Speaker 1 (00:00):
While you do want to be vigilant about net operating income, you do not need to be cuffed to the idea of delivering a very specific profit margin at all costs. In fact, it may hurt the durability of your business and that's a key idea you'll pick up in this conversation. Team leader George Lawton is focused on growing top line revenue. Chief Operating Officer Billy Hobbs is focused on managing expenses and delivering operational efficiency. Together they're building a durable business around 200 agents, around two dozen staff members, five regional offices and 19% growth year over year, a down year in the Phoenix market. George and Billy were kind enough to be our first two guests in our popular inside the Lawton team series. Now they're back to talk about profitability, trust, consumer experience, video messaging, transaction coordination, the infinite game, and the EKG of your business. Here's my conversation with George Lawton and Billy Hobbs on Real estate team os

Speaker 2 (01:00):
No matter where your business is today or where you want to take it, you'll get there faster and more profitably with an operating system. Welcome to Team Os, your guide to starting, growing and optimizing real estate team. Here's your host, Ethan Butte.

Speaker 1 (01:15):
You guys were kind enough to welcome me and John into your organization, into your team to produce an inside the Lawton team series. Thank you so much for that. I've got great feedback on it and I'm happy to have you both back for kind of a follow-up conversation almost a year later.

Speaker 3 (01:30):
Yeah, we're excited man. It, it's been a fun filled jam packed year with its ups and downs and so yeah, excited to share with you and everybody else what's taken place, but it's been a year of growth for sure.

Speaker 1 (01:47):
Cool. There are a couple of things in there I want to pick up on and carry forward. One of them in particular is the NAR settlement. I mean we recorded it I think late March or early April of 2024, so it was forming, but it was all still like what is really going to happen and so curious to know how that went and how that's going in your market. But we'll get there in time. We've got a lot of ground to cover. Billy, I want to kick this off with a modified version of the question that I ask everybody and I ask both of you in that series, which is normally like what's a must have characteristic of high performing team, but I'd love to ask you Billy, what is a must have characteristic of a high performing leadership team in particular like an executive team or a leadership team in an organization? Your size?

Speaker 4 (02:27):
Man, this is probably going to sound too easy and probably cliche, but I would say trust as we grow and scale the organization and the bigger we get and those type of things, there's some autonomy that's with that. We've got to trust that each other's out there, especially with some remote work, we're in five regional locations, we've got to trust that everybody's out there with the same goals, same energy, same task in mind, and that at the end of the day they've got the best interest of the agent, the company and everybody involved. So I would say trust and I think that's honestly one of the things that I truly enjoy about our team is you get in that executive room and there just is a level of trust that hey, we all have the good intention, the best intentions in mind.

Speaker 1 (03:13):
Anything you want to add to that, George? Either another idea or to double down on trust in some way or even speak to the idea of building trust, especially as you've added members to that crew.

Speaker 3 (03:24):
Yeah, I'll double down on the trust factor. I think trust is such a key component of having great synergy within your leadership group and knowing that if you hand something over to them that you trust that they're going to focus on it, they prioritize correctly. I think the other thing that always stands out to me is when you have trust, it's also problems aren't that challenging when you like, okay, I know we have the resilience and we have the trust, and you have the emotional intelligence here to know that, hey man, a lot of times what we are dealing with is problems and if you don't realize that's what your job is at a leadership level dealing with problems, it can really wear you down really quickly and you'd be like, oh, it's another contract issue or another dispute over here or this or that and you forget like, man, that's what we're here for.

Speaker 3 (04:26):
We're here to solve these problems and I trust when a problem does come up, I give it to Billy and Billy's leading, taking point on it that I know they got it right. Same with Justin and the other people in Michelle in that group. And that's just a good feeling to have is we got the people around you. And so building trust, how do you do that? Do it takes time. It takes finding the right people, getting the right talent. All of these people have kind of grown up through our systems and have earned the trust and we try to, and Billy and I both try to serve that back as well too. So

Speaker 1 (05:07):
One of the most interesting dynamics about trust and one of the things that makes it so valuable is that, and this is cliche to call out, but it takes, as you said, a long time to build and it doesn't take very long for it to be destroyed if it does and it's difficult to, impossible to recover once it has been damaged. I

Speaker 4 (05:26):
Find that if you trust your gut with that, a lot of times as you're trying to build it, it's pretty obvious that whether or not that's actually a possibility. And I find that if you trust your gut with that, you're typically right. And so we try to be patient with that, but at the end of the day you'll identify right away if you're when a group of people we're trust can and will and is being built.

Speaker 3 (05:46):
Yeah, that's the thing. Sometimes we get that intuition but also we don't necessarily act on that. You're just like, Hey Billy, we should probably keep an eye on this. And then you for validation of it and you're like, okay, yeah, we were right. But patience with people has served us well too. There's been some instances where you go, something's been said or something's been done or the development of people, it does, it takes time, but the patience has served us really well.

