An Insidious Danger To Your Business in the Real Estate Industry

There is something particularly dangerous and awful lurking out there that can potentially destroy just about any business – even a very successful one – and that is letting someone get between you and your “customer.”

To be clear what I mean here by “customer,” it could mean:

  • Your money partner, if you are a sponsor

  • Your investors in your fund, if you are a fund

  • Your tenants, if you are a landlord (office, retail, multifamily, etc.)

  • Your condo buyers, if you are in condo development

  • Your clients, if you are a lawyer, accountant or other service provider

And it is so innocuous at first.

Indeed, it starts out almost all the time with someone trying to “help” you, probably with customer acquisition, and maybe they do “help” you at first, but then – maybe before you even realize it — you are caught like a fish on the line.  Consider……

How did those publishers feel when Amazon got between them and the people who buy the books?  It started out Amazon was just helping them distribute books, didn’t it?

How did the music people feel when Apple – and then Spotify – got between them and the people who buy the songs?

How wonderful – or awful – does a public company feel getting into a nice safe index – or kicked out of one?  As I write this I read that GE was just kicked out of the Dow after I think over 100 years.

Hitting closer to – real estate home – how do the hotel companies feel about Expedia and Priceline?  I am sure it is a love-fest.

And all you financial fund-like players, how do you feel about Townsend between you and the investors?  Loving every minute of it?

And consider the battle – titanic in proportion – between Google, Amazon and Apple – as to who will get that snarky little “device” into your living room so that when you clap your hands and say “honey we need soap,” it will direct you to Google Soap, Amazon Soap or Apple Soap?

The above is an anecdotal list of what I could whip out in about eight minutes.  But there are stories everywhere and everyplace about these kinds of things happening.

So now, as a hypothetical, consider what happens to condominium sellers when someone starts a new company called “NYC CondoBuyersUnite.Com,” and that site starts to aggregate all sorts of data.  At first no one really notices.  Then more and more people hear about it.  Maybe it has all sorts of interesting tips about how to negotiate with the seller, which is just moderately annoying.  But then the site starts to put in pricing data, which is even more annoying.  But then when there are a lot of people using it, at some point the site asks condo sellers if they might want to advertise on the website to drive traffic to their condominiums, and at least one significant condominium seller likes the idea and puts its project on the site.  Then someone else similarly situated realizes that it can hardly not be on the site if its competition is there.  And then, all of a sudden, the game has changed hasn’t it?  The website holds some real cards and it is too late to do anything about it.

And this is not just fanciful.  Indeed, as I write this, my head is spinning in the brokerage world as versions of the foregoing seem to have been happening there, resulting in the destruction of some long-time venerable and respected brokerage institutions that, not so long ago, were doing just fine.

The bottom line is that whatever business you are in, you simply cannot allow anyone to get between you and your customer – or sooner or later your customer will become the (middleman) party that got between you and your customer.  And that (middleman) party will have no incentive to do anything but transfer (almost) all of the economic upside of your business from you to that (middleman) party.  Which is just plain awful!

Interestingly, as an aside, I have a related philosophical thought here – as follows:

One of the things everyone thinks the internet does is cut out the “middleman.”  However, as I think on it, perhaps it can also create a middleman – in the way I outline above?

This leads me to suggest that if you look at the point I am making from the other direction – i.e., getting between a business and a customer as an opportunity – if you can figure out a way to do this successfully, you will end up owning that business, won’t you….?

What’s In A Name? Everything!

What’s in a name?

Everything!  Let me show you what I mean here….

What is the worst thing that can happen to you when you are marketing something?

Being forgotten!

There is nothing worse. I have written about this before and how important it is to STAND OUT.

So let’s say you do a great pitch about your power niche practice regarding representing off-beat fashion companies in corporate, real estate, litigation, and other matters. You do everything right.

It is niched — i.e., you only represent fashion companies that are not mainstream.

You are exciting and interesting at the meeting.

You run the pitch perfectly.

And then you leave. Six months later — I mean six days later — I mean six hours later — I mean six minutes later — the party you pitched is trying to remember it. Can she? Will she?

If she can’t remember it, then your pitch — perfect as it was — goes down the drain.

Well, what if you called it your “Freaky Funky Foolish Fashion Practice”?

This kind of jars you. It may even provoke a chuckle. At the pitch, you will probably joke about it with the prospect and make fun whether she can remember it. Maybe even engage in some self-deprecation and make fun of the name. But once you place it in the prospect’s mind, it is hard to forget. The prospect probably won’t remember all of the “F” words, but will remember the alliteration weaving into the key concept of “Fashion.”  When you send a follow-up email, you will refer to it.

And it will “stick” in your prospect’s mind.

Like it or not, that is how our minds work. We remember things that are unusual and forget other things.

As you muse about this, consider that alliteration (remember that from third-grade English class?) is one of the best ways to have names stand out. The teacher referred to the Raven from Poe as the example: “and the silken, sad, uncertain rustling of each purple curtain…”

Other ideas are as follows:

One of my litigators, Kirk Brett, is a tough fellow — as litigators often are — and he calls himself The Wolf, from Pulp Fiction.

