Best of: A Punk Rocker’s Guide to Building a Business

Hello everyone. Welcome to the 21 Hats podcast. I'm your host Lauren Feldman. In a few weeks, I'll be in Portland, Oregon for Shaun Busy's Always Terrific Catalyst event. That trip has had me thinking about the city's keep it weird ethos, the spirit that's made Portland a hotbed for creative business building. My upcoming trip has also inspired me to revisit a podcast conversation Shawn and I recorded in early 2024 with Janelle Zel, who is founder of Living Room Realy. The boutique real estate agency has more than 100 brokers and a reputation for doing things differently. But Janelle didn't set out to be a business owner. In fact, she majored in weaving. Sean, for the record, majored in ceramics. She fronted a punk rock band. She lived out of a van. And yet those experiences, especially learning how to manage people who didn't technically have to listen to her, and how to serve customers who'd been ignored by the mainstream, turned out to be perfect preparation for building a thriving business in a quirky city. It's a story that says something about Portland, but even more about the unconventional paths that can lead to successful entrepreneurship. Even in good times, owning and running a business can be a lonely pursuit. Our hope is that these weekly conversations will let owners know they are not alone in facing challenges. In fact, that's the whole idea behind the 21 Hats community. Engaging with other owners to get the kinds of insights only another owner can offer. If you're interested in learning more, you can sign up for a free trial of the Morning Report newsletter, which highlights the most important news of the day for business owners and shows how other owners are confronting challenges and seizing opportunities. Just search the 21 Hats Morning Report to subscribe. You might also try our monthly Zoom mastermind where owners from around the country gather to compare notes. It's a lot like this podcast except you get to be part of the conversation. Shoot me an email at lauren at21hhouse.com for more information. Joining me this week on the podcast are Sean Busy, CEO of Kinesis, which is based in Portland and works with small businesses on marketing, culture, and strategy, and Janelle Zel, who is founder and CEO of Living Room Realy in Portland, Oregon. The episode is titled a punk rocker's guide to building a business. Welcome Sean and our special guest, Janelle Zel. It's great to have you here. Janelle, there's a lot going on in the real estate industry right now and we want to get to some of that, but first, can you tell us uh a little bit about uh your own journey and how you came to start a firm? >> Yeah. Well, thank you, Lauren. Thanks, Sean, for having me on the 21 Hats podcast. It's a pleasure to be here. I own a company, Portland, Oregon. We're also in Vancouver and on Oregon's north coast as well. and it's a real estate brokerage named living room realy and we have another company as well which is living room property management and under that is a maintenance company um that we call the fixers. So it's kind of three companies under one parent brand. It's interesting now to be like a serial entrepreneur because when I got into real estate, uh, being a business person was the last thing on my mind. Um, I have a degree in weaving. I was an artist and I was playing in a girls punk band called Spread Eagle. So, um, literally a year before I got my real estate license, I was living in a van with, uh, with my band. So, the the reason I got into real estate was that as an artist, as a musician, I was really concerned about what I was going to do for long-term financial stability. And um I had knew a fellow female musician, her name was Jen Augusta, and she invited me over to her house. Um I was working doing some part-time tile setting at the time, and so she was had a tile project. She said, "Come over, check out what I'm doing, you know, have a beer." And I'm sitting on her kitchen floor with her and we're we're putting down some tile. And she told me that she had bought the house. And I was like, "You bought this? Like, how does someone like you like buy a house?" You know, we're both in our early 20s. And she said, "Yeah, you know, the coolest thing is is I'm renting out all the bedrooms and living for free in the basement so that I'm able to tour with my band." And I just immediately like light bulb went off and I'm like, I've got to be able to do that. Um I saw, you know, one I'm a real long-term thinker. Like when I had to write an essay in third grade on what I wanted to be when I grew up, it was retired. And uh I got in a little trouble for that essay, but uh I'm a long-term thinker, but also like a like someone that was like trying to, you know, trying to really had to scrap together my day-to-day existence, you know, as an artist and a musician. And I was just thinking, "Wow, that would take the pressure off and that would give me more room to to create and then in 30 years it'll be paid off, you know, and at least I can control that bit of my financial well-being, my financial picture." So, she kind of gave me the rundown of how you do it. And at the same time, I had another girlfriend who was able to buy a property as well. And she'd used the Oregon State bond loan. And I was like, "What do you need to And they were like, "Okay, you got to find a job that pays you $14 an hour." And at the time in in 1999, 2000, that was not easy. I was like, "Okay, 14 bucks an hour." >> Um, and you need to save up $14,000 for a down payment. You know, probably between 10 and $14,000. And so >> I just saved everything that I could. Told my grandpa what I was doing, and he was like, "Hey kid, I if you can save seven, I I'm I'm in for the other seven." which was just a a huge huge blessing. So I bought a house and totally life-changing for me and and I was still playing in the band at that time. And so we'd go to a show and then I would hop off the stage and go to the bar and usually I'd be talking to the drummers. You know, they always get evicted because they make too much noise. And I was like, I've got the solution. You just got to buy a house and like this is how you do it. And I was referring so much business to my stepmom who'd had a real estate license that she's like, you know, you might think about becoming a realtor like and helping all these people that you keep sending me from the bars. And so that's kind of how I fell into fell