\n<\/p>\n
Oren Klaff <\/strong>is best known for his groundbreaking book, Pitch Anything<\/em><\/strong>. In it, he gives a systematized way to take control of every meeting<\/strong>, negotiation<\/strong><\/a>, and deal <\/strong>on your terms without taking a submissive position. Oren has the expertise to back up his claims. As a world-renowned leader in sales, <\/strong>capital raising<\/strong><\/a>, and negotiation<\/strong>, he\u2019s been in the meetings, flipped the script, and gotten deals done that most couldn\u2019t even dream of. Now, he\u2019s sharing his wisdom with you.<\/p>\n Much of what Oren describes gets a bad rap in today\u2019s world. The terms \u201calpha<\/strong>\u201d or \u201cin control<\/strong>\u201d are subliminally thought of as violent or harsh, but in Oren\u2019s context, they are completely accurate. In part one of this two-part episode, Oren gives you everything you need to take control of your deal<\/strong>, get negotiations done on the terms you want, and put opponents in the position for you both to succeed<\/strong>, instead of merely butting heads.<\/p>\n But this advice isn\u2019t just for the board room. These key principles work in every conversation you\u2019ll ever have<\/strong>, whether you\u2019re raising millions to close on an apartment complex investment<\/a> or merely trying to get your kid to eat their vegetables. The way you pitch, frame, and control a conversation<\/strong> directly correlates to its outcome. And in real estate investing<\/a>, this isn\u2019t a skill you\u2019ll want to be without.<\/p>\n David: Oren: David: Rob: David: Rob: David: Rob: David: Rob: David: Oren: David: Oren: Rob: Oren: David: Rob: David: Oren: Rob: Oren: David: Oren: David: Oren: David: Rob: David: Rob: David: Oren: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/em>sponsor page<\/em><\/a>!<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast show 663.<\/p>\n
Write this down, raise the stakes. If somebody believes there is low stakes at this pitch, at this meeting, at this interaction, it is going to end like this, \u201cHey, this looks great. Love this. Love what you guys presented, something we\u2019re really interested in looking at. Send me the deck. I\u2019ll talk to my committee, my partner, my wife. We\u2019ll take a look at it. If we have any additional questions, we\u2019ll get back to you in the next week.\u201d That requires no training. All buyers, all investors say that unless there are stakes. So raise the stakes.<\/p>\n
What\u2019s going on, everyone? It\u2019s David Greene, your host of the BiggerPockets Real Estate Podcast, here today with my co-host, Rob Abasolo with a fantastic show, and I really mean that. Today, Rob and I interview or Oren Klaff, the author of one of my favorite books you\u2019ve heard me speak about often, Pitch Anything. Oren is probably, I would consider him to be the world renowned expert in teaching the concept of frame control and how to hold people\u2019s attention so you can get them to see things from your perspective and invest in your deals.
He\u2019s hired by the big guns to come in and raise money for very big projects and he was gracious enough to share his time with us today sharing very high level concepts that you usually won\u2019t hear anywhere unless you pay tens of thousands of dollars to take courses to teach you stuff. This is the stuff high-powered business people will go sign up for and you\u2019re getting it today for free.
Our show with Oren, I\u2019m just going to give you disclaimer, we hit the ground running and he\u2019s like a Tasmanian devil of value. So in these two episodes, Rob and I are actually going to stop it a few different times throughout the show to explain how the concept that Oren is describing would relate specifically to our industry of real estate investing, as well as give you some color commentary on how this might apply in your own business. Rob, what were some of your favorite parts of the show?<\/p>\n
Well, Dave, there were a lot. There were a lot of favorite moments in this because he was speaking to my soul, I think. I\u2019ve been really going down the investor journey and working with investors. I mean, I think probably in the last year alone we\u2019ve had at least a hundred Zoom calls with different people and we\u2019ve really figured out who we are, who we want to be as real estate entrepreneurs and investors. So I really reflected a lot just in this episode because he really put a little knife in all my wounds and was like, \u201cYup. You were doing it wrong the whole time,\u201d and I\u2019m like, \u201cYeah, yeah, I was, I was,\u201d but it\u2019s really nice in retrospect to be like, \u201cOkay. Well, here\u2019s the silver lining. I learned it the hard way so that everybody at home can learn it the easy way.\u201d<\/p>\n
That\u2019s the role that you and I are in. We\u2019re the vanguards that go ahead and make a whole bunch of mistakes, everything gets messy and ugly, you lose money, you lose employees, you go through pain and frustration, and then after you finally go through all that and you figure out the answer, our battered and torn bodies come back and say, \u201cOkay, guys. I went out there and I figured out that\u2019s where the tigers are. Don\u2019t go there.\u201d We\u2019re all scraped up and clot. Our clothes are falling off, and we\u2019re like, \u201cThis is the way that you can go and you can avoid all that pain,\u201d and that\u2019s a privilege we have of sharing that with everybody who listens.<\/p>\n
That is today\u2019s retroactive quick, quick, quick, quick tip. Well, this is particularly topical for me because I threw out my back this week. So I\u2019m just in shambles. I hit 32 and the old body\u2019s just breaking down limb by limb, but it\u2019s okay, I\u2019m going to push through. I\u2019m a survivor.<\/p>\n
Rob, you\u2019re back in the gym, so everybody should know that Rob has taken his role as the co-host of the podcast seriously, and he\u2019s now training for the BiggerPockets Olympics.<\/p>\n
That\u2019s right. Well, I was. I was at back in the gym. I joined and I am out. I canceled my membership today and I said, \u201cI don\u2019t know when I\u2019ll be back.\u201d<\/p>\n
\u201cI don\u2019t know when I\u2019ll be back.\u201d Yeah, so pray for Rob\u2019s back. He\u2019s going to the chiropractor today to get that work done. I have, actually, I\u2019ll say it public, I have scoliosis. I\u2019ve had it my whole life and it\u2019s horrible. My back goes out all the time. My shoulders get messed up very, very easily and my neck. So jujitsu frequently will throw me into problems playing sports, lifting weights. It\u2019s always something that can tweak it. So back problems suck. You\u2019ll be on my mind, Rob. I hope you get through that.<\/p>\n
Thank you. Well, you\u2019ll always be my broliosis.<\/p>\n
Appreciate that. When you guys see Rob at BP Con, make sure that you either give him a free massage or at least a high five and hope that his back gets better. All right. There you have it, folks. Without any further ado, we\u2019re going to bring in Oren. Buckle your seatbelt and get ready for a wild ride.
