4 Growing a Property Business - Rick Otton & Nathan Baws
Transcript
00:00We needed to get rid of the crap that wasn't working and then double down
00:03and really hone all your resources into what's working.
00:10Hey Nathan, the guy that turns ideas into business empires. How are you going,
00:16business legend? G'day Rick, you innovative disruptive property guru.
00:21G'day buddy pal. Here we are again. Rickster, how are we today, sir?
00:31Fit, fine, wonderful and well, but let me tell you something. I want to know this.
00:36We've been talking about property strategies and we can talk about more and more property
00:40strategies, but you know what? You did all that and you learned all these property strategies
00:45and as a result, you've got a massive amount of properties. Then you ended up with a property
00:49business and then you flowed from the property business in all sorts of other businesses that
00:54you springboarded from, from the property business. What do you think some of the
01:00things are that people need to be aware of that, you know, people are going to do one property,
01:03then two or then three and someone last night said she loves property. Well,
01:07what's this transition look like and what do people need to be aware of?
01:11Yeah, it's a good question, Rick, because obviously this podcast is all about the business
01:16of property. So doing one transaction, as you say, is great. The next one's great, but
01:22how do you scale that into a business, into a full-time business? So that's what I've been
01:27focusing on and because I love business, I just love business in any shape or form and I have a
01:34bunch of different businesses across different categories and starting them up, I find that
01:39really fun. I find that the most exciting part of any business is the startup phase.
01:45So what do you need for starting up a business? So it's always good with the property when you
01:50do one or two transactions and then you work out a system or a formula for reproducing and
01:56replicating and scaling. So you need that in any business. What's a consistent strategy that you
02:03can use again and again and again to grow? One of the most important things in my mind,
02:09in any business, in anywhere, property or anything, is lead generation. We need a juicy,
02:17thick bunch of leads coming in on a regular basis so that it just gives us so much more options.
02:24Because you can imagine if you've got a bunch of properties, for example, coming in,
02:29you've got lots of motivated sellers, being in the situation that you can choose between what
02:35you want to do, the best, juiciest deals and the deals that float your boat the most.
02:40Mate, it's what you want to do rather than what you have to do, right?
02:43Exactly. And there's so much power in choice. So when you're negotiating, if you've got one deal
02:50that you only have in your pipeline and that's all you've got, then obviously you're pretty
02:56motivated and you become pretty lenient in how you negotiate. There's so many different types
03:02of leads, mate. How did I get leads? We put those very first yellow and black ugly WeBuyHouses
03:08boards up. That was in Manchester in April 2009. I think we put 65 in the CBD of Manchester that
03:15got chased to the airport by the police, right? That was the first time we ever put those ugly
03:19boards up. But they work incredibly effectively and that was just one type of marketing. But
03:24there's just so many other different sources. Where are you finding today people need to be
03:29looking for in order to, so where's the future going when it comes down to getting leads?
03:34We're doing a heap of automation. So through the likes of bots and automation software. So
03:41we're reaching out particularly through social media marketing and across lots of different
03:46businesses, not just property, but lots of different businesses. We're using automated
03:51software and this is in categories like LinkedIn, Facebook and Instagram. So there's a lot of
03:58software these days that we can utilize for our lead generation strategies and it's all done
04:06on automation. So that's the way it's going. Everyone's online. We need to be online. There's
04:13so much opportunity, just for example, through Facebook groups. If we were to reach out to
04:18Facebook groups in property owners around the UK or the US, wherever you're targeting and go into,
04:25become a member of those groups and then we can use certain software that automates a direct
04:31message outreach. So it means that we can reach out to 50 plus people a day. You've got to be
04:37careful of social media marketing algorithms that you're not going to be fast as spamming. But if
04:43you do it within the comfortable levels and we generally go somewhere between 20 to 50 in each
04:49different category. So we'll do those outreach every day and we can send direct messages to
04:55investors or people in the right category of who we're targeting and get responses and start
05:03relationships. So it's a fantastic way of lead generation. Matt, this reminds me of just leading
05:08everybody to the hopper, right? Create this big hopper and you just suck everybody at the top
05:12and then you start shaking it and all the gold drops out the bottom of the hopper, right?
