Jason Hartman starts the show with client Muthia to discuss a recent issue he had with a provider. In the interview segment of the show, Jason hosts David Burkus, author of Friend of a Friend and Associate Professor of Leadership & Innovation at Oral Roberts University. Burkus gives us ideas on how to develop your network and grow key connections. He shares his thoughts on a scientific method of networking.
Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:52
Welcome to Episode 980 980. This is your host Jason Hartman and welcome listeners from around the world. Thank you So much for joining me. We have a 10th episode show for you today. And you know what that means. If you are a regular listener, if you’re not if you’re new to the show, what it means is that we talk about something of general interest. The show is mostly dedicated, of course, to personal finance, economics, real estate investing, the most historically proven asset class in the world. But every 10th episode, we talked about something of general interest, and today, we will talk about something all of us need to improve at and that is networking, networking. We’ve got David Berkus here with us today, who will talk about networking friend of a friend, that’s the name of his book. And so we will learn about that in a few minutes. But first, I’ve got a returning guest on the show to help me with the intro portion. That is our client and now somewhat regular guest on the show Messiah, Messiah. How are you? I’m good, Jason. Thank you. How are you? Good, good. Hey, it’s good to have you on Thanks for helping me with the intro today. And you are coming to from Los Angeles, California, right?
Muthia 2:01
Yes, I am.
Jason Hartman 2:03
Awesome. Good stuff. Just a couple of things. We are going to record a full episode with you again. And we still haven’t played that episode where you interviewed me, by the way, that was a great idea. And so that one’s coming up. But we’ve got, I think, a more important episode because I’m not that interesting. But what you have to talk about on this episode we’re gonna record is really interesting, I think, because listeners know, that my biggest frustration, the hardest part of our business. Well, I guess there are two things with HIA. One is sourcing inventory, because inventory is scarce, it’s in short supply. But the other one is those daggone property managers, property managers, you know, the good ones are great, but like any business, there’s a lot of bad ones out there. We really have to I think one of our duties as investors as business people as citizens is to Hold bad apples accountable for what they do. And hopefully save the next guy from the problem. So if it’s a company in a consumer product, if it’s a property manager and bad services they provide, you gotta hold them accountable. You got to do the right thing. So you, you save the next customer, the next investor, the next victim from being a victim, right Messiah.
Muthia 3:27
Yeah, yes, that’s
Jason Hartman 3:28
Yeah. So tell us just a little bit, like super quickly here. And then we’ll record the entire episode for later about what happened to you what you did you know, you you had a seller and property manager that we recommended you actually file a an administrative complaint against Right,
Muthia 3:45
right, right. Which is saying that I found this local market specialist and the seller by listening to your podcast, they appear on your podcast and it always like like everything else, they start off smooth and everything is good. And then before you know it starts falling apart. So I bought a property this one, this one was in a terrible state state. Yeah, go for it. I bought two properties. There wasn’t Alabama. And this was my very first year, I think six months into starting to buy properties. I bought this and I liked this property and I think there’s complete naivete on lifelock because I had a pool in there and I was pretty excited about having a property with the pool. And also there was a lot of x not a lot there was some equity in the property was not at retail was below market. So I I bought it based on that and
Jason Hartman 4:34
he’s this Messiah, I’m beginning to wonder if this is the story of If it sounds too good to be true. It is. Is that the story?
Muthia 4:42
Yes, that’s what it is. And there was some equity into it and I usually like to buy properties with some equity built into it. So I bought the property and I made several mistakes myself and I you know, realized that I made them after after I made them and hopefully people will listen to the show will You know, maybe pay some attention not made the same mistakes I made I’ll be less expensive for them. You know, one of the things that I didn’t do the cows came with a pool. I had someone go inspect the house completely but not on the pool. You got to do an inspection.
Jason Hartman 5:15
Yeah, absolutely.
Muthia 5:17
And then you know, you know has to be a qualified inspector who does the pool not just you know, everyday has you know, person that does everything else and just gives you a superficial report that everything is fine. So, and another mistake I made was not sending the reflector back to inspect the repairs, re inspection, re inspect? Yeah, exactly. Even if it costs money. I think that’s very, very critical because you can’t take the sellers word for it. You can’t. Yeah, and so, I mean, I made those two critical mistakes that I made was okay, isn’t it?
