84. Building a Vertically Integrated Property Management Company with Josh Kristoff

Brock Briggs  0:00 

Hello and welcome to the Scuttlebutt podcast. This show is an exploration and discussion with the world's most interesting veterans. I'm your host, Brock Briggs. And each week I bring you a discussion with a veteran in a unique field to discuss the difficult problems of their industry and the tactics that have made them successful. Today, I'm speaking with Josh Kristoff. Josh is a former surface warfare officer and is now the managing partner at Nomad Capital Ventures and Kristoff Real Estate Investments.

In this discussion, Josh talks about the stark differences he saw leading a manufacturing company compared to working inside of a tech company in Silicon Valley. We talk about how the military develops you as a generalist and when you need to specialize in a particular skill, why executive MBAs are underrated and building a highly verticalized property management company. You can find this episode as well as the video version, transcripts and other written content all at scuttlebuttpodcast.co. Please enjoy this conversation with Josh Kristoff.

Brock Briggs

So, let's start out with you talking about this software product. You said that you just got off the phone with your business school buddy. I want to hear a little bit about what your vision for the product is. And then where you guys are at and how you're managing, build it?

Josh Kristoff  1:36 

Yeah, the headline is, the product we're looking at building is to support our property management, business and analytics side of that tied to like accounting fidelity. So this is born out of a pain point that we are experiencing firsthand in our business and the steps are going through right now. I've got a colleague of mine from business school, who knows nothing about the property management business. And I started talking with him because I initially wanted to put up some like analytics dashboards that I thought it would be helpful. And I was explaining the pain point a little bit more and saying, man, like I've spent so much time looking into how to solve this problem with like other property management softwares and maybe some integrations with accounting softwares that I don't believe anything on the market today.

Him and I have spent some time talking and I think he was evaluating if he wanted to spend some extra time on this project with me. And it became very apparent to him that yeah, this is like a pretty big pain point that we're going to have an opportunity to solve. And we keep trying to prove ourselves wrong. Now that's already out there, but we still can't find it. So we proceeded on with the development. And so what I've been doing this is a colleague of mine from business school, we're actually in the same small learning team, a group of six of us in the first year. So it's a good friend of mine. And he's the guy who writes sequel daily and code in R, which is statistics programming language and builds dashboards and all kinds of stuff that we can sync up on really well.

And so we just right now on the side for him, are having calls in about an hour or so, an hour and a half, once or twice weekly and we ramp out pace up, since we've gotten some good momentum on building a product. So that was just like, I guess, the headline and dropping listeners into what we're doing and why and how. I think where what's on my mind with this product is being focused on shipping the minimum viable product, which is effectively P&L statement, which is just obviously QuickBooks does that for you. And I'll spare the audience the nuances on why in the short term rental industry, that's just a low quality product for like timing of cash flows and stuff like that. But then it's to there's one thing staying focused on the MVP is like all the other like cool and fun things that I'm really looking forward to doing. So we can just extract immediate value. And then the second thing, which is just really broad is, what are we doing with this whole product in general? Where can we take it? How do we take it? It's we're building the data pipeline. I've engaged someone via fiber to write an API call for our property management software.

And then what other property management software, do we want to bring in? And you were working with five Tran is our ETL tool and then snowflake is our data warehouse and we had to create this AWS lambda function in order to work with this five Tran custom connector and all this should sound like nonsense to most of the listeners. The point being is how I guess maybe the to bring it back a moment as this is something I've never done before. I get it from my background, working in Silicon Valley, like the general like how to set it up or what questions ago or which tools to use, but then where do we take it and then like, how do we design for extensibility? So it's like you think of that minimum viable product? How do we solve the pain point that we have today? But how extensible is what we're solving? Could I bring this to another property manager and give them the same output and they'd basically throw in their API key and have the same experience with our products? There was just like a whole mishmash of things brought, how much it takes us in a different direction and makes some sense.

Brock Briggs  5:29 

No, you're fine. That sounds really interesting. And while the cost of like development has come down dramatically, I think what it also forces is, it actually requires you to do more on the back end. It requires all of these different things even to just get something basic running. And I think we're coming to an interesting headway just in like software in general, where there's literally a tool for everything. And all of a sudden, it's just like, you have all of these different layers.

And next thing, you know, you need to do 10 different things just to get off the ground. How have you thought about when it comes to your MVP, in terms of monetizing? One of the couple of the people that I really subscribe to their kind of belief system about what an MVP is, like, getting people to pay for it as soon as possible. Is that something that you are pursuing? Or do you want to put it in the hands of another property manager and kind of show them before you say, okay, pay me go from there?

Josh Kristoff  6:39 

Yeah, I think there's a couple of ways to get to your software product. One is born out of like a clear pain point that you're solving for yourself. And the other one is, I'm going to try to identify a pain in the market. And I'm gonna try to build a solution that solves it, not coming from like a place of like really living and sitting with a pain and figuring it out. So where we are today is if we just build something that solves a problem for our business, like that is the chief objective right now that we are designing with extensibility in mind. So thinking about monetization of the product, what I am doing in some of the channels where I communicate largely in Slack groups is teasing the idea of stuff that I'm building and also capturing feedback on hey, what are some of the accounting pain points you're having?

And I know that the willingness to pay for the tech stack and short term rentals is like pretty high. So I think, as far as it gets to monetization with this like, it's a backburner thought right now, over designing with the thought of like, how do we press go on this immediately. I guess I'm just proving I haven't thought about that monetization piece, like too much. I'm just more concerned about solving the pain point we have. And because I know if we can solve this pain point, that we can address it at scale, but it really needs to like when you're talking about, like accounting, fidelity, like in strict adherence to that and has to be, it has to be perfect. There's no way around that. So releasing something that's okay, I’m broken, from an accounting standpoint is just like not acceptable.

So we run through at least an initial shift internally and then maybe an iteration or two of it, while testing with one or two other folks that can give us like really high quality feedback. I think after that point that we have the ability to target based on which softwares we've integrated with, specifically property management software is the ability to like really roll that out. I don't think there was a direct answer to your question. Other than I guess I'd say in this case, the short answer is, I don't think I'd subscribe to roll it out and get paid. I think I'd subscribe to roll it out and get feedback, free feedback. Because the total addressable market, I think, is much larger and like the product that we're delivering is it needs to be like great quality in order to really work. Because the moment you're like accounting falls off the rails and I'm claiming that's a core feature of the product, you're dead in the water and I think you have a longer battle uphill. So

Brock Briggs  9:19 

Why is the propensity to pay for property management software, why is that high? You mentioned that their willingness to pay is there and so naturally, as you said that that makes the addressable market very large has that there just is so much that's to that. My kind of first level thinking not being in the property management space at all, is that's more costs. And there's probably in addition to what you're making here, a lot of other tools that are being used and then that just is more fixed costs every month. So why do you think that is? Is it just that good? Is the pain point that hurtful?

Josh Kristoff  10:06 

I think there's a lot of things that go into answering that question. One, I really don't understand why people spend so much on their tech stack. I think a couple of things like one, this is probably what Google News other services feed me is about the short term rentals to that's my space. But it feels kind of like a Bitcoin NFT type of or crypto type of environment where there's just like massive hype around it. So everybody wants to play, there's really exciting space. It's sexy, because there's design and you can Instagram it and all that stuff. So I think people are jumping in. And like when you do that, I think you have a pretty like wide distribution of the types of operators that's going to attract. And some of the softwares are really designed nicely to make it very easy.

And you can get off the ground with pretty high quality stuff right away. But then there's add ons, so you get dynamic pricing and you get cleaning software that can have quality control on that. And it's and also, I think a lot of people started when the money was great. So just like, man, this money is great, I've got nothing but cash to blow on tech to make my life easier. And so I think there's like a willingness to pay for that. I think it's also like, when I looked at property management softwares I looked all the way from ones that had a $30,000 implementation fee was six months of configuration and 30 plus dollar per listing per month subscription, all the way down to over the side of our portfolio, no implementation fee and less than $10 per listing per month. And then like everything in between.

So I think it's just like a willingness to think about the business that you want to be running and what's necessary. Something that pm specifically in short term rental industry will probably not like me for saying or maybe some of them will agree is the property management industry, there's maybe c minus, at best. So if you're assembling like AB minus product or you're AB minus operator, like you're winning, in my opinion and I think there's a lot more professionalization that's coming in the industry as people get a lot more interested it in it, thanks to the likes of platforms like Airbnb and VRBO and putting.com. So time will tell. I don't know why people want to pay so much for all these things because the tech stack is massively expensive. It's pretty wild.

Brock Briggs  12:41 

Yeah, it makes me wonder what as the kind of popularity maybe died. I don't want to say dies down, it's there will always probably be a need for something like this. But as the marginal returns decrease and the skill to perform well and make money in the business kind of goes up, as more people enter this space, it makes me wonder what the compression of that stack looks like. And probably somebody's willing to go through there and roll up a bunch of property management related software and build something really big. I got to imagine there's a lot of them that fit into there.

