Speaker 1 (00:01):
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 2 (00:15):
This episode of Team Os features Tom Ferry, someone who needs no introduction on a show like this one. We recorded it together in person at fcon in downtown Los Angeles. And in this conversation, Tom shares two things that every real estate business needs to be focused on right now. He shares an experience that he had in 1996 that turned him onto the potential of the team model. He also shares how and why to turn accountability into confrontation, as well as specific tips for solo agents thinking about starting a team and tips for solo agents thinking about joining a team. Here's my conversation with Tom Ferry. Tom, to kick us off, I would love to know from you what is a must have characteristic of a high performing team,

Speaker 3 (01:02):
Someone that can manage terror and euphoria at all times? Yeah, that would be my answer. Terror

Speaker 2 (01:09):
And euphoria. Talk about your last 20 years or so running and building your own organization. What has stayed the same with you through that period and what have you adapted and changed? What's something that you kind of

Speaker 3 (01:23):
Super simple. I think if you're going to start any business, you need to acknowledge that you can be one of many. You could walk down the aisle of the potato chip out at the grocery store and try and separate yourself from Frito-Lay or whatever. And this one, the yellow bag, the black bag, the problem is they're all scrambling to try and figure out a unique factor. And I think the biggest challenge right now, what most teams have is they have no unique factors. So I say, well, why should I join your team? Why should I join your brokerage? Why should I do it with you versus everybody else? And they say, well, I've got great tech. Well, everybody's got great tech. Well, I've got leads. Well, everybody's got leads, right? Well, we're going to show you, we're going to teach you. Well, everybody's got some method of training.

Speaker 3 (02:03):
The challenge right now in the industry is there's so much likeness, there's so much sameness. What we need is difference, right? And what's so exciting today is to look at the number of people that are coming into the industry that said, I'm not going to college. I'm 22, I got tattoos, I got a beard, and I want to go into real estate. And they're bringing these fresh ideas and fresh perspectives. The challenge is they're falling in the trap of the same old that I'm not saying tired, and I'm not saying bad, they're just no unique factors. So that's the first thing you got to figure out. You got to go into a room and say, everybody is over here. What's over there? And the only way you really do it right is Ethan, you do the second thing, which is you think about the customer.

Speaker 3 (02:48):
The only thing that matters is the customer. Now, a team leader might say, the customer is my agent. The broker's going to absolutely say, the customer is my agent. And I'm going to say to you, no, they're your partners. They're your partners. The customer is the first time home buyer. The customer is the 89-year-old seller whose real estate agent died 27 years ago. They have no mortgage on their house. They're living in New York City. They don't know what the taxes are. They don't know what the problems are. They want to go to Florida, but they don't know how and they haven't talked to their adult son in 10 years. So they got no one to rely on. No one became their advisor. Does that make sense? Yeah, that spectrum, that's the customer. And if you pour yourself into understanding the pains, the challenges, the worries, the nervousness of your customers, then you can create unique solutions and you can market unique messaging in a way that has them go, he's talking to me, she's talking to me. But instead, what is everybody new in this industry attracts just listed, just sold. Here's my video. I'm dancing on TikTok. I'm making calls to expires. It all works, but none of it is unique.

Speaker 2 (03:57):
So you triggered several things for me there. One of them brought me back to terror and euphoria. I think there's terror in saying, can I go over here when everyone's over here? I think that that difference is a big jump for a lot of people. You also made me think about the idea of just thinking about the younger people. I think a lot of people think that the social media presence and these kinds of things are the differentiator when in fact they're just the delivery mechanism for the differentiator. So they're doing the shallow version of that. I

Speaker 3 (04:25):
Don't even think it's differentiation. I think it's almost implied now. You just got to be there. Correct? So if everybody's there and then everybody's there, so you can say, oh, I'm going to be controversial or I'm going to dance more. But I think the challenge is, and I'm tongue in cheek when I say that, if you actually surveyed your customers, if you went online and you said, tell me what you're thinking about with your house. Tell me what your concerns are. Do you like your neighborhood when you bought that house during the pandemic, there's a study that says like 43% of the people that bought a house during the pandemic made a mistake. They got rushed into it. They had a six 50 house, they wrote 8 25 offer of 30 to get accepted. And now they're second guessing themselves. If you just take the time to get in the minds of the customers, they will throw money at you speaking their language.

