Getting Out Of Our Echo Chamber
The Amplified Impact Podcast
May 6th, 2023
Today I want to share with you my recent experience at the Best Ever Conference in Salt Lake City.
Now, I know some of you might be thinking, “Oh, another real estate conference, big deal.” But I have to tell you, this one was different.
It provided a perspective that I had forgotten these types of events can give you.
As someone who operates a real estate company in a very insular way, attending this conference allowed me to gain valuable insights into what’s happening macroeconomically in other markets.
And it’s not just about real estate or investing.
I truly believe that attending conferences and networking events can provide value in any industry, especially for those just starting out or looking to expose themselves to different viewpoints.
The Best Ever Conference reminded me of the importance of keeping my finger on the pulse of the industry, even when things are going well.
So, if you have the opportunity to attend a conference or networking event in your industry, I highly recommend it.
You never know what valuable insights and perspectives you might gain.
TWEETABLE QUOTE:
“A dollar saved is worth more than a dollar earned because the dollar earned is always on a margin.” – Anthony Vicino
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Episode Transcript:
Anthony Vicino [00:00:00]:
About a month ago I crawled out of my Minnesota cocoon, I opened the siloed door and I stepped out of our echo chamber and I went to a national level conference in Salt Lake City that’s all around real estate and investing. It’s called the best ever conference. Now I used to go to these types of events far more frequently when I was first starting in real estate and trying to establish relationships and a network. But it in recent years, I’ve been going to fewer and fewer just because the quality of relationships that you’re going to make at these events when you’re a little bit further along the road, as I am, becomes a little bit less. Because a lot of the players that I want to know, I already know, like the guys who’ve been doing the guys and gals that have been doing this for a while and that are operating on the next level, I already kind of know those people. So there’s not a lot of utility in going to these events unless we’re setting up a booth trying to attract investors or students or something like that. And not to say that there’s not a ton of value in these events though which is something I was reminded of at this event. Now the reason I went is because I was speaking on stage and that’s kind of like my new litmus test that says hey, the only reason I go to a conference anymore is if I’m presenting in some kind of meaningful capacity.
Anthony Vicino [00:01:17]:
Otherwise it’s just not really worth the time and energy or so I thought. Now at this event, the Best Ever Conference I took something away from this that I had forgotten that these events can provide which is a perspective, a perspective on what’s going on in the world at large outside of your little silo. Because for those that don’t know how our company Invictus operates we’re very insular. We focus only in our backyard of the Twin Cities. We’re vertically integrated with our own property management in house. So we buy these apartment buildings and then we are the ones that lease it out rather our team is. And so we don’t really work with a ton of operators. We don’t work in other markets or anything like that.
Anthony Vicino [00:01:57]:
So we’re just very nosed to the grindstone focused in our own backyard. And that’s good because it’s good to stay in your lane and stay hyper focused but at a times it’s good to also pull back and get the 50,000 foot views so you can see what’s happening macroeconomically, see what other operators are experiencing in their markets. And when you’re not present with people and actually talking about how their operations are going or what’s happening in their market you rely just on reports and data and that can be one side of the picture but it can be so out of context sometimes. And I find that actually talking to boots on the ground. Operators in those markets can give you just some insight and perspective that you could never get from reading an annual report or a quarterly report about, hey, what’s happening in this market. So all else to say is like there is some benefit to going to these conferences, to networking events if you’re brand new. And this isn’t just real estate, mind you, this isn’t just investing, this is entrepreneurship. If you’re in a particular industry, like the fitness industry, the healthcare industry, the marketing industry, there are countless events going on each year that you could go to.
Anthony Vicino [00:03:04]:
I think they can provide a ton of value, especially when you’re starting out, you’re trying to get relationships or you’re just trying to expose yourself to as many viewpoints as possible. Conferences are a great way to do that. As you start to progress into your career, you start to get more traction, you become more known within your industry. The value of those events tends to go down a little bit because you tend to have people that you can call, you can talk to, you can keep your finger on the pulse. But because we’re kind of unique in that we only focus in one particular tiny little market where not a lot of people are operating, we don’t have a lot of people to bounce ideas off of or to hear what’s happening outside of our silo. So going to that event the best ever. One of the things that was really fascinating to me was hearing from so many people, so many investors, so many operators, that there was already a lot of turmoil in the real estate investment market. Now for us, we’ve been performing as expected, like inflation and interest rates have changed the paradigm of our operations and our expense ratios have been higher than expected.
