and those people could be very happy. But everything in society is saying, “Well, make it bigger, add a bigger team, do more things, blah, blah, blah.” I remember reading a story about, at one point a couple of years ago, the Uber like iPhone app was growing by 1 megabyte of compiled code per week because they were adding all this stuff to it and that just boggled my mind. It's like, it's Uber. They do really just one thing and they were having to do all these things and they kept bumping up against iOS store limits of the size of the binary. Just that mentality of let's do all the things because we can and let's stress ourselves out and work ourselves raw just because more is better. AUSTIN: Yeah, and I think it's a team problem. It's an organizational problem. Because how does that happen without you having so many people working in the same small space that are duplicating effort, that are duplicating features even, or other things behind the scenes? You just keep hiring and hiring, you keep growing and growing because that's all you can do, because that's the only way you can exist in society as a corporation, or as people building a product, or whatever is to constantly consume and grow and grow. This goes into Non-Fungible Tokens, NFTs, that have taken, at least my corner of the internet, by storm and the idea that oh, this is a way that you can introduce scarcity into digital art and it's like, “Oh my God, it's such a bad idea.” Every blockchain thing is so, so awful. But the amount of energy it takes to actually encode these things under the blockchain, even on Ethereum blockchain, because of how proof of work algorithms function, the only purpose of these things is to consume more energy for a completely pointless purpose. If you're consuming energy for the sake of consuming energy, to prove that you're doing some work in order to “prove that you own something.” You can't own a tweet; Twitter technically owns that tweet. There are people who are selling cryptographic signatures like, “Oh, it's like a signed tweet. You own the signed tweet.” It's like you own a link and that I'm not even sure that you can own that from any sort of legal, or moral, or ethical standard. That's not how ownership works, especially intellectual property ownership. Oh my God, this industry. Every day, it makes me want to move to the woods and raise alpaca. CORALINE: Well, maybe there'll be an alpaca feature added to Animal Crossing soon. [laughter] AUSTIN: Maybe, yeah. Just live out my alpaca farming dreams in Animal Crossing. It’s a shame that we need money to live. JOHN: So we've come to the time on the show and we go into our reflections, which is a where each of us talks about the things that we're going to take away from this conversation. Maybe the things we're going to keep thinking about, or any new ideas that we were exposed to and just what's going to stick with us. So for me, I think I heard about Deserted Island DevOps last year when it happened, I think some of my friends presented there, but hearing you talk about it more in-depth in behind the scenes, should we a bit more about the creativity, both on your side and in the audience as they put together new ways to experience the conference. I am really excited by that because it's not a place where I've seen a ton of creativity being expressed and finding new ways to have a conference-like experience like different mediations, different ways of participating, I think are really valuable because right now, we're copying online what we used to do in-person, but kind of and it's not always working out great. So if you just sort of throw away all the stuff and start over from, this is our platform and these are our constraints, I think that that leads to creativity and so, it's nice to see that. CORALINE: And I'm thinking about what you said about moderation and the importance of moderation. I was involved in the famous tech feminist wars of the 2010s and I was one of the voices calling for codes of conduct at in-person conferences. I think that becomes even more important with virtual conferences and the need for moderation. I don't think we do a good job, as an industry, of thinking about what moderation means, thinking about how to manage random people on the internet coming to a virtual space and I'm hoping that virtual events continue to invest some more technology. I think Twitch does a great job of giving us tools and I'm hoping that that idea of really investing in moderation takes off because I think that will have ripple effects in a lot of different domains. AUSTIN: I'm going to reflect, I think when you were talking about with failure and psychological safety and how to communicate failure, or those feelings of failure and setting expectations about it to not only peers, but also to people I'm organizing events with, or two people I'm working with. Because I think that one thing that this conversation really led me to realize is that I don't actually communicate it as well as I thought I had, or there's things I don't think about. Sometimes, you need someone to mention it to really piggy back up. I'm wondering if there's ways that we can develop toolkits, or playbooks, or even just point by point, like, “Hey, here's a guide to have these conversations,” because they're hard conversations and they're conversations that maybe you think you're ready to have, or that you think you've communicated. But it's like, “Well, did you think about this?” So that's something I'm definitely going to take away from this. I will put it out in the moderation thing. I used your code of conduct for the Deserted Island one. So yes, I appreciate the work that went into that because it was invaluable to me to make a good one for this. CORALINE: I'm glad to hear that. Thank you, Austin. JACOB: I haven’t been to any conference since the pandemic started and I think part of it is that being stuck at home like pretty much everyone else, hopefully, is that I think I was always telling myself, “Do I really need to take time off when I would probably be bored and restless and would wish I could just watch the video later anyway?” I think I was kind of missing the point because I think maybe what I really need to do is find a conference like this one that has been thoughtful about how participants can interact when not in-person and make the leap and force myself to take the day off, or days off. That’s the only thing I’m doing and force myself to be engaged with it because I’ve got nothing else to do just like any in-person conference. I’m going to give it a shot. CORALINE: Well, Austin, it’s been great talking to you today. Thank you for your openness, your honesty, your vulnerability, and you great ideas. I think we all have a lot to take away from this conversation so, it was really great talking to you today. Thank you so much. AUSTIN: Thanks! It was wonderful to be here. Special Guest: Austin Parker.

This week Austin had a guest lined up but due to unforeseen circumstances, they couldn’t record. So Austin just goes over Senior National results and gives you some affirmations. Follow us on twitter. @changinglvls Austin @airearly Send us questions at the link below! https://anchor.fm/changinglevels/message Much love

Real Definition of Homestead (LA 1299) Transcript: Steve: Steve and Jill here. Jill: Hello. Steve: Welcome to the Land Academy Show, entertaining land, investment talk. I'm Steven Jack Butala. Jill: And I'm Jill DeWitt broadcasting from sunny, Southern California. Steve: Today Jill and I talk about, well, really, I talk about, the real definition of the word homestead. Jill: Why is it only you? This came up because of a call that I had it. And this guy was nutty. Well, I'll explain it. But this nutty seller was explaining to me how he got this property. He's the first one to get the property. It was never properly, what was the word he said, what did he call it? Divided. It wasn't subdivided. He said staked out or something like that. And I'm going along like a homestead and he's telling me no. So we talked about it. Now we're going to try to clear this up. Steve: That's interesting. Because I chose this topic because I was reading a stream, an extremely lengthy stream in our Facebook. Jill: So they're talking about it too. Steve: Yeah. It's all over the internet man. And it's so wrong. I have to be real straight here. There's some really bad information about the word homestead. And I know why, because homestead means four or five things to different people. So I'm going to try to clear it up. Jill: It's funny. Steve: And not in a boring way. Jill: [inaudible 00:01:22]. By the way. Steve: That's okay. Jill: Okay, good. I got to say usually we're recording this a few days before. Now pretty much today we're recording on the day. This tells you a little bit about our weekend. Steve: We were late because of our social life interfered with our professional life recently. Jill: You should not let that happen. And we did, "Well, we can record tomorrow." I'll just record tomorrow, or we can record tomorrow. And then here, we're like, Oh, you can't. We have no more tomorrows. Steve: Remember back when we first started out, not with the Atlanta Academy, but just working together. And we were there every day and working hard and all into it. And now it's just a lapse [crosstalk 00:00:02:03]. Jill: [crosstalk 00:02:06] I guess so. Don't do that. Steve: I hear radio radio switches clicking off all over the place right now. Before we get into it, let's take a question posted by one of our members on the landinvestors.com online community. It's free. Jill: Okay. So Austin wrote, "Hello. After a somewhat successful first round mailer, I have a handful of recorded deeds from the County," as you should. This is great. "I haven't sold anything so far. I focus in Northern Arizona and have five acre plus desert properties that I'm hoping to sell in the 2,500 to $3,000 range. For this price point, is it appropriate to hire a photo company such as WeGoLook. There's others like that too, to shoot photos and or video, or should I use stock photos from the region and those will be adequate?" Thanks, Austin. And we put those in there for [inaudible 00:02:59] people. That's one of the things- Steve: There's 10,000 pictures in the original program of Northern Arizona. Jill: That we shared. Steve: [crosstalk 00:03:08] 10,000, maybe 8,000. Jill: When I say we, I mean, somebody else that worked for us or you. Steve: What do you think about this topic? Jill: I would, you know what? I think that back in the day, it was hard to get people and hard to tell them where to go. And for them to find properties, it was difficult for us alone telling photographer. But nowadays you could get a guy for 50 to 75 bucks off these companies or Craigslist, and you can give them GPS coordinates that they can pop in their phone and they can drive right there. So I think not hiring it I think there's no reason nowadays to not hire a photographer, to go out there, hopefully see a couple... And you've got how many properties? Steve: A handful. Jill: Is there a way... Do all of them at the same time. Have your photographer pick the first sunny day w...

