KGCI: Real Estate on Air - How to Expand Into a New Country with eXp

Episode Date: April 25, 2024

Tell everyone who you are, what you do, how you do it, and all that good, Jess. Sure thing. First of all, thank you, Rubin, for having me on your show. This is amazing. It's great to sort of have an opportunity to spend more time with you and to just have a conversation with your audience. So I'm Michael Valdez. I'm the president of EXP Global. I have been with EXP two years as of tomorrow. What? Look at that. Two-year anniversary. It feels a lot longer, isn't it? In those two years, we've been able to open 18 countries, which is really a phenomenal feat. And it's only been able to do that with this platform. That's been an incredible platform.

You know, I was with Realogy for 15 years. And I ran all six brands and their global growth. So that was Sotheby's, Cold War Banker, Century 21, ERA, Better Homes, and Garden, and Corkrin. And I was there for 15 years. And it was when I met Glenn and I met Jason that I understood what EXP was. And once I got that, where I understood that the brand didn't lead, that the agent led, I was like, oh, my God, this is like truly unstoppable. And it's been that. It's been amazing.

You know, in about a year and a half when we opened India, we're at 1,300 agents, almost, 1400. We're over 900 agents in Mexico in just over a year. We're already cash flow positive on a lot of the offices that we opened within that period of time, including South Africa and other countries. So this model truly works. And it works around the globe, which is really exciting. So love some of the growth. And you mentioned some numbers. You mentioned some earnings right before we went live. If you don't mind for the nerds like me out there who geek out on numbers, could you share that one more time? Yes, listen, and I'm going to read it right off my phone because it literally is right off the process. It just came out this morning. We're going to have a fireside chat,

giving all of this information later this morning via EXPI Global Campus. So it's on the EXPI campus, which is open to everyone. It's a different campus than EXP world. You just have to download that one. But Glenn, Jason, and Jeff will be having a fireside chat on these earnings. But we just released literally this morning, so just about a half an hour ago. So you've got it first, Rubin. Let's go.

Increased revenue 73% year over year to a billion dollars. That's with a B, a billion dollars in revenue just this quarter. So just the first quarter of the year, ending March 31st, we've done a billion dollars of revenue. Gross profit increased 56% year over year to just shy of $84 million in the first revenue. And net income has increased 83% to $8.9 million. So those are amazing numbers. You know, there's a lot of people that talk negatively about. our organization and that we're a recruiting firm and we just just recruit people. You can't recruit

people without revenue. You don't have revenue share without revenue. You don't have revenue without transactions. If you're not in business, you can't sort of do everything else. Those numbers show that we are in business. By the way, we were named the number one independent brokerage company in the world by Real Trends last month. So this is not a story. we're making up. This is a story that's actual. 80,000 plus agents in 21 countries and counting around the world. We will be releasing our press release on the, actually they came out yesterday so I can share it with you. The next two countries are Chile and Dubai. So we'll be entering the Middle East, which is really an incredible, incredible territory for us. And it'll be

incredibly exciting. Dubai hits a little bit different. And I know the UFC has their, their fight island out there. Are you guys going to put the EXP brand? Listen, you know what the beauty is of this model? Once we're open as a cloud-based business, we're open in the entire country. So that's what's so beautiful about this. And, you know, in Dubai is an incredibly vibrant country. It's interesting because every Emirati is very different with their laws. So we're not opening EXP UAE because each of the seven Emirates have their own laws. So we're opening to buy first. And they look at it as though it's because our model is quite different. So we're not a franchise. So it's not as though we're just finding somebody in the area that wants to open up within the

various Emirates. So we're opening up and we're creating our own corporation as we do in every single country, which by the way, for your listeners, it's really interesting to sort of see that dichotomy because a franchise is real easy. You just got to go find somebody that's going to write you a check and you lend them your name. Here, we build something from scratch. So we're there. We create our own corporation. We find our own local team. We build all the infrastructure in every country that we're in, banking, finance, legal, etc. So we do that. And to think that we've done that 18 times in less than two years from scratch is sort of crazy. What's the biggest thing that you've learned or taken away from these last two years of building

something from scratch for each country that you move into? Leadership is everything. To really have the leader in every country that understands and be able to become that ambassador for this brand is extraordinary. And the fact that we're now at 80,000 ambassadors with this brand around the world, they become the greatest sort of footprint for us and the greatest sort of voice box for everything that we're doing. You know, it's the idea that when we started opening a lot of these countries, you know, it was funny. Our leader in Mexico said to be, our country needed this.

