JF1120: The History of BiggerPockets And Its Founder Josh Dorkin – Part 1
I really don’t think I need to say much here – you know who Josh Dorkin is, and you know about BiggerPockets – if you don’t, you should. Today we get to hear about how BiggerPockets has become what it is today. We’ll learn about customer complaints, new tools that have been released throughout the years, and if they were a success. Josh also tells us about himself, his past and current role with BiggerPockets. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Josh Dorkin Background:
– CEO & Founder: BiggerPockets.com, Entrepreneur
– BiggerPockets Publishing, LLC
– BiggerPockets boasts more than 825,000 members, produces the top-rated real estate podcast on iTunes, and last year raked in $7 million in revenue through advertising
– Bigger Pockets made the INC 500, came in at #400 in August 2017
– BiggerPockets added a publishing arm, which released Set For Life on April 23, 2017
– Based in Denver, Colorado
– Say hi to him at: www.biggerpockets.com
Made Possible Because of Our Best Ever Sponsors:
Fund That Flip provides short-term fix and flip loans to experienced investors. If you’re looking for a reliable funding partner, their online platform makes the entire process super easy, and they can get you funded in as few as 7 days.
They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit http://www.fundthatflip.com/bestever to download your free negotiating guide today.
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. With us today, the founder of Bigger Pockets – how are you doing, Josh Dorkin?
Josh Dorkin: What’s going on, man? You’re a crazy man… I don’t know how you do it every day.
Joe Fairless: I am a crazy man, that is for sure. That is really interesting, because I have video proof of you being a crazy man. I was on your Twitter handle, I was looking at different tweets you’ve made, and I have a question for you – are you ready for this?
Josh Dorkin: You scare me now… [laughter]
Joe Fairless: You tweeted it, baby… “What tastes better – a grasshopper, a mealworm or a cricket?”
Josh Dorkin: Oh… You know, I stuffed them all in my mouth at once, so I couldn’t tell you… [laughter] So what he is talking about – I went to the butterfly museum here in Denver (it’s between Denver and Boulder) and they basically have this thing, like “Hey, try out insects.” It’s super high in protein content, and the carbon impact of eating these insects is far lower than if you’re eating comparable mammals. So I’m with my kids, I’ve gotta be brave, I’ve gotta show them that I can do this (Superdad, right?) and they have these three things that you could eat, and I’m like “Alright, you know what? I’ll do it!”
The problem is this – they went and they seasoned all of these things. They put some powder on each of them, each with its own flavoring… All of the flavors of the powder were horrible. So if you were just eating these insects, it would have just been crunchy and fine, but the powder was disgusting.
Joe Fairless: Now, have you isolated that, where you do know the powder was actually the part that was horrible and not the actual insect itself?
Josh Dorkin: The insect was fine. Yeah, I had no problem eating the insect. The powder was just kind of gross.
Joe Fairless: 17th June 2017, Josh’s Twitter handle – go look at that and you shall see the video. It’s very impressive, you don’t flinch. You just eat it and you’re like, “Hm, okay. Next. What else have you got?”
Josh Dorkin: I’ve got this! I’ve got this!
Joe Fairless: Well, what we’re doing today is we’re gonna learn more about you, and perhaps some things that some Best Ever listeners, who I’d say 99.9% are all members of Bigger Pockets, and that 0.1%, shame on you! Go join. We’re gonna learn more about you and Bigger Pockets and your road to where you’re at now and where Bigger Pockets is.
Best Ever listeners, a slightly different format for this interview. We’re going to do more of a long form and we’re going to separate it out into two episodes. This will be part one.
Here’s what I’d like to start with – prior to our conversation, I asked some Best Ever listeners what questions they would have for you, and I think you’re gonna enjoy how we start out, because based on my conversations with you in person and just what I’ve read about you and interacted with you on Bigger Pockets, you take pride in helping Bigger Pockets members, and how it’s a community and we’re all in this together.
So here’s together – this is from Kendra B., and she asks “Is there one person that sticks out in your memory as having been helped by Bigger Pockets in all the work that you all have done?”
