Start With A Win - The Original Disruptor: Interview with RE/MAX Co-Founder Dave Liniger (Part 2 of 3)

Episode Date: February 8, 2019

During part 2 of Adam’s conversation with RE/MAX Co-founder and Chairman of the Board, Dave Liniger, Dave discusses the foundations of RE/MAX and how these concepts can be applied to business and personal pursuits. In October 1975, RE/MAX had its first cash flow positive month, and Dave and Gail finally felt that the company was stable enough for them to start taking paychecks. One of the key components of their successful business was the environment that they had created, which allowed agents and brokers to flourish and set up a trustworthy system of leadership when Dave had to be away for several months to take care of Gail after her serious plane crash.The key concepts that Dave set up early on were: (1) product, (2) brand/market share, (3) group purchasing, and (4) unique training programs. It was also during this time that they began franchising and setting up regions within the company, which provided them a way to manage their growth while still keeping the brand cohesive.Dave emphasizes the importance of surrounding yourself with people who will challenge you and make you a better person, and he references Jim Rohn’s thoughts on the subject. He continues by saying that it is important to stay focused and be a disruptor, always paying attention to changes in the market and being willing to change in response.Links:Jim Rohn: https://www.jimrohn.com/ Connect with Adam:https://www.startwithawin.com/https://www.facebook.com/adamcontosREMAXCEO/https://twitter.com/REMAXAdamContoshttps://www.instagram.com/REMAXadamcontos/

At top of the 12th floor of the Remax World Headquarters, you're listening to Start With a Win with CEO Adam Kantos. Hello from top of the 12th floor of Remax World Headquarters here in Denver, Colorado. It's Adam Kantos, the Start With A Win podcast. We are on episode two of a three-part series with the incredible co-founder, chairman of the board, and the person who's done everything in this organization, Dave Linegar. Dave, happy to have you here. Thank you very much. So we dove into the early years of Remax on the first of this three-part series.

And on this episode, I want to talk about when you feel like you hit stride because you get the business started. You overcome some of those startup challenges and find your place in the marketplace and understand that your concept is being picked up by people and you're growing the business. So when did you feel like you started hitting stride and what were some of the indicators in your business? Well, you know, we started January of 73. 22 agents that year, 44 the next. In the third year, which was 75, in October, for the first time in the entire three years, we actually broke even and made a little profit for the month. We had accumulated $600,000 in short-term debt. But for the first time, we were actually cash flow positive. Gail and I had both skipped our paychecks for almost two years. We just kept believing the concept. We hired more

and more people at the headquarters staff that really became partners to us that worked as hard as we did. And so it was about that time that we said, hey, we've got it. We're almost 75, 80 people already, and this is going to work without a doubt. We were getting almost no turnover. We'd started with some pretty marginal agents, but they blossomed. When we gave them the environment of REMAX to make their own decisions, to run their own business, to do their own marketing, to negotiate their own commissions, the glass ceiling disappeared and they grew. They learned from each other. They wanted to be successful. And, man, they started to make some good money.

That's awesome. That's amazing. And, Dave, you talk about kind of your formation of the environment of REMAX. And you always tell a story or give an anecdote about environment when you're talking to broker-owner training classes. Can you tell us a little bit about that? What is the key to creating a successful environment? Or what should you be looking for in a business when it comes to that? Well, the thing that's interesting is that brokers have offices, and so they try to build an office network of agents.

Many of our superstar agents have teams, and they're in a leadership position of trying to build a team attitude, team success. And so I think the whole key behind this is, can you create an environment where people can be as successful as they want to be? I finally had this pointed out to me in the 10th year of the business, October of 83, Gail was in a very critical airplane crash in Canada. We were up there for a REMAX convention. The regional director, the pilot was a franchisee, Gail, and another man went for a seaplane ride. She was in the back seat, even though she was a pilot.

They crashed, killed the pilot, and put the other three in the hospital for a significant period. And so all of a sudden, we had the challenge of Gail was in a coma. I was in Canada for several weeks waiting to transport her back to the United States. Nobody knew it at the time. We were scheduled to be married two weeks after the accident. So all of a sudden, my focus changed from REMAX to I've got to take care of her and my friends. My partners back in Denver had been partners with me since the beginning. They ran the company beautifully, perfectly. And so our first challenge was we had to get over that bump in the road, if you will.

As we got back to Denver, Gail continued to have to be hospitalized with in and out patient for almost three years. And so we started juggling being a caregiver to still growing the company. About halfway through that first 10 years, we had a call from a man in Kansas City, and he said he'd heard so much about our success, wouldn't we franchise to him? And I really didn't understand franchising, but we were pretty broke at the time, and I said, yeah, come on out. And as it ended up, he didn't buy,ising, but we were pretty broke at the time. And I said, yeah, I'll come on out. And as it ended up, he didn't buy, but one of his agents did, Dennis Curtin. So Dennis was 25 years old, a good superstar, up-and-coming real estate agent, really fell in love with the concept.

