Podcast Interview with Mike Calvo the CEO of Pneuma Solutions

[00:00:00] Matt: Mike, it's just a real pleasure to have you here and I'd love to get to, something that is, challenging right away so we can share with our listeners, some of the hard stuff, that you've overcome and. I'll leave it to you to share the narrative. What is something in your world that's been very challenging for you in your life,

[00:00:17] Matt: Mike?

[00:00:17] Matt: take us where you'd like.

[00:00:18] Mike: Yeah. Well, one of the biggest challenges I faced was the death of my father. my parents originally started this business and I grew up with it, went off to school, wanted nothing to do with it. my dad brought me back and, Kim and I joined it for the first, couple of years working together in this business.

[00:00:36] Mike: And then overnight, suddenly he passed away. one day he was here with us one day. He was not, he had a stroke caused by a brain tumor. And at that point, because I didn't know a lot of what I was doing, I was a pipsqueak kid. we were a small real estate company. We built and managed apartments.

[00:00:53] Mike: we were working on a new project. And the city at the time actually shut me down twice after my dad's death. And I think the reason they did it primarily is cause they looked at me and said, dude, there's no way you can be building these kinds of buildings on your own. And the second time they shut us down, they made me actually hire out a new, manager to kind of manage the project that was out there, which, I had to get done in a matter of just days, which is a terrible way to hire a key leader.

[00:01:24] Mike: and it was not quite the right fit for us. But I was also really struggling too with my own insecurities. Like, can I do this? Can I, and really build a building and design it and make this stuff happen and a positive way? And so I was really wrestling internally. And I remember toward the end of the project it was a struggle and we had this thousand foot long pipe that was buried 15 feet in the ground and somewhere in this pipe was a pin, a hole leak, just tiny little leak.

[00:01:54] Mike: How in the world do we find this? And I was out there for weeks with their excavator. I was in the mud and my nice clothes getting dirty, kind of shoveling, looking for this tiny league. We did eventually find it, but then a few days before we're supposed to open, the city staff came out and said, there's no way you guys are opening what? And we worked through the night, multiple days, and then the last day we had. Half a dozen inspectors for a half a day inspection, and the very last moment the head building official pulled me aside in the basement and said, Mike, I know we were hard on you, but honestly looking at where you're at today in this project, this is the nicest building we built in this today.

[00:02:34] Matt: Wow.

[00:02:35] Mike: finally, finally a moment of like actually feeling like we can do this, but that was sort of the summary of the toughest moments I've gone through.

[00:02:45] Matt: Oh my gosh. Wow. That's so much to unpack and wow, I've, first of all, sorry to hear that. from someone who also lost their father, I lost

[00:02:53] Matt: mine when I was 28.

[00:02:55] Mike: Wow. Yeah, we're very similar.

[00:02:57] Matt: it's sad. And, that's real life. And it happens and it puts you into a position right away where you were tested immediately.

[00:03:05] Matt: and I wonder, how did you move forward at there in business? not being as experienced, obviously as you are today, how did you start to pick up the pieces and move forward from that day on? Let's just take it for the next, month. How did you get through that next

[00:03:22] Matt: little period of time there, Mike?

[00:03:24] Mike: Yeah, I mean, the death of my father was like being hit by a train. It was just horrible. And so the emotional weight there, you've got this project you're working on, you're feeling insecure about everything. Like I can't do it anyway on my own. all I could do I almost had to like compartmentalize in my head and kind of separate myself from how I felt and just take one step in front of another going forward and look at, okay, can't think about everything, but what do I solve tomorrow?

[00:03:55] Mike: What do I solve the next day, How do I make little incremental improvements? It's a lot like they talk about eating an elephant. How do you eat an elephant? It's one bite at a time. And that's sort of how I took it. But I think the power in that too is focusing so much on just the next step, at least for that time in my life.

[00:04:13] Mike: Helped me also get past the tragedy of losing my father. Because it helped bring me back to more of a stable emotional point as well, so there's probably some blessing in it.

[00:04:24] Matt: Spoken like a true eternal optimist, the most challenging moments in our lives. what is the blessing? I don't normally lead or ask that question with. I wonder if, there is a blessing, you know, what is the positive that may have come from this,

[00:04:38] Matt: tragedy, Mike?

[00:04:39] Mike: I think there was a huge positive, actually looking back, there was a huge gift in all of that, and I think the key gift is this. I didn't know what I was doing, so that meant we could start questioning. Everything. If you look at this industry of construction, it's been stuck in its ways for the past 60 years with minimum, improvement in labor productivity.

