I used to read the pieces written by Silicon Valley entrepreneur-types about company culture with skepticism. After all, I personally have never required much external motivation to work hard, collaborate with colleagues, and generally try to behave honorably. I always figured if you hired a bunch of people like that, your culture would be fine.
But, now, as we begin to expand the organization we built on the fly over the past few years, I see the importance of articulating and fostering a specific company culture.
The reason is that real estate can easily become all about short term greed. Because everyone is in it for the money, it’s incredibly easy to fall into a pattern of taking the path of least resistance to getting paid. This would include: pushing clients to do bad deals, not negotiating prices on work performed on buildings under management, buying things for a fund in order to earn fees, doing half-assed rehab work because you know you’re selling the building, etc.
If you do the things I set out above, you will make more money, more quickly, than if you take the hard road of advising clients to walk away from bad deals, pushing hard on vendors, treating investor money like it was your own, and rehabbing buildings as if you’ll own them forever.
So, why take the harder path?
The answer is that we intend to be in business in one little area, Northeast LA, for the rest of our careers. Sure, we will invest in other places as we grow. But we’re always going to have a big presence here.
Once you decide you’re going to be in a specific business in a specific place for a long period of time, all of the incentives change. Now you want to forgo easy money in favor of building a reputation, long-term, as a reliable, honorable business partner. So, how does this relate to company culture?
Jon and I own the company (actually, companies), so we have totally internalized the long-term thinking. But, as we expand, we are bringing in new people who have not worked with us before and and will not be owners. This is where culture comes in.
Yes, we need to bring in the right people. But we also need to communicate to them, through our words and actions, their performance reviews and compensation, etc. that we’re serious about doing right by the people who do business with us and we will hold them accountable for doing likewise.
I have some ideas about how to do this, which I’ll be writing about over the next few days. But I’d also love to hear from anyone with good ideas to share.