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By Nathan Beckord

Raj Nathan wants you to have a voice. In fact, he wants everyone to have a voice. And he helps startups use their voices to tell their stories—and to pitch investors.

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Based in Chicago, Raj is a pitch and presentation coach, helping startups stand up and stand out in a crowded field. His small team at Startup Hypeman works with five to 10 organizations per week to hone their elevator pitches and pitch decks. “Startup Hypeman is intently focused on being a hype man for startups, by helping them not suck at how they pitch themselves,” he says. “And most often, that is for the purpose of fundraising.”

The problem with most pitch decks, according to Raj, is that they either don’t tell a compelling story or they fail to tell a story at all. That’s true even when a company has an incredible product.

In this article, Raj walks us through the steps he uses with entrepreneurs to turn run-of-the-mill pitch decks into ones that do the heavy lifting for you.

A winning pitch in five steps

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Step #1: Make your elevator pitch the foundation

The first thing Startup Hypeman works on with any client is the elevator pitch. Raj says many entrepreneurs fall into the trap of trying to cram too much information—or not enough—into their elevator pitches. “By the end, you’re just incredibly confused as to what they do. There’s this push from a lot of founders to be like, I gotta use all the jargon words possible to make this sound interesting,” he explains.

Instead, he has what he calls a “Que PASA” framework: Problem, Approach, Solution, Action. We’ve all seen (or perhaps made) the pitch deck that starts with “X is a $50 billion industry.” While numbers can be helpful elsewhere, Raj wants founders to think about deeply defining the problem, because as his dad used to tell him growing up, “A well-defined problem is already half solved.”

Step #2: Set up the emotion

Raj talks about the difference between what he calls “Cinderella storytelling” and “advanced storytelling.” An example of Cinderella storytelling might be, “Jimmy has a problem. Jimmy is frustrated. Jimmy finds a solution and lives happily ever after.” More complex storytelling leads from emotion rather than problem/solution. Here’s how he approaches a problem from emotion rather than mechanics: “We build up this story across a few slides about how the world is becoming more authentic,” Raj says.

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He gives the example of celebrities who make authentic connections with their fans on social media. The hashtag “#nofilter” is more popular than using filters on Instagram. Then he ties that back to the (hypothetical) product: Despite authenticity being on the rise, dating still remains inauthentic. Here’s an app to increase authenticity in dating.

Step #3: Detail the go-to-market strategy

This is the place to be explicit. You can have a great product, but if you don’t show how it will make money, it’s worth nothing to investors.

“I will ask entrepreneurs a question about their traction strategy. And they’ll just be like, ‘ Oh, social media. Okay, what about social media?’ And then it’s a deer-in-the-headlights look in response,” Raj says.

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Whether it’s ads, social media, or partnerships, be sure to think through how you’ll make money and make that the focus of your go-to-market strategy. And with ads, consider how quickly you can attract advertising dollars. He says, “You’re standing here and you’re telling me that on day five, when you’ve got nine users, you’re going to attract advertisers? Why would they buy from you? What value could you possibly bring them? I get animated about that.”

Step #4: Specify what success looks like

Metrics can be tricky. While some industries have standard metrics, they aren’t always the best for showing how your startup works. So, show investors how to measure your success from the beginning by telling them which metrics mean the most.

Along with that, don’t use neutral headers in your slides. Instead of labeling a slide “Customer acquisition,” start with “We are excellent at acquiring customers—here’s how.”

Step #5: Rethink the competition

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Rather than using the classic four-quadrant competition grid that’s been seen time and again, Raj likes to create exclusivity. He explains that by carving out a category all your own, you get to set the pace and create more hype around what you’re doing. It’s not always possible, but with some creative thinking, you can set yourself apart from the pack.

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Raj’s do’s and don’ts for pitching investors

Here are some final tips of the trade for a pitch that investors won’t forget:

Zoom in

For many investors, watching pitches on Zoom is here to stay. Raj recommends investing in a few pieces of equipment to make sure your picture is professional. That means spending a few hundred bucks on a good lighting setup and an external camera with higher resolution than whatever your computer’s built-in webcam offers.

Don’t forget that your background helps tell your story, too. Let it reflect your personality and your brand. Finally, take a tip from newscasters the world over: Stand up! Reconfigure your desk if you have to. The energy boost from standing while talking will pay off.

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Start early

Don’t craft your pitch the night before you need to give it. Ideally, Raj recommends starting your deck at least a month before you plan to start pitching investors. That leaves plenty of time for practice and revisions.

Get over the hump

When it comes to actually putting the slides together for a deck, Raj starts in Word rather than PowerPoint.

“We start in a Word document,” he says. “If you outline it first … it’s a way easier exercise. It makes then putting it on to slides a lot easier because you’re thinking about not just the raw information, but also [asking yourself], What is my belief? Or — What do I want to say about this thing?”

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Sometimes the hardest part of making a pitch deck is getting over yourself and getting started.

Article is based on an interview between Nathan Beckord and Raj Nathan on an episode of Foundersuite’s How I Raised It podcast.

About the Author

Nathan Beckord is the CEO of Foundersuite.com, which makes software for startups raising capital. Nathan is also the CEO of Fundingstack.com, which is a new platform for VCs and investment bankers to both raise capital and assist clients and portfolio companies. Users of these platforms have raised over $9.7 billion since 2016.

RELATED: Top VC Fundraising Advice from a Co-Founder Who Raised $260 Million

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Dave:
Hey, what’s going on everyone? This is Dave, your host of On The Market, and today we have a super fun show for you with Kathy, Jamil, James, and Henry. We are taking listener questions. We’ve got some incredible questions from all of you to answer today. I actually went out and assigned each question to one of the panelists, so they did some research and then we’re going to debate each of the topics. We have some phenomenal questions submitted by all of you, so thank you for submitting them. We’re going to be talking about all sorts of different topics, everything from how and when the housing market might be bottoming, whether ADU laws that are supporting the building of ADUs are actually improving affordability.
We’ll be talking about how to guide your investing 10, 20, or even 30 years down the line. We’ll talk about demographics, why lenders don’t undercut each other, and at the end, we’re even going to predict what asset class is going to perform the best over the next three years based off market fundamental. So this is going to be a phenomenal show. I hope you all stick around, but we do have to take a quick break and then we’ll get into your listener questions.
Welcome back to On The Market. Today we have seven listener questions from you all. I asked people on Instagram what they wanted us to discuss today, and I got tons of great questions. We picked seven that we thought were interesting and applicable to our national audience, so keep an eye out for that either on my Instagram or on the BiggerPockets Instagram. If you have questions for the panel, we’re going to be doing more shows like this and we’d love to hear what questions you have. So the way we’re going to do it is we each one of us picked topics that are within our wheelhouse, and so I’m going to ask the questions and then each one of us is going to answer it and we’ll have a few minutes to discuss or debate for each of the topics.
The first question is how should we think about the bottom of the real estate market? Ben, back in the great financial crisis, the housing market bottomed in 2012 compared to stocks that bottomed three years earlier in 2009, and that is accurate. February of 2009 is when the stock market bottomed. February of 2012 is when the Case-Shiller index bottomed just three years later.
Personally, I don’t really think this is an indicator that I would watch because it really matters when you think about these two different asset classes, what was going on in the context of that big correction and yes, crash. And I think the difference in what happened in 2008 that’s different from almost every other recession that I’ve looked at is that housing actually led the country into the recession in 2008. It was a housing based crisis where bad loans and speculation cratered the rest of the economy and so because housing was the source of the problem, it was also took the longest to be fixed.
If you look back at other recessions like the sort of the dotcom boom where the stock market went down from about 2000 to 2003, during that stock market decline, the Case-Shiller index never declined at all. So that just shows that housing prices weren’t really affected by stock prices in that instance. If you look back to a previous recession in the early ’90s, you can see that although housing prices did go down in the early ’90s, they went down about 1%, whereas the stock market went down about 15%.
So I don’t think these things are really all that correlated, at least historically, the Great Recession was just different because housing was the source of the problem. That is not what we see as the source of the problem right now. Housing is being affected, but I don’t think it’s the cause, and so I wouldn’t really think too much about trying to identify that housing bottom based on stock market performance. But curious if any of you think differently.

Kathy:
Yeah, I think they’re two very separate things. One of the big differences and changes that we’re seeing recently is the Fed seems to be more supportive of the stock market than ever before. And we talked about that on the Chris Martenson episode that we did here. Check that out if you haven’t seen it yet. But there were some changes made after the last recession that seems that the Fed is very accommodating to make sure that the stock market stays afloat.

Henry:
I agree with you, Kathy. There’re two separate markets. I think it’s smart to realize that there’s a shift happening within the stock market and then use that as a trigger to help you and go and research what’s causing the issue and then see if those triggers are affecting the same triggers that you would look for in the real estate market. But just because the stock market is going down, it doesn’t mean that real estate is going to follow suit, but I think again, I think it’s great to understand what’s happening in the stock world and then do some research to make sure that those what’s causing the stock market to go down won’t also have an implication on the real estate market.

Dave:
Yeah, generally speaking, I think if you’re looking for a bottom, we may have already hit it, it’s uncertain, but as soon as the Fed starts lowering interest rates pretty confident that will be a for sure bottom, but we’ll see. All right, next question. This one is for you James. This is something that has impacted your home state of Washington. The question is, can you tell us about the proliferation of pro-ADU, which stands for accessory dwelling units, that’s basically like when you build an extra unit in your backyard, something like that at a DADU mother-in-law suite, whatever you want to call it. So the question is, can you tell us about the proliferation of pro-ADU laws and what, if any effect they have had on affordability?

James:
Yeah, the ADU laws, it’s been a huge transformation of our city. So basically in 2019, the city really started or they realized that we’re going to have a mass shortage of housing and people can’t afford what’s being built there right now. Seattle, Washington needs 55,000 houses added to the rental market every year or properties for it to keep up with supply. And so that’s a big, big demand. And so what they’ve done is they’ve actually just recently, so in 2019, they started passing these rules where you could build a accessory dwelling unit on the back of your property. That started working, so they started doubling down on it and it allowed you to actually get more density throughout Seattle.
What this really comes down to is just density, what you can build on your lot, but they put in restraints on the size of properties you can also build because now you can no longer build a little mini mansion in Seattle. You have to cover a 50% far coverage, which is the amount you can build. So they’re really motivating people to build smaller units because it will provide more housing. The effect on affordability I don’t think has had any impact whatsoever, and there’s two main reasons for right now.
The reason being is the buyer demand was higher than everyone thought, and they thought that these units would be a lot cheaper, and they’re not. They’re selling for more than town homes. They’re in higher demand than a shared wall unit, and so they’re selling for 10 to 15% more than the product that they were trying to be even cheaper than. And so if we’re in a core neighborhood in Seattle, we can build them for 350 grand to 400 grand. We’re going to sell them for about 775 to 850, those are our metrics right there so that works. But the problem is you’re still spending $850,000 on a two bedroom, two bath, 800 square foot house.

Dave:
It’s wild.

James:
And so it’s not that affordable. It’s the highest price per square foot. And then the other issue is you can’t build them cheap enough to work in the affordable neighborhoods. If I build that same product for 400 grand, that thing’s only going to be worth 350 and the rents aren’t going to cover nearly what the debt cost is going to be. And so we’re kind of in this middle of the road issue right now where it’s creating more property for people to buy, but it’s definitely not affordable.

Dave:
That’s super interesting. Yeah, it’s kind of impossible to prove the counterfactual. You have no idea if prices around the city would go up if this didn’t happen because the more supply, but I think it’s really a good point that in the affordable neighborhoods it still just doesn’t pencil out. So even in the areas where it is needed probably the most, it doesn’t make sense. I heard some, I forget who, we had a guest recently who was talking about this and was talking about how one of the main things that would really help is if Fannie and Freddie would allow you to count future rental income when taking out a loan because then just normal home buyers would be able to finance building these ADUs and it might be able to help get some more of these things actually built.

James:
Well, the funny thing is these rules will always be manipulated a little bit. Manipulation might be the wrong word, but it maximized I guess because they did this, so people could build a rental unit in their backyard per viable housing, but then in Seattle, they allow you to condo those off. So all you’re doing is doing a mini subdivision and selling it off for a higher price. And so it didn’t add rental units, it added more units to sell, and so each city is starting to adapt that too, so the rental units might not be there anyways.

Dave:
All right, great. For our next question, Kathy, is there any data to guide long-term real estate investing 10, 20 or 30 years down the road?

