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Free Work Wins: Hijacking Competitor Blueprints with Rens Hayes · Big Talk About Small Business

• 0:00
  SPEAKER_01: I'll share the perspective, and it would it and it's an assumption by the industry that we learned proved to be very expensive assumption.
• 0:08
  SPEAKER_01: And that is a competent structural engineer knows how to design a cost-effective building without any systems technology or data to actually manage the cost of the building.
• 0:28
  SPEAKER_03: This is another episode of Big Talk about small business.
• 0:32
  SPEAKER_03: I'm being serious today.
• 0:34
  SPEAKER_03: So oh, okay.
• 0:35
  SPEAKER_04: Well, that's you guys are so in sync.
• 0:37
  SPEAKER_04: I love that intro.
• 0:38
  SPEAKER_04: Dude, it's great.
• 0:39
  SPEAKER_04: Finish each other's sentences.
• 0:41
  SPEAKER_04: Yeah, we've got well, it's like we're practically married, um, but not.
• 0:45
  SPEAKER_03: We're business partners.
• 0:46
  SPEAKER_03: Mark's like to always say we're partners.
• 0:48
  SPEAKER_03: I'm like, make sure we're business partners.
• 0:50
  SPEAKER_03: Okay, yeah.
• 0:50
  SPEAKER_03: I don't want anybody to get confused.
• 0:52
  SPEAKER_03: Yeah.
• 0:53
  SPEAKER_04: We both have hot wives, so we'll leave it at that.
• 0:56
  SPEAKER_04: Okay.
• 0:57
  SPEAKER_04: Although sometimes I think that's a cover-up.
• 1:00
  SPEAKER_04: You know, could be.
• 1:01
  SPEAKER_04: It could be.
• 1:03
  SPEAKER_04: I don't know.
• 1:04
  SPEAKER_04: It's not in our case.
• 1:05
  SPEAKER_04: Um, but in any case, we got Rentz Hayes with us here, and he's a very interesting guy.
• 1:12
  SPEAKER_04: He's got a company called HO Structural Engineering.
• 1:15
  SPEAKER_04: And um, I've been watching Rentz since he built this company, and it's just fantastic to see the progress and the way he's sort of rewriting the rules of engineering firm operation and marketing.
• 1:31
  SPEAKER_04: Love that.
• 1:32
  SPEAKER_04: I appreciate the intro.
• 1:33
  SPEAKER_04: Happy to be here.
• 1:35
  SPEAKER_04: Tell us a little bit about yourself, Renz.
• 1:37
  SPEAKER_04: How did you get in this business?
• 1:38
  SPEAKER_04: I know you got that blue-collar background.
• 1:41
  SPEAKER_04: You were a welder at one point.
• 1:43
  SPEAKER_04: I know your dad's got a steel fabricating and erection business.
• 1:47
  SPEAKER_03: Yeah, that's well, before we get going, how do you pronounce your name?
• 1:52
  SPEAKER_03: Renz.
• 1:54
  SPEAKER_03: Renz?
• 1:55
  SPEAKER_03: Rens, yep.
• 1:56
  SPEAKER_03: Yeah, because Mark keeps calling you Renz.
• 1:58
  SPEAKER_03: Well, sorry.
• 1:59
  SPEAKER_03: It's close enough.
• 2:01
  SPEAKER_03: It's like cream wrenz.
• 2:06
  SPEAKER_03: Hey, Renz, we forgive him though, right?
• 2:09
  SPEAKER_03: I mean, Mark, go Renz.
• 2:11
  SPEAKER_01: He was gonna roll with it.
• 2:12
  SPEAKER_01: It was close enough that it didn't even like trigger as a as a concern to me.
• 2:16
  SPEAKER_03: Well, it bothered me because like the listeners on our show look up to you, Mark, and you're over here pronouncing, mispronouncing our guest name, and I just find that very offensive.
• 2:26
  SPEAKER_03: Well, my name is constantly mispronounced.
• 2:28
  SPEAKER_04: So other people.
• 2:30
  SPEAKER_04: Z.
• 2:30
  SPEAKER_04: Yeah, or Zwag.
• 2:32
  SPEAKER_04: Zwag Zwag.
• 2:34
  SPEAKER_01: You zwag, yep.
• 2:35
  SPEAKER_01: Yeah, Zwag.
• 2:36
  SPEAKER_01: That's as a fellow podcast host, I would say it's like one of my worst qualities.
• 2:41
  SPEAKER_01: I could have a name like Mark, and I will go to introduce you and I will stumble over Mark or John or Eric.
• 2:47
  SPEAKER_01: It's like, I don't know what it is.
• 2:49
  SPEAKER_04: It's my worst quality as a human.
• 2:51
  SPEAKER_04: I always said you can call me anything, just don't precede it with little.
• 2:56
  SPEAKER_04: Little more?
• 2:57
  SPEAKER_01: Don't want to do that.
• 3:00
  SPEAKER_01: Unless we're talking about your pants, right?
• 3:01
  SPEAKER_01: You want bigger pants.
• 3:02
  SPEAKER_01: Yeah.
• 3:03
  SPEAKER_03: Yeah, you don't want little pants.
• 3:04
  SPEAKER_03: I definitely don't want little pants.
• 3:06
  SPEAKER_03: I like plenty of air flowing.
• 3:08
  SPEAKER_03: Mark.
• 3:09
  SPEAKER_03: Hey, Renz, I don't know if you know this about Mark, but on the weekends he's wearing stretchy tights.
• 3:14
  SPEAKER_03: Yes.
• 3:16
  SPEAKER_03: Leggings.
• 3:17
  SPEAKER_03: Speaking of leggings.
• 3:19
  SPEAKER_03: That's what I call them when my wife wants me to wear them.
• 3:21
  SPEAKER_03: I don't know.
• 3:22
  SPEAKER_03: And they're always like a like a like a skin tone tan.
• 3:25
  SPEAKER_03: Oh, they are not.
• 3:27
  SPEAKER_04: Tries to match a skin tone.
• 3:29
  SPEAKER_04: When he was young, Rentz, he was the guy that had the jeans with the embroidered pockets on the back.
• 3:35
  SPEAKER_04: Okay.
• 3:38
  SPEAKER_04: All right.
• 3:39
  SPEAKER_01: That's that's what he was.
• 3:42
  SPEAKER_01: So race yourself.
• 3:43
  SPEAKER_01: I like where this conversation's going.
• 3:45
  SPEAKER_01: All right.
• 3:47
  SPEAKER_01: Before H0, like, how did I end up in the structural engineering business?
• 3:51
  SPEAKER_01: Um, my family business was uh my father started around the time I was born.
• 3:56
  SPEAKER_01: It is a structural steel and miss iron company.
• 3:59
  SPEAKER_01: So I first started off in that shop like sweeping floors until I could find time.
• 4:04
  SPEAKER_01: I'd sweep the floors a thousand times, and I get some time, I go weld some steel together.
• 4:08
  SPEAKER_01: So anyway, I grew up welding, fabricating steel, installing steel, erecting steel buildings.
• 4:14
  SPEAKER_01: Like I've climbed, I've called cranes, I've sent steel, I've built stairs, all those things.
• 4:20
  SPEAKER_01: And then all the all the adults in my life that I saw as successful were all small business owners.
• 4:25
  SPEAKER_01: Like my father, my friend's father, my now wife's father, they all did small business.
• 4:30
  SPEAKER_01: I didn't know anyone in my life that was successful through corporate America.
• 4:33
  SPEAKER_01: Just like I was never exposed to it.
• 4:35
  SPEAKER_01: I didn't know what real estate development was.
• 4:36
  SPEAKER_01: I didn't know like what Wall Street was or how you even got there.
• 4:40
  SPEAKER_01: So it never even like crossed my mind as a viable path.
• 4:44
  SPEAKER_01: The other touch point I got as a as a young young kid, probably in high school, was that second generation business owners were more likely to torpedo a company than to continue growing it.
• 4:54
  SPEAKER_01: And so I was like, well, I'm not gonna be, I'm not gonna be that statistic.
• 4:59
  SPEAKER_01: So instead of just following my father's coattails, what can I do to add value to this business?
• 5:04
  SPEAKER_01: I was like, I'm good at math.
• 5:05
  SPEAKER_01: I'll go figure out how to design these things, then we can design and build them.
• 5:08
  SPEAKER_01: And that kind of sent me on this journey to where I am today.
• 5:11
  SPEAKER_04: That's awesome.
• 5:12
  SPEAKER_04: Yeah.
• 5:13
  SPEAKER_04: Structural engineers, they were usually the ones that had the good grades.
• 5:17
  SPEAKER_04: You you guys and and the chemies, right?
• 5:20
  SPEAKER_01: Yeah, I mean, what in the engineer?
• 5:23
  SPEAKER_01: I went to WPI Worcester Polytechnical Institute.
• 5:26
  SPEAKER_01: Um, chem engineering was known as like a very hard major, and yeah, civil engineering or structure was regarded as like easier.
• 5:36
  SPEAKER_01: But uh yeah, you gotta learn your stuff, get the foundation so you can actually build a career on it.