into real estate. And then, you know, working at uh I worked at the Hassan Company, one of the leading brokerages here in in Portland, I learned a tremendous amount. Um, but I also eventually got a little a little frustrated that nobody seemed to be talking to the community of people that I knew so well. Like in real estate, what I was seeing is that we would show, you know, this like straight white family with a picket fence and two kids. And I'm like, I have not even seen these people in Portland ever. I don't know who we're marketing to, who we're telling story to. And and that frustration finally kind of started to grow into what I realized like, oh hang on, there is an empty stage for me to get up and really tell the story of how people like myself are changing their lives through real estate. And this was coming on in Portland at about the same time. I had a lot of clients who worked at Sumptown Coffee that was kind of changing the way that we were thinking about business. like it was a local Portland brand. I felt like they knew who their audience was. They were really um talking to them. They were independent. And so I saw like, wow, you could maybe you can do business in a way that is in alignment with who you are. And I think that before this period, you know, I grew up in a world that business was kind of a dirty word. wasn't for creative people or wasn't for people like me. And so I think seeing what Stumptown was doing, see what some of these other local brands at the time were doing, I was like, wait, we could do that with real estate. And so the vision of of living room was was born and oftentimes people ask me, you know, how why what is the name all about? You know, why living room? Um, and that really came from because most of my clients were musicians, artists, is that we'd always check out the living room last. Like when I was with uh with a client, we'd go to the garage and see if there, you know, if there was good work space or we'd go to the basement to see if you could load in and out gear easily or we'd go upstairs and see if the light was good for painting. And then cuz those were the spaces that my clients were making a living in. Like this is where they lived and then the living room was kind of the last room and what they were looking for is like space to thrive, space to for their creative endeavors. So I was thinking about the concept of living room in this really different way. Not not as in a as in the actual room in a house, but as a concept of of of how we live and real estate giving us the ability to express that lifestyle in an in a in a way that really creative and really exciting to me. >> It's cool. >> You know, Janelle, this is a pretty common trope of when when houses are selling and the market's hot, lots of people want to be real estate agents. they flood into the business and then things inevitably change and a tremendous number of them wash out. Given your background, it sounds like that could have been you. Why wasn't it? Why did you stick with it? >> Um, well, I wasn't attracted to it because the market was hot. Like, I didn't know I didn't even know about market. I didn't know what I didn't know. It it could have been the worst time to get into real estate. I mean, in fact, when I started living room, it was in the depth of the housing recession, you know. It just it wasn't really about the timing of the market. It was about the timing of what was right for me. >> You started a real estate business what, 2008, 2009. >> Yep. Not only that, I started a real estate business in in 2008 and I started it with a 17-month old baby and another one on the way in a month and a half. Like, and from the outside, the timing couldn't have been worse. And from the inside, the timing couldn't have been better. And so I think that that's the same counsel I give to folks who are like, "Is now the right time to buy?" It's like, "I don't know." Like I don't have a crystal ball. We just don't know. But is it the right time for you? Are or is it the right time in your life? And so I think it's interesting now to have a established company and navigate another major downturn with something that's already built. I have a lot of new respect. I I was a little cocky coming into this down market because I'm like this is the stuff I'm born of. You know, I started in the downturn. This is where I'm great. This is where I've like, you know, been able to accelerate out. And um but it's a much different thing to to start something up when conditions are hard than to maintain something that's large and built and that, you know, I've got 130 brokers. I'm leading them through whatever fears, anxieties that they have. And that's a really different leadership challenge than that entrepreneurial on your own risk of like, well, this is the timing for me. Like, I feel confident. It's like, okay, well, how do you get 130 people to feel confident? It's it's really different. >> Tell us about that transition, Janelle. What was it like when you went from being uh a broker in somebody else's business to starting your own? >> Um, boy, is it humbling. It's really really humbling. I think the first thing that comes to my mind is how there were so many things I was frustrated with at my old company. Like it felt like we were in a cruise ship and I needed to do a 180 in the river, right? And so I'm like, forget it. I'm going to get out into my own speedboat. Like this is exhausting trying to get all everybody to come around. And so when I was actually running my own company and I saw the expenses, I saw the risks. I mean, I was the prodical son coming home. I called Mike Cassen, my former um the former owner and and later would become a really close friend and mentor and was just, you know, very humbled and I said to him, I I hope that you know any bit of success that I'm having is a direct correlation to all the opportunities and all the gifts that you've given me and all the lessons I got to see while I was there. And I had no idea. I had no idea like what you were um what kind of decisions you had to make and the weight you probably went home with alone. Until someone's been in those shoes, you just have no idea. And to think like, yeah, I remember asking him, you know, like we should join this environmental building group, you know, just thinking that I'd had the best and brightest idea of the year and he's like, "Oh, let me think about it." and being really frustrated, but like I think we should