Oren Klaff, welcome to the BiggerPockets Podcast. I\u2019m thrilled to finally have you here.<\/p>\n
Yeah. You might not be so thrilled 30 minutes from now, but for the moment, Hail fellow, well met.<\/p>\n
Thank you very much. Now, if you\u2019ve been listening to this podcast, you\u2019ve no doubt heard me mention the book Pitch Anything as one of my all time favorite books. I often recite this when people say, \u201cHey, David, what\u2019s a book that I should read? What book do you recommend?\u201d I\u2019ve read this book four times. I love pretty much everything about it. It\u2019s helpful in so many ways. It could have been probably three or four different books because of the concepts that are in there. Oren, do you mind giving from your perspective the gist of the purpose of the book, what type of information is in the book and who it was meant to help?<\/p>\n
Yeah. So I mean this book was mainly written to help losers struggling through life. Well, no, that was me. That was me at one point, struggling through life. So the book was cathartic in terms of it was meant to help my prior self get to where I am faster. These are the things that I lived through, going into meetings and supplicating to the buyer, waiting for business to happen, sending emails, \u201cHey, just checking in,\u201d doing a pitch and then saying, \u201cSo what do you think, guys? Are you interested? Can I answer any questions?\u201d taking the beta position. Once I learned what an alpha and a beta is, for me, it was like I went to the wardrobe to get a shirt to go to my job at an investment bank, go up an elevator, go to my tiny office overlooking a freeway, and answering to the managing directors and getting them coffee if they wanted coffee.
I went home, went to hang my shirt in the wardrobe, open up, and Narnia was back there, and I\u2019m like, \u201cHoly! There\u2019s an entire universe in my universe that is a different reality from what I\u2019m living.\u201d Then I didn\u2019t ask any questions and I\u2019m like, \u201cThere\u2019s lions and dragons and spaceships and all kinds of wonderful stuff,\u201d and I just dove into the wardrobe and living in a different world, all from understanding what a beta position is, what a supplicant is.
So long answer to a short question, but it wasn\u2019t till later when I really started understanding some of the biomechanics of this stuff. When you were in the beta position and you are \u2026 When somebody else feels powerful over you, there is a physiological response in them in which they do the following three things. They view you as transactional, \u201cHow much can I get from you without investing anything?\u201d
Second is they view you as only at a surface level. They don\u2019t care about your family. They\u2019re not interested that you surf or play racketball or a squash champion. They don\u2019t care that you have a value system or ethics. They just view you at a surface level, and that rolls into the third and most significant thing in the way people view you is that they take risks around you they would not take around their peers. Well, that means they would take phone calls, check their phone, ask you for incredibly insensitive gives, try and reduce pricing, try and get you to give away what you have. So that\u2019s what people who feel powerful do physiologically.
So the book is intended to show you how to stop that from happening, from putting yourself in the beta position. You walk in a room and I walk in a room. I don\u2019t know you from a block of ice. Everything unfolds from there. If you\u2019re in the beta position is because you put yourself there, and by default, by putting yourself in the beta position, you\u2019re putting the other person in the alpha position or the power position, and even if they\u2019ve never done a deal before in their life, they become a master deal maker from being in the power position, seeing you as transactional, seeing you at a surface level, and taking huge risks.
If anybody here is old enough, you guys obviously have seen Trading Places, the final scene with Mortimer and whatever, where they say, \u201cHey, you won the bet.\u201d They\u2019ve ruined people\u2019s lives. They exert incredible emotional distress on people and it\u2019s all for the bet over a dollar. That\u2019s what happens when you take the beta position is that people will bet your life away for a dollar, and that\u2019s what this book is intended to do or not just the book, but this is why I don\u2019t just do deals today and I invest time writing and I invest time on these kinds of podcasts because of the millions of people that I\u2019ve touched.<\/p>\n
Awesome, man. Okay. So lots to unpack here. I want to get into this. First, I want to say I very much love the concept of the book, and I feel like my life is I\u2019m a walking, talking example of the idea of Pitch Anything. I don\u2019t know if anyone really at home knows this, but before I was a content creator, I was in advertising. I was a senior copywriter at an agency for about 10 years, and it was just very funny because you were served a brief and you create ideas that answer the brief and they were never the good ideas, right? I would come up with these really crazy, out there, wacky ideas and I would say, \u201cOkay. I\u2019m going to give them five ideas that answer their problem. I\u2019m going to bring a wacky one just to let them know that I\u2019m creative,\u201d and it always seemed like the wacky ideas or the funny or the out there ones were the ones that always went through, were the ones that would pique the interest of my creative directors.
After leaving advertising towards the end of that, I was in improv, and improv is the art of pitching anything to your scene partner no matter how dumb it is, and allowing them \u2026 Basically, you\u2019re becoming very vulnerable because you\u2019re going to throw a wacky idea out and you are just crossing your fingers that they\u2019re going to pick it up and run with it.
So there\u2019s certainly this power dynamic that comes from that, from the advertising pitching in a boardroom of directors, they\u2019re the alpha, you\u2019re the beta. Same thing in improv where you are the beta and your partner can be the alpha. I\u2019m curious in the actual book here when you talk about this relationship, is the desired outcome to do away with the alpha and the beta roles or is the desired outcome to become the alpha role within the relationship?<\/p>\n
Yeah. So this is a great question. I mean, the alpha and beta roles exist. There is, in my worldview, there is no egalitarian flat win-win. We\u2019re all looking for the same outcome even in a win-win in which you say, \u201cHey, we\u2019ve approached this for both sides,\u201d it is impossible to really reconcile a perfect deal. The alpha and beta exist. One person will, by definition, get a better deal than the other. I think most people have in their, I haven\u2019t really done a scientific investigation but experientially from having been in billions of dollars of transactions, people have a notion you don\u2019t get anything you don\u2019t ask for in business. Once they feel empowered and have had some success for doing that, people are automatically going to grab the alpha role.