Josh Dorkin: The one person that sticks out, the instant answer to that is Brandon Turner. Those of you who are unfamiliar, Brandon Turner is co-host of The Bigger Pockets Podcast. He works for us, and initially, when I came to know Brandon years and years ago, he was a user on our platform; he was trying to find financial freedom or whatever it is that he was trying to find, and used the Bigger Pockets platform to get there.
He was the pure representation of who we were and what we strived for. He was this guy living in the Pacific North-West who had been kind of floundering around in his life – I think that might be an unfair characterization of Brandon, but regardless… You know Brandon — so he was trying to figure it out, like the rest of us. He came across Bigger Pocket and the idea of real estate, and used Bigger Pockets to help him build this passive portfolio of real estate.
Of course, living in the area that he lived in, he was at a point where he no longer needed a job. He had created that freedom for himself. He was writing for Bigger Pockets, and at that time I was in need of help. I needed to hire somebody to come and join me as my first employee, and we got to know each other and I brought him on.
Brandon really just is that pure representation of who we are, but there’s countless stories. Not a day goes by where we don’t hear from somebody who’s like “You guys are transforming my life. You guys are helping me out. You guys have helped me quit my job” or “Helped me retire” or “Helped me build income for my family”, or whatever it is. That’s why we do it. We’re here to help people succeed.
Joe Fairless: How many members are on the site now? Like 725,000?
Josh Dorkin: I think it’s like 830, somewhere around that.
Joe Fairless: It depends on what day, right? Every day it gets more and more. 830,000 members… I’m sure that with the positive feedback you get some gripes. How do you determine what to listen to and what to filter out that that’s just how things are when you get to a certain point and you reach a critical number of people, you’re just gonna get gripes?
Josh Dorkin: People who gripe – I have like three people. [laughter] People always wanna complain about something. You know, that’s really a good question. I would say staying true to yourself and knowing who you are and knowing what you’re doing and why you’re doing it, and making sure everyone on your team is aware of that. From time to time situations will arise where somebody has a gripe and you’re like “Oh, we never actually thought about this. Let’s think about it. Is this something we wanna be reactive to, or is this something we wanna deal with? Do we wanna change how we do certain things, change policies, whatever it is? Or is it a one-off situation?” It’s hard, man… I think the same goes with anything in business, whether it’s somebody flipping a house or buying rental property or running a Laundromat – there’s always gripes that come at you, and I think the way to best deal with it is really know who you are, really have your values spun out, and make sure that you’re staying true to yourself and what you stand for, and ultimately your customers.
No matter what, we cannot please everybody. Impossible. Whether it’s me, or Amazon, or Tesla, or any other brand, like Apple… The big guys. I’m not amongst those big guys. There’s no way you’re going to please everybody, so I think coming to acceptance on that and understanding that you can [unintelligible [00:08:01].00] to have a customer forward-looking business… Like Zappos, Tony Hsieh – they don’t think of themselves as a shoe business, they think of themselves as a customer service business. I think we’re not as outwardly stating of that, but I do believe that is core to who we are. We’re here to help people be successful, we wanna take care of people, we wanna do right by people, and that’s who we are.
Joe Fairless: How do you communicate that amongst the team so that is present with them on a daily basis as they’re interacting with Bigger Pockets members and building Bigger Pockets?
Josh Dorkin: I don’t need to, because everybody who communicates with our users knows that. If they don’t, and somebody interacts with somebody in a way that doesn’t feel right, let us know… But ultimately, that’s part of our training, that’s part of how we do things – making sure that those folks that interact and communicate, they know that we’re here for you guys; we’re here for our listeners, our users, and our job is to do our best to play an unbiased intermediary in a platform where people can come together, where people can share information and where folks can help each other. At the end of the day, I see us as this democratization platform — that’s a hard word to say…
Joe Fairless: That’s a tough one, yeah… I never get it right.