do this. And I'm like, God, how many agents did he have wanting to join whatever small interest group they had, you know, and like how do you measure big decisions like that with with, you know, he had 250 brokers, I think, at the time. And the thing that leadership has taught me too is that, you know, all the skills that got you to a place, you know, and all the strengths, they'll get you to a certain to a certain level on the mountain, but you've got to be willing to take a hard look at yourself and be like, okay, the things that got me here are not going to get me here. So, am I the right person to keep climbing? And where can I get those skills? And so leadership's given me this incredible opportunity of self-growth that I don't imagine I would have gotten anyway else. Like I've had to work so hard on myself and my own limitations and um you know my strengths, my weaknesses, communication. Um I've had to really learn the lesson of listening to people's commitment when they come up to me and they're hot. Like for example, I had an agent come and she's pissed off about our website and like I don't I mean my first reaction as a human is just to be a bit you know like what is your deal? why you coming at me so hot in the, you know, in the kitchen catching me off guard, but then underneath taking a minute and listening to her commitment that like, oh, she's just so passionate right now because she wants us to have the best website in the industry and she sees an issue and I'm the person with the power probably to change that. So she's coming to me and then you know so getting on the same page as people listening to them as bigger people seeing the best in people being able to lead them through towards solutions like all of this stuff. It was not second nature to me initially and I've have to work really hard at it every day and I've had to work really hard on on becoming a better person, a better leader. Sean, you made that same transition from being an artist to being an entrepreneur and a business owner. Anything anything you can relate to in there, Tanel? I I I've never known your full story. And it's so it's just so fun to hear because I also had that revelation of like gosh, I've got to make some money, you know? I can't just be an artist. I also moved to Portland. I moved here in ' 05 and I also rented a room. like that was my my real estate strategy was renting a room out in the house that I had bought. Oh, and then the other one too is uh I started my business in the recession of 2000 and when 08 rolled around, I told myself this story like, well, I started my business in a recession. Certainly, I can navigate through another one. It won't be that hard. >> What a freaking what? Oh, I was really kidding myself. >> They're all hard. >> They're all hard. Yeah, >> they're all hard. And yeah, your business is a different place. It's like, you know, it's just like, oh, I had a I had an infant in a recession. Okay. Well, now I got an eight-year-old in a recession, you know, or now I got a teenager, you know, it's just different. It's just every challenge is different. >> There's so many similarities, too, you know, and how in early on the stakes the stakes feel much lower in some way and like how you can just gut through it like, oh, I can work 18our days, no big deal, you know, and like you can't do that in your midlife. And and not to mention that the pressure you must feel of all those folks who are counting on you like you too. I also I didn't know finance forever. You know, I didn't know so much stuff about business. But I do think the superpower we have, right, is we're both creative. So we're like, well, we'll figure it out. You know, I'm not not scared of that, right? >> I'm kind of curious like, you know, as you've built this business, I mean 100 plus people that is a lot of communication. You know, I think as artists are actually good communicators in a kind of weird unpredictable way, but I'm kind of curious how you manage that. How do you manage, you know, keeping the lines of communication open so people feel heard, but also like you're not overwhelmed by making everybody feel heard? How do you balance that out? >> Woo, that's a good one. >> Before you answer that, >> yeah, thank >> could you just tell us are those 100 plus people are they employees or are they contractors? What's the relationship? Yeah. So, um, with residential real estate brokers that are at our company, those um, they're all independent contractors. Um, and it is like the brokerages job to ensure that, you know, they're following kind of the letter of the law and that they are kind of understanding our brand culture. So, there's definitely a lot of communication there, but I can't tell anybody what to do. So, it's like being a politician in a way. I've got very I've got a lot of responsibility with very little authority and that's an interesting leadership challenge and I think uh if anything it's going to make me a really great candidate for governor one day or or something like that. I don't know. Wow. >> Um where do you take that? But uh and then I have um employees. I've got an employee team and we're at about 26 people and our agents have their teammates too. So they've got, you know, kind of small business brands under underneath them. So we've got some folks with teams as, you know, as big as seven or eight people. >> So So back to Sean's question, sorry to interrupt. Do you want him to repeat it? >> No. Yeah. So yeah, how how do we create how do we make sure that people feel heard? You know, it's really important to me in that I think that I'm someone that I want to understand the purpose of anything. I just don't do anything because someone told me to, right? I mean, that's like a little bit punk rock. Uh, and and it's like, what what are the rules? Okay, well, let's throw those away. And I if the rules don't make sense, I'm not going to I'm not operating by those. Although I'm a person that does love to create structure and follow rules. Every good bit of thing that I do came from me just it up royally, to be honest. like I just totally screwed it up and then I was like, "Oh, okay. Let how do I build a little system so I don't do that again." And one of the things that I used to do is that um you know, I talk to the press a lot. My role at the at at work is talking to press, doing a lot of our marketing. And so I let a writer for the paper know that we were opening up in Vancouver before I let my agents