• 5:42
  SPEAKER_04: Yeah.
• 5:43
  SPEAKER_04: So you got your your structural engineering degree from WPI.
• 5:47
  SPEAKER_04: Yep.
• 5:48
  SPEAKER_01: Then what?
• 5:49
  SPEAKER_01: So uh you guys might know, the audience might know.
• 5:52
  SPEAKER_01: So uh to be a professional engineer, you can't just like get a degree and start a business.
• 5:57
  SPEAKER_01: And so I can't go back to the steel business and I have to go find an accredited engineer, professional engineering company to learn and work for four years before I can take a test.
• 6:08
  SPEAKER_01: And so I figured I gotta figure out how to design and work on the biggest buildings I possibly can to get the like the fastest crash course so that I can be competent sooner in my career to launch a business.
• 6:20
  SPEAKER_01: And so that's what I did.
• 6:21
  SPEAKER_01: I find myself in downtown Boston working on a lot of large-scale commercial real estate, exposed to super complicated high-rises, existing buildings, a ton of retail.
• 6:30
  SPEAKER_01: I got pretty good breath and client uh exposure.
• 6:34
  SPEAKER_01: And literally, what I would say the pain point that kind of leads to a lot of what we're doing at each and note today, I did feel that when I walked into the structural engineering industry, I felt like I hit my career, my head on the career ceiling right out of the gate.
• 6:49
  SPEAKER_01: So I was like, when I started to kind of reflect on what was important to me in like my life, not just my career, like uh one of one of my limiting, one of like the aha moments for me was I thought if I designed a high-rise that that would equate to status, career, uh like progression and and financial compensation, that I would achieve my life goals.
• 7:10
  SPEAKER_01: And I was fortunate to have that opportunity in like my third year of the career, my career, but it didn't associate with what I thought it would in my life.
• 7:18
  SPEAKER_01: And so it caused me to be like, well, I clearly had a misunderstanding of like value in the marketplace.
• 7:24
  SPEAKER_01: So what where did I go wrong?
• 7:26
  SPEAKER_01: And that led me down this like lifelong learning journey where I committed to like daily reading, uh like personal growth, financial health, like learn it exposed me to big talk about small business, right?
• 7:39
  SPEAKER_01: One of those first books I read was the The E-Myth by Michael Gerber.
• 7:44
  SPEAKER_01: And I'm sure you two are familiar, but it's like why small businesses don't work and what to do about it.
• 7:48
  SPEAKER_01: And I read that book and I was like, every work experience, every business I was in, the pain that I was feeling, I was like, this is it.
• 7:55
  SPEAKER_01: Like this business had this problem.
• 7:57
  SPEAKER_01: This business had this problem.
• 7:59
  SPEAKER_01: And yet everybody, we were just sitting there managing the symptoms rather than understanding what caused the problem in the first place.
• 8:05
  SPEAKER_01: And that led me down this like endless curiosity to learn all the areas of a business so that I could actually better understand the root cause of the problems we face day to day, so that I have better judgment to find the right problem worth solving.
• 8:19
  SPEAKER_04: What so who did you work for?
• 8:21
  SPEAKER_04: Can I ask?
• 8:22
  SPEAKER_04: I work for McNamara Salvia downtown.
• 8:24
  SPEAKER_04: Okay.
• 8:25
  SPEAKER_04: So high-rise, yeah, that's uh you're at the pinnacle there of uh structural engineers.
• 8:31
  SPEAKER_04: Uh yeah, they there's some tremendous talent at that company.
• 8:35
  SPEAKER_01: Uh, they had uh a big chunk of the high-rise market in downtown Boston, have done some amazing projects.
• 8:41
  SPEAKER_01: So it was an awesome place to learn.
• 8:44
  SPEAKER_03: It's serious business, too, right?
• 8:45
  SPEAKER_03: I don't think it took me a long time until I got older to start really respecting, I guess, or appreciating the engineering field, you know, and how significant like they're like like the uh just the safety measures.
• 9:00
  SPEAKER_04: Right, they're dealing with lives, real real stuff, yeah.
• 9:03
  SPEAKER_04: Yeah, 100%.
• 9:04
  SPEAKER_04: It's a big deal.
• 9:04
  SPEAKER_04: Um, do you ever read that book, Skyscraper, from Robert Byrne?
• 9:08
  SPEAKER_04: It's really good.
• 9:09
  SPEAKER_04: No, you should read it.
• 9:10
  SPEAKER_04: It's it's fiction, it's pretty funny.
• 9:12
  SPEAKER_04: It's like this guy's like a structural engineer and he knows everything.
• 9:16
  SPEAKER_04: He's a forensic engineer, and there's this building that's got like problems in New York.
• 9:21
  SPEAKER_04: And anyway, eventually the whole thing falls down, but he knows exactly where to stand.
• 9:26
  SPEAKER_04: So he survives the meltdown of this building.
• 9:30
  SPEAKER_01: He knows exactly where to stand.
• 9:31
  SPEAKER_01: Yeah, it's not preposterous.
• 9:33
  SPEAKER_01: But um Eric, if I could expand on that comment, you were saying, like, I you've really grown to appreciate like the importance of the engineer.
• 9:41
  SPEAKER_01: Like, if if anything, like one of the things that I hope to instill and kind of change in the industry is I feel like because real estate is such a mature industry, right?
• 9:50
  SPEAKER_01: Like it's as mature as it gets.
• 9:52
  SPEAKER_01: People have been developing, designing, and building buildings since like the beginning of Mandat.
• 9:56
  SPEAKER_01: It's changed in what it looks like over time, but it's been around, which means it's really easy to get commoditized.
• 10:03
  SPEAKER_01: Demand is kind of built in so supply can be commoditized.
• 10:07
  SPEAKER_01: And when you're commoditized, you're competing on low fee.
• 10:10
  SPEAKER_01: And then it for business owners that haven't been exposed, they're really great at engineering.
• 10:16
  SPEAKER_01: They spent decades of their life becoming a great engineer, but have spent little to no time learning what it takes to build a balanced, scalable organization.
• 10:24
  SPEAKER_01: You end up making decisions with a lack of data and come from a place of fear.
• 10:28
  SPEAKER_01: So you compete on low price, but those prices create all these downstream negative impacts on your business.
• 10:34
  SPEAKER_01: And I think in our in professional services in particular, what that really does is that suppresses the career growth potential of the employee more than anything.
• 10:43
  SPEAKER_01: And it creates burnout and all those other things.
• 10:44
  SPEAKER_01: And that's what I'm like really passionate about.
• 10:46
  SPEAKER_01: Why we do the podcast, why we have conversations like this is if anything, I want to shake that tree because the engineering, a lot of professional services, the subconsultants, they provide a tremendous amount of value, but they don't actually understand the value they create or how to communicate it.
• 11:00
  SPEAKER_01: And it and it kind of suppresses the earning potential of the industry.
• 11:03
  SPEAKER_01: And I'd love to change that over time.
• 11:05
  SPEAKER_04: No question.
• 11:06
  SPEAKER_04: So, Rens, um, so when did you start your own business, Mark?
• 11:11
  SPEAKER_04: Stop it.
• 11:13
  SPEAKER_06: Rinse.
• 11:15
  SPEAKER_01: When did you start your own business?
• 11:17
  SPEAKER_01: So started my own business, our launch story.
• 11:20
  SPEAKER_01: So I was actually running, I was running the steel business.
• 11:23
  SPEAKER_01: So back in 2014 is when I kind of left the traditional engineering path.
• 11:27
  SPEAKER_01: I chose to go run my dad's business with him to help scale that while I was studying business.
• 11:32
  SPEAKER_01: So if we faced a problem, I was reading and studying how to solve that problem.
• 11:36
  SPEAKER_01: So I better understood the problem and I would just move on.
• 11:38
  SPEAKER_01: And we did that for four years.
• 11:40
  SPEAKER_01: We had great growth.
• 11:41
  SPEAKER_01: During that same time, we launched HO in 2016.
• 11:45
  SPEAKER_01: So I overlapped the two businesses for two years.
• 11:48
  SPEAKER_01: And so my partner Jeremiah and I launched 2016.
• 11:51
  SPEAKER_01: We just passed 10 years in business.
• 11:54
  SPEAKER_04: And tell us about your growth trajectory so far.
• 11:56
  SPEAKER_04: I know you guys were on the Inc.
• 11:58
  SPEAKER_04: 5000 list, which is a tremendous accomplishment.
• 12:01
  SPEAKER_01: Thank you very much.
• 12:02
  SPEAKER_01: Yeah, we've had um you you two are entrepreneurs.
• 12:05
  SPEAKER_01: So I think there's days that I'll sit here and I'm like proud of where we are.
• 12:08
  SPEAKER_01: And then there's days I sit here, I'm like, God, I should be so much further further over me.
• 12:13
  SPEAKER_01: So it's like it's uh you say it tongue in cheek.
• 12:16
  SPEAKER_01: We've had um, we had really good growth in those beginning years.
