From Broke to Bootstrapping Renters Warehouse with Brenton Hayden
Before there were rollup plays like HomeRiver, before VCs were dropping tens of millions to back companies like mine, before anyone in high finance could even be bothered to think about little old property management, Brenton Hayden was dreaming and scheming about how to build an empire in this sleepy little industry.
I’ve known Brenton for awhile now. Brenton originally came on my radar screen, actually by hearing some competitor in his market kind of complain about him and his success and his swagger, and the fact that he was young and had a growing company.
And, “How did he deserve that?”
Which was interesting. It was a mental note for me.
Then I met the guy. I got to know him, got to learn more about what he was doing, and it’s been fun to watch his success.
So, you know who Renters Warehouse is if you’re listening to this right now, it requires no explanation.
The company’s blown up since Brenton departed. Brenton took an early retirement at the age of 27, but he’s taken some time out of his busy non-schedule to jump on this podcast.
- (02:15) – Background leading up to today
- (02:53) – Brenton shares the initial vision and ambition he had when he first started Renters Warehouse.
- (05:56) – His early success with leasing.
- (08:35) – The initial scope of services offered by Renters Warehouse.
- (09:12) – Giving clients what they wanted.
- (11:39) – The driving force behind the risky ventures Brenton pursued.
- (12:18) – Brenton’s personal financial state in the early days.
- (02:53) – Brenton shares the initial vision and ambition he had when he first started Renters Warehouse.
- (16:27) – Managing a high-growth, early-stage company
- (16:38) – Brenton shares his thoughts on his innovative flat fee pricing model.
- (18:11) – Technology as the fuel for growth and better service.
- (21:19) – Brenton walks us through the role of radio in Renters Warehouse’s success, and the dramatic investments he made.
- (23:58) – How Brenton took advantage of the early opportunities with pay-per-click advertising.
- (25:01) – Brenton shares how he came to operationalize sales and marketing when that was an innovative concept at the time.
- (26:45) – The Entrepreneurial Operating System.
- (30:00) – How aware Brenton was that he was operating within a time-limited window.
- (31:52) – Brenton discusses the innovations he brought to property management.
- (32:53) – Tenant Warranty.
- (33:55) – Eviction Protection Product.
- (34:13) – Rent Protection Program.
- (35:41) – Brenton shares why his insurance products were abandoned.
- (36:55) – Property Protection Program.
- (38:28) – Brenton gives advice on finding good legal counsel and accounting.
- (40:55) – Discussing the changes and evolution of Renters Warehouse’s Property Management Agreement.
- (41:10) – Tenant Placement Agreement.
- (41:39) – Lead Contracted Lease Agreement.
- (42:32) – How Brenton built a skilled team around him.
- (47:16) – Discussing Renters Warehouse’s franchising endeavors.
- (47:49) – Professional Landlords.
- (51:24) – Making the transition to corporate offices.
- (53:49) – Renters Warehouse’s centralized call function.
- (55:10) – The challenge of the first hire.
- (16:38) – Brenton shares his thoughts on his innovative flat fee pricing model.
- (59:06) – Tying it together
- (1:00:37) – Brenton offers advice for the average property manager.
● (1:05:47) – Are entrepreneurs born or bred?
EOS – Entrepreneurial Operating System (26:45) – Foundational set of concepts and tools recommended by Brenton
Traction – Gino Wickman (27:15) – Source material for the EOS
Where to learn more:
Jordan: 0:00:00.0 Welcome closers. This is the Profitable Property Management Podcasting coming at you live.
I’m your host, Jordan Muela, and this is the place to come for weekly interviews with world-class property management entrepreneurs and industry experts, who open up and share their secret sauce so that you can apply their knowledge to grow your property management empire.
0:00:19.3 Whether you manage a hundred, a thousand or ten thousand units, this broadcast is designed to help you see the big picture and give you the tools and tactics that you need to get to the next level.
0:00:30.1 Today, I’m talking with Brenton Hayden, the founder of Renters Warehouse and a true OG in the property management industry.
0:00:40.4 Before there were rollup plays like HomeRiver, before VCs were dropping tens of millions to back companies like mine, before anyone in high finance could even be bothered to think about little old property management, Brenton Hayden was dreaming and scheming about how to build an empire in this sleepy little industry.
0:01:03.2 I’ve known Brenton for awhile now. Brenton originally came on my radar screen, actually by hearing some competitor in his market kind of complain about him and his success and his swagger, and the fact that he was young and had a growing company.
And “How did he deserve that?”
Which was interesting. It was a mental note for me.
Then I met the guy. I got to know him, got to learn more about what he was doing, and it’s been fun to watch his success.
0:01:30.5 So, you know who Renters Warehouse is if you’re listening to this right now, it requires no explanation. The company’s blown up since Brenton departed. Brenton took an early retirement at the age of 27, but he’s taken some time out of his busy non-schedule to jump on this podcast.
0:01:47.6 Brenton, thanks for coming on the show.
Brenton: 0:01:49.1 Hey, what an introduction. And you hit it right on the head man. You’re an OG as well if you recall. I know you have a number of successful businesses. I haven’t quite kept up with you as much as we used to, but you’re an OG as well.
0:02:03.2 And you hit the nail on the head man. We started this thing when people really weren’t messing with property management, and it was basically beneath about every real estate agent out there. So, it’s nice to look back on that in remembrance.
Jordan: 0:02:15.7 Man, I’ve got a lot of questions to ask you, but I want to start here: They say in luck, behind every great success there are a couple of things. Luck is one of those. Luck is one of those things that doesn’t get a lot of airtime. Timing is another.
0:02:31.4 When I think about the window and the timeframe that you got in, it ended up, in hindsight, being absolutely ideal.
0:02:39.9 But at the time, you couldn’t have known that.
0:02:43.2 On day one, what did you think you were going after? What did you think you were getting into when you decided to have ambition around, like we said, this otherwise sleepy industry?
Brenton: 0:02:53.0 So I had a plan. I knew I had – I wanted – I had this plan to retire early. Retiring at 27 was by design, per se.
Did I think it would happen? Probably not. But you have to have a goal or a plan. 0:03:06.1 And I thought it seemed easy.
0:03:08.0 And so, while my plan didn’t say property management, it said real estate.
0:03:15.4 And so, I eventually got into real estate after leaving a sales job when I was 19, at Kelloggs. I was selling cookies and crackers.
0:03:25.0 And I got a job with a top, highly successful real estate agent in Minnesota. 0:03:29.0 And I was, like, one of his buyer’s agents. 0:03:32.4 Well, as a buyer agent with him, I was on salary, no commission.
0:03:35.6 And I just responded to a number of leads that were inbound. So, taught me a lot about marketing and how real estate leads are generated. This guy was a really good professional real estate agent.
0:03:46.2 But it wasn’t long that he deemed me as somebody who might become his competition, if I recall. 0:03:51.3 And, like, did one of these like, “You’ve got five minutes to get out. You’re terminated because I’m starting my own company and you’re coming with.”
0:03:59.5 It was a weird situation, and it forced my hand to, not only switching jobs twice when you’re 19, but not having a lot of money. I needed to start making a living.
0:04:07.7 And having a license was the one thing I had, and the one opportunity that was available was to do the dirty work.
0:04:15.8 Lease houses for people and investors and cheap guys and real professional jerks that were in Minnesota. Kind of real estate agents. 0:04:25.2 And different things. They would hand you business because it was beneath them.
0:04:28.5 But I needed the money and I was able to do it.
0:04:31.1 It was around that time these websites were popping up. RentClicks, Rent.com. And really everybody was using the paper still, classified ads, signs in the yard.
0:04:41.2 Well, I did all of it. I put it on one website, which literally went to like, four later. And then I had a sign, and I had a Craigslist, and as a result, I was renting properties really quickly.
0:04:51.8 And that was my way of income. That was my venture into property management. 0:04:55.8 Trying to make a living as a real estate agent at, like, 19 years of age and doing the dirty work, which was leasing houses.
0:05:01.4 Eventually rolled up into something bigger as I captured more of that opportunity. 0:05:07.2 But it was really that simple of a story.
I didn’t design a property management company and start in real estate. It just came to me. I had to.
0:05:17.2 And then, the company evolved many times over. Originally, for the first year and a half, we were only a leasing company. Period. 0:05:23.2 We didn’t do any property management.
Because I didn’t know how. I didn’t really want to either. That was hard work.
0:05:28.5 Well, after getting significant success in leasing, we’re like, “Well let’s get into the property management game.”
0:05:35.4 And – but how would we compete? We became one of the cheapest, but only offered, you know, really limited services. We offered, like, five things.
0:05:43.6 And we said, “If it wasn’t in those five things, we don’t do it. But this is what we do and we’ll do all these five things.”
0:05:48.9 Well, fast forward, we became the largest property manager of single-family homes for others in America. Without that plan.
Jordan: 0:05:56.6 Man. So, before we even move on to property management, what were you doing with leasing? Like, did the leasing thing – at 19, that’s a pretty low bar.
Like, how far did you get with that? Did that blow up enough for you to realize there was some real money here?