know. And I didn't realize like how hurt that so many people would be that they're finding out in the paper about something that's coming that's, you know, like kind affects them and the and their brand. And it's like sometimes I'm just like, am I really that dense? But I I am really that dense often. So that made me realize, well, geez, I should start a council. Maybe I could have a a leadership council of agents. And before I tell anybody anything, I will tell them and get their feedback and make sure they know and then make sure that they can help me articulate that out into our agent body. And so I actually came up with a communication protocol that's really helped me a lot. And one of the things that really drives my staff crazy is that they work at the desk and they know that when the owner of the company says something, they better pay attention and read it. Well, agents are independent. So maybe they read it, maybe they don't. And you know, and so the staff just never understands. Like I emailed them that and I'm like, "Oh, that's cute that you think that everybody read the email." Nobody read it. You're basically working with 130 entrepreneurs. >> Oh yeah. I mean it's just like are you kidding me? Unless you light it on fire in front of their house and then you know like right across their forehead like they didn't get it. So, I just I'm like, email it to him, you know, we got probably seven times. Then text it to him a couple times. Then make a rock poster and put it above, you know, in the bathroom and over the copy machine. You know, like if it's important, we better be saying it again and again and again. and you know to get a staff that you know has always worked in this structured employment atmosphere to understand these agents. It's like just because you build systems and they work and they should function does not mean that they're successful unless you can get an agent to actually do it. So, you have to stop creating things that you think work and stop complaining about creating systems that the agents won't use because if they don't use it, then we didn't create the right system. So, we have to be really creative all the time about how we get in front of which is basically our customer base is our agents. That's who we're supporting and that's how we, you know, that's how we make revenue. >> Do you really see your agents as your customers versus the folks who are doing the transactions? >> I do. I well, you know, it's interesting from a from both a operation standpoint and a marketing standpoint is that the whole world sees living room and that my customer is the buyer and seller of homes. And so I have to behave as if that is true in many ways. But then internally the way I actually make money is through collecting the membership fees of agents. And so they are my actual customers. But my act my customers, the agents, what they want from me is really great communication and marketing and attraction of their customers. So they're paying me to attract their customer and they're also paying me to support their business in a different myriad of ways. And so you know who's who. And when people come to work for me as staff, they think just like the rest of the public like, oh, home buyers and sellers are our clients. Like why are these why are these agents so demanding? Like why don't they act like they're like employees, too? And it's like, oh no, no, no, no. when we orient new um staff to support our agents, I'm like, what we are is just like a really liberal country club >> and our our agents are those members and some of them play all the time and say some of them play less frequent and some but we need to remember their drinks and their family and like you know how they want to play the course. And they also they don't work 9 to5. They may have been up working since 6:00 am and then bailing water out of someone's basement last night at 11 pm. So when you tell them, you know, that like, oh, I'm off at 4, so I can't get that to you. Like, it doesn't compute for them because they lay everything on the line service-wise. And so we have to be really um mindful that when they come in, we're the person that's bailing the water out for them, that they feel really supported and that they've got somewhere they can come where they feel like we're laying it out on the line for them, too. >> Janelle, your business is a network model. Um, meaning there's two networks, the networks of people buying homes and selling homes, and then the other network is the network of brokers that you have. You know, and the larger the scale, the more effective you can be to both of those groups. >> Yes, it's true. You know, what is hard for me is that at the end of the day, we're a small business, right? like I'm we have you know 25 staff members and we're servicing uh close to 400 landlords and then tenants and then we do maintenance work and then on the brokerage side we're supporting you know 130 brokers and so it's a small business with a gross with revenues between those two businesses of about 5 million but on a given year we might sell upwards of a billion dollars with the real estate. So, in the public eye, we look like I mean, our signs are everywhere. We look like this huge business. And so, sometimes there's a pressure and we've I've had to learn to navigate the just the tremendous asks that we're under, you know, like can you give to this school and can you give to this and you can give to this and we, you know, we've had to like come up with a lot of strategies just to navigate like our size. We're swinging way way way above our our weight class out in the public arena and the public eye and how we present ourselves and we have to do this with this tiny little staff that where the expectations on a business of that size would be completely different. So it's it's a it's a really interesting challenge. >> Are you the largest at this point in the metro? >> Um I believe that we're the largest independent brokerage now at this point. We've seen a lot of our competitors go away after this last sales cycle, which is it's just sad to me. And I'm really committed to trying to help other independent brokerages the best that that I can. I just gathered with um five different companies last week to, you know, see how how can we support each other because I I'm really I really think that real estate is a business where we all benefit when it's locally owned. Like you really should know the communities that you're