[00:05:01] Mike: When you look at things like manufacturing, they've improved labor productivity by 760%. It's just unreal the difference. Part of the reason that is, is so many people are stuck in their ways, and so we didn't have a way to be stuck into, we didn't have anyone to tell us, no. We started doing things differently in this industry.

[00:05:21] Mike: We started having some significant success from that. But I think the fact that not knowing a lot, I mean thrust into this actually was a key advantage to helping us see the world differently in the world of construction.

[00:05:33] Matt: Yeah, I love the different lens you put on it. maybe the, the most experienced eyes aren't always the best. fit to help us move forward. So I love that you brought a fresh perspective, so great gift there. So thank you for that. if we go back to your feeling, when you took control of this large project and the city wasn't cutting any slack, they were shutting it down, you had to go find a pinhole size leak, underground in the mud, I mean, I don't even know where to, begin even thinking about that.

[00:05:59] Matt: But I would ask this, when you first took over and you started to finish that project, what happened after that? That just take us through that next chapter, if you will, that brings us forward.

[00:06:11] Mike: I guess giving a little bit more depth of my dad, he

[00:06:14] Mike: had a stroke caused by brain tumor and so that day when he got his stroke, he in effect, was no longer himself. he was actually still alive, but mentally he was not there. Yeah, it was, you couldn't really communicate with him.

[00:06:30] Mike: He just wasn't the same person. And so he actually did, live for six months, but it felt like he was dead.

[00:06:37] Mike: so there was still like going to the nursing home, spending time with my dad, connecting, even though I wasn't there, it was physically present and then, in the business at that time.

[00:06:45] Mike: So we were shut down twice and, One of the big challenges that happened right about that time too, is we had a block contractor and this block contractor I had lined up, pulled out like a month before they were supposed to start. And if we don't get the block work done, then the precast can't go on and the entire building can't go.

[00:07:02] Mike: And I got a team who's coming off another project into this project and. I am at a loss cuz it is really hard finding contractors. what we ended up doing is, we generated, created a list of literally every contractor could that could possibly do that work in the Twin Cities. And I just started calling as fast and as hard as I could.

[00:07:23] Mike: I think there was like 70 people on the list. We went down to every day called all of 'em. some of 'em got back to us with like, yeah, we could do it, but it's gonna be like way more than we can afford. Like five times what it should cost. I just couldn't afford that. it was like pulling teeth, trying to find anyone to come out.

[00:07:41] Mike: And, it was terrifying. I knew if I could pull this off, we'd be in a really, really tough spot. so a couple weeks into that, I was able to find a block contractor. Luckily I could come out, but because of the rush of it all, it turned out I had hired a block contractor that wasn't the best block contractor.

[00:07:58] Mike: and so they ended up installing the blocks around the building. but the way they had done some of the steel reinforcing, they had done it wrong. And so then I had to get a, like scan done on the blocks so we could actually like find where the rebar reinforcing was and then reinstalling. And that was the first time the city shut us down.

[00:08:17] Mike: And a sudden, dude, what are you guys doing here? You're, you're messing up the rebar. So, yeah, that gives you a flare of what's going on during that time.

[00:08:25] Matt: Wow. Okay. Well, thank you for adding that extra depth. I know personally in a number of people I know. Listen to her show. Have had parents that have had, strokes or, or I'd say I know a couple of 'em that have dementia and it's just their parents aren't exactly the, the same people they grew up knowing.

[00:08:43] Matt: And I wonder with your father after the stroke, what type of emotional toll or what type of experience did you have over that next few months period with your father who was, mentally, not

[00:08:55] Matt: there

[00:08:55] Matt: anymore?

[00:08:56] Mike: It was really tough because. with part of his stroke, he actually did get a little bit better and then would get worse again. So there's this hope, like can he actually get better enough to interact in a meaningful way? can we actually connect with him? So there's this fleeting hope going on, which almost messes with your mind in some sense.

[00:09:16] Mike: cuz you think, well maybe we can reconnect again.

[00:09:18] Mike: And then it, never happened. He never got to that level and then started declining again after that. so I think in some regards, maybe it was a little bit emotionally guarded. I think when he originally had the stroke, that's really when I, went through the grieving process of losing my dad.

[00:09:34] Mike: So by the time he did eventually pass away, that moment was less difficult for me cuz I had sort of processed it much earlier on.

[00:09:42] Matt: Thanks for going there with us, Mike, and I respect the heck out of you for being able to share that. And I know that makes a difference to our listeners, so thank you

[00:09:50] Matt: absolutely.