Brenton: 0:06:10.2 No one’s ever broken the Brenton Hayden records. I don’t think they even think they’re true, but they are.
0:06:14.4 And, I used to lease 50, 55 houses a month, by myself. And I would charge first month’s rent or second month’s rent as well, for longer term leases as a commission.
0:06:26.7 And now, I was at a brokerage where they didn’t want me doing leasing. In fact, didn’t want to bother with the leasing commissions, so I got to keep all of it.
0:06:34.7 And, it was becoming very profitable. I found – “Oh why don’t guys do this?”
I could make more than some of the top agents and I had very consistent but smaller cheques. That’s where it all really started for me, was doing that.
0:06:47.6 You know, eventually I had a guy drive me around in my car. It was like an assistant. And he would help answer my phone because I had homeowners calling, prospective tenants calling.
0:06:58.2 And then I had somebody in the back that also helped me do that, and we were just like a roving mobile office.
0:07:02.9 At the time, we had, like, a PC card. You plugged in a computer and we had the old cameras you plugged in. And we were uploading and trading listings on the fly like this. We could keep up with it.
0:07:14.1 And the, eventually, I was like, “I just can’t keep up with it.”
And so, I had so much business coming in because I was actually pretty darn good at doing that, because no one was really using the internet to rent houses.
0:07:24.3 And nobody would actually do what they say they do, so I did, and that worked out pretty well as a result. Too well.
0:07:28.7 I had to find people that would come work for me. 0:07:31.1 And, as a result, I had to create – I didn’t know the laws, but I had to create my own brokerage.
And so, then I rented a broker. I brought in, like, three guys to come help me handle the business. 0:07:41.7 They got whatever I couldn’t handle and next thing you know, it turned into Renters Warehouse Leasing Company.
0:07:46.3 But actually, before that, it was called Hayden & Company. 0:07:49.9 And it was just, you know, Hayden & Company Leasing.
And we built a website called, RentersWarehouse.com to try and compete with the Rent.com, the RentClicks.com of the world.
0:08:01.4 And as a result, we were having 50, 60, 70 of the 200 listings in Minnesota at the time, so we created Renters Warehouse to try and create our own site.
0:08:09.3 It was just a little Renters Warehouse website for only Minnesota rental properties.
0:08:14.4 And people kept confusing the two. “Are you Hayden & Company or are you Renters Warehouse?”
0:08:16.0 And we finally said, “Let’s just throw this Hayden & Company thing away and call ourself officially Renters Warehouse.”
0:08:23.3 Legally, our name is still Hayden & Company, but we’re doing as business as the Renters Warehouse name.
0:08:29.0 And that really didn’t start out to be a property management company, but rather an internet listing service website.
Jordan: 0:08:35.1 So, something really stuck out to me when you talked about getting into property management.
Specifically when you connected with being a discount property manager with having a limited scope of services.
0:08:46.1 Scope of services is such an interesting thing that people gloss over in the name of wanting to provide good service.
A lot of folks are willing to do just about anything. 0:08:56.1 Which is a great way to impoverish yourself.
0:08:57.9 The reality is, if you pay less, you should get less. As a consumer, that’s not a foreign concept, but there have to be some boundaries in place to do that.
0:09:07.6 What were those – what did that initial scope of services look like when you guys first started?
Brenton: 0:09:12.5 They’re still very similar today.
What I was seeing is people complaining about the property manager. And what were they complaining about? The bad tenants? They put in a bad tenant.
0:09:22.3 Any time a tenant went bad, that guy whoever put it in, they must have did that to you. 0:09:27.5 “The tenants always damaged the property. The guy never collects the rent. He’s slow to handle maintenance.”
0:09:31.6 So, I quickly figured out what a property management company was needed for.
Do the accounting, handle the maintenance, enforce the lease, be the landlord, essentially, so that the owner doesn’t have to. 0:09:47.3 And, essentially, if it wasn’t in there, we didn’t do it.
0:09:51.0 And that’s how we started out. $79 bucks a month. No matter the rent. So if it’s $2000 dollars a month, $500 dollars a month, or $5000 dollars a month, it was $79 dollars a month.
And I remember we would say in the radio ads, “$2.54 a day and you could have my team manage your property for you and get it taxed deducted.”
0:10:07.6 And that was the whole way we got on. I got a little radio ad and that took off.
0:10:13.1 I found that people – but we guaranteed those things. Meaning, if we didn’t collect the rent, we didn’t get paid.
0:10:19.3 We would coordinate the maintenance so you didn’t have to, and you could use our discounted vendors.
0:10:22.6 If we couldn’t get you a cheaper price than you could get, then we didn’t get paid.
0:10:27.3 It was all of this, like, “We’re going to do these things, but we’re going to be absolutely great and guarantee our work about those things.”
And put our money on the line. 0:10:35.4 And further, we did one more thing. “No fees up front. Cancel anytime. Non-binding contract. Only pay when you get something you want, you deserve.”
0:10:45.7 That went with leasing as well. So, if we didn’t lease your property, we didn’t get paid.
0:10:50.7 If – and by the way, we asked our homeowners to approve the tenants, not us. And that was a foreign concept to let the homeowner decide who rented there. Was generally not done by any property manager.
0:11:01.1 Property managers told you, “Found you a tenant and he’s moving in on the first.”
0:11:03.9 That was how the industry was at that time. And I decided that’s just not right. It’s too much liability, I thought.
0:11:09.8 And so, I made it that they had to approve them, but I guided them on fair housing and whatnot.
0:11:15.8 These little subtle differences game-changed the industry.
0:11:17.3 In fact, I was in – when I was doing this, everybody hated us, complained about us, “Changed the industry, he’s so cheap. He can’t possibly do all this.”
0:11:25.4 Now, if you look at the industry, they’re all just, like – and that’s because it was required to be that way.
0:11:30.4 People were – it was an antiquated industry that needed some fresh blood in it, and I think me and a number of other superstars were the fresh blood.
Jordan: 0:11:39.0 So, let’s break this down. When we talk about what drives you to do the things that you talked about – because it all sounds great, but there’s a lot of other people that formed property management companies at the same time that didn’t take that same model.
0:11:51.9 I think part of this is just temperament. Right? Brenton Hayden came out of the womb wired a certain way that was going to – you’re ok being balls out, taking risks.
0:12:02.1 At the same time, you’re telling me you had some cash hot in your hand. Right? 0:12:05.5 Like, you had a nut that allowed you to take some more risks.
This wasn’t – making some of these differences – some of these decisions and some of these distinctions wasn’t the difference between you living in your car versus not.
Brenton: 0:12:18.5 It was in the beginning. Absolutely. I didn’t have any money to even afford to go to school, which was, like, whatever, $1000 dollars to get a real estate license.
0:12:27.0 And I borrowed three grand from my dad. And at the time, that two grand was for a laptop.
0:12:32.5 And, you know, there was something else. I was kind of tech savvy. I bought a laptop at the time that you could turn the screen around, roll it down on itself and write on it. 0:12:41.4 And nobody did that.
But I eventually, kind of, was one of the early DocuSign users. 0:12:48.0 And I could sign leases on the go, but I had to get a wifi card and, like, a fax card for my laptop.
0:12:54.8 Well, shoot, that was quite an innovation that allowed me to do a lot more deals as an individual, than others.
0:12:59.4 That laptop, that license, was all borrowed money from my father who is a 30 year truck driver.
0:13:04.4 So, no money was not not something we had. 0:13:07.0 However, once I got that – you know, I had that $30,000 salary at Zabrocki. I got that job for six months.
You know, that’s not money – that’s not real good money. I didn’t have much left. I was actually evicted from my first apartment around that time, and was basically in a fit of desperation.
0:13:24.4 While sleeping in my Oldsmobile Cutlass at the park – Alliance Cold Park taking cold showers at night not to be embarrassed, so nobody would see me.
0:13:32.5 For about a week I lived that way, because the only other place I could stay was my buddy and he was a bum. I’d rather sleep in my car than at his place.
0:13:39.9 So, I was forced into a fit of desperation. And I wrote seven pages on a yellow notebook, what I was good at, what I wasn’t good at. What I wanted to do, what I didn’t want to do. How much I needed to retire. How I’d get there, broke it down by years.
0:13:53.2 I don’t know if it was desperation or inspiration, but that paper lived with me for a long time and it kept me hungry.
0:14:00.4 Now, when I got – when I lost that job at Zabrocki, it went very quickly. It’s like, – I never had these feelings before, but a couple businesses I started – it’s like, when you start, there’s a tsunami of appreciation and want for your business.
0:14:16.8 And, so now, I’m kind of a bit jaded if I start new businesses and it doesn’t go like that. I’m very worried because when I started that leasing company, it was just an insatiable demand for my services. And I got lucky.
You know, the first two or three guys I worked with had like seven or ten properties. And this guy had six and this guy had three.
But, you know what they knew? Is they knew a bunch of other guys just like them. 0:14:37.6 And they’re all these old guys that got three jobs and they’ve got money, but they’re hard at work and it’s tough for them managing their rental real estate.