Speaker 3 (05:09):
Does that make sense? So being on social is great, making phone calls is great, emails is great, open house is great, everything is great. But that's table stakes. Look, why is Zillow dominating? Because they speak to the customer. They go direct to the customer and say whether it was the debacle of want to sell your house to the couple, remember the ad that they did with the guy in the military on the laptop communicating with his wife and the daughter, right? And okay, I'm not sure, what do you think? Hey baby, I got to go right? I'm in the middle of a war, close the laptop. And then he shows up or they go to look at the house and they open the door and there he is sitting there. And it didn't say anything about real estate. It just said, find your way home. And people, I cried when I watched the video, I cried mainly for real estate agents. There was just no way they were going to compete with that, but they can, if they put the focus off themselves and put the focus on the customer.

Speaker 2 (06:07):
All those table stakes are just means to reach people with a reflection of themselves. Back when did, you've been working with the top performers for a couple decades. When did teams and the team model occur to you like, oh, this is a thing.

Speaker 3 (06:25):
1996.

Speaker 2 (06:26):
Okay, what happened in 1996?

Speaker 3 (06:28):
1996, my dad was doing a workshop and my dad's a legend, and it's 1996, so I'm 26 years old and I'm sitting in this room and names like Walter Sanford and Freud Candel and Doty Donahue and so many others. And back then, so someone that's new was, they all have no context where those people are. But these guys and gals were all doing a hundred transactions a year in 1996. And when I went to, I met 'em all and we were doing these little masterminds, and when I went to Freud's office, Freud's office was like a doctor's office. And I walked in and I was like, well, that's kind of cool. Can real estate not too far from here in Los Angeles? And then a whole bunch of meeting rooms. And then back here was the back office transaction management, listing, marketing, all the sausage making, if you will.

Speaker 3 (07:11):
But over here it was little conference rooms. And what Freud would do is he'd go out and knock on doors three hours every single day. His geographic farm was Los Angeles, and he would just knock on every door heights for a candio, English or Spanish, didn't make a difference. I'm out here, market updates, blah, blah, blah, blah, blah. And then he'd book five or six appointments every single day and they would come to his office, his office, and Freud didn't check him in. The gal at the front desk checked him in, and then somebody else walked in and said, Hey, before Mr. Canaria comes in, I want to just verify you guys are thinking about moving the next three to six months. And at this point you guys are kind of thinking you want 450 to $500,000 to sell your home, literally like a doctor's office. And then Freud comes in and says, Hey, it's Freud. Okay, lemme look at the chart. So he's probably list it for 4 75, and let me ask you. And he would do a professional presentation they'd never seen the house might just knock it on the door, but he knocked on every door in la. So he had no idea what it was. And that's when I said to myself, oh my God, that's it. That's the future of real estate. And we've been talking about it ever since.

Speaker 2 (08:07):
It's awesome. You made me think about front of house, back of house, you said doctor's office. I could see the doctor's office. I kind of heard someone receiving you at a restaurant, for example, and you keep the back of house, back of house for a reason. I feel like where it gets messy from a customer experience perspective is when you bring people to the back of the house,

Speaker 3 (08:26):
Right? And they see where the sausage is made. Yeah,

Speaker 2 (08:29):
It's like this.

Speaker 3 (08:29):
That's a bad metaphor, right?

Speaker 2 (08:31):
Yeah. That's just not what the experience is supposed to be.

