Rich is the Co-CEO of Real Wealth Network, where he focuses on developing the teams and systems. He has specialized in creating a great team that is fully remote. His wife Kathy was a previous guest in episode JF753. Today Rich will be sharing with us how he has been able to create a team of happy employees who work from home and are more effective.
Rich Fettke Real Estate Background:
- Co-CEO of Real Wealth Network
- Focuses on developing the company’s team & systems
- Based in Malibu, CA
- Say hi to him at: www.realwealth.com
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Best Ever Tweet:
“Be sure to determine your core values and use them as hiring criteria” – Rich Fettke
TRANSCRIPTION
Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Rich Fettke. Rich, how are you doing today?
Rich Fettke: Great, Theo. Good to be here, man.
Theo Hicks: Oh, yeah. Thanks for joining us. So it’s Sunday, so we’ll be doing a Skillset Sunday. Before we get into that skill, let’s go over Rich’s background. So he is the co-CEO of Real Wealth Network, and his wife Kathy has been on the show multiple times; first episode would be 753, so make sure you check that out. And then if you just search her name on our website, you’ll find her other episodes. Rich focuses on developing the company’s teams and systems and right now, they have 25 employees who are all working remote. So we will be focusing on that for today’s skill. He is based in Malibu, California, and you can say hi to them at his website, which is realwealth.com. So Rich, before we dive into the skillset of the day, do you mind telling us a little bit more about your background and what you’re focused on today?
Rich Fettke: Sure. Going back, I was a business and personal coach for about 15 years before we started Real Wealth, helping people grow their businesses, mostly working with entrepreneurs. And then actually, I got diagnosed with melanoma, skin cancer, which is not the worst thing in the world, but when they did a CT scan, they found four masses on my liver and thought that it had spread to my liver; it was a false diagnosis. But in that, an oncologist told me I had six months to live. So Kathy was freaking at the time. She was a stay at home mom, raising our two daughters. One was three at the time. The other was seven. So she was just like, “What am I going to do here financially?” and she had this small little hobby type radio show called The Real Wealth Show, and she was interviewing people around different areas of life. So she started to interview people about how did you make money, and she found that most people made their money through real estate investing. So she came home and she said, “I think this is what we need to do. We need to get into real estate investing.” So we started on that path and she started to learn everything she could. She started to have more guests on to learn more about investing.
After that, I got the diagnosis that I was okay, that I was cancer-free after they removed the melanoma through surgeries. But that was the birth of us getting into real estate investing. And then that led to us– we were buying properties in Texas. Kathy had Kiyosaki on her show and he was saying, “Get out of California. Invest in Texas.” So we went and bought six properties in Dallas, and just started to learn what it’s like to be investors. We started to have friends who say, “How are you doing it? Can you tell me how?” and we decided to form a little group of investors just to help our friends, to help other investors, and we call it Real Wealth Network, and we thought we’d maybe have 100, 200 investors, and today, 17 years later, we have over 50,000 members at Real Wealth. So that’s the backstory.
Theo Hicks: Wow, that’s an amazing story. So at Real Wealth Network, are you guys buying deals, and then the people in your network are investing in these deals, or are you coaching them? What’s the business model?
Rich Fettke: The business model – it’s two areas. So we have SFR brokerage. So we help investors get into single-family properties, one to four-units all around the country. So we have different companies and teams that we refer to. We provide a ton of free education. We produced almost 900 free webinars over the years. So we provide free education and we help investors get into these properties. So we get a broker to broker referral fee for helping investors get into these properties. That’s one side of the business.
And then the other side is syndications, Real Wealth Developments. So we partner with developers and we raise funds. We’ve helped investors acquire over a billion dollars in assets now, and we’ve raised about– I think it’s up to about $112 million now for syndication deals, mostly in residential land development.
Theo Hicks: Perfect. So again, as I mentioned in the beginning, the skillset of the day is to talk about managing a team remotely. So I’m assuming that they’re working remotely because of the Coronavirus. So do you guys have an in-person location where everyone was there, and then now everyone’s working from home or were people already working from home?