0:14:44.5 So I quickly became, like the guy for, like 60 properties. 0:14:49.8 And next thing you know, those guys told other guys and it just went very, very quickly.
So, I did make – I was able to probably put away about thirty grand, which allowed me to form an LLC, get a lawyer, rent a $900 dollar a month office, ask a couple guys – I had enough business where it hurt, where I could share it.
0:15:12.0 I took a chance that, you know, that little investment would work out and it did. I never really had to even touch that thirty grand. 0:15:22.3 That business was immediately profitable.
0:15:25.4 The first year it was, like, – we did – we were only open for, like, two months. It was the last parts of September. 0:15:31.7 October of 2017, November 2017, December. Not 2017. 20. Shoot, what year did I start that sucker? 2012? 2009. 2009. Sorry. No, 2007. 2007. 0:15:51.9
0:15:53.7 September 2007, I started that business. By October we were profitable. That following next year, 2008, we were just shy of a million dollars in profit.
0:16:05.0 Which was huge for me. One, make a million dollars as a business owner in your first full year was like an ‘aha moment’. 0:16:14.1 I’ve got to grab this bull by the horns and ride it as far as it can go.
0:16:17.7 And from there, we were like one of the fastest growing companies in America. Well, we’re still on the Inc 5000 for the tenth consecutive year. 0:16:24.5
Jordan: 0:16:27.6 Amazing, man. Amazing. I want to go back and analyze a couple of the distinctions that you mentioned previously.
0:16:34.4 We glossed over those, but there’s a lot there. At least for me.
0:16:38.5 Let’s start with the flat fee pricing. Which, there was a lot of pushback around, right? There was definitely the reaction of like, “Hey you can’t do that. That makes us look bad and it’s supposed to be a percentage of the rent so that as rents grow, the management fee – the net fee will increase.” Etc.
0:16:56.5 What were you thinking with flat fee? Was it just as simple as, like, “Hey if I was a customer, I would want to have a simple known, kind of quantity”?
Brenton: 0:17:04.5 I want to say, like, I did the math and I knew how much it would cost me, you know, to manage a property. I didn’t.
0:17:13.7 I came up with a price that I thought I would pay. That I thought was fair for those services. 0:17:20.7 And, also, significantly undercut the competition.
0:17:25.6 I literally, on purpose, wanted to undercut the competition to get into the marketplace. Because management, in my eyes, from the very beginning, was only a job so that I could get the leasing business the next year.
0:17:40.6 That was the fruit, the juice. That was where the money was at. 0:17:45.9 Placing tenants in a property and a good one, managing it.
If they’re good, 80% of the time you did nothing. You just collected the rent and you had systems for that.
0:17:55.3 And then, the 20% of the time you had a rough tenant and you had to earn your money.
0:17:58.6 But that was kind of my thinking about all of that.
0:18:01.0 Now, I also had no property management software when I first started. It was spreadsheets. 0:18:08.0 It was just me in my 900, you know, square foot office.
0:18:11.3 But as the business grew, it became a little less profitable and it was really like a lost leader for us.
0:18:18.3 Something that, generally, the first couple years in business we all griped about. It hurt our reviews, it was a challenging business.
0:18:24.6 It was hard to just really be great at the management side of things. 0:18:29.0 We, eventually, I think, became very good at property management, but it took a lot of technologies, property management softwares, maintenance management softwares. You know, different accounting tools.
0:18:45.6 We ended up buying a software that allowed us to syndicate our properties out to 200 websites.
0:18:50.6 Before I had to go to website to website to website to website taking five, ten, 15, 30 minutes to make a listing. And we promised our customers, “We’d put you on four websites.”
0:19:00.4 Well, along the way, technology made my job easier and we embraced it. 0:19:05.0 And we were a very technology focused property management company.
0:19:08.5 And to this day, we’re – I think we’re still one of the leaders as a property manager in technology.
0:19:14.8 We have so many new things that people don’t even know about because it’s proprietary.
0:19:18.8 And, from what I know about competition, but I also don’t have inside knowledge of others, we’re by far ahead of the property managers in that space, because that was kind of like – we were built on – technology made this happen.
0:19:31.6 We can, you know, manage more properties for that amount of money than anybody else.
0:19:34.9 I think our – when I was CEO, I could manage around 250 properties per employee.
0:19:41.6 And we thought we could grow that easily to 400 through our automated systems that were proprietary to us.
0:19:47.6 Now, I think we’re about 300 today, but things are changing because we’re now in, you know, 38 states. So there’s so much more than just managing one market. 0:19:56.2 It became a more sophisticated beast.
And I go back to technology. Technology is the only way that allowed us to become that damn near RE/MAX or Coldwell Banker of property management. 20:00 To have a presence in nearly all 50 states is still our goal.
Jordan: 0:20:11.0 Alright. Let’s pause on that. I mean, my mind is, like, racing with different ways I want to take this, but you mentioned becoming a national brand.
The reality is that there is not a RE/MAX or a Keller Williams of property management.
0:20:25.4 There are franchises. There are national franchises. 0:20:28.4 But in terms of consumer – broad based consumer recognition, where the consumer can just riff off four or five brands in the category, that more or less does not exist in property management.
0:20:40.9 I would argue that you were the first guy to achieve that in a local market. 0:20:46.5 You very much achieved that in your local market. You achieved that, kind of that surround sound effect. You went all out on radio.
0:20:55.1 And what’s interesting to me, Brenton, is that you did a lot of unprofitable things, if you – meaning, for a lot of folks, if they were to mirror the same playbook and if they would start – had started spinning up radio ads at that same time, and only gone 80% with it, there would just be a large, smoking crater of lost money.
0:21:14.3 You pushed through. You kept doing the spend.
0:21:19.6 How early was the company before you started making dramatic investments in radio and media, and walk me through what that process looked like?
Brenton: 0:21:30.3 You know, I can say this now, because we’re not dependent like back then, but if you only knew me in the first year, we were on the verge of dying every – like we had two months to go at all times.
0:21:43.0 And that’s because I lived fast, I rolled fast and hard. If we made a dollar, I’d spend one dollar and ten cents on something to go get another dollar.
0:21:51.8 Just so we could keep things rolling. But there were some things, like radio. 0:21:57.9 I remember my first buy was $3000 dollars a month and that was like – and I signed a six month commitment.
0:22:04.1 And I pretty much, in my head said, “There’s no way I’ll be able to honor this unless it really works. And I’m going to be in trouble if I have to back out on this.”
0:22:11.5 But that first month – I mean, the phones just like – when a radio spot – because we don’t have a lot of business, we’re a new company.
0:22:17.3 But when the radio spot hit, I had to get – I had a problem. 0:22:20.0 I had to get phones that could take multiple calls. I had to get somebody who would answer that phone.
0:22:24.0 Because one of my things I wanted to do was answer all the calls all the time. 0:22:28.8 That’s what real estate agents never do.
0:22:30.3 And I wanted to always answer the call. Every time. “No voice mails” was kind of like our early mantra.
0:22:35.2 So, you know, it was so – some things just happen and they just work and they grab you by the, you know, fricking arm and they say, “You gotta keep doing this.”
0:22:44.7 And radio was that. Like, $3000 must have turned into $10000. So I did it again. 0:22:49.6 Turned into ten.
So then I’m like, “What if I put ten in it? Oh shoot, it comes back thirty. What if I put 30 in it?”
0:22:55.8 And I just kept upping my budget as much as I could, to the point I was spending 600, 700 thousand dollars a month in Minnesota on radio.
0:23:07.0 And, you’re right, if we – if you thought about property management, you absolutely only knew of us, thought about us, went to us – we were – we had at least had 60 – 70% market share during that time in Minnesota, and grabbing more and more and more.
0:23:22.9 And that’s why we ruffled some feathers. Because we’re making claims. We were backing them up and growing and we were shaking the industry up.
0:23:28.8 And radio – I was increasingly heavily dependent on it. 0:23:33.1 And, you know, for – towards about 2015, it stopped working, Jordan.
0:23:39.8 No longer could I just feed the beast. We hit a top. We hit the cap. You know, when we were spending – easily almost ten million dollars a year across the nation – and we hit a cap.
0:23:49.8 That’s just as much as you can spend and get – that’s as much juice as that lemon has to give to you.
0:23:56.1 And so, now we’ve really gotten smarter about how we advertise.
0:23:58.6 This thing we did though too, Jordan, was take advantage of pay per click back then.
0:24:02.6 And really, we had splash pages when you could control, you know, people’s – you had to be really specific.
0:24:09.4 “Minneapolis property management”. “Austin Property Management”.
If you didn’t have these little splash pages, it was very challenging to get them to drive back to your, just RentersWarehouse.com.
0:24:19.9 So we had 50 websites out there that were just splash pages about us in different cities.
0:24:25.4 I mean, it was the gold rush for property managers. 0:24:28.9 Everything wasn’t done when it came to technology and advertising even.
0:24:34.7 Nobody advertised being a property manager.
0:24:35.6 I direct mailed the hell out of you. I went on the radio. Eventually I had Super Bowl commercials.