Speaker 1 (06:17):
That instinct for this person to recognize this person made a mistake as opposed to this person is not trustworthy or

Speaker 3 (06:27):
It's a character flaw

Speaker 1 (06:28):
Inconsistent with our core values or these kinds of things. Right. For folks who A, didn't listen to that series and or B, haven't followed your growth over the past year, characterize the team as it is today, market agent counts, staff size, culture structure, anything you want to share on what is the Lawton team here in early 2025?

Speaker 4 (06:49):
Yeah, agent count, we're still sitting around that 200, a little over two. We always kind of fluctuate between that 2 25, 2 15, 2 20. It's like that kind of range. So we're still in that range. Yeah, I mean we were up over like 19% over last year. Our staff size is, we're down about two, but we've kind of recycled and we're hiring a few more support staff on the back end, so we're still around that 25 employee staff count and still in the five regional locations. So a lot of that has looked the same. We've kind of managed through the market, but in general, I think the value that we've seen over the last year is that we've maintained essentially the same staff size. We've grown a little bit in agent count, but we've also been up in production, so it's really nice to be able to see that we haven't had to grow staff and expenses and those things, but we have able to increase transaction count and income on that side.

Speaker 1 (07:49):
What is your, I'm doubling back a little bit, but tying it together with what you just shared. I mean just wanted to give people a sense of the scale of the organization that we're talking about. What is your formal, or actually what is your process for working together? Is it formal, is it like an EEO s or is it less structured, especially within that leadership team and how do you define the core leadership team? What functions does it include? What maybe doesn't it include and what's your rhythm, what's your structure for adding, I mean what I heard was some efficiency in there up 19%, but with about the same staff. So what are a couple of keys to that?

Speaker 3 (08:32):
Yeah, we've followed an EOS model for a number of years and actually probably modified it now to where it's our own. It was getting a little redundant for us. We've done it so much. I don't think people were being as creative and thoughtful as they once could have been, and so we shifted it around a little bit. But essentially the framework is an EOS model and in our leadership team is sales, operations, finance, marketing, and so sometimes you wear a little bit of both hats if you're somebody like Billy or, but within it we have Justin McClellan who really is kind of our sales leader, heads up our channel accounts like Flex Dave Richards also heading up on the sales side and you've got Billy on operations and Michelle who I would say kind of balances between the both. She is, I would say an operational mind but with the sales bend. And so we've got, I try to round all of those out and then Billy make sure we're always on budget so that we're following that and mine is to try to push massive growth and vision, make sure that we're staying committed to what we set to do and creating those quarterly rocks and prioritizing correctly and making sure we have the right strategies to hit those rocks.

Speaker 4 (10:00):
I'd also say just that those sequence of consistent meetings of making sure evaluating this is where we were going, are we on the right track? And if we aren't, what's getting in the way and trying to keep it simple. I think we spent a good amount of time this year trying to simplify and sometimes simplification is actually more taxing, eliminating, and you're still trying to figure it out. And I think that was something we try to maintain within that organization, that cadence of conversation to understand what's getting in the way and try to eliminate those things and put people in their strengths to get it done.

Speaker 1 (10:37):
Cool. Yeah, I was in a company where we used scaling up, which is just a different version. It came out of the same school of thought for over a decade, and I would say I love this idea of modifying it or breaking out of it because it would ebb and flow how useful it was. There were periods, there are two or three quarters in a row where there's really good healthy debate and conversation and fighting to figure out what is the next right direction from a strategic perspective, and then the rocks all roll out of that. But then there were also other times where you just felt like half the room or most of the room is just showing up and this is what we do, and so that repetitive nature can, that's its strength and its weakness at the same time. So I love hearing how you guys are running that.

Speaker 3 (11:27):
Yeah, it's not being afraid of hitting the issues. And so I think in the EOS model, you follow level 10 meeting all the time. You're supposed to spend some time on the issues, but we've inevitably you get caught up in the rocks and your transaction dashboards and reporting that we didn't get deep enough to the problems. And so that's what we are making sure that we're going deep on at least one aspect of the business or one strategy that we're working on and moving it forward, Hey, these things are progressing moving forward and Billy and I are removing roadblocks and making sure that we can help them, support them and facilitate that.

Speaker 1 (12:15):
When do a problem is something that you need to jump on right away and prioritize and when do you know that something is a problem that you know what we're over halfway through the quarter, let's just stay focused on the core things we're focused on here. Let's really take that thing on later. How do you know in the moment I need to point to people's minds at this right away, figure it out and then we'll roll it out versus this. And I asked that from my own experience as well, which is like, let's deal with that in six weeks. Let's just stay focused. Let's finish this quarter strong. We still have progress to go on the things we already committed to. Let's hold off on that. It's a constant tension.

