culture is everything and it just takes time. We need new entrants in the market, competition is good, but teams have to form. I'd suggest that what if we went deeper instead of wider? - Welcome to season seven of Bridge the Gap, a podcast dedicated to informing, educating, and influencing the future of housing and services for seniors. Powered by sponsors, Accu-Shilled, Align, Nick MapVision, ProCare HR, Sage, Hamilton Capital, Service Master, the Bridge Group Construction, and Salinity, and produced by Salinity Marketing. - Welcome to Bridge the Gap Podcast, the senior living podcast with Josh and Lucas in our nation's capital DC, the Fall Knit Conference. We wanna welcome a great guest on today, feast double field. Welcome to the show. - Thanks guys, great to be here. - Very excited to see you. And you know, we were joking before that this is not your first Nick conference. - No, it's not. I have a little Nick experience and can hand out some tips. And the late night bar at 2 a.m. is where you learn what really happens in the industry. - Yes, I think I have experienced that once or twice. And so yes, there's a lot of people here. And you've been coming to Nick since 1997. When did you found the springs? - 1996, that's when I went out of my own and started my own company with an idea. But we didn't open our first community till '98. So it took me two years to figure out what to do, how to do it, which I didn't actually figure out until years later, but I did it anyway. So we failed our way forward, but opened the first one in 1998. - Wonderful. And it's been a family endeavor? - Yeah, it's a company that I started. And you know, we've kept it close, interesting. So now we're just opening, we're moving the first residents in our new building in the springs at the Waterfront in Vancouver, Washington, which is a 250 unit community on October 1st. So that's 20 communities. And what we've done, I think of a little different is we've never sold a building. We still own the very first one we developed and we've just continued to try to get better. Maybe that's just because we've struggled with, I mean, this is a business, we're in a business of problems, right? So we just can't get to the level of perfection where you feel like we can quit. We just have to keep trying. And I think that's one of the keys that has made us, made it work. - So 20 communities now? Is that what you were saying? - 20 communities. - So, and you've held onto those, which is sort of an unusual thing, especially when you walk around Nick and you see all the transactions. So what's been the driving motive? Because as you said, it's not an easy business to operate. So what has been your driving force that's kept you in because since the '90s to now, I mean, just in the last handful of years, it's, I mean, we've encountered so much as an industry. So you put that over 20 or so years. I mean, that's a lot of experience that you've been through. So what's been the driving force and your motivation to do that? - You asked that question really well and I've never heard it asked like that. But if you're gonna stay in this business for a long period of time, for me, potentially, if I make it a couple more years longer than I have a mortgage on my house, you have to have a driving force. You have to have a reason to do it. There's a lot easier ways to make money in the world than in a 24/7, 365 day business that deals with the challenges that we have around aging and the workforce, right? You've got, and that motivation is really laid out in the book, A Culture, A Promise, but it started really simple, just solving a problem for my own family. But what's really interesting is one of the concepts that we talk about in there is, Maslow explains this, right? And it shows how challenging it is to do what we do. And so we have to have a driving force or a purpose, a reason to do it that gets you back in. It's gotta be something that you truly deeply believe in. But if you think about it, as we age, we start off in Maslow's hierarchy, we start climbing the Maslow's pyramid mountain and we get up there, we, our parents keep us safe, we finally get enough money, we move out of the house and we have safety and security, then we have friends, and you know, we get married potentially and then we go on vacations. And one day we reach the pinnacle of having an amazing podcast like you guys and yourself actualized on the top of the world. And then what happens? Time, gravity starts pooling us down the other side. We age, right? And it pulls us down, we've been there, we've done that. I don't wanna do another podcast again. I will let somebody else take over and then maybe our spouse dies, our friends die. And we're not safe at home. And so as an operator, we get a call from the families that come home at Christmas to visit their parents and all they've got is ice cream and toast in the refrigerator, right? And they're in trouble and they call us because now they're in at a place of safety. They don't have really any socialization going on. And so they're in a vulnerable state of life and they call us and we move their family in with us in the community. At the same time, we got younger people starting the journey up the other side of Maslow's that are getting going that are in a vulnerable place. They're just getting their life skills. So we get our workforce trying to make stable lives for themselves and we put those two groups together. Two groups that are in vulnerable stages of life. And we hang our entire reputation, our business, our world on two vulnerable groups. And so everything that we do here at the NIC, the capital, the operations, all the fun stuff we get to do, if it's