0:24:41.3 I’ve done – I mean, if you thought about property management, I wanted you to know I existed. And I wanted you to know our value proposition. That was the only thing I tried to do.
Eventually I was able to do, you know, cost per lead, cost per sale, and really get intelligent about it. 0:24:55.9 But I just looked at it as how well it worked in the beginning and just kept feeding the beast.
Jordan: 0:25:01.7 So, I remember doing a problem/solution interview with you some time around 2011 – 2012.
I was in Guatemala, and we were pivoting off of the lead gen service called, ‘Management Properties’, pivoting into Lead Simple, and we wanted to talk to folks to think how they thought about the sales function.
0:25:23.1 And it was a little depressing. A lot of the folks that we interacted with did not have a formal sales function within the organization. It was somebody juggling hats, doing it part time.
0:25:33.1 I get on the phone with you and we’re immediately having a conversation that I’m very comfortable with, but it’s much more like a valley SaaS conversation.
0:25:42.8 Talking about lifetime values, customer acquisition costs. I remember you giving me – and I’m looking at the document right now – you gave me a channel specific CAC for APM radio. Different types of radio. Talk versus music. Pay per click. SEO.
You told me your customer lifetime value down to the dollar. And you were making strategic bets off of that.
0:26:07.0 Meaning, it was not a faith-based proposition. I put the money in, I see how much money comes out. If it’s enough money, I’m going to put more dollars in.
0:26:14.2 And, furthermore, I’m going to max out my credit cards and I’m going to borrow against that, because it’s a profitable return.
0:26:20.0 What was the impulse that you had, or what was the training or background that got you to operationalize sales and marketing in light of the fact that so many businesses buy into this lie that if you build it they will come?
“It’s all about service.” “We’re number one.” How long you’ve been in the business. Etc.
0:26:39.0 You didn’t care about any of that. You just went straight to the jugular. Where did that impulse come from?
Brenton: 0:26:45.8 It came from, you know, being a hyper-growth business. I needed help. I’m a first time entrepreneur with this business, and I was in an entrepreneurial group called, the EO. Entrepreneurs Organization.
It’s a worldwide chapter of founders and CEOs of businesses.
0:26:59.8 And everybody in this business was talking about a business operating system. 0:27:08.1 Like, 70 of the 77 members used a business operating system called, Entrepreneurial Operating System. Short for EOS.
0:27:15.5 And it was derived from a book called, Traction written by Gino Wickman.
0:27:20.7 And now, there’s 200 people. In fact, I’m one of them that go around the country teaching this to small businesses that are willing to pay me a handsome fee to teach it.
0:27:28.5 But, that business operating concept exposed how much I didn’t know, and how much I could know.
And how, if I was already so good at this, imagine if I add some of the things I needed to know instead of just going off gut decisions.
0:27:42.9 And that’s really what it was. I mean, Traction is all about, you know, people, data. It’s about values. It’s about growth and how you’re going to track growth.
0:27:54.1 And so, this was just perfect for me. 0:27:56.7 EOS.
And so, I used that system to my benefit and that’s what – I didn’t even know these things like CPCs and what they meant, but this all taught it to me.
0:28:05.8 And it helped me organize it and see what was working well and what wasn’t. It helped me keep my finger on the pulse of the business.
0:28:11.5 So, while I was making lots of bets, I was checking in on those bets.
Like, refreshing the page every minute, because I had real time data telling me. And I was living on the edge because I could. 0:28:22.5 I had good data and things were going smoothly.
0:28:26.5 So, you were a part of that. If, you know, you were a part of my lead generation monster. You know, I wanted any and all leads.
I think we even tried to acquire you. I wanted to have exclusivity. I was like, whatever I could do to get every drop of juice out of that fricking lead source, I wanted it. And, because I found it worked.
0:28:44.6 You know, I called you up, “Jordan, what do I got to do to get more? I’m getting leads, I’m closing them, but I want more of them. I’ll pay you more, I’ll pay you less. What do we, how do we do this?” You know?
0:28:55.8 But I could tell, because I knew if I had a customer they stayed seven, eight years. 0:28:57.5 And every year, I kind of had to add a new year because they were still there.
0:29:01.2 And I was like, “Jeez, my customer lifetime value is so massive, I could really afford to spend a lot to acquire one.”
0:29:07.8 And so, that hit me in the head that no other property manager ever been hit like that. To say, “Wow, I can actually spend like $2000 dollars to go out and get a customer because it will make me $16,000 over the, you know, eight years. And 98% of my customers stay with me eight years. Well jeez, that’s an easy bet. Maybe I could spend $8000. I could spend $10,000.”
0:29:29.8 And so, I just saw that and I just thought, “If that’s the case, then what other sources can I advertise with? Let’s get on ManageMyProperty, let’s get on APM. Let’s have a Super Bowl commercial. Wow, what would happen if we did a Super Bowl commercial?”
Well it worked fricking great. 0:29:44.4 We had the numbers to back it up.
Those things drive power. Data – instead of running off ego-fueled, meeting rooms, gut feelings, I’m letting real life data drive my decisions in my business, and it empowered the shit out of me.
Jordan: 0:30:00.6 Brenton, did you know you were in the moment when you were there? Like, did you know that this was kind of a limited time window and did that cause you to really go balls out with all this stuff?
Brenton: 0:30:12.9 I never felt the pressure of a limited window. I always stated that I thought it was. 0:30:20.3 But I really never thought about it.
I was really caught up and just, like, keeping up with the growth. I didn’t have much time to think about what I had done. I just had to think about what I need to do.
0:30:32.0 And, it was only around 2014, 2015 that I actually started to look back as I was a couple months past my 27th birthday, and I was looking at my yellow notebook saying I should have been retired.
0:30:44.3 And I’m looking at my bank account and saying, “Jeez, I probably could.”
0:30:47.4 And then I’m looking at the cashflow, and I’m like, “Wow, that’s – holy shit we’re here.”
0:30:51.4 Then it made me look back on the business and see things that were changing. See what I had done.
0:30:59.2 I also realized I didn’t want to stall the business for my own comfort. Meaning, just, this is good for me. Business could go places. I was sort of burned out. I had been running at full speed for about ten years.
0:31:11.4 And I decided to sell a controlling stake of that business. I’m still the largest shareholder in that business, but I’m out of control now. Per se.
Jordan: 0:31:20.3 I love your recognition that the business can and does have a life beyond the founder. That’s the way that it should be.
There are people who’s – they’re our lives – the business depends upon, and it should have an ambition and scope beyond just the wants and desires of the founder.
0:31:37.8 That’s awesome you were able to step out.
0:31:37.7 I want to hear more about the chaos. Living on the edge.
I think anybody that hears that you’re spending that kind of money on sales and marketing, the extreme growth – what are the downsides to living on the edge?
0:31:52.5 And here’s one thing in particular I want to hear more about: In my mind, this picture I’m imagining of you being young starting this business – the flat fee thing? No downside, right?
0:32:04.6 Maybe you could go broke if the price isn’t high enough, but it’s a free country, you can charge whatever you want.
0:32:09.8 But in a much – money on radio ads? Same thing.
0:32:14.1 What about the guarantees? This is a sticky issue. There’s a lot of conversations nationally now as more awareness is in case. As more real estate boards have kind of perked up their ears to, “Are you offering insurance? How does all that work?” Talk – because you pioneered that and it was a great idea…
Brenton: 0:32:31.1 And I was banished for it to, you know Jordan.
Jordan: 0:32:32.8 So walk me through that piece of the story.
Brenton: 0:32:34.7 Well, it was all about value proposition. How can we close more leads?
Jordan: It was a damn good one.
Brenton: 0:32:42.5 We have people calling now, we’re closing 70% of them, how do we close 100%?
0:32:47.8 It was – we had a couple missing value propositions that even no one else had. But if I had them, I could have got the business.
0:32:53.3 And, it’s first thing we started off with, was a Tenant Warranty. 0:32:58.5 [Inaudible] if you heard it before, it’s my word. I own that. Let me know if anyone’s using a tenant warranty out there.
Jordan: Love it.
Brenton: 0:33:06.8 That warranty said – and this is all it was, Jordan, in the beginning. If that tenant didn’t last 60 days, we would process the eviction for you at our costs and find you a new tenant at no additional cost.
0:33:20.8 And here’s why that was created: Because everybody else’s would not only not let you approve the tenant, they would, but then if it didn’t work out, they’d say, “Well that’s how it goes sometimes.”
And then they’d charge you again to put another tenant in there.
0:33:34.3 And I’m like, “No, no, no we can’t have that.” Now, it’s very rare a tenant is going to default, but I wanted people to know we’re not like that.
0:33:42.0 So that was all it really was in the beginning.
0:33:43.4 Today? We warranty for the full length of the – the full 12 months. Ok? 0:33:50.6 Any exceptions.
That tenant’s subject to default or gets evicted, we owe you a new tenant and handle the eviction.
0:33:55.8 Then we also came out with a separate product that if you didn’t want – we would sell you an Eviction Protection Product.
