Pivot, Disrupt And Transform with Marcia Daszko
Posted by John Livesay in podcast | 0 comments
Episode Summary:
How leaders behave directly impact the course of the business. They are the ones that lead the people in the team to work towards a common goal and succeed. As we know it, everyone has the capacity to become a leader. The only thing therefore is to be good at it and not the judging critique that blames others. One of the world’s leading business strategists and catalyst for leadership and organizational transformation, Marcia Daszko, talks about how leaders beat the odds and survive with her book, Pivot, Disrupt, and Transform. Marcia gives the three-step process that tells people to stop focusing on the bottom line and performance appraisals, and shares how leaders should ask the right questions. On top of that, she talks about the foundational business strategies that will soon work towards improving and innovating to ultimately serve the customers.
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Listen To The Episode Here
Pivot, Disrupt And Transform with Marcia Daszko
Our guest is Marcia Daszko and she’s one of the world’s leading business strategists and catalyst for leadership and organizational transformation. She’s got over 25 years of proven success running her own consulting firm and workshops for executives. She’s also a researcher, a graduate level teacher, a keynote speaker, and an award-winning writer. She’s been an adviser to Fortune 500 companies, government agencies including the Pentagon. Marcia, welcome to the show.
Thank you for having me.
Pivot, Disrupt, Transform: How Leaders Beat the Odds and Survive
Your book is fantastic it’s called Pivot, Disrupt, Transform: How Leaders Beat the Odds and Survive. You’ve got some great testimonials from authors like Ken Blanchard who wrote The One Minute Manager, which is one of my all-time favorite books. Before we double click and do a deep dive into this great book of yours, can you take us back to your story of origin? You can go back as far as you want. Your childhood, high school or college. Where did you start getting interested in leadership?
I never thought of myself as a leader because I was so excruciatingly shy. Although my friends when they hear me say that they laugh and roll their eyes and wonder. They see something maybe I don’t see. I grew up in the Midwest in Iowa. My family moved to California when I was in college. I transferred out here. I attended Santa Clara University and San Jose State University and ended up getting my master’s in mass communication. I worked for various companies in corporate communications and marketing. Then one of the organizations that I worked with was owned by Dr. Perry Gluckman a statistician who had a group of colleagues’ consultants who worked with organizations to help them learn and apply Dr. Deming’s philosophy of leadership and management. For those who don’t know, Dr. Deming was a man who went to Japan at the invitation of General MacArthur after World War II to help turn around Japan and help them become a global competitor. In the 1980s, he came back to the US and worked with the CEOs of General Motors and Ford to help save our auto industry.
That’s an impressive background that’s certainly a huge impact and now that changing with Korea and China. I was looking at how China’s overtaken Japan lately in gross national product and all that good stuff. What made you want to write this book?
Once I had begun working with Dr. Perry and Dr. Deming they became my mentors. I learned from them that everyone within them has natural leadership. How I learned that is because my two mentors pulled it out of me. Over time, they taught me how to consult and that’s how I got into consulting years ago. We worked from small organizations to companies like the Fortune 500. I wrote the book because in my 25 years plus of consulting, I had seen the fork in the road for leaders. Some leaders struggle and fail and others succeed wildly. It’s like, “Why does this happen and why are some struggling so much? Why is it that we have 6,000 startup companies in the Silicon Valley Bay Area and probably 90% of them won’t go out of business? Why is it that there was a list of Fortune 500 companies that came out in the in 1955 and more than 60% of those Fortune 500 corporations do not exist anymore?” Some were merged in, but many went out of business. When we think about Montgomery Ward, Pan Am, Circuit City, and Blockbuster, they disappeared pretty fast. Does that mean that companies like IBM, Walmart or Shell Oil like we’ve seen with Sears or Target, will they go out of business? I wrote the book because I wanted to help leaders who have so many challenges see that there’s a better way. There’s a different way. There’s a bold way. There’s a courageous way to lead and it’s not that hard.
What would you say would be the one takeaway? Let’s give some great insights right off the bat. If someone is saying to themselves, “If everyone has natural leadership within them, how do I find that? What is it that I can do to discover that if I don’t have a mentor?”
I would ask people to follow their own strategic compass. If they’re thinking about their own leadership and/or they’re thinking about leading their team or their organization, even at home. That they think about what are we trying to accomplish. What am I trying to accomplish and getting people together. Knowing nobody works alone. How do we learn, work, and improve together? That is key. If you don’t have that question answered well, then everything else following it, you’ll struggle and eventually fail.
[bctt tweet=”Everyone has natural leadership within them. ” username=”John_Livesay”]
You’ve got a three-step process here where you tell people to stop focusing on the bottom line and performance appraisals. They need to start doing something new, which is asking some questions and seeing what they can do to encourage an environment of change. Finally, the transformation part of being more resilient. What do you mean stop giving performance appraisals? What do you mean stop looking at the bottom line? How else would we run a company? What do you say to that question?
We need to go back to the aim. What are you trying to accomplish? If you say, “We’ve started this company and now we have 200 employees. We need to start implementing performance appraisals,” I would ask again, “What are you trying to accomplish?” “We want to we want to coach people. We want to give people feedback. We want to help and so on.” That is usually the answer that I get around performance appraisals. What has happened is performance appraisals end up being in practice what people use to judge, rate, rank, criticize, and blame people for. The problem is the people worked in the system. They didn’t create the system. They can’t change the system. Yet, people want to hold them accountable for the system’s results. If they don’t like the results they blame and judging criticize the people, but it wasn’t the people. People come to work to do a good job. They want to be proud of their work. They want to contribute. They want to serve customers. They want to work together. Yet we saw the performance appraisals that we rank and rate the people which creates internal competition. Then we tie it to a compensation system that again is more limiting. Then we say, “Our corporate values are teamwork, collaboration, and integrity.” Yet they don’t see that there’s a huge gap between the two in the practice of even using performance appraisals which is a total waste of time. They are in direct conflict with what they say their values are.
Having been in the corporate world myself and selling advertising for Condé Nast for a number of years and selling my multi-million-dollar mainframe computers, nobody likes them. I have managers who used to dread doing that. It was a huge amount of time and they were under a lot of pressure from top management to not give anybody perfect scores. You must find something to ding somebody on so that there’s something for them to improve on. Otherwise, if you tell them they’re doing a great job, they will stop working so hard. Like, “Next year, hopefully, my three will go up to four on creative ideas or some weird category that they create.” There’s a great quote in your book from Dr. Myron Tribus, “Looking at results is like driving the car by looking in the rear-view mirror.”
That summarizes what you’re saying here. That you can’t motivate or even come up with an inspiring vision of what the future could be if all you’re doing is evaluating someone’s past performance. This concept of teamwork, I always found so amusing, especially in a sales department. They do rank you and yet they want you to all work together. Oftentimes, you would split accounts. Like if Lexus is based here and there are agency is based here, but that wasn’t always the case. Sometimes I’d have a client that the agency was in LA and the client was in New York. The rep in New York and I had to work together and split the commissions if we got the business or we grew the business, but it was still a competition of who’s the top sales person this week and this month, this year. It’s a very bizarre compete, work together, and you’re going to get paid on how you perform, not so much how the magazine performs.
