With most goals, the hardest part can be starting. Regardless of how much progress we make in one area, most of us feel stuck in others. This episode was inspired by a recent blog post by Seth Godin in which he lists five useful questions to help you take action. We look at four major decisions we’ve been faced with recently and put the five questions to the test. They hold up well but we felt the need to add a 6th question by the time we finished.
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Five Questions To Ask Yourself When You Are Stuck
For us, we don’t know how to podcast. To me, that’s the hard part. We don’t know what the hell we’re doing but we’re stubborn enough to think that we know what we’re doing. We don’t listen to many people from the outside. Whenever anybody gives us advice, I’m like, “That guy’s an idiot.” The only thing that we are less qualified to talk about starting a show was how to execute a diet, which was number one on our agenda. It’s been crossed off because Ian and I have both been on a diet for the better part of several presidential cycles.
If you are stuck, you came to the right episode. This episode is all about five questions. We took this from a Seth Godin blog post, which we thought was incredibly simple and effective. We look at four big decisions that Frankie and I had to make and a couple of them we made jointly and the other two were individual decisions we’ve made. This episode is all about looking at five distinct questions you can ask yourself if you are stuck that can get you unstuck. If you are stuck not being subscribed to this show, it’s time to change that. If you have not been a good neighbor and given us a five-star review with some nice comments in the Apple Podcast app, please do that for us.
Ian, you son of a bitch.
How’s it going?
I’m loving the Mötley Crüe t-shirt.
Fantastic ‘80s group who knew how to live life to the fullest.
They lived a life without fear like you and I do in this show.Almost everything is hard at first. There's just a lot to learn. Click To Tweet
How often do you think they ask themselves five important questions before they made a big decision?
Before they did Shout at the Devil, were they asking these five questions that we’re going to go through?
Girls, Girls, Girls, it’s poetry at its best.
Did you ever see them in concert?
No, I did not.
When they would have Tommy Lee, they’d strap him into his drum set, take him out over the crowd and it would flip him upside down while he drums. It was like a roller coaster in a cage. His drum set was a big cage. Picture a drummer going and doing 360s upside down while still drumming and he still sounded amazing. He’s talented, it’s outrageous, among his many talents let’s say.
We are talking about five questions that if you answer them honestly with yourself or with a coach can help you get unstuck on something big in your life. We got this full disclosure. We got this from Seth Godin’s blog. If you’re not following Seth Godin’s blog, Seths.blog, it’s fantastic. Frank and I love to read it and chat about it. He has five questions that say, “If you are stuck in any venture, these questions can help you get unstuck.” We loved it.
What we’re going to do in this episode is we’re going to pick 3 or 4 big things that we’ve decided on, a couple of them jointly, a couple of them individually and go through how we answer these questions. His five questions are, 1) What’s the hard part? 2) How are you spending your time? 3) What do you need to know that you don’t know? 4) What is the scary part? What’s the worst that can happen is another way to say it. Tim Ferriss calls it fear-setting where you look at all the bad things that could happen, write them down and say them out loud. Half the time when you do it, they’re not as bad as you thought they were going to be. 5) Is it worth it? Why did you decide it would be worth taking a shot?
Those are the five questions and we’re going to go through and look at all of these. The simplest venture that you and I have done is the one we’re doing, sitting here and spending almost the majority of our morning on a show. There is time and energy involved in this.
Question 1: What’s The Hard Part?
At some point, you and I did decide if it was worth it. You have things going on. You have a guy that you have to fire for reasons we will leave off. I found out that our tech company is going to be presenting. We have 20 finalists out of 2,000 people that applied to TechCrunch. I am stressed out and I have a lot of research and prep to do. Somehow you and I are still finding three hours in our week with everything else we have going on to continue recording this. Looking at these five questions and how we came to this decision is a good enough example. Question one, what’s the hard part?
I’m going to answer question one interestingly. The hard part for us isn’t the content, it isn’t finding the time, it’s building an audience. It’s something that we’re patient with. We realized it’s going to take forever. We hired a company to help us with posting everything and syndicating to all the platforms. We did a couple of interviews with them upfront. What they mentioned to us pretty quickly is some companies have failed to launch. Some people can’t get their content out. They don’t know what to talk about.
Ian and I have no problem with any of that. For us, we don’t know how to podcast. To me, that’s the hard part. We don’t know what the hell we’re doing but we’re stubborn enough to think that we know what we’re doing. We don’t listen to many people from the outside. Whenever anybody gives us advice, I’m like, “That guy’s an idiot.” The only thing that we are less qualified to talk about starting a show was how to execute a diet, which was number one on our agenda. It’s been crossed off because Ian and I have both been on a diet for the better part of several presidential cycles.