you're serving. We've historically for many years had the number one market share in the city of Portland, but the second per the person with number two market share underneath us has more than double the agents. So we have a few agents, but they're highly productive, very professional. We're a full-ervice um real estate brokerage and um and in that way makes us uh pretty unique as well. >> Do you compete for brokers the way another company might compete for employees? One of the biggest challenges currently right now is that we have a model that only works for agents who sell 10 or more homes >> per year. >> Yes, they have to sell at least 10 homes or more. Well, the average agent uh sells I think it's something around like two and a half or three. And because inventory has gone so far down because of the higher interest rates, we saw the number of agents who sell 10 or more homes decrease by 30%. And that's been pretty that's been pretty parallel to what we've seen in our own numbers. It's been challenging because, you know, before I could bring on a new agent and they could easily I could easily get them up and going with just the abundant opportunity that was just like flying off my other agents. You know, they just they just so much business happening that they could um pick up a lot of business that way. And when things contract, it's just gotten harder and harder. And so, it's interesting. We don't have a lot of agents that leave to go to other brokerages. They may leave to go to other careers or they may like join one of our uh top agents teams. But we have seen uh our agent count um dropped this last two years post pandemic. >> You said that under your model an agent to be successful has to sell more than 10 homes a year. And I'm wondering how your model differs from others. >> Well, um yeah, it's a great question. most all models in our market um you pay what's called a desk fee. We have a membership fee. So an agent to kind of wear the brand, represent the brand, and get all the benefits of the brand that that's associated with and our administrative services. Um they pay us pretty close to uh $20,000 and then some kind of auxiliary fees on top of that. And that's pretty comparable to other fullervice real estate companies, but there are plenty of digital agencies and other things and the fee is much lower for agents. So, we are, you know, we're definitely different than than that. But most agents find that it's I mean, it's like I'll use a metaphor another real estate metaphor. It's like commercial real estate. It's like, okay, you can go rent cheaper space somewhere, but you don't get the benefit of the traffic and the clean streets and like the the really great, you know, resources that you would with with a company uh of ours. I mean, just even I mean, I go back to that country club metaphor. Just to be around other players who are at the top of their game to me is the single reason that I would join Living Room Realy compared to others. It's like I want to be around top producers with the agents that we that we attract are also very valuesoriented. We're a BC Corp and it's not just production that they're after. They're after balanced lives. Um they're leaders who find joy through service. And so people find when they come the living room, they get community and culture and the value of being around other people that do business in a way that feels like an alignment with them. usually really um I've seen so many people come to us and they've been at a ceiling of seven or eight million dollars of production and take that to 30 35 because they're around other people where they can emulate like best practices or like god I didn't think I'd ever build a business that big because I'd never see my kids but you've shown me you know tools and resources and team structure that's allowed me to do that in a way that I didn't think was possible somewhere else. Can you tell us a little bit about how you're perceived in the market? >> Well, you know, certainly there are companies that I would say are bigger than us. You know, they got more agents and they're bigger, but we're really known for our quality of agents. Um, we're really known as the company that people go to, they're like, "These people really care about you. They're really community oriented. Um, they give back. We are known for being highly collaborative." The thing that we hear more than anything is this like, you know, if we hear this from other agents is is I saw this was listed with a living room agent or I saw the offer came from a buyer represented by a living room agent and I knew it was going to be a great transaction. You know, that like that we're going to be collaboratively problem solving that we're going to get to close. And so I'm really proud of that. We've got really good negotiators that understand it's not a win-lose game. It's about, you know, having a buyer and a seller both get their needs met and feel really good about the transaction. And from the public, um, what I hear all the time is that you guys have the most beautiful houses. We've heard this before, which kind of blew my mind was, um, how do you get all your sellers to paint the front door red? And I was like, excuse me? And they're like, yeah, every single one of your front doors is red. I was like, it definitely is not. I can tell you that if we do not paint everyone door red, but um we just have a consistency. Our brand color is red. And I think what they're what maybe subconsciously they're seeing is that the consistency of our branding and our marketing is always at the top level. And it just the consistency of that starts to really um land for people that like we painted the front door red. >> Yeah. You know, it's interesting because when Lauren asked that question about, you know, what do you specialize in or how do you how are you known? And the first thought that came to my mind was she's everywhere. >> Yeah. >> Like like and and I think that may or may not be true, but it's my perception. And what I mean by that is that, >> you know, you have a very unique style in the type of um signs you have and the types of ways you promote your agents. Uh maybe you could tell people a little bit about your thinking behind that. >> Sure, we are. I I think it's consistency. It's like I think a lot of people in real estate particularly there are like Keller Williams is a much bigger company than us, but they allow their agents to subbrand. And so you might