michael krisa, aka the interview guy presents thad...

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in te r v i ew w i th

Thad WongBeing defeated is only a temporary condition; giving up is what makes it permanent.-- Marilyn vos Savant

Big shots are only little shots who keep shooting.-- Christopher Morley

Courage is being afraid but going on anyhow.-- Dan Rather

Decide carefully, exactly what you want in life, then work like mad to make sure you get it!-- Hector Crawford

Don’t be discouraged. It’s often the last key in the bunch that opens the lock.-- Author Unknown

For now you know one of the greatest principles of success; if you persist long enough you will win.-- Og Mandino

If one dream should fall and break into a thousand pieces, never be afraid to pick one of those pieces up and begin again.-- Flavia Weedn

Monthly Musings

Michael Krisa, aka The Interview Guy Presents

Michael Krisa, aka That Interview Guy

Meet ThadThaddeus Wong began his career in real estate sales in 1996 and quickly established himself as one of the most successful real estate agents in the city of Chicago. During the early years of his career, Wong personally recorded more than $300 million in real estate sales and earned three consecutive Golden Eagle Awards from the Chicago Association of Realtors as the top-producing

sales agent among the association’s more than 17,000 members.

In 2000, Wong and his business partner, Michael Golden, co-founded @Properties, and within the first three years, grew the company from a four-person, $40 million operation to a billion dollar enterprise recognized throughout Illinois. Behind Wong’s leadership, drive and vision, @Properties has become Chicago’s fastest growing real estate brokerage firm and its largest independently owned brokerage.

Here are some of the topics we will be covering:

• Building a real estate business around agents.

• Successfully trimming your bottom line.

• Keeping up with technology from a business standpoint.

• Building a successful website.

• Performance Coaching Program

• How to survive and thrive in this economy.

Meet Thad at www.AtProperties.com for up-to-the-minute real estate news and advice or contact him directly at [email protected]


MICHAEL: Well, greetings everyone. It’s Michael Krisa here, That Interview Guy, with another episode for Real Estate Unplugged. And I have, I’m going to call him a celebrity rock star by the name of Thad Wong, who is the CEO of a company called @Properties.com.

Thad, how are you today?

THAD: I am good. How are you doing?

MICHAEL: I’m excellent, my friend. I’m really excited about this because you’re almost like a well-kept secret. And I like to keep my finger on the pulse of what’s happening, and I didn’t even know you existed. You’ve been flying under my radar, man, so, this is really exciting that we get a chance to sit down and talk today.

THAD: Good. I’m glad you’re happy.

MICHAEL: Well, as I mentioned, prior to the call, how this all hooked up is a friend of mine out of Austin, Texas, Krisstina Wise, who is a really savvy broker and she’s getting it when it comes to social media. She’s been doing some of these dog and pony shows across the country.

And I used to go to some of the major events, but frankly, I just got bored, because it was the same status quo that would get up there, the aging dinosaurs, and they would say, “Here’s what’s happening in real estate. Life is wonderful.” They would pat each other on the ass, walk away, and meanwhile, they’d leave the audience to drink the Kool-Aid and actually believe in what was happening.

And then I see guys like you and gals like Krisstina that are making a difference and carving out a new way that real estate is going to be done. So, before we go down that road, let’s talk a little bit about who you are, and then how you got into this wacky business of real estate, and then let’s talk about the company.

THAD: Okay. I got in the business in 1996. Prior to that, I was finishing school at night while working as a clerk at the Mercantile Exchange. And when I graduated, I knew that I didn’t want to work on the trading floor after being down there for five years during the day while doing school at night. I just figured out that it just wasn’t the environment for me.

And I’d always been a great salesman. I’d always grown up selling anything, and during the holidays while in school, I would work at the local clothing stores and just always had a nice gift of gab. And I figured if I was going to sell something that was commission-based, I should probably sell something that was a bigger ticket item.

So, I decided to look into real estate. I had a friend of mine who was a mid-size real estate developer. We looked at projects in Chicago that he was working on and he introduced me to a broker. I passed my license and got started.

And when I got started it was just a really nice, natural fit. I was about 26 years old, so I found my calling early on in life. I was really comfortable with people. I was really excited about the industry, so I spent a lot of time educating myself on construction, architecture, the buying process. I felt like I was of strong value to the customer. I felt like also at the time that I brought a higher element of professionalism to the industry.


When I first got into it, definitely the average age of real estate agents was significantly higher than my 26 years old and the dress was a little bit less professional. So, I really thought, “Okay. I’m going to try to bring a higher professional appearance, communication, service, to the industry when I started selling.”

I met my partner at the same time. He was working. He had just started a few months prior to me getting started and he was selling and he was working on a project and we partnered up. And it was a great partnership because we are completely two different people. He is more. He was with human resources before getting into real estate. I was more of the sales guy. We were two types of people that would have not been friends in high school, but after college would have become the closest of friends.

So, the two of us partnered and started selling everything together. And in 2000, we decided to form our own company primarily because one of our major clients who is a developer, and we were marketing his projects throughout the city, no longer wanted to work with us if we were working with the brokerage firm that we had previously been working with for the last three to four years.

So, we ventured off on our own and got a lot of ideas along the way. I think we learned a lot of what not to do at the company we were at before. And we had a really strong sense of what to do because we were really building the company through the lens of a real estate agent, because we were still agents. We were still selling.

And at the end of the day I think one of the things that was a very pivotal decision or idea on our part was that we saw the other major companies really kind of feeling like it was a privilege to have their agents work for them. And we realized, “Hey, in being an agent, we are the customer of the company. If there are no agents, there is no company.” So, we built the company through the basis of saying, “Okay, how do we service our largest clientele?” And our largest clientele are the agents.