Josh Kristoff  13:19 

Yeah, we've talked about compression quite a bit as it relates to the industry, specifically the broader macro environment. And then localized municipalities have certain ordinances in effect, licensing and stuff like that property short term rentals. But then there's also the supply uptick because people are bringing properties markets, they want to play. Like they watch everybody make a lot of money and they want to make a lot of money, too. So that's drastically shifted and then yet there's a lot of PMS. I want to be a Salesforce and Oracle and SAP in the PMS world. And it's like really driving toward that enterprise Enterprise Resource platform or ERP of the space. And it makes sense because it's like a financial system of record, like right now. You know, everybody's going to claim you can have it and I suppose the ones that do claim you can have that, I suppose there's a way to get there.

But their legacy software is built on legacy code bases that are like trying to either fully rebuild or build on top of that. And so you're doing like two to three clicks instead of one click. The UI, which generally we can live without the UI but the UI is pretty, pretty rough. And the biggest thing for me that really freaked me out about going to some of these, like, super robust, ERP like systems is I can't just onboard an employee to manage that. So some of that, like significant training and a lot of these places set up their own university to get your team training and employee retention rates and stuff like that. Like, I'd rather have. I mean, there's like a lot of new school, PMS that are being built for people effectively just telling like I could be if you were to join the team Brock, like you'd be up and running in three days like that. It'd be also I know, we're not talking about that at all. It would just be easy for it's like an intuitive systems that are being built. And I don't want anything more difficult than that. And so far, we've proven we don't need to have that.

Brock Briggs  15:22 

Yeah. And I know, we're going to talk a little bit more about property management and all of that. I'll be curious. I've got some more questions, but I'll say those so we get into that in a little bit later. I think it'd be helpful to kind of rewind the clock a little bit and maybe give me a two to three minute overview of your kind of life and career and how you ended up here and then cut some questions about your time in the Navy. I want to ask.

Josh Kristoff  15:47 

Yeah, looking forward to those in particular, Brock

Brock Briggs

You and JD are exactly the same.

Josh Kristoff 

Yeah

Brock Briggs

JD’s first words were, can you keep the Navy talk to like sub 10 minutes please. And I was like yeah, we can do that.

Josh Kristoff  15:58 

Yeah, yeah. JD that stuff. Yeah, me, I grew up actually just about an hour and a half east of old JD there in greater Syracuse area, Liverpool in New York. I grew up with no military influence. And when my grandparents had done their two to three year stint and really see much action, not really talked about too much and Syracuse, not really a military area. My dad had a colleague at work that suggested it. I looked at the Naval Academy, brought it home to dinner and my sister was off to college at the time. So my mom and I are like, not really military type of guy, dads. But nevertheless, I got the college or the course catalog six years old, from my private high school or whatever and started reading about life as a midshipman and really fell in love with it. 911 happened, junior year for me.

And that was like just a catalyzing event. There's no better thing I could possibly do next than join the service that was just observing that direction. And then it was just like, just without a doubt, I didn't apply anywhere else. I didn't want to go anywhere else. I didn't want to do anything else. And so that's how I ended up in there, four years in the Academy, studied quantitative Economics, played soccer. I was used to train with our youth national team for soccer and also just that off to the side to go join the Navy ended up choosing surface warfare by choice. A lot of people think that's funny because surface warfare, it's plenty to say about that. Also, jumping on JD conversation about that world to you're laughing on mute, I think over there, but it's a unique community. It's one that I felt should have been more elite like the SEAL teams. I think it would have been a community I'd still participate in.

But yeah, did the Navy four years out see two years on shore, did a year with a two star Admiral, which was one of the best tours I had, that was my stay and get out decision tour. And I decided that there's truly no reward for saying to become a flag officer got out transition into you like this one. But 60 days, my first job, which was a jam. I recruited a transition into a company that was just a really terrible fit for me. I had no idea what I was going to do. Fortunately, my wife who saw she was also a Surface Warfare Officer, staying at home and our kids had said, hey, let's just go back and live with your parents and figure life out, which is exactly what you want to do is go live with your parents. But I'm thankful for them and thankful for her for kind of saying, hey, forget about this job, work for a manufacturing company. After that and Silicon Valley and some other stuff, but I don't think I followed your guidance on the two to three minutes there.

Brock Briggs

No, that's perfect. Just give some context for or we're going to talk about and some other subject  we're gonna get into. One of the things that you had told me that I found really interesting, just because not a lot of people say it and part of this job and maybe it's just talking to more and more guests. I hear a lot of the same stuff. So when I hear something different, I perk up a little bit. You had told me that you were really eager to have a positive influence on the Navy. And I think that a lot of people think that but not a lot of people say that. And I think that maybe some of that was derived from your time with the Admiral or that tour that you were speaking of. What was that about? Like why would you say that? And what were your intentions and findings, I guess?

Josh Kristoff  19:25 

I think generally in the service, we like to whine about anything and everything, no matter what rank we are, what branch we are. And that's just like how we're wired, probably just human nature beyond veteran things. So as it relates to that, I think I was super compelled how to like, great anchor of 911. And why like, why was I doing service? So I think maybe prior to that there were probably a lot of different reasons why people join and then after that, it was like, wow, there were like some real reasons and there are bad guys and we've got national security and I like being a part of that and so having a positive impact on an organization stands for those things. I love being American. I love a lot of what America stands for. It's great. So I think when you take a look at it from that perspective, it's easy to want to be improving that large organization. Yeah, I was really interested by staying in command and I was on track for that and then became a flag officer. That's the point it really comes down to effecting policy change.

And, boy, that's tough to get back into Ben Kohlmann’'s chat with you. And, you know, the rapid innovation sounds good to see like a shutdown stuff. And my sister in law also did some really interesting things where she is a JG, was making recommendations to admirals and they were taking it. So it was a separate part of the Navy. But that was like really fascinating stuff that I saw. So it's optimistic, I guess, is what I'd say that the opportunity for change was there. I also think this is probably about anybody who takes a position of leadership and finds joy in it, whether in the service or out is I really like coaching and mentoring and helping folks make sense of the crazy world that they were just thrust into and helping them be successful and active contributors. There's nothing more frustrating than having a bunch of non qual junior officers that can't stand the watch.

And so I was really interested in how do we get better at doing all of these things. And then naturally taking command of a warship, I had plenty of good and bad examples. And I think bad feelings that turned into good leadership when I reflected on it down the road. That said, okay, when I take command, which is what I'm planning on doing, or when I have more people under my charge, like, this is how I'm gonna do things. I'm gonna do these very intentionally, so that this team can run really well. I think, just to close on at least my ranch here is like playing soccer, super competitively. Growing up working with military teams for a while, it's there are moments where you've been part of a team that's so special, and I guess I use a soccer analogy. I use it a couple of times. But it's like I played center, midfield here, nucleus and what's going on in the field and it's some of the teams I'd receive a pass from my right midfielder.

And then I could check the ball over to the left side of field that somebody perfectly in stride, never having looked at where that person was in like the last 10 seconds, you just knew they were there. And then there were other teams would do that, and nobody was there. And it sucked. So it's like when you know what the good team feels like, when you know you're doing your trials drills are evasive maneuvers. And everybody's on point and the communications are tight, man, that's like the most exciting. That's the most exciting part of it. I think maybe I was just hooked on building effective teams too and building effective teams in the United States Navy, but was pretty exciting to me.

Brock Briggs  22:58 

I think naturally so. The feeling of camaraderie that comes with whatever kind of team you're a part of whether it's soccer or the Navy or whatever. It feels good and natural when things are operating as they should. I think that the Navy is a really good and maybe the DoD writ large is a fine example of how difficult it is to maintain that, like that sort of operational efficiency that comes from a tightly knit team just because of the natural turnover that's happening, not even just with people exiting, but also even in command like they're in there for such a short amount of time.

The first like probably a year to two, you're just dealing with the mess of the last person and getting a sense for that and trying to implement your own thing. And it's difficult. Somebody who echoed a lot of what you're saying is a former guest also, Josh Steinman, who said a lot of the same stuff and he said something that's really stuck with me that the DoD kind of grows at the rate of decay, like those are almost the same figure. And so it's really difficult to enact major change that is lasting.

Josh Kristoff  24:18 

Yeah. Probably a large portion of your listeners come from this world that we've all been a part of in the DOD. And it's a tough place and for better or for worse, just the massive scale of the organization is really hard to understand what would be the better way to do it and like clearly measure those improved results. It's interesting that two year tenure, you basically on a tour to tour basis. It feels like the civilian slides look a little bit more that way too. But in a corporate standpoint, where there's so much turnover like in high growth areas like tech, that's been arrested a little bit lately, but I feel like in the tech community, we're seeing a lot of new people showing up and leaving and reorganization. And I think maybe the difference is their reorganization attempts to like mold the team a certain way.