We’ve come to the conclusion we have no right to talk to anybody about their diet on this. We should be tuning in to other podcasts when it comes to dieting. For me, what’s the hard part? You’re talking about getting unstuck. For years, Frank and I have talked about, “Why we don’t do a podcast?” We’re both good at bullshitting. We both laugh. We talk regularly. The hard part for me is everything’s new. I didn’t know what microphone to buy. I didn’t know what camera to buy.
Before we started this, Frank and I rarely used Zoom. This was years ago when we started talking about it. We didn’t have video conferences with each other. When we first started talking about it, we were thinking about renting some space in Fredericksburg and meeting up for a day a month and doing a bunch of episodes because the technology wasn’t there. We had no idea how you even take a file and put it on Apple Podcast, Stitcher, Spotify or who would do our marketing.
For me, there’s no one hard part to podcasting. Frank and I are not the most high-tech guys in the world. We’re good at talking. We’re good at outlining, having meetings and bullshitting. Almost everything was hard at first. We were like, “We need a logo. We need a jingle. We need some music at the beginning. We got to go form an LLC for this. We need a bank account.” We had lots of little things that we hadn’t done before together. No one thing that we had to go do was outrageously hard. It seemed there were lots of little things that we had to learn for this thing to get off the ground.
For us, the lesson learned was to do one thing, start with one. The first thing that we did was we booked 1.5, 2 hours maybe. Frank was in Florida. I still have the video of it. He’s out in some crappy lighting and he had a tank top on. We talked about, “What it’s going to be? Let’s come up with the name.” We looked at 2 or 3 different ones and then, “Let’s have a meeting again next week.”
The next week, we recorded an episode. We’ve figured out how to do it on Zoom. We recorded our first episode. Frank had his microphone up on architecture books, bad angles and the camera sucked but we recorded. We got through an outline and we did it. Every week, we pushed the ball forward a little bit.
For me, the hardest part was starting and doing one task and not trying to think, “We should start and have a full-running show.” That was in June of 2019. We weren’t on Apple’s system until January 2020. It took us 6 or 7 months from the first time we recorded an episode to when it was published where people could see it.
I bet if we pull out the audio on this, it’s going to be a similar set of processes for each one of these things and getting unstuck. If you ask me what the hard part is, it’s not that hard. It’s like asking Chief, Ian’s father-in-law, what’s the hard part about business? He’s been in an incredibly hard business for over six decades. He’s going to tell you nothing is all that hard because he doesn’t lament it. It’s one of those things where guys get things done so we got it done. Our time frame might have been a little different than we would have thought initially but we did it.
The hard part was the committing. The hard part is staying committed and making sure that this is an easy 3 or 4 hours every week that you could add back into your schedule. Having that time back would feel great. I’d go for a bike ride, I could do a little extra work and play with my kids. Ian could go to the batting cages with his son, which he’s asking me to do. Getting committed, committing to do it and staying committed is the hard part.
We stay on the marketing thing for a second here because it’s something we’ve invested no time or money into aside from a few things. On the second question, how are you spending your time? We are growing our subscriber base, albeit slowly. Part of it slowly is because we are going all word of mouth. We’ve spent $0 on marketing. How are we spending our time? We continue to produce a new episode every week. We continue to upload it. We continue to share little snippets on LinkedIn. We’re on no other social media with this show. We don’t have our own social media channels. We don’t have anyone dedicated to managing it.
When it becomes important for Frank and me to blow it up and get lots of subscribers, we have to first decide that’s something we want. We’re going to have to spend our time differently. Differently meaning more time because I don’t know how much time we will be able to shed on building content. When you look at how you’re spending your time, we would outsource some of the marketing. We’re going to have to spend money on it because Frank and I don’t have an extra eight hours each to do a lot of that marketing nor are we that good at it. We would have to add some time to manage whatever marketing channel we had.
We’re okay with the way this is going. We’re okay with it but at some point, we’ll have to have a real conversation about, “Do we continue? Do we do something different? Do we add marketing and spend? How do we handle it?” It’s yet another hurdle to cross or another hurdle to clear. We both think, with all of our podcasting knowledge, that the most important thing we can do is put out a good product. We’re still figuring it out.
Friends of ours who follow this who are candid have told us many times that the episodes are getting better and crisper. We’re having more fun. It’s more entertaining. They’re telling their friends more about it because the products have gotten better. Those are things that we think are the most critical. It’s like, “What are you hearing? If you’ve decided to tune into us, are you going to make it to the end? We hope you do and we hope we’re compelling enough.” That’s what we continue to focus on. When we get into one of the questions we’re talking about opening another market, you never know exactly when to make the right move. In retrospect, everything’s easy to decide on. It’s difficult sometimes when you’re living through it.