So, we built a model that was very much based on the servicing the agent and the things that we felt the average agent was not strong in. And that would be marketing, consistency, advertising, business plan. Most agents are great sales people. They have a good gift of gab. They’ve got great relationship skills. But when you ask them to get organized or to get consistent or how are you going to build your business, it’s not their forte. Some, yes, but not most.

So, when the market started actually slowing down about two and one-half, three years ago, that’s when we started really revving up, because our value proposition and what we really offered the agent base became very clear and evident in the market and our recruiting became really strong. And a number of the agents that were from our competitors started flying over to our company and helping us grow a bigger foundation.

MICHAEL: We should probably establish right now some of the numbers here. You’re not a ma and pa operation. You went from a $40 million operation, if my numbers are right here, to a billion-dollar enterprise.

THAD: Yeah. And actually, our best year of sales was 2007. We closed just over $2 billion. I think in 2009, we were at $1.875 billion, and we have the number one market share in the city of Chicago.

MICHAEL: And how many agents in total do you have?

THAD: A little over 800.

MICHAEL: Man, that’s humble beginnings from 2000 to now and doing that kind of volume.


THAD: Yeah, 2000 was four guys. We were known as the Boys Club, my best friend, Marty Winefield, another guy, my partner, Michael, and me. And it was the four of us and a couple of assistants and that’s how we got started.

MICHAEL: The whole concept here is to create something new. So, you’re obviously looking at the landscape. You’re looking at what works and what doesn’t work. By in large, what are some of the things that you think weren’t working that brokers are still doing?

THAD: I think at the end of the day one of the things that I noticed that a lot of these major brokers are still doing is they really spend a lot of money on macro advertising and marketing campaigns. Meaning, they really try heavily to brand the organization in hopes that the leads come to the organization and they’ll trickle down to the agent.

Now, we do some macro advertising, which is brand promotional for sure. But it’s definitely the lion share of our advertising budget. The majority of our advertising budget is spent on the agent, where we are promoting that specific agent, their listings, their profile, their history, their credentials to try to help that agent build their business. So, effectively the company then grows on the shoulders of the agent. If I’ve got an agent and I have a $2 million producer and they have a goal to get to $10 million. If they actually have a partner to work with to help develop a business plan, to coach them through the process, to build the infrastructure to put an email database and email marketing campaign together. To have a traditional direct mail campaign, a client appreciation program, which sends gifts to their clients and monitor their production over time, and we invest in them and participate in them with the cost of some of this advertising, we’re able to, in our opinion, make it significantly more likely for that $2 million agent to get to $10 million.

And when you look at that, that’s a 500% growth application. If we can do that over a number of agents, the company’s volume then grows significantly. And that’s what we’ve done a good job of. And I’m not saying that all our agents participate in all our programs and really work with us in growing their volume.

Any time you have ten agents, ten football players, ten curlers, since we’re in the Olympics, you’ve always got the one best one out of that ten. You’ve got two or three that really, really work hard and they’re going to do well. You’ve got about five that will be mediocre. And you’ve got a couple that aren’t going to do anything, are going to do relatively poorly. You’re just going to have that range of ability, range of dedication, range of skill sets. And we really try to focus on that mid-range and that top and give them everything they need to grow.

MICHAEL: What’s your turn around like in terms of agent retention?

THAD: You know what, we have ridiculous retention. I think contrary to most of our competitors, we spend an astronomical amount of money on retention program. And what I mean by retention program is when you take aside the advertising and marketing and promotion and organizational systems we have for a business. We put together a lot of programs to keep the agents happy. In 2003, I think we started the Road to the Rolex.

So, when an agent first sells $10 million within our organization, they win a Rolex. Now, at that point they can buy their own watch. It’s not about the material aspect of a Rolex watch. It’s about the appreciation of them doing significant volume and accomplishing that goal under our roof. And giving them a substantial gift in front of the organization and they get to be part of this membership of this club. And that was kind of like the


first thing we did where we recognized, “Hey, you know what, when you treat people right, not only do they stick around, they really perform for you.”

So, we were the first company to rent Wrigley Field and we had our softball picnic on Wrigley Field. For a lot of Chicagoans, that’s a big deal. For a lot guys and women, it was probably more important than their marriage or their wedding, because they were out on the field they’ve been going to for decades and watching their team lose, and maybe they were on a team that won that day.

But we put together a lot of things. We have a movie night where we close down a movie theater and we bring our brokers all in for movies. It’s fully catered. We also invite brokers in from competitive companies that have done deals with us showing them our appreciation. We have an enormous holiday party every year and that’s something we did different. The last couple of years when companies really cut out their holiday party because of budget constraints, we felt like, “You know if real estate agents ever need a party, it is now.”

It’s kind of like there are two categories, auto dealerships and auto salesmen, real estate salesmen, really anybody who’s selling anything in the last two years of substantial size was really having a hard time. And so, we felt like, “You know what, we really needed to appreciate our agents that year.” So, we threw a couple great parties.

And we really try to put together programs that let them know that we appreciate them, that we’re here for them. We want to help them grow their business. And mostly, at the same time, it’s not always about business. It’s also about having a good time, building relationships and friendships and feeling like you’re a part of something as opposed to just showing up and hanging your license like a shingle and doing your job and going home.

MICHAEL: I want to come work for you guys.

THAD: Hey, that would be great.

MICHAEL: I was at one. I’m not going to say which event, leadership event, sitting up there on the big stage and one of the big things that these power brokers were so pleased about was how much expense that they had cut from their bottom line. And when they were talking about cutting expenses, they were talking about, “Well, we cut secretarial staff, front end support staff. We’ve cut back on our marketing.” And they’re happy by the fact that they’ve made all these cuts.

And then when you mention parties, “Oh, we cut that out as well.” There’s no kind of employee appreciation. I say employee lightly because I’m talking about the agents, as well.