Rich Fettke: Actually, we were way ahead of the curve, thank goodness. We started the business in 2003, and then in 2010 – I was up in the San Francisco Bay Area – we had an office in Walnut Creek, we had seven different offices in there, we had our whole team there, and then Kathy and I decided to move to Malibu, which is about six hours south of Walnut Creek. So we’re running the business from here in Malibu. We still had a few people in the office there, but we started to hire people from all around the country. And then 2011, we decided let’s go remote. So we closed that office, and we became a 100% remote company back in 2011, and we have been ever since. So once Coronavirus hit and it was all the stay at home orders, we were like, “We got this.” We’ve been using GoToMeeting and Basecamp and Zoom and Skype and all that for many years. So we got it dialed in.
Theo Hicks: That’s even better. So rather than asking you about all the challenges you went through during the Coronavirus, you’re the one that’s gonna be able to tell people how to manage a team remotely to those who did not do what you did, which was start remote, but had an office, had in-person meetings, and then were forced to go remote. So I’ll let you take the reins for a second and just start wherever you think it makes sense to start. Realize that we’re trying to give this skill to those who have a team and they’re not used to managing that team remotely, like you are. So what are some of the skills, what are some of the things that they need to do in order to make sure that they are still operating at the same level they were operating at when they were all together, face to face?
Rich Fettke: Yeah, good point. Yeah, I hope I can share some stuff that’s going to help. I think I can. Back then, when we were going remote, I read a book from the founders of Basecamp, called Remote. So it’s all about how to run a remote company, how to do that and all the benefits of that, and I was just blown away; that really nailed it for me. I was like, “Okay, we’re going 100% remote and this is how we’re going to do it.” So that’s a great resource, is the book Remote. It’s Jason– Jason Fried, I think his name is.
So that was really helpful, but what’s worked really well for us, one, it’s culture first. So we got really, really clear on what our core values are, and we didn’t just come up with that ourselves. We got our whole team on board, we talked it out, we argued about it, we discussed it, we brainstormed it, and we came up with our core values that are so important to us around– I won’t go over all of them, but accountability was a big one. Connection is another big one. We help connect people, we have a connected team, like family. Another one is obviously integrity, I think that’s an important one for any core values. And transparency is a huge one, it’s a core value of ours of being transparent; being open, speaking up when anyone is not feeling good about something or has a concern or a challenge.
So I would say a huge one is make sure that you are aligned as a company and as a team around those core values and hire to those core values. We just hired a new syndication manager. In the three different interviews we had with him, what came up every interview was I would focus on one core value and say, “So one of our core values is accountability. Tell me about a time when you were held accountable and why that was important and how you had to really pull through? And also, how would you hold someone accountable if they were supposed to do a certain job or accomplish a certain goal, and they didn’t? How would you handle that?” So it really let me see behind the scenes of how he is a leader and a manager. So hiring and firing to core values.
We’ve had people that we found were out of integrity and they broke that integrity, and so that’s a no brainer, and that’s an instant, “Sorry, you’re gone. You broke one of our core values of integrity.” But it could be other things. Breaking the core value of connection, and just being a jerk. You get three strikes. If you’re a jerk three times, then you’re gone. So that’s a big one.
Another one would be having a very clear organizational chart or accountability chart. Knowing who reports to who and how they do that and have everyone have that same chart so everyone knows what their roles are, what their responsibilities are and who to go to when you need something, and who’s the expert in each area. So I think that’s another big one, too.
And I would say on that org chart, don’t just create an org chart for your business today, also create an org chart for your business five years from today. So get all those boxes out. You can look up how to do an accountability chart or an organizational chart online. It’s pretty simple. But you have – who sits in which seat? What do they do? What are their roles? Sometimes maybe you’re a three or four-person company, you might build out your whole organizational chart in five years and have all these positions rather than faces. And then you can maybe, right now, your face goes in all those and you and your partners, your employees. But over time, my goal has been to take myself out of those boxes and put someone in who’s even more talented than I am, so I can oversee the whole thing.
Theo Hicks: Thanks for sharing that. So I want to go through each of those, one by one. So first of all, thanks for sharing that book. So people who are remote, make sure you buy that book, that’ll give you a massive head start. So you said culture first. So you mentioned what happens if someone is out of line with those values. I think you mentioned a three-strike rule. Is that literally what it is? If they break the rule three times, they’re gone?
