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“If you could mix together what you’re passionate about with your purpose, then you're in the right space, you won’t leave.” — Ron Lovett
Building a successful brand requires deliberate strategizing and careful planning. The same can be said of making an impact in the affordable housing industry. Through his company, VIDA, today’s guest, Ron Lovett, is taking giant leaps in providing quality, affordable housing for those in need whilst his company’s brand is fast becoming a community favourite. Ron made the unlikely transition from securities to rental housing, failing many times along the way and using those lessons learned to forge a powerful business model of undeniable longevity. VIDA innovated four pillars which they use as guidelines to revolutionize affordable communities, and Ron explains why he is not fazed by inflation, why he’s chosen to double down on upskilling the community, how he makes the gig economy work for his business, and the unconventional methods VIDA uses to grow its brand. To find out how centralization and decentralization can be used in harmony, and why company culture is the only thing that matters, tune in now!
Key Points From This Episode:
Links Mentioned in Today’s Episode:
RL: “The vision behind VIDA is providing an affordable, safe, clean place where people are proud to live, and help them get ahead in life.”
[0:00:09.0] ANNOUNCER: Hello and welcome to Sync or Swim, a weekly podcast brought to you by Rentsync, where we take a deep dive into the PropTech, multi-family, and rental housing industry. In each episode, we uncover the technologies and strategies used to help overcome operational challenges and increase the value of your multi-family investments. So let’s get into our conversation today.
[0:00:33.0] MH: All right, welcome back to another episode of Sync or Swim. I’m your host today, Matt Hildebrand, marketing manager here at Rentync. Joining us today is Ron Lovett, Founder and Chief Community Officer at VIDA. VIDA has over 2,000 units across Nova Scotia, New Brunswick, and Manitoba, and is raising the standard of attainable rental accommodation in Canada. Ron, thank you so much for joining us today.
[0:00:54.5] RL: Thanks for having me, excited to jump into a thoughtful conversation.
[0:00:59.1] MH: Likewise. So for those unfamiliar with Ron, he’s an entrepreneur, an author, and even hosts a podcast of his own, Scaling Culture with Ron Lovett. So before we get into some of our topics today, Ron, I know a bit about your story and your journey, but why don’t you let the listeners know a bit about yourself, your past experience and really, what led you to found VIDA?
[0:01:21.5] RL: Sure, yeah and I have to say, the podcast title is a little intimidating and like, am I going to be in the—you classify your speakers as you’re sinking or you’re swimming? How does that work or is this just a fun title?
[0:01:31.7] MH: We’ll grade you at the end.
[0:01:32.8] RL: Graded me? Okay, good. Well, I hope I’m not sinking. So yeah, look, born and raised in Halifax, Novi Scotia, one of the best places in the world. For those listening, if you haven’t visited Halifax, put it on your bucket list. I guess, a bit of a serial entrepreneur, and what I mean by that is I was just in a bunch of different businesses. So my initial business was physical guarding.
So I started doing nightclubs here in Halifax when I was 21, I used to run most of the night clubs, 80, 90% of the night clubs here. Got into festivals, concerts at the same point, opened Halifax’s first bring-your-own-bottle-of-wine restaurant called Milano’s, and then next opened up a restaurant called Noodle Nook. It was like a bento, take out noodle place. I also had a construction company.
So I was really all over the map and I’ll say, just all over the map as far as my entrepreneur career was going and very unfocused. And I paid for that by the way, because I certainly wasn’t well capitalized. So I was spread very thin and I was doing a bunch of things not very well and that was challenging, and I think that showed up because I was so unfocused.
So what I mean by that is none of the businesses were doing that great, and then I hit a low point where the security business really started to struggle and I ended up winding down and selling off the other businesses and refocusing on the security company. That was quite helpful but it was still challenging. It’s still within the—so it’s interesting. I was unfocused outside of the business but then even when I had one business, I was unfocused within the business.
And what I mean by that is, I could be on tour with Jay-Z or providing security for Nicole Kidman for Toronto Film Fest, or we could do the Rolling Stones concert in Mount Wood with 400 security guards, or do security for a high school dance, or a Starbucks window broke, we’d send a guard over. So just very unfocused and that also, I paid for that in 2015, maybe mid-14. I lost a million dollars, I was the sole shareholder.