And again, they pat themselves on the back and they leave, smoke their cigars and they’re thinking, “Well, look what we’ve done here.” And they forget that their first customer, as you just identified here. Their first customers that they have to maintain are their agents, their sales people. And they just don’t get it.

THAD: Well, I think their biggest challenge is revenue. And I don’t think that they have a firm grasp on the fact that their agent is their client. But their main concern last year and the year before were to stay alive and to stay open. And I’ve very aware of the numbers of some of these companies and they are bad, worse than you can possibly ever imagine. And if they had not made those cuts, there would have been no company, no agent base, no jobs, nothing.


So, a lot of the larger companies that were really top heavy, for instance, where a lot of their net revenue was going to pay managerial salary as opposed to support staff. And a lot of them are buried in very, very expensive leases on big huge offices they opened up in the hay day that they can no longer afford. And so, if these guys didn’t cut those things, in reality, most of our competitors it would have been irresponsible for them, financially, to have a party. It really would have, because they just didn’t have the money.

And I’m friends with a lot of these companies. I’ve had a lot of them come to me that are for sale. You know, when you hear about real estate companies that are for sale, you think, “Wow, they must be rich, these guys.” Well, you know what, these companies are really not for sale.

These companies are for gift. And it’s not really a great gift. It’s sort of like a gift that you don’t want because these are companies that are losing revenue. They’re saturated and tied to big leases for space. They’ve got big management issues. They’ve got low, low, low production.

You know, we found in 2009, we lost a company that was really great at one point called Sussex & Reilly, it was a one-half billion dollar company. It went away. Effectively the debt was sold as a short sale to a franchise. That franchise that bought it, its volume was down 4% pre that acquisition. So, if you can imagine that they actually spend money to lose money.

And there was another company, a phenomenal company in Chicago, one of the best companies ever, named Rubloff. And that was a company that, I think the agents they were never. Besides our company, that was another company where agents were incredibly proud to work. It was privately owned and operated company, incredible ownership, great leadership. But at the end of the day, there was not a lot of forward thinking.

So, when the market hit, they were really stuck. They had an older agent base. They hadn’t rebuilt their agent base and been more diverse by hiring younger people to help diversify the platform of clientele that they were servicing. And it got really expensive for them.

And so, for them, I think they looked at it. The guys that owned it were two phenomenal guys, but they were in their late sixties, early seventies, and they said, “Hey, are we the ones to kind of grow this business out through this recovery or is it better for us to kind of sell it for whatever we can get for it and give it to somebody else?” And so, a different franchise bought it.

So, in reality, now in Chicago, we are almost the only one. There is one other independently owned and operated company that does decent volume in the city, but they’re fifth. The other top three behind us were all Coldwell Bank from New Jersey, Prudential from California, and ______, which will be Real Living from, I believe Royal LePage Brookfield from Toronto, Canada owns that.

So, what’s interesting is that when we’re talking about local real estate and servicing the consumers in a specific region, we’ve got companies where they’re not based in that region. And also, when you look at the movement of people going more hype or local, not only to be green when it comes to food and materials, but also to support your local economy, where is your tax base best served? Where your job creation is best served is in your local environment. You know, you’ve got, like a lot of other industries, large corporations that are owning the market.

It’s very rare, I think, when you look at some of these where we have such significant market share, but the three after us are all corporations that are not from the Chicago Midwest region.


MICHAEL: When you guys got together, obviously you’re a young, lean company and you’ve grown phenomenally. You must have incorporated state of the art technology in terms of what you were doing.

THAD: We did and we didn’t. And I’ll tell you something, you know, some of the things that you said at the beginning of the introduction when we talked about doing things completely different. You know, you have to remember who we’re speaking to at the end of the day. We’re speaking to a very wide race of Americans; young, old, technologically savvy, technologically illiterate. And you want to be able to have all of them as your clients.

The same thing is with agents. We’ve got young. We’ve got older. We’ve got some that have embraced technology. Some that business is solely based on personal handshakes and friendships. And both are fine, and there’s a validity to each.

So, when we came up with a company, we wanted to come up with a name, first of all, that was bigger than the two of us. We never wanted an agent to come work for us and feel like they were working underneath our name, because at the time we were still selling and we didn’t want that conflict of interest. So we came up with @Properties.

That was the year 2000, and I was a late bloomer when it comes to technology. I think I had just gotten my first email in 1998. So, the @ sign was becoming really, really significant at that point, so we wanted to use that to signify to people that we were a forward-thinking, young organization. At the time, it caused some problems, because I think a lot of consumers wondered if we were a discount brokerage firm or an online brokerage firm because those were just emerging at the time. But we didn’t have a website for the first 18 months, because we couldn’t afford one.

So, you’d go to this @Properties.com and you’d see this amazing flash graphics of a building doing a 360 and it said ‘Under Construction.’ It said ‘Under Construction’ for probably 12 months. So, our first website was fine, but it wasn’t really amazing. And I don’t think we really had an amazing website until now. And we just launched a website at the end of last year.

We used an awesome company out of San Francisco that’s called Terabitz to build all the functionality. We used an amazing company outside of California, just outside of San Francisco, called Thousand Watt to build our wire frame and we hired them as our consultant. We have both these guys on retainer for the next two years. We’re adding more and more functionality.

But there are a lot of websites that have applications that are more significant than ours. We are now still putting those on. I would bet that our functionality for search is more thorough and our presentation is more user-friendly than most of the websites in the country.

But I don’t necessarily believe you have to be the first to do something. And in reality, oftentimes the first at doing anything in technology means you spent the most and you’ve had the least amount of time to understand its challenges. And unless you’re Apple and you’ve got an enormous corporation with a million of the smartest people in the world working on the functionality of the latest iPad. You know, when you launch something, it’s going to have a lot of kinks in it. And we wanted to kind of wait and watch. And I watched a couple of other great companies in the country and I watched the launch of their


website for about a year. And I watched them work through the issues. And at the end of the day, I think we were able to produce the equivalent or better website at a significantly less cost through watching the errors of others.