Jason Hartman 5:50
Okay, so pool inspection. If you have a pool, it’s rare to get a property with a pool, but you know, occasionally you get them and you got to have a pool inspection in addition to a home inspection and Folks, look at never buy a property without a home inspection. Okay, you must have an inspection. Okay. So I just want to put that out there. You did have one, but you didn’t get the ID I did.
Muthia 6:11
I did have one, right?
Jason Hartman 6:13
No, no, I know. I’m just saying it. I’m saying that is a general rule for everybody listening, right? Because, you know, we’ve had some people that didn’t get a home inspection. I’m like, What are you trying to save four or 500 bucks, you’re crazy. Like, that’s just crazy. You got to get an inspection with such such a big purchase. And you must, if there are repairs and things that are unfinished and repair items, there always are. If there are any bit significant, then you’ve got to get a re inspection where the inspector goes out after the seller says okay, everything’s done now. Well, trust but verify, as ronald reagan used to say. So you got to send the inspector out for a re inspection, get photos of everything, get documentation of everything. Also, make sure that inspector is really truly independent and they’re not in bed by With the seller, so don’t go with who the seller recommends, get at least three companies, check them out, look at their reviews online, you know, just make sure they’re legit as much as you can. But what I want to fast forward to Messiah and we’ll talk about this in greater detail on the episode we do where we go in depth about this mess, but you filed an administrative complaint and we recommended that you do that and I recommend that everybody do this look at folks. Let me tell you something. The legal system is a disaster. Okay, it’s a mess. The way it works is like this mostly. First you get taken advantage of by the party, the company the person that took advantage of you, and then you get screwed by your own lawyer. Okay, that’s the way it basically works. I know I’m a bit of a cynic here right? But look at we all pay taxes. Okay, what do we pay taxes for? One of the main things according to ein Rand, a great author read atlas shrugged. read her books ein Rand, is the government needs to do is provide a court system a way to resolve disputes Human beings have disputes, right? So you pay taxes for these regulatory bodies, that’s in addition to the court system, the administrative process. So if someone holds a real estate license, or a contractor’s license, or a whatever license, you can file a complaint with that regulatory agency. It’s called an administrative complaint. It’s free, it doesn’t cost anything. You don’t have to hire a lawyer. You don’t have to go to court. You just basically go to their website. And by the way, we have what we call the Hall of shame resource list. If you want this list, reach out to your investment counselor through Jason Hartman calm or you can go to Jason Hartman comm slash ask and ask me for it. And I’ll get it to you. It’s the Hall of shame list with all the links. I spent copious amounts time putting this together of the agencies and there are more but the basic agencies that you can use And you can just file complaints. Okay. And you know, sometimes they’ll pay attention. Sometimes they won’t, you know, but it’s free, it won’t cost you anything. And ideally, it’s only going to take you, you know, 2030 minutes now, Messiah, you spent a lot more time on it. We’ll talk about that on your episode. But what basically happened, just tell them what happened real quick. You filed the complaint, and then what?
Muthia 9:21
Well, no, I filed a complaint with the Alabama real estate commission. That was based on what you said. You also asked you to file a complaint with the with people claim. It’s, that’s like an online system. Yeah. Like, what I’m trying to do with free court.com. Yeah, my passion project. Go ahead. Yep. Right. But here’s the thing, the guy that sold the property, they did not sell it under the guise of a real estate company. They sold it from another entity, which is not a real estate brokerage or not real estate company. And so the commission told me that they really have no jurisdiction over a company that sells property not under the umbrella of a real estate company. So,
Jason Hartman 10:00
so was the legal claim the custom or was it the administrator?
Muthia 10:04
I think that people say the persistence and they continue to complain, complain to the people for it. And also, I mean, even though Alabama real estate commission did not want to do anything, I did send them a whole lot of stuff. I sent you a copy of the all. So I think that they knew that I was not going to just take this lying down. I was good enough for you. So you know, it took some time, you know, and eventually they did, you know, come back and invite back from me, you know, at what I paid for, they
Jason Hartman 10:35
bought the property back. You suffered a little bit of a loss, but it wasn’t nearly as bad as it might have been. But you got to buy the property back Mutharika. That is amazing. Like, that never happens. Okay, that’s good. Good for you.