I was underwater about a million bucks, very stressful time. You know, I was lucky I hit a big question. That big question to me at the time was, “What if I had to restart the private security industry?” and that was a great question. That allowed me to go back to the drawing board, start from scratch and the two things that came out of that, Matt, were, “Could I create real culture in a command and control environment?” Where it was command and control, you know, old culture.
There wasn’t really any robust or progressive cultures in private security, so that was one thing. And the second was, “Could I decentralize, move all the mid-level management out where all of the decisions went to die and could I push all the decisions down to front lines?” Anyways, that really helped. I turned the company around, we grew 60% two years in a row, and then in the next for a 24 times multiple to a California company.
So that was great, I had my first child at this time. I wrote a book, 2018 called Outrageous Empowerment: The Incredible Story of Giving Employees Their Brains Back, not that they didn’t have brains but the industry had kind of taken it from them, and we were looking to give it back to everybody or tap into their collective brain power, which worked well. So from there and by the way, I have three kids now.
So I’ve got three kids under six, Georgia is now six years old. So I took a year and was trying to figure out what to do. And I was just telling the story over a coffee, every entrepreneur and advisor told me to not do anything for two years. Just sit tight, hold your money to do whatever you’re going to do. Think, but don’t do anything for two years. And then, there was a hundred unit portfolio that came up in Halifax in a very challenging area, these were condemned buildings.
Some of these were completely vacant, police had condemned them or the Halifax region municipality with the police just got everybody out, and so BEMO had the debt. I was going to take these hundred units over and was going to be really challenging turning them around, and it was a complex deal and I went to one of my mentors and I said, “Hey.” This guy, John Risley, fantastic guy.
If you haven’t heard of John, you should Google him. And John said to me, I said, “John, everyone says not to do a deal for two years, don’t do anything for two years.” And John said, “I don’t agree.” He said, “I think the best time to do a deal is when you don’t need to do a deal.” And what he meant by that is once you’re in a business, there’s pressure to grow the business.
There’s pressure to get more customers with terms you don’t like. But without having any business, you could get the terms you wanted and it could work for you. So I really liked that advice and I went ahead and acquired that hundred units, started to pilot things that I thought would be helpful because when I looked at the sector, I really saw three ownership groups.
I saw slum lords who I bought this from, I saw entrepreneurs and small families that were good people, kept their word, good operators but not innovative, no real strategy and no data-driven decisions. And then I saw institutional owners and publicly traded companies that in most cases, third-party the management, but because of the pressure from shareholders in most cases, would just say, “Hey, drive rents up as high as you can.” And the strategy was yeah, drive rent as high as you can and lower cost as much as possible.
So I thought, “You go back to that book, the blue ocean strategy, can you find that blue ocean?” and I thought, “Maybe it’s there, maybe it’s right there where we’ll go in and just stay in workforce housing.” I didn’t see anyone own that at this point and create a brand around it and really connect with those customers to create a sense of belonging and community that nobody was doing, and then I wanted to create a brand and the VIDA brand was born, which is the Spanish word for lifetime. So, I’ve been doing that for just over four years and we’re having a ball.
[0:07:06.7] MH: A lot to unpack there, kind of buried the lead there, love to have you back on and talk about your experiences with Jay Z and Nicole Kidman, but we’re in a multi-family so keeping on VIDA there. Kind of answered one of my questions I had and that was, what brought you to this industry? Probably one of the only people I’ve met that’s gone from securities to rental housing.
So really, it was that opportunity, like you said, that came about and you seize that, other than was there anything passionate, sorry, go ahead.
[0:07:36.7] RL: Well, I just was going to say, there are two other things that connected me to what I’ll call workforce housing, that affordable sector. Because it really, we’re talking about the 70s, 80s, early 90s, wood frame buildings from four storey, 12 to a hundred units, let’s call it. And when I was leaving the security industry, two things, I had also asked the same question in workforce housing like, “What if you had to restart this industry from scratch?”
And that allowed me to look back to the blue ocean, connect to the customers, connect to the community, that was the answer for me. And then also, what made it easier was, I was reading a book, it was a coauthor with Jim Collins, I forget the name of the book but essentially, it was talking about this concept of P Squared and if you could mix together what you’re passionate about and your purpose, then you're in the right space, you won’t leave. And so I know at that point that I was passionate about flipping an industry on its head.
