Tuesday, May 07, 2019

Meeting Mickey


We just came back from a trip to the magic kingdom, celebrating Elinor's 4th birthday (Samson is 2). It was a lot of driving, but worth it. We spent most of our time meeting characters and my mom and sister were able to join, which was great. Here are some of my favorite pictures.

We met a lot of princesses.






Plus a bunch of other favorite characters.







Plus some dudes for Samson.



Plus a few rides and other fun things.







I would say 2 years old is the minimum age and 4-7 is perfect to introduce your kids to Disneyland. Two days was also plenty of time because they were worn out by the time we left. We'll be back in a few years and I'm excited for when they're a little taller and can go on some of the bigger rides. Fun times!

Monday, April 22, 2019

Practicing Extreme Ownership

Photo by Markus Spiske on Unsplash
It's amazing to me how many things are simple to understand, yet incredibly difficult to practice. Leadership principles fall into this camp. I recently read "Extreme Ownership" by Jocko Willink and Leif Babin and there are a couple of things I like about the book.
  1. I got to read about some crazy situations in the war on terror. I'm thankful that none of my work issues are life and death.
  2. Each chapter covers a principle. It starts with a story from Iraq, then gives the principle, then shows an application to business.
  3. Each principle applies to each business, and probably each family, no matter where you are in the organization.
There are 12 principles. Here's a summary of each one. If you lead a group, it's definitely worth reading.

1 Extreme Ownership
"On any team, in any organization, all responsibility for success and failure rests with the leader. The leader must own everything in his or her world. There is no one else to blame. The leader must acknowledge mistakes and admit failures, take ownership of them, and develop a plan to win. (p. 30)"

This is a mindset. When something doesn't go as planned, look to yourself first. Especially since you are the only one you can change.


2 No Bad Teams, Only Bad Leaders
"[W]hen it comes to standards, as a leader, it’s not what you preach, it’s what you tolerate. When setting expectations, no matter what has been said or written, if substandard performance is accepted and no one is held accountable—if there are no consequences—that poor performance becomes the new standard. Therefore, leaders must enforce standards. (p. 54)"

The story in this chapter is awesome - it talks about Seal training and boat races. So intense! What's really cool is if you hold people to a standard they start to self-police and it raises the bar for everyone.


3 Believe
"In order to convince and inspire others to follow and accomplish a mission, a leader must be a true believer in the mission. (p. 76)"

"Far more important than training or equipment, a resolute belief in the mission is critical for any team or organization to win and achieve big results. (p. 77)"

I would add that this isn't a blind belief. It needs to be well-founded and explained.


4 Check the Ego
"When personal agendas become more important than the team and the overarching mission's success, performance suffers and failure ensues. (p. 100)"

Also, it's OK if someone else comes up with a better idea. Give them credit and go with it. Counter-intuitively, you gain more respect by being willing to admit there are people smarter than you.


5 Cover and Move
"Cover and Move means teamwork. All elements within the greater team are crucial and must work together to accomplish the mission, mutually supporting one another for that singular purpose. Departments and groups within the team must break down silos, depend on each other and understand who depends on them. (pp. 121-122)"

In battle, this is when you give cover fire while another person moves. One of the ways to make this work is to talk about how you'll be supported and get/make commitments ahead of time.


6 Simple
"Simplifying as much as possible is crucial to success. When plans and orders are too complicated, people may not understand them. And when things go wrong, and they inevitably do go wrong, complexity compounds issues that can spiral out of control into a total disaster. Plans and orders must be communicated in a manner that is simple, clear, and concise... If your team doesn’t get it, you have not kept things simple and you have failed. You must brief to ensure the lowest common denominator on the team understands. (p. 140)"

This is one I struggle with. My issue is my plans tend to be complex and I don't do a great job of documenting all of it. As a result, it looks "simple" on paper, but in reality, it's complicated. To make matters worse, I don't do a great job of limiting the scope of the work down. This is my focus area.


7 Prioritize and Execute
"[A] leader must remain calm and make the best decisions possible... We verbalize this principle with this direction: "Relax, look around, make a call." Even the most competent of leaders can be overwhelmed if they try to tackle multiple problems or a number of tasks simultaneously. The team will likely fail at each of those tasks. Instead, leaders must determine the highest priority task and execute. (p. 161)"

This reminds me a fantastic book called "The ONE Thing" by Gary Keller where you ask yourself: What's the ONE Thing I can do such that by doing it everything else will be easier or unnecessary?

This takes it a step further and talks about it from a leader's perspective, where you then have to impart The One Thing to your team. Here's the exact breakdown of the process:
  • "evaluate the highest priority problem.
  • lay out in simple, clear, and concise terms the highest priority effort for your team.
  • develop and determine a solution, seek input from key leaders and from the team where possible.
  • direct the execution of that solution, focusing all efforts and resources toward this priority task.
  • move on to the next highest priority problem. Repeat.
  • when priorities shift within the team, pass situational awareness both up and down the chain.
  • don’t let the focus on one priority cause target fixation. Maintain the ability to see other problems developing and rapidly shift as needed. (pp. 162-163)"


8 Decentralized Command
"Human beings are generally not capable of managing more than six to ten people, particularly when things go sideways and inevitable contingencies arise... Teams must be broken down into manageable elements of four to five operators, with a clearly designated leader. Those leaders must understand the overall mission, and the ultimate goal of that mission—the Commander’s Intent. (p. 183)"

And,

"They must have implicit trust that their senior leaders will back their decisions. Without this trust, junior leaders cannot confidently execute, which means they cannot exercise effective Decentralized Command. (p. 184)"

A tactical way of handling this comes from Claire Lew of Signal V. Noise where she encourages managers to STOP solving problems. Instead, she suggests starting with 16 questions to encourage them to solve the problem on their own. One example (#2 on the list) is, "What are the options, potential solutions, and courses of action you’re considering?" The whole article is worth reading.

By empowering the team to solve the problems for themselves, you can reliably break teams into manageable elements and trust that they can solve their own problems.


9 Plan
"Leaders must identify clear directives for the team... [T]he mission must be carefully refined and simplified so that it is explicitly clear and specifically focused to achieve the greater strategic vision for which that mission is a part. (p. 204)"

That goes back to keeping things simple. But that's not just the actions, the why behind the actions needs to simple and understood.