Which we would cover all the costs associated with an eviction and find you a new tenant. 0:34:08.4 But then we also would cover your rent for up to a period of time if your tenant got evicted.
0:34:13.1 And then, it rolled into eventually a Rent Protection Program that we licensed through AON Insurance, and became the largest seller of it in America. Until they abandoned that program and we offered our own.
0:34:25.5 Well, eventually, you know, all my competitors all launched similar – called it something slightly different.
0:34:32.4 And especially in Minnesota, where this was all going down. A bunch of copycats out there.
0:34:38.0 And we were just, you know, that’s what made us have a tough relationship with everybody in the market. Nobody would talk to us. Everybody hated us. 0:34:43.1 They called any other company, they’d talk shit about us.
But the one thing we didn’t do, is we tried – you know, maybe at the CEO level, from me to you, I’d talk some shit, but we never, as a company, would ever talk crap about any other property manager during that time, because that was also something we wanted to not be.
0:35:00.6 We had a lot of these, “We don’t want to be ‘this’ value sets.” 0:35:03.5 We want to be this.
We always had these value and anti-values, so any new person that came on board, we wanted them to know exactly where we stood, and why we are who we are.
0:35:12.5 That’s how we hired and fired. If you went against our values, you’re against our whole company plan here. And that’s just – you’re messing up the mojo.
0:35:19.7 And we had a great culture. You know, a lot of this is to the fact that, you know, over my ten years, I only had like, six people ever leave. And we had 100 plus employees. We won, like, ten best place to work awards.
0:35:31.1 So while there was chaos around us for everybody else, I think, man, I was quite content. 0:35:36.8 I had an amazing team and most everything we touched turned to gold.
0:35:41.7 But to go back to this – these insurance products, when I went to sell my business in 2015, I’d never been audited before. 0:35:49.6 By the real estate commission.
And that’s odd, because, you know, I was the biggest property manager in the state by far. 0:35:56.4 And the reason that was, was because nobody complained about us. 0:35:59.1 We were awesome. At least at the commission level, or the licensing level.
0:36:03.9 Well, when I went to sell, I had to transfer my license to another broker, or the company’s license to another guy and they initiated an audit.
0:36:14.7 And they made me abandon those programs. They said I was selling insurance without an insurance license.
0:36:19.7 But I was actually selling somebody else’s insurance, who does have an insurance license, and only getting paid like $25 dollars which was the maximum I was allowed to get paid.
0:36:27.4 It was perfectly legal. And my lawyers will argue the same.
But we had to – we would have had to argue the State and they would have deferred listing our – or deferred transferring our license and we would have lost – I would have lost the deal of a lifetime to sell my business.
0:36:43.1 So, we compromised.
0:36:46.0 And to this day, we only have some of those programs. We have our Tenant Warranty. We don’t have a Rent Protection Program, because many States don’t allow us to.
0:36:55.7 And then, we used to have a Property Protection Program that we’re not allowed to have, even though that was a product that was like a home warranty and we ran it under a home warranty-like provision.
0:37:05.2 We used to protect our homeowners against any and all property damage up to $1000 dollars.
0:37:10.3 So, they could pay a nominal fee, and if your tenant damaged your property up to $1000 dollars, we would pay for it.
0:37:16.8 It was all these things to alleviate fear and angst to hire us. It was all these things to give you more value to hire us.
0:37:23.1 And we traded all these things, and as a result, you can imagine, the marketplace loved it.
0:37:27.5 And we never had any real problems with it. They were only lost because States fought against us and said they wanted us to do it differently or just not at all, in general.
0:37:39.1 So, you know, some of those innovations are kind of lost. And are State by State specific, but Renters Warehouse had plans to take all of those products, bring them to every State nationwide, and eventually bundle them into our service.
0:37:50.5 The idea was to go from $79 to say, “You know what? If you choose the $99 dollar plan, we’re going to give you all of that. How does that sound?”
0:37:57.2 And now, the $99 dollar plan is regularly – the regular price for everybody else out there. But our $99 dollar plan included all those products.
That was our phase to take over the property management empire. Plan – but that got hijacked by many States who wanted us to get rid of those.
Jordan: 0:38:15.9 So on the back of the conversation that we just had, I want to talk building out your team. Obviously, that means staff, but before we even go there, let’s talk about vendors.
0:38:24.1 This is – we’re getting into some minutiae, but hey, it’s my show and I want to talk about some specifics.
0:38:28.4 So I want to get your advice on finding the right legal counsel.
0:38:33.0 For your average PM, you know what the game looks like. Risk, liability, etc. 0:38:37.0 Any advice on the criticality of finding the right CPA, legal advisor, etc.?
Brenton: 0:38:44.8 Yeah, absolutely. You need a great accountant and you need a great lawyer. If you’re going to be a businessman and have any skill.
0:38:53.1 And you can’t be cheap about it. You can’t just hire your friend who became one.
0:38:57.8 You got to research it. Who’s the big dog in real estate? Who spends – doesn’t work on anything else but real estate?
Who is, you know, got an entrepreneurial open mindset? Who likes your business as much as you?
0:39:11.8 You know, you want a partner. You don’t want a lawyer for today or one case. You want – you kind of want a longterm deal.
0:39:17.6 My accountants were fantastic. I eventually had both inside accountants, third party accountants and accounting firms.
0:39:23.0 I never cheaped on that. I wanted to know all the numbers were accurate. I wanted to have – we just we had a lot going on.
Collecting thirty million dollars of people’s rent a month, we wanted to make sure that that is audited to the nuts. 0:39:34.4 You know, so we never took accounting cheaply.
0:39:37.7 And then, you know, along the way we had, I think, probably the longest lease in the business.
One of our old core values was to have the most tenant – or sorry, the most landlord friendly lease in the business.
0:39:50.2 Because landlords in Minnesota were being taken advantage of by tenants all the time. And that was a common problem that investors faced.
0:39:57.0 So, I created the – like a 30 something page lease that cost me a lot of money and was way above and beyond the one page or two page that was being used in the marketplace.
0:40:07.6 And it gave a lot of power, a lot of disclosure, and it allowed us to do other things that made it beneficial for the landlord.
0:40:16.1 And so, that was all good legal work.
0:40:19.3 I had some bad choices in lawyers along the way. And went through a lot of lawyers. But eventually, towards the end, I had my own Chief Legal Officer in-house who just lived and did that. His name was Dave Thompson.
He’s actually – he opened up a North Carolina office when we were expanding. And since has left the business, but we used to have inside counsel – it’s so important to us.
0:40:44.8 And even as a smaller business, that was a – that was something we had, because we’d be out there spending a couple hundred grand with a law firm when we could pay a guy a couple hundred grand and get so much more from him than just the hours he worked.
Jordan: 0:40:55.5 I get the long tenant lease, that makes sense to me. What about the property management agreement? How did your PMA change from day one?
Brenton: 0:41:03.5 Yeah, same thing. With all those new programs and warranties and added services and optional ad ons, it got long.
0:41:10.5 And also, we wanted – that one was one – a Tenant Placement Agreement was about getting your property listed.
0:41:17.7 And we also a la carted these things. You could hire me to just lease it or just manage it. That was something not many property managers did either.
0:41:25.8 And so, we had separate agreements.
0:41:26.9 And the Tenant Placement, we took a different approach. We wanted it to be non-binding contract, cancel anytime.
0:41:33.1 “This is all we’re going to do and if we do it and you approve it, you agree to pay us. Fair enough?”
0:41:37.9 And that was it.
0:41:39.8 Now, the Lead Contracted Lease Agreement, now that’s a different story. That was a business agreement that was a lot of money at stake and somebody’s borrowing you a very expensive asset.
0:41:48.6 And while it didn’t take away any tenant rights, it just made it very clear what the landlord was and wasn’t responsible for and what they were and weren’t responsible for.
0:41:57.2 Different ways to pay rent. You know, we addressed every issue.
And every time we’d come up with something, or we’d get beat in court about some crap, or some clause or something, we would go back to the drawing board and make that lease better.
0:42:09.8 You know, today we’ve really scaled that lease down though. 0:42:12.7 I don’t know where it stands, but through good legal work, we’ve been able to combine all the years of, you know, parts that we added on and just really condensed it and still have that same great value, but I would say better written. Shorter.
0:42:26.5 So I think it’s at around, like 15 pages now. But that sucker got up to almost 40 when I was around.
Jordan: 0:42:32.0 Love it. So, let’s pivot to the other side of the team building, which is in-house. You built out a solid stable of A-players.
I’m thinking about Kevin Ortner, Jesse Evans, Ron Wright, Pam Kosanke, Kaz. Some folks from old, from new and a whole bunch of others that I don’t know personally.
0:42:49.1 But these are the ones that I’ve met – was impressed by.
0:42:52.4 What lessons did you learn along the way about both making the right hire the first time, but also doing the skill development and talent development over time?
Brenton: 0:43:05.3 Hey, that wasn’t – that was me but it wasn’t. I’m not a great trainer. But I used that Entrepreneurial Operating System.
