The Business of Running Your Business is the People: Elite Entrepreneur Trait #9 – EP 317

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If there’s one thing that successful businesses and entrepreneurs have in common, it’s great people. It’s almost impossible to achieve exponential growth, deliver excellent products/services and develop culture without a team that is engaged and loves what they do.

You can have amazing systems in place, great technology, and a powerful framework to build from. But without people to do the work, your successes will be short lived.

So today, I want to talk about building culture. You’ll learn how to make people feel valued on a daily basis, why customers will never love your company if your employees don’t, and how to create an open, honest environment that attracts and retains great talent.

Key Takeaways with Josh Cantwell

  • The importance of respect, which is a 2-way street, up and down the corporate ladder.
  • The one thing you need to have in your business so that employees love working for you.
  • Why it’s so important to have a solid review process with clearly defined performance goals and objectives.
  • How I provide as much transparency as possible with my staff.
  • How to hire with culture and customer success in mind.

Josh Cantwell Tweetables

“We have a culture at Nike where we're incredibly self-critical. We don't get comfortable with our success.”

“Being a great place to work is the difference between a good company and a great company.”

"Customers will never love a company until the employees love it first.”

"Hire great people and give them the freedom to be awesome.”

"Assume the best but hire paranoid people.”

"Transparency starts as a mindset change.”

"Everyone on the team plays an equal role. My role is to create the wave and everyone on our team keeps the wave going.”

"There's no magic formula for great company culture. The key is just to treat your staff how you would like to be treated.”

"Shaping your culture is more than half done when you hire your team.”

“If your staff loves your company, that's going to rub off on your customers and your customers are going to love your company.”

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Josh Cantwell: So, hey there. Welcome back. Hey, this is Josh Cantwell, your host at Accelerated Investor. And today we’re going to continue our discussion that we’ve been having around the nine traits of elite entrepreneurs and eight-figure investors. And today, I want to focus on trait number nine, which is The Business of Business is the People. Okay. Nothing gets done in a company without people working the systems. Okay. Your company can create amazing technology, amazing software. But how does that technology or software get created? Well, it gets created by people. People often talk about that businesses are so important. It’s so important to have culture. Culture cures everything. We have great culture. What do you have really if you have culture? Well, you have people who like each other. That is culture. If you have a brand, a brand that you have that the public identifies with, whether it’s Nike or IBM or Apple Computer or Red Bull or Converse, you have a culture. You have a certain culture that you project into the world.

 

Well, that culture is developed by the people that work there, the people that work there love the company that they work for, and those people put out a brand or a message into the world that the customer likes. And so, elite entrepreneurs recognize that the only way for them to build their business is through the people that work with them, for them. And so, there’s a couple of things that I want to read, some quotes that I really love around culture. Okay. And here’s a good one. I’ll start with this. This is from Mark Parker, the CEO of Nike. He says, “We have a culture at Nike where we’re incredibly self-critical. We don’t get comfortable with our success.” Okay. Here’s another one from Upshot. This is a great one. “Being a great place to work is the difference between a good company and a great company.” That’s from Brian Kristofek, who’s the President and CEO of Upshot. Here’s a great one from Simon Sinek. Simon Sinek is one of my favorite authors. He’s the author of the book Start With Why and he says, “Customers will never love a company until the employees love it first.” That’s probably one of my favorites. Okay.

 

So, it’s funny. I’m recording this on a Wednesday. It’s September 21st. And two days ago on a Monday, I gave my team the day off and I took them to the Cleveland Guardians baseball game. The Cleveland Guardians, the old Indians are in first place. And let’s talk about culture for a minute. So, we own apartment buildings. We also own the construction company that renovates the apartment buildings. We have over 300 investors. We’ve raised them, deployed $100 million. We have a $350 million apartment portfolio. We’ve done 19 syndications. And people will often tell you that apartment investing, it’s a team sport. You’ll hear that often. A lot of podcasts, a lot of interviews, a lot of webinars will say it’s a team sport, it’s a team sport. And that’s very true. We have three owners in our company, myself, Glenn Lytle, and Tyler Brummett. Glenn runs our CapEx team and our construction team, and underneath him is Dave. Dave’s our VP of Construction. Tyler runs our acquisitions and asset management. And so, all the property managers work underneath Tyler. I focus on all of our marketing, all of our branding and all of our investor relations, and all of our raising capital initiatives. That’s what I do.

