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Being Platformed in 2021: The Real Entrepreneur Podcast

By Frank Klesitz in Interviews on Mar 26, 2021

 

Frank Klesitz and Isaiah Colton dive into the idea of de-platforming your business in 2021. They discuss how to free yourself from being reliant on paid leads through internet leads like Zillow and instead, hosting seller workshops, using your database better, using direct mail to get more organic leads. 

0:00 Introduction

2:33 How is being platformed similar to being a surf?

6:00 How did Vyral continue to have signups even during the pandemic?

10:42 Why is getting into bridge loans a great idea right now?

20:12 What are some ways to stop relying on platforms for your leads?

25:46 Closing

 

[Full Transcript]

 

Isaiah Colton:

We have another episode of the real entrepreneur podcast, and today's conversation is going to be a little bit outside of the box. We're going to be putting ourselves two, three years, four years in the future, but also discussing some things that are taking place right now. That's really important. And this is a topic that came up last time I talked to Frank Klesitz who happens to be my guest speaker here today. He’s joining me on my podcast to talk about this topic and I'm going to steal his term, just to open up the conversation. He calls it being platformed in 2021 and beyond, and what a mistake that can be long-term for our business. And it's a very important topic. So Frank, I just want to just, you know, quickly 30 seconds. I know most people probably know you, but 30 seconds about yourself. And then let's go right into this topic of being platformed. And describe what that means and why that can be a deadly mistake for agents moving forward. Yeah. 

 

Frank Klesitz:

I started a company out of college where we interview you on a webcam to create educational videos, to help you stay in touch with your database. I've been doing that for about 11 years now. We have 50 employees, and we help people stay in touch with the number one business asset, which is their list. It's your past clients, your sphere, it's your leads. And I think we all know you've got to have some type of way to nurture them. And the way I started the company was really popular-- it was a bunch of can drip emails. You start the whole year up front with a bunch of canned material. And just as, as the years and months, years went on that just fell more and more to style where it needs to be a little more you on video, a little more relevant and unique. 

 

Frank Klesitz:

And that's what our firm does. And one of the things that I've always shared is you're really in two businesses. You're in the lead generation business and you're in the business of actually delivering the service. And he or she who controls the leads controls the business, simple as that. And if you look at, you know, real estate and professional services, home contractors, CPAs attorneys... there's a rush to platform. What I mean by that is someone else's creating the marketplace, not you and someone else is doing lead generation and not you. And now you're a surf on someone's land. It's modern-day feudalism where, you know, you used to have to work for someone who owns land. The new land is who controls the leads. Yeah. I mean, think about that. You used to be stuck on someone's land. 

 

Frank Klesitz:

Yeah. So the new land, the new feudal system is who controls the leads. And if someone else controls the leads, you're going to be toiling away, paying your time to the landowner because you never really own anything. And the reality is the only thing to own as a professional of a brand is the culture of your company. And, what they would call goodwill on a balance sheet, which is probably your database of people that will actually use you, right? It's why Coca-Cola sells for such huge premiums, because there's this line item on their balance sheet of what they think Coca-Cola's worth as a brand, right? So when you're selling the intangible and you're selling a professional service, a database, when a venture capital company comes in or you're looking to sell your business, or you go to a business broker, they're going to look at first and foremost, they're probably going to talk to the head of sales. 

 

Frank Klesitz:

And they're going to say, you know, do you control your supply? Do you control the way you get clients? And if you're getting all your clients from Zillow, you're basically their employee. If you're getting all of your referrals for where you're paid on a referral commission, you're basically their employee. I mean, they're going to come in. If you take a Zillow offer or a Zillow deal, they're going to say, you got to use our CRM. We're going to hand you the lead. You're going to have ridiculous reporting requirements. We're going to babysit you nonstop. You know what I mean? That's not freedom. That's not business freedom. So I guess that’s the topic of the conversation today, and I really liked that. It's like, you know, think about feudalism in medieval times. Yeah. The surfs would toil on the land, the landowners, the new landowners are the ones that control the marketplace, the platform where it leads. And if you're on those platforms, you don't have it. You're a surf. 

 

Isaiah Colton:

It's like a--it's digital land basically. Right. It's basically, You look at what's happening with currency right now with digital currency. Right? So, I mean, there's a lot of debate around that. We don't need to get in there with like cryptocurrency, you could say, well, the leads are like digital. It's like digital, the digital world, digital land. And to your analogy, that's the way the world's going

 

Frank Klesitz:

The way to look at it is, you're putting somebody in a toll, okay. For access to the customer. So every time you want access to the customer, you’ve got to pay a toll on the road.

