While company culture may be a familiar concept, there are a lot of interesting layers to go through in making it truly fit your business. In this week’s episode, Doug C. Brown has a conversation with Joshua Simon, the founder of SimonCRE, an Arizona-based real estate development firm. Doug and Joshua discuss company culture, lessons Joshua has learned since founding SimonCRE at the age of 24, the power of staying focused, why your core identity as a business leader is critical to your company’s success, and much more.
Joshua Simon is the CEO and Founder of SimonCRE, a national commercial real estate developer committed to developing projects that benefit clients and the communities they serve. From build-to-suit to multi-tenant developments, SimonCRE strives to build community. To date, the company has completed over 245 projects across 22 states, equaling a total value of more than $645 million.
Visit his website: www.SimonCRE.com
I’m bringing you another amazing guest. His name is Mr. Josh Simon. He owns a company called SimonCRE.com. They are a real estate development company. We’re going to talk to him about how he built this company from the humble origins of starting out by himself all the way up over the last couple of years to a 60-plus-person company doing hundreds of millions of dollars in revenue.
We’re going to speak about the success progression of what he did, how he did it, and what you should do now all the way from where he was to what the culture shift he has been in the industries and the employees, and things like that as we all know has happened, to how you keep in touch and help people feel valued, how do you sell, what would he like to have if somebody was selling to him, and other different assorted things on this show. Grab your pen and paper, and let’s go into the interview with Mr. Josh Simon.
Josh, welcome to the show. Thanks for being here.
Thanks for having me.
I want to get into your story. If I remember correctly, you started in commercial real estate in 2004, and then started your own company in 2011. In between, you had a Voice Over Internet Protocol company that you built. It was publicly traded, and you sold.
In 2004, I was in college. I got a job as an intern at a shopping center development company. I worked with that group for six years through college, finished college, and started my own real estate company. At the time, it was 2010, it was a difficult market to start a business. I had hosted a VOIP company. We grew that company and sold it to a publicly-traded company a couple of years later when I finally realized that the shotgun approach doesn’t work as well as when you’re very targeted. That was a good early learning lesson for me.
It’s a great learning lesson for a lot of people because many people are trying to build a $100 million company before they get a $5 million company when they’re starting up. They go out and have tentacles everywhere, trying to figure it out. What I heard is that focus allowed you to get to success more quickly. Is that accurate?
For sure. Anytime you’re starting a business, you’re trying to figure out what your product is and what value you create. You might do a few things that maybe aren’t going to be your core focus, but the sooner you can get to that focus, the more successful you’ll be. As we’ve grown, fast forward for a couple of years when I started the company, I had nothing. We’ve grown it without investors and do $150 million of revenue this 2022. We have about $500 million of projects in the pipeline all in 12 years with 60 employees. Now, we’ve matured to a stage where we’re experimenting and trying new projects because what got us to this stage isn’t what’s going to get us to the next stage.
It makes a lot of sense. Stay focused as much in the beginning as you can. In other words, try a few things, but get one focal point that’s working. Build upon that focal point and drive it up to a certain point. Now, you’ve got to innovate. One has to branch out at that point because what got you there won’t continue to get you to grow beyond there, not in all cases, but in most cases.
It’s for us too as the business matures. I’m having a baby this November 2022, it’s our first child. I am married. I want to spend time with my wife and I want to be a good father. What we’ve done in the last couple of years is a lot of single-tenant net leases. We would be doing volume. We still want to do a lot of these smaller single-tenant projects, but we also want to sprinkle on the bigger projects that have more meaning and purpose to me. They require a lot less time per project when you think about it on a grander scale. It’s evolving into what the CEO wants and making it more of a lifestyle business.
For those people who are reading, you now have a commercial real estate development company. You sold the telecommunication company. Talk about the single-tenant net lease.
Picture a Starbucks in a shopping center that’s freestanding. That’s considered a single-tenant net lease deal, like KFC and Taco Bell. Those deals have become extremely popular in the last years as a way for investors to buy them. They almost act as a bond. You own the real estate, the tenant pays you, and these tenants sign long-term leases. We, as a developer, build, find the deal, get the lease signed, and develop the building. We then look to sell that almost like you sell a bond, and then an investor buys that typically through a tax-deferred 1031 exchange, and then they live off the income. The way we make money is the difference between the cost to build and what we could sell it for.