Where we both struggle is Frank and I have never done a show before. We are over 50 episodes into this and it’s growing slowly. I’m sure there are lots of shows that have grown much faster. I’m sure there are lots of shows that never even got to episode twelve because they realize that this is hard. What we don’t know is, how long does this take? What pace is it? How fast should it go? Frank and I are honest that we’re not the greatest internet marketers. We’re not big social media guys. We don’t spend a lot of time there. It’s an area that we would have to get closer to and understand better.
We are taking a grassroots, word of mouth, build it and they will come to that type of approach. I don’t know that there’s a lot scary about the show. Where I would probably get scared is I’m dubious about if Frank and I went to start spending $5,000 a month to market. Is that bringing real followers, people that are going to stay and that are going to stick around? For me, the scary part would be is there a real ROI and any marketing dollars we would spend? Would it be worth it? That would probably make me nervous.Teachers would threaten you by bringing up your permanent record. But in this day and age, that is no longer an idle threat. Click To Tweet
The scary part for me is you’re putting yourself out there. The content is best if we’re being honest. We’re married. I’m an employer. We do deals. Being honest is sometimes tough because you’re putting yourself out there. You never know what’s going to happen with the information. In one of our first episodes, I said something about my brother and he got pissed off. That’s scary. Am I going to do something or say something that’s going to be forever memorialized that’s going to come back and bite me in the ass?
My body of work is pretty good and I have a good moral compass. There’s a funny joke I read in the cancel culture and what we talk about nowadays and the quote is this, “Your school teachers used to threaten that this is going to go on your permanent record.” It turns out it’s no longer an idle threat. Who knows that we talk about something that becomes no longer popular or socially acceptable and this bites us in the ass? I worry about that. I worry about who’s reading. At the same time, the body of work and the whole reason we stick with this is we have enough good stuff going on to talk about that is compelling us.
I’ve launched a coaching business. The main reason I launched a coaching business is not that I lacked to do with my time. It’s because I don’t think most of the content out there around my specific niche is good. Most of the people who put it out aren’t real estate investors, they are educators. Ian and I listen to a bunch of podcasts that we don’t think are great and we listen to a handful that’s good. We’re like, “We can add something.” It comes down to having some confidence, a little bit of arrogance, a little bit of ego.
If you’re an artist, which I’m not saying we are and you go play the guitar in front of somebody, write a song, people can say, “This is the shittiest song I’ve ever heard.” That’s fine. That’s their opinion but it was probably not something that you put out, “This is going to suck.” You’re putting yourself out there to be judged. That’s something different than what we do in the normal course of our business.
Unlike real estate, which is tangible, management tangible, business tangible, what we’re doing is almost 100% creative endeavor, meaning we create from scratch and outline. These are original ideas. These are our thoughts. This is us being ourselves. Like Mötley Crüe who recorded their first songs, they had critics. They had people say, “That song sucked. Those guys are posers. They’re not any good.” They had to get over some of that. I don’t spend a lot of my time thinking about haters but I also don’t want to be associated with something that sucks.
When I think about it, is it scary? Yes, I’m putting myself out there. I’d rather people say, “It’s helpful,” than say, “That’s shit.” That’s always a little bit scary when you create something. If you’re going to write a book, if you’re going to create a podcast, if you’re going to create a mastermind, video programs, all of it, my name is attached to it. It is a little scary when you put yourself out there. In your mind, you think, “This could be good and people can like it.” Until they try it, you’d never know and it’s always a little bit scary.
This is something real as well. I remember having these same worries and thoughts about my real estate business. I’ve gotten good enough in my real estate business and I’ve gotten enough of a foothold where I have different worries about it because it’s no longer a startup. I’m past that phase. This is a startup. With a startup comes some risk, it comes with some exposure and you can look like an idiot. We talked in our interviews about embracing failure. We don’t know if this is a failure yet or not. The goal will be how do we decipher this information and utilize it to propel us?
What’s the worst that could happen? For Frank, it was doing an episode of how to ask for a raise and then everyone of his 40 employees asking for a raise within three months. This show, while it’s cost me a few thousand bucks, probably cost Frank $250,000. People come in and work their asses over on his ideas. The last question, is it worth it? For both of us, it’s been worth it. It’s fun. If nothing comes out of it other than hanging out with Frank for a few hours a week and shooting the shit, he’s my friend so I enjoy doing it. Time has not been that big of a burden for either of us.
Both of us have seen little green shoots in our business where Frank has hired a few employees because of our shows that were followers of this show. We have some people that have invested in our real estate deals because of this show. 100% that I have not reached out to them reached out to me. I can think of at least one consulting agreement that I have because of someone who followed this show, liked our ideas and hired me to go live and do some coaching.
I had a couple of different bankers reached out, one is a private banker out of California who sees the clips on LinkedIn. I don’t know if he’s reading or not but he knows we do this and there’s credibility to it. I’ve had a local banker reach out as well because of it. I’ve had a bunch of people reach out on the marketing side like, “We would love to advertise for you and your show.” Somebody locally that does promote local shows. Overall, in the body of our lives, this is something that you strive to get to. It’s a passion project. We don’t know what it looks like in 2, 5 or 20 years but it was worth a shot and we’re taking it.
