How I bootstrapped a $40m company - Epic failures, successes, and heartaches

How I bootstrapped a $40m company overnight, and by overnight, I mean it took 11 YEARS and I SURE AS HELL didn’t build it by myself. Here’s my story, my epic failures, the successes, and the heartaches.

2010:

I was 22 and worked at an engineering firm as an assistant, and I sucked at it. I hated having to dress up and be someone different at work. I was miserable in corporate life.

I got my real estate license because I wanted to sell million dollar homes. Turns out I didn’t know any millionaires. Shit.

I was like, “what do all my broke college friends need?” They need apartments! I started finding my friends apartments in my spare time, after work and on the weekends. I didn’t quit my full time job because, that is scary duh.

2011:

Utilized my network on social media to find my friends and their friends apartments. In Texas, apartments pay you a referral fee if you are a licensed real estate agent and you send them a lease.

Still I did not quit my job, because…. that’s scary duh.

2012:

Got my broker’s license so I could start hiring people underneath me. I interviewed people after work and I stayed up until midnight every night posting ads on craigslist to find clients. Then I went to my day job at 7am.

(MISTAKE) Still I did not quit by job. Because that’s fucking scary duh.

At this point I was making about $8k/month from apartment locating part time, but for some reason it was too risky to quit my $20/hr job. Don’t talk to me about logic, I have none.

2013: 5 people, $500k revenue.

Mom died. That REALLY sucked. Read Man Search For Meaning and it changed my mindset. Said “fuck it, might as well take this apartment locating thing seriously and start a company”. Quit my job and opened the first tiny 500sqft office 3 weeks later. Launched a website.

Wow. Wish I would have quit sooner. So much more time to focus on business. Hired more people. Realized that they were better apartment locators than me, so I focused on my specialty, marketing and lead gen.

2014: 15 people, $1.2m revenue

Instagram started to blow up. We focused on posting the best apartment deals in the city. Like, the deal that we would want to lease that for ourselves because it’s such a good price. Turns out, other people wanted to lease those too and we started leasing every time we posted a unit. Then properties started calling us wanting to be featured on our “instagram”… I was like sure what are your 1 beds going for? ‘$1400’… and I was like okay we need those for $999, thinking surely they wouldn’t say yes.

AND THEN THEY WERE LIKE YES. I was like WTF?! TIGHT! And that was the birth of negotiated deals. BUT NOW SO MANY PEOPLE CALLING US.

I was a FULL BLOWN PSYCHO about the client experience. I would fire agents who gave shitty service. That was different from what every other real estate “brokerage” was doing. They wanted to hire as many people as possible. I wanted to hire as many AWESOME people as possible. I wanted people who took pride in their work, because I knew that would lead to a strong brand and a strong culture.

2015: 25 people, $2.4m revenue.

Literally could not hire fast enough. So many leads.

(MISTAKE) I started calling all my friends. I was like Oprah like YOU GET A JOB AND YOU GET A JOB AND YOU GET A JOB and everyone was like um hell yeah I’m gonna quit my $40k/yr corporate job and go do real estate for triple the money.

The great thing about working with your friends is that you get to work with your friends! Shit got REALLY FUCKING FUN. It was like a party every day. We were all making money and having a blast. But I’ll talk about the problems of hiring friends later.

We were all gas no brakes, just grow and figure it out as we go. No systems, processes.

2016: 45 people, 4.8m revenue.

We hired another 20 people and grew again. Negotiated deals took off. We were leasing 20-30 units at a time at discounted rates, all from social media.

I was working 80hr weeks and was exhausted, so I hired an assistant who ended up being a game changer hire. She would watch me work, ask me what I was doing and then say “I can do that”. I’m like, you can? Oh! Within a month or so she was running a team underneath her. That freed up my time to focus on hiring more agents.

Oh hello, issues! Customer service started declining. People weren’t following up with their leads, all anecdotal of course because we had no system to track.

My gut said it was time for a CRM because passing out leads via email wasn’t cutting it. It was a mess.

We implemented Zoho as a CRM at the end of the year (before this we were passing out leads just directly to email). This would prepare us for scale.