So, in this industry, I don’t feel like we have to be on the forefront of technology every step of the way. We just need to present a better offering to the consumer that actually works and is reliable at a fairly reasonable clip, but I definitely don’t think we need to be first.

MICHAEL: That’s an interesting point that you took the benefit of watching what others did and took advantage of, if you want to call it the failures and successes that they had and then implement that into your system. So, you’re cutting expenses. You don’t have to go through the learning curve that they did. And relatively speaking, you’re going to hit the road just as fast, if not faster than they did without having that learning curve.

THAD: That and it’s also about implementation. You’re absolutely right in everything you said. But then once you have the site, do you have enough revenue to actually implement it and get people using it? So, a big thing on our end is we manage all of our agents’ databases. So, we manage about 400,000 emails for our agents and we send almost two million emails out a month.

So, on our end, once we have this functionality. The functionality is great, but unless people are using it, it’s worth nothing. So, unless you have a budget to go buy clicks off of Google, MSN. You know, you’ve got your organic search. You’ve got your SEO set on your site, but you’re still going to want to generate giant traffic. Well, on our end we thought of that in advance and we put together these email databases, so we had 400,000 people to go promote the launch of the website too. So, our traffic rose dramatically.

We are, ironically, a very contrarian in only one respect. I don’t ever claim to be a contrarian in most of anything. But what I do believe is we have a registration site where it can be considered for some consumers to be annoying because they have to put in their information in order to get content. But what I always felt like, “You know what, if I don’t get their information effectively, I have nothing.” And unless we are going to be a website that generates revenue by selling advertising, there’s no revenue generation from a website that is not engaging the consumer.

And so, if I have a consumer that’s interested to work on our website, if we’ve developed a site that is going to be compelling enough for them to register, then I’ve got a live, captive audience. And it’s super important with that audience that I have a way to reach them. So, that is one of the ways that we use to generate and build our email database for our agents. It also, for us, is a giant source of business.

And for our agents, it’s a giant source of opportunity, because they have a program called Sitting Line, which is similar to the old days of Sitting Floor waiting for the phone to ring. We have people online 24 hours a day. Not for instant chat, I didn’t go with that. I thought it was a little odd. Anytime anybody has instant chat, I was just a little bit weirded out, because I thought at any time, if I wanted to talk to somebody, I could email them.

But we have somebody available that’s actually watching the computer 18 hours of each day, looking at what each consumer is looking at and understanding and watching and being available to answer questions for them while simultaneously capturing their search. And then able on the back end to put together results for them and either email them or call them.


And what I’ve found is that 70% of the emails that are inputted to get access to the search are accurate, and 50% of the telephone numbers are accurate. So, what’s that telling you is basically Americans are good people and if they’re asked to put in information, most of them are going to want to be honest in inputting that information. Most of them are not going to lie and put in [email protected].

And because of that, we generate a heck of a lot of business for our agents. I think our online closed just over $300 million last year of business. So, the consumer was able to get to an agent. The agent was able to get the opportunity of the consumer. It was a win/win.

And, you know what, if you don’t want to register and it annoys you, you’re going to end up going to a different site. And that’s totally okay on our end.

MICHAEL: What you’ve done, you’ve created this barrier here. And you’ve summed it up yourself. You’ll get less leads, but the ones that you do will be a higher caliber.

THAD: But in reality, we get way more leads, because nobody else is getting any leads. If you’re only reliant on the consumer that is going to email you and ask you a question, you’re not going to get very many.

We’re a part of a group of 13 of the larger privately owned companies in the country. And we get together a couple times a year and we swap thoughts and evaluate each others’ organizations. And these are big companies all around the country, California, New York, Florida, North Carolina. And I talk with them about their online programs and none of them have registration sites and none of them get very many e-registrations at all.

For my two-hour shift, on average, my agent gets 15 leads. Of those 15 leads, about eight to eleven have accurate emails and about seven to eight have accurate phone numbers for that agent to communicate with that consumer. So, the number of leads that we’re getting is astronomically greater.

What you might say we are getting less than is we’re getting fewer people to surf the website in search for property. But at the end of the day, there’s no revenue generation from that unless you’re selling ad space on your site.

MICHAEL: See, that’s a completely different approach to this, because most brokers don’t think about is this website supporting itself. It’s something that we put up there out of necessity. We’re told we have to have a site. We have to have a presence. And they put it there.

But they don’t look at it from the point of view that this thing has to pay for itself in terms of lead generation and what it does.

THAD: Not only pay for itself, but you want it to make money. And you’re also, what are we trying to do? If our client is the agent base, our goal is to generate opportunity for the agent. If you’re not generating opportunity for the agent, you have a large percentage of your agent population that are going to not be satisfied and then either go out of the business or find another company which will support them at a higher level.

And so, it’s not just web leads, but there are ten other things that every company must do to at least offer to the agent. Now, many agents are not going to participate and they’re going to be fine on their own, because they are entrepreneurs and they are independent contractors.


But I think everyone would be significantly surprised if they actually go out and engage with their agent. Offer venues for collaboration to help better the organization. I mean, there’s nobody that knows how to run an organization in real estate better than the agents.

And you’re going to get your best ideas from your free source. And that free source happens to be your clients. All you’ve got to do is engage with them. Ask them what they need. And sometimes you’re going to get requests that are not fulfillable, obviously.

But oftentimes, you’re going to get some good dialogue that generates some solid collaboration that evolves into a fantastic idea, which creates opportunity, which adds to retention, adds to recruiting. And it adds to the bottom line, because it generates more clients to serve to buy and sell real estate to build commission dollars.

MICHAEL: Speaking of ideas, I’m on your site right now and I’m under the development section. And I see something here that I haven’t seen before on other sites. You’ve got, I’ll call them for lack of a better word, banner ads that are written in kind of a direct response format. So, for a limited time only, amazing price reductions. And was this one of your ideas and how does this work for you?