Frank and I are wrapping up. We got to the number that we needed to be at, a $4.5 million capital raise. The name of this deal is the Westwood Holding deal. Westwood being a neighborhood. It is three commercial properties that we went out and raised money for the private offering. It’s raw. It’s new for us. We’re right in the middle of it. This is the second real estate deal that we have partnered together on.
Interestingly enough, Frank and I have different motivations on this even though we’re partnering on it. The hard part for me is going to be different than the hard part for Frank. Frank, you originated this deal. You found this deal. What was the hard part for you in deciding to do a private capital placement and not trying to do it the way you always do it?
I can’t start there. That’s like starting in the third quarter. Why did I do this deal? I saw it being a good deal, having limited downside, having a ton of upside, having a lot of good exits and having a lot of opportunity for incredible growth. I did the deal because of those fundamentals. I’m microwaving the conversation to get through quickly. I spent months on, “Do I do it? Do I not do it?” All of that stuff. It’s a good deal. I would do it 100% with my money. That was my deciding factor to branch out to others.
Ian and I have a goal to raise a real fund. We don’t know what it looks like, how it manifests, what it becomes, whatever. Ian is in industrial real estate. Both of us are in commercials and I’m heavy in residential. Through a network that both of us have, we see tons of deals. In podcasting, like every other business opportunity, we see opportunities that are out there that we can connect the dots. We might be wrong. We might not ever build a fund.
This one is one, I brought to Ian because it’s a good deal. It’s going to leave investors wanting more. I gave up some of the equity. The reason I gave up some of the equity in the deal is it’s a good deal for me no matter what. I gave up some of the equity because it’s one that entices people to do something else if we treat them well. The success rate of us being able to treat people well is high. The probability of it is high. Those are the reasons I said, “I’m willing to bring an outside capital.” I then went to Ian versus somebody else because I don’t want to have a deal go wrong with my buddy, “This is a good deal for these reasons.” What we did is we went to Ian’s strengths, “Let’s tell a compelling story around this deal.”
I would say the hard part for you is you’re used to getting capital in other ways. To bring in private capital in this deal, we had to put together an operating agreement. We had to get both of our lawyers to agree on certain things. It was a hassle. It probably delayed the process a little bit trying to get it all done up front. For me, the hard part probably blends in a little bit with the second. The hard part when you’re raising capital is putting relationships on the line.
As a promoter, you’re out, you’re talking to people, you have to believe in the deal and you have to feel confident. The hard part for me is asking people. I don’t mind asking people for money when I believe in the deal. When you initially look at something, you don’t know it as well as I’ve gotten to know it. The hard part for me always is believing in my gut that it’s a great deal for all the people that I’m talking to because I would never want to raise money if that wasn’t the case for the sake of raising money.
The hard part for me is not finding the deal, it’s not managing the deal, it’s not doing the deal. The hard part for me is communicating with others. That is not my biggest strength. If you look on the internet, Ian is very much in the written word. I am on video. I’m a speaker. I’m not a writer. I’m a terrible writer. My emails can be confusing or bloated. It’s not my best medium to communicate. Bringing in Ian, I have someone who understands the deal well enough, knows me well enough, knows the market, asks good questions and tells a good enough story.
I don’t use good enough in a way that is in any way demeaning. You don’t have to tell an entire story. You have to tell a compelling story that doesn’t leave anything out. Ian’s good at giving an edited pitch where I’m not. This comes down to where you’re spending your time. I get to spend my time on what I’m good at, go make money on this deal.
Ian and I will have a conversation once a quarter dedicated to this deal or write a little paragraph. I’ll give him the data and I’ll shut up. He will then take it, synthesize it, ask questions and he’ll put something out, most likely making fun of me. However, it’ll highlight the successes of the deal. To me, if I need to build a relationship base with people, that’s a lot of stress for me. I’m not that communicator but I know that I can do my job, turn it over to Ian, he does his job and collectively, we can build something together.
Question 2: How Are You Spending Your Time?
When Frank initially approached me with this, I was interested. When we started getting into the details, I almost backed out. Some of it was based on the second question of, how are you spending your time? At the time, we had the meeting with Shaquille O’Neal and we were pushing for the second meeting right then. We had finished our applications for TechCrunch. I was doing quite a bit of work in Keep.