That’s why another thing that I suggest is that not only does a company get rid of the performance appraisals, but they also get rid of incentives, arbitrary, numerical goals, and commissions. That’s a unique, bold, radical revolutionary thinking for most organizations because it’s not best practices. That’s what part of the book is saying too is stop best practices and management fads. If you step back and think, what are you trying to accomplish those don’t help you?
Leadership: Salespeople are successful if they ask the best questions.
You also talked about helping people understand why they lose customers to the competition. That’s a fascinating topic for me particularly because I had to win back a client at one point. Then I’ve helped other companies put a strategy together on how to win back a client. A lot of people don’t have a clue that winning back a client is very different than getting them in the first place. Can you expand on your insights on what companies can do to prevent losing clients and what they might do to get them back?
I have beautiful examples of that. Personal examples that’s what brings everybody to heart. If leaders think about what they are passionate about and get their whole organization focused on supporting each other to serve customers. Doing what they love to do to serve customers, they tap in on being close to their customer. It’s not by surveys and focus groups. It’s by talking to their customer. What do you like? What do you want? What do you need? It is beyond that because it’s not the customer’s job to tell you that they want the fax machine or that they want the iPhone. It’s the companies, the leader’s job to create the future. To create new products and services that are innovative and will serve and satisfy new customers and new markets. For example, for me, I was a very loyal customer of American Airlines years ago. I had more than three million miles on American Airlines. Whenever I would fly with colleagues I would say, “Come on my flight.” Even though there are tickets generally on average worth $50 more than the competition, I would stay loyal. Then their service over time drastically changed. It was a change of CEOs that was part of it. There were mergers after that and then they pulled out the San Jose market as a hub. That drastically impacted our ability to have as many routes and so forth.
The point being, their customer service drastically went down. One time, I got on 40 flights with American Airlines. On those flights, 39 out of 40 I didn’t get a hello, a thank you or a goodbye. As a premier flyer, I wrote them a letter. Months later, I got a wrinkled form letter back justifying their behavior. That’s when I said, “That’s it. I’m done.” I fly American Airlines only if I absolutely have to. I would say they’re a little bit better, but they still have so far to go. I have no interest in flying them. Plus, their seats are the tightest together. You could starve on their flights. I love JetBlue, I love Southwest Airlines. The point being that it didn’t cost them anything to say hello, thank you, and goodbye. It cost nothing for that customer service. I knew that leadership had changed because when leadership doesn’t have the mindset to serve customers, it’s for them maybe all about the bottom line or they’re competing with their peers or whatever it is, it shows up in the people who are touching the customers.
Let’s dive into the second part of the book, which is if we’re going to stop focusing on the bottom line and giving people these performance evaluations, we should be doing something new. That’s the first thing you start talking about, which is also fascinating to me. I also believe that salespeople are successful if they ask the best questions. You were talking about leaders asking questions. Can you expand on that?
What we need to help leaders do then is yes let go of the old because otherwise, if you are trying to start something new but you don’t get rid of the old, I always say it’s like trying to put strawberry jam on moldy green bread. Let’s get rid of the old is essential. Leaders need to start thinking and asking different questions. These are not questions like, “Why did you do this and why did you do that?” Instead, the questions of, “What are we trying to accomplish?” It’s a strategic compass, which I have in the book. “What are we trying to accomplish together? By what method will we achieve it together? What are the values that we’re going to stand for with our customers, with our markets in our community and with our colleagues? Who are our customers? What do they need and how do we know?”
[bctt tweet=”Looking at results is like driving by looking at your rearview mirror.” username=”John_Livesay”]
That’s significant because that means we’re going to collect data and look at that data over time and not react to it. Based on what we see about that data over time, what are the trends? Is it stable? Are we serving customers or not? Then we ask the final questions which are, how do we measure progress? How do we measure success? Most management teams and executive teams, when they have management team meetings, most of them are focusing on and that might be a day or two at a time. You’ve been in the sales team meetings where you spent a day or two or three talking about the numbers and the quotas and goals. You kept manipulating the numbers. I’ve seen those meetings and they’re a sad use of time. I share with my clients that we focus on discussions about the aim, about quality, and about the customer. About serving customers, about the systems, the processes that we need to create and improve, and enable to flow so that we can then get the results that we want.
The last thing in a management team meeting that we need to talk about if we have time are the results or the goals or the numbers. Everything that you do before that are the things that create the numbers. If you don’t like the results, if you don’t like the bottom line, if you don’t like the profit margin or the profits you need to go back. Leaders need to go back and spend 90% plus of their time thinking about, “How do I create an organization where everyone understands what the aim is and how we create the systems and processes so that we have these strategies?” Quality is a business strategy. Improvement is a business strategy and innovation is a business strategy. We need to have those three as foundational business strategies. Then we can go through the organization, work together and see how we improve and innovate to serve our customers.
It sounds like a very different use of time than what I used to have to do, which was once a week all sales reps from around the world will be on this long conference call. We have to say, “For this upcoming issue, I’m going to bring in ten ads. I have five of them who verbally said yes. Another ten that are 50/50 and maybe another seven or so that are less than 50%. Then they say, “We take 90% of the verbals, 50% of the 50/50 and then 10% of all the others. You still are short a couple of pages. Where are you going to get them from?” Then you’d have to listen to everybody else’s story. Then they go, “If we add up all the numbers that everyone says they’re promising and committing to bring in, here’s the number for the month. That’s not high enough for what our goal is.” We will do that for three months out. Tedious, painful, and unproductive. Everywhere I work, that’s what it was. That was the given way of doing it.
It’s the best practice, it’s the management bat. It’s the way we always do things even though the way we always do things isn’t helpful, isn’t innovative, isn’t serving customers, isn’t fun and isn’t motivating. That process you described is demotivating. It doesn’t make me feel good. I’m not happy when it’s over, it’s like, “I’m so relieved.” It’s all about the numbers. It’s not about things that you can get passionate about like serving customers and being creative. It sucks the life out of people.
Then they would add a layer on to it where it’s like, “You promised that you bring in as many ads.” Something fell out. You promised to the whole room as if getting people to commit to something makes them do it. If they don’t feel bad enough that something fell out.
Leadership: Once you make the decision to pivot and start trusting your people, you cannot go back and start trying to manage from fear again.
One of my friends had 1,200 sales people in his corporation. He had sales of $500 million. He was constantly competing for his share of the pie. He was frustrated with it and looked for a better way. That’s when he decided to transform his organization. He spent a year transforming his own thinking about leadership. Then he decided to change his system. He made the plan to do it. He communicated both to his key executives, his key salespeople, his employees, and his customers what he was going to do before he did it, then took all of his 1,200 salespeople off of commission and off of incentives. No more performance appraisals. He did many things to transform his organization and then he took it from $500 million to $2 billion in six years.
People think that salespeople aren’t motivated unless they’re tied to a performance and that’s not the case. I love this concept where you have here on how we transform as leaders, the old way and a better way. The biggest level is the high level of fear, anxiety, and stress or in the old way of, “If you don’t make your numbers, after three months you’re going to be fired.” There’s a constant fear-based culture. This is multiple companies, this is not unique to one. The better way you propose is to reduce the fear and build trust that if you have a bad month or two, we’re going to look at you your attitude and your work ethic. All other things besides just the numbers deciding whether or not you keep your job. Is that a fair summary of what you’re saying on the better way?