Could you imagine how impactful that message is? When somebody says, we're a real estate company, for God's sakes, when somebody says that their country needed it, I asked him to sort of tell me, what does that mean? And so he said, look, it's sort of like it equalizes the playing field. So an agent in Mexico City has as much success as an agent in a rural area in Mexico where any of our competitors would not have put up a bricks and mortar office, but they still had the opportunity to grow a business. And we've seen that.

And that's extraordinary. I remember when there was a large team that joined us from another organization. that was a 300-member team, not an office, a team in India. And before they wanted to join, the team leader wanted to speak with me. And so I got on the phone and we did a Zoom call and he says to me, you know, Michael, do you know why I want to join EXP? And I said, tell me, Dinesh. And he says, I've been in this business 30 years.

I've studied all of the real estate models. Your model was made for humanity. Ruben, that floored me. He put everything so eloquently in that one sentence. It's what we're about. I love that, man. I absolutely love to hear that. And as a matter of fact, now I start to think, man,

I need to bring some of them on this call just to hear their story and some of the stuff that they went through. Yeah, as well. So when you are, and you said leadership was number one. So I would love to ask you if somebody either sees it in them or they're looking across the table and sees a friend, family, or whoever that may be in a different country. What about the, like, I know it's the leadership position, but what?

is the quality that really helps them help you build something from scratch from the very floor up and carry this brand leadership. But what about that? Because that seems like a lot of work, right? A lot of a lot of push. So for somebody who sees it in them, what would that quality be or someone across the table? What are we looking for outside of leadership? It's got to be in the gut, that idea of servant leadership of doing this for others. When you start looking at the big picture and you start looking at the fact that it actually is changing someone's lives, you know, it's like we look at agent count internally when I speak to my team. It's of lives touched, not agents recruited. So we talk about 80,000 lives touched, right? And so it has, it's a different way to look at this, right? It's the idea of knowing that now, now this is heavy. Now you're affecting someone's life. You're affecting someone's life generationally when you start thinking about the fact that revenue shares is a willable asset in your state. When you start thinking about something that can change generationally, that entire conversation changes.

How you actually present yourself and how you show up changes. When you start thinking about this where you impact an entire country where somebody says this model was made for humanity, conversations change. None of our competitors are talking like that. Yeah, yeah, that's so true. That's so true. That's a, I had a point. I had a point. Oh, where did it go? Oh, it left me. It left me. Oh, this is it. So yeah. So with the goal being a million agents, you can't be self-centered and grow that fast, right? So it has to be a place of contribution where you do want to help others really succeed on a super high level. That's the way that you're able to hit, that you're going to hit those million-dollar levels. First of all, our goal is half a million agents in five years. I doubled it. Right here on this top.

You just did double it. So what we announced at EXPCon was half a million agents and 50 countries within five years. And so we are well on our way. We're, as you know, over 80,000 agents, we will certainly be over 100,000 agents this year. The numbers are, it's a math problem. The numbers work. We have never, ever not grown 50%. at least year over year on agent count.

And so that is our trajectory, and we should be reaching those numbers and affecting that many lives around the world. And just think about it. There is not an agency being franchised or not that is over 200,000 agents. The largest agency has 180,000 agents. And it's never, ever, ever been done.

So the moment that we crossed 200,000 agents and walk across 100 this year. The moment we cross 200,000 agents, it's something that's ever been done in our industry. Oh, that's just, who. Oh, here we go. Here we go. Oh, I thought that was a question.

Guys, if you do have questions, please ask them, and we're going to go ahead and ask them here today. All right, so last two years, moving into different countries, what is, and by the way, I've been listening to the 10x book all over again, Grant Cardone, and he probably subconsciously made me double or double that goal for this call. But biggest challenge, man, biggest challenge that you have. And I know you probably get this question a lot, but I think it's good for some of the newer listeners, just so they know when they're out searching for that talented leadership, what's the biggest challenge that you have seen thus far?