We were doing that in private security with decentralization culture, that was very different, and I thought, “This industry’s prime for that. We could do everything different.” Because it’s stale, it’s old. And the second piece is I’m passionate about helping people. I really love to fight for the underdog, help them get ahead and I thought, “Yeah, these things are coming together.” It felt really right for chapter two for me and yeah, I haven’t looked back since.
[0:09:00.2] MH: That’s great. Now, I’m going to ask you a little bit later on about maybe some of your expansion plans, but did you really set out, I know you’ve grown out less a little bit as we speak now, was your goal to really keep it local? You felt passionate about that specific industry or did you really look at it as a whole Canadian issue?
[0:09:20.6] RL: Well, you know, interesting, I see it as a global issue and I saw this as a global company. You know, at first BHAG by 2027 was we’ll hit 10,000 units but that’s—I’m sure that this company will have hundreds of thousands of units and I’m very confident it will be a global brand, and so I didn’t just see this as a Canadian problem and there’s no questions about Winnipeg. It was not in our backyard and I still debate this with people.
We’ve got assets there and it’s tougher. It’s tougher, it’s a tougher market than the east coast. It’s got higher vacancy, tougher social economic problems. It’s got a lot more challenging regulations with the tenancy board and resident tenancy act but to me, I look at that market and this is my answer to why we expanded there, it reminds me of back in the day and I’ll come back to Winnipeg.
But it reminds me of when I expanded the security company. We went from Halifax to literally Vancouver before Toronto and I was like, “Why did you do that?” Different business culture, time zone changes, all these things , and I always thought, “If I can get Vancouver right, then everything else gets easier.” And so we looked at that as Winnipeg and it’s more challenging. And lately, we’ve had to put more focus on that market.
I always think, “If we can’t get that market right, then we have no business to be a global company.” And so we’re not going to fail, we’ll get it right. So I’d taken the tough stuff. Look, it could be draining sometimes, it’s two steps forward, three steps back, but we learned a lot. You learn, and I’ve learned this in business, you get lazy when things are good. You can’t afford to be lazy when things are tough and so you can’t be lazy in Winnipeg.
You get lazy and it shows up pretty quickly. We’ve been hit a few times and you can’t take things for granted, you need to work for it and that’s okay. I think that’s how you build a great company.
[0:11:05.8] MH: I love that, taking on the challenges there and really, you touched on a few other things I’d love to get into, decentralization, building a brand but keeping on VIDA just for a little bit more, I think it will segue into it. VIDA’s purpose is really to revolutionize affordable communities. Why don’t you take us a little bit through VIDA’s innovative model, the four pillars, and how they help achieve this goal?
[0:11:30.1] RL: Yeah, sure. As a company, we have core values but we have pillars in the business. So our pillars, these were created through pilots in the early stages of what was critically important to this customer. The missing middle, I’ll call it, and the four things that seem to be quite important outside of affordability. So okay, fine, if you’re going to be affordable to that customer, which to us is 20 to 30% under market.
So four things, you need safety and security is critical because people will not have confidence where they live, so that’s one of the pillars. Cleanliness, if your building’s not clean inside out, they will not have a sense of pride, it needs to be clean. The next was community, that one is very broad, we do a few things by community. The most challenging thing we do is actually being very innovative and creative on the space inside that building.
Because for those who are listening, you know that a 12 unit or 20 unit wood frame building doesn’t have a bowling alley and a movie theater and a pool. So we do need to be creative and so there’s storage in the basement, we’ll get rid of that and we’ll put a gym down there. We’ll convert a one bedroom to a bachelor to put a common area in. So we have to be very creative.
If there’s extra room and it’s not a fire hazard on the third floor, we’ll put a working station and a library with a book exchange. So very creative on that and then, add the things to build community too. Community events and things like that, which are very important. We have lots of community partners. This also goes to opportunity, providing discounts to our customers, and opportunity is the last pillar.
That sounds unorthodox but is. I had done in my last business, when I remove the mid-level management, we started to, what I called, in source small projects to security guards. So if someone in the accounting department was being bogged down through bank racks, we would outsource that or insource, sorry, to an ex-CFO that was from India, that was working for us in Barnaby BC, just pressing a button, letting trucks in a large facility all day.