[00:09:51] Matt: I'd love to move forward to. What happens next after we get the block contractor situation sorted out and we get the underground pinhole leak fixed, and we finally get the building, fully built and ready for occupancy.

[00:10:09] Matt: what do you call

[00:10:10] Matt: that in your industry when it's ready to

[00:10:11] Matt: go?

[00:10:12] Mike: Certificate of occupancy is when they have permission to move in.

[00:10:15] Matt: Okay. Okay, good. So you got the certificate of occupancy ready to go. and give us some timeline on this. what

[00:10:20] Matt: date is this about Mike?

[00:10:21] Mike: Oh, this

[00:10:22] Mike: would've been 2013, 2014, somewhere in there.

[00:10:27] Matt: Okay. Okay. Yeah, about nine or 10 years ago. so you learned some lessons. you skinned your knees and elbow a little bit there through all that and learned a little bit. So what happened next, after that first building

[00:10:38] Matt: project was done,

[00:10:39] Mike: Yeah, so then. We started building buildings that project was called Berwood. Then we moved down to one of the best financial projects we'd ever done. gateway Green. And the reason that was, is because the land owner, struggled to sell the land. It was for like the 2008 collapse.

[00:10:57] Mike: And they had finished the parking lot. They had finished the streets, the sewer, and the water. And, it was for a new site for 84 units, and the land only cost us $35,000. To give you some sense to put all the street in the sewer and all that water and stuff in there would've been like three or $400,000.

[00:11:17] Mike: And so we got all that for free and we got the land, which would normally have cost us a million dollars a loan. So it was like a million dollar gift to us, or more than that overall. Which was just incredible. So that was a really nice happenstance, right? During that time, we did have to go through, the town home approval, which was a bit of a challenge, and that was partly why the land prices were less.

[00:11:37] Mike: but we worked through all of those issues and then we built that building, we moved on to additional buildings beyond that, and actually the next project, something really interesting happened I started learning probably the most important lesson and really the thing that started changing our business and really started to accelerate things was thatI wasn't hiring the best people.

[00:11:59] Mike: In fact, in some ways we were actually not, we were hiring sort of low end people. Cause we had a temp service that was helping us find people. Not the way to hire people don't use temp services in that regard.

[00:12:09] Mike: but what we ended up doing, Is we shifted our thinking and we realized that bringing on the very best people, they change things.

[00:12:19] Mike: They unlock doors for you that you didn't know could be unlocked. They make things happen for you that you didn't know could happen, and. We revamped our pay structure. We started paying top of market, finding the best people. We have reevaluated all of our staff, and most of them we let go and we rebought on a much tighter, more incredible team, and that changed the game for us.

[00:12:42] Mike: At that point, we started doubling in size every year. What's crazy, most people think that hiring the best people is expensive. And it's true when you look at cost per person basis. But if instead you look at a cost per unit per produced, the best people are actually the least expensive because they outperform average by two to five to 10 times as much.

[00:13:04] Mike: And I've seen this over and over again that's when things really started to change for our business.

[00:13:09] Matt: Wow. Wow. And you doubled year and year after year. And so you figured out this one mantra of principle that the best people are the least expensive over time because they're the most productive

[00:13:22] Matt: over time. great nugget.

[00:13:24] Mike: To give you some sense of the caliber, we will fly people in from other states to come work here during the week and fly them home. We have a guy who is it 2007, Steve Jobs announces the iPhone. Steve Jobs walks offstage and our employee follows that presentation on that same stage.

[00:13:40] Mike: that kind of person. In fact, last week we had our engineers stop by and they went through, it felt like an a Tesla event. I'm not exaggerating, where each engineer presented their like segment and the work they were doing, multiple of them are inventing totally new ways that construction is done.

[00:13:58] Mike: literally no one in the world has done it. They're like creating these really crazy composite materials and things. the engineers actually got up and talked about. How he has been working with the regulators and correcting the standard setting bodies analytics, that's how far the company has come.

[00:14:15] Mike: We are correcting the science behind what, they're doing to set standards. It's incredible to see.

[00:14:21] Matt: But it's, incredible to talk to you right now about this cuz you're, lighting up and you're so delightful of energy and passion just talking about it. And, when we started the conversation, oh, and even before we met, Today it was, I didn't know if that was exactly the business I wanted to be in.

[00:14:34] Matt: And then you were born into construction in a very challenging circumstance in your first few years in, so I guess the question is, when did you develop this passion for the construction industry and what

[00:14:49] Matt: You do now,

[00:14:49] Matt: Mike?