Josh Dorkin: But that’s kind of who we are, so I think that probably answers —
Joe Fairless: Yeah, and has there been a gripe that you can think of that has changed a policy or you all have changed maybe a product or a feature on the site as a result of it?
Josh Dorkin: Man, we get gripes every day, and then our team takes them, looks at them, evaluates them, decides if something needs to be altered, tweaked and modified and they do it. I don’t even know about all the tweaks and changes that happen. We empower the folks within the team to be able to do that.
Anytime we do anything, we piss people off. Remember when Facebook did that last redesign? No, we all forget it, but when it happened, everyone was like “Oh, screw Facebook! I’m done, I’m never gonna go back again. This is it!” We all went back. You’re used to something; you get used to how things are done, and when something changes, it’s off-putting, until you either decide that you like it or you really don’t like it. At that point, we can then look at it and say, “Oh, well is this something that is affecting more than just one person?” And we test stuff; we create test groups… We don’t ever just say “Oh, hey, we’re gonna make a change because this is what we think”, and we put it out there. We talk to users. We have years and years of collective wisdom, plus we talk to our users on a daily basis, and anytime we make radical changes we always bring folks in and kind of work through to make sure that we’re doing it in the best way possible.
Is there any one thing? Let’s see… We came up with a product that I thought was gonna be amazing, unbelievable, which was we had created a live chat so users can chat with each other, kind of like a Facebook chat or something like that. So if you’re logged in, you go to XYZ’s profile and it will tell if they’re online, and then you can just start chatting with them.
We launched it, I was pumped — this was like two years ago… And it was an abject failure. Complete and utter failure. People didn’t like it, didn’t use it… It might have been execution, it could have been one of a hundred different things, but total failure. After a couple months we ultimately killed it, but that was something that we were able to measure. We’re not just gonna say “Oh, there’s one person griping”, it’s “Nobody is actually using this. [laughter] The people that are using it are using it incorrectly… It is a failed product. Alright, we’ll try again with something else.”
Joe Fairless: And what is your best guess, if you had to pick why that didn’t work?
Josh Dorkin: I think because it was another platform. People already had their platform of choice for chat, whether it was Skype or AIM or Facebook, and just creating another one… It creates confusion. It’s just another thing you’ve gotta do, another place you’ve gotta go.
Look, I still stand by the product. I think it was a good decision to make that product, I think there was a ton of value in it; I used it when it was around and I found it very helpful… And not just as Josh CEO, but as user-to-user I thought it was fantastic. But you live, you learn.
Joe Fairless: Yeah. As Josh CEO, what are your main responsibilities that you focus on now?
Josh Dorkin: Me? Today, my main responsibilities are ensuring that my team leads all are on the same page, ensuring that we know where we’re going, we know what we’re working on, making sure that the people side of things is working really well, staying on top of our culture, making sure that people feel good, people feel valued, people have clarity in who we are and what we’re doing… I am definitively still the chief advocate of Bigger Pockets, the face, the brains, the beauty… No, just kidding. [laughter]
I’m the guy that — I talk to other companies… I’m not the only one, but I’m out there advocating on our behalf, I’m the one out there trying to create relationships. I look at all the options, too. As the owner of the company, you need to know other businesses in your industry, you need to think about things like “Hey, do we raise money, do we not raise money? If we’re gonna have an exit, how do we do that? How does all that work?”, because as the owner and CEO – I’m both; there’s actually two roles there, right? But sometimes they conflict. But I have the responsibility of knowing and understanding all these different things and factors that are out there, and sometimes I have to fight myself on “Hey, what’s best for the company? Is it the same as what’s best for Josh, owner of the company? How does that work out?” Thinking all that stuff through – it’s complicated.
I think that’s probably the gist of what I do. I love getting my hands dirty on product. I love working with our design guys and guiding my vision through them; I like working with our marketing people…
Joe Fairless: You mentioned the question of “Do we raise money, do we not raise money?” – have you raised money for Bigger Pockets?
Josh Dorkin: Never.
Joe Fairless: And why is that?