THAD: No, we’ve got an awesome IT staff. We’ve got a great IT director and about seven people under him that. I’d say the majority of that group’s time is working with the agents and help desk and helping them problem solve and work through the site, et cetera. But a big part of their job over the last 18 months was building that site. We’ve got about two more years of functionality that’s going to go into it.

It takes a long time to apply all the different ideas that we’ve got. But when we looked at sites, we really guided our site probably in a lot of ways after a couple of the majors. Truly, I think it’s a phenomenal site. I think Dave spent a lot of really solid time understanding what the consumer was looking for and how they wanted information presented to them.

But that just kind of came from us looking at our pages and say, “Okay. What would be cool here? How can we generate some excitement? How can we?” You know, content has to be presented in a nice way.

It’s kind of like when you go to fly somewhere and you go to the news rack at the airport and you need to buy a couple mags to get you through a three-hour flight. You buy what interests you, but you only look at the cover to make a decision on buying that magazine.

Well, that’s your one opportunity is the cover. So, if you’re looking at that screen, that’s the cover. And very few people are actually going to click on one of the subjects and go in and learn about it, but if you keep them engaged and keep them interested, their reaction to your site when they click off it, their memory is going to be exciting.

MICHAEL: I find these are very slick. And for our listeners, www.AtProperties.com/developments, you may just want to go there to check the site and get some ideas here.

In terms of training, I looked in the bio and you’ve got something called the Performance Coaching Program.

THAD: Right.


MICHAEL: What’s that all about?

THAD: We’ve got two performance coaches. And I hired my first performance coach in 2004. He was a great producer with our company. He’s actually going to be going back to sales, ironically. His wife is a solid producer for us and was our number one e-team. She did a close just over $11 million in 2008 of leads from online. And they got married. They actually met at the company and got married. She’s having a baby.

So, she is now stepping in with me to help me run a new e-team program that’s a combination of how to work with online leads and simultaneously grow your business. So, he’s going to go back into sales and run her business because her business is a big business these days. She’s doing probably in the vicinity of $15 million. So, they’re going to work together.

But he was the pinnacle of my starting the coaching program. He came in. I loved him because he did Brian Buffini, Zig Ziglar, you know, all those guys. And those coaches helped him grow his business. So, I wanted to build our own coaching network internally. So, I brought in this employee.

We built a coaching program, which included one-on-one meetings with agents, business plans. We created a spreadsheet where an agent could come and fill in what they thought they were going to sell. How much gross revenue it would bring in. They would fill in their split and it would bring in their net revenue. We suggest that you spend 10% of your gross or net, up to you, but just need to bid a number of a budget on marketing and how those marketing dollars you spent over the course of a year. And then how much business did they expect to grow through that investment.

So, we built that software and then we met in groups of about eight to twelve twice a week. These groups met quarterly. We had about 26 groups. So, we were working with about 300 agents at the time. And we met with them quarterly. We went over their business plans. We went over the goals of building the email database, the direct mail database, the client appreciation programs.

But most importantly, we sat together in a room for an hour and one-half and had a cup of coffee. We talked about what was working, what wasn’t working, what were the biggest challenges. We were able to figure out who’s really going to make it in this business and who’s not. Who’s really going to do?

And really, to make it in this business, in reality, you only need to do the basics. The problem is remembering that everyone’s an independent contractor and everyone is not motivated by the same things. And so, unless you’re self-driven, oftentimes people aren’t going to follow through and do what I would consider to be the basics to make it.

So, this program evolved over the course of the years. Now we have two performance coaches. We’re getting ready to hire a third.

We have an improve class, which is really cool. We started that in 2005. We built a curriculum through Second City in Chicago, where there were eight classes an agent signs up for. It’s free. It goes one Thursday for eight weeks in a row and it works on improv. That was important to me, because I felt like building confidence, thinking on your feet, knowing it’s okay to say whatever you think or feel in front of others; that you don’t need to be shy or embarrassed helps build a better sales person.

So, a lot of our coaching goes along with having fun, too. With the improv, they definitely have a gas.


But we really monitor the agents and we don’t scold them if they’re not producing. In my opinion, if they’re not producing, they’re hurting themselves and they don’t need to be ridiculed or they don’t need to have their split lowered or they don’t need to be reprimanded. They’re going to figure it out that when they sell less business it affects them much more than it affects us.

But most importantly, from a positive perspective, we want to be there and saying, “Hey, we’re here. You need help. We’re here. You’ve got a question? Ask it. You want to collaborate and come up with a way that’s unique and different to service your clients and help build your business? Let’s do it.”

You know, at the end of the day, we needed to build a corner for our fighters to come in and get rest, get water, get protection, and really good conversation and say, “Hey, how are you going to win this battle out there?”

There are now more real estate agents, less volume, which means that if you’re wanting to grow your business, you’re needing to take away volume from somebody else, a competitor. How are we going to help you do that? How are we going to educate you? How are we going to give you the tools so that you can go out there and be number one?

And that, at the end of the day, to me is a great investment. I think we’re one of the only companies that have performance coaches. And the caliber of coaches we have, these are not people that couldn’t make it as sales guys. These are people that were really strong; top producers that are helping me and our company grow our agents from mediocre to best.

MICHAEL: The one thing a lot of companies have, the big rah-rah. They sit down. They do business planning and strategy. And what agents don’t realize, but a lot of the brokers forget is unless you’re actually working this plan and you come back to review it, it’s not worth anything. They do it once. They feel good about themselves. They put it in the top drawer.

Do you actually follow up then with your agents to see if they’re on track?

THAD: Well, that’s why we would have these quarterly meetings back in the past. And we’re actually just starting new performance groups that meet monthly.

