Playing the Long Game: Company Culture | AWV 013

February 14, 2020 0 By Sebastian Fry


Ryan: Three cameras… …. holy [bleep] Alex: So I’m here with Ryan Iwanaga Co-founder of Sereno Group. and I would say a good buddy of mine now after all these years. Ryan: Yeah Alex: So, um… Ryan: For sure One of the things I want to talk about Ryan, today, is just basically about culture. And like I know, I mean, me, being… I wasn’t here at Sereno from day one but I was definitely – One of the reasons that I made my decision to join the Sereno Group, was because of the culture. We are seeing a lot of these companies nowadays kind of pitch that they have a great culture when they’re like year one in being established and stuff like that. And so I just wanna kind of – how you and you know, Trap, and just kind of, are you guys as a company together, how do you guys – what are your thoughts about culture? Ryan: Culture I think I think for us, culture is the most important thing. I think the way that we have tried to build the company is to focus on culture. If the culture is good, then everything else will follow. The success of the brand, the success of agents, the success of the company. I think our philosophy has always been to invest in the long game versus just looking at short term bottom line profit driven decisions, is to cultivate a culture. I think really… the reason why we started Sereno Group was really because, I think, the environment the brokerage culture after the late 90’s and early 2000’s, it had become so corporatized that what those environments were lacking was culture. And, I think, in no matter what industry, people wanna work where they feel good and where they believe in what the company is doing and what it stands for. And, I think because of the consolidation of the industry in the late 90’s, a lot of that had been taken away from the agents. And so, we were kind of a response to that. The Sereno Group was a response to that. So, over the last 12 years, at which you’ve been a very big part of that, you know, culture has always been something that we’ve tried to keep at the forefront, which isn’t always easy, you know? When you grow to a specific size, there are gravitational forces at work that try to pull you more to the business center. Whereas, where we have always found that we do our best stuff, or where we create the most meaning is always pushing the fringes and staying away from center. You know, it’s a constant battle but I think right now as a company we’re really at a good place. Alex: So how many agents does the Sereno Group have now? Ryan: I – We have a little bit over 300 and I want to say 25+ And, we have nine locations from furthest north is here in Palo Alto, furthest south is Willow Glen in San Jose. And then we have three coastal offices in Santa Cruz County. So it’s a pretty big footprint. It’s been good. Alex: Do you have – Are you familiar with Dunbar’s Law? Like, it’s a rule of 150. So basically, if one person the amount of relationships that one person can really have kind of maxes at about at that 150. Do you feel like that’s something that – was there a certain number where you feel like it was … Ryan: Yeah. As a matter of fact, it’s interesting because I wasn’t familiar with Dunbar’s Law, but it makes total sense, because from year probably nine through the present, the one thing that we struggled at as a – the one thing that we struggled with as a company, especially for Chris and I, is scaling out the personability that we had created that was important to our culture. And really what we realized is that the biggest challenge for both Chris and I, is we really love our people and we really want to invest in the personal relationships we have with our people. The company had grown to a certain size where that had become more and more difficult. That’s kind of what the gravitational pull example that I was giving you is that for me, and for Chris, it’s really the relationships. It’s what I enjoyed as an agent and as a co-founder or owner, or whatever I am, that’s what really inspires me, is getting to know people and having relationships with them. We did get to a certain point where that was being challenged on a daily basis. We still haven’t figured it out, but we’re trying to. If anything, that’s the one focus that we have as an organization right now is, how do you maintain the intimacy of culture and the tightness of what I consider a very positive culture as we expand? That’s really what we want to focus on moving forward. Alex: Each one of the offices have their own culture too, right?
Ryan: Yeah. And that’s the good thing is, is that hopefully, every person – every office – every office is a different person all in of itself. The community has a different culture. I think fundamentally all the offices have a baseline similarity and philosophy and belief in cultural vibrancy. Each one has grown differently but it’s still at the baseline, it’s still the same company-wise. I think hopefully what we’ve tried to do is cultivate that local culture enough to where it carries itself. But again, the challenge is that Chris and I, But again, the challenge is that Chris and I,
it’s a pretty big geographic footprint. it’s a pretty big geographic footprint. We wanna be around. We wanna have that personal influence and it’s not always possible. Alex: When you first started off, the first year was what 2000 and-
Ryan: Six. Alex: … six, right? So year one going into it with like, what, 25-30- Ryan: 27. Alex: 27 agents? So Describe the culture then versus – Ryan: Oh it was great. The great thing about that was, that if we ever had a – you know, like a – an idea or somehow a big agenda item corporate agenda. Not corporate agenda, but organizational priority that we wanted to communicate and have permeate through the company, all we had to do is call everybody together and tell them. It was a captive audience because it was under one roof. The challenge becomes when you have 300+ people and you’re trying to communicate a certain cultural philosophy and people are so inundated with emails and texting and social media that it becomes challenging. It’s a bandwidth situation, but… You know, I think for us, when we were a smaller company, we had chances, really. Probably that was one of the smartest things we did is, within the first six months of opening, we had people calling us from different marketplaces, not only in Silicon Valley but also up the peninsula, in East Bay, South Bay, saying, “listen we want – we wanna open up an office, why don’t you come? We have people that want to join.”