What a horrible use of their time and brain, not time maybe, but brain and so, we’re running the same playbook with our customers. So in the opportunity side, we give our customers first right of refusal on small repair maintenance projects as well as company projects. They get involved with VIDA, Robert Afari, if you’re listening, we’re really excited to have you onboard. Robert, who we just hired in a full-time sales role.
He was one of our customers, he had done some projects for us and done some video, he’s really creative individual and we went to market with the sales role. And so one of our customer’s coming on to work for us full-time, and that’s not the first time this has happened. We have few people in the office that started off doing projects and now at a full-time job. So the end of the day, the idea, the vision behind VIDA is providing an affordable, safe, clean place where people are proud to live and help them get ahead in life, and you can do that.
You can do that through opportunity, community, and sense of belonging, and it’s fine. Look, it’s not easy, we have some tough days. We’re an uncharted territory, so we’re not following a playbook. There’s all kinds of books on how to manage real estate, do property management, and not with what we’re doing. We start from pilot stage and make mistakes. We refine and get it right then move.
[0:14:52.1] MH: Especially after the year we had 2022, recording this January 13 so, a new year is trying to put 2022 behind us. So yeah, definitely roller coaster of a year. Going off of what you just said there about empowering and giving some of your residence jobs, inflation has been a hopped on subject over the past few months.
I know within your business model, you just touched on, you really add value to your house by improving curb appeal, security, common areas like you just mentioned. You don’t really strip down to the studs.
[0:15:25.4] RL: Yeah.
[0:15:26.2] MH: So what are some ways really VIDA has combatted inflation, and has anything had to shift within your existing model?
[0:15:34.8] RL: Yeah, great question. So a few things. One, I‘ll say, being an impact brand, we’re the S in the ESG, you can gain some leverage. We get some discounts and deals that companies with large rates don’t get, and it’s because we’re not just capitalists, we’re not a non-profit, we’re for profit but doing the right thing for the customer. People can really get behind that. And we’ll help tell their story and how they’ve impacted the customer, and so that’s one piece that has been helpful to us.
The second piece really, it’s interesting. So in our application process, we ask people, “What are your hard and soft skills?” “I am a painter and I like to do customer service calls.” But with our business, we get that information when someone comes in through the VIDA platform, but if you think about how quickly we’ve scaled, we acquire customers, and so we don’t have that information. So we try our best to get it but it’s not black and white for us.
And so what we started to do to combat inflation and two things, we started to move some roles in-house, right? So obviously you have some volume, you start to bring some of these rules in-house, you analyze your financial information and say, “Wow, we think we could be more efficient, it’s going to have a lower cost.” So, we just brought on a gentleman by the name Patrick Alakis, he just joined us.
He used to work security for me, now he’s actually our security manager and he’ll manage our security program, so that’s exciting and we’re now starting to run skill building programs to create what we’re calling community contractors. So I’m just going to pick on painting because it’s probably the most common RNM item in our PNL, and so from a repair maintenance standpoint, just painting.
We do it more than anything and so let’s just say that a contractor’s going to charge us a thousand dollars to paint out one bedroom. Well, we’ll tap into the community and now, from a skill building standpoint, we’ll actually, we’re creating courses which is face-to-face, as well as some online content to create what we’re calling community contractor, where people would be approved by our skill building team to come in and paint, and we’ll get that for 65 cents on the dollar and the customer who is doing that is quite happy as well.
We’re recycling capital, whether they’re putting that money towards a vacation, car payment, rent, it doesn’t matter. They will do this on the side, on the weekends or after hours and so that’s going quite well. We’re really building that out now, which is exciting to me because we can build skills for emergency things that just get in people’s way or the common repair maintenance projects that happens.
So it’s really exciting, you’ll be able to take a new immigrant, provide that type of training for them because there’s a lack of skills and a lack of contractors in some cases, whether it’s a single parent or an elderly person looking to get back on the workforce, and so it’s great. We are going to double down on that strategy whether inflation continues or not.
[0:18:30.3] MH: So now all these people are certified, licensed, that’s how you're mitigating risk with some of these things. Because I can hear people thinking, “What if they fall? What if —” Whose responsibility is that? Or do you need boots on the ground to keep an eye on these people?