So, what’s cool about it is that the agents also hold themselves accountable together. You’ve got eight agents coming in a room once a month to go over their business plan, go over their production, go over their success of fail ratios. You know, it builds some accountability within the group. I mean, you don’t really want to show up if some of the questions in the performance groups are, “How’s your database growing? What are you doing as far as building your referral base?” and if you have nothing to say each time, it’s kind of a bit embarrassing.

You want to be motivated and it’s easy to be motivated when everyone around you is doing the right steps.

MICHAEL: That’s a very powerful approach. If you look back to school days, you didn’t want the teacher balling you out.

THAD: No, never.

MICHAEL: You wanted to be on the same level as your peers.


THAD: No one ever wanted to be the dumb guy in class.

MICHAEL: You didn’t want to be the wiener standing out basically.

THAD: But you definitely didn’t want to study. So, it’s sort of like, “Okay. I don’t want to be the dumb guy. I don’t want to study. It’s not fun.” At least that was me. “How am I going to do this?”

Well, the best way to do it isn’t the most fun way that we could figure out is doing it together. We’re all out for the same things, so why can’t we work on it together. I’m all up for healthy competition. We’re a very competitive organization. But there is healthy competition where people can actually collaborate and succeed as a group. And that is what I think has to really be initiated.

But you are absolutely right when you talk about making a business plan. The first business plan doesn’t matter. What only matters are, are you following that business plan in six months? Have you figured out how your business has changed to see how you need to change your model and not just stay the course if it’s not working? But it’s a functioning, breathing, active, living plan. But it’s only alive if you’re working it.

MICHAEL: Now, Thad, we’ve talked about a lot of things here. We’ve talked about your growth. We’ve talked about the vision. We’ve talked about your corporate culture. We’ve talked about some of the technology. And I suspect that you and I could be talking forever.

One of the things that I think brokers would really want to identify with or hear is, what do you do to recruit? And I would suspect with your company, you’re probably recruiting a lot of agents from your competitors.

THAD: We are. Last year we recruited a little over 200 agents. I think that 85% were experienced agents from a competing office. About 15% of them were new. This year there are even fewer new agents that we’re recruiting, but I think in January we recruited 30 agents. And I think there were two in that group that were grand new.

And it was one of those things we’ve been focusing on for the last five years, in reality, and we really got rolling with it in 2008. We found that as the market began to change and individual agents’ average volume began to drop, if we didn’t want to have to do what a lot of our competitors were doing, which were letting go of a lot of staff, shuttering offices, cutting resources. The only way to maintain the same volume would be to add more agents to our platform.

So, because we had built this infrastructure, we thought we had a really good value proposition to show the agents. So, eight, nine times out of ten, we sat down with the agents and we showed them the resources we provide them to help them grow their business. They were usually from an environment that was beginning to eliminate many of those resources. They were attracted to our organization, which made it relatively easy for us to recruit because we were offering a significantly better value proposition than our competitors. But it was also an incredibly organized recruiting system. We never sent out any blanket recruiting emails or blanket letters. You know when you get a letter, “Thad: We saw you closed a house and we think you’re the greatest. Please call me for a secretive chat.” Signed by nobody, it was like a little stamped signature. It doesn’t make the agent feel at all valuable. And in reality, that person probably doesn’t even know they sent me this recruiting letter.


So, all of our recruiting is all done through referral, meaning that we are given the names of the agents that we recruit from the current agents within the organization and we have a referral program that’s set up as a compensation program for that agent, so it’s a benefit agents that they want to work with.

But we also have weekly recruiting meetings with all of the managing brokers. So, I meet with all the managing brokers once a week. We all have recruiting books that we create from all our competitive companies.

And in reality it would be scary, I think, if someone sat in this meeting, because we can go through a 200 agent company and go through line by line of the top 150 agents and someone in the room will have a comment about that specific person. “They just sold this. They’re doing this. They’re getting out of the business. They’re fantastic. This is their cousin.”

So, we know our competitors. Competitive intelligence, to me, is incredibly important. I should know almost as much about what is going on with my competitors as much as I do about my own organization. And if I do that I can make really strategic decisions to help maneuver my organization out there to do better business.

So, we focus on recruiting and that’s probably. There are two things we focus on. And I had this conversation with our President yesterday. There are two things that are the most important things that we can do each day. One is retention, which is our infrastructure and our value proposition to our agents, and our personal relationships with them, and our listening skills and our collaboration. And the next is recruiting; you know, how are we going to build and grow? Because effectively right now, if you’re not growing, you’re dying.

MICHAEL: You know, it’s interesting. You sound like a bunch of hockey coaches getting ready to make draft picks.

THAD: You know I’m from Minnesota. You’re in Canada. So, if you didn’t play hockey when you were a kid in Minnesota, you were weird.

MICHAEL: One question I didn’t ask you and this goes to compensation. What kind of splits do you have if you can share that with us for your agents?

THAD: I can. The splits that we have with our agents are competitive. They are not over the top because we do offer a lot of resources and services. But there are a couple of interesting things we do with our split.

One, when we assign a split to an agent when we hire them, they only have the opportunity for that split to go up. It does not go down. My view on that was because of divorce, because of death, because of children, because of marriage. There are always things that go on in a person’s personal life that will affect their productivity.

And I never wanted there to be a repercussion because of that. So, I never wanted their split to be affected because they didn’t do good business. I thought if they didn’t do good business that affected them significantly more than me. And if I felt good enough to hire them in the first place, I should stand by that decision.

And then they have the opportunity to have their split to go up the more volume they sell. I think that our splits originally were more competitive back in 2002, 2003. But I think the environment got incredibly competitive when it came to splits and everyone kind of balanced out.


You know, you’ve got different splits for different ranges, but they’re all really about the same. We’ve hired people where they’ve gone down in split a little bit, but that’s because they came from less full service organizations that didn’t provide what they needed to grow and they felt, “Hey, you know, it’s worth it for me to take a little bit of a cut in my split, but I get some bigger resources to hopefully grow my volume.”