And interestingly enough, 40-some years later, Dennis and I are still best friends. We just had a great time in Arizona with Walter Snyder. Walter joined us in 80. He was 23 years old. Both have incredible success stories. And so those friendships have kind of stayed along the way. We sold two franchises in 75 and then uh uh two and 76 and then my eight broker owners of gail and my personal offices in the denver area bought their offices in franchise so in 77 we became a franchisor and in the next, we sold about 30 regions in the United States and 100 franchises. And the transition was underway. We were going to be a franchisor.

Wow. So you mentioned you sold regions and franchises. For those that don't understand the structure of sub-franchising on the podcast here, can you talk about how you came up with that concept and how that helped kind of magnify the growth or help you manage the growth of the organization to scale? Well, I've never had too many original ideas myself. I've taken other people's ideas and tried to put them together with other ideas to have a hybrid, such as the rented desk with an extremely professionally managed company. In 1972, 73 era, franchising started in the real estate industry in the United States. In 1972, 73, Century 21, ERA, Realty World. I mean, just a dozen companies popped up. And the way they would decide to expand was two steps. First, they were going to sell territories or regions. For instance, maybe Florida would be a region. maybe Kentucky, Tennessee together would be a region. And then that regional owner would take over part of the business. The parent company, the franchisor,

would provide the national advertising, training, campaigns, trademark protection, and growth patterns. The local region, they would conduct the local meetings of the franchisees, the sales associates' quarterly sales meetings, awards banquets, and local sales of franchises. And so that was called regional franchising or sub-franchising. And then by 1978, at the National Association of Realtors trade show during the convention, there were 178 so-called national real estate franchisors. Now, most of them were franchisors. Sears had come in the business to own offices, not to franchise them, as did Merrill Lynch and Prudential. But the most of us were going to franchise our products. All the franchise salespeople were running around the convention stating, franchising is taking over the industry.

And in five years, five of us will have 80% of the market. And if you're not one of the top five, you're going to be out of business. Obviously, that didn't happen. And there was never room for 178 franchisors, period. And so those that were poorly managed, poor concepts, poor leadership or management, they failed pretty quickly. But now, as you can see, a few more companies have been added. But over a 40-some year period of time, the franchisors in the United States control probably 55% to 60% of the business. And so it didn't happen overnight, didn't happen that we got 80%, but it has continued to grow continuously.

That's amazing. And when you started franchising, you defined the key concepts that a franchisor provides. What are those? Well, if you're going to sell a franchise, there's four things that you really sell. One is a unique product or service. In Remax's case, it was the high commission concept and the concept of allowing the freedom of the agent to be a real business person and be the entrepreneur. The second was brand and market share that drives business and leads. The third is group purchasing. And the fourth is unique training programs. And so any outstanding franchisor that can do those four things with excellence will have a very successful franchise.

Interesting. And I know over the years, you know, Remax has evolved to this concept of the power of association that as you built it and it became more and more powerful. Can you define for us or kind of explain to the listeners what that means to Remax and to you as you built the company? If I was smarter, I could probably put it into a paragraph. I'm not that smart. I heard it said in the past, you play better golf with better golfers, meaning that if you're just a duffer and you go out on Saturday with the guys and have a couple of beers and you take a mulligan and you move the ball a little bit. You're not too serious. If you're in the country club and you're serious about it and you obey the rules and you practice very diligently, your game comes up to be as good as the people you're playing against.

So in the real estate business, we felt the same way. Jim Rohn, a philosopher many of us studied under over the years, said that you're the average of the five people that you spend the most time together. And that's because of the incredible influence that the people you spend time with have on you, your behavior, your exercise, your diet, your goals in life. Now, the perfect example is if you're a ditch digger, and that is an honorable profession, and some people with limited mental capacity get stuck in that place, circumstances, it's honest work, it's very low paying, but you'll behave like other ditch diggers. That will be your focus group.

You will dress the same way. You'll go to the same pub or bar. You'll drink the same brand of beer and smoke the same cigarettes. And you'll go to the same camping spots and fishing spots. And that's your world. If you're a cardiologist and you go to college for eight years and you do a two-year residency and you're surrounded by everybody else, whether they're physicians, assistants, nurses, doctors, cardiologists, they all have six, eight, 10 years of education and experience. Their lifestyle is different. You will dress like they do. You'll drive cars like they do. You'll live in the same

communities. Your kids will go to the same private schools. You'll join the same country clubs. It's that simple, is you will become exactly like the other people you surround yourself with. The whole concept behind Remax was if you surround yourself with people who are as good or better than you, you will either play up to that game and learn, or you'll run away from it because you're uncomfortable being in that circumstance. This association of similar people who are very, very highly driven, very customer-oriented feeds on itself. I love it. I love it. And one of the key components of REMAX is the average per agent productivity being so high with the full-time professional agents, which is a concept that

you have very much translated from your head into this industry and into the REMAX system. So it's been incredibly successful. So while we were speaking, I got off this concept of environment. And I couldn't figure out why did our people do so good together? Well, it was just that concept. If you're surrounded by other good people, you play up to their game. I bought Gail a terrarium when she was in the hospital. And this terrarium looked like a big wine goblet or something. It had all these little plants in it. It had a couple of porcelain toads and a couple of toad stools and so on. And that terrarium followed us from hospital to hospital, rehab center to rehab center when she had to learn how to walk again and so on.