[bctt tweet=”You can’t motivate or even come up with an inspiring vision of what the future could be if all you’re doing is evaluating the past.” username=”John_Livesay”]
The better way is that the leader is finally going to lead instead of being judge and critique and blame the king or queen. Their job as a leader is to create an environment where everyone understands and contributes to the aim of the organization, and people support each other. That means that it’s up to the leader to communicate effectively, to build trust and they do that through communication. I’m not saying to put out a memo or an email or anything saying, “Here are our mission, vision, and objectives.” That old static document has to go away anyway. Instead, the leaders are the people that are communicating a hundred times a day but they’re asking questions. They see that their job is to develop all of the people’s natural leadership in the organization. Not just the top ten people or the management team, it’s everyone. Their job is to reduce fear and build trust. Over and over again, they have to be asking questions, listening and then responding to find out what are the barriers for you in doing your job. For you personally, for your team, for this department for this division, what are the barriers getting in the way of them supporting each other? In them learning, in them developing as a team, and in them serving customers. We have to ask more questions.
One of my clients, I was sitting down with him one day. It was one of the first meetings and I had a feeling that he would get value out of seeing that list of the old way and the better way. I went over it with him and he looked at it and he said, “I’ve been doing the old way. Can I change and start doing the better way?” I said, “Yes.” Overnight he transformed. He scared the wits out of his management team. His executive assistant asked me, “What did you do to him?” I said, “What are you talking about?” She said, “He’s changed so much. It’s great, but will he change back?” I said, “When he’s under stress, he might change back but that’s why I’m here. Until he’s not wobbling on that bicycle, but he’s riding that bicycle and that’s then who he is. He’ll transform. He transformed his thinking overnight and said to me, “Marcia, over the 30 years that I’ve been managing this organization, I wish I would have known that I had a different option than the one that I was never taught in school. That I’ve never learned from anyone else before.” He felt a huge sigh of relief being able to lead, coach and develop his people and create an amazing organization versus being the critic he used to be.
That’s one of my favorite takeaways from a book. Once you make the decision to pivot and start trusting your people, you cannot go back and start trying to manage from fear again. Your final words in the book are, “Think different, act different, and be different.” Thank you so much for being on the show. The name of the book is Pivot, Disrupt, Transform: How Leaders Beat the Odds and Survive. How can people find you? If people want to hire you as a consultant, what’s the best way to find you?
They can go to my website via MDaszko.com. Through the book, my contact information is in there. They can call, email or reach out. I look forward to helping leaders however I can.
Links Mentioned:
- Marcia Daszko
- Pivot, Disrupt, Transform: How Leaders Beat the Odds and Survive
- The One Minute Manager
- MDaszko.com
- Quantmre.com
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Negotiation Secrets From An FBI Special Agent with Chip Massey
Posted by John Livesay in podcast | 0 comments
Episode Summary:
Growing a business means having to go through high-pressure situations. Sometimes, you get involved with misunderstandings among clients that take a toll on the entire business relationship. Talking about the art of negotiation in these kinds of situations is someone who is no stranger to this. Chip Massey, CEO of Plowshare Communications, is an FBI Special Agent who worked as a hostage negotiator. Sharing his experiences as an agent, he re-aligns it with how people running businesses can take some of the key points he learned in establishing a connection as quickly as possible. He talks about how to create instant rapport as well as how to de-escalate tense conversations with angry clients threatening to leave. Spilling negotiation secrets, he provides great insights that you can apply to your business.
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Listen To The Episode Here
Negotiation Secrets From An FBI Special Agent with Chip Massey
Our guest is Chip Massey, who is the CEO of Plowshare Communications, which advises business leaders on strategic negotiations on how to accelerate the sales process by building strong, powerful, and trust-based relationships. For more than two decades, Chip has served as an FBI Special Agent and hostage/crisis negotiator. During his tenure, his work has ranged from collaborating with the CIA to crack espionage rings to high profile corruption cases to the post 9/11 counter-terrorism investigations in Washington, DC. As a hostage negotiator, he’s worked extensively in crisis situations including international kidnappings and fugitive apprehensions.
While he was within the Bureau, Chip was noted for his ability to quickly build rapport and his deep expertise interviewing both victims and criminal suspects. He spent several years coordinating with the FBI’s Victim-Witness Program as well as directing the FBI Citizen Academy in DC. Before that, he was a Methodist minister, so he brings his early training in crisis intervention and a gift for public speaking to bear. As someone who grew up in the Methodist Church in the Midwest suburbs of Chicago, I can’t wait to welcome him to the show. Chip, welcome.
Thank you so much, John. It’s a pleasure to be here.
Let’s have you paint a picture, Chip, of your own story of origin. Where did you grow up? How did you decide you wanted to be a minister and then how did that parlay into what you’re doing now?
I grew up in Dover, Delaware. My family had a dairy farm and we grew crops, we had cows and the whole shebang there. It wasn’t until I got to college that I was trying to figure out where I was going to fit in. Farming was a very lonely existence. It seemed that way to me. I loved the contact and calmness of people and I loved hearing their backstories. That’s what led me on to figure out what was going to be my next step. In college, I thought that it was going to be a ministry for me, being able to reach out to people in that regard and deal with their problems and be of help. Follow that, I went to seminary and then went into an appointment at a two-point church. Since you’re familiar with the Methodist system, you know that those are two churches that you’re responsible for. It was a rural area. I knew the people. I know the mindset.
[bctt tweet=”Empathy is the secret weapon the FBI uses. ” username=”John_Livesay”]
My thing about that, John, is it was a fantastic experience in terms of getting to know people and finding out their deepest problems and how I could be of a help. You could find a person that was in a crisis every day in that job. That was both fulfilling and also humbling because you have these people that trust you with everything that’s going on in their world and their life. You are the one representative of what God’s plan or direction is for their life. They’re looking for you to be of help. That was tremendous and fantastic, but it was also hard for me and my family. It’s a 24/7 on-call all the time and you’re gone to a lot. I knew in the back of my mind that I wanted something else. I felt something was missing. I don’t know if you can resonate with that or not but I knew that there was more that I needed and I wasn’t entirely happy in the position.
I can completely resonate with that. There have been stories throughout the decades of movies. Even if you think of Yentl, the Barbra Streisand movie back in the day, there’s got to be something more. That sparks the entrepreneurs’ spirit too. It’s like, “I don’t want to just work for somebody for the rest of my life. I have more to do. I have a book in me. I have a talk I want to give.” You were giving talks every week but there’s a sense of, “I’m here for a bigger purpose. I’m here to do something else besides just this.” Not that whatever I’m doing is not enough or okay, but that inner urge to express yourself in a bigger way is something a lot of people can relate to.