Speaker 3 (08:34):
No, I think every real estate agent should read the book, the original biography on Maria Montessori, right? In the Montessori school system, that was the origin for what Walt Disney created with Disney U. It was all about the experience. You think about Disneyland, it's all about the experience. And some of us can remember a ticket rides versus B, ticket rides, all that kind of stuff. But the client doesn't really care. What they want is communication. They want certainty. They want you to solve the problem in advance and then tell them that there was a problem and you solved it. They don't want to call you and say you misspelled something on the online ad. They don't want to say, Hey, that photo of my master bedroom didn't look right, and they certainly don't want to hear. We're not going to close on time, and they don't care about the appraisal.

Speaker 3 (09:19):
You know what I mean? But all that stuff, every good agent knows all that stuff is why they get paid so much money. They're solving all those problems. So what's fun right now, and I know you see this too, what a lot of agents are doing now as they're thinking about what are all the touch points where something goes wrong in a transaction and then they're either creating a Gia Silva who's a local agent, long Beach, the client gets like 17 videos during the transaction from her, hi, it's Gia. We're now at day 24 in 17 days where, and this is what's going to happen and we've already solved for this and this is what's going on. And she's doing it all on video, all automated following the escrow process. The customers love it, and then they write these glaring positive reviews. And what's shocking is it's 2023 and the vast majority of agents still aren't doing it, right?

Speaker 2 (10:05):
I mean, it's so straightforward. I mean, what you basically broke down there with a great example is setting expectations, delivering on expectations, communicating proactively. And if you're getting a call that's problematic.

Speaker 3 (10:17):
Bingo. Because

Speaker 2 (10:18):
90% of the time you could have headed that off with proactive communication,

Speaker 3 (10:22):
1000%. And everybody watching knows every escrow has challenges and almost none of them are in the agent's control. But it doesn't mean that we can't be trying to proactively solve the problem or get ahead of the curve. It's all of that. So I want to just make sure the person watching, well, he doesn't know. I get it. I run a business. I understand. Yeah,

Speaker 2 (10:40):
Accountability comes up a lot. I hear the word a lot. I think it means a lot of different things to a lot of different people. When I say accountability in this context, team leader let's say, or broker owner, what comes to mind for you and how do you generally advise people into a healthy form of accountability?

Speaker 3 (10:57):
I have three visuals in my head. Maslow's hierarchy of needs, Douglas, and I'm going to screw up his last names, XY theory of management and whoever created the four levels of learning. And you have to blend those three together to understand X Y's theory of management. Think military, right? If Ethan is a new soldier, I don't say to him, Hey, what do you think? I say, drop and give me 20. Here's your gun. Do 500 pushups. Shoot your gun that direction. Make sure you hit the target. I tell you exactly what to do. If you don't, you're going to die. And we have people on our teams that X is the requirement. They are over here, the unconscious incompetent. They don't even know what they don't know. And as they move up, they become consciously incompetent. I don't know that. I don't know. Now what? Then you move to the conscious competent. I know what I know, and I'm pretty good at it. Now you're getting near the why Maslow hierarchy of needs.

Speaker 3 (11:47):
I know what I'm doing. This is good. Well, if you only have one approach to accountability and you're dealing with all those human behaviors and emotions and where people are at, you're going to have massive turnover. If you have no accountability, you're going to have massive turnover. You're going to have chaos. But when they get to the top, it's, Steve, what do you think? You had a bad month. What do you think? What do we need to do? Let's work on it together, man. And you don't hold somebody accountable in a rigorous way. You have an analytical conversation. You say, let's go inside the CM, let's do a little CRM audit. But if you've got somebody that's brand new, you got to tell 'em exactly what to do. And then you have to work on their behaviors, which means, Hey, I probably need you to have you a check in every single day, and let's text each other.