see there's no quality control, there's no consistency. So you could be driving by and be like, "What's that company or what is that?" Oh, >> and with Living Room, we feel like, okay, we're a small boutique agency. We need to have a very aligned brand presence so that it actually makes an impact, >> which is hard for individual agents actually to kind of wrap their minds around because they're like, well, maybe my sign should be unique because that's going to give me an edge. >> And it's like, >> oh boy, that's not how marketing and branding works. Like >> the feral cats. >> Yeah. It's like that's it's just not how it works. It's so much energy in the mind of consumer. They you know we think when we're in our industry that like everybody's thinking about real estate all the time and I know that like actually people have a real estate thought once every five years statistically otherwise they're not even seeing the signs, right? They just drive by them. I don't know whatever. I don't know. So the amount when we ask a consumer to remember our subbrand under a brand and then our name, I'm like, "Oh, >> forget it." >> Yeah, that's just never it's just never going to work. And also people forget like agents forget all the time. Like unfortunately for better or not, your name is your brand. Your level of service that you represent, that's your brand. And that's the only thing you can hope that people are going to remember. But like a subbrand that you do that's, you know, just I mean I know when I get in the car, I get in an Uber and I go to the the airport and people be like, "What do you do?" And I'm like, "I'm in real estate. I own a real estate company." What company? Oh, I've never seen that before. And I'm like, "Okay." Like if so for me to to know the that there are plenty people in Portland still don't know who my company is to think the hubris it takes for an individual agents without 135 top ranking agents that collaborate to think anyone's remembering their subbrand makes me laugh because I'm just like dude I it's hard it is hard out there but so yeah so we we we have very you know tight um brand rules that we that we follow and that helps because you know a top producer like someone like a Kristen Lincoln who's been in this business for 25 years anytime I do try to do something creative with our our brand she's like please just use the regular logo the regular font because when people see that no matter where they see it they think that's my brand they think that's mine keep it consistent and just keep reinforcing my individual brand out there as a part of the collective Then I think the other thing that you know what living room does and what we did that really set us apart and we still we still embrace wholeheartedly was that at this point anybody can go to a myriad of sites and look at the houses. Like that's the product. But what we know that Zillow will never know and Redf Fin will never know and Realtor.com will never know is the people here in our community. So tell the story of the problems that you solve specifically for the people right here in this time of our real estate market. And what I have noticed is that as we have now told 16 years of these really unique stories of what it means to make living room in Portland and how people pull it off is that it makes us incredibly referable because you know you go to a party, you're talking to a friend and they're like yeah you know I've got to figure out a way to take care of my dad and I just don't know how that's going to affect both of our living situations And you know that is a problem that if I've talked about that in like how I've helped a father and son downsize to share a duplex so he could provide care. Now I'm being highly referable because that person will hear that that issue and want to help that person solve it. They you know if they care about them and then they're like oh you got to talk to my friend Janelle. She did that for people. That's really different than like I'm thinking about buying a house and it's like okay well we all know 40 realtors like whatever you know like well go online you know that's where houses are but when you when you really talk about the individual challenges that you're solving it just makes you really referable and like whether interest rates go up or down. people are in these sorts of life situations that they can, you know, oftentimes solve with real estate. And that's where I want to be. I want to be on the forefront of like how do I help people overcome challenges and I'm gonna get the business because you can go and like look at houses all day on any kind of site but nobody owns that kind of information and the and the relationships in the way that like you know our firm and our agents do. Janelle, are you talking about having your people share those stories uh in their personal lives or is this part of a marketing campaign where you've found a way to to tell those stories to more people? >> Yeah. So, when I started the company, um you know, with no money and, you know, punk rock DIY kind of spirit, uh I knew at the time blogging was the big thing. Everybody's got a blog. You know, it's the same way that social media is now. Everybody's got to be on social media. And I was like, "Oh my god, I am so busy." You know, in in the downturn, I had sold I sold 42 homes and I'm, you know, as I've nursed a baby and changed a diaper at the same time. And I was like, "I don't have time to be a expert blogger as well." But I thought, well, okay, we're going to start this little this boutique agency. And I bet though if each one of us just told a story every time we helped a seller or buyer, we told a unique story, well then we could round out communally a pretty decent blog ourselves. And so we stuck with that over this, you know, 16 years where we've continued to tell those stories. And of course the momentum that we have now, I have like four or five unique content stories that are hitting our website every day. So I mean the free SEO rankings just in alone I mean that's just a gift that's kept giving and that just came from a strategy of not having money to compete with the big guys. It was like well what do we have? Well, we know these folks that we're helping. And I also, it went back to my own experience of, you know, I didn't know that home ownership was for me because whether anybody explicitly told me this or not, but in our culture, home ownership was something that happened after you got