And I think that just happened, very slow rate in the DOD. But I'm really not qualified to comment on anything that DOD is doing anymore. I was optimistic at one time. I'm still optimistic that we're gonna get there because I know a lot of good people that have stayed in. But it's frustrating because a lot of good people got out and they got out for kind of the reasons that you wish weren't there. It's also a tough life but I'm thankful for the people still doing it. And I'm glad I don't have two things. Number one veteran trade from at least deployed or operational jobs is perspective on life. There's nothing better than knowing I've got my bed to go home to and I'm in perfect control of that and see my four kids and my wife and that's totally in our control. There's no request to get married, that might be denied. You know that.

Brock Briggs  25:58 

Yeah. Oh, absolutely. I will say that if there's like a few small things I miss, the quality of sleep out to see still has yet to be matched no matter how expensive of a bed I bought. But everything else is the other way that, yeah, with you on that. You mentioned something I want to ask one more question, we can kind of move on. You were saying that you see a lot of tech companies having that same level of turnover. And maybe that's very peak market talk, maybe that's just added hold rates have been low and employees have all the power and whatever. And maybe if we're gonna go into a recession, maybe that equation changes. But what do you think that does to the private side or any kind of corporate job? How are they impacted from quicker employee turnover, do you think?

Josh Kristoff  26:53 

It was probably more of a tongue in cheek comment than anything. So I don't want to like latch on to that. But let's accept that it is something for the sake of the conversation. I think it's about probably adaptability and ability to do that for a customer. It's specific in the tech industry, like the speed of development, the amount of talent that can support that. And then the customer's needs are constantly shifting, especially with these new technologies coming out on a regular basis. So I think it just on an organizational level, requires the leadership that's in tune, has some vision for what's likely to happen in the future and then hedges accordingly and then is adaptable to that end. But it's hard when everybody's playing the same game, like the tech companies were playing the growth game.

And how many CEOs came out and apologized and said, hey, we hired too fast because we didn't expect this to happen. If you were the maybe all the CEOs were like, whoa, maybe we should pump the brakes. But yeah, that changes your strategy quite a bit because there's talent wars. And if you're not bringing the right talent in, then when you go through some type of layoff, you don't get to keep the best people that you have from a larger pool. Yeah, I guess I really don't know. I just say it's like adaptability. In some cases, maybe there's leaders that are willing to take a stance on what they believe to be true for the future end up winning. I don't know if there's a clear story for that in a larger organization, recently as a result of layoffs, etc.

Brock Briggs  28:27 

Yeah. I'm not sure either. I just was curious. You had said that. And I was like, oh, I wonder what his take is on that. You went and worked in Silicon Valley for a little while. But before that you worked at a manufacturing company. And I'm curious, how stark of a difference were those two different things? And was there anything about working at like a manufacturing company that you like, either took to Silicon Valley or maybe you realized afterwards of being more immersed in a tech focused role about the opportunities in like physical products and like old school, I guess I'll put it in quotes there businesses?

Josh Kristoff  29:13 

Yeah, manufacturing gig was probably the most fun job I've had until mine today,and that was more or less I had the keys to run the company and that was really fun. So I had an owner that was buying business from his dad. I knew him from high school. And he said, hey, you want to come help grow this business rapidly? And then also just read it because I kind of want to read it. I thought, man, that's a really neat opportunity. I think it's very clear differences is like the composition of the workforce, largely blue collar and the way. So we manufacture springs in wire form. So we took coiled wire rod of a variety of different diameters, those smaller than a strand of hair micro wire all the way up to round locomotive airbrakes which are like roughly half inch round wire diameter. We had loads of machines throughout the shop and we bent and shaped it and formed it into the needs, the parts that would go into assemblies that. It would end up in the final product of three to four dozen different industries.

It was a total job shop environment. And that was literally insane. It's a constant optimization problem that never gets optimized. When you're making decisions on like, how much inventory should I run, expecting that this customer is going to buy more because the per piece price goes down, it's more profitable when they were next time, etc. But like the composition of workforce, one that role like I was running operations and eventually, as we were looking to continue growth was operations and business development. But that was largely just like, how do we get the behavior of the organization to be a certain way. And I introduced a system of measurement, held regular meetings on a regular basis with the team I got there and I had the senior management team every morning for the first three months, just tell me what was going on. I didn't say anything and change anything.

But just listen and walk the shop, walk the shop floor, talk to the team, learn a bunch of different things. And it's funny, I was like 28 at the time and a plant manager have 28 years of experience as an adult running the freaking plant. So he was like, what are you doing here? And then I got to the point where it's like, hey, plant manager, we're having a conversation, like, what do you think about this? Like, we can't I was like, what about this? And then he was like, Yeah, I guess we can maybe try that way. So it's like this, you're coming in a different situation. And that was all about like team leadership and communication. And then there was a system of measurement that, I think, kept the operations on track, which I think was like transferable. So I studied quantitative economics. I like doing a bunch of stuff and spreadsheets and formulas and worked with our IT manager who could write some SQL queries and pull more information I wanted to look at so it was like in both of those worlds of just like motivating people to get the job done, but also setting goals so that we can achieve them and then work through it.

Yeah, I mean, we had temp workers come in and do some of the tougher operations to see if they can earn a spot to be a machine operator, and then maybe eventually, spring maker, which is a pretty awesome job. They work on CNC machinery, computer numeric control machinery, and it's like literally coding, it's really fascinating. Go watch a YouTube video, the spring being made and you'll probably just, like re-watch that thing over and over because it's pretty remarkable. But then yeah, we had an ex ex cons in our grinding room where you grind down the edge of the springs. And we got to figure out how to motivate those folks to like, they've done their thing. They're back in the workforce, and you gotta figure it out. And it was some of the most rewarding relationships I think I built with those people like real true material impacts on their life, not just oh, no, I can buy a BMW instead of a Honda type of stuff. It's while I can, like supporting myself and my family. So that was like the people ended up being the thing that I loved more than anything, because it wasn't a family.

But it was like a tight knit organization. And we relied on one another to get the job done. And if somebody screwed up, everybody paid. And so I really liked that. At the time, I also was reading a bunch of magazines and pulling myself with Silicon Valley dreams. And I was just always so excited about it, I wanted to put down it's better than perfect. The old Sheryl Sandberg stuff like on the walls. And that was done. That makes sense because it was all about being perfect. And on the precision springs that we were making. But I just really was drawn to what was going on out there. And I think in the Navy at the time, like I couldn't go to tech, like I didn't have a computer science degree and know anything about it. And fortunately, MIT Foundation, which is an awesome veteran organization, had a holding workshop at Facebook. I had been in touch with them.

And my wife had been in touch with them after we got out before we got out for a while. And they're just a remarkable organization. And so they have this workshop and Facebook, three days exposure to tech, Facebook, in the Bay Area. And so like we went out there on our flight home, he said, let's put our house on the market in Syracuse and figure out how to join the digital revolution. So getting into the tech space after that was sitting at my desk and I was working on implementing a product lifecycle management system. So I worked at Meraki, which seemed at Cisco Systems, the computer networking company and I worked with the hardware team. And it was basically like so we have an access point or router. And then there's a bill of materials. And this is like all the components that go into it are arranged by hierarchy. And so my job was to figure out how to get this implemented into a product lifecycle management system.

And we worked with a startup company that was building on the Salesforce platform for their product. And so we had to figure out how to get our raw data from seven or eight different design manufacturing partners in Taiwan to fit into this one system. So did like contrast of the manufacturing world where I'm like walking the floor, talking to people and then doing a little bit of measurement. And then like building systems to measure stuff. I'm like, putting headphones on and listening to music and just cleaning data every like hours. And I loved it. It was like I loved it. It was fun. Just it was like just getting points, like the more bombs we build on materials, we got the jam into the system. And, but it was like problem solving with the engineering and product team for the vendor. So that was all like, super fun.

I was like, man, I'm really done working in software and doing software stuff. And it's really fun. But my level of interaction with the team was like, just updating my boss on anywhere. I think we'll be done by this time and we'll have the PLM system, it'll be great. So there's like stark contrast. I eventually tried to push into a lot of different areas within the organization and had the freedom to do that, which was really cool. And really what we're doing now in a software product is connecting disparate data sources and like generating quality insights from that and then making strategic decisions as a result on a small or larger scale. And that's almost precisely what I'm applying today to build that software product, so.

Brock Briggs  36:12 

Coming from a non technical degree background, did you find yourself more apt at the manufacturing versus the more tech focused gig? I'm curious, just a lot of people exiting the military and maybe considering different avenues of pursuit of what kind of job that they wanted to be in. And I know that tech was not really what I was pursuing right out of the Navy. But after being made aware of what was going on in Silicon Valley and starting to think about that, I became more and more attracted to it for many of the reasons that you just discussed, but simultaneously, talking with a lot of vets that now go into like ETA or entrepreneurship through acquisition, they buy like sweaty businesses, like HVAC and not that's the same as manufacturing but in that same ilk.