Real Definition of Homestead (LA 1299) Transcript: Steve: Steve and Jill here. Jill: Hello. Steve: Welcome to the Land Academy Show, entertaining land, investment talk. I'm Steven Jack Butala. Jill: And I'm Jill DeWitt broadcasting from sunny, Southern California. Steve: Today Jill and I talk about, well, really, I talk about, the real definition of the word homestead. Jill: Why is it only you? This came up because of a call that I had it. And this guy was nutty. Well, I'll explain it. But this nutty seller was explaining to me how he got this property. He's the first one to get the property. It was never properly, what was the word he said, what did he call it? Divided. It wasn't subdivided. He said staked out or something like that. And I'm going along like a homestead and he's telling me no. So we talked about it. Now we're going to try to clear this up. Steve: That's interesting. Because I chose this topic because I was reading a stream, an extremely lengthy stream in our Facebook. Jill: So they're talking about it too. Steve: Yeah. It's all over the internet man. And it's so wrong. I have to be real straight here. There's some really bad information about the word homestead. And I know why, because homestead means four or five things to different people. So I'm going to try to clear it up. Jill: It's funny. Steve: And not in a boring way. Jill: [inaudible 00:01:22]. By the way. Steve: That's okay. Jill: Okay, good. I got to say usually we're recording this a few days before. Now pretty much today we're recording on the day. This tells you a little bit about our weekend. Steve: We were late because of our social life interfered with our professional life recently. Jill: You should not let that happen. And we did, "Well, we can record tomorrow." I'll just record tomorrow, or we can record tomorrow. And then here, we're like, Oh, you can't. We have no more tomorrows. Steve: Remember back when we first started out, not with the Atlanta Academy, but just working together. And we were there every day and working hard and all into it. And now it's just a lapse [crosstalk 00:00:02:03]. Jill: [crosstalk 00:02:06] I guess so. Don't do that. Steve: I hear radio radio switches clicking off all over the place right now. Before we get into it, let's take a question posted by one of our members on the landinvestors.com online community. It's free. Jill: Okay. So Austin wrote, "Hello. After a somewhat successful first round mailer, I have a handful of recorded deeds from the County," as you should. This is great. "I haven't sold anything so far. I focus in Northern Arizona and have five acre plus desert properties that I'm hoping to sell in the 2,500 to $3,000 range. For this price point, is it appropriate to hire a photo company such as WeGoLook. There's others like that too, to shoot photos and or video, or should I use stock photos from the region and those will be adequate?" Thanks, Austin. And we put those in there for [inaudible 00:02:59] people. That's one of the things- Steve: There's 10,000 pictures in the original program of Northern Arizona. Jill: That we shared. Steve: [crosstalk 00:03:08] 10,000, maybe 8,000. Jill: When I say we, I mean, somebody else that worked for us or you. Steve: What do you think about this topic? Jill: I would, you know what? I think that back in the day, it was hard to get people and hard to tell them where to go. And for them to find properties, it was difficult for us alone telling photographer. But nowadays you could get a guy for 50 to 75 bucks off these companies or Craigslist, and you can give them GPS coordinates that they can pop in their phone and they can drive right there. So I think not hiring it I think there's no reason nowadays to not hire a photographer, to go out there, hopefully see a couple... And you've got how many properties? Steve: A handful. Jill: Is there a way... Do all of them at the same time. Have your photographer pick the first sunny day w...

We had Sam Corbin captive so we figured why not make him do another episode of his podcast! So Austin and I try to educate Sam on some shit but I can't remember what it was, you'll just have to listen.

James: Hi listeners, welcome to Achieve Wealth Podcast. Achieve Wealth Podcast True Value in Real Estate Investing focuses on key players in valuable estate investing specifically on Commercial Real Estate asset class. Today we have Michael Becker who has done more than 7,200 units, primarily, I believe in the Dallas area, I know Michael can help me fix that. But you know, he has done a lot of deals in the past few years that he has been investing. Hey, Michael, welcome to the show.  Michael: Thanks for having me. Appreciate it.  James: Good, good. Can you tell the listeners about things that I missed out about your credentials? Michael: Yeah. So, Michael Becker, I'm based in Dallas, Texas and I'm a banker by profession. That's kind of how I got into the business was loaning money to other people and went out on my own about six years ago now, so about six years of experience. And as we talk right now, we're just closing up our 34th and 35th acquisition. So puts us about 70 to 100 units that we've done in our career. So far we going full cycle on 16 deals. So we refinanced three out, return some Capital still own and we sold 13 of them. So as we talk, we currently own about 5,000 apartment units, the vast majority of those are up here in Dallas Fort Worth, which is where I'm based. We have 400 units in Tyler and then we have 900 units in the Austin markets. So we're Texas-based focused, predominately on Dallas Fort Worth and Austin for where we look to buy. James: Awesome. Awesome. So rarely, I get to interview someone who has come from, you know, brokerage business and also the landing site, right? But I always wonder why Brokers and lenders who lend money and trade deals never really become the buyer or the owner of the assets, right? So what was your triggering Aha moment that you said, hey, I should better just, you know, go on the other side of the table here and start buying deals rather than lend money? Michael:  Yeah to be a banker, you have to have a certain like mindset and generally pretty conservative and if you start becoming successful like I was as a banker making a lot of loans, they try to tie you in the bank by giving you stock options and have more investing period so it's kind of the longer you wait, the harder it is to leave. But for me, I was 35 when I left the bank, I'm 40 now, and we're just like this little fork in the road, I felt that if I stuck around it was going to be that much harder to go. And really what I did was this all day every day was making loans to other people like yourself that would be a buyer, distress deal, renovate and sell it for big profits and I kind of realized I was on the wrong side of all those deals. It's better to be the borrower than a lender.  And you know a lot of great clients, a lot of them are friends, my friends still to this day, and I was looking at a lot of them and I was like thinking myself like if that guy can do it, I definitely could do it. You know, not that they're not smart. But what I like about the business it's a really, really simple business at its core; it's not always easy to execute but it's pretty simple to understand. So I had a lot of connections, had a lot of experience, you know, I underwrote deal after deal after deal, I knew everyone in Dallas Fort Worth, I was in the industry. I just wasn't doing anything about it.  So I met my business partner, Shawn, back when I was at the bank and he was helping people out of California buy properties in Texas. I made a loan to them. And so, he was kind of sick of working for his boss the broker and I was sick of working for my boss at the bank and so we kind of went out on our own. And like I said, we're probably the second or third most active B classifier in Dallas Fort Worth and the current market cycle. So we've been pretty active here in Dallas Forth Worth.  James: Got it. Got it. That's interesting. I always wonder, I mean, what do the Brokers and lenders see in themselves that they want to continue doing that rather than owning an asset? Michael:  You know, when you think about it though, like as a banker, you don't have any money at risk, you got other people's money at risk, you got your clients' money, you got the bank's money and you know for you to go tie up a deal, especially today, I mean, you posted up six figures in earnest money or God forbid, you know, well north of that hard earnest money day one and get all this like Risk and then you got to go out and raise, syndicate the capital. So to take that to do what we do for a living, you got to have a certain amount of guts to go out and do that because you know, you're taking a calculated risk along the way and you don't have a paycheck. So if you don't do business you don't get paid. So that's a certain minority of people in the world I can go on and take that type of risk on and thrive and if you go out setting cases up like I do, you just have to be comfortable taking that kind of risk. And on top of that, you know, most of the stuff is on recourse, where you still sign and carve out. Some bankers get pretty, pretty nervous about signing, you know, I have 4- 500 million in debt right now so I mean that's a lot of money, you know, and to try to take that mentality, it's just a different type of mindset for sure.  James: Yeah, I guess the entrepreneurship mindset and whether you want to do it, I mean, especially if you have gone through the last crash in 2008, you can be very scared.  