[0:18:44.0] RL: Yeah, so look, we check and balance. They’re not light from a compliance standpoint, maybe in the US there’s a place like this but here in Canada, you need to be a licensed painter or to put caulking on a base board because a lot of these things, we use third-party contractors to lay floors and do different things, redo a kitchen or update kitchen cupboards. We aren’t using—you’ve got some liability. We certainly don’t use this for repairing roofs or changing bathtubs or windows, right?
[0:19:10.6] MH: Sure.
[0:19:10.3] RL: So if there’s safety and warranty, we’re quite careful and we use third-party contractors but yeah, like people would look at that and say, “Yeah, can’t someone slip and fall in their penny?” Yes, they can. We do treat it as a third-party contractor. So no different than, I guess my question to you Matt is, if you needed someone to paint your garage, you went on Facebook and people suggested three or four people that can do it, you’re probably not even going to the stage like we are, which is having them sign some paperwork to take responsibility and make sure that they claim their own income for CRA, et cetera.
You’re probably just having to go in and you’re going to need to transfer them some cash, right? So that’s essentially, we’ve taken that gig economy model but formalizing and creating processes around it to protect the business.
[0:19:51.2] MH: I love it and like you said, you are doubling down on it, so it is part of your expansion plans. Do you see this plan also working in other markets? Strong in Vancouver, it’s going to be part of your core business model moving forward?
[0:20:03.4] RL: I don’t know if someone could convince me that this wouldn’t work globally. I got back from Nigeria just over a month ago and we were looking at some stuff in Abuja. You couldn’t convince me it wouldn’t work there, as far as skill building and helping people. Then if you think about it, you live in the building, you’ve painted a unit, you’re proud of the work you’ve done.
You have a sense of pride, sense of ownership, a new customer moves in, you’re going to be like, “Hey Matt, it’s Ron. I don’t know if you knew this but I painted your unit. Did you like it?” It’s a conversation that we go have a coffee. There is all of these things that happen from that outside of the transaction of “I got paid to paint your unit.”
[0:20:40.0] ANNOUNCER: Like what you hear so far? Make sure you never miss an episode by clicking the subscribe button now. This podcast is made possible by listeners like you. Thank you for your support. Now, let’s get back to the show.
[0:20:54.2] MH: You mentioned something a little bit earlier, how you get this customer data through the VIDA platform but when you acquire buildings, there is a bit of a data hold there.
[0:21:04.2] RL: Yeah.
[0:21:04.7] MH: How have you found that the VIDA brand, and we’re talking about brands, has really resonated in the area? And you are almost seeing residents excited that it is now a VIDA building, and are jumping two feet in the air, or are you still working towards that?
[0:21:17.1] RL: Yeah, it’s a great question but I don’t have a single answer. So I’ll say this, we have an incredible lady by the name of Sandra Wilson. She’s a building ambassador at one of our buildings but she also helps us in the office with accounts receivable. She started as we acquired her building. She was a customer, became building ambassador, then did some small projects. Now she’s full-time. One of those great stories.
Anyhow, I go back to a story of when I was touring the building and she was the superintendent of the building. We walked in, of course, she pretended like we’re the insurance company because nobody wants to say it’s for sale. I walked it and she just – her eyes and her eyes lit up and she had a smile ear to ear. She had read some media stuff and was like, “Ah, VIDA bought it, this is great,” and she was really excited.
Now, that was probably because of some research she had done. The brand is still growing, so I think in some cases, people are quite excited. Other people don’t give a damn, they just don’t care. In some new markets, it’s going to take us longer. I’ll go back to Winnipeg, the brand is not as strong as it is here. We haven’t had the same media attention, you know? We, our strategy is media and turn customers into fans.
People know this business, they know that it’s landlord versus tenant and it’s unfortunate. We started with business and customer, moving towards co-stakeholders that are in this thing together and creating fans for marketing purposes. So that takes some time. As we expand that, that is going to continue to be a challenge for us to continue to strategize, say, “How do we get the brand out there as fast as we can?”
“How do we get the message to these acquired customers about who we are as fast as we can?” And yeah, we’ll keep working on it.
[0:22:59.9] MH: I don’t want you to give away any company secrets but what are some of the steps you’ve been taking to grow that brand, maybe outside of your conventional social media, things like that?
