How to Build (and Keep) a $200M Staff with Josh Cantwell – EP 269

The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE! 

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Growth isn’t easy when you’re building a company worth $200 million. It’s hard to have a clear hierarchy of what everyone is doing and how they’re doing it. 

For example, our portfolio will soon have about 3,000 units. We have at least 25 in-house staff as property managers and leasing agents. We also have 25 out-of-house to handle repairs and maintenance, 80 people on our CapEx crews, and a small handful of individuals in our corporate office. 

What makes this arrangement work? Even though I’m usually focused on investor relationships, underwriting acquisitions, and analysis, our so-called C-suite isn’t driving Ferraris and eating lobster while everyone else is taking the bus to work and surviving off of hot dogs. That’s not how it works.

In today’s conversation, I want to talk about the difference between having your head in the clouds versus hanging out in the dirt. And more importantly, why having mutual respect between your employees, no matter what their role is in the company, is critical to your success.

Key Takeaways with Josh Cantwell

  • Why you need great working teams in order to focus on what you (and your best employees) do best.
  • Why so many construction companies fall apart–and how you can use their failings to your advantage.
  • How new entrepreneurs and investors can get out of the dirt and into the clouds.
  • Why it’s so important for you as a leader to put in one-on-one time with your employees.

Josh Cantwell Tweetables

“Growth is not easy. But one thing that does make it easier is having a group of people who operate in the clouds versus the dirt.” – Josh Cantwell

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Josh Cantwell: Guys, welcome back to Accelerated Investor. Hey, listen, I just got off the phone with my CFO and had a good-spirited discussion about growth. And when you’re building a $200 million company, which is what we have now and more processing, $10, $12, $13, $14 million a year through our businesses and through our apartments, growth is not easy. Growth is not easy. Growth, growing a business, getting to that level, and having the hierarchy of what everybody is doing and how they’re doing it, it’s not easy. But one thing I can tell you that does make it easier is what we call mutual respect, and also having a group of people who operate in the clouds versus the people that operate in the dirt.


I heard Gary V. talk about something like this years ago. I never really followed Gary or really followed much of his discussions. But this whole concept of the clouds versus the dirt is really, really important. If you look at our portfolio right now, we’ve got about 2,700 units. We’re buying another 300-unit. We have about 3,000 units here within the next 30 days. And that also means that we’ve got roughly 25 people in the house when it comes to property managers. Property managers, leasing agents, about 25 people working on our buildings that are in-house, meaning property management, leasing agents. Then we’ve also got 25 people out of the house, meaning repairs and maintenance guys, repairs, maintenance.


In addition, we’ve also got nearly 80 people working in CapEx. So, these are crews. They are guys doing lighting, flooring, paint, carpet, unit turns, kitchens, baths, all working under our CapEx budgets. And then on top of that, then you have what we call HQ, the HQ office, the home office, the headquarters. And that’s much smaller, the HQ office, CFO, controller, Director of Operations, Director of Investor Relations, customer service. We have a very small kind of corporate office because most of the buildings are managed by the property managers, those 25 people. And then the repairs and maintenance guys, those 25 people, and then those 80-ish that are working on different projects right now doing the cutbacks, and those people kind of come and go because they’re contractors. You might have 10 guys come in and do a flooring job and then they leave. You might have six guys to do a lighting job and then they leave. And then you might have 20 guys doing unit turns and they do the unit turns and then they leave.


But what’s interesting is, is that today, I find myself spending all of my time in the clouds. I don’t do any leasing, I don’t fix any toilets, I don’t turn any units, all of my time is spent in investor relationships, underwriting acquisitions, and in analysis. And I think here’s the point, here’s what I’d like to impress upon you with this quick discussion is the mutual respect between the guys doing the analysis and the guys actually doing the work, the clouds versus the dirt, that mutual respect is so critical because just because I’m sitting in the CEO seat and then I have my CFO, my chief strategy officer, my chief operating officer, the C-suite, if you will, just because we’re primarily looking at analysis doesn’t make us any more important, doesn’t make us any more special. It doesn’t mean we get to eat lobster when everybody else is eating hot dogs. That’s not how it works.


To build a $200 million company like we have, processing $10, $15 million a year in cash flow, it doesn’t work where the guy sitting in the C-suite gets to drive the Ferrari and eat lobster where everybody else is just in the dirt. For me, I enjoy the work, I enjoy the journey, I enjoy the process of building this company, seeing the cash flow, turning units, even though I’m not in there turning the actual unit, putting in a new vanity or laying flooring, I’m not doing that. I enjoy the process of building a company that people want to work for. Because I have so much respect for the people that are in the dirt, the property managers, the leasing agents, the maintenance and repairs guys, the contractors, the CapEx people that it affords me the time to spend in analysis.