Muthia 10:50
Yeah, they bought the property packet paid the closing costs and had them pay the closing costs on the buyback. Plus, there was about seven or $8,000 in foundation damages that happened after I bought the property and so I you know, they paid for some most of that anyway. And so they did, I would say came pretty close to break even. And you and Carrie were very generous to helping me out as well so that out, I really appreciate that as well. So, overall it took some time and effort but I think once they knew I was not going anywhere and I kept filing this complaint and
Muthia 11:23
good stuff gets it bite back.
Jason Hartman 11:28
Ray, Ray, Messiah, this is what it’s all about listeners. This is what it’s all about. It’s all about being the empowered investor. You are not going to be a victim on my watch. Okay. We will help you with any issues that arise if you want to know where to go to help get you know most of these people and companies these weasels these bad apples, big companies, small companies, I mean the big companies do it the worst. You know, I told the story About how at&t screwed me over, right? They literally stole my iPhone. I couldn’t believe it. American Airlines has screwed me over so many times I can’t even believe it. You know, these bad actors, they go through life just rolling over people. They just roll over people. It’s disgusting. You know, this company I’m in litigation with I just filed a complaint in federal court against Platinum investment properties. Charles sells, Don Fullman, p IP, West p IP s p IP group, whatever the hell Her name is. I accuse them I’m alleging that they are running a Ponzi scheme that they are doing something I call investor stalking. We’ll see where it goes. But it’s a complaint in federal court I filed against them. And of course, I did a few podcasts on them as well as you know, and then you know, I’ve got that results property management now. And it’s now called Quincy property management or something. Quintin Kearney, Ken Logan, in Kansas City, Missouri. You know, nightmare With those guys, you know, even if it costs you money, even if it costs you time, you have got to do something. This is part of the duty of just being a citizen in the civilized world, you got to hold these bad actors accountable. And you know, maybe you won’t win, maybe you’ll lose, maybe you’ll get nothing out of it. But you know what they’re gonna do, they’re gonna think twice, before they roll over the next guy, okay? Before they roll over the next person, they’re gonna think twice, because, you know, even if I didn’t get anything, or have to give up anything, you know, to Messiah or whoever, you know, they’re gonna think twice about that. And, you know, these administrative complaints, these regulatory agencies, these various government agencies, in all these different states, you know, they accumulate these letters, okay, they might not do something on the first complaint, but on the second or third one or the fifth one, they might just go revoke their license. We had a bad actor in Austin, Texas. One of our clients has been on the show, I recommend it. He filed a complaint and he got some money out of them. You know, the guy mostly made good. I think he got his license suspended for a month or something. So, yeah, you know, do not be a victim folks. Do not be a victim. Okay? Do not be a victim. Okay. Hey, Messiah. Thanks for sharing that. We’ll have you on to talk about that in detail. A couple things I want to mention before we get to our guest today. 1031 exchanges, income property, the most tax favored asset class in America. One of those huge benefits is 1031 exchanges. A lot of you listening have highly appreciated properties in overvalued cyclical markets. A lot of you have done 1031 exchanges, you’ve worked with us. We have helped you set those up. I just want to remind all of you, you know, this is a good time to be thinking of doing a 1031 exchange, selling that overinflated property and trading it for several properties. In diverse markets, and diversifying your wealth, and improving your cash flow dramatically, we’ve talked about that a lot on past episodes. Just a reminder, 1031 tax deferred exchanges, one of the wonderful tax benefits of income property, we can help you with it. Just reach out anywhere on Jason hartman.com. One of our investment counselors will get with you and they’ll help you and you know, all of our services are free consulting. We basically make money one way essentially we run a referral network referring you to local market specialists and providers in different areas. events. We got a couple great events coming up. Of course, I am getting ready to go to the Ice Hotel with our venture Alliance mastermind group next week. We’re all going to Sweden, that event sold out and it’s going to be a once in a lifetime experience. With Aya I plan to do a podcast from within the Ice Hotel. So yes, if my equipment does not freeze, I hear the acoustics are incredible in their in in the ice cave.
Muthia 16:06
That would be nice. That would be very nice.