Kathy:
Well, my answer is I’ll just let the numbers give the answer. I went back and looked at the Fred basically home sales numbers or home price numbers over the lifetime of my life. So five decades, actually almost six. So going back to 1964, the median home price was $18,000, you guys when I was born, and then by the time I was 10, it had doubled. In just that 10 year period home prices were $35,000. Then by the time I was 20, they almost doubled again, $78,000. Then in ’94 they went up to $130,000. In 2004, $212,000 that’s when I kind of basically started investing. I remember saying that on one of the shows, that’s the home price.
So moving forward to today, the average home price according to Fred, again, $436,000, this is taking in all kinds of units, including new homes. So if I take those, I just decided to go with something more conservative, which would be a 40% increase, not doubling, but if prices just went up 40%, which would be the lowest over the last six decades, by 2034, the median home price would be $610,000 by 2044, $854,000, and by 2054, almost $1.2 million for the average home. And that’s again, using very, very conservative numbers.
It’s hard to imagine that, but it was hard for people to imagine in ’64 that a values could double from $18,000 to $35,000. So the bottom line is that the dollar is being devalued every single year. So it’s not really so much that home prices are going up or that property’s becoming more valuable. Just your purchasing power is weakening every single year. And we know that that’s not changing at all with this issue of the debt ceiling that we’re facing right now where, well, nobody wants to cut costs on anything.
Republicans want to make sure that we’ve got a strong military budget, and of course the Democrats want to make sure that there’s social programs and nobody wants to cut anything. So the debt ceiling keeps increasing, but you can’t keep increasing taxes or else people would have nothing to live on. So the way that the government deals with all of this spending is printing more money. So it’s not going to be anytime soon that we stop seeing the dollar devalue, it’s going to continue, and therefore these prices are going to look like they’re going up.
So that’s the best. Nobody can predict the future, but when you take six decades and just average it really low of what could happen, that’s what could happen. That’s why I think if you’re not getting into the housing game now, it is not going to get easier. It’s just going to keep continuing, especially now that, like I said, there’s kind of a baby boom happening in certain areas in Texas for sure, just look that up, baby boom in Texas. I already said Salt Lake. We are seeing population growth. Some people say it’s on the decline, but we’re still growing and certain areas are growing faster than others. So if you really want to take advantage, you want to be in those areas where there’s job and population growth that would continue over the next few decades.

Dave:
Definitely a baby boom in my group of friends. So anecdotally, I can definitely support it. Everyone I know has had a baby in the last three months, but it’s great. But Kathy, to your point, I think it’s a great point that the housing market fluctuates and we are in a unusually volatile time, but if you just look at the median home price of the United States, go look it up. Go to the FRED website and look at the median home price of the United States back 50 years, and that will tell you what you should do with real estate investing, it’s really not that complicated.

Kathy:
And there’s been recessions, massive recessions during all of those decades. Each decade there was some kind of recession and it was pretty terrible at the time. And yet you’re still seeing those home prices nearly double almost every decade. It’s incredible. So it is hard to believe that by 2054, my grandson’s going to have to pay a million dollars for an entry level home, but that’s just what we’re going to be dealing with.

Dave:
All right. Well, thank you Kathy. Henry, the next question is for you, the question is what is the federal solution to a broad pathway to affordability, ie, a 40-year mortgage restrictive invest? What is that?

Henry:
Those are just examples.

Dave:
Do you think that means restricting investment with them?

Henry:
No, I think it’s more about what the government has done with the FHA kind of restructure. So I think the general question is what can or is the government doing about affordability within the real estate market for the average home buyer? Yeah, I mean, obviously one of those is the FHA mortgage restructure program, which is a start, but there’s some restrictions. It’s not available to everybody. You have to already have an FHA insured mortgage and you have to be current on your payments to qualify. And then if you are, you’re able to restructure into a 40-year mortgage, which can help with affordability because now you’re stretching your payment out over 10 more years, which helps your monthly payment go down. But the trade-off to that is you’re going to pay a lot more in interest now because you’re stretching that interest out over another 10 years.
And again, it’s not available to everybody or all the borrowers. So you already have to be a homeowner essentially to qualify for this. And so if you think about options for what the government can do to help affordability, we’ve talked about this on a previous show, I don’t think affordability can be solved by one party. I don’t think just the government can solve affordability. I think the government partnered with builders and investors and the people who need to afford those homes, I think all four groups have to come together.
And when all four groups come together and work in each other’s best interests, then I think that’s when we can start solving the housing affordability. And what I mean by that is everybody’s only looking through their own lens. And so if the government wants to enforce restrictions on what builders can build, then there will be less builders because builders are building for a profit and city and local governments, that’s who also has to be included. And so a well-rounded solution would be the government provides tax breaks to builders and or investors. The city and local government helps provide either tax breaks for the buyers or tax breaks for the builders.
Maybe they offer discounted land and some city and local governments are doing this, offering discounted land where builders can then build in those areas and get tax breaks and the tax breaks help offset what they would lose in profits because if they’re going to have to build something that they can’t sell at the tippy top price in order to maximize their profits, and there has to be some other reason for them to be able to do that.
And so if there’s a tax incentive and the city and local governments are helping to supply land, and then we help educate the general public on what they could be doing from a financial perspective to improve their financial situation, you put all those things together and you can really help and start to fix affordability. Now, the likelihood of that happening anytime soon, probably not too high. So in the short term, some of the things that can be done are providing incentives to tax breaks to renters. If they don’t have to pay as much in taxes, there’s more money in their pocket to be able to afford rent.
And then just expanding so when you think about affordability, there’s, can I afford the monthly payment? And then there’s, can I afford the down payment? And for the typical buyer, those are two separate things because if I can afford the monthly payment, but I can’t come up with 50 grand for a down payment, it doesn’t matter what the monthly payment is, I can’t get to that 50 grand. So having some sort of expanding access to down payment assistant programs, so there can be maybe some government down payment assistant programs that we can push out nationwide to help with the down payment, and then offering a 40-year mortgage to everyone. Expanding the years of the length of a mortgage isn’t new.
The 30-year mortgage was introduced in what, 1934? And before that, the length of mortgages were like five years. So because what Kathy talked about was happening every 10 years, real estate was doubling, it was becoming more harder and harder for people to be able to afford homes, and so they had to expand the mortgage length to something where people could afford it. And so it wouldn’t be unprecedented for there to be a 40-year mortgage program for the general public in the coming future. I think it’s going to be here. I think it’s necessary because I don’t know how else you’re going to be able to combat the rising home prices. And again, if those interest rates start to come down and that buyer demand is going to go up, that’s just going to drive prices even higher faster so-

Dave:
Yeah, I mean, I agree with you that it should be an option to people, but I also think you brought up a really important point that a 40-year mortgage just means people pay more interest over time. So although it is, I think people should have that option, if they want to choose that, that’s fine. But it isn’t like the best long-term solution in my mind, it could help in the short term just because that’s just putting more money in lenders pockets over time and helping and not necessarily fixing what I personally believe is the big issue, which is a lack of supply.
And you talked about some of the big issues that we need to handle. I’m curious because the question was is about federal, and you mentioned a lot about state and local governments, and I tend to agree that that’s probably where the solution will go. I don’t know if anyone has any other thoughts if the federal government can do anything else.

Jamil:
If you look at what happened in LA, they tried this. The state tried to come in and build units to see if they could affect the homeless situation there and these small little units that they were building were $800,000 a piece. Just think about the amount of waste that had to have happened for that, and we’re talking 400 square feet. 400 square feet for $800,000, what is going on? So there’s just, people are not incentivized at a state government level to be able to be efficient. You’ve got to put the efficiency in the hands of the business people who understand how to do that correctly and efficiently to make it make sense.

James:
Government should not be building housing. It’s got to be together.

Dave:
Yeah, yeah, exactly, but James, you talk about this a lot. You said it just earlier that it’s not affordable to build an ADU in a neighborhood that needs it. So the question is, is it through government’s role then to help incentivize builders to make it profitable so that they can build and help provide a service or a product that is needed?

James:
Yeah, I think, incentives are great. That would help fix a lot of things. They just have to have the right incentives. The problem is the incentives you get have zero impact. It’s like, oh, they’ll subsidize certain things, but they’re still so far disconnected with what actual bill costs are. The funny thing is what Jamil just said that LA was building these for so expensively, but then they expect us to build it for cheaper than a fourth of what they could build it for to keep the cost down. And so it’s like, they’re just unrealistic incentives and expectations and it would make a big, if policy could change everything, but they just got to have that critical conversation. They got to get everybody in the same room and have that solution figured out, not just dictated.

Kathy:
It needs to be more streamlined, less red tape. I think I told you guys about an apartment we bought for, it had 220 units and we wanted to increase density to 800 units in Mountain View, California across from Google where’s it’s desperate, the housing is desperately needed and we were putting aside 30% of those units as affordable, and yet they still blocked it every step of the way and it became too expensive for us to build it. So we didn’t.

Dave:
I saw in Florida, they just announced a law that I think is going to overrule local municipalities to stop them from limiting increasing density. So if people are trying to increase density in, say a town wants to stop it, the state government is preventing that in some instances in Florida now, which is an interesting approach to the “nimbyism” where people all want affordable housing, but they don’t want it next to their house.

Kathy:
But I kind of get that too because you also have resources that are going to be used. There’s only so much water, there’s only so much room for cars and parking and so forth so I also understand the regulation side. It’s not an easy job, but there does need to be a way to streamline it for sure.

Dave:
That’s true. It was a very, very complicated question, but I agree, Henry. I think it’s really about getting the local people together who know what is needed and know what’s possible to try and improve affordability. All right. Let’s move on to our next question, Jamil, this one’s for you. Question is, what do the demographics look like after 2024? How do you see these demographics impacting real estate investors?

Jamil:
Well, that’s a great question and I again look back at what was the demographics of the buyers from 2014 to about 2022. And the largest share of buyers that we had were Millennials. This made sense. They were really cashing in on the cheap rates. They didn’t have large pools of equity and they hadn’t had the sophistication or at least the acceleration in their jobs to be able to have these really high earning jobs that allowed them to come into the housing market and make larger purchases or be able to absorb the higher rates.
And so it made sense that the Millennials were the largest group, but now with rates where they are, we’re seeing the Baby Boomers actually come in and take control of the housing market, and they’re doing that because many of them are repeat buyers. So they’re pulling equity from all of the housing appreciation that they enjoyed over the last decade, and they’re cashing in and buying their dream homes. And I don’t see that ending anytime soon with rates where they’re going and especially 2024 is not very far away. I think we’re going to continue to see the Baby Boomers lead that as well as Gen Xers who are still the highest earning demographic group in the entire picture here. They’re the ones, they’re more racially diverse, they have higher incomes. They are going to be along with the Baby Boomers, the most aggressive purchasers for homes in 2024, in my opinion.

Dave:
All right, so it’s the people who already have some money?

Jamil:
Already have some money. I think it’s going to continue to stay that way for the foreseeable future.

Dave:
Yeah, I don’t know. I don’t have any data to support this, but I imagine it’s really tough for younger Gen Z people, for example, to afford homes in this kind of climate right now.

Kathy:
And part of my research, I was looking at demographics and the people over the age of 65 will double from 52 million to 95 million. So that’s something to pay attention to.

Jamil:
Just to button up what you were saying, Dave, Gen Z right now, they are making up 4% of buyers and sellers so it’s a small amount.

Dave:
That makes sense. I mean some Gen Z is still under 18, I don’t even know.

Jamil:
18 to about 23.

Dave:
Yeah, okay. So I guess that makes sense, but I do still think generally they’re going to face a pretty tough time affording homes in this market. So in addition to 2024, I feel like a lot of people ask me this question about demographics. We are seeing a declining birth rate in the United States, and I have a lot of people ask if that will affect real estate valuations in the long run. And I’m curious if any of you have an opinion on that.

Kathy:
Yeah, I mean, it’s like I said, there’s certain states where there’s actually Baby Booms and that’s probably states where just a lot of young people are moving to and having babies. You have a huge Millennial population right at family formation age between 30 and 34. It’s the largest group of Millennials. So you would think there’s probably going to be a Baby Boom over the next few years. That’s at least my opinion. And then you have states where the Roe V Wade rollbacks where now they’re seeing Baby Booms in those states as well. So I don’t know. I know that historically, Dave, that’s what I was hearing is that there was a decrease. But I’m wondering if that’s going to change over the next few years.

James:
I mean, at the end of the day, don’t we still have a housing shortage and we can’t keep up with it? So I don’t know if it’s going to have too much impact on the housing market, but that’s definitely a stat you got to watch just for all sorts of different reasons as far as social security goes and other types of funding that can affect the whole economy of the United States. But I mean, we’d have to build more houses for that really to have impact.

Dave:
Because social security is just a Ponzi scheme and we need more people to be bored to pay into it.

Henry:
Oh, you’re going to get us canceled.

James:
So is it a clawback thing though? Do we get our money back from social security if it ends up being a Ponzi scheme?

Kathy:
Not if it runs out.

James:
I like to get my check.

Dave:
I mean, it kind of is a Ponzi scheme though. You literally, the whole premise is that more people are born and pay into it, and that funds other people’s retirement. I don’t mean that’s it’s a scam, it’s just dependent on more people entering into it than people who are retiring.

Jamil:
So new investors pay old investors?

Dave:
That’s exactly what it is.

Kathy:
You guys, the money’s not there. They’ve already said over and over that it’s going to run out. So unless they just print up a bunch more money, it’s not there. So I don’t expect to get social security and I don’t want it. I’d rather go towards social programs than to people who need it. And that’s one of the conversations that’s being had right now is maybe the people who don’t really need it should just not, just let it go. But no, I mean, they’ve stated many times that they’re running out and I don’t even think the money’s there. I think it’s just an IOU at this point.

James:
IOU attached to gold somewhere, some promissory now for gold.

Kathy:
Well, everybody says that you’re supposed to have 10% of your net worth in gold. We have a little bit. Rich is into it, but if you’re going to have something that’s sort of a hedge against inflation, I’d rather have something that cash flows or if I’m going to have gold, I’d just like to wear it. I don’t want to store it, but doesn’t cash flow, I don’t get it.

Jamil:
Kathy’s got like $5 million in gold chains.

Henry:
Yeah, she can only physically wear two chains, the gold weighs more than her.

Dave:
Henry, if Kathy put 10% of her net worth in gold around her neck, she wouldn’t be able to walk.

Henry:
That’s it. She’s done.