It is tying into that, honoring that and following that. Instead of saying, “I’d like to do that but,” “It would be fantastic, but,” there was something in me that was pushing forward. I went ahead, I looked into it and I talked to some people who were agents. I didn’t know what those guys did. I’ve seen the various shows like everybody else, in movies but I didn’t know what their day-to-day life was like and I didn’t know if that was going to be a solution for my current situation and whether I needed to look at something else. I knew what was inspiring for me and was pivotal in choosing the FBI as a career was the movie, Mississippi Burning. There was this government entity that was dedicated to taking down the Klan. They were above the politics, they were above the prejudices, they were enforcing the laws of the land, of the constitution. They were going to do it and they were going to stay there until it was done. It made a real impact on me. What a force of good that was. That’s what got me toward that lane and looking in that direction. You take a test. It’s how it starts out. You fill out a form, you turn it in and then the process goes from there. You are interviewed if you pass a certain test and then you take a battery of tests. It goes on and on.
Negotiation Secrets: That inner urge to express yourself in a bigger way is something that a lot of people can relate to.
Is it a personality test or an intelligence test?
I would love to tell you that it was based on intelligence and personality. I don’t think that’s what it was. At least when I took it, there was a criterion. It is more of a judgment screen. There was also a math portion, which I thought that a door slam shut in my face, I’m done. My math was not the greatest. There was also a writing portion. That was part of the screening process. There was also where you had to go through the medical clearance, you had to go through a polygraph, and then they went and did the background check with your neighbors, people that you’ve known and teachers. Most of your audience knows the drill on that. It’s extensive.
I preached my last sermon that Sunday morning and that afternoon, I reported to Quantico. I told the classic because you had to go around and introduce yourself and where you’re from. You’ve got guys there that are Special Forces, lawyers, accountants. There was a judge in our class. There were former police officers, pilots and here’s Chip Massey, a minister. It was a great experience. Thinking about it, I wish the academy would open up something that the general public could go to and participate in. Aside from the stress that they put you under in a class, there are so much interesting things to learn that people would benefit from.
[bctt tweet=”How To Create Instant Rapport.” username=”John_Livesay”]
Is it like the law school thing where they say, “Look to your left, look to your right. Only one of you will still be here by the end?”
They don’t do that. There is the idea, “We’re going to weed out the weak.” That’s what it comes down to. In my class, we started out with around 50, we ended up with 44 so not many washed out, but some wash out because of injury and that happens all the time. Some after the first few days of them telling you, “This is the real world of being in law enforcement,” some people that were not totally in tune with that and what that meant would also decide to part ways. They had a vested interest in making sure that you were going to get through this if you were the kind of person they were looking for.
Do you get to specialize and say, “I want to be a hostage/crisis negotiator,” or everybody has to carry a gun and go through and then you can specialize, almost like med school? You have to become a doctor and then you can become a specialist. Is that the way it was?
Exactly, that’s it. Everybody starts out as a special agent. That’s your title. Anything else you do is a collateral duty. We had people that were on SWAT Teams, that’s a collateral duty. We had people that are Evidence Response Team, that’s a collateral. It goes on and on, but your main focus is still investigations of crime. The way the Bureau is set up is that there are two houses. There’s the National Security side of it and then there’s the Criminal side of it. You will be selected to participate in one of those programs and in general, you stay within that lane. There is movement. I started out in National Security and moved eventually to Criminal. It took some time. You have to establish yourself, establish a reputation that you’re a hard worker, that you’re able to perform and you know how to have success. That’s how it works.
Negotiation Secrets: Establish a connection as quickly as possible.
I’m curious to ask you about what it was like to collaborate with the CIA because there was so much controversy after 9/11 that that was part of the problem, that the FBI and the CIA were not collaborating and sharing information. Do you have a story around that?
It was amazing to me when I first reported to the Washington field office. I was on an espionage squad and our specific area of focus was on Americans that have been co-opted by a foreign power to provide information. It was our job to track those people. On this specific squad, we were involved with trying to find a spy that we believed Russia had co-opted and was operating within our US government, which brought us to the CIA. We had certain allegations and information that led us to a specific individual at the CIA. It was a case officer. We were devoting a lot of resources to try to find who that person was. Part of that is to work with the agency, the CIA and figure out who this person is. There were tremendous people over there. I’m continually astounded by the level of professionalism, abilities and talents. These are fantastic people. It is both gratifying to see that not only do you believe in your own home as an FBI agent in the FBI, but you also have this huge respect and belief in the CIA and what they do. They’re fantastic analysts and case officers. It was a fantastic experience.
You’ve been featured as one of the people at the Carnegie New Leaders program at the US Military Academy at West Point. You have multiple places that are having you come and speak on these techniques to corporate leaders about how to build professional relationships quickly and profitably, which allows them to grow their business. Let’s double-click on how we create instant rapport as opposed to people checking their phone or just walk out of there going around, “That didn’t go well.” What clues are there that we can do to prevent that from happening?
The first thing that we would say in terms of a hostage negotiation skill set, what we want to do is we want to establish a connection as quickly as possible. The same is true in the business world. The stakes are different, certainly. One person that is holding somebody for ransom and on the other hand, you’re trying to make a connection to somebody who is in and out of a conversation with you, not engaged with you. The first thing that we would do and I advise my business leaders to do is to find that thing that is going to pull them out of that phone, that text and that email.
[bctt tweet=”Whatever I’m doing now is not enough.” username=”John_Livesay”]
One time when we were on an arrest, a lead came out of the Philadelphia field office. We were to find this person and make the arrest, take them to court and so forth. It turned out that there was a bad address that we had. He wasn’t there. This is bad news because there is a huge force out to accomplish this and you’ve got a guy out there in the wind, you don’t know where he is. We had a phone number for him. That’s all. They’re trying to make a decision. They’re contacting the heads of the field office. “What do you think is the best course of action?” They’re like, “We don’t know. Let’s talk about this.” Eventually it was, “Let’s try to call this guy.” I’m on the arrest team and who are you going to give the phone to but the negotiations? They hand me the phone and say, “Can you call?”
I’m thinking in my head, “What am I going to say to this guy if he picks up?” If it’s me and I’m on the run, I’m not picking up a phone that I don’t know the number to. I’m thinking I probably got one in a thousand shot he’s going to pick up. I’m thinking, “What do I say if he does?” I’m putting some things together and I’m looking around this area where he’s from, in the Bronx. I put the number in, it rings, it goes, it rings forever. It seemed like it probably was ten seconds. You hear that there is a connection, but there’s nobody talking. My next thing is, “My name is Chip. I’m here to help you.” I leave it hanging for a little bit longer and still nothing. I then say this, “How bad does your life suck right now?” I let that hang. It seemed like forever.
I’ve got all these people breathing down my neck. The bosses are waiting for the call. They’re like, “What’s going on? What’s happening?” Teams are looking around. It’s tense and then I hear, “What’s your name again?” I went on from there and I said, “I’m an FBI agent but I want to see if what I’m thinking about is right. You can say nothing or you can grunt, whatever, but I’m guessing that your life sucks because you don’t know where you’re going to sleep most of the times. You can’t keep staying at the same place. You can’t use an ATM. You can’t show yourself too much around with too many people that you’re familiar with because you don’t know who’s going to drop a dime on you.”
Negotiation Secrets: “The key to success is confidence and the key to confidence is preparation.” – Arthur Ashe
You’re putting yourself in their shoes, painting the picture.