Another one of my partners, Todd Eisner, who does a lot with joint ventures — we call Super JV Man.

Since I do a lot to help clients build their business, we often say “Put Bruce to Use.”

My tax partner, Jessica Millett, is all over Opportunity Zones (from the recent Tax Reform Act), so we are calling them Jessica Zones.

This only scratches the surface, but the bottom line is, that which gets named in an interesting manner gets remembered.

Networking Groups And Young Lawyers: A Perfect Match

I think that a lot of times younger lawyers feel either (or both) that (i) networking groups are inappropriate to join at an early stage in their career, or (ii) they are too junior to start their own networking group.

However, I think that the best time to start one’s marketing efforts is at the beginning of your career — this, so that you get into the habit of marketing as part of everyday life. Indeed, I always wish that I had done exactly this myself, instead of waiting until I was 39 years old to try to bring in clients. Sigh….

And networking groups are no exception. There is no reason to wait.

One of my marketing threebies is to “Get Out And About,” and networking groups are a great way to do this. So how do you get started?

Below I have outlined a few ideas on how to create your own networking groups. Here goes:

First, think of the industry you practice in. Is it fashion?  Is it real estate?  Is it liquor and related goods?  Your networking group should be in your industry.

Second, think of a purpose for the group that is other than pure networking. This could be a hobby — you are a triathlete, you are someone who likes ballet, you like MMA, you like to race cars, you like movies, you like paintball, you like knitting, basket-weaving, or skiing — or just going out on the town and staying out all night.

Third, see if you know someone who is, well, it’s hard to say this subtly, cooler than you. Someone who will draw in others. Reach out to her first. See if she will join your group. If yes, this is a great beginning.

Fourth, once it is you and this other person, you have a team. That will make it easier to get others in the group.

Fifth, once you get a base group — probably five is about the minimum — set the ground rules, as to who is paying (usually costs are split equally), what you generally will be doing, how often you will get together, how additional people can get in the group, etc. Also — hard to be subtle here either — you probably don’t want other competitor lawyers in the group and you should make that known.

Sixth, make clear that there are two purposes for the group. One is to have a good time in the hobby or other interest you all have. The other is to network and support each other. There is no reason to be subtle here either.

Seventh, make sure the first event is a success.

Finally, here is a story from one of my junior associates who has set up his own networking group, which he did on his own in his first year here:

I formed the group after talking to a couple of friends working in the real estate industry about the value of building relationships early on in our careers. We all noticed that the successes of many of those senior to us could usually be traced back to relationships that started well before anyone was in a decision-making position, and we decided to all put the effort in (easier said than done as time goes on) to stick together as we grow in our careers. Since the purpose of the group is to build valuable relationships, we have two goals: (i) to keep the group small (only adding a member when someone thinks they’ve found someone who will actively contribute to the group) and (ii) to make sure that anyone who joins the group is a good “fit” so we’ll all actually hang out.

The “Best” Books to Read for Building A World Class Real Estate Organization

This article contains my thoughts on which are the ‘best’ books to read in order to build a world class real estate organization.

As a philosopher I am supposed to think – of course – that’s what we philosophers do.  However, when you really are honest with yourself, you admit that most thinking is built on the thinking of others.  You learn something and then you apply it to something else or you build on it, or, just maybe, you break away from what you learned completely.  In any case, without belaboring this too much, a good philosopher is not too proud to learn from others.  And I will certainly admit that many of my greatest ideas in the real estate, legal and marketing worlds (my three worlds) were outgrowths of ideas that had been thought up by others, and my contribution was to perceive how to modify these ideas so that they would apply to my business or the businesses of my clients or those I was teaching.

So I read a lot.  And my hobby is reading on the two most critical elements of building any successful business, as outlined by Peter Drucker, who points out pithily that the two key ingredients any business must do effectively are to:

  • Innovate

  • Market

in order to “create” customers.

With this backdrop, I thought it might be useful for me to set forth which books I think are the best for someone trying to build a world class organization in the real estate world, whether one is building things, servicing others, marketing real estate assets or doing pretty much anything else.  So here goes – this is my reading list for success in the real estate world:

General Business and Management:

Peter Drucker’s compilation called simply Management.  This is not easy reading, but every word is – for me at least – like catnip to a cat.  Who else could explain the purpose of a business in a single sentence: “To ‘create’ a customer”. He is truly the father of this science of “management”.

Jim Collins’s two incredible books, Built to Last and Good to Great.  For many years this was required reading at my law firm.  Indeed, I don’t think I would have a law firm without them.  His adage is both prophetic and instructive that it is much more important to figure out “who should be on the bus” than to figure out? where the bus is going”.  How many times has my business model changed along the way? Answer: many.  Accordingly, I could never have succeeded without my incredible partners and teammates who were on the bus with me and who took those changes in stride and indeed saw them as opportunities.