A lot of times, it seems to me that the Navy kind of naturally equips you more for one of those more blue collar-esque jobs because like you were saying, a lot of what you were doing was optimization. You can bring the analytical mind to it. And then it's leadership, rallying people around a common objective. A lot of all of the people related things that you do, as opposed to a more tech focused job, you need some more like hard skills and like, it's a plus, if you can code and like all of those types of things. I think there's a question in here somewhere, but

Josh Kristoff  37:51 

You just filled it down pretty well, Brock. I think what you're talking about is like being a generalist versus specialist and a generalist is rewarded in a lot of areas and we come out of the military is pretty generalists. As a surface warfare officer that's supposed to command a warship. I literally develop expertise in not one specific area, you run the engineering plan for one job and then you go to run the missile systems for the next job and then you're the navigator for the next job or whatever. And that's you're not an expert in any of those things. You're just supposed to be generally competent enough to understand how the systems interplay. And I was like in the manufacturing world, like I wasn't an expert on any of that stuff. And in the case of tech and this was like, the interesting thing that I thought and so my wife was in internal communications for a brief stint in the tech world for a couple of years in the tech world.

And I used to think like, why do these VPS effectively like commanders need somebody to communicate like your job as a leader is to communicate? It's like the number one most important, most difficult thing to do is make sure the team is on the same page. And these guys and gals that are in these positions aren't just experts at what they do. And that's not communication. And that's happened to be the VP of Communications, but like all other VPS are not, they're just like specialists in their field. And so that's just like a totally different experience to the translatable skill set like leadership is absolutely transferable, like in the tech world as an individual contributor and then building a team after that, like leadership was. I was leveraging a lot of the same skills.

I would just, you know, I didn't have direct reports, but it was without a doubt different and I only made real good strides when I acquired skills and the skills that I needed to run the manufacturing companies, certainly I like to think I'd be a lot better at it. Now 10 years later than then, but yeah, I think it's a generalist or specialist and running an HVAC shop is you don't have to be a specialist to run that. You can learn and be better at observing who does quality work. But yeah, software is extensible. HVAC tech is not. It's just like you're one person, you can only do a finite amount of work, but you build smart, efficient code and it can go to the moon and back.

Brock Briggs  40:16 

What do you think about when is the right time to specialize or to learn a technical or kind of a hard skill like that? Thinking about our earlier conversation about you working on this software product, like you may not be in the nitty gritty of the technical stuff of what's happening. However, enough to be like, hey, I know the title of the person I need to hire for this or I know at least the questions to ask. And I think that is a good position to be in because you maybe don't need to spend all of the time getting that technical or that specialized. So do you have any thoughts about when is the right time or if there is a right time to get those?

Josh Kristoff  41:03 

I think that those technical skills are becoming a lot more ubiquitous and a lot more necessary in a way that non tech non Silicon Valley companies run. So I think when's the right time, like when you're interested and you have the ability like you would do it on nights and weekends after you put your kids to bed or whatever the case may be like, that's probably a good time because you have an interest in that. For me talking about getting into Silicon Valley, I talked to a handful of gosh, I talked to a mounds full of people, like hundreds of people before getting out there, well being out there and trying to find a job and all that stuff and just a constant conversation. And I pulled out this common thread of knowing sequels, a big advantage. And then out of the 10 people that told me that one or two of them said they could do it, it sounds like that's a dumb. If it's important, why isn't everybody doing it?

So I went on Code Academy, took a free SQL class and then put on my resume that I had that skill. And Job one was day one would show up and say we need to write a SQL query, I'd be like, oh, my God! I can't do that. So interesting like technical skills. My first job was with a company I spent three months with before myself and half the company got laid off and the third round and those three months of layoffs that happened. Welcome to venture backed startups. But so we had this business intelligence tool that Google now bought called Looker. And it was awesome. So based on how the data was hooked up, in the back end, you can pivot and filter and draw some insights. So nobody could self serve pretty intuitively. But they had this other feature called SQL runner. And like every pivot and filter you did, like you could generate the SQL query that got you that information.

And what I do is I want to look at something more specifically. So I go to StackOverflow and asked the question the right way. They get the syntax for the sequel to pull out what I wanted to pull out. And that was an insane advantage for me. The amount of stuff that I was able to go, like self serve. We had an analyst and I couldn't bother her because she had tons of other stuff to do. But I saw these opportunities. And so I just said, okay, get on StackOverflow and get after it. So how am I answering your question on when's the right time to get a technical skill? But I don't think the hurdle is that high, especially nowadays, if I just had to chat GPT to read your query for you to require you those skills. They like technical skills about understanding like numbers and data and quantifying stuff.

So if you don't have that ability or you don't have any interest in that ability, it's pretty hard to go after a technical skill unless but I think it's important not to just like pursue a technical skill just to acquire the badge and then do that thing. This is like the most frustrating thing. What's your passion? What do you really like doing? It's like, shit, I don't know. I still like I generally, I know what I like spending time on and sometimes you don't get paid money for that. So it's tricky to figure that out. So I think some of his you just have to put your nose to the grindstone like figure out, like how to make moves in advance if you're like a growth mindset person, which, so I don't know what's the right time to go for technical skill, like when you want to and it's clear that's limiting you from getting where you need to be. You just can't communicate with people, that's like the other thing.

Maybe it's if your company is bilingual and you don't know how to speak Spanish and the entire marketing team speaks only Spanish, like you can't get the job done. Period. So if you can't communicate, like you just can't get the job done. Again, back to communication, right? So the technical skill is probably more to underscore how to communicate. And that's a software product we're building. It's all about my ability to like, look at the code and understand why it's not achieving the result we want and being able to explain that and also explain it in terms that my buddy can understand when he's doing coding. I'll pause there.

Brock Briggs  44:58 

You bring up an interesting point about Chad GPT writing your SQL query for you. Hopefully my statistics professor is not listening to this. But that's like probably the reason that I'm going to pass statistics this term because there were, it was unbelievable the quantitative power that brought and it really gets me questioning, like what the next 5 to 10 years looks like in terms of these some of these technical skills like coding and I haven't used it is that the GitHub co pilot. I haven't had the chance to use that yet. But if you're using Chat GPT and you say, hey, here's my problem, here's what I'm trying to do. The code output of that is insane. And you can say, oh, I'm getting this error. And it will just say, oh, this is probably the problem, try this. And it becomes this conversational thing. And it really has me having a big question mark over some of those, like coding and SQL and things like that.

Josh Kristoff  46:00 

So I'm not gonna comment on Chat GPT other than like, those types of tools, large language models, like they're awesome. And we use them in some ways in our business. But I think the thing as it relates to technical skills and analytics and queries and you're talking about statistics, it's like putting the ability to write code as though you're a statistician but you're like a non statistical mind is, I think it's just a total there just going to be people are like, I ran this regression analysis and I got this output. So we should do that. And it's oh, dear God! You've got to have somebody that's statistically trained, that can understand the quality output. So I studied, I was very intentional on picking Wharton exact program for two reasons. One, I could run there from my home and to the San Francisco campus to stay there for the weekend. And I didn't want to be inconvenience of flight to any other programs. So it was like literally the only exact program that supported my need, but also because of focus on quantitative studies.

And one of the things that at Wharton was so clear and the number of statistics class that really doubled down on was just, this is no surprise that there's so many different opportunities for like, PhD trained data scientists to like, make bad decisions by doing a statistical analysis. It's pretty remarkable how I get a PhD folks are less likely to do it. But mostly the scientists that are like having that title or business analysts aren't PhD level folks. I think that type of thing is concerning as we get better at using “data” is like the practical like statistical statistically significant application of that data, like you've got to have that mind as a manager of investing in a skill set that you'll be able to bring to the market, especially when you finish up your program. But that's an interesting output. But like, how did you factor for this, that or the other thing? Why is that the significant variable? And what about this other variable? And so it's anyways, I think that's something that the business analytics team that understands how to manage that's going to be better poised for success.

Brock Briggs  48:25 

I think on the surface level, it optically appears that hey, like, anybody can code now and anybody can do all of these things because you can just, hey, here's my problem. However, as you pointed out, what that does is it just polarizes both ends because there's the other side of the coin is that you almost need to be, maybe you almost need to be smarter than you needed to be before because you actually have to be able to recognize when there's a problem with that. It's hey, this output is not good. And it's not accounting for this or you have to be able to see through because it's giving you this answer so confidently, but saying, oh, this is the answer. And you have to be able to challenge it and know enough to be able to see when there's a problem.

Josh Kristoff  49:18 

We love low friction as humans, especially these days. This call this morning, all we did was diving until the into the 5th level the basement on edge cases or specific detailed questions on like, how do we handle this specific case? Or like, how do we clean this data a certain way so that the output is going to be the same when we run it? So I think there's a lot of you can send it off that made too much sense in context, but it's just that there's so many detail oriented things that need to be gotten right that one, I think is you're talking about being a technical person, like a lot of it is just very much attention to detail.

And then the second thing was just probably a repeat of what in my diatribe on making sure that you're statistically trained before you're making statistically oriented decisions or enacting them or if you're an operations manager and you've fortunate to have an analytics team and they're presenting output, like you cannot blindly trust that. I remember one thing that like really turned me really bad toward quant is I loved reading Forbes and Fortune and Harvard Business Review. And there was this one article on HBR.