 

Frank Klesitz:

And it’s really hard to build a business when every time you want access to the audience, every time you want access to customers, you have to pay someone else's toll. 

 

Isaiah Colton:

Yeah. And it's interesting, cause I feel like people are...you look at a lot of vendors and services that are helping real estate professionals and that real estate professional, that team leader, I think they're waking up to how important their database really is. And in a lot of ways of it's funny, cause you've been in this niche for how long professionally-- your whole professional life. And you've been saying this for how long? Are you seeing that trend?

 

Frank Klesitz:

Well, I'll tell you, I'll tell you this. I mean last March and April, a third of our clients just left because they were just cutting expenses. Everyone was getting ahead of it. I mean, it was just a meltdown. Yup. You know, I was laying people off. They needed to do something or else like, it would just have been a snowball, but then it stabilized probably around May. And the come June, it’s like, “Oh, sorry. I gotta do something.” Yeah. 

 

Frank Klesitz:

And what was really interesting at that time, while we had a lot of people leaving our firm, our signups stayed consistent. It usually ticked up in March and April, the same thing happened. People were coming in and giving us all this money at a time when all these people are leaving. I'm like, that's interesting. Yeah. And we spoke with the customers and here's what we heard we heard was, “Hey, a lot of my business was doing client appreciation events. Can't do it. A lot of my businesses would be door-knocking. Can't do it. Hey, I threw in the towel buying referral leads or buying leads.” I mean these couple thousand dollars a month things. Facebook PPC leads. I'm just this COVID thing, just like a cancer. You know what I mean? Like, you know, the whole, “I gotta hire an ISA for a grand or two a month.”

 

Frank Klesitz:

“I got to pay all of Facebook.” They take two years to convert. Right? A lot of people were leaving that and they were going, okay, what do I have left? Well, I basically have me calling and pounding phones, but I gotta have some leverage than just being the phone. Like, what else can I get that's not too expensive? And a lot of it is creating some content, creating some webinars, creating some videos, using email, using Facebook, using digital media. Not so much to throw up online to magically get found, but to push it out to your warmest audience, which of the people on your list. 

 

Isaiah Colton:

That’s right. It's interesting. The same thing here. We have two different divisions for our company. One is the inside sales division and our other division is largely database marketing focused, using automation and text message campaigns and artificial intelligence. And we saw that trend. We saw people getting weak, our ISA division got hammered during that period of time, and then a stabilized rate around June. We saw more people saying, “Oh my gosh, like I have to do something with my database right now.”

 

Frank Klesitz:

Yeah. I think it's where you always go back to. The euphoria of easy money and easy sales weans off. Right. So you kind of retreat back to like, okay, where is the foundation? Everything is built and it's on those relationships. And it's really easy, man. I mean, when you're doing business and you're doing leads and you can just buy some quick leads online right now, you don't have to go through all that work. I always wondered...We started our company back in like 2009, 10. So we just started kind of like in the trough of the great recession then. Right. And it's pretty much been on a run-up for the last 10 years. And I always talk to my business partner, John, and have him be upfront with me. I was like, I wonder how, you know, Vyral would run in like a recession or run in a low inventory market? Like we're seeing now, or, you know, we get clobbered or we do well and businesses ticking back up, back up to where we started. I was talking to somebody in Phoenix yesterday. They said ast year at this time they would have 25,000 listings on the market. And currently, there's 5,000. 

 

Frank Klesitz:

So there should be 25,000 homes for sale this time, last year. And right now there's 5,000 homes here. Now what I hear is I hear a giant game of musical chairs of real estate agents. Yeah. Because that's just a lot less commission money sloshing around the system, you know? So I think what happened is in the summer of last year, we borrowed and a lot of that, like basically like borrowed into 2021 with all these transactions. And I don't know, man, we'll see. Maybe we'll pay the price this year.

 

Isaiah Colton

Yeah. Yeah. It's interesting. Right. Because the homeowner that wants to buy also needs to sell first a lot of times. So then they don't sell, they need to buy first and it just creates this. 