"The frontline troops tasked with executing the mission must understand the deeper purpose behind the mission. While a simple statement, the Commander’s Intent is actually the most important part of the brief. (p. 204)"

"Following a successful brief, all members participating in an operation will understand the strategic mission, the Commander’s Intent, the specific mission of the team, and their individual roles within that mission. They will understand contingencies—likely challenges that might arise and how to respond. The test for a successful brief is simple: Do the team and the supporting elements understand it? (p. 205)"

One of the keys here is asking them to repeat back, in their own words, what needs to be done. I'm good at doing that myself to test my own understanding, but I need to get better at asking others to summarize plans back to me.

I also like the idea of making the plan, and then combined with Decentralized Command, stepping away from all the details. This allows you to come in later with the big picture and seem like a genius because you can see the forest from the trees. I've seen this at my company and it's amazing.


10 Leading Up and Down the Chain of Command
"[L]eading down the chain of command. It requires regularly stepping out of the office and personally engaging in face-to-face conversations with direct reports and observing the frontline troops in action to understand their particular challenges and read them into the Commander’s Intent. (p. 230)"

Bill and Dave of HP made this type of management style famous int he 1970s. There tends to be a trend towards attending more and more meetings and reviews, which doesn't leave time for walking around, but it's critically important.

Going the other direction:

"If your boss isn’t making a decision in a timely manner or providing necessary support for you and your team, don’t blame the boss. First, blame yourself. Examine what you can do to better convey the critical information for decisions to be made and support allocated. (p. 237)"

Another compelling idea from the book is realizing your boss is NOT out to get you. They want you, and the group to succeed. So if they don't seem to be headed in the same direction as you, it's not because they're trying to make your life hard for the fun of it. Instead, they're simply not able to see your point of view or have other considerations. Instead of getting frustrated, talk to them as someone who's on your side.


11 Decisiveness and Uncertainty
"There is no 100 percent right solution. The picture is never complete. Leaders must be comfortable with this and be able to make decisions promptly, then be ready to adjust those decisions quickly based on evolving situations and new information. (p. 254)"

If you chose to wait, you'll find you're playing defense more often than not because decisions will get made for you.


12 Discipline Equals Freedom
"Every leader must walk a fine line. That’s what makes leadership so challenging. Just as discipline and freedom are opposing forces that must be balanced, leadership requires finding the equilibrium in the dichotomy of many seemingly contradictory qualities, between one extreme and another. The simple recognition of this is one of the most powerful tools a leader has. (p. 274)"

This chapter really is the beginning of another book: "The Dichotomy of Leadership" that talks about finding that balance between contradictory qualities.

Final Thoughts

As you can tell, there are a lot of nuggets to take away from the book. And it comes back to deciding to take ownership of your actions and the outcomes. Like my pre-school teacher taught me: You can't change others, but you can change yourself.

If you're in a leadership position, or a parent, this book has a lot of lessons worth taking to heart.


Monday, April 08, 2019

“The deal of a lifetime comes once a week”

Photo by Markus Spiske on Unsplash
This is my all-time favorite quote: "The deal of a lifetime comes once a week." Dolf de Roos was explicitly talking about real estate, but I think it spans all of life.

I read his book, "Real Estate Riches" in high school and this quote has stayed with me. The idea is simple: There are always fantastic opportunities for us to seize upon. So even if you miss one today, there will likely be another one later... Perhaps even next week.

It's like catnip to eternal optimists like myself, and the antidote to people with the FOMOs.

Of course, it doesn't mean you can procrastinate and never pull the trigger because "there will be another one next week," but it does mean you don't need to try and force something to happen for fear of never getting another chance.

So when you find an awesome real estate deal you can't fund? It's OK because there will be another one. This has happened to me. I purchased a fantastic property - a quality deal I never thought I would get again. A little while later another property came my way that was just an interesting. However, I wasn't able to close the deal. Then, the next time I went looking for a property, I found another one with similar returns to the first one.

Part of the reason this works in real estate (and sales in general) is that everyone tends to have a large "life event" every six months. Some examples:

  • A new job
  • A new home, or substantial change to the existing home
  • Kids changing schools and/or schedules
  • A change in health (good or bad)
  • An increase or decrease in savings
  • You learn a new skill or make a new connection

The point is that life is continually changing, and a "no" six months ago might become a "yes" today because of some change in their life. So a deal of a lifetime that didn't exist last week could suddenly exist this week.

So take heart! There's always a fantastic opportunity for you to take advantage of, even if you recently saw someone else take advantage of an opportunity last week.





Friday, March 29, 2019

Thoughts on Apple Card


On Monday Apple announced Apple Card. It's a physical credit card tied to Apple Pay/Cash. Here are the features:
  • Pretty receipts that provide information, such as the location, about your purchase. They'll also categorize the type of spending for you.
  • You get 3% cash back on Apple purchases. 2% back on purchases made using Apple Pay. 1% on purchases made using the physical card.
  • You get the cash back to your Apple Cash account each day.
  • No fees. No annual, cash‑advance, over-the-limit, or late fees.
  • Interest rates that are comparable to the lowest in the industry.
  • It shows how much interest you pay if you do the minimum, pay off the balance, and in between.
  • The card itself is made of titanium and is a clean white. Doesn't show a card number, just your name at the Apple Logo. The number is stored on your iPhone in case you need to look it up.
  • It uses the same security as Apple Pay with dynamic security codes for each purchase and authentication via Face/Touch ID.
  • Customer Service happens via iMessage.
  • Goldman Sachs is the issuing bank of the card.
Wow! That seems like a lot.

The Good

From what I can gather, each of those individual features is available, in parts, from other services. Want pretty spending reports with categories? Mint has you covered. What cash back? CapitalOne is one of hundred examples, also with no fees. Want a titanium card? Mastercard offers one, and I bet there's more.

For the record, I'm not a credit rewards points hacker. I don't spend hours on nerdwallet trying to optimize my points so my family can fly for free. Maybe once my kids are old enough to appreciate a trip I'll change my mind... Once I see the price of four seats! For now, I have a "regular" credit card that I pay off each month. In this regard, I consider myself average.

To me, the compelling case for the card is all the features coming together. This is especially true if security is important to you. Again, no feature alone is enough to make me ditch my current go-to card, but putting them all together starts to make the case.

I do wonder if the card will eventually bend to the shape of my body since 99% of the time I'll be sitting on it.

The Perception Problem

When I read reviews, most of them are "meh."