not in service to that, making that stronger and better, this is probably a business you don't want to be in. Because it's just a vulnerable thing to do. And so you have to have a driver, as you put it, I love that. A driver that makes you feel like I feel a sense of mission. My grandparents, both my grandmothers live in and pass away in our community. So I feel like I accomplish a purpose for my personal purpose that I start out with. And now it's become more about the workforce and the staff. And what are the things that we can do so that the rising tide lifts all the boats? And there's just a lot of concepts around it. So anyway, that's a long answer to your one question. So we better get to more questions. I want to get deeper into that because you talked about a lot of things there in that and the drive and the motivation and the culture. And we're dealing with people at a very frail state. And you pointed out, eloquently, the two different groups that are at both frail states. But to get a deal, we're talking here at Nick, where we talk in deals a lot of times and transactions. How-- I've found it very difficult in my 15, 20 years doing this to get everyone aligned towards the same mission and purpose. Because to get a deal together, you've got your capital stack, your equity, your debt. You've got the developer. If you're not the developer, you've got your manager, your operator, all these stakeholders. And if any one of them is misaligned, there's this friction that happens. And just between the capital stack and the owner operator group, a lot of times, it becomes very difficult to do, to have a meaningful culture. So what has been some of your secret sauce that you could share with our audience? Because we've got a very diverse audience out there. And I know there's a lot of young, very successful people that will probably be the future of our industry. So I mean, what kind of nuggets of wisdom can you give them? Well, it's one of the reasons why the only organization that I-- nonprofit organization in the senior housing space that I donate my time to is the NIC. Because what you articulated again is very perceptive and accurate. I believe that how you structure your capital is the key for you being able to fulfill your promise to your customers, to your residents, to your patients. And OK, think of the couple things. Think of the phrase, "Arising tide lifts all boats." I think a lot of the way we structure these deals at capital, there's people anchored to the bottom of the sea. And the tide goes up, you're going to drown. You're not going to be there. And so being smart that you've got a rope tied to the bottom of the ocean with a big old piece of concrete in it is probably a good idea. Another metaphor that I like is I think that one of the problems we have with quality is because we don't really understand what business we're in. Everybody thinks we're inventing this business. Businesses have state cultures. And our culture is this culture of enrichment. It's a-- we promise to take care of people. We're in service to people. It's messy. It's 24/7, 365. It reminds me, so I'm also-- I have an interest in agriculture, right? And so I don't do orchards, but I'm going to use an orchardist as an example, because I think it's the best one of all the agriculture that I know. I mean, when you go out-- when a farmer goes out and they're going to create an apple orchard, right, they're going to take this ground. It's dirty. It's messy. They're going to be out there on their tractor, working the dirt, making sure the soil is right. The pH is right in it. And they're going to plant their rootstock. They're going to nurture that. They're going to protect it. They're going to make sure it gets water. And that's going to happen for five to seven years, right? And then one day, they're going to get a crop of golden apples on this tree. And that's going to last for a really long time. I would contend that what we do is exactly the same business, right? The difference is we're not growing apples. We're growing relationships. But it takes to plant your culture to give your customers confidence that you're going to be there 24/7, 365, to be persistent and run to the problems, not away from the problems, takes time. And I've noticed that when we acquire a building or a company, when we built a building or a company, it's a three to five year, very similar to growing grapes or an orchard before you get a crop, very natural principle. Before you actually get this crop of relationships, but once you get that-- because our product is different. We're not selling microphones or headphones or we're taking care of people, something that will happen to us someday. So it's a deeply personal business. And so you have to approach every problem like it is big. Even if you've dealt with it three times, even if the resident has forgotten 10 times that you've already dealt with this, you have to take it fresh every time. And you have to have a point of view. Your promise to take care of people is an aspirational promise, which-- an aspirational promise, which I defined in the book. There's two kind of promises, aspirational promises and business promises. The combination of those two, besides your capital structure, which actually is important to the capital structure, the combination of business promises and aspirational promises, is a key to success. Because aspirational promises are ones that will fail and fall short, business promises must not. We take capital from capital providers. That's a business promise. We have to return the money. We have to give them returns. And as operators, sometimes I hear a lot of complaints like, well, they were really