0:43:14.2 And that gave me a tool to help me to, you know, track and organize my vision. 0:43:20.3 Which then I could clearly articulate that to new hires.
0:43:25.6 I also hired and fired based on core values of the company and myself.
0:43:30.1 I liked having like-minded people around, so I would hire like-minded people. And that had same core values and appreciated my company’s core values.
0:43:38.0 And I used a tool called, ‘The People Analyzer Tool’. Which allowed me to make sure I was hiring people that fit in.
0:43:44.5 You know, they could have been a great superstar, but maybe they were a jerk. 0:43:48.2 And they just go mess up the vibe you’ve got. Well, that was – I wouldn’t do that.
0:43:52.4 And, in fact, I would hire guys that I knew had a good vibe, good ability to learn, and were openminded, but had never done property management before. That was how I built a really great team.
0:44:01.3 Everyone you mentioned, every single one, they didn’t know jack about property management. They do now. They do now, but they never did.
Jordan: 0:44:10.8 I should hope so. Kevin Ortner’s the CEO of the company.
Brenton: 0:44:12.8 Yeah. I mean, he had like two properties he managed with his dad that he just got started on, but, you know.
Jordan: 0:44:19.6 [inaudible].
Brenton: 0:44:19.8 He’s a veteran. He’s the CEO now. I made him CEO. He was my longtime President.
When I – I actually retired a year before I sold the business to move away. 0:44:30.1 And he ran that business for me and did a good job. He’s still there.
0:44:33.5 Some of those names you mentioned are no longer there.
0:44:36.6 But, we’re still attracting really top talent. But now, we’re attracting them from Fortune 500 companies.
0:44:44.1 I think some of those same values and tools are being used. I just had that conversation with Kevin, our CEO, about whether or not he’s using Traction. Or, I call it Traction. 0:44:52.3 It’s EOS.
0:44:55.9 And he said, you know – and in many of the markets, and at least at corporate, we are.
So, I believe all of those things are still be – happening.
And that’s, I think – you know, it creates a culture. It creates a culture of transparency, shared interest.
0:45:12.7 And, you know, as a result it just leads to more conducive workplace environment. You get more from your employees.
Those employees get empowered with new tools, new systems, and makes better executives out of them.
0:45:26.1 Even if – if they’re really great executives and they never worked with EOS, and now they have, and now they also worked in property management, it made them better.
0:45:34.2 I know that EOS will make everyone better and so… In any business I’ve ever done, I still put it in. For my pizza shop, to my laundry mat to some development companies, you’ve got to have EOS in it.
0:45:44.0 Or, at least have an operating system. That operating system is responsible for – radio advertising. I’m going to go as far as saying the book Traction, by Gino Wickman and I Heart Radio, were like, the cement and bricks to the Renters Warehouse.
0:46:02.3 They were the building materials I needed. And I’ll let everyone know. 0:46:06.7 If you had those two in your pocket like I did, you’re unstoppable.
Jordan: 0:46:12.9 That is not what I expected to hear, Brenton. 0:46:17.2 I remember you mentioning EOS back in the day and that you had a trainer in.
I didn’t realize it was that big a part of the success. But it actually makes sense to me.
0:46:24.6 In light of the level of chaos that you willing embraced and pumped into the organization because of your ambition, knowing that EOS was kind of the metal superstructure undergirding the whole thing. 0:46:39.2 That’s actually really inspiring. I actually just had Mike Paton on the Podcast a couple of episodes ago.
Brenton: 0:46:43.5 Mike’s an OG, man. He’s – I was taught by somebody who taught – who he taught. CJ Dubay.
You may have met her at our national convention once that you were a sponsor at.
Jordan: 0:46:55.0 I did. That’s who I was thinking of.
Brenton: 0:46:56.7 CJ taught me and all my businesses and is Renters Warehouse’s coach. She’s now, along with Mike, top dogs at EOS, that actually sold to private equity recently.
0:47:08.0 And now I’m part of EOS as a Implementer. Just recently. Like two months ago. I’m a CJ and a Mike now. But not quite to their level.
Jordan: 0:47:16.7 Love it. So, the last leg of the conversation around team building and selection. I just would love to hear your story of the journey through franchising.
0:47:24.5 Why was that initially attractive to you? What was – what hurdles did you uncover? And why did the company eventually transition away from franchising?
Brenton: 0:47:33.7 That was a very capital efficient way for me to expand. Going back to the fact that I did speak about how I thought it was a limited opportunity for us to achieve national recognition as the Coldwell Banker, the Re/MAX of property management. 0:47:48.2 Instead of real estate.
0:47:49.4 And we were going around, we had our new term: Professional Landlords, that we coined. 0:47:54.3 And trademarked.
And we wanted to no longer be property managers, but the professional landlords.
0:47:59.0 And with that, we set on a mission to expand nationwide. 0:48:04.0 You know, that plan to expand nationwide really required me to have a better management team.
0:48:13.3 And, along that way, I had to expand. I decided to basically stop doing the property management and focus on: How do I teach people to do property management?
0:48:27.4 Sell some franchises, learn the franchising business. Because you’ve got to become licensed in 50 states. All of those have fees.
0:48:33.9 You’ve got long franchise agreements. People are buying rights to certain states, or counties or markets. 0:48:40.5 We ended up selling 38 franchises.
0:48:44.4 We were different than, like a Subway or Real Property Management, where we gave large exclusive territories, because my model allowed you to be very big.
0:48:53.1 Versus, like a Real Property Management kind of wanted you to work your neighborhood.
Jordan: 0:48:55.5 So your model was built on what you had personally achieved and experienced.
Brenton: 0:48:58.4 Yeah. It was replicating what we had done in Minnesota.
If I could only have 50 more of those, one in every state, we could – that’s all it needed. Instead of, you know, like a RE/MAX is on every corner.
0:49:06.2 Renters Warehouse could cover the whole state from one corner. 0:49:10.5 That was just how our model worked.
0:49:12.4 And so, we were a very franchisable concept. We still have a number of very successful franchises. Houston is very …
Jordan: Works great.
Brenton: 0:49:19.2 … multi-thousand unit franchisee.
Atlanta, with Todd Barton. Those are the two bigger ones.
0:49:30.1 Our guy out in Baltimore, David Gurian. I think he was franchise number one, other than Phoenix, who was Kevin, and was like a partner at the time.
0:49:41.4 But that guy walked right into my first ever franchise convention. 0:49:45.6 It was like, nine in the morning on day one of Thursday, and literally comes in, doesn’t look at a single thing, walks right up to my booth, “I came here to buy a Renters Warehouse. I would like to buy it today. I already researched it, I already want to do it.”
0:50:01.5 And I was taken away by it, and we went into the backroom and we signed a franchise agreement. Or a franchise receipt because you had to wait 14 days or whatever. But he owned – he went out and opened up in Baltimore. 0:50:11.2 Well, he’s got the Maryland area. He’s doing very well for himself. David Gurian.
0:50:15.8 I always remember his story because he was such a great, low maintenance franchisee and a great entrepreneur. 0:50:21.5 Now why did we get away from that?
Jordan: 0:50:25.1 Before we talk about that, let’s talk about the flip side of David Gurian. Because I know, invariably, just math, probabilities, you also probably picked some dogs. Right?
I mean, how do you handle the drag that the less ideal decision making around franchisees creates in the organization when they start to underperform?
Brenton: 0:50:44.7 I never had any under performers. All of them were able to actually achieve pretty decent success.
0:50:52.4 What I had was guys that didn’t want to carry on. 0:50:56.1 Didn’t like the work, too much to keep going.
Or perhaps there was too much pressure for them to work harder.
0:51:03.9 And so, we lost a couple that wanted to leave the industry after being it in a year or two. 0:51:08.7 But none of them were ever closed. None of them were ever taken back, except for one who got himself in a bit of a legal trouble.
0:51:17.0 I had probably two franchises we took back, or the guy wanted to leave. And I never had one close or fail.
0:51:24.9 We’ve since bought 20 of them back. I mean, the corporate offices. 0:51:31.9 Where I was going with this.
I used franchising as a way to expand capital efficiently. I didn’t have a lot of money that allowed me to expand really quickly using other people’s money and get into those markets and obtain my piece.
0:51:49.0 Well, when you’re backed by private equity, they say, “Why would you do that? We have money. Let’s open up corporate offices.”
0:51:54.4 And, that’s what they decided to do. And almost promptly after I sold the controlling stake in the business, they decided, not I, I would have kept going with both – they decided to close the franchising division for future sales.
0:52:12.6 Now, we still have a number of franchises that we support and many of them are probably going to be purchased back.
That’s our ultimate goal. Is we roll up our own and then also continue to expand by opening up new offices.
0:52:24.2 We also bought a number of companies that were unrelated to us. Big and small.
0:52:29.8 We must have spent 20 million dollars in the last two years buying companies. 0:52:34.0 Some of them are some of them not. So we’ve been growing inorganically as well.
Jordan: 0:52:38.9 Love it. So, this was a long term play to have corporate really be the primary dominant player in the market. But you used a capital efficient strategy to gain traction. 0:52:51.7 Totally makes sense.