Like, probably back in 2011 issue or something like that. And it said, the three things executives today need to brush up on and focus on and get good at. I don't remember the other two, but one of them was Regression Analysis. And I mean, it's just how could you possibly let somebody else drive the train for you, like, in my opinion and right now, because we have the power of compute and increasingly trained workforce that can put out some type of analysis on some type of data. The responsible executive is going to be able to understand and interpret and challenge that. So

Brock Briggs  51:10 

You talked about the value of that executive MBA that you did. Do you want to dive into that? I haven't had the chance to talk with somebody who's done one of the executive ones, it's usually people, former officers that get out and go do just a traditional one. Maybe compare and contrast what you've heard about other MBAs versus this one and maybe the real value that brought to you or lack thereof.

Josh Kristoff  51:36 

Yeah, the MBA conversation’s a huge one, specifically among the junior military officer community, but organizations like services school are helping show like the entire community that you can be enlisted and still go do great things better than officers. There's like literally no limitation, which I think is remarkable. And that organizations great to that end. So for me, the warrant exact program. First of all, like back in 2013 when I got out, my wife and I had just left Bahrain, transitioned out of the Navy and had our first daughter in July in Bahrain. It was funny, my wife was walking around the only pregnant sailor or whatever, out in Bahrain. So she had her like tent, camouflage suit and she would always be like, I'm not fooling anyone right here, giant belly. But yes, I mean, she was funny, she gave birth it was like 130 degrees the next day in July. And it was like, around the time there are a bunch of protests and I was like, helping if there's a protest, we're planning some people already get to the hospital.

But so we had transitioned out, had our daughter and my wife decided she was going to be a stay at home mom, what she could tolerate for two, three years, basically. But for all the moms out there that are thinking about it, it's like a good thing to do, I think, but it's okay if it's maybe a little bit too much or like you want to get into the professional world after. So I wanted to do like that full time MBA. I was like, I literally have no idea what I'm gonna do. I'm using it was JMO recruiter from Bahrain, placed me in a company that was a terrible fit, terrible experience for me. And I was just like, man, business school would have been great. Two years to meet people that are doing all types of stuff. I'll get recruiting, party, network, have a great time. And I never did that. A couple of reasons. When I decided like when it was round two round three application, I didn't have a GMAT like that mattered.

So I took it cold, got a 600 basically, took a cold again, got a 610, studied a little bit, got a 614 and finally took in the fourth time studying got a 690. I showed up because nobody serves their GMAT scores or that story. And I find that a lot of people find that helpful. I took it four times. And that was a 690. And it was good enough to get into Wharton. So the 5.5 GPA from the Naval Academy, proud of not proud of that fact. The executive program when it came around, like I didn't even know it was in San Francisco. I literally had been like running by the Embarcadero. And I saw a Wharton logo. And I was like, What the hell was this? I found out that there was another gal that had served in the Navy, he was working in private equity that had done the program. So good friend of ours and then we started talking about the program and I learned more about it. And I think the interesting thing about it exactly MBA, one, the format's important. This one was every other weekend, like Friday through Sunday on campus. Even if I lived two miles away from campus, like I was paying for a hotel room. I didn't have to stay there.

But the intent was that people on site so it was the same amount of hours as the full time MBA. The difference there is the composition of the classroom, the median age 35 median years of experience roughly 11 And these are people that are like executives, that billion dollar organizations or just phenomenally talented, bright people, but and that's what like a lot of elite business schools and other business schools have, but they're just earlier in career so When we're doing the case studies or having a conversation in the classroom, people are like I was actually there. And let me add some more like, color to what was really going on. So just people that have built businesses already like to scale and so the professors, they were like, man, we'd love the executive program because just the way that the class can engage is just at such a higher level.

And it's obviously not fair. We just have more experienced than like a full time program. It was also great because the opportunity cost. I was getting paid my W2 money by going into class and my work allowed me to do that. It was great, was hard with two kids. We had our third during the program, but I really felt the merit of the program was super high. A lot of the business school discussion is you go there to network, to learn something, get the brand. And like originally, the brand of the network's most important, the brand’s the second most important, the learning is the least important that basically is just you throw out the window, who cares? Like probably, like still agree with that. But the amount of like hard skills I took away from sitting about working classroom was really remarkable. And I think the executive format or just, you have a day job and you're going to night school or whatever the case may be is you can bring what you're working on into the workplace or what you're working on the workplace in the classroom.

And so there's like a ton of value in that you don't have to like extrapolate, you're just doing it, like, straight away. So I think that was a really interesting part of it. And then the final thing maybe it'll say about business school here is I'm partnered with a guy from Excel learning team, I've got another colleague that launched a company that we angel investment and gave a couple $1,000 to participate in a seed round. It's funny, because people will say they're an angel investor when they do stuff like that. So I was joking about that. But he launched his own company. And that's really cool. And then there was another guy who actually ran a manufacturing company, left that partnership that he had on the manufacturing company and started his own software company and recruited a guy that had been a managing director at Citi for 15 years. So 15 years of investment banking experience left to go work on this software startup.

And those are two classmates. So a lot of like really neat opportunities of people starting businesses and recruiting classmates, specifically from that cohort to the business, which I got a lot of in business school. So I think that's pretty remarkable. I didn't say the last thing I'd say. But I used to always look at all the people that I want it to be like an attack. And they always say how to stupid business school on their LinkedIn profile. And it made me so like jealous and I wanted it so bad. And all of them would say, when I get on the phone, look, business school didn't do anything for me. It wasn't of any value. There was just like a waste of time. And you can learn anything, when you don't need business school for that. And I think all that's true, except for the blatant disregard for the fact that the people that they met while they were there are like something in their brain unlocked.

And I think Harvard and Stanford have a way of doing it's just like making people believe they can do the most nonsensical things and turn them into like brilliant companies, but then they go and do it. So there's something psychologically that gets unlocked. And again, you don't need business school to have it. So I'm not saying that by any stretch. But in a way, I found a lot of irritation with people that said that the school was a waste of time, but they all had gone to business school and were successful or at least what I perceive to be successful based on how they presented themselves on LinkedIn, which is always losing of success. So

Brock Briggs  58:45 

You just definitely just described a feeling that I've had for a long time about the merits of education after the military. And this is coming from an enlisted point of view. So I wasn't coming in with a degree but going to school after the Navy. But then realizing kind of the path that I was looking to pursue, there certainly wasn't anything about the schooling necessarily that did that. But there is a mental unlock that kind of happens that you certainly can't get elsewhere.

However, it may be helpful for you and just the positioning and maybe giving you the, I don't know, maybe giving you the authority to do it. A lot of people, I think that we really, sometimes get in our own way sometimes need to be told like yeah, hey, you can do this. You're allowed to do it like this. You gotta have given permission. But yeah, I have been guilty of pointing to schooling and saying, oh, this wasn't necessary to get here. However, I don't know. I don't think that I can pull it off in any way because it certainly has given me a lot and it's hard to just even make a comparison without it. Once you've done it is oh, easy to say after the fact.

Josh Kristoff  1:00:00 

Yeah, an academic environment is, like very experimental, I think in a lot of cases. So it's a place where you can bring your ideas in a safe space with people that you trust and establish some relationship with that are like outside of your normal group of people, which I think is something special about that. You just test mode and the stakes are low. So there's plenty more to say about that. But I think it's a positive experience for me and this isn't for everybody. But man, the academic environment, I think, is just really fun. I love learning new things. Even if I hate them, like it's still there's some amount of value, like I learned that I don't like them. And that's just as important as learning what you like to a degree. So

Brock Briggs  1:00:47 

I think if nothing else for some people and I'm speaking to myself, going on and doing education like in a formal setting was a forcing function for me to actually get something accomplished. After I finished my undergrad, I fell into analytics and did found this like interest in coding and had a subscription to data camp and Code Academy and all this stuff. And I had all this time just outside of my W2, virtually unlimited time to work on it. And I couldn't even bring myself to do it. Like it's I knew that I wanted to but I needed something to say, hey, you're going to learn this. And so that's how I ended up in the grad program, which certainly has shortened that learning curve. But most importantly, it was that function to actually get that done. It's different for everybody. I'm a little bit stubborn and I need a big threat about what's going to happen. That's bad. If I am getting bad grades, it's definitely one of those for me.

Josh Kristoff  1:01:52 

The other thing, I think that's interesting, especially in business analytics, so I got a double major one in marketing and operations management, the other in business analytics, I think that was, again, why I chose Wharton specifically was for that quants that they could deliver on but a lot of people asked me and conversations I've had is just a should I like really go after my MBA? Or should I do this or that or the other thing and like I'm like, I'm just here to accelerate people's learning not tell them what to do. So I think that's important for people are asking that advice is anybody tells you what to do. Like, if you just waive off or take that with a grain of salt, quite frankly, by sharing why I chose those things. And you probably were very intentional on why you chose business analytics versus generalist MBA, like you're acquiring a skill set. In MBA, you're not acquiring a skill set. Many more cases are not, you're not acquiring a hard skill set. As if I just took a master's in statistics, I would have spent a lot more time learning those things anyways.