Dave:
All right, cool. Let’s move on to our next question, which is for me, which is why isn’t there a mortgage lender who offers lower rates to outcompete everyone else? I love this question. So basically when we see interest rates go up or we see bond yields go up, mortgage rates pretty much across the board follow suit, there is some variation between different lenders in different locations, but the reason, at least I believe that you don’t see anyone trying to undercut the market is because the risk is too high for any of these mortgage lenders.
So put yourself in the position of a bank. They have let’s say a million dollars to lend out and they have options on who they’re going to lend it to. One option is to lend it to you as a mortgagee, and let’s say that they’re willing to do that for these days, something around 7%, and although I’m sure you intend to pay your mortgage, there is some risk associated into lending to you.
On the other hand, right now, you could go out and buy a US government bond, which now that we hopefully have a debt ceiling crisis is the most reliable investment in the entire world that pays just north of 5% right now, the bank is thinking, I could lend to the US government. That’s essentially what a bond is, I can lend to the US government at 5 plus percent or I can lend to you at 7%, and that spread between 5 and 7% is basically what they would call a risk premium, that it is riskier to lend to you. And so they jack up the interest rate a little bit.
The reason they don’t undercut you is because they have better options. If they were going to lend to you at 6%, they’re probably better off from a risk adjusted return standpoint to just buy government treasuries or buy corporate bonds or to put the money somewhere else because it’s just not worth it to them. So that’s why I see it is because there are other ways for them to earn a better risk adjusted return. But I’m curious if any of you have other thoughts on this.

James:
Yeah, I think it’s also just because the rates have been bouncing around so much, there is no consistency and the more it bounces around, that’s just more risk. And the banks, yeah, they’re assuming worst case because I mean, right when these rates started jumping, they jumped three points immediately. They were well in front of the rate hikes and I think they’re going to continue to do so. It’s just not worth the risk because if you get caught with the wrong kind of debt, I mean that can be detrimental.

Dave:
Yeah, for sure. Especially you see that with banks right now, they’re all being a lot more risk averse in their lending given what’s gone on in the banking sector right now so that’s another reason that they don’t want to undercut the market because it would hurt their balance sheets. So great question though. Hopefully, maybe someone will do it, if someone will just start undercutting the market and offer cheap mortgages, but these types of capital markets tend to be very efficient and I think they’re very unlikely to do that.

Henry:
And I’d imagine if that happened, the qualifications for being able to land one of those mortgages would be through the roof. It wouldn’t be just everybody go get a 6% mortgage, it’s not going to happen like that.

Dave:
All right. Well, for our last question, we’re just going to all talk about this, is a open debate here. When you see the real estate market in three years, what asset class has the best fundamentals? Is it residential, multifamily, industrial? What do you see? Let’s just make the question, if you were to invest in the next six months, what do you think will have the best return three years from now?

Jamil:
I’m still betting on single family. In my opinion right now, it’s still the most aggressive real estate asset class and again, it’s localized in specific markets, but you can still make great returns, you can still get great deals. There’s a lot of opportunity and because it’s been able to be pretty resilient through what’s happened over the last year, I believe that it’s giving us signals that it’s strong. It’s a strong asset class to invest in. Look at what’s happening in commercial, it’s getting creamed. Look at what’s happening in coming around the corner in multifamily, a lot of blood in the water, but I’m not seeing that in single family. And so I still feel, to me, viscerally it’s the safest investment and that’s why I’m going to continue to double down on it.

Kathy:
Me too. I’m with you there. I have single families where it’s at for me, I understand it. I can get those fixed rates, but also there’s just not enough of it. And we do know that our population is growing, at least with the age group of people looking to buy homes and also right behind them, the Gen Z population as a whole is if you go to the whole population, it’s pretty big. So I think single family is, to me, one of the safer bets right now. And that’s why we have a single family fund and we’re about to start a bill to rent fund.

Dave:
Henry, what are you giggling about over there?

Henry:
I was just going to say Kathy’s got a single family fund. Her investors are listening, she’s like, “She better say single family right now. She better be singing single family from the mountaintops.”

Kathy:
But I do, I look at everything. I want to do something new and different, although that’s never usually a good idea, but I know industrial is probably going to do pretty well. I think certain multifamily will do really well. Certain areas, retail and office are actually going to do pretty well if you go into the suburban areas, I’ve talked to a lot of people who are killing it. It’s just for me, single family is something I know and understand, and I know that there’s not enough of it and people who want it, whether they’re going to rent it or buy it.

Henry:
I wholeheartedly agree. I tease you, Kathy, but you’re right on. I remember my first couple of years investing 2017, 2018, people were saying then single family’s not a real asset class. You got to get into multifamily and commercial and Jamil and Kathy hit the nail on the head, single to small multifamily, I think is the place where you want to hedge your bets right now because if something catastrophic happens, people still have to have a place to live, and it’s typically the most affordable asset class other than mobile homes.
And so I think it’s a way to hedge your bets. I think right now, especially, I’ve heard Jamil talk about this in the past, but that single family asset that’s got that 2 to 3% interest rate tied to it being the new asset class to try to acquire, I totally agree because then you potentially getting some additional cashflow and I think it’s the safest bet people got to have a place to live. They’re either going to rent or they’re going to own those single family assets. And you can’t say the same for commercial real estate and you can’t say the same for apartment buildings. It’s on the ownership side anyway.

Jamil:
And just on top of that Henry, look at the liquidity availability in single family versus multifamily. You want to get some cash because of a catastrophe or something going on, sell a house. It’s not as easy to sell 300 units.

James:
I’m going to go against the grain on this one.

Dave:
Office space in Seattle.

James:
For me, the question is, where do we think we will do best in three years? And single family housing is the safest bet. I 100% agree with that. It’s consistent. You’re going to get your returns. You know what you can do with that asset class. That also seems boring to me, because it’s like if it’s the safest, it’s going to give you the safest return too, in my opinion. So I want to look at what’s getting creamed right now. Multifamily, it is hard to get a deal done, but once you find that deal, it is going to 2X when the rates drop out.
In addition to, I still believe just like the single family housing, people, as things are getting more and more expensive, it is breaking up our asset or it’s breaking up our demographics in classes where the renter, these Gen, we were just talking about these Gen Ys, they’re going to be renters, and so rent’s going to continue to grow. It’s a harder asset class. I think development’s a great one that we’re really buying right now too, because cost of dirt is down 40%, but on a three-year basis, I’m looking at what’s getting cream today that’s going to have the best upside for me.

Dave:
I’m totally with you, James. I was going to say the same thing. I think the things that are going to tank in the next six months are going to be the best returns three years from now, but agree that it is risk of reward return there will definitely adjust it. There’s definitely more risk in that. But I think the question, talking about fundamentals, I think housing units is what we’re saying. You guys are saying single family homes, those are residential. James is saying multifamily. I tend to agree that over the long run it’ll do well because we just need more housing units. I also think industrial is really strong, as Kathy mentioned, but it’s not my area of expertise, so I don’t think I could… There’s also so many subcategories of industrial, I don’t really know which ones are going to do best, but from what I read, these broad macro reports, industrial does still look pretty good, just office looks terrible.

Henry:
No, I totally agree with you and I had completely forgotten about that, but industrial or just warehouse space in general has gone through the roof over the past couple of years because of all of the online spending and just online businesses need places to store stuff.

Jamil:
But do you think that’s a knee-jerk, Henry to the supply chain issues and people are just warehousing more product and inventory so that if something happens, they’ve got access?

Henry:
No, I think it’s more to do with more people becoming entrepreneurs and starting online stores and drop shipping products. And even though they’re themselves not housing the inventory, somebody has to house that inventory somewhere. You’ve also got these ghost kitchens that have started popping up where people are now able to start a restaurant without having to have a brick and mortar restaurant. And you still need a place to prepare that food and get it out. And so people are using warehouse space, turning it into kitchen space, and then renting different spaces out in those kitchens to these ghost kitchens, essentially, who you can order food from on DoorDash like the-

Jamil:
So it’s Mr. Beast’s fault, Mr. Beast Burger?

Henry:
It’s Mr. Beast, the flexibility of being able to start your own online business and not having to own any other brick and mortar, somebody does own it and it’s typically these people buying up or renting out these warehouse spaces. They’re building four warehouses around the corner from where I live right now. They don’t even have a plan for them. They just know we need them and someone’s going to use it.

Dave:
All right. Well, thank you all so much for joining. This was a lot of fun and everyone listening to this, if you like this episode, please give us a good review. We always appreciate that. And keep an eye out for the BiggerPockets Instagram feed or my Instagram feed where we’ll be asking for future listener questions. I think that’s it. All right, well thanks everyone. Thanks for listening. We’ll see you next time for On The Market.
On The Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, research by Puja Gendal, copywriting by Nate Weintraub and a very special thanks to the entire BiggerPockets team. The content on the show On The Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

Don Mullen, Pretium founder and CEO, joins ‘Last Call’ to discuss gains in the Homebuilders sector and why it might not be reflective of what is really happening in the housing market.

When surveyed 81% of buyers say they want to establish real connections with brands. But they also don’t want to be overwhelmed by brand communications. So is there any way to satisfy their desires? Yes; you put the customers’ needs first.

I connected with Surbhi Gupta, a digital product manager based in Silicon Valley, who suggests that the key to putting your customer’s needs first is to start from a user-centric position.

Gupta, who has 18 years of experience in shaping and predicting major industry trends for growing industry professionals, has helped many companies succeed in delivering a top-tier product to their end users.

She recently spoke at the 2023 Product-Led Summit in Las Vegas, where she shared some discoveries made while working on a messaging product for a large brand. Nearly three-quarters of the product’s users said they wanted real-time notifications as one way to connect with the brand. Yet when they got notifications, they started leaving the product out of frustration. It was an obvious (and confusing) case of disconnect.

After approaching the problem from a user-centered viewpoint, Gupta and her colleagues found the underlying problem. Essentially, “real-time” meant something different to users than it did for the company. Users only wanted truly urgent messages right away, not every notification right away. After uncovering this issue, the company began using contextual signals to determine whether to send or delay a notification. The outcome was a far more valuable system built around the needs of users.

If your brand is struggling to put your customer’s needs first, try the following strategies. Each is aimed at fostering more of a give-and-take with your users.

1. Give consumers control over what they see.

Putting consumers in charge of their notification cadence can be a game-changer. Consider Meta’s revamped notification system that Gupta helped overhaul in 2022, for instance. Consumers were given smart defaults and power to opt-out or opt-in. They could also choose how often they were contacted.

This change helped keep conversations flowing between brands and buyers. And what made the premise work was that it was controlled completely by users.

Users will only opt-in if they feel the messages they’re receiving have inherent value and importance.

With this in mind, explore your historic notifications data. Which of your messages get the most responses? Why do users appreciate them over other messages? Are there ways to replicate their success with the verbiage of your future notifications? Be sure to conduct plenty of tests so you can figure out how to please your target audience, so they don’t tune out.

2. Automate without losing authenticity or risking violations.

It’s easier than ever to set your systems on autopilot. Plenty of AI-powered systems promise out-of-the-box automation services. The only issue is that you don’t want your messages to sound too robotic or generalized. Remember, 70% of consumers expect personalization.

It can be hard to know where personalization begins and privacy ends, though. A full 95% of respondents in one recent survey said privacy mattered to them. Consequently, it’s essential for brands like yours to figure out how to lean into technology without violating ethical customer obligations.

This is an area to experiment and be hands-on in your approach. Make certain you’re following privacy regulations and best practices. Case in point: Evaluate how you’re collecting, storing, and using data. You want to foster sustainable, long-term, trusting relationships with customers. To do that, you’ll need to make sure your automated systems are authentic without losing sight of customers’ rights and needs.

3. Adopt a philosophy of continuous improvement.

The systems that work well for you this year might not work as well next year. Resist getting too comfortable or you won’t be able to pivot quickly. The last thing you want is to lose ground to disruptive, future-forward competitors with better setups.

Speaking with Gupta about the importance of continuous improvement, she said, “During my time at Tesla, I was able to revolutionize automotive sales with a zero-touch experience. That groundbreaking innovation embraced a direct-to-consumer model and empowered customers with the information they need, minimizing the need for sales interaction.”

Because Gupta focused on the needs of customers, her projects were industry-changing. In fact, the Tesla web-based application helped generate more than a billion dollars in revenue and saved hundreds of thousands man-hours each quarter. And other product leaders have been inspired to use this model of direct sales.

By looking over reports consistently and listening to consumer feedback, you can spot and remove friction points as soon as they arise. Less friction means fewer user cancellations and a better user-brand connection. It also creates new opportunities for innovation.

As part of this continuous improvement process, solicit customer feedback to inform your ever-changing system roadmap. Allowing users to add their input shows you care about their needs and wants. It also gives you one more touchpoint with your user base.

Getting notifications right can be challenging whether you’re a startup or legacy corporation. Regardless, it’s worth the investment to give your notifications an overhaul. Just be sure your efforts start from a user-centric place for the most impact. If it works for well-respected product innovators such as Gupta, it can work for your brand.

David:
This is the BiggerPockets podcast show, 779.

Pamela:
I went from delivering pizzas to a nine figure real estate career, which was absolutely insane. And getting in the development game, the construction game, and learning about how to add value to properties and all these different things, and then building my own portfolio in this realm has really enabled me to be financially free at such a young age and also create generational wealth for my family to come. And generations beyond that. If they’re smart with it, of course.

David:
What’s going on everyone? It’s David Greene, your host of the BiggerPockets Real Estate Podcast. The biggest, the best, the baddest real estate podcast in the world. Joined today by a fellow bad man, Robert Abasolo. Rob, how you feeling today?