So look, because we're not a franchise, what we do is that we have a lot of flexibility in what we do. There's a different model in every single country because we are a local player with a global platform. We want to be able to compete with every single one of our competitors there. And so what we've been actually, the challenge has been, every one of the 80,000 people that we have in our organization are very entrepreneurial. They want to help grow this. They are part of the ownership of this. So some of the struggles that we've had was for people that have maybe sort of shared the U.S. model.

And the U.S. model is not, it's not the same in any of the same. country, right? So health care is not available outside the U.S. KB. Corps is not available outside the U.S. Things like that that are very specific to the U.S. Once people start sort of sharing that internationally, it becomes a challenge because we have to backtrack a little bit. So those things are not available. So I would always sort of say to somebody, share the ex-P story on the macro level, share the story of being able to have a competitive commission split with the ability to get to 100%. Share with them the ability to be a shareholder. in this company and earn shares just by simply doing your job every single day and share with them

the ability to build their own organization through revenue stream by just sharing the EXP story. Just keeping it that macro without getting into specifics is the best way to share our story. Yeah, you don't want to promise something that takebacks are the worse, right? And you don't want to do something like that. And you know it's very interesting, even just the stock or just the ownership part, obviously that's very intriguing for an entrepreneurial spirit. but the success magazine that had Shaq on the front. And in there, what it said was that Shaq really didn't go for, on his endorsements,

didn't go for a payday. He looked for equity because he understands the power of equity. So that alone should just be enough to really excite you that we're all in this thing to build up the stock that we all have ownership in. And we have very smart people that are actually helping build out this thing as well. So we do have a question. Ru. Just put that point on the stock just before we jump to the question.

There's also think about the ability of somebody coming in from another country to get NASDAQ traded stock. That's something that they probably don't have access to. There is sometimes someone who doesn't even actually believe us when we sort of say, wait a minute. It's sort of like, so we actually have to convince them that they actually are getting the stock, that we're trading on NASDAQ in their account. So there is a greater value for what we are offering outside of the United States.

All right. So I'm moving. There you go. Awesome. All right. So we'll jump on this question. Anybody else have a question, please ask. So it says, how many agents were recruited to EXB in April?

And you may or may not know this. An average out of U.S., how many agents served the largest? out of country location. Can you decipher that a little bit? I cannot, but I'll try to answer it another way. So we average, and I don't have the April numbers, but we average around 2,000 plus agents that get recruited on a monthly basis.

We are, some months are much, much higher than that. And I think the question was how many international agents bake up the the EXPH. I think so, yeah. And that's about 12%. And when I joined, it was at 3%. So we've grown pretty substantially. And our target is to be over 15% by year end.

Listen, the growth is outside of the U.S. If you start thinking about it, there's 1.4 million agents that are part of NAR. When you start thinking about it internationally, there are 2 million plus agents in India. There's a million agents in Mexico. Two countries of the 21 that we're in, I've just doubled the U.S. agent population. So the growth is exponential and the growth is incredible. So for everyone that's listening, think global. So the goal is a million. Well, keep stop saying that. Oh, man. Okay.

The official number is half a million agents in five years. Yes, sir. So, and they kind of clarify it at the very end of that question, which is, what's the largest agent count country outside of the nation? It's Canada. Canada. So Canada is just shy of about 5,000 agents. It's just under that. And then India would be the next one, and it's about 1,400 agents.

But remember, Canada, we've had for about eight years. And India is around for a year and a half. Right, gotcha. We got another question, so I'm going to go and bring it up on the screen. What do you think is the biggest reason productive agents are drawn to EXP? What makes it so sticky, Michael? It's the idea that somebody who is productive really sees this as being the CEO of a global company. Every single agent is the CEO of their own company. Right now when they join EXP, they're the CEO of a global company.