Speaker 4 (13:03):
I think some of it is being in tune with the business and understanding what the goal is, what's the intention? And I think in that problem, that issue, whatever it is really, is it affecting us accomplishing the goals and the things that we're trying to accomplish? Is it in line with our ultimate end end goal? So that's one thing we try to evaluate is like, hey, we understand it's an issue, but is it affecting the things that we're trying to accomplish today? And then the other part of that is capacity and resources, right? Hey, we're finishing this up. I'll give an example. We had the fall boss conversion last year. We had another transaction management, CSU conversion this year. It's like there are other things that we want to accomplish, but man, we got to get those things done so then we can get the resources over here.

Speaker 4 (13:53):
And then if it is something that is directly affecting our business and we evaluate resources, and maybe it is like, okay, well we're just going to have to buy the bullet here, add additional resources and we'll get it solved. But usually it's those two things. Is it getting in the way of the progress and the goals and the things we're trying to accomplish? And then do we have the resource and capacity at the moment to do that? We don't want to do it at the detriment of the things that we're trying to accomplish and finish and complete move on.

Speaker 3 (14:18):
Yeah, there's hardly ever a challenge that derails us from the focus of our goals and that's what we have to remember. And so you kind of go back to that, as Billy pointed out, if it is something that's going to be detrimental to that and it's going to have a big impact on what we're trying to accomplish, then we've got to allocate the resources to that. And that's how you're like, Hey, can I pull my best operator off of this? Do I have to pull them off of this and put 'em here? And if you go, no, I wouldn't pull my best talent, then it is not a priority. I'm like, bill, you got to focus on this then I know it's a priority. Hey, we feel it's going to have a big impact on the current business or the future business

Speaker 1 (15:03):
Kind of tucked in. There was a little bit of on the fly scoping as well. If we were to take this on, what would that look like? So you at least entertain that conversation, make the right decision for the business and for the people from there. You all were kind enough to host me this week.

Speaker 3 (15:19):
Thank you.

Speaker 1 (15:20):
Kickoff all agent meeting first of the year thing, and we met in advance and it's kind of settled on consumer experience and video messaging, which I had a background in both of those topics. And what emerged as I was putting together was this natural underlying theme of what's the right role of people and in generally speaking of the agent, but of people in general versus what's the right role of the machines in creating and delivering consumer experience. And then of course I see video messaging as a bridge between those things at some level. But I'd love to hear any, I'm not asking for back padding, but anything a couple days removed from it, anything that stands out to you as a good message of the day or of the time for your team or for the industry in general.

Speaker 3 (16:12):
And I've gotten feedback where I actually had our top producer mastermind the next day and they were all talking about takeaways from the content, the integration of video and the ways, some of it they've been told before, Hey, the five ways that they could integrate video today into creating a more human element and a human touch and creating a better experience for their clients. All of them had ways that they wanted to start integrating it in. So one of the ones that was super impactful was the thank you. We try to think of these ways to follow up with our past clients and stay in front of our database and repeat referral business, a genuine video that says thank you. It is funny how you don't think of that. We think send, yeah, we've got to send them with a call to action and this and that, but it's also, it is a great way to reach out. It actually is quite fulfilling too. And so thank you. Thursdays was something that resonated with them creating where the Thursday and the follow-up for their database and past clients and sending just little thank you videos. I thought that that was a super impactful one. And then we went into the CMA video.

Speaker 3 (17:39):
A lot of them use it right now. One of the challenges that we have and one of the problems that we're trying to solve is longer days on market, we've a boatload of listings and we're taking on new ones every week and they're not coming off the market as quick as we're taking them. Great problem to have to be getting all those listings, but at the end of the day, if you don't have a great communication and you don't have trust, your cancellation rate's going to go up If the client doesn't believe that you're working hard on their behalf and you haven't communicated well on what you're doing for them. And I firmly believe and said for years, but it was great when you come in and you reaffirm that that video is a great way to do that guys. And so every Tuesday you need to be giving a breakdown on what the weekend traffic look like, what's happened in the marketing, what the current market is doing, what the competition is doing, and then what's next? And now what was it? What were the three?

Speaker 1 (18:38):
So what And now, and it applies to everything by the way. It applies to every call, every email, every text,

Speaker 3 (18:43):
Yeah, presentations, I think of that too. But they all took that away from it. It was like, okay, I've got to reengage with my Tuesday videos with my current active listings and also those ones that I'm trying to pursue, the sellers that are in the pipe and then keeping that in mind. A lot of people don't know what to say, what to do, and it really is a simple framework if you go with that solution. So yeah, it was good healthy dialogue that took up all of the time in the mastermind, which I love when I don't even get to my content. They're just talking about that. So it definitely had the impact. So we appreciate you coming in and sharing.