Rob:
I’m feeling good. I’m feeling energized. I walked 10,000 steps today. I worked out, I launched a company. It’s like the running joke on Instagram where they’re like, “Start an LLC by 6:00 AM.” I actually did. Not by 6:00, but later on. So it feels good. I’m feeling I got a new vibe about me. How about that?

David:
Apparently walking 10,000 steps can completely change your life. So there you have it. This is what Rob considers exercise.

Rob:
Well, no, I also worked out. Cool it, pal.

David:
Okay, I thought you were saying the workout was the 10,000 steps and I was a little disappointed. That’s in addition to the workout? Now, I’m getting excited. Okay.

Rob:
And very important, through new said company, I was able to save us four to $600,000 in taxes on our Scottsdale property through cost segregation and then bonus depreciation and all that good stuff. So yeah, it always feels nice to lower your tax bill.

David:
Oh, yeah. And I love that you took credit for it, like you invented cost segregation or had the crazy idea to utilize it for the situation when that’s one of the reasons we bought the house.

Rob:
True. However, my company is a cost segregation company and thus-

David:
Oh, I did not know about this. You have a cost segregation company now?

Rob:
I do.

David:
All right, well slow down over there, Turbo. You’re making all the rest of us feel inferior.

Rob:
Well, you have 18 companies. You start 15 LLCs by 5:00 AM.

David:
That’s me. I’m that guy. Jocko’s up doing a workout and I’m up starting an LLC. That’s exactly right. In today’s show, we interview Pamela Bardhi, who has a fascinating story. Who went from delivering $9 pizzas to owning a nine figure real estate portfolio. And you can too. We interviewed Pamela and she shares a lot of practical advice as well as sort of the emotional parts of her story where her brain clicked, things changed, and she got off of the wrong path and onto the right path where she’s now living her best life and we are excited to bring this to you. Rob, what were some of your favorite parts of today’s show?

Rob:
I think, honestly, it’s a really great story because we get right into why she wants to build generational wealth. A lot of people just sort of toss that out there, but she gave us the motivation on how to do that. She talked about how she found a mentor that helped guide her through a lot of her first deals and how that led into a lot of the successes. She’s done a hundred deals and she’s 31. She was on the Forbes, I guess, 30 Under 30 list by age 27. I mean, it’s kind of one of those talks where she keeps naming the accolades and I’m like, “Okay, I need to turn things around. I need to start several LLCs by 6:00 AM.” It’s a very motivating guest to have on the pod.

David:
And very fun too. You guys are going to love this one. You’re going to want to go follow her when you’re done. Before we bring in Pamela, today’s quick tip is you’ve got the skills, now go put them to work in real estate. Many people listening to this, yes, you as you’re listening right now, have specific skills that you develop through life experiences or workplace experiences or a combination of the two. Those will help you in your real estate career. Just look for the right opportunity to use them. And a bonus quick tip to listen for, your pizza delivery guy may help you build a deal funnel for deals. Listen to today’s show to find out how. All right, listen to today’s show. And on the next episode, Rob is going to explain how he has applied math to real estate to cause it to make money and not lose money. We got you here at BiggerPockets. All right, let’s bring in Pamela. Pamela, welcome to the BiggerPockets podcast. How are you today?

Pamela:
I am doing lovely my friend. How are you?

David:
I am wonderful and I’m excited to dig into your story here. There’s so many cool parts of it. So people have a little understanding of your background, you have done over 100 deals between flips and renovations. Currently, you own 27 units, have been investing for 10 years in Boston. And as a fun fact, you side hustled as a DJ in college. Anything that I missed?

Pamela:
Sounds about right. And I’m a dog mom. I have two dogs. I always count them in there.

Rob:
Now, are you still a dog mom after you have a kid? I’m just kidding. This is a call back to a previous podcast.

Pamela:
Always.

Rob:
But we’ll come out soon before this. Sorry, David, carry on.

David:
So Pamela, what are your dog’s names? First off, let’s give them a shout-out.

Pamela:
Absolutely. Rhea, who’s five years old and Blue, who’s a year and a half. They are hilarious.

David:
Okay, this sounds like the makings of a country song already. We’re up to a great start here. Do you call him Old Blue by chance? I feel like you got to call the dog Old before Blue.

Pamela:
I have not yet, but I’ve definitely got to mention that to him. He is a spunky dude.

David:
All right. So tell me, how has real estate investing transformed your life up to this point?

Pamela:
Where do I even begin? I mean, it’s transcended generations from me at this point, which is I think the most beautiful part of it all. By the time I was 27, I went from delivering pizzas to a nine figure real estate career, which was absolutely insane. And getting in the development game, the construction game, learning about how to add value to properties and all these different things, and then building my own portfolio in this realm has really enabled me to be financially free at such a young age and also create generational wealth for my family to come and generations beyond that. If they’re smart with it, of course, and maintain what I’ve established. But yes, that’s I think, the most powerful thing about real estate. It’s a long game. You guys say that all the time. It’s a long game.
It’s not a let’s make six figures in six months kind of deal. It’s let’s build for the future. Let’s play this out throughout a couple of years and build and build and build and go from that. And all of a sudden you go… This compound interest and rock and roll from there. So it’s transcended so much. Aside from that too, it’s also community. How cool is it that real estate is the space… As developers and as people in real estate, we help to define communities. We help get people into those homes. We create those homes. There’s a whole ideology that I have about all of that, but it’s just the coolest thing in the world for me.

Rob:
That’s really cool. Well, I don’t want to glaze over what you said, which is you went from delivering $9 pizzas to building a nine figure real estate business. That that’s really cool. One thing that you mentioned was generational wealth, and I was just sort of curious on is there a particular reason why you want to build generational wealth? Because that is something we talk about a lot in real estate, but I don’t think we ever get into why that’s important to the actual individual. Is there anything in particular that resonates for you, why that’s such an important goal?

Pamela:
Totally. So I mean, I came to the US when I was about five years old and my parents came here with nothing to build the American dream. And really everything from such a young age for me in my ear was “Build for your family. Build for the future,” do all of that stuff. And then my parents getting into business and all of that, and then me eventually getting into real estate, I saw the impact of all of that kind of in the long run. And I understood how powerful real estate truly is. I mean, we all think about like, “Oh, let’s make money, let’s do this. Let’s get into real estate, let’s do this long term.”
And then we really look at it. And most people don’t ask themselves, “Why am I doing this? Why hustle so hard? Why do this? Why go crazy over all of this?” And the answer is legacy. Why are we working our tails off at this point? It’s so that our generations can then have something we didn’t have and continue to elevate the generational line continuously down the line because real estate builds that wealth. I mean, the last stat I read was 76% of the US, their main source of wealth comes from their primary residence, which is insane. They take equity lines of credit to pay for college. I mean, there’s all kinds of stuff. This is a powerful wealth vehicle for Americans.

Rob:
So as we mentioned, you’re in Boston now? Is that where you grew up?

Pamela:
Yeah, so when I was five years old, we moved to Boston Mass, and that’s where we’ve been kind of this whole time since we came from Italy, because I was born in Tirana, Albania, which is right above Greece, moved to Italy when I was about six months old. And then we won the visa lottery when I was about five to come to the US. So we came straight to Boston.

David:
Okay. So you were five years old when you came here. So most of your life you’ve lived here. How did you avoid picking up the Boston accent? I don’t hear any of it right now.

Pamela:
I don’t know. See, the thing is, Dave, a lot of people tell me that I do have it. They’re like, “Oh, you must be from Boston.” And I’m like, “I don’t have an accent.”

David:
Tell me that you parked the car near the water.

Rob:
No, near the Harvard yard.

Pamela:
I parked the car near Harvard Yard. See, I say my Rs and everything. I don’t know, why do the people say I got the Boston accent? It’s hilarious.

David:
All right, so you avoided a Boston accent, but you did not avoid being exposed to entrepreneurialism. I understand that you went to college. What was your major in school?

Pamela:
So when I went to undergrad, I went to Stonehill College and I literally thought… So being an entrepreneur my whole life. So my parents came here when I was about five years old. My dad ended up buying a restaurant when I was about 10. He spent many, many years working three jobs. I barely saw my dad when we were growing up because my mom was a stay-at-home mom. My brother was a newborn and I was young. So my dad worked all types of jobs and eventually ended up buying a restaurant because his best friend gave him a down payment to do so. And he said, “Hey man, the way that you build wealth in America’s one of two ways. A, you own real estate. B, you own your own business.” He’s like, I know you don’t have the credit to buy real estate right now, but keep that in mind for the future. But here’s a down payment, go out and buy a restaurant.
So my father bought a restaurant when I was about 10 years old and it was the coolest thing ever because I just wanted to hang out with my dad. And so I dragged myself to work with him, even though he was like, “Pam, stay home, play with toys.” And I was like, “Nope, I’m getting into the game, dad.” And so my whole life I had spent in the restaurant industry and then doing all kinds of other things. I’m probably one of the most unemployable people on planet earth because I’ve never worked anything corporate, never did any type of job. So when I went to college though, ironically enough, my parents said, “Hey, Pam, we really want you to get into something that’s more secure. We don’t want you working 12 to 14 hours like we do in our business so that you can get married, start a family, do that stuff,” which is interesting coming from entrepreneurs.
But the restaurant business is really tough. And growing up in the immigrant mentality of how much you physically work determines your success levels, that’s a whole other thing. So when I went to college, I actually went in for marketing. I got a full scholarship to Stonehill and I was wicked pumped… See, the Boston came out. And then I’m taking this supplied calculus class. And first off, I don’t even understand algebra one, let alone algebra two and then get into calculus. And it was this adjunct professor that just was on my case. He just kept throwing tests at us and I was like, “Dude, I don’t even understand algebra. You’re throwing calculus at me. This doesn’t make logical sense.” See geometry, I would slay geometry all day, all night. Now, algebra and calculus is a whole nother thing.
So I get to the middle of the semester and I have a 40 in this class and I’m like, “I’m going to lose my scholarship. I need to drop this class.” I’m thinking that I went in for marketing was then going to graduate Stonehill and work corporate and then get into a 9:00 to 5:00. And then when I was 40 start a business or something. That was not the case. I dropped this class and I thought my entire world ended basically because I could no longer take that major because I needed that class.

David:
Isn’t it funny how certain classes click and they make all the sense in the world and other ones for the life of you, no matter how hard you work, something just doesn’t fit. Very smart people can struggle with certain topics and I’ve always been fascinated by… You said you could slay geometry, but calculus was really… It was similar for me. Geometry, I didn’t understand how anyone could struggle with that. It was so sensible. Just if this is this, then that has to be that. And basic algebra, same type of thing. But when I got into pre-calculus and it was complex formulas that there was no logical connection between those numbers on a piece of paper and a graph that they turned into, my mind could not make a connection to understand that type of thing. Economics made all the sense in the world, supply and demand, and if this happens, that’s likely to happen.
I was like, “How could anyone not understand that?” I think a lot of people that go through an experience like yours, they feel there’s something wrong with them. It crushes their confidence. They think “I’m just not meant for this. Other people are good at this, not me.” And then the saddest thing ever happens, they quit. They say, “All right, well, I’m just going to resign myself to being a secretary or playing small in some way because I tried and I wasn’t smart enough. I didn’t make it.” Did you have a moment like that where you questioned your ability to start a business, to be an entrepreneur, to be successful? Or did you just have an unflappable confidence that carried you through that?

Pamela:
Well, you made a lot of interesting points there. Now, some classes struck more than others and it was so interesting to me how I loved geometry. I was a beast at chemistry. I had 101 average in chemistry. I should have been in Breaking Bad. I should have been casted for that at this point, to be honest. But I really got to a point where I got super down on myself. I’m like, “Dang, why don’t I get this? No matter how much I try, it seems like I’m beating myself against the wall and it’s just not working.” I’ve always been surrounded by incredible mentors and incredible souls in my life that were like, “Pam, just because that doesn’t work for you means that you’re just meant for something else, and that is totally cool and totally okay and don’t freak out.” So I decided to then be dramatic and change my entire major to communications which I loved because I love people. I absolutely love people.
And then shortly thereafter, I was missing the whole business piece because I love that. It’s something that was kind of inherent to me. Imagine you’re in the restaurant business since you were 10 years old. You develop all these business skills. I mean, my parents were making me pay bills by the time I was 12. Like, “Pam, you call them and make the payment over the phone.” And I’m like, “I don’t know what to say.” They’re like, “Well, we can’t speak English, so you’re going to have to do it.” And so these skill sets that as a kid I was like, “Oh my God, this is so annoying. No other kid has to do this.” But it built me into business.
So reflecting back on that, when I was in college, it was kind of like, “Well, I’m missing the whole business element of this. I love entrepreneurship.” So that’s when I decided to go into Stonehill and say, “Hey, I want to double major and I want to create my own major in entrepreneurship.” And I remember as Professor [inaudible 00:16:16] and he’s like, “Pam, you’d be the first in school history to do that. I mean, we’ve had minors but never are a major.” So that’s when I combined the two. But even still at that point, still at that point, I didn’t think that I was going to be an entrepreneur right when I graduated. I had another moment, another one.

Rob:
Okay. All right. So well, first of all, I just had a flashback to my childhood because my parents are also immigrants and I used to always have to call companies and pretend to be my dad or my mom whenever I had a higher voice. I’ve never met anyone else that had to do that. So small connection there. But I know you were helping your parents out occasionally with the restaurant. You picked up another sort of side hustle or another part-time job in college too, right?