 

Frank Klesitz

Well, I think, I think it's going to create a huge market for bridge loans. I could see a lot of brokerages offering a bridge loan where it's like, look, you know, sell your home to us. We'll lease it back to you. And then we'll let you make an all-cash non-contingent offer, which is what you need now to go buy your next house. And then you can time the moving date. 

 

Isaiah Colton

Wow. That's an interesting niche right there. 

 

Frank Klesitz:

That's the trade-in program, which Rich Barton calls it, at Zillow. One-click Nirvana where somebody can click a button and they trade in their homes and they trade up and it's all beautiful. Right. But there’s, I mean, billions and billions of dollars going into being able to create that type of consumer experience. And I think, launching technology is going to enhance that if you're a real estate agent 

 

Frank Klesitz:

Right now, one of your main objections besides, “why do I need you as a realtor in a hot market?”  Your main objection is going to be “I have no place to move and I don't want to stand outside with 30 other people getting the situation on a house.” That sounds terrible. Then I'm going to overpay for the home. I'm just going to get emotional. The sellers want a closing date at a super inconvenient time and I haven't even sold my house yet. Right? And I'm going to be homeless. So what about the moving? It's just like, Oh my God, this is terrible. And I think someone that comes along and offers some type of bridge loan product well is going to directly solve that homeowner pain point. And it gives an agent like a real advantage. And then just like, you know, the typical “I'll take pictures of your home,” but it's a sign in the yard. 

 

Isaiah Colton:

That's awesome. Yeah. That's a really good idea. Agents who are watching this, you know, write that down. I just did for our brokerage. Um, that's a really great idea. That's really, really strong.

 

Frank Klesitz:

Yeah. We can help you buy before you sell. Yeah. I think the other idea is “I'll help you understand all of your options,” you know. “Hey, there's investors that can buy your home. There's instant offers to buy your home. I can arrange an off-market sale. We could do open houses. You know, when's the last time you sold a home? A lot's changed, right?” And, “I'm holding a workshop or I'm teaching a seller workshop where I teach you all of your options. We can play list it or flip it.”

 

Isaiah Colton:

That's awesome. 

 

Frank Klesitz:

So I think like helping people understand all their options, you know...There's a lot of agents, sorry, sorry. 

 

Isaiah Colton:

No, that's okay. Yeah. I just want to go back just a couple of steps. Yeah. And how do you get on that platform? 

 

Frank Klesitz:

I think just having an awareness is that you don't control your business is that you're basically a glorified employee. You're an employee in disguise. And a lot of these companies are really pushing the line when it comes to independent contractor employee deals. But, understanding that you are platform, is that you're held hostage, you are tied up in a quarter and a hostage situation from a lead provider. Now that lead provider can take many forms, the assailant can take. 

 

Frank Klesitz:

This is good because this is a good metaphor. It could be Facebook deciding to lock you out of your account or deciding, I'm not gonna let you run your ads anymore because we changed your algorithms or Apple changes anything, right? It could be a Google pay-per-click that someone comes along and spends more per click and drives up your costs, or Google changes their algorithm. Like the penguin update back in the day… It could be telemarketing. It could be do not call laws and getting sued for TCPA violations as auto-dialers. Right. You have, obviously the Zillows and the Realtor.com where they generate the lead and the brand loyalty is to them and not you. 

 

Frank Klesitz:

I read an article about someone calling it the Home Depot effect. The story was, he was at Home Depot shopping and he's like, “I need someone to install this thing I’m thinking about putting in my house.” So, Home Depot had the preferred providers with the Home Depot stuff. So he hired one of the providers. Now, when they showed up, they were obviously dependent contractors, but he didn't look at them as their own business. It was like, they work for Home Depot, they're licensed or approved or screened from Home Depot. And the relationship was with Home Depot. It wasn't with the provider that came out. Do you follow me? And, when the provider messed up, because it was his own business, he blamed Home Depot, which forced the hand of Home Depot to get into the business. This is exactly what you're seeing with Zillow is, you know, Spencer Rascoff was like, “Hey, half the leads I send to the premier agents don't even get called.” I'm like, “what do you guys want me to do?” Like, they're all yelling at me. I have to get in lead follow-up business. And then when I pass your leads, you guys dropped the ball. The biggest asset and the biggest liability of Zillow is the agent. So it started as a media platform where they wanted to just send leads over to agents, but because the agents were ruining the Zillow brand so much, they had to get more into the business. 