Speaker 4 (19:24):
Yeah, I'll just add to that. I think you gave some really practical actionable things to do, but you spoke at it from a way that the personality of an agent and video, as you know is a challenge. Some agents get it, some agents, but like George said, the thank you Thursdays, the CMAs, the practical things that you gave really spoke to each individual personality people that could do that that are more numbers. We call it that high SC that could grab that shoot, that CMA send it out or the one that is that more high eye like relational that's going to do that. Thank you. Thursday. It wasn't that high eye. It's going, oh, thank you Thursday. That stresses me out. But man, I could do those type of things. So that's what I took out of it as well. It's like great practical, easy, understandable things for anybody in that spectrum of personalities to do.

Speaker 1 (20:19):
Cool. For folks watching and listening, that is a subscriber only episode. We recorded that session. So what George and Billy have been talking about is a portion where I walk through five different ways that you can use video messages among hundreds. And all you need to do is go to realestate team os.com/subscribe. When you sign up there, you get access not only to that but to seven other subscriber only episodes at this point. So there's a bunch of stuff in there just to you for subscribing, and then you get weekly email exclusive insights sent to you as well. So that's all@realestateteamos.com slash subscribe. I welcome anyone's feedback on that stuff. So back to the real conversation. Thank you for enduring that promotional message.

Speaker 1 (21:06):
Two pieces of language that you both offered and you offered it in. I assume these are deeply held principles. I don't assume it, I just know it is a little bit of an assumption on my part, but you both mentioned them when I spent that time with you for the inside the Lawton team series. For you George, it was having a goal of making your agents as consistent and efficient as possible or to make the most consistent and efficient agents on the planet. And we use systems and training and technology to do that. And then with you, Billy, in our conversation, what I remember from it from last year was a filter of is it to the delight of the consumer or is it to the delight of the agent? And I think those two things together were what kind of motivated me to figure out what to bring to speak to your agent population because that consistent inefficient pieces, what is the right role of the person, what is the right role of the machine? And then what are we actually doing here from a goal setting perspective, from a consumer experience perspective, is it to the delight of the consumer? So I'd love for either of you to speak to each of those and how foundational are those ideas? Are these ideas that you talk about within the organization or are they just things that you personally feel and you happen to communicate them to me that way?

Speaker 3 (22:28):
Yeah, that's at the core of our mission here. One, it is obviously keeping saying consumer consumer-centric and seeing the agents as our partners. And so how can we add to the agent success while keeping the consumer experience in mind, creating the way that we think we can provide value as a team leader through the generation tech stack, things along those lines. It is creating these really efficient, consistent agents. What is our value proposition? How do we create that mission is through that, right? And so integrating in different things, tech, tech that's actually usable. The agents are going to use and it's not just an add-on that nobody's actually going to take advantage of. And so obviously AI components of a lot of people are thinking right now on sales ai and it reminds me of that me that I saw was like, Hey, yeah, I want AI to do my laundry and dishes, not write music and write for me.

Speaker 3 (23:41):
I want it for, and so that's why I think about it for our agents too is like what is the stuff that they hate doing? And some might say the prospecting side, but that's where the human element is so stinking important. And so as we look through the tech stack and what technologies can we add and how can we create efficiencies, it is through transactional management, keeping the consumer informed, helping our agents keep great database hygiene, things along those lines and essentially giving them an assistant that is the things that can do the things that they don't want to do. And that's how I think that's where our big value is and where we're trying to drive more and more change and consistency and value.

Speaker 4 (24:31):
If you just break it down to its core principles of the fact that we are a consumer like service business, at the end of the day, if we don't serve the consumer in a way that there's so many options that they have today and they're getting inundated by these opportunities and if we're not differentiating ourselves by creating a great experience for them, that's going to be detrimental not just to the consumer but to the business in general. And so it's got to be to their delight, as I said, to their liking. And then as a team lead, as team leaders, our job is to provide the opportunities and the resources and the value for the agent to be able to do that. So it truly is at the core of everything that we think about because at the end of the day, that's where the rubber meets the road and being successful is being able to, we really kind of at our core have that servant leadership thought and mindset and that translates to the consumer.

Speaker 1 (25:30):
You mentioned follow-up boss, which I talked about probably the most at length with Julia O. Buckley in that inside the Lawton team series. You also mentioned a TC, I think change. You mentioned CSU in this conversation. I'd love to walk through those in light of that setup. So you're almost a couple years into follow-up boss at this point I think, and I don't need to go step by step through how it was implemented and all these things, but at a high level, when you think about before and after, is there anything that stands out with regard to consistency and efficiency of agents or delight of consumer or delight of agent with regard to that change then we'll move through a couple of those other technologies.

Speaker 4 (26:14):
Yeah, I'll start with the CRM is where at the end of what we do, what we're continually trying to do is create an environment where the agent does have a million places to go. Part of being efficient is I don't have to log into 15 different websites. I have one place where I can operate my business. At the team meeting, you were referencing that you were here a couple days ago, we always have that founder's lunch that you graciously came on and it's all the new agents that have joined the, and I had an agent ask me, Hey, what you guys are providing is amazing, but if I was going to spend my time in one location to do business, where would that be? And my answer was, fault boss, right in the CRM. So from a high level, what that's allowed us to do over the last couple of years is to add value that plugs into that system that I'm not having to take them away from that system.