Here\u2019s what you have to understand. There is an alpha and beta. However, most people who occupy the alpha don\u2019t know how to handle that role professionally, fairly, with parity, with integrity, with transparency, with honesty. So if you believe that if you were in charge of this deal, if you were actually making the pricing points, and you were making the closing conditions, and you were making the equity-to-debt ratios and the debt service, and you were deciding on which part of the deal, in your guys\u2019 terms of art, which part of the deal was interest only, what the balloon was, what interest rate was fair against the fed open interest rate window, if you were deciding all of that from the alpha position, would the deal be likely to be done fairly, honestly, transparently with parity for everybody involved, and survive the test of time so then people look back on it and say, \u201cThat was a well constructed deal\u201d? Because if you feel that that\u2019s true, you should take the alpha position because the other guy is going to take that position and ruin the deal.<\/p>\n
All right. This is a great point. Now, Oren is speaking in terms that are known to his industry as an alpha, beta. We wanted to take a quick minute because these can be confusing terms because the phrases alpha and beta are often used in different terms like an alpha male describing a certain kind of guy. That\u2019s not what we\u2019re talking about here. What we\u2019re talking about when we talk about alpha position is the person that has the most leverage in the situation. That could be the person with the most experience, the person that has the deal and their contract and they\u2019re trying to bring investors into their deal or it could be the person that has the money that someone\u2019s trying to pitch to, which would put them in the alpha position.
Now, what Oren\u2019s saying is when you\u2019re in the alpha role, it is your responsibility to put a deal together that works for everyone. If the person who\u2019s in the alpha role isn\u2019t doing that, they\u2019re making a one-sided deal, the deal\u2019s not going to get done. This is why you should strive to be in the alpha role because when you\u2019re the one that has the experience, the knowledge, the way to put a deal together, that\u2019s a win-win. If you\u2019re not in the alpha role, you\u2019re not able to do that successfully. Rob, did you have anything you want to throw in there?<\/p>\n
Yeah. What he just described was legitimately just my investor journey for the last two years. My partner and I, the way we structure it is, obviously, I have the content, I teach people how to do this, and people send me inquiries to invest with me. Then my partner, my COO, he basically will go and he\u2019ll meet with the investors. There is a bit of an interesting power dynamic because you just never really know walking into the conversation who is the \u201calpha\u201d, right? A lot of the times you would think it\u2019s us because we\u2019re the experts here, but then there is, like he was saying, the empowerment that comes from successful investors and they\u2019re like, \u201cHey, I\u2019ve done this. I\u2019ve made the money doing this, and I\u2019m giving you my money and thus you have to do what I say.\u201d
So over the past year, our entire process of how we work within investors has completely changed. I think getting started it was all about, \u201cOh, sure. You want this? Okay. Great. Yeah. You want to pref here? Great. Oh, you don\u2019t want a 50\/50 split? You want 60 and we get 40?\u201d Just over time, I saw how bogged down my partner was just fulfilling every single request. So when people would say, \u201cOh, well, when you work with investors, do you usually do this?\u201d and we would always say, \u201cIt depends,\u201d and it\u2019s because we were willing to bend over backwards because we were getting our bearings on how to work with investors, but now, I\u2019ve really had to be a lot more stringent with people walking through the door for the exact reason that Oren was talking about, where we are in this for the win-win, right? My reputation is at stake here.
If I mess a deal up, that is on me for my career, and thus it behooves me to put together the best deal that\u2019s going to be worth it for me to put my time into this and that will make my investor a good return. So we do have people that try to negotiate all the time and I always tell my business partner, \u201cThe moment you allow negotiations to open, they think it\u2019s pawn stars and they\u2019re like, \u2018Tell you what, I\u2019ll give you 40%, I get 60, and I get a 15% pref.\u201d I remember one time my partner gave that investor a 15 pref and I was like, \u201cWe\u2019re not going to do this. I\u2019m sorry. I know that you negotiated it. I know that we\u2019re at the finish line, but that is not worth it for us.\u201d
We get nothing out of this. We get a small equity share in this property, but we\u2019re giving up all cash flows to this pref that\u2019s impossible for us to win, and if it\u2019s impossible for us to win, it\u2019s impossible for us to be motivated to keep this deal alive. So yeah, I don\u2019t know, it\u2019s just really interesting to hear it from him. You\u2019ll always be all pro because that\u2019s what it sounds like. It\u2019s like if you\u2019re going to be in the \u201calpha\u201d position, you got to make sure that it\u2019s a win-win for everybody and it checks the boxes and there\u2019s no negotiation on that, I think, personally.<\/p>\n
This is super applicable to our industry of real estate because we\u2019re always working on a deal where two sides are negotiating against each other, a buyer and a seller, and then you\u2019re working on a partnership where two people are looking to get into a deal. Sometimes they\u2019re in equal position and then other times when it\u2019s a syndication or something, you\u2019ve got one person setting the terms and the other person deciding if they want to be a part of it. So this is very helpful information because it will come up constantly in your career. It comes up in the world of real estate. I always tell agents who say, \u201cHey, I want a better commission split,\u201d and I got so tired of hearing that I said, \u201cOkay, fine. You can have it. You name your split. What do you want?\u201d
\u201cCan I have 80\/20? You can have 90\/10?\u201d
\u201cYeah, you can have it all. Okay. You got it, but you need to know when you walk out this door, when that client comes, I\u2019m going to give it to the person that\u2019s on a better split for the company. So you won the battle where you got 90% of the commission, but you lost the war because you\u2019re not going to get any of the leads.\u201d
You have to be thinking about both sides at all times. Oren is just someone who has spent so much time mastering this and being in these environments that he\u2019s come up with this way of looking at it where you do have an alpha and a beta, and we want you as the BiggerPockets listeners to be in the alpha position.<\/p>\n
I want to go back to something so critical that you mentioned, improv. So I lived on Sunset Boulevard in Beverly Hills in West Hollywood for years. I think when I was 44 or something, I went, I\u2019ve signed up for improv. So I show up in the class and it\u2019s a bunch of 22-year-old actors and actoresses, whatever the right, mainly waiters and waitresses in the class.