• 12:20
  SPEAKER_01: Like I think sometimes those those metrics, like when you go from half million to a million to one million to two million, two million, like those are really big jumps percentage-wise.
• 12:29
  SPEAKER_01: Um, and we've had we've had some of those growth, so those inc.
• 12:33
  SPEAKER_01: 500 years, like we had continual years of like 30 to 50 percent growth.
• 12:37
  SPEAKER_01: Um, and then I would say I've also learned talking about small business, growth isn't always top line.
• 12:47
  SPEAKER_01: I think growth can look different because you can be improving the long-term value of your organization, the long-term predictability of your revenue, profit, cash flow, and ability to serve a customer without growing the top line.
• 12:58
  SPEAKER_01: So, like one uh a time that I look back as such a pivotal moment to our growth trajectory now, like we grew 50% last year, our trailing 12 months of closed revenue is up another 30, 40% again this year, um, was back in the interest rates changed in November 22.
• 13:16
  SPEAKER_01: So that's when interest rates went up for the first time in forever, which made which made capitalizing commercial real estate development really difficult.
• 13:24
  SPEAKER_01: And so we have good control of our data, so they're a good forecasting of revenue.
• 13:28
  SPEAKER_01: But we saw our existing pipeline of closed revenue like get cut in half.
• 13:33
  SPEAKER_01: We didn't lose a customer, customer just wasn't doing as many deals.
• 13:36
  SPEAKER_01: So you're like burning off the old backlog.
• 13:39
  SPEAKER_01: But if you have healthy margins and good understanding of your cash flow and understanding the cycle, this is the same time when we invested and figured out our differentiator, which is the HO cost index, where we're the only structural engineer with the data technology and systems to manage the cost of the structures we design.
• 13:59
  SPEAKER_01: And then that led to us creating our risk-free peer review, which is like our attraction offer that totally changes like our ability to engage and accelerate a net new customer sales cycle.
• 14:10
  SPEAKER_01: Right.
• 14:11
  SPEAKER_01: So those things happened in 23, but our revenue actually declined 15%, but we got more tier one customers.
• 14:18
  SPEAKER_01: And then because we expanded our customer base, despite eating that revenue, still gave raises, still beat industry average um financial performance, but we really grew our business by completely separating ourselves from our competition.
• 14:34
  SPEAKER_04: Yeah, that is a really innovative program.
• 14:36
  SPEAKER_04: So explain that to people.
• 14:37
  SPEAKER_04: And I can't believe, you know, you've been doing this for three years now that other people aren't copying it yet.
• 14:44
  SPEAKER_01: Because I can talk about that too.
• 14:48
  SPEAKER_04: Yeah, tell everybody how this works, what you do exactly to get these clients.
• 14:53
  SPEAKER_01: Yeah.
• 14:53
  SPEAKER_01: So I'll um I'll I'll share the perspective, and it would it and it's an assumption by the industry that we learned proved to be very expensive assumption.
• 15:04
  SPEAKER_01: And that is a competent structural engineer knows how to design a cost-effective building without any systems technology or data to actually manage the cost of the building.
• 15:15
  SPEAKER_01: And we were tracking this all the time, or we would see other engineers like we might lose a fee, we'd be$250,000 to design a building, we might lose to$200,000 and be like, but their building's so expensive.
• 15:26
  SPEAKER_01: But the mistake we were making at the time was we thought that the customer understood the difference between one design and another, but our customer doesn't understand the design.
• 15:35
  SPEAKER_01: Right.
• 15:35
  SPEAKER_01: And there's so many variables changing building to building, it's impossible to like point your finger.
• 15:40
  SPEAKER_01: Everybody has an answer for why something is the way it is on a building.
• 15:43
  SPEAKER_01: But once you create the systems, you can create the benchmark and the track and the accountability, like you can actually manage the the cost of the buildings you design.
• 15:52
  SPEAKER_01: And so, for instance, we have like a banner example where through our uh a developer, between design development and their GMP drawings, their costs went up by two to three million dollars unforeseen, which like kind of broke their portfolio.
• 16:08
  SPEAKER_01: They were supposed to close in eight weeks.
• 16:10
  SPEAKER_01: They had an LP, they're supposed to close on the land, and like that was gonna be finance while go to construction.
• 16:15
  SPEAKER_01: So they came to us because the contractor and the concrete sub knew about our offer that we might be the ones that could help them.
• 16:23
  SPEAKER_01: And we had the data.
• 16:25
  SPEAKER_04: Explain that, explain that offer though.
• 16:27
  SPEAKER_04: I don't think people got that yet.
• 16:29
  SPEAKER_04: Thank you.
• 16:29
  SPEAKER_01: So if there's a if there's a commercial real estate development anywhere in the country in the United States, we will review the design for cost savings at absolutely no cost to you.
• 16:41
  SPEAKER_01: If you need help, if if there's enough savings on the table, we will help you capture those savings and you don't owe us a dollar unless you save a hundred grand or more, which means you literally have no downside to send us your drawings.
• 16:53
  SPEAKER_04: What do you think of that?
• 16:55
  SPEAKER_04: I like it.
• 16:56
  SPEAKER_01: That's a good offer, isn't it?
• 16:57
  SPEAKER_01: Yeah.
• 16:58
  SPEAKER_01: So then this feeds us our data.
• 17:00
  SPEAKER_01: We can do that effectively because we build the systems.
• 17:02
  SPEAKER_01: This is literally the same quality management system we run on our entire all of our designs.
• 17:07
  SPEAKER_01: We do this to every single building we design.
• 17:10
  SPEAKER_01: With like, and so we can very quickly identify what those decisions are because we understand where costs are hidden, and we'll find half million, million, million and a half, two million.
• 17:22
  SPEAKER_01: So this development came to us and we had data that showed that we should be able to save at least like two million.
• 17:30
  SPEAKER_01: And then we were able to offer stack like we were going to share in the risk, so no guaranteed fee, but like 20% of savings or 10% of savings.
• 17:38
  SPEAKER_01: We had shared models, and uh we ended up taking over the design, but we saved$2.1 million in a four-week redesign of a 290,000 square foot building.
• 17:48
  SPEAKER_03: Can we go can we generalize this a little bit for the audience and even for myself, right?
• 17:52
  SPEAKER_03: Because I'm not in the structural engineering business, right?
• 17:54
  SPEAKER_03: And it shit gets pretty complicated.
• 17:56
  SPEAKER_03: Like I know you know it really well, Mark, but you like to hide things from people so that you stay relevant and you continue to profit off of other people.
• 18:05
  SPEAKER_03: But Renz is a practical guy.
• 18:08
  SPEAKER_03: So, like from a practical standpoint, you have a client, you as in your firm has a client, and your client are typically developers.
• 18:15
  SPEAKER_03: Correct.
• 18:17
  SPEAKER_03: Developers are tip are you know folks that have a vision to buy a piece of property, develop it out, and build commercial, mixed use residential, whatever, right?
• 18:28
  SPEAKER_03: But in your case, mostly commercial, yeah.
• 18:30
  SPEAKER_03: Maybe some mixed use.
• 18:32
  SPEAKER_01: Yeah, mixed use that that all falls under commercial real estate.
• 18:35
  SPEAKER_01: So that's like multifamily, that could be retail, that could be office, that could be life science, industrial.
• 18:41
  SPEAKER_01: That's like all under the umbrella of commercial real estate.
• 18:44
  SPEAKER_01: And I think the important thing maybe for the audience to understand there too is commercial real estate developers aren't generally using all of their own capital.
• 18:52
  SPEAKER_01: They are really stewards of financial investments.
• 18:56
  SPEAKER_01: So they have some capital.
• 18:57
  SPEAKER_01: Let's say a deal is$100 million.
• 19:00
  SPEAKER_01: They might have of like their close friends and family or their own money, four to five million.
• 19:06
  SPEAKER_01: Then they have to go raise$35 to$40 million from an accredited, like an institutional investor, and then the rest is bank debt.
• 19:13
  SPEAKER_01: So they have to build a financial investment pro forma to attract capital and debt to be able to build a building.
• 19:19
  SPEAKER_01: It's like a light switch.
• 19:20
  SPEAKER_01: So when something like interest rates goes up, it totally changes the investment portfolio because the cost of building a building was built on old interest rates.
• 19:28
  SPEAKER_01: Interest rates go up, construction costs are still high.
• 19:30
  SPEAKER_01: Now all of a sudden you can't raise capital and debt.
• 19:32
  SPEAKER_03: And so, like for it to generalize this, I mean, it's very much like the developers are kind of the entrepreneur founders, right?
• 19:39
  SPEAKER_03: And they're going out, they might raise capital, then they get debt financing.
• 19:42
  SPEAKER_03: All of it equals this 100 million bucks, but they're really in the game, maybe five, 10 million dollars on a$100 million project.
• 19:50
  SPEAKER_03: But what they've done is as these developers, is they build a pro forma to the total cost of building services, everything to make this happen.
• 20:00
  SPEAKER_03: Then they calculate, you know, the end amount of leases that they need to get, the number of leases that they need to get to pay for this, and they build a financial pro forma for this project that's convincing the banks, the debt holders, the investors, and everybody else.