A lot of people reading this already have established businesses. There are few startups, but for the most part, they have established businesses. What were some of the strategies in the beginning? Let’s go back to where you were beginning out, doing maybe $5 million or so. What gets you from $5 million to $20 million? What were some of the focus? I know you had a direct focus but was it you went out and expanded a sales team? Did you put more into marketing? Where do you think people should focus when they start getting to that point?
For us, it was understanding where other developers in our space fell short. One of our core values is, “Be first, be fast, persist.” Much of our competition is the opposite. They’re not fast. They don’t persist. They take their time on responses. One of the early things we did was we brought in in-house counsel. He’s a full-time transactional attorney. Why? Now we can turn purchase agreements, leases, and other documents around in record time.
The industry has a saying in our office, “Simon Speed.” We’ve built this branding on that, “We move really fast.” Fast forward to now, we’re doing much more complicated projects. We still are super-fast, but we’ve had to slow that down slightly to make sure that we’re very thorough and are not missing anything because when you have multiple tentacles on a project, there can be a lot of unintended consequences if you move too quick.
What I heard was you found something to differentiate on that was probably a pain point, I would suspect. I used to do a lot of real estate flips and it’s the same thing. We’re just dragging time. Time is money in flips because the longer you keep it, the less money you make. If I could find somebody who was an outsourced entity that could come in and do what I needed in the flip, and they could do it in 3 days versus somebody doing it in 2 weeks, it would be much more advantageous for me to do that because it cut the timeframe.
Now, the other people on the project could also do what they were needing to do. Let’s say it was an electrician or whatever. What I heard was Simon Speed, which is cool. I love that. That was a differentiating point for you. People in the industry were like, “We don’t have to wait this long.” It’s like a drive-thru coffee. You don’t have to commoditize it to that level, but Starbucks has made a lot of money on drive-thru coffee.
There are also universal things like communication. The more touch points you can have with your customers and vendors, the better. We started creating weekly, and this is not done by everybody, and more and more people are taking this up now, but communicating project updates every week. We’re sending out weekly construction pictures. Small stuff like this keeps you in front of your customers.
That’s another pain point. These customers might be like, “Are we going to be able to open this 2022? I want to see progress.” Another thing that we brought in is my background in tech. We started a software development company within our company. We found that there was no off-the-shelf software to run project management for us, so we built our own custom software. That goes back to keeping up at Simon Speed.
I love the fact that you’re doing weekly communication. In most industries, it’s intuitive to think that you should do that. Most companies don’t do this, whether it’s B2B or B2C. You and I were talking. I purchased two homes. To get a furniture store and communicate with me on where my order is, I’m better off running down the street and try to figure it out. It’s frustrating to that point, but if you’re having weekly communication within the industry that is traditionally not known for that, I’ve got to imagine that’s a huge differentiation point where people go, “When Simon Speed comes along, people listen.”
What can other companies do to create their own version of either Simon Speed where they’re communicating better? Good communication is the bloodline of all relationships. Somebody reading this might be going, “That’s cool. I need to create my own Jackson Speed,” or whatever they want to call it. What would be some of the steps they can first look at and possibly put in play that are not too overwhelming?
It starts with the CEO. Who are you? What’s your vision for the company? Our core values are to be first, be fast, persist, do more, be more, be direct, show respect, be flexible, embrace change, be inspired, be proud, say it, own it, dream up, team up, be helpful, and build trust. That is us. That is the organization. It flows through my blood and into our team’s blood. When you’re starting to figure out what your Simon’s Speed is, it’s figuring out who you are as a leader and what you want your company to be. You can’t say you’re Simon Speed and then not respond to emails every day. That doesn’t work.
You have to figure out who you are. That’s so important, especially now when you’re trying to attract and retain talent. Pay is a big thing, but what is your culture like? I try to do little things. I’m out of town for the summer. I like to work remotely for a couple of months of the year to refocus and recharge. One thing I do every day is call at least three employees and check in for maybe 2 minutes or a 10-minute phone call. I have a list with my assistant, Chief of Josh. She is good about keeping me on and making sure my list is always updated.