I love some of the guys that you mentioned. Rich Drake, smart operator. 0:52:57.7 Every time I’m with that guy I learn something. 0:52:59.4 I was actually at one of his Houston events at The Redneck Country Club.
Brenton: 0:53:03.1 [Inaudible]. You know, 0:53:04.4 [Inaudible] Jordan, I have a number of board seats on Renters Warehouse, just enough to keep me out of control.
0:53:12.0 And, but because I control so many seats and so many votes, I don’t want – I want more insight in the board room, and so I actually appoint different people that I think bring a lot of value to the board.
0:53:21.2 And Richard Drake is my newest appointee. He’s one of seven voting board members on Renters Warehouse’s corporate advisory board.
0:53:29.3 So, that just happened, like a few months ago. 0:53:30.8 Pamela was on there for awhile. But, you know, my OG partner, Ryan Marvin, he decided to move north and do a lot of playing monopoly up in northern Minnesota town, buying up and developing as much as he can up there and is taking time away from the board. 0:53:46.6 And, as a result, we fill his seat as well.
Jordan: 0:53:49.7 Beautiful. So, one of the other aspects of operations that was unique was what you did with the sales function.
And this wasn’t because early on you were multi market. It was just in the one market you were in, you were driving so much volume.
0:54:05.9 Was it a complete no brainer to you to have that inside sales function of a centralized call function? Because very few companies do that, even when they’re multi-market.
0:54:18.1 You kind of – you were really going all out being able to drive mass efficiency in that regard.
Brenton: 0:54:25.4 In the beginning it was just me. And that was kind of appealing to some people, I think.
Being able to talk to – you know, by having these radio ads, we were perceived to be this big company.
0:54:37.4 And I remember, in the early days, everybody perceived me to be this giant company. And, “I can’t believe I’m talking to the CEO! I can’t believe I’m talking to the owner. That’s so cool.”
0:54:45.5 And I was like, “Oh, we’re about five people here, but that’s cool.”
0:54:49.1 And, you know, so I answered almost all the phones for like a year and a half. I perfected the script. Overcoming the objections that were common.
I was developing our value proposition by listening to people. 0:54:58.7 Why they did or didn’t do business with us. 0:55:01.6 So, for me, it didn’t come naturally.
It came naturally for me to manage the phone because it was my money and I needed it to work.
0:55:10.8 But that was my first level of, like, trusting someone else. Was bringing in somebody to help me answer the phones so that I could work on the business instead of just doing that now.
0:55:22.9 And that started out with a guy I trusted and he did a good job. He was a good salesman. He lasted about a year.
0:55:28.4 And then Jesse was one of like, the first six employees I hired. I think he was employee number six.
0:55:34.8 And he started out in customer service, but quickly earned a lot of respect in the office. 0:55:39.8 And then became about a six year, you know – went on to be the head of sales for six years.
0:55:45.7 And he helped me, along with my management team – created a very robust sales process. 0:55:50.5 Automated, followups, you know, having a CRM, overcoming objections, signing deals out to agents.
0:55:56.4 Tracking, you know, conversion. How long it took us to get to a call. 0:55:59.8 We were really building things out, one by one, by one, by one, by one.
0:56:04.0 And eventually, became a sophisticated system, which even today we’re reworking. 0:56:08.3 And we’re building brand new custom proprietary, you know, CRM with a heavy emphasis on how we’re handling our sales division.
0:56:16.3 So, we’re redoing that to make it even more smarter. 0:56:20.5 Having text incorporated – text messaging followups and all kinds of new tech.
0:56:24.5 So, it was – it was increasingly more important and easier to expand once I got that one guy in there. But that was probably the hardest thing ever.
0:56:34.0 I hung onto that seat for a long time. Giving somebody control of that – I called it the money funnel.
0:56:38.5 Because, you know, you better make sure that money comes in that funnel. If you suck at selling or don’t answer the phone, man, that would just make me insane.
0:56:47.0 And I used to get just nuts in the first year or two. If I hear the phone ring a couple times, or somebody went to voicemail and then they called again, I would just lose my cool.
0:56:53.7 That was the quickest way to get me fired up, is like, you know, it cost me, like $600 dollars to make that phone ring and we just said, “Fuck it, let’s just not answer it.”
0:57:01.9 And, you know, if you answered it, it was like an 80% chance we were going to get that business. And, you know, we didn’t. “Nice job.” 0:57:07.9 You know.
0:57:08.6 And we created this environment where just nobody wanted to let anyone down.
0:57:12.8 That EOS gave us this great transparency. 0:57:14.7 Because everybody had numbers and goals and we had to report on them every week. And you had to self report.
0:57:21.0 And we had benchmarks to know if you were doing good or bad. And nobody wanted to be on the wrong side of the benchmarks, so everybody came prepared. Hit the benchmark and then some.
0:57:28.6 It just created a very competitive, shared vision collective. 0:57:34.3 I think of my – I think of the early days of Renters Warehouse like the T2 collective.
0:57:38.7 You know, what did Terminators want to do? They wanted to do one thing. They want to kill humans. Right? Take over the world.
And everyone is aligned on one mission. Right? 0:57:47.1 Let’s go kill all things. Well, we were like a cybernetic collective of property managers. We wanted to just go kill and slay the property management industry. And know how to focus.
0:57:56.6 And if you wanted to come join the army and have a mindless mission, like this is all we’re doing and we only do this now. This is your mission, you’ll agree to stay the mission. 0:58:04.9 Then you came on board and you stayed a long time if you did back then. 0:58:08.0 It was really cool.
Jordan: 0:58:09.9 Man, a cybernetic group of property management organisms. Wow.
Brenton: 0:58:16.2 If you asked my guys, I think that’s how they’d describe it. We were so connected. We were friends.
They were lower paid than ever, but happier than ever, because we were all working together.
They all felt they were a part of something, which they were. 0:58:28.7 They can all take credit for pieces of the success.
0:58:31.0 Those insurance products we brought up. Those warranty programs. I didn’t think of all of those.
Those were discovered in problem solving meetings as part of my EOS system. 0:58:43.9 And they were trouble-shooted and brainstormed amongst what I called, my Level 10.
My ten advisors in my business that I met with every week that helped me run and innovate the business.
0:58:53.2 I was the visionary. I had an integrator and then I had a team of people I wanted their input. People who thought differently than me and people thought the same as me, and together we created so much. 0:59:03.5 I’ve got to go back to that EOS system.
Jordan: 0:59:06.2 Wow. I want to – there’s a lot we didn’t get to talk about.
I do want to pivot to one last theme.
And that’s this: As you grow, and you learn more about life, being an entrepreneur, being a man, as the scope of your view of the world broadens over time, I’m sure you’ve experienced, as I have, the reality that, “What’s true for me is not always true for somebody else.”
There are many paths to happiness and fulfillment, etc.
0:59:35.8 With the kind of success that you’ve had, with the path that you took, I’m curious what advice you have to the average property manager.
And I don’t say that in a derogatory way. 0:59:46.8 I say that in the statistical sampling kind of way. 0:59:49.8 You take your average – you take 5000 NARPM members, you peg the average temperament and profile and it doesn’t look like Renters Warehouse, or anything close to that.
0:59:58.7 What is your advice – how would you advise or counsel somebody that’s managing, let’s say, between three and four hundred doors.
They’re growing at 50 doors a year and it feels like a lot of sweat and a lot of work. But they’re not going to go borrow a half a million to run radio ads.
They want a decent lifestyle, they want some more freedom within the business. They’re probably – their number one complaint is people issues.
1:00:27.3 What kind of advice do you think is germane for that flavor of entrepreneur and business play?
Brenton: 1:00:37.0 I’d say, I’m going to come back to EOS, Jordan. Because, if you’re content and you’ve built something. Like, three or four hundred units, and you’ve got a good reputation and things are fine, you’re happy.
1:00:51.7 You achieved your level of success, then I would say, “Make it easier for you to manage. And make it easier for you to tell if things are going good or bad. And make it easier for you to continue to remove yourself from that role and make the company more valuable so it doesn’t depend on you.
1:01:06.2 So that one day, not only can the income be there, but you can sell the business as an asset like I did and let it live on.
1:01:14.3 You know, most people’s businesses are themselves. If you can transform your business that is of yourself, without even changing the size, you’ve changed your value.
1:01:24.5 And EOS did that for me. I didn’t know I was doing it. But hindsight said that that’s what it was. And that’s my advice.
Jordan: 1:01:34.3 Man, I love that. And what we’re not talking about is the ego commitment that is required to do that.
1:01:39.7 Somebody pointed out to me, just recently – I think I was actually watching a Gary Vaynerchuck interview and he was interviewing a gal that was running a very tiny company, and she was complaining about not being able to find the right people.
1:01:52.1 And he turned it aback on her and basically said, “Are you sure that you’re not allowing your ego to be the limit of the competence of the people that you’re willing to hire in order to always be the smartest person within the organization?”
1:02:05.3 And at some point, you’ve got to give that up.