That’s it, John. You key on the things that you already know that exist in their world.
They may not have even thought about it like, “You’re right. I can’t go to an ATM.”
It could be. Two weeks in, he’s been successful thus far to live on the lam but it’s draining. Hollywood glamorizes Bonnie and Clyde being on the run and so forth, but the fact of the matter is it sucks. It’s draining. You don’t have any friends. You can’t call home because if you’re doing it right, you’re not going to make those mistakes. That’s the same thing I tell my business leaders. It’s that if you’re going to meet a client for the first time or you’re going to meet a prospect for the first time, you had better do your homework before you even pick up that phone. By that I meant as an agent, before we would do any interviews, any interaction with the public in an investigation, we find out as much about that person as we could. Most of it was a result of public databases. It was Googling, it was finding out on LinkedIn, it was seeing if did they have an IG profile, what they were saying on Twitter. All these things. Some of it is going to be strange or fabricated or not in line with who they are, but you’re going to pull some things. You’re going to tease out some information that’s important.
It reminds me of a quote from Arthur Ashe, “The key to success is confidence and the key to confidence is preparation.” I’m a big proponent of that when it comes to sales and any situation. You’ve described a tense conversation but in the business world, those happen a lot even if someone’s not on the lam. Losing a client, they’re mad at you and people have a very hard time with their emotional IQ not getting them back or defensive. How do you help clients deescalate these tense conversations when they’ve got an angry client threatening to leave?
[bctt tweet=”If you’re going to meet a client for the first time, you’re also going to meet a prospect for the first time. ” username=”John_Livesay”]
This is perhaps one of the greater opportunities for a breakthrough. This is the thing that gets me excited when I explain this concept to clients because it’s counterintuitive. We are designed by nature that when we’re under attack, when we feel that there is something that could be pulled from us, we become defensive. We contract. We try to come up with things as to why this is a dumb idea. One of the things I like to do is I talk about the relationship you have with your significant other. If you think about the last time you were in a fight, you were in an argument, were you thinking about the greater points that they were making when they were yelling at? Or were you thinking that, “I should take some of this to heart and there’s something here I can change or there’s something here I know that I could modify, this is an excellent point?” No, none of that is going through anybody’s head. We’re waiting for that person to pause because we’re looking to attack. We’re looking to jump in at that point, go for the jugular and say, “No, it’s you that’s wrong and here’s why.”
This is the thing I say, “Did anybody solve a problem in that? You might have won a fight in your mind, but what did you gain?” What is your goal? If your goal is to understand and create a better relationship, you failed. If your goal was to win a fight or to dominate the other person, you did that well. Congratulations. I say to them the same thing. If principles of de-escalation are the same thing, what you need to do is put yourself in their shoes and you have to keep the goal in mind. This takes training. As I said, it’s counterintuitive. It doesn’t come naturally. You have to keep at it. Every interaction you have with somebody when you’re under that kind of stress and when that threat is present, you have to train yourself to think, “What do I want to do here? What is my goal?” My goal is I want to keep this client happy. I want to make good on the promises that we made them. I want to find out deeply where we messed up.
I want to show them that it’s important to me and this is where empathy comes in. Empathy is huge and I am glad that it’s being touted now as being an important skill. The FBI uses it. The FBI use it not because we want to be soft and cuddly. We use it because it is deadly efficient. It is the quickest way to get into somebody’s world and then to bring them to a more rational mindset. That’s all part of the de-escalation process. If somebody is at a ten, like my guy on the lam and they’re attacking, it’s my job to bring them down. How do I do that? By showing empathy.
Negotiation Secrets: Utilize empathy, reach out with those feelings, and then use your active listening skills.
The third part of what you do, which is so crucial, is building trust. You have this wonderful blog about My Dog Is A Better Listener Than You. I’m guessing that listening and trust go hand-in-hand. Can you tell us about that?
We say it all the time, “I need to be a better listener. You’re not listening to me.” We hear these comments and we think about these things. In reality, we do suck at listening. It wasn’t until I took the certification course to be a hostage negotiator that the skill set of active listening opened up to me. I’ve heard about it, I’ve been trained about it in the past but this took it to a different level. I’m not only listening for the information that they’re trying to give to me and trying to portray themselves at, but I’m listening for the things that are emotional. I’m listening to the content that holds value to them because what I want to do is I want them to put the gun down. I want them to walk out of the house.
I can’t get there from the jump, so I need to work that through. I need to hear their side. I need to hear what’s going on and I need to connect to that. The only way to do that is by them talking to me and me listening to the point where I can identify with what they’re saying. I can see it. I can feel it. I can almost smell it. What are their fears? What are their concerns? Who’s done who wrong?
I’m utilizing empathy, reaching out with those feelings, active listening skills and I’m going to pick up on things that they’ve said. “You said that the person that fired you, you felt it was unjust. What else can you say about that? How was it unjust?” I get them to unpackage more and more about it. You never let a motion go by without identifying it. We’re talking about a very tense situational anger with a client. Not only are you angry but it sounds like you have a real deep resentment toward us. If you key on those things in their world, the more they’re going to come to you. They’re going to open up. You use those open-ended questions, you expand, you get more robust answers and they then begin to feel that this is now a collaborative process. This person is hearing me. I use that with my dog. My dog, when I am around the house and she’s engaged with me, she’s looking at my face. The dog is reading that but the dog is also picking up on my body language. She sees when I’m rushing around, she knows when I’m trying to get out of the house or she sees when I might be frustrated. She also knows when I’m going to go for a snack and she makes sure she positions herself to be right there. There’s so much that we leave on the table and that’s what I try to get across to my clients. If you’re not deeply listening to somebody, you are missing cash on the table. I guarantee you, you’re missing opportunities.
[bctt tweet=”You better do your homework before you even pick up that phone. ” username=”John_Livesay”]
Double-clicking on, “It sounds like you’re not just angry, but that you resent us. Is that accurate?” What you’re doing there is you’re describing the problem. I’ve said this many times when people are pitching to get a new client. The better you can describe the problem that someone is experiencing, the more they think you have the solution. That’s another way of looking at what you described there. This concept of listening as a way to not lose cash, I’ve had several clients that have said, “We have a whole list of cold case files.” We call them the dead accounts we’ve lost. We didn’t even know how to begin to get them back so I work with them on repairing and rebuilding those relationships through listening. Nine times out of ten, the number one reason why clients leave is, “You didn’t listen to me. I told you I was concerned about that deadline not being met and it didn’t get met. I’m leaving because you didn’t listen to me.”
Even if it was an old team of people that now there’s a new team, you still have to own what the old team did. Getting people to understand that the people have to feel listened to and before they can start trusting you again, to maybe hire you again, it’s quite a journey and so many people make the mistake of, “We’ll go in with a lot of research and numbers. I’m not going to listen to you and showing how smart you are.” You’ve got to repair this stuff first. You offer different kinds of workshops for different kinds of companies. There’s basic negotiation, there’s the intermediate, then there’s the executive intensive. Who’s your ideal client for the executive intensive?
That would be the leadership team or anybody that has client-facing responsibilities. I’m looking for people that are trying to have a breakthrough in how they connect to their clients and how they deal with their employees to bring up the organization as a whole. That would be the people that could benefit from that the most.