So I walk in and they\u2019re like, \u201cOh, hey, you\u2019re looking for the DUI class to get your license back? That\u2019s down the hallway. This is improv.\u201d
I\u2019m like, \u201cNo, no, I\u2019m here for the improv class.\u201d
They\u2019re like, \u201cWhat is this 44-year-old dude in a suit doing in improv?\u201d
It\u2019s the ability to create novelty is I think what is amazing about improv. So in context, novelty, right? As the years progressed, what I realized is the way I execute novelty, it raises the stakes. This is not just another meeting with another dude that you are at the end of the meeting going to say, \u201cHey, yeah. That\u2019s super interesting. We really want to invest in this area. We like your presentation. I need to talk to the committee. Send us the deck. We\u2019ll review it. If we have any questions, we\u2019ll get back to you in a couple weeks.\u201d
So with the ability to deliver novelty and differentiation, you can also raise the stakes and saying, \u201cThat\u2019s not happening here. This meeting is not only to your benefit, it\u2019s to my benefit as well.\u201d
If you have improv chops, then you have the ability to say, \u201cDavid, listen. Great that you have these questions. Great. I could invest some time in being with you today, and as much as you need to evaluate our investment, the whole period, the going in cap rate, the going out cap rate, the debt-to-equity ratio, the debt service coverage, the underwriting on the asset, the competition, make sure environmental is done, that the underwriting matches the appraisal where difference from the appraisals document, you got to evaluate all that stuff, but as much as you\u2019re evaluating us, our track record and the asset, we also need to leave some time for me to evaluate you.\u201d
That is raising. So that\u2019s what improv is gives you the ability to say things that are novel to the environment you\u2019re in with seriousness and raise the stakes. So I think you can agree that the goal of improv for an audience is constantly raising the stakes, right? Each addition to the scene has to hold somebody\u2019s attention longer, make them laugh harder, build to something, build momentum. No audience wants to stay in stasis, in the same emotional state that you\u2019ve created.
So if you know how to raise the stakes, then you\u2019re driving towards a decision, and I\u2019ll say, \u201cHey,\u201d and I can give you some things that obtain frame control immediately, right? Certainly, if anybody listening to this has some time to go spend inside of improv, then you have the ability to say things that you know you should say, but you\u2019re just not sure how to get them out of your mouth, and improv gives you that ability.<\/p>\n
Yeah. I mean, when you summarize it, effectively, what a lot of improv comes \u2026 The number one golden rule of improv is what we call yes-and. If your scene partner pitches you something, you say, \u201cYes, and this other thing that makes it crazier, funnier, wittier, more off the cuff,\u201d and you keep yes-anding each other until you get to a moment where you agree that you\u2019re on this concept and you run with it.
The number one downfall of most improv scenes is no-but, right? If you say, \u201cNo, but this \u2026\u201d you\u2019ve now denied your partner, and now you\u2019re deescalating the situation in a lot of ways. So I think that makes sense and there are some pretty useful applications of that even in real estate because, for me, in the whole Airbnb world, we\u2019re all about creativity and creating unique experiences. When I\u2019m concepting a new experience or new listing with my partner, we are trying to yes-and each other to say, \u201cHow are we getting to the best product?\u201d versus saying, \u201cNo, no, but this, the logistics here are terrible,\u201d and shooting ourselves in the foot. So I do think that this is why I really thrive with a lot of my partners because we\u2019re very complimentary in making sure that we\u2019re basically escalating every single deal that we have on the table.<\/p>\n
Well, I think, yeah, if you\u2019re listening to this and you want to write something down, \u201cHey, these idiots have been occupying my time for 15 minutes now. I\u2019m not sure I\u2019ve learned anything,\u201d write this down, raise the stakes. If somebody believes there is low stakes at this pitch, at this meeting, at this interaction, it is going to end like this, \u201cHey, this looks great. Love this. Love what you guys presented, something we\u2019re really interested in looking at. Send me the deck. I\u2019ll talk to my committee, my partner, my wife. We\u2019ll take a look at it. If we have any additional questions, we\u2019ll get back to you in the next week.\u201d That requires no training. All buyers, all investors say that unless there are stakes. So raise the stakes.
One thing, I just want to revert to improv. This is not a sales pitch for Second City in Chicago or that you should move to Los Angeles but you should and you should also go to Second City in Chicago, but one thing it gave me is the ability to reframe people\u2019s own behavior and lens on themself in a outrageous way. I have to deal, and I\u2019ll just give you an example of what I mean by that, and this is something that you could take home with you and if you use this, if you\u2019re doing transactions, this is something you\u2019ll make a couple million dollars with that we\u2019re going to go over in the next 30 seconds.
I talk to billionaires. I talk to guys who manage billion dollar funds. I talk to hundred millionaires. I talk to private equity groups. I wouldn\u2019t say all day long, but at least every day that I come to work. Invariably, a billionaire is busy and, for me, I\u2019m in the beta position going in for that meeting. Very high view of themselves, low to middle view of me, and they always come late, always. Never have them come on time. Every once in a while you have somebody super punctual, but they always come late.
So I\u2019ll say, \u201cHey, David. Great. You\u2019re here for the 108 call? Hey, David, are you here for the 108 call?\u201d So everybody managing a billion dollar fund, it immediately gives them a lens to view their own behavior. I\u2019ve had billionaires start off calls, apologize, \u201cI\u2019m so sorry. We had a three billion dollar shipment stuck in the port of Los Angeles. They needed my final sign off. The DocuSign wouldn\u2019t load. This is food for the food bank of California to save the lives of small children. I\u2019m so sorry that I created this thing,\u201d because they know the value of time, whether you\u2019re important or not. They know that their ability to show up and do what they say is just a marker of quality in business and they didn\u2019t get to running a billion dollar fund by showing up to meetings whenever they want.
So that is immediately, they\u2019re starting off the meeting apologizing to me for their behavior. Now, we are becoming peers, and now they can see me as a person, as somebody with high values, and somebody who is not a beta and supplicant for them to order around and tell me to do whatever they want.