MICHAEL: So, what’s a number then, 50/50, 60/40? What do you start off at?

THAD: No. I think starting agents in our company start at about 55%, sometimes 60% depending on some variables. They really cap out at 85% and that’s for a significant producer doing $20 million plus. But that’s the range we’re really working within.

MICHAEL: And part of it too, when it comes to commissions, it’s an allusion, because some agents are seduced by a 95% or an 80/20, whatever that is. It’s a big number they’re seduced by. But what they don’t realize is there’s a whole infrastructure that they have to pay for. So, at the end of the day that net split which started off on paper as 95% can whittle its way down to 65% pretty quickly.

THAD: Oh yeah. Especially if they go in for a listing presentation and the seller says. And this is our big advantage. I mean, a seller meets with one of our agents and then meet with an agent from another company. Our presentation is so far superior to the competition that unless there was a personal relationship with that seller with another agent, it is extremely unlikely that the seller wouldn’t hire our agent, because we’ve given them a very comprehensive program to show the seller so that seller can be confident on where they’re being advertised, where they’re being marketed, how their property is viewed online.

And so, it’s very, very clear. It’s not an ambiguous sort of “I promise I’ll do this” platform. It’s really a laid out, clear cut strategy on how to sell the home where the seller has very few questions as far as what’s going to go on once their property is listed with our properties.

MICHAEL: Now, it’s a corny expression, but you get what you pay for. And it’s no different when you become an agent with a brokerage. If you take a higher split, you’re not going to get the infrastructure or the support. And that support is crucial to help you make more money.

THAD: Oh yeah. Most definitely.

MICHAEL: If we were to rewind the clock. Forget rewinding the clock. If you had to start all over again right now, Thad, what are some of things that you would implement right now in this economy?

THAD: It’s interesting, because you see a lot of companies really generating revenue and profit right now, based on short sales and REO properties. We have an institutional services group, which is doing very well. We have a contract with Fannie Mae. But I think that jumped on that bandwagon a little late.

But at the same time, I have always had a hesitancy in revolving our business around a new flash, which is REO short sales. And they’re not going to be around forever. They’re only going to be around for about another. You’re going to start seeing the volume decline in about eight to twelve months. But it will decline and it will go back to normal where that’s not enough revenue to sustain a company.


So, in hindsight, I kind of wish I would have been even more prepared to generate more revenue from there, but I was also afraid of being pigeonholed as a company that works with foreclosures and short sales.

And for our brand, which is only ten years old, I’m not sure if it could have gone through that rap. We might be the largest volume in Chicago and the largest company, but at the same time, we’ve only been around ten years. And I think it would have been really easy for us had we controlled the REO short sale market to be thought of as that company and have the consumer that’s not in a distressed situation not want to work with us because they wouldn’t want to be perceived as that.

But simultaneously, boy is there a lot of money being made in that. And boy, is there a lot of opportunities being distributed. So, we participate in that market, but not at the level I think as some would have imagined. I was always concerned of being labeled by only focusing on that.

That would have been one thing that I think we could have done a little bit better to generate more revenue, more opportunity for the agents. The other, that’s a tough one. We had an opportunity to open office in Uptown and that’s a region where we have the number one market share and we chose not to. And, you know, that could be thought of as a good decision because right when we chose not to the market really began to change. Or, simultaneously, if we had had that office open right now, I think that we would have even more of a market share in that region of the north side of Chicago.

So, I go back and forth on that. But if I had my druthers, I would have probably had a full, functioning 100, 120-agent offer in Uptown, which services Edgewater, Andersonville, Rogers Park area of the north side of the city.

Those would be the two things I might have done differently in the past three years.

MICHAEL: When you talk about offices, do you have the “traditional office?” you mentioned you wanted to try to get 120 agents. So, is it a big production shop, private offices? Or do you have something completely different?

THAD: It’s a hybrid. You know, in the country, the average square foot per agent is about 150. We’ve fluctuated between 25 and 30. So, our cost for space is astronomically lower than our competitors, which is a huge benefit.

In the city of Chicago, all of our competitors have office space leased on Michigan Avenue. And most of the leases that they pay each month are greater than the mortgages we pay on all five of our offices we have in the city, because we own all of our locations.

So, you know, we’re saving a huge amount of money on space. And that money we reinvest back into infrastructure for the agents. So, if you come into our office. Like, my office, which is the first office we ever opened, is about 3,000 square feet. I think that it had, at the hay day, about 120 agents working from it. And I think it’s volume before we opened other offices I think maxed out at about one-half a billion.

So, it’s a lot of volume coming through a small space. That being said, the space is all the things you would expect in a normal office right now, all wireless and very comfortable, very nice furniture. But we have a lot of


shared space. I’m not from a dimension which a number of people are of opening up a coffee shop. I think it’s ridiculous to have sofas and chairs and coffee for everybody to do business. We have that in our kitchen area where everyone is there to relax.

In the main area where people are working, we have desks and chairs and computers and it’s more of a work space, not a relax space. And we have great conference rooms and places for people to work. But what we’ve found is that if you give everyone their own chair.

If I were to have a big open space here with 100 chairs for 100 people, there would probably be at best eight people there at any given time. So, you would have zero energy, zero noise, and it would feel like a morgue. And that’s the way most real estate offices feel. They feel like morgues when you walk through them because if you’re in your office all day, you’re not selling any real estate.

So, what we’ve done and it was easier for us because we started with this. It’s harder for the other companies to go towards this because they feel like they’re taking something away from their agent. But we went through this feeling from the beginning was “Hey, we’re all sharing.” There are some top producers that definitely have their own desk with their own space and they really need it for sure.