Speaker 4 (27:08):
They still, they can get any AI component that we've integrated. They can get that information right in the CRM, that AI component, if they engage in assistant will update the CRM update, follow boss. So from a high level, it's really just what we hoped it would be at that point, which was just open integration, the ability to work well with others and play with others well. And so it's done that and it's lived up to that to this point. We're still learning, we're still growing. It's still somewhat of a culture change a little bit. You've got your systems and operational change, but then you've got the culture change and that's coming and that's through just consistency and continuing to do that. So that's been really good and we've been really happy with that side of it. Transaction management, we just recently finished that. We went started with dashboarding and it was again simplifying.

Speaker 4 (27:59):
We had a couple different systems we were using. It's like how can we simplify this? And we're just now getting that dialed in at the end of December. So not a lot of experience as far as feedback as to what it's done for us, but the experience of getting a transition, the team getting it in, and those things have been good and we've been able to get some integrations even in that sync to follow Boss and some different things that again lead to that creating an efficiency consistency and opportunities for agents to do what we want them to do, which is serve the consumer

Speaker 1 (28:31):
Really quickly without asking, I'm not asking for history walkthrough, but I think you've been on the team Billy for six-ish years. Seven next month. Awesome. Okay, awesome. Got a nice anniversary coming up here. George goes to take that out. So what was TC like six, seven years ago? What were the steps leading, and I'm asking again on behalf of the folks that watch and listener that they might still be in that early spreadsheet checklist phase. What are some of the phases that it went through and what forced any of those major changes and or what forced or what brought on, what enlightened you to the opportunity that got you to do this latest project or this latest upgrade?

Speaker 4 (29:19):
When I came on, it was one Excel spreadsheet on one individual's computer with two transaction managers trying to make sure this thing was synced up. So that was the extent of it. So the iteration went to, Hey, let's not get too crazy. Let's get this thing online to where it's sinking and everyone has the same visibility. And then honestly the iterations came from George's desire to see the data instead of having to constantly filter all these columns to get to what do we have pending, what are our numbers? It started with me just creating a tab and building essentially graphs and charts out of the Excel spreadsheet to show those things. But then we went through a pretty heavy extensive growth with agents when I came on, I want to say we had 20, 25 agents and then within a couple of years we were at a hundred, 150, close to a hundred.

Speaker 4 (30:15):
And at that scale you're no longer managing that from an Excel spreadsheet and you're not getting the data that you want from those things. So then we started looking at the systems that did, that functioned well in those things and as your business scales and iterates, you're looking for different things. You're looking for things that provide different values for you, and I would say the iterations really come from the ability to integrate with systems so that we can simplify that. I don't have 50 different programs doing the same thing. And so that's how we've ended up where we're at. We started simply with that sheet. We were through broker, we through a few others and then we ended up here just with the idea to simplify and get down to the point where we can be ready for the next version of scale.

Speaker 1 (31:03):
Cool. And what was going on for you, George, when you were like, I want to see this data or I want to see this differently. Where were you? What distance had you had, I mean whether it was by design or not, what distance did you arrive at from some aspects of the business that you wanted to draw yourself closer to? What pulled you apart and what made you say, I want to see that, I want to be closer to that, and what were some of those elements?

Speaker 3 (31:29):
At that time, I was spending most of my day in the trenches with the agents, coaching, mentoring, also some production and other channel accounts that we had. And so when you're head down and you're in the trenches, you can have this belief that the business is doing well or things are going good or things are going really bad too. You can have this idea that that exists as well. The data tells the real story and I've wanted it at our fingertips and while there's some out there in transaction management systems, I have good dashboarding software and things along those lines.

Speaker 3 (32:15):
I wanted to see everything. I want to be able to see financials, I want to go one place to see that integrates transaction management, financials, whatever else the heck we have jot forms, all these other things that can go into one spot. We, Billy migrated us into a BI software that did all of that grow and now I can go and I can look at, we probably have 50 different dashboards, but there's like five that I go to and now I get the data that I want. I can see and assess the business at any point in time. It's in real time on what's going on. We know how many pendings, what our cancellation rates are, who's performing, how many are company generated lead sources, how many are agent generated lead sources? I mean how many files each TC is carrying? So there are those, the EKG of the business that I want to know at any given time, and you can drill down to even the micro if you want to. So I'm looking at macro mostly, but if there's a problem we can drill down very micro and see where it's actually coming from.