So there are indications to people that you are a peer, even if they\u2019re a billionaire, if they\u2019re a billion dollar fund, they have to understand that you are not a commodity, that what you have cannot be bought anywhere, and they cannot impress their values on you, and your value system is as important or more important than theirs, and when they behave awkwardly, weirdly, out of phase with our culture, you are there to scratch your head and go, \u201cHmm, don\u2019t quite get what\u2019s going on here. I like you. You guys are super credible. You\u2019ve done some amazing stuff and you\u2019re our dream client, but also, I don\u2019t understand what I\u2019m seeing. Can you help me square this circle?\u201d<\/p>\n
I think something that\u2019s fascinating about what you\u2019re describing, because what you\u2019re saying is you know coming in you\u2019re in a beta position. That\u2019s a very simple thing that you did that changed the dynamic of the relationship that maybe didn\u2019t put you completely in alpha but, like you said, put you in peers. I just want to highlight very briefly, the point of this is because you need to get your point across. It\u2019s not to fuel your ego, it\u2019s not to feel-<\/p>\n
A million percent. Someone will not listen to you. You cannot pitch and you cannot close from the beta position. Until they perceive you as a peer, you\u2019re not closing that deal at anything near numbers that would be fair to you. Nobody closes a parity deal with lots of margin in it with somebody they believe they have power over. So until you\u2019re perceived as somebody who is busy, has momentum in their own business, is not needy in any way for this transaction, and is offering a opportunity for a partner as peers, they will continue to negotiate and chip away your deal until they feel like they\u2019re in the super majority position.<\/p>\n
It\u2019s important we highlight that because the phrases alpha and beta have as stigmatism to them where you often hear, \u201cI\u2019m an alpha male,\u201d right? It\u2019s not about the way you come across. It\u2019s in this specific relationship and you\u2019re bouncing around them all day long. There\u2019s a position of first position, which is alpha or beta, which would just be second.<\/p>\n
So another word that has a lot of stigmatism with it is control. I am looking for control. Why? Because I am a better governor of the outcome for you than you are. You will negotiate too aggressively. You will negotiate a deal that won\u2019t hold together all the way through legal, and you\u2019ll negotiate a high friction deal. In the same deal between you and I, it\u2019s better for me to have control because I\u2019m going to craft a deal that can be stress tested, that will last through legal, that will get to the other side, that can withstand an argument, that can go through friction and still be a deal.
So I want deal control because I\u2019ll put together a deal of quality that everybody will in the end be happy with the outcome. You will put together a controlling deal that benefits you, puts me at risk and my legal, my partners. I\u2019m not going to perform because at the end of the day, even if you get one over on me a year from now, I learned that my desk service coverage is incredibly high, I\u2019m going to look for litigation, I\u2019m going to blow out of the deal, I\u2019m going to file bankruptcy in the SPV, whatever it is. So I want deal control because I\u2019m going to do a better job with control than you will, not you, David, of course<\/p>\n
We see this a lot in the relationship between real estate agents and their clients, particularly when you\u2019re selling a home. So I would notice this if I would go in and I let them stay in the alpha position, they\u2019d say, \u201cOkay. Well, I want to pay you a 4% commission and you\u2019re going to work around my schedule and we\u2019re going to list my house for way more than it\u2019s worth,\u201d and they thought they won. What happen is I would see repeatedly they get a terrible experience. No one buys their house. No one\u2019s motivated to work hard for them because they chipped away the commission. They out-negotiated their own agent, which usually means their agent sucks and isn\u2019t going to fight hard to get them money. When you let your client win, they lose.
This is where your book came in so helpful because I realized I need to be comfortable taking the control because I am the freaking expert. They\u2019re not. I sell houses all the time. They don\u2019t. If I give them the control, it\u2019s giving the control of an eight-year-old what they\u2019re going to have for dinner. I\u2019m sure they\u2019d like it, they\u2019re not going to make good decisions so it\u2019s going to lead to everyone being upset.
This is why the concepts in your books, which, frankly, I think they can make people a little uncomfortable because you are learning how to be in a position of control, but if you are the fiduciary, if you\u2019re the expert, if you can see the angles better, you got to have it. So this comes into play a lot for real estate investors that are trying to raise money for their deals, that are trying to acquire properties from a seller who doesn\u2019t know what their property\u2019s worth, all kinds of scenarios that it makes your job so much easier when you understand the dynamics that are actually happening within the relationship.
I also think that there\u2019s a large contingency of people that want to move forward in a particular endeavor of life. They want to buy properties. They want to build wealth. They want to get a better job. They want to ask for a raise, and all they could say is, \u201cI just don\u2019t feel confident. I just don\u2019t have confidence to do it,\u201d and they don\u2019t understand they\u2019re living in that beta position every day and, physiologically, it changes how you feel.<\/p>\n
So this is very interesting to me because, again, he\u2019s really harping on a lot of the pain points that I\u2019ve had. When you think about investing, you have your buy box. You have the criteria that you look at when you\u2019re buying a property. For me, I invest in four different places when it comes to short-term rentals. I invest by national parks, state parks, vacation destinations, and eclectic towns. That\u2019s my buy box, if you will, for short-term rentals.
I never depart from that because my strategies work there, but as we started to come into this journey with investors, I started to realize that there\u2019s an investor box too, if you will, where basically, you have to set the parameters of how you work with investors and when you\u2019re willing to walk away. A lot of people think that because money is being offered to you, you have to take it. When you\u2019re starting out, I understand that notion and you probably should, but when your experienced and when you\u2019ve cut your teeth in the industry a bit, you got to stick to your guns, truly.
So for now, when we\u2019re working with investors, it\u2019s very clear. We take this kind of split. If there\u2019s a pref, this is what it is. We call the shots on the design. We call the shots on the location. We handle everything. When we have an investor that wants to come in and basically be another cook in the kitchen, it\u2019s a no for us. So now, we have this criteria, and as much as we want to work with people that are really nice and that respect us for what we\u2019ve done, it\u2019s just not worth it for us because the more that we give to an investor, the more that\u2019s always taken away from us, not necessarily just in equity but in time. Really, that\u2019s what it all comes down to is he just talked about it for a little while ago how important time is. So if you\u2019re burning all your time trying to make a deal work, it\u2019s probably not worth it, Dave.<\/p>\n
That\u2019s a great point, and it also opens the door to another great point, which is that many people that will be hearing this are going to be experiencing a little bit of uncomfort, maybe discomfort, possibly some cognitive dissonance because control is a tricky thing. When you\u2019re in a position of control, it should come with responsibility. So you\u2019ve always heard that Spider-Man phrase, \u201cWith great power comes great responsibility.\u201d
A lot of people don\u2019t want responsibility, so they inherently just don\u2019t like control. Others have been in a situation where someone had control over them and it resulted in pain. So a common defense mechanism is to say just avoid a situation where anybody has control over anyone else. Then there\u2019s other people who just need to be in control all the time, and that can be bad too because sometimes they shouldn\u2019t be in the position of control.