• 20:16
  SPEAKER_03: And so they got this, it's a business plan.
• 20:18
  SPEAKER_03: Right.
• 20:18
  SPEAKER_03: Right.
• 20:19
  SPEAKER_03: And so if you're a founder listening, this is the same thing thing.
• 20:22
  SPEAKER_03: Like you're building a business, you got a business plan.
• 20:25
  SPEAKER_03: Then you take it, and then what you're saying, Ren, is that your company, they'll find your company and they're like, hey, here's our pro forma of what our project is.
• 20:33
  SPEAKER_03: And what you're saying that you did is you said, here's what I'm gonna do.
• 20:37
  SPEAKER_03: I'm gonna look at your pro forma and I'm gonna find you$100,000 or more in savings on your calculations because your design is structural engineers, like you can like like they might think that, hey, buying these steel beams to construct Rens is like, actually, we can find you a better price on that, and we can save you$20,000 on buying all those beams because of the way maybe it was if you switch the design up a little bit, yeah, you can actually say instead of having 200 beams, you could have 150.
• 21:09
  SPEAKER_03: That saves you$20,000.
• 21:11
  SPEAKER_01: That's a good, that's a good example.
• 21:13
  SPEAKER_01: Exactly.
• 21:13
  SPEAKER_01: And so when I when I talk about, let's say a building's a hundred million, their their structure is probably$15 million or more.
• 21:21
  SPEAKER_01: And then so really I go backwards, like they're fine, their stewards are financial capital.
• 21:26
  SPEAKER_01: The whole reason they're building a Proforma is with data so that they can manage it, but they are unknowingly trusting an engineer that has no system to manage the costs that's designing a$15 million line item.
• 21:38
  SPEAKER_01: Do you think you're gonna be 95% optimized of anything without managing, measuring, and directly managing it?
• 21:45
  SPEAKER_01: So what's 5% off of$15 million?
• 21:49
  SPEAKER_01: 5% of 20 million is a million bucks.
• 21:52
  SPEAKER_01: Right?
• 21:52
  SPEAKER_01: So you're$750,000 and like it's peanuts relative to the investment for the design fee for the total investment.
• 22:00
  SPEAKER_01: So we just focus on like how can we create measurable value?
• 22:04
  SPEAKER_01: Because without measurable value, success is subjective.
• 22:09
  SPEAKER_01: Which means it's emotional, which means your emotion and what you believe to be like important changes over time.
• 22:16
  SPEAKER_01: We now define and measure how success is.
• 22:20
  SPEAKER_03: And so like let's pretend your design fee, just as a blanket number, is$250,000.
• 22:26
  SPEAKER_03: Like that's what you need to charge to pay your team to structurally design and engineer this project.
• 22:32
  SPEAKER_03: However, like if you're at$250 and but your competitor comes in at$150, right?
• 22:38
  SPEAKER_03: That's what usually catches these developers and say, oh, I'm going to pay the$150 because I'm saving cost of my overall performer and business plan.
• 22:45
  SPEAKER_03: However, with what Renz is doing, he's saying, hey, we're going to charge$250 because we do quality shit, right?
• 22:52
  SPEAKER_03: But I'm going to find you a million dollars in savings.
• 22:54
  SPEAKER_03: So actually, you're saving money by hiring me with a better quality design, but still saving you$750,000 over here.
• 23:03
  SPEAKER_03: That's what he's saying on the front end.
• 23:04
  SPEAKER_04: But let's say they don't hire him for that.
• 23:06
  SPEAKER_04: They hire the$150.
• 23:08
  SPEAKER_04: Uh-huh.
• 23:08
  SPEAKER_04: They will look at the plans of whoever did it for free.
• 23:12
  SPEAKER_04: And if they can find$100,000 in savings, then they go ahead and they get a cost share of the savings.
• 23:19
  SPEAKER_04: So they'll do it after the fact.
• 23:22
  SPEAKER_04: Okay.
• 23:23
  SPEAKER_04: Everybody says that their designs are going to be more cost effective to build.
• 23:29
  SPEAKER_04: The buyer that does not always believe that.
• 23:33
  SPEAKER_03: So their developer may choose the other competitor to design it, but you can still enter in and that capital on the savings without the designs.
• 23:44
  SPEAKER_01: So from a business perspective, right?
• 23:46
  SPEAKER_01: Big talk about small business.
• 23:48
  SPEAKER_01: Yeah, let's say the private commercial real estate industry is 1.2 trillion in construction value a year.
• 23:55
  SPEAKER_01: So that's$100 billion of construction every month.
• 23:59
  SPEAKER_01: The entire industry is chasing that same$100 billion a month.
• 24:03
  SPEAKER_01: My offer services the other$1.1 trillion that's already awarded at a totally different phase.
• 24:10
  SPEAKER_01: And then so if I think of my marketing and sales, I want to you want to think about in business what are your two points of sales?
• 24:15
  SPEAKER_01: So my two point of sales are my customer is a sophisticated, confident developer that's a great steward of capital that is willing to invest in quality partners, right?
• 24:26
  SPEAKER_01: Like another way I asked that is like, were you the cheapest person your company could hire to run this job?
• 24:31
  SPEAKER_01: No?
• 24:31
  SPEAKER_01: Okay.
• 24:32
  SPEAKER_01: Like why not?
• 24:33
  SPEAKER_01: So it's like you're either a sophisticated, competent that like is looking for value partners that help shore up their risk and help them succeed.
• 24:42
  SPEAKER_01: Or you didn't do that and you're screwed and you need help now.
• 24:45
  SPEAKER_01: And I either want all of my content, all my discussions to push you to one end of that spectrum before you engage with HO.
• 24:52
  SPEAKER_03: So help me understand.
• 24:54
  SPEAKER_03: Like I get I get kind of the front end part, like it's that convincing of hiring a higher quality partner like yourself.
• 25:01
  SPEAKER_03: I get that channel.
• 25:02
  SPEAKER_03: But how do you like let's say they already kicked off the project and they're using this other design firm?
• 25:07
  SPEAKER_03: How do you come in?
• 25:08
  SPEAKER_03: Like, how do you come in and help with that kind of mess on the back end?
• 25:11
  SPEAKER_03: Like how do you save this money?
• 25:14
  SPEAKER_01: So I think it's I it in one way, it could be just outbound sales, right?
• 25:19
  SPEAKER_01: So outbound sales to prospective customers, you see developments that already got awarded that are in your pipeline.
• 25:25
  SPEAKER_01: We can now run outbound sales, but instead of me saying like we're HO, like try to hire us on your next deal, it's like, hey, uh, like you have your process, and then it's we have this irresistible offer.
• 25:38
  SPEAKER_01: It's like put an if I if I put it into simple context, if I had an offer that said if you paid HO a dollar and you made 10, and you saw that Mark had a testimonial and worked with us, and you were like, Mark, is this offer real?
• 25:52
  SPEAKER_01: It feels too good to be true.
• 25:53
  SPEAKER_01: You can just give them a buck and you get 10 back.
• 25:55
  SPEAKER_01: Yeah, I keep doing it.
• 25:57
  SPEAKER_01: Works every time.
• 25:58
  SPEAKER_01: Like, you don't need to know me to make that buying decision, right?
• 26:02
  SPEAKER_01: So it's like if you can have a it Alex Remozzi put it this way is like, if I can make something for 10 cents, sell it for a dollar, and to my customer it's worth$10, I'm gonna be a billionaire.
• 26:14
  SPEAKER_01: Because there's a 10x gap between cost and price and price and value.
• 26:18
  SPEAKER_01: You need to have a gap between both.
• 26:21
  SPEAKER_01: You can't have price and value be too close because otherwise your your buying resistance is way too high.
• 26:26
  SPEAKER_03: So I do want to get, I know I'm I might be ignorant, but maybe no, maybe there's other people, but right.
• 26:30
  SPEAKER_03: You're like on this second phase, like on this back end, like at what point in the project are you entering in?
• 26:36
  SPEAKER_03: Like the developers chose their designer, they're starting to design.
• 26:39
  SPEAKER_03: They're are they actually building?
• 26:42
  SPEAKER_03: And now you stuck you can step into it.
• 26:43
  SPEAKER_01: It would be before they build.
• 26:45
  SPEAKER_01: So there's a design process, capitalization, and then construction.
• 26:50
  SPEAKER_01: So what can happen and where this is a good point of sale is when a design happens and they're trying to create that financial pro forma, but their building's too expensive.
• 26:59
  SPEAKER_01: Now they can't get capital.
• 27:01
  SPEAKER_01: And so now if we've done a good job with our media engine and people being aware of that, like if you have a friend that's a commercial real estate developer and they're like, you guys are just out to dinner and they're like, I can't get this thing capitalized.
• 27:11
  SPEAKER_01: I'm like a million or two over budget, you'd be like, hey, you should send it to Renz.
• 27:15
  SPEAKER_01: He'll take a look at this for no cost.
• 27:17
  SPEAKER_01: And if you can side save a million or two, great.