When I’m in the office, I stop by everyone’s desk and say, “What’s up?” and a little fist pound. That’s my secret. That’s my, “What’s up?” I also send handwritten Thank You notes to three employees a week. We do something called the Big Dealz Chain, which is very Simon. That’s our culture. Every two weeks, I give the chain. It’s got a big Georgia football where I score the touchdown color, and it goes to one employee, and they get the front parking spot for two weeks, which is in the summer when it’s hot, it’s covered. It’s a very valuable commodity. We get a video that gets sent out to the company. Whatever it is that you’re going to do, it needs to start from the top and then work itself down.
What I’ve been talking to people about and what I’ve experienced in my own company is it’s not about money anymore being the primary motivator. Money is a motivator for people, but that quality of life experience you’re delivering from the top down is what it’s all about. That’s what I’m finding in people. It’s the fact that you’re sending handwritten notes. We’re speaking with Mr. Josh Simon of SimonCRE. Check it out at SimonCRE.com. The fact that you send handwritten notes, how long does it take you to write those notes personally?
I’m a pretty quick writer. It’s 5 to 7 minutes a week.
For 5 to 7 minutes a week, you are building trust and loyalty amongst your employees. We can send you people on a trip to The Bahamas, but the reality is, and I’ve talked about this so many times, incentives are not just monetary. There are things that people value. The fact that you’re sending out weekly handwritten notes, people value that type of thing. It’s the fact that you have the big chain around there and say, “You’re the big dog.” Here in Arizona, in the middle of the summertime, you’ve got covered parking. That speaks volumes to people.
The client that I helped one time had this thing. At first, I thought this was a little strange, but they had something they called the Yankee Award. The Yankee Award was to the department or the division that was doing the best. They had this 7-foot stuffed giraffe. They would take this giraffe every month and move it around, or if it was in 2 to 3 months in the same place, because they won performance awards.
When I first saw this, I was like, “It’s a little weird to me,” but the people internally would compete more for that Yankee Award than they would for anything else in the company. The message I’m getting is, “Differentiate even within your own company and show people that you care.” People respond, and they’ll do the right thing, but not only the right thing internally with the company. I’m going to go out on a limb here without asking and just assume that they probably do the same thing for the clients, your clients, and their clients, that they’re going out and going above and beyond because you’re teaching them what to do from the CEO down. That is so powerful.
I remember hearing a story about Wynn Hotel one time, whether you liked Steve Wynn or not for those folks reading. I remember one of his employees one time. Somebody drove an hour and a half to get to the hotel. She was a little older and forgot her medication. The employee, after hours, got in his car, drove to her town, picked her medication up, and drove an hour and a half back. That made me want to stay at the Wynn Hotel when I went to Las Vegas versus all the other hotels. In a competitive field like commercial real estate development or any competitive field, the fact that your people go above and beyond is going to give you the competitive edge, no matter what.
Your team enjoys working for your clients. They love being a part of it. Even the ex-employees, they understand our organization. It didn’t work out, but they have nothing but respect for what we do and how we do it. It creates a unique set of tentacles into the commercial real estate marketplace for us.
I would imagine that also improves the online reputation with things like Glassdoor and things that employees fill out because they feel loved, valued, trusted, respected, etc.
Go to somebody’s website. A lot of people ask, “How are you able to find a good talent? What do you do?” Imagine if you’re looking for a job or talking to somebody, the first thing anyone does is Google. They go to the website, and you get a feel if your website looks like it was built in the 1990s. Culture is probably pretty lame most likely.
On our website, our marketing team put a picture of our puppy, my dog, that I bring in the office quite a bit. He’s a Junior Pawject Manager, and people love it. He has an email too that comes to me like Scout@SimonCRE.com. I will get emails once a quarter from somebody that season. They think it’s the greatest thing since sliced bread. Be unique. Be who you are. My company is me. I’ve been able to develop a culture that is me.
I imagine people are thinking now, “I’m lacking culture in my company,” because they are. When it comes down to it, they’ve been going and doing the thing. As the CEO of your company or as the CEO or the founder of whatever company they own, what are some of the steps where they step back for a second and say, “If I was going to do these 3 to 5 things to start culture in my company, what would I do?” Would you start with the end in mind? What kind of thing do you want or whatever it might be? What would you advise people to do?