The person that should be is the one that has the experience, that has the knowledge, that can put a deal together that works for everyone. If you want to get ahead in life, if you want to build wealth through real estate, you\u2019re going to have to, at some point, get comfortable with the fact that you need to own the control you have. When you are the buyer in a transaction and there\u2019s no other buyers that you\u2019re competing with, you have leverage over that seller, and using it will allow you to save more of your capital and get a better deal so that you\u2019re incentivized to buy more property.
When you\u2019re selling a property and there\u2019s eight interested buyers, you have control, you have leverage, and you can put a deal together that makes more sense for you so that you\u2019re incentivized to want to do this again. The same is true if you\u2019re the person that finds a deal and puts it under contract and you\u2019re bringing in investors. They\u2019re depending on you as the person with the control to put a deal together that will make them money.
When a mistake is made by someone in control, it can be catastrophic. If a mistake is made by someone who doesn\u2019t have control, the limitations are there that it can\u2019t get that bad. It\u2019s what I\u2019d like to encourage people to do as they\u2019re listening to this is to ask themselves tough questions. Are you okay acknowledging that there is an alpha and a beta in situations like this and it\u2019s in your best interest to seek to be the alpha? If you\u2019re not ready to be in the alpha position, what knowledge, what information, what can you do to improve your position so that you do a better job when you\u2019re in the alpha position? When it comes to real estate, you can make a lot of money in this industry, but it\u2019s not going to happen if you don\u2019t have the control.
So there\u2019s discomfort that can come from that, but it doesn\u2019t have to be that way. When you know that you make good decisions that make everyone money, you put win-win solutions together, you take properties that are not being managed well and you put them in their highest and best use, you should have a form of confidence that comes with that. Rob, have you had an experience like that in your life where you recognized, \u201cI need to be comfortable in this position of power that I never had before\u201d?<\/p>\n
100%. You got to think about it, right? It\u2019s what he\u2019s saying. You want a win-win scenario here, right? That\u2019s the outcome. This might seem like a win-win scenario, David, but it\u2019s not. Investor says, \u201cHey, Rob. I\u2019m going to give you money. Go buy the house. Here\u2019s the splits.\u201d I take a bad deal but, hey, I get a free \u201chouse\u201d, right? Then at that point, once we\u2019ve closed the deal, we run it, we perform, we perform well, but then I say, \u201cI never want to work with that person again because the negotiation was terrible. Now, I\u2019m going to go find another investor, brief them, pitch them on another property, and work with them, and find the better deal.\u201d That to me is not a good scenario because at that point, I\u2019m looking for strategic partners that will invest with me not just for one deal but for several deals.
So you really have to try to put together a deal that\u2019s a win-win like Oren\u2019s saying for the exact reason that, look, it\u2019s either I\u2019m going to get a crazy good deal and the investor, and thus the investor might do it, but they\u2019ll never invest with me again or the investor gets the crazy good deal, and I get the bad deal, but I go through with it, but then I never invest with that investor again. Both of those are lose-lose scenarios to me.
So I think you\u2019re really trying to prevent any friction in the future by just setting the stage that it\u2019s like, \u201cHey, I\u2019ve underwritten conservatively, just so that you know, so that we are winning across the board and we\u2019re getting this thing to the finish line together.\u201d<\/p>\n
That\u2019s it.
Would you mind sharing the story in your book, I\u2019m former law enforcement, so I love it, of what it\u2019s like when you\u2019re interacting with the cop who\u2019s pulling you over? I just thought that that was brilliant when you\u2019re describing what emotions the cop is feeling versus the person being pulled over.<\/p>\n
Yeah. So I mean, I would love for people to read the book and have that for the first time, but maybe I can give you the opposite story of that. So right there is what I would call a college kid\u2019s poster sports car, apex sports car. I could walk over and touch it. Happy to turn the camera if you want to see it. So I have a friend who is a police officer in the California State Police. On Christmas, we met up in Orange County, and he got in the car and was driving it up the freeway. It was Christmas and it was fun, and he was coming up 140 miles an hour behind a car, and people would look and see some jerk in a super hyper sports car behind them.
So they were freaking out, and he was pointing them to pull over. So they were getting pulled over by a state trooper on Christmas in a hyper car. We were having fun with it. Obviously, I don\u2019t want to mention the guy\u2019s name, but the emotion \u2026 People pulled over immediately, and just the emotional chaos of being mad at someone for driving up behind you in a jerk sports car, and that\u2019s why I\u2019m not naming which car it is, and then they\u2019re a state trooper, it\u2019s a massive overwhelm.
I said, \u201cJoe, hey, let\u2019s just stop doing it.\u201d He\u2019s six-foot-three in all his gear and fully showing himself to people. I go, \u201cLet\u2019s stop doing it.\u201d This is massive emotional overwhelm for people in which they can \u2026 They were shaking. You can just see them visibly disturbed and stopped being funny really quickly.
So I\u2019m not sure if that helps, but in terms of frame control, and getting this alpha position, and controlling people, and getting them to see things from your perspective, you\u2019ve got to put them in some emotional state in which they are in a situation that they\u2019re unaccustomed, they want something, they\u2019re excited about something, and they\u2019re in an emotional state in which they\u2019re unaccustomed to being in.
I\u2019ll give you an example that\u2019s not in the book, which I think you\u2019re looking for, but I do want people to read that and experience it for the first time. So I was in a meeting with a venture capital investor for a genetics company. There were 10 of us in the room, and they brought their expert into the meeting, their genetics expert. She was incredibly aggressive about the company\u2019s IP, about the company\u2019s technology, about the company\u2019s ability, questioning the company\u2019s claims.
I said, \u201cSusan, this is all fantastic. We can break all, but the questions you\u2019re asking all require 45 minutes to two hours to answer, and we\u2019re here for another 30 minutes. None of your questions are answerable. You\u2019re looking at one of the best genetics companies in Southern California. You guys are 70% on the way to ask to making the investment, and you\u2019re asking the unanswerable questions. So one, why don\u2019t we set some breakout sessions? You can sit with the scientists and get solid answer to your questions. Two, you stop frazzling everybody in this meeting wanting to help you in a situation in which it\u2019s not possible to do so. Third, is there any way you think you could help this deal move forward or do you only want it to move backwards?\u201d
So that is a complete reframe, and I\u2019ll give you an example. She completely became emotionally destabilized. Nobody talks to her like that, but I didn\u2019t confront her that she\u2019s wrong or these things, but I did say, \u201cWhat is your values?\u201d So if you want to move somebody emotionally, you show them that their values are out of phase with what I would call the moral center. Values are where you can get somebody emotional without trying to be right or wrong.
