JF2416: How to Make the Inc 5000 | Syndication School with Theo Hicks
Theo is on the podcast to discuss what it takes to become one of the nation’s top companies. Founding a company without any prior experience is a challenging concept to fathom with no one to turn into when unforeseen situations occur. With a majority of companies being founded at a young age, the Founder Syndrome is something to be expected when scaling is at stake— coming from an abrupt success with little to no foundation. From the presentation made by the Co-Founder and CEO of Spartan Investment Group, who experienced 1,479% growth in 2020, any company with the grand ambition to scale should know the three tips to be at the top-most echelon.
Define your culture, develop your plan, and create your team. How can you effectively utilize these points to navigate your company to success? In this episode, Theo dissects and dives deeper into these three vital points to achieve what you have always envisioned.
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Theo Hicks: Hello Best Ever listeners and welcome to another episode of the Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I’m your host, Theo Hicks. In this episode, we are going to talk about what it takes to become one of the nation’s top companies; I’m going to continue breaking down some of my favorite presentations from the 2020 Best Ever Conference. This presentation was done by Scott Lewis, who is the co-founder and CEO of Spartan Investment Group. They syndicate self-storage deals, and their company was named one of the fastest-growing private companies in America on the Inc 5000 (or 500) list. Their company experienced 1,479% growth in 2020, which was 308th out of all companies, and then 8th for real estate. In his presentation, he kind of broke down three tips for becoming a top company, for becoming a fast-growing company, and making the Inc 5000 list. Ultimately, all of these points surround setting up your company for success and turning yourself into more of a corporation, a very professional, serious company.
Scott says this, he starts with his point number one, which is defining your culture. If you want to become one of the nation’s top companies, you need to define your culture. What does this mean exactly? Well, Scott broke the culture definition down into three different parts. Part one is going to be your why, part two is going to be your vision, and part three is going to be your values.
Your culture is your why, your vision, and your values. Let’s break that down even more. So your why – everyone listening to this knows the importance of a why. We’re not going to focus on this one too much. Your why is why you do what you do, why you go in to work each day. So pretty simple. For all of these three parts of the culture, if you haven’t thought of this already, which you probably have, but the exercise is to actually write down the answers to these questions. So why do you do what you do? Why do you invest in real estate? Why do you want to become a multifamily syndicator? Why are you a multifamily syndicator? What gets you up in the morning? Why do you get up each morning and grind to create a syndication company? Based off of your responses to this question, you’ll want to formulate a one or two-sentence mission statement or why statement. It’s not a paragraph, it’s just a sentence or two.
For all of these parts of the culture, I’ll use Spartan Investment Group as an example, because they made the Inc 5000 list, plus if you go to their website, you’ll see their why, their vision, their values. It’s kinda scattered everywhere, so it’s very easily accessible and you can use this as a guide to creating your own mission statement.
Their mission statement is “To improve lives through real estate.” That is their why, that is why they raise money for self-storage. With this company mission statement, it gets you clear on why you’re doing what you’re doing, and this is the key, it’s an inspiration for you and for your team to show up every single day. Because you’re not going to make the Inc 5000 and you’re not going to become one of the fastest-growing real estate companies in the country by yourself; you need to have a team that is inspired.
I was actually writing a blog post yesterday about this a little bit, and I might get into this later in this blog post. That was based off of Joe Fairless’s Best Ever Conference presentation, which we’ll talk about in the future at some point on this show… But the mission here, the reason why you want to have a strong mission that motivates your team, is because what motivates you is going to be different than what motivates your team. And it’s actually your company, not their company. So it’s figuring out how can you get your team members as inspired and as motivated as you, even though the compensation that you receive is tied to something different than the compensation that they receive. One way to accomplish that is through a strong mission statement.
The next part of your culture is your vision. Your vision is what you see… So this is where you see yourself going in the future, or at least where you want to see yourself in the future. This is based off of really what success looks like to you. This is more than just a quantitative, “I want X dollars in real estate.” Your vision is more of a qualitative thing. It’s not really going to include numbers; that comes a little bit later. This is just high-level where do you want to go? What does success look like to you?