What’s the purpose? It’s understanding the purpose of creating this culture. It’s understanding your mission, vision and values so that everyone’s on the same page. Who’s your leadership team? Do you have an executive team? We have two things called A team. There are two of them. One is operational excellence, and they focus on process improvements. They’re all managers. We have one that’s the culture team, and they only focus on culture. This culture that we’ve created has been built up over a couple of years.
We have gotten to the size over the last few years as we’ve grown that we need buy-in from everybody else. There’s a lot of feedback on what’s working, what’s not, and how we make our culture better. I had feedback that people sometimes felt disconnected from me. They didn’t understand what was going on and what I was thinking, so I started doing a monthly video for the company. I’d self-record for five minutes, reading off an iPad, nothing professionally done, phone pointing back. The feedback has been tremendous.
They’re like, “That’s our CEO. We have trust that he’s going to get us through this whatever situation. He’s the right leader.” I think so much of the culture getting the feedback from everybody else and allowing it to permeate up to you, and not sitting in your office closed off to everybody. I’m a very open-door CEO. That’s important because a lot of times, you have to hear the things you don’t want to hear. It’s important to create an environment in which you can hear those things. Type-A hard-charging CEOs don’t want to hear things like, “We don’t want to hear that we did anything wrong.” There were a lot of tough conversations, but those are the opportunities for growth.
Why is that? People hire me, I come in, do an audit on their company, and I have a list of the things that if you were the CEO, you would not want to hear. I understand why, but I think for other people, why is it so important to hear the things for growth? Maybe that’s the reason you said it, but why is it important for somebody to be open to this whole process?
It’s reality. There’s your reality of this show. There’s my reality of this show, and there’s whatever is in the middle. If we have two different sets of reality, you might be hearing the team says, “Josh doesn’t communicate well. They don’t do this.” You might be thinking, “I do that all the time.” The reality is that’s not what’s being heard. If a customer is not happy, you might have thought that you’ve done everything right, but from their perspective, it wasn’t. It’s being able to be open to that feedback. When you’re presenting to it, you’ve got to pick and choose, “There might be 20 things on that list, but what are the 5 that are going to move the needle?”
I want to shift gears here. You organically funded your company. A lot of times, people who are organically funding their companies are always thinking, “I need more money. I need more of this or that.” How did you continue the growth? In other words, if you sold something, did you take a piece of that and then reinvest it into different divisions or departments? How did it work? A lot of times, people who are reading this have asked me this question numerous times. They’re a little confused like, “Should I get a bank loan? Should I get an investor? Should I get that? I want to hold my company all by myself, but it’s always the chicken and egg. I need this initiative, but I don’t seem to have the cash.” How did you do it?
Initially, I had $50,000 to my name when I started. To do real estate, you have to have your brokerage license to be legal. I would also do some side deals of teeing up a couple of what we call tenant reps, where I would represent somebody looking for space to make some easy cash so I could afford my car, food, all that stuff. The first few deals we did in 2010 were when we went to buy something. I didn’t want to have equity partners. Why? If you get an equity partner, you’re giving them half of the upside on every deal you do.
I went and decided, “I’m going to roll the dice. I’m going to go super high-interest loans and get hard money.” At the time, I was 25 or 26 years old, had no real track record on my own, and not a lot of money. I was able to do those first few deals playing 16% or 18%, but we would sell them within six months. I would sell them, pay the interest, and keep all the proceeds. The popular thing is to 1031 your deals so that you delay taxes. My whole theory was you don’t build the Sears Tower on a small foundation. We need to pay the tax so we can build a big foundation in our business. In real estate, cash is king, and you need a lot of cash to do deals.
Fast forward, we’ve pretty much recycled most deals. We probably sold close to 200, and we’ll probably sell another chunk of those out of the 260 we’ve developed. We’ve been pretty much a net seller of everything, but we’ve paid the tax as we’ve moved along. That’s been able to get us to the point where we don’t need partners. The financing mechanisms we used were mostly normal bank loans, which took a while to get qualified for in the beginning.
We created this mezzanine debt situation. You can’t do it as a second loan because of the Dodd-Frank passing of 2010, where they had a high volatility construction real estate loan, which said, “You can’t leverage up to 100%.” We created a new structure where we would allow an investor to come into our operating agreement, but I would have the right. They would technically be a partner, but I could buy them out at a 10% or 12% simple interest rate. We were able to create this new financing mechanism where, “We’re going to pay more in interest, but we get to keep more of the upside.” Fast forward, we’ve been very blessed not to need equity partners up until this point.