This confused me for a while. Sure, there's no killer feature, and it's a non-starter for credit hackers/optimizers, but for the average person, it's fine. Why all the hate?

I think it's because Apple continues to use over-the-top superlatives to describe their products: "The most significant change to the credit card experience in 50 years." was Tim Cook's final statement about Apple Card.

That's quite the statement. It's probably true, but they didn't show me any distinctive feature that proves it.

Post Jobs era, Apple chooses to focus on checking all the required boxes instead of figuring out, and focusing on, what could indeed set it apart. For example, when iPhone launched there wasn't copy and paste. BUT, when you scrolled there was a rubber band bounce effect that made it seem like the content on the screen had "weight," which matched your feeling of friction on the phone. It felt different and significant even if technically it was a UI trick that didn't depend on the touch screen.

Apple Card includes the equivalent of copy and paste but doesn't have any fun scrolling effects, so it feels boring despite actually being more functional and complete out the gate.

Hence the scoffing at "the most significant change to the credit card experience in 50 years."

---

BTW, Apple Watch appears to struggle from the same perception issue. It's a great watch! But they hyped it up so much, it couldn't live up to those expectations, especially when the 3rd app thing didn't really work out. Here's an idea: Scrap 3rd party apps and make them complications only. Then open up an API to create and sell watch faces via an app store with all the same reviews as the current App Store. It seems so obvious. What am I missing?

---

Back to Apple Card.

One option to solve the perception problem is to under promise and over deliver, but underpromising isn't in Apple's DNA.

The other option is to keep iterating on the product until you find that "significant" feature. Here are two ideas, for free.

Show Me Colors

Just one color? Why not 6 like the iPhone XR? White, black (or space gray for you Pro users out there), blue, yellow, coral, and (PRODUCT)RED. Like the iPhone and Apple Watch, the card is personal and letting me make a color choice makes it feel personal. I suspect this will be a future option if the card sells well.

Psychology is weird. People want to feel in control; that they're in charge and making the decision. So when you offer one product option, only one choice, people take control by deciding if they're going to get it or not. However, and this is where it's weird, if you offer them 2 or 3 product offerings, they're willing to take control by choosing which one they want. Notice, they were happy to give up the power on whether or not to purchase as long as they got to decide something.

This works great for kids. Don't tell them to put on their shoes, ask them which pair they want to put on. This works for adults too. I use this technique when working with tenants. This is one reason why offering different colors, payment plans, memory sizes, and product bundles work so well.

Dynamic Numbers

If you've used Apple Pay, you know that there's a default card, but you can change cards on the fly right before paying.

Why not offer the same option with the physical card? Apple Card could be a dumb piece of titanium that can stand in for any card held in the Apple Wallet. Now, this would be a game changer! You have to authenticate the transaction no matter what, so give me the option to change cards on the fly.

Clearly, there's a lot of caveats, and the exact way it would need to work is likely different than I just described, but the general idea is sound: let one physical card stand in for all your credit cards.

I'm sure there's some sort of technical and fraud hurdles to overcome, but that's the hallmark of Apple: figuring out how to bring software and hardware (and services apparently) together in ways previously thought impossible.

Had Apple come out with this, and forgone the pretty reports, daily cash back or any cash back (!), this card would be the talk of the industry solely for its ability to consolidate.

I think Apple was hoping that the slick looking titanium would be enough, but it's not. It doesn't make my life appreciably better. Instead, it feels like Apple figured out a way to make money via credit card interest fees and choose to hype it up a little too much.

Monday, March 18, 2019

Raising Private Capital To Purchase Real Estate


Getting started in rental real estate is rather simple at a high level:
  1. Find a property that provides a "good" return.
  2. Fund the purchase, and sometimes rehab, of the property.
  3. Rent it out by screening for "good" tenants.
  4. Keep up with regular maintenance, rent collection, bookkeeping.

Of course, there's lots of nuance to each step, but that's it in general. And lots of people are able to buy one rental every couple of years following this simple formula:
  1. Spend less than you earn and save some cash for a down payment.
  2. Find a property on the MLS to buy.
  3. Purchase the property using your cash for the down payment, and finance the rest through a bank by leveraging the property as collateral and your job for reassurance of payments.
  4. Rent it out
  5. Either manage it yourself or hire someone else to do it.
  6. Plus an optional step at retirement: drop your lowest performing asset(s) and use the proceeds to pay down debt on higher performing assets. Or, trade up to a larger property someone else manages.

Depending on how fast you save, you could buy a property every 2 to 3 years and at the end of a career have a nice rental portfolio for retirement. Lots of people do this, and you can too!

But what if you want to grow your rental portfolio faster?

Running Out Of Cash To Fund Properties Stops People From Further Building Their Rental Portfolio

The number one problem people experience when growing their rental portfolio is running out of cash to fund purchases. Thankfully, there are a couple ways to overcome this problem:

First, you can live in each rental for a year. Since you're living there, the bank thinks there's less risk and allows you to contribute a much smaller downpayment (like 5% down instead of 25% down).

For our 1st, 3rd, and 5th property that's what we did. We lived in each for a while and then moved. Of course, we love our 5th property and have no intention to move. So that method is out for us. It's also difficult to find a property that will still provide positive cash flow given the high leverage, but it can be done.

Second, find a property that's significantly undervalued. Once you buy it, then you improve the value by fixing it up. Here's a simple example. Let's say you find a house for sale for $50K, but it needs $25K of work. BUT, if you do that work, it'll be worth $100K (which you know because the house across the street, of a similar type, just sold for that much). You buy it, fix it, and then refinance with a loan of 75% the new value (called the ARV: After Repair Value). Boom. You just got your money back and you still own the property. Or, perhaps you decide to sell it and earn ~$25K for your efforts (minus any holding and transaction costs)

If you could do that over and over, you can make a decent living and own a lot of property in a short amount of time.

But where did the $50K and $25K come from? Where did you find such a diamond in rough?

To find such a deal, you typically are finding properties NOT listed on the MLS. You're finding people who want to sell quickly or own a piece property in such bad shape it won't qualify for traditional financing.

To fund the purchase and rehab, you might need to pay with cash.

Raising Private Capital

That's where the book "Raising Private Capital" by Matt Faircloth comes in. His book describes how to raise money from other people (private individuals) to help fund that initial purchase and rehab. They provide you with cash as either a loan where they earn interest or as a part owner where they earn or a portion of the property's overall return.