I also was right in the middle of selling my Orlando property. I was pretty stressed about that because it was the first time I was sending checks on an exit to investors. It was a great deal for all of them but I was stressed about it. I was talking to an accountant every day and I couldn’t get the numbers and the lineup largely because of a tax situation that’s neither here nor there. I had those couple of things going where I was spending a lot of time on it. The customer that I’m consulting for, that client wanted to add another ten managers to what I was already doing so I was adding more and more stuff to my plate.Never want to raise money just for the sake of raising money. Click To Tweet
Right in the middle of the all-star tournament, I was coaching a little league all-star team and we were practicing twice a day. Every day I was getting set in the morning and go into a batting cage every night from 4:00 to 6:00. I was on a field with them. I had all of these things going on at the same time at a time of my life where I only had from 9:00 to 3:00 where I could work. My day had been shortened by that all-star team commitment.
I had six hours a day to get what felt like twelve hours of work done. I was pretty overwhelmed. I was like, “Frank, I don’t think I’m right for you on this. I got to back out.”What I needed was two weeks to get through the Orlando deal, get through to the end of everything we wrapped up with Shaquille O’Neal and get through to the end of the all-star. All of a sudden, my time was freed up.
For me, I was looking at it like, “Shit, this is overwhelming. They have to go call 40 people and pitch a deal. I don’t have the time and I’m not ready to do this.” I had to go break down my time. Frank did a good job of saying, “Relax. Why don’t you take a week? How are you doing? Are you all right? If you do it or don’t do it, we’re buddies. It’s cool. I got a little more time than you think I do.” Part of that was communication where I thought Frank needed the money in a month. He needed my money in a week. He didn’t need everyone’s money. He didn’t need my check. Once I realized that I relaxed and I was like, “You’re going to give me three months. I’m back in.”
The thing is when you’re doing a deal, you’re in a partnership or you’re in a business, The hard parts can be different for everybody. Being empathetic kept Ian in the deal. I realized he was overwhelmed and stressed and had a lot on his plate. I also knew that how I wanted to do the deal is with him. I had to change my approach a little bit. That’s business. This deal might morph over time. It might not be exactly like we think it is. That’s what you have to do. Life constantly throws curveballs.
Question 3: What You Need To Know?
We talked about the hard part, we talked about where we’re spending time. The thing we have to dive into is what do you need to know. To buy this deal, I need to know the Richmond real estate market. I needed to know why it is only rented at 53% because that’s the occupancy rate. What are the short-term wins? What are some intermediate wins? What are some long-term wins?
If we’re going to hit a home run on this thing, what does it look like. What do we need to do to accomplish them? I needed to make sure I wasn’t selling a bunch of bullshit. I was confident that what I thought was reality. I did a ton of work doing due diligence. I had this under contract for 60 days before I ever brought it up to Ian because I was doing a ton of research to figure out what I thought could potentially be with this deal. Those are the things I spent my time on.
Also, one of the properties is an old church. Frank spent years getting that church permitted and making sure it was zoned right. When he said, “What do you need to know?” Frank needed to know that if he was going to bring investors in on a deal, that he wasn’t going to be sticking them with an old 100-year-old church for the next five years. He couldn’t build residential properties that were never going to make any money because Frank and I are not about to go become pastors in this church because we brought investors in. That’s something you need to know.
Beforehand, what are my exits? Frank does a good job of this when I start asking them questions. Frank always has 4 or 5 different exit plans. I would not want to invest with Frank if he was a burn the boat guy, “There’s one exit and that’s the only exit we’re going to do. God damn it, we’re going to make it work.” I want a plan B, C and D when it comes to real estate. We’ve talked about not having a plan B in a lot of areas of your life, real estate is not one of them. It’s good to have a plan B and C as we learned during COVID.
I’ve added the deal. I look at Westwood as Westwood but there’s Westwood plus the church, the church that I’ve been vetting on for three years. Brought Ian in. Ian felt comfortable with this timeframe where his responsibilities were. It’s my job to go execute the plan. That plan changes six times a day, “So and so needs to move. This person doesn’t want to.” That’s part of life. I have a property management division, a construction division. It’s pouring outside, which this thing gets water. We’re going to all these different things but that’s part of the execution. That’s what we signed up for.
The other thing we did that was smart is we gave ourselves three years. Do we need three years? We shouldn’t but we gave ourselves a good long window because I didn’t think COVID was going to pop up at the beginning of 2020 and it did. We’re hedging a little bit. The whole goal here is to give ourselves lots of different wins. What I’m doing daily is moving the ball down the field to get to a point where we have an asset that produces income or we can pay back the investors and turn this thing into a real asset that provides an annuity and runs.
A lot of people that respect and trust Frank and I and we respect and trust them or we invest them to get the deal wired to us anywhere from $100,000 up to $500,000. Every single one of those wires, no matter how rich those people were, they’re texting me saying, “Did my wire hit?” Wiring $100,000, no matter how much you have in the bank is always a little nerve-racking when it’s a bank you’ve never wired to.