Brock Briggs  1:02:54 

Yeah. So around this time, if I'm not mistaken, you started making real estate investments through some friends of yours, Carly and Jared and then ended up going and start a company with some of their friends. Is that right? Get me through starting your real estate investing process and getting that off the ground.

Josh Kristoff  1:03:18 

Yeah, so Carly and Jared are business partners, husband and wife team. West Point grads, we still love them. And my wife and I are partners with them. And so back in 2016, actually, a commit foundation had connected us with Carly and Jared. They were associated with the trauma foundation for veterans. And they were like in the coach mentor or whatever capacity. And we were moving out of Silicon Valley. And they were like dual veteran dual income and plenty of kids category and so are they. And so we did the advance party call ahead to get to just talk to them about living in San Francisco, two kids, two parents working small kids at the time. What do we do? I'm assuming you've done quite, how are we going to live? Or is it good neighborhood? How do you find a job? Who should we know? What did you think about business school? Well, that's

Brock Briggs

All the good stuff

Josh Kristoff

Yeah, all that stuff. And so we ended up becoming really good friends with them fast forward 2019. They were progressively moving to smaller and smaller companies and doing cool things in that space. But they're like, man, we just want to run around. And so it's pretty sick of dealing with all this nonsense. And so they quit their jobs. And they also started a project where they raised capital about a six unit in San Francisco. Carly acted as a general contractor and got random just like really massive overhaul of this building and it was a great investment. And so they had constantly done like fix and flips through their past. My wife and I like no real estate like anything. I did a long term rental of a condo that I bought in Florida. And that was like the extended life like real estate experience. And so, the day it left 2019, they said, hey, we're gonna test out the short term rental. They had a little bit of experience doing it in San Francisco under the radar. They got slapped and stopped doing it.

But then they were like, hey, we're gonna pick a market, test our short term rentals, right. So I'm going to Jacksonville, Florida. It's amazing. And in particular, the beach, we loved it. That's calcined my first duty station when we were at Naval Station Mayport. We got engaged on Atlantic Beach and all that good stuff. So we love the area, we knew we wanted to move back. So there's a bunch of market research, agreed with us. Jacksonville was a great place to start. So he tested it with their own money, saw it was a good business model, bought a few more places, syndicating so like raising money from limited partner investors from another network buying more property. And then we had invested in a deal with them, an amazing deal that's really kicking ass right now. And then COVID hit. We moved to Jacksonville, got the first mover advantage, like figured we'd ask for forgiveness that that was a problem from our companies at the time and counselors interviewing for a job at Facebook out in the Menlo Park office.

And they're like, hey, we'd like to make an offer. She's great. So they live in Florida now. And they're like, oh, we'll just fish out the Miami office. Yeah, so that worked out really well. And then we just stayed in Jacksonville and wanted Miami. But the other thing that I think happened before we invested Carly and Jared flew back and stayed with us flew back from Florida State of a lesson in Silicon Valley over Thanksgiving, we'd like totally ignored our kids just talked like real estate deals the whole time. And then that was like a point where we all got to know a lot more about the specifics of the business. So we invested in a deal we put Florida bought a place with the intent to do a short term rental. It was funny, we closed on it as our primary and then 12 days later, we're under contract on another place, that would be our primary, we certainly didn't intend to move that fast.

But nevertheless, we did underwriting was a pain in the ass down to the final wire to prove why we're moving to another primary so soon. And that worked out it was good. So we started short term renting the first place we had, we had an accessory dwelling unit and that building as well. So we had tested that one before it was going really well. And then I took a page out of that Carly and Jared flew back and raised some capital buy more places, or do two deals on my own, which quite frankly, are okay, like there. This is like a number of things happen that in the market as we know it today that took it from what looked like a Grand Slam brought it down to a single, it was a bummer. So positive, which is good. But also a little bit of reality. And like we're not just like printing money. We weren't for a little bit. And it was good while we were. But so do those two syndications. And then Carly and Jared had we're hey, this is we need to get as much real estate as possible. As soon as possible.

Too many articles were coming out talking about Jacksonville and Tampa. And we're like dammit, it's only a matter of time before everybody comes in and gets a piece of this beautiful arbitrage investment like significant Alpha opportunity for us. And so there were like six properties under contract to close in four to five weeks. And it was typically we'd get 123 Main Street under contract and then start 123 Main Street FC and that would be the syndication. So this was the moment of this was the birth of the first fund that we raised. So we just acquire assets under the fund, raise up to a certain cap and then close on those assets and then operate them. But it was also getting like Carly and Jared were looking in the future. And they were starting to think about hiring folks. And they're like, man, that's just like a lot. And really, we don't want to hire anybody. We just want like another partner level person and literally the only person it's like whatever mile radius that had done syndication had done short term rentals and knew them and can partner and stuff like that.

And we've been talking about building this business specifically back over Thanksgiving when they had flown back. We're like, oh, man, maybe there's time to pull the plug on our W twos and get after it pretty risky. Obviously. Ultimately, that's where we went. So we got started just like going nuts, acquiring properties and building a property management business. The initial intent of the real estate investing business like you called it was to be that in nothing more like we're supposed to be asset managers. The property management business came as a function of necessity for generating the returns. And also as you look at having roughly 30 assets under management that are operating at short term rentals. There's a lot of exposure there.

We didn't want any leverage over us and that way, there's a lot of flexibility on the property management business there when you run that as well. So we've vertically integrated, we do a lot of renovations. We have a design and development company that oversees the construction and we just set up a real estate brokerage are transacting a lot. All right, we've been working with the same agent who left his brokerage with his own brokerage license. He had wanted to launch that business, but his wife quit her job, partnered with him. And then the six of us partnered on the brokerage. And so that's where we are today.

Brock Briggs  1:10:14 

You had said in another interview, one of your worries going into this process was like getting into bed with friends, like you're taking something that like, hey, we're both at this level. And then as soon as there's money involved with friends or family that kind of adds interesting challenges and different dynamic to the relationship. What you did, was that the right thing to do? And obviously, it's worked out great. But maybe what were some of the things that helps that go well, assuming that you're still friends with all of them?

Josh Kristoff  1:10:55 

Yeah, getting into bed with friends is you apply that to Carly and Jared expressly. There's about eight kids in the family. So it's awkward to think of it using those words specifically. And then like the other thing I'd say is I can talk about how it's been like, it's going great. Yeah, like the story is still being written, it's still a business in growth mode. And there's a lot of positive signals that we're seeing, right? I think it's gonna, it's easier for people to see somebody that's got a company with the words, capital and ventures and that sounds like they must be like crouching killing it. We certainly expect to this to be like really great. But there's a lot of challenges and a lot of them are on the partnership level. Building for businesses in parallel is then now potentially a fifth year, the software one is really tricky.

So when we were in the courting phase of I was the first one for my Christoph Syed to leave the W2 nest and go partner and Jared would cost me like, why wouldn't you want to work with your best friends? It's just you spend so much time with these people. Wouldn't it just be great to spend time working with them? And it's like, yeah, until it goes terrible. And then we're not friends anymore. And it's really bad. And we can't hang out, like, why would you want to interfere? So it was really a pain probably could have moved forward on the partnership quicker. But I think for me, I just wasn't there. And I still have these Silicon Valley pre IPO tech dreams and had an offer from a cool company doing more technical work that I was interested in.

And I felt like I was giving up or leaving that opportunity and in a way felt safer. You heard of this other interview. But the strength of the partnership has just been the amount of stuff we've endured, like some pretty like it's been, my business is tough no matter the market conditions and then you throw into market conditions. There's so many opportunities to be just frustrated or throw in the towel or blame. And you just don't do that when you're good friends. You shouldn't do that if your partners or co founders. But you definitely don't do that if you're really truly deep, good friends. And we had that. We had five years a history of that growing up with them in California and a shared common background of military service, which generally like ethically take that stuff to the bank, where we sit and we professionally like, I think partnership, it's not just hey, we're good friends, but it's like the four of us bring like really different unique skill sets to the table. Like we have different interests.

And the Venn diagram, there's imperfectly like this. But if you were to put the four circles of everybody's skills and there's this overlapping point in the middle, and a couple overlaps between me, Jared and me and TAs and I mean, Carly, this is really nice. Like, instead of complementarities for the business and being a partnership, it's when you're making that decision on when you're founding a company or thinking about bringing on a partner or like what is the case, it's like trust is just so paramount. And there's a lot of ways to establish that like shared background, shared experiences, good relationship, trust and understanding of skill sets. And I think we were just fortunate to have years of opportunity to get exposure. And all those ways like we saw each one of us saw each other one of us deal with stressful situations.