[00:14:49] Mike: I've always been this way in that I wanna make some kind of meaningful, positive impact on the world, and For me, it's younger years is trying to figure out what that was. And I wanted nothing to do with the construction world. In fact, I went off to college for computer science, mathematics management, virtual reality, and a variety of other things.

[00:15:09] Mike: it was my dad who kind of pulled me back into the business. But I wrestled with that for the first year or so. But what I realized is that we could take this small business and grow it to have that kind of impact, especially when you start to piece together the puzzle and understand that we can drive down the cost of construction.

[00:15:28] Mike: Right now, we're already achieving about a 20 to 30% reduction in cost compared to other developers, and we believe we can achieve a 50% reduction in cost. But imagine what that means. That means someday your rent could be half. Or your mortgage payment could be half. And when I look at my life, if we can truly solve America's housing affordability crisis by driving down those costs by as much as half, to me that is a life well lived, at least professionally.

[00:16:01] Mike: And my dad, as you know, died relatively young, and it really reminded me how short life really is. And so for me, I don't want to waste the minutes. I want to make the biggest positive, long-term impact that I can.

[00:16:16] Matt: Yeah, everything just sounds so amazing, uh, to get it, the costs down, to drive down how many families that's gonna impact, I imagine. that there are probably some big interests at play that might not want you to succeed or that are naysayers to this and may try to block it. I wonder where do you think the challenge might come in?

[00:16:36] Matt: Where do you think the, upfront to what you're talking about, where are the challenges gonna hit

[00:16:40] Matt: us?

[00:16:41] Matt: I wonder.

[00:16:41] Mike: Yeah, the concepts of how we solve this is pretty simple, right? We take the lessons from areas like manufacturing, apply it into construction, and there's a lot of like specific things we could talk about, but the biggest challenge is in the execution of that.

[00:16:59] Mike: Elon Musk talks, how about how it's hard to produce a car, but it is 10 to a hundred to a thousand times harder to produce the system that builds the car, right?

[00:17:09] Mike: The manufacturing plant, the infrastructure that actually produces those vehicles, and it's the same in the world of construction. We're taking all of our profits right now and pouring it in time and attention and pouring into building this system. Including manufacturing systems that are building housing.

[00:17:31] Mike: And that's the biggest challenge. and there's so much that goes into that. the other thing to think about too is that there is no one silver bullet. The reality is there are 10,000 little problems. And we have to solve all 10,000 problems, and I can't do that alone. I'm just one person. The leadership team can't do that alone.

[00:17:53] Mike: We talk a lot about how you have to get everyone involved in the company to be part of solving those issues. I need the brain power of literally everyone to get through it all. And so there's a big part about building a culture that focuses on making these kinds of improvements as well.

[00:18:13] Matt: Mm. you're getting into a place. I love to be talking about culture and getting everyone involved and to help build it. Yeah. Let's, go into that place for a minute. so what types of things are you seeing or doing right now, with your culture to

[00:18:25] Matt: help grow this Mike?

[00:18:26] Mike: Yeah. I think, honestly, the older I get, the more I realize that the mindset of the leader. Is a big chunk of what creates the culture because there's things that you do as a leader that are subconscious To give you some example, example of this, we talk a lot about paying top of market.

[00:18:44] Mike: I never want payer benefits to be the reason why someone leaves. But before I really like believed that I would still say it. But then there was an instance that came up and one of my, leadership team members said, Hey, I got this employee. they got a better offer. they're getting calls from recruiters for better offers.

[00:19:00] Mike: we're gonna make this work and see how it goes. And I just kind of like, yeah, okay, fine. That sounds good. But what I realized is because I wasn't passionate about it in that moment, I look her in the eye and say, no, we really need to be fighting for people. Pay and benefits should never be the reason someone leaves.

[00:19:17] Mike: Just because I didn't say that when I should have. Then she didn't really take it as seriously as she could have, and we ended up losing that good employee. And it really hit home like, no, I, in my heart of hearts, I've gotta believe this because then it will bleed out of me more naturally when communicating to others.

[00:19:36] Mike: So I think that's a big part of where our culture starts. Another key element, and hands down, you can create half your culture simply by hiring the right people. If you bring on the wrong people, you can't shape that culture the way you want it. But if you bring on the right people, people that align with your values, it is so much more powerful. another aspect is simply defining it, I mean, this is sort of culture 1 0 1, but unless you define it, unless it's really clearly said, this is what our culture is and this is what our culture isn't, then how do you know what that culture is that you're even shaping? And for us to give you some flavor of this, one of our core values is to be a genuine human.

