How to manage a large company, how to form a successful partnership, and what is the importance of implementing effective systems and processes? Amy Johnson, managing partner of Y Street Capital, shares her knowledge.
Tell us a little bit about yourself.
I am a mom of five, I run a few companies, one of which is Y Street Capital. We're in eight other states in the United States, and two provinces in Canada. We focus mostly on large land development, self-storage, and multi-family housing, usually from the ground up.
How do you scale to that level? How did a partnership come about, and how do you manage such a large company?
I started as a school teacher, my husband and I had student loan debt, and we said, "How are we ever going to get out of this?" I have a teacher's salary, he wasn't making a ton, and we just didn't want to have this grind. We decided to get into the rental game market of residential houses and we turned our own little primary house into a rental and moved into a gross, ugly, disgusting house and kept doing that over and over. It was difficult for us to scale, to keep doing individual residential houses: get the loan, qualify, find the right property, etc, and we knew we wanted to continue to grow. Fast forward, we luckily acquired a great amount of properties, and we decided to sell some of our portfolio and roll those into some larger assets. One of those assets we were an LP (a limited partner) in self-storage and we saw the power of that asset.
We continued to do other projects and I had a lot of individuals or spheres around me that followed us in our residential home, acquiring real estate. We were the first, and then others said, "Oh, I want to do that." And so, they did that. For the residential, there were some that we would take a house and we would partner with. We'd be 50-50, and they would bring in capital for the project. We decided we were doing those JV partnerships, so why don't we just do the same thing on a larger scale? And we made some bad choices on a couple of things and we learned "Okay, I'm not going to invest in that market, or we won't do that again." I remember thinking, still stuck a little bit in that residential mindset, that I needed to find the cheapest property so I bought a condemned building. We still made money, it was a lot of work to go from condemned to occupancy, but how valuable those life lessons were. And we are so grateful we didn't lose money on it, we made some, as long as we account for all of our time.
Then we got into land development and while I was doing that, I had a couple of larger projects. I'm not a builder, I didn't know construction very well. I had gotten a project entitled, but to go vertical and build the building, I needed some additional support, and that's where I met Victor Menasce, through a different mastermind. I paid him as a consultant on a project. They're in Canada, and I'm in Utah, and as we were bringing on different projects, we had a really good working relationship with different things, and they had some skills and knowledge and different things that I needed. I realized that if I wanted to scale this, I couldn't do everything on my own because during that time when I was starting to work with Victor, I had this sense of, "I'm super overwhelmed. How am I going to accomplish all of these things?" And to be honest, I've grown a lot since then. I remember holding this badge of making me worthier because I'm hustling so hard, my life is so chaotic and I'm so stressed. I was thinking of it as a badge of honor, and just affecting my health. It wasn't better, I wasn't being that effective and I realized I needed to get out of my way.
Because our relationship worked so well, we decided to merge our companies, and I became a managing partner, and it's worked out well. It allowed us to scale and work better. I'm so grateful, because two years ago, I got rushed into the emergency room. They thought I was having a stroke, and it was terrible. I couldn't speak, I would stutter, and I had this terrible, debilitating disease, and it crushed my world at first. If I was still doing everything alone and not having these systems, processes and people, everything would have gone out the window. It took about a year and a half for me to get back to where I was. That's when I realized, I'm super grateful that I had listened to my intuition that you need to work on getting some systems and processes so you can scale. Do only what you love to do, and then pass off what you don't love to other people.
I have large investors that are joint ventures with us or in our syndications, or people that we work with, and thinking back to that time, some of those individuals had no idea that I was sick because I didn't want to worry them. I probably should have communicated with them, but I didn't want them to stress because I was just looking at it in a professional manner, and the investments that the projects that we were working on didn't result in any major hiccups. After all, I had a good, solid team and we still had a good process, and that is critical. When people are thinking of investing, with a company or invest with a team, I would challenge you to look at, who am I investing with. Does it have what's called the key man syndrome, if that key man is gone, will everything fall apart? And the fact that everything didn't fall apart, we didn't have major delays, and investors weren't upset, meant that we have some incredible systems and processes in place, and we're able to step up and take on some of my responsibilities that I couldn't do, and I could do my bare minimum of what was important.
I also own a Residential Brokerage as well, but we've put good people in place for it so I'm not there. It's like, "Get out of the way, Amy. We're running this for you and we'll give you our input, we'll report back." It's running smoothly so that's been a critical thing for me in my business relationships, understanding who to look for, what to look for, so that I can depend on really good people. When people say that they can't find good people, it's usually their ego getting in the way in terms of hiring somebody better than them or saying I'm the only one that can do it the best way and nobody can do it as good as me. Remember how I was saying I was holding this badge of honor of "busyness", my ego was in my way of saying I couldn't possibly hire another individual to talk to these individuals for me, or I couldn't possibly hire somebody to write that or design that.
From the time that you were first introduced to Victor until the time you guys found a partnership, how long did that take?
About a year.
How did the conversation start so people can understand where values come from? Why would you both want to do that?
Both companies were very successful before and I think that it is like a relationship, because partnerships are a good relationship. Instead of coming for a spouse or boyfriend having a cup that's half full, and expecting your partner to fill the other half, both of you come with a very full cup and come together, and then you get to create something even bigger. It wasn't that one person came in and tried to save or rescue or take over, that is not a great partnership. Now, that can be a business move. I have looked at other companies where I could see where I could add value. It doesn't mean you can't add value to them, but you're going to come together full and create something bigger, so that each has one cup and, together instead of making two cups, you make three.
You have some systems in place which are important and there are people out there that have 78 businesses and they all run on the same system. It is a must. What have you implemented? What has been the most helpful to your company and how do you manage and oversee all of that?
One of the systems that we utilize, and I've carried it over to my other company is our EOS system, it's been our rocks and our wigs. It is aligned and doing our level 10. If you have a good EOS system, it's because you have your priorities straight. When you have a company that is only handling emergencies or firefighting, you're not putting your priorities and that's where you're not growing as well. Another system for us is Asana but that's more for our project management standpoint. It wouldn't be beneficial for a plumbing business or something like it. I used to use Google Doc to make my to-do list, and then I'd share it with my assistant. It's a good tracker, but there's more accountability with Asana. There are things you can build out inside of it. Paul Han is our systems guy in our company, and he's remarkable for the zaps, automation, and everything else there. There's no way I could ever do that, and that's going back to making sure you have the right people in the right seats. I am not Paul, but he also would probably never want to trade with me and talk to all the people that I talk to every day.
Traction is fantastic. A lot of companies do get to where they're going with Traction. However, it can be very complicated, and you need to bring in a consultant who understands the process for at least a year to do the goals and the vision.
Some individuals say, "The last thing I want to do is taking four meetings a year of two days each, plus every single Friday for two hours to go over our rocks and wigs and our issues lists, and things like that. If you're busy, sometimes that can seem overwhelming and I was grateful for the structure. There were times that I was like, "I'm so busy I don't have time for this." You need to make time so that you can create it.
Did you bring a consultant to help out in the beginning?
We did not. The beginning of our process was messier than working through it, but the next year was way better. Company wise, I would at least start, even if it's messy, you will get there eventually.
Amy Johnson
www.ystreetcapital.com
amyj@ystreetcapital.com