1:02:09.7 Certainly, when I think about those people that we talked about earlier: Kevin, Jesse, Ron, Pam. Some of those folks – Kaz – some of those folks have to be a lot more competent than you in their specific domain.
1:02:18.0 I mean, I’ve been in the marketing game for awhile, but Pam? Man, she’s a baller.
Brenton: 1:02:23.3 That’s a legend right there. That’s a real – that’s the OG of ad game, man. That’s the big game, too.
So, you know, that’s a girl that invented the dollar menu. 1:02:33.5 That’s the girl that’s got, like, things like that on her resume that made me chase her for two years.
But you know what? That woman made three, five, six, eight hundred thousand dollars a year at the biggest firms around. Plus then some. And then some. But she wasn’t happy.
1:02:49.7 She came to me, worked for, like a hundred. 1:02:52.5 And I think we built a – she came along – she was the only person I felt comfortable letting take over advertising.
That was the last job I had that I wouldn’t let go because it was such a big spend.
1:03:03.2 And I talked myself through it with a really great mentor, partner, Tracy Call, the owner of Media Bridge Advertising Minnesota.
1:03:10.7 We started our businesses around the same time. 1:03:13.1 She’s a tycoon now in that space. Her and Pam are working together, working together, and Pam is clearly the best in her space.
1:03:22.7 You know, Kevin is highly intelligent, doer. And I was able to reposition him as my President. 1:03:29.4 You know.
1:03:28.5 Jesse, has a great management style of people and can sell as well if not better than me. 1:03:36.6 And a better temperament than me. Selling.
You know, every one of these guys had absolutely key things that made them better, or the reason I felt comfortable giving that job. 1:03:48.3 And those people were also in my Level 10 room.
1:03:50.7 If you remember Caleb Gilbertson. Man, me and him would butt heads. God we would butt heads.
1:03:55.3 But that was like my favorite employee. Like, he and I couldn’t think differently on shit.
1:03:59.8 But, that guy as a wizard in the tech game. He fought and challenged me ruthlessly on everything. 1:04:06.4 And I fucking loved it. I loved it.
Because I always knew where he stood. He always backed up what he said he said. He didn’t just spout from the mouth. He had a real reason why he was rhyming right now. While he was talking to you.
1:04:17.9 And I loved that. I love guys that could contribute to the business, but actually, if challenged on it, knew there shit. Instead of just talking to hear themselves.
1:04:25.9 I had nothing but OGs around me. 1:04:29.2 Caleb, all these guys are now gone, doing bigger, better things.
1:04:32.6 And taking their skills to new businesses. Except for, you know, Kevin’s still around. Jesse’s – Jesse is the top corporate office that we newly opened – he moved to Texas and runs Austin and Dallas now for us. 1:04:51.2 And Ft. Worth. We have three offices down there.
The only one he doesn’t run is Houston, because Rich is still a franchisee. 1:04:56.8 But we really improved our presence in Texas.
1:05:00.0 And Jesse, one of those OGs has moved on from selling to know running a State for us. But he’s actually moving into an even bigger position here soon. Going to start managing the guys that manage States.
Jordan: 1:05:10.2 Man, so I think you just made the ultimate argument for growth. And that is this: It’s not about the Rolls, it’s not about the Rolex. It’s about providing abundant opportunity for growth and for development for your team.
1:05:26.7 Hiring A players that require the organization to be going somewhere so they can go somewhere.
1:05:32.8 If you get on that ladder and you realize it’s a three-rung ladder, you ain’t going to be on it for real long, unless that is essentially the scope of your ambitions.
1:05:40.5 And there are a lot of folks – people want to work with other people that have that hustle and the ambition. That’s where the need for growth comes from.
1:05:47.9 Final question of the interview. I ask every single guest this, Brenton. And I’m very interested to hear your reply. The question is this: Brenton Hayden, in your opinion, are entrepreneurs born or bred?
Brenton: 1:06:03.4 I think you had to be born, because I wasn’t bred. And I never really thought about being an entrepreneur until it was forced on me through being a real estate agent.
1:06:13.0 Like, I didn’t even really want to start my own company, I just – I did. 1:06:16.8 Because I guess I had a license and I knew that I essentially had to.
Jordan: 1:06:21.4 So you weren’t the kid that dressed up like Trump at five years old on Halloween.
Brenton: 1:06:25.3 You know, I did say – and this might say I was born – I looked up to businesses executives.
I wanted to have the private jet and where the fancy suit and go to business meetings instead of work hard, and get sweaty and dirty. 1:06:36.0 You know?
I looked up to those things my whole life. 1:06:40.3 Like today, I still think Elon Musk is just – inspires the shit out of me. He’s just an alien walking this Earth, I think.
1:06:47.5 And he – these are guys that just – like if I hear, I just listened to his Joe Rogan Podcast, and that stuff got me all fired up and wanting to start a business and be more like Elon. And I just couldn’t control myself.
1:07:01.9 But those guys get me fired up, and so I think I’m born with a certain – I pick up on those wavelengths of those types of people and that’s what inspires me.
1:07:11.1 And when I get inspired – you know, inspiration is perishable. Right?
1:07:15.7 I mean, I’m not inspired any more a couple days after, you know, that podcast. 1:07:19.2 You know, but when you get inspired and if you can harness it, you can do the work of like – a month of work in one hour because you’re inspired and you’re just sweating working and I felt inspired the whole time I was at Renters Warehouse.
1:07:31.2 And so, finding inspiration for me, was what fueled my entrepreneurial fire. 1:07:37.4 Because I constantly found new inspiration.
1:07:38.7 There was a lot of times it was in my business. I think you’re born, man.
1:07:41.7 I think you also can be bred though too. 1:07:43.8 I’ve seen guys be bred. I’ve probably bred a few, come to think of it.
1:07:49.6 And I don’t think there’s one – there’s no negative connotations either way. 1:07:54.2 Be bred, go to Harvard, go to Yale and then do some more. Get that pedigree up and then go to work. That’s great.
1:08:01.8 You know, I ended up going back to school. I went to Harvard and MIT, but through executive education.
1:08:05.3 That shit sure empowered me. You know, maybe I did – maybe I was breeding myself, but I jumped right into the fact that I was capable of being a leader. Maybe that was coming from sports.
But there are certain characteristics you need to be an entrepreneur and actually be successful. 1:08:22.9 And maybe that we’ll leave for our next podcast we do together.
Jordan: 1:08:25.0 That sounds good, man. We’ll have to leave it there. This is a great interview.
Where I come down on it is that entrepreneurial thinking can be taught and learned, but the fundamental characteristic of embracing irrational long-term suffering for a non-certain or a low-probability gain, that’s the aspect where you’ve got have a couple screws loose for good or for bad.
1:08:46.0 That’s the side of the born that I identify with.
1:08:49.6 Man, I appreciate you coming on the show. 1:08:51.8 If folks want to learn more about what you’re up to and kind of follow you in retirement, are you on Twitter?
Where can folks go to kind of see what you’re up to?
Brenton: 1:09:00.5 Man, I’m off the grid now. I’ve been retired five years, but, you know, LinkedIn. LinkedIn is now, every now and then I’m checking in. I’m interacting with people. Every now and then I’m looking for investments in there. LinkedIn’s kind of like my business public page.
Don’t find me on Twitter or Instagram. I’m not going to follow you back and I don’t let you follow me. I’m a private man now.
1:09:20.5 But, I am doing that Entrepreneurial Organizational System coaching and implementing.
And that’s something I’m going to be building out at my new website: OceanoRosso, which stands for Red Ocean in Italian.
1:09:33.3 And my new company’s called, Red Ocean Consulting.
1:09:35.2 Because I’m going to help businesses that are in industries like property management. You know, proven industries, but they want to go in there and dominate. 1:09:43.3 You know, red ocean stands for blood in the water and sharks are there. There’s a lot of people eating.
It’s the opposite of blue ocean where nobody’s there, there’s no fish and nobody’s eating.
1:09:51.1 That’d be like what Elon’s doing in some SpaceX versus starting a new sandwich shop would be Red Ocean.
Well, I’m going to help people in those red ocean industries soon enough. Use the same growth model I did.
1:10:03.9 And so, you know, follow me on LinkedIn, because I’m going to be coming out of retirement soon, part time. And finding some hotshots to teach this new business model system to.
So, find me on LinkedIn would be a great way to contact me. 1:10:15.4 And, you know, don’t lose touch with Renters Warehouse and what we’re doing there. That’s still a big part of my life and we’re still booming and doing big things.
1:10:21.1 We’ve got a lot of new things coming out there so I hope people check us out at Renters Warehouse if you ever need a good property manager.
Jordan: 1:10:27.7 Ah man, what a great way to close. To quote the Godfather, “Just when I thought I was out, they pulled me back in.” You’re back in the game. I love to hear that, man.
1:10:35.0 Check out the websites that he referenced. If you have any inclination or interest in EOS, which you should, contact Brenton, learn more about what he’s up to. 1:10:44.2 Again, my man, thanks for coming on.
Brenton: This was fun, Jordan, thank you so much.