And how did we respond the amount of just like the amount of stress that I'll tell you about Cass and I felt like getting set up in Silicon Valley was just like enormous over two jobs searches that spanned 11 months for me, three of which I was working, and I got rejected almost 200 times from jobs and that's stressful and you're like paying massive rent and like entry have a lower entry point not entry level, but like lower entry point income for Silicon Valley, that's insane amount of stress. And so, like we saw each other deal with all those, like, tough moments of trying and that's like really where true character is revealed. And that's why if you know somebody in an operational environment in the service, you can probably bank on that person. They responded well, you probably bank on them, responding well and other stressful situations.

Brock Briggs  1:15:33 

Did you guys have, obviously there's a whole crock of legal paperwork and stuff that goes into this. But did you guys really sit down and have written out like an idea of, hey, this is what the end state is desired or kind of a shared understanding about what you are all trying to pursue together. ‘Coz I’m curious, like, even though all of those things are great that shared background and experiences and things are all important and a good recipe, however, maybe not 100%. And nothing is going to be 100%. But you see a lot of things where the business maybe reaches a certain point where one person thinks, oh, I want to get to X dollars per year and then just chill. And the other person maybe wants to, maybe there's a double that or just different end state ideas. And just curious if you had some kind of litmus test for making sure that you guys were all on the same page with the strategic direction and outcomes?

Josh Kristoff  1:16:41 

Yeah, I think we run our business on a fund by fund basis right now. So we launched our second fund last year. And we're working through the body of work for most funds still, because some of the process there. So that's how we like think about it. But I remember a certain point where we had a conversation where it's just like there were periods that were very overwhelming. And it didn't feel like we wanted to keep that up. Now it was hard to see the light at the end of the tunnel. Because we are living like in this really intense period of just the constant barrage of waves crashing on us is what it felt like. We're like, when is this going to end. And that was just like timing of renovations and setting up properties and trying to run the operations to try and raise more money. It was just like, everything was going just like non stop all the time.

And I think Carly was just like, I don't, this is too much. Like, we got to get to a point and stop and sustain rather. And like, honestly, we might do that. It's the volume of changes that happen in life. And like I've got this opportunity to build a software product. Like, maybe that becomes a main focus of what I do. And we launched another fund. But like I'm involved in that last time, like, I don't really expect that to be the case, I expect when we're doing the core product of buying assets, renovating, establishing them as operating assets. I think the four of us are going to do that. But yeah, we definitely have had those conversations. And if like, somebody and we've talked about, hey, if this is somebody wants to exit or walk away or team wants to exit and walk away, we'll just figure it out when we get there. Back to the earlier part of the conversation, I think like adaptability, right? It's really important.

This is a dynamic environment, the market on a very localized level. And then of course, on a macro level. So I think we just check in with each other a lot. And that's based on friendship, again, it's another member of their family is gonna be joining us soon. And that changes, like I remember three to four kids was like and I think it was just maybe the newborn phase. I was like jeez, this is overwhelming. Like, launching a business and all that stuff is boy, there's so much going on. So yeah, I think we just constantly check in and we go back and forth between. There's just so many different ways we can apply what we've built. And we don't know what the future is or like how we apply it is uncertain.

Uncertain in that there's we don't know which path will focus like the majority of our efforts, I'm sure we will have to make choices. Funds, two compositions different than fun one composition isn't really when there's a fun three, like, what is the composition of that? Are we focused on Jacksonville? That's generally where we've been talking about being focused, but maybe go somewhere else. Maybe we think about how do we franchise our model? Maybe we did. I don't know. That's inside my head on how we've been through that rather than just yes or no.

Brock Briggs  1:19:38 

You've talked about a couple times mentioned the dynamics of an ever changing market and kind of being the need to be flexible throughout that especially when you're dealing with money and asset prices changing. And just weird kind of black swan events that can come up. In that conversation I was referencing earlier, you were talking about how you saw them in short term rentals and going into COVID, you were really, you observed that they were probably going to get wiped out like that COVID was going to be a really bad thing for them, which ended up to be the exact opposite.

Short term rentals, like, really had this big boon and really took off just because of those restrictions. I'm curious how that instance has shaped your feelings about risk because I don't think that like that initial insight that you had about that, the risk that a pandemic brings to short term rentals and that property management business is still valid. That risk hasn't gone away. It just maybe in this one instance, it happened to be good. So I guess, how is your kind of outlook on risk changed because of COVID? And how do you think about staying in business not getting wiped out?

Josh Kristoff  1:21:05 

Yeah, I think, in the case when I made that comment, it was early on in COVID. And this was like back when we thought we'd be going back to the office in June or July. And then maybe we learned more like this is longer standing. And I think that was probably the moment I was like, oh, my God, like our friends are screwed. And we're safe here working from home. Thinking about another global pandemic COVID, it was like the reality of COVID was that it was like 10xs fatal of a disease or 100x or like, massive, like, that's just scary. And I don't think I really give a shit about this. At that point, it's just survivability. And like, how do we figure that out? Thankfully, I guess in a very, like, hyper localized way, like our family personally, it was like relatively, just didn't feel much. How did that inform the short term rental industry? I think it specifically in Florida, it demonstrated resiliency of the industry. I think travel habits have changed.

And I think they'll continue to change the volume of people that were zero review Airbnb stays. That would say, hey, this is my first time doing this, it was pretty high. So people are trying it out, because hotels they didn't like. And then if we delivered a good experience, we probably converted them to be consistent, constantly shifting their like propensity to book, short term vacation rental or short term rental. Well not all but more so than a tried and true hotel. And I think there's a lot safer the professionalization of the industry, specifically managing risk as it becomes more professionalized the experience of market access and then more people are booking and then that gets resiliency for the marketplace there. How do you COVID overall shape my thoughts on how do I assess risk? Was that kind of like deleting part of the question?

Brock Briggs

Yeah

Josh Kristoff

Probably not as much as it should have. And that is quite frankly, because like we had moved out of San Francisco into Redwood City into a bigger house with a yard on a gated culdesac that only had five houses on it. And when COVID had folks next door had a daughter the same age as our daughter and we've agreed to become a merged family. And then we agreed with the other neighbors to become a merged family. Everything I needed like when you have three freaking small children in your house, like everything you need is under that roof, you're not missing out on anything. Because like, you would just want the weather in California was great. We went to Florida, the weather was great. We are so preoccupied with our kids. We're fortunate that we didn't have anyone severely impacted that was super close to us.

So we didn't like, we probably know people that have these invisible scars or impacts from COVID. And I'm surprised when I hear somebody say, oh, my kid looks really impacted by COVID. And I don't understand. I get it. But it's like it's definitely not through sympathy. It would only be through empathy. And so I don't think, yeah, I don't think I've really thought about that in any more of a selfless way than the selfish like what would that mean for the business. So yeah, I don't know if I have anything useful to say beyond that, other than maybe a little bit of a feeling of guilt that I could sympathize with people that went through this big except that it might like loss over it. And that might not be fairly experienced.

Others had I just remember calling friends back in California from Florida and a playgrounds had police right police sign tape wrapped around him for like months I think over a year in some cases. That's like sad our kids were in school five days a week in Florida. Now there's plenty to say around that but in a very focused like, how did that help us selfishly? Like it was great. How did that help our kids? It was great for them. Was it risky? Let's leave the ellipses at the end of that. And I don't want to go down that road on politics between specifically Florida and California. That's not a fun podcast topic. So

Brock Briggs  1:25:17 

That's a whole nother can of worms right there.

Josh Kristoff 

Yeah

Brock Briggs

You were talking about ratings on Airbnb and talking about the professionalization of the industry. And another thing you had mentioned to me, offhandedly, before was talking about how much opportunity there was in all of these adjacent spaces to short term rentals and property management. Is that the reason why you have chosen to go vertical? I was looking at how you guys structured your business and looking at all these offerings of brokerage construction design, property management, all this stuff, that's a lot of different moving arts. And I'm curious what's informing, going vertical rather than going for quantity of like, just to having double the amount of short term rentals?

Josh Kristoff  1:26:12 

Yeah, I think there's, we know, people that have gone horizontal. And that's what they're doing. Some folks have actually gone like vertical and horizontal, which is pretty remarkable. And they're getting out at massive scale. But I think for us, it was just this is how we decided to build. We are focused on Jacksonville and we were focused on being like, intimately involved in building the operations for the property management company on the ground. And the only way to do that was like one to keep it not horizontal. That doesn't answer the vertical question. The vertical question just came because it was obvious, I guess it was like what it just we looked at construction, and the cost plus and then just to what we believe to be true at the time is we're going to spend a ton more money. And we all had some amount of experience doing this type of renovation work. So we said, hey, we could probably do this, I think we'd go back and do that again.

And then I guess the brokerage was like, we want to set that up on our own, like, we would have gotten a license and waited the two years to get the broker's license, we just happen to have a great a remarkable partner that we love working with that we saw how it would be mutually beneficial to launch this thing together. And quite frankly, like the four of us are adding too much value on growing that business other than transactionally at the moment. But Rich and his wife, Tricia Ray are just phenomenal. So that was just kind of luck. But I guess it was we created that luck by building a great relationship with a great guy that enhance our business and we enhance that was that's a perfect partnership. I think the other thing is, as we made that commitment to going vertical, the thought of expanding horizontally was just a little bit much.