[00:20:17] Mike: and maybe for like modern day companies or you know, like a software company, it's not too hard that maybe that's not a distinguishing thing in the world of construction, being a genuine human is a clear distinguishing difference between us and the vast of majority of construction companies that are out there.

[00:20:35] Mike: Cause they're rough and tumbled kind of places. But that's powerful because when we're hiring, when we're. Firing. When we're promoting, we are looking well at all of our values, but we're looking at that value and it's helping spread the field on the candidates and the people that we bring in. oh my gosh, there's so much more Surveys, for example,

[00:20:53] Mike: we do surveys every six months.

[00:20:55] Mike: we get that feedback from our staff and a lot of companies do surveys, but the key is to actually take real action. And so our first step is that when we get the survey results, we share those results honestly with their entire company. And that includes my results, which aren't perfect. In fact, my last scores went down a little bit.

[00:21:17] Mike: And we share all of that with the entire organization and it's a bit embarrassing, right? But what we started doing last year is we now start sharing all of our results openly on our website. You can go read what people are honestly saying, the good, bad, and the ugly. And there's ugly in there. I promise you.

[00:21:34] Mike: It's kind of fun to read up on our website, but again, I don't want to be fake Good. I want to be actually good. And step one to improving is saying, Hey, hi, I'm Mike, and I got problems. And then we can take steps together to work to improve them. So I got a lot, but this is the most important thing to me that I think a lot about within our company.

[00:21:55] Matt: I love the absolute transparency here. It reminds me of Dalio's book Principles, just complete radical transparency and you're sharing it all. I love it. I absolutely love it, man. I'm, I'm getting fired up. Ready to go to the website and see it? it reminds me of a quote I heard of this morning, actually, Peter Drucker said that management is, uh, knowing the right thing to do and leadership is actually doing.

[00:22:14] Matt: Those right things and you're doing them. and that's awesome to hear that. well, so what might be an example when you get a piece of feedback, if you think back in the archive here, some feedback that you've received in a survey, cuz a lot of companies probably have surveys, but you got some feedback and you took action on it.

[00:22:30] Matt: What might be an example of some

[00:22:31] Matt: action you've taken from a survey,

[00:22:33] Matt: Mike?

[00:22:34] Mike: Yeah, I'll give you my action steps that I took away from my own results that I'm applying right now. On the last survey, the last survey, people felt a disconnect from me. I mean, there's things that I do like orientation, follow up orientation. We do events and things like that. But people didn't feel enough of a connection to me.

[00:22:52] Mike: And honestly, like my deep seat of weakness in this area is that I'm an introvert. I'd rather just sit at the computer all day. And so, I have to change my mindset on that. the steps that I spoke instead of what I was gonna do and that I'm doing right now, is I'm taking time. And it sounds basic, but it's so important is just going onsite, going to all the, there'd be at a lot of the locations now, going to the different locations and just spending time chatting with people and like, where are you at?

[00:23:22] Mike: what are you dealing with right now? How can I help you, your world? Another kind of subtle corollary to that that I've learned is that, part of The challenge is then you hear all these problems, And like, oh shoot. Now I got a massive list of things to fix. One of the things I've kinda let myself go this time around is I don't have to be the one to solve all of them.

[00:23:42] Mike: I'm there to listen and to connect and the magic. What I'm finding is that just by connecting and listening to enough people, I'm starting to have richer conversations in our leadership team meeting. Because now something comes up and I'm like, oh, you know what, so and so they're having this problem over there, but if you made this change that might solve their problem, go talk to them.

[00:24:03] Mike: So that is the specific one that I'm working on this six month period.

[00:24:07] Matt: Love it. and you say introvert. I wouldn't be able to tell just by speaking with you. This seems like super comfortable, easy, natural. how easy or hard or challenging is it for you to get the microphone and speak in public or speak on

[00:24:18] Matt: podcast? Mike?

[00:24:19] Matt: What's that like

[00:24:19] Matt: for you?

[00:24:20] Mike: you know, for me, I've done so much of it. Now, it's just a skill that I've learned that it's not really a big deal. But, I remember the first time I. I spoke in public and I've done quite a bit of it now since, but the first time I was so bad that the leader that happened to be there was just a small group.

[00:24:37] Mike: They never invited me back to speak

[00:24:39] Mike: again.

[00:24:39] Matt: no.