Michael Porter is one of the great thinkers on competitive advantages.  Although he has written many books, I think the easiest way to distill him is through Joan Magruder’s book, Understanding Michael Porter.  Porter is probably most famous for defining the Five Forces that determine competition in an industry; however, the single phrase that has dictated my law firm’s success is the statement that “strategy is deciding what ‘not’ to do.”  Without that phrase from Porter, how would I have concluded that my law firm’s success in competing with bigger and stronger law firms would depend on our becoming The Pure Play in Real Estate Law?

And then just read all of Patrick Lencioni’s books.  He is a genius in assessing human interactions and how to manage them effectively and positive.  And, to boot, he gives you his brilliant thinking through enjoyable and metaphorical stories.  If you are running a team – whether as a CEO or a team leader – you will benefit from his books, and you will benefit a lot.

Marketing and Sales:

Seth Godin’s easy-to-read and powerfully counterintuitive Purple Cow is perhaps the best marketing book of all.  He illustrates so simply that it is more important to Stand Out, like a purple cow, than just about anything else.  In this vein, I ask you, how many real estate philosophers are there?

Tilt, by Niraj Dawar, is also a superb marketing book.  Among other things, Mr. Dawar points out that victory in the business world no longer goes to she who ‘does’ things; instead, victory goes to she who ‘markets’ things.  This lesson is kind of a bummer for all of us over-achievers, but like it or not, this is a fact of life.  Drucker knew that of course, but Mr. Dawar makes this point very effectively in his book.

Blue Ocean Strategy, by Kevin Kaiser and David Young, is notable for its creative thinking that the last thing you want to do is “compete” in a “red ocean” (where it is blood red due to competitors clawing at each other for market share).  Instead, say the authors, you should swim away to a blue ocean where there is no competition and do something completely different.

Brand Warfare, by David D’Alessandro, I read long ago, and then again more recently.  The point I took away was that there is nothing more important for the CEO to focus on than her brand.  Nothing at all.  Warren Buffett points out that a brand permits a company to sell its product at a higher price for an extended period of time (not an exact quote).  If you are a CEO and aren’t thinking about your brand and how to make it stronger, you are missing a major boat.  Notably, your brand doesn’t just apply to customers – it applies also to the talented people that will either join your company or join your competitor instead.

How to Master the Art of Selling, by Tom Hopkins, is a masterpiece.  He doesn’t spend the first 75 pages telling you what he is ‘going to tell you.’  He just tells you how to sell stuff.  Boy did I learn a lot from him.  Before I picked it up, I thought I knew just about everything about marketing.  I mean, for heck’s sake, I just wrote a book on marketing that will be published later this year.  But when I read his book I felt like a schoolboy being schooled.  If you have to sell or market things, you should buy this book.  It is out of print and hard to get though.

The Presentation Secrets of Steve Jobs, by Carmine Gallo, is notable for the theme that one should have a “passion statement” that is short and to the point and evidences the thrill and passion you have in what you are presenting, marketing or selling.

The Challenger Sale, by Matthew Dickson and Brent Adamson, is also very useful.  Their point is that the prospect is usually tired and bored with sycophants kissing her ass as they ply their wares; and, what makes the CEO sit up and take notice is someone who clearly is no pushover – someone who has ideas that might be of use – someone who will (at last) challenge the CEO intellectually.

General Lessons:

Simon Sinek blew me away first with his Ted Talk and then with his book, Start with Why.  His point is that the ‘why’ is inspirational, and he is right.  If you can’t answer the question ‘why are you in business,’ then you have a serious problem.  For us it is our hedgehog, which means that we truly care about our clients and colleagues.  Without a ‘why’, then ‘why’ should anyone of talent join your company and stick around?

Also, if you are kind of a math guy (and if you aren’t I think you should be), consider reading The Drunkard’s Walk by Leonard Mlodinow.  It gives you a come-uppance that you “might” not be nearly as smart as you think you are and a math-based way of evaluating what you and others are doing.  And don’t worry even though there is ‘math’ all over the book, it is easy and fun to read and understand.

And whatever you do, one should read – and re-read – Dale Carnegie’s incredible book, How to Win Friends and Influence People.   I had some trouble coaxing, manipulating, begging, and even bribing my daughters (when they were teenagers) to read this book, but even though it came from their Dad, both of them admitted it was one of the greatest books they had ever read.  And Warren Buffett is said to have read it numerous times, and he hasn’t done half bad.

Along the way, it won’t hurt you to take 45 minutes to read (or probably re-read) Jonathan Livingston Seagull, by Richard Bach.  If you are down and need to be inspired – or maybe just could use a reminder as to what is important – there is nothing like reading this book.  I don’t know if I have read it more or less than 50 times, but it is close either way.

Okay – are these all the great business books I have read?  By no means, but these are the ones that have helped me the most in forging what I hope will be a lasting and successful law firm business in the real estate world.  I hope this is helpful to you as well.