I just had a call the other day with a guy who listened to a podcast and it's like, hey, I think I'd like to basically do what you're doing and accelerate my learning by taking your blueprint and maybe open up a new market. And that I couldn't think of launching another market the way that we've done it. That was my point on horizontal there. It just wasn't the right path, I think like requires a significant. Oh, yeah. So what I was saying to him was we don't have I don't think we have the operations like blueprint fully tied up. Like it's not fully, I don't think we could say hey, here's like, exactly, quote unquote, which you do at these points, here's how you launch, maybe we're expecting that it needs to be better than it really does, as well. But I think maybe we look at the way we do business with a little bit differentiated. And based on doing it at scale and retaining the quality of reviews and scores and repeat bookings and staff, I think there's some merit to that.

So I guess horizontally, we've chosen to build a very high quality product. I think because of the tech stack and then the product that we're building, the extensibility piece becomes a little bit different on the digital side, but like the operation side, that is just that's just a management leadership equation and scaling that I feel like I think we all agreed was a distraction from building out like the core elements of a vertical side when we talk about it frequently. Should we do this? Should we go to Fernandina Beach and St. Augustine or maybe the Space Coast they're pretty close. But we've got four kids and we established this business for time freedom and the moment we start opening up other markets that require us at the partner level to go there. Like we've lost focus of one of the chief reasons why we wanted to be entrepreneurs in the first place.

Brock Briggs  1:29:57 

And I think in a way too, we're talking about risk. The benefits of that verticalization is it sustains you because it rounds out your earnings probably if we're maybe about to enter into a period. I don't know, everybody that I know in Florida says Florida is still popping off. But maybe at some point in the future, there will be likely a low and loss of appetite for that type of thing and offering alternative services, things where you're continuing to make money if there isn't the desire for another fund or anything like that. You're still managing properties. You're still I can offer these other services in addition and like you said makes it less lumpy in terms of your take on.

Josh Kristoff  1:30:46 

Yeah, I think there's definitely ways to spread the earnings risk across like a lot of different ways. Verticalization is more disability at businesses that support the core thing. So it's not we're because we've got the construction company bringing in revenue, like we're okay with a lower performing property management business like output. That's not really the case. We're not running that construction company, like a true construction company. That's like an affiliate support business. So it exists to support us and only us right now, we're like working on that a little bit.

But I'd be surprised if in the next two years, we're scaling that business too because we've got capacity to deliver to the market. I don't know if we're going to be in that case. Florida poppin off low in the market, plenty to say about Florida as it relates to it as a vacation market, like as long as that beach and the sun are still there. Like I feel pretty good about Florida. Sure why I live here. JD, if you were on the call, give a long conversation about global warming and Florida. And I think that's a salient one. But there's a lot of work to do there. But for the short term fund horizon of 10 years for us, that's we're comfortable with the business proposition there.

Brock Briggs  1:32:02 

Do you want to maybe cap this off and talk about you the size of the business today, if people are interested in working with you? What is it that you can offer them and we can take it from there.

Josh Kristoff  1:32:14 

Thanks, Brock. So we're really four businesses: real estate investment, asset management, the construction company business, the property management business and the brokerage. We have 16 million assets under management. And we've achieved that by raising roughly $16 million. So we do use leverage, that gives us at short term doors about another 30 or so an active renovation that we have roughly 70 long term doors. The services that we offer and we're looking at, like rolling out a third party management solution. So managing a little bit more intentionally managing for people who we were we don't own the property investing, there are two ways to participate. One is totally passively as a limited partner on our funds, which if you reach out to us, we're on a 506 B Fund, which just means we need to know you before we take your money. And that's important.

So that would be like schedule a call, let us get to know you and make sure it's in good shape of what we're doing. And of course, you'd want to understand what we're doing. And then another way, which is interesting to a lot of people is working through our brokerage and then putting Personal Capital through the brokerage to buy a property and then we could offer the full suite of services, design development, property management and again, eventual exit services. So the brokerage you come in and say, hey, I want to deploy half a million dollars into Florida. I want to buy a place, I want to renovate it and I want you guys to manage it for us, we can do that. And then we just put you in the Nomad Realty pipeline there, take the dripping, learn about all types of assets based on constraints you put in that you get and we'll help you think through the deal and go through that whole process so we can offer that service as well.

Brock Briggs  1:34:09 

I think that's one more pain in the cap for why that verticalization is cool. That's like an attractive offer to an investor. And especially if they're bought into you and they don't need to go find all those extra services that are involved in investing in a city that they certainly don't live in. That is start to finish if offer at all, that's really neat.

Josh Kristoff  1:34:34 

Yeah, absolutely. That’s exactly it.

Brock Briggs  1:34:39 

If you had to sum up what we could take away from you and implement in our lives today, what do you think that would be?

Josh Kristoff  1:34:49 

Boy, that's pretentious. One thing that I thought about in between that that we didn't spend too much time talking about, although is partnership. I didn’t really talk about like a partnership between Cass and myself. So we just said 12 years being married, we just had our 4th kid. Cass I met on USS Doyle proud of it and are proud of it and have just been like the best of friends throughout our whole relationship. And like when I made that first misstep on that first job, but it was her who said, let's get out of here where I was like, hey, my duty of family is just continue to bring home this paycheck. We're a good match because we get excited or impulsive. And we make moves together all the time. And I think that's something that's allowed us to bounce around the country and bounce across industries and do a lot of interesting things.

And really, to sum it up is that, like, I have visibility on what the next 10 years look like. I know I'm not trying to become a director of a tech company or make it to a pre IPO company and reach a certain dollar amount. Well, I know who I'm going on that journey with, but certainly going to be Cass. I'm sure Carly and Jared are going to be a part of that. And of course, with our kids. And we did a lot of things that people literally told us, we were crazy to move out to California, to Silicon Valley with two kids and no jobs. Cass got a job at Pinterest and then we decided we can move in pay. But I think the takeaway would really be like partnerships, like high quality partnerships, whether that's with your spouse or your business partners or whatever will make and or break you. And they're probably also like the best way to find enjoyment in life. And that doesn't mean it's been a smooth road by any stretch, but like I wouldn't walk that road with any other person.

Because I think that person and that like now that four of us have business partners gives us the courage to go do what we want to do. I think we earned the right to have that courage by forging it on the path of the slog of W2. And like trying to figure out what we wanted to do. So maybe distill down to: pick a good partner, whether that's business or spouse or friends, stay true to them and open with them. And if you feel like you have no idea, like where the hell you are, what the hell you're doing, keep pressing like in a lot of different places to try to figure out where you should pop out and end up and it'll be a hard road. But like you'll, it'll be a life that it’s so dumb for me to say, but I feel when I'm 60 or 80 hopefully have the joy of being able to make it that far that I look back and say, I don't really regret the major things I did in my life, like the way that I live my life.

Like maybe I didn't make it to Fiji or Bora Bora and seeing one of those cool hotels that sits over the water that I see pictures of. But yeah, I don't know. I think that everything's been fine because of the people I've been doing it with and when it wasn't fun those people revealed like just stop doing that go do something else. Sometimes I was a little bit whiny if they revealed stop being so whiny just suck it up and get through it. I don't know I think that's one did that me as a 25-28 year old getting ready to start my life with Cass like what wouldn't have like really been able to think through. I don't know anyways that it's what I've been thinking a lot about and it's not any like business wisdom so I don't think.

Brock Briggs  1:38:48 

I think that it is to some extent. You said you a whole lot of your nobody makes it on their own first of all and second of all, it sure makes those difficult times much more bearable when you have a good support group whether it's friends whether it's a life partner, whatever it is. Like it makes a world of difference. I couldn't agree more. One last thing, what can myself and or the listeners do to be useful to you, aside from coming and giving you all their life savings to invest?

Josh Kristoff  1:39:22 

We certainly did. That's actually not helpful. We don't want people giving their life savings all in bulk to us that's not a good fit. Check us out nomadcapitalventures.com, nomadhospitality.co and that domain was not available to see how you can come visit Jacksonville Beach in Jacksonville. It's like a lovely area. I love engaging with the communities that I choose to spend time in, Brock, the veteran community in the scuttlebutt podcast communities.

One of them think my life is most full when I'm being able to look backwards and offer my same accelerated learnings to people who are having a similar decision set that I did at one point in my life and just not telling them what to do or advising them. Just reach out if you got a question that you're afraid to ask. I'd love to do that. And the other pieces like I think I talked about in another podcast. Don't be afraid to cold call people randomly. I'm not straying. But yeah, let's chat. Let's connect later. Let's partner on building something. So all that sounds fun.

Brock Briggs  1:40:31 

Fantastic! Josh, I really appreciate your time. Thank you so much.

Josh Kristoff

Thanks, Brock! Pleasure!