So the way you call somebody\u2019s values into play is you say, \u201cFirst of all, there\u2019s two steps to this,\u201d and everybody should be doing this, anyway. \u201cTake the moral center always. Show up on \u2026\u201d You know in the Navy they say, \u201cHey, if you show up early, you\u2019re on time. If you\u2019re on time, you\u2019re late, and if you show up you\u2019re late, don\u2019t even come to the meeting.\u201d Obey the rules of business, which are timeliness.
\u201cSecond, work hard.\u201d Business is about work. Whenever you\u2019re working hard, you occupy the moral center, right? Who is out of phase in America with values? People who show up unprepared, don\u2019t work hard, and want things for free. Anytime somebody shows up, they want a big win, they want a deal to really happen, they\u2019re hoping to get something for themselves, but they haven\u2019t worked hard, they\u2019re not timely, and they haven\u2019t prepared. You can just say, \u201cI\u2019m confused. You want these big win. You want something that\u2019s incredible and hard to get, but some of the things you\u2019re doing don\u2019t make sense.\u201d
This is how you summarize that, \u201cWe cannot work harder on your deal than you will. We don\u2019t have the upside. We don\u2019t have the benefit. We have other things to do. We will do what we say, but we cannot work harder on your house, on your asset, on your deal than you will.\u201d
So one is you always want to show up doing the work, preparing, and timely. That lets you have the moral center. From the moral center, you can share your values. Once your values occupy the strongest position, everything they do can be compared to you, not the other way around, and that is true frame control. You can read the book and you can go through the examples and everything like that, but if you want to hear it from me directly, true frame control in which other people have to react to what you\u2019re doing is when you have the best set of values in the deal, and then you control everything no matter how many billions of dollars they\u2019re bringing to the table because you are not needy.
One of the core values is I will show up on time, I will work hard, we\u2019ll bring everything we\u2019re supposed to be, we\u2019ll prepare, we\u2019ll invest ourselves, but we will not work harder than you will on your deal. We will invest a certain amount of time in order to try and get to a transaction. If we can\u2019t visibly see you contributing to our transaction happening, we\u2019re out.
Another set that goes into the value is, \u201cWe like this deal. We like you, David. We love what\u2019s going on here. We\u2019ll probably overinvest in this, but it has to fit in our business model. You can ask us to do almost everything, but we won\u2019t be bad business people. So it has to be fair to us. It has to be a timeline that makes sense for our business, and the agreements have to happen on a pace that every other real estate deal happens on because we are busy,\u201d and that\u2019s where I\u2019ve arrived at. \u201cWe are busy.\u201d
Acting needy frames you as the beta, frames the other person as the alpha, puts them in the power position, and then they\u2019re going to start to exert control and weird behavior on top of you, and you\u2019re just going to constantly have to be reactive to the things that they\u2019re doing and seeing.
How do I know if I\u2019m the beta? I\u2019m reacting to what they\u2019re doing insane. If they\u2019re reacting to me, then I\u2019m the alpha and they\u2019re the beta. There are not two alphas, there are not two betas. This is the function of human interaction.
So to finish that thought, I many times will go in and say, \u201cHey, David. I love you. I love everything you\u2019re doing. I want you in this deal. To me, there\u2019s no one else.\u201d I would even say, \u201cI need you in this deal,\u201d right? So why would Oren Klaff who said never be needy in multiple printed journals and books say those things? Because I have the other side of it, which is to say, \u201cI need you in this deal. Your money is the best money for this deal. If you\u2019re my partner, this is going to be a love affair that\u2019s going to last 20 years until one or both of us die. We\u2019ll probably be that couple,\u201d and here\u2019s the improv, right? \u201cWe\u2019ll probably be that couple that when one of us dies within three hours, the other one will die, and it\u2019s all going to start here because we just can\u2019t live with each other, and it\u2019s all going to start here with this investment. Honestly, I mean, I feel that way.\u201d
So that\u2019s prima facie needy position, but on the other hand, now I exhibit that I\u2019m busy and I don\u2019t need it, but on the other hand, I\u2019m super busy and you\u2019re busy as well. This is two trains passing in the night. If we can\u2019t get comfortable with each other on this 45-minute call and do two more calls this week, even though it\u2019s Wednesday, it\u2019s going to be sad, it\u2019s going to be frustrating. It\u2019s going to be another tier spilt into a full beer, but that\u2019s the way it goes. Life is not fair.
So it\u2019s the desire and the emotional state of being ready to work hard and bringing resources to the table, but also not needing this at all. That frames the walk away. Hey, if I\u2019m willing to walk away from you, as much as I want it, after expressing that I wanted, if I\u2019m willing to walk away within five minutes of starting the pitch, well, what will happen if you are high friction and difficult to deal with at the end? You\u2019ve already seen my willingness to walk away, and now I say, \u201cHey, I don\u2019t know. This seems high friction. Might not be for us.\u201d That has teeth because you \u2026 So wanting the deal but not needing it is the ultimate in the alpha-beta frame control.<\/p>\n
Now, this is some gold. One of the things that I learned in realtor training is the one who ask the questions is the one controlling the conversation. So they would actually run us through exercises where I would be talking to someone like Rob and I would be holding a pen as long as I was asking him questions, but if he could switch the conversation around to where he was asking me questions and I had to reply, he would take the pen out of my hand.
When you do an exercise like that, you realize how real it is that when someone\u2019s asking questions, they\u2019re the ones that are controlling where the conversation goes. You notice people doing this to you that are really good, that have a very strong frame in certain situations. So if a client walks into an open house or I should say a lead and they say, \u201cTell me about the house. Tell me about you. Tell me about area,\u201d and I\u2019m just responding to everything they say, they control that whole conversation. They\u2019re probably going to walk away and go find a different agent that made them feel safe. I didn\u2019t.