married and you had a baby. So here I am this punk rock chick that's like I don't know marrying a baby are ever on the table for me. So it just didn't occur to me that home ownership could be because it's just not the way I saw things going. And I think there's so many people in our culture that think the same thing. They just think that's not for me. That's for someone else. And so I really had this mission when we started that like please show regular people, you know, funky, weird, whatever, unedited, tell the story of how they did it because I want more, you know, young punks like me to see that and know that it's possible for them. And so that's really, you know, at a on a the deep level of why I'm really committed to this storytelling is because I think until you see someone from your own community, you just don't know it can be done. And you know, we've one of our uh values is diversity. And I and I am so moved every day by, you know, the agents that I have at Living Room, the incredible diversity that we have there and the communities that they get into, showing them that homeownership is for you, too. And like, I can help you and I'm someone from your from your world and your community that can show you how. And I I believe in in every bone in my body that a strong democracy, a functioning democracy, it really is dependent on the widest distribution of home ownership. >> Well, I want to get to the litigation that's rocking the industry. But before we go there, Sean, I just want to ask you, you know, I know Janelle said she learned everything through trial and error and screwing things up, but I don't know. It sounds like she's got really good instincts for managing people, for marketing, for building a business. What is it about art school? Or should people be going to art school instead of getting MBAs? How do you explain this, Sean? >> You know, it's interesting, Janelle, when I ask you like how is it I I know you're everywhere. You said consistency, which I think is such an important message that people hear. There's another part of it though that like I think you've done really well and this might be the art school thing which is like you have your degree in weaving. I have mine in ceramics so it's like the least financially viable degrees you could pick. I think >> yeah a >> you might beat me but I do think what but to your question Lauren I think what Janelle has done especially in this idea of like customer segmentation and saying there's a group of people out there who are not being paid attention to you know a diverse interesting group of people who might be punk rockers they might be non-traditional they may not have families they may not be married they may be married to the same sex blah blah blah on and on and on. So, you've got this like idea of finding a niche that wasn't being well served. And then the the other thing too, it's like I was thinking of your consistency thing. I'm like, yeah, well, Hassan is consistent. Remax is consistent. There's a lot of consistent brands out there, but they don't feel so dominant to me. And I think the other part of your magic equation is differentiation. your agents are all these like handdrawn portraits of the agents, which is cool on a functional level in lots of interesting cool ways that I love, but it's also it's just different. It's just different than the rest of the market. And so there's so much sameness out there that like you've done a good job of looking different. And I think art school teaches us that or at least you taught me that to like think in different ways. I think, you know, and and being from the art world, being from the the punk world, like being okay to be a little different. And that's something that is challenging and hard. It's hard for my agents sometimes because like honestly, do I love being a cartoon? No. Like, does it repel some agents from wanting? They're like, I don't want to be a cartoon. It's like, I get it. It's not about the cartoon. It's that they work. Like, they work though. Like, people notice them and they work. I think I'm a very practical person in that it's like if something works, don't throw it out because it it makes you a little uncomfortable. Well, then that probably means you feel a little vulnerable. And what is that really about? What what is that about? And like I think being an artist, you've got you get so used to being vulnerable. You put yourself out there. I mean, being in sales seemed like nothing to me. Like sure, I'll sell real estate. That's hell of a lot easier than selling myself all the time. selling something, you know, like >> Yeah. It's, you know, it's so interesting you use the word vulnerable, but but it's true. It's like the work you do to be a creative in in some ways is like really hard. It's really really hard. People often throw art under the bus. Like it's really a rigorous discipline if you take it seriously and as is performing, you know, music, whatever. >> And it's about self-discovery. And so I think too that's where it's really powerful for for leadership. >> Yeah. Um because you you have to you have to look like you you're making with purpose and in managing resources managing my punk band on the road. I mean like what better you know financial lessons are there than that like you know very scarce resources and negotiation skills and you know it was like I got an MBA on the road with with those with those women. >> That makes sense. And you never took investment money, did you? In terms of your business, you never all bootstrapped. >> Oh, you should have heard the banks laughing at me in 2008 when I'm like, I want to buy this building and start a real estate company. They were like, have you you turn on NPR? Like, do you have a radio? Yeah. It's like, uh, >> all right, Janelle, can you explain the litigation to us that has uh changed your world? Well, I will say this is that um it's really interesting to me the press and the spin. I I will say the Daily New York Times absolutely broke my heart because I their their coverage of it was so one-sided and also came from a starting point as if a buyer's agent has no value, which I was like, well, that's interesting that we're saying that. I completely disagree. Um, but for us in the industry for for years, for for years and years, I have been hoping they would decouple commissions, which they did. I think that there were so many of us in real estate who wanted more transparency and also who represented buyers