05:17Correct. And get it all going. So that's just one of a bunch of strategies that we use for
05:22business growth and lead generation. So direct message marketing, fantastic. It's organic and
05:28it's free. TO is something that we've used a lot in the UK for generating leads for property in the
05:34past. So I've had websites that we set up and we do an article on every day. So we create more
05:42keywords that we're looking for. We optimize it. We got to the stage in the UK where I was getting
05:48around three qualified sellers per day coming in. And it was really interesting as we were learning
05:56your strategies back then, which was starting in what, 2009, around 2009, 2010. We were building
06:02up these websites, creating the SEO search engine optimization, if you know what that means. So
06:09that's optimizing your websites for keywords so that people who are going to be searching come in
06:14off those keywords. And we were, interestingly enough, we were getting, when we first started
06:21utilizing your systems and patterns of speech, we were converting one in 50 leads that came through
06:28the website. As we refined that process, we got to convert one in three leads.
06:37I remember when I used to run some pretty advanced classes, right? And the kids in there,
06:41they'd be converting one in one and a half, right? But I mean, you don't do that day one, right? You
06:45just get really good at what you do. You said something interesting that was, you know, people
06:49get one or two properties and three properties and they go to a business. Now, and you actually said
06:54you do a couple of property transactions and then you scale it up. Now, when you started to scale
07:01and what you're doing, I think this is an interesting module right here.
07:05Were you doing all different types of property strategies or did you specialize in something?
07:11And then when you pick the something, you just scaled that.
07:15Absolutely. Absolutely. Good point. So it was about refining and that's how we went from
07:21one in 50 to one in three conversions. And it was just narrowing the focus down, being very,
07:27very specific. In essence, by doing the vendor finance and the creative systems,
07:33you just open yourself up for the ability to do so many more transactions. We were actually doing
07:39everything at the beginning. And that's what we do. You know, there's much mud on the wall,
07:44see what sticks and then choose one that you get the most momentum in. And that's what I do
07:49across all my businesses. For example, in my food business, what we do is we've got about
07:55eight different verticals, eight different strategies for getting the... So we sell
08:00wholesale, we sell retail, we have restaurants, we have fundraising, we do catering. So in property,
08:08you can do the same. You can stretch what works and what resonates best, but there's always the
08:1380-20 principle. So 80% of your business is going to come from 20% of your strategy. So if you can
08:20narrow that down, find what you're good at and find what's converting best, then you really start
08:27to scale. Now, would you say that when you do that, right, you start getting the numbers,
08:31numbers are coming in, you're looking at where your money's, most of your money's coming from,
08:35would you suggest therefore you start letting go of the other stuff and pour more energy and
08:40resources into that one? It's all about doubling down, tripling down, 10X, whatever's working,
08:47obviously put your energy towards that, get rid of the others very quickly. And that's another
08:52thing that I've found in business, in businesses that are hemorrhaging cash and on a daily basis,
08:58and you've got to shut them down pretty quick. And then you've the energy. So we originally,
09:04when we went on Shark Tank and pitched our restaurants, we were really, really fun
09:08restaurants. That was the main thing. And then we found that that was actually pretty challenging,
09:12is a very challenging industry to be in. They say, the question is, how do you make a million
09:18dollars out of restaurants? Start with 10 million. So, you know, that says we needed to get rid of
09:24the crap that wasn't working and then double down and really hone all your resources into what's
09:30working and just grow the hell out of that. You know, it's interesting you say that because,
09:35you know, we got the We Buy Houses brand in the UK and it just took off, right? And you'd have
09:39lots of people calling you for all sorts of stuff. And even to this day, if people call me
09:44about a development, I simply say, I don't do developments. You know, about Airbnb, I do Airbnb.
09:49I don't do rent to rent. I don't do HMO. I'm really, really smart about what I do and what I don't do.
09:54So I've always found that every time I've gone into areas for which I have no experience,
09:59I end up getting the experience by burning cash, right? So I've always been, this is the bit I do,
10:05but I'd never say, if someone rang me up and said, oh, what I do, I rent to rent or an HMO,
10:09I'd actually say, look, I don't do that, but I'll find someone who does that. Like,
10:13I'm not gonna spend the life energy to learn. Like you said, I'd rather be 50 miles deep
10:19and an inch wide, right? I like a grand of spaghetti. I just do one thing really well.
10:26All the other stuff, I accept the fact that I'm not the guy for it. I might do joint ventures
10:30with other guys and plug other guys in, but I totally get it. Yeah, cause it's gonna be
10:34everything to everybody. Ah.