They are able to say that they can represent themselves. their clients and everything that they're doing in now 21 countries, soon to be 23 countries, and you are indeed the CEO of a global company. When you understand that, when you understand everything else that's a part of that, your commission split, your stock participation, your ability to sort of build your own organization around the world, that is not only the stickiness, but the idea that they are in fact changing not only their own lives and that of their family and community. But those are the people that they touch and recruit and be able to share

the EXP opportunity to everybody. Totally agree. Totally agree. I used to be, well, my last firm I was with, one of the biggest, because I served as a CEO in that office. And one of the challenges we found was the expansion side of it, the different standard operating procedures, different caps, different ideas, different thoughts, different people. This has been so easy to expand. Like, There's no way you could cap the talent that comes over here. There's just no possible way. You could grow and grow and grow. And now you're crossing the oceans to grow even bigger.

I mean, it's just amazing and almost unfathable if you just sit down and really think of all the value that comes with this. You know, it's exactly what your t-shirt says. Lean into the disruption. We are indeed the disruptor in the industry. And we're the disruptor because people are seeing the value. you, right? There are somebody, you know, once you're the leader, then everyone wants to throw the arrows in your back. I just said this yesterday. Go ahead, sorry. No, please, go on. That's exactly right. I mean, I was telling it, because we have a meetup called Profit Powwow, where we talk about

increasing profit without necessarily increasing units sold, right? Like, how can we do that? And in that conversation, I was like, it's very interesting to see how the industry changes, Everyone shoots their arrows at them. Fast forward some time and they start to adapt the same things that they were shooting arrows at. And you see this in the, it's just crazy. It's just so cool just how far ahead that this company is that they're shooting arrows. Yes. But we're almost so far that they can't hit this.

You know, it's so cool. It's where you sort of see people who become competitors then becomes sort of like colleagues, right? And there's a great example. there's a company called IAD out of France. A very similar model to EXP, believe it or not, five levels of revenue share, but a very sort of like very sort of staunch split. You can't get to 100%,

but very similar model that was started the exact same year that EXP was started. So it wasn't copied. It just like two great minds thought the same thing in different parts of the world, right? So they're the largest brokerage in France. They have over 15,000. agents in France. And so the CEO and the president were at Inman last week. And they actually

reached out to Glenn and Jason and myself. And they said, can we meet? And it was just like, of course. And so we invited them to our hospitality suite at Inman. And we had a great conversation. And they were so complimentary of what we have done and what our growth has been. Whereas here's our number one competitor in France and we're stealing agents from them every single day and they came in just to sort of say congratulations on what you've done you know that's what it should be we're all colleagues and you know and we're all offering things to help people and when you come from that space you can always sit in a space of collaboration 100% and and after that after that meeting we did did take a selfie, right? And we did a post. And at the bottom of the post, I said, everyone's

welcome no matter company affiliation. Because with the abundant mindset, it doesn't matter. We're all going to succeed. And success is not a commodity, right? Like, there's plenty of it. And so, no, I 100% agree with that. I got another question. What country are you just dying to get? It's like at the fingertips and you just really, really want it. So we're working on over 20 countries. at a given time. And so we have different levels of due diligence. And as a publicly traded company, I can't answer that question. We're working on that. So we're working on 20 different countries at any given time. And so we look at this. And so there's about 20 different things that I look at. So, you know, the country's population, their GDP, their agent population count,

what the competition looks like in that country, how readily our model can work in that country. So we look at a lot of different factors, and then we start looking at what's the organic interest in that country, because we have a website, which is exPglobal. Partners, and that's sort of our repository of everything that's all information globally. So all of our models are there around the world.

There's an interactive map. Once you click on that map, it'll take you to the country landing page. The model is available in native language and in English. So everything is there. But there's also something there where you can nominate a new country for consideration. So as we start getting more organic interest in a country, that will move up or down on the list. And so that, and I meet with my team every single week, we go through that inquiry page that comes in. And we start sort of like really sort of shifting things around as to what might be next.

And so we do a financial analysis of any new country we look at. We want to sort of go into that that break even point of about 15 to 18 months to sort of get cash flow neutral to cash flow positive. I came from a banking background. So I look at all of this as a strong P&L and any country that we look at because we have very strong fixed costs into any country that we enter. So I'm going to have the same cost if I open up Brazil or Belize, right? So there's half a million agents in Brazil and there's 5,000 agents in Belize. So I'm going with Brazil. So it's sort of like, so that's sort of part of that sort of look at all of these things as well.