Jason Hartman 16:08
You can all look forward to that. When we’re at the Ice Hotel, dog sleds pick us up from the airport, we land at the airport, and we’re picked up by dog sleds. Isn’t that cool? Pretty neat stuff. Pretty neat stuff. As far as events that everybody can participate in, in May. We’ve got Philadelphia, where we’re going to be for our creating wealth event. Go to Jason Hartman comm click on events. A lot of you have already purchased tickets for that Philadelphia event. So that’s going to be great. We’ve got a really swanky venue, and that’ll be creating wealth. It’ll probably be the only creating wealth event we do this year. That’s probably going to be it. I mean, I don’t know. Maybe we’ll add one. I don’t see where in the schedule, we could add another one. So it’s probably our only our last creating wealth event this year. And that’ll be in Philadelphia, Jason Hartman calm In the event section, and then the following weekend, which is Memorial Day weekend, will be the venture Alliance mastermind group in New York City in the Big Apple. So I am staying back east for the week between those two events. And they’re just going to be awesome. So I hope you will all consider joining us get a one time ticket for venture Alliance if you want to do that, but certainly come to creating wealth Philadelphia. And again, these are our first events in the northeast. Well, actually, we did Newport Rhode Island and did the mansion tour with the venture Alliance a few years back, but our first public, bigger seminar event, Bakkies will be this one in Philadelphia. So join us for that Jason hartman.com. Click on events and get your tickets for that early bird prices. Messiah. I think we better get to our 10th episode guests and talk about networking.
Muthia 17:50
What do you think you’re absolutely right. Hey,
Jason Hartman 17:53
if I look forward to having you on the show where we go into detail about your story, really helping and educating the other investors about that. So here we go. Let’s talk to David Berkus about networking. It’s my pleasure to welcome David Berkus. He’s a best selling author a sought after speaker and Associate Professor of leadership and innovation at Oral Roberts University. His forthcoming book friend of a friend offers readers a new perspective on how to grow their networks and build key connections. It’s one based on the science of human behavior, not your typical networking advice. He’s delivered keynotes to leaders of Fortune 500 companies, and future leaders of the United States Naval Academy. His TED Talk has been viewed over 1.8 million times. And he’s a regular contributor to the Harvard Business Review. David, welcome. How are you?
David Burkus 18:52
Oh, thank you so much for having me. I’m doing great. Yeah,
Jason Hartman 18:51
it’s good to have you. So as we talked about off air, zillions of gurus say they can teach you how to be a better networker. There are many books on the topic. But you really dive into a more scientific approach, I believe. Tell us about that and what we can learn from it.
David Burkus 19:09
Yeah, I mean, that’s exactly right. So there are, this is not the first networking book out there in the world. There’s a lot of them. But one of the things that I found about two years ago, in the course of writing, looking for another book, ID, etc, I dove deep into the research on network science. And you know, people are probably a little bit familiar with like six degrees of separation or weak ties, that type of thing. Now, but the truth is, there’s been about five or six decades of research into how networks actually operate, what are the universal principles of how networks work and their advice. Sometimes it lines up with the advice of the sort of gurus and and other times it doesn’t, quite frankly. So the goal was really to write a book that is this is not how to network according to Dave Burke is this is how your network works. And so the best strategies that you can come up with are, learn how it works, and then act accordingly.
Jason Hartman 19:54
Right, right. Okay. So how does it work? I mean, is there really a scientific methods and networking,
David Burkus 20:02
the first thing to do is really to develop a different mental model, right? So if you’re looking for a scientific method, the best first thing to do is change this mental model from I think most people, when they think of their network, they think of like a list of contacts on there and their email app, right? Or their LinkedIn connections, etc. The truth is, networks are three dimensional, right? So it’s not just Who are you connected to, but who are they connected to? Who is one or two degrees of separation out from you, that you can be introduced to and the first thing that you really need to do is study all of that not just look to collect contacts, so you can up your, you know, your LinkedIn following or have more, I mean, certainly, I don’t need any more email addresses in my address book, etc. So it’s really starting to learn that to push it the fringes and explore Who are the people that know each other in your network and who are the people that one degree or two degrees of separation are out from you that you could find a path to.