hard on me. Well, did you fulfill your business promise? And so we have to choose our capital partners, right? And we've got to structure it, right? And we've got to know it's going to take time. A lot of time, that's why we've never sold a building. It just takes too long. I mean, it's like selling my kids. And I know that's probably bad in analogy, but you get so into it and know it so well to replace that is really hard to think about. Well, I think it's really hard to think about. And when you do put blood, sweat, and tears into something for so long, oftentimes you're thinking about what's going to happen to it if I get rid of it. And so I hear that happening. And I think there's a huge shift happening in the dynamic where I'm kind of, I'm thankful that it seems that people are starting to talk a little bit more about the relationship aspect of what we do versus transaction of what we do. Because we are in the real estate world. We are financing things. And there is a transaction that occurs. But it's not like when that asset manager makes a decision based on a pro forma, if there isn't a lot of thought and intention that goes into, well, what are we actually doing if we make this cut? Or if we raise this revenue, or if we do this like that, the trickle-down effects to actually humans that are living with you and in the frailless part of their life and their families have trusted you, it's a huge responsibility. So as we're seeing so many new operators coming in to our industry, I think I've seen and talked to probably at least six new operators at this conference that I've never met. Yeah, it's amazing the names I've never even heard of. Right, which is great. It is, it's exciting, but we're also, you know, they're operators that have been in other verticals that are much more, I would say, transactional type of a service. And so I've heard two things. I've heard, wow, everyone in this vertical is so friendly. And oh, this is a really tough industry to break into. And so it's interesting how those two have gone hand in hand, but I think it's for all the same reasons that you're describing. So I'll say some unpopular things if that's okay on that. Absolutely, we've done that before. I've said your sponsors. First of all, new companies are amazing, I was one, but the same growth principles apply. It's three to five years, maybe seven before you can cement a culture. It's like the, it's like the bringing the basketball superstars together, you know, for a couple of games where there's no culture or relationship versus, you know, I would rather coach the team that's been together for three to five years and, you know, outperforms. It just takes time to build, to build culture. The other controversial thing that I'll suggest, capital has a business culture of control, which it should, their promise to their customer, right? All culture comes from the promise to your customer. Their promise to their customer is we're going to take your money and we're going to give it back to you and keep it safe. That's inherently a culture of control. It's not personal, it's not about. You're a nice person that we're taking the building back or we're kicking you out of the building. It's because they've got a promise. Cultures of control needs certain types of leaders. They need control, they need directive leaders. Enrichment, when you're caring for others, child care would be the same type of business that's a cultural enrichment, culture as Bill Snyder calls it, Guinness is in the book, my book. If it's also in his book, he's a great book, lead right for your company type. In a culture of promise, I kind of take his concept and I break it down. So we are an enrichment culture, which means we're promising to take care of people. It's messy. We actually, the leaders that work best in those cultures are not necessarily directive leaders. Although you have to have all these, you have to have different, you've got to balance it. You've got a business promise, which is more directive and aspiration promises. But fundamentally, our industry profession is an enrichment culture and it leads leaders that are going to be more charismatic. And I'm not saying charismatic in like a religious type of way. I'm saying true believers. You know, the driver that you were talking about, what's the thing that drives you and keeps you there? It's a servant leadership perspective and in the fact that, you know, everything you do is to get that outcome and you've got to be smart enough. The bipod, does the apples come off the tree, the relationships come off the tree, the good care comes off the tree, the financial returns come off the tree when you give it enough time. But we're not planting these companies and these orchards with enough time. To come in and yank and operate out of a building because it's momentarily not working is like saying having three years into a tree growing and coming in with a dozer and yanking out the dozer or yanking it all out and then bringing another operator and say, I want apples on schedule. I want apples in a year. It's not going to happen. Or if the disease comes in and wipes out, like COVID wipes out the orchard, bringing another farmer and saying, hey, you know, we want to crop up this next year. Can you do it? Well, it doesn't matter what they say. It's not going to happen. So culture is, building culture is everything and it just takes time. We need new entrants in the market, competition is good, but teams have to form. I'd suggest that what if we went deeper instead of wider? 