If I control the conversation, if I say, \u201cWell, what are you guys looking for in a home? What did you like about this area? Did you know property taxes are higher on this part of town than they are over there? Did you know we can get you loan that doesn\u2019t have PMI?\u201d I put myself into the alpha position simply by asking questions and then was able to reveal to them knowledge I had that would make me a more attractive agent to choose.
Oren\u2019s getting into the same thing right here. When they\u2019re responding to you, you\u2019re the one who\u2019s in control. When you\u2019re responding to them, they\u2019re in control. Think about a time you\u2019ve been on stage and you\u2019ve been listening to the speaker. Was the speaker responding to you or were you responding to what the speaker said? A speaker should be holding control. You want to look for this at any time in a relationship where you want to be in the first position or the alpha position. People need to be responding to you. Rob, do you have any thoughts on that?<\/p>\n
Yeah. I feel like one of the other things I took away from this was, honestly, just being honest with your business model because I think what happens, especially when we\u2019re getting started, is we become yes people, right? So if the investor\u2019s like, \u201cHey, I\u2019ve got 100 grand to invest. Can you do this?\u201d
\u201cYeah, yeah, we could do this.\u201d
\u201cCan you do this?\u201d
\u201cYeah, sure. I\u2019ve never done that before, but why not?\u201d
So we get into this yes mentality. Whereas what it sounded like he was saying it\u2019s like I actually am to the point now where when investors are pitching me wacky ideas, I\u2019m like, \u201cLook, I appreciate it. I\u2019ll handle the wacky ideas. All right? I like your idea, but it would be irresponsible financially for me to do that for you, not just for me to go and be the guinea pig with your money, but to all the other investors that I have that I only invest in these capacities.\u201d
So that\u2019s another way that you, again, taking the control. It\u2019s like being very honest with what your buy box or what your model is because we have done that, we have crammed a lot of different ideas. We\u2019ve tried it. We\u2019ve always succeed in everything like that, but at the end of it we\u2019re like, \u201cWow. The return was pretty much the same and we worked 15 times harder.\u201d So that\u2019s why it\u2019s like, \u201cNo, let\u2019s stick to the script and what we\u2019re good at.\u201d<\/p>\n
Well, Oren describes that as your values or dominating in the relationship, and he makes another very solid point. If you want to control the frame in any interaction, make it that the other person has to operate by your values. So if you think about when you\u2019re standing in front of a judge, you don\u2019t have a ton of control. You\u2019re not there to tell the judge what you think should happen. There is a value system and the judge is the determiner or the judge of if you cross the boundary or if you didn\u2019t. Same as interaction with the police officer, same as when you\u2019re a student in a teacher\u2019s class that holds strong frame. There are rules to the classroom that you have to follow and you don\u2019t get to make them.
So the one who makes the rules in the transaction is the one who\u2019s in the position of control. Well, that\u2019s what you just described. We do our deals this way. We operate like this. You\u2019re very honest and transparent. Here is the code that we operate by in this environment and if you\u2019re going to work with us, you\u2019re going to have to follow it.<\/p>\n
Those are always people that, honestly, I appreciate the most because the world is made up of yes people. Everyone just wants to make everybody happy most of the time. There are times where I\u2019m talking to someone where I just want to be like \u2026 I want people to always be agreeable, but when people are like, \u201cNo, I don\u2019t really do that,\u201d I\u2019m like, \u201cOh, thanks for being real.\u201d That is something that I really appreciate.<\/p>\n
Now, they hold your attention more, right? Now you\u2019re like, \u201cTell me more. I want to hear more about how this person does things.\u201d<\/p>\n
Yup. I\u2019m always very fascinated by someone who can just be extremely honest and upfront.<\/p>\n
Yeah. So do that in a way that holds your value. So if Rob\u2019s putting a deal together, he\u2019s going to tell the investor, \u201cNope, we don\u2019t do it that way. Our value system, it has to be worth it for us,\u201d what Oren described as, \u201cWe\u2019re busy.\u201d What he\u2019s really saying is we have a lot of other opportunities. So if we\u2019re going to work with you, this has to align with our value system, and by imposing your values on the other party, you put yourself in the position of the alpha, and now they have to cater to what you\u2019re looking for, which gives you the control to put the deal together in the way that works best for everyone.
I understand this is high level stuff, but this is fascinating stuff if you want to get into the upper tiers of being successful. All of us that have been on this journey for a while have learned we have to get good at this stuff, not just running a deal through a calculator or learning how to fill out a loan application.
So thank you very much for your attention. We love that you have spent this time with us and you\u2019ve gotten to hear some stuff that, frankly, people have to spend a lot of money to get Oren\u2019s time and information in the degree that we have. So this interview was a little too long to make it to one episode, so we\u2019ve split it into two and provided some commentary to make it applicable specifically for real estate investors.
So check out the next episode of the BiggerPockets Podcast where we\u2019re bringing Oren back to finish the interview that we did today and provide some more commentary. If you want to know more about Oren in the meantime, check out orenklaff.com. That\u2019s ORENKLAFF dot com, and you can learn about what he has going on, as well as Rob. Rob, where can they find you?<\/p>\n
You can find me on Robuilt at YouTube, Robuilt on Instagram. I think as of today, I just hit 50,000 Instagram followers, a lot of those are the BP audience, so thanks everybody for doing that, I guess I should say, and if you want to catch me on TikTok, Robuilto.<\/p>\n
You can find me online, @DavidGreene24 and on YouTube, @DavidGreenRealEstate, most boring YouTube name ever, but easy to remember. Any last words before we get out of here, Rob?<\/p>\n
No. Just go listen to this one again. Really, I\u2019m being very genuine when I say that I wish I had heard this podcast two years ago. It would\u2019ve saved me a lot of heartbreak, heartache, and trauma, but not really. I\u2019m always happy to go through what I did, but it will help you. Take notes, listen to it again, and use it to inform how you carry on with your real estate career because this is a big one.<\/p>\n
There it is. In the same way that I hear people say Rich Dad Poor Dad changed the way that they looked at finance, this book, Pitch Anything, changed the way that I looked at interpersonal relationships and dynamics when you\u2019re talking to other people. So I would recommend everybody read this book, especially if you want to build big wealth through real estate.
All right. That is our show for today. We will see you on the next one. Be sure to subscribe to BiggerPockets so you get notified when it comes out. This is David Greene for Rob Flower Child Abasolo signing off.<\/p>\n<\/div>\n