Rich Fettke: Yeah. It works really well, and I’ve learned this over time. I’ve made a lot of mistakes as a business leader. I’ve learned from those mistakes, thank goodness, except when I don’t… But one of those lessons is to not blindside someone, to not complain about someone behind their back. Especially Kathy and I have been co-CEOs of the company, it’s an easy thing for me to be like, “This employee is really bugging me. They didn’t do this, they dropped the ball,” whatever, and I’m telling her, or vice versa. So we got really clear on that transparency value is like, “We have to share this. We can’t just talk about this and be disgruntled and pissed off at this person. We have to bring it up.” So that’s where the three strike rule works really well, is you bring that person, have a one on one, and just say, “Hey, this is what’s going on. This is a problem and this is a strike. We have a three-strike rule here at Real Wealth, so please don’t let it happen again,” and make sure they’re clear about it, what’s the strike for and have them repeat it back.
And then if it happens again, say it’s a month or two later, it happens again, you bring them in again and say, “This is strike two. This is your second strike.” It might be for the same thing, it might be for something different, but it could be, “This is a strike. This is heavy enough for a strike. If you get another strike, sorry, but you’re gone. Three strike rule here.” So that way, no one’s ever blindsided. No one’s ever just, “I didn’t even know. I would have course-corrected or something.” They’re just like, “You know what? Yeah.” And when we get to third strike people are like, “Yeah, my heart’s not in it.” But most people, we’ve had it really well. Our average employees’ been with us for seven years. It’s amazing. So people stay for the long haul, and I think that’s because of the culture.
Theo Hicks: And then is this something that you’ve always had in place or is it something that you created after you started the business? And then assuming it was after you started the business, how do you communicate that with your employees? Do you sit them all down and say, “Hey, this is something we’re implementing”? Or do people only know this once they get their first strike that they know it exists?
Rich Fettke: That’s a great question. No, we’re really clear about it. So the other thing we do for culture is we do a quarterly state of the company address. Kathy and I do it together. At the end of the quarter, we’re just like, “Hey, everyone, here’s how we did. These were the big goals that we accomplished this last quarter. Here’s how we did financially. Here’s the profit-sharing”, everyone on our team shares in the profits of the company; so the better the company does that better our whole team does. So we share that in the state of the company.
So in that state of the company, that’s when we brought that out. We’re saying, “We’re implementing a new policy. It’s called the three-strike rule. This is the way it works,” and explain it that way. And then on top of that, I’m just thinking about these quarterly meetings – people love face to face human connection. That’s what we’ve learned as a remote company. So every year, we take our whole company on a three-day retreat. We hook everyone out, we treat them to a resort. The last time, we went down to San Diego at this paradise resort, and we do half day of looking at the year, the past, what worked, what didn’t, what have we learned, how did we grow, we acknowledge people for their role and what they did… We also look at what didn’t work, what did we learn, what were the mess-ups. And then the second day, we look at where are we going. We look at the vision, the ten-year vision, the three-year vision, the one-year vision, the goals for the year. And then we have a lot of fun. So we’ll do stand up paddle boarding, kayaking, we’ve gone on ski trips with the whole company.
So there’s something about that magic, getting the whole team together, all 25 people, that everyone falls in love with each other, and it’s really cool. Zoom is good and you can get the face to face, but face to face and really connecting is an awesome thing. So after this whole COVID stuff is over and we can get together and be face to face and hug, we’re really looking forward to that.
Theo Hicks: Thanks for sharing that. So on a similar note, when your company transitioned from office to remote, I’m wondering if there were people who couldn’t necessarily make that transition. They weren’t very good at working from home. Because the reason I’m asking that is — let’s say, I’ve got a company right now and we’re all working in office, and then Coronavirus hits, everyone’s working from home, and I’ve seen just a massive drop in productivity from people because they don’t work as well at home. I’m wondering how should we approach that? Do we fire them? Do we say, “Well, hopefully, we’ll eventually come back to an office and then everything will be fine”? How do you think people should approach that?