• 27:20
  SPEAKER_01: And so it's just like this word of mouth, like nobody does that.
• 27:23
  SPEAKER_01: It's created complete clarity.
• 27:25
  SPEAKER_04: No, no one no one else does this that I'm aware of.
• 27:29
  SPEAKER_04: Okay.
• 27:29
  SPEAKER_04: And I'm yeah, pretty knowledgeable about the structural engineering world.
• 27:32
  SPEAKER_04: Nobody else does.
• 27:34
  SPEAKER_04: What you have to understand though, is just to step back for a second.
• 27:37
  SPEAKER_04: First off, structural engineers are very, very conservative because of what you said.
• 27:42
  SPEAKER_04: They're dealing with life safety issues.
• 27:44
  SPEAKER_04: So the tendency is to not do anything that hasn't been done 10 zillion times before, okay, to over-design things because they want to be absolutely sure that there's no problem.
• 27:57
  SPEAKER_04: All right.
• 27:58
  SPEAKER_04: And because they've always done it this way, they're very resistant to change.
• 28:03
  SPEAKER_04: So you've got that sort of driving the thing.
• 28:07
  SPEAKER_04: And that's why somebody like Renz can come in there and look at what they're doing and go, hey, but what about this, this, this, this?
• 28:15
  SPEAKER_04: But they're not going to do things like this.
• 28:17
  SPEAKER_04: I mean, the average structural engineering firm principal, if I told them what Renz is doing, they'd go, that guy's crazy.
• 28:24
  SPEAKER_04: He's just a cowboy and yada, yada, yada.
• 28:27
  SPEAKER_04: Okay.
• 28:27
  SPEAKER_04: Is that not the truth, Renz?
• 28:29
  SPEAKER_01: Yeah, I'm sure that's what they, I mean, that's their leg of defense.
• 28:33
  SPEAKER_01: Yeah.
• 28:33
  SPEAKER_01: Right?
• 28:34
  SPEAKER_01: But we're far from cowboys.
• 28:36
  SPEAKER_04: Yeah, you're doing it the opposite way.
• 28:38
  SPEAKER_04: You're trying to actually use real data instead of just rules of thumb and things that have always been done before.
• 28:45
  SPEAKER_01: And so you were talking about like why you've been doing this for three years, why is no one copying?
• 28:49
  SPEAKER_01: And and I think a good conversation for any small business.
• 28:53
  SPEAKER_01: I think in general, especially in small business, owners will drastically underestimate the amount of training and SOPs and quality management required to have predictable, consistent results across a team.
• 29:09
  SPEAKER_01: It's like maybe I can design a pretty cost-effective building by myself, right?
• 29:14
  SPEAKER_01: Like I ran a steel company, I built an estimating department.
• 29:17
  SPEAKER_01: Like maybe I have pretty good judgment without measuring.
• 29:19
  SPEAKER_01: I can have a pretty good result.
• 29:20
  SPEAKER_01: And this is how I felt before we did this, right?
• 29:23
  SPEAKER_01: Like I have awareness, I can design cost effective.
• 29:25
  SPEAKER_01: I don't need to, but the reality is, is like just because one person might have good judgment doesn't mean a team of 50 or 100 engineers are going to have that same judgment.
• 29:35
  SPEAKER_01: So it's like, what does the operational systems in the background say about a company?
• 29:42
  SPEAKER_01: And I think far too much in highly educated, certified professional service industries, there's a lack of training, process, and quality management actually in place.
• 29:52
  SPEAKER_01: And so to actually layer this onto a firm that's not doing this, they're going to expose themselves because it is a fact that there is a lot of wasted money coming out of a firm that has no systems to manage cost.
• 30:06
  SPEAKER_01: Absolutely.
• 30:07
  SPEAKER_01: We have the data that shows that.
• 30:09
  SPEAKER_03: So let's say you won on that back end.
• 30:12
  SPEAKER_03: Do you now are you working alongside that ex that current design firm and you're kind of auditing them and making sure that what they're procuring and the so that's the risk-free part?
• 30:23
  SPEAKER_01: So we will help guide an existing team how to save that money.
• 30:26
  SPEAKER_01: The challenge there is you never get 100% of the savings.
• 30:30
  SPEAKER_03: Yeah.
• 30:31
  SPEAKER_03: Because that that other resisting well, it's it's resisting and it's without getting too technical.
• 30:39
  SPEAKER_01: This isn't like I think over design is kind of a misdiagnosis of the problem.
• 30:45
  SPEAKER_01: It's like it's a series of small decisions that happens over a nine-month design cycle.
• 30:50
  SPEAKER_01: And so when you ask that engineer, did you design this cost effectively?
• 30:53
  SPEAKER_01: they're gonna say yes, and they mean it, right?
• 30:56
  SPEAKER_01: Because they think they did.
• 30:57
  SPEAKER_01: They made good engineering decisions that maybe felt right and not, but they didn't understand the cost of that decision.
• 31:04
  SPEAKER_01: And then they made dozens of those over nine months and they just add up.
• 31:09
  SPEAKER_01: And so that to me is like the big gap.
• 31:14
  SPEAKER_01: It's like somebody can say they believe it in their core because that's their intent.
• 31:20
  SPEAKER_01: But if they don't have the systems to manage and measure it, like they're not gonna have that result that they want.
• 31:24
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• 31:34
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• 31:39
  SPEAKER_03: It's and so part of this, are you like a little bit more current with new tech trends and new materials and new things that new studies and engineering?
• 31:49
  SPEAKER_01: That's another great, uh, great question.
• 31:52
  SPEAKER_01: So if I produce a set of steel design drawings right now and we hand them to five steel companies, we're gonna have five different prices.
• 32:02
  SPEAKER_03: Yeah.
• 32:02
  SPEAKER_01: Right.
• 32:03
  SPEAKER_01: And so the the claim or our ability to manage the cost of a structure isn't that we can like nail your exact buyout price.
• 32:11
  SPEAKER_01: The buyout price has so many other factors.
• 32:14
  SPEAKER_01: Like, is somebody, did somebody just have a job that pushed a year?
• 32:17
  SPEAKER_01: Did they just lose three projects to a low fee?
• 32:20
  SPEAKER_01: Did they do they have uh do they have a gap in their manufacturing facility that if they don't fill that, they're gonna start burning a hundred grand a week?
• 32:28
  SPEAKER_01: It's like those things all determine buy price.
• 32:30
  SPEAKER_01: The only thing we can do is manage the amount of material and how something's put together to get put us in a position to get the most efficient buyout.
• 32:40
  SPEAKER_01: And so we have to use relevant data to measure this.
• 32:44
  SPEAKER_01: I say money's the uniform language of design development and construction.
• 32:48
  SPEAKER_01: Because if I say something's expensive to you, uh you you might say, hey, in our lobby for big talk about small business, we don't want any columns.
• 32:58
  SPEAKER_01: But you have like a 10-story building and be like, well, that's kind of expensive.
• 33:02
  SPEAKER_01: It's like I don't care, I don't want the columns, versus, hey, if we got rid of these two columns to create this open space you want, it's gonna be about 250,000.
• 33:10
  SPEAKER_01: Is that a good investment?
• 33:11
  SPEAKER_01: You're like, oh my God, I I thought this was gonna be like 50 grand, not 250.
• 33:15
  SPEAKER_01: Like we can put one column by the couches.
• 33:17
  SPEAKER_01: That's fine.
• 33:18
  SPEAKER_01: So it's like having relative data to have a horizontal conversation just makes the decisions throughout the entire design process that much better.
• 33:28
  SPEAKER_03: It's like you can tell them what the price is before they make the decision.
• 33:32
  SPEAKER_01: Correct.
• 33:32
  SPEAKER_01: And then so think about think about this.
• 33:35
  SPEAKER_01: That building doesn't check as a pro forma, and you ask the engineer, like, did we have a cost-effective design?
• 33:41
  SPEAKER_01: And you're like, Yeah.
• 33:42
  SPEAKER_01: They did their job technically.
• 33:44
  SPEAKER_01: But the challenge is there's a knowledge gap on what the actual impact of the decision was at the start of the design.
• 33:51
  SPEAKER_04: It it's not just the engineers, though.
• 33:53
  SPEAKER_04: I mean, like, one of my pet peeves is these ridiculous cantilevers I see on everything.
• 33:58
  SPEAKER_04: Okay, we're building one right now, the uh School of Art over on MLK.
• 34:04
  SPEAKER_04: They got one new building over there with a huge cantilever on it.
• 34:07
  SPEAKER_04: Now they're doing one that's got even a bigger cantilever on it.
• 34:10
  SPEAKER_04: I don't know how long the thing is.
• 34:11
  SPEAKER_04: It's 1960 feet.
• 34:13
  SPEAKER_04: Huh?
• 34:14
  SPEAKER_04: Competition.
• 34:16
  SPEAKER_04: And and so it's like somebody along the way, I mean, you do wonder like if if they were told, like, hey, if we stick one column on this thing or two columns on this thing, we could save you a million dollars over what you're doing right now.
