March 20, 2018

JF1295: Home Building In Developing Countries with Brett Hagler

Brett was blown away by what families were living in after the earthquake in Haiti a few years ago. During that visit, he made the decision to start helping people get the basic necessities such as safety, shelter, clean water, a food program. Hear how Brett and his company helps people in developing countries receive basic human needs. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Brett Hagler Background:

  • CEO, Co-Founder of New Story, an innovative nonprofit that builds homes in the developing world
  • A Y Combinator alum, and 2016 Forbes 30 Under 30 Entrepreneur
  • Fast Company recognized New Story as one of “The World’s Most Innovative Companies” in 2017
  • New Story is one of the fastest growing startup nonprofits in the world: 1,300+ homes, building 10 communities across Haiti, El Salvador, and Mexico
  • Based in San Francisco, California
  • Say hi to him at
  • Best Ever Book: Great by Choice

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Brett Hagler. How are you doing, Brett?

Brett Hagler: I’m doing great, Joe. Thanks for having me on.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Brett – he is the CEO and co-founder of New Story, which is a non-profit that builds homes in the developing world. They’ve built homes in Haiti, El Salvador, Mexico… They’ve built over 1,300 homes, and he has been named Forbes 30 Under 30 entrepreneur in 2016, and he’s based in San Francisco, California. With that being said, Brett, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Brett Hagler: Yeah, so I’m fortunate to run an organization called New Story. We’re about three and a half years old; I started after a personal trip that I took down to Haiti a couple years after the 2010 earthquake that happened down there. I was basically just blown away by what kids and moms were growing up in after the earthquake, and realized that safety and shelter was a really, really huge need… So I wanted to create a solution for that and try to do it in a fresher approach, with more transparency for donors, because I was very frustrated with what seemed to be kind of like a black hole when I game money, especially internationally…

So that’s how we started, about three and a half years ago, and we’ve been very fortunate to actually work with a lot of real estate companies, a lot of real estate agents, a lot of investors around the real estate world, just because of the synergy with houses and communities that we build, which we’ll talk more about, and then some of the technology that we also have that allowed people to have a better experience. So that’s the high-level.

Joe Fairless: Can you talk to us about the mechanics of how you do what you do?

Brett Hagler: Yes. Very simply put – I’ll give you one example and we can multiply that out. We go into developing world countries and we find areas where families are living in extreme poverty and don’t have access to life’s most basic human needs – that’s safety and shelter, clean water, and some type of food program. Think of the bottom of Maslow’s hierarchy, basically.

Then we will identify a great local non-profit and a local construction company, we will secure land very close by, and then we’ll essentially become a developer in a sense, where we get a large piece of land where we could put a few hundred homes on that piece of land, and then we’ll use other usually non-profit partner or maybe local government partners for other components of the community, such as a school, such as clean water, such as maybe a small factory, other income opportunities where then the end result is a community. We’ve been able to do 11 of those now, throughout Haiti, El Salvador, and soon to be Mexico.

How that looks and how we fund that from the donor side or the company’s side is that if you come onto our website, we built a crowdfunding platform, kind of like Kickstarter or Kiva, but for families that are homeless, living in extreme poverty… And you get to meet the family online, so you see their picture and their story. When you give, 100% of your donation goes towards building the house for the family, which is actually built by local workers, buying local materials, and then when the families move in, we take a very simple but really moving move-in video, of the families getting their keys, and their homes [unintelligible [00:05:57].14] It’s one of the best days of their lives – we capture that, and we send it back to the company or the donor that made it happen.
And the last thing – the homes we build are a little different than I’m sure what your listeners are investing into. Our homes are only about 500 square feet and only about $6,000/home.

Joe Fairless: It makes my head spin about how you all coordinate all the things that you’re coordinating to build a community, let alone it being in an area that is impoverished. The partnerships that you all have to coordinate with, the water, the factory, the school stuff, and even the general contractor – it’s incredible. What are some lessons learned for successfully executing those partnerships?

Brett Hagler: Yeah, we get a lot of leverage through partnerships, and we’ve been able to make it work, and our team stays lean, we can scale, all that good stuff. I’d say the number one lesson learned is just the due diligence up-front of choosing the right partners, and wanting to choose partners that you know if a pilot works, then you can go much deeper.

I think that we’ve been able to have some success in this area because of the SOP that we put together beforehand–

Joe Fairless: What’s SOP?

Brett Hagler: Standard operating procedure…

Joe Fairless: Got it.

Brett Hagler: …with the partners. Yeah, sorry. And making sure that we are disciplined in what we’re looking for, and then really holding the partner accountable, and if we feel that they cannot meet the standards of excellence that we try to set, then I will move on to a new partner.

Joe Fairless: How do you hold the partner accountable?