Speaker 3 (12:26):
And accountability. I've been doing it my entire life in business. I think I've really been doing stuff. I was like six years old. My parents got divorced and had to say to my older brother, don't worry, I'll make the beanie weenies and mom, I got your back. Right? Yeah. Accountability really should be thought of as care confrontation. I care so much about you that I'm willing to have honest conversations about your behaviors and the impact of those behaviors. And if you can take that on and have empathy for the person in the situation where they're at. I deal with some of the most, I coach the CO of home services, right? I mean, think about that. Gina. Ari, for 31 years, the guy has 57 companies. One is Berkshire Hathaway, you know what I mean? The real estate company. I don't need to confront him, but I have to have empathy for his situation.

Speaker 3 (13:11):
I got to acknowledge where he is at. I never tell him what to do at the highest level. You whip me on this. But I ask careful questions to get him to think, to look at things differently. He's always saying to me, bring me new ideas. I just talk to Nick, who's the ceo, EO of remix, bring me new ideas. What's going on, man? I want to stay with it. You follow me on this. So is that accountability or am I confronting these incredible CEOs with insights that maybe they weren't familiar with yet? And I can open up the kimono, give 'em some insight, tell 'em some books to read, make some introductions to people. Is that accountability also at the highest level? It is. But my son, who's eight days in real estate, you got to text me every day when you start making your calls, you got to text me every day after you made your calls. And oh, by the way, he's got a team leader and he works on one of the best teams at all in New Jersey. Shout out to Jill Biggs. You have me on that. If he doesn't do it, he's going to die. Yeah. So you got to have a wide range of what you would call accountability

Speaker 2 (14:10):
Specific to the individual in some cases, generalizable at some level, at least tiered at a minimum. And what you really described to me was essentially therapy, which is guiding a process of discovery, diagnosis. And then I'm going to guide you to a process where you get to self solve your own solution. Yes, 1000%. Because that's the only way you're going to see it through is through that level of ownership. A couple more questions for you. Yeah.

Speaker 3 (14:34):
I have to tell you though, its why I took all my coaches and took them through multiple different therapeutic methods. Love it. If you don't understand what's going on in the minds of the customer, in this case, our client, then you can't really serve them. What are you going to do? Hey, make your phone calls. They're like, I'm getting a divorce, right? My wife has cancer. Make your phone calls. No, you have to understand human psychology to be a great leader, to be a great manager, to do good interviews. You with me? You got to understand people. Yeah. Sorry to interrupt. No,

Speaker 2 (15:05):
That's great. Appreciate that. Ad. I was just going to ask for a basic tip for, I'm thinking about two classes of solo agents here. One who is actively thinking about starting a team. What would you advise that person or maybe what questions would you have for them?

Speaker 3 (15:23):
I would first say to you, read three books. Read the book, the Four Disciplines of Execution. Read that book, then read traction, read that book. They say the same exact thing. They just call it differently. You're going to find the one that you like. It's like driving cars. You know what I mean? Oh, I like this one versus that one. But they're all cars. And then I would read the book, measure what Matters. And the reason why is for the person that's maybe a little more SC on the disc profile, they're going to go, oh, I love traction. We get these rocks and we do all this and it's great. I have a very clear process. Right? Exactly. And for the D, they're going to be like, I totally love the four disciplines of execution. Just bang, bang, bang, four things. Follow that process, build billion dollar businesses.

Speaker 3 (16:08):
And then measure what matters is for the techie that wants to like, Hey, I want to be a tech enabled coaching company, tech enabled business person, tech enabled brokerage. And they all three say the same exact thing. And what I would say to you is inside each one of those books, where you're going to discover is if you're the founder, you have to find the operator. Now, one calls it the integrator. Everybody calls it an operator. Most people would call it a COO, probably would call it a co-founder. You got to find that person first, because what you have is an idea, and ideas are shit. Everybody's got ideas. What you need is someone that can actually execute the idea, refine the idea, finesse the idea into here's our primary objective. Here's the KPIs we're going to measure against. Here's the team we need to build.