Michael: That's right, for sure. James:  So let's come back to how did you scale up to this large portfolio, right? Because I used to listen to your podcast when I started in this multifamily investing in 2015. When I was listening, I know you had like, first year in[05:47unintelligible] you had like 1000 units and now you have like 7,000 units, right? I mean maybe now you own like 5,000 units, but what was the system's process if you put back yourself back into that time and I know you made mistakes from then until now but you know, what are the teams or what are the processes and who would you hire first to grow to this scale? Because now it seems like clockwork for you because you guys have been... Michael: Yeah, so we started out, it was pretty lean. So when we first started out, I did the first four deals, first 800 units. I still worked at the bank and then I kind of had enough scale that I felt like I could you know, keep going. I had enough credibility in the market place; you buy one deal, you get a lot of credibility. You buy four like quickly everyone in town knows you're out there buying it because like I mentioned, I had a lot of resources like from the standpoint like all I did, all day, was underwrite apartment loans. I had a lot of connections to a lot of people. What was holding me back was that everyone thought of Michael Becker as a banker, they didn't think of me as a principal so I had to kind of change the perception in the marketplace what I was from a banker to a principal. So once I did that, that changed it pretty quick and then from there, we sort of started to scale. And so it was my partner Sean and I and we had one employee when we started. We kind of did a little bit everything and we all do a little bit everything when you're that kind of small. And so, you know, we were just kind of guys who were doing deals and then all of a sudden we woke up. I think we had seven or eight deals and we had all this work on us and there was still just three guys out there doing deals. So we had to figure out how to systematize so we started out with someone that's got an IT project management background experience actually, so she came in and kind of did operation; we were disorganized with stuff everywhere. So like our Dropbox wasn't orderly, you know, just wasn't everything wasn't save down. We didn't have any documentation of processes and procedures. So she came in the systematically, you know by meeting with me for two hours at a time., she'll talk about whatever, interview me and systematically built out all our policies and procedures and organize everything. You know, our chaos for life got real organized over a six to a 12-month period from there. Then we added an analyst to kind of help on top of it. And then we started layering in an administrative help on top of that and then you know, we start getting Asset Management help, hired a professional asset manager and then you know, we hired transaction people to kind of help run process the escrow and things like that. So those are the types of teams, you know, we have a third-party management company. I think you're vertically integrated when you do management in-house.  So we're able to manage 5,000 units with nine people; basically my partner and I and seven employees. We've got ahead and taken the approach. So I want to hire really high-quality people, pay them a little bit more money, but just be a little bit leaner. So that's kind of the approach we've taken because I really don't like managing people. So the lesser quality people will take a lot more of my resources so I rather pay someone that's a killer really high salaries and trust they can go out and do the job. But you know, admin help is the first thing I think you need. Someone to make sure you get organized. You have a process, make sure you get an investor database. Be really helpful, if you do syndication dropboxes, so we use dropbox all the time.  You'll have internal chat systems. Those are things that kind of we can do quick little messaging, you know, all sorts of stuff like I talk about, about raising money more efficiently if you want to go down that path or if you want to talk about operation, we talked about that too. But just trying to use technology and work smarter not harder. And every time we do a deal, at the end of the deal, we always have a Post-mortem meeting where we go over the good and the bad and we take away lessons that were bad and then we take those and try to improve the process for the next deal.  And when we first started out, they were a lot of bigger issues and now, fortunately, the issues are really small and minor because we got the list of stuff you don't ever want to do again list, got really long pretty quick and try not to make the same mistake willingly twice. James: Yeah, so can you name like top three things that you have realized from that not to do list, can you share it with the listeners?  Michael: I mean around raising capital in particular, you know, we first started out, we had a database and I needed to raise a million. I remember I had to raise a million four for a deal, I think it was a million five something like that. And it took me about 20 25 people somewhere in that range to get a million five in, a hundred thousand minimum. We first started out I'd get a package. I need be able to an investor. I set up a call and have an hour-long call, 45 minutes to an hour long call and I had to do that 25 times. Now, what will do is we'll email the list, we hit schedule webinar and it's at, you know, seven o'clock Central Time on Wednesday. People that can attend Live, great. If not, we'll send them a recording of the webinar. And then they can watch the webinar when they want to and then I have a five-minute call with them if I need to resolve. So I presented all the materials of the deal so maybe a lot more efficient that way. Whereas, you start scaling up doing like webinars a lot more efficient way to present your opportunity than one on one calls. Because, for example, we just finish up with 24.6 million dollar equity raised and if I had to do that one call at a time like that is so huge, you can't do that. It's going to be 200 people basically invested to get 24.6 million. So, you know, you'd have to have 300 calls to get that and that just isn't an efficient way of doing it. So, that'd be one thing.  Another thing that's been official, as I said we got an investor database. So when you invest with us, you go to our database or portal up our website you fill your stuff in electronically and you electronically sign your documents. And that's a much easier way of going about it and getting the old school, paperwork out, that's kind of how we started. And then finally what was another good way to be able to work efficiently. You know, I think we got more efficient the way we've kind of work it and keep people in line and we clearly communicate what's expected of people and we're really consistent with it. So those are things you grow into, those aren't things you necessarily have money to do out the gate because we, you know, spent a couple of thousand bucks a month on our investor database. So if you have zero units to spend $24,000 a year on a database doesn't make sense. But you know, gotowebinar is certainly something you can do and you can use a Google sheet instead of a set of a database until you ultimately get enough revenue where you can afford some of the more technology tools that are available out there.  James: Yeah, yeah. In fact, I just launched my investor database yesterday, which was a lot of my investors love it. They just say it's so nice for them to see their dashboard, in terms of investment because a lot of them have multiple investments with me and it's just nice for them to see. And all the documents are in one place and they can just log in and get the report. They just love it. Michael: And it'll help you when it comes to tax time to track all your distribution in there, I'm sure and then you don't have to go recall your distributions at the end of the year to do your K1s. James: Got it. So coming to I mean you must have a good number size of passive investors. I mean, how do you select certain passive investors for certain deals? I mean is it first come first serve or how is that? Yeah, so we have, let's see, I did 900K1s last year. I think I had about 500 unique investors when we closed the year out. We just raised, I'm not quite sure what the stats are of how many are a repeat, how many are new but I probably have 600 unique investors who've literally invest with me at this point in time. And we're going to do 12-1300K1s  next year easily. So yeah, we generally will so we definitely have like a blacklist, right? So if we take your money and you're a pain, we'll make sure we don't take your money again. That's certainly the thing I think everyone should do that for sure.  On the front end if we think you're going to be a pain we'll generally kind of blacklist you as well, life's too short. Yeah, too many people, we don't have time to have a little distraction. But basically when we have an offering, we'll just go in the database and you'll get together like the MailChimp will send out a little, hey, coming soon email or save the date email, got a future opportunity coming up and then you just email the database and just generally first come, first serve.  