Faircloth describes the two roles: The Deal Provider and the Cash Provider.

"The Deal Provider is the one who goes out and finds opportunities such as fix-and-flips, rental rehabs, and other real estate investments that require an investment using private capital."

and

"The Cash Provider is the investor or lender of the private capital for the project. Most of the time, Cash Providers are passive investors making a return on their money."

As I described above, you typically start out with playing both roles. But to grow faster you can pool funds from other people. What makes a good cash provider?
"Cash Providers who are a good fit understand that their role is to properly vet out you and the deals you bring them, make a decision, and then trust that you will make the right call on their behalf. They will produce the funds for the project when they say they will, and they won’t get cold feet and back out on you at the last second after they have made a decision to go with your deal. They will want regular updates on how you are doing with their investment but will not want to meddle in the day-to-day activities."
What I found interesting was all the different places people have money, and they may not even know it!

Source 1: A self-direct individual retirement account (SDIRA).
This is exactly like an IRA or Roth IRA you might have with Vanguard (with all the same tax benefits), except you can invest directly in anything (with some exceptions. For example, you or a family member cannot benefit financially from the asset or its derivatives. That means you can't manage the property yourself).

What I found interesting is that you can't use a 401(k), but after you leave a job you can roll it over into an IRA, which could be an SDIRA. So his advice is to chat with people who were at one company for a while and recently changed jobs. They might have a nest egg available to loan.

I personally haven't converted or helped someone convert a 401(k) or IRA into an SDIRA, but it sounds like it's fairly straightforward once you identify the right company to be the custodian of the account.

Source 2: Real Estate Equity
"In this case, the real estate equity I am referring to is the difference in the market value of a home and what the homeowner’s current mortgage balance is. If the mortgage balance is less than 50 percent of the home’s value, there is potential to unlock some of that equity."
If you have more than 50% equity in a home, it could be earning you interest from an investment. In general, I advocate avoiding the use of debt, especially if your primary house is your biggest asset. But, if you're already saving at least 10%-15% of your income for retirement, lived in your current house at least 15 years, or have a second property, this could be a viable option.

The way you'd free up that equity is by refinancing to get a new, larger mortgage or a home equity line of credit (HELOC).

Source 3: Cash
The third source, cash, can come from an inheritance, from saving, savvy investors, and high-income earners. The problem is that these types of people (especially the savers) can be difficult to learn about, but Faircloth goes into how to meet them.

He also goes into the types of deals that work with each source of funding and the advantages real estate offers (such as tax benefits like depreciation). It felt comprehensive and I felt like I could have a productive conversation with someone after reading this section.

Creating The Deal

The second half of the book is about preparing the deal so Cash Providers can easily assess if the deal is right for them. He even details what to do during investor meetings. He has chapters dedicated to structuring private loan deals and private equity deals. Again, it felt comprehensive and did a good job of breakdown each step the Deal Provider must take to successfully raise private capital.

The Start of a Master Class

The book feels like the beginning of a "master class". I mean that in the sense that does a good job of describing the steps but could go deeper with examples and templates. He does say that each deal is different, which is true, but he could still go down the path of "here's how we do it 80% of the time."

For example, he doesn't provide any resources for converting an IRA into an SDIRA. He also talks a little bit about creating a sample deal packet but doesn't give an example of the elements to include. For investor meetings, you get the sense he's sharing investor questions off the top of his head instead of tracking the number of times he actually gets asked them and sharing his responses and why he gives them.

I get it, you're not going to have that much detail in a book, which is why it feels like it needs a companion website or a $2,000 master class which includes some Q&A. He does have a youtube channel he regularly posts to where perhaps he covers more specifics.

At the very least, I now have the vocabulary and principles to go learn the detailed specifics I still have questions about it.

Next Steps

While reading the book, I sent out ~800 letters to multifamily property owners offering to buy their property if they were looking to sell. The day after finishing the book I got a property under contract to buy. And it just so happened that I had enough of my own cash on hand to purchase it the traditional way (25% down, a loan for the remaining 75%). So I didn't need to use the strategies I learned in this purchase.

But, I'm going to once again run into the number one reason people stop buying: I won't have any more cash.

Since I won't send out letters again for a few months, that gives me time to put together a sample deal package using a previous deal, learn how to convert accounts to an SDIRA, and put together a holistic strategy for raising private capital. Or, even decide if I want to go down this route at all. Buy a property every 2-3 years seems to be working pretty well at the moment.

If you're an investor in a similar situation of wanting to grow faster, I recommend reading the book. Then send me a message and let's talk. Perhaps we can learn together.

Monday, March 04, 2019

If you have 19 different priorities in life. You don't have any priority.

Photo by Jo Szczepanska on Unsplash
I initially saw this tweet by @dutch726 on Twitter. I like it because it's something I struggle with daily, especially with a full-time job, a small business, a startup, and a family. Oh yeah, and I care about my physical, mental, and spiritual health.

Despite that list, I feel like I'm able to balance each priority. Here's what I do, which isn't perfect, but it works for me.

Reduce the Number of Priorities With an Audit

Twice a year Jessi and I sit in front of a whiteboard and list out all the things we participate in. Then we cut a couple of them out. It really hurt the first couple of times, because we had to make a lot of cuts. I was busy almost every night doing something. Today I only have something regularly scheduled on Thursday nights.

We still do our twice a year check-in because I have a habit of saying yes to most things, and priorities do shift over time.

Create Times of Focus

I find it helpful to split my day and week into times of focus. That way, despite having multiple priorities, I only focus on one at a time. For example, from 6-8am I focus on me: my physical, mental, and spiritual health by reading, praying, journaling and running.

On weekdays I shift focus to my fulltime job. If it's Saturday, I focus on the startup.

From 5pm-8:30pm I focus on my family.

In the evenings, I focus on either my small business or the startup.

It's not always that clean, but it works most of the time.

The point isn't the amount of time, but deciding - for whatever the period of time - that I'm only going to focus on one thing. And since I know I have other times dedicated to other activities, I'm able to focus.

Take Action

Do you feel like you have too many priorities?

  1. Take an audit of what you're currently doing? You don't need a whiteboard. Sticky notes or a single sheet of paper also work.
  2. Make the hard decision to cut a few things.
  3. For the remaining items, schedule time when you can focus on each one.

Good luck!