[00:24:41] Mike: Yeah. And so, uh, and then that leader moved on with this group that I was a part of, and then I got invited back ended up becoming the mander speaker there and speaking on a regular basis. The interesting lesson I've learned though, and this is more than just speaking, but whenever we start something, we're terrible at it.

[00:24:59] Mike: And that's okay. That's normal. Like when we're born, we can't walk, we can't talk, we can't read, we can't do anything. But why, when we get older do we start to think like, oh, I need to start this thing off and be good immediately. And the reality is, what I've kind of learned is that you just have to step in it and just know that you're going to be bad at something and then try, learn, grow, and improve.

[00:25:23] Mike: So podcasting was this way. The news media, like we were on, CCBs or ABC just called me yesterday, that kind of stuff. That was terrifying. Initially I was terrible at it, but just getting in there, trying, learning and growing has been, A valuable asset, and I think the powerful thing to recognize there is to let yourself off the hook a little bit.

[00:25:42] Mike: You still need to practice, you still need to prepare, but it's not the end of the world if you screw up a little bit. It's part of the process. It's normal. It's okay.

[00:25:50] Matt: I'm so pleased to hear a successful, well-known leader come and talk about it's okay to make mistakes and it's okay to, to learn through the process. Cuz there's this fear of, especially as a leader in public, of making a mistake and, and, and being embarrassed and a lot of ego might come out and it feels like I'm speaking with a, a genuine human who.

[00:26:12] Matt: is

[00:26:13] Matt: willing to play the game transparently.

[00:26:15] Matt: And to me

[00:26:16] Matt: that's a

[00:26:16] Matt: magnet. You know, to me, I'm really attracted to that. That's the kind of person I wanna follow and hang with is the person that is just transparent, authentic, willing to make mistakes. I wonder when you're, in the interviewing, recruiting process with new teammates,

[00:26:33] Matt: how do you bring them onto your culture and determine if they're the right fit or not, so that you are hiring

[00:26:39] Matt: those

[00:26:39] Matt: right people, Mike.

[00:26:40] Mike: Yeah, so there's multiple levels that are involved. You know, the first thing, I think one of the most important things we did was we actually hired on, so we were a hundred person company and we hired 16 recruiters at this point of our growth.

[00:26:53] Mike: Tremendous amount of energy and resources into making sure we do hiring well.

[00:26:58] Mike: Cause it's the most important thing you can do to have success in your business. And so then as part of that recruiting team, one of the interviews that people will have is a interview entirely focused on values. we have our five values, and then in with those values, they ask specific questions.

[00:27:16] Mike: It's behavioral based questions. So gimme an example of a time when you did this. That can illuminate whether or not you have those values. And so that team has got really good at eliminating a lot of people that don't meet our values. Then, there's also skills tests in there, but then they go on if they get an job opportunity.

[00:27:35] Mike: most people, not everyone, but most people will be on a two week trial period. certain positions, it doesn't really work well to do trial period. But if we can, we will. And then at the end of those two weeks, it's the coworkers that make the decision of if you're on the team or off the team. Again, what are they evaluating?

[00:27:54] Mike: They go through each of the five values and they say, does this person, are they a hell? Yeah. At every single one of these categories. And what's incredible is when you build up an incredible, amazing team, they become self-policing. Cuz what they find that they love about their team is that every single person is incredible.

[00:28:15] Mike: They push them to be better. they're inspired by the others on their team, and when they got that going on, they're not willing to sacrifice on quality when they're hiring. if we have 10,000 applicants that get, with us, only about a hundred of them will actually get an offer for our trial period.

[00:28:32] Mike: And out of those a hundred, only 40 of those will actually make it through. It's super selective.

[00:28:38] Matt: Hmm. Thank you for that. That was a wonderful step-by-step, behavioral questions to get to the bottom of it. skills tests for the roles, trial periods if we can. And then the team themselves self-policing because they're empowered to do that through the five values. So, love, love to hear it.

[00:28:56] Matt: approximately how many people do we have right now

[00:28:58] Matt: in the organization, Mike, at any

[00:28:59] Matt: given

[00:29:00] Matt: time.

[00:29:00] Mike: yeah, about 250 today.

[00:29:02] Matt: 250 today. Got it. well certainly, appreciate the nuggets that you've dropped here so far today. I feel compelled to ask a question around, ai, cuz it's a buzzword nowadays in 2023. I wonder if AI has any of what type of role that might play in some of these

[00:29:21] Matt: challenges that you're

[00:29:22] Matt: solving.