 

Isaiah Colton: 

Yeah. And, and, and what you realize, cause I'm on a much smaller scale, but I've experienced that starting off with my brokerage, that I launched an inside sales division, thinking that was going to solve a problem for my brokerage and eventually clients. And then there's still a follow-up problem. Even when the ISA puts the appointment in their hands, there's still a problem with working that lead the right way and following up with it the right way for it to be converted. And for that lead to have a good experience. 

 

Frank Klesitz:

Yeah. That's ultimately what it comes down to. And that's why Jeff Bezos runs the world as Mr. Customer Experience. And the elephant in the room is the leads in real estate. And I know we're getting out of the platform conversation, but you're trying to ensure a consistent customer experience and lead experienced independent contractors where you cannot exert that control. Yeah. I think that's the big thing that needs to be talked about is switching probably to a W2 model, if you really wanted to put the consumer experience first. Because you just can't do it legally with the level of insight and inspection and supervision and teamwork and a contract relationship. 

 

Isaiah Colton: 

I firmly believe in what I've been talking to a lot of colleagues is that we're going to see more of a movement towards that, where you have in certain areas and pockets where you have teams start creating that environment, or brokerages start creating that environment. I'm already starting to test that right now. That W2 model. Because I know one reason why I stay in the business is because I never want to be to somebody who offers a platform that I won’t use myself. And so I try to stay in the business with our brokerage and we experienced these same things. It’s one of the things I've been training a lot about is your traditional sales funnel, so to speak, talks about generating leads, getting a transaction. Where, to me, if you're going to truly scale a spot, a business that's special, you got to look at the whole picture and that's marketing sales and service. And even though that's common sense and to a lot of people, I think that the next biggest UVP or USP crank is going to be experience. It's going to be the team that can provide the best experience for that client. 

 

Frank Klesitz:

It's always what's going to win. That's what over time capitalism rewards, than the sheer economics of big effect. Your question, cause we're just getting off-topic is what does an agent do when they platform? And they realize this? Well first is to realize that you're held hostage by someone else. And you're on someone else's platform. And you're a surf on someone's land. You could be a serf to Facebook. It could be a surf to the phone laws. It could be a surf to Realtor.com and Zillow, all these different sources. And that's not bad if you play the game where it's like, okay, I'll get my leads this way. They're going to be expensive, but I'm going to take that lead, put it into my database, and factor in the lifetime value of it, where the referrals and repeat business comes from it. 

 

Frank Klesitz:

That's one way to look at it. The second way is you have to invest in some other highway, so to speak, where there's no toll. Build some other highway’s rent to pay toll position channels. Yeah. And there's a lot of those, I'll go through a couple that are, that are pretty popular, that work well. First is, you know, rounding up everyone in your Gmail and your Outlook and everyone that you know. Load them into an email marketing account and start sending a couple of helpful educational emails out a month. For those people in Facebook run, some ads to them to stay in touch and then run them through one of these likely to sell companies. There's lots of them. One that we'll be probably doing a partnership with is Likely.AI, You go over to them, upload your list, and they'll run them through a statistical algorithm, and use behavior data to figure out who's likely sell and you start working that list in some way, specifically your past clients and sphere. 

 

Frank Klesitz:

And then, you know, it sounds like a company like yours can go on and take all of those leads and start texting them and going deeper and calling them. 

 

Isaiah Colton: 

Yeah, we have a system we rent. Actually, we call it a scoring. It sounds a lot like Likely to Move, where that's one of the layers of service that we offer. It takes your list and it runs it through an algorithm that says, “Hey, there's there might be something going on in this person's life based upon, I don't know, their iPhone location, the websites they're going to their credit card transactions,” you know, all this stuff. There's like 700 different point data points out. 

 

Frank Klesitz:

Yeah, yeah, yeah. Yeah. I was reading Axiom has a 5,000. Axiom has 5,000 data points on every American to be able to slice and dice lists for consumer behavior. But anyways, is looking at your database that this, the second thing honestly, is you have to start looking to teaching workshops. This is not very common in real estate. It's extremely common in financial services, but teaching, investing, teaching first-time home buyers, teaching home selling workshops...those are wonderful. And you put them on your platform, right? You invite a cohost, you invite guest speakers, they all email their lists to your platform, which is the workshop. Follow me. And that's a really easy way for people where it's like, “Hey Frank, I don't have any money. What do I do?”