And as enticing and as flattering as that was, I think the best decision that Chris and I ever made was the fact that we were trying to figure out what we represented as a company. We had ideas when we recruited the first original 27 people. We had basic ideas of what we stood for. Or what we wanted to stand for as an organization but once you get inside the walls, it becomes a question of, okay, well how do you implement that? We spent the first, probably two or three years, really trying to figure out what that meant. I’m listening to this book right now, Front Sight Focus, by an ex-Navy Seal and one of his rules is, crawl, walk, run. You have to take every … the learning cycle has to happen in that way. Obviously, you can’t run before you know how to crawl or walk. So you have to have the discipline and the patience to focus on what’s needed at that basic level. We could have very easily said, okay we’re gonna open up five offices within the first three years. But I think culturally we would have suffered. We were patient and really diligent about trying to figure out what we stood for. And I think that has served us well as we’ve grown. Alex: So there are good examples of some companies that actually expand fast and quickly. How does the culture suffer? Ryan: Well, I think, you know… The problem with the brokerage culture in the early 2000’s is that, because of the consolidation, one or two companies would come into a local marketplace and buy up all the local brands and then the next day expect everybody who had just been acquired to somehow adopt a new culture. If you – If you don’t honor people’s experience and you expect them to behave in a certain way but they haven’t really had a choice in the matter or they haven’t been able to organically grow that culture, you can’t expect to create a place where they feel appreciated and supported. That’s so, in real estate years, that’s such a long time ago, right? Those companies still exist and the agent today has
no idea what transpired in the late 90’s typically. But that was the lesson that we learned.
Really what we told people when we first opened was – and I think we still believe, I mean I know we still believe it, but what we told people is that our goal isn’t to be the biggest brand
in the fastest amount of time. I think the the corporate mindset not only in our industry but other industries is always, we wanna grow. Growth is good. You see smaller companies always tout that they’ve been
recognized by the INC. Inc Magazine as one of the 500 fastest growing companies. To me, that doesn’t necessarily mean that’s a good thing. What I wanna know is, are your people happy?
Is it an environment where people come to work and they feel positive? Or are you growing just for growth’s sake? Are you growing organically, or is it sort of … if the corporate agenda is to grow and get big and do whatever,
I just wonder what the quality … at some point you have to shed aspects of your culture and the quality of that experience for the sake of growing. Alex: Right. So you can’t have both in your- I think you can have both but you have to temper it with making sure that you’re always returning to the why of the culture, you know. If your why is just to grow, that just kind of creates a different culture and it attracts different people. We just wanted to create the why of just good quality real estate experience and that’s really, hopefully what’s happened. Alex: Yeah. You said earlier, the word, honor, when bringing a whole bunch of people together that haven’t had the chance to … if they don’t have time to spend with each other yet and understand each other and have that relationship and know how each of the people work, then it’s really hard to honor whatever the –
Ryan: That’s right. Think one thing that we’ve always been proud of is, the one thing that we always appreciate is, Chris and I, we definitely are 100% clear that we don’t know a whole lot. A lot of the things that have been created that have served the growth of the culture and have served the … have created significance within the company, say,
for instance, the 1% For Good program, those things were all agent driven. Those were people coming to us and saying, look I have this idea. And Chris and I being smart enough to say, let’s run with it. Let’s check it out. Let’s try it. As opposed to … I think – I think the challenge of any large corporate culture is that it actually, in order to keep the whole structure stable, you can’t actually … you lose nimbleness. So when people want to change or bring in something new or challenges the convention, what happens is that the the balance of whatever the structure is, becomes – there’s a threat that it might actually throw things off balance. For us, it’s the imbalance that actually creates the new discovery of whatever that next thing would be. That’s really what excites both of us really, is that change, the constant change.
Alex: That’s interesting because, now in the real estate industry itself right now, we’re seeing that kind of somewhat imbalance. In this industry it’s always been really somewhat archaic in terms of being set in their ways.
Ryan: Somewhat, yeah. Alex: And now we have a new guard or a new group of people or companies, or disruptors, or whatever, trying to kind of change it.