Monday, February 18, 2019

Use a 5-Day Design Sprint For Your Next Project (Book Review)


We live in an amazing time. And it's not just because of the internet, flowing water, and plentiful food (If you're reading this. I recognize this isn't true for everyone in the world... yet).

It's amazing because we're living through an age transformation. There's been a lot of them during human history. I bet the transition from the Stone Age to the Bronze Age was tectonic! We know the Roman Period was amazing (of which I'm certain I'm an ancestor). Columbus helped set up the Industrial Age with the cotton gin being the first big example of machines taking over work. Here's what it's looked like on the left (based on this).

And here we are. In the midst of the beginning of the Information Age, predicted to last about 500 years, and we're only 50 years in. It's hard to imagine the full impact in 450 years or what'll be next (a Space Age seems possible), but we're living through the transition right now.

It's exciting because of new technologies that enable new ways of living (do you work remotely now?), and how we see the world is rapidly changing.

One of the impacts of the Information Age is the changing nature of work. I'm specifically focusing on project management and product development. Typically during the Industrial Age, a waterfall style method was used. It was very linear. Everything was completely thought through first. Then construction started. Then it was tested and deployed as a finished product. This was often because physical machines were being created. Here's what it looks like:

Concept -> Requirements -> Design -> Construction -> Testing -> Deployment

Today, the thinking on project management has changed to favor an agile method implemented using Scrum. The general difference is how much you do at once. Instead of thinking through everything, plan 2-3 weeks of work which finish with testing and deploying what's done. The big benefit is that it allows the requirements to be flexible further down as you learn more. The Information age has made the cost of incremental changes low enough that everyone can afford to do it.

This is also part of the idea behind the Minimal Viable Product (MVP). Instead of working a long time to make something perfect, create the absolute minimum features, get feedback and then focus on improving based on the feedback. The big benefit is you don't waste a lot of time working on something nobody likes.

Finally, the concept of Scrum is a derivative of the Information Age. Instead of deploying hundreds of people to tackle a project, break into groups of 5-7 people with different skills. That small group focuses on building/testing/deploying a product over 2-3 weeks. They generally meet for 15 minutes each day to check-in and help each other out.

What do you get when you combine Agile + Scrum + MVP in the Information Age?

"Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days" by Jake Knapp, John Zeratsky and Branden Kowitz.

In the book, a design sprint is a 5-day method to help you focus on a question and then learn from the surface of a finished product.

The basic idea is that you don't need to build a full-featured product (not even an MVP) before finding out if your idea will work. Instead, treat your idea like a movie: just create the "look" of a product and get that in front of people. If they like the "surface" - the GUI, the part they see - then you can feel confident in spending the time to make the real thing.

The book is a how-to manual which details what to do on each day and explains why you're doing it. If you're looking for prescribed actions to take, you'll love this book.

Who Should Read "Sprint"?

It's amazing how poor we are at guessing what other people will like. Have you ever spent a lot of time on something to only find it doesn't quite hit the mark? I have and it's no fun. The best way to overcome this problem is by getting feedback sooner and more often. A sprint helps you do that.

If you're involved in any sort of project that's building something new for someone other than yourself and has open questions, a sprint could help. If you're repeating a previous project/process (like running another forecast, building another house, or training for a marathon) then you don't need a sprint.

What do you do during those five days?

Here's a short video the authors put together which describes the five days pretty well.


They also have a website with more information and resources. If you're on the fence on reading the book, I recommend checking out the website first (and won't repeat it here).

Finally, it's a fast read. It took me two weeks and I only average 10-20 minutes of reading a day. Also, given that their website has all the checklists easily available, you could easily listen to it as an audiobook and then reference the checklists later.

If you're engaged in any project where you're building something new, it's worth reading.

Monday, February 04, 2019

Action Breeds Clarity

Photo by Justin Medina on Unsplash

I don't remember where I heard this, but I love the saying "Action breeds clarity."

For me, it's the antidote to analysis paralysis.

How often have you wanted to do something, but found yourself spending too much time thinking/dreaming/wishing about it? Only to see that a week, a month, a year (!) later you're in the same spot?

I've done it.

Usually, it's because of uncertainty. Sometimes inaction is driven by fear of failure, but often that's more a symptom of uncertainty.

For me, I like to have every step known and planned out. Before then, I don't want to do anything. Saying to myself "Action breeds clarity" helps me move forward because it gives me permission to NOT have everything figured out ahead of time. Instead, I focus on doing something small to learn more, which often brings clarity to the bigger picture.

An Example of Small Actions Breeding Clarity

I wanted to create a software product for landlords. But I didn't know what to build, or how to make it.

So I took a small action step.

I called up a couple landlord friends and asked them general questions. "What's something that bothers you? Or that you do over and over and over?" I had a guess but didn't know.

After talking to four people (that's it!), I was surprised that each of them had the EXACT SAME problem. A little bit of clarity.

So I took more action and developed a set of questions to dive deeper on that problem with more people.

Even more clarity.

Eventually, my co-founder and I felt like we had a good sense of the problem. So we took another small action step: I built a small web app in a week to test a potential solution. It was super simple and incomplete but showed the idea and was enough to get clarity on how the final product could work. From there we took another step based on the new set of questions.

I could have spent a year thinking about a product idea and never made progress because of uncertainty. By the way, more original guess was totally wrong. By taking the small act of talking to four people, I gained enough clarity to completely change the direction I headed in.

Action bred clarity.

Take Action

Do you have something you're uncertain about it? Try taking action today.
  1. Read more about it.
  2. Talk to someone about.
  3. Try it in a safe environment.
  4. Don't commit to the whole thing, just the next step
Good luck!

Monday, January 21, 2019

This Is Marketing by Seth Godin (Book Review)

Showing off a remarkable product

Some books I read and think "I could write a book like that." They often have to do with real estate or productivity, but the idea is that there are times when I feel equally competent as a thinker and writer (with the notable exception that I haven't published anything).

And then there are authors like Seth Godin who operate on a level I don't even know how to touch. Perhaps it's as simple as the 30-year head start of marketing experience, but it feels more profound: he sees the world differently. He has a clarity of marketing and a way of explaining it that consistently causes me to pause and admit "I never thought of it that way."

He's also a prolific writer. In addition to his many books, he also writes a daily blog, where each post is often short and to the point. I recommend checking it out.

I guess you could say I'm a fan.