Sometimes we have a couple of guys that we know that we have a special situation with that. They're like, hey, I have this money. I want to place it with you. Maybe we'll give them a little bit of a head start to deal from time to time. But generally, send it out first for people to pay attention, fill the paperwork out, get it all done, wire the money in, those are the ones that get into the deal. James: Yeah. I mean, I agree with some investors being a pain. I mean, it's just so hard to win. Especially sponsors like us. I mean, there's so much of moving parts and so much hard money in and on day one, I mean, so much money stuck on escrow and this has so many things going on in closing a deal. And there will be some people we just had to deal with it, right? Michael:  Yeah, so, you know, it wasn't the vast majority, people are great and but you know, one of the things that I was talking with one of my buddies, he's syndicating his first or second deal, yesterday, and he was getting a little frustrated, it wasn't going quicker and I'm like well just because you have a deal in escrow and you have a deadline and it's important to you, doesn't mean that it's not as important to investors, but they have other stuff going on their lives. So you got to be able to make sure you meet your deadlines. So you got to consistently communicate deadlines and be proactively reaching out to people and you know, you gotta push sometimes to get these people. Because if you don't stay in front of them, they're going to get distracted and something else in life is going to come up and they'll just simply forget that, you know read about your deal. They don't mean to and it's kind of like happens.   James: Yeah. Yeah, I always communicate as well to make sure that everybody knows the timeline and when do we expect things and keep on communicating to them because everybody's working on getting things done, the passive investor, the sponsors and all that. So that's important. And so the type of deal nowadays that you're doing because usually I mean, I'm not sure whether you know, I wrote a book called Passive Investing in Commercial Real Estate where I categorize three different types of deal, which one is core, the other ones are light value add the other ones a deep value add. So the type of deal that you're doing, can you describe those characteristics? Michael: Yeah. So when we first started out, we bought a whole lot of[16:37unintelligible] that's kind of generally where we started out that's where most people start out. So the first probably ten deals may be more raw 1960s 1970s vintage stuff and then about two years into the business, we started to transition more in the B-class. So Texas, things like the 1980s vintage. And then really the last two to three years the vast majority of what we have done had been kind of more B plus, A-minus. So things kind of like late 90s all the way to about 2008; that's kind of my most favorite part of the market, as we sit right now.  We have done a couple of brand new deals. We had some exchanged money, we sold a BDO and we just bought a brand-new 17:16unintelligible]  and then we bought a few deals a little bit older than the 90s. But generally speaking, if you ask me, A-minus is my favorite space and a couple of reasons for that. Now one, if you go back when I first I bought my first apartment 2013, I bought a brand new class A Deal in Dallas for about a 5 cap, a BDO was like six and a quarter six and a half cap and a CDO was like eight, eight and a half cap. Fast forward to today an ADO is like a 475, a BDO is like a 5 and the CDO like five and a quarter by five and a half, something like that, right? So what used to be a big gap is now really, really narrow.  So we have the ability to track larger amounts of capital. So it make as much sense to me to be on a risk-adjusted return basis to buy a 1970s piece of crap building if I can buy a 2004 vintage building for a similar cap rate. So that's kind of what we're focusing on. And the stuff that was built that's 15 years old, stuff kind of on the 2000s. Still, most of those have like white appliances and cheap light fixtures and you know, no backsplash and you know cheap cabinet fronts. You still do similar value add things like flooring, appliances, fixtures, backsplash, cabinet fronts and still push the rent lift up a hundred dollars or maybe more per unit by doing the work. So that's kind of my favorite part on the market and then just kind of we've been fortunate enough to have a couple of deals go full cycle and return a bunch of capital. So we have a lot of money in our database and so I can't simply go raise two or three million dollars, that's just too small, you know, we need to be raising, you know, nine ten million time minimum; it's just too small. So we're just trying to do a little bit of a larger deal. And that's kind of what we've been focused on and say light value add, A-minus that's the vast majority of what we do with a couple like more newer stabilized kind of deals then thrown them in if we do an exchange or we just think we're getting a good basis on a deal. James: Got it. Got it. And also the other thing that I mentioned the book is the passive investors will be, they would like to invest based on their preference or based on their investment cycle. So when you look at your passive investor demographic, do you see some differentiation in terms of these are the group of people that like to invest in my deal?  Michael: Yeah, I mean, listen with 700 different people that invested with us you get a little bit of everything, right? You know, but that's one of the things that we always try to make sure we stress is you know, hey, here's what to expect. You know, we're really explicit about what the projections are, the timing and amount and the timing of the cash flow and when you do a syndication, ultimately most of those things need to sell at some point. It's hard to keep a whole bunch of unrelated people to together for perpetuity; forever is not a good hold in a syndication environment. That's cool if it's like you or you and a partner or a really small group of people, but when you have, you know, a hundred unrelated people that's hard. So we want to make sure when we're communicating with them that--and they understand like, you know what to expect and I also let them know if we're going to sell it and it doesn't fit what your objectives are, then this isn't a good thing for you to invest in.  So we try to be really explicit. So we match expectations properly because what I don't want is a year down the road, for you to be upset because you thought you were investing in, you know, one thing and there's really something different so, you know trying to be explicitly and very clear to our investors is what we're trying to do.  James: Yeah, that's good. That's the best way to just make sure that everybody knows what they're getting into right? So with the market at the current cycle right now, I mean in DFW Austin, you know, the whole taxes or places where you're investing it's very hot right now so, where do you think we are right now and how your strategy has changed in terms of acquisition? Michael: Yeah, I mean. You know, this has been a hell of a run where we're nine years into this thing or something like that. I mean, it's been one hell of a run. You know, with that said, the more we focus on a predominately Austin which is where you live in Dallas which is where I live and if you look at the population projections about three weeks ago, I've done this with staff about three weeks ago. The Census Bureau came out and kind of have stats for the growth 2018. So Dallas, Fort Worth from 2010 through 2018 over an 8 year period, there are a million more people in here in 2018 that was in 2010. So, we went from that 6 and a half million people to about 7 and a half million people and their projections in Dallas Fort Worth are to grow from about 7 and a half million people to almost 10 somewhere between the next 12 to 15 years. So to put that in perspective that's about two and a half million more people coming to Dallas, Fort Worth if the projections are right. So that's the equivalent of like the entire metropolitan area of Charlotte or Orlando and then putting it on top of Dallas, Fort Worth today. And everything I just quoted to you about Dallas, if you take the percentages, it's even higher in Austin. So Austin is growing even faster on a percentage basis. If you feel like just driving around, there are just more cars, more people all that. So I don't know a whole lot, James, but I know if the equivalent of the entire metropolitan area, Charlotte is put on top of Dallas Fort Worth[22:50unintelligible] have to go higher right? They just have to go higher. So what we want to do is, you know, make sure that we're focusing on the right locations within the metropolitan area. You know, we're trying to buy away from these Supply the best we can. We're buying like Suburban multifamily deals in better school districts. We're trying to focus on basis. So we're trying not to pay Crazy Prices. One of the strategies we've done here recently is focused on properties that you can come buy and assume someone else's mortgage and you get this avoids having a large yield maintenance or the [23:24unintelligible] prepayment penalty. So you get a pass along a lower cost to you as a buyer. So that's a way to kind of counteract that a little bit.  