[00:29:23] Mike: know, I think the scenario that we're thinking a lot about right now is we want to be able to provide a computer program, a site plan. So just a map of the lay of the site and then it. Goes through and computes a bunch of varieties of options for different buildings based on the constraints and things that we've done.

[00:29:45] Mike: And then optimum out the building, creates all the architecture and engineering drawings all the way down the shop drawings, then computes out all the supply chain infrastructure and scheduling and the whole pipeline right from a site plan that's our dream. And so we have a whole engineering team What they're working on doing is to not be building buildings instead, or designing buildings.

[00:30:09] Mike: They wanna be designing the system that designs buildings. And so this is fairly new for us, but they're right now hiring on software developers and really building out that, capability so that we can make that a reality. that's a key area. I think AI will be powerful for us.

[00:30:25] Matt: Wow. Wow. Well, Mike, let's say that we look forward into the future. let's just say 1, 2, 3 years, just a little bit down the way, and things are going amazingly well. You envision this future, you're, bringing to fruition, to reality. And what do you see over the next few years, that your company might be in the forefront of building and, serving people with?

[00:30:50] Mike: Well, I'll give it out a little bit further. 10 years, our dream is to reach 192,000 units under management with a construction pace of 60,000 units per year. And the reason that's important to get to a high construction volume is that the way we're hoping to solve housing affordability is by providing so many units to the marketplace that the prices start coming down, not just for our own residents, but for everyone nationwide.

[00:31:21] Mike: See, today we could offer lower rents, but that would solve, housing affordability for a few thousand people, and that's, Nice, but that's not nationwide. So we're taking those profits and putting it into the system. We're building the infrastructure that builds that housing. over the next few years, the things that we're working on is expanding our factories.

[00:31:39] Mike: So we've got two factories right now. We're, we're looking to build another one in Mexico, probably another one in Texas. And, expand out what we're actually building in factory. We're working on. Developing even more new construction methods to drive down costs. We're building on an entire, supply chain infrastructure.

[00:31:57] Mike: So we have people in China, Mexico, the United States right now, but we want to be delivering those materials directly from manufacturers to drive down those costs as well. and right now our properties are only in Minnesota, but we are working to expand that into Texas at the moment. So that's also coming down the pike.

[00:32:16] Matt: Wow, so much, opportunity to serve well, ultimately your end user, your client, and also to serve, I

[00:32:23] Matt: mean, I'd say serve humanity.

[00:32:25] Matt: You know, to be able to take pressure off. Make it better for people. As costs are skyrocketing, you're figuring out how to make it half the price, so that people can have affordable places to live.

[00:32:34] Matt: God, I love you for that. It's just amazing to hear this. where might our listeners go to find out more about you and what you're doing and connect with

[00:32:43] Matt: you and your organization,

[00:32:44] Matt: Mike?

[00:32:44] Mike: Yeah, the best place to connect is going to visit our website nor hart.com. That's N O R H A R t.com. And kind of two fun things on there right now. One is our new podcast called Zero to Unicorn. It's about the journey of small business growing to billion dollar. Scale and what that is actually like, the good, bad and the ugly.

[00:33:07] Mike: Ugly. And then there is, our nor Heart invest. We're offering people an opportunity to invest in what we're doing. it's pretty cool.

[00:33:13] Matt: Wow. Well, anyone that listens to this or sees

[00:33:17] Matt: you or connects with you, just feel your authenticity is gonna love you and love the mission. So I'm wondering if I'm here, I'm, excited about this. I wanna be a part of something that's, a powerful why. And you certainly have shared that today, how.

[00:33:30] Matt: Easy Is it to, to do something with you in investing? Because some people probably they hear the word investing and go to the website. That might be intimidating. help it make it easy for us. How, simple is that

[00:33:42] Matt: process for us,

[00:33:44] Matt: Mike?

[00:33:44] Mike: Yeah. You know, I'm glad you asked that question because I think that is the challenge in today's real estate market is that. It's not really, not simple, but it's disallowed for most of Americans to be able to invest in real estate. And the reason that is, is because it's it's investor productions, but we went the more costly, kind of painful route.

[00:34:06] Mike: It's taken us a year to get approval from the s e c, and hundreds of thousands of dollars hundreds of legal pages, of documents, But because of all that work and the extra effort we went through, our opportunity will be allowed that anyone can invest in it. it doesn't matter who you are in America.

[00:34:21] Mike: also the first product that we're launching Feels a little bit like a bank account. It's not actually a bank account. It's not F D I C insured. Be very clear on that there is risk involved, although there's steps that we take to protect yourself by putting our money at risk first before any of your money gets touched.