Brett Hagler: Well, that goes into the operating procedure that we put together. A simple description would be around just hitting certain timeframes and metrics, reporting structure, auditing that we put in place… So it’s not extremely heavy-lift, but we do have those procedures in place so that there is accountability baked into the whole process.

I think a lesson for the people listening is when you can put that in place from the very beginning, then accountability can be baked into the operations from the beginning, and then when you go forward, there are things held in place for accountability, as opposed to trying to identify a problem later on, and then go back and try to rework some things. That’s happened to us a few times, and that’s when we’ve got into – not trouble, but it just hasn’t been the highest level of execution that happens.

Joe Fairless: Do you typically do a pilot with every new partner?

Brett Hagler: Yeah, that’s right. We’re very clear about that. We say “Hey, here’s our pilot, here’s what we’re expecting” and then if this goes well, we have all the intent of getting much more involved. It seems to work, it seems to motivate the partner to work hard and prove that they can be a longer-term partner. So yeah, that’s been a really good process for us.

Joe Fairless: For a Best Ever listener who wants to give back more than what he/she currently is, what advice would you give to him/her about if they should start a non-profit, versus donate to one?

Brett Hagler: Definitely donate to one. Starting a non-profit – I don’t really recommend that. The only reason I started a non-profit was because — it wasn’t because “Oh, I saw people that were homeless, so I wanna start my own non-profit.” I actually went to find other organizations that I can really champion and I can really support, but the reason that I wanted to start mine was because I was very frustrated by what was out there. That was the reason that I started it.

Now, if somebody else has that feeling, okay, then maybe your entrepreneurial mind can open up a little bit about why you should actually exist, and I think that you shouldn’t start a non-profit just to replicate what other organizations are doing. There’s already so many great orgs doing awesome work; I would just say do the due diligence, find the right one, and then if you do a lot of research and talk to a lot of people and all of a sudden you’re just very frustrated and very passionate and you can see a clear path, just that there should be a better way to do this and nobody else is solving it the way that you believe should be done and other people believe should be done, then it makes sense to maybe to a very small test for like a minimum viable version of what you think should exist. I always say think big, but start really small. That’s how we started.

Joe Fairless: What are some challenges that you came across when creating your non-profit?

Brett Hagler: Before this I actually had a for-profit that I started as well, and I think obviously there are differences, but overall it’s pretty the same formalities to start a non-profit or to start a for-profit business; it’s just a little different in what the paperwork and all that stuff is… But I think the mindset as well is about the same.

You create something that is an obvious need, and is uniquely better than what is already existing if you wanna get any type of traction. So when you find those things in the very beginning I think it’s very similar, actually.

I think the best non-profit entrepreneurs that I’ve had a chance to meet have either in the past been great for-profit executives or entrepreneurs, or if given the choice, it’s very clear that they could run a very good for-profit company.

Joe Fairless: From a strictly business sense and as cold and calculated as we can be, just to separate the obvious incredible benefits that you all are doing to families – let’s separate that and just talk about from a business standpoint, how do you benefit from a business standpoint from creating a non-profit.

Brett Hagler: I’m happy to answer that, but I don’t know if I have clarity on what you mean by benefitting from a business standpoint.

Joe Fairless: Well, what I mean is you could be spending your time on a for-profit startup or business, so there’s some sort of opportunity cost here… And in some ways, this benefits you from a money-in-your pocket standpoint; now, I’m not saying it’s a direct cause and effect, but I’m saying there is — because anytime we give, we get 10 times back what we give, so how are you benefitting from a business standpoint?

Brett Hagler: For me why I do this work is ultimately for impact, and people have different things that they measure and why they wake up in the morning and go to work, whether that’s a for-profit job or a non-profit job. Some people are really optimizing for impact, some people are really optimizing for money, and I have just decided to optimize for impact. My metric is “How many lives can we change?”, but in doing that, for us and my team, the culture that we’ve created, how we go about doing it, where we really prioritize innovation and technology and really being on the forefront of what’s coming – that creates a lot of really awesome opportunities to meet amazing people, to be in rooms that I would never be in if I weren’t doing this, and to really just understand that there are things such as relationships and experiences and obviously impact that are all different currencies.

Money is one currency, those are other currencies, and me my team, even though we actually make a decent amount of money – I don’t believe in paying people very low just because they’re part of a non-profit, but those things you could say they have dollar value on them, and they’re experiences that I and my team wouldn’t trade for anything. So that’s a long way to answer what is the “benefit” other than helping change people’s lives.

Joe Fairless: What are some of the rooms that you have been in that you would have never been in if you weren’t doing this?

Brett Hagler: We’re based in Silicon Valley, so if anybody takes a look at our advisory board, our page there, it’s some of the top CEO’s or investors in this area, which is really cool just to be able to interact with those leaders on a daily basis if we’d like, to then go into introduction meetings that they’ll make for us, and to just build relationships with really world-class professionals. That’s just what we do now, and it’s a very fortunate position to be in, to grow, especially as a young professional, young leader. I’m personally only 28, and my team is relatively young as well… So we’ve been fortunate to kind of build out that network, and it’s incredibly fun and challenging, and really pushing us forward.