This Is Marketing

His latest book is called "This is Marketing: You Can't Be Seen Until You Learn to See" and, of course, it's enlightening. In some ways, it feels like you're reading his blog because it's broken up into a bunch of short, punchy, sections that all sort of stand on their own. In fact, it's the opposite of a streaming narrative. You could flip to the middle, read a section - about a page - and learn something. You won't learn a lot in each section, but they all start to add up over time. It's written in a similar style to Remote.

In that spirit, I'll write this review in a similar style.


What the Book Isn't

It's not a how-to manual. You won't get copywriting advice or headline formulas. There are no pricing strategies. No tutorials on A/B testing, keyword research, or competitive intelligence gathering. There's definitely nothing about Facebook Ad campaigns or specific email do's and don'ts.

Instead, it about marketing philosophy. It's about the purpose of marketing. It's about broader principles: the smallest viable market, showing empathy for others, focusing on emotions instead of features, using tension to create change and permission marketing.

The goal of the book is to get you thinking (or re-thinking, in my case) of principles. Then you use those to guide strategic and tactical how-to decisions.

The following is a brief overview of some of the concept to give you a flavor of the book.


The Purpose of Marketing
"If creating is the point, if writing and painting and building are so fun, why do we even care if we’re found, recognized, published, broadcast, or otherwise commercialized? Marketing is the act of making change happen. Making is insufficient. You haven’t made an impact until you’ve changed someone. (p. xiv)"
Making change happen, mentioned 50 times in the book, is the purpose of marketing.
"Marketing is the generous act of helping someone solve a problem. Their problem. It’s a chance to change the culture for the better. Marketing involves very little in the way of shouting, hustling, or coercion. It’s a chance to serve, instead. (p. 2)"
Godin views marketing, and likely all professions, as a tool for service. A genuine focus on helping someone else achieve their goals. What I found was he didn't say anything earth-shattering, but brings clarity to concepts I already knew, but couldn't articulate as eloquently. This next quote is a way of saying "be empathetic," but said in a more specific way:
"The way we make things better is by caring enough about those we serve to imagine the story that they need to hear. (p. 19)"

The Smallest Viable Market
"It’s tempting to pick a grandiose, nearly impossible change: “I want to change the face of music education and make it a top priority across the country.” Well, sure, that’s great, but it’s never been done before, not by someone with your resources. I’m a huge fan of game-changing home runs. I love the inspiring stories of people who beat all the odds and changed everything. But . . . That’s a heavy burden, as well as a convenient excuse in moments of despair. It’s no wonder that you’re stuck—you’re seeking to do the impossible. Perhaps it makes more sense to begin with a hurdle you can leap. Perhaps it makes sense to be very specific about the change you seek to make, and to make it happen. Then, based on that success, you can replicate the process on ever bigger challenges. (p. 26)"
So true. It's empowering to know you don't have to change everyone. Just a few.
"[Y]ou have no chance of changing everyone. Everyone is a lot of people. Everyone is too diverse, too enormous, and too indifferent for you to have a chance at changing. So, you need to change someone. Or perhaps a group of someones. Which ones? We don’t care if they all look the same, but it would be really helpful if you had some way to group them together. Do they share a belief? A geography? A demographic, or, more likely, a psychographic? Can you pick them out of a crowd? What makes them different from everyone else and similar to each other? (p. 28)"
I'm regularly reminded to "niche it down" and am good at pushing for at least three filters. Here's my example for residents: live in the area, wants to do everything online, puts responsibility - which I specifically define - as a top priority.
"Begin instead with the smallest viable market. What’s the minimum number of people you would need to influence to make it worth the effort? (p. 31)"
What a great question! I hadn't really thought about it precisely this way before. I know the concept of a minimal viable product which preaches simplicity, testing, and rapid iteration. But this looks at the idea of a niche and says "how small can it be?" Again, this is something I know, but it's articulated so well. Speaking of minimal viable products:
"Lean entrepreneurship is built around the idea of the minimal viable product. Figure out the simplest useful version of your product, engage with the market, and then improve and repeat. What people miss about this idea is the word viable. No fair shipping junk. It doesn’t help to release something that doesn’t work yet. (p. 33)"
Ouch. He's right. I tried this, and it doesn't work.
"“It’s not for you” shows the ability to respect someone enough that you’re not going to waste their time, pander to them, or insist that they change their beliefs. It shows respect for those you seek to serve, to say to them, “I made this for you. Not for the other folks, but for you.” (p. 37)"
This is super hard to do, but I'm getting better at it. I remember being on a sales coaching call and the coach asked who the product was for. The leader answered "The whole world. Everyone can benefit from this product!" The coach was great. "That's not true. Your product is only available in the US, and you live in Denver. Since you only have 24hrs a day and have to limit talking to everyone, who will see the biggest benefit? That's what I mean when I asked who the product was for".


Focus on Benefits,  Concentrating on Feelings, Emotion, and Status
"A marketer is curious about other people. She wonders about what others are struggling with, what makes them tick. She’s fascinated by their dreams and their beliefs. (p. 50)"
This is the start of any successful product. When you hear someone say they solved their own problem, it was them diving into what made themselves tick.
"A lifeguard doesn’t have to spend much time pitching to the drowning person. When you show up with a life buoy, if the drowning person understands what’s at stake, you don’t have to run ads to get them to hold on to it. (p. 51)"
I love this quote. If you get a product right, it'll feel like it sells itself. This is the tipping point where you become in demand. This is why Craigslist works so well with rentals: it's doesn't have to be feature-rich because everyone visiting understands what's at stake.

At first, I was a little underwhelmed by the next two quotes:
"We sell feelings, status, and connection, not tasks or stuff. (p. 78)"
"Marketers make change. We change people from one emotional state to another. (p. 81)"
And then I read this:
"What do you want? Let me guess. You’d like to be respected, successful, independent, appropriately busy, and maybe a little famous. You’d like to do work you’re proud of and do it for people you care about. What’s not on that list? That you need to own a certain color car. That you have to sell your items in packages that are six inches wide, not seven inches. That you want all your customers to have first names with no fewer than six letters in them. (p. 83)"
Nailed it. The things I really want are emotion and status driven.