Josh Dorkin: When I started the company, it was a hobby site. I was just doing it for fun, and — well, I don’t know how much fun I was having, but it was a hobby site still. Eventually it became this lifestyle business, and in the first number of years I did think a lot about raising, not raising. It was the cool thing to do. “Hey, I’ve got a tech company. I should raise money”, and then “I have this valuation, and now I’m worth all this money” — you know, all that stuff that the tech press and everybody else kind of perpetrates. I’ve definitively perseverated, but at the end of the day I’ve always decided not to raise, because I never wanted to have over my shoulder, telling me “Hey, this is how this company needs to be run. Hey, Josh, you’d better get an ROI in the next three years, or you’re gonna be out of job and we’re gonna shut your company down.” For me, that would be a travesty.
This company is too important, not just to me, but to so many people, that I can’t possibly have somebody who doesn’t get it directing what we do and how we do it in order to just eek out some kind of return. So that’s been it — but look, there’s use in raising money, there’s value in raising money, based on strategic objectives. Do we wanna go and acquire a company? It might be helpful. Hey, do we need to drastically improve our headcount in order to create or modify some kind of product? That might be a reasonable use. But there’s other ways to do it, too – there’s loans, and things like that. But right now we’re good, and I’m not necessarily looking… Though, you know, if somebody comes in and says “Hey, I’m gonna give you some F U money to buy a piece of your company”, I might have to have a conversation with them for sure, but I’m not necessarily seeking out a capital raise right now for any particular product or objective.
Joe Fairless: You mentioned some of the aspects of your responsibilities that you focus on that you really love, like the product, working with the marketing people etc. What’s the least favorite part of what you’re responsible for?
Josh Dorkin: Talking to you. [laughter] I mean, this show is great… [laughter] Look, we’ve got 20-something people in our office. Once you start getting more than a handful of people, personalities come in and people drama kind of happens. It’s inevitable, no matter how good you are at hiring, no matter how hard you try…
Joe Fairless: No matter how many ping-pong tables you have.
Josh Dorkin: Yeah, we’ve got two.
Joe Fairless: I know.
Josh Dorkin: But that really is the one thing that drives me nuts. I’m kind of the old school like “Can’t we all get along? I may not think you’re a particularly good person, but I’ll work with you.”
Joe Fairless: That’s not your opening line when you attempt to resolve an issue… [laughs]
Josh Dorkin: Correct.
Joe Fairless: “You’re not a particularly good person, but hey, I’ll work with you on this.”
Josh Dorkin: That is me acting as somebody who may have a squabble with somebody else. That is not me as me. Look, I’m from New York; when I don’t like somebody, I tell them “Hey man, this isn’t working. I don’t like you.” I don’t have that at the company and I don’t see that at the company, because — I would hang out with everybody at the company if I weren’t their boss. Everybody here I like, and they’re all good people, but look, again, that’s irrelevant – you may have different mindsets, different mentality, and you may not get along super well with somebody, but be a pro. Work through it and figure it out. Most of the time that happens here; 99% of the time that happens here, but when the drama comes up, which is inevitable, I hate dealing with it.
Joe Fairless: Your first hire, Brandon, did well there, clearly… How do you help set your team up for success on subsequent hires? That’s a good question again. Wow, look at you.
I would say having a very clear idea of the kind of culture we’re trying to create, having a very clear idea on job objectives and roles and responsibilities, and making sure that we have team buy-in. One of the things that we do is we have a “family interview” where a potential hire — you’re gonna go through all the regular rigmarole, make sure that they’re skilled and capable and they can do the job… But are they somebody that the team as a whole can get along with? Are they somebody that shares the mindset that the family does?
If you’re an engineer, you’re gonna be sitting down with a customer service person, folks from all different areas of the company who may not directly even work with you, but the idea is that by doing that we can do clear objectives, we can get clarity on who this person is. And frankly, we also have a no A-hole rule, so it also really helps to vet out the A-holes that may be coming through, because four of us may not see it, but the fifth person may be like “You didn’t see that? That lady was a total A-hole/that guy was a total A-hole.” “Can you clarify that?” “Yeah, blah-blah-blah…” “Yeah, okay. You’re right. Good catch!”