Rich Fettke: Awesome question. That’s a big one. I’m really proud of our team. What we focus on that I always have focused on is creating empowered leaders. So each person’s a leader. Rather than having to micromanage or look over their shoulder and say, “What did you do?” and everything, what we do is we have four directors at Real Wealth. So each one has their own division. There’s one in SFR brokerage, there’s one in syndication department, there’s one in Director of Marketing, Director of Finance and Legal… So each of those directors have their own team. So what they do with their team is they meet one on one with each of their team members, and they come up with their big, most important goals each quarter. First to get together as a team and they say, “What are we going to do this year? What are we going to accomplish this year as a team that fits into the company overall goals?” So the directors get together, we come up with the overall goals for the company. “This is our initiatives, this is what we’re going to do this year.” And then each of those directors takes their part of that to their team and say, “Our department, this is what we’re responsible to make happen this year.” And then they work with each of their people and say, “Okay, so what about you?”
We follow the EOS system, the Entrepreneurial Operating System from the book Traction. We’ve been following that for almost four years now; that’s a great one. So that’s one of my highly recommended books, is the book Traction, and the other books that Gino Whitman’s put out. So we use that same type of process. So each person has what they call rocks, putting the rocks in the jar, and it’s one to five of the most important things to focus on during the quarter. So each person has rocks.
So we don’t micromanage. We don’t look over someone’s shoulder and say, “You’ve got to do this, you’ve got to do this.” We just say, “Here’s your rock.” It’s very clear what they need to accomplish and how they need to accomplish it. And then every week, when we have our meetings, we’re looking at that and people are saying, “My first rock is this. I’m on track,” or “My first rock is this. I’m off track.” If it’s off track, then we drop it down, we make it an issue, we talk about it. What support do you need? What help? So that really helps. So people are responsible for the results, not just working their ass off. It’s getting the result is what matters for them. So everyone has a number.
Theo Hicks: Perfect. I interviewed someone before and we talked about a rock, and I told him he should just get a bunch of boulders, and then literally write whatever the goal is on there and then mail it up their employees’ offices. They get up to their office, there’s a big stone just sitting there that they see every day.
Rich Fettke: Yeah, that’s what it visually feels like. It is like that, these are the big three. I really like the big three. More than that, it starts to get a little bit diffused. So I like people to have one to three main rocks, because then they can really focus on, “Okay, this is what I’m responsible for this quarter. This, this and this”, and all the extra minutia, it’s like, “Don’t put a focus on it, don’t get sucked into email or any of that stuff. You focus on what needs to happen.”
Theo Hicks: Something else you mentioned right in the very beginning was you went through all of the different technologies that you use. So for people who are transitioning from office to remote, do you recommend that people Zoom and visual face to face type of meetings, or is the phone okay, is just email okay? What’s the best tech to use when you are communicating with people when you’re working remotely?
Rich Fettke: I think it’s a blend. We do not do all Zoom meeting. It drives me crazy at times; our whole team crazy. It’s like sometimes you just want to focus on someone’s screen and look at the numbers or what we’re doing or the site or the membership portal, whatever it is. So having everyone’s face up there is not necessary. What we do – we just started initiating this – is we do a monthly call. So like I said, we do a meeting every single week, and the different teams have their own meetings. So there’ll be maybe five to eight people on a meeting. It’s a very structured meeting. It’s very clear. And in that, what we do once a month — so three weeks, we just share screens, we don’t look at each other, and once a month, we have an agreement that, “Hey, we’re going to share our screens.” So whoever wants to get dressed up, they can do that and do their hair or do their makeup or whatever they want to do, they can do that. But then we get to get that human connection, the face to face. But I honestly, not for our company, I don’t think it’s necessary to have every call be a face to face Zoom type meeting.
Theo Hicks: And then my other question on the tech side is– and again, this may just be a “This wasn’t an issue for us”, but when you did go to remote and you started to add in technologies, did you ever get to the point where you’re like, “I think we’re using too many different softwares. I think we need to bring it down a little bit and focus on the ones that are the most important.” So maybe walk us through that process, and again, for people who are now working remote, maybe they think about buying all these softwares and maybe doing overkill.
Rich Fettke: Yes, we did go through the overkill. I love tech, I’m an early adopter, I’m always looking at what’s next and what’s coming and what useful thing… So in the beginning, the most important thing that we did was Basecamp. So we use Basecamp as our project management software. It’s awesome. There’s teams in there, you can communicate through teams. So it keeps away from having to use Slack or Skype or all these different things – texting and everyone’s getting pinged and all these different things. So we run our whole company on Basecamp. And Kathy and I run our whole investment portfolio on Basecamp. We have each property in Basecamp as well, because each one can be set up as its own project. It can have photos, it can have all the documents, all the closing documents, HUD, whatever it might be, can go in there. So Basecamp’s great.