What I find with so many business owners is that they’re so disrespectful to the people doing the work in the dirt, and the special companies, the big companies, the companies that have legacy, the companies that last are the ones where the C-suite that’s in the clouds has a tremendous amount of mutual respect for the people in the dirt doing the work. And my job in the clouds is to find the holes, to grow and fill the holes, to find the chokepoints and get rid of the chokepoints. So, one of the chokepoints recently, our CFO, Roberdo, needs basically an accounts payable/accounts receivable clerk, needs somebody that can just constantly be looking at invoices and paying invoices and then assigning those to the properties that he’s working on so that he can be more in the clouds, looking at analysis, looking at the deal, looking at the deal from a financial perspective.


And so, I look at that and I said, “Okay, he needs more support.” We started interviewing. Sure enough, we find people that used to work doing construction for other property managers or other construction companies. And sure enough, some of those companies are falling apart because they’re doing such a bad job. They’ve got employees that we can steal. And that’s exactly what we’re doing, to fill our hole, to fill our chokepoint, working underneath Roberdo. When Dave, our VP of Construction, was taking on all these large budgets. Right now, he’s spending about $67 million in CapEx. Right now, as I record this, that’s what he’s working on. He needed more help, another admin person to basically go walk units, create punch lists, to review the work that the contractors did, make sure it’s good, see if there’s anything that’s broken, or punch lists that need to be punched out.


So, we brought that guy in because your best employees, your best people making the most money, if they’re constantly putting out fires, they’re never going to be able to do a good job. And if there’s constantly fires in your company, then there’s going to be somebody who’s creating those fires, there’s going to be an arsonist that’s actually creating the fire. And ultimately, the person that’s creating the fires is the C-suite, it’s the people in the clouds. If the people in the clouds are not looking down and finding the fires and putting them out and making sure that there’s no more fires that are there, and the people in the C-suite that are in the clouds, they’re actually the ones creating the fires. You’re building the systems, they’re not hiring the people.


So, this is the tough part for a new entrepreneur or for a new investor, somebody that’s just buying apartments is how do you go from being in the dirt and in the clouds to just being in the clouds? And I would submit to you that the answer to that is buying bigger properties. When you buy your first 200-unit or your next 200-unit, for every 200 units, you need a full-time property manager and then another part-time property manager/leasing agent. So, you need two people in the house and then you need two repairs and maintenance people out of the house. So, that is the first opportunity now where a building can essentially be a standalone business, a standalone silo, a $10 million asset or a $20 million asset, 200 units, but that can be managed by the property management company and the repairs and maintenance guys. And if you add your CapEx guys, obviously, you add that in. But it wasn’t really until we owned and managed at least a thousand units that I was truly able to just be in the clouds all the time. And that’s where I’m at now. And thank God I’m there because there are still fires, there are still things that happen, but the numbers tell me where the fires are, the conversations with the employees tell me where the numbers are, tell me what we need.


The last thing I would tell you is that when you’re operating in the clouds and you’re in the C-suite and you’re the owner, you’re the executive, whatever it is, you’ve got to carve out time to spend with your employees one on one. It can be 10 minutes face to face, it could be a review that takes an hour, but there’s got to be the time that you go sit down with every employee every year and get at least some face time with them and find out what makes them tick. Why do they like their job? What about your company do they enjoy? What is it that makes them tick? Why are they working there? What would help keep them if they’re a good employee? What would help keep them is often asking them about Little Johnny’s baseball game, their son’s baseball game, their daughter’s dance recital. What’s going on with their aging parents?


Knowing them on a slightly personal level, again, it’s impossible to know everything about everybody, but on some personal level, understanding who they are, what makes them tick is going to keep them around and keep them working in your company. That’s why, again, working in the clouds allows you to be able to spend that time, like I just did with Sheila yesterday, we had lunch yesterday, it was a review, and we started talking about the business. She’s crying because I’m telling her what a good job she’s doing and that I appreciate her, that she’s been with me for 14 years and how important she is to me and how important she is to the company. I’m asking about her husband. I’m asking about her son. What’s the next chapter of her life? How can I help her with either compensation or equity or bonuses to be able to save and afford retirement? These kind of questions for an hour is the glue that makes the clouds and the dirt work together. The people that are in the business every day, having that mutual respect, but then also having those simple conversations for five minutes, 10 minutes, an hour, a couple of times a year to make sure that they know that, hey, the guy sitting in the C-suite in the clouds, they’re not better than us. They don’t think they’re too good for us. They don’t think that they just call the shots and they’re the puppet master and they’re just telling us what to do and we work for them.


You want to build a $200 million company, make sure that there’s the gap, you bridged the gap between the clouds and the dirt, the people in the C-suite and the people doing the stuff through those conversations, understand what makes them tick, go meet with them face to face. Alright. And also help them understand that you need to be in the clouds, you need to be doing analysis so that you can understand where the fires are at and put them out permanently in your business.

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