What you give up as a buyer; you give up five years of interest only on the front end as you're assuming a mortgage that's most likely already amortizing so kind of hurt you up from yield. But if you save a million dollars or two million dollars in basis, you know, one day, that's going to burn down if you need to sell it or refinance it free and clear. So that's one strategy we've been doing. And then here's another thing. I mean you own a bunch of stuff to San Antonio like those we were talking about before we started recording. You know, this is one of the things I would say, it's completely unfair business, you know, a lot of it who you know, what you know, what chips you can trade. And you know, I own a lot of stuff in Dallas but I walk in the San Antonio, you know, you have more clout in San Antonio than I do, just because I don't own. So the Brokers are more apt to sell you something than someone that doesn't know that market. So we're at this point in the cycle doing 35 deals or some like that at this point, we know everybody, everyone knows us that our Brokers are players in town. So we get our unfair share deals. So, you know, we're looking at a lot of stuff and we're trying to be selective with it. It's also as far as strategy goes, you know, the lone assumption route has been something that's been successful for us. And then two, we put up a lot of hard money. That is the other thing that helps.  So you can put up a lot of hard money, get aggressive with your terms, you know, act quickly, you know, we got a deal in escrow that we officially never got to tour, you know, so we had to go shop it and then we never got to tour it and so we just basically got it in escrow went hard [25:10unintelligible]  without ever having an official tour and I can do that because I've done 30 something deals. You don't do that on your first deal. So I know what's up, I know what's going on and we did our due diligence and we didn't find anything that we didn't already expect. So we knew what to expect and that's what experience and repetition gives you a psyche. I got my 10,000 hours and I kind of know what's going on. I kept having to make better decisions, quicker with that level of experience.  James: Yeah and brokers love it too because for them is like you're a very easy buyer because you already know the submarket. You're not going to give a surprise and they have done deals with you. They just love it things to go much smoother. They make money as well. So they love the repeat buyers and the local players, as well. Michael: Yeah, that's right. And then we're all friends like we go and have drinks together we go to the baseball game together. We all become friends and you know people do business with people they know like and Trust so being local in the markets that we own and operate in. I was at lunch before this podcast and ran from the[26:17unintelligible] Brokers because of their office across the street from me. Walking down the street and you ended up having lunch in these just randomly. And as I was walking out, one of my competitors who own like 12,000 units whose office is around the corner for me walked across me in the hallway, you know, and on the sidewalk, I mean so this like being proximity and doing a lot of deals that stuff helps. James: Got it. Got it. So let's say nowadays, what's the process of your firm looking at a deal? So let's say today there's a deal coming. I mean, it's not on the market, the broker tells you, who looks at it first, how does it come to your eyesight before?  Michael: Yeah. The way we are set up, a deal comes in, say I get it, you know comes across my desk. You know, I basically kind of where's it located? You know, what's the basic price? Right? So I'll just kind of go to Google Map. Make sure you kind of know the location I'm in and I know whatever location that they are sending us. Like we know like the markets because we're in the market. So, you know, usually, most of the deals are like, no, it's the wrong location or no, you're prices are extremely insane. I'm not paying that price per unit for this type of product. And so usually a lot of people kind of get kicked out, but if it passes kind of that basic high-level test, then at that point usually we'll do like a real get the financial statements in from the seller. And then what we'll do like a real back of the envelope analysis.  We'll spend 20 to 30 minutes doing a real high-level underwriting just to make sure that it kind of passes the high-level test and usually a lot of those deals die right then. So, you know, the deal was just like, you know the match it doesn't work. It's just way too expensive or we don't think there's not much upside in the rinse. Just whatever it is. We kick a lot of deals out that way. Then if it passes that deal usually at that point, we'll do a full underwriting and that will take this like four hours. You know, we have a CFA that's our analysts. Our analyst will go underwrite the deal for four hours. Since it's my partner and I, then my partner will go through and kind of review the model. And once you review the model, it passes that, then, you know usually, most of the deals kind of die right there then they don't really work. But the deals that kind of pass that screening that's when you know, we'll kind of get down and get serious about it. And I think that point that's usually when I go tour. So that point, they pass all the tests so we set up a tour maybe put [28:34unintelligible]  in early kind of depends on the situation. And so, you know, we're looking at you know, 60 70 deals to get one that actually makes something like that. That's probably somewhere in that kind of General ratio is what we look at. And we just have like little series of check marks along the way that we gotta like, you know, but doesn't pass this one little test and let's just kill a deal and move on. I found on the biggest cost to have in my life anymore, stop tuning cost. So if I spent a lot of time on one thing it's at the expense of something else. So my time is precious. So just trying to make sure I get, you know, use that the most widely and don't chase these deals for you know weeks and weeks. I never had the opportunity of actually making it in a day. So that's hard to do when you're first starting out and that's a lot easier to do when you have some experience.  So when you start out, you got to learn these lessons sometimes the hard way. You got to underwrite this deal that if you would have just at the end of it just kind of be self-reflective like, you know, what could I have seen earlier on this deal that would have stopped me from wasting a week of my life on it? You know, you need to start that. I think that's what separates a better apartment owner, ownership syndication type groups from the less successful ones.  James: Yeah, I agree. I mean, I don't look at more than five parameters in any P&L to decide whether I want to dig deeper. So what's the ratio of deals that you look at verses you looking at and passing it to your analyst for the four hours underwriting? Michael:  I mean, it's probably pretty limited. So if it's called 60 deals to get one, I mean it's probably, at least half just get killed or your pricing is way too high or it's the wrong location or the deal too small or something physically about the deal I don't like. So that's probably half of them and the ones I've been going to like get a back-of-the-envelope, we probably kill, you know, the 30 that make it through on the 60 we're probably killing, you know, so that's 20 right there. Then we'll probably underwrite, you know, ten to get the one type of thing.  James: What do you look for in a location?  Michael: You know, yeah, so we're Suburban multi Family Guy. So good Suburban location that is in the better school districts, you know near major thoroughfares preferably to have access to Lifestyle and Retail amenities like, you know, like they are near a Starbucks, near a good grocery store, you know, retail restaurant, stuff that people want to live in. First and foremost, low-crime area too, I don't want to buy in the hood. So, you know, no low-crime area. Those are the things I look for and we're targeting, you know, preferably 200 plus unit, A-minus family deals, but that's kind of my perfect deals. An A-minus deal with more than 10% or an upside, you know it's well located, low crime, better School District, near employers, near retail and restaurant. That's kind of what I look for.   