[0:23:08.8] RL: Yeah, so look, we do three things from a marketing standpoint. It’s when with the media, get out there and get the media to tell our story, customers into fans, which is really critical and just telling our story.
So one of the best strategies we have is one called newsjacking. Essentially, what will happen is if there’s a story that hits and someone has written a story about how a customer in a workforce housing asset was mistreated or there is a major lack of security, and this happened, if it is something that we do the opposite or that our business solves, we’ll reach out to the reporter and say, “Hey, great story Matt.”
“We read your story and loved that story. We actually solved that problem and we think your readers will like to hear about that.” And boom, we will hijack. It’s called newsjacking. David Meerman Scott was a great marketer in the US, coined this. And I learned it from him and will jack the story and then sometimes, another media outlet will pick that up and they’ll say, “Oh” they’ll read from – you know what’s happened.
You go online right now and you are reading the same article in 15 different news places, right? So they just keep taking the story, ours. We don’t get that type of attention sometimes but we certainly will have other media outlets pick it up. So that’s been quite helpful. That newsjacking really gets us some media attention and that’s helpful.
[0:24:32.7] MH: I love that, newsjacking. I haven’t heard that term.
[0:24:35.6] RL: Yeah.
[0:24:36.5] MH: Exactly, but it sounds quite interesting. I might have to jack it for Rentsync.
[0:24:40.9] RL: There you go, you should be thinking about that.
[0:24:43.0] MH: So going back a little bit there, you talked about the idea of empowering brand ambassadors, scaling, building culture, building a brand as you expand, just to go behind the office store for a minute. How are you approaching the challenge of centralization, decentralization? I know you touched on your security business there of decentralizing and it brought in lots of success for you.
Are you approaching that as the brand is growing, as the business is growing, as you are bringing on more employees and building ambassador? How are you really looking at that idea of centralization versus decentralization?
[0:25:21.9] RL: Yeah. So constantly looking at different processes, and are we ready? We’ll sometimes build something from a centralized standpoint and then decentralize it. But in a perfect world, everything will be decentralized, but we’ll build the system with the right stakeholders. So we build it with the frontlines to make sure it works for them, they’re the real customer here.
So we build the framework, the support, the checks and balance, the training, and then we push it out to the frontline. So a great example of that would be our building ambassadors, in some cases either we find another customer that will clean the building or the building ambassador do it themselves. And so when we first started the business from a centralized standpoint, we either provided them the cleaning supply.
They had to come pick it up or sometimes we would ship it to them and here is what we would give them and really, this was getting too clunky with. Some people have cars, some people that didn’t, some people had cash to buy some stuff and some people didn’t, they were buying different products, all over the map. So we now drop ship through Amazon. It’s just we, there’s these eight items and they can drop ship and it sends to them directly.
So we have a relationship with Amazon, we pick the products, we procure the products, we tell them what the products are, we have training about how to use everything through our VIDA university, but they can order direct and so we’re out of the way and so that’s a great example. I think about this all the time when it comes to building supplies. I think a lot of companies, they scale and they say, “Oh, it’s time to look internationally.”
“We are going to start buying our paint from China” or “We’re going to buy our hardwood floors from —” wherever, or laminate, but that comes with other problems. You do that, you have to store it, you’re kind of an asset manager now. You need to have vehicles to ship it, you need a warehouse to keep the inventory. It causes other problems and sometimes you don’t see it first glance. So we also like to support local business.
So from a decentralized standpoint, we’ve said, “Look, we’d rather our folks locally have a relationship with the local hardware store,” And they get a phone call from Larry, the sales person on Thursday to say that laminate floors are on sale, it’s the last box. We also know that our customers don’t care. Man, if you and I are neighbors in one of our units and we meet in the hallway and I come over to your place for coffee and you come over to my place the next day for coffee and your laminate is dark brown and mine is a lighter color, no one gives a shit. They just don’t care.
I think we get caught into what aspects of the brand are really important, like a sign, that is quite important. You want to be pretty consistent with the brand and the sign outside the building but do you need that for the floors inside? By the way, I understand that developers, value adders, they’re buying stuff in bulk and that strategy works for some. It’s just not working for us and so we’ve taken a different approach.