Speaker 4 (33:26):
I'll add and circle back to the question you asked about how do we identify when there's an issue, whether it's something we jump on today or we push out. That's a key component for us is one, it helps us get to the ground truth of we hear this, is that really what's happening? And then we can get in there and see, okay, yeah, that is, or it's not as bad as it seems and we can make those decisions appropriately.

Speaker 1 (33:49):
One of the main things that I'm trying to bring up more often because it's a challenge for a lot of different people because they don't necessarily have this type of visualization or understanding or handle on the business or they just came out of a massive growth phase or they just came out of a massive firefight over a couple of months or several months or whatever is profitability. And profitability I feel like at some level is something that is managed day to day, but it isn't really either in that it's the end result of a lot of small decisions that are made and a lot of things that are permitted to continue existing that maybe should have been killed a while ago and all these different elements, they do add up to the final thing, but it's not something you can really actively manage per se on a day-to-day basis. It's just not that relevant. How have either of you thought about profitability and how has that changed over the past seven years? You've been through a lot of different stuff, market conditions of course, but even agent count, I'd love a few minutes on how you think about profitability, what kind of eye you keep to it, what are some of the core elements where you're like, well, we learned that the hard way, we're not going to make that mistake again, anything you have to share on profitability and either of you can jump right on that

Speaker 3 (35:06):
Profitability, we always have a target in mind. And then with that, my mind generally goes to how do we generate more revenue and Billy's mind goes to how do we reduce expenses and so it's good to have that yin and yang of your business and where we realize each one of our seats is at, and so Billy goes on the mission of breaking down the p and l and going, it can be death by a thousand cuts within a p and l. And so we're looking for everything that we can cut back on and Billy probably he'll know the exact numbers, what we've actually been able to remove from the p and l without removing humans. A lot of times you go to your payroll, payroll is our rent and our biggest expenses, but we've got a really good group of people and here's the challenge, the market is soft right now and we believe rates and demand all coming back here in the next year or so and all this amazing talented people, if I were to let them go, I'm going to have to go ask them to come back at some point.

Speaker 3 (36:17):
And so that's where we're at. It is like, Hey, Billy and I have to make a choice. Or 2023, 2024 was like, do we hold the line? Are we slaves to the numbers? This is the margin and you need to have a margin in mind, but we don't chase without a doubt we have to hit this margin. It's about there's real humans on the other side of this. I never forget that. People with families, things along those lines and so we adjust. We adjust and go like, yeah, I would love to hit a 20% margin. When you're in production, you've got a smaller team that's very achievable when you're like us, I don't know, I don't know anybody doing it. It probably is out there somebody way more efficient, maybe a little more shrewd than we are to be able to hit that we don't.

Speaker 3 (37:17):
And so we like to see in that double digit NOI, but in hard times that gets down to single digits, man, it gets 5, 6, 7, 8%, but that's a choice we make and that's what we know at the beginning of this year. We go, alright, this is our target. Let's do everything we can to stay there. And so we're analyzing not just based on what our desires are and what Georgia's net income and bill's net income we want it to be, we're looking at the market and making really sound decisions based on that and then also based on the durability of our business, first and foremost, we're not in this for the short. This is the infinite game for us and in that is a very durable business and we want to make sure that our team feels protected in that every whim of the market we don't shift with the winds of the market. We are durable, we're predictable, and we're your shield. And so that's where it comes from and I don't know where those values were created, but I think both Billy and I's families have come from corporate America and have seen my father got laid off after 32 years of working with the same company that my grandfather worked for and everybody else in my family worked for too. And retirements, promises not fulfilled, things along those lines and so we have a duty to do something better.

Speaker 4 (38:56):
George mentioned the infinite game. We're not in this to look at it at the end of each year and look at what that profit margin is. We're looking, growth is always the vision and growth sometimes in general it eats capital and sometimes when you're still trying to grow, have market constraints at the end, how we do that is with people and so we've got to balance that as much as, yeah, that's my job to dive in and reduce the expenses, which we did, but that came from systems and things that we just weren't using effectively or didn't need anymore because the market or our internal people, it just wasn't a value anymore. So he call it death by a thousand cuts I call it. It's the, it's onlys, right? It's only this. It's only that. Well, you add enough of those, it's onlys up. It gets pretty significant.

Speaker 4 (39:47):
So it's making sure we keep those things in check, that we're not spending a little bit on things that really don't matter. Let's get rid of those things and then going back, focusing on the agents and the people and making sure that we're strong when the market does shift in those things, we're not having to, as George mentioned I think earlier as we try to do everything we can to not jerk the wheel and if we were chasing a profit line, that's all we'd be doing is we'd be jerking the wheel every time the numbers change and we just don't want to do that.