Over a period of three years, I watered it, nurses watered it, other people watered it. And I noticed that one day, you know, I just said, oh, my God, that's ugly. It's all mossy and green on the bottom. It's just not attractive. And I told Gail, I'm going to buy you a new one. And she, with her head injury, couldn't handle that. It had been hers for three years, and she didn't care if it was ugly or not. It was hers.

And so I said, well, look, let's do it this way. I'll buy you a new one. We'll keep the old one, and we'll repot all those plants. And that satisfied her. We took those plants that had been in this glass container for three years and had never grown outside the glass container. Even though there was no top to it, they were stuck in this environment. And we put those plants in other containers and potted plants.

And fast forward 30-some years, some of those plants are now in our house that are 25 to 30 feet tall. So you just kept increasing the size of the environment? The environment got bigger and the watering got more and the sunlight got bigger and we took the confines of this glass container away from it and they grew to the environment

they should have grown in in the first place. So self-limiting factors, is that kind of what we see people put themselves in in their environment, and it's reiterated by those around them? Yeah, the brokers of a 50-50 company often held the agents down. A broker said, I'm the broker. I'm paying for the advertisements. I'll tell you where we're going to advertise. I'll tell you how much you can spend. I'll tell you how many ads a week you can do.

Whereas the frontline person, the agent, really knew the business better than the broker who hadn't sold a house in 30 years. And so when you liberate people to make their own decisions, they will grow to fit the environment they create. That's amazing. And it's interesting because, you know, I take you back to the early years, the first episode in this three-part series, and you said, we're going to become a worldwide real estate company. You didn't say, I'm just going to start a small real estate company in Denver, Colorado. It was, we're going to be intergalactic or something like that. I've heard you say elsewhere before.

Is that where you put your environment? Well, I think you have to be a little bit stupid. You have to be a little bit brash. If you look at some of the most successful people in the world and you start looking around, most of them are pretty unique individuals. You look at Branson or whatever, this is not a very modest person. And so it takes some personal self-confidence and the ability to ignore other people laughing at you. And when I said I'm going to create the largest real estate company in the world, ignore other people laughing at you. And when I said, I'm going to create the largest real estate company in the world, I'm in it. And other people would look at me thinking, you're out of your mind. And yet today, 116 countries and

it worked. Never lost focus, never got lost. And it was never a goal. It's a journey. And it's not even close to over. So that reminds me of a pretty cool quote that Mahatma Gandhi said. It fits this situation. And that's, first they ignore you, then they laugh at you, then they fight you, and then you win. That kind of sounds like the history of RE-MAX a little bit there. I'd just throw in one more, and that's then they hate you.

Okay. Yeah. Yeah. I mean, it's becoming an enemy. And then you win. And it's interesting. When we got started, you know, you have to understand, it's 45 years ago. The powers that be that tried to put us out of business are all gone.

They were all 50 and 60-year-old men who were running the biggest real estate mortgage companies and so on in the country. They were the ones that were skeptical. They were the ones that were gaining up on us. Somewhere along the line, they retired, died, whatever, and went away. And now I'm the older generation. And so I know what it's like to be a disruptor. And I'm watching the younger generation actually become disruptors. And so the one thing that Gail and I did correct of everything we did, we kept an open mind and said, change is inevitable. You better be looking at every idea that comes along because out there,

there's somebody who sooner or later going to outwork you, outthink you, outdream you, and you better be paying attention to what they're doing because if you ignore it and say it'll never happen, it will happen. This episode is just unbelievable. And I want to continue this conversation in our next episode, but some amazing takeaways, just building REMAX, hitting stride, and some of those key leadership components,

key growth components that you went through. So thank you so much, Dave. And on the next episode, we are going to be talking about some of that change, some of those major transitions and big business lessons that Dave Linegar has learned over the years from the 12th floor of Remax World Headquarters, top of the world here in Denver, Colorado, and this global real estate company talking to the co-founder Dave Linegar, an amazing man in the industry. This is Adam Kantos. We'll see you on the next episode to continue this conversation.

Thank you so much for joining us today. Make sure to head over to startwithawin.com to get more great content. Please subscribe and rate the show on iTunes or wherever you get your podcasts. Follow Adam on Twitter, Facebook, and Instagram. And remember, start with a win.