So there's a lot that goes into it. Yeah, absolutely. So, oh, man, I had my own question, but a question came in and I will respect the viewer. So let's just do this one real quick. How does a U.S. agent break into real estate in the other countries that EXP is already established in? So here's, that's a great question. Remember, put yourself into shoes of somebody else. So think about where you want to go into and start breaking into other countries and then figure out the value that you can add. So I would say this to a lot of the U.S. agents that want to break into a lot of the global markets.

reach out to the broker of record. They're all on my team. They all report into me. Those broker of records are here to serve you. So go in, jump into a sales meeting in another country. Put the value of what you do in the U.S. Talk about the U.S. market. A lot of these international buyers are probably coming into your markets.

Show them the value of what you can sort of give them. Create a partnership. create something that makes sense. So I would start jumping in there. I would also start just start sort of adding value to someone. If you want to target agents in France or in Mexico or in India, wherever it might be, you can also start doing a lot of social media posts. You can start doing a lot of training on social media where you're adding value to someone

and target agents in those countries. You can do the Facebook advertising when you can target agents in any country. So start creating synergies and start showing you the value that you have for someone else. Yep. Gary Vaynerchuk says jab, jab, jab, right hook or value, value, value, value, then you can go for the ask.

But the whole point is to add value up front. I absolutely love that. All right, so I'm going to ask an off the wall. We got three minutes. So off the wall question. No, you know what? So what do you believe? I know, switch to it.

What do you believe is the biggest fell forward moment that you have had with this company so far that has really set up the global side to success? No, that's a really interesting question. I think it was really, we moved really, really fast. So remember, there was only three countries that were open in eight years before I got. here. And the first six months that I was here, I opened five countries. The next year, I opened nine, and then we've opened up the remainder. So it's a really fast trajectory. And sometimes there's been a lot of sort of growing pains where we're trying to sort of, you know, fix the rocket ship as it's still in the air. And that's okay. That's fine. But there are sort of like, you know, we still get best practices

every single day. And we're continuing to grow and to perfect. But I'm not going to stop and learn. I'm going to keep going. And so, whew, let's go. Okay, I love that. I love that. And, you know, and that's part that that is part of the process, right? We always say, um, growth is messy. Growth is messy. And it is. And I asked my wife the other day, I said, man, how many times do you think we we fell a month? Do you think we fail more than we succeed? We do. We fail more than we succeed. Now, they may be so much. And I hope so, Rubin, because that's where you learn from, right? 100%.

It's sort of like, I want to fail more than I succeed. Yep. Yep. We're going to learn so much to just add to the system, make the system a lot better. 100%. So we got, Terry came in with the last question. I know you got two more minutes. We can, oh, we can advertise in all other countries, just not U.S., question mark.

Is that true? So question mark on advertising. So it's how you advertise. So it's not as though you can, you know, you can't spam. So you cannot spam in any country. You can't spam in the U.S. So if you are sort of coming in and giving value to something, if you're going in and doing a webinar, yes, you can advertise your webinar all over the place,

you can't sort of go in and put a Facebook sort of thing in India and sort of say, know, join my downlight. That's not, right? So there's a, there's a nuance as to what advertising is. Perfect. We got like 20 seconds. What profession other than your own would be fun to attempt? And that'd be the last and we'll close it out. So, you know, listen, I was in banking for a long time. This is now real estate. And I think that probably the next chapter once I eventually retire from real estate will probably be politics. of some sort and see how you can sort of like help others. It's always been a trajectory of trying to help others and it's always been my success. That's awesome, brother.

And, you know, we'll love to see you in that platform as well. And we'd love to support you. I mean, you've done so much here and helped out so many people. So that's awesome. I absolutely love that. It's on the dot. You go have fun. I know you got a lot more to do.

Thank you so much for showing up, brother. I appreciate it. Thank you so much. Thank you for what you do. And thank you, everybody, for listening and participating. Yes, sir. Adios. Bye-bye. Bye.