Jason Hartman 20:49
Okay, okay, so give us an example of how we might apply this. And do you address where to go or is it from the angle of Online networking in the old six degrees of separation thing I mean, I don’t know, you know, with with the social networking phenomenon, I think it’s about two degrees of separation nowadays. It’s, it’s amazing but but
David Burkus 21:12
during the Facebook research, it’s actually four it’s something like 4.17 Facebook account, it’s only four degrees of separation. Yeah, it’s
Jason Hartman 21:19
it boggles all of our minds, you know, we’ll get a new quote, friend, unquote, from somewhere in the world, maybe while we’re traveling, we’re 6000 miles away from home, right? And we have mutual friends, but the definition of friendship has obviously changed pretty dramatically. That’s exactly
David Burkus 21:35
right. And I mean, that’s a huge point that most of the research supports the idea that unless your online network so Facebook, LinkedIn, Twitter, whatever, unless it is a an online representation of your in person, it’s not really all that helpful. All of those friends from 6000 miles away if you haven’t gotten to know them personally, it’s not really all that helpful. Now, you said something really interesting in terms of the where where is the best place to do this, and I have good news for most people who want to grow A bigger network isn’t. And that’s the networking events that we all sort of feel like we’re supposed to go to. They’re not actually all that effective. Some of the best strategies are to avoid those places where the whole goal is to meet new people, and actually participate in what are known as shared activities. These are things where there is an activity to participate in together whether there is something at stake to win or lose. So this could be everything from sports leagues to pick up basketball leagues. One of my favorite examples in the book is a friend of mine, Christian Bruh, who runs a dinner party where Dinner is served only after everybody takes turns cooking. So there’s only about 12 people at the dinner per time and you get paired up with people, and you all get an assignment into cooking. So you’re working alongside each other for 3045 minutes getting to know one person, and then you come to the table and begin to interact now that you’ve built that deeper bond, it’s a far more effective way than to go to one of those sort of speed dating for professionals type networking events.
Jason Hartman 22:52
Yeah, I would agree with that. Certainly working on something having a project together or I mean the stock and trade Friendship is shared experiences, right? So couldn’t agree more that that’s definitely a very good component to it. Okay, so someone listening to this that wants to improve their network or, you know, maybe even get to a specific person a specific contact, if you will,
David Burkus 23:16
what do they do? The best thing to do, you know, we hinted at six degrees of separation a little bit before and the research and the whole thing of Facebook actually being pointed forward, there’s actually a really cool lesson in that. So when you look at the way that studies are conducted, six degrees of separation came from sending messages out to a bunch of random people, and then asking them to get in touch with a specific person. And then those people had to choose who is the best person to introduce me to that other person. And the Facebook research is a little bit different. In one, it’s the online connectivity piece, but to it was using an algorithm to sort of crawl through the networks and find the most efficient path, one that’s usually more efficient than humans, where I sort of take this as it’s proof that you don’t know the most effective route to get to know that person that you want to know. So what I encourage a lot of people to Based on this research is to develop a regular habit of asking people Hey, who do you know, in blank, you know, who do you know in titles and appraising? Who do you know, in real estate? Who do you know, in television? Or it could be a city who do you know, in Chicago, whatever it is, the point is that you’re doing a couple different things differently. One is the person that you’re asking, you’re allowing them to come up with multiple people. Whereas when you ask for an introduction, a lot of times it’s just, Hey, can you introduce me to Jason, right? And when I ask, Hey, can you introduce me to Jason, I’m also asking you to vouch for me, which they may not want to do. So when you say Who do you know, in blank, you get a collection of different potential people that they could introduce you to, and it’s usually far more broad, then if you ask for specific person, if you LinkedIn, stalk them, and see who the mutual friends are, etc. So I encourage people to ask a much more broader question to always be kind of exploring the fringes of the network. And I try and work it into regular conversations with people so that when the time comes that I need the introduction, people are actually used to the idea that I’m always sort of searching out the fringes of my network
Jason Hartman 24:59
right now. Can that be done online? I mean, can and should it be done on a Facebook post? For example, that type of thing? Or should it always be a one on one question? I’m just trying to scale. Yeah.
David Burkus 25:14
So if you’re exploring, then it can definitely be a scale thing. So those who do you In fact, actually, I did this about a month ago who do you know, in television specifically, and you get people that can comment and maybe even offer introductions, etc. So it can definitely scale that way. I will say I’m very hesitant to ask someone I only know online to introduce me to someone else because I don’t know the strength of our relationship and I don’t know the strength of their relationship to the target. Individual but certainly if your goal is to always be exploring then online definitely helps you scale it far faster.