Speaker 3 (16:48):
Here's the expectation for profitability. Here's how much cash we're going to need to start the business. Here's how we're going to hire people and deal with all that stuff. You need that person. Because typically what founders do is they say, let's build a world-class microphone. You with me? Yeah. Or they're the founder that can build a world-class microphone, but doesn't know how to run a business. So you got to find the end of your yang. And if you're unwilling to do that in today's environment, I would say you become a really good listing agent. Hire three to four licensed assistants, all of 'em licensed, and you just get a driver and go on appointments. That's a team too. And you can make a fortune, especially if you have a really big personality and a great brand in your marketplace. You don't need to have 25 salespeople.

Speaker 3 (17:29):
Maybe you need two that do open houses for you have your sister do it, and your 29-year-old son. But the rest of you don't need the nonsense because today it is so competitive that if you don't have an operating system and all three of those books are an operating system, and they all are basically the same, there's not many of 'em out there. If you've got an operating system, then you can go start a team. Otherwise, what do most people do? Hey, you like blue jackets? I like blue jackets. We should start a team. You know what I mean? Let's take a photo of all of us that looking really good together. But no, no, a team, it's like the NFL, right? You need a quarterback, you need a center, you need some wide receivers. You need a slot receiver. You need a front line.

Speaker 3 (18:06):
And if you don't have those things in a running back, if you don't have those things, you don't have a team in real estate, same exact deal. You got to have the front line, my sales team, my marketers, you got to have your key experts, the wide receiver, the running back you to have a brilliant quarterback. Maybe they're ops, maybe they're the sales leader. You need all those things to orchestrate the kind of success that you want. Or you'll put a bunch of people together. You might do a bunch of deals, but you won't make any money burn through all the cash. You don't have that operator saying, we need 38% profit.

Speaker 2 (18:37):
Yeah. Yeah. There's a lot of people get caught in that past from that highly profitable small model you described and getting to where they think they want to go, and maybe they really do, but it's very complex. I especially appreciate your call to those books in particular to the solo agent who's operating inside a brokerage average to above average broker, let's say. But they're day to day trying to be too good at more things than they can be good at

Speaker 3 (19:03):
All. The brokerages are great. Do you know what I mean? I mean, anyone that owns a brokerage, my hat's off to you. It is not an easy business. It's a low margin business with high drama, right? So you got to give your I hug brokers all the time and say, thank you for doing what you're doing. So the question is, you got this high producing agent

Speaker 2 (19:24):
Or average agent even, they might be better off surrounding them to stay with the kind of football team metaphor. It takes a diversity of skills, talents, positions, playbook, et cetera.

Speaker 3 (19:35):
Should they join a team? Correct. Some will. Yeah.

Speaker 2 (19:40):
How would you break that down for them? I am thinking about maybe joining a team. How should I be thinking about that?

Speaker 3 (19:46):
I've been doing this for a long time. There's people that are joining teams today because they got into the business. They sold a lot of houses during the pandemic, and now they realize they have no operating system, they have no marketing, they have no consistency. Somebody was feeding them deals or all their friends were buying a house. And now they're like, wait a minute, nothing's going on here. I love Lucy. Remember I love Lucy at the chocolate factory. Ethel, right? The conveyor belt isn't bringing chocolates down anymore, and you got to go to work and go find the chocolates. And for a lot of people, that's hard to do. So if you join a team, it's great. Maybe they've got the conveyor belt and lots of chocolates and they need you to put the wrappers on and do all that stuff. That's called selling houses.

Speaker 3 (20:27):
Some people are looking at it now out of necessity. And my concern is, is it desperation? And if it's desperation, maybe just, maybe you need to gut check yourself and be honest and say, am I doing this? Because I'm unwilling to make the phone calls. I'm unwilling to figure all this stuff out. And by the way, it's okay. Just be honest with yourself. I knew when I started my business, I left in the morning and I came home with 11 employees, and my wife was like, I thought you were just going to have lunch with your mentor. And I said, well, I did. And then we leased 3000 square feet, and I hired Aaron McGovern and Steve and this. And she was like, what? Right. But see, I knew when I started that I needed all those people for me to be effective. I'm only good at a couple things.