So, we don’t have to worry, we give the local folks the autonomy to make those decisions, build those relationship, support the local businesses, and it’s working for us. We’re going to keep doing that.
[0:28:20.5] MH: Well Ron, I’ve got a bit of a loaded question coming up for you here. Like I said, we’re recording this January 13th. 2022 was an interesting year for the rental industry and nobody saw a demand hit all-time highs in early 2022. We saw interest rates spike in late 2022 with VIDA having not your conventional model, maybe take us through a little bit about how VIDA navigated the past year? And I know you’re newer to the industry, did you learn anything, what are your takeaways?
[0:28:51.1] RL: Yeah, I guess high, high level because I haven’t been through a cycle and I am new to the industry. I have more questions than I have answers. You know, I was really lucky because when all of this was starting to happen, I was on paternity leave. I know that sounds crazy, to take five months off, I took five months off with my daughter, Margo, from April to September, but it was probably the best thing for the business and for me.
What I mean by that is because I was home with my daughter, I wasn’t in the office, I wasn’t in meetings, but she was napping twice a day and I would just call really smart people and say, “What are you thinking? What are you hearing? What are you seeing?” And that was, I was really educated. I got to get a very broad spectrum of what was going on. What I was seeing is during that time, all these changes can be noise, right?
They can be noise and you turn focus onto a lot of that noise. “Oh, what are rates going to be?” that’s just crystal ball questions. They are actually stupid questions in some cases because you don’t have the answer. I don’t care how smart someone is, they don’t have the answer either. And I think we would get caught sometimes debating these things and we say, “Look, let’s just get all of these…”
The question for us became, “Are you going to take out now or hold onto your cheaper debt before you refi at a higher rate?” Blah-blah-blah. And I remember talking to some bankers. They said, “Well, the question is, what do you think rates are going to be in two years?” That’s a stupid question. Nobody knows the answer. The question is, the rate as it stands of the CMAC ten-year rate, is the property cash flowing at that rate?
If it is, take the market risk off the table. Take it off the table, move. And so we refined a lot of our assets. We have a very small chunk left to go. So I’d say, those were two things that I thought about. Then the last thing I’ll say is when things like that happen, you see three categories of business owners or real estate owners I guess, whatever you want to call it, in this space. And one, people are panicked.
That is a bad place to be, they’re panicking, they’re freaking out, they make bad decisions. You have another group that don’t really know what’s going on. That could almost be worse than panicking. Panic, you know too much, right? You’ve over thought it, you’re freaking out, you are emotional. Not knowing enough, you’re not asking any questions, “Ah, it’s just business as usual.” No, it’s not. You should be asking lots of questions and thinking about it.
So those two categories is not good. And then the steady, just to be in the middle, just stay the course and keep moving forward with your strategy but understanding what’s going on and strategizing around that, but not panicking and not, not knowing anything.
[0:31:24.1] MH: I love that. I think we are both in that September there at the Toronto Apartment Investment Conference, and you could almost feel the panic in the air.
[0:31:32.5] RL: Right.
[0:31:33.0] MH: That some people, people are watching their phone waiting to see what the next interest rate hike was, not collaborating, just panicking and waiting for the shoe to drop.
[0:31:42.2] RL: Yeah, it was interesting. Look, I am still learning a lot about that but I go back to what we talked about earlier, which is what can you do? You can’t do anything about some of that stuff. What can you do, and that is where if you are in the middle, you’re going to focus. Sometimes that’s outside of just refinancing or selling an asset.
That could be what can you do within your business and you know, that we have just talked about some of those strategies of us on our skill building model. So we try to focus on what we can do. We are exploring, potentially creating our own captive insurance. That is something we can do and so I think times like these, if you ran your business especially with the pandemic.
I will actually say during the pandemic because that even created more chaos. People were pivoting, starting, stopping, you name it, but it is an opportunity, right? These times are an opportunity to be thoughtful, get educated, and be very strategic. If you are the same company entering the pandemic as you were towards the end or now, I think you really lost an opportunity in all aspects, your system, your processes, your people, your strategy. It is a great time to go back to the drawing board.
[0:32:53.4] MH: That’s a great segue into my next question there, we want to put 2022 behind us, new year, what are you looking forward to this year? Looking at it like expansion, you just touched on the insurance there. Coming out of this year, what are you excited about for 2023?