And then we have others that keep everything in their briefcase and they come in and come out of the office and they use whatever desk is available. They share with a few other people. And our desks are put together as pods. Everyone knows that if I’m not in my office, if the conference room is taken, they can definitely meet with their clients in my office. My office is about, I’m in it now, smaller than a kid’s bedroom. Maybe it’s nine by nine. There’s no window.

So, we definitely walk the walk in the sense that even the owners of the company, the brokers, we all have very small, efficient offices. None of us are big space wasters.

So, our most productive office, which is a big one, about 8,000 square feet, but at the end of the day, I think that will be our first office to close $1 billion.

MICHAEL: It’s kind of interesting that you made the distinction that when you walk into your office, it is an office. It’s a place to do business, where some real estate offices don’t know what they are. You know, are they selling fruit? Is it a bakery? Is it a coffee stand? And it’s like somehow they’re trying to be all things to all people and satisfy all the trends. And at the end of the day they forget that this is a place to do business.

THAD: Right. And very rarely do your clients come to the office. Some agents, they have a system where they bring their clients into the office, and that’s where they communicate with them, list properties, have their buyer orientations. Most we meet with them at home, or at Starbucks, or whatever’s convenient for them.

I never wanted somebody to come to our office and not have a receptionist, not be offered something to drink, not have a nice chair to wait, not have a good conference room which displayed information about the organization. It needs to be a business. If we take the professionalism out of this business, what are we selling? We’re supposed to be selling people’s largest investment of their life.

I think the goal for us is to become real estate advisors as opposed to real estate agents. Most the people’s value of their home is larger than their stock portfolio. But definitely they have a different perception of their stock broker than their real estate advisor.


And in my opinion, there should be no differentiation. They should have their insurance broker, their stock broker, their real estate advisor, their banker, their retirement planner, all of that. And all of these people that are helping with the decision making are some of the biggest decisions financially of people’s lives. We need to be professional. We should, at the minimum, have a professional space to bring them to if they choose to come.

But we also need to educate ourselves and offer a higher level of service and professionalism which I think went back to my first days in the biz when I had no money to buy a tie.

There was always this funny story that I shopped at this place called The White Elephant on Fullerton and Halsted in Chicago, which was a secondhand clothing store where the proceeds went to the Children’s Memorial Hospital. Well, I did that at the end of the day because that was all I could afford. But what I found was, “Hey, for even $30, anybody can look good.”

MICHAEL: Good point. Good point. Well, speaking of looking good as we kind of wrap this up, Thad. If I were to stick you on an island somewhere with pen and paper and say, “What’s the most impactful thought that you can leave with our listeners today?” And let’s make that twofold, I’ll be generous here. I’ll give you two bottles.

One would be a message that you’re leaving for agents in this economy, and the other is for brokers. What would that be?

THAD: You know, I sent out an email two days ago to our office. And it was funny, I was in a bookstore with my kids and they were all just going nuts in the children’s section. And both my parents are psychologists, so I always gravitate towards the self-help introspection section and I pulled out a book that was written in, I think, 1933 by a guy named Peck. I think my mom bought me this book when I was in high school and it was called The Road Less Traveled.

And I read this book, but really, the only part of this book that you need to read is the first page. And there are a few paragraphs in it, but they effectively say that life is difficult. But once you accept the fact that life is difficult, it’s no longer difficult.

So, I’m talking with agents. You know, a lot of times you hear agents griping about the market, “When is it going to change?” And when I talk to them about it changing, the real issue is if you’re waiting for it to change, when it does change it’s not bringing you with it, number one.

But number two, this is the market and it’s reality. If you accept it as being reality, you’re more able to work through it and succeed. If you’re constantly complaining about something that you cannot change, you will never ever grow and develop.

So, the first thing is accepting the things you can’t change and that’s the fact that, you know what, this business, this market, right now in this economy is difficult. If you accept it, you never have to talk about it again. You’re just working and you’re just succeeding and you’re not worrying that the external environment is affecting you. You’re affecting you.

For brokers, that’s an easy one. For brokers, their number one thing that they need to be doing right now is building relationships with their agents. They need to be building relationships with their agents, because


relationships are the prized and valued component of our business right now. And if it’s a good agent, every other broker should be talking to them, because we all want the best agents working for us.

So, we need to keep our agents happy. We need to have it based on solid, honest relationship, collaboration, and the fact that we are actually giving them what they need to succeed. We can’t be keeping the agents in our office based on guilt or time, because both things are not valuable. Time is great, but unless it was a good use of time, it’s not valuable.

MICHAEL: Have you ever thought about being a Navy Seal?

THAD: Me? They would probably kick me out.

MICHAEL: It’s the same strategy or philosophy. You’ve got a problem, you adapt. It’s that simple. Here it is. You adapt. You move on.

THAD: Yeah, but I mean, what’s your other choice? You know, you have a choice. You want to either succeed or do you want to fail? And how you adapt to the tools, resources and environment that you have, that’s what you’ve got. You don’t need to complain and talk about it or wish you could have done it better or wish you were given this one piece that would have helped your business better.

You say, “This is what I’ve got. How am I going to use what I have to be the best today?”

MICHAEL: You know, it’s not even a choice, Thad, because if you don’t do it, by default, you will lose. So, it’s like the Gods will take care of it for you.

THAD: And there are no other opportunities these days. The days of saying, “I’m going to go out and get a job.” Well, what job are you going to get? And there are not a lot of options out there right now. You either make it or you don’t. And that is a direct reflection of how much energy one is willing to put into it.

MICHAEL: Well, Thad, either you make it or you don’t. I mean, you know the numbers show that you guys are making over $1 billion. I mean, that’s phenomenal success from 2000 on.

And I want to thank you for taking the time out to do this, my friend. And continued success.

THAD: Thank you. I appreciate it. It was good talking with you.

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michael krisa, aka the interview guy presents thad...

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