Pamela:
I created it, for sure. It was hilarious. And I was a DJ, so inadvertently when my father was doing pizza deliveries as we were growing up, when he bought the restaurant… At that time, there was cassettes and then there was CDs and then came MP3s and Aux cords. Now, my dad’s driving around all day. He didn’t have anything to listen to, so I’d always be jamming with him in the car. That was one of our favorite bonding moments was literally just jamming in his minivan, driving around town in Boston, dropping pizzas off and food off.
Now, all those mixtapes said DJ Pammy B on them. I literally would burn CDs for my dad and create mixtapes and a whole list and everything since it was available to burn. And it was hilarious because I go into college and I’ve always loved music. I’ve always been at parties, under 21s. Anything that I can get into, I was there, I was vibing. That was my jam. So come college days, I’m a freshman going out on campus at Stonehill and I’m going to all these parties. I’m like, “This music is horrendous. You can’t even dance to this. Who are these people? Who’s DJing these things?”
And so, I went back to my room with my three roommates and we just threw a party and it got super wild. And from there my name spread around campus and all of a sudden I became DJ Pammy B and was getting paid stupid money per night to DJ and get free drinks and get free food and everything. And back in 2009, that was a lot of money. 300 bucks a night plus food, plus drinks was unreal. I was like, “Guys, I’ve made it.” So it’s something I did all four years and it was a blast. It was cool because you control the energy of the room. You’re bringing different cultures together. It’s a vibe. And the stuff you see from the DJ booth is hysterical. You get the best view of all of it.

David:
So this experience broke you out of the paint color by number. Go here, go there, go there. Here’s the box you fit in. Then you moved to this one and this one, the corporate world that you were preparing yourself to get into to seeing creativity, to seeing opportunity, to making your own way. I guess as a DJ, you can create the environment you want as opposed to in the corporate world, you bounce around looking for the environment you want. What was the turning point where you decided you were going to do your own thing, that you weren’t going to wait until you were 40 to start that business?

Pamela:
Yeah. So it happened on accident. Most of us, we get into these situations and we’re like, “Oh, man, I was not planning this.” It was my junior year I was entering into, I was still fixated that I was going to be in marketing when I graduated undergrad. And I’m still telling myself I want to do events in marketing, I want people, I want to put on big events because the DJ in me came out. Love those vibes. So I was thinking about the biggest sports venue in Boston. What better place to be that where all the action is for sports, entertainment, all that stuff. That’s where I wanted to be. So I was like, “You know what? Spring semester, I’m going to do an internship there and I’m going to rock it.”
And so I got the internship, which was extremely difficult to get into. The end of the internship, I was doing social media and marketing for them at that point. And at that time, social media was still a fairly new thing. This was 14, 15 years ago at this point. And I go in for my final review for my internship and my supervisor’s like, “Oh yeah, Pam, thank you so much for everything throughout the semester.” And I’m like, “Oh yeah, no, no, thank you guys, learned so much. This is so cool. What a different experience for me. What’s my grade?” And of course, I’m the kid that showed up every single day, was going above and beyond, was crushing it, participating in everything, teacher’s pet level type stuff. But I’m just built to do things at a very high level and to always be doing multiple things at once. I can’t sit still.
And so she’s like, “Oh, Pam, it’s a B minus.” And I was like, “Can I just ask why?” And the interior of me was filled with rage because I’m like, “Dude, I showed up. I did all the things. Why did I get a B minus here? I get punished for doing the right thing? I don’t get it.” And she literally said to me the words that changed my life, “You’re just too ambitious.” And I remember hearing that and just going ballistic in my mind, but still got to keep your cool in front of people. You’re like, “You’re just too ambitious?”
I lost my mind. I’m like, that’s the one thing my parents always said to do was just to be ambitious and go out there and get it in whatever it is that you want and go get it. And that’s what I did my whole life. Whatever I wanted, I got it, period, because I worked my tail off for it. Now, if it was meant for me or not, it dictates itself in the future. But I remember walking out of that room and I said, “Thank you so much.” And I was walking out of the office threshold door, and I remember just little tap on my shoulder that was like, “Hey, Pam, you’re not meant to work for anybody When you graduate, you’re meant to do your own thing. This is why this didn’t work out.” And I felt this immediate relief and I was like, “Oh, I get it.”
“If you’re going to be an entrepreneur, you got to remember to have a big heart no matter what you do, okay? Just promise me that.” And I was like, “Okay, dad.” And that was that conversation. And later that summer, my dad had a vacancy coming up in his building next to his restaurant, which is where I had been my whole life. That’s where I worked and helped my parents and all of that. And I had the opportunity to present a business plan to my dad. And so that’s what I did and got prepared for senior year.

Rob:
Okay, so you tried too hard and you crushed it too hard at your internship. And they’re like, “Hey, we don’t overachievers over here. We only do the status quo.” And so that sort of lit this fire in you to be like, “All right, I’m going to be too ambitious, but for myself.” I feel like I said that word myself. And then you called your parents and you’re like, “Hey, guys, I’m never going to work for somebody.” And somehow miraculously… I mean, I imagine they understood the grit that you had, but they were on board. And did real estate come right into the picture as soon as the vacancy opened at your dad’s place? Or was it some sometime after that?

Pamela:
It was sometime after that. So ironically, I had two restaurants by the time I was 21 because I was super young in college, so I graduated a year early from everyone. So I opened my first restaurant, which was Rio, and then I was offered a partnership opportunity on another restaurant in downtown Boston. So I had two restaurants that I was running by my senior year and then-

Rob:
Wow. At 21?

Pamela:
And one of them, the one in downtown Boston was the biggest food operations in the entire country. So if you know where the Hatch Shell is in Boston, where they do July 4th, the Pops and all that?

Rob:
Were you asking that to us?

Pamela:
Yeah, if you guys heard of the Hatch Shell where they do the Boston Pops and they do the big July 4th celebration and all that? So my partner, we ran that. So we ran every food vendor from the Mass app, so from the Museum of Science to the Mass Ave Bridge, which is miles. So we controlled that. And then we had a brick and mortar location as well. And I had another restaurant on top of that. So this was me at 21 hustling around, I mean working every single day because events, it’s primarily weekends and it’s like 12 to 14 hour days. And I’m sitting here like, “Man, this is craziness.” I’m like, “I started two of my own businesses. I thought this was going to be the dream. And here I am still hustling, still grinding, still working, what is going on?”
I still wasn’t fulfilled and it felt so messed up. This is another moment that I felt like down and out in failure on myself because I’m like, “This is people’s dreams to open their own business. And here I am not fulfilled.” I felt like an ungrateful little kid, but I wasn’t happy, which was ironic. And so I had a lot within myself. And then these real estate developers started to come through our stores and my restaurants. And then also my uncle was a general contractor. He was starting to get into flips because this was around 2013, 2014 when I started getting into the game. Around 2013 is when I was learning because I was like, “What is this real estate game all about?”
Because the first time someone mentioned it to me, I was like, “I’m not selling houses, thank you very much.” I was like, “That’s not what I’m interested in.” And then these real estate developers started coming to my restaurants and I’m like, “Who are these dudes, man? They come in whenever they want. They have the nicest cars, the nicest clothes. They’re talking about their vacations and how they’re going to leave on Thursday night to go to their vacation house.” And I’m like, “There is no way that they do anything legal. These are drug dealers, a hundred thousand percent. These are drug dealers. There’s no legality in what they do.” And then I started talking to them like, “What do you guys actually do?” And started getting into it. And they were telling me about making your money work for you and just concepts that you’ve never heard before. And here I went through undergrad, a very expensive undergrad. Luckily I had a full scholarship there, but did all the things that society told me to and even started my own businesses and just all these things.
And yet I still wasn’t exposed to these ideologies in these types of businesses where making money work for you, investing, what is that? As an immigrant, we knew that hustle determined your success levels. If you weren’t working then you weren’t successful, period. And that’s just the way it was. And so that’s when I decided to go into real estate investing because I was like, “What is this game that they’re talking about? I don’t know. I don’t get it. This is pretty cool.” It was like, “Let me look into this.” And that’s when I dove in. So again, a whole nother accident that kind of just happened on its own.

Rob:
Wow, that’s crazy. Well, an “Accident.” But I think really it’s your ability to adapt, I’m sure is sort of really what forms your entire career. It’s really cool to hear this unfold. So let’s get into your early deals. First, it sounds like from our previous talk you had a mentor. So what made you choose to get a mentor diving right into real estate?

Pamela:
Well, so my game plan in getting into real estate, and the reason why I got into it was not for me to get out of restaurants. My whole game plan was like, “Hey, I want to do a flip or two per year so that I can have some additional income aside from my restaurants.” And it’s something that I can do because I don’t have to be on site every day and all these things. My uncle was a GC and all of that. And so I remember thinking about getting into it and I literally went to every networking event that I possibly could, connected with everyone that I possibly could. And this was around the time that HGTV was really blowing up, Flip or Flop and all those shows were coming out and all of that.
And I remember just thinking to myself, I’m like, “Pam, you have so much to lose. You need to hire a coach.” And my mentors were telling me the same thing. They’re like, “Pam, this is a brand new game for you. You’ve got a lot to lose. You have two restaurants, you’ve got employees and things. You can’t just try to figure it out. This is big money where you could lose thousands. Yes, it’s high risk, high reward, but it’s high risk and you could lose your damn shirt like a lot of people have, so be careful.”
And this was still four years after 2008, 2009. So there was still a lot of overflow of deals from that time period. And so there was still a lot of people that were newly burned from all of that. So that was the biggest piece of advice that I got was “Pam, hire a coach and just somebody who’s been there, done that, who’s playing in your marketplace and just roll with that. You have too much to lose to try to figure it out yourself. You’re going to time hack and time save and all of that, but just don’t forget this part of the game, please.” And so that was the best move I ever did, literally.

Rob:
Yeah. Learn from someone else’s experience. And so obviously it sounds like you were able to avoid a ton of mistakes, but you said that you wanted to do a couple of flips every single year to start making some extra income every single year. You landed on flips. How did you land on what to look for in a flip, really not knowing much about the real estate landscape?

Pamela:
So everything ran by my coach. I was trained by him. Every single move that I made was always audited, I like to say. I’m like, “Okay, so show me the way. How do I get to these deals? How do I make this happen?” It was a step-by-step. I got the handholding the whole time. So he told me, “Pam, number one thing is you fall in love with numbers and not the actual house and you run numbers and analyze every single property.” He’s like, “But first you’ve got to figure out what are you going to buy? What’s your budget? What are you going to buy? And then from there you can work numbers.” But if you’re kind of in the unknown, you’re going to be all over the place, which is what happens with most investors as they’re starting. They want to do everything everywhere. They live on the East Coast, but they want to do a deal on the West Coast because they think magically somehow it’s going to happen.
So he told me, you get very focused on what it is that you want, figure out your asset class, your budget, and then move from there. And I said, “Well, I would like to start with a single family.” It seems manageable. I don’t want to go into a two or three unit property when it’s my first rehab. I want to be as low risk as I possibly can and single family was that. So that’s what we were looking for and we came across an awesome deal from a local wholesaler actually, and picked that deal up. That was the deal that made me go all in real estate, to be honest with you.

Rob:
It sounds so obvious when you say it because it’s sort of hiring a personal trainer at a gym. They just know how to guide you immediately. “Hey, this is what you do, this is what you don’t do. You do this and this and this. If you do all these things, you’ll have results.” And I kind of feel like sometimes coaches get way too much of a bad shake in this industry, but it sounds like it ended up working for you pretty fantastically. So I do want to hear about your first flip. Tell us the story. How did it all pan out?

Pamela:
Sure. Well, the first day that I pulled up to it, I couldn’t find it. I drove by it 17 times and I was like, “What is this thing?” And I remember going in and it was terrifying. It had fallen apart and the family… So the story was that the family had… So the kids were out of state, they’re older, they moved out of state and the parents had gone to a nursing home. And so the house had been sitting vacant for a while and in need of serious disrepair, which was super sad because I could see so many different beautiful characteristics in the house like cathedral ceilings and all this gorgeousness that it had and all the potential that it had.
And I remember the sellers really… The son was mainly handling it. And he said something to me and he’s like, “Pam, please just one thing. Please restore this house the way we remember it as kids because that was our home that we grew up in and we just want to see it come back to life because it’s so sad to see it in disrepair.” So I picked that thing up at 150. It was an awesome deal. I’m like, “I wish we could do 150s here around the Boston Mass market.” But this deal was particularly in Stoughton, and it’s funny because this was only 10 minutes away from where I used to live in college. So Stonehill College is in Easton, so just a stone’s throw away. So I was very familiar with the area and then it was a full [inaudible 00:33:24] rehab. We added another bathroom and all the things. It ended up being a three bed, two bath and absolutely came out absolutely gorgeous. And I’ll never forget, I sent those photos to the family and the video walkthroughs when we were done and they were absolutely mind blown.
They’re like, “How did you do that? It looks absolutely unreal. Pam, thank you so much for restoring that. And our family legacy can now continue.” They were happy that it’s at this stage now. And then I’ll never forget, I’m sitting there at the open house and I’m just soaking it all in. I see the family that actually ended up buying the property and they’re interacting with it, they’re engaging with it, they’re loving it and talking about all the details, all the things and all the heart and soul that I put into it, they’re talking about it and I’m like, “Wow, this is the coolest thing in the world.” It was a very surreal experience for me kind of sitting back and being like, “Holy crap, this is how you impact people.” You literally are creating the homes or the properties that people create memories in. That’s the craziest thing in the whole entire world, the coolest thing and the greatest privilege.