When I used to watch Shark Tank, Daymond John is one of the Sharks that was up there. The guy is like, “I need $500,000.” He goes, “$500,000 is a lot of money even for the people sitting up here. People don’t keep that liquid. It’s not like checking a Chase account.”
Question 4: What Is The Scary Part?
It’s real money. Anyone who has $100,000 to wire for a real estate investment knows how friggin hard they work to make that $100,000. They don’t want to lose it. For me, the scary part is they all wired that money and they know not much more than Frank and Ian are going to take care of it. For me, raising money is almost the responsibility you feel as a parent where those kids expect that you’re making good decisions and you’re going to take care of them. If you do a bad job as a parent and you don’t take care of them, there’s no safety net, the kids are screwed.
It’s the same with everyone else’s money. If Frank and I are making a bunch of bad decisions with this, we’ve lost money for people that we trust. I am going to be seeing those folks around town. I’m going to be seeing them when I go to visit Chicago. I’m going to be bumping into him, talked to them and communicating. I need them to look me in the eyes and say, “We’re doing a good job with your money. Thank you again for wiring that money to us.”
Some of these people we’re going to see at Thanksgiving because it’s family. There’s a couple of things. From my perspective, I have two things that scare me. Number one, I got all the daily stuff that I got to deal with. I’m cool with that. I’ve got the right staff. I feel like I’m in good shape. Does it scare me? A little bit? Does it freak me out to the point that I can’t perform? No. It gives me opportunities to do other things.
The other thing that scares me is anything that scares Ian because that’s the arrangement I’ve worked out here. He did the capital raise. Some of these people are my family and friends but a lot of them are his. That’s a responsibility and a burden that I knew that I was getting into. It’s like marriage, you don’t go into it blindly. You think it through. This is the marriage for this particular deal. If this deal goes great, we’re all going to be working together for decades.
That’s a partnership. Frank is worried about what I’m worried about. If Frank is suddenly concerned about the market or something going on, I’m going to be as nervous about it. We have to be in lockstep. Frank can’t hide his anxieties. We’re in this now. We got everyone’s money, we took it. We’re in it together. If he starts to get nervous and something starts going sideways that we didn’t plan on, he needs to tell me the truth. I need to tell him the same as we go through it. That’s what a partnership is.
The fifth question is, is it worth it? In a few years, we’ll know if it was worth it. It’s going to be incredibly profitable for everyone who got involved, the investors, for myself. Frank stands to do well on this deal. There’s enough money where we can all kick ass on it. We’ll know. Frankie, the way to answer this is nothing that could be incredibly profitable comes with no stress. There are going to be these stresses. There’s going to be everything we talked about. If there wasn’t, everyone will be making a lot of money. You’re never going to have an investment that doesn’t come with some stress that doesn’t pay off well.
Question 5: Is It Worth It?
Is it worth it? The method here is how to get unstuck. This is a $10 million deal. We’re only talking about the capital and raising the equity. This is a big decision. For a lot of people, a $10 million deal is a deal that’s bigger than most people are going to take on. It’s a deal that I wouldn’t have taken on before. I wasn’t good enough. The full question in the context of how do you get unstuck? Is it worth it? Why did you decide to take a shot? Is it worth it? I don’t know for sure but it’s a good deal and it made a lot of sense. Why did you decide to take a shot? I took a shot because I had enough good information.
Ian and I did a show on the 40/70 Rule. If you don’t have at least 40% of the information, you’re not making a good decision. If you have more than 70%, you’re probably procrastinating. I’m somewhere between 40% and 70%. I’m probably closer to 70%. I’ve got a lot of different exits to not burn the boats, a lot of different exits and different things that I’ve not even fully articulated to Ian that could work out and even give us more upside. On the downside, I feel I understand what those risks are. We could easily rent this for less than I have performed in it. Get it fully leased and maybe our returns are not as good but everyone gets their money. There are all kinds of things. It made enough sense to say, “Let’s do it.”
For those of you that are reading, think about flipping your first house, changing jobs, nothing is completely certain. When I was getting married, a friend of mine from California called me and he was asking me questions. My quote to him was, “I picked the right girl.” He’s like, “You better know.” I’m like, “I’m not going to know until I die. If she’s by my years from now, that was the right choice.” At this very moment, with the information I have, I’m making an incredible decision.” That’s what I feel about this deal.
These are a couple of joint decisions we went through. Let’s take a couple of big decisions you and I have done. One is that I did and one is one that you’re working on. With Keep Technologies, our car alarm company tech startup, what’s the hard part? We are inventing a consumer device that has never been done before with ten patents, meaning the technology has not been invented. There are 60 parts in the bill of material. It is going to require a ton of engineering. It is mainly being done in Atlanta and I am in Virginia. I’m not going to be involved in the design production part of it. All of that was incredibly stressful.Some things morph over time. It might not be exactly like you think it is since life constantly throws curve balls. Click To Tweet
The question is around my involvement. Also, how will I spend my time? The CEO wanted me to take an active role in everything, sales, marketing, fundraising, investment capital, the business side of the business, anything non-engineering-related. To me, I knew that was going to be a big use of my time. I’ve worked with the CEO before. I know how it works. I knew it’d be a lot of time. I knew when our product was ready, it was going to be an exponential jump in the hours and time that would happen. I’m spending a couple of hours a day on this company. I know that at some point it could become the only thing that I have time to do. That’s it.