2017: 100 people, $10m revenue

Hired another 30 people. Launched another market in Texas.

SO MANY OPERATIONAL ISSUES. EVERYTHING IS ON FIRE. WE NEED PROCESS, STRUCTURE, WE NEED AN ORG CHART, WE NEED ACCOUNTING?!?! Still running a $10m business on a spreadsheet.

Read the book “Traction” by Gino Wickman.

Promoted an agent to operations. PRO - he was a killer, working around the clock to help us implement everything in the Traction book. Pushed the business forward and created regular cadence for our leadership meetings.

(MISTAKE) Titled him Vice President with zero Vice President experience. Because I don’t fucking care about titles, I only care about how much I’m paying. Well, that came back to bite me later when people want their pay to match their title.

The hardest lesson I’ve learned in leadership is to be honest with people about their growth and if you believe they won’t be able to get you to the next level, have a REAL and TRUTHFUL conversation. This is hard. Especially if you only have the budget for 1 person and the one you have isn’t able to accelerate the company. I fucked this up many times in my career. I wanted people to like me, but it did the opposite. I was an inexperienced leader who just kept hiring over people because I was afraid to be real. What got you here won’t get you there. I knew that, but I was too afraid to say the hard things. I wish I learned this lesson earlier.

Also hired a fractional CFO company. They tried to move us to accrual, but I didn’t understand it so we stuck to cash.

Started to slowly put systems and process in place.

TRIED to put accountability in place for the agents, everyone freaked out thinking they were all going to get fired so we took it away. Big mistake.

2018: 120 people and $13m revenue

Had to calm down on growth and figure out what the hell we were doing. We hired our first outside person, a Director of Sales. He was a game changer for allowing me to focus on growth while he focused on the sales team.

Remember back when I hired my friends? It was all fun and games till you actually have to manage them. Or fire them.

Most of my friends quit or were fired, and I lost them as friends. My inexperience as a business leader caused me lose people I cared about. It was an emotional year, but it was then that I realized I needed outside help.

So I joined Vistage and EO (networking groups for entrepreneurs). This was A GAME CHANGER. I learned so much from other business owners. Before this, I had no real mentors who were in their businesses every day. And I had no real working experience in leadership since I started this business so young.

We tried again to implement accountability but the agents all freaked out so we took it away, AGAIN. Still no clear accountability.

Implemented Net Promoter Score to get insight into our customer experience. Turns out it wasn’t great. Zoho was a nightmare, it was over complicated and leads were still falling through the cracks. Agents couldn’t stay organized so we decided to build our own custom CRM. That cost a cool $1.2m. But it set us up for scale.

2019: 100 people and $19m revenue

Remember that custom CRM we built? Well that increased agent revenue per head by 38%. We were CRUSHING it. Growing and hiring people like crazy. Multifamily industry exploded.

I was working nonstop, and I was so deep in the weeds I didn’t have time to focus on the future. My Vistage group said I needed a COO and a CFO. I still didn’t have clear insight into my numbers, but my gut said we were going to have to do a compensation change for the agents. Get ready for this, because this was one of the worst mistakes of my career.

Hired an accounting manager (instead of a CFO, another mistake). Another attempt to get us to accrual accounting, failed. For the record- I was being cheap here, having clear insight into my numbers is one place I wish I wouldn’t have been cheap. This caused me so much pain.

Because I didn’t have clear insight into my numbers, my gut said we needed to be at a lower comp for agents. I was afraid of risk. This fear cost millions and our reputation, and has taken over 18 months to repair. Having clear accounting is rookie shit guys, I know. I really wish I knew this back then.

In November of 2019, we HEAVILY adjusted comp downwards. We lost 30% of our team, which is about what we were expecting. Over the following 5 months, we lost another 30% of our team, resulting in us having to replace 60% of our entire agents. It was rough, and morale was low.

Here’s why we lost so many.

Comp mistake 1: We gave people only 2 weeks to make a decision on whether or not they wanted to stay. This was so dumb on my part. My fear was that they were gonna stop taking care of them and it would hurt the business. That was a poor assumption on my part. People need more time with comp changes to decide if it makes sense for them to stay or to look at the market to see what is out there.