David:
So that was the affirmation. This is where I’m supposed to be. I’m doing the right thing.

Pamela:
Oh my God. Yeah.

David:
Now, I’m curious because you grew up in the restaurant industry trying to figure out how do we use space? How do we create an environment that people want to make memories? They’re kind of coming here, they’re going to eat. You want them to feel welcome, you want them to be in an environment that they’re comfortable, they’re going to laugh, tell jokes. You sort of applied that same logic to housing. Do you think that was just happenstance or do you think that some of your background in the entrepreneurial world made it so that designing homes clicked for you?

Pamela:
Totally. So it was something that I didn’t even realize that I had. I can literally walk into a space and see it all. For me, it was like nothing scares me, still doesn’t. And people are amazed by that. It’ll be just the crappiest, dingiest and they’re like, “Pam, I…” And I’m like, “Oh, if you take down this wall and this wall, we keep this open concept” and this and this… It’s like I can see the final product up here in ways that other people can’t. My visualization skills are on a whole nother level when it comes to that. And that’s what happened with that property.
And to add some figures and some backdrop on that one, I made 100K on that deal. I put in about… I think it was 125 and then we had some holding costs and stuff and ultimately sold it for over 400. So on my first deal making pretty much 100K profit, I’m thinking to myself as somebody who owns two restaurants, how many dinners or sandwiches do I have to sell to net 100K? It was a lot of sandwiches. So it all started clicking for me and designing out my restaurants, I didn’t realize that I had that skillset in designing places and things and how that really applied to what was going to happen down the line in real estate, through development and all of that. So it was all connected. I see it now, but at the time I was always so super confused.

David:
So Pam, you have now done over 100 deals, like we said when we started the podcast here. What are some lessons that you can share that you’ve learned along the way?

Pamela:
So the top three I would say is financial forecasting, operational efficiencies and partnerships. So those three things have been the most critical that I’ve learned. And starting with financial forecasting now, I tend to be a very optimistic human being. And the thing is I’m like, “Oh, I can get it done within six months. I can get it done with X amount budget.” Found out a couple of times that really wasn’t the case. I under budgeted where I was supposed to and realized that cash flow is really important. Cash is king to keep all the deals moving and flowing so you don’t run into any issues. However, how did I mitigate that? And what was the lesson learned there? Number one is make sure you’re opting in for a contingency on every single one of your deals. Create a cushion for yourself in every deal that you do.
I don’t care if it’s a flip, I don’t care if it’s a buy and hold, I don’t care if it’s anything like that. Make sure you’re allocating 20 to 25%. Like, “Hey, if this goes south, I’m going to make sure that I have this in my budget to allocate for that.” And guess what? If the project goes awesome and you’re just as optimistic as you thought you were going to be, then amazing. You get to keep that money at the end of the day, but at least allocate that when you’re analyzing the deal from day one.
Tying into the financial forecasting model, another item that I would like to add in there is making sure that you have several different exit strategies when it comes to a property. We’re in a market where things seem to be changing on a month by month basis. So if you’re purchasing something as a flip, make sure that you are also running it as a long-term hold just in case that property for some reason isn’t selling or it’s going to sell for less than what you thought it would so that you’re not losing money on the deal. So make sure that when you’re running your numbers from day one, you’re analyzing different ways that you can get out of that deal with your shirt on. So if it’s going to be a flip or buy and hold, make sure you at least got two ways out.
So operational efficiencies, what I found was whenever I would have a deal that was more than 30 minutes away from each other, I would have operational inefficiencies because for example, I’m in Boston and there’s North Shore and South Shore and typically there’s no contractor who works on the North Shore that’s going to go to South Shore. They don’t cross certain highways, they work in their zone and that’s it. And I found that I lost a lot of time that way, which means I lost a lot of money. So the key here is to make sure that you’re centralizing operations. So if you’ve got one project going on and you’re looking to scale some more, try to keep them within 15, 20 minutes of each other and keep the same contractors on the job, it’s going to keep things moving much faster. So that is definitely lesson number two.
So number three, partnerships and pretty much all the clan of people that you’re going to have around you, surrounding you during these projects. So just a whole lot of people, making sure that you vet them correctly, make sure that your goals are aligned. And for example, ask yourself question number one, would I have a drink with this person? Would I actually party with this person? If the answer is no, most likely you’re not with the right partner. You want to enjoy the company and build long-term relationships. You don’t want to just, for example, start with one lender and then move on to the next and move on to the next. You want to stay solid with one partner, one attorney, one lender, that kind of thing. So that way you’re cranking out efficiently and building for the long-term together and have aligned goals. That’s super important for long-term growth and scaling.
Some red flags to look out for when you are vetting your partners is anybody who’s really trying to throw themselves at you, I find is very uncomfortable and strange and never really works out well. If they’re trying to throw themselves at you and get very salesy, you can feel that right away. You’re like, “Okay, this is probably not the partner.” And then you’re going to ask yourself that question, would I actually want to hang out with this person? Probably not because they seem very, very clingy. All of these things are things to think about when you’re vetting your partners because you’re going to be dealing with them nonstop. And typically they say that 10% of the people in the market do 90% of the deals, and that’s the truth. The big dogs, the ones who are out there doing deals are the ones who really don’t say much, right? It’s referral basis, they do things on their own and that kind of thing. That’s who you want to be affiliated with, for sure.
What would I say to new real estate investors or those who are just simply interested in real estate in general? Well, first things first is you’ve got to ask yourself, do you want to be a passive or an active investor? That’s the first place to start because real estate is a very overwhelming type of industry. You can make money everywhere. The question is how do you want to make it and how does it suit your lifestyle and fit your needs? So are you going to go passive, which means you’re investing in a fund and then you get your dividends in return and you’re kind of hands off on the deal? Or is it that you want to be an active investor and purchase properties and be hands on and kind of do the thing, whether it’s buy and hold or do fix or flip deals. So that’s the question to start with baseline like, “Hey, passive or active?” Before you do absolutely anything else, that’s step number one.
Now for step number two for advice for new investors is how do you choose your market? Because, oh my God, this has been one that I’ve had to guide so many people on and I’m like, “Listen, it doesn’t have to be super complicated. Just start in your market.” When I started, literally some of the best market that I knew was West Roxbury here based in Boston, Massachusetts, because that’s where I delivered pizzas. And literally I was like, “Well, this is where I have the relationships the best. This is where I know every street. This is where I know all the things. So why would I not start here? When I become super big, then I can go crazy and go everywhere else.”
So I started by printing out just literally an eight and a half by 11 sheet and it’s black and white and all it said was, “Hey, I buy houses in this area, please give me a call if you’re interested,” and my cell phone number. Super plain, no crazy designer, no bandit signs, none of that stuff. Put it on the pizza boxes. And people would call and text me and be like, “Oh, Pam, this is what you’re doing now?” And I’m like, “Yeah,” and then I got a whole bunch of leads from that. But again, start with your relationships and start with your market. From there, you can always expand. You just need a starting point.
So the third piece of advice for new real estate investors, anyone interested in getting into the real estate game is surrounding yourself with like-minded people and creating partnerships off of that. Because in the beginning when I had absolutely no idea what I was doing in real estate, didn’t know anything about it, I started going to networking events. Essentially I wanted to surround myself with real estate developers because that’s what I knew I wanted to do. I had decided that I wanted to be an active investor, that I wanted to flip a couple of houses a year. I knew I wanted to do it in my market, which was in Boston. So I looked for events in Boston that I could go out and meet like-minded people and people who are doing deals in that market.
So that’s super important. I mean, if you’re connecting with people, say you’re on East Coast and you’re connecting with people on the West Coast, it’d be a little bit different because those are different markets. So surround yourself with like-minded people that are doing the things that you want to do in your market most specifically. And if not, somewhere close by. And from there, you can start to meet your lenders, your attorneys, there’s contractors, there’s other real estate investors, and you start to get all of these tips. And sometimes in the very beginning, you may not be equipped to handle a deal completely by yourself. So maybe there’s somebody that you can partner with at one of those events that you meet. I hear that all the time. So those are definitely the top three things I would suggest when getting started.
So within those partnerships and going to these networking events, you’re going to find that you’re going to meet individuals that inspire you and you think to yourself, “Oh my god, this person’s incredible. If they did it, I could do it too.” And that was certainly my case. One of the people that inspired me the most in this industry when I got into real estate development was Cindy Stumpo. She was a builder, still is a builder. She’s out there hustling, grinding every single day. She began in the eighties and she’s building in the most top tier markets in literally the State of Massachusetts, if not the entire country, which is Newton and Brookline. And I’m saying to myself, “This woman has built all these projects in the toughest cities to ever build in, 3 to 5 million houses minimum,” that’s like her minimum and beyond. And I just remember thinking, “Well, she did it, then I could too.”
Finding a model and somebody who inspires you is also a very, very key thing when you’re first getting started because you can relate to them. And it’s almost like if they trail blaze the way, it’s almost like you can walk in those footsteps as well, which is absolutely incredible. And the first thing I did, even though I still think to this day… I’m like, I can’t even believe I showed up to her office and asked her… I said to her is straight up. I said, “Cindy, I know you don’t know me, but I just think you’re absolutely amazing and just thank you for being who you are and just being fearless and doing what you do because you’re inspiring me now to go out there and do my thing, even though I have no idea where I’m going with it. Just know that you’ve inspired me to at least take these steps forward.”
So finding that model is really, really key. And I’ll never forget, she said to me, “Honey, anything you need, I’m here.” Even simple words of encouragement, that really propelled me forward and look at where it got me to this day. So I always give credit to my role model there all the time. It’s funny, I texted her this morning actually, and we’re still in touch.

David:
What are some of the skills that you gained working in your family’s restaurants and then running yours that you feel translated into real estate? And what I’m hoping for here is people that are in a position right now, they work for a CPA, they’re a paralegal, they’re a nurse. They have something where they built skills, and we want them to understand how that could translate into real estate success and make the transition easier for them.

Pamela:
So first and foremost, I think that everyone who wants to start a business or get into real estate should have the prerequisite of working as a bartender and/or waitress or waiter before they do that because that is the biggest pressure test of all time. So being in restaurants since I was 10 years old, I was taught to improvise. I was taught customer service skills, how to connect with people, how to manage a million different things at once. Operations, all these things that I didn’t even know became second nature to me. And so translating into real estate, managing people, motivating people, helping them when there was deals, because in real estate we put out fires all the time, that translated over beautifully, all of it because all the skills that I built in the restaurant world completely translated over, even though it seems like completely different industries, it touched on the same things.
Your problem solving, at the end of the day, you’re literally problem solving and relationships, which I love. And so for anyone who’s out there that’s looking to transition into real estate, I mean, I say this all the time to everyone that I know. I’m like, “Guys, real estate fits into your life differently, whether you’re a nurse, doctor, whatever.” If you want completely passive income, invest in a fund and just close your eyes. And that’s how you’re going to get invested in real estate. If you want to be hands-on, then it’s going to be a little bit more different than that. But just know that there’s different ways for you to get involved in real estate, that there could be ways that doesn’t work for most people but it works for you. Maybe you side hustle on the side and you want to be a real estate agent because you want to get closer to the deals. Maybe you partner with a local developer and invest in their deals.
I mean, there’s a million different ways you get involved with real estate. And just because you’re a nurse or doctor, you’re in a totally different industry does not mean that it can stop you from investing in it. I mean, listen, your primary residence is real estate right there. So you choose how active, how passive, and how deep you want to go. Just don’t be afraid of it. And if you are afraid of it, and if you are afraid of that risk, then just kind of back up and say, “Who can I align with that can make this a little bit easier?” Maybe it’s a local developer like I was mentioning or something that you’re taking the risk off yourself. Because there’s people that I’ve heard that are like, “Oh, Pam, to be successful in real estate, I’ve heard you’ve got to quit everything and put all this money in and do all this.” I’m like, “Guys, no. That is the biggest lie ever. Just because one person did it one way doesn’t mean it’s going to translate the same for you.”

David:
Question for you, because I worked in restaurants all the way through college, do you still get those anxiety fueled dreams where you’re in the restaurant and you’re trying to put the pizza in the box and you drop it on the floor, and then you’re trying to open the next box and it won’t open, and then you realize you left a pizza in the oven and it’s burned and the phone’s ringing it and everything is going wrong and you can’t get your hands to work. Am I the only one that has those terrible nightmares or have you had those two?

Pamela:
I have completely had those two, Dave. Honestly, I absolutely have. And it’s so funny because I used to deliver pizzas as well, so sometimes I would drive too fast and the cheese wasn’t fully settled on that top layer. And if it had toppings and I’ll open it and I’ll be like, “Oh my God, the green peppers are everywhere.” No, you’re not alone. You’re totally not alone on that one.

David:
Rob, did you ever have anything like that, similar nightmares in your past jobs? Never. You didn’t have a marketing dream where they’re like, “Rob, what is your great idea?” And you’re just like, “Oh my God, I don’t have one.” And everyone’s staring at you disappointed.

Rob:
Yeah. I guess my nightmare was that I would be so successful at my 9:00 to 5:00 that I’d keep getting promoted and then settle into the status quo of just living day to day for the corporate machine that bogs us down and doesn’t really ever let us spread our wing and fly away. And so yeah, that was my nightmare for a long time. But thank goodness I’m a real estate investor now.