Jason Hartman 25:43
Okay. So you can do that in person. You can do it online. Okay, so your friends dinner party concept, that’s great. But you know, most people listening they don’t have that friend and they don’t know where that kind of party is. You know, are there any events or things that you can recommend? That would apply to just generally anybody listening, you know, anywhere in the US or anywhere in the world. Of course, you probably will say check out meetup or something like that.
David Burkus 26:12
A lot of times it has to do with I mean, meetup is a great place, but you can’t really find as much anymore. I understand they were recently acquired. So maybe that’ll improve the site. The truth is, it depends on what you’re looking for. If you’re in a specific industry, then there is usually a watering hole, a community place online, or a regional conference type of thing that you can seek out. And those are always great because there are people of like minds, similar profession, etc. So it’s easier to build rapport than the sort of speed networking type events. The other thing again, this goes into an online is the probably the most useful thing about online social networks these days are Facebook and LinkedIn groups. The idea that I’m going to start a group of people who are doing this and looking for this, etc. Now, again, the trick is to go from online to offline and try and invite those people into something and offline. Sometimes if you can’t find anything, it’s actually if you can’t find anything, and you really, really feel like there needs to be a community around this started I one of the most useful things that I’ve been a part of in the last two years is an online Facebook group that will remain nameless. So it doesn’t get flooded with requests, but of people who write in business literature and professionally speak. And so it’s become it’s about 300 people that we can all bounce ideas off each other. And it started two years ago because one guy said, Why doesn’t this thing exist? Now there are national level speaking conferences and that sort of stuff. But we wanted to really niche down and start something in that specific niche and see who else was there. So if you can’t find that perfect thing, you might be the one that’s supposed to start it.
Jason Hartman 27:40
Mm hmm. Yeah. Okay. Okay. Good stuff. Are there any questions I haven’t asked you just anything in general you want to share with our audience.
David Burkus 27:47
So one of the most surprising things that I found is is that those networking events that where the goal is just to meet new people is a little bit because of a social science principle called hum awfully are like attracts like we say in the profession. literature and one of the things that’s most interesting about it is it’s not just an innate tendency to want to hang out with people who have a similar job than us or who look like us or are from the same city as us. It’s actually kind of a network effect to In other words, over time, as we go about building our network, it starts to look an awful lot like us, which makes finding a broader and more diverse network much more difficult. So when you’re trying to say, you know, who do you know, in blank, the reason that I encourage people to ask that as open ended, is that you’re looking for the diverse answers so that you can reach out to those people and then build a far more broad network because you’ve got lots of people who aren’t like you, versus where a lot of us take the approach of let’s let’s just meet as many people as we can we end up not being deliberate about who we’re getting introduced to. And we end up with a portfolio Rolodex of Contacts app of people that look act and think like us, and that’s not all that useful.
Jason Hartman 28:49
Yeah, yeah. No, it’s not it’s not gonna diversify our life at all. Tell us about some of your other books if we’ve kind of covered the networking topic. If not, feel free to tell More about this, but in this book is not out yet at the time of this recording, of course, podcasts are perennial. So, you know, by the time anybody hears this, it may well be out. But talk to us about some of your other work. You’ve got, what four books, right?
David Burkus 29:12
Yeah, so the previous book before, this was a book called under new management, which is a book about some of the counterintuitive, some of the different ways that a lot of businesses are acting. I mean, one of them actually pertains to network. And that’s that a lot of companies are experimenting with going away from the traditional organizational chart, and really kind of building. The best term I’ve ever heard for this is teams of teams, this ability to sort of reallocate based on the needs of a project, etc, who’s on what team and who responds to who and you know, if you’re a solopreneur, or you’re sort of a working professional, real estate agent, lawyer, financial advisor, etc. You already know this is true, because you need to have a broader network in order to build teams for what your individual projects need. So that was under new management was really dealing with a lot of the newer policies and we we went into a bunch of other ones sort of like what’s with unlimited vacation, what’s with this whole Zappos paying people to quit? But one of the biggest ones was that idea of write the org chart in pencil and don’t assign people to a bucket and have them stick there for life. Because you never know who you’re going to need on your team At what time?