James: So, can we go a bit more deeper into the back of napkin underwriting? So, let's say there's a $10 million deal you know, 50 unit, maybe a 100-unit deal, how did you underwrite that? Back of the Napkin. Michael: I mean, so what is the first major metric is a, you know, one other [inaudible31:51} ransom what's our basic market survey say . So, pull a [inaudible] and look at the market rent. So then how much upside do we have in rent? So, I say, so, if there's only 5% upside in rents then it's probably not ideal for us, you know, we typically 10 plus percent in upside of rent to make the mass work. So, if I only have 5%, I know when I layer in my sponsorship compensation it's just not going to make sense. All right, so you know, like it's just not going to have no margin for us to be able to go attract capital. So, that's the first thing and then we'll then obviously go down and like other income or other income opportunities, then obviously look at the expenses as well. Michael: So, you know, one of the deals were we just got awarded, the payroll is by 1600 ,1650 a unit and it should be 1200, you know, so we can on day one, boom, take 450 out of payroll that certainly helps quite a bit. So, we're looking for things like that, that's kind of what it is. And you know, basically for maybe if you think about it at its simplest form, James, like, I need to do a deal I need to be able to deliver somewhere between 13 to 15% IRR today that's what takes me to attract capital. So if I can't get a deal layer in my compensation layer in whatever capital you need to do, um, you know, talk to the purchase price and I don't have enough upside of rents because at the end of the day, if I can't produce a 14% or 15% IRR over a five year hold period, my investors don't want to invest. So, I can't spend time on deals on can produce those types of returns. So, we're just trying to find, stuff that has enough upsides would be able to produce that. So, whatever that is, reducing expenses, increasing income, the two most common things, or is there some sort of way we can get a different type of debt quotes that may be kind of juices, some of these returns or whatever the specific situation is to that property. That's kind of what we're trying to get to the heart because, if I can't produce a 14 or 15% return, I need to shoot the deal and move on. James: Got It, got It. So, coming to 13,14% IRR is it to investors, or is it overall returns on ... Michael: Investors right. So, if it’s like 15 investors 17 and a half, 18 to the deal and you put a sponsor comp in there? So, it's got to be, I gross 8 total 18 they get up 15 and our structure or something, something like that. James: Got It, got It. Yeah. It's interesting on the debt code side, no, sorry, before I go there, how do you know that the seller is not taking some of your upside? Because nowadays that's what sellers do, right? They price it slightly higher; they give you upside, but they price it higher, which erases your upside. So how do you determine that? Michael: That's the whole thing why we don’t buy c class anymore because of the same catch, so yeah you know, that's the thing so I mean, all these deals that have a lot of upside have a lot more interest and so they can again, bit up and the cap rates are compressing. So, the trick is you got to overpay a little bit, but you can't overpay too much. Right. James: Right. Michael: And that's kind of like what you're doing. So, at the end of the day I got to, I, it's as simple as I deliver a 15 IRR and if I can't deliver, I can pay up to a certain price and then you start doing past out price and I can produce the returns I need. And that's kind of when we back off. James: Okay. Michael: So that's kind of how I think about it, so, every, most of the deals we'll work out at a price. So, we just kind of get to where this is the Max price what we can do to push to push out a 15 IRR for investors. And so that works up to 20 million and 20 million, 100,000 it doesn't work. So, you got to kind of draw the line in the sand and have a lot of arms in the fire. You get a whole bunch of deals working all at the same time. Usually, they start popping. James: Yes, yes, yes. The basis of my question is because they could be $150 or hundred dollars a rent bump potential, but the seller has priced it so much or we could have outbid-- Michael: Yes. James: --so much that it's not worth it, right. So, to do that because you might be just getting-- Michael: Yes, there's that. And then you get a little nervous for some of the less-- the newer people in the business, with little less experience like you're going to pay a five cap for 19 C class, 1917 deal. Okay, location and suburban St. Tonio or Dallas or whatever and then you're going to perform like a five and a half or five 75 extra cap. Five years down the road for a c class deal, maybe that, maybe that's the right cap rate, maybe it's not, it needs-- as you go and improve the property, you're able to increase rents and by extension, you value you’re in a why. But at the same time, the more upside you take out of these deals because your turnover, 50% units upgrade them, shrinks your buyer pool cause everyone wants value add. So, the more value you take out on the deal, your cap rate actually goes up. So, it's like a weird little dynamic you're in that you got to like, you got to factor in. It's like a 3-D puzzle you're doing because what's great because you're increasing, you're why. Because you're raising your rent, but at the same time you're also expanding your cap rate, as we sit in the same marketplace. So, it's interesting, complex puzzle, the marketplaces are right now. James: Yes, I was talking to a broker and you say hottest deal to sell nowadays it’s like deals where everything is done right, 90% is done. Michael: Yes. James: Nobody really wants it because everybody wants value add right? Michael: That's probably the opportunity to go buy a bunch of that stuff. Cause that's what today is. And then if you can get higher leverage loan, you get a 75% loan and get a good low-interest rate and get a bunch of I Own and go buy a deal that's turnkey. Maybe that's a better way of going, to be honest with you. And just kind of get a little bit more your return from current yield versus a big pop on the backend. That's thought about strategy, to be honest with you, it's a lot more safer than going and doing a bunch of work on a property-- James: Yes. Michael: --and paying a 475 cap for 1970 deal. I'd rather pay a six and a quarter cap for six and a half cap for a deal that's already done. James: Yes, because the backend is not certain. Right. Nobody knows what's going to happen-- Michael: Right. James: --at the [inaudible37:58] cap rate, so. Michael: That's right. James: So that brings to my next-- Michael: And then you do all the work, you might expand your cap rate anyways. And then you're doing all this work to only get half the payment. So, I think if I could go back in time, I would've bought every deal on a bridge loan. I would not have spent a single dollar in renovations and just operate it, wait five years and you sell it in today's environment for like a freaking 475 cap, that would have been a better decision with the benefit of hindsight. James: Yes, correct. Correct. So how would you-- sorry, in terms of cash flow vs. IRR vs. Equity multiply, right? So, what do you see, what is the most important number that-- for you, right, I know you're passive investors need to look at? Michael: Yes. You know, I think everyone, that everyone's different too. Like, all my investors have different things that are most important to them. I think, honestly at the end of the day, a pair of this investment, that investment, IRR is really kind of the driven. I'm not the biggest IRR in our store. We, I think the cash on cash certainly matters because I can't pay my bills on IRR, but I can with a check every month. So, I, that certainly protects it. But at the end of the day, really, we're focused kind of when we're-- comparing this, it's up to you in the next one, really kind of IRR. Because you know, if I'm able to come in this deal, I assume a mortgage and refinance in the third year or something like that and have a partial return of capital that pops my IRR pretty, pretty good. And I keep take some of this capital and return to my investors quickly. Two-year period, you know, 30% of their money back through a refi or something like that. That certainly is attractive. So, we'll, I think I kind of focused on IRR when I'm making the decisions on which deal, I want to buy, which deal I don't. And we've been, we like [inaudible39:54], we've been focused many deals about loan assumptions recently trying to get a lower basis. So, the first and foremost I'm focused on basis, making sure I buy a deal that's a relative value to everything else is trading right now. And I, cause I was only two things. You can't change on a property; you can't change your purchase price and you can't change location of it. Everything else you can kind of modify can always refinance it. I can always improve the property, but I can't change what price I paid or where it's located. So, we'll locate a deal with good prices, and I think everything else will kind of generally work itself out. James: Got It. And got it. How do you make decent between buy and hold for long term vs. buy and buy and refi? How do you decide? Michael: Yes, so if it's a syndicated deal, we've done a couple deals, especially when it first started out doing dentures where it's like what equity partner in us. Those deals we tend to hold longer. We bought a bunch of workforces, we sold them, we exchange, like A-minus or a product. So, we did a bunch of that. And then when it's a syndication people for like forever is not a good whole period if you're in syndication. Because people want, return on their money as well as return of their money and kind of the intermediate term. So, we're typically performing a five-year hold period. I think you'd be going much past seven. Most people kind of like, you know, shoot, I don't want to tie my money up for 10 years or 20 years. Now I kind of want to get my, I kind of want to see a return of my money as well as the return on my money. So, it kind of depends on the thing, but that's a heck of a lot of work buying and selling these things. So, it was just a lot easier just to kind of hold and it's kind of operate, especially the way we're set up with a third-party management company that does all day today. I, managing a bunch of thousands of apartment units. It's kind of like adult daycare. James: Yes, it's adult daycare, it's a good one to see. Michael: It's property management as a business of problems. I mean, there's always a problem, like every day, always, problems