28 years, we're kind of underachievers here, only 20 buildings in 28 years. Okay, by Nick's standards, you walk around here as you're an operator, if you're in an orange badge, you know, everybody wants to know, how many buildings you have? How many buildings you have? I mean, what do they ask? How many buildings you have? Why aren't we asking what's your quality? What's your quality like? What's your mod rate on your worker comp? What's your loss run on your liability insurance? Those are indicators of what your culture's like. But, you know what, we don't even, we don't, at 20 buildings, if you structure, right, we don't need to do anymore. You don't have to have 500 gabillion buildings in every market in the world unless you just want to do that, which is fine, it's America, right? We can build what we will see and what we want to build. But do we need that to get the quality? I think deeper versus wider is my vote. - Well, and I would tend to agree with you. And I think, I don't know if you're seeing this, but I'm almost seeing that there is starting to be a little bit of a shift, more to, hey, not as, not how many regionals do you have, but where are your regionals focused? How are you servicing your buildings? I'm actually starting to the first time in my 20-year career, hearing those questions being asked at Nick, which is very refreshing to me. I mean, I don't know if you're sensing that or not. Maybe that's through some of your leadership and influence through the years. Maybe through your book that people need to read, just launch, but Lucas, this is, I mean, you go into so many buildings from every flavor of operator there is out there. This has to be something you notice as you go in. - It is, and this is such an important conversation. And I'm really glad that we're having this at Nick because that culture driver, that these anchor points, these orchards, it takes time. And you're the living embodiment of that. And you're not in the background, you're here. You're telling your story and people know you here and you're on giving your time to Nick. And I think that as the industry continues to change and bigger companies and bigger transactions and bigger, bigger, bigger. I think the core of our business is regional, smaller operators. It's really what makes up the majority of our industry. - Can I disagree with you? - Not disagree with you, but can I propose a little thought around that? Everybody says, oh, regional operators, regional operators, regional operators. I don't think size matters. In fact, I think you have to grow and we have to become bigger. I think it's how we grow. Why is it that when you grow theoretically, you're supposed to have more resources. You'd be able to buy more buying power. You got more experience. So why aren't we getting more quality? Why is there a reverse correlation to size and quality which is, I think, Chapter 10, quality growth curve concept. And it's because we outgrow our quality, but I think the opposite's gonna have to happen. I think we have to have operators that have more resources that have invested in growing their quality and therefore the number of buildings and number of lives you can impact just naturally follows it as a byproduct. There's a consultant out of Portland, Oregon, I work with Greg Bell, great guy. And he's got this book called, "Water the Bamboo." And we like, it springs, we bring in all these management consultants over the years and we try to garner all these nuggets to hold a different way, similar business concept. So here's Greg's theory. Tall timber bamboo, they plant it, the farmer plants it in South America. And for four years, all you see is this a little sprout above ground. There's nothing going on. For four years, you think, nothing happened. And then in 90 days, it grows 90 feet. And everybody goes, wow, an overnight success. Where did that company come from? Well, it wasn't an overnight success. So in that prior four years, you guys know the answer to this. What was happening is it was growing down, it was growing roots. So I anticipate, there's a lot of organizations out there that are doing it right, that have been growing roots. They're gonna have the opportunity to impact and to grow in a meaningful way. And the customer ultimately doesn't care about the size of the company or any of that other, to the extent that they get their needs met and their promises met and you fulfill your promises to 'em. But you have to have, you gotta grow those roots and that takes time. Well, I agree with you, I think it's a great point. And we're coming out of some difficult times to our industry. And I think difficult times show true character. And I think there's a lot of operators, developer owners who have weathered a lot of the storms like you have and are coming out stronger on the other side and just what our industry's gonna need to pivot into the future. Well, this has been an amazing conversation. You've gotta book out. Lucas, we're gonna connect our fans, our listeners to all this information. We're gonna put the links in our show notes and to our listeners. We're gonna connect with Pete and his organization in this book. I know that I'm gonna be ordering it and really diving into it. I think there's a lot of lessons that can be learned here. Pete, thank you so much for spending time with us today in a busy schedule. Thank you very much, guys. And all the proceeds of the book goes to funding our workforce stability program. So it goes right back into our frontline workforce. Awesome. Go to btgvoice.com, catch this content and so much more. And thanks for listening to another great episode of Bridge the Gap. Thanks for listening to Bridge the Gap podcast with Josh and Lucas. Connect with the BTG network team and use your voice to influence the industry by connecting with us at btgvoice.com.