Jason Hartman 30:10
Yeah, right, right. So I think Zappos paying people leave is a pretty cool idea. I don’t know if their holacracy idea with, you know, no management works. But if you do, I’d love to hear some updates on that, because it seemed like a crazy socialist. That’s just it. Yeah. So me,
David Burkus 30:29
so my, my jury is still out on holacracy as a specific operating system. So there’s a bunch of different companies that have experimented with this manager list format. And the truth is, none of them are purely manager lists what most of them are saying that the work of management so tracking, budgeting, etc, needs to be pushed over to the team. So it’s not like we’re not having management anymore. It’s that we’re trusting four or five people to manage sort of the whole team instead of that one person. I think a lot of it is cultural and it also depends on the work being done. The organizational chart for example, which delineated out reporting responsibilities, etc, that was designed originally for a very specific industry, it was designed for the railroad industry, which never changes, really, once you lay down the track, it’s really hard to move it up. And it works really well in other systems military, for example, in really large organizations. But those smaller startups, the ones that are scaling fast, etc, are finding they need a little bit more flexibility. And I totally get that jury’s still out on which perfect system is the right one for which one I will say holacracy probably has a good chance of working Zappos only because they applied to pay to quit to anybody that still wanted to be a manager. So a lot of people left although then again, when they decide to go back to the manager formula. They’ve lost a lot of good managers.
Jason Hartman 31:41
Interesting, interesting point. I mean, I know Tony Shea have been to his house several times or his you know Tracy’s trailer. Yeah, I’ve been a
David Burkus 31:50
little small, but hey, it’s interesting.
Jason Hartman 31:53
For sure, it’s interesting, for sure. I mean, he’s definitely a creative guy that has a very different view of the world. So I love that about I love that about him. But you know, in the under new management book, I want to ask you about creativity as well in a moment, you know, you’ve got some interesting chapter heads, paying people to quote, we’ve talked about that, you know, what about getting rid of the standard vacation, and banning non competes,
David Burkus 32:17
actually, both of these policies really kind of stemmed from a little bit of a distrust of employees. So in terms of getting rid of the standard vacation, the company that really really made this idea popular though, it’s it’s far broader than we ever thought was Netflix, and they circulated around a culture deck and I think early 2008 2009, and one of the policies that got immediate media attention was this. The story of what really happened is that employees were coming to Reed Hastings and Patti McCord, the CEO and the Chief Human Resource Officer of the company, and basically saying, you know, you’re not tracking when I’m showing up at work. You’re not tracking when I’m leaving, you’re not tracking how long my lunches are. And when I go on vacation, most of the time I work anyway, why are we tracking this whole thing and that was a constant refrain in their head. And then as they were getting ready to go public, the legal team said that your current vacation policy is not stringent enough. If you want to be a publicly traded sec regulated company, we need something more stringent. And Reed Hastings, to his credit, went back and said, well, do we Is there something in the law that says we have to have a specific vacation policy? And it turns out, no, there’s actually nothing that says you have to have a specific number of days, etc, at least in terms of sort of federal and the state. Be careful. It depends on the state, you know, you know, where are you state of California where they were, they were I used to employ people and I just decided not to because it was so damn difficult. After a while, they totally discourage employing people the Socialist Republic of California. I mean, it’s absurd. If you’re an employer, you are a taker, and a criminal. That’s the way the state views you in California. It’s mine. No wonder they’re all leaving. No wonder what is.
David Burkus 33:51
The amazing
David Burkus 33:52
thing is that that sets up in us versus them between the employer, right and so what Reed was trying to get away with was was that it was Trying to signal like, No, we trust you. And we’re going to push back on this idea that we have to micromanage it because the state says this, etc. So we’re just gonna say our vacation policy is take as much time as you need, and we trust you. And you know, to be fair to them, you get one out of 100 or so people that take advantage of it and run off to Tahiti and claim they’re still employed. But why make a policy that signals to the other 99 that they can’t be trusted? Just because one person could, right?
Jason Hartman 34:23
Yeah, no, I mean, I agree. Look, you know, with our real estate investor clients, I have a real estate investment company. And there’s this common view in the landlording world that, like tenants are these little children, and they’re bad people. You know, there’s this sort of like us against them mentality. And I tell people look, you’re 10 is your customer. If you own a hotel, you would treat them like a guest. Right? You know, if you were in the hospitality industry, this is just a long term hotel, you know, they’re renting from you. So this idea that, I mean, listen, there are bad tenants and there are bad employees. No question about it. There are bad people in the world. But the vast majority by and large, people are decent good people, at least I want to think so. I’m not wrong. Yeah. And you know, they, they want to maintain a relationship. They don’t want to get in, you know, fights, they don’t want to be can, you know, talked badly about you know, most people have a conscience, right. And that’s a great thing. And they’ll do mostly the right thing. But you’re right. You know, it’s like you take the, the policy always or the legal system always degrades to the lowest common denominator. It’s sort of an unfortunate reflection on society. And I’d say that might be true of society in general, when we look at the media.