10:36True, true. It's very hard to be everything to everybody. And if you can find what you're
10:41really good at and scale that, then that's where it happens. And it's sometimes in the
10:46traditional way, for example, of buying property, we need to be a little bit limited based on
10:52borrowings, our borrowing capacity. So utilising creative strategies for finance is a system that
10:59allows you just to scale the hell out of your business. And it's infinite. You're not
11:04upset when you're going into creative finance. You can just, it's just so scalable that you
11:10don't have to have finance to, you can just do it.
11:15Yeah, no, that's it. So, so really what you're saying is, is we go from property to other
11:19businesses. You've found really those property, the way you ran your machine, the property
11:26business that you ran your machine, really just picked it up and duplicated that to other
11:30types of business.
11:30Exactly right. Yeah. The process applies to any business that you run, be it property
11:34or anything. Yeah.
11:36Okay. So if I see you look, um, yeah, we were property deal. And if you had to do a property
11:42deal, knowing that there's all sorts of different property deals out there, what would you do?
11:47And what wouldn't you do? Based on your own experience?
11:50Exactly. Based on my experience, I would only do things that I was comfortable with doing,
11:54but if there's a great opportunity, there's no reason why, as you mentioned before, we
11:58can't find joint venture partners. We pick up the bit that we're good at and then pass
12:04it on to them where their strengths lie. So it just means you can do so many more deals
12:09and you've got so many more business opportunities that you can say yes to when you're
12:15strategically aligned. For example, our little podcast that we're doing right now, you know,
12:20property, I'm passionate about businesses. And then so putting those together, it becomes
12:26a great outcome. You know, many people will benefit from the business of property.
12:31Combining those two. So let me ask you, you're putting a business
12:33together. I know that freaks a lot of people out. They go, I've never started a business.
12:37How do you start? You know, of all the years we've done property, people always go, where
12:41do you get started? I totally get it. But I reckon as soon as you start talking to people
12:45about business, where do you get started? So I know I'm going to be really simple here,
12:51but if I said to you, Nathan, I'm thinking about starting a business, what do I need
12:55to know? What are some of the real basics just to get myself along that road?
13:01The thing to find the best opportunities in business is finding where the biggest problems
13:07lie. And then if you can start with the problem and then step one step back and say, what's
13:13my solution? And if you can bring an amazing solution to a big problem, you have a phenomenal
13:19business or you have the start of a phenomenal business.
13:22So it's really interesting because Virgin, right? Virgin's never actually created anything.
13:27What they've done is looked at existing things, seen where there've been problems with existing
13:33things in business and just made them better. Yep.
13:36Right. And a lot of guys are going, okay, so, uh, what's the Apple company, right?
13:41They never invented the MP3 player, but then they brought, but they just made a better
13:46with the iPod, right? But they never invented MP3. So they just bought a better vehicle
13:51on which to run. And that's what Virgin does. I'll pick up stuff and go, how can we make
13:54that little bit there better? So you're right, because there's a problem. This isn't working
13:59that well. How do we fix it so it does? Well, recreating the wheel is a very long
14:04and intensive process and it's generally not very lucrative, but making an improvement
14:09on an existing structure. For example, we, for our products, uh, Tommy's one of my businesses
14:15that we do, we manufacture pasta. Now there's a lot of crap pasta out there on the market.
14:20They fill the needs, but what we started to do is go a way better. So in making small
14:26increments, we've gone to just making the whole process a lot more seamless with delivery,
14:33home delivery, free delivery, and then product in itself. As I say, there's a billion different
14:38pastas out there, but a product which has amazing flavor without all the artificial
14:44rubbish in it is, is the next up. So we haven't recreated food as such. We haven't built food
14:50for the first time, but we've just made it better. Look, you always say you can get from
14:55A to B either in a Rolls Royce or a Mini. So it is all about getting the message out
15:01and same with any property. So property business, we've got to be generating a shitload of leads
15:07if we're going to move forwards, right? So we're in front of 50,000 people. So that's
15:12in our own retail stores. We run pop-up shops in very, very busy shopping to the Perth,
15:18Western Australia. And we're in front of all those eyeballs. Plus we're, we're doing a
15:22whole bunch of social media marketing. So we constantly giving the message out there
15:27because we've got a lot of educating to do. So the first step is educating our customers.
15:33And then the second step is, is constantly around. And then the third step is having a
15:38really awesome product that will, that will business. So in the property world, what that
15:45means, the conversion is having an amazing solution that can help so many sellers and
15:50buyers move forwards that people are going to start talking about you and referring you.