Change it and make things a little bit more, change things up basically. Ryan: Yeah and you know – it’s funny because I’ve given it much thought. I mean, when I got into the business in ’97, we thought that – the Affinity brands or the Affinity movement where you had Costco offering real estate services or USAA, you know, we thought that was sort of the beginning of the end. And then it was. Well it was, but then Yahoo started publishing property, there was a big uproar. And that was a significant shift in our business. And so, we’ve always believed that the industry is under constant threat. And I think that in and of itself, that’s true, but again, as like Leanna said at today’s meeting, I think the one thing that technology cannot replace is the person at the kitchen table who’s with the husband and a wife, making a very big decision on, you know, a pretty significant change in their life or taking on a greater risk by purchasing a home, or you know, technology can’t bridge that human interaction and that value. Right? And, I think up until someone figures out how that happens, I don’t know if there’s really gonna be a disruption. Chris has actually been thinking about this as well, and you know, he believes that really the disruption is happening within our industry. You know, maybe this might be too negative for this but… Alex: No go for it man. Ryan: But just the cannibalization of our business, right? Like, You know, we’ve always believed in quality agents, thoughtful growth, you know, just being very careful about what we represent in the industry. And you know, I don’t mind that there’s a low barrier of entry into our business, because I think it’s great. Every agent on day one has the same opportunity as everybody else and I love that. But I think the brokerage community has to take a greater responsibility in training those people and making sure that they understand that, you know, this is a – this business is noble business. It is a hard business. It takes honesty and hard work and commitment. And I think that we do ourselves a disservice as a brokerage community when we don’t instill that in our agents. When we just hire people, you know, not really understanding whether they’re going to be successful or not. Just throwing them up against the wall and seeing who sticks. That’s not how you build a reputable industry. Right? I’ve always said this that I don’t need a haircut now, but when I’m not shaving my head, I go to my barber. He’s my buddy and you know, I talk to him and he had to take 1500 hours and go to barber school every day for 8 hours for a whole year before he could actually… then study for the state exams – And then, because he’s got a license, he can charge me $35 for haircut. Right? He’s taken a whole year out of his life. Alex: 1500 hours. Ryan: Yeah, 1500 hours. With real estate, you can get your principal’s license and take your … within three months really, or within six months without any real schooling. And the moment you get your license, technically you’re qualified to go sell a 20 million dollar house. But do you have the baseline knowledge and the expertise to do that? No you – I would venture to say no – you know. And so that has always really struck me as a bitter irony in our industry right? is that – why don’t we have higher barriers of entry? I’m all for opportunity. I don’t ever want to say that one person can’t do it. But I think as an industry we do ourselves a disservice if we don’t invest in our people and make sure that they understand the importance of what we’re doing. Alex: Warren Buffet does a series on CNBC, and they interviewed him about, you know – because he’s investing in various real estate – real estate spaces and companies within the real estate space, and he’s like, “Are you concerned with the Redfins or the discounters?” and he said, “No.” He said, “Because it’s all about this… I mean, personal relationship.” Right? And so, if you have the agents that can understand that and know how to do that and get better at it and be at the top of their game … but it does seem like there is some consolidation of the really, really good agents to become larger teams or brokerages or whatever you call it. And – a lot of the other ones- Ryan: And I think that has a lot to do with it. If you look at it statistically, there, I think, and this was, I read reports years back, but they said that the pie of business would become smaller and the proportion of agents who actually had pieces out of that pie would shrink. And it really would, the quality of agent would be … you know, very rarely do you see a transactional based agent versus a relationship, someone who is interested in creating the relationship. Right? You have some agents who are just focused on transaction. They don’t really develop relationships with their clients. But you have, really the agents that I think are around for the long run whose focus is, yeah, let’s do the business but let’s develop the relationship because that’s where the value of kind of, the experience is, right? Alex: Absolutely. Ryan: And so, I think that more and more, as the business and industry becomes more and more competitive, that quality of client experience is going to be the point of differentiation. It’s not gonna be the number of transactions. It’s gonna be how the agent interacts within the transaction and the value that agent brings, not only in knowledge but you know, a lot of what we do, it has to do with easing fear and reading relationships and balancing the different struggles that go on within the relationship or the psychology of the buyer, the seller you know, trying to figure all of that out. If you’re just focused on the transaction, you’re gonna miss a lot of that. And through my years of dealing with you know, clients who are not satisfied with their experience, it’s ultimately, you know, 99.99% of the time, what it boils down to, is they just don’t feel heard. Right? And so the agent has missed… kind of, clues as to what they want. And they’re so focused on what their agenda is- Alex: What they want. Ryan: What they want and basically all it takes is taking a moment, a breath, and listening and acknowledging. Okay, this is what they want. This is what we’ll do. So… Alex: Well, Ryan, thanks man. Ryan: Yeah man. Cool. Peace. Thanks man. Alex: Appreciate it. Ryan: Hopefully I didn’t suck. Alex: That was fire man. That was all fire.