Back to Spartan Investment Group, the vision that they have listed on their website is “To build a company where a relentless drive fuels our growth and improves the lives of our team and our investors. To do this, our focus is to provide opportunities for our team to grow and achieve their dreams, both personally and professionally. For our investors, we provide only investment opportunities that have been thoroughly scrutinized by our processes. Day in, day out, we work with determination to persevere through every challenge in achieving our goals.”
Theo Hicks: I really like how they broke it down to the vision for Spartan, but also for their investors. Because again, where the investors see themselves in the future and what success looks like to them is a little bit different than what success looks like to you, since they’re passive investors and you’re the active investor. Again, what does success look like to you? Where do you see yourself in the future? Write down your answers formulate, about a paragraph, for your vision, so a little bit longer than your mission.
The third part of your culture are your values. After you have your mission statement and after you have your vision, your values are going to be the behaviors that you need to see in your organization, so out of you and your team members, in order to stick to that mission statement and to realize that vision.
For example, Spartan Investment Group’s values are a lot longer than this, but they summarize that with the word GRITT. Their values are growth, respect, integrity, tenacity, and transparency. In order to achieve their mission to improve lives through real estate, in order to realize that vision, they need to have the values of growth, respect, integrity, tenacity, and transparency. Once you have all of these defined, this is really going to be the focus of the entire company. Everything the company does is going to be based off of the mission, the vision, the values. It’s a very clearly defined mission, vision, and values.
To wrap all of this together, once your culture is defined, you need to make sure that this is not just something you’ve written down, but are actually living out, or what Scott calls the say/do gap. You say that your mission is to improve life through real estate, you say that your vision is x, y, z, you say that your values are growth, respect, integrity, tenacity, transparency, but are you actually doing that in reality?
The reason why you obviously need to do that is because if you don’t, your culture isn’t believable. If you don’t live out the values of your company, you’re not going to accomplish your mission, you’re not going to accomplish your vision, because no one’s going to invest with you and no one’s going to want to work for your company. So you need to define your culture and then you need to actually live out your culture and avoid that say/do gap. All of that is one of the three things you need to do in order to create a company that can become one of the fastest-growing private companies in America, and that’s defining your culture.
Step three is developing your plan. You’ve got your qualitative vision, mission statement, and values to guide you as kind of your guiding star, but then your plan is how you actually get there. These are your quantitative actual numerical goals. Once you create these goals, you need to create a strategic plan on how to actually accomplish these goals. When you’re setting your goals and you’re developing your plan, Scott breaks it down pretty well. He says that he recommends spending about 90 days in education mode. You set your goal for yourself, and you need to spend about three months figuring out the best way, the best technology, software, people, strategies, tactics, to actually accomplish that goal.
Once you know what’s out there and what you can use to get there, you want to spend the next three months actually developing the plan. So based off of your experience, your education, go out there and actually make the plan, find the people, find the technology, find the strategies, layout exactly what you’re going to do to get to that goal, and then you go out there and take action.
This is what the best companies do. They don’t just go straight into development mode and then take action, they don’t just educate themselves and then just go out and start taking action, and they don’t just go out there and set a goal and start taking action. They educate themselves first on what they need to do. They actually set a written plan for what they need to do, and then they go out there and follow that written plan.
Even more specifically, when you’re developing that strategic plan during that development stage, Scott recommends setting three overall goals to be accomplished over a three-year period. So every three years you reset your goals. For each of these goals, you have three to five objectives for those goals. Then for each of those three to five objectives, you want to create a list of at least three key results. Think of it as a pyramid – you’ve got one goal at the top, below that goal you’ve got three to five objectives, and below each of those objectives, you’ve got three or more key results to measure those objectives.
For example, one of the Spartan Investment Groups’ three-year goals is to monetize $250 million of commercial real estate with an average margin of 30%, and develop $50,000 of monthly revenue from advisory services. See, very specific – he’s got numbers in there, it’s got days and it’s measurable.
One of the five or so objectives they have for this goal was to build an acquisitions infrastructure capable of nationwide marketing and monetizing 100% of opportunities. So how is the success of this objective measured? They have five key results for this, and one of them, for example, was to create a seamless wholesaling process that drives contracts to package in less than three weeks. Then for each of the objectives that they had, there was a projected completion date, as well as a leader that was assigned to that objective.