And then we also use software called Ninety. It’s just ninety.io is the address for it, and that is a software for running this EOS, the Entrepreneurial Operating System. So it’s the structured meetings, you can put to-do’s in there. You actually open it up when you run your meeting, you start the meeting off and what they’re called is an L10 meeting, a level 10 meeting; at the end of the meeting where everyone rates the meeting, and the goal is to have everyone say that was a 10. Usually, it comes in around 8.5, but 10 would be “That was an amazing meeting. It flowed quickly, we solved a lot of issues and everything.” So anyway, we use Ninety to run those meetings, which has a scorecard built into it. So it’s a dashboard. It shows how we’re doing, with leading indicators about where’s the company going, how many sessions of our investment counselors’ done with our members and investors, where are we on a raise till we transact for a syndication… So we look at that. Then it goes into to-do’s from the last week. So each person goes through and say, “I said I was committed to doing this; I did it. I was going to reach out to this person; done. And then I was gonna finish this report; not done.” And then if they’re not done, we can drop it down into this area of called IDS, which is – identify, discuss and solve. So we have 60 minutes there just to identify what issues are happening – issues can be good or bad – and discuss those issues and go back and forth. Take one issue everyone on the team could share, debate it, give ideas, and then we solve it. So what’s the solution here, and usually, that solution comes with a to-do that gets assigned to someone. Someone would be like, “Okay, we have a solution. I’ll take it on. That’ll be my to-do,” and then you wrap up the meeting. So anyway, ninety.io works awesome for that, for anyone who’s running on the EOS system, which I know a lot of your listeners probably are for their companies.
And then let’s see, we were using something called 15Five, which is a really good software as well. When we went with Ninety to run our meetings and everything, we dropped 15Five; even though there’s too many platforms, but 15Five’s really good. It’s each person on the team fills out a report that takes them 15 minutes a week to fill out what they did, what their big wins are, what their challenges were, any numbers or anything, and it takes five minutes for their supervisor to review it. It was created by Yvon Chouinard, who started Patagonia. He wanted to use it to travel and rock climb and surf and all that, so he came up with this method for holding his employees accountable and know what’s going on in his company, where people would actually physically write it down in the day. It takes 15 minutes to write down what their week was like, and then it would take him only five minutes to review it. So they would send it over to him by fax or whatever back in the day. So he could be on a surfing trip or halfway around the world climbing and know what’s going on in his company. So very similar, 15Five is a great one if you’re not using Ninety. So those are great tools. And then we’ve been using GoToMeeting for years and years. So we usually use GoToMeeting which is just like Zoom, but we also use Zoom as well, for the same purpose.
Theo Hicks: Well, Rich, thanks for joining us today and going through the skill set of how to manage your 25 employees remotely. Fortunately for you, you were able to start doing this back in 2011, so you’ve had about ten years to master this process, and today you shared with us all the lessons that you learned.
You gave us two book ideas. You’ve got the book by the founders of Basecamp called Remote, as well as the book about the EOS system that your company uses called Traction, and you broke down the best ways to manage employees remotely into first, the culture, so you said that you want to make sure you’re clear on the core values of your team and that you need to hire around these values, as well as a fire around these values.
So you gave us your three-strike rule. If someone breaks a value once, you have a one on one, let them know what’s going on. And then they do it the third time, they ultimately get let go. Other ways that you focus on culture is quarterly state of the company addresses, as well as in-person retreats. You also talked about having a clear organizational chart and accountability chart for today, but also for five years in advance. Now of this can also help you realize what which roles you need to hire someone for.
From a tech perspective, you did mention that there is the possibility for tech overkill. The most important tech you use is Basecamp. You also use a software called ninety.io for EOS, as well as GoToMeeting. And you mentioned that you don’t do every single meeting via Zoom. You’ll just do your monthly meetings, face to face using video, whereas the weekly meetings are just simply screen share. So those are the main takeaways, but obviously, you went into a lot more detail on each of those as well as other piece of advice.
I really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.
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