• 34:33
  SPEAKER_04: Is it worth it to make that like that?
• 34:36
  SPEAKER_04: Because the architects came up with it.
• 34:38
  SPEAKER_04: It's not always the engineers, though, that create this problem either.
• 34:42
  SPEAKER_04: It is the architects.
• 34:44
  SPEAKER_04: I mean, so do you find yourself at odds with them in this process?
• 34:50
  SPEAKER_01: I would say it's a communication tool, right?
• 34:52
  SPEAKER_01: Because I think we we generally are are drawn to like-minded architects.
• 34:58
  SPEAKER_01: We work with a ton of great architecture firms.
• 35:00
  SPEAKER_01: So, like in that instance, right, if we're talking about this early on and talking about a pro forma and make creating a development that we can actually build, like the customer matters a ton there.
• 35:10
  SPEAKER_01: Like there might be a customer that wants that, and like that is design excellence and drives a yield for whatever they're trying to achieve.
• 35:16
  SPEAKER_01: Maybe it's financial, maybe it's an experience, right?
• 35:19
  SPEAKER_01: Maybe it's their their project, maybe it's an institution.
• 35:22
  SPEAKER_01: But I think it's just conveying like the the pros and cons.
• 35:26
  SPEAKER_01: I like to say we can achieve anything, it just takes money and space.
• 35:30
  SPEAKER_01: Yeah, yeah.
• 35:31
  SPEAKER_01: Right?
• 35:31
  SPEAKER_01: I don't like space and we have the money, then like let's go.
• 35:35
  SPEAKER_04: I see, but in like in this case, I really do wonder if the ultimate owner of this building understands what they committed to and why they're spending that money.
• 35:46
  SPEAKER_04: Yeah.
• 35:47
  SPEAKER_01: I think it's you know, if they just did resist in a good process, you you're right, it probably does happen, but I think in a good process, like an architect and a design team is collaboratively discussing those decisions and the impact of those decisions with an owner.
• 36:02
  SPEAKER_01: Because you're right, like in commercial, like market rate multifamily, so we do a ton of like large-scale suburban multifamily, like we have a really good handle on whether we think something is financeable or not.
• 36:16
  SPEAKER_01: And so when we start to see like a 200 unit development and then like a Taj Mahal type clubhouse, like it's probably something we should be talking about, depending on where it is, right?
• 36:28
  SPEAKER_01: And it's not to say that it's not a bad decision, it's just saying, like, hey, we're curious about this, we're not seeing this for this type of development, and these other developments are struggling to be financeable.
• 36:37
  SPEAKER_01: Like, do you have confidence in the direction of this development?
• 36:40
  SPEAKER_01: And is this something you want to explore?
• 36:43
  SPEAKER_04: Yeah, I think the coolest thing about it all though is it's free.
• 36:46
  SPEAKER_04: Yeah.
• 36:47
  SPEAKER_04: And that has gotten you a lot of new business with clients that you never would have had if you hadn't created this system.
• 36:54
  SPEAKER_01: Correct.
• 36:54
  SPEAKER_01: Yeah, like it I talk about this a lot.
• 36:57
  SPEAKER_01: It's what is the what's the business you're in?
• 37:00
  SPEAKER_01: Right.
• 37:01
  SPEAKER_01: So I'll I'll share an example outside of engineering.
• 37:04
  SPEAKER_01: Um, I was at an event and got to know this business and I ran a tremendous business.
• 37:08
  SPEAKER_01: It was door knocking sales.
• 37:09
  SPEAKER_01: I don't even remember what they sold.
• 37:11
  SPEAKER_01: But literally taking so like you think they're competing on door-to-door sales, but really what that business is competing in is a recruiting, training, and onboarding system.
• 37:22
  unknown: Yeah.
• 37:23
  SPEAKER_01: Because you'd have super high churn for that type of employee.
• 37:26
  SPEAKER_01: So it's like, how are you attracting them?
• 37:28
  SPEAKER_01: How are you bringing them in?
• 37:29
  SPEAKER_01: How are you training and onboarding?
• 37:31
  SPEAKER_01: They had a ridiculous system.
• 37:33
  SPEAKER_01: I think they were employing, I was, I want to say it was like over a thousand door knockers down in Texas, but like their bi-weekly cadence of like a hundred people coming in for one day training to then be an effective door knocker and their ability to drive that much.
• 37:49
  SPEAKER_01: It was like a tremendous, tremendous like operation, which was really cool to think because it's not like whose door-to-door sales are better.
• 37:57
  SPEAKER_01: It's like whose recruiting and hiring engine is more efficient to get more door salesmen out there because they had the scripts, they had the stuff that would make the sales.
• 38:06
  SPEAKER_01: So it was really that.
• 38:07
  SPEAKER_01: So in engineering, it could be like you could have two completely similar engineering skill sets, but they can drive totally different value to the customer based on the system that you put them in and how you how we create the environment for communication to happen between the customer, right?
• 38:23
  SPEAKER_01: So technically they're the same.
• 38:25
  SPEAKER_01: The value they create to the market is totally different.
• 38:28
  SPEAKER_01: And so when I look at the business that we're creep, we're really competing in, it's one, our ability to communicate the problem we solve and how it how it creates value for our customer, which then creates a customer acquisition cost to LTV competition, marketing and sales competition.
• 38:44
  SPEAKER_01: Because if if a cus if I create more custom more value, say let's say Mark's my customer, my competition charges you$50, but I charge you$100 because I create more value.
• 38:56
  SPEAKER_01: So you happily pay the hundred.
• 38:58
  SPEAKER_01: You're now worth more to me than you are to anybody else in the industry, which means I can spend more money to acquire you and more customers like you.
• 39:06
  SPEAKER_01: And then so that's like a growth engine that people can't compete against.
• 39:10
  SPEAKER_04: Yeah, you got to have enough fee to be able to hire good people, spend money on RD, spend money on marketing and all those other things.
• 39:18
  SPEAKER_04: Correct.
• 39:18
  SPEAKER_04: It's basically what you're saying.
• 39:20
  SPEAKER_04: But so let's take a new direction with this talk.
• 39:24
  SPEAKER_04: Um, I know you've got some progressive management practices.
• 39:28
  SPEAKER_04: One of them I'm a huge advocate for, and I constantly find resistance to implementation of it, and that's um open book management.
• 39:36
  SPEAKER_04: Tell us about what you do there.
• 39:39
  SPEAKER_01: Um looking back where we are today, Jeremiah and I couldn't see business any other way.
• 39:46
  SPEAKER_01: Like we would never run a business that wasn't open book financial management.
• 39:50
  SPEAKER_01: Uh, we got exposed to it um from Jack Stack, the great game of business.
• 39:55
  SPEAKER_01: We listened to a podcast with him, then we read the book, we uh engaged with an advisor, we went through the training, and then we rolled that out.
• 40:03
  SPEAKER_01: Um, and now for any business owner that is like apprehensive, like it definitely is scary, and you definitely want to be disciplined and due diligence, like in running all of your financial models.
• 40:14
  SPEAKER_01: We probably spent six months forecasting and making sure that our books were completely dialed and in a way that was understandable.
• 40:23
  SPEAKER_01: And because we with Open Book Financial, we have a company-wide bonus plan.
• 40:27
  SPEAKER_01: And so we wanted to stress test that as we grew.
• 40:30
  SPEAKER_01: I think one of the hardest things, and maybe this is slightly off topic, but probably a good conversation for small business.
• 40:36
  SPEAKER_01: It's like the reason small businesses often talk about seller discretionary earnings is because rarely is an owner's comp actually appropriate on the PL, right?
• 40:48
  SPEAKER_01: So, like we had to stress test our own comp versus the PL to make sure that it was appropriate for our team.
• 40:55
  SPEAKER_01: Um, in practice, our team forecasts our PL to us every single Monday.
• 41:01
  SPEAKER_01: So we have a year-to-date uh income statement, all of our all of our salaries and kind of benefits lumped in.
• 41:09
  SPEAKER_01: We have revenue and then all of our expenses and our in our profit before tax.
• 41:13
  SPEAKER_01: And then we forecast that for the month ahead, and then we update that every single week to see how accurate we are.
• 41:18
  SPEAKER_01: Now that forecasts for the year, and it also forecasts the entire company bonus plan every single Monday.
• 41:24
  SPEAKER_04: Love it.
• 41:24
  SPEAKER_04: Yeah, it's good.
• 41:25
  SPEAKER_04: And so everybody's tied into the results.
• 41:27
  SPEAKER_04: Now, how often do you pay bonuses out based on your performance?
• 41:31
  SPEAKER_01: Yeah, that's great.
• 41:31
  SPEAKER_01: So we tie it to the cash flow of the business.
• 41:34
  SPEAKER_01: So we have quarterly bonus payouts.
• 41:37
  SPEAKER_01: So at the end of the quarter, it is calculated based on the margins of that quarter, and then it's paid out average AR days.
• 41:45
  SPEAKER_01: So then we're incentivizing not only financial performance, but financial collection.
• 41:49
  SPEAKER_01: And so everyone's kind of tied in.