Comp mistake 2: If they chose to stay, they were REQUIRED to sign a contract that forces them to stay until July 1, which is when our “busy” season ends. This was such a huge fuck up. My thoughts were - protect the business and the rest of the team during its busiest season so people don’t just say they’re gonna stay and then leave mid Q2. I thought I was protecting the rest of my employees, but by putting these “shackles” in place, it made things worse. I realized agents were staying at my company because of a contract, not because they wanted to be here. (I later rescinded this contract and apologized, and we still had a majority of people stay through that).

Comp mistake 3: the comp plan itself. In one of our markets, it was backwards. I have no idea why we did it that way. The more you produced, the less money you made per deal. It was dumb. Also, our average agent take home for full time went to $60-80k. I thought that was a really great living for agents who were getting all leads provided, all they had to do was find people apartments. Turns out, there is a lot more variability, which is why we ended up adding back more comp in 2020.

Comp mistake 4: As CEO, I did not announce the comp change myself, my Director of Sales did. My thinking? At some point he has to take full ownership of the sales team. I was at home with my one week old baby, and I knew he could handle this. The perception from my team? That I was too cowardly to announce the plan myself. Is there some truth there? Absolutely. I didn’t learn how to stop shying away from the hard conversations until after I hired my COO. (Will talk about him in a bit, he was a huge role model for me on how to be a better leader)

Fifth and most important mistake: I lost the trust of my team.

Overall, I had to choose whether I wanted the agent role at the company to be an INCREDIBLE opportunity for a few, or a GREAT opportunity for many. I chose the latter. Let me be clear, I would make that same decision again, but I would roll it out so differently, and clear accounting means I could have done a less drastic comp change.

2020: 200 people and $21m revenue

It took me over a year to find my COO and CFO. I had issues hiring “overhead” positions because I thought I could do it all, and I just couldn’t justify spending the amount of money for the position. And these were expensive high level positions that I wasn’t ready for before, but I knew I needed them now that I botched comp so bad. I was an inexperienced leader who needed help to get to the next level.

I finally found two people who spoke about the culture and the people (and not just numbers) and I did everything I could to get them to join the team. I told them that they would have a TON of mess to clean up, and all of it was caused by me.

Over the first 3 months of 2020, morale was rough. New comp, new C level positions, and we also built out our leadership team. A lot of new faces from outside the company, and I had lost trust. We continued to have high turnover.

Then, BOOM. Pandemic hit. Fuck. I was scared shitless. But I’ve learned what damage my fear could do now, so we did the complete opposite of everyone else. We decided to launch 3 new markets in 90 days. It was NUTS, we had sales leaders moving across the country for this company. After the initial lockdown, we had more clients than ever, so we kept hiring and kept growing.

Then my CFO started and he cleaned up our accounting mess. Once I had clear insight into my numbers, he showed me that we could increase comp. I cried out of joy. So we gave some comp back to agents in July. It went well, but we were still earning trust back.

My COO taught me invaluable lessons about facing the hard stuff straight on. So I started talking openly about it. If there is hard feedback, I give it immediately. He made me see how good it is to put the hard stuff out in the open and talk about it in front of the whole company. To be real, and transparent. It is the most important lesson I’ve learned.

And the company is a better place and I am a better human because of it.

We put in SO MUCH STRUCTURE. SO MANY SYSTEMS, SO MANY PROCESSES. Leadership was able to set us up for scale. We focused on our new mantra, “how do we help agents win”. The more our agents crush, the more comp we are able to give back as we gain efficiency.

Lesson? Hire people before you need them. Inexperienced leadership can take down a company, and I am grateful that we didn’t have that fate but easily could have. By the end of 2020 we were slowly earning back the trust of our people.

2021: 530 people, on target for $40m+

We hired 400 people between November and March of 2021, and launched 2 additional markets.

Our agent comp plans now have opportunities for our killer agents to make over $100k, with our top agents are making over $150k/year and we’re hiring another 500 people over the next 12 months.

Lot’s of work to do but grateful to still be growing!