I knew I haven’t had anything like that since I’ve left NVR where it’s something that dominated my time. I know that’s looming here. Aside from the whole fact of a tech startup with a consumer device that’s manufactured and shipped and put on shelves, hardware is incredibly hard. For me, the spending of time, I knew that at some point this was going to be all-encompassing for me. That was hard.
What do you need to know? I spent months and months researching the problem and the competition. I’m Talking to David daily. I needed to feel confident that we were doing something unique and we weren’t a me-too and that we could build something that had a defensible moat. I needed to know a lot of that because that gets to the fourth part. Not only have I committed my capital into this tech startup but a significant amount of capital, a large wire that I sent to David. Not only have I committed my time, my resources, being C-level in this company but I also went and raised a good chunk of the $4 million capital and it’s valued at $16 million. Similar to what I’ve done with Frank, nothing’s different.
The scary part is I’m asking people that trust me to invest in a tech startup. I had to be honest, “Here are all the risks. Here’s why I’m putting my own money into it. Here’s what I know about the CEO. Here’s what I know about the team. Here’s what I know about the upside potential. Here’s where the floor could be. Let’s be real, it could be you lose all of your money if you’re investing in it.”
That is a whole other level of scary for me. One, I could lose my capital. Two, I can invest a lot of my time and give up. There are trade-offs that come with that. Three, I also have a lot of people that I got involved in this seed round. There are a lot of scary parts. The fifth part for me is, is it worth it? So far, hell yes. I’m having a blast.
Bonus Question: Is It Fun?
What comes out of all of this stuff is a question that we haven’t thrown in here that would go along with Westwood and the show. I would add a sixth question, is it fun? That question permeates everything I do in my life. Is this show fun? Hell yes. I love my Wednesday mornings. I protect it. I’ve told two people I couldn’t do something from 10:00 to 1:00 because I love this time hanging with Frankie, talking and everything about it. I love doing a real estate deal with Frankie. I tell you I’m scared a little bit of raising money. I love it. I love big deal hunting and closing deals. I love that. I’m into it.
With Keep, I love working with David. He’s a brilliant guy. He’s smart. He challenges the way I think. I add value to him. It’s fun. You are building a product that has never been done. With Shaquille O’Neal, we’re presenting at a big TechCrunch. There are a lot of things going on that I am jazzed to get out of bed and go do.
Frankie, after IJ’s football game, I took a shower, came back to my office until 12:30 and I was watching old presentations from TechCrunch because I am taking notes in Google Docs because I want our presentation to be the best. That’s not because anyone told me to. It’s because I love it and I want to do it. It’s better than watching Netflix.
We’re not two guys that get stuck often. We don’t have to get unstuck. What Ian and I have is what we call discretionary decision-making. We don’t have to do much. We get to do a lot. That’s not because we were born into it. We both worked our asses off for a couple of decades to get to this point. We’ve gotten to the point where the sixth question can be is it fun. It’s no longer about survival. It’s about doing things that have real meaning for us.
To me, I have two young kids. I’m not at the closest point yet. When people ask me what I want for them, I want them to have discretion. I want them to be able to make choices that are good for them, that they don’t feel like they have to, they get to. If you ask these five questions of yourself and you do it right enough, the sixth question comes behind it, “Do I enjoy it? Is it fun? Is it meaningful?” That’s good work. It’s fun to be able to have those choices.
Frankie, let’s wrap with the big decision that you are making. You’ve dipped your toe in but you are not all in yet. Frank started in Charlottesville. For the better part of it, you have focused on Richmond as your core market. That’s served you well that tight focus. Frank is considering a brand new market, which is Virginia Beach. He’s dipped his toe in. He’s brought an employee to Virginia Beach.
He needs to decide whether he tries to fully replicate the Cava model in Virginia Beach that he has in Richmond, meaning office-based staff, infrastructure, everything that he has in Richmond. Does he continue to support Virginia Beach as a niche market with the people he has in Richmond? I’ll start by asking the first question, what’s the hard part of a new market?
The hard part is when should you do it. Do you still do it? My sister lived in Seattle for about three years and I went there 3 or 4 times to visit her. Starbucks comes from Seattle. I don’t know if you know this, Ian. Do you know how far apart the first two Starbucks stores were?
I’m going to guess it’s short, a couple of blocks?