Anthony Vicino [00:04:05]:
But still our assets are performing. We’re still making cash flow distributions every quarter to our investors. And so from our perspective, things have been pretty been good. We didn’t really think that there was a ton of blood in the street yet. But in talking to investors at this event, one of the recurring themes was this kind of doom and gloom perspective because there were already so many operators having to make capital calls. So if you’re not familiar with investing or with private placements of this type of capital, call is when you invest into a deal. Let’s say you put $50,000 into one of our deals, into an apartment building, and then maybe two years down the road, we run out of money because we didn’t budget properly for expenses. We thought rent or revenue was going to continue increasing at a rate at which it didn’t.
Anthony Vicino [00:04:51]:
And so we run out of money and we’re left with one of two options. You can either give the property back to the bank and file bankruptcy, or you can go back to the investors and do a capital call where everybody gets the opportunity to put more money into the project to try and save it. And that’s fairly common in particular asset classes. Like when you’re looking at tech startups, they have multiple rounds of funding. So that’s kind of like a capital call provision in a way. But in real estate in the last few years it’s been less and less prevalent. And so hearing that people were having to make a lot of capital calls recently was very surprising. Not just capital calls, but capital calls in very, very hot popular cities in markets that people had looked at and said that’s a very strong place to be investing.
Anthony Vicino [00:05:34]:
And now they’re finding themselves in trouble. And a lot of that is due to, I think, operational inexperience. And this is the message. This is the lesson for everybody listening to the podcast right now, even if you’re not in real estate or whatever, is that as we go into whatever this next market cycle brings, whether that’s a recession or back into a bull market, I don’t believe there’s such a thing as a good or a bad market. I think there’s only the right or wrong market. Given your skills, your resources and your business plan. And your business plan can be good, your resources can be great. But if your skills aren’t up to snuff as actual operators, as your ability to execute the game plan, then you’re going to struggle.
Anthony Vicino [00:06:15]:
And so I believe that during recessions that’s the time to really focus on the fundamentals of operations and execution. So if you’re listening to this, that means getting really into the weeds with your expenses and making sure that you’re not carrying more overhead than is strictly necessary. That could be in the form of labor, that could be in the form of utilities or taxes, could be insurance or whatever. Maybe don’t cut down insurance because insurance is always a good thing to have. But you look ruthlessly at your expense lines and you start to say, where can we trim back? You don’t want to cut back so far that you’re now not growing or able to sustain your level of quality experience for your customers. But that’s probably the first thing to look at because one of the most impactful lessons I was taught at the beginning of my career as an entrepreneur was that a dollar saved is worth more than a dollar earned because the dollar earned is always on a margin. And so you think about a dollar of revenue coming in if I sell this widget, this pen for a dollar, but it took me fifty cents to make the pen to distribute and send you the pen, then I only get to keep fifty cents, right? So $0.50 goes towards my expenses. You paid a dollar, so I got fifty cents of profit.
Anthony Vicino [00:07:28]:
So for every dollar of revenue I only get to keep a portion of it. Whereas if I can cut a dollar of expenses. If I can cut a dollar of how much it makes to make this each time, then that is just straight to the bottom line every single time. So in this example, where it’s a 50% margin, the value of a dollar saved is twice as valuable as that of a dollar earned. And so instead of focusing on increasing revenue, which is important, but in recessionary environments, that can be very difficult, instead of focusing on that, focus on the expenses. That’s not a great long term strategy for growth and scaling, but during the times where it gets rough and frothy, that’s the game plan. So wanted to share that with you guys. My experience going to this event kind of getting out of the silos, seeing some new perspectives, just kind of being awakened to what’s happening out there in the world.
Anthony Vicino [00:08:17]:
And hopefully this brought you a little bit of value. If you’re an entrepreneur with a business, maybe this gave you another lens through which to think about how to navigate these troubling times so that you can come out the other side unscathed or relatively unscathed, or maybe just beaten, but not broken. So hope you guys got some value out of this. As always, I appreciate you being here. I’ll see you tomorrow in the next episode, but until then, stay hyper focused, my friend.
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