Speaker 3 (21:09):
So if you can be honest with yourself and say, I'm really good at showing houses. I'm really good at negotiations. I'm really good at that first time buyer. I'm really good on a listing appointment. Then you fit well on a team, then it's just economics. But you got to be honest. Is it desperation? Is it necessity? Is it desire? Do you want more time off? There's a GI won't say her name. In fairness, her $20 million producer in Lala, California, she joined one of my clients' teams, $20 million producers. She joined, she said, can't hire an assistant. I hire 'em. They quit. I hire 'em. They quit. I hire 'em. They quit. This is stupid. You guys have had the same team forever. Can I join you guys? And basically just drag on your resources. That was a smart thing. She didn't go from 20 to 40.

Speaker 3 (21:52):
She does 20 million a year. She's totally comfortable made the economics, the finance side of it work, right? Teams making enough money to offset the cost. She brings a little more signs to the marketplace. It's now her name and their name. It's a match made in heaven, but it's not for everybody because most people, A, won't be honest with themselves. And B, they want all the glory. I don't know. I'm having dinner tomorrow night with Tim Grover. So I was at the Super Bowl when the Rams won beat, beat the Bengals, and he was up there. He's the trainer for Aaron Donald. So Aaron Donald ring me the Super Bowl guy. And I remember watching, because I was on the 14 rows down on the 50 yard line, I'm watching the play happen, and I loved it. That team wouldn't exist without every one of those players, without the guys to bring the balls out without the guys that wash the clothes. It is this orchestration that happens, and the question is, do you want to build that or do you want to be a part of it? And if you could be a part of it, it's pretty magical.

Speaker 2 (22:49):
Yeah. Yeah. I really appreciate that you went to the high performer and had a great example in your pocket on that one too. I'm sure you had more. This has been awesome. I appreciate you making time for this. Yeah, of course. Love what you're doing. Appreciate you sharing these perspectives. But before I let you go, fun question for you, and you only have to answer one of these two, what is your most frivolous purchase, or what is a cheapskate habit that you hold onto, even though you probably don't need to

Speaker 3 (23:14):
Define frivolous

Speaker 2 (23:20):
Generally, I guess I would say a little over the top. Well beyond need. The value prop isn't maybe quite there. You're like, I got it. I just did it.

Speaker 3 (23:31):
The ring I bought for my wife when I married her for the third time, she said, I can't even fit it in my pocket when I'm wearing jeans. And I was like, sorry. It was stupid. But I love her. And I was marrying her for the third time, and it was the only way I could figure out how to express without having my kids there, how much she means to me. That would be probably the answer. And then where am I really cheap? I don't know. I don't know. And it's not like I walk up and money falls out of me. But I learned a long time ago that my dad said to me, if you control your health and you control your environment and you control your money, you can do anything. So I'm always elevating my standard when it comes to money. Right?

Speaker 3 (24:20):
I'm reading Elon Musk, his biography right now, and his first wife, he said, how many kids do you want? She said, I'd like to have two. He said, I'd like to have four, maybe six. And she said, we would need a nanny. He said, well, then we'll get one. That's kind of my mindset. We will figure it out. We will create enough value for others. So if you're always raising your standards, then I dunno. I mean, Warren Buffet says, oh, I live in the same house. He also has many houses around the world and he flies around in a G 700. So don't think that just because you see him driving a truck, that is actually how he's living with me on this. I like the fact that he kept his old house, and I liked the fact that he kept the old truck, but he's also got a place in Laguna Beach in Emerald Bay that is not an old house in Ding ding, bill. So raise your standards would be my answer. Yeah.

Speaker 1 (25:06):
Awesome. Appreciate that so much.

Speaker 3 (25:08):
Yeah. Cool man. Thank you. I appreciate it. Thank you.

Speaker 1 (25:11):
Thanks for checking out this episode of Team Os. For email exclusive insights every week, sign up at real realestate team os.com.