How can people reach out to you? Are there any social media platform you will encourage people to follow you on?
I’m on LinkedIn, Instagram and Twitter, @ChipJMassey.
Chip, thank you so much for being a great guest and sharing your wisdom from your experience working in incredible intense situations that we can now apply to our own lives, where the stakes aren’t quite as high but the same lessons can definitely be applied.
Thank you. It was a pleasure.
Links Mentioned:
- Chip Massey
- Plowshare Communications
- My Dog Is A Better Listener Than You
- LinkedIn – Chip Massey
- Instagram – Chip Massey
- @ChipJMassey on Twitter
- https://www.ChipMassey.com/
- Quantmre.com
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The Marriage Of Real Estate And Blockchain with Henry Elder
Posted by John Livesay in podcast | 0 comments
Episode Summary:
Henry Elder comes from a four generation of Los Angeles real estate professionals, yet he made his own way in the world when he got out of Pepperdine. He was going to go to law school and decided to go work for a hedge fund instead, and then pivoted again and went into the world of blockchain. The lessons he’s learned along the way starting his own company of surrounding yourself with people you trust as well as people who have complementary skill sets, and finally how he found a confidence at a very young age that made it contagious so that people would want to do deals with him is something you won’t want to miss. Henry delves into the blockchain technology and tokenized real estate, and talks about the concept of marriage between real estate and blockchain.
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Listen To The Episode Here
The Marriage Of Real Estate And Blockchain with Henry Elder
Henry Elder is the guest on the podcast. He comes from a four generation of Los Angeles real estate professionals. He made his own way in the world when it got out of Pepperdine. He was going to go to law school and decided to go work for a hedge fund instead and then pivoted again and went into the world of blockchain. The lessons he’s learned along the way, starting his own company of surrounding yourself with people you trust as well as people who have complementary skill sets. Finally, how he found a confidence at a very young age that made it contagious, so the people would want to do deals with him is something you won’t want to miss.
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Our guest is Henry Elder who is also a friend of mine. He’s the Co-Founder of Digital Asset Advisors, which facilitates the tokenization of any asset including equity ownership. Henry and his team lend their deep experience across compliance, finance, tax, blockchain technology and most importantly to me, strategy to the clients around the world with projects that they currently have active on both coasts of the Middle East and Asia. An early client was Slice.Market which you might have heard of, one of the first platforms for tokenizing real estate in the US. Henry serves as Director of Origination and Investment there. Before that, he was involved with over $1 billion of domestic investments while working in real estate private equity and investment banking. He comes from four generations of Los Angeles real estate professionals. It’s rare enough to meet a native let alone someone who’s family’s been in the town that long. Welcome, Henry.
Thank you. It’s great to be here. Thank you for having me.
I want to ask you to go back to your own story of origin. If you don’t mind, take us back to what was it like with that history growing up in LA. Is it, “We’ve always been in real estate. It’s in your blood. You must go into this. You have no other choices,” or did you start going to open houses or going to commercial construction sites? Tell us a little bit about how that started and what impact that had.
It was very much one of those, “This is in your blood,” type of things. My family has been in this industry for four generations. After four generations you see both the good and the bad. There have been incredible businesses built and fortunes made and poor decisions made that have brought a lot of turmoil back to a renaissance of sorts. You get to see all of these different ways that people can invest in real estate. The right way to do it, the wrong way to do it and how to deal with the interpersonal conflicts and various family members. It’s very applicable today since we’re going out to vote and it gives you a good idea of how politics works. Some of my earliest memories were visiting my father who ran the family company for a while, visiting him in his big office and being absolutely blown away. In my mind, he was a titan in the industry.
He’s well known in the industry, but to the little five-year-old me, he was an absolute god. In my mind, there was nothing more than I would ever want to do than go into real estate and continue that legacy. That followed me all through college. I studied political science with the goal of going in as a real estate lawyer and going from there. What I found quite quickly after I graduated college is that law is an industry that appeals to a certain type of person. It can sometimes be difficult to find those types of people. I went to the law firm and I took a large number of lawyers out to lunch to get their perspective on the field. Whether or not it would be something that I should go into and what specific part of the field I should go into. What I found by and large probably about 95% of lawyers I took out to lunch either said, “Don’t go into this industry. If you are going into this industry, go into it to learn a lot to go do something else.”
I thought to myself I’m not the person who wants to spend five to eight years building a basis in one industry so that I can go into another one. I would rather go do the thing that I want to do. It was Thanksgiving and I was at a family event speaking with a cousin of mine who works in the hedge fund industry. I was telling him how I was struggling with this. I had taken the LSAT. I was applying to law schools. I was on the path towards committing myself to this. He shared with me that he had almost the exact same struggle where he had originally meant to be a lawyer and quickly found out that it was not quite what it was cracked up to be. He decided to explore something else and ended up working in a hedge fund. He recommended to me that I participate in their internship program. I did that and I applied for it. I got in. I moved to San Francisco for a few months. I worked at this hedge fund. It’s called ValueAct Capital.
At the time that I was there, ValueAct was taking on Microsoft to reform the company and push out Steve Ballmer especially. I’m sitting there. I’m 23 years old. I’m fresh out of college. These guys are talking about strategies for bending a multibillion-dollar corporation to their will. I’m blown away. When I was five years old, my father seemed the absolute pinnacle of corporate professional achievement. Then here I am listening to these guys. I’m 23 years old and I’m like, “This is what I want to be.” I end up coming back to Los Angeles afterwards. I started looking for a job in finance. I’m absolutely smitten at this point. I end up working at a company called George Smith Partners which does real estate investment banking in Century City. I truly started my finance career in a professional capacity and I loved it. I was doing all these real estate deals all over the country. $200 million deals here in LA, $50 million deals in Dallas, $100 million deals in New York. From there I move onto a company called Latitude Real Estate Investors.
[bctt tweet=”Confidence is contagious. Surround yourself with people you trust.” username=”John_Livesay”]
That’s a large amount of money. Our audiences will be fascinated. You’re young and you’re closing deals in the $200 to $250 million range. What was your biggest surprise? Was it how easy it was or how complicated it was? What was your takeaway from doing those deals?
It exposed something to me that I have struggled with my entire career. I walk into this place, green behind the ears, trying to figure out my place here. I’m working for one of the founders of the company, a guy named Gary Tenzer. He brought me on and he was like, “I need you to run deals for me. I need you to call these 50 people to get this deal signed up.” I was thinking to myself. “What value do I have to these people? How do I get my foot in the door? Why will they take up my call?” I was calling people and I was like, “I work on Gary Tenzer’s team. You have worked together before. Please answer my call. I have a deal you may want to look at.” Some people are picking up the line, but they’re treating me exactly the way that I introduced myself. Which is as someone who has no confidence in himself. It wasn’t until maybe four or five months in that I realized that any of these guys will pick up my call if I simply call them and tell them I have a deal. That’s all I need to do.