• 41:52
  SPEAKER_01: Um one of the biggest ahas for me if somebody is considering or against open book financial management, it's like if you think about a business, you are trying to incentivize your team to increase, to improve the revenue and profit of a business without ever showing them the revenue or profit.
• 42:12
  SPEAKER_01: So, like the great game of business, it's like imagine playing football without a scoreboard.
• 42:15
  SPEAKER_01: You don't know what quarter it is, how much time is left in the game, you don't know what down it is, how many yards to a first down, you don't know if you're in the red zone or on your own goal line.
• 42:23
  SPEAKER_01: So, how are you going to make a decision that increases the likelihood of success?
• 42:26
  SPEAKER_01: It's like you need a scoreboard so the entire team understands where you're trying to go and this is the judgment of their day-to-day decisions and behavior.
• 42:35
  SPEAKER_04: Amen.
• 42:35
  SPEAKER_04: But the resistance is they'll see how much money I'm making or don't make.
• 42:41
  SPEAKER_04: Or don't make, and I'll be embarrassed.
• 42:44
  SPEAKER_04: Um, or they'll think I'm greedy.
• 42:46
  SPEAKER_04: And my response to that is if there is actual research on this, if you don't show your employees how well you are doing, they automatically assume that you're taking far more out of that business than you actually are.
• 43:01
  SPEAKER_04: That is always the presumption.
• 43:03
  SPEAKER_04: I saw one with restaurant employees, and I wish I've got it somewhere printed, and it's in a manila file folder lost in my giant attic full of boxes somewhere.
• 43:14
  SPEAKER_04: But it showed that the average restaurant worker thought that the owner of the business made 20-something times more than they actually did.
• 43:23
  SPEAKER_04: Now think about how that impacts their behavior.
• 43:25
  SPEAKER_04: Sure.
• 43:26
  SPEAKER_04: Do they give people more than they should?
• 43:27
  SPEAKER_04: Do they care about waste?
• 43:28
  SPEAKER_04: Do they care about portion control?
• 43:30
  SPEAKER_04: Do they care about you see what I mean?
• 43:32
  SPEAKER_04: 100%.
• 43:33
  SPEAKER_05: You're making so much money.
• 43:34
  SPEAKER_05: What do you care?
• 43:35
  SPEAKER_05: Yeah.
• 43:35
  SPEAKER_05: You see what I mean?
• 43:36
  SPEAKER_05: It's demoralizing for the team and off a bad assumption.
• 43:40
  SPEAKER_05: Exactly.
• 43:41
  SPEAKER_05: Yeah.
• 43:42
  SPEAKER_04: And you know that, and and and I know that.
• 43:44
  SPEAKER_04: I mean, how many businesses do we have where we're trying to get them going, where we're not taking anything out?
• 43:50
  SPEAKER_04: All we're doing is trying to pay people.
• 43:51
  SPEAKER_04: Yeah.
• 43:52
  SPEAKER_04: Yeah.
• 43:53
  SPEAKER_04: And yet the presumption is that we're as you know, we're all so rich that we can afford, you know.
• 43:59
  SPEAKER_05: And
• 44:00
  SPEAKER_04: And it really impacts their behavior, I think.
• 44:02
  SPEAKER_04: And so yeah, it also, Rens, I'm sure you agree that you're training your people in the business.
• 44:09
  SPEAKER_04: You're creating a new cadre of potential managers and owners of this enterprise by educating them like this.
• 44:18
  SPEAKER_01: Yeah, it's like uh a company's ability to grow is directly correlated to their ability to develop leaders.
• 44:27
  SPEAKER_04: Yes.
• 44:27
  SPEAKER_01: Yeah.
• 44:28
  SPEAKER_01: Right.
• 44:28
  SPEAKER_01: So it's like why why handcuff them by not exposing them to like one of the most important functions in the business, which is the financial function.
• 44:37
  SPEAKER_01: It's like that's the that's the health of the business.
• 44:41
  SPEAKER_01: Yep.
• 44:42
  SPEAKER_01: Yeah.
• 44:42
  SPEAKER_01: If I break it down into, I'll share like a maybe this triangle view for the audience is helpful.
• 44:48
  SPEAKER_01: I think of you have your business strategy, your go-to-market, your offer, your mission, vision, your core values, your strategy.
• 44:55
  SPEAKER_01: Now you have your training, your process, your quality management.
• 44:59
  SPEAKER_01: That's your execution model.
• 45:00
  SPEAKER_01: And then you have your financial model that tells you whether the strategy and the execution are working.
• 45:05
  SPEAKER_01: If you want to change one, you better be able to show how it improves the financial outcome.
• 45:11
  SPEAKER_01: Right.
• 45:11
  SPEAKER_01: But if you don't have that third layer, like that financial performance, you don't know if the strategy or execution is working.
• 45:17
  SPEAKER_05: Yeah.
• 45:18
  SPEAKER_05: Yeah.
• 45:19
  SPEAKER_01: Right?
• 45:19
  SPEAKER_01: You can have an idea, but you don't really know, which means you either you could be underinvesting or overinvesting in certain functions of your business.
• 45:27
  SPEAKER_03: Hey, can we, I would like to uh with a few minutes we have left, point the conversation over to like your go-to-market strategy.
• 45:36
  SPEAKER_03: Speaking of business development in podcasting is a core piece of your go-to-market strategy.
• 45:43
  SPEAKER_03: Absolutely.
• 45:44
  SPEAKER_03: Yep.
• 45:44
  SPEAKER_03: Tell tell us, go, can you go down in the weeds with that and tell us like what how you look at it, why you think it's valuable, how you're measuring it.
• 45:52
  SPEAKER_03: I mean, give some folks some ideas about if they wanted to leverage that type of strategy, how to go about it.
• 46:00
  SPEAKER_01: So, especially as a small business, so I started creating content on LinkedIn probably 2019, maybe 2020.
• 46:07
  SPEAKER_01: I want to think it was 2019.
• 46:09
  SPEAKER_01: Um, and the reason I felt like I had, I didn't know, like we didn't have a differentiating offer.
• 46:16
  SPEAKER_01: And so when I I don't think you have a differentiating offer, you just claim that you're better, right?
• 46:20
  SPEAKER_01: A new sale is really hard because they haven't experienced better yet.
• 46:24
  SPEAKER_01: And and even before that, it's like, how much is better worth?
• 46:28
  SPEAKER_01: 10 grand, 30 grand, 100 grand.
• 46:30
  SPEAKER_01: It's like, hey, you guys are great, but some so-and-so is 30 grand less.
• 46:33
  SPEAKER_01: So either drop your fee or I'll take you golf and we'll get you on the next one.
• 46:37
  SPEAKER_01: And so I started investing in content.
• 46:39
  SPEAKER_01: And when you're a small business, especially we're trying to serve large-scale commercial real estate.
• 46:44
  SPEAKER_01: What's going to be one of the objections I hear if you're a small new business going for large commercial real estate?
• 46:51
  SPEAKER_01: It's going to be like, are you you're too small?
• 46:55
  SPEAKER_01: Or are you big enough?
• 46:56
  SPEAKER_01: Do you have the resources?
• 46:57
  SPEAKER_01: Can you do this?
• 46:58
  SPEAKER_01: Well, if I have an opportunity to create content that changes their perception of me as a business leader and us as a company, like what a gift that would be.
• 47:07
  SPEAKER_01: Right.
• 47:07
  SPEAKER_01: So instead of having to go to every single one of my customers when I don't really have anything great to like this great offer to make that valuable, they don't want to be sold to, right?
• 47:17
  SPEAKER_01: Because they're not in a buying decision any day.
• 47:19
  SPEAKER_01: But if I can get connected with them somewhere in media, I can create content that I can leave a positive impression on their view of me and of our business every single day.
• 47:28
  SPEAKER_01: And if I do that every day and that audience grows, like what a gift that would be.
• 47:33
  SPEAKER_01: So it's almost like it's changing the perception of you and your brand before you're ever even in a sales opportunity.
• 47:39
  SPEAKER_01: It's building a relationship before you're in the door.
• 47:41
  SPEAKER_01: The podcast is my growing effort on top of that content strategy that's bringing in more industry leaders.
• 47:51
  SPEAKER_01: So I'm building relationships and I'm providing goodwill.
• 47:54
  SPEAKER_01: I grew a ton.
• 47:55
  SPEAKER_01: My business acumen is purely from running businesses, reading books about business, listening to podcasts of businesses, and talking to people like yourselves.
• 48:03
  SPEAKER_01: Yeah.
• 48:04
  SPEAKER_01: So what a gift that would be.
• 48:06
  SPEAKER_01: Like that changed my life, that daily habit.
• 48:08
  SPEAKER_01: So a podcast one is my way of giving that back to the industry.
• 48:12
  SPEAKER_01: If I can share lessons learned, somebody sees a similar path in their career to you, Eric, or you, Mark, and it helps them see the constraint that they have in their own life and changes their decision or their behavior or their perspective that they're on this and helps them grow.
• 48:28
  SPEAKER_01: Like, what an amazing result that would be.