Joe Fairless: Is there any direction given to the family interview for the people who are doing the interviewing?
Josh Dorkin: Yeah, our HR makes sure that they’re asking legal questions and doing it all in the way that they’re able to, so yes.
Joe Fairless: Got it, fair enough.
Josh Dorkin: We’re not asking “So how many kids do you have?”
Joe Fairless: Yeah, I wasn’t implying that, I was more along the lines of…
Josh Dorkin: Hey, Joe, are you Christian? Because we don’t hire Christians here. [laughter]
Joe Fairless: Is there was a particular format, or is it just a roundtable and then it’s just “Okay, here’s all this people and they just start asking you questions…”?
Josh Dorkin: I think it’s fairly loose.
Joe Fairless: Fair enough. Alright, so let’s talk about what we were touching on earlier, and that is Bigger Pockets as a business. What are your top three revenue streams?
Josh Dorkin: Sure, so our top streams are advertising, memberships, and our publishing business.
Joe Fairless: Okay. And what do you see the most potential for in the future of those three?
Josh Dorkin: Actually, the most potential is not one that has been named. I think connecting our users with service providers through lead-gen is definitively one of the biggest opportunities for us.
There’s so many people that are looking for X on the platform, and X is usually like “Hey, I need a great agent”, “I need a great lender”, “I need a property manager”, all these things, and I think servicing that is going to create a monster opportunity for us from a financial standpoint, and I think it’s also going to create a massive opportunity for our users to get their needs serviced, to help people find what they want, find what they’re looking for, and solving that. That’s one of the biggest opportunities for us going forward.
Yeah, business — look, as the site grows, all of our different media grow; you have the opportunity to grow that, but over time, when I started the company almost 13 years ago, our revenue per thousand eyeballs was five, six, seven times what it is today. That’s kind of where things have gone in online advertising, which is great, no problem… Which is why we’ve also created other means for driving revenue, otherwise we would have been out of business a long time ago.
Joe Fairless: In terms of your focus as a CEO on Bigger Pockets, what’s something that keeps you up at night? Either it excites you or it is a concern of yours?
Josh Dorkin: What keeps me up at night…? I would say the things that I really ponder are how do we touch more people? How do we tell folks who don’t already know about us – or not even us… How do we help tens of millions of people out there that don’t even realize that they have an opportunity to go forth and build wealth through something other than their 9 to 5. Because we do a really crappy job in this country in teaching people financial wellness; we don’t teach them financial wellness, they don’t learn that stuff in school… Maybe few and far between do, but we don’t teach that, so the average person might learn about banking, maybe they learn about a savings account; some of them don’t trust it and put their money under their pillow anyway.
Folks who have jobs that give them 401k’s may know that they have a 401k and know that their contributes to it and that they should put their money in the market, but they may not know what that really means, they may not understand “Okay, what does buying a stock actually mean? What does buying a mutual fund actually mean? What is an ETF?” And then all the way down to real estate. Most people look at real estate and they say “Well, that’s for rich people. Only rich people can buy real estate. Only really wealthy people have an opportunity to do that”, and we say that’s not true. We say “Well, how do we solve this?” Because I think it’s a real problem in our society.
I’ve just talked to so many people who are like “I don’t have a chance, I don’t have an opportunity. I can’t get out of whatever it is that I’m in. My life, my lifestyle, my place in society… I’m stuck.” Unfortunately, the second you have that mindset, you’re stuck, you’re done; you’re not getting out. So how do we change it, how do we alter that, and how can I, through Bigger Pockets, touch as many people as possible? And pass the message that it may not be real estate. Look, if we can use our voice in some way, shape or form to help somebody who thinks they’re stuck get unstuck, and they never go into real estate, then we succeeded. If it’s “I’m unhappy with my job and Bigger Pockets helped me realize I’m unhappy with my job so I’m gonna go find another one that just best suits who I am and what my truth is”, then I just did my job, and we’re solving in need.