I don’t need to qualify myself by saying, “I’m associated with this individual,” or “You’ve done business with someone I know.” All we need to do is call them and say, “I have a great deal. You’ll want to hear more about it. Here are some of the terms. Give me a call back when you have a second.” Once I started doing that and I was more confident in myself and the value that I had to offer, everyone treated me differently. My voicemails were returned, my emails were answered. As long as you portray yourself as a lackey, people who were trying to get business done don’t want to take the time to educate you on how business needs to be done. They want to get business done. If you portray yourself as someone who knows how to get business done and knows what their value-add is, people are likely to do business with you.
There’s a great line of insight there that if you’re confident, then people want to do business with people that are confident. It’s that simple. Is there a big difference between closing a deal of $25 million versus $250 million or is it just a zero in your head?
It’s just a zero. You may be calling different people. In terms of what the process, the types of due diligence that you need to do and the things that you need to know, it doesn’t change that much. Particularly in real estate, real estate is almost like professional sports. You can drill down each property into a series of numerical metrics. Those metrics are exactly the same across virtually every property. Every baseball player has a batting average and every basketball player has a field goal percentage. With real estate, it’s what’s the price per square foot? What’s the rent per square foot? What are the rental coms? If it’s a $200 million deal, those metrics are still the same. It’s a larger magnitude. Real estate is like sports and that it can be boiled down to a series of numbers. You have your batting average with baseball players, with basketball players they have their assists. With real estate, you have price per square foot and rental rates. Whether it’s a $200-million property or a $25-million property those numbers are the same because at the end of the day the way that you’re getting to that valuation is based on those same metrics. There might be more square feet right. There might be a higher rent but it’s still the same numbers.
Real Estate And Blockchain: People don’t want to take the time to educate you on how business needs to be done right. They just want to get the business done.
It’s still a mental game. There are some people that get so afraid, whether it’s their salary or a deal that you’ve got to stretch yourself outside of your comfort zone especially when you’re starting out or if you’re asking for investors to invest in your company. The difference between $1 million versus $10 million, if you’re not confident with it and what you’re going to do with the money then neither would the investors be. That’s a great lesson there. From there you moved to Latitude Real Estate Investors who you’re dealing with bridge debt. How different was that?
It wasn’t too different. The biggest difference was that instead of being the party that brought all the other parties to the table, I was controlling one side of the table. We were bringing the actual capital to the deals, which was an interesting position to be in. If I was worried about the value that I was bringing at George Smith Partners, it’s not something you have to worry about when you’re representing a company that’s going to write a $40 million check.
An analogy would be the difference between hosting a dinner party at a restaurant versus owning the restaurant and inviting people. Would that be close?
That’s accurate.
You’re bringing in the cash and the people as opposed to putting people together.
Once we had a deal under contract, if I picked up the phone and I asked for something, that thing would be delivered. If I called someone and I was like, “We have two days to get this done. I need it done within the next 48 hours,” it would get done within 48 hours. When you’re working to bridge debt fund, it’s a fairly commoditized product. When I was going out to brokers and property owners and trying to get them to use my product, I had to figure out how to sell it to them. That’s where the difficulty came from because that was the difference between me and the 50 other bridge debt lenders that we had out there. That was where I learned sales techniques. You figure out how to differentiate yourself from the rest of the competition. I was lucky in that regard for working at Latitude because it was extremely well-known. It had been around for sixteen years and it had been through a couple of cycles at that time. When I was going out and I was pitching to people, that was what I relied on. “We are like a grandfather of this industry. You can go put your faith in one of these new upstarts and then get left at the altar scrambling for a replacement or you can go with us. We’ve been around for this long because people believed in us, people trust us and because we don’t re-trade or drop deals.” We put out an application that is our solemn if not legal promise that we will fund this deal.
[bctt tweet=”Go do the thing that you really want to do.” username=”John_Livesay”]
When you’re selling anything that is somewhat seen as a commodity, it seems to me like what you were doing was painting a picture for people of what life would be like with you and the history that you bring to the table of stability and competence so that they can sleep at night. You’re tapping into the emotions of that to differentiate why us versus why somebody else. Anytime you’re pitching anything always the question comes down to two things. Why are you the right choice? Why is now the right time? That differentiation of the team from a standpoint of our history but saying, “We’ve been around a long time,” is not enough in my humble opinion. You need to connect the dots, which it sounds like you did so that you won’t be left at the altar by somebody who hasn’t been through this before. Our experience gives you peace of mind. All of that is a great way to sell something no matter what your selling that allows you to stand out from other people. Then you had this moment of insights, a-ha moment. Those, “What am I doing with my life? Am I happy?” You’re too young to have a midlife crisis but you did have a moment where you went, “I’m not a lawyer. I love doing this and I’m good at it. There’s something else.”
I thought to myself, “Four generations of real estate. I’m doing well on my own.” I made it a point of mine not to rely on the family connections to build my own real estate career. Here I was at Latitude nothing to do with the family company. Nothing I had done previously had anything to do with family companies. I’m feeling pretty proud of myself. My then girlfriend and now fiancé was working at a company called Gem. Gem is here in Venice and they build enterprise blockchain applications. Through her, I was getting introduced to all of these people in the blockchain space. One of those people was this gentleman by the name was David Bailey. I met David Bailey the owner of Bitcoin Magazine who was dating my fiancé’s roommate at the time. David was the complete opposite of the buttoned-up, very conservative real estate people, who I had been interfacing with to that point. David was all about Bitcoin. He was very much a Bitcoin maximalist. At first, his appearance and demeanor and all of that seemed exactly what I would associate with someone who was interested in Bitcoin. At that time, it was somewhat fringe and I don’t think anybody from real estate thought that it was something to be taken seriously. Over time listening to David talk about Bitcoin and the blockchain industry as a whole, I started to become more and more interested in it.
In December 2016, we spent New Year’s with David and Emily in Nashville. I think of that as my blockchain baptism. It was four days of concentrated look at what exactly was going on behind the scenes in the blockchain world. It gave me a very early look at what was going on in the ICO’s space. When I came back to Los Angeles, I quickly realized that this created a new capital market. That new capital market would provide new sources of funding for any business venture. I also realized quite quickly that this new capital market would need to be regulated. When I came back to Los Angeles, I started exploring how to tap this capital market to raise a real estate fund specifically because that’s what my expertise was. I called two friends of mine, Paul Monsen who I worked with at the investment bank and Mark Rutter who is one of my oldest friends and is a moderating influence.
Real Estate And Blockchain: Real estate is almost like professional sports that you can drill down each property into a series of numerical metrics.
Paul is like an absolute steam engine. If you get him excited about an idea, he will make it a reality. Mark is very cerebral. He’s absolutely brilliant. He’s a lawyer. I knew that if I took an idea to him and if he got excited about it then that was a good indication that that idea had some serious legs. Mark and Paul got excited about it. We started putting together a team to explore how we could compliantly tap this capital market. At the same time, we started hosting Meetups in Los Angeles called The Blockchain Hideout to educate people on this technology. Also, to take the crowd’s temperature on securities and regulation in this market. Blockchain Capital did their raise in March of 2017. That was the first regulated compliance security token.