Joe Fairless: I’m gonna go back to the partnerships that you all have on the ground, so switching gears a little bit on you… I want to follow-up with your construction partners that you have in Haiti, El Salvador, Mexico, because you’re building homes, and it’s likely homes that the construction partners haven’t built exactly how you’re building them. First, is that a fair statement?

Brett Hagler: Right now we’re still pretty young, so in our first two and a half years they are pretty similar.

Joe Fairless: Okay, the construction partners on the ground – it’s a similar type of house that they’ve been building with other projects not working with you?

Brett Hagler: There’s definitely some differences, but for the most part it’s a similar structure. Mostly concrete, similar square foot size… However, a really big new initiative that we have just as an overall company is innovating on the actual home unit, and we have some really exciting things coming up in 2018 that we’re doing for that.

Joe Fairless: We’ll come back to that. The reason why I was asking about the on the ground contractor/local construction team is because when you’re partnering with companies that are thousands of miles away in a different country, and as investor here in the U.S., that is one major challenge for fix and flippers or for other people who are hiring a local construction company.

So I know you mentioned accountability and timelines and giving a pilot program, but is there anything else that comes to mind? Because this is a major pain point for investors here, and you all are doing it at an entirely different level with a bunch of more variables more that could go wrong, but clearly, you’re seeing yourself through those.

Brett Hagler: I definitely don’t have any great or creative answers. For us, it’s pretty simple – it’s just choose excellent people that are at these partnerships and are running the organizations, make sure they have an excellent track record that you can really trust and have potential in them. I would say that’s where it really starts with us, and then all of the other operating procedure stuff just flows down from that.

Joe Fairless: Do you call on references?

Brett Hagler: Oh, absolutely. Yeah, we’re obsessed with all of that.

Joe Fairless: Got it. Alright, you mentioned innovating on the home unit – what are some things you have coming up?

Brett Hagler: Well, we have one thing coming up that is pretty big by itself that is happening in March at South by Southwest; it’s our biggest innovation to date for sure. I’m not allowed to say what that is right now, but it has to do with building a home for half the cost, a fraction of the time, and a better quality product. So that’s one thing.

Then what we’re doing later in the year is we’ll be looking much more into the type of pre-fab, but not just the stuff that we’re all used to and I’ve heard here, but actually having potential small factories in the areas that we work… Because one of the issues with pre-fab is that if you’re working in the developing world, it’s all the shipping costs to get something from a warehouse in Brooklyn to a place out in the middle of nowhere in Southern Mexico.

So we’re gonna be looking at what could we do to make the most of the promise of pre-fab and what will make sense there that we’re exploring, and then also to be able to get it there logistically in a very efficient way.

Joe Fairless: Based on your experience founding a non-profit in the real estate world, what is your best advice ever for real estate investors?

Brett Hagler: Again, nothing great or creative. I would just say bet on the best people. That’s what we’ve tried to do. Whenever we can, we get the best people that we partner with, on our team, our innovation partners, it’s always with the highest caliber people. That’s what we always try to go with first.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Brett Hagler: Sure.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:18:30].19] to [00:18:58].17]

Joe Fairless: Best ever book you’ve read?

Brett Hagler: The best business book is Great by Choice. A most recent other book that’s not technically business but I absolutely love is Shoe Dog, which is a memoir by the founder of Nike.

Joe Fairless: What’s a mistake you’ve made in business?

Brett Hagler: Over-promising and not delivering would probably be my biggest mistake.

Joe Fairless: Best ever way you like to give back?

Brett Hagler: Well, I run an organization that is about giving back on a very large scale, but what is personally fulfilling as well is trying to do for one person what you wish you could do for everybody.

Joe Fairless: And how can the Best Ever listeners learn more about your company and get involved?

Brett Hagler: You can just google “new story.” You’ll see our website, you’ll see other press and media pop up there. We’ve been very fortunate to have some awesome partnerships with real estate companies, real estate investors, individual folks in real estate… So give us a look to make an impact; the house is only $6,000. There’s really cool ways that you can fund-raise for that, and a lot of other stuff. So just go to our site, check it out, and then you can just reach out on the site.

Joe Fairless: Really enjoyed our conversation, and your approach to what you’re optimizing for, and how you mentioned we can optimize for money, we can optimize for time… You’re choosing to optimize for how many lives you can change. It’s a question that I don’t think I’ve asked myself, and it’s a powerful question. I think if we ask ourselves “What are we optimizing for?”, that’s something to make us think.

Brett Hagler: Cool, I appreciate that. Thanks for having me on, man.

Joe Fairless: I hope you have a best ever day, and we’ll talk to you soon.

Brett Hagler: Alright, cheers.

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