That’s the stuff that I’m always just trying to crunch through – how do we do that, how do we impact…? And again, I think that problem is a lot bigger than Bigger Pockets. I think we’re here to help solve it, but we can’t solve it alone. I think there’s societal things that we need to do, or schools need to make change, or – as much as I hate to say it, our government needs to get involved; I think they should play a role. I think teaching financial wellness and teaching people to not rely on the system only creates a more productive society.
Joe Fairless: It kind of ties into what you were talking about just a second ago, the connecting users to service providers via lead generation… Perhaps not a service provider, but just connecting people from “they have a challenge” to “here’s your solution.”
Josh Dorkin: Yeah, I think that’s fair. The big issue I always have is there’s never one solution, and I think one of the reasons Bigger Pockets is successful is because we were never so bold as to say that we know there’s one answer for everybody, “This is what’s right for everybody”; a very anti-guru mentality that we have. Instead it’s “You, Joe, come on Bigger Pockets and you have a question or an issue or a concern”, and you get 10 people, 15 people, 20 people with 10, 15, 20 different ideas and what works, and then you have an opportunity to go through and say “What works best for me?” I think that’s why organizations like YPO, which I’m not a part of, but I contemplate joining all the time, are so successful. They’re organizations where people aren’t telling you what to do… Well, people do tell you what to do on Bigger Pockets, you just don’t have to listen to it. [laughter] But it’s “Hey, I’m gonna share my story, and through my story you can kind of extract and answer”, or maybe after hearing two or three stories you can extract what’s true for you.
I think the beauty of Bigger Pockets is you get altering opinions, and those opinions are there to guide you.
Joe Fairless: Whether it’s something you read on a post on Bigger Pockets, or whether it’s just something you’ve come across as an entrepreneur, what’s the worst advice that you’ve seen or have been given personally?
Josh Dorkin: The worst advice… “Trust me.” [laughter] I think the most dangerous or worst thing that I see is typically — I don’t think I see this, I just know that people do it… People not taking responsibility for doing their own homework, doing their own due diligence. That can be in anything, whether it’s “Hey, I’m gonna go buy a property from a turnkey company and I’m gonna trust their numbers” or “I’m gonna buy a rental property from an agent and I’m gonna trust the numbers from the seller”, or “Hey, I’m gonna partner with somebody, but I’m not gonna do background checks and I’m not gonna make sure that they are who they say they are.” I think that’s the one thing that I see over and over again which blows my mind… Even on Bigger Pockets – there’s people on Bigger Pockets that have been around for years and years, and have written maybe tens of thousands of posts, and they’re wicked smart, and I wanna trust the hell out of them, but if I were gonna get into bed with them, if I were gonna partner with them, I’m gonna go through every ounce of due diligence check that I would with anybody else that I didn’t know at all, and I think that’s the one thing that people do that drives me nuts.
Do your homework, do your due diligence… Look, at the end of the day there’s shitty people out there – sorry, I don’t know if I’m allowed to curse on your show (bleep me), but there’s people out there that take advantage of people in society, in the world, and unfortunately everywhere else, and so it is incumbent upon us to make sure we are protecting ourselves and our families and our nest eggs by being careful.
I think that’s not necessarily something that I see, but something that I know happens all the time, on or off the site, and I think it’s just so important that people do their homework.
Joe Fairless: On the due diligence note and doing your homework, a question that Dave M. asked is “What are the likes and dislikes for owning a business versus owning real estate, and which one do you enjoy most?”
Josh Dorkin: I think the dislikes are the same on both. The dislikes are the people – not that I dislike my people, but I dislike people drama. I’m a relatively low drama kind of guy, so people drama, I just don’t like it. Likes, I would say they’re very similar. You’re embarking on some endeavor to reach some kind of goal, and real estate it’s “Hey, I wanna buy some property with the means to build wealth in some way, shape or form.” In business it’s the same, at least for me… I always have the “How do I do better? How can I do a better job than I did before? How can I not make this mistake again? How can I improve my processes? How can I serve more people in a better way?” If it’s rental property, “How do I treat my tenants better?”, whatever it is.