Nobody seemed to care. ICO mainly started taking off. Everybody was raising $10 million to $100 million in ten minutes. That was all that anybody cared about. We were having these meetups. We were telling people this company did compliantly. This is probably the model going forward for these. A lot of these ICOs are being conducted in a non-compliant manner. People did not like hearing that. We would get shouted down. We would have people stormed out of the meetups in anger. In October and November, Science Blockchain did their raise and fell somewhat short of the dollar amount that they been targeting. That indicated to us that this concept, although we think it’s interesting and it is the future is not quite ready for prime time. Neither the investor demand nor the community acceptance for security tokens exists yet in a mature form. We showed our idea, but at the same time, we were absolutely bitten by the blockchain bug.
Paul and I started Digital Asset Advisors and said, “We love real estate. We’re good at it. There is an entire world of other stuff out there that we can take part in and make a true impact in the formation of an entirely new industry.” With that, we entered the space and our first client was Slice, which was building a platform for tokenizing real estate. Specifically, commercial real estate, specifically for sale to international investors. One of the greatest and original use for the blockchain is the ability to transact large or small value amounts internationally across borders with very little friction. This lends itself incredibly well to commercial real estate because assets here in the United States are very desirable. However, they are not easy for international investors to access. When you have a situation where the majority of wealth sits offshore, but the majority of desirable investable assets sits onshore. If you can create a pipeline to facilitate the frictionless investment of that wealth into those assets, then that’s a winning business case right there.
[bctt tweet=”Figure out how to differentiate yourself from the rest of the competition.” username=”John_Livesay”]
If I’m to sum up the problem you’re solving at Digital Asset Advisors, it is simply that there’s a lot of wealth overseas that wants to invest in commercial real estate in the US. There are regulations preventing them from easily doing it. It also typically requires huge amounts of money. By using blocking technology, you create this almost like an oil pipeline that takes something from one location to the other and allows it to be fractionalized. It allows people to invest in an asset. In this case Slice is offering commercial real estate that’s never been available before and certainly not in small chunks.
That’s what Slice is doing. I should carefully bifurcate Slice and Digital Asset Advisors.
You helped craft this. It’s the problem you saw, but they’re not the only ones with this problem. What you bring to Slice is the understanding of real estate and blockchain combined.
Real Estate And Blockchain: One of the greatest and original use cases for the blockchain is the ability to transact large or small value amounts internationally across borders with very little friction.
For Slice, yes. We started working with Slice when it was just the two co-founders. They brought on a third co-founder long after we were working with Slice. We worked with Slice exclusively for five months, helping them build their platform. We were helping them figure out the thorny issues of allowing access to foreign investors because there’re tax and regulatory burdens that come with bringing in foreign investors. We need to figure out how to solve that. We were helping them find a pipeline of real estate to bring to the platform, creating due diligence processes that institutional investors would appreciate, investment memos and underwriting models. In that case, our real estate experience was immediately applicable. Real estate is not the only industry that will be impacted by blockchain. Our basic knowledge of finance, economics, blockchain technology and the network that we have built out was applicable across multiple industries and clients. We had the benefit of having worked with Slice and created this high profile and survived for long enough because there was a shakeout of service providers in the spring of 2018.
In the summer of 2018 and fall all the sudden all these people who we been in contact with and all these companies that we were talking to at conferences wanted our help as well. In the winter of 2017 and the winter of 2018, we would go to conferences and they would be absolutely full of people. Every other person you met was some sort of a service provider saying that they could do this and they could do that. By the summer of 2018, you’re going to conferences and none of those people were there anymore. All that’s left were the people who are doing things. Us sticking around long enough and working on a high-quality project like Slice gave us the legitimacy. Where when we went to people when we were like, “You have a problem, we can solve it.” They will believe us off the bat. We went around and we signed up three or four additional clients in completely unrelated industries. Each one of those we’ve been able to apply our knowledge and our skill sets to help them effectuate their business plans. Even to help them put together a legitimate business plan. There are so many good ideas out there for uses of blockchain technology, but there are a lot of people who don’t have the experience of running a company.
[bctt tweet=”Surround yourself with people that compliment your skill sets and open up your point of view so that you don’t end up with a tunnel vision.” username=”John_Livesay”]
They don’t understand financials or they don’t understand what a business financial should look like. While they have an idea of how they can apply blockchain technologies, they don’t know who the best partner is to build the technology or which protocol they should be building on that can utilize their idea of the best. Our position in the middle of all of these different service providers because we work with the issuance platform. We work with the security lawyers. We work with the broker-dealers. We work with the protocols. We work with tech firms. The different disparate parts that you either pull together in order to successfully execute an asset tokenization or a security token offering, we know them all. We can shepherd anyone of these clients through that process and introduce them to the different players and the different service providers and say, “For what you’re trying to do this is the best guy, but these guys are also very good. This is the pros and cons of each one. Let’s sit down with each one of them. We’ll walk you through the platforms and then you decide. We’ll run that process for them because we already have a relationship with all these different guys.
That’s like curating three different businesses. The technology, the protocols, the compliance, the tax implications and the business model. If you’re maybe good at two, but not all three of those things where you need somebody else who’s done it before to say, “Use GoChain versus ERC20.” All those in the weeds kinds of questions that you have to decide while managing the compliance issues and all the other things to make an asset-backed token. It can get overwhelming even if someone’s got a lot of business experience to try and figure it out by yourself. To me, the real value you bring is relationship, insights and curation which saves time, which gets you to market faster. That’s how I connect the dots of the real outcome of what working with you looks like.
If you punch in security token issuance platform in Google, you’ll see twenty different platforms. How do you know which ones are legitimate, which ones have done an issuance and which ones can perform what they say they can? We know that. That’s something that we’re facilitating some of the issuances that they’re doing. We know who’s doing what. We consider ourselves like the guide to this world. You want to understand it, you want to be a player, you want to know how to do it, we’ll help you with all of that.
I think of you as a Sherpa helping people climb Mount Everest. What last piece of advice would you have for someone who wants to get involved in the blockchain, make a career change. If they say, “I want to get into asset back tokens and still have people excited about it.” They may not have the volatility of a Bitcoin but there’s still some upside. What insights and advice do you have for the industry in general?
My big takeaway would be twofold. Surround yourself with people that you absolutely innately trust. Make sure that those people compliment your skill sets. Open up your point of view so that you don’t end of the tunnel vision. Also, this industry is so full of data. It’s changing at such a rapid pace that newbies who are coming into it, it’s quite easy to be overwhelmed by it. When you have a good idea and you’re bringing it to the market, there are a lot of people who will tell you that it’s a bad idea. They’ll shoot it down with a bunch of stuff that you may not understand. In an industry as fast moving as this one, it’s like drinking from three fire hoses. It’s quite easy for somebody to shoot down any idea. If you stick to your guns and you find someone who also supports you and believes you that it’s a good idea, don’t be overwhelmed but don’t be intimidated by the naysayers.
You went through that yourself when you and Paul were starting your own little meetup group. People are like, “What compliance? Get out of here. We don’t care about that.” You’ve lived it and you’re walking your talk. I can’t thank you enough for sharing your journey. You are certainly on an exciting trajectory. You have long since proven yourself separate from your family’s business especially by jumping into the blockchain, not just the real estate but in other areas. It’s going to be fun to watch where you go and which companies are fortunate enough to get to work with you.
Thank you, John. It was a pleasure to be on here.
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John Livesay, The Pitch Whisperer
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