[00:34:38] Mike: But, What it does is it lets you put money in, lock it in for maybe six to 24 months and you get to pick that term and the end of that term you get your money back, but you get a high interest rate as a result. It's much higher than anything you can get a bank account.

[00:34:53] Matt: Wow. Wow. It's, yeah. This is exciting. It sounds like you're taking a private equity in the markets that, as you say, most people are not able to get to, and you have offered something that anyone might be able to invest in. So that sounds exciting. So nor hart.com, and that's N O R H A R T. Dot com and that'll be here in the show notes, listeners, so you can check that out.

[00:35:17] Matt: well, Mike, I've lost track of time just listening to you. you've wooed me, if you will, with just this amazing, authentic message, and it's just so amazing to be in your presence hearing this. I wonder is there anything else that you'd like to rant on or talk about for a few minutes before we go to our famous lightning round?

[00:35:32] Matt: Is there anything else in your mind

[00:35:34] Matt: that you wanted to get out today?

[00:35:35] Mike: You

[00:35:36] Mike: know, I think one thing you touched on earlier, which is really valuable is, not being afraid to fail. And so at orientation, one of the things that we talk about, let me frame it this way. One of our staff members said they felt a little bit of concern because one of the things we're like careful on is that if you're not up to our values, we do let people go and we support people really well on the way out.

[00:35:56] Mike: But were very clear about that. And she said, well, Mike, with this policy. I feel a little bit like I'm walking on eggshells. Like if I screw up, if I make a mistake, it just means you're gonna fire me. My response was this, how do we decide who to let go? She respond with our values.

[00:36:12] Mike: Exactly. Good job. Is there anywhere in our values that say, if you make a mistake, we're gonna let you go. Should look through? No, you're right. In fact, it's almost polar the opposite. We want you to be trying new things to challenge the status quo, to take initiative. We, in fact, we empower people to make the decision that they want to make and we live with it.

[00:36:36] Mike: We run with what they want to do. And I said, if you are not making some degree of mistake, I have concern because that means you're not trying something new. And that's what we want our organization to be. We want our organization to be the one that's experimenting, that's trying, that's failing, but learning from that failure and iterating and approving quickly.

[00:36:58] Mike: And so that's really important to me to get right.

[00:37:00] Matt: Mm, amazing. Amazing. I'm super excited to be able to share this, episode with the world because you've spoken some amazing transparent truths that you're practicing. You're living. And I wish that every company would live their values, the way that you are holding your team and yourself publicly, transparently, to those values.

[00:37:21] Matt: So thank you, Mike, for sharing that. well, I would love to, uh, ding, ding, ding, invite you to the lightning round of questions here, as we go to, wrap things up today. the first question is always when you hear, eternal optimism. What might that mean to you, Mike?

[00:37:36] Mike: You know, for me, it's not about being unrealistic with the world around you. It's recognizing that even when you're in a tough spot, That you can get out of it, right? If you take the right actions, take the next step, have positivity, look toward the future, that you can actually move past all of that.

[00:37:55] Mike: And if you get stuck in the opposite of optimism and that pessimism, you'll be stuck in that challenging spot forever. So yeah, I've always had a very optimistic view of the world and just not let myself get down with the situation I'm in.

[00:38:08] Matt: Thank you. What might be, a book or a resource, that has been important to you, either on your shelf now or in your past, that you might recommend to us?

[00:38:17] Mike: No Rules. Rules by Reid Hastings, the founder of Netflix. That's the book I was reading during the time of. Hiring and finding the best people. It shaped my view on that and really changed the game for us. Powerful book for me.

[00:38:33] Matt: And is there, a show or a movie or some music, that might get you inspired and get your blood boil and, taken some action.

[00:38:42] Matt: Mike, anything there?

[00:38:43] Mike: Well, when I was in college, I was a huge fan of Lincoln Park and there's one song that they have that I've listened to something like 5,000 times. It was outrageous just on repeat all day long, but it got me going.

[00:38:58] Matt: Nice, nice Lincoln Park. Awesome. Well, Mike, this has been, amazing to have you on the show today and appreciate you for sharing your heart, sharing your business, sharing everything so far. it's been amazing. I want to give a little credit here. I believe that we were introduced to each other, by our mutual friend, Gary.

[00:39:14] Matt: Mr. Gary, I think it was Mr. Gary Wilson. who introduced us. So I wanted to give credit and say thank you, Gary, for making this introduction. And we certainly wish you the very best, Mike, and

[00:39:23] Matt: thanks so much.

[00:39:24] Mike: Thanks for having me.