For me, the likes are in the challenge of doing better. The dislikes are in the challenge of people who are difficult, or could be difficult, from time to time.
Joe Fairless: I have identified your own personal version of hell… Are you ready for it?
Josh Dorkin: Yeah-no [unintelligible [00:30:26].08] [laughter]
Joe Fairless: It is if you were trapped in a room with a big screen TV, playing Jerry Springer on loop.
Josh Dorkin: Yeah, that sounds pretty terrible. [laughter] People who are griping and griping and griping would pretty much be my version of hell, yeah.
Joe Fairless: [laughs] Alright. You and Brandon interview a bunch of people, and high-achieving real estate entrepreneurs, as well as people who are just getting started… So you benefit from getting a front seat in hearing about how people are achieving certain things, and what works/what doesn’t work… Where do you see the future of real estate investing industry going, or just real estate in general going? Is there anything that you see in the future that is coming to light?
Josh Dorkin: Yeah, there’s so many new companies trying new stuff… Man, I think it’d be nice for some of the process to be simplified. Let me think about this for a second here. At the end of the day, there’s two groups of people, right? There’s homeowners, and then there’s investors, and I think you have to group them separately, because their mindset is typically very different.
New investors I think are gonna think like a homeowner, experienced investors are gonna think like a business owner. From the homeowner perspective – look, you’re gonna buy a house, you’re gonna wanna walk that house, you’re gonna wanna walk through it, you’re gonna wanna feel it, you’re gonna wanna experience it and get a vibe for it. There’s all these prognostications and development of technology for “Hey, let me put on some VR goggles and walk around a property…” I don’t know, I’ve never worn VR goggles, so I cannot even imagine how that would be; well, I can imagine, but I just don’t know what it’s like, but I can’t imagine it giving you the same experience as walking through the property that you’re gonna buy. There’s a smell, right?
Joe Fairless: There is a smell.
Josh Dorkin: There’s a vibe, there’s an energy, there’s a feeling, inside and outside, that you’ll never in a million years get from VR. I think people buying houses, no matter what, are gonna have to always go — at least the vast majority, that’s the vibe that they want; they wanna feel it. So I don’t know that there’s any way to bypass that.
Now, for that group, “Hey, can we make financing easier? Can we make the paperwork easier? Can we make the process easier?” – that’s a definite yes. Why do I have to sign eight thousand sheets of paper? There’s ways that can all go.
From the investor perspective, I think just facilitating information flow, and I think the same goes for regular homeowners as well. There’s still just so much bad information out there. We rely on a seller’s agent to provide accurate information, which they may not be privy to or they may not necessarily wanna have full disclosure of, right? How can we centralize this stuff? I know very little about blockchain, but I think blockchain can be a very good technology for real estate information, because once that accurate data is in the chain, if somebody messes with it, everybody knows. So finding a way to ensure that accuracy and truthfulness is passed along…
I bought a house a couple years ago – my primary – and there had been water damage in the living room, and they had repaired that water damage. It was not disclosed at the sale, and the cause of the water damage was actually never fixed. So there was water damage on the floor, the floor was fixed, the cause was not repaired… I bought it, I didn’t notice it, and two, three months later my floor started warping and coming apart. Clearly, the homeowner knew, there was a high likelihood that the agent knew, but at the end of the day nobody disclosed it. So I end up with all this damage, and it’s a lot of money – this is on the order of probably 10k+, and that never in a million years should have happened.
The second that person went and fixed the floor, that should have been disclosed or added to some kind of thing… Like a CARFAX, right? Something that would pass along, so I know what the deal is. “Hey, these homeowners did X, Y and Z. These homeowners did all these modifications and changes, and it’s part of the permanent record.” I think stuff like that would be really valuable and really helpful.