A Better Business Plan
"Here’s what I want to know about your VC–backed Silicon Valley startup: How many people outside of HQ use it every day? How often are they sending you suggestions to make it better? Here’s what else I want to know: How many people are insisting that their friends and colleagues use it? As in right now. (p. 92)"
In the book, he goes into making a business plan that's customer focused. Technical skills and core competencies are essential, but it's even more critical to understand your market and prove they crave your offer. Yet, don't expect it to go gangbusters:
"[S]omeone is going to make hits, and it’s probably not going to be you... For the rest of us, there’s the other path: the path of connection, empathy, and change. (p. 97)"
I love this thought. It goes with the idea of the small viable market.


Tension Creates Change
"[C]hanging our behavior is driven by our desire to fit in (people like us do things like this) and our perception of our status (affiliation and dominance). Since both these forces often push us to stay as we are, it takes tension to change them. (p. 103)"
The way you create tension is through a pattern interrupt. You used to do it one way, but there's a better way. That's tension. Here's an example:
"Slack began by doing a pattern match, offering new software to people who like new software. A new way of doing work for people looking for a new way of doing work. But then came the leap. They gave this group a tool to create a pattern interrupt. Peer to peer. One worker saying to another, “We’re going to try this new tool.” That single horizontal transmission built a multi-billion-dollar software company. It’s not accidental. It’s built into the software itself. What pattern are you interrupting?" (p. 117)"
This works because of the emotional tension it creates:
"We don’t want to feel left out, left behind, uninformed, or impotent. We want to get ahead. We want to be in sync. We want to do what people like us are doing. (p. 120)"
He even takes it a step further by diving into status roles:
"If you look closely at decisions that don’t initially make sense, you’ll likely see status roles at work. The decision didn’t make sense to you, but it made perfect sense to the person who made it. (p. 124)"
Here's another example of how dynamic we are with our status and priorities:
"On the ball field, a twelve-year-old might care about nothing but winning. And not just winning, but beating the opposition. He’ll impugn the referee’s motives, stomp on toes, and hold nothing back in order to win. That same kid doesn’t care at all about being at the top of his class, but he cares a lot about who sits next to him on the bus. In the jazz band, someone is keeping track of how many solos he gets, and someone else wants to be sure she’s helping keep the group in sync. The people you’re seeking to serve in this moment: What are they measuring? (p. 136)"
It's probably at this point you're thinking "this is hard work." I know that's what I keep thinking. How do you keep everything straight? How do you keep your focus pure? He goes into some ideas, but mostly he describes the requirements and then leaves it to you to figure how to do it.

Back To the Business Plan
"[M]ost marketers actually have the same “purpose.” To be successful. To engage with people in a way that benefits both sides. To be respected, seen, and appreciated. To make enough of a profit to do it again. That’s your why... a better business plan takes that universal need and makes it specific—describing who and what it’s for. It outlines the tension you seek to create, the status roles you’re engaging with, and the story you’re bringing that will make change happen. (p. 144)
In Majordomo's initial business plan, a lot of our feedback was about being more specific. This is an area we need to continue diving into. I also see this with a lot of landlords: they invest to make money. True, but to really succeed, the reason needs to go deeper and be more specific.
"What’s your flag? Why would someone fly it? (p. 150)"
A great question to ask.
"The foolish thing to do is pretend your features are so good that nothing else matters. Something else always matters. (p. 153)"
So true. Features for the sake of features don't matter.


Permission Marketing Creates an Asset of Attention

This is the heart of marketing. Understanding that people's attention is an asset, and the only way to build that asset is to build trust and get their permission to talk to them:
"Before paying for ads... begin with the idea of earning this asset. The privilege of talking to people who would miss you if you were gone. Permission marketing recognizes the new power of the best consumers to ignore marketing. It realizes that treating people with respect is the best way to earn their attention. Pay attention is a key phrase here, because permission marketers understand that when someone chooses to pay attention they actually are paying you with something valuable. And there’s no way they can get their attention back if they change their mind. Attention becomes an important asset, something to be valued, not wasted. Real permission is different from presumed or legalistic permission. Just because you somehow get my email address doesn’t mean you have permission to use it. Just because I don’t complain doesn’t mean you have permission. Just because it’s in the fine print of your privacy policy doesn’t mean it’s permission either. Real permission works like this: If you stop showing up, people are concerned. They ask where you went. (p. 190)"
I love this. When doing the Furlo Bros Podcast, we made a backend mistake, and it didn't get published. As a result, we received emails from people wondering where our podcast was. It's the best feeling in the world!
"Facebook and other social platforms seem like a shortcut, because they make it apparently easy to reach new people. But the tradeoff is that you’re a sharecropper. It’s not your land. You don’t have permission to contact people; they do. You don’t own an asset; they do. (p. 191)"
This is one of the reasons Facebook and Google are so valuable. Personally, I think it's OK to prime the pump with search and social media, but you need a way to build a direct relationship.
"Protect it. It’s more valuable than the laptops or chairs in your office. If someone walked out the door with those, you’d fire them. Act the same way if someone on your team spams the list just to make a metric go up. (p. 193)"
How do you get permission? It's simple, but hard to do in practice:
"In order to get permission, you make a promise. You say, “I will do x, y, and z; I hope you will give me permission by listening.” And then—this is the hard part—that’s all you do. You don’t assume you can do more. (p. 191)"

The concept and philosophy of permission marketing is huge! This is how you compete against "the big guys" and how you great true fans and remarkable products.

People Will Share Your Offer When It Benefits Them
"[I]ntentionally create a product or service that people decide is worth talking about... whether something is remarkable isn’t up to you, the creator. You can do your best, but the final decision is up to your user, not you. If they remark on it, then it’s remarkable. If they remark on it, the word spreads. If the conversations move your mission forward, then others will engage with your idea and the process continues. Easier said than done. (p. 196)"
Easier said than done. How true! The reminder that it's not up to you to define remarkable is helpful. This is where the minimal viable product concept helps: get that feedback fast and then iterate until it's remarkable. Again, it's important to remember that it's not about you:
"The best reason someone talks about you is because they’re actually talking about themselves: “Look at how good my taste is.” Or perhaps, “Look at how good I am at spotting important ideas.” (p. 196)"
Here's a fun thought:
"Don’t say it all, and don’t make it obvious. It’s fine that there are secret handshakes, Easter eggs, and unknown features. It’s fine that commitment and longevity earn an extra edge. (p. 236)"
I love the idea of Easter Eggs. It's this weird counterintuitive thought that making something harder to find makes it more valuable. I think this is why Dropbox's scavenger hunts worked so well, why Apple can get away without an instruction manual for their devices, and why XKCD hides messages in its images. Secrets alone don't make a product remarkable, but it helps raise the status of its customers.