everywhere. So, if you have third-party management to kind of oversee that and we're set up and I have an asset manager that layered in between me and them. As a principal, the way we're set up, it's really not that bad on the day today. So, what we've been kind of focusing on is we're just selling the older stuff and buying newer, nicer stuff. Cause there's old stuff, I mean, not only, it was great, and we made a bunch of money, but you have asphalt parking lots and casts on sewers and t one 11 siding, Hardie. You go renovate a deal and two or three years later you've got to renovate the deal because the parking lot needs to be redone and you painted over wood. So, then you've got to have more wood of what, right? You got to go paint over again. And you can't cast, our sewers are collapsed in every time you turn around and get, dig it up and replaced sexting sewer pipe. So, you have all these like nonrecurring items that recurrent all the time. So, doesn't impact in a live per se, but it impacts your actual cash and the bottom line? So, I'm so I think the actual net cash you can pay out, it's not that different on a higher cap rate, older deal versus, or maybe a little bit lower cap rate, better quality deal if you're going to be in these deals for a long period of time. So, we've been just trying to get younger in our portfolio, so stuff I owned a day, I'd be much more likely to want to hold than the stuff I owned in 2014, 2013 cause those were just tougher, older, older deals. And I think that's what I've seen been kind of like the natural progression of most people that do what I do for a living. Just over time. One of the things, one of my mentors told me once when I first got in the business was, you own apartments in dog years, and every year of ownership feels like seven. So, like over time, you know that statement is very, very true. The older the property and the smaller the property, the more true that statement is. The bigger, nicer. It's just easy, just easier. So, I don't know if I answered your question,-- James: [inaudible43:42]. Michael: --but those are the-- between owning or selling a deal. James: Absolutely. Absolutely. And-- so let's go back to a bit more personal stuff, right? So, can you name like three things that you think is your secret sauce in, scaling up to this level? Michael: Yes, so, first and foremost, I mean I'm pretty tenacious and I had a lot of ambition, so, that was, that was a lot of it, right? I was like, I was willing to do what it takes to get to where I got. So, we had a lot of experience, background, and training and that certainly, so first and foremost, I just really, really, really wanted it. And like last weekend I flew to Jacksonville, not check, yes, Jacksonville, Florida, I'm sorry. Losing track of where I was. So, I was in Jacksonville for 21 hours. I spoke in front of 300 potential investors. I flew back home. I did that Saturday morning, came back Sunday morning and three weeks earlier I was in Newark, New Jersey, went to some hotel conference room on a Saturday, came back on Sunday. So, I'm willing to sacrifice a good chunk of my weekend to go out and get in front of investors so I can then do these larger deals. So, if you're not willing to put in the work and do what it takes and you're only, you're going to get a moderate your success for sure. Second thing was, I had a great background being a banker for over a decade and I just did deal after deal after deal. So, I've got a great education on my, on the bank Stein. So, most people don't have that. Cause then they're not bankers. Right. But, go get educated. That's the other thing I would, I would say get educated, higher from a reputable mentor. There's a lot of people out there put the time in. Become a student of your craft, go listen to this podcast, or listen to our podcasts, read books, do stuff like that. That’s a great way of learning. These podcasts are great. Like we host the Dole Capitol podcasts or your podcast. You're going to sit here and talk to me. So, it looks like about at least 45 minutes here- James: Yes. Michael: --at this point. And you get to your conversation from two guys that own almost 10,000 units collectively for 45 minutes for free. And there's a lot of wisdom and nuggets, but I think hopefully you can take out of that. Um, so, my background, my education was certainly it. And then really just a lot of its just relationships. You know what I mean? A lot of this is as simple as just don't be a jerk. That's, that's a lot of it, right? So, the brokers want to do business with people they know, like, and trust. They want you to be honest with them. They want you to be, do what you say you're going to do. And if you could just do that and be in a good guy and be friendly with them, man that goes a long way. It really does. So those are, those are three things I've done pretty well in this business. James: Got it, got it. And why do you do, what you do, I mean, where are you? Michael: I understood back, couple of things, right? To have a better life to be able to, the monetary if you'd have done well, the very rewarding monetarily. I sit back, so I got a couple of things happen, reflecting back on this, cause you know, we've done a lot in a short period of time. When I was 2010, so my mother passed away in 2010. So, I was like 32, I'm 32, 31, something like that at the time. And, so she was like 57 when at the time she passed away and then she-- her and my father sacrificed to save all their life to then be able to retire one day and then go have all those great traveling adventures in the sunlight and do stuff that was great in life and she didn't get to do that. She works to sacrificed and saved and I never got to-- the fruits of it. So, I kind of, that was a thing that kind of burned into my mind that I need to be able to do something young, unable to take a risk young. So, then I can then enjoy a lot of stuff in life. So shortly after, that's when I really first started was in 2011. I bought a bunch of rent houses in 2011. I [inaudible 47:28] my mom passed away and that's kind of really when I started like taking risks and doing stuff because being a banker, you're just naturally conservative. You're not really wanting to go take risks. But I started small and kind of got some confidence and then a transition in the multifamily. So that was one thing. And then, and then when I was about 34, 35, I was sitting at the bank and I worked for a large, large national bank and then, I was really successful, and they're kept trying to promote me. And, when I was looking at the bank and I looked at my boss and my boss's boss and his boss and thinking about what they do all day, it was kind of depressing, to be honest with you. Like I didn't want to do that. And I felt like a, it is a metaphorical thing, but it felt like a little fork in the road. Like I'm 34, 35 and if I don't go out and take a chance like right now, and I wait one more year, every year is, we made a little bit harder to go out and take this risk. But if I like go out right now, I saw the market, the market was right. Capital was blowing and the deals are so good. And I knew that because I was in the industry. So, I was like, if I go out and I fail I can always come back and be a banker because I was a really good banker and I can, y'all are going to need to be a banker. But if I go out and I succeed, then I can have a great life and get to go to Hawaii for three weeks. Like I'm going to this summer, I'm just going to pick up the family in Hawaii for three weeks. I'm just going to work from Hawaii for three weeks to sort of be in a hundred degrees in Dallas. Right. So that's what you, that's what I get to do today. And I get to pay for my sister and her family to go to Hawaii because we've taken the risk and been successful and those are-- that's kind of, I guess some of my whys right there. James: Yes. It's, it's interesting on how you're tenacious. I mean, whether its real estate or anything. And you can do this in anything, right to, you just have to be-- Michael: Yes. James: --persistent in doing it and know your why and just push it. And I can change your life. Right? So. Michael: In every transaction, there's always a problem, right. James: Yes. Michael: So that's the thing too. And that's what I always fall back on. Like there's always a problem. There's always stress, there's always, whatever. And you just got to like push through who's going to put your head down. You just got to push through. Just kind of will it, so do what you needed to do, you know? And not that every time I feel frustrated and you were not getting a deal, right? Like I've gone months and months on a deal, I just do more. Like, you know, I make more calls, I go do this, I'm proactive. I'm just like more always answer. So, we don't get what you want to do. More effort, not, that's usually, usually tends to work out pretty good for me. James: Good. Good. We're coming to the end. One more question. Do you have any like a daily habit or daily ritual that you do that contributes to your success or effectiveness in life? Michael: I'm not the most, I don't really read a lot of books. I don't really meditate on do any of that. So, what-- I, I do find myself from time to time, I'll go down the rabbit hole of doing something and like burn off 30 minutes by all my life around the internet or something like that in the middle of the day. And I always try to catch myself and say, okay, like I just need to prioritize. So, I have a hundred things to do every single