What’s so cool about what you said is you seller finance this thing and look at the interest rates as just a mechanism. It was like, “Get me to the next level,” where a lot of people look at an interest rate and go, “It’s 28%.” If you make $300,000 but paid 28%, you’re still up X hundred thousand.
Versus giving half of the deal to somebody.
It’s a way of leveraging your growth and understanding like, “This is part of the deal. We’re going to pay to play.” That’s what’s happening. Many business owners don’t do that because they get too myopically focused on, “I’m paying this per interest,” but they’re not realizing what they get from the actual side of the investment if they move into it, whether it’s real estate or any type of investment. I’ve talked to people in the SaaS business and solar business. It’s the same thing. They look at it differently. It’s more like scarcity versus opportunity.
They had Virgin Airlines once say to Richard Branson, “I always try to keep 5%. That’s what I’m looking for.” Everything else doesn’t matter because if you get 5% of multiple billions of dollars, it’s a lot of money. I hear you employing the same type of philosophy. Thanks for sharing all this. I am speaking with Josh Simon of SimonCRE.com. Check it out. He’s a smart dude. Josh, I can speak with you all day, but I promised we’d be in and out on time. I have one more question. People ask this question all the time.
You’ve got 60 employees doing $750 million-plus in real estate. You said billions in the hopper to put potentially. Somebody is thinking, “How does Josh like to buy? In other words, if I want to get a hold of somebody like him in his position as a CEO of a company, how do I penetrate that account?” What are some of the things they could do that would be something that you personally, as a CEO of a company of this size, would want to see?
It’s simple. Selling is DMRVP: Description, Meaning, Relevance, Value and Purpose. Anytime you’re making a sale, you should be speaking to all those things. Depending on the person you’re selling to, they and most CEOs will force you a lot to skip to, “Give me the purpose.” When I want to be sold to, I don’t need the description, meaning, relevance and value. I just want to understand the purpose because I can tell you the rest of the narrative. Like most of these CEOs, when you’re trying to get into that market, get to the point. Get to the purpose of what you’re trying to pitch.
Josh, thanks for being on the show. I’m grateful you were here.
How many of you have employees or outsource vendors, and you’re not keeping in touch with them as Josh is doing? For example, he’s sending at least three handwritten notes or letters to his employees, thanking and telling them how special they are, and how appreciative he is to have them in the organization. When do you do that even with your clients? How many of you invest $9 to send something like that to three clients a month or a week?
Think about this for a second. If you set $9 a week, you’re investing $450 a year in order to tell the clients that you appreciate them. How much do you think they’re going to remember you if you send them a handwritten note? As he said, it takes about 5 to 7 minutes to do it, maybe 9 minutes out of your time.
What are you doing? What’s your culture like? Did you step back and think during this, “Maybe my culture is not what it should be?” Are you taking the top-down approach as the founder, CEO, or whatever position you’re in, or maybe you run a division? Are you taking the top-down approach to say, “I’m responsible for this. Let me create the culture here. Let me let people know how valued they are, and let me help them along their paths?” There’s so much that came out of this show in such a little bit period of time that I would recommend you go back and read it again.
As always, if you want content or a certain subject matter, reach out to me at Doug@CEOSalesStrategies.com. We will bring that content to you. We’ll find the guests if we don’t already have the guests on our own radar and bring that content to you. If you love this show, please subscribe to it if you haven’t already. Tell your friends. Have them subscribe and give five-star reviews. The more of those we get, the happy we are, and so are the algorithms that boost our rankings for this particular show.
As always, if you want to grow your revenues, put on A-players for sales, those who hire, manage, retain and train those people, or you want to get yourself or someone on your staff or someone you know to the top 1% in your sales globally in your industry. In other words, the revenues that are coming out of that and the commissions that you might be driving, reach out to me at Doug@CEOSalesStrategies.com. DougBrown123 is my LinkedIn, or reach out to the company at (603) 595-0303. Go out, sell something, sell a lot, sell it profitably, make people happy, and you’ll be happy too to your success.