At the end of the day, there’s always gonna be a demand for real estate, there’s always gonna be a demand and a need for people to own property. Hey, crowdfunding came along and suddenly crowdfunding is gonna dominate and take over everything in real estate – meh… It’s another way to raise money, it’s another way to finance a property, it’s another way for people with money to get a return, but people are still buying and selling and getting loans. The basics are always gonna be the same. I can’t imagine the basics ever changing; I just think we’ll come up with creative ways for making different parts of the process easier and better and more accurate.
Joe Fairless: I agree. I think that when you talk to institutional guys and gals, who have a more macro level than I do, and who look at it from a much more institutionalized reference point, real estate investing – they say that real estate investing is broken, it’s a fractured industry, and there’s not a lot that connects the dots among all the properties, unlike other industries that they invest in, and I think that what you’re talking about, the CARFAX for properties, that is some sort of national or statewide database, is needed and would certainly be helpful. I do see that coming; it’s just inevitable with the amount of technology and smart people that are in the world. So yes, I do agree.
Josh asks “What are the 3-5 most important things in your experience to growing and scaling a company?”
Josh Dorkin: The most important things to growing and scaling a company… One, having a good idea that’s scalable – start there. So having an idea, having some kind of plan, whether or not it’s written… I don’t think you need necessarily a written plan from zero (I didn’t). So one, an idea, two – a plan. Three, your business has to solve some kind of need for the customer that somebody else is not serving. I say that out loud and I think about McDonald’s versus Burger King. Burger King is solving a need, McDonald’s is solving the same need, but now it’s flavor choices, right? So do you like A or B better? But having a USD (unique selling proposition), something that is unique or that you believe to be unique about what it is that you’re doing – you’re building, you’re offering service, products, you name it.
Three – being passionate, or having a team of people that are absolutely passionate about that idea. It’s pretty rare to see successful companies where — companies get to a point of success where the founders or creators or people running the show that don’t have some kind of passion for it, it’s too hard; it’s too much work, it’s too difficult to struggle through that without having that passion. Having a dedication to people and to your own people… You can’t build a scaling company without taking care of people, and I’m saying that and I can think of examples of companies where they have a really crappy culture and I’m like “Hm, maybe not…”, but at the end of the day I think what goes around, comes around.
I think those are the keys, and especially in 2017 when we’re recording this, I think something that we didn’t do in the past – and by “we” I mean businesses in general – is becoming very data-oriented… Metrics and data and understanding your business from a data perspective. I think you often see small businesses where they don’t get it struggling a lot.
Knowing your numbers — let’s take real estate investors. If you’re a real estate investor and you market by mail, if you don’t know your send and open rates and your cost per send and your funnels, you’re just throwing money out the window. You don’t know what you’re doing, you have no way to measure whether or not what you’re doing is successful or not.
A pizza restaurant – what’s our cost per ingredient? Can we drop that down? And measuring our volume per day and being able to predict… Most restaurants fail because they can’t buy correctly, they can’t manage their costs and all the waste. All of that is knowing and understanding the numbers. I think that’s probably one of the biggest things.
Joe Fairless: Hey, Josh, thank you for being on the show, from talking about the overall approach that you take to business and how to build a company, the process or the things that we need to pay attention to when we build a company – have the idea, have the plan, make sure we’re solving something with a unique selling proposition… Be passionate, have dedication to our people, and know our business from a data standpoint – that right there is the blueprint for creating not only a real estate investing company, but just a company in general. Also, you’re speaking to a Bigger Pockets member, and I am now going to start using the member notes section, so Best Ever listeners, go check out the members notes section; it sounds like a really cool feature.
From an overall entrepreneurship and mindset standpoint, I noticed one thing that you honed in on when you were talking about the overall vision, and it’s not saying “I can’t do something” or “I don’t have access”, it’s HOW do we do something, and really coming at it from an abundance mentality and a solutions-oriented mentality, which is what a true entrepreneur would do.
Then the family-style interview. Culture is incredibly important it’s obvious to you, and how much emphasis you put in that, and don’t bring no drama.
Thanks for being on the show, Josh. I hope you have a best ever day. I enjoyed it, we’ll talk to you soon.
Josh Dorkin: Thanks, Joe. Take care.