Final Thoughts
"Good enough isn’t an excuse or a shortcut. Good enough leads to engagement. Engagement leads to trust. Trust gives us a chance to see (if we choose to look). And seeing allows us to learn. Learning allows us to make a promise. And a promise might earn enrollment. And enrollment is precisely what we need to achieve better. Ship your work. It’s good enough. Then make it better. (pp. 244-245)"
Make it good enough. Ship it. Then make it better. Beautiful.

In case you couldn't tell, I enjoyed the book and took lots of notes. If you engage in marketing, this is worth reading. Even if you think you know everything, it's still worth reading. If you're looking for specific tactics and how-tos, you'll be disappointed. Check it out. It's remarkable.

Monday, January 07, 2019

2019 Goal: Business Quadrant


2019 feels like a continuation of 2018 in many ways. I learned how to play bass guitar and want to continue improving. I also worked on Majordomo and will continue to do so.

Even though I have a goal for Majordomo, it doesn't feel right to publish it here (in the same way I don't post my HP goals because I'm not the sole owner). Instead, I'll focus on personal items and Furlo Family Homes.

Although I didn't have a specific goal for Furlo Family Homes last year, the focus, in retrospect, was automation and removing tasks from my plate. It wasn't an altruistic "let's get more efficient," but more "I don't have time and something needs to change."

Here are some of the changes I made:
  1. I transitioned the rent payment system to be through Cozy. I previously offered 2 additional payment methods.
  2. I switched the accounting system to be in Quickbooks. I started in 2017, but 2018 was the first full year of exclusive use. Versus a spreadsheet, this saved me at least 20 hours this year. I do miss my custom reports, but not enough to spend the time re-creating them.
  3. I tracked all my miles using TripLog. Not only am I capturing each mile, but it also takes less time.
  4. I completely turned the application and screening process upside down, saving 9 hours of work on each turnover. This was a big deal!
  5. I hired a virtual assistant to help with back-office tasks like tracking payments, handling maintenance requests, and resident turn-over tasks.
  6. Right before the end of the year, I turned the new-resident onboarding process into an online course. Not only does it save me an hour on each new resident, but it also creates a better experience.

Again, in retrospect, that's a lot!

CASHFLOW Quadrant

I've also been re-reading a book called "Rich Dad's CASHFLOW Quadrant" by Robert Kiyosaki, and it's doing a great job of challenging me to think bigger. For a little bit of context, here are the four quadrants:


Kiyosaki proposes that true financial freedom comes from getting your income, or at least enough income to cover your living expenses, from the B and I quadrants.

What's the difference between an S and a B? According to Kiyosaki:
"Those who are true B’s can leave their business for a year or more and return to find their business more profitable and running better than when they left it. In a true S type of business, if the S left for a year or more, chances are there would be no business left to return to. So what causes the difference? Saying it simply, an S owns a job; a B owns a system and then hires competent people to operate the system. Or put another way, in many cases, the S is the system. That is why they can’t leave. (p. 34)"
At the beginning of last year, Furlo Family Homes (FFH) was solidly in the S quadrant. Today, it's straddling the S and B, which is great, but... I think you can see where my goal is heading for the year.

The other quadrant of interest is the I quadrant, which has 5 levels:
  1. Spend all that you earn. No investing happens.
  2. Savers. The most common example is people who put their money the Bond market.
  3. I'm-Too-Busy. Likely a 401(k) and IRAs where you let other people manage your money.
  4. I'm-a-Professional: The DIYer. "If they invest in real estate, the do-it-yourselfer will find, fix, and manage their own properties. (p. 105)" That sounds familiar...
  5. The Capitalist: Uses other people's money, and usually invests with a team.

I'm a level 4, which isn't bad, but I got a glimpse of being a level 5 investor with the apartment building, and it is more exciting.

I want to point out that you can retire at levels 3 and 4, not just 5. Many people, especially advocates of FIRE (Financial Independence Retire Early) typically focus on level 3 investments with 401(k) matching, IRAs and index funds. A lot of them do it as E or S. So it can be done, if you spend less than you earn and invest. If you have money (15%-50% of your income) and little time/interest in learning about investing, index funds might be perfect for you.

And finally, the Bible says work is good. Perhaps my favorite example is right in the beginning with Adam: "The LORD God took the man and put him in the garden of Eden to work it and keep it. (Genesis 2:15 ESV)" After Adam and Eve sinned, work became toil, but the work itself is a good part of creation. We are stewards of our stuff, our families, and this planet. So it's good to work hard and take care of what's been given to you, no matter what quadrant you do it in.

So the only way to retire isn't through the B and I-5 quadrants. If you're an employee (E) and investing (I-3) 15-50% of your income for retirement, you're doing it right.

2019 Goal: Business Quadrant

I like the clarity of focusing on ONE Thing. So I'm going to do that again. I also like the idea of solving a problem. It allows you to not have all the answers day one but gets you thinking about how to solve it and acting upon it, so you're headed in a purposeful direction.

My goal, my problem to solve, is to make Furlo Family Homes a true business, one that I could leave for a year or more and return to find it running better than when I left it. I don't think I'll entirely move it to a B-Business by the end of the year, but I want to continue the process I started out of necessity last year and have a clear roadmap by the end of the year. There are a few sub-problems I'll need to solve:

  • I need someone local who I trust to meet residents and open doors.
  • I need to change my mindset to stop saying "I". FFH needs to find a trusted local person who can meet residents and open doors.
  • Currently, I personally do 90% of the maintenance, how can that switch to 0%?
  • How can FFH afford these changes? Related, how can FFH improve its operating margins?
  • Following the recommendations from E-Myth, business roles/responsibilities/tasks, the entire system (!), needs to be documented and followed. What's the best way to record this? We have an internal wiki, but perhaps there's a better solution?
  • I'd like FFH to grow this year. It currently owns 16 units. I want that number to be 45 (given some per unit profit assumptions). What's a consistent way to buy and hold rentals? This likely requires becoming a level 5 investor. How do I make that transition?
  • Does hiring a full-service property management company make sense? What are FFH's core competencies and differentiating factors?
  • Plus, a few more questions I haven't thought of yet.

For a single goal, this feels like a lot, but it'll be good for me, my family, and FFH's current residents.