Speaker 1 (40:17):
I really appreciate that sensitivity. So many really good things in there. Even going back to the idea of I'm focused on top line growth and he's focused on creating efficiency inside the business so that they're both happening all the time and someone is just focused on those things. I also appreciate the sensitivity to this person came up and was developed within our culture and in our organization. They've been a star in each of their seats. They're in this particular seat now and if we happen to feel compelled and we have trust as to going back to the beginning of this conversation, the idea of letting them go over some fraction of some percent. You mentioned you threw a lot of percentages out there. The difference between six and seven eights and seven and one 16th percent in a tough market is like it's not worth her or him necessarily and all the investments that we've made together going forward, we really appreciate so much of that. I would love just a quick go. I want to hit a couple more topics before I've also modified my closing questions for you guys. You've already answered, I think you'll enjoy it.

Speaker 1 (41:25):
Lead sources. When you think about partnerships, lead sources and other just as a group of investments, how does that fit into this philosophy? How have you vetted them over the years? If you've moved away from one, how much time did you give it? What were you looking for? Any thoughts? I assume this is you George, but it's probably also Justin, but I don't know exactly how these decisions are made, but just over the years for a high level for someone thinking about, okay, if I was to double the size of my organization from 18 to 36 agents because I've got a good plan, we've proven this out pretty well. I'm looking to maybe add a couple more or I'm not sure if I have the right ones. Any tips on lead sources in this zone of we're looking for good partners to build a durable business at the same time? We're not going to live in something, we're not going to add another it's own because someone made the right call on the right day and I happened to pick up the phone and they were like, whatever.

Speaker 3 (42:34):
Yeah, yeah. Lead sources depending on, obviously you go a number of different routes, but ROI is the key for picking the right lead sources. Which ones do we believe are going to provide us with the best ROI and accelerate? What you also have to bake in is how quickly can I accelerate building a book of business? And so some are actually lower, a little bit lower margin on the front end, but they're so down funnel that it doesn't take all the nurturing, it doesn't take all the time. And so you can accelerate building a great book of business for an agent that's been in two years and a business three years and get them to something that is more repeat referral and a better blend of business. What we're trying to do is take what would take a normal agent 10 years to build and see if we can get it down to two and say, okay, and now here's what you do with that database.

Speaker 3 (43:37):
And so when you come on with us, 90% of your business might be coming from a company generated lead source in which our company generated lead sources of reverse, but there's one clear standal that stands out. Zillow. Zillow has sent us over 10,000 opportunities in the last year. My agents, even though maybe a little bit lower margin than some sources, they see the value in continuing to build up their database and build up their client past client repeat referral business. And so while you, 90% of your business may come from Zillow the first year you're with us by year three, year four, we're hoping it's probably 30%. So preserving that agent net or increasing that agent net over time is a focus. If I'm evaluating, if I'm a team leader and I'm evaluating these sources, I'm asking the hard questions. If it's one of the aggregates like RDC homes.com, anything along those lines, give me real data to support.

Speaker 3 (44:47):
You have to show me the data that supports that. There's an ROI on my investment and how long do I stick with that? I don't like year long deals, but I'll do a year long deal if there's maybe some clawback on that. I can get into more detail on all that sometime, but I can commit to, I think as a company you have to commit to six months. Now if you're doing social media marketing, if you're doing things that take a little bit longer for PPC, you're, you're really kind of marketing your IDX site, things along those lines. You're farming, you better at least have a year or two year commitment on that because you're not going to see the ROI right away. But you need to be tracking those numbers and watching that effectively, making sure that people are moving through the funnel, right, because just a little bit further upstream than what the Zillows have. And so you need to be tracking, make sure that the lead indicators are still moving it down funnel and that all the things are going in the right way and that's moving in the right direction, but if you're not focused on it, you're just going to be throwing money down the drain.

Speaker 1 (45:54):
Did I hear you right on in terms of ROI and saying this is good or this is not good. Are you factoring in the idea that on average this lead source, most people would say this converts at X percent, therefore it's good, or this converts at X minus, therefore it's bad given that they're of equal cost or whatever. So pretty simple mat there, but one thing I always wondered is do you factor in the idea that but why percent of the time our database is built on repeat and referral from this source?

Speaker 3 (46:33):
Yeah, I don't have it in a dashboard, but we do have originating source. How many of our 2000 1800 transactions, even the repeat referral was an originating source from what was a company generated. That's important. And if we were to look at that, I mean you're probably somewhere in the 90% range of our business comes from in this last year originates with company generated lead sources,

Speaker 1 (47:07):
High level two minutes or less NAR settlement. How has it gone net positive, net negative, still too early to know how is that going overall,

Speaker 4 (47:23):
I think there was a lot more, at least for us, a lot more anxiety and emotion leading up to it and within 30 days, very few conversations. It was more around process of the rules of the MLS and different things of that nature and within 60 days not, I don't think we've had a discussion about it in the last probably four months. Honestly. Our association just actually updated a form yesterday to even remove some of the confusion that was there initially because they were concerned about just certain things. So yeah, I think the lead up was far more concerning than the actual play out. We haven't yet seen a huge impact to commissions. Agents have figured out how to have those conversations, and in general, I think the market understood consumers know that these are the things that have to be done to get out to see a home and those type of things. So we haven't seen a huge impact. Actually, if anything, it's caused our agents to step up their game to understand, to be able to explain their value and show their value and get those agreements under signature. So outside of that, it's only been, from what we can tell a positive,