[0:33:10.5] RL: Yeah, I think a few things. Excited to double down on strategy on the skill building for sure and systemizing that so we are piloting things. We use some suppliers to help us but really building the internal resources in person or online, very exciting to me. Excited to continue to really strategize and execute and be efficient in markets like Winnipeg. I’m really excited, it’s hard work there and I’m excited about that.
Excited to look at US expansion. There is a few cities we’re looking at, Indianapolis is one of them, and we’ve got a few short listed, starting to look at those cities. Really want to enter the US, still lots more homework to do but been talking to some great capital partners there and excited to expand south of the boarder and continue to grow in Canada. I think there is going to be a huge opportunity for companies like ours.
I think we’re back in the game. When interest rates were at 2% and one of my business partners, really smart guy, Blair Temlin, he said, I called him one day and he said, “You know, the last ten years…” he said, “A lot of people made money in real estate and a lot of smart people made a lot of money. So in the next ten years, smart people will make some money and the others will get wiped off the map.” And I think he’s probably right.
Some people don’t have much of a strategy, you know? So it’s funny, the real estate business is an old, and I’ll call it fairly simple, business. Fix the building, collect the rent. We’ve made it much more complex, but I really enjoy that and that’s us getting to really build stakeholders in these communities and double down, and get to know our customers and add value to those customers.
Because I always say, yeah fine, we’re in real estate, we provide a safe, clean place and a roof over someone’s head. But if we take one more step to the sideline and say, “Well, that’s one thing we do for the customer, what else can we do for the customer?” Then you’re actually not in the real estate business. You are just serving a customer and trying to add value to that customer, and we have to continue to think that broadly and that strategically about it.
[0:35:12.6] MH: We’re closing in on our time here, this has been really insightful. I’m just going to open it up to you, plug anything that VIDA is working on that you might want the listeners to know about or your podcast yourself, an author, anything that you are working on as well, I’ll just open up to you.
[0:35:29.0] RL: Yeah, let me see, you talked about my podcast and look, I won’t plug my books or anything like that but what I will say is I do think no matter what business you’re in, that company culture is the winning strategy. And there’s that saying “culture eats strategy for breakfast,” I actually agree with that. I think that you have to be strategic about your culture and that’s how you win, and business is about finding the right—
If you go back to sports and you compare it to sports, it is about recruiting the best team members and getting them playing well and you win the game of business, and I really believe in that. So as much as I want to build an international brand and company and really impact people’s lives, we can’t do that without having an incredible culture and people that are very committed to what we’re doing.
There’s this quote, “None of us will build great companies, we’ll lead incredible people who will lead companies.” And that’s certainly something I subscribe to. So we’ll just continue to double down on culture. We just came up with an internal survey and asked very progressive questions that most wouldn’t have the cajones to maybe do, which is we’ve asked questions like, “Do you see…” and we debated this but this is a, what do you call?
Anonymous survey, which I don’t like. But I think Jodie and I, our chief people culture officer debated and she was right in the end because we ask questions like, “Look, do you see yourself working here in two years?” And so we wanted the real honest answer. “How would you rate from one to five the impact, five being high, one being low, that VIDA has made on your mental health, your family life, your physical health?”
Our lowest score out of five was four on the mental health question, and we’re really proud of that, and we still have work to do. So I really believe we’re building world-class culture. I would put us up against any company in the world and we have to continue. That also means we can’t get lazy about it. When you think you’re doing incredible, you have to go back to the drawing board then, not when you’re in the shitter like I did with my security company.
That was a big lesson is go back to the drawing board when things are good, otherwise you get lazy. So yeah, I brought in with that little mic drop.
[0:37:45.8] MH: That’s great advice to everyone out there. Well Ron, thank you so much again for joining us today. I’m looking forward to do this again sometime in the near future. For all the listeners out there, make sure to check out VIDA, their Instagram, their YouTube, they have great social media content that really amplifies their community building. Check out Ron’s podcast, Scaling Culture, if you want to learn more about how to really build up internal culture and a brand. So with that, thank you again Ron.
[0:38:11.9] RL: Thanks Matt. Thanks for having me.
[0:38:13.4] MH: All right, have a great day everyone.
E78:The Housing Pulse: Toronto Star's Business Reporter on Canada's Rental Landscape
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