that wanted the ability to be able to negotiate our commission. What I am surprised by and which is completely just media cycle and spin is that when this ruling came out that many of us in the industry were excited about, we didn't expect to be made into like the the the bad guy or the boogeyman in the story of like, oh, you know, agents have been, you know, making so much money and they wouldn't negotiate. And it's like none of that was true. >> Let me see if I have this right. The suggestion has been that there has been collusion on the part of buyers and sellers agents and that it removed the ability of uh of buyers of homes from being able to negotiate a sales fee uh with their agent. It was all coupled together as you put it. And this settlement will allow for negotiation that wasn't occurring before. Do I have that basically right? >> Yeah. Yeah. So a buyer so when I sit down with a buyer now we can which I've been doing honestly though this has been in practice and this is in practice already for our agents it is that we sit down and we fill out a buyer broker agreement and they are clear on the fee that we are going to be paid whether that came with in the past came from the seller or if there was not a fee offered which was also something that that we saw happen all the time or I would help buyers buy unrepresented property or trade property or buy something from their landlord or whatever. They would sign a fee agreement which now all buyers will upfront sign a fee agreement because the number one problem that I really feel like this solves and very happy about is that there was all sorts of in our market, all sorts of marketing that was saying, "Oh, well, it's free for you as a buyer to to get representation." It's not free. like you are paying for the cost of that home and so in that you are financing the cost of not only your commissions but you're financing the cost of the the seller's commissions they're going to be paying their agent too. So it's it was never free. Um and this is great because it's a step towards transparency and you know I really really do welcome that. Now what is a a huge I think a loss is that we are talking about it's being brought up often that like this is going to help the affordability of homes. This is not going blaming workers for affordability. To me it kind of reeks of the same things we we see in any other industry. It's like, well, if those coal miners would only work for cheaper, then we'd have cheaper coal, you know, and it's like, uh, why why in this country do we blame the workers on our affordability issues? Affordability is much much deeper issue than, you know, the experience and skill that two cooperating brokers take to get people to their end goal of of home ownership or listing and marketing a home. I mean this is affordability has a lot to do with government policies and the and you know restrictions of building and you know wages not keeping up with with the price of homes. I mean it's such a complex issue and I'm absolutely devastated to see that we are once again deflecting you know important conversation we really need to have about affordability. >> What does the change mean for your firm? uh will it have a financial impact on what you're doing? >> I don't believe so. No. Um you know, I think that initially that anytime there's big change in industries or perceived change, you know, we're it's going to slow things down a little bit in just our process and our work because we're going to have to be educating the consumer about, you know, what does this mean in practice and answering a lot of questions and maybe there be some doubt. The market here is so tight. I don't see it's going to be affecting whatsoever our our housing market at all. >> I I'm really passionate about housing affordability partly because I think that there's such a trickle down effect of, you know, economic vitality of a community. I think about where are we going to have our employees at if they cannot afford to live in a community. Right. >> Exactly. like a basic thing if every business owner should be thinking about housing affordability for that reason alone if not for greater you know kind of ethical reasons. >> I'm curious um if you were to kind of wave your magic wand and you could say changed a policy or two that you think could have an actual meaningful impact on housing affordability and and even volume and availability of housing. What what would that be? Yeah, I mean I definitely feel like the development fees in our city are absolutely astronomical. They make no they make no sense. And um and also how the incumbrances on trying to build. I know a lot of really great builders who've left the city. They just don't want to work here anymore. Um and so I think that that has really um impacted affordability. you know, it's a it's a bigger thing, but like the um mortgage interest deduction, and this is where I vary from the National Associated Realtors, they lobby and fight to keep that in place, but to me, I just think we as homeowners, we don't need another win. We are already winning. Let's redistribute that and make sure that's going more to um low-income folks. So, I mean, those are two big ones. I'm sensing, Janelle, that uh you might not have been joking when you said you expect to run for governor someday. >> Oh, you're you're that's my my husband when um he's always like, I can't wait to live in that mansion. And I'm like, that sounds like a like a a really >> oh god >> um a scary reason to take that job. But um I just I'm passionate about our city. I've lived here. I care deeply about it. And I and I want great people to run and I want to keep doing what I'm doing because like you can have a lot of influence I think in in business and on the ground and and I feel like I'm in such a unique and just very privileged position to be interfacing with all the people that are falling in love with Portland coming here from other places. My thanks to Shan Busy and Janelle Zel and to our sponsor, The Great Game of Business, which helps businesses use an openbook management system to build healthier companies. You can learn more at greatgame.com. Thank you both. [Music] One thing before you go, everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd, or by becoming a founding member and joining our monthly Zoom forum, where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the morning report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone. [Music]