15:55So that's an amazing lead generation opportunity is having a great solution to any of the problems
16:02out there. And you just watch the momentum that that creates. Pasta, for example, is just freaking
16:08awesome. And because it's a great product, we generate so much peak out of it. So bringing
16:14that across to any business you like. Well, as you said, mate, it's word of mouth, right? It's
16:17the best marketing machine you could ever have. You're going to spend millions on marketing,
16:21but all you need is Mary Smith to say to Sue, listen, if you're going to go and buy this
16:25ravioli, get this stuff. It's a great, it's fantastic, right? And that just knocks in the
16:30teeth of everybody else's marketing machine. Spot on. Correct. Yeah. Yeah. So in how you've
16:36built your business, if you had to start again, what do you reckon you might've done differently?
16:41Without a doubt, I've seen that I've started in, particularly in the early days when I was in the
16:45health industry, that the most important thing is just marketing and lead generation and just
16:51getting, getting your message out there. You can, if you can't process, your business just grows,
16:58you know, sales are the important part of the business. So not only lead generation,
17:04but then what do you do when you've got that customer on board or knocking on your door,
17:10ringing you on the phone, the patterns of speech and the language that we use are just
17:14absolutely essential because there's no good having a truckload of lead mumbling on the phone.
17:20And we don't really understand. I mean, I wouldn't have any more leads if you can't convert them.
17:26So it's all about your ability to convert that, well, I guess a suspect into a prospect
17:31because people go, oh, I've got a thousand leads. How many did you convert? One. Well,
17:35maybe you only need a hundred leads if you convert 10, right?
17:38Yep. Yep. And, and how to give people the comfort level around what you're doing
17:44and also the strategies in the background that you can solve a lot more problems.
17:50So when we do the property industry, they're just absolutely amazing tools
17:55to have increasing conversion. I remember the first negotiation book I ever read,
18:01I think it was called, You Can Negotiate Anything. It was by Herb Cohen.
18:05Yes. He did two books. One was called Negotiate This and the first one that you mentioned,
18:10both by Herb Cohen. And he was the guy that negotiated for the American government to
18:15get out of the Vietnam war at the Paris peace conference. Fantastic. It was, it was amazing.
18:21And I remember the first time I read it, I was in, I was the pharmacies, I was in the health
18:27industry and I had just read this stuff. And one of the things that it's talked about was,
18:33I always ask for more than you expect to get. And I was sitting in this meeting with a, with
18:39a, these watered jugs and they were discontinuing them. And I think the wholesale cost was something
18:46around $25. And I was sitting there absolutely shitting myself, wanting to, about to,
18:53I'd read the night before for the negotiation to see if I could get a cheaper price on this,
18:58on these, just sweating. I was, I could hardly breathe because I was just so nervous.
19:02This was the first time I'd ever negotiated anything. And he said, so I'm going to let
19:08you have them at $10, $10 a jug from 25. We're just trying to discontinue them.
19:15So we want to get rid of the lot. So I said, I'll give you $5. And I just blurted it out.
19:21And then I sat there and there was just silence. And I just, that was the most nervous I think
19:26I'd ever been in my first negotiation. And then a few seconds passed and he said, yeah, okay,
19:32we'll do that. I was like, what? It's that easy? Once you know the systems and the tools.
19:37And it's like, oh my God. And then it was just mind blowing. And then from then on,
19:43I just started learning more and more negotiation. I spent a year with you,
19:47hanging out with you and learning all negotiation strategies. And it's just so,
19:52it's into the zone. And I teach my team all about negotiating and when they do customers and how to
20:00upsell and all those things. And it's very uncomfortable for a lot of people when they
20:05first start. And can I just say, I was going to jump in there, but you're on a bit of a roll
20:09and said the whole thing about sales and negotiation is one of those things that most
20:12people hate. And what are you going to find is most people on the internet, they'll say,
20:16I'll do anything on the internet, but I don't want to have to sell anything to anybody. And
20:19I don't want to have to negotiate with everybody because they're not comfortable. Now, what they're
20:23really saying is you're not comfortable because you don't know. So let's say I gave you a roadmap,
20:27right? And the roadmap said, you start here, you say that, say that, say questions, right?