 

Frank Klesitz:

Yeah. I don't want to slog away pounding cold calls, bro. Like, please God, can someone give me a different option than that? And I know it works, I get it. But please, I don't want to be dealing with doing that. What else do I go? Well, I'm like, you get your database and you put on webinars or workshops where you bring in guest speakers and they all mail their list of registrations, which is something that you're really good at Isaiah. I mean, you put on events and you bring in speakers from the industry and they all mail their lists to get people there. So you're not just a slave to Facebook for the lead for those registrations. 

 

Isaiah Colton: 

Yeah. We use that same model for our brokerage. It's why you bring up events, because we have a huge push. We have a huge push on doing online events. And just like, you'd run an in-person buyer seminar or seller seminar. And you invite your lead mortgage person, your insurance guy to come join or sponsor it. You can do the same thing online. We can be just as effective. And we just did one for a brokerage and we did two segments. The first part was for sellers. The second part was for buyers. We had almost a hundred homeowners show up to it. And it was so powerful. And then the follow-up was phenomenal. The relationship was there and Frank you're right on point. That is a sphere. It's one of the first things to get de-platformed. 

 

Frank Klesitz:

I'll give one more. The third one in order, it's going to be direct mail. It's going to be direct mail. Direct mail is the most democratic most American form of media. Right? Let me tell you why. First off, I don't have to worry about anyone outbidding me on the price of the stamp. I also don't have to worry about the post office opening my mail and going, “Hmm. What's our policies today, given the political situation and privacy concerns? You know what, I'm not going to deliver this piece of mail.” I don't have to worry about that. Right. 

 

Isaiah Colton:

Right. Like texting and cold calling and direct voice, all these things. 

 

Frank Klesitz:

Oh, we're going to change the laws and we're going to reinterpret the 1991 TCPA on what the capacity of an autodialer is. If I make some autodial call or I send some mass text, I get like a multi-million dollar lawsuit because they subpoenaed all my texts and all my calls, you know, I don't have to worry about that because I can mail you if you can call me and say, stop mailing me. If you call me and say, don't mail anywhere, I don't have to listen to it because the mailbox is government property. You don't own it. Right. So I don't have to worry about getting sued. I don't have to worry about privacy issues. And on top of that, I can slice and dice a direct mail list with all different types of criteria. And I can write one letter. I can write one letter and mail the same letter over and over. So what I'm getting at is, if you're using direct mail, I would not consider the postal system as being on someone's land. 

 

Isaiah Colton:

And if you're an Aryan client, just to let you know, we believe that a hundred percent in what Frank is saying. As a matter of, if you're listening to this podcast within a couple of weeks, you're going to see a new application. Go up on our dashboard, called Run Postcards. You’re going to be able to click a button and then sync your database with the postcard campaign and automate the whole thing, right. From the dashboard, because we believe a hundred percent in what Frank is saying. And so just be on the lookout for Run Postcards. That'll be at the top of your dashboard. I had to make that announcement anyway. 

 

Isaiah Colton:

So to kind of wrap up this podcast and, you know, one of the things I really appreciate about your approach, Frank, is there's a lot of people in this industry. I can tell you're always researching. You're always masterminding, and you're always trying to bring the best insights and information to your sphere,  which I'm thankful to be a part of your sphere. And so if you are listening to this podcast and you have a void when it comes to video marketing and database, there's no better company than Vyral Marketing to reach out to thank you. And so, just take it. And if you're on our dashboard, if you're a client, click on his app, click on the Vyral Application or the app there, the title, and you'll get a copy of a video marketing plan. A video marketing plan. So I'm going to send you a copy of the official video marketing plan to get business from your list. 

 

Isaiah Colton:

And I've seen that I've seen that plan and I've used. I've actually used that plan to say, “Oh my gosh, this is what our brokerage is missing.” Like, that plan is awesome. It's really awesome. And you came up with that plan years ago, I think 11 years ago.

 

Frank Klesitz:

That was the plan I wanted for my own real estate business that I was going to get into after college. And I just realized that maybe that's something you can sell. 

 

Isaiah Colton:

Yeah. That plan is so far ahead of its time, and it's still a hundred percent relevant today. So thank you, Frank. We're happy to have you on the real entrepreneur podcast anytime you want to come back. 

 

Frank Klesitz:

Thanks. Awesome. Thanks a lot.

Topics: Interviews

Frank Klesitz

Written by Frank Klesitz

Frank Klesitz is the CEO and co-founder of Vyral Marketing

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