Speaker 1 (48:45):
That's very consistent with what I've been hearing from team leaders who are put together and have a put together team that are thoughtful and are providing training. Their single biggest challenges. Most often, the more ignorant or under-prepared or confused agents on the other side of a deal, slowing things down with regard to this and the type of agents that you're building and investing in are typically out there doing a lot of that second and third layer education for people that don't have it available to make sure that the whole deal goes properly. Okay. I really appreciate you guys. You're awesome. I love the business that you've built. I'm so privileged to have spent so much time with you all in person. Thank you again for having me recently. Just one question for each of you to wrap this up, it is an either or the other ones, you can answer one or the other. And I'll start with you, George, and this gives you an advantage, Billy, because you'll have a minute to think about it. Thank you. But you guys have been working together for almost seven years now. You've known each other for several years prior to that, so George, what is something that Billy is into that you can't relate to or what's something that you learned about him recently that surprised you?

Speaker 3 (49:54):
I don't know if there's anything I've learned recently. Okay, wait, let me see. What is something Billy's into that

Speaker 1 (50:02):
You just

Speaker 3 (50:02):
Can't relate to that's I cannot relate to? Let's go there. So I mean, it is the depth at which he understands some technologies and he's my go-to on any kind of Apple update or anything along those lines, and I'm like, I know how busy we keep him and I don't know where the heck he has time to understand all the other stuff. He'd be like, oh yeah, it's a new update and it does this, this and this, and I'm like, when do you figure this stuff out, man? I just like, what do you do? Is this what you do at night? And or formulas and spreadsheets, things along those lines. I'm like, I don't know. This is where I want the number to tell me how do we get it there? And so I have no desire of learning that. I just love that he does the cheat

Speaker 4 (50:57):
Code. Now is AI for those things he used?

Speaker 3 (50:59):
100%? Yeah. Yeah, 100%. It didn't use to be, but yeah.

Speaker 4 (51:04):
What was the second part of that

Speaker 1 (51:05):
Again? What's something George's into that you can't relate to or what is something that you learned about him recently that surprised you? Like, I've known this dude for a decade and I just learned this.

Speaker 4 (51:16):
Yeah. I don't know if it's something that I just learned. I'll just say I want to go there just because I think I'm shocked at times of how much of a, we joke we're both the same in this is how much of a consumer George is. George is usually very disciplined, thinks that there's nothing that he doesn't do that hasn't been thought through, that isn't tied to some sort of goal. We're only doing this. The one thing he doesn't do that with, and he doesn't have a ton of cars, but cars are purposeful. I need one, let's go get it. We're not thinking, well, I'm going to do all the research. I'm going to tell you everything that's going on with it so that I can make an informed decision. But I think it's that we joke about, man, we're such consumers. We jump on it all the time, but I think that's the one thing I was like, huh, I did. That was one thing I was not expecting,

Speaker 3 (52:08):
And

Speaker 4 (52:08):
It's usually little stupid stuff. It's some major stuff. It's just little stupid stuff like, gosh, yeah, that Instagram feed got us.

Speaker 3 (52:18):
It's always like some sort of biohack thing, like the grounding bed sheet or the hydrogen water bottle thing or then I'm like, I don't know if I feel exceptionally better, Billy. I've been grounded for the last three months now, and I don't think anything's actually changed. I think we got taken on this.

Speaker 1 (52:38):
Instagram is so good at putting those things in front of people, and it's persistent as heck. Even if you just dwell on it for a half a second too long, you're not going to escape that ad or its second or third iteration. That's really funny. That's really good. Thank you both so much for making time today and for everything that you shared with us and continued success to you in the year ahead.

Speaker 3 (53:01):
Ethan, man, we appreciate your time. Yeah, thank you for everything you're doing.

Speaker 4 (53:04):
Yeah, yeah, always enjoy hanging out with Ethan. Appreciate your sacrifice of time. We know you traveled here from Colorado Springs and served our agents really well, so greatly appreciative of you and your time.

Speaker 1 (53:17):
Cool. Thank you. Thank you. Lots of stuff right down below, links to both of these guys online, links to the inside the Lawton team series that we did. It's an eight episode series. Michelle was mentioned, Justin was mentioned, Julia was mentioned. They're all in that series with standalone interviews and episodes diving into their specialty and their contribution to this awesome organization. Thank you both guys, and we'll talk again soon.

Speaker 3 (53:39):
Thanks. How are you going?

Speaker 2 (53:41):
Thanks for checking out this episode of Team Os. For email exclusive insights every week, sign up@realestateteamos.com.