 

And so, Monday we gave our team off. We all went down to the Indians game. I told everybody, “Meet me at the Clevelander at 11:00.” So, I show up about 11:20, 11:30, a little bit late. There’s about half our team is there and everybody’s already having fun together. Everybody’s already having drinks, cocktails, and they’re all like, “Man, this is the best. It’s a Monday. I’m getting paid for today. It’s a paid day off. I haven’t taken a day off in a long time during the week and I haven’t been to an Indians game in forever. So, this checks all the boxes.” And so, that’s one way to build culture, right? Is that one moment we give people a day off, we buy them drinks, we buy them food, we take them to an Indians game. We sit right behind the Guardian’s dugout. That’s one way to build culture, but that’s just one event. So, to me, that’s kind of like the short spark in a business where the business can be amazing for that day. But the next day, what has to happen? All the employees have to head back to work. Everybody’s got to get back to their job. They’ve got to get back to leasing and property management and capital improvements and construction and evictions and all these kind of things.

 

So, if the employee loves the company because they feel like they’re valued on a daily basis, the employee can feel value. So, I’m going to give you a couple of pointers here of what I think makes great culture because, remember, this trait is that elite entrepreneurs realize that the business of running their business is the people has a lot to do with culture. So, number one, how do we build great culture? Okay. Well, first of all, I believe the leadership has to truly respect and value all of their employees. You call them rank and file. You can call them the people that are in the dirt, the boots on the ground, all these different kind of things people have said. But I believe there has to have a certain level of respect within the organization regardless of your title. Because if I want customers to love the company, I have to have the employees love the company. The only way you create love for a company is first it starts with respect. Okay. How many of you guys have seen the movie Gladiator with Russell Crowe? One of my favorite movies.

 

He’s the Army general. He becomes a slave. He becomes a gladiator in Italy. He fights inside of the Colosseum and the new prince, Commodus, he says to his senators that work for him, he says about the people of Rome. He says, “How can they ever love me if they don’t respect me?” Okay. He wants the people to love him. And he says, “How can they love me if they don’t respect me?” Right. So, these are the people of Rome. Let’s call them the boots on the ground. Let’s call them the rank and file, whatever you want to name you want to use for that. Those employees that are in the dirt have to respect the leadership and the leadership has to respect the rank and file. So, if you’re ever in an organization where leadership, let’s call it the white collar, doesn’t respect the blue-collar, you’re going to have a major culture problem and that business is going to suffer. So, that’s the first thing is about respect, respect up and down the corporate ladder, let’s call it, number one.

 

Number two, I think it’s critical that for people to love the company they work for and for the leadership to love the employee and vice versa, there has to be clear swim lanes. There should be a clearly defined objective for each employee within their job, within their company, within their department. What is their job? And leadership has to be very clear with them about what is going to allow them to get a high grade and a high review. If you do this, this, and this, you’re going to get a high grade, you’re going to get a promotion, you’re going to get a raise, you’re going to get a bonus. So, the employee knows that on a daily basis they do X, Y, and Z that they’re going to be getting a good grade, they’re going to be advancing the company, they’re going to be giving the customer a great experience. So, I think swim lanes, number two, is super critical for an employee to be successful. That’s very clear.

 

Number three, employee must know, as I just mentioned, what do they have to do to get a high grade. So, if they’re going to get an annual review and a lot of companies do annual reviews, during their annual review this year say, “If you do X, Y, and Z, you will get a high-grade next year.” Okay. So, the expectation of an annual review could be also quarterly, monthly, etcetera, but at least annually a review for them to check-in.