Two blocks. Do you know how long it was that they had only two stores? Almost two decades. Two stores within two blocks for two decades and now they have a billion stores.
It gives me hope about this show, Frank. We’re ahead of schedule.
It’s one of the statistics that I love. Everyone asked me, “Why don’t you do this? Why don’t you do that? Why don’t you move into this market? Why don’t you do those things?” I was honest, we weren’t ready. We’re good in Richmond. We were average in Charlottesville and it’s only an hour away and it was my primary market. What’s the hard part? It’s hard to be good at business. You can do many things to screw it up. You can get a big head. You can get through vertically. The hard part is when.
The second question, how are you spending your time? This is the beauty and this goes into the when. I’m not spending a lot of time on it. I’ve got one major person who runs it internally. I’ve got a staff person there but all of our support staff supports it. It’s not something that is taking a lot of brain damage for me because I built the team to be able to do it. The reason I wasn’t capable of doing this before or I didn’t do it before is it would have just been me. Now it isn’t. I have a competent leader making good decisions, checking in with me and asking me questions. To that end, they’re doing a lot of it.
What do you need to know? Let’s think about this. Why did I go to Virginia Beach? Similar market to Richmond. Why didn’t I go directly to DC? Why did I pick Virginia Beach? Virginia Beach is a tertiary market and on a major metro. It’s smaller. Its demographics are similar. It’s got priced homes that are replicable here. If you’re in a $250,000 market and you move to a $750 market, it’s hard to understand that market. It’s different markets. If I was to move to Vienna where Ian lives, it’s a different price point than what we deal with here. I’m trying to get people to make group decisions.
It’s also relatively contiguous. You have a little bit of a brand of Virginia Beach from Richmond.
Less than you think. My ads hit Fredericksburg as much as they hit Virginia Beach but the product is more similar.
Are price points similar to your customers?
Yes. That’s another reason. Also, I didn’t jump states. I stayed in Virginia because the only thing that changed besides the zip codes and the street addresses is the NLS. My contract is a state contract. My attorney’s state assured. I have all of my insurance. Everything is the same. It’s in the same state. It’s a small weep versus a skip. What’s the scary part? The upside of this is the scary part is pretty small. It’s a mitigated risk. It costs about $50,000 a month to keep it running from a standpoint of ads and people.
We went right on TV, which is a big expense but it’s a small expense for what has the chance to be a huge upside. It would have been a much bigger risk and a much bigger proportionate risk in my business years ago. Is it worth it? Why did you decide you would take a shot? I thought the time was right. The market was right. We are sophisticated enough as a business to ring the market for every bit of juice that’s in a piece of fruit and we can capitalize on it. Those are the things that we’re looking at.
Why didn’t I go full bore into it? It’s because this is a proven way to do it, to dip your toe versus to deal with a house or a market that’s a little bit smaller. Worse, I still have to know who we are. We’re a small business. We’re not someone who can go drop $200,000 a month and not affect us. $50,000 is reasonable. That’s how we made those decisions. To Ian’s question, is it fun? Hell yes. There have been several people who have called and texted me, like, “I’m at the bar. I saw an ad.” People that are friends of ours that are in the outer banks are like, “I didn’t know you’re in Virginia Beach.” Conquering is what human beings do.Raising money is almost like the responsibility you feel in raising children. Click To Tweet
It’s new. It’s novel. You go to the market, you don’t know it as well. You’re looking around and you’re trying to put a stake in the ground.
You put a flag in the ground. It’s fun and it’s exciting. It’s an opportunity. It’s growth.
Did the Romans have to go to Carthage? No. They went anyway and slaughtered every son of a bitch in that town. That’s what we do. It’s what humans do. Is there a chance that we’re going to be raising $5 million for a Virginia Beach offering?
You can bet your ass, Ian.
I like that. If you are stuck, here are your five questions. What’s the hard part? How are you spending your time? What do you need to know? What’s the scary part? It’s usually not as scary as you think. Is it worth it? Should you take the shot? Those are the questions and I’m adding the sixth, the Ian Matthews question, is it fun? Life is too short. Don’t do stuff that isn’t fun. That’s the way to do it. I’ll tell you what is fun, subscribing to this amazing show and turning on the notifications. If you are one of those people that love our show, tell us all the time and you have not given us a five-star review on Apple, you son of a bitch. We’ll find you. Frankie, great hanging out with you.
This was an awesome episode.
Yes, it was. Good to hang with you.
- blog post – Seth’s Blog Five useful questions
- Apple Podcast – Let Me Speak To A Manager
- Tim Ferriss
- LinkedIn – Let Me Speak To A Manager
- episode – How To Ask Your Manager For A Pay Raise
- Keep Technologies
Mike WayhartOctober 1, 2021 8:52 pm
I look forward to everyone of your podcasts.
• make my day
• make me think
• make me laugh