• 48:30
  SPEAKER_01: And so goodwill compounds faster than anything.
• 48:33
  SPEAKER_01: And it allows me to build relationships with people like yourselves or customers or industry partners while sharing what they've done great, sharing their journey, creating media and content for them that lives forever.
• 48:45
  SPEAKER_01: So that's that's building a relationship without asking for anything and providing value to them.
• 48:50
  SPEAKER_04: Yep.
• 48:51
  SPEAKER_04: I always thought, like, if I had a professional services firm and I was had a podcast, I would want to be continuously interviewing people that I wanted as my clients.
• 49:02
  SPEAKER_04: Yeah, 100%.
• 49:03
  SPEAKER_04: Okay, because I mean, what better way to I mean, who doesn't like being asked about themselves?
• 49:09
  SPEAKER_04: Sure.
• 49:10
  SPEAKER_04: And then you're out there glorifying their their you know egos and and and and accomplishments.
• 49:17
  SPEAKER_04: And um, that just to me seems like the greatest marketing strategy there is.
• 49:21
  SPEAKER_04: You cared enough about them to want to talk to them, and you're not trying to sell them anything.
• 49:26
  SPEAKER_03: Yeah.
• 49:27
  SPEAKER_03: And you're delivering a value to Ren's point.
• 49:29
  SPEAKER_03: Like, I mean, you know, the content production part is not cheap, it's valuable, it costs money.
• 49:33
  SPEAKER_03: Yeah.
• 49:34
  SPEAKER_03: And they don't have to do anything other than show up and then they they get passed around, they grow.
• 49:38
  SPEAKER_03: I mean, you're you're a baby.
• 49:39
  SPEAKER_01: You can help them attract talent, uh customers, industry partners, yes, right?
• 49:44
  SPEAKER_01: Rekindled relationships, like it it provide it can provide a ton of value.
• 49:48
  SPEAKER_03: So, do you do a daily podcast with guests then?
• 49:51
  SPEAKER_03: I do it every week.
• 49:52
  SPEAKER_01: So I've done it every week.
• 49:53
  SPEAKER_01: I'm coming up on four years in November.
• 49:56
  SPEAKER_03: Yeah, yeah.
• 49:57
  SPEAKER_03: So every week you're sourcing, finding a new guest, you're preparing that guest, they come on the show, you're yeah, and pushing it.
• 50:06
  SPEAKER_03: What what channels do you?
• 50:08
  SPEAKER_03: I mean, you mentioned LinkedIn earlier.
• 50:10
  SPEAKER_03: Is that your primary kind of channel that you're pushing through or use tube and other ones?
• 50:14
  SPEAKER_01: So where I am in my in in uh or where we are in HO's growth, we we invested in our business and our team in delivering consistent high-level quality.
• 50:27
  SPEAKER_01: We layered on the cost management.
• 50:29
  SPEAKER_01: So now we're structural engineering experts who also manage the cost of your structure.
• 50:33
  SPEAKER_01: We have an attraction offer that makes this.
• 50:36
  SPEAKER_01: Um, we are investing in a software development team that continues to make us more efficient, give us more data, give us more cost efficiency in design, and also like gives us new offers in the future that I think could become its own asset or really help us scale nationally.
• 50:51
  SPEAKER_01: And then on the media side, I D I D-risk the financial business.
• 50:57
  SPEAKER_01: And you two can probably appreciate this.
• 50:59
  SPEAKER_01: I think you can take financial risk or execution risk to tackle the next constraint of your business.
• 51:08
  SPEAKER_01: And when you're small, we always chose to not take financial risk and to take personal execution risk.
• 51:14
  SPEAKER_01: So I would develop a new skill, solve business problem.
• 51:17
  SPEAKER_01: Develop a new skill, solve the next business problem.
• 51:19
  SPEAKER_01: My partner would be doing the same.
• 51:21
  SPEAKER_01: Well, eventually that becomes the fine, the bottleneck of the business.
• 51:25
  SPEAKER_01: And you have to, we're at the partners that's like who, not how.
• 51:28
  SPEAKER_01: So we have to solve the next stage of growth with who, not how can we?
• 51:33
  SPEAKER_01: And so I de-risk marketing and sales growth to now to build product market fit and have this understanding of our customer and how we communicate.
• 51:42
  SPEAKER_01: And now we're building the team to scale our media production, build a sales team because we have something to offer multiple ways to connect with new customers.
• 51:50
  SPEAKER_01: And I think we've built a marketing and sales engine that will scale because we have that data.
• 51:56
  SPEAKER_01: That makes sense.
• 51:56
  SPEAKER_01: So to date, I've done all that sourcing moving forward.
• 52:01
  SPEAKER_01: We I think you're gonna see a lot a bigger increase of more better media production, outbound cadence, connection, storytelling, all those things because I'm building the team around it.
• 52:12
  SPEAKER_01: But we had to prove that it was a good financial investment in order to go there.
• 52:16
  SPEAKER_05: Yeah, makes sense.
• 52:18
  SPEAKER_05: Yep.
• 52:19
  SPEAKER_05: All right, well, we're out of time.
• 52:21
  SPEAKER_05: Yeah, it's been fun conversation, man.
• 52:23
  SPEAKER_05: I know Rentz is an intense guy, isn't he?
• 52:25
  SPEAKER_05: Yeah, man, he's good.
• 52:28
  SPEAKER_05: I have total faith in this guy.
• 52:30
  SPEAKER_04: I know he's gonna be successful.
• 52:31
  SPEAKER_04: Yeah.
• 52:32
  SPEAKER_01: Oh, I appreciate you both.
• 52:34
  SPEAKER_01: Thanks for having us on here.
• 52:35
  SPEAKER_01: I'd love uh, I think big talk about small business is um an important thing to share with the world.
• 52:42
  SPEAKER_01: Like most businesses are small businesses.
• 52:45
  SPEAKER_01: Yeah, that's right.
• 52:47
  SPEAKER_01: And they're experts in the thing that's not running a small business.
• 52:50
  SPEAKER_01: And so the more we can have conversations that helps them become problem aware, brings them one step closer to getting to that next level.
• 52:58
  SPEAKER_03: Well, and I think that like Mark and I've vision, like we've lived like you have, lived in a very isolated world as an entrepreneur, and all you hear are stuff about like you know, the flywheel effect, and it's really built for CEOs and educational institutions, and all the while the entrepreneur is living day by day in a freaking gosh dang war zone, and they need to feel that they're that yes, they're not alone.
• 53:22
  SPEAKER_03: They're not alone by stretch of the imagination.
• 53:26
  SPEAKER_04: You know, so it's uh it's a battle.
• 53:28
  SPEAKER_04: I think the other thing is that that these small business owners need to see that A, although there are a lot of problems, there are things that people do to overcome them.
• 53:38
  SPEAKER_04: And that B, um there there's every small business has ways to be improved.
• 53:46
  SPEAKER_04: 100%.
• 53:47
  SPEAKER_04: Every single one has has plenty of business for improvement.
• 53:52
  SPEAKER_04: It really is true.
• 53:54
  SPEAKER_04: So well, Renz, we really appreciate your being here today.
• 53:57
  SPEAKER_04: If anybody wants to reach out to you, where do they get a hold of you?
• 54:01
  SPEAKER_01: They can get a hold of me right on LinkedIn, Renz F Hayes IV.
• 54:06
  SPEAKER_01: You'll see me on there, or h-0.engineering.com is our company website.
• 54:11
  SPEAKER_01: You can learn about our cost management process and our risk-free peer review.
• 54:15
  SPEAKER_01: So you can get to us right through the website if you have a project that you want us to look at.
• 54:19
  SPEAKER_01: Um, and then yeah, email as well haze at h-0.engineering.
• 54:24
  SPEAKER_03: Awesome.
• 54:25
  SPEAKER_03: I'm connecting with you right now, Rent.
• 54:27
  SPEAKER_03: I'm already connected with you, man.
• 54:29
  SPEAKER_03: There we go.
• 54:30
  SPEAKER_03: Sick.
• 54:30
  SPEAKER_03: Didn't even know.
• 54:31
  SPEAKER_03: There you go.
• 54:32
  SPEAKER_04: All right.
• 54:33
  SPEAKER_04: Thank you, gentlemen.
• 54:34
  SPEAKER_04: Thank you, Rent.
• 54:35
  SPEAKER_04: Appreciate it.
• 54:36
  SPEAKER_04: Take care and until next week.
• 54:37
  SPEAKER_04: This has been another episode of Big Talk About Small Business.
• 54:52
  SPEAKER_02: Thanks for tuning in to this episode of Big Talk About Small Business.
• 54:55
  SPEAKER_02: If you have any questions or ideas for upcoming shows, be sure to head over to our website, www.bigtalkaboutsmallbusiness.com, and click on the Ask the Host button for the chance to have your questions answered on the show.
• 55:09
  SPEAKER_02: Stay connected with us on LinkedIn at Big Talk About Small Business.
• 55:13
  SPEAKER_02: And be sure to head over to our website to read articles, trust episodes, and ask questions about upcoming shows.