Overall, when you’re developing a plan, you’ve got your 90 days of education mode, and then you draft your development mode where you’re creating our strategic plan for the, say, three years. You create your three goals for that three years, your objectives for that goals, and then key results to measure those objectives. For each of the objectives, you have a predicted time and completion date, as well as a person who is responsible to achieve that objective.
If you go to the Spartan Invest website, you can find their two-year plan. It is a very long and very detailed PDF. Maybe you’re saying “Well, how to take 90 days to come up with a strategic plan?” Well, if you see their PDF and the level of detail, then you’ll understand. I just give you one example of one objective that they have of one of your goals. Multiply that across three of those, and you understand how they became one of the fastest-growing companies in the nation.
The third tip he gives about becoming the fastest-growing company in the nation is in regards with assembling the team. How to create your team. Before you even go out there and create a team, you need to understand what you’re really good at and what you’re really bad at.
None of this is really new, we’ve talked about it on the show in the past. But kind of just reiterating that hey, this is a company that grew by over 1400%, made the Inc 5000 list, and they’re doing these things. This is one of the top pieces of advice they give. Sure, it’s simple, but in practice, obviously, not everyone is doing this, or everyone would be growing by 1400% every year.
So before you go out there and create your team or find your partner, you need to understand your strengths and your weaknesses. Now, this is something unique. Obviously, you can take your personality tests and you talk to your friends and your family, but Scott’s unique twist is to work with your spouse to figure out what your strengths and weaknesses are. Because they most likely know you as much or if not more than you know yourself, but they’re going to be more objective than you are. I’ve already said during a presentation, I was like, “Oh, I could see how this could spark an argument.” So make sure you don’t get defensive when you ask them, but this is a great way to figure out what you aren’t good at.
Once you figure out your weaknesses and what you aren’t good at, then you know who you need to hire, who you need to partner with, and then who you need to bring on to your team. Now, you don’t want to just hire people who are good at what you’re bad at. That’s only one portion of it, and maybe even the smaller portion of it. The bigger portion of it is that they align with your values. So going all the way back to point number one, which is defining your culture – they need to be a good fit for your culture.
You can teach people certain skills, certain competencies, but you really can’t teach people character. You can’t change someone’s values by hiring them and bringing them into your company. Even if you could, would you really want to have to teach someone to –going back to Spartan’s values– focus on growth, respect, integrity, tenacity, and transparency? Probably not. It’d be easier to find someone who already has those, and then if need some extra training, that’s totally fine. So character over competency when you’re hiring team members, but both are obviously important.
Assuming that they align with your values, and they have those complementary competencies, the third thing you want to look at is their experience and their track record. This is also kind of unique. I hadn’t heard someone say it quite like this before, but when you’re bringing someone on, you want to evaluate their track record and make sure that they were successful because they have skills and not because they were lucky. Not because they just happened to get into real estate at a time when any deal you bought, as long as you held on to it, was good, or whatever; insert your example of skill versus luck.
Those are the top three things that Scott Lewis of Spartan Investment Group –a company that grew for over 1400% in 2020 and made the Inc 5000 list– said is the reason why his company was able to accomplish all the things that I just said.
In summary, the three points were… Ultimately it all comes down to your team. But more specifically, the three points were to define that culture, which involves the mission statement, the vision, the values. Then developing your plan, so creating those goals based off of your mission, vision, and values. For each of those goals, having a strategic plan on how to achieve those goals, which includes objectives and then further objective key results.
Then, once you have the foundation set with the culture and with a plan, then you can assemble your team. Again, you want to focus on people who align with your values and have complementary skills, not complimentary luck.
Those are the three things. I really recommend going to learn more about this stuff. Go to the Spartan Investment Groups website because, really, everything that I talked about today they have on the website; they have their culture, their plans… I guess not really their team, but the first two points. Especially that number two, the developing your plan. Their strategic plan is very, very detailed, and I therefore recommend checking that out, Spartan Investment Group.
That concludes this episode on the top three ways to become one of the nation’s top companies. Thanks for tuning in. As always, Best Ever listeners, have a Best Ever day. Make sure to check out our other Syndication School episodes at syndicationschool.com, and we’ll talk to you tomorrow.
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