David:
So your nightmare was that you were too good at what you did and you just got too comfortable?

Rob:
That they would tell me I was too ambitious.

David:
All right. Well, thank you for… Those things are real, dude. When you work in the service industry, you are dealing with so much pressure and anxiety that’s building up and you just don’t realize it. It all comes out in your dreams. And years later, I was doing that a long time ago, 20 years later, I’m still having these nightmares. I’m glad it’s just not me.

Rob:
This inspires me to start a YouTube series with you because we always get the headlines. I’m sure the headline for this podcast is From $9 Pizzas to Nine Figure Portfolio, but we never hear… It’s always from waiter to millionaire, but we never hear from millionaire to waiter. And so maybe you and I do a YouTube series where we go back to our grassroots and become a waiter again.

David:
That could be fun.

Rob:
And see if we still have the chops.

David:
Yeah, see if we still have what it takes. Maybe make an instructional video for other people. I could do that. Here’s how you learn how to be a good waiter.

Rob:
I’ve often thought of that because everybody wants to be the millionaire, but sometimes you got to be good at what you’re doing to build the skills. Like what Pam Pamela was just saying, she got good at this, which translated to this, which translated to this, and ultimately led you, Pam, to where you are today versus trying to skip that whole process and not giving your best. And that’s my philosophy is you have to pursue excellence with where you are that will open up doors to get you somewhere new. So let’s recap your current portfolio. 27 properties, the president of a real estate consulting and development company, a nine figure net worth by the age of 30. What’s next?

Pamela:
So it’s interesting that yes, that was a beautiful recap. It’s been a hell of a journey though. Going into flips, then I got into construction because I was boots on the ground the whole time. And then getting into brokerage because people were like, “Pam, you’re leaving money on the table by not getting involved in these deals. Everyone’s asking you for advice.” So that’s kind of how the trifecta of all three came up. And that’s how I really built this career was through diversified revenue streams in real estate, not just development. And kind of when I got to my first net seven figure a year is when I had this little tap on the shoulder that it’s like, “Pam,” this was when I was 27, “you’re doing great things for yourself. What are you doing for the world?” And I was like, “Well, damn.” That’s when I started kind of soul-searching and dove into wanting to get into the coaching space because again, realizing that real estate changed my life.
And so that’s kind of what has been happening alongside all of this. The development, the construction, all of that stuff. The consulting and the coaching side of things is really helping people get to the next level. And then really thinking about intention has really been the next thing that I’m really honed in on. And Rob, I’m so interested, because I know you’re in this space, to you hear what you say about this, but building with intention and kind of studying what does the world need now? Anyone can build condos. Anyone can build new construction, anyone can flip. Anyone can do all of that stuff. You just need to learn the skillset. But I really want to build with intention and what is it that I want to build? I want to get into affordable housing. And what I mean by that is things that can be reasonably built for a reasonable cost, which really doesn’t exist in the construction industry right now.
I’ve watched it for the last decade, I’ve been part of it. One project can last you an entire year. Whereas if you get into creating a tiny home development or a shipping home container development, you are kind of accelerating the pedal much faster. You’re not dealing with as much construction overhead. Most of all, you save time. And so that’s kind of what I’m working on next is how do we develop these communities that people can actually afford, that could be done fairly quickly and that we build with intention and how do we build these communities across the country? So that’s where my mind is next, to be honest with you. And I am expecting twin girls in August. So that’s a big one in terms of family.

Rob:
Yay. Congrats.

Pamela:
Thank you. But in terms of real estate and business, the investment side, I really want to be building with intention. And then on the real estate front, I mean I’m always helping people elevate through real estate, whether it’s through coaching, consulting, still building up my portfolio as well. But that’s kind of where it’s all at right now. I mean, it’s such a legacy builder. Real estate is the freedom vehicle, period.

Rob:
Yeah. So do you think… Because I mean, you’ve done a hundred deals so far, you’ve got 27 properties, is that going to slow down and then you’re going to really ramp up the kind of tiny home affordable space community aspect? Are you going to keep that machine rocking and rolling while you sort of pursue a different endeavor within this space?

Pamela:
So my portfolio, it basically pays all my bills and everything and then some, which is amazing. So being at my age, I’m 31 now, being at this age where you’re pretty much all set for life, but still wanting more, that’s kind of where I’m at. That’s where everyone comes into play with wanting to help them elevate through real estate and all of that. But building with intention is definitely next. I think now, because it’s my slowdown time with the girls is really when I’m going to go hard because I tell people… They’re like, “Do you think they’re going to slow you down?” I’m like, “No, they’re coming with me. They’re coming to job sites as babies and we’re going to go crush it together.” So it’s interesting that as I’m shifting into this new space, it gives me the perfect time to build those relationships and kind of build that model the way that I want to and really then go out there and execute as soon as I’m able to. Really, that’s the next wave.

Rob:
That’s amazing. Well, let me ask you this as we wrap up here, why should you be looking for deals from your pizza guy?

Pamela:
Oh, my gosh. Remember, real estate is a local business. When I first started in real estate, I’m not even joking, I printed out, “I want to buy your house,” put my cell phone number. And I was like, “Text me or call me.” And I printed these out and put them on the pizza boxes at my family’s restaurant. Because my family sold this restaurant about a year and a half ago. So they had it when I first started in investing and I put it on every pizza box.
And believe it or not, I’d have agents call me, homeowners call me. And they’re like, “Hey, Pam, we didn’t know you were in real estate. This is super cool. I have an uncle who’s looking to sell his two family or whatever.” All my deals happened organically through my relationships, which was amazing. And that’s how I got a steal of a deal, even at the biggest height of the market, which was insane. But yeah, the total valuable tool, small businesses are so key for the locations that you want to get into and the local pizza guy is the guy. He’s going to get you the deals.

David:
All right, Pamela, thank you so much for sharing your story. I think this is awesome. It’s a wonderful American success story. You started off with an entrepreneurial family. Your father starts a business. He is not afraid to start in the trenches delivering pizzas himself, bringing you in the car with him. He’s bringing you to work and you’re making these memories and bonding together as you’re jamming out to the music of DJ Pammy B, you go from cassette tapes to CDs to MP3s and eventually start your own business, realize you’re too ambitious for the corporate world, follow in their footsteps, but amplify the success that your family had, making it even bigger. Not afraid to do things differently, like putting your information on a pizza box and finding the right mentors. I love hearing this. I hope more people are inspired by this and copy it. Rob, what do you think?

Rob:
I agree with that. I think we have a story of adaptability and how that helped create a nine figure portfolio.

David:
So Pamela, for people that want to know more about this fascinating journey you’ve been on, where can they reach out and find out more about you?

Pamela:
Absolutely. So I’m on Instagram, LinkedIn, Facebook, all over Pamela Bardhi, B-A-R-D-H-I, and it’s also my website, www.pamelabardhi.com. To reach out and find me there, DM me, I’m always floating around just living life. So please reach out to me anytime. Any way that I can help you, I’m here, man. I just want to see people rock it and slay it. I mean, what real estate has done in my life, I mean from delivering pizzas to a nine figure real estate career, featured in Forbes and Time Magazine by the time I was 27. If that could happen for me, a kid that came to this country with absolutely nothing and was able to build that just through hustle, it can totally happen for you.

David:
It all started with avoiding that Boston accent. I really think that the skills that you built resisting the urge led to the amazing success you have now. Rob, where can people find out more about you?

Rob:
Oh, they can find out more about me on the Apple Podcast store where you can leave us a five star review and we appreciate it. I appreciate it so much that I’m not even going to plug my channels because I would rather you just go there, just give us a quick little, “Oh, hey, five star. Rob and Dave are so funny. We love these guys. We learned so much about real estate.” That way we can get served up to new audiences and hopefully inspire more people to have amazing stories like Pam. David, what about you?

David:
Well, I need a pity follow because Rob has so many more followers on YouTube than me. So I will ask for a pity follow. I’m not too proud to beg. Please go to YouTube.com at DavidGreene24 and subscribe to my channel there. Or check out davidgreene24.com or DavidGreene24 all over social media, the most boring screen name in all of the real estate space, which forces me to make up for it with better content. Pam, thanks again so much. This was a blast. Thank you for sharing your story. We’ll have to have you back on again. This is David Greene for Pamela, the life of the party, Bardhi and Rob Salt Bae, Abasolo signing out.

Tom Shapiro, GTIS Partners president and CIO, joins ‘Closing Bell Overtime’ to discuss the state of the housing market, where the home builders sector stands, and how the Federal Reserve’s pause could impact real estate.

Jennifer Pahlka founded Code for America to enhance government services with technology and design expertise. She served as deputy chief technology officer under President Obama and has advised administrations at state and federal level. In her new book Recoding America, Jen examines why government is failing in the digital age. A conversation about policy, hierarchy, and how to move ahead.

Konstanze Frischen: In government culture, you write, implementation is seen as policy’s poor cousin. Why is that?

Jen Pahlka: It goes all the way back to the British Civil Service that divided their employees between the intellectuals making decisions and the mechanicals – the people who get stuff done. That division still holds today, even though in the metaphysical Silicon Valley, companies get started by programmers who in the social structure of D.C. would be at the bottom – an interesting reverse. But still – in government culture, it’s the ideas that matter, and how they actually get out into the world is the job of less important people. That divide is not helpful. In our complex, fast-moving world, the implementers need to be at the table when big ideas are being cooked up.

Frischen: Because constituents experience policy in the form of implementation?

Pahlka: Exactly. Just look at our tax system. People in the highest levels of government, economists and analysts think about our tax code, but the average American has no idea about that complexity, they know that they’re supposed to file taxes every year and interact with the system and find it frustrating. We experience policy through delivery.

Frischen: And the delivery, if you allow me to summarize the many examples in your book with one informal word, often sucks – despite good intentions, and despite technology.

Pahlka: Yes. One good example I describe in the book is when the Centers for Medicare and Medicaid Services were trying to implement a law that’s going to pay doctors more for better quality care. A great intention, but many sole practitioners and doctors in small practices were a) already frustrated with their current interaction with Medicare, and b) the administrative jumps they’d have to go through to upgrade to the new system were so overwhelming that they were threatening to leave altogether, which would then degrade the quality of care. The entities who could easily take advantage of the new law were the big health care systems – because they’re better at complying with the paperwork. In other words, the way the law was to get implemented was instead of incentivizing everyone to provide better care ranking doctors by their ability to do administrative tasks.

Frischen: And the ability to comply with the administrative requirements, you write, highly correlates with money and power?

Pahlka: Absolutely, you can see that in so many ways, like the ways in which many wealthy people take advantage of the tax system because they have lawyers and accountants to do this for them whereas low-income people don’t even get the tax benefits they’re entitled to. That is why when we think about the complexity of government services, it’s not just a question of convenience, it’s a question of equity. There’s such an instinct amongst people who care about equity to gather more and more data, which requires more and more paperwork. We’ve got to balance that out and really think about whether the impacts of all of those attempts to track equity end up decreasing equity. Delivery is how we experience policy, and one of my messages for policy people is to look at it from the delivery view up as well as the policy view down.

Frischen: A big theme of the book is what you call the waterfall culture in which civil servants move. Can you describe that?

Pahlka: Government culture tends to be one in which power, information and insights only flow down. When you get direction from the person above you in the waterfall, you have very little opportunity to question it and circle back, and so very often, well-intentioned public servants will simply do literally what they’re told, even though they might have their own opinions as to whether this is good or not. General McChrystal described why this is problematic by telling his people “Don’t do what I told you to do. Do what I would do if I knew what you know on the ground.” The larger insight here is that while the waterfall seems to serve people in power because they get to tell people below what to do, it actually does not serve anybody.

Frischen: But you have seen time and time again that civil servants rise through the ranks when they stick to procedure – even if the outcome is terrible. How can that culture be changed?

Pahlka: First, it’s important for people to understand that we the people have created this culture. We elect our officials who help foster this unhelpful fidelity to the processes of bureaucracy. Second, there are innovators out there with a passion for the mission, who understand the intention of a law they are being asked to implement, and who have the courage to keep that in focus even if that means a slightly loose interpretation of the literal words of the regulation. People want to work for bold leaders like that. We shouldn’t vilify the servants who follow process to the iota because they are operating rationally within the system, but we do need new leaders who are creative and who want impact and reward them. To help bring about this change is one of the reasons I wrote the book. I know some of these new leaders who are civil servants, and they are attractive to top level tech talent.

Frischen: Talking about the tech industry – your book is a strong reminder that technology alone will not reform government, it takes a mindset and culture shift. What practices can government adapt from the tech industry?

Pahlka: Hiring. It currently takes about nine months to hire a product manager in government, which is simply too long. You’ll take another job offer in the meantime. We could solve a lot of government’s problems right now by just making it possible to hire people quickly. Second, incremental budgets— budgets that start small and allow teams to learn what they need for whatever amount of time is appropriate, and then grow it, rather than pretend that they can know everything that the software needs to do from the beginning. But overall, it’s culture. Culture eats even the most well-intentioned policy when it’s applied in such risk averse, legalistic ways — it ends up having the opposite effect. I think it’s Deepak Chopra who says, “What we pay attention to grows.” We need to pay attention to how policy gets implemented, to the new leaders from among the civil servants. And we need to actually design the systems around users, around the American people, instead of just taking the rules that come down from Congress and then making paperwork that fits them.

Frischen: In today’s climate, can the left and the right agree on this?