20:32And I used to teach you guys the eight questions because that takes you in and out of a negotiation
20:36every single time, never changed, learned it since I was 18 years old. And even now,
20:40I still use the same eight questions. Well, when you've got a formula, it gives you much more
20:44reassurance than if you just walk it in there and go, oh my God, what's going to happen next? What
20:48am I going to do? Do you know what I mean? Yeah. And once you, it is so much fun. It's just
20:53mind blowing how it can take you. I remember one of the key things, and this is an absolute nugget,
20:59changing the way a question or asking a completely different question will obviously lead that
21:05customer into the direction that we want them to go into. So that was one of the things is
21:11think one or two steps ahead in the negotiation of where it's going to end up. Tell us more about
21:17that. It's probably funny because most scripts or most things that people say are embedded, right?
21:22And they get activated by what you say. So if you say to your partner, I love you, babe,
21:26what do you reckon they're going to automatically say back to you? I love you too, babe. It's
21:30embedded, right? So what you've done is if you're not too sure whether she loves you at all, don't
21:34say, do you love me? Because that makes the person uncomfortable. Just say, I love you, babe.
21:39And that automatically springboards back the reply, right? And I was telling a guy the other day
21:44that what his wife does is warning because he doesn't understand this. And his wife will go,
21:49babe, one o'clock in the morning, right? I really love you. She'll wake him up. Now he does the
21:54embedded reply and he goes, well, I love you too. Then she says, well, babe, if you really love me,
22:00you'd go downstairs and take the garbage can out because I forgot to, right? And then you go
22:05downstairs, you take out the garbage can and your dressing gown and your slippers, and you find
22:08there's 15 other guys in the neighborhood also at one o'clock in the morning taking out the
22:11crash can because they didn't understand the embedded language. So I always tell the guys
22:15to get around that. When your wife says to you at one o'clock in the morning, babe, I love you,
22:18right? Your answer should also be awesome. The thing is most language is embedded. And so if
22:23you know what the inputs are, you know what the outwards are, you can actually know what someone's
22:26going to say if you've influenced what you say first, because most language replies are embedded.
22:32Like, you know, we do this, you just go to work, right? And you go, hey, John, how are you? He
22:36says, good. How are you, Rick? You say, good. And you walk on. It's so embedded that if you're
22:41listening to the podcast, you go to work, you go, hey, John, how are you? He'll say, good.
22:46How are you, Rick? Dead. Good. Because it's so embedded, right? You walk past everybody,
22:50you're dead in the building, and they'll congratulate you. And that's another thing
22:53I noticed. When I'm selling, it's not about the words much, but the body language. So I tell
23:00people, I tell my team, there's a way, it doesn't matter so much what you say, because I train
23:06our team exactly what to say. But I've had in the past team members who just blurt it out,
23:13identical, read it off the script, and we get zero sales. You know, it's crap, bad results.
23:19But then when you understand more of the body language, and the use of your hands and your
23:24facial expressions, you know, I feel 80% of information that comes from those. And you're
23:31the key, mate. You know, you studied underneath. Yeah, that body language book, the first one
23:36came back there in 1980. And I tell you, it was really funny, because I started work with Al in
23:3978. The first book on body language came out in 80, right? Now, that was the first book ever on
23:44body language, because prior to that, it was only Darwin's book of evolution, or scientific
23:50journals. And I remember when the body language came back, a book came out in 1980. No publisher
23:55in the world would print it. This is a really interesting story. And no publisher in the world,
23:59because they all thought it was voodoo, we know crystals in the air, like, what is this stuff?
24:04You're telling me that when people's eyes do this, and no publisher, embarrassing their publishing
24:10house by publishing body language. Now, here's what's interesting. Alan was forced to self
24:15publish. So to publish the book cost $1.10. And it used to sell for $19.95. Here's the point,
24:22it's now sold 18 million copies. Fantastic. Yeah. But I used to go to these conventions and watch
24:30him trying to introduce body language to people, because you had 7% of communications words,
24:3538% tonality, 55% body language. And I used to watch all these people in rooms,
24:43and I used to look at him like, you're a dickhead, mate, what are you talking about? You're wacko.
24:47But as he actually said, Alan said, if you want to introduce anything in our marketplace,
24:53it'll take you 20 years for people to get it, to get past what I call tipping point, right?
24:57Tipping point is where the first 20% get it, and then it tips over and everybody else gets it.
25:02But it took you about 20 years, and now there's a million different books on body language,
25:06and it's a great subject and blah, blah. But he was out there the first one.
25:09Awesome. That's so cool. We should do a whole podcast on that at some stage,
25:13but I think we're getting pretty close to needing to wrap it up this one, mate.
25:17Well, buddy, until then, I guess I'll look forward to speaking to you on the next podcast.
25:21Awesome. See you soon, buddy.