day and I need to ensure I know what the most impactful thing is. And I focus my time on that. Cause, sometimes you let the tyranny of the urgent get in the way of the important. So just cause I have 40 emails on red, I need to go clear. It doesn't mean that's the most important thing for me to do right then. Even though that's like dinging on my screen in front of me. Sometimes I'll try to shut that out, focus on what are, what is the most important thing. And then I know when I, I'll schedule time to come back and clear my emails out an hour later down the road when I kind of get done the most important thing. Because, if you're in a Sproul, I'll leave you with, it's kind of, there's this whole thing that I've, I've definitely learned in this business, as a syndicator, as someone that does, find that puts together an apartment operators, apartment investment opportunities or any sort of opportunity like that. The best way you make, the way you make money in this business, you've got to find deals and find money. Going to find deals and find money and everything else is sort of noise. It’s all really important. You got to operate; you've got to do all their things right. But, that doesn't really, that's not driving revenue. So, if you want to focus on revenue, you've got to find deals or find money. So, I'm not talking to brokers, I'm not talking to my investors, you know, everything else is, not driving revenue. So, at the end of the day, I always try to remember that when I'm deciding, what do I spend my time on. Do I spend my time on this or that, that's always in the back of my mind? James: Got it. Got it. Is there anything else that you want to share in this podcast that you have not shared in hundreds of other podcasts that you have been? I should have [inaudible51:57]. Michael: I, I think, we do a pretty good job. So, I would, if you want to know more about me, I think really there's a couple of ways you can, the easiest way to find me, just get my company's website, which is a company spiadvisory, just go to our website www.spiadvisory.com. It's spi like spy advisory dot com. There's a contact us form, fill that out. I always happen to have in 10 or 15 minutes. A telephone call, listeners of the podcast. You guys are interested in maybe working with us or really the best way if you want to know more about me or if you listen to this podcast or [inaudible] or. So, you can listen to a dual capital podcast. So that's on iTunes or Stitcher or YouTube or anywhere you're probably listening to me right now. You can find the old capital real estate investing podcast. So, we have probably 300 episodes in the archive or more at this point. So, we do interviews with other people kind of similar to this format. As well as we do a little short one where my partner Paul interviews me and asked me one question a week and I answered about one specific topic. So, if you want to know anything about and just all-around apartment investing in your or some form or fashion. So you want to learn more about me, that's a good way to kind of-- I talk, I have a lot of stuff recorded that's out there that, but if you like this, you may, you may like that and hopefully can provide some, a little nub. It nuggets on different little talk topics, to listen to those. James: Yes. Yes. I learned a lot from you. I mean, listening to you from different, different podcasts throughout my apartment investing journey. So, I'm thankful for that. And I think that's it. Hopefully, all the audience and listeners got the value that they want to get or getting from Michael and myself. I think that's it. Thank you. Michael: All right. Thank you.  

Really excited to have Austin on the show. What’s really cool is that he found My Food Job Rocks because he’s a regular listener of Don and Ben’s podcast, Food Safety Talk. Funny how that works, right? So Austin became a regular listener and engaged with me on social media. We now pretty much support each other in everything we do. Austin has his own site, Fur Farm Fork where he posts really technical, powerful stuff about food safety. This was a fun interview. Austin’s past was a bit different than most as he found out why his food job rocks out of falling into an internship and found out he really loved auditing and making corrections to said audits. Now taking on a leadership role at Earth2O. We get into in-depth discussions on whole genome sequencing, and since we have a water expert, we get into the raw water craze that was sweeping Silicon Valley at the time, and Austin has quite the interesting viewpoint on that. Also, quick disclaimer, I apologize for saying the company name Earth2O as Earth H2O multiple times in the episode. Hope you can forgive me. About Austin Austin Bouck is a quality assurance manager at EartH2O, a certified B-corp bottled water and coffee manufacturer in Oregon. When not at work solving technical quality challenges, he continues to ponder food safety issues on his blog, Fur, Farm, and Fork, which helps him stay sharp and share his knowledge with other professionals and the public. Sponsor - BAKERpedia This episode is brought to you by BAKERpedia – your one-stop, resource that answers all your questions on industry trends, ingredient information, food safety and more. It’s shared knowledge, freely available, always. BAKERpedia.com – we do all the thinking so you can focus on your business. Sponsor – FoodGrads If you are even just a little bit interested in a career in food & beverage, you should join FoodGrads.  It’s an interactive platform where you can hear about different careers, hear from your peers, have a voice and share your story as well as ask specific questions and get feedback from industry experts across the sector. You can create a profile, add your resume and search for co-op, internships and full-time opportunities just for Food Grads. Employers can find you too, they can recruit you for jobs and projects they need help with to give you the relevant industry experience you need. Join FoodGrads today! Just go to Foodgrads.com Sponsor – ICON Foods Unless you have been living under a rock you can not get away from Halo Top Ice Cream’s amazing success with their under 300 calories per pint ice cream. What’s a frozen dessert manufacturer to do to compete? Pick up the phone and call Icon Foods at 310-455-9876 or find them on the web at www.iconfoods.com that’s what. They have a new HiPro Ice Cream Dry Mix that delivers amazing mouthfeel and sumptuous flavor all under 300 calories per pint. But, here’s the best part; you simply add the HiPro dry mix to any milk type, add glycerin and inclusions and you are off to the races with an amazing finished product lickity split. Icon Foods HiPro Ice Cream Dry Mix comes in hard ice cream mix, soft serve, vegan and wait for it… Keto. Call my friends at Icon and let them ReformulateU. 310-455-9876. Job Title: QA Manager for Earth2O The difference between Quality Assurance versus Quality Control Quality Assurance: The framework used to set up quality Quality Control: The action step. The auditors used to make sure things are done right Earth2O is a small company. I brought someone on last year. I used to lead a team of 9. The biggest misconception: A lot goes on in bottled water. For example, cleaning, has to last 2 years, etc. Technical Expertise in water: Water treatment is complex. There are tools such as: Reverse osmosis: Pretty much means ultrafiltration Deionization Distillation Describe the steps it took to get to where you are today: I wanted to be a vet and I did my bachelors in animal science. I applied but I’m on the waitlist. I did an internship at OFD Foods. I had to do a risk assessment in the lab and I loved it! I stayed for 3 years and then I moved to my hometown in central Oregon Temple Grandin Certified B-Corporation. A business that’s a force for good. Oregon gas law What is the most important skill you need in Quality Control/Assurance?: The devil is in the details IFSQN – A Forum for QA people What’s your dream job title?: I want to be known as a _______ guy What do you look for most in a  company?: Employee investment. Either going to an established company or start your own QA culture. Some companies don’t care about Quality Management Mary Wilkerson – American Peanut Corporation Whole Genome Sequencing: The hottest technology for food safety, but still really new Sequencer Cell Phones Where can we find more information about whole genome sequencing?: It’s actually hard to find info about it. What is the biggest challenge the food industry needs to face?: As we get more specific on food safety, we’ll be focused more on processing What about Raw water?: “can you please define what’s raw water?”. Different people want different water and everyone has a different reason to not trust your water. However, there are some natural spring water sources that are actually up to standard. (Earth2O has this water). As a capitalist, go them! As a food safety standpoint, it’s like raw milk. Favorite Quote: Where does the true source of music lie? In the strings themselves or the hands that pluck them? Favorite Kitchen Items: Avacado Slicer and Silicon Rubber Stapula Any advice for anyone who wants to go into the food industry?: Be ready for multiple roles and be ready to find out you like some of those roles. What would you tell yourself your first day at your job?: Calm down. Eat the elephant a bite at a time.

It's been too long! So Austin checks in. Download the episode at http://trigames.net/media/music/tricast_episode_243.mp3