Pahlka: Yes — I mean the left might call it reducing administrative burden and the right will call it regulatory reform – whatever you want to call it. The required culture change is not about deregulating in the sense of taking away all the rules. It’s streamlining how rules are imposed. We shouldn’t be choosing between lots of burdensome regulations and no regulations at all. That’s a false choice. The big opportunity here is a shift towards accountability and actual impact. And for that to happen, we need to hire talent, and set them up for success so they can get the job done.

Jen Pahlka is an Ashoka Fellow since 2012. This interview was edited for length and clarity.

Another famous name is weighing in on the housing market. A few weeks ago, it was Elon Musk claiming that home values would plummet as commercial real estate faced headwinds. Now, it’s Barbara Corcoran—albeit a more experienced source when it comes to real estate—touting the opposite.

The statements came in a recent interview Corcoran did with Fox Business’s Liz Claman. “There’s no relationship between the commercial and the residential,” Corcoran told her. “The residential is starting to rebound, but the commercial is in trouble.”

“So Elon’s wrong?” Claman asked.

“Of course he’s wrong,” Corcoran said. “Yet again.”

An Interest Rate Bottleneck

According to Corcoran, what’s keeping prices from rising much now is a “bottleneck” caused by higher mortgage rates, which now sit at 6.71%, according to Freddie Mac.

Average rates have climbed nearly 150 basis points in just the last year and over 400 since rates were at their lowest—a mere 2.65% in early 2021.

The rising rates have put what many in the industry call “golden handcuffs” on today’s homeowners, discouraging them from listing their homes and buying new ones. (That would require trading an ultra-low interest rate for today’s much higher one). According to Redfin, about 85% of mortgage homeowners currently have a rate of 5% or lower. 

“Sellers don’t want to move from their apartment or their home because they don’t want to take on higher interest rates, and buyers are too afraid because they are getting less house. In fact, they’re getting half the house they would have two years ago,” Corcoran said. “So you’ve got a standoff going on.”

Higher Home Prices Could Be Down the Pike

Corcoran’s right: Buyers have definitely pulled back since rates jumped. Applications to purchase a home are now 27% below last year’s levels, according to the Mortgage Bankers Association, and home prices have stopped their steep upward climb as a result. The median sale price clocks in at $407,415, per Redfin’s latest numbers, up from $382,000 in January but down 4% from a year ago.

Things will change once rates turn a corner, though, Corcoran told Claman. “The minute those interest rates come down, all hell’s going to break loose. Prices are going to go through the roof,” she said. 

Many industry players expect rates will indeed fall later this year. MBA predicts rates will drop to 5.6% by the end of 2023 and 4.8% by the close of 2024. Fannie Mae’s latest forecast calls for 6% and 5.4% rates, respectively.

Those are just forecasts, but if they ring true, it could spur a jump in demand, which the housing market’s ill-prepared to meet. Housing inventory is currently near all-time lows, and according to Realtor.com, the market’s already 6.5 million short of demand. Lower interest rates would only add fuel to the fire.

As Corcoran put it, “It’s going to be a signal for everybody to come back out and buy like crazy. We could have COVID all over again.”

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On May 5, 2023, news broke that weight loss juggernaut Jenny Craig was filing for Chapter 7 bankruptcy in the US.

Of course, in light of the recent news of so many legacy brands crumbling (the 50-year old-home decor shop Bed Bath and Beyond filed for Chapter 11 bankruptcy in April, and the 30-year-old news outlet Vice Media filed for Chapter 11 in May), it wasn’t exactly shocking to hear that another big-box store was going out of business.

According to an insider I spoke with, who was involved in the M&A conversations, the company “had been declining year over year – they were bleeding cash and trying to figure out how to turn the business around.”

But, why was this particular moment the final death knell? After all, Jenny Craig (“JC”, or “Jenny”) had been through its fair share of private equity and corporate M&A over the years:

• JC was delisted from the New York Stock Exchange in 2001, and a majority stake in the company was sold in 2002 to ACI Capital and MidOcean Partners for $112 million;
• In 2006, Nestlé, the Swiss food giant, purchased the company at a premium, for $600 million;
• Nestlé divested the underperforming brand – selling it to North Castle Partners in 2013; and
• HIG Capital acquired the business in 2019 for an undisclosed sum.

In spite of recent financial challenges, certainly there was some sharky investor eager to scoop up the distressed assets along with 40 years of brand equity, at a deep discount, right?

Wrong.

Here are five reasons why the hate-it-or-love-it diet company met its demise. And if you’re running (or working for) a similar legacy brand – you should be paying close attention to avoid these pitfalls.

1. Jenny Craig, ironically, couldn’t trim the fat

JC’s business model historically focused on high-touch support for individuals looking to lose weight, leveraging a network of weight loss centers and personalized consultants around the country (as well as in Canada, Puerto Rico, Australia and New Zealand). These centers meant that JC maintained a hefty brick-and-mortar footprint, and remained loaded with debt because of this footprint – to the tune of $250 million. This “bloat” became unsustainable over the years – particularly with the accelerated shift to online coaching brought on by the Covid-19 pandemic.

According to the insider I spoke with, JC had a big fixed cost infrastructure. In comparison, newer and more popular weight-loss companies like Noom, which was founded in 2008 as a digitally-native subscription-based app for tracking food intake and exercise habits, offer a much more scalable model.

Part of the challenge was that for many Jenny clients, the centers were an important part of why they stuck with the program. One customer I interviewed named Ariel Faison, who maintains a YouTube channel providing tips on how to recreate JC menu items at home, shared that she had built a strong rapport with her coach, and looked forward to sitting down and sharing the ups and downs of her life and weight loss journey every week. Faison further explained, “it wasn’t just an automated chatbot – where an agent will get back to you. This was a real person, who would learn your habits and really be there as a friend.”

In late April 2023, the company woke up to the reality of its unsustainable model and announced it was overhauling its business with plans to close its 600 centers across the U.S. and revamp itself as an e-commerce player. But it was too late.

2. Jenny Craig, who?

Jenny Craig had its heyday in the 1990s and 2000s – recall their iconic commercial, 1-800 94-Jenny! The company initially IPO’d in 1991 and has been a household name for decades. However, like so many legacy businesses, the Jenny Craig brand hasn’t kept up with the changing times.

In response to the shut-down, Reddit users joked that they were surprised Jenny Craig was still around.

And this brand perception is not surprising, considering Jenny’s lagging social media presence. JC has 31K followers on Instagram, 236K likes on Facebook and 3K subscribers on YouTube. By contrast and for context, its close rival, Weight Watchers (which rebranded to “WW” in 2018) has 1.7M followers on Instagram, 2.9M likes on Facebook and 172K subscribers on YouTube.

Even though WW was founded in 1963 – making it two decades older than JC, they were able to pivot from “IRL” to digital- and appeal to a much younger demographic. How? I believe it was their clear shift in brand messaging from weight loss, to wellness; a focus on inclusivity and curves, and shift away from counting calories. When WeightWatchers rebranded in 2018 to WW – accompanied by the tagline “wellness that works”, they were specifically tapping into a cultural zeitgeist that prioritizes body positivity and getting fit, rather than just getting skinny. And, regrettably, that brand facelift, was something that Jenny Craig was unable to accomplish.

3. “Jenny Craig is for older, White folk”

In describing her experiences, Faison, who is a thirty-year old African American woman, explained to me that she didn’t see diversity at Jenny Craig. “I had heard about Jenny for years and years – in my mind – it’s an old people’s weight loss program. And I have never seen anyone who looks like me in a Jenny Craig center. But I’m used to it. I live in Arizona. You won’t see anyone who’s Black. They are all older and caucasian. [Jenny targets] older, white females. And a lot of them are lifetime members who have been with the company since 1993!”

Competitor WW was more proactive about attracting a more diverse clientele by leveraging celebrity brand ambassadors, like singer-actress Jennifer Hudson (joined in 2010), media mogul Oprah Winfrey (2015), DJ Khaled (2017), singer Ciara (2021) and actress Tia Mowry (2022), through the years.

Now this is not to say that JC never brought on a racially or ethnically diverse brand influencer. In fact, in 2008 rapper-actress Queen Latifah replaced the now late actress Kirstie Alley in Jenny ads. But unfortunately, for JC, the private equity community just didn’t believe that the brand could sufficiently capture a younger and more diverse demographic.

4. O–o-o-ozempic! And other prescription weight loss drugs

The market for prescription weight loss drugs is booming. According to Axios, it is estimated to reach $30 billion by 2030.

The Ozempic jingle accompanying nightly commercials for the “miracle drug” produced by Novo Nordisk and endorsed by celebrities such as Elon Musk and Chelsea Handler, is a steady reminder for Americans – you don’t have to suffer through calorie counting and food rationing, when you can take a daily or weekly injection and have it done-for-you.

Charles Barkley recently shared publicly that he was able to lose 60 pounds in 6 months on the drug Mounjaro, a similar weight-loss medication produced by Eli Lilly.

Both Ozempic and Mounjaro, along with others like Wegovy, Victoza and Saxenda, are part of a class of drugs initially designed for diabetics, known as glucagon-like peptide-1, or GLP-1, receptor agonists. The injectable hormones are designed to do three things:

• increase insulin production, in order to increase sugar absorption and decrease blood sugar;
• slow down gastric emptying so you feel full longer; and
• decrease your appetite by reducing the feeling of hunger in your brain

I asked Faison, who is a diabetic whether she had been prescribed one of these drugs, and she shared, when she first started on her weight loss journey she would have tried anything, but has since developed more discipline. “My mentality was, give me a pill, give me a shot, give it to me, put it in my body! But these drugs weren’t out at that time. Where I’m at now, I’ve learned to develop good habits, self monitor and be more accountable on my own – I am checking how different foods raise or lower my blood sugar.”

Now, it’s not the first time prescription weight loss drugs have popped on the scene. In 1996 the Food and Drug Administration (FDA) approved dexfenfluramine and fenfluramine (brand names, “Redux” and “fen–phen”), causing revenue at Jenny Craig and similar diet programs to plummet. So, JC hired part–time doctors to prescribe the drugs. Unfortunately, the drugs were quickly withdrawn from the market, when a study linked one of them to pulmonary hypertension and valvular heart disease. A cascade of lawsuits then followed, from injured patients who had developed abnormal heart conditions.

WW, which had previously sat on the sidelines during the Redux/Fen-Phen era, took a much different approach. In March of 2023, adopting a “if you can’t beat ‘em, join ‘em” approach, WW acquired Sequence, a subscription telehealth platform offering access to healthcare providers specializing in chronic weight management, for $132 million, enabling the company to offer these drugs to its customers as a premium subscription. This go-round, Jenny stayed out of the fray, likely because it was burned before.

There certainly are plenty of downsides to relying on medications for weight loss, which would cause many to question WW’s business strategy, including:

• hefty price tag — approximately $1,200 / month, without insurance;
• chronic supply shortages, preventing customers from obtaining;
• side effects including nausea, diarrhea, abdominal pain, bloating and in severe cases, pancreatitis and thyroid cancer; and
• the yo-yo effect — these are long-term / life-long medications, so many people who stop taking the drugs gain the weight back.

Despite the drawbacks, the frenetic market demand for these medications is not stopping, and is certainly slowing demand for traditional weight loss programs. And Jenny Craig was undoubtedly a casualty.

5. Meal delivery services are too expensive

At the end of the day, Jenny Craig’s core business was a meal delivery service, which although supremely convenient, was also very expensive.

The cost ranged from approximately $97 to $200 per week ($14 – $30 per meal) depending on the plan you chose, and customers were encouraged to add fruits and vegetables to supplement the pre-packaged deliveries. All-in, customers might be spending $600 – $1,000 per month on food, and that’s just for one-person, let alone a whole family. According to the Department of Agriculture’s most recent figures, in 2021, the average family of four spends approximately $1,000 per month on groceries on the low-end, and approximately $2,000 per month on the high-end.

Some former customers took to Facebook to complain about the expensive diet plan. “Food is great! Jenny Craig is expensive particularly if you have to purchase food from markets for other family members.” Another remarked, “​​I’m surprised they are shutting down. The food was very expensive. Shame that with their high prices she still couldn’t make it work. Seems she racked in tons of money.”

Jenny Craig certainly isn’t the only meal delivery service which has been struggling financially, especially given the drop in demand for meal kits post-pandemic. Freshly shut-down in January 2023. New York-based Blue Apron, which is still not profitable (sustained a $79M loss in 2022), said in early December 2022 that it was downsizing its corporate workforce by 10%. No matter how you slice it, whether it’s restaurant or at-home delivery, the margins are tough and food is a hard business.

Admittedly, there is still strong demand for convenience in the kitchen, albeit at a reasonable price point. And this is why the market for meal kits is quite crowded, with companies like Blue Apron, HelloFresh, Green Chef, Daily Harvest, Factor, BistroMD, offering everything from keto-friendly recipes and ingredients to dietician-designed meals that are delivered fresh and ready to eat in under 5 minutes. However, in a tightening economy, as Americans are looking for ways to trim their food spend, meal delivery services are considered luxuries. And again, companies like WW and Noom have adopted a more sustainable model, where the customer is responsible for their own meal preparation.

Conclusion

A recent study by McKinsey found that the average life-span of companies listed on the S&P 500 was 61 years in 1958. Today, it is less than 18 years. So by any measure, Jenny Craig had a solid run at 40 years. But that doesn’t mean we can’t unpack the ways that they could have breathed new life into the business, to get back to growth. The next question is – which, if any, of the many lessons from JC’s decline, can help you adapt to changing consumer preferences and stay competitive?