David Burkus 35:42
Yeah. The interesting thing with tenants is it’s similar to employees, right? Where do you get new tenants a lot of times referrals, right. And it’s the same thing with employees, where do you get some of your best employees where you get them from the employees who used to work there left on good terms and still have a hugely positive experience. They’re still going to Refer new people to your company and Patti McCord, the Chief Human Resource Officer of Netflix actually says it this way that like, the goal is to be a great place to be from. Yeah, in addition to be a great place to be,
Jason Hartman 36:10
yeah, yeah. You know, I do want to interject one idea to you and see if this makes a difference. These tech companies with zillions of dollars flowing in, right. Most people listening are not that fortunate, right? They don’t have that kind of business. So, you know, does this apply mostly, or maybe exclusively to these companies like LinkedIn or Netflix that have the luxury of doing this, you know, they can afford because the markets, the capital markets are just totally lopsided toward technology. And venture capital just flows in and money flows in, you know, whether or not just venture capital any kind of capital, and, you know, it sort of gives them the luxury to do the whole autocracy and the no vacation policy. Just Go to T if you want and, you know, try not to take advantage of us. I mean, does this apply to a regular business that is struggling to stay alive? Because that’s the vast majority of businesses, right? Oh, totally. So
David Burkus 37:11
so when I was writing the book, one of the things that I made sure we started with a much broader collection of policies and practices. And we eliminated anything that wasn’t reproduced in some other industry. Right. So and the weirdest one I actually found so for the unlimited vacation, there is a hospital Windsor, regional in Windsor, Ontario, Canada, which is if you think about a hospital, you really got to manage the schedule, right? Because you need the right number of nurses, doctors, everybody on the team there. And they actually turned it over to the team and said, We want to do an unlimited vacation policy. We trust you guys to set your schedule with each other. In fact, across the board, in all industries that adopt this, you find that companies that adopt an unlimited vacation policy, people take about the same number of days The difference is when they are working, they feel more trusted because they’re not sort of being nickel and dime so it you know, it’s less of a resource issue and more of just Philosophy of ownership that Do you trust your people in is your goal as a leader to do what you can to get out of their way so they can do their best work? Or is your goal to always be peering over their shoulder checking in on them, making sure they’re doing everything you need them to do, etc. Two different philosophies. One happens to have a way better ROI than the other.
Jason Hartman 38:17
Yeah, right. Right. Definitely. Interesting stuff close with a few thoughts on creativity. You’ve got a book on creativity. Everybody probably wants to be more creative. Any advice there?
David Burkus 38:28
The biggest, probably most surprising thing in the midst of creativity, which is a book about what are the misconceptions? What are the things we believe that aren’t really true? According to the social science, psychology, sociology research, and probably one of the most interesting things I found I’m still sort of discovering is that creativity is a team sport. We tend to think of individual geniuses, right? We think of Steve Jobs, we never think of Steve Wozniak or Johnny Ive or all of the other people that helped him. But in almost every time somebody makes a dent in the universe, it turns out there were other people there that were working on the project alongside them operating with them, and I think this is a huge lesson for anybody, any entrepreneur no matter what you’re trying to do, because if we believe in the sort of lone genius, then we can feel like, if we’re having trouble, it’s because we’re not good enough. And in reality, if we’re having trouble, and we need help, it’s because we’re as good as everyone else. because creativity is a team sport. Yeah,
Jason Hartman 39:16
yeah, definitely true. Good stuff. David, give out your website.
David Burkus 39:19
So the best place to find me would be David Burke is calm, bu Rk. Us I’ve got a really weird last name. And so the domains are always, always open. We’ve got a lot of resources around all three books there. So I encourage you to check it out, poke around, enjoy some free content. And I mean, obviously, I hope you buy the book eventually. But truthfully, if I can just be helpful with some of that free content, that’d be great. Good stuff. David burkas. Thanks for joining us. Thank you so much for having me.
Jason Hartman 39:44
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