 

Number four, each employee has to have a set of goals and objectives. Let’s call them 3 to 5 goals, and then leadership must leave them alone for 90 days to get those objectives completed. So, if we believe that we can give a staff member 3 to 5 goals and let’s say within three months, one quarter or six months or a year, give it 3 to 5 goals and we ask them and say, “Hey, are you committed to achieving these, whatever, 3 to 5 goals?” They say yes. “Okay. So, I have your commitment to achieving these 3 to 5 goals.” “Yes, I do.” “Okay. Well, I’m going to turn you loose now for the next 90 days for you to go achieve those goals. If you need anything from me, my door is always open. Come and find me. But when we check in 90 days from now, I expect these 3 to 5 goals to be completed. Are we clear?” “Yes, we’re clear.” “Okay, great.” And off they go. Andrew Mason, the founder of Groupon, he once said, “Hire great people and give them the freedom to be awesome.” Give them the freedom to be awesome. That is incredible. Evan Williams, the co-founder of Twitter, said, “Assume the best but hire paranoid people.” So, again, this is the idea of let’s give them 90 days, but let’s be paranoid about making sure that they achieve the goal. These are all critical.

 

In our business, we meet with our property managers every other week. So, our property managers know that we’re going to have an owner call every other week and they’re going to check in with us. We’re going to check in with them every other week. It’s basically we sit around a table, it’s actually a Zoom call, and we check in on leasing, evictions, collections, make-readies, full-turns, stuff like that, and we tell them what’s going on with construction and major projects. So, those are all really, really important items that if you follow those couple of ideas, I think it’s really important to follow those three or four or five ideas. And if you do that, your staff will begin to love your company. And if your staff loves your company, then that will come out as your staff deals with customers. So, I think about our property managers and our leasing agents and our maintenance guys, if they love working, even though they work for a third-party property manager, if we treat them with respect, if I treat them and talk to them like another human being like they are, I treat them and talk to them like my own kids, like my own wife, like my mother but they have clear goals and objectives to 90-day deadlines. They’ve got clear swim lanes. They know exactly what their role is. We check in with them. We’re a little bit paranoid about having them meet their goals. We believe that that’s now going to rub off on the way that they treat the resident or the customer.

 

Number six, I believe in complete transparency, so I have no problem sharing with my staff the P&Ls, the books. I love open book management. I love for everybody to know how the company is making money, how much money the company is making, and how much profit we’re making. I don’t share everybody’s salaries. I don’t do that. I don’t think that’s necessary. Every employee doesn’t need to know what every other employee is making or how much salary I take but they do need to see what the net profits are, where the expenses are, what the budget is. So, Kevan Lee, who’s a content crafter on a platform called Buffer, he says, “Transparency starts as a mindset change.” So, when I had pancreatic cancer, before pancreatic cancer, I wasn’t really as transparent. I was kind of afraid to share with my staff everything that was going on. Well, if I wanted to have great people and, again, remember, this elite entrepreneur has this trait, which is they believe and know that the business of running their business is the people.

 

When I had cancer, I started to say, “You know what? I don’t give a sh*t.” As a cancer survivor like I just don’t have any time to bullsh*t anybody anymore so I’m going to be 100% honest with you. My wife says all the time she’s Italian and Italians tend to be kind of overly critical of their own family and their friends. But my wife will just say like, “I’m just being honest.” It’s another way of saying, “I’m just being transparent.” And so, it’s very important to have that kind of transparency. William Wang, the founder of Vizio, you know, Vizio Televisions, says, “Everyone on the team plays an equal role. My role is to create the wave and everyone on our team keeps the wave going.” Richard Branson, founder of Virgin Group, says, “There’s no magic formula for great company culture. The key is just to treat your staff how you would like to be treated,” the Golden Rule, the Golden Rule that Jesus Christ told us about and said, “Love one another.” And Jessica Herrin, the founder of Stella & Dot, says, “Shaping your culture is more than half done when you hire your team.”

 

So, if you hire your team and you see a potential hire who’s a great candidate, but you think that that person has some ethics issues, some moral issues, maybe they’re willing to kind of bend the rules to make a sale in order to get their bonus, I would rather have somebody who had incredible morals, who had incredible ethics and some respect for other people than teach them the job than to try to unwind the damage that’s going to be done by somebody who’s maybe great at sales but lacks morals, lacks ethics, lacks respect.

 

So, listen, trait number nine is that the business of running your business is the people. Nothing gets done without the people working the systems and culture cures everything. But culture doesn’t happen overnight. It takes all those different things I just described to build amazing culture, to build up your people. And if your staff loves your company, that’s going to rub off on your customers and your customers are going to love your company.

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